TaxTMI 
TaxTMI 
2012 (11) TMI 283
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....; 2. The Ld. CIT(A) has grossly erred in admitting fresh evidence in violation of Rule 46A of the I.T Rules on the basis of which the Ld CIT(A) directed the A.O to re-work the deduction u/s 80HHC of the Act. The assessee though specifically called for, has not submitted such details before the A.O during the course of assessment proceedings." 2.1.1 Ld. D.R. supported the assessment order whereas the Ld. A.R. supported the order of Ld. CIT(A). He further submitted that it is clearly noted by Ld. CIT(A) on page 6 of his order that the Reserve Bank of India have granted extension of time for realization of export proceeds up to 31.07.2001. He further submitted that Ld. CIT(A) has directed the A.O. to rework the deduction u/s 80HHC including export proceedings realized up to 31.07.2001 and hence, his order should be confirmed. He further submitted that the permission letter of RBI dated 18.01.2002 is available on page 20 of the paper book. 2.1.2 We have considered the rival submissions, perused the material on record and have gone through the orders of authorities below. Regarding ground No.2 of the revenue's appeal, we find that nothing could be shown by the Ld. D.R. as to wh....
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....vi) of the Act and as there was no transfer , there was no capital loss , therefore he did not allow the Long Term ^/'Capital Loss and took the same as nil." 2.2.2 Being aggrieved, assessee carried the matter in appeal before Ld. CIT(A) who has decided this issue in favour of the assessee and now, the revenue is in appeal before us. Ld. D.R. supported the assessment order. It is further submitted that as per Section 47(vi), there is no transfer when there is any transfer of a capital asset in a scheme of amalgamation by the amalgamating company to the amalgamated company if the amalgamated company is Indian company. He submitted that since there is no transfer, there cannot be any capital loss. As against this, Ld. A.R. supported the order of Ld. CIT(A). 2.2.3 We have considered the rival submissions, perused the material on record. We find that it is noted by Ld. CIT(A) in para 5.1 of his order that as per the details submitted by the assessee, this loss of Rs.523.42 lacs has arisen on sale of shares of six limited companies. Names of those six companies are noted by Ld. CIT(A) in the same para. He has further noted that these shares were originally acquired and held by Stum....
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....loss because of indexation. Section 47(vi) is in respect of transfer of asset by amalgamating company to amalgamated company and on such transfer, there cannot be any capital gain or capital loss because there is no transfer as per Section 47(vi). But in the present case, the loss was claimed by the assessee on subsequent sale by the amalgamated company, and shares received by it from the amalgamating company and hence, in our considered opinion, no interference is called for in the order of ld. CIT(A) on this issue. This ground of the revenue is also rejected. 2.3 In the result, the appeal of the revenue stands dismissed. 3. Now, we take up the appeal of the revenue for the assessment year 3.1 Grounds No.1 & 2 are interconnected and are reproduced below: "1. The Ld. CIT(A) has erred in law and on the facts of the case in deleting the disallowance of commission expenses of Rs.5,40,00,000/-. 2. The Ld. CIT(A) has erred in not appreciating the fact that the assessee has not submitted any details or evidence in respect of the services rendered by various persons to whom the assessee claimed to have made the payment though the same was specifically called f....
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....turn. As per the agreement between the appellant and Matrix Logistics Ltd. which was earlier known as Genesis Consultants Ltd dated 1.4.2000 the latter concern has provided services for procuring orders of medical equipments on behalf of the appellant and the commission has been paid on the basis of orders procured as per clause 3(d) 'of the agreement. Therefore, the disallowance of commission without any adverse information or materials or evidence is held to be not justified and hence, the disallowance is deleted." 3.1.5 From the above para, it is seen that it is noted by Ld. CIT(A) that there is an agreement regarding payment of commission to this party and the sale of the assessee has increased considerably i.e. from Rs.7.40 crores to Rs.24.27 crores. It is also noted by Ld. CIT(A) that this agreement was executed on 01.04.2000 for making local sales. It was submitted before Ld. CIT(A) that before this year, the assessee was mainly making export sales directly or indirectly and it has decided to enter into local market for sale for the first time and it had no infra structure for achieving the local sales to this extent. It is also noted by Ld. CIT(A) that payment of commiss....
