TaxTMI 
TaxTMI 
2015 (1) TMI 517
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....ve filed cross appeals. The grounds of appeal in the revenue's appeal in ITA No.934/JP/2011 read as under :- "1. That the ld. CIT (A) has erred in law as well as on the facts and circumstances of the case in deleting the trading addition of Rs. 20 lacs as made by the AO. 2. That the ld. CIT (A) has erred in law as well as on the facts and circumstances of the case in deleting the addition of Rs. 1,43,24,420/- u/s 2(22)(e). 3. That the ld. CIT (A) has erred in law as well as on the facts and circumstances of the case in deleting the disallowance of Rs. 72,07,040/-. 4. That the ld. CIT (A) has erred in law as well as on the facts and circumstances of the case in deleting the disallowance of Rs. 24,62,950/- u/s 80IA. 5. The Department reserves its right to add, alter, modify, delete or amend all or any of the grounds of appeal before or at the time of hearing of appeal." The only Ground of appeal taken in the assessee's appeal in ITA No.988/JP/2011 reads as under :- "That ld. assessing officer has erred in law as well as on the facts and circumstances of the case in applying the provision of sec. 14A of the I.Tax Act 1961 and also erred in making the disallowance ....
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....The AO held that books of account have not been properly maintained, therefore, he rejected the books of account and made lump sum addition of Rs. 50,00,000/-. Detailed submissions were filed before ld. CIT (A). Reliance was also placed on various case laws. It was submitted that similar addition was made for assessment years 2003-04 to 05-06 and the entire addition has been deleted by the Tribunal. It was also contended that no addition under this head has been made for assessment year 2008-09. Even the GP rate was lower than the assessment year 2007-08. 22. After considering the submissions and perusing the material on record, the ld. CIT (A) found that similar additions were made for assessment years 2003-04 to 05-06 and they have been deleted by the Tribunal. The ld. CIT (A) by further observing that AO did not point out any defect in the books of account, stock register, purchase and consumable stock, therefore, he held that there is no justification in making lump sum addition of Rs. 50,00,000/-. Accordingly the same was deleted." Ld. AR also submitted that AO has rejected the books of accounts with similar observations for assessment years 2003-04, 2004-05 and 2005-06 ....
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.... be deemed dividend. Since it is a deeming provision, this is to be construed strictly. For applying this deeming provision, there should be a payment; payment should be of a sum; and such payment should be a loan or advance. Unless and until, all these conditions are satisfied, deeming fiction shall not be attracted. The assessee company is trading and manufacturing of mustard oil and oil cake. During the year, in the course of business, both the companies are entered into various transactions of purchases, sales, making payments and receiving payments. For the year under consideration, the assessee made purchases of Rs. 1163.84 lacs from M/s. Saurabh Agrotech (P.) Ltd. and sold goods of Rs. 595.52 lacs to it. Against this purchases and sales, the assessee made payments and received payments. There was an opening credit balance of M/s. Saurabh Agrotech (P.) Ltd. in the books of assessee of Rs. 93,43,520/-. Ld. AR further submitted that nature of transaction between the assessee and M/s. Saurabh Agrotech (P.) Ltd. are business transactions. He also submitted that for invoking the provisions of section 2(22)(e), it is necessary that the payment should be either a loan or advance. He....
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....rothers Vs. ACIT 47 TTJ 434 (Cochin) (Trib.) (vi) DCIT Vs. Lakra Brothers 106 TTJ 250 (Chand.) (Trib.) (vii) Sri Satchindananad S. Pandit Vs. ITO 19 SOT 213 (Trib.) (Mum.) (viii) CIT Vs. Creative Dyeing & Printing P. Ltd. 318 ITR 476 (Del.) (HC) Ld. AR also relied on the decision of the ITAT in assessee's own case in ITA Nos.361 & 387/JP/2011 dated 21.10.2011 for the assessment year 2006-07. 10. We have heard both the sides on the issue. The CIT (A) has deleted the addition by holding as under :- "4.2 After hearing the learned counsel in detail and perusing the written submissions, it is seen that the same issue have came up for consideration in the assessment year 2006-2007 in the assessee own case, wherein, while deciding the appeal 386/2008-09 dt. 10.02.2011, I have given the following finding:- "7.3 I have considered the submissions of the learned counsel thoroughly and perused the assessment order and annexure annexed thereto. The submissions of the learned counsel are found to be in order not only on one ground but on several grounds. Firstly and foremost among them, is that the assessee company is having the transaction with the Saurabh Agrotech (P) Ltd ....
