TaxTMI 
TaxTMI 
2008 (4) TMI 365
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....nsaction. 4. The assessee has been doing job work of a number of parties and in this process it converts the raw materials supplied by such parties into aluminum conductors of different specifications. He has been doing this work for the past several years. During this year the break up of job charges is as under: ---------------------------------------------------------------- Name of the party Gross Debit note Net amount invoice issued credited amount ---------------------------------------------------------------- M/s P.G. Foils Ltd., Ahmedabad 73,72,897 56,70,828 17,02,068 -------------------------------------....
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....; invoice per debit note per MT MT ------------------------------------------------------------ 1. Job 1 to Job 5 ASCR Zebra 4,000 1,000 ------------------------------------------------------------ 2. Job 38 -do- 5,000 1,000 ------------------------------------------------------------ 3. Job 8A, Job 9, ASCR Weasel 4,000 1,000 Jobs 15, 16, 23 and 37 ------------------------------------------------------------ 4. Job 6 ....
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....tive of the assessee also stated that the issue of debit notes has not affected revenue because M/s P.G. Foils Ltd., which has been benefited on this count, has been regularly assessed to tax and has paid tax at the identical rate as that of the assessee. In this process Authorised Representative also referred to the copy of computation of total income of M/s P.G. Foils Ltd., Ahmedabad for asst. yr. 1996-97 and annual report for asst. yr. 1996-97. It was further stated that total income returned of M/s P.G. Foils Ltd. is Rs. 2,30,61,636 and, thus, there were no revenue loss. 5. But, the AO did not agree with the explanation of the assessee and concluded that the job work agreement relied by the assessee is nothing but colourable device to reduce taxable income. But the CIT(A), accepted this agreement to be genuine and thus deleted the major addition in question. 6. The Department is aggrieved. We have heard the rival submissions, perused the evidence on record, and circumspetously considered all the relevant facts, evidence and surrounding circumstances of this case. 7. The bone of contention in this case is the 'agreement' in question. The learned AO held, this agreement,....
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....he Department, which can be accounted for and to be relevant is that it has to watch if the assessee company had not employed any such methodology which could lead to evasion of tax. The Department was to see, whether this agreement has been designed and devised to reduce the taxable income, or it is a genuine need or exigency of the assessee's business, whether this is a collusive document? 11. After careful consideration, the AO came to the conclusion that it was a colourable device utilized by the assessee. The doubts raised by the AO are not irrelevant or illegal. In past the assessee was getting more rate for these works from M/s P.G. Foils Ltd. and also issued bills and entries on that basis in this financial year also. But at the fag end of the financial year debit notes were issued, in consonance of the terms and conditions of this impugned agreement. The doubts raised by learned AO are genuine, particularly when both concerns are sister concerns and managed by same persons. The AO has given various reasons for the same. The CIT(A) has accepted this agreement to be genuine by holding that reduction in the rates per metric ton of job charges and conversion charges was onl....
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....d AO has ignored the fact that a company is a legal entity, separate from its promoters or directors, and is governed by certain laws as laid down by the Companies Act. 16. The next material reason given by the learned AO is that the assessee's as well as the conduct of M/s P.G. Foils Ltd., in recording the transactions regularly in their books of accounts also support the conclusion that the agreement is nothing but a colourable device to reduce taxable profit. Tax at source had been deducted at regular intervals by M/s P.G. Foils Ltd., in normal manner on the job/conversion bills on invoice rates and tax so deducted had been deposited at regular intervals to the credit of the Central Government. The doubt of the AO is that had there been an agreement in force genuinely, M/s P.G. Foils Ltd. would have definitely indicated the error made by the assessee in the bills and corrective action would have been taken then and there. But, both the parties regularly followed the old rates. So, accordingly to the AO, this conduct of the parties to the agreement is against the agreement itself. 17. As we have stated above, the assessee admits that this mistake was committed inadvertently....
