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1995 (11) TMI 137
Demand - Extended period ... ... ... ... ..... wilful mis-statement of facts and suppression of facts. The proviso is clearly attracted and only Collector of Central Excise has jurisdiction to initiate the proceedings by issue of show cause notice. Therefore, the show cause notice issued in the case was issued by an officer who has no jurisdiction the entire proceedings are illegal. 5. emsp The DR pointed out that this ground was not taken either before the Assistant Collector or the Collector (Appeals) or even in the appeal memo presented before the Tribunal. The submission appears to be correct but it is seen that Tribunal has by specific order dated 1-3-1983 permitted the appellant to raise this. A plea that the proceeding is vitiated by lack of jurisdiction can be taken at any stage, for, lack of jurisdiction is not capable of waiver. 6. For reasons indicated above, we set aside the orders impugned herein. 7. The appeal is allowed. The Assistant Collector shall give effect to this order within three months from today.
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1995 (11) TMI 136
... ... ... ... ..... s made by the buyer even though coming prospectively did in fact take into account the manufacturing cost for the period for which there correspondence has been exchanged between the seller and the buyer. I further observe that there is no evidence on record to establish that any amount other than one by way of increase on the basis of correspondence made in this regard has been received by the manufacturer. Therefore, the demand of Rs. 2,45,815.71 is not sustainable. rdquo 13. emsp In view of the submissions made by the respondents we are inclined to agree with the findings of the Collector that there is no evidence on record to establish that any amount other than the price by way of increase in the sale price on which duty was paid on the basis of the approved price list was received by the respondent. We, therefore, confirm the finding of the Collector in this regard as well. 14. In view of the foregoing we confirm the finding in the impugned order and dismiss the appeal.
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1995 (11) TMI 135
... ... ... ... ..... ame claim of the assessee has been allowed by the Department for the earlier asst. yr. 1992-93 and subsequent asst. yr. 1994-95. Since the point in issue according to the assessee is debatable in nature, the ITO is not justified in disallowing the claim of the assessee and adding the same to the income of the assessee in the assessment completed under s. 143(1)(a) of the Act. The learned Departmental Representative, on the other hand, supported the orders passed by the authorities below. 6. I have carefully considered the rival submissions. Whether the particular claim is to be allowed or not, is to be decided by the AO only by issue of a notice under s. 143(2) to the assessee and giving an opportunity to the assessee of being heard. Since the AO has disallowed the assessee s claim under s. 143(1)(a) of the Act in the present case, I am of the opinion that he is not justified in disallowing the claim of the assessee. 7. The appeal filed by the assessee is accordingly allowed.
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1995 (11) TMI 133
Agricultural Land, Assessment Year, Business Income, Capital Gains, Sale Proceeds ... ... ... ... ..... axation. In this respect, we direct the Assessing Officer to verify the contention of the assessee with regard to investment of total sale proceeds, in the National Rural Development Bonds, and consider the assessability or otherwise of the capital gains, if any, on the sale of the land in question, in the hands of the assessee, of course, after affording the assessee reasonable opportunity of being heard. 21. Since we have allowed the main grounds of the assessee and held that the activity of the assessee does not amount to an adventure in the nature of trade and as such surplus on sale of land is not taxable under the head Business income , the alternative plea of the assessee contained in ground No. 19, and in the additional ground raised during the appellate proceedings before us, do not survive for our consideration. They are accordingly rejected. 22. In the result, since the main grounds of the assessee in this appeal are allowed, assessee s appeal is treated as allowed
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1995 (11) TMI 132
