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2001 (12) TMI 209
Issues Involved:
1. Maintainability of the appeal involving tax effect up to Rs. 25,000 based on CBDT Instruction No. 1903.
2. Binding nature of instructions issued under Section 119(1) of the Income-tax Act on subordinate income-tax authorities.
3. Enforceability of such instructions by the assessee against the revenue.
Detailed Analysis:
Issue 1: Maintainability of the Appeal Involving Tax Effect Up to Rs. 25,000
The learned AR raised a preliminary objection regarding the maintainability of the appeal based on CBDT Instruction No. 1903, which sets a monetary limit for departmental appeals. The AR cited several judicial decisions supporting the contention that appeals involving a tax effect below Rs. 25,000 should not be entertained. The learned DR countered that Instruction No. 1903 is administrative and not enforceable by the assessee. However, the Tribunal, after careful consideration, held that the instruction is binding and the appeal in question, having a tax effect below Rs. 25,000, is not maintainable.
Issue 2: Binding Nature of Instructions Issued Under Section 119(1)
The Tribunal examined whether the instructions issued by the CBDT under Section 119(1) are binding on subordinate income-tax authorities. The Tribunal referred to several judicial decisions, including those of the Bombay High Court and the Supreme Court, which affirmed that instructions issued under Section 119 are binding on subordinate authorities. The Tribunal concluded that the instructions issued under Section 119(1) have the force of law and must be followed by the income-tax authorities.
Issue 3: Enforceability of Instructions by the Assessee Against the Revenue
The Tribunal addressed whether the assessee can enforce the instructions issued under Section 119(1) against the revenue. The learned DR argued that such instructions are internal and do not confer any rights on the assessee. However, the Tribunal, relying on judicial precedents, held that the instructions issued under Section 119(1) are not merely internal guidelines but have the force of law, thereby conferring rights on the assessee. The Tribunal emphasized that the purpose of these instructions is to ensure proper administration and avoid undue hardship to the assessee.
Conclusion:
The Tribunal allowed the preliminary objection raised by the assessee and dismissed the appeal, as the tax effect was below Rs. 25,000, in accordance with CBDT Instruction No. 1903. The Tribunal affirmed that instructions issued under Section 119(1) are binding on subordinate authorities and enforceable by the assessee against the revenue.
Appreciation:
The Tribunal acknowledged the assistance and efforts of the learned Departmental Representative, Mr. P.N. Dixit, in supporting the case of the Department.
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2001 (12) TMI 208
Issues:
Maintainability of appeal based on payment of admitted tax before filing appeal before the ITAT.
Analysis:
The judgment deals with the issue of the maintainability of an appeal before the Income Tax Appellate Tribunal (ITAT) based on the payment of admitted tax before filing the appeal. The Senior Departmental Representative raised a preliminary objection regarding the maintainability of the appeal, citing section 249(4)(a) of the Act, which requires the assessee to pay the admitted tax before filing the appeal. The authorized representative of the assessee argued that this provision should not apply to appeals filed under section 253(1) of the Act, falling under Chapter XX-B. The contention was supported by the fact that the assessee was willing to make the balance payment if directed by the Tribunal, as certain funds were seized by the revenue. The issue before the Tribunal was whether the provisions of section 249(4)(a) under Chapter XX-A also apply to appeals filed before the ITAT.
The Tribunal considered the submissions of both parties and reviewed relevant case law, including a decision by the Chennai Bench of the Tribunal. The Chennai Bench's decision emphasized the legislative intent behind requiring payment of admitted tax before filing an appeal. However, the Tribunal found that the word "Chapter" in section 249(4) did not necessarily encompass both Chapter XX-A and XX-B. The Tribunal noted that the Act's provisions did not explicitly mandate payment of admitted tax before filing an appeal to the ITAT. The structure of Chapter XX, with distinct headings for appeals to different authorities, indicated that the requirement to pay admitted tax might be specific to appeals before the Deputy Commissioner (Appeals) and Commissioner (Appeals), rather than the ITAT.
Additionally, the Tribunal observed that Form No. 36 for filing appeals to the ITAT did not include a requirement to provide information on payment of admitted tax, unlike Form No. 35 for appeals to the Commissioner (Appeals). This further supported the conclusion that the Act did not impose a mandatory condition of paying admitted tax before filing an appeal before the ITAT. Ultimately, the Tribunal ruled against the revenue's preliminary objection, finding no substance in the argument raised by the Senior Departmental Representative. The Tribunal directed the appeal to be fixed for hearing on merits, indicating that the appeal was maintainable despite the non-payment of the full admitted tax before filing.
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2001 (12) TMI 207
Issues:
1. Disallowance of remuneration paid to partners as per partnership deed.
2. Adjustment under section 143(1)(a) for disallowance of remuneration.
3. Retroactive effect of codicil on remuneration.
4. Application of Board Circular No. 739 dated 25-3-1996.
5. Certification requirement for partnership deed and codicil.
Detailed Analysis:
1. The issue of disallowance of remuneration paid to partners as per the partnership deed arose in this case. The Revenue contended that the original partnership deed did not authorize the payment of remuneration to partners, leading to the disallowance. The Deputy CIT(A) directed the Assessing Officer to obtain all partners' signatures on the partnership deed to allow remuneration within legal limits.
2. Another issue was the adjustment made under section 143(1)(a) for disallowance of remuneration paid to partners. The Revenue argued that the partnership deed did not include a clause for remuneration, justifying the addition back of the claimed amount. The Deputy CIT(A) set aside the intimation under section 143(1)(a) based on procedural lapses and principles of natural justice.
3. The retroactive effect of the codicil on remuneration was debated. The Revenue contended that the codicil executed on 18-2-1993 could not have retrospective effect to authorize remuneration for periods before that date. The Deputy CIT(A) directed the Assessing Officer to consider the codicil for remuneration, which the Revenue challenged.
4. The application of Board Circular No. 739 dated 25-3-1996 was a significant aspect. The circular allowed deductions for remuneration to working partners based on specific clauses in partnership deeds. However, the circular did not apply when the partnership deed was silent on remuneration, as in this case, impacting the eligibility for deductions.
5. The certification requirement for the partnership deed and codicil was crucial. The Assessing Officer rejected the application under section 154 due to the lack of certified copies of the documents. The absence of certification raised legal compliance issues, affecting the validity of the claimed deductions and procedural rectifications.
