9911796707
TMI Blog2017 (11) TMI 796X X X X Extracts X X X X X X X X Extracts X X X X ..... essee a domestic company is engaged in the manufacture and sale of garments, fashion accessories, etc., under the brand name "Provogue". For the assessment year under dispute, the assessee had filed its original return of income on 30th September 2008, declaring total income of Rs. 19,92,41,080. Assessment in case of assessee was originally completed under section 143(3) of the Act vide order dated 11th May 2009, determining the total income at Rs. 20,60,70,360. Subsequently, pursuant to a search and seizure operation under section 132 of the Act, conducted in case of the assessee, the Assessing Officer initiated proceedings under section 153A of the Act. Ultimately, the Assessing Officer completed the assessment vide order dated 9th January 2014, making couple of additions which resulted in determination of total income at Rs. 21,17,25,100. One of the additions made by the Assessing Officer was an amount of Rs. 55,61,275 under section 14A r/w rule 8D towards expenditure incurred for earning exempt income. The assessee challenged the addition before the first appellate authority. 4. As far as the addition made on account of disallowance of expenditure under section 14A is concerne ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the delay of two days. The only effective ground raised by the Revenue reads as under:- "Whether On the facts and in the circumstances of the case and in law, the learned Commissioner (Appeals) was justified in holding that amount of forfeiture of share warrants is capital receipt and not revenue receipt, without appreciating the fact that if a receipt was of capital charecter, when received, its character changes when the amount becomes the assessee's own money because of limitation or by any other statutory or contractual right, as held by the Apex Court in the case of CIT v/s T.V. Sunderam Iyenger & Sons Ltd. (SC)" 8. Brief facts relating to this issue are, in the course of assessment proceedings, the Assessing Officer while verifying the Balance Sheet of the company for the relevant financial year found that the assessee has shown an amount of Rs. 2,09,82,015, towards forfeiture of share warrant without offering it as income, therefore, the Assessing Officer called upon the assessee to explain why the amount received by the assessee should not be treated as revenue receipt and made taxable. In response, it was submitted by the assessee that it had issued share warrants to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... factual aspect of the issue is concerned, there is no dispute that the assessee has issued share warrant against share application money received from various persons / entities. Notably, the share warrants were issued at a premium of Rs. 440 per share in accordance with SEBI guild lines and each warrant entitled the holder to exercise an option to subscribe to one equity share at a price of Rs. 450 per share. In the impugned financial year the applicants exercised their rights to convert the equity shares in respect of 4,33,733 warrants, whereas, the balance warrant totalling to 4,66,267 were forfeited. Thus, an amount of Rs. 2.09 crore representing such forfeited warrants were credited to the capital reserve account by the assessee. It is a fact on record that issuance of shares are not the business of the assessee, therefore, it cannot be said that the amount received towards share warrant is in regular course of assessee's business. Further, the assessee has not credited the amount received for forfeiture of share warrant to its Profit & Loss account. As per the ratio laid down in the decisions relied upon by the learned Commissioner (Appeals), the nature of receipt on account ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssee accepted a part of the purchases to be bogus and to cover up such bogus purchase had offered income of Rs. 30,06,34,643, in the assessment year 2012-13. However, in respect of some other purchases assessee did not accept them to be bogus. The Assessing Officer, therefore, called upon the assessee to prove the purchases by producing documentary evidence. Though, the assessee claiming the purchases to be genuine produced some supporting evidence, however, the Assessing Officer was not convinced and held that neither the purchases made by the assessee nor sales effected out of those purchases are genuine. Though, to prove the genuineness of the purchases the assessee produced stock register, payment details, quantitative details of sales, however, the Assessing Officer did not find the submissions of the assessee convincing. He was of the view that though the assessee might have been able to establish the availability of goods and corresponding sales, but, possibly purchases were not made from the concerned parties but were from other sources on payment of cash. Accordingly, he added back the amount of Rs. 12,57,708 to the income of the assessee. 18. The learned Commissioner (Ap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... isallowance made by it, however, the Assessing Officer noticing that the assessee's claim was not accepted in the original assessment completed under section 143(3) of the Act made a disallowance of Rs. 94,09,045, as was made in the original assessment. 22. Though, the assessee challenged the disallowance before the first appellate authority, however, learned Commissioner (Appeals) noticing that the disallowance under section 14A was a repetition of disallowance made in the original assessment did not accept assessee's claim. 23. We have heard rival contentions and perused the material available on record. It is the submission of the learned Authorised Representative that the addition having already been made in the original assessment, cannot be made again in the assessment order passed under section 153A of the Act. Further, he submitted, while deciding the appeal arising out of the original assessment order, the Tribunal has restored the issue of disallowance under section 14A of the Act to the Assessing Officer for fresh adjudication. Having considered the submissions of the assessee, we are unable to accept assessee's contention that the addition made on account of disallowa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... der Explanation to section 36(1)(va) of the Act. Accordingly, he disallowed assessee's claim of deduction for an amount of Rs. 6,22,416. Assessee challenged the disallowance before the first appellate authority. 