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....was submitted by the Ld. A.R. that the matter may go back to the file of the A.O. for fresh decision. 3.2.4 We have considered the rival submissions, perused the material on record and have gone through the orders of authorities below. We find that this issue has been decided by Ld. CIT(A) as per para 5.2 of his order which is reproduced below: "5.2 I have considered the submissions of the A.R. carefully. As per the submissions filed by the A.R and the certificates filed from Core Healthcare Ltd. and Matrix Logistics Ltd. regarding the purchases made from them, the total purchases from them are of Rs.I9.97 crores. If other purchases of Rs.75.71 lakhs are considered and credit note for rate difference of Rs.1.65 crores is taken into account, then net total purchases comes to Rs.19.0.7 crores which tallies with the figure of purchases as per the P & L account of Rs.19.07 crores. As the difference has been reconciled there is no justification of addition of Rs.89,28,672/-. Hence the addition is deleted." 3.2.5 From the above para of the order of Ld. CIT(A), we find that this issue is decided by him on the basis of credit note for rate difference of Rs.1.65 crores. It w....
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.... A.O. this was income of the appellant. The appellant had entered into settlement with the above persons to whom the appellant had to discharge the loan liability and the appellant had benefited on account of settlement reached. The settlement had resulted in reduction in liabilities and the appellant had gained the amount. The benefit by way of remission of liability has accrued to the appellant and is covered within the provisions of sec.41(l) of the Act. The benefit has arisen during the business and it was not out of capital asset, therefore the claim of capital receipt was not accepted by the A.O ." 3.3.2 Being aggrieved, the assessee carried the matter in appeal before Ld. CIT(A) who has deleted this addition and now, the revenue is in appeal before us. 3.3.3 Ld. D.R. supported the assessment order. He further submitted that fresh evidences were admitted by Ld. CIT(A) and no remand report was obtained by him from the A.O. with regard to these additional evidences. 3.3.4 As against this, Ld. A.R. supported the order of Ld. CIT(A). He also placed reliance on the judgment of Hon'ble Gujarat High Court rendered in the case of Chetan Chemicals Pvt. Ltd. as repor....
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....the business of trading in equipments, plant & machinery and pharmaceutical products and providing technical services as has been noted by the A.O. on page 1 of the assessment order. This being so, it cannot be said that the benefit has arisen to the assessee in the course of business. This is a different aspect that loan has been taken by the assessee for the purpose of business but this does not mean that taking and giving loan is the business of the assessee and hence, it cannot be said that Section 41(1) can be attracted for remission in respect of loan liability when admittedly, no deduction was allowed to the assessee in respect of such loan liability in the present year or in any earlier year. We also do not find that any fresh evidence was admitted by Ld. CIT(A) because his decision is mainly on the basis of judgment of Hon'ble Gujarat High Court rendered in the case of Chetan Chemicals Pvt. Ltd. (supra) and this judgement is also cited before the A.O. This was never in dispute before the A.O. or before Ld. CIT(A) that advantage received by the assessee is in respect of waiver of loan liability for which no deduction was allowed to the assessee at any point of time. Hence, ....
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.... to trading business of the appellant on account of various services rendered by the bank for realization of export proceeds . Considering the said facts the disallowance of interest made by the A.O. is deleted." 3.4.5 From the above para of the order of Ld. CIT(A), it is seen that a clear finding is given by Ld. CIT(A) that as per the balance sheet of the assessee, there is no bank loan and there is bank overdraft amounting to R.5,97,641/- which has been stated to have been invested in the trading business of the assessee and no interest had been paid on unsecured loan. He has given this finding also that interest expenses of Rs.1,05,030/- pertained to trading business of the assessee on account of various services rendered for realization of export proceeds. These findings of Ld. CIT(A) could not be controverted by the Ld. A.R. and hence, we decline to interfere in the order of Ld. CIT(A) on this issue also. In the result, ground No.7 is also rejected. 3.5 Ground No.8 and 9 are interconnected which are as under: "8. The Ld. CIT(A) has erred in law and on the facts of the case in deleting the addition of Rs.66,77,658/- made on account of interest on Fixed Deposit. 9. T....
