TaxTMI 
TaxTMI 
2015 (10) TMI 2703
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....essee unit to be Small Scale Industrial Unit by simply relying on the submissions of the assessee and by not giving any independent findings. 2. That the Ld, C1T(A) has erred in law and on facts in allowing deduction u/s 80IB by holding the assessee unit to be Small Scale Industrial Unit and by not giving any finding as to why some machineries have been excluded from the total Plant and Machinery for making it eligible for a Small Scale Industry. 3. That the Ld. C1T(A) has erred in law and on facts in allowing deduction u/s 801B by holding the assessee unit to be Small Scale Industrial Unit and by not giving any finding that whether the value of machinery is to be considered as on the last day of the Previous Year or in the year in which the assessee was registered as a Small Scale Industry although it is clearly provided in clause (g) of sub section 14 of section 80IB that the value of Plant and Machinery has to be considered on the last day of the Previous Year. 3. Briefly stated, the facts of the case are that assessee derives income from manufacturing and trading of biscuits, namkeen and buns etc. and trading on confectionary biscuits, rusk and bread. During the assessmen....
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....T(A) is cryptic and non-speaking in view of the provisions of section 250(6) of the Income-tax Act, 1961, therefore, the order is not tenable. Section 250(6) of the Act reads as under:- "250 (6) The order of the [Commissioner (Appeals) disposing of the appeal shall be in writing and shall state the points for determination, the decision thereon and the reason for the decision." It is well settled law that provisions of section 250(6) are mandatory and it is obligatory for Commissioner (Appeals) to pass a speaking order stating points raised in appeal, his decision thereon and reasons for such decisions. The under lying rationale of the provision is that such orders are subject to further appeal to the Tribunal. Speaking order would obviously enable a party to know precise points decided in his favour or against him. Absence of the formulation of the point for decision for want of clarity in a decision undoubteldy puts a party in quandary. In our considered opinion, section 250(6) expressly embodies the principles of natural justice and such a provision is clearly mandatory in nature. The impugned order passed by the CIT(A) in violation of the provisions of section 250(6) could n....
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....dance with law after affording due and reasonable opportunity of being heard to the assessee. 6. We may observe here that in the assessment year 2007-08, on similar set of facts, the CIT(A) has confirmed the disallowance under section 80IB amounting to Rs. 26,41,716/- in respect of Noida unit. In the assessment year 2007-08, while deciding a similar issue the CIT(A) has not made any reference to the order passed by his predecessor in assessee's case for assessment year 2006-07. The order passed by different CIT(A)'s on similar issue involving assessment years 2006-07 and 2007-08 are contrary to each other. In view of the above, we set aside the order of Ld. CIT(A) on this issue and remand the matter to CIT(A) with a direction to decide the issue afresh in accordance with law after providing due and reasonable opportunity of being heard to the assessee. 7. Ground No. 4 & 5 of the appeal, reads as under:- 4. That the Ld. CIT(A) has erred in law and on facts in deleting the disallowance of 10% ( Rs. 12.16,332/-) made by AO on deduction u/s 801C claimed by assessee on Tahliwal Unit without giving any reasons and by simply stating that the AO is highly unjustified in denying deducti....
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....at Thaliwal unit, the CIT(A) has confirmed the disallowance in assessment year 2007-08. However, in this year the CIT(A) has allowed the claim of the assessee. The facts are similar and there is no consistency in the findings of CIT(A). In fact, on similar issue, the appellate authority below has given contrary findings. Furthermore, in this year the order passed by CIT(A) is cryptic and non-speaking. We therefore, set aside the order of CIT(A) on these issue and remand the matter to him with a direction to decide the issue by passing a speaking order. The CIT(A) has also directed to give an opportunity of being heard to the assessee in the matter. 10. Ground No.6 of the appeal reads as under:- 6. That the Ld. C1T(A) has erred in law and on facts in reducing the allocation of common expenses of head office from Rs. 25 lacs to Rs. 10 lacs against the income of Tahliwal Unit while computing deduction u/s 80IC of the IT Act, 1961 without giving any reasons. The Assessing officer added a sum of Rs. 25 lakhs to the total income of the assessee on account of wrong distribution of common expenses incurred by the head office as per provisions of section 40A(2)(a), 80IA(8) and 80IA(10)....