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....ere are certain inherent defects in the investigation of this agreement. When a company enters into any agreement, a resolution of the board of directors of the company is passed and the same is to be sent to the RoC. This aspect has not been verified by the Department. The other important fact about the date of purchase of the stamp papers, has also been not verified by the AO. 24. We may, however, mention other reasons which weighed in our mind to restore the issues to the file of AO, which are: The opening sentence in the impugned agreement referred to letters exchanged between the parties, to the agreement. The learned AO has mentioned in his order that no such correspondence was produced before him by the assessee. But learned Authorised Representative has produced copies of letters which are contained in the paper book, which are the correspondence dt. 2nd Feb., 1995, 17th Feb., 1995, 18th Feb., 1995 and 20th Feb., 1995. According to these letters, a rate for such work was settled and finally an agreement was drawn, for making 'the terms and conditions' legally binding on the parties. This aspect is a very material aspect in this regard, which remained uninvestigated by....
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....ake a decision afresh on the same. 31. In the result, this appeal is accepted for statistical purpose. JOGINDER PALL, A.M.: 7th Oct., 2004 I have gone through the proposed order of my learned Brother (JM). I have not been able to persuade myself to agree to the view taken by my learned Brother, I, therefore, proceed to write my own order, in this appeal, the Revenue has raised the following three grounds: "On the facts and in the circumstances of the case the learned CIT(A) has erred in- (i) deleting without appreciating fully the facts brought on record by the AO, the addition of Rs. 56,70,828 on account of debit note issued for job charges. (ii) deleting without appreciating fully the facts brought on record by the AO, the addition of Rs. 4,08,109 made on account of debit note issued for conversion charges. (iii) holding the agreement entered into by the assessee with M/s P.G. Foils Ltd. as genuine ignoring the facts and circumstances as well as the reasons mentioned in assessment order." 2. The outcome of this appeal solely rests on the facts of the case. Therefore, I feel, the facts of the case require little detailed discussion. The same are that the....
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....;credited amount ---------------------------------------------------------------- M/s P.G. Foils Ltd., Ahmedabad 73,72,897 56,70,828 17,02,068 ---------------------------------------------------------------- M/s Torrent Cables Ltd., Nadiad 8,31,555 25,044 8,06,511 ---------------------------------------------------------------- M/s General Engineering Works, 62,330 - 62,330 Faridabad. ---------------------------------------------------------------- 82,66,782 56,95,872 25,70,910 ---------------------------------------------------------------- The AO also observed that the rate charged as per origin....
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....---------- 7. Job 25 -do- 5,000 1,000 ------------------------------------------------------------ 8. Jobs 10 and 24 ACSR Dog 5,000 1,000" ------------------------------------------------------------ Thus, the AO observed that while the assessee initially charged job charges varying from Rs. 4000 per MT to Rs. 8000 per MT but subsequently reduced the job charges to a petty amount of Rs. 1,000 per MT by issuing debit notes on 30th March, 1996. In the process, the assessee passed on the benefit of Rs. 56,70,828 to M/s P.G. Foils Ltd. and thereby reduced its taxable income by the same amount. 4. Likewise, the AO further observed that the assessee had charged conversion charges as per original invoices @ Rs. 4,000 and Rs. 8,000 per MT. Subsequently, the assessee revised the rate to Rs. 2,000 per MT in respect of M/s P.G. Foils. In this manner, a benefit of Rs. 4,08,109 was passed to M/s P.G. Foils Ltd. The AO confronted ....
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....0 per cent of the normal rates being charged in the past and subsequent assessment years. He also observed that the assessee charged the same job charges from other parties, i.e., at the rate of old rates and not at the reduced rates. (iv) The AO also observed that the assessee failed to furnish separate trading accounts in respect of various activities undertaken by it on the ground that it was not possible to do so because the same labour and other manufacturing inputs have been utilized both for manufacturing and the job work and conversion activities. The AO observed that if the manufacturing expenses of Rs. 1,33,83,807 were allocated between the manufacturing of conductors and balance for job charges/conversion charges, the same would yield substantial GP on manufacturing activities. However, there would be a loss on account of job work and conversion activities by taking the reduced rates received from M/s P.G. Foils Ltd. (v) The agreement was sweeping in nature as it did not provide differential rates for the various types of conductors having different sizes and specifications. The fact that in the past and future, the differential rates had been charged, show, that l....
