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Dy. Commissioner of Income Tax, Central Circle–2 (3) , Asstt. Commissioner of Income Tax Versus M/s. Provogue India Ltd.

2017 (11) TMI 796 - ITAT MUMBAI

Assessment u/s 153A - Addition u/s 14A r.w.r. 8D - Held that:- By the time the search and seizure operation took place under section 132 in case of the assessee on 20th January 2012, assessment for the impugned assessment year stood completed under section 143(3) of the Act. Thus, as on the date of search there was no abated assessment proceeding for the impugned assessment year. Therefore, in the proceedings initiated under section 153A of the Act, the Assessing Officer could have made addition .....

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power to re–visit such issue in the proceeding initiated under section 153A of the Act in the absence of any incriminating material concerning such issue. - Decided in favour of assessee - Addition made on account of forfeiture of share warrant - Held that:- Addition was not on the basis of any incriminating material found as a result of search. Rather, all information relating to forfeiture of share warrant and credit to capital reserve account was reflected in audited account as well as n .....

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of the learned Commissioner (Appeals) deserves to be upheld. - Addition made on account of alleged bogus purchase - dispute is only with regard to source of purchase made by the assessee - Held that:- The facts on record indicate that, though the assessee has made the purchases, however, he has failed to prove the exact source from which such purchases were made. In the circumstances, addition of the entire purchases would not be proper considering the fact that the assessee might have made .....

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ribution 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. (2014 (7) TMI 477 - BOMBAY HIGH COURT ) squarely applies to the fact of the present case. Accordingly, we uphold the decision of the learned Commissioner (Appeals) by dismissing the ground raised. Deduction allowed. - Claim of deduction under section 80IC - delivery c .....

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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 section 80IC has been allowed in scrutiny assessment made under section 143(3) for the assessment year 2013–14. The aforesaid fact also gives crede .....

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TANT MEMBER For The Assessee : Shri Mandar Vaidya a/w Shri Rushabh Mehta For The Revenue : Shri H.N. Singh ORDER PER BENCH These bunch of nine appeals, five by Revenue and four by the assessee, are against separate orders of the learned Commissioner (Appeals)-48, Mumbai, for the assessment years 2008-09, 2009-10, 2010-11, 2011-12 and 2012-13. ITA no.1545/Mum./2015 Revenue s Appeal for A.Y. 2008-09 2. The only issue raised by the Revenue pertains to deletion of addition of ₹ 55,61,275, made .....

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ssee was originally completed under section 143(3) of the Act vide order dated 11th May 2009, determining the total income at ₹ 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 .....

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de on the basis of any incriminating material could not have made in an assessment under section 153A of the Act. The learned Commissioner (Appeals) having found the aforesaid contention of the assessee acceptable in view of the decisions of the Tribunal, Mumbai, Special Bench, in All Cargo Global Logistics Ltd. v/s DCIT, [2012] 23 taxmann.com 103, deleted the addition made by the Assessing Officer. 5. We have heard rival contentions and perused the material available on record. Undisputedly, in .....

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income which was found as a result of search or has a nexus with the incriminating materials found as a result of search. On the contrary, in the computation filed along with the original return of income, the assessee made a disallowance of ₹ 10 lakh under section 14A of the Act. Thus, the issue of disallowance of expenditure under section 14A stood concluded on completion of assessment under section 143(3) of the Act originally. That being the case, the Assessing Officer has no power to .....

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he Registry has pointed out a delay of two days in filing the present appeal. However, as per the letter dated 29th July 2017 of the Assessing Officer, the delay of 2 days was due to wrong mentioning of date of receipt of appeal order in Form no.36. Considering the above, we condone 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 holdin .....

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Assessing Officer while verifying the Balance Sheet of the company for the relevant financial year found that the assessee has shown an amount of ₹ 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 the applicants .....

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price. It was submitted, the forfeiture of share warrant was in the nature of capital receipt, since the amount was originally received for subscription to the share capital of the company. In support of his contention, the assessee relied upon the following decisions:- i) DCIT v/s Brijlaxmi Leasing and Financing Ltd., 118 ITD 546; ii) Asiatic Oxygen Ltd., 49 ITD 355; iii) Deepak Fertilizer and Petrochemicals Ltd. v/s DCIT, 116 ITD 372. 9. The Assessing Officer did not find merit in the submissi .....

