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 →

ACIT, Central Circle, Kolhapur Versus RDS Construction Pvt. Ltd., RDS Construction Pvt. Ltd. Versus DCIT, Central Circle, Kolhapur

2015 (11) TMI 998 - ITAT PUNE

Disallowance u/s.40A(3) - Held that:- Since in the instant case, there is nothing on record to suggest that any material was unearthed during the search or in 153A proceeding which would show that non-disallowance u/s.41(1) was erroneous, therefore, we do not find any infirmity in the order of the CIT(A) deleting the addition made by the AO.

Addition u/s.69B - bogus claim of expenses in the name of labour contractors - CIT(A) delted the addition - Held that:- There is no dispute to th .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

846 - Delhi High Court) has held that addition to income based solely on report of DVO is not valid in absence of any evidence of understatement of consideration. Further, the contention of the assessee before the AO as well as the CIT(A) that the agreements for purchase of lands were entered in the year 1996 and 2002 and the possession was also taken prior to 2004- 05 could not be controverted by the Ld. Departmental Representative. Under these circumstances, we find merit in the submission 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

ded against the assessee by the decision of the Tribunal in the case of J-Sons Foundry Pvt. Ltd. [2015 (11) TMI 922 - ITAT PUNE] allowing higher depreciation @80% on civil work foundation and related labour cost of windmill. - Decided in favour of revenue.

Addition on account of cessation of liability u/s. 41(1) in respect of creditors outstanding for a period of more than three years - Held that:- No reason to hold that the liability has ceased in the hands of the assessee and such 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

URT ), we hold that the amount received by the assessee is capital in nature

Interest u/s 234A - Held that:- Once the search takes place on a person and the due date for filing of the return u/s.139(1) has not expired he can file the return only after the issue of notice u/s.153A. He is not required to file the return u/s.139(1). Therefore, the authorities below are not justified in levying interest u/s.234A of the I.T. Act for a period from 31-10-2009 to 20-07-2010. The ground raised .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ash as self assessment tax. Until and unless the assessee makes a specific request, the AO is not duty bound to appropriate such tax either towards advance tax or towards self assessment tax. He can only adjust such seized cash from the tax determined after completion of assessment. Since in the instant case, the assessee vide letter dated 30-03-2010 only has requested the AO to adjust such seized cash towards self assessment tax for A.Y. 2009-10 and since the CIT(A) has accepted this plea of th .....

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 hands of the assessee will amount to double taxation. We do not find any infirmity in the order of the CIT(A).

The assessing authority is denuded of its authority to verify the correctness and completeness of the return, which authority it has while framing a regular assessment. It must accept the return as furnished and shall not in any event raise a demand for payment of further taxes. Accepting the income as disclosed in the return of income furnished by the assessee, it must .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

facts of the present case. The various other decisions relied on by the Ld. Departmental Representative are also not applicable to the facts of the present case. Therefore, this argument of the Ld. Departmental Representative is also without any force. In this view of the matter the ground raised by the Revenue is dismissed. - ITA Nos. 377 to 383/PN/2013, ITA Nos.2578 to 2581/PN/2012 - Dated:- 6-11-2015 - Shri R. K. Panda, AM And Shri Vikas Awasthy, JM For the Petitioner : Shri Nikhil Pathak For .....

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 order. ITA No.377/PN/2013 (By Revenue) (A.Y. 2004-05) : 2. Facts of the case, in brief, are that the assessee is a company engaged in the business of Civil construction. It filed its original return of income for the year under consideration on 01-11-2004 declaring total income of ₹ 72,07,240/-. A search u/s.132 of the I.T. Act was carried out on 23-09-2009 in the group of cases. In response to notice u/s.153A the assessee filed its return of income on 20-07-2010 declaring total income 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

d. Accordingly, the AO disallowed an amount of ₹ 4,060/- being 20% of such cash payment of ₹ 20,300/- made in A.Y. 2004-05. 4. Similar additions have been made for other assessment years, the details of which are as under : A.Y. Amount of Expenses Spent in excess of ₹ 20,000/- in cash Disallowance u/s.40A(3) of the I.T. Act 2005-06 213941 42788 2006-07 361069 72214 2007-08 317566 63513 2008-09 609305 609305 2009-10 184068 69384 2010-11 80499 NIL 5. So far as addition 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

s and since when they have remained unpaid. The AO noted that investigation during the course of search and assessment proceedings revealed that assessee is generating unaccounted income by inflating its expenditure. Since assessee is doing Government contract work it cannot suppress the receipts. When an expenditure is debited in the books, the payment is made through cash from its unaccounted income. However, the liability is continued till such time the cash book has sufficient cash balance. .....

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, the AO disallowed the outstanding liability for more than 3 years amounting to ₹ 2,35,117/- for A.Y. 2004-05. 6. Similar additions have been made for other assessment years, the details of which are as under : A.Y. Amount 2005-06 1,03,230/- 2006-07 1,94,223/- 2007-08 3,12,525/- 2008-09 25,23,585/- 7. Before CIT(A) it was submitted that original assessments were completed u/s.143(3) for the A.Y. 2004-05 to 2006-07 and various additions were made after verifying the books of account and 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

cs Ltd. Vs. DCIT vide ITA No.5018 to 5022 & 5059/Mum/2010 for A.Yrs. 2004-05 to 2009-10 it was submitted that the Tribunal in the said decision has held that in cases where assessment orders have already been passed, assessment u/s.153A will be made on the basis of incriminating material, i.e. the books of account and other documents found during the search but not produced during the course of original assessment and undisclosed income or property discovered in the course of search. It was .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

concerned the Ld.CIT(A) deleted the addition holding that the AO in the order passed u.s,143(3) which was completed prior to the search, had verified the issue of outstanding creditors and no incriminating documents were found as a result of search. He accordingly deleted the addition. 10. Aggrieved with such order of the CIT(A) the Revenue is in appeal before us with the following grounds : 1. Whether on the facts and in the circumstances of the case the CIT(A) is justified in deleting the addi .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

43(3) r.w.s.153A of the Act in the absence of incriminating material found during the search. 3. The Appellant prays that the order of the Ld.CIT(A) be vacated and that of the Assessing Officer s order may be restored. 4. The appellant craves leave to add, alter, amend, modify any of the above grounds raised, any other grounds at the time of proceedings before the Hon ble Tribunal which may please be granted. 11. The Ld. Departmental Representative strongly opposed the order of the CIT(A). She s .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

/s.143(3). 12. The Ld. Counsel for the assessee on the other hand submitted that no incriminating evidence was found as a result of search u/s.132 or during the assessment proceedings u/s.153A. Therefore, no addition could have been made. Referring to the decision of the Special Bench of the Tribunal in the case of All Cargo Global Logistics Ltd.(Supra) he submitted that the Tribunal in the said decision has already considered this issue. Further, the Hon ble Bombay High Court in the case of Con .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ring to the decision of Hon ble Supreme Court in the case of CIT Vs. Sugauli Sugar Works Pvt. Ltd. reported in 236 ITR 518 he submitted that the Hon ble Supreme Court in the said decision has held that the mere fact that the assessee has made an entry of transfer in his accounts unilaterally will not enable the department to say that section 41(1) is applied and the amount should be included in the total income of the assessee. Thus, even when the assessee has credited such amount to its profit .....

