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Deepak Jain Prop, M/s Prime Commodities, Ludhiana Versus Commissioner of Income Tax, Ludhiana

2015 (12) TMI 624 - PUNJAB & HARYANA HIGH COURT

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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dited in the books of account of the assessee and had been invested in the bank account of the assessee. In such circumstances, no fault can be found with the orders of the Assessing Officer, the CIT(A) and the Tribunal which may warrant interference by this Court. - Decided against assessee. - ITA No. 252 of 2015 (O&M) - Dated:- 15-9-2015 - Ajay Kumar Mittal And Ramendra Jain, JJ. For the Appellant : Mr. Divya Suri, Adv. with Mr. Sachin Bhardwaj, Adv. and Mr. Madhur Sharma, Adv ORDER Ajay Kumar .....

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ether under the facts and circumstances of the case, while arriving at the chargeable income u/s 29 of the Act, 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? II. Whether under the facts and circumstances of the case, while arriving at the chargeable income attributable to the 'accommodation entries business', ca .....

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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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ted 31.12.2009 (Annexure A-5) under Section 143(3) of the Act at an amount of ₹ 6,02,04,380/- by making additions on account of unexplained income and the household expenses. Feeling aggrieved, the assessee filed an appeal on 25.1.2010 (Annexure A-6) before the Commissioner of Income Tax (Appeals) [for brevity "the CIT(A)"]. The CIT(A) vide order dated 4.3.2011 (Annexure A-7) dismissed the appeal. Still dissatisfied, the assessee filed an appeal before the Tribunal who vide order .....

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d to be illegal. According to the learned counsel such deduction was admissible even after incorporation of Explanation to Section 37 of the Act. 5. After hearing learned counsel for the appellant, we do not find any substance in the said submission. 6. This Court in ITA No. 445 of 2006 (The Commissioner of Income-tax, Jalandhar v. M/s Kap Scan & Diagnostic Centre Pvt. Ltd.) decided on 3.12.2010 while dealing with the similar legal issue after referring to the judgment in T.A. Quereshi's .....

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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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Section 37 of the Income-tax Act is amended to provide that any expenditure incurred by an assessee for any purpose which is an offence or which is prohibited by law shall not be deemed to have been incurred for the purposes of business or profession and no deduction or allowance shall be made in respect of such expenditure. This amendment will result in disallowance of the claims made by certain assessees in respect of payments on account of protection money, extortion, hafta, bribes, etc., as .....

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