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Showing 101 to 120 of 910 Records
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2008 (8) TMI 927 - SUPREME COURT
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... ... ..... ed by the State Government. Lastly, the words "any tax" in Section 184 of the Railways Act is required to be read in the context of Article 285 of the Constitution and is required to be understood as "any tax" on property or income as a direct tax. There is one more reason which we wish to give with regard to the scope of Section 184 of the Railways Act and Section 36 of the Orissa Entry Tax Act, 1999. Deployment/distribution of taxes collected by the State Government amongst various local authorities each year is the subject matter of Section 36. In other words on collection of taxes by the State, their distribution amongst local authorities is to be decided by the State Government from the Revenues collected by it under the Act each year. Therefore, Section 36 has no application in the present case for deciding the controversy in hand. For the aforestated reasons, we find no merit in these Civil Appeals. The same are dismissed with no order as to costs.
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2008 (8) TMI 926 - SUPREME COURT
Continuation of detention order - Held that: - There is no dispute that despite the fact that the order of detention was passed as far back as on 19-3-2002, the same could not be or has not been executed against the appellant till date. The detention order was in respect of the activities indulged in or said to have been indulged in by the appellant as far back as in 2002 - continuing the order of detention today is an exercise in futility and the same should not, therefore, be given effect to any further - appeal allowed.
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2008 (8) TMI 925 - BOMBAY HIGH COURT
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... ... ..... ct only on the ground that the entire duty amount had been reversed by the respondent before issuance of the show cause notice? 3. Mere reversal of credit by the assessee before issuance of show cause notice does not absolve them of liability to pay penalty and interest thereon under Rule 13 read with Rule 15 of Cenvat Credit Rules, 2004? 4. Whether in the facts and circumstances of the case and in law, considering the mandatory language of provisions of Sec. 11AC of the Act, the penalty cannot be imposed if the Cenvat credit availed by the assessee is reversed prior to issuance of the show cause notice? 3. To be heard along with Central Excise Appeal No. 195 of 2006.
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2008 (8) TMI 924 - SUPREME COURT
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... ... ..... puted either before the Tribunal or in the High Court as to whether the computers are plant or not. Since this point was also not raised, we do not permit learned ASG appearing for the Revenue to raise the point as to whether the computers are plant or not. o p /o p The High Court has recorded a finding that data processing amounts to manufacture or production of article or thing. o p /o p Learned ASG for the Revenue also argued that the data processing does not fall within the expression, 'manufacture or production of article or thing'. This point is concluded against the Revenue and in favour of the assessee by an order of this Court in the case of Commissioner of Income-tax v. Peerless Consultancy & Services (P) Ltd. 248 ITR 178. o p /o p In view of the findings recorded above, Questions Nos.3 and 4 are decided against the Revenue and in favour of the assessee. o p /o p The appeal is disposed of accordingly leaving the parties to bear their own costs. o p /o p
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2008 (8) TMI 923 - SUPREME COURT
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... ... ..... the Tribunals or the High Courts." o p /o p We had asked learned counsel appearing for the revenue to produce the original file to show that the revenue has taken a conscious decision not to file the appeal as the revenue involved was meagre. In response to our query, Mr. Tripathi has placed a letter stating that the original file is not traceable for the reasons that the case is quite old, pertaining to the years 1974-77. In the absence of the original file showing that the revenue did not file any appeal by taking a conscious decision against the decision of the Calcutta High Court in the case of Rupenjuli Tea Co. Ltd.(supra), we assume that the revenue had accepted the ratio of the aforesaid case in Rupenjuli Tea Co. Ltd.(supra) and accordingly answer the question regarding the applicability of Section 44C of the Act against the revenue and in favour of the assessee. o p /o p The appeals are accordingly dismissed leaving the parties to bear their own costs. o p /o p
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2008 (8) TMI 922 - DELHI HIGH COURT
