TaxTMI 
TaxTMI 
2019 (7) TMI 125
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....are as under: Sr. No. ITA No.Asst.Year Appeal by Dt. of CIT(A)'s order AO's order 1-2 1379 and 1380/Ahd/2009 Asstt.Year 2005-06 and 2006-07 Assessee 12.03.2009 12.03.2009 31.12.2017 24.12.2008 3-4 ITA No. 1661, 1662/Ahd/2009 2005-06, 2006-07 Revenue 12.03.2009 12.03.2009 31.12.2007 24.12.2008 5 1064/Ahd/2010 Asstt.Year 2007-08 Assessee 17.12.2010 31.12.2009 6 No.1825/Ahd/2010 Asstt.Year 2007-08 Revenue 17.2.2010 31.12.2009 7 172/Ahd/2012 Asstt.Year 2008-09 Assessee 16.11.2011 31.12.2010 8 No.322/Ahd/2012 Revenue 16.11.2011 31.12.2010 Asstt.Year 2008-09 9 135/Ahd/2015 Asstt.Year 2008-09 Assessee 13.11.2014 Penalty Order 31.12.2010 10 2365/Ahd/2012 Asstt.Year 2009-10 Assessee 22.08.2012 30.12.2011 11 No.2546/Ahd/2012 Asstt.Year 2009-10 Revenue 22.08.2012 30.12.2011 12 No.106/Ahd/2016 Asstt.Year 2010-11 Revenue 30.10.2015 22.02.2013 13 No.548/Ahd/2016 Astt.Year 2010-11 Revenue 30.10.2015 22.02.2013 14-15 116 and 117/Ahd/2016 Asstt.Year 2010-11 and 2011-12 ....
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....999-2000); ITA No.898, 1111 and 1108/Ahd/2009 (Asstt.Year 2002-03); ITA No.4 and 33/Ahd/2007 (Asstt.Year 2003-04); ITA No.4515 & 4563/Ahd/2007 (Asstt.Year 2003-04 and 2004-05). The ld.DR, on the other hand, relied upon the orders of the ld.AO. 6. On due consideration of the above facts, we are of the view that in order to earn goodwill of the people residing in the neighbor-hood area and to keep social relations with residents, assessee company has to incur certain expenditure, which would ultimately facilitate the assessee's business, otherwise there would be friction or law and order situation which would arise if it adopt continuous unfriendly approach with the residents residing in the surrounding areas. In order to show good gesture, it has repaired certain village roads and given donations during social occasions. To our mind, such incurrence of expenditure are essential in running factory smoothly and the ld.CIT(A) has rightly deleted disallowance. It is also pertinent to note that in the past similar expenditures were claimed, which have been allowed by the ld.CIT(A), and orders of the ld.CIT(A) were upheld by the ITAT. Taking into consideration this consistent approach ....
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.... Hence, the pro rata expenditure is large. They have enclosed balance-sheet and income expenditure account of the association to show that there has been no creation of any capital asset. On going through the income and expenditure account and balance-sheet of REGMA, the assets are mainly kept in the bank account and the expenses are for advertisement investigation charges, traveling etc., there is a positive balance left over which is kept in the bank account. The other members besides the assessee are SRF Ltd. of Delhi, M/s. Chemplast Sanmar Ltd. of Chennai, Naveen Flouorine Industries in Mumbai. In short, it is an association on the lines of trade association which look after the welfare of its members and takes up the issues relating to their activities. They call for contributions the basis of projected expense. For this, also correspondence was filed before the Ld. CIT(A) to show that these amounts are requested by circular letters after taking a decision during REGMA meetings. The amounts are duly paid by cheques to Gujarat Flurochemicals Ltd. the association which is based in New Delhi. The details in these correspondences show that the association which is a new one has pu....
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....nding foreign exchange trading liabilities/assets as on the last date of the financial year at the exchange rate applicable on that date. Accordingly, it has to determine the loss or gain. It made reference to the decision of Hon'ble Delhi High Court in the case of CIT Vs. Woodword Governor India P.Ltd., and Others to demonstrate that such claim was not notional or contingent, rather it was a determined loss/gain. The ld.AO did not accept this contention of the assessee and held that such claim by the assessee is notional one and does not allowable. On appeal, the ld.CIT(A) has allowed such claim of the assessee by following the order of the ITAT passed in earlier years. 13. The ld.counsel for the assessee, at the very outset submitted that the issue in dispute is covered by the order of the ITAT passed in 4563/Ahd/2007 (Asstt.Year 2004-05). He further relied upon the judgment of Hon'ble Supreme Court in the case of Woodward Governor India Pvt. Ltd., 312 ITR 254 (SC). On the other hand, the ld.DR relied upon the orders of the Revenue authority. 14. We have duly considered rival contentions and gone through the record carefully. The issue is that at the end of the financial ye....
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....ofit/loss on sale of mutual fund is to be assessed as long term capital gain/short-term capital gain/loss. The Revenue is challenging this part of order in ground no.3 in Asstt.Year 2008-09, 2009-10 and ground no.1 in the Asstt.Year 2010-11. The ld.counsel for the assessee, for buttressing his claim, relied upon the orders of the ld.CIT(A) form the Asstt.Year 2005-06 to 2007-08. On the other hand, the ld.CIT-DR relied upon the orders of the ld.CIT(A) from the Asstt.Year 2008-09 to 2011-12. 16. During the course of hearing, we have directed the ld.counsel for the assessee to compile details in tabular form indicating various factors required to be visualized for forming the opinion, whether activities of purchase and sales of shares is to be treated as business activity or simplicitor as investment. On our directions, the ld.counsel for the assessee filed such details in tabular form. The details are also on the record scattered in different orders of the Revenue authorities. They are also available in seven volumes of the paper book filed by the ld.counsel for the assessee. For the facility of reference, and taking into consideration the relevant details in more scientific manne....
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....g from sale of shares as short-term capital gain - Assessee had opening investment of Rs. 1 crore in shares - During year under consideration shares worth Rs. 4.10 crore had been sold while shares of Rs. 4.9 crore were purchased -Tribunal found that assessee had regularly dealt in purchase and sale of share which indicated period of holding to be very short and that he earned only a meager amount of dividend of Rs. 21,952 while gains from sale of shares was Rs. 65.45 lakh - whether Tribunal. After analyzing turnover of shares, nature of transactions i.e. duration ot holding, proportion of income derived as dividend to investment made, had rightly held that income arising from sales of shares was assessable as business income - Held, yesfparas 7 & 8] [infavour of revenue]. 2). New Jehangir Vakil Mills Co.Ltd. Vs. CIT [49 ITR 137 (Supreme Court)] Section 28(i) of the Income-tax Act, 1961 [Corresponding to section 10(1) of the Indian Income-tax Act, 1922] - Business income - chargeable as - Assessment year 1945-46 - Whether extent to which a decision given bv ITO for one assessment year affects or binds a decision for another year, doctrine of res judicata or estoppe....
