9911796707
Advanced Search 
TMI Blog2016 (7) TMI 1494X X X X Extracts X X X X X X X X Extracts X X X X ..... erstate sales made by the assessee. 2.1.During the appellate proceedings, the assessee submitted before the First Appellate Authority (FAA) that from the facts of the case and the scheme framed by the Government of Maharashtra the subsidy in the form of sale tax incentive was not given to the assessee for assisting it in carrying out the business operations, that the object of the subsidy was to encourage the setting up of industries in the backward area, the subsidy was capital receipt, that the claim about the subsidy was not raised before the AO, that it was a pure legally claim, that same should be admitted based on certain Supreme Court decisions and adjudicated by following the decision of the special bench in the case of Reliance Industries (88 ITD273).The FAA held that the claim that the Central sales tax embedded in the sales is a capital receipt and therefore was to be excluded from the gross total income was not made by the assessee either in the return of income filed by it or before the AO in the course of assessment proceedings, that the receipt on account of Central sales tax was disclosed by the assessee in the return of income on its own, that the AO had not made ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ich became available on account of change of circumstances or law, but with additional grounds which were available when the return was filed. The words "could not have been raised" must be construed liberally and not strictly. There may be several factors justifying the raising of a new plea in an appeal and each case must be considered on its own facts........................." Respectfully following the above judgment, we direct FAA to adjudicate the issue after affording a reasonable of opportunity of hearing to the assessee.Effective ground of appeal raised by the assessee is decided in its favour, in part. ITA/6569/Mum/2013 (Revenue's Appeal) : 3.First ground of appeal is about deduction claimed u/s.80IB of the Act.During the course of hearing before us,the AR stated that the issue was deliberated upon by the Tribunal (ITA No.8418/M/2010).We find that Revenue had raised the following grounds before the Tribunal: "1. On the facts and circumstances of the case and in law, the Ld CIT (A) erred in directing the AO to allow deduction u/s 80IB of Rs. 8,50,23,349/- in respect of profits and gains of business of three new industrial undertaking i.e., Unit II, Unit III and Falau ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vity and consequently eligible for deduction u/s 80IA of the Act. Accordingly, the appeal filed by the Revenue has been dismissed. Similarly, we find the ITAT in the cross appeals vide ITA Nos.4737/Mum/2006 ad 5260/Mum/2006 order dated 29.10.2008 for the AY 2003-2004, where one of us (AM) is party, has held that the activity of the assessee is that of manufacturing and the assessee is entitled to deduction u/s 80IB of the Act. We find the decision of the Hon'ble Apex Court in the case of Techno Weld Industries (supra) and the decisions in the grounds of appeal are distinguishable and not applicable to the facts of the present case. We further find merit in the submission of the learned counsel for the assesse that when the ITAT granted relief in the initial year and subsequent years and since there is no compelling circumstances, to take a different view than the view taken by the ITAT consistently, therefore, the relief cannot be withdrawn and the proper forum for the Revenue is to approach the Hon'ble High Court for this year also since they have approached the High Court for the earlier years. Since, the CIT (A) has followed the orders of the ITAT for the earlier years. Therefor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he assessee and the assessment order the FAA held that it was not the case of the AO that the assessee was a shareholder of Oxford. He referred to the case of Bhaumik Colour P. Ltd.(313ITR(AT)146), National Travel Services(347ITR305) and granted relief to the assessee. 4.2Before us, the DR supported the order of AO. The DR stated that the assessee was not a shareholder of OSPL.In our opinion,the AO was not justified in invoking the provisions of section 2(22)(e) of the Act without establishing the basic fact as to whether the assessee was a shareholder of OSPL or not.We find that in the case of Universal Medicare (324ITR263),the Hon'ble Bombay High Court has held as under :- "In order that the first part of clause (e) of section 2(22) of the Income-tax Act, 1961, is attracted, the payment by a company has to be by way of an advance or loan. The advance or loan has to be made, as the case may be, either to a shareholder, being a beneficial owner holding not less than ten per cent. of the voting power or to any concern in which such a shareholder is a member or a partner and in which he has a substantial interest. Section 2(22)(e) defines the ambit of the expression "dividend". Al ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dering these facts the AO found that there was certain amount of production that was not disclosed by the assessee in its return of income. 5.1. He concluded that unit-III had carried out unaccounted production of steel wires to the tune of 6979.736 metric tons. He worked out total saleable production of it is goods resulting out of the unaccounted production at 5310.486 metric tons. Applying the selling price of finished goods at Rs. 54511.26 per metric ton and GP rate of 9.73%, the AO worked out the unaccounted gross profit of Rs. 2.81 corrodes. Finally, he added and amount of Rs. 2.81 corrodes under the head unaccounted profit on the sale of out of books production. 5.2.Before the FAA, during the appellate proceedings, the assessee argued that the addition were made by the AO by notionally computing alleged unreported production by considering only the average units of power consumed per month for production of goods per MT, that there was no production and/or sale which was not recorded in the books of accounts, that the assessee was governed by excise law, VAT and other regulatory laws, that the figures reported for excise and VAT were the same as reported for the income tax ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to investigated to arrive at the correct taxability, but there is marked difference between a lead and an evidence .It is duty of the AO to call for explanation of the assessee about discrepancies noted by him before fastening tax liability to it. There can be several reasons for abnormal results and they could be perfectly valid. So, without considering the same no decision should be taken. Business world does not run as per the arithmetic rules it has many a nuances and each factor play role on taxable income of an assessee. It is not appropriate to apply mathematical formulas and determine tax liability. In the case before us, the assessee had filed a letter addressed to the State Electricity authorities informing them of malfunctioning of meter for two-three months. It is quite common feature that electricity meters in some cases do not function properly and electricity boards takes time to rectify the defects. Thus, a plausible and reasonable explanation was filed by the assessee about the discrepancy in electricity bill. But, the AO without making any inquiry in that regard, jumped on a final conclusion. Besides even if there was no malfunctioning of the meters, there can be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ities as well as citations quoted by the Ld Counsel along with the relevant material placed before us. On perusal of the cited judgments of the higher judiciary, we find that they are relevant for the proposition that the there is no question of isolating the interest received on margin money paid for obtaining bank guarantee and assessing it as separate income under section 56. Therefore, agree with the view of the Tribunal that the income derived on the margin money for obtaining bank guarantee cannot be separately assessed under section 56. Considering the binding judgments given by the Hon'ble High Courts as well as the Hon'ble Supreme Court, we are of the opinion that the interest derived on margin money for the purpose of obtaining bank guarantee should be assessed as „business income‟ instead of 'income from other sources'. Accordingly, we decide this part of the ground in favour of the assessee. 17. Regarding the issue raised in ground no.3 with regard to benefit of netting off of interest income against the expenditure and the same was raised without prejudice. In this regard, it was argued by the Ld Counsel that whether the impugned interest is assessed unde ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
