TaxTMI 
TaxTMI 
2015 (11) TMI 998
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....1-2004 declaring total income of Rs. 72,07,240/-. A search u/s.132 of the I.T. Act was carried out on 23-09-2009 in the group of cases. In response to notice u/s.153A the assessee filed its return of income on 20-07-2010 declaring total income of Rs. 78,14,980/-. The AO completed the assessment u/s.153A r.w.s. 143(3) for the impugned assessment year on a total income of Rs. 80,54,157/- by making the following additions : a. Disallowance u/s.40A(3) Rs. 4,060/- b. Addition on account of bogus claim of expenses in the name of labour contractors Rs. 2,35,117/- 3. So far as addition made u/s.40A(3) is concerned the AO noted that during test check of certain expenses, certain cash payments exceeding Rs. 20,000/- were found. Accordingly, the AO disallowed an amount of Rs. 4,060/- being 20% of such cash payment of Rs. 20,300/- made in A.Y. 2004-05. 4. Similar additions have been made for other assessment years, the details of which are as under : A.Y. Amount of Expenses Spent in excess of Rs. 20,000/- in cash Disallowance u/s.40A(3) of the I.T. Act 2005-06 213941 42788 2006-07 361069 72214 2007-08 317566 63513 2008-09 609305 609305 ....
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.... made in respect of the above items were as a result of change of opinion on the same set of facts considered in the original assessments. Relying on the decision of the Special Bench of the Tribunal in the case of All Cargo Global Logistics Ltd. Vs. DCIT vide ITA No.5018 to 5022 & 5059/Mum/2010 for A.Yrs. 2004-05 to 2009-10 it was submitted that the Tribunal in the said decision has held that in cases where assessment orders have already been passed, assessment u/s.153A will be made on the basis of incriminating material, i.e. the books of account and other documents found during the search but not produced during the course of original assessment and undisclosed income or property discovered in the course of search. It was accordingly argued that no addition is warranted either u/s.40A(3) or u/s.41(1) of the I.T. Act, 1961. 8. So far as disallowance u/s.40A(3) is concerned the Ld.CIT(A) confirmed the addition for all the years in absence of any examination by the AO during the first round of assessment proceedings and in absence of the assessee to show that the expenses made in excess of Rs. 20,000/- were incorrect due to circumstances beyond the control of the assessee. 9.....
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....go Global Logistics Ltd.(Supra) he submitted that the Tribunal in the said decision has already considered this issue. Further, the Hon'ble Bombay High Court in the case of Continental Warehousing Corporation vide ITA No.523 of 2013 and 1969 of 2013 order dated 21-04-2015 after considering the decision of Hon'ble Karnataka High Court in the case of Canara Housing (Supra) has held that the scope of enquiry u/s.153A is to be confined only to the undisclosed income unearthed during the search or proceedings u/s.153A. He submitted that merely because creditors were outstanding for some years it did not mean that the liability has ceased in the hands of the assessee. Referring to the decision of Hon'ble Supreme Court in the case of CIT Vs. Sugauli Sugar Works Pvt. Ltd. reported in 236 ITR 518 he submitted that the Hon'ble Supreme Court in the said decision has held that the mere fact that the assessee has made an entry of transfer in his accounts unilaterally will not enable the department to say that section 41(1) is applied and the amount should be included in the total income of the assessee. Thus, even when the assessee has credited such amount to its profit and loss account still p....
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....ring the search or in 153A proceeding which would show that nondisallowance u/s.41(1) was erroneous, therefore, we do not find any infirmity in the order of the CIT(A) deleting the addition made by the AO. 13.2 Even on merit also, we find the issue stands covered in faovur of the assessee by the decision of the Hon'ble Supreme Court in the case of Sugauli Sugar Works Pvt. Ltd. (Supra). We find the Hon'ble Supreme Court in the said decision while deciding on the issue of cessation of liability u/s.41(1) of the I.T. Act has observed as under: "The respondent-assessee is a private limited company. In the proceedings for assessment of tax for the year ending 30.6.1964 relevant to the Assessment year 1965-66, the assessee transferred a sum of Rs. 3,45,000 out of the suspense account running from 1946-47 to 1948-49 to the capital reserve account. The Income Tax Officer found that an amount of Rs. 1,29,.000 was with reference to the deposits and advances which had been paid back and he included a sum of Rs. 2,56,529 under Section 41 of the Income Tax Act in the total income of the assessee. The assessee went on appeal before the Appellate Assistant Commissioner and the order o....