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....e in shares by assessee, it could be inferred that those transactions must have been entered into by assessee with a profit motive and not for purpose of investment, income arisen to assessee from such transactions would be assessable under head 'Profits and gains of business or profession' - Held, yes, Whether merely because shares were acquired by assessee from primary market and assessee had to wait for two to three months for allotment process, transaction could be held to be a non-business transaction - Held, no -Whether fact that shares purchased from secondary market were transferred in name of assessee, would make transaction as non-business transaction - Held, no 6. Smt.Harsha N.Mehta Vs. DCIT [ 43 SOT 332 (Mumbai)] Section 28(i), read with section 45, of the Income-tax Act, 1061 - Business income - Chargeable as - Assessment year 2005-06 - During relevant assessment year, assessee filed her return showing income from sale and purchase of shares under head 'Capital Gains' - Assessing Officer did not agree with treatment given by assessee and treated said income as business income - On appeal, Commissioner (Appeals) partly accepted assessee....
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....sulted in business profits assessable as such in bonds of assessee - Held, yes 2. Without prejudice to above discussed judicial pronouncements, a kind attention is drawn to provisions of S.73 Explanation which creates a legal fiction (deeming provision) to treat transactions of purchase and sale of shares as speculation business. It is true that S.73 relates losses but legislative intention is clear that purchase and sale of shares by a company (other than excluded categories) has to be treated as speculation business. Accordingly, there cannot be dispute to treat impugned transactions as business. 3. Keeping in view above mentioned judicial pronouncements, in light of facts of the extant case as discussed in the assessment order and more so, in view of Explanation to S.73, it immensely transpires that the action of the A.O. to treat impugned shares/mutual fund transactions as business activity is justified. Accordingly, it is humbly prayed that action of the A.O. may kindly be confirmed." 16. On the other hand, apart from the details compiled in tabular form, the ld.counsel for the assessee has also relied upon a large number of decisions in support of his con....
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....e has borrowed money to purchase and paid interest thereon? Normally, money is borrowed to purchase goods for the purpose of trade and not for investing in an asset for retaining. (3) What is the frequency of such purchase and disposal in that particular item? If purchase and sale are frequent, or there are substantial transaction in that item, if would indicate trade. Habitual dealing in that particular item is indicative of intention of trade. Similarly, ratio between the purchases and sales and the holdings may show whether the assessee is trading or investing (high transactions and low holdings indicate trade whereas low transactions and high holdings indicate investment). (4) Whether purchase and sale is for realizing profit or purchases are made for retention and appreciation its value? Former will indicate intention of trades and latter, an investment. In the case of shares whether intention was to enjoy dividend and not merely earn profit on sale and purchase of shares. A commercial motive is an essential ingredient of trade. (5) How the value of the items has been taken in the balance sheet? If the items in question are valued at cost, it would i....
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....in its earlier decision rendered in the case of Pari Mangaldas Girdhardas vs. CIT reported in 1977 CTR 647. These tests read as under: "After analyzing various decisions of the apex court, this court has formulated certain tests to determine as to whether an assessee can be said to be carrying on business. (a) The first test is whether the initial acquisition of the subject-matter of transaction was with the intention of dealing in the item, or with a view to finding an investment. If the transaction, since the inception, appears to be impressed with the character of a commercial transaction entered into with a view to earn profit, it would furnish a valuable guideline. (b) The second test that is often applied is as to why and how and for what purpose the sale was effected subsequently. (c) The third test, which is frequently applied, is as to how the assessee dealt with the subject-matter of transaction during the time the asset was the assessee. Has it been treated as stock-in-trade, or has it been shown in the books of account and balance sheet as an investment. This inquiry, though relevant, is not conclusive. (d) The fourth test is....
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....vious assessment years, the following amounts have been added back to the total income on this ccount in the computation and no deduction has been claimed under section 88E for the securities transaction tax paid during the year. (Rs.in) Asstt.Year Amount added back to the total income Amount added back in the total income in previous Asstt.Year 2005-06 Rs. 31,565/- Rs. 6,02,99,64/- 2006-07 Rs.NIL Rs. 31,565/- 2007-08 Rs. 27,58,400/- - 2008-09 Rs. 10,19,61,651/- Rs. 27,58,400/- 2009-10 Rs. 2,68,08,789/- Rs. 10,19,61,561/- 2010-11 Rs. 15,59,83,907 Rs. 2,68,08,789/- 2011-12 Rs. 60,75,000/- Rs. 15,59,83,907/- 22. It is further submitted that the assessee has made the investment without having recourse to borrowed funds. The entire funding for shares/securities has been made out of capital reserves and surplus available from time to time. 23. So far as frequency of purchase and sale of securities are concerned, it is submitted that the following details demonstrate bifurcation of total investment, purchase and sales in respect of shares and mutual funds etc. in the respective assessment years. ....
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....motive is an essential ingredient of trade. In this regard, it is further submitted that where purchase and sale is entered into for realisation of the same, it constituted trade and where the purchase of the asset is made for retention and appreciation of value, the same would indicate investment. In the instant case, the assessee has earned dividend income of Rs. 5.37 crores, 5.33 crores, 8.20 crores, Rs. 10.52 crores, Rs. 7.35 crores, Rs. 10.61 crores and Rs. 4.85 crores for the Asstt.Years 2005-06 to 2011-12 respectively, and interest income on bonds of Rs. 3.07 crores, Rs. 4.60 crores, Rs. 6.47 crores, Rs. 5.40 crores, Rs. 3.15 crores for the Asstt.Years 2005-06 to 2009-10 respectively. 26. It is submitted that during the year, the company has earned capital gains from mutual funds, strategic investment and equity shares etc. Bifurcation of such capital gain is as under: (Rs.in crores) Asstt. Year Gain from Mutual Fund Gain/Loss from Strategic investment Gain from Equity shares Total capital gain 2005-06 24.32 (including LTG Rs. 10.17) 7.61 2.98 19.69 2006-07 3.47 (including LTG Rs. 1.22) 52.81 8.07 64.63 2007-08 1....