In conclusion, the judgment addressed multiple issues related to the disallowance of remuneration, procedural compliance, retroactive effects of documents, and the application of relevant circulars. The decision favored the Revenue's position, emphasizing adherence to legal provisions, certification requirements, and the absence of authorization for remuneration in the original partnership deed.
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2001 (12) TMI 206
Issues Involved:
1. Whether the sum of Rs. 61,945 received by the assessee during the financial year 1992-93 accrued during the year.
2. The procedural adherence for the distribution of consultancy fees.
Issue-wise Detailed Analysis:
Issue 1: Accrual of Income
The primary issue in this case is whether the sum of Rs. 61,945 received by the assessee during the financial year 1992-93 accrued during the year. The assessee, a distinguished Scientist, had a consultancy agreement with M/s. Sun Pharmaceuticals Ltd., and the payment was routed through CCMB. The assessee admitted only the first instalment of Rs. 47,936 in his return of income and did not admit the second instalment of Rs. 61,945, arguing that CCMB did not follow the prescribed procedure before making the payment, and hence, the amount did not accrue to him.
The Assessing Officer rejected this contention, stating, "The procedural irregularity, if at all any, in the determination of the consultancy fees cannot affect the receipt of income. The assessee's right to receive the income accrued during the year, and he was in fact paid the amount during the year itself."
The Commissioner of Income-tax (Appeals) upheld the claim of the assessee, stating, "In order that income may be said to have accrued at a particular point of time, it must have ripened into a debt at that moment. The appellant's right to receive consultancy fees will arise only at the point of time when the pattern of distribution as well as the quantum of distribution have become final after proper publicity on the Notice Board of the CCMB and after taking into consideration objections, if any."
Issue 2: Procedural Adherence for Distribution of Consultancy Fees
The procedural adherence for the distribution of consultancy fees was a crucial aspect. The prescribed procedure required the Team Leader to recommend the distribution of fees, which had to be displayed on the notice board for two weeks, allowing participants to file objections. This procedure was not followed for the amount of Rs. 61,945.
The Commissioner of Income-tax (Appeals) noted, "As long as the aforesaid prescribed condition is not observed and complied with, the appellant is not entitled to the receipt of Consultancy Charges. Therefore, the appellant's right to receive consultancy fees will arise only at the point of time when the pattern of distribution as well as the quantum of distribution have become final after proper publicity on the Notice Board of the CCMB and after taking into consideration objections, if any."
Supporting this, a letter dated 13th October 1997 from the Senior Controller of Administration (CCMB) to the Commissioner of Income-tax (Appeals) stated, "CSIR Headquarters has directed the laboratory to follow the procedure once again and distribute the honorarium to Dr. Bhargava now. Action has now been taken accordingly."
The learned counsel for the assessee provided further evidence, including an Office Memorandum dated 2-8-1997, which confirmed that the prescribed procedure was followed in 1997, leading to the payment of Rs. 59,556 after deducting tax at source.
Conclusion:
The Tribunal concluded that the right to receive Rs. 61,945 did not accrue to the assessee within the year of account relevant for the assessment year 1993-94. The payment received in 1993 was considered an erroneous payment or at most an advance. The prescribed procedure was finally followed in 1997, regularizing the payment. Hence, the Commissioner of Income-tax (Appeals) was correct in upholding the assessee's claim, and the appeal of the Revenue was dismissed.
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2001 (12) TMI 205
Issues Involved:
1. Addition made in respect of purchase of raw materials.
2. Deletion of addition in respect of contribution towards share capital.
3. Direction of CIT(A) regarding W.D.V. computation.
4. Direction of CIT(A) for computation of book profit u/s 115J.
Summary:
1. Addition Made in Respect of Purchase of Raw Materials:
The Revenue appealed against the deletion of an addition of Rs. 1,77,36,885 made by the AO disallowing purchases from 17 parties. The AO's decision was based on the previous year's assessment where similar purchases were disallowed. The assessee argued that the purchases were genuine, supported by detailed records and payments made via cheques or bank drafts. The Tribunal noted that the assessee maintained comprehensive records as per Central Excise Rules, which were periodically verified by excise authorities. The Tribunal found the AO's rejection of purchases unreasonable, especially since the sales were accepted. The Tribunal upheld the CIT(A)'s decision, confirming the genuineness of the transactions and rejecting the AO's addition.
2. Deletion of Addition in Respect of Contribution Towards Share Capital:
The Revenue contested the deletion of an addition of Rs. 1 lakh and Rs. 5 lakhs made u/s 68 for contributions towards share capital. The assessee provided evidence of the transactions, including confirmations from the contributing companies and their audited balance sheets. The Tribunal referenced the Supreme Court's decision in CIT vs. Steller Investment Ltd., which held that share capital contributions cannot be treated as undisclosed income. The Tribunal upheld the CIT(A)'s decision, confirming that the contributions were genuine and could not be added as income.
3. Direction of CIT(A) Regarding W.D.V. Computation:
The Revenue challenged the CIT(A)'s direction to compute W.D.V. based on the appeal effect order for the previous year. The Tribunal found no error in the CIT(A)'s direction and upheld the order.
4. Direction of CIT(A) for Computation of Book Profit u/s 115J:
The Revenue objected to the CIT(A)'s direction for proper adjustments as per s. 115J. The Tribunal found the CIT(A)'s directions appropriate and upheld the order, noting no valid grievance from the Revenue.
Conclusion:
The Tribunal dismissed the Revenue's appeal and allowed the assessee's cross-objection, confirming the CIT(A)'s decisions on all points.
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2001 (12) TMI 204
Issues Involved:
1. Disallowance on account of travelling expenses.
2. Disallowance of depreciation due to exchange rate fluctuation.
3. Deduction for expenditure pertaining to axle project.
4. Deduction of alleged discount allowed.
5. Deduction of expenses incurred on issue of partly convertible debentures.
6. Disallowance u/s 43B.
7. Disallowance u/s 35(1)(iv).
8. Computation of deduction u/s 80-I.
Summary:
1. Disallowance on account of travelling expenses:
The CIT(A) restricted the disallowance to Rs. 1,06,864 against Rs. 1,85,282 disallowed by the AO. Both parties agreed that this issue is covered in favor of the assessee based on the Tribunal's decision for the assessment year 1991-92. Therefore, it was decided in favor of the assessee.