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... ... ..... upra) wherein the Court has categorically held payments made for landing and parking charges to be deemed to be ‘rent’ under Section 194-I of the said Act. Our answer to the question formulated in this appeal is that the Tribunal was not justified in law in holding that the payment for landing charges and parking charges made by the assessee to the Airport Authority of India would be covered within the meaning of section 194-C of the said Act. On the contrary, such payments would be deemed to be ‘rent’ under section 194-I of the said Act. 7. The appeal, therefore, succeeds. We make it clear that any consequential benefits that the assessee would be entitled to would be granted by the department in case the assessee is able to demonstrate that the Airport Authority of India has paid the taxes. The department shall also calculate interest under Section 201 (1A) of the said Act in accordance with the relevant provisions and as a consequence of this order
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2008 (8) TMI 921 - ITAT DELHI
Challenged the order passed by CIT u/s 263 - assessment framed by the AO is erroneous in as much as prejudicial to the interest of revenue - no inquiry had been made by the AO before the assessment mid there was cash payment exceeding ₹ 20,000 which is required to be considered for disallowance u/s 40A(3) - HELD THAT:- In the instant case, we found that assessment was framed by the AO after due inquiry and verification of the books of accounts and other details. Justifiable addition has also been made by the AO, merely because the books of accounts which were destroyed could not be produced before the CIT, as unreasonable view for estimating the profit at the rate of 8 per cent cannot be substituted for the decision of the AO which has been arrived at after verification of books of accounts, details of expenses, reason for low GP rate etc.
Therefore, we found that action of CIT is net sustainable on facts and in law. On merits also, no expenditure in excess of ₹ 20,000 have been made in cash, as found by AO on subsequent inquiry which framing assessment u/s 263/143(3). There is also no justification for computing the profit at the rate of 8 per cent when the reasonable addition has already been made by the AO after taking into account various facts and circumstances of the case Including nature of assessee’s business, reason for decline in GP rate, possibility of over statement of expenses or that of unverifiable nature of expenses etc.
Hence, the order passed by CIT u/s 263 is set aside and the appeal of the assessee is allowed.
In the result, the appeal of the assessee stands allowed.
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2008 (8) TMI 920 - UTTARAKHAND HIGH COURT
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... ... ..... nder Section 201 of ITA 1961 for not complying the provisions of Section 195 of Act, the apex court held that for default on the part of the employer’s failure to deduct the tax, penalty was leviable under Section 201(1) of the Act and it allowed the appeal of the Revenue in said case. (8) Having gone through both the above mentioned case laws, we are of the view that now it is settled principle of law that where it is the duty of the non resident foreign company, who engaged the individual assessee, who is non resident foreign company, to deduct the tax at source, the individual assessee cannot be made liable to pay the interest under Section 234B for default on the part of the company who engaged or employed such individual. Question of law raised stands answered accordingly. Therefore, for the reasons as discussed above, impugned order passed by ITAT suffers from no illegality and this appeal has no force. The same is liable to be dismissed. The appeal is dismissed.
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2008 (8) TMI 919 - SC ORDER
Valuation - of expenses from gross commission for Service tax. ... ... ... ... ..... explanation offered for the same. The appeals are dismissed on the ground of delay having not been explained satisfactorily.”
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2008 (8) TMI 918 - RAJASTHAN HIGH COURT
Undisclosed investment u/s 69 - enhanced GP rate - excess stock found during survey - rejection of books of account u/s 145 - deduction u/s 80IA - additions made in the income from the undisclosed sources - considered as income of the business - eligibility for deduction u/s. 80IA?
HELD THAT:- From Persual of provisions of s. 69, it is clear that the basic condition, for attracting the provisions of s. 69 is, that the investments made in the financial year concerned, should not be recorded in the books of account, maintained by the assessee, for any source of income, and secondly, the assessee should have not offered any explanation, about the nature and sources of investments, or the explanation offered should not be satisfactory, in the opinion of the AO.
In the present case, the relevant financial year is 1999-2000, and in the books of accounts of that year, this stock has been duly accounted for, and after so accounting for the same, the figure of sales has been accepted by the Department, and enhanced GP rate has been applied thereto.