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....g factor. 29. The ld.counsel for the assessee further relied upon the following decisions: i) ACIT Vs. Shah Investor's Home Ltd., ITA No.1424/Ahd/2010 (ITAT, Ahmedabad Bench) ii) DCIT Vs. Tejas Securities, IT(SS)A.531, 532/Ahd/2011 dated 22.3.2016 (ITAT, Ahmedabad. iii) CIT Vs. Nita M. Patel, 42 taxmann.com 125 (Gujarat) iv) CIT Vs. Smt. Datta Mahendra Shah, 62 taxmann.com 325 (Bombay) v) Seer Finlease P.Ltd. Vs. ACIT, Ahmedabad ITA No.3326/Ahd/2009 and others order dated 17.3.2015, ITAT, Ahmedabad. vi) CIT Vs. Kapur Investments P.Ltd. 61 taxmann.com 91 (Kar) vii) ITA No.1912/Ahd/2012 and others in the case of Alembic Ltd. Vs. DCIT, order dated 9.12.2016 (ITAT, Ahmedabad.) viii) Gajjala Madhusudhan Reddy Vs. ITO, 39 taxmann.com 157 (ITAT, Hyderabad) ix) DCIT Vs. UMIL Share & Stock Broking Services Ltd., 96 taxmann.com 168 (Kol-Trib.) x) PCIT Vs. Bhanuprasad D. Trivedi, HUF, 87 taxmann.com 137 (Gujarat) xi) PCIT Vs. Bhhanuprasad D. Trivedi HUF, 94 taxmann.com 114 (SC) He has placed on record copies of the above decisions. 30. We have duly gone through all these details. ....
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.... specific. The assessee has pointed out the volume of funds available with it in the shape of reserves and surplus. For example, in the Asstt.Year 2008-09, the share capital was Rs. 1099 lakhs. The Reserves and surplus was Rs. 1,21,844 lakhs. Gross investment in the Asstt.Year 2008-09 is Rs. 51,861 lakhs. All these details have been compiled by the assessee in tabular form and available on page no.1 of the synopsis. This indicates that all funds were far more than the gross investment in that year. Similar is the position in all other years. Investment is far less than own funds available in the shape of share capital and reserves and surplus, therefore, if these figures are appreciated in the light of Hon'ble Bombay High Court decision in the case of CIT Vs. Reliance Utilities & Powers Ltd., 313 ITR 340 (Bombay), then it would reveal that one has to draw an inference that the assessee must have made investment out of its own funds. The ld.CIT(A) cannot reject this argument simply for the reason that the assessee has incurred interest expenditure of Rs. 27.64 cores. But this expenditure is attributable to manufacturing activities also. The ld.CIT(A) ought to have visualized the com....
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....of mutual fund only capital gain arise to the assessee. 33. As far as decisions relied upon by the ld.CIT-DR are concerned, we have gone through the decisions. It is observed that each decision is given on the particular fact of that case. We have already observed that on this issue, whether the assessee is a trader or an investor, there are large numbers of decisions available. In the case laws cited by the ld.counsel for the assessee, Judicial Member (herein) is party to two of the cases viz. Shah Investor's Home Ltd., and Seer Finlease P. Ltd. (supra). All these cases were being decided by keeping in mind specific fact situation in them. The tests propounded in large numbers of cases have already been considered by us. Therefore, the ld.CIT(DR) could not buttress the reasoning of the ld.CIT(A) in the Asstt.Year 2008-09 which has been followed in subsequent years with help of these case laws. We have considered specific reasons assigned by the ld.CIT(A) for differing with conclusions of his predecessor in earlier years. In view of the above discussion, we hold that gain arising on sale of shares or mutual fund is to be taxed in all these years as long term capital gain/short t....
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....,727/-, out of that the ld.CIT(A) has deleted the disallowance of Rs. 91,63,869/-. Grievance of the Revenue is that the ld.CIT(A) has erred in deleting this disallowance, whereas grievance of the assessee in ground no.5 of its appeal is that the ld.CIT(A) has erred in confirming the disallowance of Rs. 19,83,585/-. 37. Brief facts of the case are that the assessee has shown dividend income of Rs. 5,32,00,000/-. The AO though treated the activity of the assessee of sale and purchase of shares as trading activity, he assessed the profit on share transaction as business income, but on protective basis, he disallowed expenditure of Rs. 62,56,732/- out of professional fees and Rs. 1,11,47,627/- on account of interest expenses. He observed that if at any appellate stage the same is held taxable under the heading "capital gain" then disallowance under section 14A should require to be made and this disallowance would be worked out accordingly. The ld.CIT(A) has held that profit on share transaction is to be assessed as capital gain. We have upheld this finding of the ld.CIT(A) while rejecting the ground of appeal taken by the Revenue in the above discussion. Therefore, we are required t....
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....were not required to be calculated on the basis of an estimation using the above formula. While confirming the disallowance of Rs. 19,83,858/- is concerned, the finding of the ld.CIT(A) is that it "it was fairly pointed out that on the basis of direct nexus the interest amount of Rs. 19,83,858/- is in respect of investments. This amount worked out without prejudice to the stand that no disallowance is required out of interest on the basis of submissions made earlier." Though the ld.CIT(A) has observed that this expenses has a direct nexus, but it is neither discernible from the assessment order nor from the CIT(A)'s order. Major part of the expenses i.e. Rs. 91,63,869/- has been deleted by the CIT(A) by following judgment of Hon'ble Bombay High Court in the case of Reliance Utilities and Powers P.Ltd. (supra) on the basis that the assessee was having more interest free funds, than the investment. In this situation, part expenditure cannot be culled out unless a direct nexus has been demonstrated. It is neither discernible in the assessment order nor in the CIT(A)'s order. We have extracted relevant finding of the ld.CIT(A). In view of the above discussion, we are of the view that t....
