TaxTMI 
TaxTMI 
TaxTMI 
2011 (3) TMI 1028
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....at the assessee filed return for the assessment year under consideration on 27.02.1991 alongwith the auditor's report. The Assessing Officer has stated that the notice was issued to the assessee under section 143(2) dated 26.03.1991, but the assessee failed to comply the date of hearing fixed for. It is stated that the assesese began filing details on 15.06.1992 and the latest letter filed by the assessee containing relevant information in connection with the assessment proceedings is dated 29.03.1993. The Assessing Officer has stated that the assessee filed particulars literally till the end of the time the proceeding was going to be barred by limitation. 4. Now coming to the ground of appeal under consideration, viz. Ground No. 1, the Assessing Officer has stated that from the Profit and Loss A/c. of the assessee, it is observed that on sale of Rs.7,697.05 lacs, net profit arrived at is Rs.973.61 lacs. He has stated that these figures, prima facie, do not reveal the exact state of affairs. He has stated that there is sale of Bonds of Public Sector Undertakings and Units of U.T.I., which amounted to Rs.7,025.51 lacs and it resulted in loss of Rs.438.29 lacs. Thus the net p....
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....ng Officer at the time of assessment proceedings and submitted that it contains the details of interest paid and/or accrued during the relevant financial year. The ld. A.R. submitted that the interest paid to Peerless General Finance and Investment Co. Ltd. comes to Rs.27,38,627/- and whereas the Assessing Officer has calculated the interest of Rs.33,40,493.14. He submitted that even if the disallowance of interest paid is to be disallowed, it could not exceed more than Rs.27,38,627/-. 7.1. The ld. A.R. further submitted that investment made by the assessee in purchase of Units and shares is one of the businesses of the assessee and the same were shown as stock-intrade and also offered to tax as business income. He submitted that the investment activity carried on by the assessee is for earning both taxable as well as exempted income. However, the Assessing Officer linked up dates of investment made in tax-free Bond with the dates of working capital loan taken from Peerless General Finance and Investment Co. Ltd. and cash credit facility availed from Banks. He submitted that the above basis is not correct because both investment as well as availment of credit is an on-going....
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.... of income not chargeable to tax. The ld. D.R. also referred to page 2 of the order of the ld. CIT(Appeals) and submitted that the ld. CIT(Appeals) has stated that the assessee did not file any alternative calculation to point out that the calculation made by the Assessing Officer is erroneous. The ld. D.R. further submitted that the dealing in securities is not core business of the assessee and hence, the contention of the ld. A.R. that the interest taken by the assessee for investment in shares, Units, Bonds is allowable under section 36(1)(iii) of the Act is not factually correct. He submitted that the ld. CIT(Appeals) has rightly confirmed the action of the Assessing Officer to disallow the interest in view of section 14A of the Income Tax Act. 9. We have carefully considered the submissions of the ld. representatives of the parties, the orders of the authorities below and the cases relied upon (supra). 10. As far as the contention of the ld. A.R. that the investment in shares, purchase of securities and bonds is one of the core-businesses of the assessee, we, on perusal of the object clause of the Memorandum of Association of the assessee and also considering t....
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....t expenditure incurred by assessee for borrowing money used for the purposes of investment in shares for trading as well as investment purposes has to suffer the disallowance because of overriding effect of section 14A of the Act irrespective of the fact that the interest is considered under section 36(1)(iii) or under section 57 of the Act. Hence, if the interest has been paid by the assessee in respect of the amount borrowed for investment in shares/Bonds/Units, income from which is not chargeable to tax, the said interest is disallowable as per section 14A of the Income Tax Act. 11. The ld. A.R. has submitted that its own fund is much higher than the investment made in tax-free Bonds and relying on the decisions (cited supra) submitted that no disallowance of interest is to be made. We have perused the said cases (cited supra) and observed that in those cases, the assessee could establish that it had the sufficient funds to provide interest-free loans and/or the interest-free loan was given for business purposes and hence, it was held that considering the facts no disallowance of interest was to be made. In the case before us, it is a fact that the assessee made investme....