In that view of the matter, it cannot be said, that an investment has been made, which was not recorded in the books of account.
Thus, in our view, the provisions of s. 69 cannot be said to be attracted to the price of stock in question. Though, not necessary, but still it may be considered and observed, that during the relevant year, the entire income of the assessee was exempted u/s 80-IA, and thus there was, possibly no reason, for the assessee to conceal the stock-in-trade, as thereby, the assessee was not to gain anything.
The net result is that, we do not find any force in the appeal, and the same is therefore, dismissed.
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2008 (8) TMI 917 - ITAT BANGALORE
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... ... ..... ly follows that 50 expenses so reduced from the export turnover is to be reduced from the total turnover for the purpose of computing deduction u/s 10A, which issue stands covered as relied upon by the learned counsel in the case of M/s I Gate Global Solutions Ltd.," 3. Nothing contrary was brought to our notice. Facts being same, so following the same reasoning, we uphold the finding of the; CIT(A) that for the purpose of computing deduction u/s 10B of the IT Act, adjustment need to be made to export turnover on account of expenditure attributable to the delivery of goods outside India. So, the CIT(A) was justified in reducing outward freight charges from the export turnover. However, with regards to alternative contention, we hold that the expenses reduced from the export turnover is to be reduced from the total turnover for the purpose of computing eligible profit for deduction u/s 10A of the IT Act. 4. As a result, the appeal filed by the assessee is partly allowed.
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2008 (8) TMI 916 - ITAT BANGALORE
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... ... ..... ears 2003-04 and 2004-05 (2008) 6 DTR (B)/(Tribunal)27. "8. On the second issue, he pointed out that the law clearly stated that the computation of MAT being special provision relating to certain companies, the learned AO was within his jurisdiction to hold that when the amount of expenditure relatable to any income to which section 10A applied would have to be increased for deriving the book profit for the purpose of adjusted book profit to be computed under section 115JB. Since the deduction u/s 10A was restricted to 90 percent only for the year (impugned assessment year) and the provision of sec.115JB stood inserted w.e.f. 1st April, 2001, the learned CIT(A) rightly upheld the action of the AO by justifying his action that there was no scope for hypothetical deduction of 100 percent expenditure of income from the book profit. The amount, therefore, was rightly brought to tax by the AO". 3. In view of the above, the appeal filed by the assessee is partly allowed.
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2008 (8) TMI 915 - ITAT BANGALORE
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... ... ..... ly, the appeal could not be filed in time. The learned AR further submitted that the delay in filing of this appeal is attributable to the communication between staff of the assessee company. In the facts and circumstances and in the interests' of justice, the delay in question is condoned and the appeal is being decided on merits. 3. The learned AR was fair enough to submit that he is not pressing ground no.(a) and (b) with regard to telecommunication and technical services fees raised before us. In view of the above, the same is dismissed as not pressed. With regards to alternative contention regarding exclusion of expenses from total turnover in case the same are excluded from export turnover for computation of eligible profit u/s 10A, we uphold that in case expenses are excluded from the export turnover the same should be excluded from total turnover for the purpose of computation of eligible profit u/s 10A of the IT Act. 4. As a result, the appeal is partly allowed.
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2008 (8) TMI 914 - ITAT JAIPUR
Benamidar and commission income in bogus billing - introducer/facilitator for bogus billing and the owners of the primary and secondary concerns were not benamidars - search and seizure operations - statements recorded of the benamidars u/s 131 - trading additions - books of account not produced for verification of the results shown in the final accounts - Unexplained investment and commission earned in share transactions - Addition made by the AO on account of Jewellery - Unexplained cash - Advertisement expenses.
