Subscription   Feedback   New User   Login      
Tax Management India .com
TMI - Tax Management India. Com
Articles Highlights TMI Notes SMS News Newsletters Calendar Imp. Links Database Experts Contact us More....
Extracts
Home List
← Previous Next →

Thomson Press (India) Ltd. Versus Commissioner of Income Tax-II

2015 (10) TMI 756 - DELHI HIGH COURT

Revision u/s 263 - whether the Assessee could include notional interest as income in computation of profits and gains derived by its undertaking from export of articles or things, for the purposes of claiming deduction under Section 10A ? - whether the CIT can assume jurisdiction under Section 263 of the Act and enhance the assessed income by reducing the deduction allowed to the Assessee in respect of the eligible undertaking? - Held that:- Supreme Court in Commissioner of Income Tax v. Max Ind .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

owers under Section 263(1) of the Act were available only if the order sought to be reviewed was prejudicial to the interests of the revenue and was unsustainable in law.

In the present case, the interest so credited and debited by the Assessee in the books maintained does not, in the first instance, represent any real profit or gain by the Assessee. Assessee has not derived any interest income. Therefore, reducing such notional income - which has neither been accrued nor received - f .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

the contention that since in the preceding year, no issue has been raised with regard to charging of interest by one unit to another, the same could not be picked up by the CIT under Section 263 of the Act. Merely because an issue remained unchecked in a preceding year does not mean that the CIT is estopped from exercising its powers under Section 263 of the Act. It is well established that the principles of res judicata do not apply to income tax proceedings and an error in the preceding year n .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

decided in favour of the Assessee. The Revenue had accepted the same and not filed an appeal. It is in that context that the Court held that since the Revenue had accepted similar transactions in the past and had allowed a view to sustain for several years, an exercise under Section 263 of the Act was not warranted. In the present case, the issue was not picked up in the preceding year. Further, the claim of the Assessee cannot be stated to be of a nature which has been consistently accepted in .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

rest charged by the head office to NEPZ Branch”. He, nonetheless, proceeded to consider the alternative issue whether the turnover of the eligible undertaking (at NEPZ, Noida) could be considered for the purposes of computing exemption under Section 80HHC of the Act. Clearly, this issue did not arise as the CIT had only proposed to reduce the profits and gains claimed by the Assessee as being derived from the eligible undertaking. Thus, only question to be considered by the CIT was whether the n .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

or Standing Counsel with Mr Ruchir Bhatia JUDGMENT Vibhu Bakhru, J 1. The Assessee - by way of these appeals filed under Section 260A of the Income Tax Act, 1961 (hereafter the Act ) - impugns a common order dated 5th August, 2002 passed by the Income Tax Appellate Tribunal (hereafter the Tribunal ) in ITA No.2641/Del/96 and ITA No.2642/Del/96 in respect of the Assessment Years 1991-91 and 1992-93 respectively. Both the said appeals (ITA No.2641/Del/96 and 2642/Del/96) were filed by the Assessee .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

rated from its undertaking at NEPZ, NOIDA in the books of accounts maintained for that undertaking. Correspondingly, a contra entry was passed by the Assessee in the books of accounts maintained in respect of its Head Office. The Assessing Officer (hereafter the AO) did not reject the inclusion of such interest as the profits and gains of the undertaking, which were deducted by the Assessee from its total income for computing its taxable income. The CIT considered the assessment orders passed by .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

e I.T. Act, 1961, holding the assessment order for the assessment year 1991-92 as erroneous in so far as the same was prejudicial to the interests of the Revenue.? 2. Whether the Income Tax Appellate Tribunal was correct in law, in holding that the income of the assessee company had been under-assessed in so far as it related to the amount of interest debited, aggregating to ₹ 8,13,651/- for the Assessment Year 1991-92? 3. Whether the Income tax Appellate Tribunal was correct in law in not .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ue? 2. Whether the Income Tax Appellate Tribunal was correct in law, in holding that the income of the assessee company had been under- assessed in so far as it related to the amount of interest debited, aggregating to ₹ 37,61,132/- for the Assessment Year 1992-93? 3. Whether the Income Tax Appellate Tribunal was correct in law in not considering the alternative submissions pertaining to deduction u/s 80HHC of the Act as also 10A of the Act pertaining to the unit at Faridabad and NEPZ, Noi .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ied under section 10A(2) of the Act as it stood at the material time and, consequently, was eligible for exemption under Section 10A of the Act for a block of five years relevant to the AYs 1991-92 to 1994-95. The Assessee filed its return of income for AY 1991-92 on 31st December, 1991 declaring a taxable income of ₹ 32,86,776/-. This return was subsequently revised and the Assessee declared a total income of ₹ 1,45,73,443/-. The income derived by the Assessee from the eligible unde .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ion 10A of the Act and, consequently, reduced by the Assessee from its total income for computing the income chargeable to tax 6. The CIT found that the eligible undertaking had accumulated profits of ₹ 98,05,560/- as on 31st March, 1991 and an interest of ₹ 8,13,651/- had been charged on the aforesaid surplus in the books of the eligible undertaking. Correspondingly, the Head Office had expensed the aforesaid amount as interest and credited the account of the eligible undertaking in .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