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 than 3 years it cannot be taxed as cessation of liability u/s.41(1). He accordingly submitted that no addition could have been made. 13. We have considered the rival arguments made by both the sides, perused the orders of the AO and CIT(A) and the paper book filed on behalf of the assessee. We have also considered the various decisions cited before us. We find the AO made addition of ₹ 2,35,117/- u/s.41(1) of the I.T. Act on the ground that the liability appearing in the balance sheet on .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

lopment Company (Supra) the AO can make addition in an assessment u/s.153A even though the assessment has been completed u/s.143(3) prior to the date of search. 13.1 We find the Hon ble Bombay High Court in the case of Continental Warehousing Corporation (Supra) after considering the decision of Hon ble Karnatak High Court in the case of Canara Housing Development Company (Supra) has held that the AO while passing the independent assessment order u/s.153A r.w.s. 143(3) of the Act could not have .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

s.41(1) was erroneous, therefore, we do not find any infirmity in the order of the CIT(A) deleting the addition made by the AO. 13.2 Even on merit also, we find the issue stands covered in faovur of the assessee by the decision of the Hon ble Supreme Court in the case of Sugauli Sugar Works Pvt. Ltd. (Supra). We find the Hon ble Supreme Court in the said decision while deciding on the issue of cessation of liability u/s.41(1) of the I.T. Act has observed as under: The respondent-assessee is a pr .....

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 total income of the assessee. The assessee went on appeal before the Appellate Assistant Commissioner and the order of the I.T.O. was confirmed. The assessee carried the matter to the Tribunal. The Tribunal accepted the contention of the assessee and held that its unilateral entry in the accounts transferring the amount to the capital reserve account would not bring the matter within the scope of Section 41 of the Income Tax Act and consequently held in favour of the assessee. The decision 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

nnot bring about a cessation of his liability. The cessation of the liability may occur either by reason of the operation of law, that is, on the liability becoming unenforceable at law by the creditor and the debtor declaring unequivocally his intention not to honour his liability when payment is demanded by the creditor or a contract between the parties, or by discharge of the debt the debtor making payment thereof to his creditor. Transfer of an entry is neither an agreement between the parti .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

debt and the matter would fall within the scope of Section 41 of the Act. Section 41 reads as follows : "Where an allowance or deduction has been made in the assessment for any year in respect of loss, expenditure or trading liability incurred by the assessee and subsequently during any previous year, the assessee has obtained, whether in cash or in any other manner whatsoever, any amount in respect of such loss or expenditure or some benefit in respect of such trading liability by way of r .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

mount in respect of such loss or expenditure or some benefit in respect of such trading liability by way of remission or cessation thereof, the amount obtained by him". Thus, the section Contemplates the obtaining by the assessee of an amount either in cash or in any other manner whatsoever or a benefit by way of remission or cessation and it should be of a particular amount obtained by him. Thus, the obtaining by the assessee of a benefit by virtue of remission or cessation is sine qua non .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ociety Ltd., (1994) 207 ITR 169. The Division Bench of the Calcutta High Court has taken care to set out the two important factors in that case which weighed with them to come to the particular conclusion. The Bench said : "It appears from the assessment order that there is one peculiar aspect in the present case. It is the practice of the assessee to write back such unclaimed and unspent liabilities from year to year on grounds of bar limitation of the liability and to get away without pay .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

cisions referred to before it by pointing out that the facts were entirely different in those cases. Hence, the ruling of the Calcutta High Court in the case cited will not help the appellant as it turned on the peculiar facts of the case as stated in the passage extracted. 5. Learned counsel submits that the said judgment has been followed by the Calcutta High Court in Commissioner of Income-Tax, v. Jiajee Rao Cotton Mills Ltd., (1997) 227 ITR 860. There is no separate reasoning in the said jud .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

tion of law, but in such cases bilateral act of the parties will be necessary to bring about cessation of liability. According to the Bench, if the recovery had become barred by limitation by operation of law, unilateral expression of intention of the debtor not to treat the amount any more as liability might be sufficient to bring about a cessation of the liability. The Bench also accepted the alternative argument that where an assessee had written off his time barred liability from his account .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

t rid of his liability when called upon to meet either by the employees under the Industrial Disputes Act or by the Government under the Bombay Welfare Fund Act on account of the special provisions of those Acts. We are unable to accept the reasoning of the Bombay High Court in that case. Just because an assessee makes an entry in his books of accounts unilaterally, he cannot get rid of his liability. The question whether the liability is actually barred by limitation is not a matter which can b .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

. One aspect of the matter has been completely ignored by the judgment of the Division Bench of the Bombay High Court. As pointed out already, the crucial words in the Section require that the assessee has to obtain in cash or in any other manner some benefit. That part of the Section has been omitted to be considered by the Division Bench of the Bombay High Court. The said words have been considered by a Full Bench of Gujarat High Court in detail in The Commissioner of Incometax, Gujarat-II, Ah .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

whether or not some benefit in respect of trading liability by way of remission or cessation thereof was obtained by the assessee and it is in the previous year in which the amount or benefit, as the case may be, has been obtained that the amount or the value of the benefit would become chargeable to income tax as income of that previous year. 12. We fully agree with the view taken by the Division Bench in C.I.T. v. Rashmi Trading (1977) Tax LR 520 Gujarat (Supra) that the only meaning that can .....

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 actual amount which is contemplated by the Legislature when it used the words "has obtained; whether in cash or in any other manner whatsoever, any amount in respect of such loss or expenditure in the past". As rightly observed by the Division Bench in the context in which these words occur, no other meaning is possible." we are in agreement with the said reasoning. 8. There is another judgment of the Bombay High Court which was rendered much earlier in J.K. Chemicals Ltd. v. Co .....

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 debtor cannot bring about a cessation of his liability. The cessation of the liability may occur either by reason of the opera-tion of law, i.e., on the liability becoming unenforceable at law by the creditor and the debtor declaring unequivocally his intention not to honour his liability when payment is demanded by the creditor, or a contract between the parties or by discharge of the debt - the debtor making payment thereof to his creditor. Transfer of an entry is neither an agreement bet .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

Bombay Dyeing & Manufacturing Co. Ltd. v. The State of Bombay and Others, [1958] SCR 1122, If that principle is applied, it is clear that mere entry in the books of accounts of the debtor made unilaterally without any act on the part of the creditor will not enable the debtor to say that the liability has come to an end. Apart from that, that will not by itself confer any benefit on the debtor as contemplated by the Section. 11. In the circumstances, we find no merit in this appeal and it is .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

oceedings, the assessee filed a written note stating that the AO invoked the provisions of section 41(1) of the Act and according to the said provisions, the AO cannot treat the said amounts as income of the assessee or deem them as case of remission or cessation of liabilities, where the said amounts were not written of by the assessee in the books of the assessee. During the proceedings before us, the assessee filed case laws to support view including the Pune bench decision in the case of M/s .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