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....s not allowed by the AO. According to the AO, it was a capital expenditure, whereas the assessee has submitted that it was a paid for protecting the title of the land. The ld.counsel for the assessee has contended that this issue has been decided against the assessee consistently from the Asstt.Year 2002-03. We find that the Tribunal has examined this aspect in detail in the Asstt.Year 2003-04 while deciding ITA No.33/Ahd/2007. Taking into consideration consistent stand of the authorities as well as appeal upto the level of ITAT, we do not find any merit in this ground of appeal. Both these grounds are rejected. Ground No.3 in Asstt.Year 2005-06: 45. In this ground, grievance of the assessee is that the ld.CIT(A) has erred in confirming the disallowance of Rs. 9,883/- which has been disallowed out of sundry balance written off. The ld.counsel for the assessee did not press this ground of appeal on account of smallness of the amount involved therein. Accordingly, it is rejected. 46. Ground No.4. In this ground, grievance of the assessee is that the ld.CIT(A) has erred in confirming the disallowance of Rs. 60 lakhs out of expenses of professional fees. This ground is inter-c....
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....ce under section 14A would be relevant. He has worked out the above disallowance. As far as disallowance out of professional fees is concerned, while deciding the appeal of the assessee, we have already confirmed the finding of the CIT(A) for disallowance to the extent of Rs. 60 lakhs. At the time of hearing also, the ld.counsel for the assessee did not dispute confirmation of this disallowance on the ground that if the profit on share transaction is being taxed under the head "capital gain", then disallowance out of professional fees deserves to be confirmed. Therefore, we have rejected the ground of appeal bearing no.2 in ITA No.1380/Ahd/2009 raised by the assessee. As far as disallowance out of interest expenditure is concerned, the ld.CIT(A) has deleted this disallowance. We find that gross investment by the assessee in the Asstt.Year 2006-07 is of Rs. 53,081 lakhs. It has reserves & surplus of Rs. 71,153 lakhs. Thus, it has far more interest free funds than the investment. We find that the ld.CIT(A) has noticed the profit earned during the year at Rs. 97 crores. Compensation received under Montreal Protocol at Rs. 8.68 crores. The ld.CIT(A) thereafter made reference to the dec....
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....wance, assessee carried the matter in appeal before the ld.CIT(A). The ld.CIT(A) confirmed methodology adopted by the AO on the ground that Special Bench of ITAT in the case of Data Capital Management P.Ltd., 117 ITD 169 has held that Rule 8D is applicable with retrospective effect, and therefore, disallowance has rightly been computed by the AO. However with regard to the computation of interest expenses, the ld.CIT(A) did not concur with the AO. The ld.CIT(A) was of the opinion that the assessee was having more interest free funds than the interest expenses. Therefore, no disallowance out of interest expenses ought to be made. Theld.CIT(A) thereafter observed that disallowance of administrative expenses is required to be made at 0.5% of the average investment, which according to the CIT(A) comes to Rs. 1,45,21,368/-. The ld.CIT(A) further found that the assessee itself has disallowed Rs. 25 lakhs under this head. She confirmed the disallowance of Rs. 1,20,78,214/-. 56. Before us, the ld.counsel for the assessee contended that the decision of Daga Capital Management P.Ltd., (supra) has been reversed by the Hon'ble Bombay High Court. It is reported in 228 ITR 81. Rule 8D has bee....
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....ng a disallowance of claim of deduction under section 80IA(4) of the Act. 62. Brief facts of the case are that assessee manufacturers chemicals. It also generates captive power, out of two captive power plants, one at Ranjitnagar and another at Dahej. The assessee claimed deduction under section 80IA(4) on the electricity generated by IT in these captive power plants and used by it for its own consumption. The AO has rejected this claim on the ground that deduction was available only when separate business undertaking was put up for generation/distribution of power. According to him, the assessee had set up the plant mainly for captive use, therefore deduction under section 80IA(4) would not available. The AO thereafter observed that even if the assessee is eligible for deduction, the quantum of deduction was to be worked out with reference to the market rate of electricity generated by the assessee, and not at the rate claimed by it. The assessee had claimed deduction amounting to Rs. 2,91,87,340/- on the basis of purchase price of power from GEB i.e. at the rate of Rs. 4.72 per unit. The AO has held that it was not entitled for deduction. In case it is to be held that deductio....
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....("DGVCL" for short) etc. are supplied the electricity to the assessee's manufacturing unit. The ld.AO did not adjudicate the issue in the assessment year 2012-13 for the enhancement of deduction in the draft assessment order. Before the ld,DRP, the assessee raised specific objection about the non-adjudication of the issue by the AO. Also it raised that enhanced rate should be adopted for determining the value of electricity at which deduction under section 80IA has to be granted. The ld.DRP rejected the contentions of the simply for the reason that the AO cannot entertain any claim for allowing deduction resulting in reduction in the total income returned by the assessee. The ld.DRP placed reliance upon the decision of the Hon'ble Supreme Court in the case of Goetze (India) Ltd. (supra). It further rejected the contentions of the assessee that the identical issue was decided by the ld.CIT(A) in the assessment year 2011-12 and the matter is pending before the Tribunal. Thus, according to the DRP, the issue has not attained finality therefore, the deduction under section 80IA cannot be granted on the enhanced amount claimed by the assessee during the assessment proceedings. ....
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....of CIT, Gujarat Alkalis and Chemicals Ltd. He placed on record copy of the Hon'ble High Court's decision and contended that for the purpose of computation of deduction admissible under section 80IA market price of the electricity supplied by a CPP is to be determined by adopting rate at which manufacturing unit has been purchasing the electricity from the open market. The ld.DR, on the other hand relied upon the order of the DRP, but unable to controvert the contentions raised by the assessee. 30. We have duly considered rival submissions and gone through the record carefully. Before us the dispute has two dimensions. In the first fold of dispute the issue is, whether the claim of the assessee for enhanced deduction can be entertained during the assessment proceedings by way of a letter. The ld.DRP after putting reliance on the judgment of Hon'ble Supreme Court in the case of Geotze India Ltd (supra) did not accept the claim of the assessee in the assessment year 2012-13. It has been brought to our notice that such claim can be made even before the ld.DRP in the form of objection. A reference to the decisions of ITAT, Mumbai and Bangalore Benches have been made; Asian Pain....
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....lectricity duty the Assessing Officer discarded for the purposes of ascertaining market value of the electricity generated by the CPP Unit and supplied to its general unit. 4. CIT (Appeals) confirmed the view of the Assessing Officer on the same line of reasoning. The Tribunal, however, on further appeal by the assessee, reversed the orders passed by the Revenue authorities referring to and relying upon the decisions of other Tribunals. The Tribunal was of the opinion that the market value of the electricity supplied by the CPP Unit to the general unit would be the same being charged by GEB from the consumers. 5. Counsel for the Revenue contended that the component of 8 paise per unit was the electricity duty which GEB was not authorized to retain but had to pass on to the Government. In essence, GEB was only collecting 8 paise per unit as electricity duty for and on behalf of the Government. He submitted that the market value of the electricity should be reckoned on Rs. 5.32 ps. per unit as was done by the Revenue authority. 6. Under sub-Section(8) of Section 80IA of the Act, if it is found that where any goods or services held for the purposes of the el....
