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2014 (10) TMI 661 - HC - Income TaxUnclaimed credit balances excluded but included in part of book profits – unilateral action by the assessee in writing back a liability - addition u/s 41(1) - Held that:- The tribunal proceeded on the assumption the appellate commissioner has recorded a finding of fact after verification of the materials that these amounts were already included in sales turnover of respective years and suffered tax - The Assessing Authority asserts that no records were produced before it - No records were produced before the Appellate Authority also. Both the Appellate Authorities have not looked into the records - The Assessing Authority did not look into the records because the records were not produced before it - the findings recorded by the Appellate Authorities is based on no evidence and it cannot be sustained - matter remanded back for reconsideration. Payment made to perfect its title and the right to manufacture IMFL – Capital or revenue in nature - Held that:- This unit run by SDPL was running under loss - It was taken on lease by them from the sister concern of the assessee - Then the assessee granted the licence to manufacture the assessee’s products - It is properly attributable to capital and capital expenditure - It is not a case where the advantage consists merely in facilitating the assessee’s trading operations or enabling the management and conduct the assessee’s business to be carried on more efficiently or more profitably - It is not the expenditure which is incurred to improve the business of the concern or spend for its expansion of its business or for substantial replacement of its equipment - This amount is paid to regain the profit making unit which had gone out of the hand of the assessee and the expenditure incurred in regaining this profit company unit is in the nature of a capital expenditure and not the revenue expenditure - the Appellate Authorities were not justified in recording a finding to the contrary solely based on the judgments referred by them when those judgments expressly stated in every case which should matter and only in that context the law has to be applied – Decided in favour of revenue.
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