2. Disallowance of depreciation due to exchange rate fluctuation:
The CIT(A) deleted the disallowance of Rs. 32,43,114 on addition to plant and machinery due to exchange rate fluctuation. Both parties agreed that this issue is covered in favor of the assessee based on the Tribunal's decision for the assessment year 1991-92. Therefore, it was decided in favor of the assessee.
3. Deduction for expenditure pertaining to axle project:
The CIT(A) allowed the deduction of Rs. 1,16,16,792. Both parties agreed that this issue is covered in favor of the assessee based on the Tribunal's decision for the assessment year 1991-92. Therefore, it was decided in favor of the assessee.
4. Deduction of alleged discount allowed:
The CIT(A) allowed the deduction of Rs. 45 lacs on account of discount. The Tribunal found that the issue was not decided by the CIT(A) in the right perspective and set aside the order of the CIT(A). The matter was restored to the file of AO for fresh adjudication based on material/evidence furnished by the assessee.
5. Deduction of expenses incurred on issue of partly convertible debentures:
The CIT(A) allowed the deduction of Rs. 33,89,393. The Tribunal held that the expenditure on public issue of debentures is allowable as revenue expenditure. However, since the issue was partly convertible debentures, the Tribunal directed the AO to allow 37.5% of the total expenditure as revenue expenditure.
6. Disallowance u/s 43B:
The CIT(A) rejected the claim of Rs. 95,66,232 under s. 43B. The Tribunal accepted the assessee's contention and allowed the deduction under s. 43B. However, the AO was given liberty to make an addition in the subsequent year in accordance with law.
7. Disallowance u/s 35(1)(iv):
The CIT(A) upheld the AO's disallowance of Rs. 39,63,018. The Tribunal set aside the order of the CIT(A) and restored the matter to the file of AO for fresh adjudication, directing the AO to refer the matter to the prescribed authority if there was any doubt regarding the use of machinery/equipment for R&D activity.
8. Computation of deduction u/s 80-I:
The CIT(A) allowed the deduction on net income after adjusting the loss from the axle unit. The Tribunal noted conflicting views on the interpretation of s. 80AB and preferred the view in favor of the assessee, as expressed by the Andhra Pradesh High Court. The matter was restored to the file of AO to verify whether the steering unit and axle unit were functioning independently. The AO was directed to allow the deduction without setting off the losses of the other unit if they were found to be functioning independently, considering the provisions of s. 80A(2).
Conclusion:
Both the appeals were partly allowed.
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2001 (12) TMI 203
Issues:
- Chargeability of income under the head "Capital Gains"
- Interpretation of the term "transfer" under section 2(47) and section 47
- Applicability of section 47(vii) in the case of conversion of shares
Analysis:
1. Chargeability of income under the head "Capital Gains"
The appeal involved a dispute regarding the chargeability of income under the head "Capital Gains" for the assessment year 1992-93. The Assessing Officer had computed the capital gain based on the transfer of shares from one company to another by the assessee. The assessee argued that no transfer took place as the conversion of shares was part of an arrangement and not an amalgamation. The Assessing Officer applied section 47(v)(ii) to compute the capital gain. The CIT(A) upheld the Assessing Officer's decision, citing a previous judgment. The Tribunal considered the arguments put forth by both parties and analyzed the provisions of the Income Tax Act related to capital gains taxation.
2. Interpretation of the term "transfer" under section 2(47) and section 47
The Tribunal delved into the definition of "transfer" under section 2(47) of the Income Tax Act, which includes various transactions like sale, exchange, or relinquishment of assets. The Tribunal examined the case law, including the decision of the Supreme Court in Vania Silk Mills (P.) Ltd., to determine the scope of the term "transfer." It was highlighted that recent judgments, such as in the case of Mrs. Grace Collis, expanded the interpretation of "extinguishment of any rights" beyond just transfers. The Tribunal analyzed the evolution of legal interpretations and emphasized the broader understanding of the term "transfer" in light of recent judicial pronouncements.
3. Applicability of section 47(vii) in the case of conversion of shares
The Tribunal addressed the contention raised by the assessee regarding the application of section 47(vii) to the conversion of shares from one company to another. The Tribunal noted that section 47(vii) specifically pertains to transfers in a scheme of amalgamation, where companies merge to form a single entity. Since the case at hand involved a different arrangement where both companies maintained separate legal identities, the Tribunal concluded that section 47(vii) did not apply. The Tribunal emphasized that without a provision similar to section 47(vii) for arrangements other than amalgamations, the assessee could not avoid tax liability for the transaction. The Tribunal upheld the decision of the CIT(A) based on the legal and factual analysis presented.
In conclusion, the Tribunal dismissed the appeal, affirming the tax liability of the assessee for the transaction involving the conversion of shares between two companies. The detailed analysis provided clarity on the interpretation of relevant legal provisions and judicial precedents in determining the tax implications of the transaction under consideration.
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2001 (12) TMI 202
Issues Involved:
1. Jurisdiction of the Assessing Officer.
2. Non-deduction of tax at source on emoluments paid in Japan.
3. Validity of penalty orders u/s 271C.
4. Existence of reasonable cause for non-deduction of tax.
Summary:
1. Jurisdiction of the Assessing Officer:
The appellant-company contended that the jurisdiction for TDS matters lay with the Asstt. Commissioner of Income-tax, TDS Circle 31(1), Mumbai, where they had been filing returns and paying taxes. The Tribunal found that the appellant had consistently filed returns and paid taxes in Mumbai, and the jurisdiction was transferred to New Delhi only on 11-2-1999 by the CBDT. The Tribunal held that the penalty orders passed by the Joint Commissioner of Income-tax, New Delhi, were without jurisdiction and thus null and void.
2. Non-deduction of tax at source on emoluments paid in Japan:
The appellant-company had not deducted TDS on emoluments paid to expatriate Japanese employees in Japan, believing that these payments were not taxable in India. The company voluntarily paid the TDS and interest in August 1996 after discussions with the Ministry of Finance and the CBDT.
3. Validity of penalty orders u/s 271C:
The Tribunal noted that the penalty orders were issued without establishing a clear liability to deduct tax. The Tribunal also found discrepancies in the figures mentioned in the penalty notices and the actual tax payments made by the appellant. The Tribunal held that the penalty orders were not valid as they were based on incorrect facts and without proper jurisdiction.