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....bsp; --------- 99,25,465 -------------------------------------------------------------- Had there been genuine agreement entered into on the last date of the previous accounting year relevant to asst. yr. 1995-96, M/s P.G. Foils Ltd. would have noticed the same and could have not deducted the tax at source by taking the amounts as per original invoices, bills and issued Form No. 16A accordingly. He further observed that if the debit note had been issued on 30th March, 1996, there was no need for M/s P.G. Foils Ltd. to credit an amount of Rs. 23,09,442 by way of job charges at the old rates when, in fact, the debit note already stood issued at the reduced rates on 30th March, 1996. (viii) The excise duty was also paid regularly on the basis of original bills issued by the assessee. Thus, the AO concluded that the so-called agreement was only a device to reduce the taxable income of the assessee. While coming to such conclusion he also took into account the fact that by claiming higher income, M/s P.G. Foils Ltd. had claimed deduction under s. ....
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.... for job charges and conversion charges. After due consideration of the matter, I hold that the AO was not justified in making these additions by holding that the agreement between the appellant and M/s P.G. Foils Ltd. was a colourable device to reduce the genuine income of the appellant because the AO had laid too much stress on the reduction in rates for job charges and conversion charges but he had not seen overall fact of such reduction in rates. In my view, reducing rate per metric ton of job charges and conversion charges was only on account of business consideration because by doing so appellant could get the manufactured conductors out of the raw material supplied by M/s P.G. Foils Ltd. at a reasonable rate so that it could earn huge profits by making supply of such conductors to RSEB. It is to be noted here that though rates were reduced on account of job charges and conversion charges but at the same time as per agreement appellant had been given the credit of Modvat and appellant's liability stood reduced on account of excise duty. In fact, appellant's liability of excise duty is reduced by 400 per cent and thus gain for the appellant were much more which ultimately resu....
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....nto AAC and ACSR Conductors. (ii) The manufacturer will fully co-operate and carryout all responsible direction of the supplier for manufacturing AAC/ACSR Conductors. (iii) For the above work the manufacturer will raise their bill @ Rs. 1,000 per MT during the period 1st April, 1995 to 31st March, 1996 irrespective of size and quantity of conductors so required by the supplier. (iv) Excise duty will be paid by Prem Cables (P) Ltd., at the time of removal of the goods. Modvat credit will be taken by Prem Cables (P) Ltd., on input material supplied by P.G. Foils Ltd. as per excise rules and necessary credit be given to P.G. Foils Ltd. at year end. (v) The specification for the conductors to be manufactured on job shall be given by supplier to manufacturer, verbally from time to time with the consent of manufacturer. (vi) The finished goods manufactured by Prem Cables (P) Ltd. will be taken in possession by P.G. Foils Ltd., in the godown of Prem Cables (P) Ltd., before clearing/removing the goods/conductors and the goods/conductors will remain in the godown of Prem Cables (P) Ltd., as ownership of P.G. Foils Ltd., till the ownership is transferred to them. (vii) In c....
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....reement as per which M/s P.G. Foils Ltd. was made liable to pay compensations or damages for any delay in supply of raw materials. It is also undisputed fact that even for the assessment year under reference the assessee was visited with a penalty of Rs. 96,627. If the same was due to delay in supply of raw materials for which M/s P.G. Foils Ltd. was responsible the assessee could have at least asked that concern to compensate the loss. In any case, there is no clause in the agreement as per which M/s P.G. Foils Ltd. was under an obligation to ensure timely supply and failure on their part would entitle the assessee for some compensation of damages. Therefore, this submission of the assessee has no merit. 9. As regards the contention of the assessee that as a result of agreement with M/s P.G. Foils Ltd. entered on the last day of the previous accounting year, the assessee earned better profit. The assessee contended that M/s P.G. Foils Ltd. supplied conductors to the assessee on time and as a result the assessee was able to execute huge orders with RSEB resulting in better profit. It is observed that no such, benefit flows from the agreement. As mentioned earlier, the agreement ....
