2014 (11) TMI 592 - HC - Income Tax

Notices issued u/s 143(2) and 142(1) Mere intimation u/s 143(1)(a) could not be equated with an Assessment Order or not - Held that - The assessee had set off this loss against its business income of this year - For the purpose of purchasing the units, the assessee had taken a loan of ₹ 15 crores from its sister concern M/s. Deepak Fertilizers & Petrochemicals Corporation Ltd.- On this loan, an interest of ₹ 21,83,698/- was paid to the sister concern - The assessee was the owner of the Unit only for One month and seven days and the total amount of dividend received from the UTI amounted to ₹ 1,82,23,200 - following the decision in DEEPAK NITRITE LIMITED Versus COMMISSIONER OF INCOME-TAX 2008 (5) TMI 233 - GUJARAT HIGH COURT mere intimation u/s 143(1)(a) could not be equated with an Assessment Order - for the reasons stated in his order the claim of loss is not acceptable and the same is ignored in the computation of income - Decided against revenue.

Summary

Issues involved:
1. Challenge to impugned judgment by Revenue
2. Substantial questions of law for consideration
3. Short-term capital loss claimed by assessee
4. Loan taken from sister concern and interest paid
5. Claim of deduction under sec. 80-M on dividend
6. CIT(A) and ITAT decisions upheld
7. Decision based on previous court ruling

Analysis:

1. The Revenue challenged the judgment and order passed by the Income Tax Appellate Tribunal for the Assessment Year 1990-91. The substantial questions of law considered included the deletion of additions made by the Assessing Officer, the disallowance of guest house expenses, and the deduction allowed under section 32AB of the Act.

2. The brief facts of the case revealed that the assessee company, engaged in manufacturing chemical products, claimed a short-term capital loss on the sale of units. The assessee had set off this loss against its business income and had taken a loan from a sister concern, on which interest was paid. The assessee also claimed a deduction under sec. 80-M on the dividend received.

3. The transaction undertaken by the assessee was scrutinized, leading to notices being issued under relevant sections. The CIT(A) and ITAT upheld the order, which was challenged in the present Tax Appeal. The court noted that a previous decision of the Court covered the issue, resulting in the dismissal of the appeal in favor of the respondent-assessee.

4. The court, considering the applicability of a previous decision, concluded that the present appeal should be dismissed as the earlier ruling was fully applicable to the facts of the case. Therefore, all questions were answered against the Revenue and in favor of the assessee, leading to the dismissal of the Tax Appeal.

5. In conclusion, the judgment highlighted the importance of precedent and the application of previous court rulings in deciding tax appeals. The detailed analysis of the issues involved and the considerations made by the court provided a comprehensive overview of the case and the reasons behind the dismissal of the appeal.