TaxTMI 
TaxTMI 
2024 (6) TMI 330
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..... Thereafter, the search and seizure action was conducted on assessee and its group companies on 14.11.2011. Accordingly, the Assessing Officer issued notice under Section 153A of the Income- Tax Act, 1961 and directed the assessee to file return thereafter framed the assessment. The assessee in response to the notice under Section 153A of the Act filed the return declaring same income as it was declared originally i.e. Rs. 37,46,25,210. During the course of assessment proceedings, the Assessing Officer also made a reference to the Transfer Pricing Officer (TPO) and sought his comments. However, he could not make any addition as the TPO held that the transactions between assessee and the foreign entities were at arm's length. Be that as it may be, the Assessing Officer disallowed an amount of Rs. 2,27,02,922 on the ground that this expenditure claim by the assessee for lacking and unloading charges of the films are bogus. 3. Aggrieved with the order of the Assessing Officer, assessee filed appeal before the learned Commissioner (Appeals) and assailed the order of the Assessing Officer. 4. In respect of the first issue i.e. disallowance of expenses related to payments made....
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....es in form of the PAN card/ Adhar Card, service tax registration, copy of service tax return, copy of bank statement of the appellant company and e- TDS details about such contract payment etc. Subsequently, the Ld. Assessing officer asked to produce these sub contractors. During the assessment proceedings, the appellant produced five out of six contractors and statements of these contractors were recorded b the assessing officer. All of them confirmed that they have provided labour to the appellant company for packing and loading of finished product. During the appellate proceeding, the appellant has produced even sixth contractors Sh. Satravir Singh before the assessing officer whose statement was recorded by the Assessing Officer. In his statement, he confirmed to have supplied labour for packing, loading and unloading. The assessing officer has stated these fact in the assessment order. During the remand, proceedings, when sixth labour contractor Sh. Satyabir Singh was produced before the assessing officer, he also explained that he has left the address where enquiry was done during search and post search proceedings, and shifted to the native place. He also stated tha....
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....rs have stated that the bills were prepared at the premise of the appellant as these contractors were only supplying labour and does not have separate infrastructure. The only issue remains whether being known person as contractor, there is excess payment towards services rendered by the contractors. In this regard, Ld AR vehemently argued that before the assessing officer, the appellant has submitted that number of contract labour provided by these contractors are maintained by the appellant company and average monthly salary of each such employee is ranging from Rs. 6,000 to 7500/- which is minimum for semi-skilled labour. Further, the appellant has provided figures of salary and wages for per kg. production in similar industries. In appellant's case, the salary and wages per kg. production is in the range of 10% to 25% of other industries. There is no adverse findings in the assessment order on this submission. In view of the above facts and circumstances, I do not consider that there is excess payment on account payment for packing, loading and unloading charges made to contractors. Considering the entire facts and circumstances of the case, in my view, no disallow....
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....tion is in the range of 10% to 25% of other industries and there was no adverse findings in this regard in the assessment order. Furthermore, books have not rejected. been 7. Accordingly, in the background of aforesaid discussion, we do not find any infirmity in the well-reasoned order of Id. CIT (A), hence we confirm the same." 9. Respectfully following the order of the Co-ordinate Bench, this ground is decided against the Revenue. 10. Second ground of appeal raised by the Revenue with respect to the deletion of addition of Rs. 48,00,000 alleged to have been made by the assessee in purchase of land at Nasik. The Assessing Officer in this regard was of the view that the assessee has made the investment in the land out of the books of accounts and hence he added the amount of Rs. 48,00,000 under Section 69 of the Act. 11. Before learned Commissioner (Appeals), the assessee pointed out that no incriminating material was found during the course of search which would show that the assessee has made any investment outside the books of accounts. In fact, the document which was relied upon by the Assessing Officer was a mere proposal for the purchase of alleged land and ....
