TMI Blog2017 (11) TMI 796X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 notes to the accounts filed along with return of income which was available before 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. 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, t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... round raised by the Revenue is dismissed. - ITA no.1578/Mum./2015, ITA no.1584/Mum./2015 And ITA no.1585/Mum./2015, ITA no.1579/Mum./2015, ITA no.1586/Mum./2015, ITA no.1580/Mum./2015, ITA no.1587/Mum./2015, ITA no.1581/Mum./2015 And ITA no.1545/Mum./2015 - - - Dated:- 10-11-2017 - SHRI SAKTIJIT DEY, JUDICIAL MEMBER AND SHRI MANOJ KUMAR AGGARWAL, ACCOUNTANT 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 by the Assessing Officer under section 14A of the Income-tax Act, 1961 (for short the Act ) r/w rule 8D of the Income tax Rules, 1962. 3. Brief facts are, the assessee a domestic company is engaged in the manufacture and sale of garments, fashion accessories, etc., under the brand name Pro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 re visit such issue in the proceeding initiated under section 153A of the Act in the absence of any incriminating material concerning such issue. That being the case, in our view, the learned Commissioner (Appeals) was justified in deleting the addition made by the Assessing Officer. Accordingly, we uphold the order of the learned Commissioner (Appeals) by dismissing the ground raised. 6. In the result, Revenue s appeal is dismissed. ITA no.1578/Mum./2015 Revenue s Appeal for A.Y. 2009 10. 7. 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. The only effective ground raised by the Revenue reads as under: ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... igh Court in Solid Container Ltd. v/s DCIT, 178 tasmann 192, the Assessing Officer held that the amount received by the assessee on account of forfeiture of share warrant is a revenue receipt and accordingly added back the amount of ₹ 2,09,82,015 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 addition made by the Assessing Officer. 11. Learned Departmental Representative relied upon the reasoning of the Assessing Officer. 12. Learned Authorised Representative strongly supported the finding of the learned Commissioner (Appeals). 13. We have heard rival contentions and perused the material available on record. We have also applied our mind to the decisions relied upon. As far as the factual aspect of the issue is concerned, there is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 contrary decision has been brought to our notice by the Learned Departmental Representative to dispute the finding of the learned Commissioner (Appeals). Therefore, applying the ratio laid down in the decisions referred to above, we uphold the order of the learned Commissioner (Appeals) by dismissing the ground raised. 14. In the result, Revenue s appeal is dismissed. ITA no.1584/Mum./2015 Assessee s Appeal for A.Y. 2009 10 15. Ground no.1, is not pressed, hence, dismissed. 16. In ground no.2, the 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 accepted a part ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 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, relates to disallowance of ₹ 94,09,045, made under section 14A r/w rule 8D. 21. Brief facts are, during the assessment proceedings, the Assessing Officer noticing that the assessee has earned exempt income of ₹ 5,94,70,673, whereas, it has disallowed amount of ₹ 10 lakh towards expenditure incurred for earning exempt income, was of the view that the disallowance made by the assessee was not correct. Accordingly, he called upon the assessee to explain why disallowance of expenditure attributable to exempt income should not be made in terms of rule 8D. Though, the assessee justifie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ble disallowance of the same expenditure. Therefore, in terms with the direction of the Co ordinate Bench in ITA no.2155/Mum./2013 dated 21st January 2015, we restore the issue back to the file of the Assessing Officer for fresh adjudication after providing due opportunity of being heard to the assessee. This ground is allowed for statistical purposes. 24. All other grounds raised in this appeal are not pressed, hence, dismissed. 25. In the result, assessee s appeal is partly allowed. ITA no.1579/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, during the assessment proceedings, the Assessing Officer on verifying the tax audit report found that the assessee has not paid employee s contribution to P.F. and ESI ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 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. 41. In ground no.1, Revenue has challenged deletion of addition made on account of delayed payment of employee s contribution of P.F / ESIC. 42. This issue is similar to the issue raised by the Department in ITA no.1579/Mum./2015, dealt in the earlier part of the order. Following our decision in Para 29 of 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 (Ap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Unit. The assessee challenged the decision before the learned Commissioner (Appeals). 45. The learned Commissioner (Appeals) after considering the submissions of the assessee in the context of facts and material available on record having found that the assessee had actually carried out the manufacturing activity in Baddi Unit in respect of which deduction under section 80IC of the Act was claimed, deleted the 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 was claimed on the stock transfer from Daman Unit. On the contrary, the Baddi Unit was carried on manufacturing activity and the deduction claimed by the assessee under section 80IC is in respect of the goods manufacturing at Baddi Unit. He further submitted, simply relying upon ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 from Statewise details of stock transfer. He also found that the stock transfer is made against Form F as required by the Sales Tax Department which were disclosed to the Sales Tax Department. From the inventory details of Baddi Unit submitted before him, the learned Commissioner (Appeals) found that deduction under section 8IC was claimed on the garments produced in the said unit and not on garments received in distribution centre. On examining the details, the learned Commissioner (Appeals) has 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 othe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he order. Following our decision in Para 23, we restore the issue to the file of the Assessing Officer for fresh adjudication after providing due opportunity of being heard to the assessee. 55. In the result, assessee s appeal is partly allowed. ITA no.1581/Mum./2015 Revenue 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 is identical to the issue raised in ground no.1 of ITA no.1579/Mum./2014. Following our decision in Para 29 of this order, we uphold the order of the learned Commissioner (Appeals) and dismiss the ground. 59. In ground no.2, Revenue has challenged the decision of the learned Commissioner (Appeals) in allowing assessee s claim of deduction under section 80IC of the Act. 60. This issue is ident ..... X X X X Extracts X X X X X X X X Extracts X X X X
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