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....ansactions would not fall within the ambit of the provisions of Section 2(22)(e) of the Act - Revenue's appeal dismissed. While delivering the judgement, honourable Delhi high court has distinguished the decision of apex court in the case of P.Sharda and Taru Lata Shayarn. It has also recently been held by honourable Delhi High Court in case of Commissioner of Income-Tax v/s Ambassador Travels (P) Limited (2008) 173 Taxman 407 (Del.) that "the assessee was involved in the booking of resorts for the customers of these company and entered into normal business transaction as a part of its day-to-day business activities. The financial transaction cannot in any circumstances be treated as loans or advances received by the assessee from these two concerns". Decision of honourable Delhi High Court was again recently followed by the same high court in the case of CIT v/s Creative Dyeing & Printing (P) Limited (2009) TIOL 532 (Del.) wherein it has been held that "advances given for commercial purposes of expansion of business con not be treated as loan or dividend income in the hands of the shareholders of the assessee company." Income-Tax Appellate Tribunal, Bench - Mumbai in NH Securi....
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....ore considering the facts of the present case, and case laws on the subject is categorically held that the transaction of assessee company with the Saurabh Agrotech (P) Limited are the business and trade transaction entered into the normal course of business and the provision of section 2(22)(e) are not applicable thereupon and the addition of Rs. 14324420.00 u/s 2(22)(e) of the Income-Tax Act' 196l is deleted. Since I have deleted the addition of Rs. 14324420.00, therefore my finding upon the issue of deduction of tax liability, the depreciation as per the income and possess accumulated profit have remained merely of academic interest therefore, no finding thereupon have been given." After hearing both the sides and considering all the relevant facts and circumstances and the case laws. We find that ITAT in assessee's own case in ITA Nos.361 & 387/JP/2011 dated 21.10.2011 confirmed the findings of the CIT (A) and decided the issue in favour of the assessee vide order dated 21.10.2011. The relevant paras of the aforesaid order is reproduced as under :- "35. After considering the above findings of ld. CIT (A) and the written submissions of the assessee which are also repro....
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....oney as loan (ii) generally carries an interest (iii) obligation of repayment. Therefore, the word "advance" which appears in the company of the word "loan" could only be such advance which carries with it an obligation of repayment. Thus, trade advances which is in the nature of money transacted to give effect to a commercial transaction would not fall within the ambit of section 2(22)(e). 35.1. Similar facts are involved in this case also as the transactions are of business nature. Therefore, they do not fall within the ambit of section 2(22)(e) of the Act. We have also gone through the various case laws, some of them have already been considered by ld. CIT (A) and found that they are in support of the case of the assessee. 35.2. The decisions relied upon by ld. CIT D/R are not applicable on the facts of the present case as these transactions of the assessee are of business in nature and, therefore, they do not fall within the ambit of section 2(22)(e). In view of these facts and circumstances and in view of the detailed reasoning given by ld. CIT (A) which is reproduced somewhere above in this order, we hold that ld. CIT (A) was justified in deleting this addition. Accordi....
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....ses. 14. In the ground no.4, the issue is regarding deletion of addition of Rs. 24,62,950/- u/s 80IA of the Act. 15. The assessee installed windmills and started producing electricity in the assessment year 2003-04. The depreciation and business losses of the windmills upto assessment year 2006-07 were adjusted against other business income of the assessee. Assessment year 2007-08, the year under consideration, is the initial year in which the assessee has claimed deduction u/s 80IA (4)(iv)(a) of the Act @ 100% of the profit and gains of eligible business i.e. windmill. 16. The CIT (A) has granted the relief to the assessee by holding as under :- " The decision of Goldmine's case as relied upon by the Assessing Officer, is no more a good source of law, in as much as in a subsequent decision of Hon'ble Madras High Court in the case of Velayudhaswamy Spinning Mills (P) Limited Vs. ACIT 231 CTR 368, as rightly relied upon by the counsel, the issue is decided in favour of the assessee after considering the decision of Goldmine's case. The main issue is as to when the provision of section 80IA will become applicable upon the appellant. The appellant has opted to claim the....
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....07.2011 & 11.07.2011 respectively, I have taken a view that the appellant is entitled for deduction u/s 80IA of the I.T. Act, 1961 as claimed by it in its return of income. Therefore, considering all these issues & on the principle of consistency, it is held that the action of AO is not justified in denying deduction of Rs. 24,62,950/- within the meaning of section 80IA of the I.T. Act, 1961." 17. Ld. DR relied on the order of the Assessing Officer. 18. Ld. AR relied on the order of the CIT (A) and also relied on the following case laws :- "(i) Velayudhaswamy Spinning Mills (P) Ltd. Vs. ACIT 340 ITR 477 (Mad.) (HC) As per sub-s (5) of s. 80IA, profits are to be computed as if such eligible business is the only source of income of the assessee. When the assessee exercises the option, only the losses of initial assessment year are to be brought forward and not the losses of earlier years which have been already set off against the income of the assessee. Revenue cannot notionally bring forward any loss of earlier years which has already been set off against other income of the assessee and set off the same against the current income of the eligible business. Fiction creat....