4. Existence of reasonable cause for non-deduction of tax:
The Tribunal found that the appellant had a bona fide belief that TDS was not required on emoluments paid in Japan, based on legal advice and consultations with other Japanese companies. The Tribunal cited the case of Mitsui & Co., where a similar bona fide belief was accepted as a reasonable cause. The Tribunal concluded that the appellant had a reasonable cause for the delay in TDS deduction and payment, and thus, the penalties u/s 271C should be cancelled.
Conclusion:
The Tribunal quashed the penalty orders passed by the Joint Commissioner of Income-tax, New Delhi, due to lack of jurisdiction and accepted the appellant's bona fide belief as a reasonable cause for non-deduction of TDS. All appeals of the appellant were allowed.
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2001 (12) TMI 201
Issues Involved:1. Confirmation of the action of the Assessing Officer under section 201(1) of the Income-tax Act, 1961, demanding tax which ought to have been deducted at source under section 195. 2. Confirmation of the levy of interest under section 201(1A) of the Act. Detailed Analysis:Issue 1: Confirmation of Action under Section 201(1)The primary issue is whether the assessee was liable to deduct tax at source under section 195 for the royalty payment to its non-resident parent company, LME, and consequently, whether the assessee could be deemed as an assessee in default under section 201(1). The assessee contended that no income accrued to LME because the agreement for royalty payment was void under the Industrial Policy of the Government of India, which prohibited such payments by 100% subsidiary companies to their non-resident parent companies. The assessee argued that the agreement was void under the Contract Act, 1872, as it was opposed to public policy and, therefore, no enforceable right or liability arose from it. The Assessing Officer rejected this contention, stating that the payment of royalty was clearly income chargeable to tax under the Act and that there was no restriction in the approval granted by the Foreign Investment Promotion Board (FIPB). The CIT(A) upheld this view, stating that the income from royalty accrued to the foreign company by virtue of the Corporate Visual Identity Agreement, and the liability to deduct tax at source arose at the time of crediting the income. The Tribunal, after considering the submissions and the material on record, held that the agreement between the assessee and LME was void ab initio as it was opposed to the Industrial Policy declared by the Government of India, which prohibited the payment of royalty by 100% subsidiaries to their non-resident parent companies. The Tribunal noted that the policy had the backing of Article 73 of the Constitution of India and was enforceable at law. Consequently, no enforceable debt was created in favor of LME, and no income accrued under the Act. Therefore, the assessee was under no obligation to deduct tax at source under section 195, and could not be deemed as an assessee in default under section 201(1). Issue 2: Confirmation of Levy of Interest under Section 201(1A)As a result of the finding that the assessee was not liable to deduct tax at source under section 195, the Tribunal held that no interest under section 201(1A) could be charged. The CIT(A)'s order confirming the levy of interest was set aside. Conclusion:Both the appeals were allowed, and the orders of the CIT(A) were set aside. The demand of tax under section 201(1) and the levy of interest under section 201(1A) were deleted. Judgment:In the result, both the appeals are allowed.
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2001 (12) TMI 200
Issues Involved:
1. Admission of Additional Grounds of Appeal
2. Relevance of Pure Questions of Law
3. Jurisdiction of the Tribunal
4. Compliance with Section 132
5. Procedural and Substantive Justice
Detailed Analysis:
1. Admission of Additional Grounds of Appeal:
The main issue was whether the assessee could raise additional grounds of appeal at this stage. The Tribunal considered the written submissions from both the assessee and the Departmental Representative. The assessee argued that additional grounds, being pure questions of law, should be admitted as they do not involve fresh facts and are merely an elaboration of ground No. 1 in the appeal. The Departmental Representative opposed this, stating that these grounds would require fresh investigation of facts not available on record.
Upon thorough consideration, the Tribunal decided to admit the additional grounds. It was noted that the additional grounds were indeed an elaboration of ground No. 1, which challenged the legality of the assessment under section 158BC(c) for being in violation of legal provisions and principles of natural justice.
2. Relevance of Pure Questions of Law:
The Tribunal acknowledged that an assessee is entitled to raise a pure question of law for the first time before the Tribunal, even if it was not raised before the ITO/AAC. This was supported by precedents such as Krishan Gopal Bhadra vs. ITO and Addl. CIT vs. East Coast Flour Mills (P) Ltd. The Tribunal emphasized that it has a statutory obligation to entertain and decide on such legal questions.
3. Jurisdiction of the Tribunal:
The Tribunal discussed its jurisdiction extensively, citing various judicial pronouncements. It reiterated that the Tribunal has wide powers to entertain grounds of appeal, including new or additional grounds, as long as the affected party is given sufficient opportunity to be heard. This is derived from section 254 and Rule 11 of the Income-tax (Appellate Tribunal) Rules. The Tribunal rejected the narrow view that it could only consider issues arising out of the appeal before the CIT(A).
4. Compliance with Section 132:
The Tribunal examined whether the additional grounds related to the compliance of various provisions under section 132 were covered in ground No. 1. It concluded that the assessment under section 158BC(c) is intrinsically linked to the validity of the search conducted under section 132. Therefore, any non-compliance with section 132 could render the assessment invalid. The Tribunal rejected the Departmental Representative's plea that facts relating to section 132 compliance were not on record and needed fresh investigation.
5. Procedural and Substantive Justice:
The Tribunal emphasized the importance of substantive justice over technical considerations. It cited several judicial decisions, including National Thermal Power Co. Ltd. vs. CIT and Collector, Land Acquisition vs. Mst. Katiji & Ors., to support the view that the Tribunal should ensure correct assessment of tax liability, even if it involves admitting new grounds of appeal. The Tribunal also highlighted that the assessee had provided a sufficient reason for not raising the additional grounds earlier, which was the emergence of a relevant decision by a Third Member.
Conclusion:
The Tribunal allowed the assessee to raise the additional grounds of appeal, emphasizing the need for a justice-oriented approach and the broad jurisdiction of the Tribunal to consider all relevant legal questions and facts on record.
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2001 (12) TMI 199
Issues Involved:
1. Valuation of closing stock including MODVAT.
2. Deduction of royalty payments under s. 35AB.
3. Disallowance of guest house maintenance expenditure under s. 37(4).
Summary:
Issue 1: Valuation of Closing Stock Including MODVAT
The Revenue contended that the closing stock should include the amount of MODVAT, contrary to the assessee's valuation excluding MODVAT. The learned CIT(A) deleted the additions made by the AO on account of MODVAT. The Tribunal noted that a similar issue had been decided in favor of the assessee in the case of Dy. CIT vs. Swaraj Engines, ITA No. 2158/Chd/1992. The Departmental Representative conceded that the issue was covered in favor of the assessee by the said decision. Consequently, the Tribunal rejected ground No. 1 in both appeals, deciding in favor of the assessee.