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....emission or cessation thereof, the amount obtained by him, shall be deemed to be profits and gain of business or profession and accordingly chargeable to income tax as the income of that previous year, whether the business or profession in respect of which the allowance or deduction has been made in existence in that year or not." 3. It will be seen that the following words in the Section are important: "the assessee had obtained, whether in cash or in any other manner whatsoever any amount in respect of such loss or expenditure or some benefit in respect of such trading liability by way of remission or cessation thereof, the amount obtained by him". Thus, the section Contemplates the obtaining by the assessee of an amount either in cash or in any other manner whatsoever or a benefit by way of remission or cessation and it should be of a particular amount obtained by him. Thus, the obtaining by the assessee of a benefit by virtue of remission or cessation is sine qua non for the application of this Section. The mere fact that the assess has made an entry of transfer in his accounts unilaterally will not enable the Depart-ment to say that Section 41 would apply and the amou....
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.... bring about cessation of liability. According to the Bench, if the recovery had become barred by limitation by operation of law, unilateral expression of intention of the debtor not to treat the amount any more as liability might be sufficient to bring about a cessation of the liability. The Bench also accepted the alternative argument that where an assessee had written off his time barred liability from his accounts and transferred the amount to his profit and loss account thereby treating it as his income, he could not be permitted to turn round when the question of inclusion of such amount in his income under Section 41(1) of the Act arose. The Bench distinguished the judgment in Kohinoor Mills Co. Ltd. v. CIT, (1963) 49 ITR 578, by observing that there was no cessation of liability in that case despite the expiry of period of limitation to enforce the same. The Bench said that the assessee could not get rid of his liability when called upon to meet either by the employees under the Industrial Disputes Act or by the Government under the Bombay Welfare Fund Act on account of the special provisions of those Acts. We are unable to accept the reasoning of the Bombay High Court in t....
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....s year clearly refer to the actual receiving of the cash of that amount. The amount may be actually received or it may be adjusted by way of an adjustment entry or a credit note or in any other form when the cash or the equivalent of the cash can be said to have been received by the assessee. But it must be the obtaining of the actual amount which is contemplated by the Legislature when it used the words "has obtained; whether in cash or in any other manner whatsoever, any amount in respect of such loss or expenditure in the past". As rightly observed by the Division Bench in the context in which these words occur, no other meaning is possible." we are in agreement with the said reasoning. 8. There is another judgment of the Bombay High Court which was rendered much earlier in J.K. Chemicals Ltd. v. Commissioner of Income-Tax, Bombay City II, (1966) 62 ITR 34. The Bench observed : "........The transfer of an entry is a unilateral act of the assessee, who is a debtor to its employees. We fail to see how a debtor, by his own unilateral act, can bring about the cessation or remission of his liability. Remission has to be granted by the creditor. It is not in dispute,....
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....emission or cessation of liabilities, where the said amounts were not written of by the assessee in the books of the assessee. During the proceedings before us, the assessee filed case laws to support view including the Pune bench decision in the case of M/s Atidab Concrete Pipes and Products Pune vide ITA no 1017/PN/2002 to support the above. Further, counsel stated that the said amounts were written off as the income of the assessee in the year relevant to the AY 2006-07 and therefore, there is no need for any addition during the year under consideration. Further, we find the judgments in the cases of DSE Engineers (30 SOT 31) (Mum), Sugaoli Sugar Works P Ltd (236 ITR 518) holds that the liabilities do not cease to exists merely by efflux of time. Considering the above settled principles on the issue, we find that the finding of the CIT(A) has to be reversed on this issue. Accordingly, the relevant ground of the assessee are allowed. Further, the grounds of the revenue are dismissed. 13.4 Following the above precedents we hold that the CIT(A) was fully justified in deleting the addition of Rs. 2,35,117/-. Accordingly, the grounds raised by the Revenue are dismissed. ITA No.....
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....said properties the AO made a reference to the DVO u/s.142A of the I.T. Act to determine the cost of the properties in the hands of the assessee as on the date of acquisition. 18. The DVO valued the properties at Rs. 64,00,000/-. The AO, therefore, asked the assessee to explain as to why the difference of Rs. 22,04,250/- shall not be added u/s.69B of the I.T. Act. It was submitted by the assessee that the difference between the investment shown by the assessee and the value determined by the DVO is due to the sudden increase in price by more than 60% to 70%. Further, the DVO has not considered the fact that one of the properties, i.e. Plot No.22/1 at Bavdhan was agreed to be purchased in 2002 and Plot No.21/1 at Bavdhan was agreed to be purchased in 1996. The DVO has not considered the above fact and has considered the fair market value of properties on the date of purchase. The fair market value on the date of first payment, i.e. 2002 and 1996 should have been considered by the AO. However, the AO did not accept the arguments advanced by the assessee and made the addition of Rs. 22,04,250/- being the difference between the cost arrived at by the DVO and shown by the assessee u/....