HELD THAT:- We find that the learned CIT(A) has made elaborate findings in his order for asst. yr. 1998-99, after discussing and considering all the facts of the case and statements of alleged benamidar recorded during the course of search and after the search, statements recorded by the customs authorities, returns filed by alleged benamidars, assets owned by the alleged benamidars, operations in bank account/demat account by the alleged benamidar before and after the search and filing of the returns before and after the search by alleged benamidar and various case laws and we fully agree with these and uphold the findings of learned CIT(A) that the contemporary evidence which are in the form of statement recorded by search party u/s 132(4)/131 and statements recorded under the customs authorities clearly speak that the alleged benamidars were acting for themselves. No corroborative evidence was brought on record to prove that the business concerns belonging to these alleged benamidars were funded, managed and controlled by the assessee or his associates and they are the beneficial owner of these concerns.
Thus, we are of the view that there was no sufficient material or evidence before the AO to come to the conclusion that Shri Umesh Saboo, Shri O.P. Ghiya, Shri Mahesh Sharma, Shri Mohan Prakash Sharma, Naman Gems (P) Ltd., Shri Gauri Shanker Pareek, Shri Mahesh Khandelwal, and Shri Raghuvar Dayal Pareek were benamidar of the assessee and his partners, Manmohan Krishna Bagla and Shri Ramesh Chand Maheshwari and the assessee and his partners cannot be held as involved in any manner in the business of these persons.
Therefore, the AO was not justified in making addition on account of commission from issue of bogus purchase bills by holding that the above named persons/concerns were benamidar of assessee and his partners. We thus, while setting aside adverse findings of the lower authorities in this regard, direct the AO to delete the addition of ₹ 51,649 in asst. yr. 1998-99, ₹ 86,832 in asst. yr. 1999-2000, ₹ 1,98,377 in asst. yr. 2000-01, ₹ 2,40,710 in asst. yr. 2001-02, ₹ 2,75,081 in asst. yr. 2002-03, ₹ 5,41,152 in asst. yr. 2003-04, and ₹ 2,15,807 in asst. yr. 2004-05 sustained by learned CIT(A) because there is no material to hold that the assessee and his partners, Shri Manmohan Krishna Bagla and Shri Ramesh Chand Maheshwari might have acted as introducer/facilitator for bogus billing.
In the result ground Nos. 1 to 5 of the appeal filed by the Revenue are dismissed and ground No. 2 of the appeal filed by assessee is allowed.
Trading addition - AO rejected the books of account and applied the provisions of s. 145(3) and estimated the profit - We find substance in the contention of the learned Authorised Representative. We find that the Department has carried out search operations and no material was found to show that the assessee has suppressed the profit or sales. The AO estimated the profit without having any material. The AO has not cited any comparable case. Even if the books of account are rejected, the estimation of profit should be made on some basis. Therefore, in the circumstances and facts of the case, the AO is not justified in making trading addition. The learned CIT(A) under these circumstances in our view has rightly deleted the addition of ₹ 67,353 in asst. yr. 1998-99, ₹ 20,000 in asst. yr. 1999-2000, ₹ 1,57,704 in asst. yr. 2000-01 R ₹ 49,874 in asst. yr. 2001-02 and ₹ 2,82,533 in asst. yr. 2002-03 and we uphold the findings made by learned CIT(A) in this regard.
In the result ground No. 6 of the appeal filed by the Revenue is dismissed.
Unexplained investment and commission earned in share transactions - We agree with and uphold the findings of learned CIT(A) that the share transactions in the shares of Gaytri Shakti Papers & Boards Ltd. is an accommodation entry and the real beneficiary in the share transactions is Agarwal family. We uphold the findings of learned CIT(A) that S/Shri Rakesh R. Purohit, Manmohan Krishna Bagla and Ramesh Maheshwari neither control the acquirer of the shares nor they are their agents because the Revenue has no any positive evidence to show that money received against the sale of share was transferred or given to S/Shri Rakesh R. Purohit, Manmohan Krishna Bagla and Ramesh Maheshwari and there is nothing on record to suggest that money relating to these share transaction have flowed from S/Shri Rakesh R. Purohit, Manmohan Krishna Bagla and Ramesh Maheshwari or the shares of these companies were transferred to the above named persons or any benefit has been accrued to these person.
In the result ground No. 6 of the appeal filed by the Revenue is dismissed.