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....and it was only a proposal. In view of the above, I hold that alleged investment is not made, since, transaction has not materialized. Accordingly, I agree with the argument of the appellant and therefore, findings of the A.O. are erroneous. Therefore, addition of Rs. 48,00,000/- made u/s 69 of the Act, as unexplained investment, is deleted." 13. Before us, learned counsel for the assessee reiterated the submissions made before the learned Commissioner (Appeals) and the learned CIT DR has relied upon the order of the Assessing Officer. 14. After considering the entire facts and circumstances of the case, we find no infirmity in the order of learned Commissioner (Appeals) and hence, the Revenue's appeal fails and dismissed on this ground also. 15. Now, we adjudicate the appeal of the assessee in ITA No.3360/Del/2016 for assessment year 2007-08. 16. The facts related to the issue raised by the assessee in its appeal are that the assessee has got sales-tax subsidy of Rs. 32.91 crores under Package Scheme of Incentives (Maharashtra), 1993. For claiming this subsidy, the assessee filed an application of additional ground before the learned Commissioner (Appeals) fo....
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....We have considered the rival submissions of both the sides and perused the material available on record. We observe that similar issue was raised by the assessee in assessment year 2006-07 and the Tribunal decided the issue against the assessee. The Co-ordinate Bench has not commented upon the merits of the issue involving rather held that since the Co-ordinate Bench has already quashed the assessment, the claim of the assessee is not maintainable. 20. Against the order of the Tribunal, assessee preferred appeal before the Hon'ble High Court and Hon'ble High Court has held that whether an assessee is allowed to make additional claim in an unabated assessment is a matter which requires consideration. 21. However, the learned counsel for the assessee pointed out that the year before the Bench is the case of abated assessment years. Since, incriminating material was found in respect of the impugned year which we are dealing with and hence the issue pending before the Hon'ble High Court is of some difference. 22. The learned counsel for the assessee drawn the attention of the Bench towards the judgment of Co-ordinate Bench in ITA No.5248/Del/2015 in the case of Jin....
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....nits who expanded substantially for developing the region of Maharashtra State. It was further submitted by the learned counsel for the assessee that incentive scheme was introduced in 1964 and was amended from time to time after conducting survey of the Maharashtra State from time to time. He pointed out that Government of Maharashtra has divided the entire state into five groups, namely, Group A, Group B, Group C, Group D and Group D+. Thereafter, the learned counsel for the assessee also pointed out that the assessee has obtained a certificate of exemptions from sales tax dated 18.04.1996 from the Maharashtra Government under Notification No. FINC(I) 1993/Exemption/EC-3226 which certificate was valid for 11 years from 16.04.1996 to 15.04.2007. Thereafter the assessee has obtained another eligibility certificate from Government of Maharashtra vide the Notification FINC(I)1993/Exemption/EC-4491 28.12.2001. The same is reproduced as under: dated "Conditions (i) The holder of the Eligibility Certificate shall keep true and proper account of the value of raw materials purchased, finished goods manufactured/sold by the Eligible unit, raw material/finished goods re....
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....2.2001. The Eligibility certificate under Para 3.12(b) of the 1993 Package Scheme of Incentives (hereinafter referred to as 'the 1993 Scheme is hereby issued to JINDAL POLYESTER LIMITED for additional Fixed Capital Investment of Rs 8719.00 lacs as detailed on pre-page made at 28 km Stone, Nashik-Igatpuri Road, NH-3, Village Mundegaon, Taluka: Igatpuri, Dist,: Nashik for manufacture of i) Polyester made at 28km Stone, Nashik-Igatpuri Road, NH-3, Village: Mundegaon, Taluka: Igatpuri, Dist,: Nashik for Chips-33000 TPA (Addl.), ii) Polypropylene Films (BOPP)-23000 ΤΡΑ (Addl.), iii) Methanol Product-10860 TPA (Addl.). Conditions (i) The holder of the Eligibility Certificate shall keep true and proper account of the value of raw materials purchased, finished goods manufactured/sold by the Eligible unit, raw material/finished goods returned with proper classification of both purchases as well as sales of Goods.... (ii) (iii) (iv) .......... (ix) In case of breach of any of the conditions of this eligibility Certificate or in case Eligibility Certificate is found to have been issued on the basis of in....