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....rse of assessment proceedings for assessment year 2006-07. Hence, in accordance with the principles for examination of items of addition in a reassessment proceeding under section l53A (supra), I hold that the assessing officer was not entitled to revisit the same issues which were already concluded in an assessment proceeding completed under section 143(3). It is also not the case of the assessing officer that incriminating documents indicating cash dealing in land purchase were discovered during the course of search and seizure. Under these circumstances, the assessing officer has incorrectly assumed jurisdiction over this item and made the addition of Rs. 15.90 lakhs in assessment year 2006-07 and Rs. 22.40 lakhs in assessment year 2005- 06. 21. Even on merits, there is no case for an addition because the DVO has taken comparable sales instance of the year 2005 whereas he was supposed to take the comparable sales instance of the year 1996 and 2002. There is nothing on record to indicate that land was undervalued while making the purchases m these two years. Therefore, the additions made are deleted. 21. Aggrieved with such order of the CIT(A) the Revenue is in appeal....
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....raised by the Revenue is accordingly dismissed. 25. Grounds of appeal No.4 and 5 being general in nature are dismissed. ITA No.379/PN/2013 (By Revenue) (A.Y. 2006-07) 26. Grounds of appeal No.1 and 2 by the Revenue read as under: "1. Whether on the facts and in the circumstances of the case the CIT(A) is justified in deleting the addition of Rs. 1,94,223/- made on account of creditors outstanding stating that the issue of outstanding creditors was already subject to scrutiny during original assessment and the Assessing Officer cannot re-assess the income u/s.153A? 2. On the facts and in the circumstances of the case and in law, whether the Ld.CIT(A) is justified in holding that the original assessment made u/s.143(3) had reached finality and the same could not be agitated during the course of assessment proceedings u/s.143(3) r.w.s. 153A of the Act in the absence of incriminating material found during the search." 27. After hearing both the sides, we find the above grounds are identical to grounds of appeal No.1 and 2 in ITA No.377/PN/2013. We have already decided the issue and the grounds raised by the Revenue have been dismissed. Following the same r....
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.... of Ld.CIT(A) on this issue. Ground raised by the Revenue is accordingly dismissed. 33. Ground of appeal No.4 by the Revenue reads as under : "4. On the facts and in the circumstances of the case and in law, the Ld.CIT(A) erred in allowing the depreciation on windmill of Rs. 17,50,000/- and MEDA charges holding that this issue is already been looked into during the course of original assessment u/s.143(3) and an opinion was formed that depreciation is allowable on foundation of windmill at the rates applicable to WTGS and MEDA charges were an allowable business expenditures. Hence, it is not possible for the Assessing Officer in the absence of any material found during the course of search to make the disallowance as the same tantamount to a change of opinion which is not permitted in the course of assessment u/s.153A." 34. Facts of the case, in brief, are that the AO during the course of assessment proceedings noted that the assessee during the impugned assessment year has installed new windmills. From the various details furnished by the assessee the AO noted that the assessee had claimed depreciation on the entire expenditure including purchase and installation of....
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....ent year 2006-07, the assessing officer had, vide questionnaire dated 10/12/2007 issued along with notice under section 142(1), had sought the details of an addition of fixed assets vide item no. 14 of the questionnaire and specifically asked for the details pertaining to windmill i.e. purchase details etc., vide item no. 21. The appellant had provided details vide letter dated 11/01/2008 vide item no. 17 of the answer and had provided the bills etc. showing the addition of fixed assets. This bill given by M/s Enercon Ltd. clearly shows that an amount of Rs. 25 lakhs was billed towards earth work and foundation, including approach and internal roads and construction of the DP structure post. The details also show that further sum of Rs. 10 lakhs was charged towards erection and commissioning of the windmill. Applying the principles for assessment as above in the foregoing paragraphs, I hold that these issues were already looked into during the course of original assessment and an opinion was formed that depreciation is allowable on foundation of the windmill at the rates applicable to WTGS and that MEDA charges were an allowable business expense. Hence, it was not possible for the ....