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....assessee debited by the assessee as revenue expenditure is disallowed as the loan was taken to acquire capital asset. The Assessing Officer stated that the assessee will be entitled to depreciation allowance. In the return filed by the assessee, the assessee did not claim investment allowance as per section 32AB of the Act as the assessee claimed the said loss under the head "Revenue Expenditure". The assessee contended that if the said loss is considered as capital loss and the Assessing Officer was allowing depreciation thereon, the assessee should be entitled for investment allowance under section 32AB of the Act. It is a fact that the said plea was not taken by the assessee before the Assessing Officer as the assessee claimed the said loss under the head "Revenue Expenditure", but the assesee claimed the same before the ld. CIT(Appeals). 15. The ld. CIT(Appeals) rejected the claim of the assessee under section 32AB of the Act on the ground that no claim was made by the assessee before the Assessing Officer regarding any allowance under section 32AB of the Act. It is relevant to state that the ld. CIT(Appeals) has confirmed the action of the Assessing Officer that the sa....
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....reciation schedule. Hence, the assessee is in further appeal before the Tribunal. 21. During the course of hearing, the ld. A.R. referred pages 107 and 108 of the paper book, which is a copy of the letter dated 29.03.1993 addressed to the Assessing Officer and submitted that the assessee sold certain assets in the assessment year under consideration at an aggregate consideration of Rs.56,96,272.35 and submitted that the said sum was excluded from the block while considering depreciation allowable under the Income Tax Act in view of section 32 read with section 43(6) of the Income Tax Act. To substantiate his submission, the ld. A.R. referred to page 60 of the paper book, which is a copy of the schedule of depreciation. The ld. A.R. submitted that the Assessing Officer has made double disallowance on account of nonexclusion of the said profit of Rs.30,22,361/-. 22. On the other hand, the ld. D.R. relied on the order of the ld. CIT(Appeals) and submitted that the assessee could not furnish the details before the authorities below. 23. We have considered the submissions of the ld. representatives of the parties and page 60 of the paper book, which is a copy of ....
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....er:- "That on the facts and in the circumstances of the case, the ld. CIT(Appeals) grossly erred in not directing the ld. Assessing Officer to recompute the claim for depreciation as a result of appeal orders of earlier years, and other adjustments". 29. In the return filed, the assessee claimed depreciation of Rs.1,76,92,195/- and referred page 2 of the paper book. The assessee referred letter dated 15.09.1992, a copy of which is placed at pages 57 to 59 of the paper book and submitted that the assessee filed the revised depreciation computation chart by enhancing the depreciation by Rs.75,970/- on account of consequent changes in the depreciation allowance from assessment years 1983-84 to 1989-90 following the appeal effects of various proceedings and related matters. The Assessing Officer did not consider the same. In the first appeal, the ld. CIT(Appeals) has confirmed the action of the Assessing Officer on the ground that in the absence of details furnished, the claim of the assessee is unsubstantiated. Hence, the assessee is in further appeal before the Tribunal. 30. During the course of hearing, the ld. A.R. made his submissions by referring to the le....
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....day, the transactions were completed without taking delivery of the Units. The ld. CIT(Appeals) has held that such transactions are covered by the definition of the speculation transactions within the meaning of section 43(5) of the Act. Hence, the ld. CIT(Appeals) has stated that the Assessing Officer is correct as per law in not allowing the loss from the transactions of these units in computing the business income of the assessee and hence, could not be allowed. Hence, the assessee is in further appeal before the Tribunal. 36. The ld. A.R. referred to pages 68 to 77 of the paper book and submitted that it contains the details of the Units purchased and sold by the assessee, in which the assessee incurred loss of Rs.14,80,880/-. The ld. A.R. relying on the decision of the ITAT, Bangalore Bench in the case of ACIT -vs.- M/s. Standard Chartered Finance Leasing Co. dated 30.01.2009, a copy of which is placed at pages 159 to 166 of the paper book, submitted that Units of U.T.I. is neither commodity nor stock and shares and hence, provisions of section 43(5) are not applicable. Further, the ld. A.R. submitted that in respect of transactions shown at Sl. No. 11 and 12 and 13 an....
