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2015 (12) TMI 624

Chargeable income u/s 29 - whether once the claim of the appellant as 'business' of accommodation entries is accepted, then the 'charge' has to be computed in accordance with the 'integrated scheme of taxation' of Income Tax Act, 1961? - Held that:- As decided in Commissioner of Income-tax Versus Kap Scan and Diagnostic Centre P. Ltd. [2012 (6) TMI 620 - Punjab and Haryana High Court] assessee would not be entitled to deduction of payments made in contravention of law. Similarly, payments which .....

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Mittal, J. 1. Delay of 88 days in refiling the appeal is condoned. 2. This appeal has been filed by the assessee under Section 260A of the Income Tax Act, 1961 (in short "the Act") against the order dated 20.3.2014 (Annexure A-8) passed by the Income Tax Appellate Tribunal, Chandigarh Bench "A", Chandigarh (hereinafter referred to as "the Tribunal") in ITA No. 506/CHD/2011 for the assessment year 2007- 08, claiming the following substantial questions of law:- I. Wh .....

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-1) from the customers for the purchase of commodities. The assessee filed the return of income electronically on 31.10.2007 through acknowledgment No. 7840720311007 at an amount of ₹ 2,50,090/-. The scrutiny assessment proceedings were through issuance of notice dated 2.9.2008 under Section 143(2) of the Act and thereafter notice dated 12.6.2009 under Section 142(1) of the Act was served upon the assessee for furnishing reply to the questionnaire. A show cause notice dated 12.11.2009 (Ann .....

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dated 20.3.2014 (Annexure A- 8) partly allowed the appeal. Hence, the present appeal by the assessee. 4. Learned counsel for the assessee relied upon the judgment of the Apex Court in T.A. Quereshi (Dr.) v. Commissioner of Income Tax, Bhopal (2007) 2 SCC 759 to submit that the appellant was entitled to deduction of the cash deposits at the behest of the beneficiaries who were the recipients of the drafts through accommodation entries even if the activity carried on by the assessee was considere .....

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i) The expenditure must not be governed by the provisions of Sections 30 to 36. (ii) The expenditure must have been laid out wholly and exclusively for the purposes of the business of the assessee. (iii) The expenditure must not be personal in nature. (iv) The expenditure must not be capital in nature." 14. Explanation to sub-section (1) was inserted by the Finance (No.2) Act, 1998 with retrospective effect from 1.4.1962, which reads thus:- "Explanation.- For the removal of doubts, it .....

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business expenditure. It is well decided that unlawful expenditure is not an allowable deduction in computation of income. 20.2 This amendment will take effect retrospectively from Ist April, 1962, and will, accordingly, apply in relation to the assessment year 1962-63 and subsequent years." 16. It, thus, emerges that an assessee would not be entitled to deduction of payments made in contravention of law. Similarly, payments which are opposed to public policy being in the nature of unlawful .....

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upreme Court held that seizure and confiscation of such stock in trade has to be allowed as a business loss and Explanation to Section 37 has nothing to do as that was not a case of business expenditure. Since the present case is not a case of business loss but of business expenditure, that judgment is distinguishable and does not help the assessee." 8. Further, the addition of ₹ 5,98,82,294/- had been made to the total income under Sections 68 and 69 of the Act as the cash was found .....

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