Issue 2: Deduction of Royalty Payments under s. 35AB
The AO treated the royalty payments to M/s Kirloskar Oil Engine Ltd. as lump sum payments under s. 35AB, allowing only 1/6th of the amount as a deduction. The CIT(A) allowed the deduction of the royalty payments as revenue expenditure, except for a lump sum payment of Rs. 2 lakhs for obtaining technical know-how which was treated under s. 35AB. The Tribunal upheld the CIT(A)'s order, noting that the royalty was paid based on sales and was directly related to production, thus qualifying as revenue expenditure. The Tribunal also considered past assessments where similar deductions were allowed, applying the principle of res judicata. Consequently, ground No. 2 in both appeals was rejected.
Issue 3: Disallowance of Guest House Maintenance Expenditure under s. 37(4)
The AO had disallowed guest house maintenance expenditure claimed by the assessee. The CIT(A) deleted this disallowance. The Tribunal referenced prior decisions where similar issues were decided against the Revenue and in favor of the assessee. The Departmental Representative conceded on this point. Therefore, the Tribunal upheld the CIT(A)'s order, rejecting ground No. 3 of the Revenue's appeal.
Conclusion:
Both appeals filed by the Revenue were dismissed, with the Tribunal upholding the CIT(A)'s orders on all contested grounds.
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2001 (12) TMI 198
Issues:
Appeals against penalties imposed under section 271(1)(a) for late filing of income tax returns for assessment years 1984-85 and 1985-86.
Analysis:
1. The assessees, Canadian citizens, were co-sharers in agricultural lands acquired by the Government, leading to compensations and interest. Notices under section 148 were issued for the assessment years 1982-83 to 1988-89. Returns were filed late on 19th Oct., 1992, due to various reasons, including the sudden demise of their father, who handled tax matters. The AO imposed penalties under section 271(1)(a) for the delay beyond Dec., 1990. The Dy. CIT(A) partially reduced the penalties for a period of four months based on similar cases.
2. The assessees contested the penalties, arguing that the entire delay should have been accepted due to reasonable causes preventing timely filing. They cited a similar case where penalties were deleted by CIT(A). The Revenue supported the lower authorities' decisions.
3. The Tribunal examined the facts, acknowledging the late filing but considering the circumstances. The assessees' father's death, engagement of professionals, ongoing litigation, and delay in accessing funds were factors contributing to the delay. The Tribunal noted that the CIT(A) in a similar case deleted penalties for the entire period, considering valid reasons for the delay.
4. Considering the circumstances and the reasons provided by the assessees, the Tribunal concluded that they were prevented by a reasonable cause in filing the returns late. It found no conscious disregard by the assessees for the remaining period of delay. Therefore, the penalties imposed by the AO and sustained by the Dy. CIT(A) were unjustified. The Tribunal set aside the penalties for the assessment years in question, allowing the appeals filed by the assessees.
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2001 (12) TMI 197
Issues Involved:
1. Validity of the CIT's exercise of jurisdiction under section 263 of the Income-tax Act.
2. Justification for dropping penalty proceedings under sections 271(1)(c) and 273(2)(aa) of the Income-tax Act.
3. Legitimacy of waiving interest under section 215 of the Income-tax Act.
Issue-wise Detailed Analysis:
1. Validity of the CIT's Exercise of Jurisdiction under Section 263:
The CIT (Central), Ludhiana, invoked jurisdiction under section 263 on the grounds that the orders passed by the Assessing Officer (AO) were erroneous and prejudicial to the interests of the revenue. The CIT issued a notice to the assessee, pointing out that the disclosure made by the assessee was neither full nor voluntary but was made when the assessee was cornered by the incriminating material found during the survey. The CIT argued that the AO had not made necessary inquiries and had passed non-speaking orders while dropping the penalty proceedings and waiving interest. The CIT's action was based on the belief that the AO's orders lacked thorough investigation and proper scrutiny of the seized documents and the statement of Dr. Rohit Jindal, one of the directors, which allegedly admitted the concealment of income.
2. Justification for Dropping Penalty Proceedings under Sections 271(1)(c) and 273(2)(aa):
The AO dropped the penalty proceedings under sections 271(1)(c) and 273(2)(aa) based on the assessee's explanation that the additional income was offered to purchase peace and avoid prolonged assessment proceedings. The AO noted that the seized documents were not fully verified, and the entries were difficult to decipher. The AO appreciated the assessee's cooperative conduct and immediate payment of taxes on the surrendered amounts. The assessee relied on various case laws to argue that the surrender of income alone was not sufficient to attract penalties, and the department needed to prove the factum of concealment with material evidence.
The Judicial Member held that the AO failed to make necessary inquiries and scrutinize the seized documents properly, leading to an erroneous and prejudicial order. The Judicial Member emphasized that the AO should have conclusively determined whether the surrender was made before detection and whether the surrendered amount was concealed income. The Judicial Member supported the CIT's view that the AO's order was not sustainable in law.
The Accountant Member, however, disagreed, arguing that the AO had applied his mind and acted as a quasi-judicial authority. The Accountant Member pointed out that the AO had given detailed office notes explaining the reasons for dropping the penalties, which showed application of mind. The Accountant Member held that the CIT could not substitute his opinion for that of the AO and that the AO's order was not erroneous or prejudicial to the interests of the revenue.
3. Legitimacy of Waiving Interest under Section 215:
The AO waived the interest under section 215 based on the assessee's application under Rule 40(5) of the Income-tax Rules. The AO considered the facts and circumstances of the case, noting that if the surrendered amount was excluded, no default existed, and the interest was waived accordingly. The CIT, however, found this waiver erroneous and prejudicial to the interests of the revenue, directing the AO to decide the matter afresh along with the penalty proceedings.
Conclusion:
The Third Member, Vice-President R.M. Mehta, resolved the difference of opinion between the Judicial Member and the Accountant Member. The Third Member approved the view of the Accountant Member, holding that the AO had applied his mind and acted as a quasi-judicial authority while dropping the penalties and waiving the interest. The Third Member emphasized that the AO's detailed office notes showed application of mind and that the CIT could not substitute his opinion for that of the AO. The Third Member concluded that the CIT's order under section 263 was not justified and that the AO's orders dropping the penalties and waiving the interest were valid and sustainable in law. The appeals filed by the assessee were allowed, and the CIT's order under section 263 was canceled.