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....accrued interest in Schedule V in the balance sheet. Since this income was already offered by the assessee, no further addition as required to be made and on this basis, Ld. CIT(A) has deleted this addition. Ld. D.R. could not controvert these findings of ld. CIT(A) and hence, on this issue also, no interference is called for in the order of Ld. CIT(A). These grounds of the revenue are also rejected. 3.6 In the result, this appeal of the revenue is partly allowed for statistical purposes. 4. Now, we take up the appeal of the revenue in I.T.A.No. 2099/Ahd/2008 for the assessment year 2002-03. 4.1 Ground No.1 is as under: "1. The Ld. CIT(A) has erred in law and on the facts of the case in deleting the disallowance of Rs.3,35,08,600/- made on account of trading loss." 4.1.1 Brief facts of this issue till the assessment stage are noted by Ld. CIT(A) in his order at para 4, which is reproduced below: "4. The ground of appeal no.5 is against disallowance of trading loss of Rs.3,35,08,600/-. The A.O. has stated in the assessment order that the appellant has claimed business loss of Rs.3,35,08,600/- on resale of medical products and that from the quantitative details it i....
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.... not rejected books of accounts of the appellant. The purchases and sales are properly vouched and the A.O. has not given any finding that the purchase prices have been 'inflated. The A.O. has not detected any bogus purchases. The appellant had submitted the full names and addresses and PANs of the parties from whom purchases were made and parties to whom sales were made. The A.O. has not made any enquiry with the suppliers of goods. Therefore, it was contended that the disallowance of loss was not proper. The contention of the A.R. is found to be tenable, the A.O. has disallowed the trading loss on the ground that the purchases and sales were made to sister concerns and paper transactions were carried out and no genuine purchases or sales have taken place. I find that the appellant had submitted before the A.O. the full names and addresses and PANs of the parties from whom purchases have been carried out and of the parties to whom sales were made. The A.O. has not made any enquiry but has come to a conclusion on presumption that the transactions are bogus. Further the appellant has explained that the average purchase price of IV fluids was Rs.1.75 per unit and average selling pric....
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....dering all these facts as discussed above, we do not find any reason to interfere in the order of Ld. CIT(A) because the quantity of purchases and sales are also tallying and identity of the parties with whom such purchases and sales have taken place, is not in doubt and there is no allegation regarding inflation of purchase price or deflation of sales price and the facts are not shown to be different in the present year as compared to the facts in the preceding year where huge profits were declared by the assessee. Hence, we decline to interfere in the order of Ld. CIT(A) on this issue. This ground of the revenue is rejected. 4.2 Ground No.2 of the revenue's appeal is as under: "2. The Ld. CIT(A) has erred in law and on the facts of the case in deleting the disallowance of Rs.1,00,000/-out of expenses u/s. 14A of the Act." 4.2.1 Brief facts of this issue till the assessment stage are noted by Ld. CIT(A) in para 5 of his order which is reproduced below: "5. The ground of appeal no.6 is against disallowance of Rs.1,00,000/- out of expenses. The A.O. observed that the appellant company has invested Rs. 73,10,740/- in the joint venture Mauritius company M/s. Catalys Venture C....
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....said joint venture and the investment has been made form internal accruals and reserves. From the balance sheet filed by the Id. A.R. it is observed that there are no bank loans and it has been stated that on unsecured loans no interest has been paid. The interest expenses of Rs.30,137/- pertain to trading business of the appellant on account of various services rendered by the bank for realization of export proceeds . As contended by the A.R, the appellant has not received any income nor the appellant has incurred any expenditure with respect to the above investments. As there is no exempted income and no expenditure has been incurred, I agree with the submissions of the A.R. that there can be no disallowance U/S.14A of the Act, accordingly, the disallowance is deleted." 4.2.5 We find that Ld. CIT(A) has deleted this disallowance mainly on this basis that there is no exempt income in the present year. In our considered opinion, this is not relevant as to whether there is any dividend income in the present year or not because this is admitted fact that the assessee has made investment of Rs.73.10 lacs with joint venture company and further investment of Rs.1604 lacs was made ....