1996 under Section 263 of the Act in respect of the AY 1991-92. A similar notice dated 5th February, 1996 was also issued in respect of the AY 1992-93, as in the Previous Year relevant to AY 1992-93, the Assessee had deducted a sum of ₹ 37,61,132 on account of notional interest credited in the books of the eligible undertaking. 8. The Assessee responded to the show cause notices by its letter dated 28th February, 1996. 9. The CIT passed an order dated 27th March, 1996 in respect of the AY .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

id not give rise to any real expenditure or income. He, accordingly, held that the expenditure could not be allowed in the hands of one unit and correspondingly, the question of enhancing income of the eligible unit by such notional income, did not arise. 10. The CIT also considered alternative pleas on behalf of the Assessee including the plea that relief under Section 80HHC of the Act as available to the Assessee should be computed by including the turnover of the eligible undertaking for the .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

1. The CIT passed a separate order dated 27th March, 1996 in respect of AY 1992-93 and following its decision for the earlier AY, enhanced the total income of the Assessee by a sum of ₹ 37,61,132/-. The said enhancement resulted in the income of the Assessee being assessed at ₹ 4,07,172/- instead of a loss of ₹ 33,53,960/- as assessed by the AO in its assessment order dated 20th March, 1995. Since the assessed income was now a positive figure, the CIT further directed the AO to .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

rnover of the Assessee. 13. The Tribunal rejected the appeals filed by the Assessee. Being aggrieved by the said decision, the Assessee has filed the present appeals. Submissions 14. Mr Salil Aggarwal, learned counsel appearing for the Assessee contended that the orders passed by the CIT were beyond the scope of Section 263 of the Act. He referred to the decision of the Supreme Court in Malabar Industrial Company Ltd. V. CIT: (2000) 243 ITR 83 (SC) and submitted that before proceeding under Sect .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

he view taken by the AO was unsustainable and patently erroneous, the CIT could not assume jurisdiction under Section 263 of the Act. 15. Mr Aggarwal further argued that in the preceding year 1990-91, the eligible undertaking had debited interest amounting to ₹ 7,75,399/-, which had been accepted in an assessment framed under Section 143(3) of the Act. He referred to the decision of this Court in the case of CIT v. Escorts Ltd.: (2011) 338 ITR 435 (Del) in support of his contention that wh .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

us of sections under Chapter VI-A of the Act that provide for deductions to be made in computing total income of an Assessee; whilst, the present case concerned Section 10A of the Act, which was part of Chapter III of the Act that pertained to income which do not form part of the total income . He argued that the deduction under Section 10A of the Act provided for a deduction in respect of incomes profit and gains derived by an Assessee from an industrial undertaking at the threshold and not as .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

in the income of the Assessee. He submitted that in view of the said scheme the reasoning of the CIT and the Tribunal that no one could earn interest from oneself was not tenable as the eligible undertaking had for all practical purposes to be treated as a separate entity. 18. Mr Aggarwal, further referred to Section 10A(6) of the Act by virtue of which, the provisions of Section 80IA(8) of the Act, insofar as applicable, were incorporated under Section 10A of the Act. Section 80IA(8) provided .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

me derived by an Assessee from its undertaking . He submitted that this was different from the language used in Section 80HH or 80IA which referred to income derived from an industrial undertaking . He submitted that this also indicated that an eligible undertaking under Section 10A was to be considered as a separate and independent source. 20. Countering the aforesaid arguments, Mr Chaudhary, learned counsel for the Revenue submitted that irrespective of the merits of the contentions advanced o .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

could not be considered as a part of profit and gains derived by the Assessee from the eligible undertaking. 21. Mr Aggarwal in his rejoinder submitted that in the present case no other view was plausible and the assessment order was, clearly, erroneous. He submitted that Section 10A did not contemplate any notional income but only such profits and gains that were derived by an Assessee from an undertaking, to which Section 10A applies. Reasoning and Conclusion 22. The principal issue to be addr .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