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.... ITR 518] and thus, there was no reason warranting the addition u/s 41 (1) in this year." 44. After hearing both the sides we find the AO made addition of Rs. 3,12,515/- from the outstanding sundry creditors on the ground that the some of the trade creditors are outstanding for few year and the liability has ceased to exist. The Ld.CIT(A) confirmed the addition following the decision of Hon'ble Supreme Court in the case of CIT Vs. T.V. Sundaram Iyenger and Sons Ltd. reported in 222 ITR 344. 45. Aggrieved with such order of CIT(A) the assessee is in appeal before us. 46. The Ld. Counsel for the assessee submitted that merely because the creditors were outstanding for a period of 3 years it does not mean that the liability has ceased in the hands of the assessee. He referred to the decision of Hon'ble Supreme Court in the case of Sugauli Sugar Works Pvt. Ltd. (Supra) and the decision of the Pune Bench of the Tribunal in the case of Hrishikesh L. Joshi vide ITA No.702/PN/2007 order dated 13-08-2010 for A.Y. 2003-04 and submitted that the Tribunal following various other decisions has deleted similar addition made by the AO and upheld by the CIT(A). He accordingly submitted th....
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.... as under: "3. The learned CIT(A) erred in holding that the compensation received of Rs. 40 lakhs from Suzlon Energy Ltd. was taxable as a revenue receipt in the hands of the assessee. 3.1 The learned CIT(A) failed to appreciate that the compensation received from Suzlon Energy Ltd. was before the windmill was put to use and hence, the said compensation was a capital receipt which was to be reduced from the cost of the asset." 51. Facts of the case, in brief, are that the AO during the course of assessment proceedings noted that the assessee has received 2 credit notes aggregating Rs. 40 lakhs given by M/s. Suzlon Energy Ltd. It was explained before the AO that the credit notes in respect of compensation were received from M/s. Suzlon Energy Ltd. for delay in completion of windmill project within the stipulated time limit. It was further explained that these credit notes were received for the period before the asset was put to use and was treated as capital receipts and deducted from the invoice of the value of the windmill purchased. However, the AO rejected the above contention of the assessee that these were capital receipts and accordingly brought to tax th....
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.... 363/11, Balaji Niwas, Deep Bunglow Chowk, Shivaji Nagar, Pune - 411016. Kind Attn : Mr. M.S. Dandavate Subject : Your proposed wind power project of 600 KW at Dhalgaon Dear Sir, With reference to the above subject and your letter dated 14th march 06, we sincerely regret the delay caused in completion of your proposed wind power of 600 KW project to be installed in Dhalgaon, Maharashtra. As discussed we would like to offer following : Enclosed drafts of revised purchase orders to be placed on us along with detailed working. We also request you to complete the advance payment as per PO drafts. The proposed project will be completed on or before 30th September 2006 at Dhule/Nandurbar, Maharashtra. Rs.22.5 Lacs as compensation for delay caused in completion of project payable on receipt of revised purchased order and completion of advance. We request for your kind acceptance of the above and would like to assure you of your best endeavours to strengthen business relations with your group. Thanking you, With best regards, Sd/- Anjali Lothe (Sr. Manager-Market....
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....n and Co. Ltd. (supra), dealing with the question whether compensation received by an agent for premature determination of the contract of agency is a capital or a revenue receipt, echoing the views expressed in Rai Bahadur Jairam Valji (supra) and analysing numerous judgments on the point, this Court laid down the following broad principle, which may be taken into account in reaching a decision on the issue : "Where on a consideration of the circumstances, payment is made to compensate a person for cancellation of a contract which does not affect the trading structure of his business, nor deprive him of what in substance is his source of income, termination of the contract being a normal incident of the business, and such cancellation leaves him free to carry on his trade (freed from the contract terminated) the receipt is revenue : Where by the cancellation of an agency the trading structure of the assessee is impaired, or such cancellation results in loss of what may be regarded as the source of the assessee's income, the payment made to compensate for cancellation of the agency agreement is normally a capital receipt." 13. We have considered the matter in ....
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....ion at the rate applicable to building and not at the rate applicable to windmill. 5.1 The learned CIT(A) failed to appreciate that the expenditure on Power Evacuation facility and infrastructure cost was part and parcel of windmill and hence, the entire expenditure was entitled to depreciation at a higher rate which was available to windmill. 6. The learned CIT(A) erred in directing to apportion the other misc. expenses between windmill cost and infrastructure cost without appreciating that all the expenses incurred by the assessee were relating to windmill and therefore, all such misc. expenses should have been allowed depreciation at the rate applicable to windmill. 7. The appellant craves leave to add, alter, amend or delete any of the above grounds of appeal." 61. The Ld. Counsel for the assessee at the outset submitted that the above grounds are decided against the assessee by various decisions of the Tribunal. In view of the same, the grounds raised by the assessee are dismissed. ITA No.380/PN/2013 (By Revenue) (A.Y. 2007-08) : 62. The only effective ground raised by the Revenue reads as under : "1. On the facts and in the circums....
