TMI Blog2006 (1) TMI 185X X X X Extracts X X X X X X X X Extracts X X X X ..... quashed and declared as unsustainable in law. (2) On the facts and in the circumstances of the case, the authorities below have erred in drawing adverse inferences against the assessee ignoring the bona fide nature of the conduct of the assessee and the fact that all legitimate taxes have been duly paid and any point of doubt or debate in regard to the interpretation of the statutory provision and the possibilities of divergence of opinion between the assessee and the Revenue cannot by themselves justify any allegation of mala fide conduct against the assessee nor can the factual and legal submissions placed by the assessee be disregarded to take negative view and hence the orders and observations/findings of the authorities below must be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he additional grounds of appeal filed by the assessee. 4. After hearing both the parties the Bench admitted ground No.1 of the additional ground of appeal as the ground involves a pure question of law and its adjudication is essential in the ends of Justice. The additional ground No.2 taken by the assessee was rejected. The parties were then permitted to make submission on the additional ground raised by the assessee in this appeal. 5. The learned Authorised Representative of the assessee submitted that the AO has made addition of Rs. 1,49,640 by disallowing out of the foreign travel expenses of Rs. 6,58,921 spent on the tour to Mauritius for the period 20th June, 1993 to 28th June, 1993 of Shri S.K. Arya on the ground that the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 5,677. These incomes were not derived directly from the industrial undertaking. It has been held by the Hon'ble Supreme Court in Cambay Electric Supply Industrial Co. Ltd. vs. CIT 1978 CTR (SC) 50 : (1978) 113 ITR 84 (SC) that the term "derived from" in the relevant provisions of the IT Act indicate the restricted meaning given by the legislature to cover only the profits and amounts directly accruing from the conduct of the industrial undertaking. Hence he excluded Rs. 74,85,677 while determining the deduction allowable under s. 80-I. The learned counsel for the assessee submitted that in the earlier asst. yrs. 1989-90, 1990-91 and 1992-93 and 1993-94 the interest and miscellaneous income of the assessee was assessed to tax under the head ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ticulars of its income. Similarly, while disallowing the claim for deduction under s. 80-I on the interest and miscellaneous income of Rs. 74,85,677 the AO has followed the decision of the Hon'ble Supreme Court in 1978 CTR (SC) 50 : (1978) 113 ITR 84 (SC) and had disallowed the claim for the reason that the said interest and miscellaneous income was not derived from the conduct of the industrial undertaking. We find that the learned counsel for the assessee has submitted that in the earlier years assessment namely, asst. yrs. 1989-90, 1990-91, 1991-92, 1992-93 and 1993-94 the said interest and miscellaneous income has all along been subject to tax under the head 'Business income'. This was the first year when the AO has assessed the interes ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rent from the order itself. It is not for the Courts to go into the minds of the authorities or towards the reasons from the file of such authorities. The order ex facie suffers from the vice of non-application of mind. We are further of the opinion that the judgment of this Court in the case of CIT vs. Ram Commercial Enterprises Ltd. (2001) 167 CTR (Del) 321 is squarely applicable to the case." In the instant case also we find that no satisfaction has been recorded by the AO in the assessment order before initiating penalty proceedings against the assessee. Hence, the order of penalty passed by the AO is not a valid order and consequently the penalty levied by the AO was invalid. In that view of the matter, the appeal of the assessee is al ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