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2001 (12) TMI 196
Issues Involved:
1. Liability of deducting tax at source u/s 195 for payments made to foreign companies for installation and commissioning services.
2. Application of Double Taxation Avoidance Agreements (DTAA) and their precedence over the Income-tax Act.
3. Scope and interpretation of 'fees for technical services' under relevant DTAAs.
Summary of Judgment:
Issue 1: Liability of Deducting Tax at Source u/s 195 for Payments to Foreign Companies
- The primary issue was whether the assessee was required to deduct tax at source from payments made to foreign companies for installation and commissioning services.
- The Assessing Officer held that these payments were taxable in India as 'fees for technical services' u/s 9(1)(vii) of the Income-tax Act and directed the assessee to deduct tax at 30%.
- The CIT(A) ruled in favor of the assessee, stating that the services did not constitute 'technical consultancy service' and were not taxable in India due to the absence of a 'permanent establishment' (PE) of the foreign companies in India, as per the India-France and India-UK DTAAs.
Issue 2: Application of DTAA and Precedence Over the Income-tax Act
- The Tribunal emphasized that provisions of the DTAA override the provisions of the Income-tax Act if they are more beneficial to the assessee.
- Citing the case of CIT v. Davy Ashmore India Ltd., it was reiterated that in case of inconsistency, the DTAA provisions prevail.
- The Tribunal examined the taxability of the payments under the India-France and India-UK DTAAs, confirming that the foreign companies did not have a PE in India and the projects did not exceed six months.
Issue 3: Scope and Interpretation of 'Fees for Technical Services'
- The Tribunal analyzed the definition of 'fees for technical services' under the India-France DTAA and noted that services ancillary and subsidiary to the sale of property are excluded from this definition.
- Similarly, under the India-UK DTAA, it was found that installation and commissioning services are excluded from 'fees for technical services' if they are ancillary and subsidiary to the sale of property.
- The Tribunal concluded that the payments for installation and commissioning services made to Decoufle (France) and NTM (UK) did not qualify as 'fees for technical services' and thus were not taxable in India.
Conclusion:
- The Tribunal upheld the CIT(A)'s decision, confirming that the assessee was not required to deduct tax at source from the payments made to Decoufle and NTM.
- All three appeals filed by the Revenue were dismissed.
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2001 (12) TMI 195
Issues Involved:
1. Whether the stock exchange card held by the assessees in the Bombay Stock Exchange is an asset within the meaning of section 2(e) of the Wealth-tax Act, 1957, and consequently wealth-tax is payable thereon.
Summary:
Issue 1: Applicability of Supreme Court Judgment
The primary issue was whether the stock exchange card is an asset u/s 2(e) of the Wealth-tax Act, 1957. The Tribunal referred to the Supreme Court's decision in Stock Exchange, Ahmedabad v. Asstt. CIT [2001] 248 ITR 209, where it was held that the stock exchange card is not property and hence cannot be attached u/s 281B of the Income-tax Act. Consequently, the Tribunal had previously followed this decision, holding that no wealth-tax was payable on the stock exchange card.
Issue 2: Department's Request for Reconsideration
The Department requested an opportunity to contest the applicability of the Supreme Court judgment to the Wealth-tax Act and distinguish it. Despite previous Tribunal orders following the Supreme Court judgment, the Tribunal decided to hear arguments from both sides to ensure all viewpoints were considered.
Issue 3: Rules of the Bombay Stock Exchange
The Tribunal examined the relevant provisions of the Bombay Stock Exchange Rules, which indicated that membership is a personal privilege, non-transferable, and inalienable. The right of nomination is also personal and non-transferable, ceasing upon the member's death or default, at which point it vests in the Exchange.
Issue 4: Supreme Court's Ratio in Stock Exchange, Ahmedabad's Case
The Supreme Court had held that the membership right is a personal privilege and not property, relying on its earlier judgment in Vinay Bubna v. Stock Exchange, Mumbai [1999] 97 Comp. Cas. 874. The Tribunal noted that the rules of the Bombay Stock Exchange (BSE) and Ahmedabad Stock Exchange (ASE) are similar, and thus the Supreme Court's decision applies.
Issue 5: Applicability to Wealth-tax Act
The Tribunal rejected the Department's contention that the Supreme Court's decisions were inapplicable to the Wealth-tax Act. It held that the concept of "property" is consistent across different contexts, including the Constitution of India and the Wealth-tax Act. The Supreme Court's judgments, based on the rules of the stock exchanges, concluded that membership is a personal privilege and not property.
Issue 6: Other Relevant Judgments
The Tribunal referenced several judgments, including Sejal Rikeen Dalal v. Stock Exchange, Bombay AIR 1991 Bom. 30 and the Special Court's decision in Stock Exchange v. Custodian, which supported the view that stock exchange membership is not property.
Issue 7: Obiter Dicta of the Supreme Court
The Tribunal addressed the argument that the Supreme Court's observations were obiter dicta, asserting that even obiter dicta from the Supreme Court are binding on the Tribunal.
Issue 8: Special Bench Order in Jagan Nath Sayal v. Asstt. CGT
The Tribunal distinguished the Special Bench decision in Jagan Nath Sayal v. Asstt. CGT [2000] 72 ITD 1 (Delhi), which dealt with the Delhi Stock Exchange, noting that the rules of the Delhi Stock Exchange differ significantly from those of the BSE.
Issue 9: Section 47(xi) of the Income-tax Act
The Tribunal discussed the relevance of section 47(xi) of the Income-tax Act, which exempts certain transfers of stock exchange membership from capital gains tax. It concluded that this provision does not imply that the membership card is property.
Issue 10: Supreme Court Judgment in CWT v. Prince Muffakham Jah Bahadur Chamlijan
The Tribunal considered the Supreme Court's judgment in CWT v. Prince Muffakham Jah Bahadur Chamlijan [2001] 247 ITR 351, distinguishing it on the basis that the nature of the right to reside in a property is different from stock exchange membership.
Conclusion:
The Tribunal held that the stock exchange card of the Bombay Stock Exchange is not an asset u/s 2(e) of the Wealth-tax Act. The appeals filed by the department were dismissed, and those filed by the assessees were allowed.