Additional Tax, Assessing Officer, Debatable Issue ... ... ... ... ..... be made under the proviso to section 143(1)(a) of the Act. 12. If that be so, the provisions of section 143(1A) providing for levy of additional tax as a result of the adjustment made under the first proviso to section 143(1)(a), cannot be applied. As we have already held earlier, the provisions of section 143(1A) do not provide for any variation in the amount on which the additional tax Is payable under clause (a) if the same has increased as a result of an order under section 147. Increase or reduction in the additional tax has been provided only as a result of an order under section 154, 250, 254, 260, 262, 263 or 264 but not under section 147. We, therefore, hold that no adjustment in this case by reducing the assessee s claim for deduction under section 80HHC can be made under the first proviso to section 143(1)(a) and consequently no additional tax in this case can be levied under section 143(1A). We accordingly delete the same. 13. In the result, the appeal is allowed
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1995 (11) TMI 131
Assessment Year ... ... ... ... ..... of the assessee to get his accounts audited. The DC (Appeals) has not examined the issue as to how the audit of books of account under section 44AB can arise when the assessee did not maintain any books of account. Time and again, the assessee stated before the Assessing Officer that he had not maintained any books of account in respect of his contract business and that the obligatory audit under the Income-tax Act, 1961 arose only when the books of account were maintained by him. This plea was not all appreciated by the Assessing Officer as well as DC (Appeals). On these facts and in the circumstances of the case, we hold that the audit of the books of account under section 44AB does not arise when no books of account were maintained by the assessee. In such a factual position, the Assessing Officer was not at all justified in levying penalty of Rs. 23,918 under section 271B of the Income-tax Act, 1961. We delete the impugned penalty. 8. In the result, the appeal is allowed
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1995 (11) TMI 130
Assessment Year, Interest On Borrowed Capital ... ... ... ... ..... he assessee was to include the amount of interest paid in the actual cost of the machinery. In view of the facts and circumstances of the case, we hold that the provisions of Explanation 8 to section 43(1) cannot be interpreted in the reverse order so as to capitalise the amount of interest paid on borrowings and include the same in the actual cost of the machinery. We, therefore, hold that the assessee is entitled to deduction under section 36(1)(iii) on the amount of interest paid in respect of capital borrowed for the purposes of business and that the AO has rightly allowed the claim of the assessee. The order of the learned CIT under section 263 is, therefore, set aside and the order of the learned AO is restored. However, the Department is free to withdraw any relief given to the assessee in the assessment year 1986-87 with reference to this amount while allowing the claim of the assessee for investment allowance and depreciation. 8. In the result, the appeal is allowed.
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1995 (11) TMI 129
Assessment Year ... ... ... ... ..... gy.... As held by the Supreme Court in the case of M.D. and Farm v. Union of India AIR 1957 SC 1492 law is not always logic and taxation considerations may stem from administrative experience and other factors of life and not artistic visualisation or neat logic and so the literal, though pedestrian, interpretation must prevail . Further in the present case, the assessee is already in the business of running a printing press and purchase of machinery on which the impugned interest paid was for the said business only. On these facts and in the circumstances of the case, we hold that the lower authorities are not justified in holding that the interest amount of Rs. 3,61,684 has to be capitalised under Explanation 8 to section 43(1). 8. Ground Nos. 2 and 3 in the grounds of appeal were not pressed at the time of hearing. To the said effect, the assessee s counsel has signed in the grounds of appeal. They are, accordingly, dismissed. 9. In the result, the appeal is partly allowed
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1995 (11) TMI 128
... ... ... ... ..... ted. 7. Grounds Nos. 3 and 4 relate to the disallowance of depreciation on car on account of personal use by the partners. The AO made a disallowance of 1/4th of car expenditure on the ground that the car had been used by the partners for personal purposes. This disallowance was upheld by the CIT(A). Depreciation to the extent of 1/4th had also been disallowed and that disallowance was, however, deleted by the CIT(A). 8. The learned Departmental Representative has submitted that once part of the car expenditure has been disallowed on account of personal use by the partners, depreciation to that extent should also be disallowed in the light of the provisions contained in s. 38(2) of the Act. We find force in the plea of the learned Departmental Representative and we, therefore, hold that depreciation is also to be disallowed to the extent of 1/4th under s. 38(2) of the Act. Grounds Nos. 3 and 4 succeed and are allowed. 9. In the result, Revenue s appeal stands partly allowed.