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....had accordingly directed the AO to re-compute the depreciation allowance according to the following : i) Cost of new windmill will be inclusive of all items mentioned at 1 to 5 above. ii) Cost of power evacuation facility and infrastructure will be apportioned between the rates applicable to building/roads and windmill in 60 : 40 ratio. iii) Cost of other miscellaneous expenses will be apportioned on prorata basis between windmill and infrastructure facilities. 66. The following observation of Ld.CIT(A) is also relevant : "43. It was submitted by the appellant that the details of separate cost of foundation were not available with them in respect of WTGS supplied by Enercon. They have provided me with copies of tax invoices for supply of tower including wind turbine generating system, component and accessories, civil work for foundation and allied work, electrical items, installation and commission charges, labour charges etc. provided by Suzlon. The assessing officer is directed to find out the cost of items at Sr.Nos. 4, 5, 6 and 7 of the above table in respect of WTGS supplied by Enercon. The appellant is directed to provide the cost attrib....
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....of J-Sons Foundry Pvt. Ltd. (Supra) we find no infirmity in the order of the CIT(A) allowing higher depreciation @80% on civil work foundation and related labour cost of windmill. Ground raised by the Revenue is accordingly dismissed. ITA No.2579/PN/2012 (By Assessee) (A.Y. 2008-09) : 72. Ground of appeal No.1 by the assessee reads as under : "1. The learned CIT(A) erred in confirming the various additions made by the learned A.O. without appreciating that the various additions made were not based on any incriminating material and hence, such additions were not warranted in the assts. completed u/s 153A." 73. The Ld. Counsel for the assessee at the outset submitted that this ground is against the assessee by various decisions of the Tribunal. The Ld. Departmental Representative has no objection. Accordingly, this ground by the assessee is dismissed. 74. Ground of appeal No.2 was not pressed by the Ld. Counsel for the assessee for which the Ld. Departmental Representative has no objection. Accordingly, the said ground is dismissed as not pressed. 75. Grounds of appeal No. 3 and 4 by the assessee read as under: "3. The learned CIT(A) erred in holding ....
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....ailed to appreciate that the expenditure on Power Evacuation facility and infrastructure cost was part and parcel of windmill and hence, the entire expenditure was entitled to depreciation at a higher rate which was available to windmill. 4. The learned CIT(A) erred in directing to apportion the other misc. expenses between windmill cost and infrastructure cost without appreciating that all the expenses incurred by the assessee were relating to windmill and therefore, all such misc. expenses should have been allowed depreciation at the rate applicable to windmill." 81. The Ld. Counsel for the assessee at the outset submitted that the above grounds are decided against the assessee by various decision of the Coordinate Benches of the Tribunal. In view of the above, the above grounds by the assessee are dismissed. 82. Ground of appeal No.5 by the assessee reads as under : "5. The learned CIT(A) erred in holding that the interest u/s 234A was leviable for the period from 31.10.2009 to 20.07.2010 without appreciating that as per law, no interest was leviable for that period." 83. Facts of the case, in brief, are that the assessee during appeal proceedings befo....
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....iling the return and therefore levy of interest u/s.234A is not justified at all. He submitted that as per the provisions of sub-section (3) of section 234A the interest can be levied for the default in not filing the return u/s.153A within the time limit prescribed in the section. Therefore, when the notice u/s.153A was served on the assessee on 24-06-2010 asking the assessee to furnish the return of income within 30 days from the receipt of notice and when the assessee has filed its return of income on 21-07-2010, i.e. within the prescribed period of 30 days, therefore, there is no justification for levy of interest u/s.234A. 87. The Ld. Departmental Representative on the other hand heavily relied on the order of the AO and CIT(A). 88. We have considered the rival arguments made by both the sides, perused the orders of the AO and CIT(A) and the paper book filed on behalf of the assessee. We have also considered the various decisions cited before us. The only dispute in the instant case is levy of interest u/s.234A of the I.T. Act for the period from 31-10-2009 to 20-07-2010 by the AO which has been upheld by the CIT(A). It is the submission of the Ld. Counsel for the assess....
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....of the time aforesaid, ending on the date of furnishing the return; or (b) where no return has been furnished, ending on the date of completion of the re-assessment or re- computation under section 147[ or reassessment under section 153A], on the amount by which the tax on the total income determined on the basis of such re-assessment or re-computation exceeds the tax on the total income determined [under sub- section (1) of section 143 or] on the basis of the earlier assessment aforesaid. 91. We further find the Hon'ble Bombay High Court in the case of CIT Vs. Continental Warehousing Corporation reported in (2015) 93 CCH 0048 (Mumbai HC) at para 22 of the order has observed as under : "22. A bare perusal thereof would indicate as to how a non obstante clause has been inserted and with a defined intent. One would find that in section 139 of the IT Act, the return of income is contemplated. These provisions fall in Chapter XIV entitled "Procedure For Assessment". Section 139 deals with return of income whereas section 140 states that such return has to be verified. Section 147 which also falls within this Chapter deals with income escaping assessment an....