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2,015 to the income of the assessee. Being aggrieved of the addition made, assessee preferred appeal before the first appellate authority. 10. The learned Commissioner (Appeals) after considering the submissions of the assessee and applying the ratio of the decisions cited before him held that the amount received by the assessee towards share warrant being not in the regular course of business cannot be held as a trading receipt, hence, is not revenue in nature. Accordingly, he deleted the addit .....

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nst share application money received from various persons / entities. Notably, the share warrants were issued at a premium of ₹ 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 ₹ 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 .....

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down in the decisions relied upon by the learned Commissioner (Appeals), the nature of receipt on account of forfeiture of share warrant has been held to be capital. In fact, in a recent decision the Tribunal, Mumbai Bench, in case of DCIT v/s Jayant Agro Organics Ltd., ITA no.5056/Mum./2014 dated 24th February 2016, after following the decisions of Asiatic Oxygen Ltd. (supra) and Brijlaxmi Leasing and Financing Ltd. (supra) held that the receipt from forfeiture of share warrant is capital in n .....

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fore the Assessing Officer during the original assessment completed under section 143(3) of the Act. Therefore, on the date of search, there being no abated assessment the Assessing Officer could not have made addition in a proceedings under section 153A in respect of an issue which has no nexus with any incriminating material found during the search. For this reason also addition made cannot be sustained and the order of the learned Commissioner (Appeals) deserves to be upheld. Inasmuch as no c .....

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e assessee has challenged the addition made on account of alleged bogus purchase. 17. Brief facts are, in the course of assessment proceedings the Assessing Officer found that as per the report of the investigation wing of the Department, the information obtained from Sales Tax Department revealed that the purchases made by the assessee from certain persons are not genuine as the concerned persons are only providing accommodation bills. He further found that in the course of search, the assessee .....

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ed 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 .....

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x Department and also for the reason that the assessee was unable to produce concerned parties before the Assessing Officer. However, it is a fact on record that in the course of assessment proceedings, the assessee had furnished purchase invoice, challan, stock register, payment details and corresponding sales effected from the purchases made. The assessee has also furnished evidence to indicate that export sales have also been made out of such purchases. Though, the Assessing Officer has refus .....

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tion of the entire purchases would not be proper considering the fact that the assessee might have made such purchases by paying cash thereby avoiding payment of VAT. Therefore, for taking care of leakage of revenue on that account, it will be reasonable to estimate the profit on bogus purchase at 12.5%. Therefore, we direct the Assessing Officer to restrict the disallowance @ 12.5% of the bogus purchase. This ground is partly allowed. 20. The only other surviving issue as raised in ground no.4, .....

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iture attributable to exempt income should not be made in terms of rule 8D. Though, the assessee justified the disallowance 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 ₹ 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) .....

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ng 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 disallowance under section 14A of the Act amounts to double addition. As per the scheme of the Act, for any particular assessment year, only one assessment can be made. If in a particular case, a .....

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relating to disallowance made under section 14A of the Act the Assessing Officer for fresh adjudication. It is a fact on record that the disallowance made under section 14A in the original assessment was repeated in the impugned assessment order without any change. Therefore, whatever decision the Assessing Officer takes while deciding the issue in pursuant to the direction of the Tribunal will automatically apply to the issue raised in the present appeal howsoever, it should not result in doub .....

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/Mum./2015 Revenue s Appeal for A.Y. 2010-11 26. The Registry has pointed out a delay of two days in filing the present appeal. However, as per the letter dated 29th July 2017 of the Assessing Officer, the delay of 2 days was due to wrong mentioning of date of receipt of appeal order in Form no.36. Considering the above, we condone the delay of two days. 27. Ground no.1, is against deletion of addition made on account of delayed payment of employees contribution to PF/ESIC. 28. Brief facts are, .....

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loyee 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 prov .....

