TaxTMI 
TaxTMI 
2012 (7) TMI 654
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....e to earning of the dividend @ 5% of the dividend received by following the decision of the Hon'ble Madras Bench of the Tribunal in the case of Ind Bank Merchant Banking Securities Ltd. in ITA No.420/Mds./98 dated 14.04.2004 and accordingly disallowed Rs. 14,07,080/-. 4. Before the Commissioner of Income Tax(A), the assessee submitted that no expenditure was incurred in relation to earning the exempt income as the income by way dividend from companies are mostly from its subsidiaries which are being held for a long time. The assessee also contended that the Tribunal in assessee's own case for Assessment Year 2004-05 in ITA No.732/Mds./2009 dated 04.09.2009 held that no disallowance to be made under Section14A in respect of exempt income. The assessee also filed detailed breakup of the exempt income and the investments from which income is derived to drive home the point that investments have been held for a long time. 5. On appeal, Commissioner of Income Tax(A) restricted the disallowance to 2% from 5% of the dividend income by observing that the Hon'ble Bombay High Court in the case of ACIT Vs. Godrej & Boyce Mfg. Co. Ltd 328 ITR 81 (Bom.) held that even for the period prior....
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....tive could not bring any material on record to show that the estimate of expenditure at 2% by the Commissioner of Income Tax(A) as expenditure for earning the dividend income was lower than the actual expenditure incurred by the assessee in earning the said income. In absence of any such material being brought on record, we do not find any good and justifiable reason to interfere with the order of the Commissioner of Income Tax(A). It is confirmed. The ground of appeal of Revenue is dismissed. 9. The second issue in this appeal relates to the order of the Commissioner of Income Tax(A) holding that gains due to exchange difference can be allowed as business profits for computation of deduction under Section 80HHC. 10. The brief facts of the case are that the Assessing Officer while computing deduction allowable to the assessee under Section 80HHC of the Act excluded 90% of Rs. 88,40,013/- on account of exchange difference earned by the assessee. On appeal the assessee contended before the Commissioner of Income Tax (A) that the exchange difference has arisen out of exchange fluctuation difference between the date of accounting of sale and the date of actual realization of the mone....
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.... are not that the exchange difference was earned by the assessee out of EEFC account. On the other hand, the facts are that the assessee submitted that the exchange fluctuation difference arose due to difference in exchange between the date of accounting of sale and the date of actual realization of the sale proceeds and therefore, the same should be treated as profits of business. Therefore, the decision of the Hon'ble Bombay High Court in the case of C.I.T. Vs. Shah Originals(supra) is not applicable to the present case of the assessee. Hence, we do not find any good and justifiable reason to interfere with the order of the Commissioner of Income Tax(A). It is confirmed. The ground of appeal of Revenue is dismissed. ITA No.607/Mds./12 (A.Y. 2002-03) 14. The only issue involved in this appeal is that Commissioner of Income Tax(A) erred in deleting the disallowance of entry tax on raw materials and other inputs that are brought into the assessee's factory at Bangalore for manufacture of tractors. 15. The brief facts of the case are that Assessing Officer observed that assessee had debited an amount of Rs. 2,30,30,088/- towards entry fee under the head 'Miscellaneous charges' in ....
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....e assessee company had claimed deduction amounting to Rs. 1,19,77,063/- towards entry tax paid to various dates. This entry tax was required to be paid for entry of vehicles to various States which have been dispatched for sale. It was further noticed that as per sale tax rule of T.N. Government, the entry tax paid was allowed to be set off against sales tax payable by the Assessee. The Assessee company was requested that once the sale tax collected was not debited to profit and loss account then why this deduction should be allowed. It was explained that the claim was made under sec 43B on the basis of payment to the Government, The Assessing Officer though agreed that entry tax was allowable on payment basis but since set off was available against this sales tax and the assessee had not set off the sales tax, the deduction was not allowed. 29. Before C.I.T. (Appeals) it was submitted that entry tax was payable upon the entry of vehicles into the State of TN and Orissa. Further entry tax paid is allowed to be set off against sales tax liability arising on the sale of vehicles which was suffered entry tax in such states. It was further submitted that entry tax paid but unadjusted....