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....vernment notification" On perusal of the above scheme and certificates, it may be noted that in order to attract entrepreneurs to set manufacturing base in Nasik and other areas, from 1993 onwards, such areas were classified and notified as a backward area and complete exemption from sales tax was given to newly set up units in that area. This led to tremendous industrial development in these areas which further strengthens the view that the Government of Maharashtra introduced the Incentive Scheme in the form of exemption of sales tax to industries for industrial development of the notified developing and underdeveloped parts of the State. Further, as demonstrated above, the objectives of the State Government were, inter alia, to achieve (a) enhanced industrialization, (b) increased production; (b) improvisation of infrastructure facilities: (c) creation of employment, (d) acceleration of pace of industrial development, etc., which are matters of public interest. It is thus emphatically submitted that the purpose granting exemption from sales tax for a fixed period of time was clearly to provide incentive for establishment of new industries in the underdeveloped regions s....
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.... Indo Rama Textiles Ltd. on identical facts has held that the decision of the Mumbai Tribunal, Special Bench in the case of Reliance Industries 88 ITD 273 is applicable. Accordingly, in the background of the aforesaid discussion and precedents, we hold that that the Ld. CIT(A) has passed a reasonable order which does not need any interference on our part. Accordingly, we uphold the same." (emphasis supplied). The aforesaid decision of the Tribunal has been recently confirmed by the Delhi High Court titled as CIT V. Mis. Indo Rama Synthetics (1) Lid: (2024) 337 CTR (Del) 139, by observing as under: "25. At the risk of repetition, it must be stated that the sole purpose of the 1993 Scheme was to set up new units and/or expand existing units in underdeveloped and developing areas, an aspect which also emerges on perusal of classification of areas given in paragraph 1.3 of the 1993 Scheme." 26. Learned Departmental Representative relied upon the orders of the authorities below and contended that assessee is not entitled for raising the claim before the learned Commissioner (Appeals). However, she could not be able to controvert the facts and decision of Co-ordin....
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....is mutandis here also. This issue is decided accordingly. 32. So far as the disallowance mad under Section 14A read with Rule 8D of the Act is concerned, the contention of the assessee is that own funds of the assessee were sufficient for making tax free investments and hence, no disallowance would have been made by the department in view of the recent judgment of the Hon'ble Gujarat High Court in CIT Vs. UTI Bank Ltd. - 32 taxmann.com 370 wherein the Hon'ble Gujarat High Court has held that where the assessee has sufficient own funds then provisions of section 14A of the Act cannot be invoked. 33. Learned counsel appearing for the assessee further informed that SLP against this judgment of Hon'ble Gujarat High Court has also been dismissed by the Hon'ble Apex Court in Civil Appeal No.468/2014. 34. Second argument of the assessee is that Rule 8D and 14A provisions are only invokeable in respect of those investments from which the assessee has earned dividend. For this proposition, learned authorized representative of the assessee relied upon the judgment of ACB India Ltd. vs. ACIT reported in 374 ITR 108 (Del.). 35. Learned CIT DR relied upon the orders ....
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.... with the order of the Assessing Officer, the assessee filed an appeal before the learned Commissioner (Appeals) and argued that disallowance made by the Assessing Officer by invoking section 14A read with Rule 8D is unwarranted for the following reasons: a) There was no proximate nexus between the expenses incurred and interest free income earned. b) Own funds of the assessee were sufficient to make the investment yielding dividend income and hence, no disallowance could be made. c) Learned authorized representative argued that investment in growth mutual funds is outside the purview of section 14A because these mutual funds would not earned any dividend income. 44. After considering the facts of the case, the learned Commissioner (Appeals) partly allowed the appeal of the assessee and directed the Assessing Officer to exclude the investments made in growth investment, mutual funds from the ambit of section 14A of the Act. 45. Aggrieved with the order of learned Commissioner (Appeals), the Revenue as well as the assessee both came up in appeal before us. The appeal of the assessee for the same year is decided hereunder separately. 46. After cons....