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....be given to M/s P.G. Foils Ltd. at year end. A plain reading of this clause shows that the assessee was to pay excise duty in respect of raw materials, which otherwise was the responsibility of M/s P.G. Foils Ltd. because the raw materials were to be supplied by the suppliers, i.e., M/s P.G. Foils Ltd. Since the assessee agreed to pay excise duty, it was provided that credit for Modvat be taken by the assessee on input materials supplied by M/s P.G. Foils Ltd. It further states that necessary credit be given to M/s P.G. Foils Ltd. at year end. Thus, there is no such clause in the agreement as per which the assessee was entitled to some additional benefit over and above the job charges and conversion charges by the assessee from M/s P.G. Foils Ltd. In fact, the assessee was allowed a period of 3 months to quantify the benefit accruing to the assessee in monetary terms as a result of such agreement. No such specific details have been furnished before us. Therefore, this submission of the assessee that the assessee was able to avail of modvat credit as a result of such agreement is also without merit and substance. 10-A. We also find that apart from job work done for M/s P.G. Foils....
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....ingly. M/s P.G. Foils Ltd. also deducted the tax at source in respect of original invoices at higher amounts of job charges and conversion charges and paid the same accordingly. If this agreement actually existed at the relevant time, it is not understood as to how the same escaped the attention of both the companies at the time of deducting the tax at source and paying the same in the Government account. This lapse on the part of both the companies does not appear to be a matter of co-incidence. 12. Further, the AO has noticed that as per agreement, the assessee was also to receive conversion charges as per Rs. 1,000 P.M.T. However, as per debit notes, conversion charges were actually paid at Rs. 2,000 P.M.T. and not Rs. 1,000 as mentioned in the agreement. However, the assessee explained before us that conversion work was not the subject-matter of present agreement dt. 31st March, 1995. This contention of the assessee appears to be correct as it does not refer to conversion work and conversion charges. The title of the agreement is 'Job Work Agreement' and it does not include conversion work. Still, however, M/s P.G. Foils Ltd. issued similar debit note on 30th March, 1996 red....
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....d the agreement was made on 31st March, 1995. This shows that preparation of making the agreement preceded before the need for making the agreement was felt and the letters were exchanged in February, 1995. These facts do not inspire much confidence about the genuineness of the agreement, though my findings are not based purely on this fact. 15. Thus, in the light of detailed discussion in the preceding paras. I am of the considered opinion that the AO was justified in coming to conclusion that the agreement was only a device for reducing the profits of the assessee and making the impugned additions of Rs. 56,70,828 and Rs. 4,08,109. The learned CIT(A) has misled himself in taking cognizance of irrelevant factor while deleting the additions. He has not properly appreciated (sic) points raised in the assessment order. Therefore the order of the CIT(A) is set aside and that of the AO restored. The grounds of appeal of the Revenue are accordingly allowed. 16. In the result, the appeal is allowed. REFERENCE UNDER S. 255(4) OF THE IT ACT, 1961 JOGINDER PALL, A.M.: 7th Oct., 2004 In my view, the following points of difference need to be referred to the Hon'ble President....
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....ion of Rs. 4,08,109 being reduction in conversion charges allowed by the assessee is to be confirmed or matter remanded for making further enquiries." 3. Briefly stated the facts of the case which are material to decide the controversy are that the assessee derived income from manufacture and sale of conductors of different specifications. Besides that, it had also executed job work for which job work receipts and conversion charges were shown. Return of income was filed at Rs. 64 lakhs and odd. It had disclosed total turnover at Rs. 23,47,76,832 comprising of the following three components: 1. Trading/sales of raw material : 1,69,31,160 2. Turnover on account of purchase of readymade conductors : 12,74,94,900 3. Sales of conductors/wires manufactured by the assessee : 9,03,50,772 The assessee ....