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....ricity generated by eligible unit of assessee. This amount included Rs. 4.17 per unit which was the cost of electricity generation and Rs. 0.34 per unit which was duty paid by the assessee to GEB for such power generation. Thus the sum of Rs. 4.51 per unit only represented the cost of electricity generation to the assessee. In Section 80IA(8) of the Act what is required to be ascertained is the market value of the goods transferred by the eligible business, when such transfer is by eligible business to another non eligible business of the same assessee and the consideration recorded in the accounts of the eligible business does not correspond to market value of such goods. Term "Market Value" is further explained in explanation to said sub-section to mean in relation to any goods or services, price that such goods or services will ordinarily fetch in the open market. To our mind sum of Rs. 4.51 per unit of electricity only represented cost of electricity generation to the assessee and not the market value thereof. It is not in dispute that the GEB charged Rs. 5 per unit for supplying electricity to other industries including non eligible unit of the assessee itself. Tribunal theref....
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....ity on facts. Therefore, respectfully following the order of the Tribunal in the Asstt.Years 2012-13 and 2013-14 passed in ITA No.805/Ahd/2017 and 2744/Ahd/2017, we do not find any merit in this ground of appeal. It is rejected. 66. Ground no.7(a) & (b): In this ground of appeal, grievance of the Revenue is that the ld.CIT(A) has erred in deleting the addition of Rs. 3,95,56,650/- which was added by the AO by deleting the claim of capital loss made in the revised return of income. 66. Facts leading to this controversy has been noted down by the CIT(A) in para 11.2. We deem it necessary to take note of these facts from the order of the CIT(A) which reads as under: "(i) The appellant company subscribed fresh cumulative redeemable preference shares of face value of Rs. 100/- each amounting to Rs. 18.83 crores (18,83,000 shares). These shares carried better terms for the assessee in as much as at the time of redemption at the end of the 5th year, i.e., in the FY 2011-2012, the shares would be redeemed at a premium of Rs. 35/- per share. Instead of carrying 5% dividend as earlier, the new preference shares carried 1% dividend and additional premium of Rs. 47- per share fo....
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....on or a colourable transaction. The assessee basically has not suffered any loss, rather long term capital loss arose account of indexation of cost, as the investment was long term investment. Accordingly, the ld.CIT(A) has allowed the capital loss to the assessee, more so, this capital loss has not been claimed for set off in this year, rather it has been allowed to be carried forward. 68. With the assistance of the ld.representatives, we have tone through the record carefully. The ld.AO did not possess any material except a reference to the fact that 49.50% shares in Inox Global Services Ltd. were held by the assessee and group concerns, for treating the transactions as bogus. To our mind this reasoning is not sufficient, just to deny the identity of any corporate entity. On the other hand, the ld.CIT(A) took note of the facts how the assessee-company has subscribed preference shares in the F.Y.2001-02 and 2002-03, and how they have been redeemed by subscribing fresh cumulative redeemable preferential shares. In fact, there is no loss to the assessee-company except loss computed on account of indexation. In order to get the return on old investment, it has redeemed the shares ....
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....of material at Rs. 149.37 cores. The second contract was entered into on 6.1.2007 vide which a payment was accrued at Rs. 3.92 crores for errection and commission charges. In the contact for supply of goods, no work contract or services aspect is involved, and therefore, it does not fall within the ambit of definition provided in section 194C and no TDS requires to be deducted. As far contract for errection and commission is concerned, it already deducted TDS and no disallowance could be made. The ld.AO was not satisfied with the explanation of the assessee, and he did not allow the depreciation. 71. On appeal, the ld.CIT(A) allowed the claim of the assessee by recording the following findings: "12.2 I have considered the submissions of the Id. AR and the facts of the case/ The disallowance of the claim of depreciation in respect of wind mills (wind turbine generators) has been made by the AO on the ground that tax was not deducted at source in respect of payment for the supply of such wind mills by the contractor M/s Vestas Wind Technologies (I) Pvt. Ltd (VWTIPL). The provisions of section 40a(ia) specify that certain amounts shall not be allowed as a deduction in comp....
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....ctible in respect of supply of goods, whether manufactured with inputs from the purchaser or otherwise. Hence on this ground alone the transaction of supply of wind turbine generators would be outside the purview of section 194C. However, it is instructive to refer to Board's Circular issued on this subject. The Circular No. 681 dt. 8.3.1994 relates to TDS u/s 194C. In this circular, the CBDT, after considering the judgement of the Supreme Court in the case of Associated Cement Co. Ltd. v CIT, 201 ITR 435, laid down certain guidelines with regard to the applicability of the provisions of section 194C. Inter-alia, it provided as follows: "(vi) The provisions of this section will not cover contracts for sale of goods. (a) Since contracts for the construction, repair, renovation or alteration of buildings or dams or laying of roads or airfields or railway lines or erection or installation of plant and machinery are in the nature of contracts for work and labour, income-tax will have to be deducted from payments made in respect of such contracts. Similarly, contracts granted for processing of goods supplied by Government or any other specified person, where the ow....
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....n that case also, as in the present case, the contract was bifurcated into two parts, i.e. contract for supply of equipment and contract for erection and commissioning of the said equipment. The applicability of the provisions of section 194C was the issue there, as here. The ITAT in that case held as under (head notes):- "TDS - Under s. 194C - Works contract vis-a-vis contract for sale -If equipment are manufactured as per the design, engineering etc. supplied by the supplier, it -would not result in a works contract especially when all the materials belong to the supplier even though it produced a tailor made product - Erection portion being subsequent to passing of title by execution of supply portion, it cannot be said that the erection portion controls the supply portion even though fulfillment of erection contract is a condition precedent to fulfillment of supply contract - As the title in the equipment manufactured as per the design, engineering, etc supplied by assessee passed on to the assessee before commencement of the erection contract and assessee had entered the same in its stock register before issuing the same for erection, it was a contract of sale not att....