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1995 (11) TMI 127
Issues Involved: 1. Deletion of addition of Rs. 50,000 in the trading account u/s 145(1) for AY 1986-87. 2. Deletion of addition of Rs. 75,000 on account of income from combine harvester for AY 1986-87. 3. Deletion of disallowance of Rs. 92,870 u/s 40A(2)(b) for AY 1986-87. 4. Deletion of addition of Rs. 83,617 u/s 40A(2)(b) for AY 1987-88. 5. Addition of Rs. 5,000 out of staff welfare expenditure and Rs. 32,657 out of car-running expenditure for AY 1987-88.
Summary:
1. Deletion of Addition of Rs. 50,000 in the Trading Account u/s 145(1) for AY 1986-87: The AO made an addition of Rs. 50,000 in the trading account due to discrepancies in the stock statement filed before the bank and the stock records maintained by the assessee. The assessee argued that the stock classification was rough and the higher valuation shown in the books indicated no suppression of stock. The CIT(A) deleted the addition, and the Tribunal upheld this decision, noting that the method of accounting was consistent with previous years and no specific defects were found in the books of account.
2. Deletion of Addition of Rs. 75,000 on Account of Income from Combine Harvester for AY 1986-87: The AO added Rs. 75,000 assuming the harvester was hired out during the season, despite the assessee's claim that it was sold and not hired out. The CIT(A) deleted the addition, and the Tribunal agreed, finding no evidence of hiring income and noting that advance money for the sale was received in May 1985, precluding the possibility of hiring out the harvester.
3. Deletion of Disallowance of Rs. 92,870 u/s 40A(2)(b) for AY 1986-87: The AO disallowed interest payments above 18% to related parties, deeming them excessive. The assessee justified the higher interest rates by comparing them to market rates and bank charges. The CIT(A) deleted the disallowance, and the Tribunal upheld this, citing consistency with previous years where similar interest rates were allowed and noting the higher GP rate in the current year.
4. Deletion of Addition of Rs. 83,617 u/s 40A(2)(b) for AY 1987-88: The Tribunal rejected the Revenue's appeal for AY 1987-88, finding the facts and circumstances similar to the previous year and upholding the deletion of the addition of Rs. 83,617 u/s 40A(2)(b).
5. Addition of Rs. 5,000 out of Staff Welfare Expenditure and Rs. 32,657 out of Car-Running Expenditure for AY 1987-88: The AO made ad hoc disallowances for staff welfare and car-running expenditures. The CIT(A) restricted the disallowance on car expenses to 1/4th. The Tribunal deleted the Rs. 5,000 disallowance for staff welfare, finding it unjustified, but upheld the CIT(A)'s decision on car expenses, considering personal use by partners.
Conclusion: The Tribunal rejected the Revenue's appeals for both years and partly allowed the assessee's cross-objection.
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1995 (11) TMI 126
... ... ... ... ..... 312 (Guj) and the Rajasthan High Court in CIT vs. Emery Stone Mfg. Co. (1995) 126 CTR (Raj) 345 (1995) 213 ITR 843 (Raj). We have gone through the judgments but we do not find anything in those judgments which is of any assistance to the Revenue in the present case. In the Gujarat case there was no enquiry into the return by the ITO on certain important issues and, therefore, the CIT s jurisdiction was upheld. In the Rajasthan case the ITO had overlooked a statutory provision and, therefore, the CIT was held justified in invoking s. 263. The facts before us in the present case are different and, therefore, these two judgments are not of any assistance to the Revenue. 14. For the aforesaid reasons we set aside the order of the CIT under s. 263 and allow the assessee s appeal. 15. The facts in the other two appeals are identical. Therefore, we set aside the orders of the CIT under s. 263 in those cases also and allow the appeals. 16. In the result, all the appeals are allowed.