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....eived from M/s P.G. Foils Ltd., a company in which the directors of the assessee company and their family members are interested, who hold substantial interest in both the companies. Numerous transactions were carried out by the assessee with M/s P.G. Foils Ltd., which included executing job work on the raw material supplied by them. purchasing finished goods/conductors which were manufactured by the assessee on job work basis from the said M/s P.G. Foils Ltd. and also lending and borrowing of raw material depending upon the availability of aluminium. The assessee charged job rates during the year varying from Rs. 4,000 per MT to Rs. 8,000 per MT from M/s P.G. Foils Ltd., a table in respect of which has been extracted by the learned JM in para 4 of his proposed order. Subsequently, such job charges were reduced to Rs. 1,000 per MT by way of debit note issued by M/s P.G. Foils Ltd. on 30th March, 1996. The total amount of debit note came at Rs. 56,70,828 as against the original invoice amount of Rs. 73,72,897. Thus the net amount of Rs. 17,02,068 was eventually credited in the P&L a/c of the assessee. On being called upon to explain the reasons for issuance of debit note for such a ....
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....n of aluminium ingots into aluminium rods for a number of parties including the abovereferred M/s P.G. Foils Ltd. Such activity of conversion was also being done in the past and also in the succeeding years as well. As against the invoiced amount of Rs. 25,60,276, being. the conversion charges from M/s P.G. Foils Ltd., charged throughout the year, a debit note of Rs. 4,08,109 was acknowledged thereby bringing down the income from conversion charges from M/s P.G. Foils Ltd. to Rs. 21,52,167. It was observed by the AO that the assessee also did conversion job for other 27 outside parties from whom invoiced amount was received at Rs. 26,12,325 and there were no such debit notes. Debit note issued by M/s P.G. Foils Ltd. on this account was dt. 30th March, 1996. On being called upon to explain the reasons for reduction in the conversion charges by way of debit note, the assessee stated that it had issued bills for conversion of scrap into aluminium rods @ Rs. 4,000 per MT vide invoice dt. 27th Oct., 1995, 31st Oct., 1995, 14th Feb., 1996, 10th March, 1996 and 31st March, 1996. The assessee revised the rate of Rs. 2,000 per MT and debit note dt. 30th March, 1996 was acknowledged from M/s....
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....t the gains on account of benefit of excise duty to the assessee was material one and this aspect has also not been properly considered by the AO. Considering these facts, the learned JM, after setting aside the order of the learned CIT(A) on this issue. sent the matter back to the file of the AO to verify the genuineness of this issue from all angles and to take a decision on the same afresh. 8. The learned AM in his dissenting note came to the conclusion that the alleged agreement was a colourable device for reducing the income in the hands of the assessee. He did not concur with the opinion expressed by the learned JM for remitting the matter back to the file of the AO on the ground that there was no benefit to the assessee by way of excise duty as the assessee was allowed to avail the benefit of Modvat credit paid by M/s P.G. Foils Ltd. in respect of raw materials and the necessary credit was to be given to the sister concern at the year end. Hence there was no resultant, accrual of income to the assessee on this count. Insofar as the fresh investigation of deduction under s. 80HHC in the hands of M/s P.G. Foils Ltd. is concerned, the learned AM came to the conclusion that b....
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....inely made as at the closing day of the preceding year to be effective during this year as per which the job charges were to be paid @ Rs. 1,000 per MT. It was further contended by the learned Authorised Representative that by no stretch of imagination this agreement could be doubted or said to be a colourable device for the reason that it was executed prior to the opening of the financial year and as such there could not have been any consideration about the prospective income to be earned from job charges in the year to come. The learned Authorised Representative further explained that the assessee company was manufacturing its own products and also doing the job work on the raw material supplied by M/s P.G. Foils Ltd. the finished product so made which was eventually purchased by the assessee company and sold to the electricity boards. The learned Authorised Representative explained that by reason of the reduction in the job charges to Rs. 1,000 per MT, there was ultimately reduction in the purchase price of the goods to the assessee. The learned Authorised Representative further explained that the assessee had earned benefit on account of excise duty from M/s P.G. Foils Ltd., w....