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....st sales tax payable as and when it is reduced from the sales tax payable on account of sales tax is claimed only at the lower amount. 31. On the other hand, the Id. Departmental Representative strongly supported the order of the Assessing Officer. 32. After considering the submissions of the parties, we are of the view that the C.I.T. (Appeals) has correctly adjudicated the issue because if the assessee has not received or collected the sales tax on account of sales made by it, then naturally entry tax cannot be set off against such sales tax. Even, the Assessing Officer has admitted that the deduction on account of entry tax is allowable if the payment is actually made and admittedly payment of entry tax has been made by the assessee. Therefore, we find nothing wrong with the order of the CIT(Appeals). The Revenue's appeal is dismissed." Following the above quoted order, Commissioner of Income Tax(A) held that entry tax paid by the assessee for goods entering Karnataka for being used in their manufacturing facility in that state is an allowable deduction under Section 43B. 17. Before us, the Departmental Representative relied on the grounds of appeal taken by the Revenu....
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....o referred to the order under Section 143(3) for Assessment Years 2006-07 & 2007-08 where it was found that the consultancy charges paid by the assessee was nothing but fee for technical services on which tax is required to be deducted. Since the above expenditure was required to be disallowed under Section 40(a)(i) and since claim of depreciation on brand equity also needed to be examined, the case was reopened. 23. The assessee strongly objected to reopening of the assessment under Section 147 after a lapse of more than four years. In its submission, the assessee stated that reason given by the Assessing Officer for reopening the assessment was dealt with by the Assessing Officer in the original order made under Section 143(3) and there was no new information available to reopen the assessment. It was submitted that the first reason for reopening was due to non-deduction of tax at source for payment to non-residents. It was submitted that during the course of assessment proceedings, the Assessing Officer had called for certain particulars as per questionnaire dated 28.10.2005. The information called for included details of payments made in foreign currency and tax deducted there....
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....aid letter. The required information was filed by the assessee by its letter dated 12.12.2005 a copy has been produced by the appellant. The assessee also produced a copy of the relevant agreement for use of brand in respect of claim of depreciation on brand equity and details of expenditure in foreign currency along with reason for non-deduction of tax for certain payments. The AO disallowed the depreciation on brand equity giving reasons therefor. No disallowance was made by the AO on expenditure in foreign currency. The AO made other additions disallowing certain expenditure claimed by the appellant and completed the assessment. Subsequently, the assessment was reopened by the AO by issue of notice u/s 148 dated 29.03.2010. The AO by his letter dated 21.10.2010 informed the appellant that he had reason to believe that income has escaped assessment as the claim for depreciation on brand equity need to verified for correctness and failure to deduct tax on foreign expenditure in the nature of commission on sales, consultancy charges and others are liable to be disallowed u/s 40(a)(i) of the Act. The appellant by its letter dated 15.11.2010 objected to the reopening of the assessm....
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....ncept of change of opinion as in built test co check the abuse of power by the A.O. hence, after 1 April, 1989 the AO has power to reopen provided there is "tangible material" to come to the conclusion that there is escapement of income from assessment. Reasons must have live link with the formation of the belief." There is no reason as to why the ratio of the above decision would not be applicable to the facts of the instant case. Further, as held by the Hon'ble Madras High Court in the case of CIT v Cholamandalam Investments and Finance Co. Ltd, 309 ITR 310(Mad), the AO cannot reopen the assessment beyond four years from the end of the assessment year if the assessee had filed all the particulars necessary for making assessment. The other decisions cited by the assessee also supports this view. In the case of CIT v Annamalai Finance Ltd., 275 ITR 451 (Mad) the Hon'ble Jurisdictional High Court has held that where the assessee has fully and truly disclosed all material facts necessary for completing the assessment u/s 143(3), notice u/s 148 issued beyond four years was not valid. In case of incorrect opinion formed by the AO, it cannot be said that there was non-disclosu....
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....47, production of books at the time of scrutiny will not amount to disclose of all facts necessary for assessment." The Commissioner of Income Tax(A) has held the reopening of the assessment as invalid for the reasons quoted above in this order. We find that in the instant case reopening of the assessment was made by issue of notice under Section 148 on 29.03.2010, which was beyond the period of four years of the relevant Assessment Year. Therefore, proviso to Section 147 of the Act is applicable in the instant case. According to the said proviso, the assessment framed under Section.143(3) of the Act cannot be reopened after the expiry of four years from the end of the relevant Assessment Year unless any income chargeable to tax has escaped assessment for such assessment year by reason of the failure on the part of the assessee to make a return under section 139 or in response to a notice issued under sub-section (1) of section 142 or section 148 or to disclose fully and truly all material facts necessary for his assessment, for that assessment year. A reading of the above recorded reasons show that there is no such failure as mentioned in the proviso to Section 147 of the Act exi....