as been argued that this is a plausible view and, therefore, the assessment order allowing such reduction could not be considered as erroneous. 24. Section 263(1) of the Act empowers the Commissioner to call for and examine the record of any proceeding under the Act and if it is considered that any order passed by the AO is erroneous in so far as it is prejudicial to the interest of the revenue , he may after giving the Assessee an opportunity to be heard and after making such inquiries as neces .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

words: A bare reading of this provision makes it clear that the prerequisite to the exercise of jurisdiction by the Commissioner suo motu under it, is that the order of the Income-tax Officer is erroneous in so far as it is prejudicial to the interests of the Revenue. The Commissioner has to be satisfied of twin conditions, namely, (i) the order of the Assessing Officer sought to be revised is erroneous; and (ii) it is prejudicial to the interests of the Revenue. If one of them is absent-if the .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

requirement of the order being erroneous. In the same category fall orders passed without applying the principles of natural justice or without application of mind. The phrase prejudicial to the interests of the Revenue has to be read in conjunction with an erroneous order passed by the Assessing Officer. Every loss of revenue as a consequence of an order of the Assessing Officer cannot be treated as prejudicial to the interests of the Revenue. For example, when an Income-tax Officer adopted one .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

hat the phrase prejudicial to the interest of revenue as used in Section 263(1) of the Act must be read in conjunction with the expression erroneous and unless the view taken by the AO is found to be unsustainable in law, the powers under Section 263 of the Act cannot be invoked. 26. Following the aforesaid decision, this Court in Commissioner of Income Tax v. DLF Ltd.:(2013) 350 ITR 555 (Del) had also emphasized that powers under Section 263(1) of the Act were available only if the order sought .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

rs, is reproduced below:- 10A. (1) Subject to the provisions of this section, any profits and gains derived by an assessee from an industrial undertaking to which this section applies shall not be included in the total income of the assessee. (2) This section applies to any industrial undertaking which fulfils all the following conditions, namely:- (i) it has begun or begins to manufacture or produce articles or things during the previous year relevant to the assessment year commencing on or aft .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

is not formed by the transfer to a new business of machinery or plant previously used for any purpose. Explanation : The provisions of Explanation 1 and Explanation 2 to sub-section (2) of section 80-I shall apply for the purposes of clause (iii) of this sub-section as they apply for the purposes of clause (ii) of that sub-section. [(3) The profits and gains referred to in sub-section (1) shall not be included in the total income of the assessee in respect of any five consecutive assessment yea .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

puting the total income of the assessee of the previous year relevant to the assessment year immediately succeeding the last of the relevant assessment years, or of any previous year, relevant to any subsequent assessment year,- (i) section 32, section 32A, section 33, section 35 and clause (ix) of sub-section (1) of section 36 shall apply as if every allowance or deduction referred to therein and relating to or allowable for any of the relevant assessment years, in relation to any building, mac .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

of sub-section (1) of section 36, as the case may be, shall not apply in relation to any such allowance or deduction; (ii) no loss referred to in sub-section (1) of section 72 or sub-section (1) [or sub-section (3)] of section 74 and no deficiency referred to in sub-section (3) of section 80J, in so far as such loss or deficiency relates to the business of the industrial undertaking shall be carried forward or set off where such loss, or, as the case may be, deficiency relates to any of the rel .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

levant assessment years. (5) Where an industrial undertaking in any free trade zone has begun to manufacture or produce articles or things in any previous year relevant to the assessment year commencing on or after the 1st day of April, 1977, but before the 1st day of April, 1981, the assessee may, at his option, before the expiry of the time allowed under subsection (1) or sub-section (2) of section 139, whether fixed originally or on extension, for furnishing the return of income for the asses .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

puting the total income of the assessee for the assessment year immediately succeeding the last of the relevant assessment years and any subsequent assessment year. (6) The provisions of sub-section (8) and sub-section (9) of section 80-I shall, so far as may be, apply in relation to the industrial undertaking referred to in this section as they apply for the purposes of the industrial undertaking referred to in section 80-I. (7) Notwithstanding anything contained in the foregoing provisions of .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ct, 1987 shall, notwithstanding such amendment or omission, be construed, for the purposes of that sub-section, as if such amendment or omission had not been made.] Explanation : For the purposes of this section,- (i) free trade zone means the Kandla Free Trade Zone and the Santacruz Electronics Export Processing Zone and includes any other free trade zone which the Central Government may, by notification in the Official Gazette, specify for the purposes of this section; [(ii) relevant assessmen .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ssee. Section 10A(2) of the Act specifies the conditions which are to be fulfilled by an undertaking for being eligible for the benefits of Section 10A(1) of the Act. In the present case, it is not disputed that the Assessee s undertaking at NEPZ, NOIDA (i.e. the eligible undertaking) fulfilled the requisite conditions and the profits and gains derived by the Assessee from the eligible undertaking was not to be included in the total income of the Assessee. 30. The expression derived followed by .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