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1995 (11) TMI 125
Assessing Officer, Mistake Apparent From Record, Rectification Of Mistakes ... ... ... ... ..... t. The same holds true where facts are not free from doubt as in the present case as found by us, from the facts narrated elsewhere above. We are of the considered opinion that there has been no dispute or debate between the Assessing Officer and the assessee-company in regard to the factum of interest claimed under section 244(1A) of the Act. To our knowledge, there is also no judicial controversy with regard to the meaning and scope of section 244(1A) as has been examined by us in the preceding paragraph. The meaning of the said section and the object behind it render itself easily amenable to clear interpretation and perception. It does not admit of any debate, specially in the facts of this case. 16. From the above discussion, there is not hesitation in our mind to uphold the order of the Appellate Commissioner erroneously impugned by Revenue before us by way of second appeal. We have been left with no option except to dismiss the revenue s appeal, which we hereby dismiss
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1995 (11) TMI 124
Business Expenditure, Business Income, Deductions In Respect, Depreciation On Building, Export Business, Lease Rent, Plant And Machinery
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1995 (11) TMI 123
Applied To, Assessing Officer, Income Returned, Mistake Apparent From Record ... ... ... ... ..... fore I part on this issue, I shall reproduce from the order of the Assessing Officer his basis for rectification. It reads, In consequence to the order under section 143(3) dated 26-2-1990 for the assessment year 1987-88 the assessment order under section 143(1) dated 2-2-1989 for assessment year 1988-89 requires to be rectified. . . . The perusal of this clearly hint at the point of review of an order based on another order while the section 154 of the Act suggests rectification of an order on such mistakes that could be said to be glaring and apparent from the record and review of an order is out of the ambit of rectification proceedings. Even on this basis, I hold that the order of rectification deserves to be set aside which I do. There are two order issues raised that touch upon the claims advanced before the CIT(A) which had not been answered which were not pressed during the hearing and hence, these two issues are dismissed. In the result, the appeal is allowed in part
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1995 (11) TMI 122
Advertisement Expenditure, Assessing Officer, Assessment Year, Commercial Profit, Expenditure Incurred, Initial Depreciation, New Industrial Undertaking, Previous Year, Profits And Gains
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1995 (11) TMI 121
Assessing Officer, Interest On Securities, Interest Payments, Liability To Deduct Tax, Tax At Source
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1995 (11) TMI 120
Assessing Officer, Mistake Apparent From Record ... ... ... ... ..... where the Assessing Officer had failed to levy interest under section 139(8) it was held that mistake was rectifiable under section 154. The present case is at par with the facts of the cited case inasmuch as both under sections 139(8) and 234A the charging of interest is mandatory. In view of the aforesaid, we are of the considered opinion that the view taken by the learned Dy. CIT(A) is not legally correct. Charging of interst under section 234A being mandatory and imperative, we are unable to agree with the reasoning advanced by him that the Assessing Officer failed to arrive at any conclusion that such interst was payable. Even at the cost of repetition, it may be stated that there is no discretion left by the Legislature with the Assessing Officer in not charging such an interest if the conditions enumerated in such section exist. 8. In the result, the view taken during first appeal is set aside and the direction given by the Assessing Officer restored. 9. Appeal allowed
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1995 (11) TMI 119
Issues Involved: 1. Violation of provisions of Section 269SS of the IT Act. 2. Levy of penalty under Section 271D of the IT Act. 3. Nature of book adjustments and their classification as loans or deposits.
Summary:
Violation of Provisions of Section 269SS of the IT Act: The assessee, a subsidiary of M/s Lallubhai Amichand Ltd., purchased goods from its holding company and made partial payments by account payee cheques. The remaining amounts were transferred to the Sarafi account by book adjustments. The Assessing Officer (AO) observed these transfers as acceptance of deposits in violation of Section 269SS of the IT Act, which mandates that loans or deposits must be accepted through account payee cheques or drafts.
Levy of Penalty under Section 271D of the IT Act: The Dy. CIT levied a penalty of Rs. 23 lakhs u/s 271D for the alleged violation of Section 269SS. The assessee contended that the transactions were mere book adjustments and not actual loans or deposits involving the transfer of money. The CIT(A) upheld the penalty, reasoning that the book adjustments constituted constructive receipts, thereby violating Section 269SS.