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....r giving due opportunity of hearing to the assessee and considering such details as may be filed by the assessee. Hence, Ground No. 6 of the appeal is allowed for statistical purposes by restoring the issue to the Assessing Officer. 39. In Ground No. 7 of the appeal, the assessee has disputed the order of ld. CIT(Appeals) in upholding the disallowance of ex-gratia payment amounting to Rs.5,11,293/-. 40. The Assessing Officer while computing the income of the assessee added a sum of Rs.5,11,293/- which was claimed by the assessee as ex-gratia payment. It is relevant to state that there is no reason/discussion of the Assessing Officer while making the above addition. In the first appeal, the ld. CIT(Appeals) has confirmed the action of the Assessing Officer on the ground that the assessee has not furnished any evidence to substantiate the contention that the ex-gratia payment is a business expenditure and is allowable under section 37(1) of the Act. The ld. CIT(Appeals) has stated that in the absence of satisfactory evidence, the appellant's contention is unsubstantiated. Hence, the assessee is in further appeal before the Tribunal. 41. During the course of he....
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....ever, in reply to a query from the Bench, the assessee conceded that the details of the articles and the expenditure incurred on each of the item could not be furnished before the authorities below to substantiate that the articles did not have any advertisement value and, therefore, the said expenditure does not fall under the purview of Rule 6B. 46. Considering the above facts, we are of the considered view that the reliance placed by the ld. A.R. on the earlier order of the Tribunal dated 29.08.2003 to which one of us is a party, (Judicial Member), we do not find any reason to interfere with the order of ld. CIT(Appeals). The assessee was required to give the details of the expenditure to substantiate that the articles presented did not have any advertisement value and these are outside the purview of Rule 6B of the Income Tax Rules. Hence, we uphold the order of the ld. CIT(Appeals) and reject the Ground No. 8 of the appeal taken by the assessee. 47. Ground No. 9 of the appeal is as under:- "That on the facts and in the circumstances of the case, the ld. CIT(Appeals) was not justified in upholding disallowance of payments made to Clubs amounting to Rs.46....
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....vant to the assessment year under consideration. The ld. CIT(Appeals) has stated that the said expenditure is allowable as per section 43B of the Act in the assessment year under consideration. In respect of the balance amount of Rs.1,86,917/-, the ld. CIT(Appeals) has stated that no evidence has been led to prove that the said expenditure has crystallized in the assessment year under consideration. The ld. CIT(Appeals) has stated that in the absence of satisfactory evidence, the Assessing Officer is correct to disallow the sum as not relating to this assessment year under consideration. Hence, the assessee is in further appeal before the Tribunal. 54. During the course of hearing, the ld. A.R. submitted that the said expenditure of Rs.1,86,917/- has been crystallized during the assessment year but in reply to a query from the Bench, the ld. A.R. submitted that there are no details to substantiate that the said liability of expenses of earlier years was crystallized in the assessment year under consideration. 55. In view of the above, we do not find any reason to interfere with the order of the ld. CIT(Appeals). Hence, we reject the ground No. 10 of the appeal taken....
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....posits, interest on fixed deposits and speculation income as income from other sources and excluding them from the profits of the business, resulting in reduced deduction claimed under section. 80HHC". 63. In the return of income filed, the assessee treated the interest on deposit of Rs.19,10,397/-, interest on fixed deposits of Rs.6,98,198/- and speculative income of Rs.2,98,900/- as business income and accordingly claimed deduction under section 80HHC of the Act. The Assessing Officer considered the above incomes of the assessee under the head "income from other sources" and accordingly allowed deduction under section 80HHC of the Act by reducing the above amounts. Being aggrieved, the assessee filed appeal before the first appellate authority. 64. The ld. CIT(Appeals) confirmed the action of the Assessing Officer in excluding interest on fixed deposit and speculation income while computing the profits of the business for the purpose of section 80HHC of the Act. Hence, the assessee is in further appeal before the Tribunal. 65. During the course of hearing, the ld. A.R. relied on the decision of ITAT in assessee's own case for the assessment year 1989-90 in....