29. The learned Commissioner (Appeals) having found that the assessee has paid employee's contribution to PF/ESIC before the due date of filing of return of income under section 139(1) of the Act, allowed the deduction claimed after following the decision of the Hon'ble Jurisdictional High Court in CIT v/s Hindustan Organic Chemicals Ltd., 366 ITR 001 (Bom.). 30. We have heard rival contentions and perused the material available on record. There is no dispute that the assessee has paid employee's contribution to PF/ESIC dues within the due date of return of income as provided under section 139(1) of the Act. That being the case, the ratio laid down by the Hon'ble Jurisdictional High Court in Hindustan Organic Chemicals Ltd. (supra) squarely applies to the fact of the present case. Accordingly, we uphold the decision of the learned Commissioner (Appeals) by dismissing the ground raised. 31. In ground no.2, the Revenue has challenged the deletion of addition made o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cts are, as stated earlier, the assessee is engaged in manufacturing of garments and accessories. For the purpose of its manufacturing activity it has set-up two units, one at Daman and other at Baddi in Himachal Pradesh. Besides, the manufacturing units, the assessee has several distribution centres located at different places in India including Daman and Baddi. In the course of assessment proceedings, the Assessing Officer found that in the computation of income, the assessee has claimed deduction under section 80IB of the Act in respect of Daman Unit and section 80IC in respect of Baddi Unit. He further found that in the course of a survey conducted under section 133A of the Act at Baddi a statement was recorded from one Rajesh Bahadur Singh, Production Manager of the company, wherein, he allegedly stated that readymade garments were transferred from Daman Unit to Baddi Unit. The Assessing Officer, therefore, called upon the assessee to explain whether while claiming deduction under section 80IB / 80IC, the conditions mentioned therein have been fulfilled. Though, the assessee explained that the deduction claimed by the assessee are after fulfilling the conditions of section 80I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hich has no evidentiary value, the deduction claimed by the assessee cannot be disallowed. In support of such contention, he relied upon the decision of the Hon'ble Jurisdictional High Court in CIT v/s S. Khader Khan Sons, [2013] 352 ITR 480 (Bom.). 48. We have heard rival contentions and perused the material available on record. On a reading of the impugned assessment order, it becomes clear that the Assessing Officer has disallowed assessee's claim of deduction under section 80IC of the Act in respect of Baddi Unit by relying upon the statement recorded during survey under section 133A from one Rajesh Bahadur Singh stated to be the Production Manager of the company. On a reading of the relevant extract from the statement of Rajesh Bahadur Singh, which is reproduced in Para-53 fo the assessment order it is evident that he has simply stated that in the relevant previous year Baddi has received 92,389 pieces of readymade garment from Daman and other enterprises. When the aforesaid statement was confronted to the assessee it was stated before the Assessing Officer that in addition to the manufacturing unit at Baddi there was also a distribution centre. It was submitted, readymad ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... garments transferred from Daman Unit assessee's claim cannot be denied. It is further relevant to note, the learned Commissioner (Appeals) also observed that the delivery challan impounded in the course of survey evidencing transfer of readymade garment from Daman Unit to Baddi Unit was reconciled through the inward register to demonstrate that claim of deduction under section 80IC of the Act was not in respect of readymade garments from Daman unit. Thus, from the observations made by the learned Commissioner (Appeals) it is noticed that through evidence brought on record, the assessee was able to demonstrate that the deduction claimed under section 80IC was in respect of readymade garments manufactured at Baddi Unit and not on stock transfer from Daman Unit. The aforesaid factual finding of the first appellate authority has not been controverted by the Learned Departmental Representative by bringing before us any cogent evidence. Therefore, we are unable to disturb the findings of the learned Commissioner (Appeals) on this issue. Moreover, in the course of hearing it has been brought to our notice by the learned Authorised Representative that assessee's claim of deduction under se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssioner (Appeals) by dismissing the ground raised.
61. In the result, Revenue's appeal is dismissed.
ITA no.1587/Mum./2015
Assessee's Appeal for A.Y. 2012-13
62. The only issue raised in this appeal relates to disallowance made under section 14A r/w rule 8D. Following our decision in Para-23 of this order, we restore the issue to the Assessing Officer for fresh adjudication after providing due opportunity of being heard to the assessee.
63. In the result, assessee's appeal is allowed for statistical purposes.
64. To sum up, Revenue's appeal in ITA no.1545/Mum./2015 is dismissed, Revenue's appeal in ITA no.1587/Mum./2015 is dismissed; Assessee's appeal in ITA no.1584/Mum./2015 is partly allowed; Revenue's appeal in ITA no.1579/Mum./2015 is dismissed; assessee's appeal in ITA no.1585/Mum./2015 is partly allowed; Revenue's appeal in ITA no.1580/Mum./2015 is dismissed; assessee's appeal in ITA no.1586/Mum./2015 is partly allowed for statistical purposes; Revenue's appeal in ITA no.1581/Mum./2015 is dismissed and assessee's appeal in ITA no.1587/Mum./2015 is allowed for statistical purposes.
Order pronounced in the open Court on 10.11.2017 X X X X Extracts X X X X X X X X Extracts X X X X
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