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TMI Blog2009 (4) TMI 111X X X X Extracts X X X X X X X X Extracts X X X X ..... by the assessee in the State Bank of India, Jawahar Nagar, Baroda, the Department seized IVPs of face value Rs. 67.60 lakhs out of which IVPs of Rs. 90,000/- was found to be purchased by the assessee's son and balance Rs. 66.70 lakhs was found to be the investment of the assessee. Based on the recovered cash, IVPs. and promissory notes and other recovered documents, the assessing officer revised assessments already completed under Section 147 of the Income Tax Act, hereinafter called the "Act", and regular assessments were completed for later years. From the records, it was found that the assessee was maintaining Patients Register and assessee charges initial amount of Rs. 30/- towards consultation fee and all charges later recovered are towards value of medicines supplied. However, the Department noticed that instead of writing the full amount, the assessee was using N for 90, S for 60, F for 50, etc. After decoding the entries in the seized books, entire amount recovered was found out and the assessing officer while assessing the income from profession granted an estimated expenditure of 20% from the total receipts. It was the finding of the assessing officer that assessee would ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... acts and circumstances o the case, the Appellate Tribunal being the final authority on questions of fact was justified in law in disallowing the claim of expense of salaries to doctors, staff and depreciation of car in computing the professional income by not entertaining the ground, treating the issue as factual and without dealing with the judgment of the Supreme Court in (1992) 84 STC 383. 2. Whether on the facts and circumstances of the case the Appellate Tribunal is justified in holding that IVPs are not bonds and hence not capital asset inspite of the judgment of the Supreme Court in 2006 (2) K.L.T. 423 holding that IVPs are bearer bonds. 3. Whether on the facts and circumstances of the case the Tribunal is justified in holding that there is no market value for IVP and it cannot be termed as capital asset by non considering the decisions relied on and by stating that they are irrelevant. 4. Whether on the facts and circumstances of the case the Appellate Tribunal was justified in holding that the only decisions available on IVP i that of the Mumbai Bench of the Tribunal in 89ITD 282 and in view of the said decision IVP is neither a capital asset nor there can be any transf ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as to income estimated and levy was without hearing and reasons. 12. Whether on the facts and circumstances of the case is not the order of the Tribunal perverse in as much as the Tribunal has decided the issues not on the basis of law laid down by the Apex Court/High Court but on the basis of what the Tribunal decided by holding that the principles arising out of the precedents are not relevant. We have heard Sri. G. Sarangan, senior counsel appearing for the assessee and standing counsel appearing for the revenue. 3. The first question pertains to disallowance of assessee's claim of deduction on salary paid to doctors, staff and depreciation for car, furniture, etc. in the determination of professional income of the assessee. The assessee's grievance is that the Tribunal rejected the claim for the reason that the claim was made for the first time before the Tribunal and the assessee never raised the issue in assessment before the officer or in first appeal before the first appellate authority. Admittedly the assessee did not make such a claim in the assessment or in first appeal. According to the assessee the claim pertains to salary paid to two doctors and staff member ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Rs. 60,000/- per year, which was increased by the Tribunal on a percentage basis of the turnover, thereby granting substantial deduction. Therefore this is not a question of law as projected by the assessee, but only a question of fact, that is, whether this Court will be justified in interfering with the order of the Tribunal refixing the income of the assessee on estimation basis after granting further deductions, that too in a case where return of income itself is filed by the assessee on estimation basis. We are of the view that no substantial question of law arises in the claim of deduction made by the assessee towards salary paid to doctors, and staff and depreciation in a case where the assessee has not maintained books of accounts and has returned his professional income on estimation basis. In our view when assessee returns net income from gross receipts on estimation basis, and the same is substituted by granting deductions on percentage basis in assessment and further deductions of estimated expenditure as granted by first appellate authority and the Tribunal, all such deductions granted cover eligible deductions, allowances, and rebates admissible under the Act in full. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d of each year, calculated from the date of initial purchase of the certificate from the Post Office up to the end of the fifth year for the purpose of tax payable by a holder in the relevant assessment year under any law for the time being in force. Under sub-rule (4) the above scheme is retained for deposits made after 1.4.1987 but with reduced rate of interest at 13.43 per cent per annum. Even though assessee contended that IVP Rules cannot be read into the scheme of the Income Tax Act or Rules, we are unable to accept this contention because Rule referred to in the IVP pertaining to tax can only be related to income tax payable under the Income Tax Act, 1961. Standing counsel appearing for the department referred to the decision of the Supreme Court in CIT V. BAGYALAKSHMI & CO., A.I.R. 1965 SC. 1708 and contended that other statutory law not inconsistent with the Income-tax Act should be applied for the purpose of income tax. we are in agreement with this contention more so because post office deposits under IVP Rules specifically refer to tax on interest. So long as the Rule is not in derogation of the scheme of IT Act it is applicable for the purpose of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eturn filed and only after search the assessee offered interest for assessment while filing return and revised return for the year 1995-96. We are of the view that the assessee who does not even maintain books of accounts can canvass for assessment of interest income on cash basis which applies only to assessees who maintain books of accounts. Charging Section under the Income Tax Act, namely, Section 4, Section 2(24), which defines "income" and Section 5,which provides for total income, authorise assessment of income either received or deemed to be received or income accrued or deemed to be accrued in India. The assessee cannot raise the contention that conditions of issue of IVP do not bind him. In fact, conditions of issue of IVP are exhaustively provided in the IVP Rules above referred, which under Rule 8(3) provides for assessment of interest income for the purpose of income tax. We have already held that tax referred to in Rule 8(3) can only be the income tax liability under the Income Tax Act, 1963. Further by virtue of the decision of the Supreme Court in BAGYALAKSHMI'S case referred above, IVP Rules apply for income tax purposes. Since Rule 8(3) of the IVP Rules binds all ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... LINGAIR, 241 I.T.R. 753. The main contention raised by the assessee is that except for the assessment years 1996-97 and 1998-99, there is no statement in the assessment order about interest charged under Section 234B of the Act. However, assessee admits that in the computation portion, the assessing officer has worked out the interest due under Section 234B in all the assessment orders . We do not think the assessee's contention is tenable because after the amendment to the provisions in the statute by Direct Tax Laws (Amendment) Act, 1987 with effect from 1.4.1989 interest payable under Sections 234A, B and C are mandatory in nature and no discretion is vested in the assessing officer in this regard. In fact provisions prior to amendment gave discretion in regard to waiver of interest. Once interest is made mandatory, the liability falls automatically on the assessee on default. The balance is only working out the amount due. The Supreme Court in KALYAN KUMAR RAY V. CIT (1996) 191 I.T.R. 654 held that calculation part of tax payable need not be done in the assessment order itself, but can be done separately in form No. ITNS 150, subject to the condition that the said form is signe ..... X X X X Extracts X X X X X X X X Extracts X X X X
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