Supreme Court referred to the dictionary meaning of the word derive which is usually followed by the word from and interpreted the expression derived from in the following manner:- 10. The dictionaries state that the word derive is usually followed by the word from , and it means : get or trace from a source ; arise from, originate in ; show the origin or formation of. 11. The use of the words "derived from" in Item 11AA(2) suggests that the original source of the product has to be fo .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

" 31. The Supreme Court in CIT vs. Sterling Foods: (1999) 237 ITR 57 (SC) considered the question, whether income derived by an Assessee from the sale of import entitlements was profits and gains derived from an industrial undertaking , in the context of Section 80HH of the Act and held as under: "We do not think that the source of the import entitlements can be said to be the industrial undertaking of the assessee. The source of the import entitlements can, in the circumstances, only .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ents, which it can sell. The sale consideration therefrom cannot, in our view, be held to constitute a profit and gain derived from the assessee s industrial undertaking" 32. Although, the said decision was rendered in the context of Section 80HH of the Act, the same would be equally applicable to the facts of the present case as the court had answered the question involved by interpreting the plain meaning of the expression derived from , which is also the expression used in Section 10A of .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

A(1) of the Act that only those profits and gains of an Assessee which have a direct nexus with an undertaking to which Section 10A of the Act applies would be excluded from the income of an Assessee. In the present case, the interest credited by the Assessee in the books of the eligible undertaking is notional and practically unconnected with the eligible undertaking; the interest has been credited on the surplus generated, which has been transferred from the accounts of the eligible undertakin .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

the question, "Whether, on the facts and in the circumstances of the case, the Tribunal was right in law in holding that the interest income derived by the assessee from funds in connection with letter of credit is income derived from the profits of business of the industrial undertaking so as to be entitled to get the benefit of section 10A of the Income-tax Act, 1961 ?" In that case the Assessee had set up an industrial undertaking in Kandla Free Trade Zone for manufacturing of light .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

between interest and the undertaking could not be established. The relevant extract from the judgement is quoted below: In this case the interest received by the assessee was on deposits made by it in the banks. It is that deposit which is the source of income. The mere fact that the deposit made was for the purpose of obtaining letters of credit which letters of credit were in turn used for the purpose of the business of the industrial undertaking does not establish a direct nexus between the .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

10A of the Act. The Supreme Court referred to the decision of the Madras High Court in Menon Impex P. Ltd. (supra) and remanded the matter to the Tribunal for deciding the issue whether the interest earned by the Assessee therein had a direct nexus with the business of the undertaking as was done by the Madras High Court in Menon Impex P. Ltd. (supra). 37. Indisputably, the interest credited by the Assessee in the books of its eligible undertaking is not earned from its business but is only a n .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ed in the books of the eligible undertaking is not the income of the Assessee at all. Therefore, the question of treating the same under the head of profits and gains from business or income from other sources did not arise. 38. In view of the aforesaid, the interest cannot be considered as profits and gains derived by the Assessee from the eligible undertaking as it does not bear a direct nexus with the activities of the eligible undertaking. 39. The next aspect to be considered is whether noti .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ch allowed a deduction to a cooperative society in respect of profits and gains of business attributable to any of the specified activities under that Section. He further submitted that there was a difference between deductions available under Chapter VI-A - which included Section 80P - and exemptions under Chapter III of the Act. He submitted that in the case of deductions under Chapter VI-A of the Act, the total income of the Assessee is computed and, thereafter, the deductions in respect of c .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

of exemptions under Chapter III of the Act. 41. We are in agreement with the Assessee s contention that under the scheme of the Act, the exemptions under Chapter III and deductions available under Chapter VI-A of the Act are qualitatively different. The incomes exempt under Chapter III of the Act are excluded from the stream of income at the threshold and the same cannot be treated as deductions available under sub-heading C of Chapter VI-A of the Act. We are also in agreement that the deduction .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