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....t years immediately preceding the assessment year relevant to the previous year in which such search is conducted or requisition has to be made." 92. A combined reading of the above provisions as well as the decision cited (Supra) indicates that a non-obstante clause has been inserted and with a defined intent. In our opinion, once the search takes place on a person and the due date for filing of the return u/s.139(1) has not expired he can file the return only after the issue of notice u/s.153A. He is not required to file the return u/s.139(1). Therefore, the authorities below are not justified in levying interest u/s.234A of the I.T. Act for a period from 31-10-2009 to 20-07-2010. The ground raised by the assessee is accordingly allowed. 93. Ground of appeal No.6 by the assessee reads as under : "6. The learned CIT(A) erred in holding that the cash seized of Rs. 1,14,60,500/- should be appropriated towards the tax liability of the assessee from 30.03.2010, i.e. the date of letter submitted by the assessee for adjusting the seized cash and not from the date of seizure of cash, i.e. 12-10-2009 for the purposes of determining the interest payable u/s.234B." 94. Fac....
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....earch towards advance tax payable on the amount of undisclosed income declared during the course of search. Referring to page 169 of the paper book the Ld. Counsel for the assessee drew the attention of the Bench to the letter addressed on 30-03- 2010 to the AO requesting the adjustment of seized cash against the assessment of tax for A.Y. 2009-10. He accordingly requested that appropriate direction may be given. 99. The Ld. Departmental Representative on the other hand heavily relied on the order of the CIT(A). 100. We have considered the rival arguments made by both the sides, perused the orders of the AO and CIT(A) and the paper book filed on behalf of the assessee. We have also considered the various decisions cited before us. We find in the instant case cash amounting to Rs. 1,14,00,000/- was seized from the residence and office premises of the director of the assessee company. We find the assessee vide letter dated 30-03-2010 addressed to the AO had requested to adjust such cash seized during the course of search as self-assessment tax for A.Y. 2009-10. We find the AO appropriated the seized cash for adjustment against tax liability in the month of March 2011. We find t....
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....Ltd. and it does not belong to the asessee. He therefore held that telescoping adjustment against declaration made on the basis of sources in the hands of the assessee cannot be given for the unaccounted expenses of the sister concerns. He noted that in the case of M/s. Mahalaxmi Infraprojects Ltd. declaration has been made on account of application basis whereas in the case of the assessee declaration has been made on source basis. He therefore held that shifting of application on undisclosed fund pertaining to the sister concern M/s. Mahalaxmi Infraprojects Ltd. does not have any impact on the undisclosed income of the assesse. 105. Before CIT(A) the assessee challenged the action of the AO in rejecting the claim made for reducing Rs. 1.50 crores surrendered as income on account of unexplained business expenses in respect of Ghodzari Project stating it to be on source basis. It was submitted that the source based income as per SMS cash receipts is Rs. 4,35,65,000/- as against undisclosed income declared of Rs. 5.83 crores and the balance of Rs. 1,47,35,000/- was application based income. It was pointed out that the said amount was subject to tax twice, i.e. in the hands of the....
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.... did not allow the shifting of Rs. 1.50 crores on application basis to Mahalaxmi Infraprojects Ltd. There is no confusion in respect of the amount of Rs. 5.83 crores made in the hands of the appellant by Shri R D Shinde in the statement made under section 132(4). It is the appellant's contention that out of this Rs. 5.83 crores, a sum of Rs. 4.3665 crores was on account of kickback from contractors i.e. on source basis. The balance amount of Rs. 1.4735 crores was on account of expenses incurred by the appellant. The appellant has provided a copy of the details of cash receipts and payments to sub-contractors as per SMSs retrieved from the mobile belonging to Shri R D Shinde, which is reproduced below: Date of SMS Received Amt. Paid Amount 22/09/2009 1,32,00,000 - 19/09/2009 74,00,000 - 15/09/2009 13,00,000 - 10/09/2009 27,00,000 - 08/09/2009 18,00,000 - 07/09/2009 20,00,000 - 05/09/2009 - 85,00,000 03/09/2009 35,00,000 - 29/08/2009 - 31,00,000 29/08/2009 23,00,000 - 27/08/2009 31,00,000 - 27/08/2009 6,65,000 - 18/08/2009 56,00,000 - 14/08/2009 - - 30/07/2009 - - 03/07....