. Considering the above settled principles on the issue, we find that the finding of the CIT(A) has to be reversed on this issue. Accordingly, the relevant ground of the assessee are allowed. Further, the grounds of the revenue are dismissed. 13.4 Following the above precedents we hold that the CIT(A) was fully justified in deleting the addition of ₹ 2,35,117/-. Accordingly, the grounds raised by the Revenue are dismissed. ITA No.378/PN/2013 (By Revenue) (A.Y. 2005-06) : 14. Grounds of app .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

that the original assessment made u/s.143(3) had reached finality and the same could not be agitated during the course of assessment proceedings u/s.143(3) r.w.s. 153A of the Act in the absence of incriminating material found during the search. 15. After hearing both the sides, we find the above grounds are identical to grounds of appeal No.1 and 2 in ITA No.377/PN/2013. We have already decided the issue and the grounds raised by the Revenue have been dismissed. Following the same reasoning, 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

ear 2005, whereas the Assessing Officer was supposed to take comparable instance of 1996 and 2002. However, there is nothing in the purchase deed to suggest that the assessee had made payment in the year 1996 and 2002? 17. Facts of the case, in brief, are that the AO during the course of assessment proceedings noted that the assessee has acquired the following properties during A.Y. 2005-06 : 1 Land at S.No.22/1 (Part) Bavdhan (Budruk), Tal Mulshi, Dist. Pune 2 Land at S.No.22/1 (Part) Bavdhan ( .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

00/-. The AO, therefore, asked the assessee to explain as to why the difference of ₹ 22,04,250/- shall not be added u/s.69B of the I.T. Act. It was submitted by the assessee that the difference between the investment shown by the assessee and the value determined by the DVO is due to the sudden increase in price by more than 60% to 70%. Further, the DVO has not considered the fact that one of the properties, i.e. Plot No.22/1 at Bavdhan was agreed to be purchased in 2002 and Plot No.21/1 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

ct. 19. Before CIT(A) it was submitted that the stamp duty registration charges are accounted for in its books at the time of purchase deed. Relying on the decision of Hon ble Delhi High Court in the case of CIT Vs. Puneet Sabharwal reported in 338 ITR 485 it was submitted that the Hon ble High Court in the said decision has held that addition cannot be made only on the basis of report of the DVO and that the primary burden to prove understatement or concealment of income is on the revenue. 20. .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

hase deed and details of payments made by providing the extract of land account. These details comprised of both lands purchased at Bavdhan i.e. details were given in respect of survey no. 22/1 and 21/1. During the course of appellate proceedings, the appellant has pointed out that possession of both the pieces of land was taken in earlier years. For this purpose, it has provided with the account extract of construction and material purchased account from 01/04/2003 to 31/03/2004. These account .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

l year 2002-03 itself. These fats indicate that the transaction for transfer and purchase of land was completed before the date of registry for sale, which were executed in the financial year 2004-05. The transfer of land was completed in accordance with section 53A of the Transfer of Property Act. Now, these facts were already before the assessing officer during the course of assessment proceedings for assessment year 2006-07. Hence, in accordance with the principles for examination of items 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

this item and made the addition of ₹ 15.90 lakhs in assessment year 2006-07 and ₹ 22.40 lakhs in assessment year 2005- 06. 21. Even on merits, there is no case for an addition because the DVO has taken comparable sales instance of the year 2005 whereas he was supposed to take the comparable sales instance of the year 1996 and 2002. There is nothing on record to indicate that land was undervalued while making the purchases m these two years. Therefore, the additions made are deleted. .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ments for purchases were entered into in the year 1996 and 2002 and the possession of the said lands were also taken prior to 2004-05. The DVO instead of taking comparable sale instances in the year 1996 to 2002 when the agreements were made had taken comparable sale instances of 2005. Therefore, the Ld.CIT(A) was fully justified in deleting the addition. 24. We have considered the rival arguments made by both the sides, perused the orders of the AO and CIT(A) and the paper book filed on behalf .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

valuation report of the DVO. The Hon ble Delhi High Court in the case of Puneet Sabharwal (Supra) has held that addition to income based solely on report of DVO is not valid in absence of any evidence of understatement of consideration. Further, the contention of the assessee before the AO as well as the CIT(A) that the agreements for purchase of lands were entered in the year 1996 and 2002 and the possession was also taken prior to 2004- 05 could not be controverted by the Ld. Departmental Repr .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

missed. 25. Grounds of appeal No.4 and 5 being general in nature are dismissed. ITA No.379/PN/2013 (By Revenue) (A.Y. 2006-07) 26. Grounds of appeal No.1 and 2 by the Revenue read as under: 1. Whether on the facts and in the circumstances of the case the CIT(A) is justified in deleting the addition of ₹ 1,94,223/- made on account of creditors outstanding stating that the issue of outstanding creditors was already subject to scrutiny during original assessment and the Assessing Officer cann .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

TA No.377/PN/2013. We have already decided the issue and the grounds raised by the Revenue have been dismissed. Following the same reasoning, the above grounds by the Revenue are dismissed. 28. Ground of appeal No.3 by the Revenue reads as under : 3. On the facts and in the circumstances of the case and in law, the Ld.CIT(A) erred in deleting addition of ₹ 15,90,000/- u/s.69B of the Act stating that the Assessing Officer has incorrectly assumed jurisdiction over this item when assessment p .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

t Sy.No.21/1 (Part) Bavdhan (Budruk), Tal Mulshi, Dist. Pune for ₹ 22,50,000/- as per purchase deed as on 12-04-2005. He made a reference to the DVO u/s.142A to determine the cost of the property in the hands of the assessee as on the date of acquisition. The DVO valued the value of the property at ₹ 38,40,000/-. Rejecting the various explanations given by the assessee the AO made addition of ₹ 15,90,000/- u/s.69B of the I.T. Act. 30. In appeal the Ld.CIT(A) deleted the additio .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

completed prior to the date of search and no incriminating material whatsoever was found to substantiated that any unaccounted investment has been made, therefore, we find no infirmity in the order of the CIT(A). The decision of Hon ble Delhi High Court in the case of Puneet Sabharwal (Supra) is squarely applicable to the facts of the case according to which addition cannot be made solely on the basis of the report of the DVO in absence of any evidence of understatement of consideration. We ther .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

tion of windmill at the rates applicable to WTGS and MEDA charges were an allowable business expenditures. Hence, it is not possible for the Assessing Officer in the absence of any material found during the course of search to make the disallowance as the same tantamount to a change of opinion which is not permitted in the course of assessment u/s.153A. 34. Facts of the case, in brief, are that the AO during the course of assessment proceedings noted that the assessee during the impugned assessm .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

tself. It was submitted that the civil work done in the form of foundation work could not be separated from the wind turbine and therefore it was entitled for depreciation on the entire cost of the wind turbine. However, the AO was not satisfied with the explanation given by the assessee. After perusing various bills in connection with expenses incurred on wind turbine, the AO held that the assessee was not entitled for depreciation on civil work and payment towards MEDA charges. For the above p .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

