9911796707
Advanced Search 
TMI Blog2016 (6) TMI 854X X X X Extracts X X X X X X X X Extracts X X X X ..... sued notice dated 28.4.2008. In the reasons recorded, he had stated as under : "In this case assessment order for A.Y. 2005-06 was passed u/s. 143(3) on 31.12.2007 by the Addl. CIT, Range1, Baroda. It was observed by him that the assessee has shown huge income as short term capital gains and long term capital gains arising out of investments. These incomes were held to be income assessable under the head "profits and gains of the business or profession" to the tune of Rs. 16,54,53,272/- and thereby brought to the net of higher slab of the tax net. The perusal of the records for the year under consideration shows identical facts. The assessee has earned huge profits of Rs. 19,12,92,135/- on sales of investments. However, it has shown long term capital gain of Rs. 3,81,32,086/- under the head "Capital Gains" and thereby income has escaped assessment under the head "profits and gains of the business or profession'. In View of the facts of the case as above, I have reason to believe that income chargeable to tax under the head "profits and gains of the business or profession" has escaped assessment. Issue notice u/s. 148 of the Act." 3. By the impugned judgement, the Tribunal held ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... quity investment and investment management fees respectively. Considering the nature of expenses, the assessee was asked to show cause as to why these claims of the assessee should not be disallowed because these are not wholly and exclusively for the business purpose. The assessee's reply is as under- "The appellant is a large company. For the year under consideration, we had total assets aggregating to Rs. 42218/- lacs at the end of the year and had turnover of Rs. 15219/- lacs and profit before tax of Rs. 61 79/- lacs. The funds of the appellant are invested in fixed assets, stocks, debtors, advances; inter corporate deposits, bank deposits, immovable properties, shares, mutual funds etc. Depending on exigencies and in the best interests of the company, funds also keep getting redeployed from one asset to another from time to time. The management of funds of this magnitude requires expert advice for which the company retained the above persons The payment for various services including the following:Page - To review our asset portfolio from time to time and advise of any changes therein in view of economic scenario and expected event in the financial market. - To study our ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... claim other related expenses also in view of the following case laws - 7) Swadeshi Cotton Mills Co. Ltd. vs. CIT ITR 57 (SC) 8) Laxmi Ratan Cotton Mills Co. Ltd. vs. CIT, 73 ITR 634 (SC) 9) Harinagar Sugar Mills Ltd. vs. CIT, 117 ITR 945 (Bombay) 10) CIT vs. Southern Sea Food Ltd., 205 ITRI 76 (Mad) 11) CIT vs. Industrial Development Corporation of Orissa Ltd. 249 ITR 401 (Ori.) 12) CIT vs. Udaipur Mineral Development Syndicate Pvt. Ltd., 269 ITR 263, (Raj) In view of the above discussion, it is clear that the expenses claimed by the assessee as discussed above are not at all for the business, purpose.Therefore, the assessee has clearly failed to establish that these expenses are wholly and exclusively for the business purpose. Further, since the activity of investment would result in income chargeable to tax either under the head "capital gains" or income under the head "income from other sources". No expenses other than cost of acquisition is admissible, and allowable under the head "capital gains". Secondly, all the receipts which are falling under the head "income from other sources" in the instant case which are the dividend and tax free interest are exempt i.e. not in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the amended section 147 of the Act was applicable. On certain claims of the assessee which were not rejected by the Assessing Officer in the scrutiny assessment, the court held that in cases where the Assessing Officer has not made an assessment of any item of income chargeable to tax while passing the assessment order, it cannot be said that such income was subjected to an assessment. The court was of the opinion that in the original assessment, the Assessing Officer never really formed an opinion on a particular contentious issue. It was in this background that the Court was of the opinion that since no opinion was formed in this regard, consequently there would be no question of a mere change of opinion. The Court also expressed an opinion that in view of the explanation 2 to section 147 of the Act, power to make assessment or reassessment within four years would be attracted even in cases where there has been complete disclosure of all material facts. 46. The decision in case of Praful Chunilal Patel v. M. J. Makwana, Assistant Commissioner of Income Tax, however, goes beyond the above proposition. The Bench went on to hold that, "On a proper interpretation of s. 147 of the Ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... filed several replies before the Assessing Officer. Only after considering such replies and documents accompanying such replies, Assessing Officer framed the assessment in such assessment order. He disallowed only a small portion of the petitioners claim for deduction. To the extent the petitioner had claimed deduction for sample storage income, the same was disallowed, rest of the claim was accepted. By no stretch of imagination, can it be stated that the claim under Section 80IB(8A) of the Act was not examined by the Assessing Officer in the original assessment. Entire claim was thoroughly and painstakingly scrutinized. His queries were not restricted to sample storage income alone. For example, in his communication dated 21.10.2009 he called upon the petitioner to furnish details of transactions with various companies, such as M/s Cadila Healthcare Ltd., Lupin Ltd. Etc. These are the companies with whom the petitioner had entered into detailed agreements for carrying out scientific research. In paragraph 4 of such notice, he called upon the petitioner to furnish note on claim of deduction under Section 80IB(8A) of the Act to produce necessary evidence in support of such claim. H ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