Addition made by the AO on account of Jewellery - whether the jewellery found at the time of search is explained or not - AO has not led any iota of evidence to prove that Smt. Ram Janki might have given her jewellery to someone else. The AO merely disbelieved the explanation given by the assessee. Hon'ble Justice Hidayatullah of the Supreme Court in the case of Sreelekha Banerjee vs. CIT [1963 (3) TMI 47 - SUPREME COURT], observed that the IT Department cannot by merely rejecting unreasonably a good explanation, convert good "proof into no proof". Further, overall jewellery declared in the WT return should be taken into account while deciding whether the jewellery found at the time of search is explained or not. We are of the view that the jewellery disclosed in past cannot be lost sight in view of non-availability of item-wise tally.
Further the claim of the assessee for 4,000 gms. silver items as ancestral is very reasonable. Therefore, the AO was not justified in making addition on account of the jewellery and silver articles explained by the assessee as belonging to his late mother Smt. Ram Janki and learned CIT(A) has rightly deleted the addition.
Jewellery of 502.160 gms. and 498.400 gms - It is undisputed fact that the jewellery weighing 335.504 gms. (net) was found from the bedroom of Smt. Sweta Purohit and jewellery of 382.00 gms. (net) was found from the locker of Smt. Sweta Purohit and the jewellery of 414.032 (net) gms. was found from the possession of Smt. Mandakani Purohit. Thus, the search party found jewellery weighing 1131.536 gms. from the possession of these two ladies. We also agree with the learned Authorised Representative that jewellery to the extent of 500 gms. should be treated as reasonable holding in the case of each married lady. Therefore, in the circumstances and facts of the case, the AO was not justified in making addition on account of the jewellery explained by the assessee as belonging to his daughters-in-law, Smt. Mandakani Purohit and Smt. Sweta Purohit and learned CIT(A) has rightly deleted the addition.
In the result, ground No. 9 of the appeal filed by the Revenue is dismissed.
Unexplained cash - AO has not rejected the books of account including the cash book hence the balance shown in the cash book have been rightly treated by the learned CIT(A) as correct. Therefore, the AO was not justified in making addition on account of unexplained cash and learned CIT(A) has rightly deleted the addition.
Ground No. 10 of the appeal filed by the Revenue is thus dismissed.
Advertisement expenses - The explanation of the assessee that due to slump in the market, the assessee could not obtain the orders, the business of the assessee was not closed but he could not obtain the profit making orders and the assessee remained busy in attending the office of Dy. Director of IT and other authorities due to search during the year and the business of the assessee remained unattended and the clients shifted to other parties cannot be brushed aside without giving any adverse material against the assessee. For other expenses like car petrol, car insurance, interest on car loan, depreciation on car, we find the disallowance is at higher side. We thus, while setting aside orders of the lower authorities in this regard, direct the AO to restrict the disallowance upto 10 per cent of the total expenses as against the disallowance under these heads made by the AO.
In the result ground No. 3 of the appeal filed by the assessee and ground Nos. 6, 7 and 8 of the appeal filed by the Revenue are dismissed.
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2008 (8) TMI 913 - BOMBAY HIGH COURT
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... ... ..... iolate the principles of natural justice. In view of the admitted position that some additional grounds which were not found in the show cause notice were made the basis of the order of the revisional authority, in our opinion, the tribunal was justified in setting aside the order passed in revision. So far as second question of law is concerned, it reads as under - "Whether the Hon’ble ITAT is right in holding that the AO made sufficient enquiries about the assessee’s claim of expenses made in the re-revised return of income without considering that further examinations to arrive at a definite finding was required after statement in assessee’s letter dated 13-2-2004 that the expenses were for security purposes and that payments have been made out of cash balance available etc.? Whether the AO had made sufficient inquiry or not cannot be the question of law. It is necessarily a question of fact. Appeal, therefore, cannot be entertained. It is rejected.
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2008 (8) TMI 912 - SC ORDER
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... ... ..... e and having regard to the fact that earlier similar statement made by the Union of India in other special leave petition was withdrawn, the appeal is dismissed.