06-07 the AO had allowed depreciation @80% on the entire cost of windmill which included expenses for civil work, foundation, erection and commissioning and testing. It was argued that addition could not have been made in the order passed u/s.143(3) r.w.s. 153A for the reason that the issue of depreciation for A.Y. 2006-07 was already concluded in the original assessment passed u/s.143(3) and also no incriminating documents in this respect were found during the course of the search. 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

the claim of excess depreciation on windmill by observing as under : 33. In respect of assessment year 2006-07, the assessing officer had, vide questionnaire dated 10/12/2007 issued along with notice under section 142(1), had sought the details of an addition of fixed assets vide item no. 14 of the questionnaire and specifically asked for the details pertaining to windmill i.e. purchase details etc., vide item no. 21. The appellant had provided details vide letter dated 11/01/2008 vide item no. .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

hold that these issues were already looked into during the course of original assessment and an opinion was formed that depreciation is allowable on foundation of the windmill at the rates applicable to WTGS and that MEDA charges were an allowable business expense. Hence, it was not possible for the assessing officer, in the absence of any material found during the course of search to make the aforesaid disallowance as the same tantamount to a change of opinion which is not permitted in the cou .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ubsequent years also the Ld. Counsel for the assessee has conceded on this issue. Accordingly, the order of Ld.CIT(A) on this issue is reversed and the ground raised by the Revenue is allowed. 40. Ground of appeal No. 5 and 6 being general nature are dismissed. ITA No.2578/PN/2012 (By Assessee) (A.Y. 2007-08) : 41. Grounds of appeal No.1 and 7 by the assessee being general in nature are dismissed. 42. The Ld. Counsel for the assessee did not press ground of appeal No.4 for which the Ld. Departme .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

doned their right to enforce recovery as no action was taken by them and hence, the liability had ceased to exist once the recovery became legally time barred and therefore, the addition was rightly made by the learned A.O. u/s. 41(1). 2.2 The learned CIT(A) failed to appreciate thata. There was no evidence that the liability in respect of the creditors had ceased during this year and hence, the income u/s 41 (1) could not be assessed in this year. b. Just because, the period of three years was .....

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 addition following the decision of Hon ble Supreme Court in the case of CIT Vs. T.V. Sundaram Iyenger and Sons Ltd. reported in 222 ITR 344. 45. Aggrieved with such order of CIT(A) the assessee is in appeal before us. 46. The Ld. Counsel for the assessee submitted that merely because the creditors were outstanding for a period of 3 years it does not mean that the liability has ceased in the hands of the assessee. He referred to the decision of Hon ble Supreme Court in the case of Sugauli Su .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

r of the CIT(A). 48. We have considered the rival arguments made by both the sides, perused the orders of the AO and CIT(A) and the paper book filed on behalf of the assessee. We have also considered the various decisions cited before us. We find the AO in the instant case made addition of ₹ 3,12,525/- on account of outstanding sundry creditors holding that these trade creditors are outstanding for a few years and the liability of the assessee has ceased. We find in appeal the Ld. CIT(A) 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

ot made to them immediately on performance of their part of contracted work. Therefore, the probability that the amounts should be outstanding against sub-contractors and labourers is contrary to normal human and business conduct. He accordingly upheld the addition made by the AO. It is the submission of the Ld. Counsel for the assessee that in view of the subsequent decision of Hon ble Supreme Court in the case of Sugali Sugar Works Pvt. Ltd. (Supra) there is no reason to hold that the liabilit .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

unds of appeal No.1 to 3 in ITA No.377/PN/2013 for A.Y. 2004- 05. Since facts are identical, therefore, following the same reasonings, the grounds raised by the assessee are allowed. 50. Grounds of appeal No.3 to 3.1 by the assessee read as under: 3. The learned CIT(A) erred in holding that the compensation received of ₹ 40 lakhs from Suzlon Energy Ltd. was taxable as a revenue receipt in the hands of the assessee. 3.1 The learned CIT(A) failed to appreciate that the compensation received .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

for delay in completion of windmill project within the stipulated time limit. It was further explained that these credit notes were received for the period before the asset was put to use and was treated as capital receipts and deducted from the invoice of the value of the windmill purchased. However, the AO rejected the above contention of the assessee that these were capital receipts and accordingly brought to tax the sum of ₹ 40 lakhs as income from other sources. 52. Before CIT(A) 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

t satisfied with the above explanation given by the assessee and held that the same is revenue in nature. Aggrieved with such order of CIT(A) the assessee is in appeal before us. 54. The Ld. Counsel for the assessee referring to Page 120 of the paper book drew the attention of the Bench to the letter addressed by M/s. Suzlon Energy Ltd. to the assessee according to which an amount of ₹ 22.54 lakhs has been offered by them as compensation for delay caused in completion of 600 KW project at .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

vily relied on the order of the CIT(A). 56. We have considered the rival arguments made by both the sides, perused the orders of the AO and CIT(A) and the paper book filed on behalf of the assessee. We find the AO made an addition of ₹ 40 lakhs being compensation received from M/s. Suzlon Energy Ltd. as revenue receipt in the hands of the assessee. We find the Ld.CIT(A) upheld the same. It is the submission of the Ld. Counsel for the assessee that since the amount was received as compensat .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

subject and your letter dated 14th march 06, we sincerely regret the delay caused in completion of your proposed wind power of 600 KW project to be installed in Dhalgaon, Maharashtra. As discussed we would like to offer following : Enclosed drafts of revised purchase orders to be placed on us along with detailed working. We also request you to complete the advance payment as per PO drafts. The proposed project will be completed on or before 30th September 2006 at Dhule/Nandurbar, Maharashtra. Rs .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

o pay another ₹ 17.50 lakhs as compensation towards the said delay. 58. We find the Hon ble Supreme Court in the case of Saurashtra Cement Ltd. (Supra) while deciding an identical issue had an occasion to consider the nature of such receipt and held such type of receipt as capital in nature. The relevant observation of Hon ble Supreme Court reads as under : 10. Thus, the short question for determination is whether the liquidated damages received by the assessee from the supplier of the pla .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

aluable only as indicating the matters that have to be taken into account in reaching a conclusion. In Rai Bahadur Jairam Valji (supra), it was observed thus: "The question whether a receipt is capital or income has frequently come up for determination before the courts. Various rules have been enunciated as furnishing a key to the solution of the question, but as often observed by the highest authorities, it is not possible to lay down any single test as infallible or any single criterion .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ading profit or no trading profit, are questions which, though they may depend no doubt to a very great extent on the particular facts of each case, do involve a conclusion of law to be drawn from those facts." 12. In Kettlewell Bullen and Co. Ltd. (supra), dealing with the question whether compensation received by an agent for premature determination of the contract of agency is a capital or a revenue receipt, echoing the views expressed in Rai Bahadur Jairam Valji (supra) and analysing nu .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

free to carry on his trade (freed from the contract terminated) the receipt is revenue : Where by the cancellation of an agency the trading structure of the assessee is impaired, or such cancellation results in loss of what may be regarded as the source of the assessee's income, the payment made to compensate for cancellation of the agency agreement is normally a capital receipt." 13. We have considered the matter in the light of the afore- noted broad principle. It is clear from claus .....