Assessee's total income. Plainly, such profits and gains referred to in Section 10A must mean real income of the Assessee and not fictional or notional income. 43. It is also important to note that the profits and gains which are exempt under Section 10A are not to be included in the total income of the Assessee. It would, obviously, follow that but for the exemption under Section 10A of the Act the profits and gains would be included in the total income of an Assessee. In other words, the .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

lved in that case was whether, for the purposes of computing the gross total income of the Assessee, the loss of non-eligible undertaking could set off against the income derived from the undertaking to which Section 10A of the Act applied. In that case, the AO had set off the loss of non-eligible unit against profits of an eligible unit and further added back disallowances to compute the gross total income of the Assessee. It is in that context that this Court had held that the income of the As .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

evenue had contended that since the expression deduction had been used, the gross total income of the Assessee was to be computed as per the normal provisions of the Act (without giving effect to Section 10A(1) of the Act) and, thereafter, the deduction under Section 10A(1) of the Act was to be allowed. Plainly, this controversy does not arise in the present case as the plain language of Section 10A(1) of the Act as it stood during the assessment years involved in the present case of the Act, cl .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

essee from the eligible undertaking. 45. In the present case, the interest so credited and debited by the Assessee in the books maintained does not, in the first instance, represent any real profit or gain by the Assessee. The Assessee has not derived any real income. Therefore, the question of deriving such profits from the eligible undertaking does not arise. 46. Section 10A if read in the manner as suggested by the Assessee, would imply that profits and gains of an Assessee from its eligible .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

owner. The relevant passage from the said judgment is quoted below:- It is well recognised that in revenue cases regard must be had to the substance of the transaction rather than to its mere form. In the present case disregarding technicalities it is impossible to get away from the fact that the business is owned and run by the assessee himself. In such circumstances we are of opinion that it is wholly unreal and artificial to separate the business from its owner and treat them as if they were .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

because he cannot be compelled to sell at a profit. But in this purely fictional sale to himself he is compelled to sell at a fictional profit when the market rises in order that he may be compelled to pay to Government a tax which is anything but fictional. 48. The aforesaid principle was followed by the Madhya Pradesh High Court in Malwa Mills Karamchari Parasper Sahakari Sanstha Ltd. (supra). In that case the Assessee concerned was a cooperative society and was carrying on banking business as .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ded as profits and gains of business attributable to carrying on the business of banking. The Madhya Pradesh High Court upheld the decision of the Tribunal in reducing the profits available for deduction under Section 80P of the Act. The Court reasoned that an Assessee could not be said to have earned income from itself and, therefore, the deduction as available under Section 80P was not available to the Assessee in respect of the interest paid by the consumer stores unit to the banking unit of .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

of Section 80IA(8) of the Act , in so far as applicable, were also incorporated in Section 10A. He submitted that Section 80IA(8) of the Act had referred to the transfer of goods or services between eligible businesses and other businesses carried on by the Assessee and by virtue of Section 80IA(8) such transfer would be taken at market value irrespective of the prices at which such goods or services had transferred. It was submitted that this would necessarily entail one unit making a profit a .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

an eligible undertaking and which otherwise, forms a part of his total income. It is from the real income of the Assessee that a portion, which is derived from the eligible undertaking is excluded. The real income of an eligible undertaking is computed by evaluating the goods and services at market value. There is no scope for computing any fictional income or unreal income and assuming that the same is derived by an Assessee and further assuming that the same is derived from an eligible underta .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

the present case, the Assessee has not derived any interest income. Therefore, reducing such notional income - which has neither been accrued nor received - from the Assessee s total income is completely alien to the scheme of the Act. Such notional interest could never form a part of the Assessee s income and thus the Assessee s claim that the same is to be excluded under Section 10A of the Act is flawed and wholly unsustainable in law. The view as canvassed on behalf of the Assessee is not, e .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

n 263 of the Act. It is well established that the principles of res judicata do not apply to income tax proceedings and an error in the preceding year need not be repeated or ignored in the subsequent years. The decision of this Court in Escorts Ltd. (supra) was based on the principle of consistency. In that case, the Assessee had been carrying on transactions similar to the one which was sought to be questioned under Section 263 of the Act, for past several years preceding the relevant assessme .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

 

 

 

 

 

what is new what is new
  ↓     bird's eye view     ↓  


|| Home || Acts and Rules || Notifications || Circulars || Schedules || Tariff || Forms || Case Laws || Manuals ||

|| About us || Contact us || Disclaimer || Terms of Use || Privacy Policy || TMI Database || Members || Site Map ||

© Taxmanagementindia.com [A unit of MS Knowledge Processing Pvt. Ltd.] All rights reserved.

Go to Mobile Version