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2008 (8) TMI 911 - DELHI HIGH COURT
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... ... ..... Section 40A(2)(b) and Section 92 of the Act, 1961 and Article 9 of the Double Taxation Avoidance Agreement” (b) WHETHER the ITAT was correct in law in holding that the AO could not have examined reasonableness and genuineness of the alleged expenses/payments made by the Assessee to 100 subsidiaries of the assessee's holding companies in view of the permission given by the Reserve Bank of India” The paper books be filed in accordance with the High Court Rules. Tag alongwith ITA No. 1202/2005.
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2008 (8) TMI 910 - RAJASTHAN HIGH COURT
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... ... ..... egistered society under the provisions of section 12AA of the Income-tax Act, it enjoyed the exemption as provided under section 11 of the Act. 5. On close scrutiny of the findings recorded by the Commissioner of Income-tax and Appellate Tribunal, we are of the view that the donations given in favour of the society could not have been held to be bogus without examining the donors and subjecting them to cross-examination. The veracity of genuineness must be tested at the touch-stone of evidence and not otherwise. We are satisfied that registration of the society has not been withdrawn even on account of finding the donors as ingenuine. If the registration is allowed, the society would be entitled to get the exemption as provided under section 11 of the Act. In the given facts and circumstances of the case, therefore, the finding recorded by the Commissioner of Income-tax (Appeals) and Appellate Tribunal, in our view, cannot be faulted. 6. This appeal is accordingly dismissed.
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2008 (8) TMI 909 - ITAT BANGLORE
Interpretation of statutes - Exemption u/s 10B on interest - receipt of interest on margin monies - export sale proceeds were utilised for making fixed deposits with the banks as margin monies in order to open the LCs - Whether the interest income can be considered as profits and gains derived by the EOU from the export of articles or things within the meaning of sub-section (1) of Section 10B? - expression "profits of the business of the undertaking" - manufacture and export of gold bullion, jewellery and medallions - also deals in gold bullion locally -
HELD THAT:- The expression "profits of the business of the undertaking" is wider in scope than the expression "profits derived from the industrial undertaking". This aspect of the matter has been examined by the Delhi High Court in CIT v. Eltek SGS P.Ltd.[2008 (2) TMI 17 - DELHI HIGH COURT]. In this decision, the Sections involved were 80HH and 80IB. While Section 80HH required that the profits and gains should be derived from the industrial undertaking, Section 80IB required that they should be derived from any business of the industrial undertaking.
No contrary judgement of any other Court on the scope of the expression "profits of the business of the undertaking" as contrasted with the expression "profits derived by/from the industrial undertaking" was brought to our notice.
The facts of the case undisputedly show that it is only for the purpose of making imports that the assessee had to open LCs with the banks and that it was only to comply with the direction of the banks that the assessee was compelled to make fixed deposits with them as margin monies. It is not in dispute that the proceeds of the fixed deposits came out of the export sale proceeds and not out of any surplus monies available with the assessee. Therefore, not only is there an inextricable link between the margin monies and the business of the undertaking, but there is also a link between the interest arising from the margin monies and the assessee's business. Thus, the receipt of interest on margin monies arises out of business transactions and, therefore, has to be considered as profits of the business of the undertaking. If it is found, as we have been able to from the facts of the case, that the interest is incidental to the business carried on by the undertaking, then Section 56(1) comes into play and it is not permissible in law to treat the interest as "income from other sources", the reason being that the interest is assessable as profits of the business of the undertaking. Therefore, in our humble opinion, the departmental authorities were not right in taxing the interest under the residuary head. They ought to have assessed the same as profits of the business of the undertaking.
Therefore, it appears to us that it would not be correct in law to treat the interest income under the residuary head. The mere fact that the fixed deposits were retained well beyond the realization of the related export proceeds cannot justify the assessment of the interest income under the residuary head, the reason being that the margin monies have to continue with the banks until the LCs are honoured. In any case, it cannot be disputed that when the fixed deposits were made with the banks as margin monies they were made as part of the business operations of the undertaking, subject to all the risks of the business, and the character of the deposits cannot change merely because they were retained by the bank beyond the realization of the export proceeds.