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 respect of loss of profit on account of supply of a particular part of the plant. It is evident that the damages to the assessee was directly and intimately linked with the procurement of a capital asset i.e. the cement plant, which would obviously lead to delay in coming into existence of the profit making apparatus, rather than a receipt in the course of profit earning process. Compensation paid for the delay in procurement of capital asset amounted to sterilization of the capital asset 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

upra) and hold that the amount of ₹ 8,50,000/- received by the assessee from the suppliers of the plant was in the nature of a capital receipt. 14. We, therefore, dismiss the appeal with no order as to costs. 59. Since the compensation of ₹ 40 lakhs received by the assessee from M/s. Suzlon Energy Ltd. was for delay in executing the project, therefore, respectfully following the decision of Hon ble Supreme Court cited (Supra), we hold that the amount of ₹ 40 lakhs received by t .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

frastructure cost was part and parcel of windmill and hence, the entire expenditure was entitled to depreciation at a higher rate which was available to windmill. 6. The learned CIT(A) erred in directing to apportion the other misc. expenses between windmill cost and infrastructure cost without appreciating that all the expenses incurred by the assessee were relating to windmill and therefore, all such misc. expenses should have been allowed depreciation at the rate applicable to windmill. 7. Th .....

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 Ld.CIT(A) erred in allowing additional depreciation of ₹ 92,32,906/- at higher rate of 80% for civil work foundation and related labour cost of the windmill. 63. Facts of the case, in brief, are that the AO in the assessment order has noted that the assessee has invested in windmills at ₹ 3,80,00,000/- which includes investment of ₹ 25 lakhs towards Earth Work Foundation, i.e. civil works and internal road etc. which is not entitled for higher rate of depreciation. He obse .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

not constitute windmill. Therefore, the claim of depreciation at higher rate to that extent is wrong. He accordingly disallowed ₹ 92,32,906/- being excess depreciation claimed by the assessee. 64. In appeal the Ld.CIT(A) following his decision in the case of Chappalkar Brothers for A.Y. 2008-09 directed the AO to recompute the depreciation on the basis of the guidelines given therein. According to Ld.CIT(A) the various components which go on to make up the case of the windmill are as under .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ation facility and creation of Infrastructure 7. Miscellaneous a) Processing charges b) Interest of loan capitalized upto 17/01/2008 c) Professional fees d) Registration fees e) Substation charges f) Franking charges g) MEDA or equivalent charges 65. He had accordingly directed the AO to re-compute the depreciation allowance according to the following : i) Cost of new windmill will be inclusive of all items mentioned at 1 to 5 above. ii) Cost of power evacuation facility and infrastructure will .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

tower including wind turbine generating system, component and accessories, civil work for foundation and allied work, electrical items, installation and commission charges, labour charges etc. provided by Suzlon. The assessing officer is directed to find out the cost of items at Sr.Nos. 4, 5, 6 and 7 of the above table in respect of WTGS supplied by Enercon. The appellant is directed to provide the cost attributable to these items for the purpose of allocation. In case the appellant is unable t .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

s. J-Sons Foundry Pvt. Ltd. vide ITA No.2349/PN/2012 order dated 28-01- 2014 submitted that under identical facts and circumstances the directions given by the CIT(A) for computing the depreciation on windmill has been upheld and the grounds raised by the Revenue have been dismissed. He accordingly submitted that the grounds raised by the Revenue should be dismissed. 70. We have considered the rival arguments made by both the sides. We find in the case of J-Sons Foundry Pvt. Ltd. (Supra) the CIT .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

10% on some items but allowed the depreciation @ 80% on the cost of foundation as well as cost incurred on erection and commissioning of the Wind Mill. The Tribunal also held that cost incurred on installation of Wind Mill is an integral part of the Wind Mill and the assessee should be allowed depreciation @ 80% on the cost of foundation as well as on erection and commissioning. As the issue is consequential in this year vis-à-vis the allocation made by the Ld. CIT(A), we find no reason t .....

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 accordingly dismissed. ITA No.2579/PN/2012 (By Assessee) (A.Y. 2008-09) : 72. Ground of appeal No.1 by the assessee reads as under : 1. The learned CIT(A) erred in confirming the various additions made by the learned A.O. without appreciating that the various additions made were not based on any incriminating material and hence, such additions were not warranted in the assts. completed u/s 153A. 73. The Ld. Counsel for the assessee at the outset submitted that this ground is against the asse .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ility and infrastructure cost would be entitled to depreciation at the rate applicable to building and not at the rate applicable to windmill. 3.1 The learned CIT(A) failed to appreciate that the expenditure on Power Evacuation facility and infrastructure cost was part and parcel of windmill and hence, the entire expenditure was entitled to depreciation at a higher rate which was available to windmill. 4. The learned CIT(A) erred in directing to apportion the other misc. expenses between windmil .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ly effective ground raised by the Revenue reads as under : 1. On the facts and in the circumstances of the case and in law, the Ld.CIT(A) erred in allowing additional depreciation of ₹ 1,10,70,063/- at higher rate of 80% for civil work foundation and related labour cost of the windmill. 78. After hearing both the sides, we find the above ground is identical to ground of appeal No.1 in ITA No.380/PN/2013 filed by the Revenue for A.Y. 2007-08. We have already decided the issue and the ground .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

3 and 4 by the assessee read as under: 3. The learned CIT(A) erred in holding that 60% of the cost of Power Evacuation facility and infrastructure cost would be entitled to depreciation at the rate applicable to building and not at the rate applicable to windmill. 3.1 The learned CIT(A) failed to appreciate that the expenditure on Power Evacuation facility and infrastructure cost was part and parcel of windmill and hence, the entire expenditure was entitled to depreciation at a higher rate which .....

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 Coordinate Benches of the Tribunal. In view of the above, the above grounds by the assessee are dismissed. 82. Ground of appeal No.5 by the assessee reads as under : 5. The learned CIT(A) erred in holding that the interest u/s 234A was leviable for the period from 31.10.2009 to 20.07.2010 without appreciating that as per law, no interest was leviable for that period. 83. Facts of the case, in brief, are that the assessee during appeal proceedings before the CIT(A) challenged levy of interest .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ate of filing return u/s.139(1) gets shifted to the date prescribed in the notice u/s.153A. 84. However, the CIT(A) was not convinced with the arguments advanced by the assessee. He observed that there is nothing in section 153A or 139 which allows the AO to extend the time limit for filing of income-tax returns during the regular course. According to the CIT(A), if the contention of the assessee is accepted, then even if the assessee did not file the return of income for any of the 6 years cont .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

would result in allowing prescribed benefits to a delinquent assessee. He accordingly held that in respect of the A.Y. 2009-10 the assessee should have filed the return of income on or before 31-10-2009. Since this was not done the assessee was liable to pay interest u/s.234A. He accordingly dismissed the grounds raised by the assessee. 85. Aggrieved with such order of the CIT(A) the assessee is in appeal before us. 86. The Ld. Counsel for the assessee submitted that when the search took place .....

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 234A the interest can be levied for the default in not filing the return u/s.153A within the time limit prescribed in the section. Therefore, when the notice u/s.153A was served on the assessee on 24-06-2010 asking the assessee to furnish the return of income within 30 days from the receipt of notice and when the assessee has filed its return of income on 21-07-2010, i.e. within the prescribed period of 30 days, therefore, there is no justification for levy of interest u/s.234A. 87. The Ld. De .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

submission of the Ld. Counsel for the assessee that on the date of the search on 23-09-2009 the due date for filing of the return u/s.139(1) has not expired. Since the search has taken place the assessee was precluded from filing return u/s.139(1). The assessee in response to notice u/s.153A served on him on 24-06-2010 has filed the return on 21-07-2010 which is within the period of 30 days which is granted by the AO. Therefore, there is no question of levy of any interest u/s.234A. 89. We find .....

