TaxTMI 
TaxTMI 
2017 (1) TMI 251
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....see had claimed loss under the head capital Gains on sale of shares amounting to Rs. 10,82,27,8791- in the original Return of income filed. Subsequently, a revised return was filed by claiming the loss under the head business income and capital gains in respect of the sale of same assets shares. The Assessing Officer has noticed certain discrepancies in the original return compared with that of revised return such as dates of Audit Report filed u/s 44AB as 25.06.2009 and in second return the date was mentioned as 03.09.2009. Similarly method of accounting also changed from cash to mercantile in the above said returns. On verifying the Column No.12A of the Audit Report regarding the conversion of Capital Assets into Stock-in- trade which was mentioned as 'NIL' however, the Chartered Accountant stated in his notes on accounts that the assessee has converted certain investments into stock-in-trade during the year without furnishing any details. Even the Minutes book and Board of Meeting books were not produced either before the Assessing officer or before the CIT(A) to prove that shares were converted as a result of any Resolution passed by the Board of Directors. According to AO, the....
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.... loss on sale of short term investments" In the tax audit report filed along with the original return of income in Column No.12A, the Tax Auditor had qualified as 'Nil' in answering question on the capital asset being converted into stock-in-trade during the previous year relating to the Assessment Year under consideration. The said audit reported was dated 3.9.2009 whereas in the original return of income the said date was wrongly typed as 25.6.2009 inasmuch as the said original return of income was filed electronically on 26.9.2009. The provisions in Section 139(5) of the Act prescribe for filing of the revised return of income within one year from the end of the relevant Assessment Year or before the completion of the assessment whichever is earlier for correcting any omission or any wrong statement upon discovery of such omission or wrong statement by the Appellant. There are two principles emerging from the consideration of the provisions in Section 139(5) of the Act and the first principle is relating to the interpretation of such provisions in canvassing the theory of the revised return effacing the original return. The other theory/principle on the interpretation o....
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....al income, while further not allowed the carried forward of Long Term Capital Loss to full extent in view of his decision not to treat the business loss as such. The Assessing Officer first relied on the Tax Audit Report to reject the revised return of income filed within the permitted time u/s 139(5) of the Act and the clerical mistake in the said Tax Audit Report especially in Column No.12A was not taken into consideration as a bonafide mistake. The act of the Assessing Officer in rejecting the revised return of income based on the said mistake committed in the Tax Audit Report is erroneous and invalid. 4.1.5 In fact, the Tax Auditor appeared before the Assessing Officer during the course of the assessment proceedings as reflected and recorded in the impugned order at Page No.2, Para 1.3 and fortified the fact of mistake in issuing the Tax Audit Report. In the process, the Assessing Officer had referred to the notes on accounts giving the accounting policies which formed part of the annual accounts of the Assessment Year under consideration. The reasoning of the Assessing Officer in this regard as mentioned in para 1.3 of the impugned order is not well taken inasmuch as there ....
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.... the listed companies into stock- in-trade. The Assessing Officer went wrong in stating that the said Board Meeting was not conducted on the said date merely on the ground of the minutes of the Board Meeting produced in the assessment proceedings was dated as 22.8.2008. 4.1.8 He submitted that the copy produced before the Assessing Officer had clearly mentioned the conduct of the Board Meeting as on 22nd April 2008 and hence the conclusion reached to reject the claim of business loss on conversion of capital assets/investments in the form of shares in the listed companies into stock-in-trade in the computation of taxable total income is flimsy and devoid of merits. The procedural requirements in the maintenance of the records of the Board Meetings under the Companies Act, 1956 were widely touched upon and discussed in the impugned order by the Assessing Officer and the irregularities in following such procedural requirements under the Companies Act, 1956 are not fatal to the claim of business loss based on the conversion of investments into stock-in-trade as on 22.4.2008. 4.1.9 He pleaded and raised another legal issue questioning the power of the Assessing Officer in rejecti....
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....ase on 13.05.2010. While filing original return on 26.09.2009, the assessee admitted in the original return the taxable total income at Rs. 8,84,763/- under the head "business income" and claiming loss Rs. 1,35,82,239/- as loss under the head "capital gains". 5.1 In this case, the assessee filed revised return on 13.05.2010, admittedly total loss business of Rs. 10,68,99,214/- and short term loss of Rs. 6,05,51,477/-. The reasons for filing the revised return of income was on the reason that a part of the investment held by the company has been converted into stock-in-trade at the market price. As on the date of conversion, the difference between the cost and conversion, amounting to Rs. 6.15 lakhs has been considered as loss under the head "business income". 5.1.1 Now, let us see, what is the relevant provisions of the section 139(5) of the Act for filing the revised return of income, which reads as under:- S.139(5): If any person, having furnished a return under sub-section (1), or in pursuance of a notice issued under sub-section (1) of section 142, discovers any omission or any wrong statement therein, he may furnish a revised return at any time before the expiry of on....
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.... be due to bona fide inadvertence or mistake on the part of the assessee. The omission and wrong statement in the original return can be said to be due to bonafide inadvertence or bonafide mistake on the part of the assessee only on the basis of evolution or material on record. 5.3 It was therefore, necessary to ascertain as to whether there was any wrong statement made in the return of income originally filed by the assessee and whether the assessee was not aware of such wrong statement at the time of filing the original return. For this purpose, the claim made by the assessee in revised return of income, vis-à-vis the return of income filed originally to be examined on merit to ascertain whether there was any wrong statement made in the original return of income of which the assessee was not aware at the time of filing the original return of income. Such examination of the assessee's claim will reveal as to whether the condition No.(ii) was satisfied in the present case in order to enable the assessee to furnish the revised return of income u/s.139(5) of the Act. In the present case, the main reason for filing the reviser return of income by the assessee was that the as....
