TaxTMI 
TaxTMI 
TaxTMI 
2017 (5) TMI 713
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....ssue before the learned Commissioner of Income-tax (Appeals) i.e. copies of invoices for sale made by M/s. Lakshmi Energy and Foods Ltd. to the parties other than the assessee. The Assessing Officer commented on the same that this is just two instances of sale done in September 2004 and March 2005 and cannot conclusively establish the purchase price to be the genuine prevailing market rate. The assessee had purchased damaged wheat from M/s. Lakshmi Overseas Industries Ltd. at 5.25 per kg. The seller namely M/s. Lakshmi Overseas Industries Ltd. had purchased the said damaged wheat from Government at Rs. 3.60 per kg. as noted by the Assessing Officer. The Assessing Officer had doubted the price of Rs. 5.25 per kg. sold to the assessee which according to the Assessing Officer is excessive purchase price given to the sister concern. The Assessing Officer noted that no details of payments made to the group concern for purchases made from them as per the provisions of section 40A(2)(b) of the Act were reported in the tax audit report. The Assessing Officer also noted that despite given opportunity, the assessee failed to furnish the trail of the source of such damaged wheat. The Assessin....
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.... rates charged by the sister concern. The agreement with M/s. PEC Ltd. had never been doubted by the authorities below. M/s. Lakshmi Overseas Industries Ltd. has sold damaged wheat at Rs. 5.25 per kg. against the purchase price of Rs. 3.60 per kg. and the profit on such sales have been declared in the return of income showing a substantial income of Rs. 19.61 crores for the assessment year 2005-06 and paid the tax of Rs. 8.11 crores. Paper book page 131 is return of income filed of M/s. Lakshmi Overseas Industries Ltd. which is the on higher slab. Thus, both the companies have paid maximum rate of tax and there is no loss to the Revenue or gain to any of the group companies. Reliance has been placed on the judgment of the hon'ble Supreme Court in the case of CIT v. Glaxo Smithkline Asia (P) Ltd. reported in [2010] 236 CTR (SC) 113 in which it has been held that if the entire exercise is revenue neutral, no interference is called for. The findings of the learned Commissioner of Income-tax (Appeals) that trail of such damaged wheat is not there is misconceived, since the source of purchase is evidently clear that the same has been purchased from M/s. Lakshmi Overseas Industries L....
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....Ltd., a Government of undertaking at Rs. 5.50 per kg. The seller has made sales of the identical items to other independent parties at a higher rate between Rs. 5.50 per kg. to Rs. 6.10 per kg. i.e. Adani Exports Ltd. and R. K. Enterprises Calcutta, therefore, sufficient cogent evidences have been produced before the authorities below to prove that the assessee paid reasonable market price of purchase of damaged wheat to the sister concern as compared with rates of other independent parties. The assessee-company and the seller are assessed by the same Assessing Officer and they have shown the higher income in their returns of income in the same slab and both of them paid maximum rate of tax, therefore, the revenue is not at loss and it is merely revenue neutral exercise. The hon'ble Supreme Court in the case of Upper India Publishing House P. Ltd. v. CIT [1979] 117 ITR 569 (SC) held that before section 40A(2) of the Act is applied, the Assessing Officer should have proved expenditure is excessive or unreasonable. The assessee has explained before the authorities below all the facts and circumstances that reasonable payments have been made to the sister concern and there is noth....
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....n such payments to various parties could be adduced by the assessee. The Assessing Officer accordingly disallowed Rs. 94,03,417 under section 40(a)(ia) of the Act. 11. The assessee challenged the addition before the learned Commissioner of Income-tax (Appeals) and the written submissions of the assessee is quoted in the impugned order in which the assessee explained that the assessee provided details of brokerage etc. The assessee had deducted TDS on brokerage paid and deposited in the Government account which is evident from the copy of the TDS return in requisite Form 27A in which compete details have been noted. The assessee also deducted TDS on forwarding and handling charges and deposited the same into the Government account. As regards others, it was submitted that there was no requirement to deduct TDS. The learned Commissioner of Income-tax (Appeals) noted that it has been stated that evidence of TDS deductions on most of the items have been furnished. In the case of P. D. Prasad and Sons P. Ltd. it was put forth that entity is its authorised representative for booking goods through railways and as the payment was to a Government authority, no TDS was deductible. As the TD....