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 notice, the return of income in respect of each assessment year falling within six assessment years referred to in clause (b), in the prescribed form and verified in the prescribed manner and setting forth such other particulars as may be prescribed and the provisions of this Act shall, so far as may be, apply accordingly as if such return were a return required to be furnished under section 139; (b) assess or reassess the total income of six assessment years immediately preceding the 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

nished after the expiry of the time allowed under such notice, or is not furnished, the assessee shall be liable to pay simple interest at the rate of [one] per cent, for every month or part of a month comprised in the period commencing on the day immediately following the expiry of the time allowed as aforesaid, and,- (a) where the return is furnished after the expiry of the time aforesaid, ending on the date of furnishing the return; or (b) where no return has been furnished, ending on the dat .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

H 0048 (Mumbai HC) at para 22 of the order has observed as under : 22. A bare perusal thereof would indicate as to how a non obstante clause has been inserted and with a defined intent. One would find that in section 139 of the IT Act, the return of income is contemplated. These provisions fall in Chapter XIV entitled "Procedure For Assessment". Section 139 deals with return of income whereas section 140 states that such return has to be verified. Section 147 which also falls within th .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ned in these provisions where search is initiated under section 132 or books of account, other documents or any assets are requisitioned under section 132A after 31st day of May, 2003, that the Assessing Officer is in a position to and mandated to issue notice within the meaning of sub-section (1) of section 153A. That is because the preceding Chapter, namely, Chapter XIII within which the powers of search and seizure and powers to requisition books of account are spelt out enable the Revenue 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

uisition books of account etc. This is because it is of the view that the books of account are required to be summoned or taken into custody. It, therefore, issues a summons in that regard. It may also requisition the books of account or other documents for that might be useful and or any assets representing withholding or part income or property which has not been or would not have been disclosed for the purpose of the Indian Income Tax Act, 1922 or the Income Tax Act of 1961 by any person from .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

relevant to the previous year in which such search is conducted or requisition has to be made. 92. A combined reading of the above provisions as well as the decision cited (Supra) indicates that a non-obstante clause has been inserted and with a defined intent. In our opinion, once the search takes place on a person and the due date for filing of the return u/s.139(1) has not expired he can file the return only after the issue of notice u/s.153A. He is not required to file the return u/s.139(1) .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

cash and not from the date of seizure of cash, i.e. 12-10-2009 for the purposes of determining the interest payable u/s.234B. 94. Facts of the case, in brief, are that the assessee during the course of appeal proceedings before the CIT(A) raised a ground disputing the charging of interest u/s.234B and 234C on cash seized on ₹ 1,14,60,500/- from the residence of Shri R.D. Shinde. It was submitted that the AO had not taken cognizance of the assessee s letter dated 30-03-2010 requesting to 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

tax for the year under consideration since the same was seized on 13-10-2009 he held that credit cannot be given from the date of seizure of the cash. According to the CIT(A) until and unless the quantum of tax payable is determined and the assessee specifically requests the department to appropriate the cash seized towards meeting of such income tax liability it cannot be said that the cash was available with the department for appropriation towards taxes due. 96. As regards the letter dated 30 .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

sment tax, he directed the AO to rework the interest chargeable u/s.234B and 234C on the balance tax liability. 97. Aggrieved with such order of the CIT(A) the assessee is in appeal before us. 98. The Ld. Counsel for the assessee referring to the decision of the Pune Bench of the Tribunal in the case of Pushphendra Subash Chandra Vs. ACIT reported in (2013) 37 CCH 127 submitted that the Tribunal in the said decision has held that section 132B(1)(i) does not prohibit utilization of the amount sei .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

heavily relied on the order of the CIT(A). 100. We have considered the rival arguments made by both the sides, perused the orders of the AO and CIT(A) and the paper book filed on behalf of the assessee. We have also considered the various decisions cited before us. We find in the instant case cash amounting to ₹ 1,14,00,000/- was seized from the residence and office premises of the director of the assessee company. We find the assessee vide letter dated 30-03-2010 addressed to the AO had .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

makes a specific request, the AO is not duty bound to appropriate such tax either towards advance tax or towards self assessment tax. He can only adjust such seized cash from the tax determined after completion of assessment. Since in the instant case, the assessee vide letter dated 30-03-2010 only has requested the AO to adjust such seized cash towards self assessment tax for A.Y. 2009-10 and since the CIT(A) has accepted this plea of the assessee, therefore, we find there should not be any gri .....

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 is identical to Ground of appeal No.1 in ITA No.380/PN/2013 for A.Y. 2007-08. We have already decided the issue and the ground raised by the Revenue has been dismissed. Following the same reasoning this ground by the Revenue is dismissed. 103. Ground of appeal No.2 by the Revenue reads as under : 2. On the facts and in the circumstances of the case and in law, the Ld.CIT(A) erred in deleting the unexplained business expenses of ₹ 1,50,00,000/- in respect of Ghodzari Project. 104. Fa .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ts Ltd. Thus, the unaccounted expenditure pertains to the sister concerns M/s. Mahalaxmi Infraprojects Ltd. and it does not belong to the asessee. He therefore held that telescoping adjustment against declaration made on the basis of sources in the hands of the assessee cannot be given for the unaccounted expenses of the sister concerns. He noted that in the case of M/s. Mahalaxmi Infraprojects Ltd. declaration has been made on account of application basis whereas in the case of the assessee dec .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

was submitted that the source based income as per SMS cash receipts is ₹ 4,35,65,000/- as against undisclosed income declared of ₹ 5.83 crores and the balance of ₹ 1,47,35,000/- was application based income. It was pointed out that the said amount was subject to tax twice, i.e. in the hands of the assessee as well as in the case of M/s. Mahalaxmi Infraprojects Ltd. It was accordingly argued to reduce the income to this extent as it amounts double taxation. 106. Based on the arg .....

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 ₹ 31 crores,Rs.21.91 crores pertained to Ghodzhari project. Although the year wise breakup of declaration on account of Ghodzhari project is not given in the statement made under section 132(4) on 12/10/2009, it is evident that the amount of ₹ 21.9182 crores was made by the appellant for the previous year 2007-08, 2008-09 and 2009-10. Perusal of assessment orders in the case of Mahalaxmi Infraprojects Ltd. shows that the entire amount of ₹ 21.9182 crores was considered as un .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

partment 2007-08 - MIL 2,75,17,500 2008-09 35,63,000 MIL 14,90,67,500 2009-10 MIL 7,46,12,030 MIL 4,25,97,000 RDS 1,50,00,000 2010-11 10,55,06,970 - (Cash) 2,05,00,000 - Total 21,91,82,000 21,91,82,000 47. In assessment proceedings, it was noted that the appellant had declared an amount of ₹ 5.83 crores as undisclosed income of assessment year 2009-10 which included ₹ 1.50 crores on account of unexplained business expense in respect of Ghodzari project. The assessing officer noted th .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

sum of ₹ 4.3665 crores was on account of kickback from contractors i.e. on source basis. The balance amount of ₹ 1.4735 crores was on account of expenses incurred by the appellant. The appellant has provided a copy of the details of cash receipts and payments to sub-contractors as per SMSs retrieved from the mobile belonging to Shri R D Shinde, which is reproduced below: Date of SMS Received Amt. Paid Amount 22/09/2009 1,32,00,000 - 19/09/2009 74,00,000 - 15/09/2009 13,00,000 - 10/09 .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

₹ 1.7510 crores was bifurcated into sums of ₹ 86.50 lakhs and ₹ 85 lakhs which were declared on application basis in the hands of Mahalaxmi Infraprojects Ltd. and the appellant, respectively (refer to question No.17) of the statement u/s.132(4) dated 12/10/2009). It is apparent therefore, that the entire declaration of ₹ 5.83 crores was not made on source basis. It is evident from the replies given during the course of statement made u/s.132(4) that a sum of ₹ 4.35 .....