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....ssee notwithstanding the same was not raised before the lower authorities. Further, the appellate authorities must be satisfied that the ground raised was bona fide and that the same could not have been raised earlier for good reasons. 5.5. Further, Supreme Court in the case of M/s.S.A Builders Vs. CIT reported in 288 ITR 1 wherein held that the Revenue cannot claim not put itself in the arm chair of businessman or in the position of Board of Director and assume the role to decide whether to incur any expenditure or not. The reasonableness of the expenditure has to be decided from the point of view of the businessman and not the Revenue. 5.6. Now, coming to the first reason for rejecting the revised return was that in original return, the assessee has changed the method of accounting as "cash", in the second return it was shown as "Mercantile". However, the AO accepted the method of accounting of assessee as "Mercantile" as noticed from the first page of the column-8 of the assessment order wherein mentioned as "Mercantile". Once the AO has accepted the method of accounting of the assessee as "mercantile", there is no question of doubting the method of accounting by AO. 5.....
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....d is with regard to confirming the disallowance of Rs. 1,28,83,860/- being the two payments to the sub-contractors for want of TDS on the application of sec.40(a)(ia) of the Act in the computation of taxable total income without assigning proper reasons and justification. 6.1 The facts of the issue are that the Assessing Officer disallowed Rs. 1,28,83,860/- being the payments to two sub-contractors for want of remittance of TDS amounts within the stipulated period on the application of Section 40(a)(ia) of the Act.. The appellant has not deducted any TDS on the payments made up to February 2009 to the two sub-contractors at Rs. 1,28,83,860/-. The assessee company has not made any TDS till end of the year i.e. 31.03.2009. As per the amended provisions of Section 40(a)(ia) the appellant can avail time to remit into the Government accounts of TDS amount deducted before the end of the Financial Year. This amended provision is applicable from 01.04.2010 onwards. In the instant case under consideration the appellant has not deducted any TDS amount on the payments made to two sub contractors till February 2009 at Rs. 1,28,83,860/-. Thus clearly violated the provision of Section 40(a)(i....
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....al in the case of TRV Global Trading had declined to follow the above mentioned Special Bench decision in the light of the decision of the Calcutta High Court rendered in the case of CIT vs. Virgin Creations. The decision of the Calcutta High Court is referred to in the decision rendered on 14.5.2012 by the Chennai Bench in para 3 and according to the said decision, the said proviso is retrospective inasmuch as consequently all payments of TDS made/remitted before the due date of filing of the return of income in terms of Section 139(1) of the Act are outside the purview of applicability of Section 40 (a) (ia) of the Act. 7.1.5 He relied on the order of the Delhi Bench of the Income Tax Appellate Tribunal in the case of Sri Naresh Kumar represented through his legal heir, Sri Naveen Kumar in l.T.A.No.1300/DEL/2012 dated 21.5.2012 had held in para 6 that the insertion of the proviso was to be considered as remedial and curative in nature and hence had retrospective effect. 7.1.6 Similarly, the ld.A.R relied on another decision of Delhi Bench of the Income Tax Appellate Tribunal rendered on 22.5.2012 in l.T.A.No.3592/DEL/2011 had echoed and approved the retrospective nature of ....
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....r of the ld. Assessing Officer. Against this, the assessee is in appeal before us. 10. The A.R submitted that The disallowance of expenses relatable to the earning of the tax free income and placed reliance in the decision of P&H High Court reported in the case of CIT Vs. Hero Cycles Ltd. reported in 323 ITR 518 wherein held that disallowance u/s.14A requires finding of incurring expenditure. When it is found that for earning exempted income, expenditure has been incurred, disallowance u/s.14A cannot stand. He also pointed out that the AO failed in discharging the initial burden of proving the incurring expenses for earning the tax free income would vitiate his action in applying sec.14A of the Act. 11. We have heard both the parties and perused the material on record. The Ld.CIT(A) based his conclusion on his earlier order in assessee's own case for assessment year 2009-10. For assessment year 2009-10, the same issue came for consideration before this Tribunal in the case of M/s Consolidated Construction Consortium Ltd in ITA No.594/Mds./14 & 702/Mds./14 dated 06.01.2016 wherein the Tribunal remitted the issue to the file of AO with the following observations:- "5. We ha....
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....ule 8D is to be made. 2.1. On the other hand, Shri Akhilendra Yadav stronglydefended the conclusion arrived at by the ld. Commissioner of Income tax (Appeals) by contending that a well reasoned order has been passed by the ld. First Appellate Authority as apportionment of expenditure for earning the dividend income was done as per the provisions of the Act. It was pleaded that section 14A r.w. Rule 8D of the Rules is clearly applicable to the facts of the present appeal. 2.2. We have considered the rival submissions and perused the material available on record. The facts, in brief, are that the assessee is a limited company, engaged in trading of bulk and fine, chemicals, solvent and pharmaceutical raw materials declared its income at Rs. 74,40,000/- on 26/09/2009. The assessee credited dividend income of Rs. 1,82,262/- in its profit and loss account. The Assessing Officer while framing the assessment invoke section 14A r.w. Rule 8D by contending that assessee claimed various expenses which are related to exempt income in its profit & loss account and disallowed Rs. 14,58,412/-. On appeal, before the ld. Commissioner of Income tax (Appeals) broadly the stand taken....