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....pon the assessee has not been discharged. 14. We have considered the rival submissions. The assessee has specifically pleaded before the authorities below that on brokerage and forwarding and handling charges, TDS has been deducted and paid in the Government account. As regards freight, customs house agent loading and unloading charges, it was pleaded that since it was for railways indent, therefore, no TDS was required to be deducted. The learned Commissioner of Income- tax (Appeals) found the contention of the assessee to be correct that TDS has been deducted on most of the items and deposited in the Government account, therefore, there is no question of disallowance of the same. As regards the transportation through railways indent, no TDS is required because it is a payment made to the Government undertaking. The findings of the fact recorded by the learned Commissioner of Income-tax (Appeals) has been supported by TDS return, tax challans filed in the paper book, therefore, finding of the fact arrived at by the learned Commissioner of Income-tax (Appeals) have not been disputed through any evidence or material on record, therefore, part addition deleted by the learned Commiss....
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....idences which he has admitted : (i) Confirmation of Nav Bharat Enterprises (ii) Certified statement along with PAN No. in the books of Nav Bharat Enterprises. The Assessing Officer while making the addition observed that an amount of Rs. 7.60 crores was received by the assessee-company from M/s. Nav Bharat Exports during the year under consideration under the garb of loan. The assessee, however, changed its stand and submitted that the amount of Rs. 7.60 crores was received from two parties namely M/s. Nav Bharat Exports-Rs. 3 crores and M/s. Nav Bharat Enterprises-Rs. 4.60 crores. Summons under section 131 of the Act were issued to both the parties and the statement of the director was recorded under oath and are placed on record. M/s. Nav Bharat Exports have confirmed given a loan of Rs. 3 crores only in the year under consideration. Confirmed copy of the account and statement of the director was placed on record. However, M/s. Nav Bharat Enterprises has categorically denied having advanced any money to the assessee. The statement of the director recorded under section 131 is placed on record. During the remand proceedings, the Assessing Officer contended that addition was m....
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..... 4.60 crores was debited to the account of M/s. Lakshmi Overseas Industries Ltd. which is proved from the copy of account in the books of account of the assessee. Copy of the bank account of the assessee was also filed. It was therefore, submitted that wrongly the amount was credited to the account of the assessee. Copy of account of all the parties are filed in this regard. 18. The learned Commissioner of Income-tax (Appeals) considering the explanation of the assessee noted that the Assessing Officer has already accepted the sum of Rs. 3 crores by recording the statement of the concerned persons. The learned Commissioner of Income-tax (Appeals) considering the explanation of the assessee and the material on record noted that all the transactions have been conducted through banking channel and fully clarified. The confirmation of account filed by M/s. Nav Bharat Enterprises as additional evidence, clearly stated that a sum of Rs. 5 crores was received from Adani Exports Ltd. had been debited. The adjustments had been made immediately as is evident from the ledger account and bank statement. The learned Commissioner of Income-tax (Appeals) accepted the explanation of the assessee....
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....hare capital money which itself is doubtful. The assessee further explained that Smt. Vijay Lakshmi is a founder director of Lakshmi Overseas Industries Ltd. and is regularly assessed to tax. The unsecured loan of Rs. 11,50,000 was received through cheque drawn on IDBI Bank Ltd., therefore, the creditworthiness is proved. The assessee filed confirmation from Smt. Vijay Lakshmi who is holding equity share of public limited company namely Lakshmi Energy and Foods Ltd. and she is a promoter director. She had advanced the amount to the assessee out of dividend amounting to Rs. 11,82,660. The assessee filed copy of the confirmation by Smt. Vijay Lakshmi, copy of certificate of payment of dividend, copy of the bank account and copy of the shareholding pattern. The learned Commissioner of Income-tax (Appeals) noted that Smt. Vijay Lakshmi is one of the founder directors of M/s. Lakshmi Energy Foods Limited holding number of shares and her shareholding is at 3.8 per cent. The company has paid dividend of Rs. 11,82,660 to the creditor which is supported by all the certificates. The learned Commissioner of Income-tax (Appeals) accordingly deleted the addition. 22. After considering the riva....
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....Finvest Ltd., M/s. Ganeshay Overseas Industries Ltd. and M/s. Loil Impex Ltd. It was submitted that the Assessing Officer misinterpreted the provisions of section 2(22)(e) of the Act. As per the chart reproduced in the assessment order, it is clearly evident that none of the shareholders of the other companies from whom unsecured loans taken, hold any substantial interest in the assessee-company. The assessee relied upon several decisions in support of his contention that the provisions of section 2(22)(e) of the Act was not attracted in the case of the assessee. 25. The learned Commissioner of Income-tax (Appeals) noted that it is a case of the Assessing Officer that the beneficial shareholding of the alleged bogus companies are held primarily by various family members of Uppals. The learned Commissioner of Income-tax (Appeals) on a perusal of the shareholding pattern tabulated in the impugned order noted that it is apparent that the assessee/its shareholders while they may be registered shareholders are not beneficiary holders of the shares. Payment must be to a registered shareholder who is also beneficiary shareholder. They must also hold substantial interest in the companies ....