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 of ₹ 62 lakhs. The appellant has also demonstrated that this amount will be available with it even if the amount of ₹ 1.4735 crores is reduced from the declaration of ₹ 5.83 crores. 48. In my opinion, given the facts in paragraph 46 (supra) the contention of the appellant deserves to be accepted. There is no doubt about the fact that the total quantum of declaration on account of unexplained expenses on Ghodzhari project cannot exceed ₹ 21.9182 crores. The appellant had .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ts that the amount of ₹ 1.50 crores (it should be ₹ 1.4735 crores) pertains to Ghodzhari project declared in the hands of the appellant. Now, if the entire amount of ₹ 21.9182 crores is considered in the hands of Mahalaxmi Infraprojects Ltd. then, there is no scope for treating any amount over and above this amount as unexplained expenses in the hands of the appellant. It is also clear that the entire declaration of ₹ 5.83 crores was not on account of source only. A part .....

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 CIT(A). She submitted that the statement given u/s.132(4) legally stands and it was never retracted. Nothing prevented the assessee not to present the above table before the AO. Only after the assessment was completed it was brought before the CIT(A). If the orders passed by the CIT(A) giving telescoping benefit is accepted, then the assessed income becomes below the returned income. 109. Relying on various decisions she submitted that the assessed income cannot go below the returned income. 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

he director of the assessee company Shri R.D. Shinde, who is also the director of another sister concern M/s. Mahalaxmi Infraprojects Ltd. had made a total declaration of ₹ 31 crores out of which ₹ 24.71 crores pertain to M/s. Mahalaxmi Infraprojects Ltd. and ₹ 6.29 crores pertains to the assessee firm. Similarly out of total declaration of ₹ 31 crores ₹ 21.91 crores pertain to Ghodzari Project. The break-up of ₹ 21.91 crores in different assessment years both .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

residence of Shri R.D. Shinde, Managing Director of assessee company contains details of receipt of kick back from various sub-contractors. The seized documents are SMS s of amounts received from sub-contractors by Shri R.D. Shinde from his accountant. Amount is paid through cheque to the subcontractors and same is received back in cash. Evidences are found for ₹ 4,35,65,000/-. This amount was admitted by the assessee group as additional income in the hands of RDS Construction Company, sis .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

fraprojects Ltd. an amount of ₹ 21.90 crores has been accepted. Referring to the decision of the Pune Bench of the Tribunal in the case of Jyotichand Bhaichand Saraf and Sons reported in 139 ITD 10 he submitted that addition has to be made on the basis of evidence and not on the basis of any statement. 111. As regards the various case decisions relied on by the Ld. Departmental Representation to the proposition that assessed income cannot go below the returned income are concerned, he subm .....

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 to the Held portion of the order which reads as under : Held, that the circular in question refers to assessments which are to be made u/s.143(3) of the Act. The circular directs that in a particular type of cases, i.e. in scrutiny cases u/s.14(3) of the Act, the income can neither be assessed at a figure lower than the returned income nor the loss assessed at a figure higher than the loss nor further refund given except what was due on the basis of the returned income. Thus, by issuance of t .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

rcise its jurisdiction under article 226. The order of the Assessing Officer to the extent it stated that the total income would be the returned income, was to be set aside, with a direction to the Assessing Officer to make assessment without keeping in mind the Central Board of Direct Taxes circular dated October 31, 1989. 112. Referring to the decision of Hon ble Bombay High Court in the case of CIT Vs. Pruthvi Brokers and Shareholders Pvt. Ltd. reported in 349 ITR 336 he submitted that the CI .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

partly allowed the appeal and rejected assessee s contention that the AO was acting without jurisdiction. On further appeal, the Tribunal held that the assessment orders were void ab-initio as the AO lacked jurisdiction. Reference against the said order of the Tribunal was pending before the High Court and the assessee in the meantime, pursuant to order of the Tribunal, applied to the AO for refund of the tax paid by them. Since the taxes were not refunded, a director preferred an appeal before .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

d by the assessee. It cannot raise a demand for further payment of taxes and the tax paid by the assessee must be accepted as it is. In the event of the tax paid being in excess of the tax liability duly computed on the basis of return furnished and the rates applicable, the excess shall be refunded to the assessee since its retention may offend Article 265 of the constitution. However, if the tax paid is found to be less than that payable no further demand can be made for recovery of the balanc .....

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 of RDS Construction Company. 115. We have considered the rival arguments made by both the sides, perused the orders of the AO and CIT(A) and the paper book filed on behalf of the assessee. We have also considered the various decisions cited before us. We find the Revenue has challenged the order of the CIT(A) in deleting the unexplained business expenses of ₹ 1.50 crores in respect of Ghodzari Project. We find the AO during the course of assessment proceedings rejected the claim of 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

s in the hands of assessee. It is seen that the application of undisclosed expenses of Ghodzari Project is pertains to the sister concerns M/s. Mahalaxmi Infraproject Ltd. Thus, the unaccounted expenditure pertains to the sister concerns M/s. Mahalaxmi Infraproject Ltd. and not belongs to the assessee. A Telescopic adjustment against declaration made on the basis of source in the hands of the assessee cannot be given for the unaccounted expenses of the sister concerns. In the case of M/s. Malaxa .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

377; 5,83,00,000/- and the balance of ₹ 1,47,35,000/- was application based income. The assessee also provided a copy of the details of cash receipts and payments of sub-contractors as per SMS retrieved from the mobile belonging to Shri R.D. Shinde, the director of the firm. We find the CIT(A) allowed the claim of the assessee on the ground that an amount of ₹ 21.92 crores has already been considered in the hands of Mahalaxmi Infraprojects Ltd. on account of Ghodzari project which 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

he previous year relevant to assessment years 2007-08 and 2009-10 could not be controverted by the Ld. Departmental Representative. Therefore, we find merit in the observation given by the CIT(A) that if the entire amount of ₹ 21.9182 crores is considered in the hands of Mahalaxmi Infraprojects Ltd., then there is no scope of treating any amount over and above this amount as unexplained expenses in the hands of the assessee. Further, the entire declaration of ₹ 5.83 croes was both on .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ction of the Ld. Departmental Representative that CIT(A) has admitted additional evidence, we find the same is without any basis. The AO has discussed the evidence seized from the residence of the director of RDS Construction Company in the hands of Mahalaxmi Infraprojects Ltd. at para 28 of page 9. However, the AO chose not to discuss the same in the body of the assessment order of the assessee. Therefore, we find no force in the submission of the Ld. Departmental Representative that the Ld. CI .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

