TMI Blog2010 (7) TMI 438X X X X Extracts X X X X X X X X Extracts X X X X ..... he assessee s claim for credit on account of taxes paid by M/s Minicon Insulated Wire (P.) Ltd. (Minicon) on the rental income. 3. The assessee in the present case is a company which had let out the premises owned by it to a group company M/s Minicon vide an agreement dated 29.5.1995. As per the said agreement, annual rent of Rs. 6.40 lacs was to be received by the assessee company in addition a onetime security deposit of Rs. 29.50 lacs. M/s Minicon established a business centre cum warehouse in the premises taken on lease from the assessee company after carrying out necessary repairs/renovation thereto. The income derived by M/s Minicon from subletting the said premises was found to be exorbitant by the A.O. as compared to the rent paid by the said company to the assessee company. It was also noted by the A.O. that while the rent received by M/s Minicon had increased from year to year, the rent received by the assessee company from M/s Minicon remained fixed. Keeping in view these facts as well as other facts of the case, the agreement between the assessee company and M/s Minicon was treated by the A.O. as sham alleging that the same was entered into with the intention to diver ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng to him, the facts involved in the case of Bachu Lal Kapoor (supra) were totally different from the facts of the assessee's case in as much as in that case the matter was with reference to taxing the income in the hands of individual vis-a-vis HUF. He noted that it was held in this context by the Hon'ble Supreme Court relying on the provisions of section 14(1) of the 1992 Act debaring imposition of tax on income of HUF received by its members that the same could not be taxed twice in the hands of HUF as well as in the hands of its members. The ld. CIT(A) held that the assessee company and M/s Minicom, on the other hand, were two distinct companies assessable separately in their respective income and there was no provision in the 1961 Act similar to the provisions of section 14(1) of the 1922 Act prohibiting the income of one company to be taxed in the hands of another company. He also held that there were no provisions in the Act by which the credit for taxes paid by M/s Minicon could be given to the assessee company. He, therefore, held that the ratio of the decision of Hon'ble Supreme Court in the case of Bachu Lal Kapoor (supra) was not applicable in the facts of the assessee' ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the case of the said company and credit for the tax paid thereon has also been given. 6. The ld. D.R., on the other hand, submitted that when the credit for the taxes paid on rental income by M/s Minicon has already given in the ease of the said company, the assessee company cannot be given credit for the same again as the same would amount to giving credit for taxes paid twice. He submitted that as rightly held by the ld. CIT(A) in his impugned order, there is no provision in the I.T. Act to give such credit even if the corresponding rental income has been assessed to tax in the hands of the assessee company. He also submitted that the assessment completed in the case of M/s Minicon assessing the rental income and giving credit for taxes paid thereon has not been disturbed and the same has already become final. He contended that the claim of the assessee for credit on account of said taxes paid by M/s Minicon is not supported even by the decision of Hon'ble Supreme Court in the case of Bachu Lal Kapoor (supra) being distinguishable on facts as rightly pointed out by the ld. CIT(A) in his impugned order. He also contended that the issue relating to the said claim of the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessed again as that of HUF. Hon'ble Allahabad High Court held that the notice issued by the A.O. u/s 34 was invalid as it offended the principles against double taxation. The Hon'ble Supreme Court, however, did not agree with the decision of Hon'ble Allahabad High Court that the said notice was invalid. It was held by the Hon'ble Supreme Court that as provided in section 14(1), so long as the HUF existed, the individual could not be assessed in respect of the income of HUF. It was held by the Hon'ble Supreme Court that if under some mistake, such income was assessed to tax in the hands of the individual members, a proper assessment has to be made on the HUF in respect of that income and the Revenue has to make the appropriate adjustments. It was held by the Hon'ble Supreme Court that if the assessment proceedings initiated u/s 34 of the Act culminate in the assessment of the HUF, appropriate adjustments have to be made by the A.O. in respect of tax realized by the Revenue in respect of that part of income of HUF which was assessed in the hands of individuals. It is thus clear that the issue involved before the Hon'ble Supreme Court was with regard to taxing the income in the hands ..... X X X X Extracts X X X X X X X X Extracts X X X X
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