TaxTMI 
TaxTMI 
TaxTMI 
2024 (3) TMI 820
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....appeared before the Assessing Officer and furnished the requisite details as called for. The Assessing Officer completed the assessment u/s 143(3) on 15.12.2019 determining the total income of the assessee at Rs. 48,38,41,030/- wherein he made the following additions: A) Disallowance u/s 40(a)(ia) - Rs. 2,01,240 B) Disallowance of personal expenses - Rs. 14,63,993 C) Interest paid on customs duty - Rs. 1,83,00,000 D) Delayed payment of employees' Contribution to PF - Rs. 72,94,624 E) Duty drawback on export - Rs. 2,74,437 3. In appeal, the learned CIT (A) NFAC granted part relief to the assessee. 4. Aggrieved with such order of the learned CIT (A) NFAC giving part relief, the assessee as well as the Revenue are in appeal before the Tribunal by raising the following grounds: A) Grounds raised by the assessee: "1) The order of the learned CIT (A) is against the law, weight of evidence and probabilities of case. 2) The learned CIT erred in confirming the addition of Rs. 14,63,993/- which was incurred towards the medical expenditure of one of the Director inspite of submission that the same is approved by the Board resolution of the company. 3) The learned....
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....reatment of the Chairman of the company in USA and in absence of production of any evidence that the Chairman has admitted such expenditure as perquisites in his hands to tax, the Assessing Officer disallowed the expenditure incurred by the assessee towards the treatment of the Chairman of the company in USA for an amount of Rs. 14,63,990/-. We find in absence of any further details filed before the learned CIT (A) NFAC, the learned CIT (A) NFAC upheld the action of the Assessing Officer. The learned Counsel for the assessee referred to the certified copy of the Bozard Resolution and copy of Form 16 filed in the paper book and requested for admission of the same as additional evidence. He submitted that given an opportunity, the assessee is in a position to produce the copy of the resolution of the Board of Directors approving the treatment of the Chairman of the company in USA and also file the copy of the ITR of the Chairman wherein such amount has been admitted to tax as perquisites. Considering the totality of the facts of the case and in the interest of justice, we deem it proper to restore the issue to the file of the Assessing Officer with a direction to grant more opportuni....
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....re so incurred is penal in nature and not related to business, therefore, he asked the assessee to explain as to why the same should not be disallowed u/s 37(1) of the Act and added back to the total income of the assessee. The assessee in response to the same submitted that the amount of Rs. 1,83,00,000/- paid is on account of customs duty along with interest and is in the nature of business expenditure and not penalty. Accordingly, it was claimed that the assessee is eligible to claim the same as business expenditure u/s 37(1) or 43B of the I.T. Act. 14. However, the Assessing Officer was not satisfied with the arguments advanced by the assessee. According to him, the assessee had defaulted in payment of customs duty which is an offence and only on the direction of the Hon'ble Supreme Court, the assessee has paid customs duty along with interest of Rs. 1,83,00,000/- . Had the assessee paid the customs duty in time, the interest expenditure would not have arrived. Since the interest expenditure of Rs. 1,83,00,000/- is not at all relate to the business, the Assessing Officer disallowed the same and added back to the total income of the assessee. 15. In appeal, the learned CIT....
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....me Court in the case of Mahalakshmi Sugar Mills Co. vs. CIT (Supra) has deleted the addition, the reasons of which have already been reproduced in the preceding paragraph. We do not find any infirmity in the order of the learned CIT (A) NFAC on this issue. We find the Hon'ble Supreme Court in the case of the assessee vide Civil Appeal No.4444-4445 of 2005 dated 31.07.2015 has observed as under: "14) In the present case, advance licence was issued to the assessee in terms of para 7.4 of the EXIM Policy 1997-2000. It was in terms of this licence that the import of the specified material was permitted on the condition that the assessee is obligated to meet the export obligation as contained in the licence issued by the DGFT. No doubt, this obligation in the export licence, read with conditions contained in Notification No. 30/1997, puts the onus upon the assessee to make the exports of the products produced from the material so imported. However, it is the case of the assessee that for certain bona fide reasons (as the bona fides of the assessee have been accepted by the DGFT), as the assessee was not able to export same very goods produced by it from the material imported on wh....
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....vity. The Court considered the scope of 'substantial manufacture' and held that assembly of various components into finished machines (ultrasound scanners in that case) amounted to substantial manufacture and it was not necessary that manufacturing of substantial amount of component is required. Obviously, the issue was altogether different which has no bearing on the controversy involved in the present case. 19) Since the conditions of the exemption notification are not fulfilled and the law requires strict compliance of the exemption notification, the assessee becomes liable to pay the import duty which was payable, but for the benefit of exemption Notification No 30/1997, which was obtained by the assessee. 20) Though we have rendered this decision keeping in view the legal position discussed above, at the same time, we deem it necessary to observe that the Government should bestow its consideration and make appropriate provision dealing with such situations. After all, the Exemption Notification No. 30/1997 has been issued to implement and effect the EXIM Policy provisions. Therefore, the purport of the exemption notification is to advance the objectives of the EXIM....