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....4 of 2013 dated 24.7.2015, the decision rendered in the case of Abhishek Industries Ltd Vs. CIT (supra) is not applicable to the facts of the present case. In our considered view, this issue needs to be verified and decided at the level of the Assessing officer. The assessee is free to produce the recent decision of the Hon'ble Punjab & Haryana High Court on this issue. Considering the entire facts and circumstances of the present case, we set aside the order of CIT(A) on this issue and remand the matter to the CIT(A) for a fresh decision in accordance with law. For statistical purposes, this ground of the Cross objection is allowed. 15. Ground No.2 of the cross objection, reads as under:- 2. That the learned CIT (A) - II, Ludhiana, has erred in confirming the disallowance of Rs. 10 Lakhs u/s 80IC in the Tahliwal Unit ignoring the fact that the appellant had correctly allocated the common expenses and no further allocation was required to make a disallowance of Rs. 10 Lakhs. While deciding ground No.6 of the appeal, we have set aside the order of CIT(A) on this issue and remanded the matter to CIT(A) for a fresh decision. In that view of the matter, we remand ground No.2 of....
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....year. 20. The Assessing officer observed that the assessee had debited expenses of earlier years to the profit and loss account. The details of these expenses are given in para 10 of the assessment order. The contention of the assessee was that some bills were received after the close of the year which pertained to the earlier years. By this time, the balance sheet had been finalized therefore, the bills received after the close of accounts were booked in the current year. The Assessing officer held that the assessee was following the mercantile system of accounting and as such the bills should have been debited in the year to which they belong. The Assessing officer also observed that some of the bills pertained to the year 2004, therefore, submissions of the assessee were rejected. Consequently, the Assessing officer disallowed Rs. 1,15,595/-. 21. On appeal, the CIT(A) confirmed the addition and, hence, the assessee is in appeal before the Tribunal. 22. We have heard Shri Subhash Aggarwal, Ld. Counsel for the assessee. He submitted that liability was determined and crystallized in the year in question on the basis of maintaining account on mercantile basis. Shri Subhash Aggarw....
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....s relate, the mercantile system does not call for adjustment in the books of account on estimate basis. It is actually known income or expenses, the right to receive or the liability to pay which has come to be crystallized, which is to be taken into account under the mercantile system of maintaining books of account. " In the above judgment the Hon'ble Gujrat Hon'ble High Court has categorically held that merely because an expense relates to a transaction of an earlier year it does not become a liability payable in the earlier year unless it can be said that the liability was determined and crystallized in the year in question on the basis of maintaining accounts on the mercantile basis. In the instant case, bills were received in this year and, therefore, it can be said that the liability was determined and crystallized in the year in question on the basis of maintaining account on mercantile basis. In view of the judgement of the Hon'ble Gujrat High Court referred to above, we allow ground No.3 of the appeal. 23. Ground No.4 of the appeal, reads as under:- 4. That the learned CIT(A)-II has erred in confirming the disallowance of Rs. 4,71,880/- u/s 40a(ia) of the....
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....rposes. 28. Ground Nos. 5 & 6 of the appeal reads as under;- 5. That the learned CIT(A)-!I has erred in confirming the disallowance of Rs. 4,05,610/- - paid to M/s Ernst & Young and M/s KPWG as advisory charges. 6. That the learned CIT(A)-!I has erred in confirming the disallowance of Rs. 17,33,220/- paid to M/s AZB a partners, BMR Associates and PKP Consultants P Ltd as consultancy charges. 29. While framing the assessment, the Assessing officer disallowed the expenditure of Rs. 4,05,610/- and Rs. 17,33,220/- claimed by the assessee as deduction while computing capital gains on transfer of the assessee's company to M/s Mrs. Bector Food Specialties Ltd. The assessee sold its business to M/s Mrs. Bector Food Specialties Ltd. and have paid tax on capital gain on such sales. In the calculation of the capital gains, the assessee has claimed certain expenses as 'deduction'. The Assessing officer required the assessee to submit the evidence in respect of the expenditure claimed as deduction. According to Assessing officer, the assessee failed to submit any details regarding the charges paid to Ms. KPMG and M/s Ernst & Young. As regards the expenditure of Rs. 4,05,610/-, the assesse....
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....y on behalf of the M/s Goldman Sachs. The appellant has not been able to controvert this finding of fact of AO through any evidence. Keeping in view the aforesaid facts of the case, the AO was fully justified in disallowing these expenses of Rs. 17,33,220/-. These grounds of appeal are accordingly dismissed." 31. We have heard the rival submissions. The assessee claimed the expenditure and, therefore, onus was upon it to substantiate its claim. It is apparent from the records that the assessee has failed to produce any evidence in the form of bills, from the concerned parties. The Ld. CIT(A) has categorically observed that even during the course of assessment proceedings, no such bills were filed. We are in agreement with this observation of the CIT(A) that the mere claim of the assessee that these expenses were on account of legal expenses for the purpose of business transfer would not justify the claim. As regards the payments made to M/s PKP Consultants and M/s AZB & Partners is concerned, the CIT(A) has categorically observed that the Assessing officer had verified from the above parties. The Ld. CIT(A) has categorically stated that the expenses claimed by the assessee have no....