TaxTMI 
TaxTMI 
2003 (6) TMI 187
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..... (iii) Allowing relief of Rs. 5,150 out of total disallowance of Rs. 10,150 made out of subscription paid to various clubs. (iv) Allowing relief of Rs. 1,10,601 out of disallowance of Rs. 2,28,593 made on account of commission paid to managing director and other executives. (v) Deleting the disallowance of Rs. 49,591 made out of managerial remuneration to the managing director. (vi) Allowing relief of Rs. 3,33,059 treating the same as revenue expenditure out of total disallowance of Rs. 3,50,609 made out of expenses debited under the head repairs and maintenance of building." 3. At the time of hearing the learned counsel of the assessee stated that except ground Nos. 1 and 2, all other grounds are covered by the orders of the Tribunal for earlier years. The attention of the Bench was drawn on copies of the orders of the Tribunal placed in the record. On the other hand, the learned Departmental Representative fairly conceded to the submissions made by the learned Authorised Representative. Regarding ground Nos. 1 and 2, the learned Departmental Representative placed reliance on the order of the AO. On the other hand, the learned counsel of the assessee placed reliance on the o....
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....to all the additions sustained by the CIT(A) and had stated that except ground Nos. 1 and 5, all other grounds have already been decided by the Tribunal while deciding the appeals for earlier years, either in favour of the assessee or against the assessee or the matter was restored to the file of the AO. Therefore, it was requested that in regard to all those grounds, similar view may be taken. 8. On the other hand, the learned Departmental Representative fairly stated that most of the issues involved in the appeal of the assessee have already been decided by the Tribunal as stated by the counsel of the assessee. As per chart, the grounds of the assessee are summarized as under: Rs. 1.Saleof UTI units treated as speculation loss 51,61,875 2. Deduction under s. 80-I 20,97,948 3.1 Add back of amount paid to auditors for taxation matters under s. 40A(12) 14,000 3.2 Retainership fee paid to Sh. Anoop Gupta disallowed as non-business purposes 24,000 3.3 Professional charges paid to Lall Lahiri & Salhotra disallowed as non-revenue expenses 14,200 4. Subscription and membership to clubs disallowed as non-business expenses 5,000 5. General expenses disallowed as earlier year....
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....rm the order of the CIT(A) on this issue. 16. Ground No. 12 was not pressed, as the same was decided by the Tribunal against assessee in earlier year. Therefore, the same is dismissed as not pressed. 17. Ground No. 15, which is against the deduction under s. 80HHC, was partly allowed by the Tribunal for asst. yr. 1990-91 in ITA No. 2337/Del/1996. Therefore, we direct the AO to recompute the deduction, in view of the finding of the Tribunal given for asst. yr. 1990-91. 18. Ground No. 5 is against the sustenance of addition of Rs. 54,177 on account of general expenses. The AO disallowed the entire claim of the assessee by observing that these expenses pertain to earlier year. The contention of the assessee was not accepted by the CIT(A), that the payment of these bills were cleared during the year under consideration because there was a dispute and the matter was not settled during the year under consideration. 18.1 The counsel reiterated his contentions as raised before the CIT(A). It was further submitted that no expenses were claimed by the assessee in earlier year. Further, reliance was placed on the decision reported in Saurashtra Cement & Chemical Industries Ltd. vs. CIT (1....
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....at bank has not charged any interest on the amount of loan sanctioned for purchase of these units. It was further noted by the AO that in the month of May there was highest price of the units, whereas in the month of July, there was decline in price of units. Examples for last four years were also quoted in his order. Further, by placing reliance on the decision of McDowell & Co. vs. CTO (1985) 47 CTR (SC) 126 : (1985) 154 ITR 148 (SC), the AO held that the transactions are of speculation in nature which were entered with a device for the motive to reduce the taxability. Accordingly, the claim of loss of the assessee was negatived. 19.2 Before the CIT(A), same contentions were reiterated. It was further submitted that there was no colourable device, as neither assessee was related to ANZ nor with UTI. It was further submitted that units were transferred in the name of assessee and heavy dividend of Rs. 45 lakhs was earned by assessee, which has already been offered for taxation. Further, reliance was placed in the case of M.V. Valliappan & Ors. vs. CIT (1988) 67 CTR (Mad) 289 : (1988) 170 ITR 238 (Mad) and Appollo Tyres vs. Dy. CIT (1992) 44 TTJ (Coch) 534 : (1992) 43 ITD 464 (Coc....
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....ey took place, were duly recorded in regular books of account. The attention of the Bench was drawn on various pages of the paper book. It was further submitted that huge dividend, i.e., of Rs. 45 lakhs was earned and has been shown in the P&L a/c. Regarding the observation of the CIT(A) that assessee has claimed exemption under s. 80M, it was submitted that the deduction was claimed as per the provisions of law and the same was allowed also, therefore, it cannot be said that there was any mala fide. Regarding provisions of s. 73, it was stated that now it does not survive, because in the case of Appollo Tyres Ltd. vs. CIT (2002) 174 CTR (SC) 521 : (2002) 255 ITR 273 (SC), the Hon'ble Supreme Court has held that the AO cannot disturb the consistent method of accounting adopted by the assessee. On a query from the Bench, the learned counsel fairly admitted that this was the planning of the assessee to buy units in the month of May, 1990, with a mind that those will be sold after the expiry of 60 days' period. It was further submitted that there was no bar in law to make planning for its better commercial expediency. It was also submitted by the counsel of the assessee that many asse....
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.... price of the units sold to the company. This facility was secured by a demand promissory note given by the company." 20.1 The assessee was confronted with this letter received from the bank. The assessee vide its letter dt.18th March, 1994, relied on its office letter dt.21st May, 1990, written by the company secretary to the bank that the payment for the units was to be made after two months without interest. 20.2 After perusing all these replies and letter from the bank, the AO noted that the assessee entered into these transactions just to reduce its taxability. It was noted by him that no correspondence was made with the bank in regard to purchase of the units from ANZ. It was also noted by the AO that the units were shown as purchased on21st May, 1990, but minutes of the board meeting dt.27th May, 1990, ratify the purchase. Therefore, it was inferred by the AO that even there was no proper authorisation to the person, who purchased the units. It was further ascertained by the AO that even no debit entry has been passed by the bank on 21st May, 1990, as only a single entry was passed on 20th July, 1990, the date of repurchase of the units from the assessee by the bank. On th....
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....de. This is a settled position that assessee wants to earn as much profit as it can, and, on the other hand, the assessee likes to pay minimum tax thereon. It is never seen that a person will knowingly enter into the transaction which results into losses. This is undisputed fact that prices were highest in the month of May, when the assessee purchased 25 lakhs of units for a consideration of Rs. 3.75 crores and the same were sold on 20th July, when the prices were on the lowest side. 20.4 In the case of Twin Star Holding Ltd. vs. Anand Kedia, Dy. CIT (2002) 178 CTR (Bom) 205 : (2003) 260 ITR 6 (Bom), the Hon'ble Bombay High Court has held that where on a resolution converting investment into shares to stock-in-trade, immediately prior to liquidation of the company and transfer of such shares to a holding company for a consideration, which was not adequate, the action of the TRO under s. 281 of the Act declaring the transfer itself to be void, cannot be challenged. While holding so, the Hon'ble High Court referred to the judgment of the Supreme Court in the case of McDowell & Co., and pointed out that even if the transaction is genuine, it could be ignored if the object is tax avoi....