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.... section 194C as well as section 40(a)(ia) as these are applicable in the Asstt.Year 2007-08 and 2008-09 would reveal that any person responsible for paying any sum to any resident for carrying out any work including supply of labour in pursuance of a contract between the contractor and ..... State Government..... any company .... or any authority etc... then TDS has to be made. The expression "work" has not been defined in section, but has been explained in Explanation III appended to this section. According to this Explanation "work" shall include (a) advertising, (b) broadcasting and telecasting including production of programmes for such broadcasting or telecasting; (c) carriage of goods and passengers by any mode of transport other than by railways, (d) catering, and (e) manufacturing or supply of product according to the requirement or specification of a customer by using the material purchased from such customer. But it does not include manufacturing, supplying a product according to the requirement and specification of customer by using material purchased from a person other than such customer. If an assessee failed to deduct TDS on payment pertains to such work, then the e....
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....as well as ground no.5 of Revenue's appeal in the Asstt.Year 2008-09 and ground no.6 of assessee's appeal in the Asstt.Year 2008-09. We take all the grounds of appeals together. 75. Brief facts of the case are that the assessee has entered into a consultancy agreement with Mckinsey & Co. ("MC" for short) and it has capitalized a sum of Rs. 5,10,17,289/- as fees paid to "MC". It has claimed depreciation of Rs. 2,55,08,645/- in respect of this payment in the Asstt.Year 2008-09. Similarly it claimed depreciation in the Asstt.Year 2008-09. The AO has disallowed depreciation claimed on this amount by holding that (a) job assigned to "MC" was not complete in the present financial year, and (b) consultancy charges were paid towards a new business by another company of group and did not relate to the present business of the assessee. Dissatisfied with the finding of the AO, the assessee carried the matter in appeal in both years. The ld.CIT(A) has decided the issue in the Asstt.Year 2007-08 which has been followed in the Asstt.Year 2008-09. Therefore, we deem it appropriate to take note of finding of the CIT(A) in the Asstt.Year 2007-08, which read as under: "13.2 I have consid....
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....ubmitted that the name of "Inox" was just appeared because of address purpose, otherwise every correspondence took place with the assessee. There is no justification for habouring a belief that only 20% consultancy was meant for assessee and it is entitled to crystalise 20% of such expenses. 77. We have duly considered rival contentions and gone through the record. It emerges out from the submission filed by the assessee and considered by the ld.CIT(A) that the assessee was having surplus funds and exploring some suitable business opportunities for future investment and growth. Therefore, it has appointed "MC" as consultant for exploring the business idea in some of sectors viz. wind farm, food service, budget hotel chain, cold chain, step down care, containerized cargo, third party logistics etc. "MC" has submitted a consultancy report to the assessee about the above business items, and ultimately it was decided that "GFL" should embark on the power generation business by setting up and operating wind farms. According to the assessee, as a part of the study, it was also suggested by the "MC" that to strengthen the competitive advantage of setting up and operating wind farms, "G....
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....of Rs. 5,69,034/-. 79. Brief facts of the case are that the assessee has capitalised a sum of Rs. 5,10,17,289/- as paid towards consultancy charges to "MC". The AO was of the opinion that this report is not related or connected to the present business of the assessee, hence, the amount incurred as consultancy charges was not for the purpose of business. He did not permit the assessee to capitalise those expenditure. Consequently, he proportionately disallowed the interest expenditure debited by the assessee in the accounts. In other words, the assessee has interest expenditure of Rs. 495.63 lacs in the profit & loss account. The AO has worked out interest expenditure on the consultancy charges and disallowed that interest expenditure out of the total expenses debited by the assessee in the profit & loss account. The ld.CIT(A) deleted this disallowance. 80. In the ground no.9, we have held that the assessee is entitled to capitalise expenditure as incurred towards consultancy charges. In consequence to that finding, no interest expenditure deserves to be artificially worked out for disallowance, because principal amount has been treated as for the purpose of business and permi....
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....of "transfer" of 82,430 equity shares and 2,44,790 preference shares to be falling in FY 2007-08 on the basis of Share Purchase Agreement entered on 1.2.2008 between appellant and its related concerns with Humsay Information Services Pvt. Ltd. In Lhis regard, appellant has relied upon CBDTs Circular No. 704/1995 dt. 24.4.95, i.e. date of transfer in respect of outside the Stock Exchange transactions is date of contract of sale between parties provided it is followed up with actual delivery of shares and the transfer deeds. As per para 3.2 of the Agreement, transfer of shares in question was to be given effect to on the date of signing of the Agreement i.e. 1.2.2008. Terms & conditions for payment and delivery of shares as per para 2.9 of the Agreement were to make payment four days before the milestone dates in para 3.2, after which delivery of shares was to be done. The transfer of ownership as per share transfer forms took place on 9.4.2008 i.e. in the next financial year and the payment was received partly in March 2008 and partly in April 2008. Thus, the terms & conditions of the Share Purchase Agreement dt. 1.2.2008 were not complied with. In fact, the remaining conditions in ....
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....om others. Thus, assessee was not in position to deliver the shares physically. The ld.CIT(A) has recorded a categorical finding that transaction did not materialize in this year. Transfer of ownership as per share transfer form took place on 9.4.2008 i.e. financial year relevant to the Asstt.Year 2009-10 and not 2008-09. Assessee is not entitled to claim loss on sale of IGSL shares. The loss has rightly been denied and we do not find any merit in this ground of appeal. It is rejected. Ground No.2 and 3: 84. In these grounds of appeal, grievance of the assessee is that on sale of shares, profit/loss deserves to be assessed under the head capital gain. 85. We have already adjudicated this issue while taking up all these grounds along with grounds of appeal raised in the Asstt.Year 2005-06. Ground no.4: 86. In this ground of appeal grievance of the assessee is that the ld.CIT(A) has erred in confirming disallowance under section 14A read with rule 8D of the Income Tax Act. 87. Brief facts of the case are that the assessee has shown dividend income of Rs. 13,47,01,641/- which was claimed as exempt from tax. It emerges that the assessee has shown gross investment of Rs. ....