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....if the entire amount of Rs. 21.9182 crores is considered in the hands of Mahalaxmi Infraprojects Ltd. then, there is no scope for treating any amount over and above this amount as unexplained expenses in the hands of the appellant. It is also clear that the entire declaration of Rs. 5.83 crores was not on account of source only. A part of it pertained to application as well. Finally, there were sufficient funds available in the hands of the appellant to cover up for any eventual discrepancies such as this. Hence, credit for Rs. 1.4735 crores has to be given to the appellant and the assessing officer is directed to do so accordingly. The appellant succeeds on this ground." 107. Aggrieved with such order of the CIT(A) the Revenue is in appeal before us. 108. The Ld. Departmental Representative strongly opposed the order of the CIT(A). She submitted that the statement given u/s.132(4) legally stands and it was never retracted. Nothing prevented the assessee not to present the above table before the AO. Only after the assessment was completed it was brought before the CIT(A). If the orders passed by the CIT(A) giving telescoping benefit is accepted, then the assessed income becom....
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.... did not choose to discuss the same in the assessment order of RDS Construction Pvt. Ltd. for reasons best known to him. He submitted that an amount of 4.35 crores is source based and Rs. 1.48 crores is expenses based. He submitted that in the hands of M/s. Mahalaxmi Infraprojects Ltd. an amount of Rs. 21.90 crores has been accepted. Referring to the decision of the Pune Bench of the Tribunal in the case of Jyotichand Bhaichand Saraf and Sons reported in 139 ITD 10 he submitted that addition has to be made on the basis of evidence and not on the basis of any statement. 111. As regards the various case decisions relied on by the Ld. Departmental Representation to the proposition that assessed income cannot go below the returned income are concerned, he submitted that the same can go below the returned income. Referring to the decision of Hon'ble Gujarat High Court in the case of Gujarat Gas Company Vs. JCIT reported in 245 ITR 84 he submitted that the Hon'ble Gujarat High Court in the said decision has held that the direction of the CBDT to issue instructions to subordinate authorities directing that scrutiny assessments not to be made at figure lower than that returned is ultra ....
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....ssessee in the meantime, pursuant to order of the Tribunal, applied to the AO for refund of the tax paid by them. Since the taxes were not refunded, a director preferred an appeal before the AAC which was allowed and the AO was directed to refund the assessee the advance tax and self assessment tax. The Tribunal affirmed the order of the AAC and on a reference the High Court also affirmed the order of the Tribunal. Under these circumstances the Hon'ble Supreme Court set aside the order of the High Court and held that if an assessing authority cannot make a fresh assessment in accordance with provisions of the Act, it amounts to deemed acceptance of the return of income furnished by the assessee. It cannot raise a demand for further payment of taxes and the tax paid by the assessee must be accepted as it is. In the event of the tax paid being in excess of the tax liability duly computed on the basis of return furnished and the rates applicable, the excess shall be refunded to the assessee since its retention may offend Article 265 of the constitution. However, if the tax paid is found to be less than that payable no further demand can be made for recovery of the balance amount since....
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....e as per SMS cash receipt is of Rs. 4,35,65,000/- as against undisclosed income declared of Rs. 5,83,00,000/- and the balance of Rs. 1,47,35,000/- was application based income. The assessee also provided a copy of the details of cash receipts and payments of sub-contractors as per SMS retrieved from the mobile belonging to Shri R.D. Shinde, the director of the firm. We find the CIT(A) allowed the claim of the assessee on the ground that an amount of Rs. 21.92 crores has already been considered in the hands of Mahalaxmi Infraprojects Ltd. on account of Ghodzari project which includes the amount of Rs. 1.4735 crores (Not Rs. 1.50 crores). Therefore, making addition of this amount in the hands of the assessee will amount to double taxation. We do not find any infirmity in the order of the CIT(A). The finding of the Ld.CIT(A) that while making the assessment of Mahalaxmi Infraprojects Ltd. the AO treated the entire sum of Rs. 21.9182 crores being the amount of unexplained expenses of Ghodzari Project in the case of Mahalaxmi Infraprojects Ltd. itself during the previous year relevant to assessment years 2007-08 and 2009-10 could not be controverted by the Ld. Departmental Representativ....
