Tax Management India. Com
Law and Practice  :  Digital eBook
Research is most exciting & rewarding


  TMI - Tax Management India. Com
Follow us:
  Facebook   Twitter   Linkedin   Telegram

TMI Blog

Home

2016 (5) TMI 956

X X   X X   Extracts   X X   X X

→ Full Text of the Document

X X   X X   Extracts   X X   X X

..... (A) in our opinion was oblivious to the date of accounting of the supplementary invoice by the assessee which was on the very same day when it had raised original invoice. He was also oblivious to the ALP of the goods relating to the supplementary invoice fixed by the auditors at zero. He considered the raising of bogus invoices to inflate the agricultural income as mere non-compliance with procedures of the RBI or Customs. What we observe is that assessee had claimed agricultural income which was not possible from the type of holding it had, and had adopted dubious methods for this. Nothing was brought on record to show that there was any industrial practice in floriculture where two invoices were raised on the same day, on purportedly for a notional value and other purportedly based on subsequent realization. To be precise there cannot be any industrial practice of that sort at all. We are of the opinion that CIT (A) fell in error in deleting the addition made by the AO. We reverse the order of CIT (A) and reinstate the addition. - Decided in favour of Revenue. - I.T.A No.198/Bang/2012 - - - Dated:- 12-4-2016 - SHRI. ABRAHAM P. GEORGE, ACCOUNTANT MEMBER AND SHRI. VIJAYPAL RAO .....

X X   X X   Extracts   X X   X X

→ Full Text of the Document

X X   X X   Extracts   X X   X X

..... the supplementary invoice. In reply assessee stated that the plants which were sold were perishable in nature. According to the assessee the sale price was split into two and only if the buyer, which was the subsidiary of the assessee could use the plants, the supplementary invoice was raised. 5. However AO was not impressed by the above reply. According to him assessee had not paid the mandatory cess of 0.5% to the customs station and there were no GR forms which would enable the bank to authorise receipt of the export proceeds, arising out of supplementary invoice. AO also noted that despite several opportunities being given, assessee had not substantiated its claim of agricultural income arising out of the supplementary invoices. Further as per the AO against the purported horticulture sale of ₹ 22,74,57,819/-, what was actually received from the subsidiary was only ₹ 3,62,72,680/-. Sum of ₹ 12 crores was squared up vide a journal entry dt.30.01.2006 transferring such sum to a head called Advance to Ehiopian Meadows Plc . Balance shown as receivable from the subsidiary at the end of year was ₹ 7,11,85,138/-. Thus as per the AO against the claimed sale .....

X X   X X   Extracts   X X   X X

→ Full Text of the Document

X X   X X   Extracts   X X   X X

..... one followed by the assessee where two invoices could be raised for sale of perishable goods. As per the Ld. DR second invoice was never routed through the Customs. Assessee s own auditors had certified the ALP value of such second invoices as nil. As per the Ld. DR assessee had discontinued this practice in later years. Even the amounts as per the primary invoice were not realised by the assessee. Just because a part of the dues were transferred to capital or transferred to share application money would not convert the claim of excessive agricultural income, a legitimate one. As per the Ld. DR, mother plants claimed to have been exported by the assessee to its subsidiary M/s. Ethiopian Meadows at Ethiopia totaled to 9,42,020 numbers from about 10 hectares of land where six green houses were erected covering 5 hectares, Out of the balance five hectares of land held, as per the Ld. DR, two hectares, were open field used for growing rootstock / budwood, one hectare was used for propagation and two hectares were buildings, pathways, etc., Further as per the Ld. DR yield of plants per hectare of green house, as per Indian standard was 60,000 numbers per annum. Therefore the maximum yie .....

X X   X X   Extracts   X X   X X

→ Full Text of the Document

X X   X X   Extracts   X X   X X

..... or propagation and two hectares were used for building and pathways. Claim of the assessee is that it had sold more than 9,00,000 mother plants to its subsidiary in Ethiopia from the above holding. As per the Department, assessee could not have raised more than 3,30,000 plant saplings from the above holding. 11. Leaving this apart, what we find is that assessee had along with its return filed audit report in form 3 CEB which is required to be furnished u/s.92 E for international transactions with AEs. AO had compiled the figures given at para three above from such report. It is clear from the said report that against the claimed sale of ₹ 22,74,57,819/-, ALP was only ₹ 4,20,20,714/-. This is not the opinion of the AO / TPO, but it is the opinion of the auditors of the assessee. What the AO did was to accept the ALP determined by the auditors of the assessee in accordance with Section 92E of the Act. A reading of the table would clearly show that the determination of ALP with regard to supplementary invoices were zero. It is clear that there was no under lyng of agricultural goods or any goods for that matter which were sold. Contention of the assessee that supplement .....

X X   X X   Extracts   X X   X X

→ Full Text of the Document

X X   X X   Extracts   X X   X X

 

 

 

 

Quick Updates:Latest Updates