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....hereafter observed that there is no specific identification of the expenditure. The assessee has incurred expenditure of Rs. 27.64 crores, and it has not allocated any expenditure towards exempt dividend income of Rs. 13.47 crors. He relied upon the order of the ld.CIT(A). 90. We have duly considered rival submissions and gone through the record carefully. There is no dispute that the assessee has shown gross investment of Rs. 55,668 lakhs. It has debited interest expenditure of Rs. 27.64 crores in the accounts. But that expenditure is meant for other manufacturing activity. For the purpose of investment, it has not used the interest bearing funds because surplus interest free funds available with the assessee are far more than the investment. We have considered this aspect while dealing with identical issue in earlier year. We have put reliance upon the decision of Hon'ble Bombay High Court in the case of Reliance Utilities & Power P.Ltd. (supra) wherein it has been held that if an assessee demonstrates more surplus funds available with it than the investment, then an inference can be drawn that such investments have been made out of surplus fund. Therefore, no interest expendi....
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....allowed. 95. We have considered this issue while considering ground of appeal raised by the Revenue i.e. ground no.5 as well as ground no.9 of Revenue's appeal in the Asstt.Year 2006-07. Considering our finding, this ground of appeal is allowed because we have held that the assessee is entitled to capitalize total fees and entitled to claim depreciation on such amount. There cannot be any bifurcation. ITA No.2546/Ahd/2012 (Asstt.Year 2009-10): 96. Revenue has taken three grounds of appeal. We have already adjudicated all these three grounds while taking up identical issues in the Asstt.Year 2007-08 and 2005-06 etc. Accordingly this appeal is dismissed. ITA No.106/Ahd/2016 (Asstt.Year 2010-11): 97. Three grounds are taken in this appeal. We have already considered ground no.1 and 2 wherein Revenue has challenged allowance of contribution made to Refrigerant Gas Manufacturers Association and village development expenditure. We have already considered both the issues while taking identical issue in the Asstt.Year 2005-06, and rejected. Hence, these grounds of appeal are also rejected. 98. In ground no.3: Revenue has pleaded that the ld.CIT(A) has erred in holding tha....
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....ltancy Fees for Equity Research Services 1,12,360 5) Out of other expenses- As estimated by Management 50.00,000 TOTAL 71,75,743 Asstt.Year 2010-11 Sr. No. Particulars Amount (Rs) 1) Securities Transaction tax 14,51,893 2) Demat Charges 1,66,573 3) Out of other expenses - as estimated by Management 75,00,000 Total 91,18,466 Asstt.Year 2011-12: Sr. No. Particulars Amount (Rs) 1) Securities Transaction tax 23,60,273 2) Demat Charges 2,81,917 3) PMS fees 3,09,370 3) Out of other expenses - as estimated by Management 75,00,000 Total 1,04,51,560 102. The ld.AO was not satisfied with the explanation of the assessee. He worked out disallowance of Rs. 17,29,04,416/- Rs. 17,55,02,134/-, and Rs. 12,10,31,520/- in these assessment years respectively. The working made by the AO in each assessment year read as under: "Asstt.Year 2009-10 (i) Amount of expenses directly attributable to income (as submitted by the assessee): Rs. 71,75,743/- (ii) Interest expenses incurred which is not directly attributable to any particular income o....
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....allowance a set off of the amount which the assessee has disallowed itself in all these three years. For example, in the Asstt.Year 2009-10, a disallowance on account of administrative expenses at 0.5% of average investment has been worked out by the AO at Rs. 2,63,05,193/-. In principle, this disallowance is confirmed, but it be reduced by a sum of Rs. 71,75,743/- disallowed by the assessee itself. The same exercise be carried out in rest of two years. This ground of appeal is partly allowed all three years. 105. No other ground in Asstt.Year 2009-10, hence, this appeal is treated as partly allowed. Similarly, no other ground remained in the Asstt.Year 2010-11. This also is treated as partly allowed. 106. Ground No.2 of this appeal is common in ITA No.2365/Ahd/2012, 116 and 117/Ahd/2016 (Asstt.Year 2009-10, 2010-11 and 2011-12) i.e. common issue involved all these three grounds is, whether the assessee is entitled for deduction under section 80IA on the value of the captive power generated by it. If yes, than at what rate such deduction is to be admissible. 107. The AO has adopted the purchase rate of GUVNL at Rs. 3.2 per unit as market value of the power produced by the ....
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....el for the assessee at the very outset contended that as far as issue on merit is concerned, it is covered in favour of the assessee by the order of the ITAT in assessee's own case for the Asstt.Year 2012- 13 and 2013-14. He further submitted that order of the ITAT in the Asstt.Years 2012-13 and 2013-14 has followed the decision of Hon'ble jurisdictional High Court in the case of Alembic Ltd. In that case, the assessee treated such receipts as revenue receipts in the return of income but thereafter took a stand before the Tribunal that this receipt be excluded being capital in nature. The Tribunal has allowed the contentions of the assessee. The ld.counsel for the assessee took us through finding of the Tribunal on page no.169 to 170 of the paper book (order of the ITAT passed in ITA No.1912/Ahd/2012 and others (Page no.152 to 170). A reference to the following was made by the ld.counsel for the assessee: "19.2 The Id. Departmental Representative, on the other hand, contends that the realization from carbon credits has been treated by the assessee itself as revenue income and offered to tax and in fact in actualities they are revenue receipt. However, no adverse judgment o....
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.... Similarly, in the assessment year 2013-14, the assessee has pleaded that the DRP has erred in rejecting claim made by the assessee that revenue earned from sale of carbon credits is to be held as capital receipts. In other words, common issue in both the years is, whether receipts received by the assessee on sale of carbon credits is to be assessed as a capital receipt or to be treated as revenue receipts. 36. Facts in both the years are common. The assessee has filed a note explaining the alleged carbon credits and how it has received the receipts. The note has been reproduced by the DRP in both the assessment years in its order. The note and the discussion made by the DRP on this issue are as under: "Claim of deduction in respect of income from Carbon Credit being Capital receipt - During the year, the Company has received income from Carbon Credit of Rs. 441.69 crores. The said revenue is credited to Profit & Loss account and is included in Revenue from Operations. Please refer to Schedule 23 of the Annual accounts. We are enclosing herewith a detail note on this Carbon Credit. In the said note we have explained as under: GFL's C....
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.... issued by the CDM Executive Board, which operates under the UNFCCC and those are sold to international buyers for cash. We have also explained that the CERs are not received or allocated by Government. It will also be observed that in our case carbon credits are not received for using alternative fuel like non-fossil fuel which may be specific to wind energy business or other fuel switch or energy efficiency projects. The claim is made that the said revenue from Carbon Credit is not taxable as income but a capital receipt not liable to tax. Hence, while computing total income, the said receipt, net of expenses, may please be excluded as capital receipt. This claim is based on the ITAT order in the case of My Home Power Limited, Hyderabad Bench, which is now confirmed by the Hon'ble Andhra Pradesh High Court. We may state that such claim, that Carbon Credit revenue is Capital receipt not liable to tax, and hence should be excluded from total income, was made during the course of assessment proceedings for A.Y. 2010-11 and 2011-12 also. In the Assessment order, the AO has not accepted the said claim. The Company, has filed appeals for both the years before CIT(....
