TaxTMI 
TaxTMI 
2017 (9) TMI 1521
X X X X Extracts X X X X
X X X X Extracts X X X X
....urn of income filed on, income returned , assessessed income etc. for both the AYs can be summarised as under:- A.Y. ROI filed on Income as per return Dt. of Assessment order Assessed income 2008-09 28/09/2008 Nil 10/12/2010 Nil 2009-10 21/09/2009 Nil 08/12/2011 Nil ITA/7120/Mum/2011,AY.2008-09: 2. First effective Ground of appeal (GOA-1-3) is about addition Rs. 5.86 crores on account of difference in sale price for the goods sold to M/s. Hamilton Housewares Pvt. Ltd.(HHPL). During the assessessment proceedings the AO found that the assessee had sold goods worth Rs. 44.33 crores to HHPL,that it was related concern of the assessee group. He directed the assessee to submit the details o....
X X X X Extracts X X X X
X X X X Extracts X X X X
....nvincing and satisfactory, that the assessee has not filed any documentary evidence in that regard,that the other unit was eligible for deduction u/s. 80-IB. He referred to the case of Shatrunjay Diamonds(261ITR258);Nund and Samont Co. P. Ltd.(70 ITR 268), and upheld the order of the AO. 2.2. Before us,the Authorised Representative(AR)contended that that no provision in the Act permitted the AO to make addition for alleged shortfall,that no additional consideration passed, that the AO did not take notice of the submissions made by the assessee. He referred to Pg.69 of the paper-book and stated that the sister concern was incurring expenditure on account of advertisement and freight,that the FAA had not dealt with the 80 IB issue, that th....
X X X X Extracts X X X X
X X X X Extracts X X X X
....d by it. Prima facie it may appear that the transaction entered into by the assessee with HHPL were not at arm's length. But,if the entire picture is looked at it become clear that there was justification for selling the goods at lower rates to HHPL. The assessee was suffering huge losses whereas HHPL was earning profit. By submitting the accounts of both the entities the assessee had discharged the initial onus cast upon it with regard to selling the goods at lower rates. Thereafter,the onus had shifted to the AO and he had to demonstrate as to how the payment was excessive or unreasonable. Apart from the presumption,based on the relationship between HHPL and the assessee-company,there was no other material before both the revenue authorit....
X X X X Extracts X X X X
X X X X Extracts X X X X
....rofits. Deciding the matter the Hon'ble Apex Court has laid down a basic principle and has held as under :- "The law does not oblige a trader to make the maximum profit that he can out of his trading transactions. Income which accrues to a trader is taxable in his hands: income which he could have, but has not earned, is not made taxable as income accrued to him. By adopting a device, if it is made to appear that income which belonged to the assessee had been earned by some other person, that income may be brought to tax in the hands of the assessee, and if the income has escaped tax in a previous assessment, a case for commencing a proceeding for reassessment under section 147(b) may be made out. Avoidance of tax liability by so a....
X X X X Extracts X X X X
X X X X Extracts X X X X
....tal gains on that basis. Dismissing the appeal filed by the Department,the Hon'ble Apex Court held as follow: ......since the Tribunal had found that the consideration was not understated and there was no evidence direct or inferential to show that the consideration actually received by the respondent was more than what was disclosed or declared by the respondent, the proviso to section 12B(2) could not be invoked. ......Though the legislation in question is to remedy a social evil and should be read broadly and should be so read that the object is fulfilled, yet the onus of establishing a condition of taxability must be fulfilled by the Revenue.....Unless there is evidence that more than what was stated was received, no higher pri....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... rule 8D. As per the AO, the assessee did not file any details regard expenditure related to investment. He made a disallowance of Rs. 1.39 crore to the income of the assessee, invoking the provisions of section 14 A of the Act. 3.1. During the appellate proceedings, before the FAA, the assessee argued that AO had erred in making the disallowance without any justification,that he had not provided any computa - tion as to how the said figure was derived that he did not appreciate the fact that assessee had not earned any exempt income during the year under consideration, that the investment were very old and were not earning any income,that the disallowance on account of interest expenditure made by him was absolutely unjustified,that the....