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2001 (12) TMI 194
Issues Involved:
1. Limitation of assessment order u/s 158BE.
2. Exemption of income for a housing building co-operative society.
3. Recognition of income under the completed contract method.
4. Disallowance of items debited to contractors' accounts.
5. Computation of undisclosed income from seized materials.
Summary:
1. Limitation of Assessment Order u/s 158BE:
The assessee argued that the assessment order is barred by limitation as per s. 158BE of the IT Act, 1961. The Tribunal examined the dates of the search and subsequent visits, concluding that the search should be considered completed on 23rd Feb., 1996, not 25th April, 1996. Hence, the assessment order dated 31st Oct., 1997, was beyond the permissible time and thus quashed.
2. Exemption of Income for Housing Building Co-operative Society:
The assessee claimed exemption based on mutuality, arguing that it is a co-operative society providing housing sites to its members, with no dealings with outsiders. The Tribunal agreed, noting the complete identity between contributors and participants, and found the case in line with the principles of mutuality as per the Supreme Court's decisions in Chelmsford Club vs. CIT and CIT vs. Bankipur Club Ltd.
3. Recognition of Income Under the Completed Contract Method:
The assessee followed the completed contract method of accounting, arguing that income or loss could only be computed upon project completion. The Tribunal upheld this method, recognizing it as a valid accounting practice for long-term projects, referencing the High Court of Karnataka's decision in Khoday Distilleries.
4. Disallowance of Items Debited to Contractors' Accounts:
The AO disallowed certain items debited to contractors' accounts, alleging diversion of funds by directors. The Tribunal found no evidence of personal use by directors and noted that the Government of Karnataka had exonerated the managing committee members of all charges. Hence, the disallowances were deleted.
5. Computation of Undisclosed Income from Seized Materials:
The AO added Rs. 60,70,400 as undisclosed income, claiming it was realized by a director on behalf of the society. The Tribunal found that the amount belonged to the contractor, not the society, and thus should not be treated as undisclosed income of the assessee.
Conclusion:
The Tribunal quashed the block assessment order due to time limitation and held that the assessee's income is exempt based on mutuality. It also upheld the completed contract method of accounting and deleted disallowances and additions made by the AO. The appeal was allowed in favor of the assessee.
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2001 (12) TMI 193
Issues Involved:
1. Disallowance of Technical Know-how fees.
2. Disallowance of interest and commitment charges.
3. Disallowance of Hermes charges as revenue charges.
4. Deduction in respect of contribution to GIDC for developing infrastructure.
5. Disallowance of contributions to welfare trust and GACL Benevolent Fund.
6. Computation of deduction under Section 80HHC.
Detailed Analysis:
1. Disallowance of Technical Know-how fees:
The assessee contested the disallowance of Rs. 4,65,14,148 as technical know-how fees. The Assessing Officer (AO) and the Commissioner of Income Tax (Appeals) [CIT(A)] had previously disallowed this expense in the assessment order and appellate order, respectively. The Tribunal upheld the disallowance, referencing its own decision in the assessee's case for the assessment year (AY) 1995-96, given the identical facts and circumstances.
2. Disallowance of interest and commitment charges:
The assessee challenged the disallowance of Rs. 10,05,25,017 on account of interest and commitment charges. The AO and CIT(A) had previously disallowed these charges. However, the Tribunal reversed this decision, citing its own ruling in the assessee's favor for AY 1995-96 due to identical facts, thereby deleting the disallowance.
3. Disallowance of Hermes charges as revenue charges:
The assessee objected to the disallowance of Rs. 5,81,02,062 as Hermes charges, which were claimed as revenue charges. Both the AO and CIT(A) had disallowed these charges. The Tribunal, however, allowed the appeal, referencing its favorable decision for the assessee in AY 1995-96 under similar circumstances, and deleted the disallowance.
4. Deduction in respect of contribution to GIDC for developing infrastructure:
This ground was not pressed by the assessee during the hearing. Consequently, it was dismissed as not pressed.
5. Disallowance of contributions to welfare trust and GACL Benevolent Fund:
The assessee contested the disallowance of Rs. 66,00,000 and Rs. 1,08,411 for contributions to a welfare trust and the GACL Benevolent Fund, respectively. The AO and CIT(A) had disallowed these contributions. The Tribunal upheld the disallowance, referencing its decision in the assessee's case for AY 1995-96, given the identical facts and circumstances.
6. Computation of deduction under Section 80HHC:
The assessee raised two points regarding the computation of deduction under Section 80HHC: (i) inclusion of excise duty and sales-tax payments in the "total turnover," and (ii) consideration of only net interest as expenditure. The second point was not pressed by the assessee. The primary contention was whether excise duty and sales-tax should form part of the total turnover. The Tribunal noted that this issue had been decided against the assessee in the earlier order for AY 1995-96. However, the assessee argued based on the subsequent decision of the Bombay High Court in CIT vs. Sudarshan Chemicals Industries Ltd. The Tribunal, after considering various judicial pronouncements and the legislative intent behind Section 80HHC, held that excise duty and sales-tax form part of the total turnover. The Tribunal referenced several Supreme Court decisions which construed the term "turnover" as inclusive of excise duty and sales-tax, emphasizing that any contrary view would violate Article 141 of the Constitution. The Tribunal also noted that the Bombay High Court decision did not consider these Supreme Court rulings and was distinguishable due to amendments in Section 80HHC post-1992. Thus, the Tribunal dismissed this ground.
Conclusion:
The appeal was partly allowed, with the Tribunal upholding some disallowances and deleting others based on prior decisions and judicial interpretations.
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2001 (12) TMI 192
Issues:
1. Levy of interest under section 215 in reassessment.
2. Jurisdiction of the AO and CIT(A) in rectifying interest charged under section 215.
3. Applicability of the decision in Modi Industries Ltd. case on interest under section 215.
4. Interpretation of section 215(3) in relation to reassessment proceedings.
5. Consideration of interest under section 215 only up to the date of regular assessment.
Analysis:
1. Levy of interest under section 215 in reassessment:
The case involved reassessments for the assessment years 1987-88 and 1988-89 where the AO charged interest under section 215 after reopening the assessments under section 147. The CIT(A) allowed some relief to the assessee, leading to a dispute regarding the levy of interest under section 215 in reassessment proceedings.
2. Jurisdiction of the AO and CIT(A) in rectifying interest charged under section 215:
The AO rejected the assessee's application under section 154 to delete the interest charged under section 215 in reassessment. However, the CIT(A) directed the AO to effect rectification and not to charge interest beyond the date of the first assessment. The issue revolved around whether the AO had the authority to modify the interest charged under section 215 in reassessment.