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....r for AY 2011-12; / "9. 1 This issue has .been decided in appellant 's own case for the A Y 2010-1 1 vide order dated 30-10.2015 in Appeal No. CAB- 11321201415. In this order the revenue earned from the sale of carbon credits, net of expenses has been held to be taxable in the hands of the appellant. Moreover, it is seen that in the current year such revenue also includes profit earned on account of trading of such carbon credits which are revenue in nature under all circumstances. Hence, following the decision of the earlier order and considering the fact that the appellant is also engaged in the trading of carbon credits, it is held that such revenue in the current year is also taxable in the hands of the appellant as income from business. Alternatively, this is also taxable as short term capital gain as has been held in the appellate order of AY 2010-11. Hence, this ground of appeal is dismissed" From CIT(A)order for AY2010-11 "11.1 In the present case too, the appellant had profit motive in the establishment of the CDM project. Hence it is held that it is carrying on the business of generation of CERS through this CDM project and accordingly, the ....
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.... CTR(Kar) 147; (2016) 69 taxmann.com 394 (Kar). The Hon'ble Karnataka High Court has also relied upon the decision of Hon'ble Andhra Pradesh High Court in the case of CIT Vs. My Home Power Ltd., (2014) 46 taxmann.com 314 (AP). Apart from the above, he further contended that w.e.f. 1-4-2018, a special provision has been enacted in the shape of section 115BBG which prescribe levy of tax at the rate of 10% on income from transfer of carbon credit. He took us through explanatory statement of Finance Act, 2017. 38. We have duly considered rival contentions and gone through the record carefully. Issue before us is, whether receipts received by the assessee on sale of alleged carbon credit is revenue in nature or capital in nature. An identical question was formulated by the Hon'ble Gujarat High Court in the case of CIT Vs. Alembic Ltd. (supra). The question framed is as under: (4) Whether on facts and in the circumstances of the case and in law, the ITAT erred in treating the income from realisation of carbon credits as capital in nature, despite the fact that the realization from carbon credits has been treated by the assessee itself as revenue income and offered to ta....
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....nergy-efficient machinery, landfill methane capture, etc. The Kyoto Protocol commits certain developed countries to reduce their GHG emissions and for this, they will be given carbon credits. A reduction in emissions entitles the entity to a credit in the form of a Certified Emission Reduction (CER) certificate. The CER is tradable and its holder can transfer it to an entity which needs Carbon Credits to overcome an unfavorable position on carbon credits. Income-tax Department has been treating the income on transfer of carbon credits as business income which is subject to tax at the rate of 30%. However, divergent decisions have been given by the courts on the issue as to whether the income received or receivable on transfer of carbon credit is a revenue receipt or capital receipt. In order to bring clarity on the issue of taxation of income from transfer of carbon credits and to encourage measures to protect the environment, it is proposed to insert a new section 115BBG to provide that where the total income of the assessee includes any income from transfer of carbon credit, such income shall be taxable at the concessional rate often per cent (plus applicable su....
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....assessee's own case for the Asstt.Year 2012-13 and 2013-14, this issue is decided in favour of the assessee. The ld.AO is directed to treat the sale proceeds from carbon credit as capital receipts in all these years. ITA No.135/Ahd/2015: 117. Present appeal is directed at the instance of the assessee against order of the ld.CIT(A) dated 13.11.2014 passed for the Asstt.Year 2008- 09. Solitary grievance of the assessee is that the ld.CIT(A) has erred in confirming penalty of Rs. 1,13,00,000/- which was imposed by the AO under section 271(1)(c) of the Act. 118. Brief facts of the case are that the assessee has filed its return of income on 27.9.2008 declaring total income at Rs. 289,33,41,010/-. The ld.AO has passed assessment order under section 143(3) on 31.12.2010 and determined taxable income at Rs. 369,55,61,740/-. During the course of assessment proceedings the ld.AO found that the assessee has capitalized a sum of Rs. 5,10,17,289/- as pre-operative expenses paid to M/s.Mckinsey & Co. ("MC"). It is pertinent to observe that the assessee had appointed MC as a consultant for exploring supporting business opportunity for possible expansion. The ld.AO held that this report ....
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.... loss on this transaction. Its claim was rejected by the AO for two reasons viz. (a) the assessee has failed to demonstrate that it has physically delivered equity shares to the purchaser and since it was a transaction out of stock exchange, therefore, the transfer could be considered if physical delivery of shares were given. In his second reasoning, he observed that after the main agreement, there was an addendum and by virtue of that transaction has taken place in subsequent assessment year. According to the AO the assessee is not entitled for this capital loss. The ld.CIT(A) concurred with the AO. We have also upheld this finding and disallowed the claim of loss made by the assessee. 122. With the assistance of the ld.representatives, we have gone through the record. Section 271(1)(c) of the Income Tax Act, 1961 has direct bearing on the controversy. Therefore, it is pertinent to take note of the section. "271. Failure to furnish returns, comply with notices, concealment of income, etc. (1) The Assessing Officer or the Commissioner (Appeals) or the CIT in the course of any proceedings under this Act, is satisfied that any person (a) and (b)** ** **....
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....ation I to section 271(1)(c) postulates two situations; (a) first whether in respect of any facts material to the computation of the total income under the provisions of the Act, the assessee fails to offer an explanation or the explanation offered by the assessee is found to be false by the Assessing Officer or Learned CIT(Appeal); and, (b) where in respect of any fact, material to the computation of total income under the provisions of the Act, the assessee is not able to substantiate the explanation and the assessee fails, to prove that such explanation is bona fide and that the assessee had disclosed all the facts relating to the same and material to the computation of the total income. Under first situation, the deeming fiction would come to play if the assessee failed to give any explanation with respect to any fact material to the computation of total income or by action of the Assessing Officer or the Learned CIT(Appeals) by giving a categorical finding to the effect that explanation given by the assessee is false. In the second situation, the deeming fiction would come to play by the failure of the assessee to substantiate his explanation in respect of any fact material to....