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....r MT. Not only the monthly payments were made by M/s P.G. Foils Ltd. to the assessee company but deduction of tax at source on such amount was also promptly made. While referring to copy of Form No. 16A, being part of assessment folder, the learned Departmental Representative contended that these forms were signed by Shri Pankaj P. Shah who was shown as managing director in the alleged agreement dt. 31st March, 1995. It was further submitted that in the preceding year, namely asst. yr. 1995-96 the rate charged by the assessee was at Rs. 5,365 per MT and the rates so charged in the succeeding year, namely asst. yr. 1997-98 also remained between Rs. 4,000 to Rs. 5,000 per MT. The rate was argued to have been allegedly reduced only in this year for same job work done and almost for same quantity of work done. It was further stated that the entire exercise was done for artificially boosting the income in the hands of M/s P.G. Foils Ltd. so that it could avail the benefit of deduction under s. 80HHC on such enhanced income since the benefit of deduction under this section was not available to the assessee company. The learned Departmental Representative further stated that there was no ....
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....atisfied. I am afraid that this proposition is too broad to be accepted in view of the limited scope of Third Member under s. 255(4) as per which he has to agree with either of the two opinions expressed by the learned Members of the Bench on the point of difference. He cannot formulate a third view de hors the opinion of the two Members who earlier heard the appeal. The choice before him is to either agree with the view taken by the learned JM or with the learned AM and hence he cannot set up a third view as proposed by the parties. Hence, I am unable to accept the view point of the learned counsel for the assessee that the agreement be held to be valid and sustaining the deletion of addition by learned CIT(A). 12. Reverting to the examination of question before me as to whether the matter should be restored to the file of the AO for fresh decision, or the addition be upheld. I observe that the power of framing assessment rests with the AO who has to make assessment on the basis of material produced before him and after hearing the assessee and perusing the evidence placed before him during the course of assessment proceedings. In this respect it is the duty of the assessee to ....
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....any document to be produced or any witness to be examined or any affidavit to be filed to enable it to pass orders or for any other substantial cause, or if the IT authorities have decided the case without giving sufficient opportunity to the assessee to adduce evidence either on the points specified by them or not specified by them, the Tribunal, for reasons to be recorded, may allow such document to be produced or witness to be examined or affidavit to be filed or may allow such evidence to be adduced. The sum and substance of this discussion is that it is the primary duty of the assessee to produce necessary documents/evidence as called for the by the AO for framing assessment. If he fails on his part in this regard, then the matter goes out of his hands and the furnishing of additional evidence at the appellate stages becomes the discretion of the appellate authorities which can be exercised only in the circumstances specified. Hence, there is no rule that if the assessee had not adduced necessary evidence/material at the assessment stage, then the appellate authorities must remit the matter back to the file of the AO for considering the additional evidence later on sought to b....
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....years also in same manner by way of doing job work on material supplied by M/s P.G. Foils Ltd. and thereafter purchasing such finished goods, which were eventually sold. In the year in question the assessee did similar activity of job work for M/s P.G. Foils Ltd. and rate was charged in original invoices ranging between Rs. 4,000 to Rs. 8,000 per MT. The invoices so raised by the assessee company on M/s P.G. Foils Ltd. were appropriately sent and the payment was made on monthly basis as per invoice value after deduction of tax at source, by M/s P.G. Foils Ltd. Such transactions continued during the entire previous year. At the end of year, a debit note was raised by which the rates charged in original invoices was reduced to Rs. 1,000 per MT. The case of the assessee is that an agreement was entered into between the two companies on 31st March, 1995, i.e., before the commencement of the previous year relevant to the assessment year under consideration as per which the rate of job charges was settled at Rs. 1,000 per MT. The rate of job charges invoiced by the assessee was stated to be continued on the basis of rates of the preceding year, by mistake and such mistake was realized on....