Nature of Book Adjustments and Their Classification as Loans or Deposits: The assessee argued that the book adjustments were not loans or deposits as defined u/s 269SS, which requires the involvement of money. The Tribunal noted that the provisions of Section 269SS aim to prevent tax avoidance and the introduction of unaccounted cash. The Tribunal found no evidence suggesting that the book adjustments were part of any tax planning or evasion scheme. It was concluded that the book adjustments did not involve the transfer of money and thus did not fall within the mischief of Section 269SS.
Conclusion: The Tribunal held that the book adjustments from the goods purchase account to the Sarafi account did not constitute loans or deposits involving the transfer of money as required by Section 269SS. Consequently, the penalty u/s 271D was unjustified. The appeal was allowed, and the penalty order was reversed.
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1995 (11) TMI 118
Issues Involved: 1. Assessment of Smt. Bhartiben Ghanshyambhai on a protective basis and clubbing of income from Rupa Textile Engineers in the hands of her husband, Shri Ghanshyambhai R. Thakkar. 2. Deletion of Rs. 60,000 as bad debt in the case of Shri G.R. Thakkar.
Summary:
Issue 1: Assessment of Smt. Bhartiben Ghanshyambhai and Clubbing of Income In ITA No. 4060/Ahd/1990, the matter pertains to the assessment of Smt. Bhartiben Ghanshyambhai (B.G. Thakkar) on a protective basis and clubbing of income from Rupa Textile Engineers ('Rupa') in the hands of her husband, Shri Ghanshyambhai R. Thakkar (G.R. Thakkar). The AO conducted a survey operation u/s 133A at the office premises and found that G.R. Thakkar was managing the business of Rupa, although it was in the name of his wife. Both Smt. B.G. Thakkar and G.R. Thakkar admitted that the business activities were managed by G.R. Thakkar and agreed to club the income from Rupa in his hands. However, the Dy. CIT(A) reversed the AO's decision and directed the assessment of Smt. B.G. Thakkar on a substantive basis. The Tribunal upheld the Dy. CIT(A)'s order, noting that the business of Rupa was genuine and had been assessed as such in previous years. The Tribunal found that Smt. B.G. Thakkar was the real owner of Rupa and not her husband, thus making the clubbing of income unjustified.
Issue 2: Deletion of Rs. 60,000 as Bad Debt In ITA No. 4059/Ahd/1990, concerning Shri G.R. Thakkar, the AO had clubbed Rs. 29,910 as income from Rupa in his hands, which the Dy. CIT(A) deleted, holding that Smt. B.G. Thakkar was the real owner of Rupa. Consistent with the decision in ITA No. 4060/Ahd/1990, the Tribunal upheld the Dy. CIT(A)'s decision. Additionally, the AO had disallowed Rs. 60,000 as bad debt due to lack of details. However, the Dy. CIT(A) deleted this addition after examining the details and finding that the debt pertained to M/s Indequip Engineering Ltd., which had gone into liquidation. The Tribunal upheld the Dy. CIT(A)'s order, finding it justified.
Conclusion: Both appeals by the Revenue were dismissed, upholding the Dy. CIT(A)'s orders in favor of Smt. B.G. Thakkar and Shri G.R. Thakkar.
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1995 (11) TMI 117
... ... ... ... ..... eral practice in similar business or profession. The CIT(A) also placed reliance on judgment of Kerala High Court in the case of CIT vs. P. Ali Kunju M.A. Nazir Cashew Industries (1987) 62 CTR (Ker) 206 (1987) 166 ITR 611 (Ker). In view of the aforesaid discussions and the judgment, the CIT(A) directed the AO to allow the claim of bonus after ensuring that the three conditions laid down by the Hon ble Kerala High Court are satisfied in the case of the appellant. 14.2. We do not find any infirmity in such a view taken by the learned CIT(A). The order passed by him is perfectly valid and is justified. He has merely restored back the issue to the AO and directed him to allow the deduction only if the three conditions laid down in the second proviso to s. 36(1)(ii) are fulfilled in the case of the assessee. Such a view taken by the CIT(A) is perfectly valid and requires no interference. 15. In the result, Revenue s appeal is dismissed and the assessee s appeal is partly allowed.
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