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....essment year but after that the 10 years have in continuity. Sub-s. (5) of s. 80-IA would come into operation only from the year in which the appellant started claiming deduction under s. 80-IA i.e., from the initial year, and the depreciation relating to the years prior to the initial assessment year cannot be brought back notionally to be adjusted against the income of the initial or subsequent assessment years (iii) Commissioner of Income Tax Vs. Mewar Oil and General Mills Ltd. 271 ITR 311 (Raj.)(HC) The question of rectification would have been germane only if there had been carry forward of unabsorbed depreciation and unabsorbed development rebate or any other unabsorbed losses of the previous year arising out of the priority industry and whether it was required to be set off against the income of the current year. In view of the finding that there was no carry forward of allowable deduction under the head depreciation or development rebate which needed to be absorbed against the income of the current assessment year 1984-85, recomputation of income for the purpose of computing permissible deduction under section 80I for the new industrial undertaking was not required. ....
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....TA No.15/JP/2012 filed by the revenue and ITA No.65/JP/2012 filed by the assessee, emanate against the order of the CIT (Appeals), Alwar dated 24.10.2011 for the assessment year 2008-09. 25. The grounds of appeal in the revenue's appeal in ITA No.15/JP/2012 read as under :- "1. That the ld. CIT (A) has erred in law as well as on the facts and circumstances of the case in deleting the addition of Rs. 32,68,447/- on account of deemed dividend u/s 2(22)(e) of the I.T. Act. 2. That the ld. CIT (A) has erred in law as well as on the facts and circumstances of the case in deleting the addition of Rs. 25,42,980/- deduction u/s 80IA on wind mills. 3. The Department reserves its right to add, alter, modify, delete or amend all or any of the grounds of appeal before or at the time of hearing of appeal." The grounds of appeal in the assessee's appeal in ITA No.65/JP/2012 read as under :- "1.0 That the learned assessing officer has erred in law as well as on the facts and circumstances of the case in applying the provision of section 14A of the Income-Tax Act'1961, in as much as the said provision has no applicability upon facts of the case since the assessee company does....
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....a nos.14 to 19 in ITA No.934/Del/2011 of this order. Following our observations made as above, we delete this ground of revenue's appeal. 28. Ground No.3 is general in nature and does not require any adjudication. 29. In the result, the revenue's appeal being ITA No.15/JP/2012 is dismissed. 30. In Ground No.1 in assessee's appeal in ITA No.65/JP/2012, the assessee has challenged the applicability of provisions of section 14A of the Act read with Rule 8D of the Income-tax Rules, 1962. 31. Ld. AR submitted that assessee has no dividend income for the year under consideration, therefore, these provisions are not applicable. Further, the assessee company has not invested any interest bearing funds in the acquisition of shares, therefore, the CIT (A) was not justified in sustaining the addition. For the year under consideration, the assessee had total investment in shares of Rs. 7,88,45,129/-. It was pleaded before us that these investments were made in earlier years except for investment of Rs. 10 lacs in Dhurva Enclave P. Ltd. Ld. AR also submitted before us that Rule 8D is not automatic. The assessee has claimed that it has not incurred any expenditure in relation to the ....
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....d. vs. ACIT - 79 DTR 315 (Mum.) (Trib.). 32. Ld. DR relied on the orders of the authorities below. 33. We have heard both the sides on the issue. There is no dispute that provisions of Rule 8D are applicable from the assessment year 2008-09 only. Thus, the rule is applicable for this year. This Rule provides a formula by which it is worked out what amount of expenditure in relation to income which is not included in the total income is to be worked out. When AO is not satisfied with the correctness of expenditure claimed by the assessee or when the assessee claims that no expenditure has been incurred in relation to income which does not form part of the total income but AO is not satisfied to such claim in that circumstances, the AO shall determine the amount of expenditure in relation to such income in accordance with the provisions of Rule 8D. The expenditure in relation to income which does not form part of the total income shall be the aggregate of the amount of expenditure directly relating to income which does not form part of the total income and interest expenditure during the previous year which is not directly attributable to any particular income or receipt, an am....