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....ed a categorical finding in the body of the assessment order that almost identical rates were charged by the assessee for job work done for outside parties in the assessment year in question. Such finding has not been controverted by the assessee either before the learned CIT(A) or the Tribunal. When the same work was done by the assessee for M/s P.G. Foils Ltd. as was being done in the past or future and the rate originally charged as per invoice, during the year correspond with that charged from M/s P.G. Foils Ltd. in the past as well as in the future and also from other parties in the current year, then what can be the possible reason for scaling down the rate of job charges drastically from Rs. 4,000 to Rs. 1,000 per MT, is a question which required to be examined in depth. 14. The Hon'ble Supreme Court in the case of Sumati Dayal examined the facts in which an amount was credited in the assessee's capital account declared as winning from races. The Revenue authorities did not accept the explanation offered by the assessee. The case of the assessee was that the amount was received from various race clubs on the basis of winning tickets. When the matter finally travelled to t....
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....ory is found to be unbelievable as the Tribunal has found, and in our opinion rightly, then the position remains that the consideration for the sale proceeds from the assessee and, therefore, it must be assumed to be his money." 16. From the ratio decidendi of these two summit Court judgments, it is manifest that before relying on the documents placed for consideration, it is important to consider the truthfulness of such recitals, which become paramount when these are between two interested parties. Adverting to the facts of the case, I am not inclined to accept the genuineness of the alleged agreement dt. 31st March, 1995 for the reason that when the assessee continued to render the same services to its sister concern as was done in the past and future, there was nothing to show the reason for reducing such rate in this particular year only to around 20 per cent of that charged earlier. It is further seen that the same rate of Rs. 4,000 to Rs. 5,000 per MT was charged by the assessee for same services from other outside parties as well. The theory propounded by the assessee does not inspire confidence further in view of the fact that throughout the relevant year the invoices w....
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....that would increase the income in the hands of M/s P.G. Foils Ltd. on which deduction under s. 80HHC would be admissible, that an ante dated agreement was executed for giving colour of genuineness to their intention. 17. The learned JM has taken into consideration the fact that the question of deduction under s. 80HHC in the hands of M/s P.G. Foils Ltd. was not property appreciated by the AO, which needed fresh consideration. In my considered opinion, the requisite information about deduction under s. 80HHC in the hands of M/s P.G. Foils Ltd., was made available to the AO along with computation of income, it was only on the perusal of this information that the AO on p. 6 para (j) came to note that M/s P.G. Foils Ltd. had claimed deduction under s. 80HHC for Rs. 44,82,097 on business income of Rs. 2.75 crores. It was further observed by the AO that on showing higher business income, M/s P.G. Foils Ltd. was able to get higher deduction under s. 80HHC as compared to what would have been allowable to it had it not accounted for the debit note. It is, therefore, clearly, borne out that the assessee, in collusion with M/s P.G. Foils Ltd., diverted its income to M/s P.G. Foils Ltd., so....
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....o the assessee, worth the name, has been made available to any of the authorities below or the Tribunal. Further, since the assessee was issuing invoices during the currency of year at actual rate of job charges, it was also purchasing the goods from M/s P.G. Foils Ltd. at the stipulated price. The exercise of reducing job charges was done at the end of the year and by that time the assessee had already made purchases from its sister concern and recorded accordingly. No corresponding debit note issued by the assessee at the end of the year to reduce its purchase price from M/s P.G. Foils for setting off the impact of reduction in job charges has ever been argued or brought on record. 19. The learned counsel for the assessee also submitted that M/s P.G. Foils Ltd. had accounted for job charges at the reduced rate and if that rate is varied in the hands of the assessee that would be very inequitable. In this regard I find force in the submission advanced by the learned Departmental Representative, for which he has relied on the case of Jairamdass Lokesh Kumar. In this case the Hon'ble jurisdictional High Court has held that if income actually belongs to the assessee, there was no ....