3. Applicability of the decision in Modi Industries Ltd. case on interest under section 215:
The parties contested the applicability of the decision in Modi Industries Ltd. case, where the Hon'ble Supreme Court held that interest under section 215 is payable only up to the date of regular assessment and on the income determined at that stage. The arguments centered on whether subsequent orders could impact the levy of interest under section 215.
4. Interpretation of section 215(3) in relation to reassessment proceedings:
The judgment delved into the interpretation of section 215(3) concerning the enhancement or reduction of interest as a result of orders under various sections of the Income Tax Act. The court analyzed the provisions to determine the correct application of interest under section 215 in the reassessment context.
5. Consideration of interest under section 215 only up to the date of regular assessment:
The court clarified that interest under section 215 should be charged only up to the date of regular assessment and on the income determined at that stage. The judgment emphasized the importance of adhering to this principle while addressing the issue of interest under section 215 in reassessment proceedings, ensuring a fair application of the law.
In conclusion, the judgment provided a detailed analysis of the issues surrounding the levy of interest under section 215 in reassessment, jurisdictional aspects of the AO and CIT(A) in rectifying interest charged, the impact of the Modi Industries Ltd. case on interest under section 215, interpretation of section 215(3) in reassessment proceedings, and the correct consideration of interest under section 215 only up to the date of regular assessment.
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2001 (12) TMI 191
Issues Involved:
1. Deletion of protective addition made for interest received from K. Khodidas Patel Specific Family Trust.
2. Assessment of interest income in the hands of the beneficiary for various assessment years.
3. Impact of Kar Vivad Samadhan Scheme (KVSS) 1998 on the assessment of interest income.
4. Allowance of rebate under section 88.
5. Assessment of interest on fixed deposits in the hands of the beneficiaries.
Detailed Analysis:
1. Deletion of Protective Addition:
The primary issue raised by the revenue was that the CIT(A) erred in directing the deletion of the protective addition made for interest received from K. Khodidas Patel Specific Family Trust in the hands of the assessee. The interest received by the assessee, a beneficiary of the trust, was declared in the returns filed for the relevant assessment years. The Tribunal had previously held that interest paid to the beneficiaries is deductible from the income of the trust, based on the Gujarat High Court's decision in CIT v. Tanvi Sajni Family Trust, which established that the trust is a distinct legal entity separate from its beneficiaries.
2. Assessment of Interest Income:
For the assessment years 1988-89, 1991-92, and 1992-93, the appeals by the revenue were allowed, and the interest received from the trust was to be assessed in the hands of the assessee. For the assessment year 1990-91, the counsel for the assessee argued against the assessment of interest income on the grounds that the trust had paid tax on the interest amount under the KVSS, which would result in double taxation. However, the Tribunal did not accept this contention, emphasizing that the interest income belongs to the beneficiary and must be assessed in their hands, as supported by the Supreme Court's decision in ITO v. Ch. Atchaiah.
3. Impact of KVSS 1998:
The Tribunal considered the declaration made by the trust under the KVSS, which is a recovery scheme allowing the settlement of tax arrears. The counsel for the assessee argued that since the trust had paid the disputed tax under the KVSS, the interest received by the beneficiary should not be taxed again. However, the Tribunal held that the declaration under the KVSS does not alter the legal position that the interest income belongs to the beneficiary and must be assessed in their hands. The Tribunal also noted that the KVSS is not a litigation settlement scheme but a recovery scheme, and the Board's circulars clarifying the KVSS provisions do not apply to this case.
4. Allowance of Rebate under Section 88:
Regarding the cross-objection filed by the assessee for the assessment year 1991-92, the Tribunal held that since the interest income is assessable in the hands of the assessee, the rebate under section 88 is liable to be allowed in accordance with the law.
5. Assessment of Interest on Fixed Deposits:
For the assessment year 1991-92, the interest paid to the beneficiaries, including the fixed deposit interest, was held to be allowable. Therefore, the interest on the fixed deposits of the beneficiaries is liable to be assessed in their personal assessments.
Conclusion:
The Tribunal allowed the revenue's appeals for all the assessment years, holding that the interest income received by the assessee from the trust is liable to be assessed in the hands of the beneficiary. The cross-objection filed by the assessee was partly allowed, with the rebate under section 88 to be allowed in accordance with the law, and the interest on fixed deposits to be assessed in the beneficiaries' personal assessments.
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2001 (12) TMI 190
Issues Involved:
1. Applicability of section 2(22)(e) regarding deemed dividend.
2. Addition of unexplained cash credits u/s 68.
3. Disallowance of interest on deemed dividend.
4. Levy of interest u/s 234B/234C.
Summary:
1. Applicability of section 2(22)(e) regarding deemed dividend:
The appellant company received a loan of Rs. 56,65,000 from Hynoup Food and Oil Industries Pvt. Ltd., where it held more than 20% shares. The Assessing Officer (AO) deemed this loan as dividend u/s 2(22)(e) since the accumulated profits of the lender exceeded the loan amount. The CIT(A) confirmed this addition. The Tribunal noted that the accumulated profits should be computed up to the date of loan advancement, excluding current year's business profits, and remanded the matter back to the AO for recalculating the accumulated profits.
2. Addition of unexplained cash credits u/s 68:
The AO added Rs. 47,01,000 as unexplained cash credits, later reduced to Rs. 23,03,500 after reconsideration. The CIT(A) remanded the issue for fresh consideration. The Tribunal upheld the CIT(A)'s decision, noting that the assessee failed to produce necessary evidence to substantiate the cash credits.
3. Disallowance of interest on deemed dividend:
The AO disallowed Rs. 2,08,617 as interest paid on the deemed dividend loan. The CIT(A) remitted the matter back for verification. The Tribunal observed that no disallowance was made in the subsequent order and dismissed this ground as infructuous.
4. Levy of interest u/s 234B/234C:
The Tribunal restored the issue of interest levy u/s 234B/234C to the CIT(A) for fresh decision, noting that the AO must pass a specific order for charging interest, as per the Supreme Court's decision in Ranchi Club Ltd.
Conclusion:
The appeals were partly allowed, with the issue of deemed dividend remanded for recalculating accumulated profits, the addition of unexplained cash credits upheld, disallowance of interest on deemed dividend dismissed as infructuous, and the levy of interest u/s 234B/234C remanded for fresh decision.
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