Therefore, we are of the humble opinion that the departmental authorities were not right in treating the interest as "income from other sources". In our opinion, the interest falls to be assessed as profits of the business of the undertaking. If that is so, the interest becomes eligible for the deduction u/s.10B. We, accordingly, direct the AO to allow the deduction and modify the assessment. Thus, ground are allowed.
Disallowance of the commission payment to M/s. Virgo Polymers (India) Ltd.- The functions of Virgo Polymers were described for the first time before the Commissioner of Income-tax (Appeals) and we have already reproduced them.
One of the functions was that Virgo Polymers would ensure that there were no bad debts and if there were any, they would make good the same. If such a term is included in the agency agreement, the agent would be a del credre agent which means that the agent will be responsible for any bad debts.We are unable to appreciate why this term was included as one of the functions of Virgo Polymers because in the course of the arguments before us, the ld counsel for the assessee did state that all the sales of bullion were for cash.
It is generally known that in the bullion market transactions are put through only in cash and if really Virgo Polymers had an insight into the functioning of the bullion market, it would not have accepted such a term as one of its functions. Be that as it may, absolutely no evidence has been led to prove that Virgo Polymers did carry out any of the eight functions assigned to them. It may be that the assessee had filed some papers before the Income-tax authorities and it may even be that the commission payment was made by cheque. But the Income-tax authorities are not bound by the mere existence of the documents to hold that the payment was made wholly and exclusively for the purpose of the assessee's business.
Assessee and Virgo Polymers are not related to each other in any manner is not of any consequence. The fact that this was the only year in which any commission was paid is also of no relevance. Merely because of these facts the AO cannot be compelled to allow the commission as deduction in the absence of any evidence to show the rendering of any service by Virgo Polymers.
Therefore, we are unable to hold that the departmental authorities were not justified in disallowing the commission payment to Virgo Polymers. The disallowance is confirmed and ground nos.5 and 6 are dismissed.
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2008 (8) TMI 908 - MADRAS HIGH COURT
Deemed dividend addition u/s 2(22)(e) - Whether the Tribunal was right in holding that out of ₹ 15 lakhs undisclosed income admitted by the assessee, to have received from another person, only ₹ 10 lakhs had to be treated as undisclosed income of the assessee when said transaction was not reflected in the books of account of the assessee ? - HELD THAT:- On persual of Tribunal's order, it is clear that the Tribunal has given a categorical finding for deleting the addition of ₹ 5 lakhs i.e., only ₹ 10 lakhs has been seized from the business premises of the assessee and also mere statement that ₹ 15 lakhs were received from one Senthil, which had been found true by the AO and further, the said sum was not even recorded in the books of Senthil. It is the question of fact and it is not a perverse order and the reasoning given by the Tribunal is based on valid materials and we do not find any illegality in the order of the Tribunal. Therefore, the order passed by the Tribunal is confirmed.
Whether the Tribunal was right in holding that the interest free amounts received and returned by the assessee to the company in which she is a director, cannot be treated as deemed dividend u/s. 2(22)(e) in the hands of the assessee? - Here also the Tribunal has given a categorical finding that the amount was given only in the course of the business and also the said amount was returned subsequently. The sale transaction did not materialise and hence, the amount was returned. It is the question of fact and we find no error or illegality in the order of the Tribunal and the same is confirmed.
It is also further brought to our notice the recent circular issued by the Central Board, in Instruction No. 5 of 2008, dt. 15th May, 2008, prescribes the conditions for filing appeal to the Tribunal, High Court and Supreme Court - The tax effect in each tax case is less than ₹ 4 lakhs and also there is no dispute regarding the same. The said appeals are also filed after 15th May, 2008. Therefore, considering the same, the appeals filed by the Department are not maintainable in view of the circular.
In these circumstances, we are of the view that the above tax case appeals are dismissed on merits as well as jurisdiction.
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