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ssue raised in ground no.1 of ITA no.1578/Mum./2015. Following our decision in Para-13 of this order, we uphold the decision of the learned Commissioner (Appeals) by dismissing the ground raised by the Revenue. 33. In the result, Revenue s appeal is dismissed. ITA no.1585/Mum./2015 Assessee s Appeal for A.Y. 2010-11 34. Grounds no.2 and 4 are the only effective ground in this appeal. 35. In ground na.2, assessee has challenged the addition made on account of bogus purchase amounting to ₹ 4 .....

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t of the order. Facts being identical, 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. This ground is allowed for statistical purposes. 39. In the result, assessee s appeal is partly allowed. ITA no.1580/Mum./2015 Revenue s Appeal for A.Y. 2011-12 40. The Registry has pointed out a delay of two days in filing the present appeal. However, as per the letter dated 29 .....

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f the order, we uphold the order of the learned Commissioner (Appeals). Ground raised is dismissed. 43. In ground no.2, the Revenue has challenged the decision of the learned Commissioner (Appeals) in allowing assessee s claim of deduction under section 80IC of the Act. 44. Brief facts 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 Prad .....

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ecorded 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 80IB / 80IC of the A .....

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though, the assessee stated that the claim of deduction under section 80IC for Baddi Unit was in order and there was no transfer of readymade garment from Daman to Baddi Unit, but, the readymade garments were received at Distribution Centre at Baddi on stock transfer scheme against F Form, however, the Assessing Officer did not find merit in the submissions of the assessee and disallowed assessee s claim of deduction under section 80IC on the reasoning that no manufacturing activity was carried .....

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disallowance made by the Assessing Officer. 46. Learned Departmental Representative relying upon the observations made by the Assessing Officer submitted, the claim of the assessee that they have not claimed any deduction under section 80IC in respect of stock transfer from the Daman Unit requires verification. 47. Learned Authorised Representative relying upon the findings of the learned Commissioner (Appeals) submitted, the assessee has factually proved that no deduction under section 80IC wa .....

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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 .....

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nit at Baddi there was also a distribution centre. It was submitted, readymade garments are generally received at the distribution centre at Baddi. However, as far as the manufacturing unit at Baddi is concerned, it receives raw material from Daman Unit such as fabrics, accessories, etc. and manufactures readymade garments. The assessee has specifically stated that the movement of readymade garments from Daman Unit to other distribution centres are against F Form under stock transfer scheme and .....

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addi without F form as evidenced from the fabric receipt note. He has also found that readymade garments received at Baddi distribution centre are against F form and clearly mentioned in the delivery challan as found from the stock transfer note. It is also noticed that the learned Commissioner (Appeals) has examined in detail the facts relating to stock transfer of ₹ 7,86,46,337 and found that it relates to stock transferred from various units and not only from Daman unit as can be seen f .....

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also found that readymade garments sent from Daman Unit to Baddi distribution centre against Form F amounts to ₹ 41,37,469. Further, on going through the statement recorded from Rajesh Bahadur Singh, in the course of survey the learned Commissioner (Appeals) observed that only on the basis of such statement taken in course of survey and without any other cogent evidence to suggest that the deduction claimed under section 80IC of the Act relates to the readymade garments transferred from D .....

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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 (Appe .....

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issed. 49. In the result, Revenue s appeal is dismissed. ITA no.1586/Mum./2015 Assessee s Appeal for A.Y. 2011-12 50. In this appeal, grounds no.2 and 4 are the only effective grounds. 51. Ground no.2 relates to the addition made on account of bogus purchase. 52. Identical issue raised by the assessee in ITA no.1584/Mum./ 2015, was dealt by us in the earlier part of the order. Following our decision in Para-19 of this order, we direct the Assessing Officer to disallow 12.5% out of alleged bogus .....

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nue s Appeal for A.Y. 2012-13 56. The Registry has pointed out a delay of two days in filing the present appeal. However, as per the letter dated 29th July 2017 of the Assessing Officer, the delay of 2 days was due to wrong mentioning of date of receipt of appeal order in Form no.36. Considering the above, we condone the delay of two days. 57. In ground no.1, Revenue has challenged deletion of addition made on account of delayed payment of employee s contribution to P.F. / ESIC. 58. This issue i .....

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