2000 (8) TMI 236
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.... a few days earlier to date of making deposits with assessee credit entries of substantial amounts appeared and almost all the credited amount was deposited either in Ushma Industries of other concerns in which Karta is interested leaving meagre balance. This is clear from following: In account of Shri J.B. Patel (and Shri M.R. Patel), total amount of Rs. 4.5 lacs was deposited between 28th Nov., 1989 and 9th Dec., 1989. On 15th Dec., 1989 deposits into Ushma Industries (Rs. 1.5 lacs). Ronak Corporation (Rs. 1.75 lacs) and Hema Chemicals (Rs. 1.25 lacs) were made. In the account of Shri G.V. Patel (and Shri M.R. Patel) an amount of Rs. 60,000 was deposited on 25th Nov., 1989 and same amount was deposited in Ushma Industries on 15th Dec., 1989. In the amount of Shri N.B. Patel (and Shri M.R. Patel) total amount of Rs. 2 lacs was deposited on 25th Nov., 1989 and 28th Nov., 1989. On 15th Dec., 1989, almost entire amount was deposited with Ushma Industries (Rs. 1 lac) and Hema Chemical (Rs. 99,000)." The AO made enquiries from the bank which revealed that the aforesaid credits had been made by way of depositing cheques drawn on Union Bank of India of Baroda and that these chequ....
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....alf of the creditors signed by Shri Kaushik C. Patel wherein it has been mentioned that because of a car accident on 18th March, 1993, which resulted in death of three members of the family, the summons issued for appearance of the depositors could not be complied with. 5. The learned counsel strongly urged that the assessee has fully co-operated with the AO in the matter of complying with the request made during the course of assessment proceedings from time to time and the evidence with regard to the sources and nature of the deposits as well as identity of the cash creditors have been duly furnished before the AO. 6. On the other hand, the learned Departmental Representative strongly supported the orders of the tax authorities and argued that the facts regarding the cash credits, coupled with the non-production of the creditors despite specific requests made by the AO fully justify the addition sustained by the learned CIT(A). 7. After careful consideration of the rival submissions and going through the facts and material placed before us we feel that the entire issue concerning the genuineness of the cash credits in question would have to be remitted back to the file of t....
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.... with the bank have been issued out of the current account and the funds were generated out of business of assessee-HUF. On looking into the details the AO noted that the assessee purchased a FD for an amount of Rs. 9 lacs on 12th May, 1987, and amount is reflected in the balance sheet as on 30th June, 1986 and 30th June, 1987. Vide para 4.2 of the assessment order the AO analysed the cash flow position during the accounting year 1st July, 1986 to 30th June, 1987, when the aforesaid FD was purchased and found that the assessee had brought capital aggregating to Rs. 19,22,800. On these facts the AO came to the conclusion that the FD has been made by the assessee out of non business-funds and interest income earned thereon is liable to be assessed as income from other sources. The AO accordingly assessed the income of FD amounting to Rs. 1,28,393 as income from other sources. The assessment of interest income under the head 'other sources' has been upheld by the learned CIT(A). 9. The learned counsel placed reliance on the decision of Gujarat High Court in the case of CIT vs. Gujarat Mineral Dev. Corpn. (1981) 20 CTR (Guj) 73 : (1981) 132 ITR 377 (Guj) and argued that the amounts k....
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....ase before the Hon'ble High Court were clearly distinguishable. In that decision the established facts as noted by their Lordships were that the amounts were kept in short-term FDs without any intention to invest these amounts with the bank. In the instant case we find that the amounts have been kept invested with the bank right since 1987 and with the intention to keep these investments by the assessee. Apart from the facts of the instant case, being distinguishable from those of Gujarat High Court decision, we may note that the proposition laid down by the Hon'ble Supreme Court in Tuticorin Alkali Chemicals and Fertilizers Ltd. that bank interest can be assessed under the head income from other sources holds the field as law of the land. 12. For the reasons as aforesaid, we uphold the conclusion of the learned CIT(A) and dismiss this ground. 13. Ground No. 3 pertains to deductions under s. 32AB, ss. 80HHC and 80-I of the IT Act in respect of interest income. 14. Insofar as ss. 80HHC and 80-I are concerned, the issue is squarely covered in favour of the Department by the following decisions of the Hon'ble Supreme Court: 1. CIT vs. Sterling Foods (1999) 153 CTR (SC) 439 : (....
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....d before us. Sec. 32AB has been inserted by the Finance Act, 1986, w.e.f. April, 1987. The main objective for introducing the incentive scheme as contemplated under s. 32AB was to encourage a more productive use of capital leading to a low cost economy since the benefits under the new investment deposit scheme shall be available only if there are profits in the eligible business or profession whereas the earlier scheme along with benefit of investment allowance is available even if there is no such profit because the deduction in the earlier scheme is linked merely to the cost of plant and machinery. In this connection it would be useful to refer to Circular No. 461, dt. 9th July, 1986, issued by the CBDT, New Delhi, dealing with the salient feature of scheme of investment deposits allowance. Para 17.4 of the said circular elucidates the entire mechanics for working out the deduction under s. 32AB. The first requirement as envisaged under s. 32AB and explained under the aforesaid circular is that the investment deposit or the purchase of a new asset or plant must have come out of the income chargeable to tax under the head profits and gains of business or profession. This clearly m....
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....ere is no express requirement under the Sixth Schedule for excluding such items while working out the profits of business or profession. Even in s. 32AB, after referring to the profits from business worked out in accordance with Part-II and Part-III of Sixth Schedule of the Companies Act there is no statutory requirement set out under s. 32AB for excluding such items of miscellaneous receipts and income as listed out above. Therefore, we feel that the action of the AO in excluding the interest income, which is credited to P&L a/c, for the purposes of s. 32AB is contrary to the provisions of s. 32AB and cannot be sustained. The decision of Kerala High Court in Apolo Tyres relied upon by the learned counsel fully supports the view taken by us above. We further note that Ahmedabad Benches of the Tribunal have taken a similar view consistent with the Kerala High Court decision in Apolo Tyres. 20. Regarding the Gauhati High Court decision relied upon by the learned Departmental Representative we feel that this decision is on a limited issue and does not extend to quantification of profits of business as contemplated under s. 32AB(3). At p. 266 of the reports their Lordships of the Gau....