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....thorities have the discretion to permit such additional claims to be raised. The appellate authorities have jurisdiction to deal not merely with additional grounds, which became available on account of change of circumstances or law, but with additional grounds which were available when the return was filed. The words "could not have been raised" must be construed liberally and not strictly. There may be several factors justifying the raising of a new plea in an appeal and each case must be considered as its own facts." 120. As regards reliance on the decision of Hon'ble Supreme Court in the case of Shelly Products (Supra) by Ld. Departmental Representative is concerned, we find the facts of that case are different from the facts of the present case. In that case, the assessee after having paid the advance tax and self assessment tax filed its return of income for the relevant assessment year. The AO framed the assessment u/s.143(3) r.w.s. 144B. CIT(A) partly allowed the appeal and rejected the contention of the assessee that the AO was acting without jurisdiction. On further appeal, the Tribunal held that the assessment order was void ab-initio as the AO lacked jurisdiction. Wh....
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....ming the addition of Rs. 25,23,585/- made by the learned A.O. on account of cessation of liability u/s 41(1) in respect of creditors outstanding for a period of more than three years without appreciating that as per law, the addition is not justified. 2.1 The learned CIT(A) erred in holding that the creditors had abandoned their right to enforce recovery as no action was taken by them and hence, the liability had ceased to exist once the recovery became legally time barred and therefore, the addition was rightly made by the learned A.O. u/s 41(1). 2.2 The Ld.CIT(A) failed to appreciate that : a. There was no evidence that the liability in respect of the creditors had ceased during this year and hence, the income u/s 41 (1) could not be assessed in this year. b. Just because, the period of three years was over, it did not mean that the liability had ceased in this year as per the ratio of Supreme Court decision in the case of Sugauli Sugar Works [236 ITR 518] and thus, there was no reason warranting the addition u/s. 41 (1) in this year." 124. After hearing both the sides we find the above grounds are identical to grounds of appeal No. 2 to 2.2....
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....so the AO observed that while making the claim of deduction under section 80IA(4)(iv), the assessee had ignored the provisions of 80IA(5) which provided that the profit and gain of eligible business should be computed as if such eligible business were the only source of income of the assessee during the previous year relevant to the initial assessment year and to every subsequent assessment year upto and including the assessment year for which the determination is to be made. The AO observed that the assessee is in the business of civil construction and in the year of installation of wind mill the unabsorbed depreciation of windmill was claimed and allowed against profit of such other business. Further the assessee had shown profit from windmill for subsequent years. The assessing officer reworked the manufacturing and profit and loss account in respect of windmill as per provisions of section 80IA(5). He observed that as per this working even at the end of the assessment year under consideration, there was unabsorbed depreciation of Rs. 4,64,79,412/-. Based on the above observation, the claim of deduction u/a. 80IA(4) was rejected and the sum of Rs. 74,26,459/- was brought to tax.....
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....eligible business for computing the deduction under section 80 IA. Following this judgment of Honble Madras High Court, this issue is decided in favour of the assessee. The assessee is entitled to claim for deduction u/s 80IA(4)(iv)(a) of the Act. 53. Thus, in view of the identical facts and circumstances, decision of the Honourable ITAT reproduced above is applicable to the instant case also. The disallowances made for the assessment years under appeal are therefore, deleted. This ground of appeal is allowed." 134. Aggrieved with such order of the CIT(A) the Revenue is in appeal before us. 135. After hearing both the sides, we find the issue as to whether initial assessment year u/s.80IA(5) means year of installation of windmill or year in which the claim of deduction u/s.80IA is first made has been decided in favour of the assessee by the decision of the Pune Bench of the Tribunal in the case of Poonawalla Estate Stud & Agro Farm Pvt. Ltd.(Supra) wherein it has been held as under : "13. We have heard both the parties and perused the factual matrix of the case and orders of the Revenue and the paper book. We have also examined the legal position on the matt....
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.... jump the assessment year once an initial assessment year is opted. Therefore, we find no fault with the assessee in selecting the asst. yr. 2004-05 as the 'initial assessment year'. In this regard i.e., on the issue of assessee's option to select the 'initial assessment year', we have perused the citations relied upon by the assessee's counsel. The conclusion by the Tribunal Mumbai Bench decision in ITA No. 4620/Mum/2007 (asst. yr. 2004-05) in the case of Dy. CIT vs. Ushdev International Ltd., is straight on this issue of initial assessment year and the option to the assessee and the held portion of the decision reads as under : "In view of the above learned CIT(A)'s order to the extent of holding that initial assessment year and subsequent succeeding assessment years can only be considered for the purpose of computing deduction under s. 80-IA. Coming to the facts of the case, however, as seen from the schedule of details available in the learned CIT(A)'s order the assessee has incurred losses in the asst. yrs. 1997-98 and 1998-99 only. Subsequently in all the years there were profits till asst. yr. 2004- 05. It is not clear whether the assessee has claimed any deduction ....