will amount to double taxation. 119. As regards the objection of the Ld. Departmental Representative that the assessed income cannot go below the returned income if the contention of the assessee is accepted, we find the Hon ble Bombay High Court in the case of Pruthvi Brokers and Shareholders Pvt. Ltd. (Supra) has held as under (Short notes): An assessee is entitled to raise not merely additional legal submissions before the appellate authorities but is also entitled to raise additional claims .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

l and each case must be considered as its own facts. 120. As regards reliance on the decision of Hon ble Supreme Court in the case of Shelly Products (Supra) by Ld. Departmental Representative is concerned, we find the facts of that case are different from the facts of the present case. In that case, the assessee after having paid the advance tax and self assessment tax filed its return of income for the relevant assessment year. The AO framed the assessment u/s.143(3) r.w.s. 144B. CIT(A) partly .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

efund the amount paid by the assessee towards advance tax and self assessment tax. The Tribunal affirmed the order of the AAC and the High Court upheld the order of the Tribunal. Under these circumstances the Hon ble Supreme Court set aside the order of the High Court holding that if the assessing authority cannot make the assessment in accordance with provisions of the Act, it amounts to deemed acceptance of the return of income filed by the assessee. In such case the assessing authority is den .....

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 that payable, no further demand can be made for recovery of the balance amount since a fresh assessment is barred. However, if the assessee has paid more tax then the income that was returned then the excess tax to be refunded. We therefore, are of the considered opinion that the said decision is distinguishable and not applicable to the facts of the present case. The various other decisions relied on by the Ld. Departmental Representative are also not applicable to the facts of the present ca .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

d. 123. Grounds of appeal No.2 to 2.2 by the assessee read as under: 2. The learned CIT(A) erred in confirming the addition of ₹ 25,23,585/- made by the learned A.O. on account of cessation of liability u/s 41(1) in respect of creditors outstanding for a period of more than three years without appreciating that as per law, the addition is not justified. 2.1 The learned CIT(A) erred in holding that the creditors had abandoned their right to enforce recovery as no action was taken by them an .....

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 ratio of Supreme Court decision in the case of Sugauli Sugar Works [236 ITR 518] and thus, there was no reason warranting the addition u/s. 41 (1) in this year. 124. After hearing both the sides we find the above grounds are identical to grounds of appeal No. 2 to 2.2 in ITA No.2578/PN/2012 for A.Y. 2007-08 filed by the assessee. We have already decided the issue and the grounds raised by the assessee have been allowed. Following the same ratio, the above grounds raised by the assessee are all .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

preciation at a higher rate which was available to windmill. 4. The learned CIT(A) erred in directing to apportion the other misc. expenses between windmill cost and infrastructure cost without appreciating that all the expenses incurred by the assessee were relating to windmill and therefore, all such misc. expenses should have been allowed depreciation at the rate applicable to windmill. 126. The Ld. Counsel for the assessee fairly conceded that the above grounds are decided against the assess .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

129. After hearing both the sides, we find the above ground is identical to ground of appeal in ITA No.380/PN/2013. We have already decided the issue and the ground raised by the Revenue has been dismissed. Following the same ratio, this ground by the Revenue is dismissed. 130. Ground of appeal No.2 by the Revenue reads as under : 2. On the facts and in the circumstances of the case and in law, the Ld.CIT(A) erred in allowing deduction u/s.80IA(4)(iv) of ₹ 74,26,459/-. 131. Facts of the 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

ear upto and including the assessment year for which the determination is to be made. The AO observed that the assessee is in the business of civil construction and in the year of installation of wind mill the unabsorbed depreciation of windmill was claimed and allowed against profit of such other business. Further the assessee had shown profit from windmill for subsequent years. The assessing officer reworked the manufacturing and profit and loss account in respect of windmill as per provisions .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

which was the first year of generation of power. It had set off loss from windmill against the profit of construction activity for four years till assessment year 2009-10. When the operation of windmill activity resulted in profit of ₹ 1,07,72,594/- for the first time, it had claimed deduction u/s.80IA(4) in assessment year 2010-11. It was submitted that the year-wise details of profit / loss from windmill activity produced during assessment proceedings were not considered by the assessing .....

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 38 DTR 57 and the decision of the Pune Bench of the Tribunal in the case of Poonawalla Estate Stud & Agro Farm Pvt. Ltd. Vs. ACIT reported in 136 TTJ 236 were brought to the notice of the CIT(A). 133. Based on the arguments advanced by the assessee the Ld.CIT(A) allowed the claim of the assessee by observing as under : 52. I have given careful consideration to the contentions of the appellant. A similar issue had come up in appeal before me in the case of M/s Preetam Enterprises wherein th .....

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 years earlier to the initial assessment year which have already been absorbed against the profits of other business cannot be notionally brought forward and set off against the profits of the eligible business for computing the deduction under section 80 IA. Following this judgment of Honble Madras High Court, this issue is decided in favour of the assessee. The assessee is entitled to claim for deduction u/s 80IA(4)(iv)(a) of the Act. 53. Thus, in view of the identical facts and circumstanc .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

s been decided in favour of the assessee by the decision of the Pune Bench of the Tribunal in the case of Poonawalla Estate Stud & Agro Farm Pvt. Ltd.(Supra) wherein it has been held as under : 13. We have heard both the parties and perused the factual matrix of the case and orders of the Revenue and the paper book. We have also examined the legal position on the matter. Before adjudicating the issue in question, it is necessary to examine the scope of the provisions relating to the initial .....

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 computing the total income of the assessee, a deduction from such profits and gains of an amount equal to hundred per cent of profits and gains derived from such business for the first five assessment years commencing at any time during the periods as specified in sub-s. (2) and thereafter, twenty-five per cent of the profits and gains for further five assessment years : Provided that where the assessee is a company, the provisions of this sub-section shall have effect as if for the words t .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

: Provided that where the assessee begins operating and maintaining any infrastructure facility referred to in cl. (b) of Explanation to cl. (i) of sub-s. (4), the provisions of this sub-section shall have effect as if for the words fifteen years , the words twenty years had been substituted..............." 14. From the above provisions of sub-s. (2) of s. 80-IA of the Act, it is evident that the assessee is granted the option to select initial assessment year i.e., first assessment year 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

year , we have perused the citations relied upon by the assessee s counsel. The conclusion by the Tribunal Mumbai Bench decision in ITA No. 4620/Mum/2007 (asst. yr. 2004-05) in the case of Dy. CIT vs. Ushdev International Ltd., is straight on this issue of initial assessment year and the option to the assessee and the held portion of the decision reads as under : "In view of the above learned CIT(A) s order to the extent of holding that initial assessment year and subsequent succeeding asse .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ject, assessee would be left with only another 7 years of claim out of the 10 years available to the assessee. Considering this we are of the opinion that the initial assessment year is to be determined on the basis of the year the assessee choose to claim the deduction for the first time........" 15. When the statute have granted the option to choose the initial assessment year and when the assessee has so chosen the current assessment year as the initial assessment year and when 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

 

 

 

 

 

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