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TMI Blog2013 (4) TMI 173X X X X Extracts X X X X X X X X Extracts X X X X ..... t schedules were produced with detailed calculation of depreciation. So the fact that no details produced is not correct and depreciation of Rs.1,28,000 cannot be disallowed. 3) That the assessee is not liable for any penalty imposition as the basic addition basing on which penalty proceeding has been initiated do not stand the scrutiny and there is no concealment of the particulars of income or inaccurate furnishing of particulars of income. 4) In view of the above facts demand of additional tax and penalty of 100% of Rs. 58,898 is not justified, hence not payable by the assessee. 2. The learned Counsel of the assessee submitted the brief facts that the assessee is a Private limited company engaged in the business of investments. A sear ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing officer in his order stated that as there is no investment as everything is claimed to be sold, so there is no reason to maintain the capital reserve and added an amount of Rs 48,488.50 lying in the liability side of the balance sheet. C) That the assessing Officer had erroneously added depreciation on vehicles which was debited in the P&L A/c amounting to Rs 1,27,728.53 D) That the assessing officer has also levied penalty on tax calculated on above additions i.e. on B and C amounting to Rs 59,898, being 100% on tax alleged to have been evaded. E) That interest under section 234A, B, C amounting to Rs 49,85,615 has been levied on assessed Tax u/s 143 (3)/153B (b) of the I.T Act 1961 without considering, the amount of cash seized whi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on income in the profit and Loss account and brought it to tax. A copy of Audited Balance sheet and profit and loss account is enclosed in Annexure 1. 2.5 In view of the above the commission enhancement on surmises is illegal and not tenable hence kindly be deleted. Explanation to (B) 3.0 The Learned Assessing Officer was explained that the assessee has converted the investments into stock in trade at a nominal value of Rs 27,42,000 and the capital loss generated due to this conversion has been debited to the capital reserve related to share premium account which has been carried forward from the previous years. 3.1 This stock in trade so converted for Rs 27,42,000 then sold at Rs 3,57,38,700 and credited in the profit and loss account ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e? This treatment would definitely give absurd results. 3.5 Further capital reserve comprises of Security Premium which was generated at the time of issue of shares and its generation had nothing to do with the investments. The contention of the AO that as the investments were sold, there is no requirement to maintain the capital reserve and required to take as revenue income is absurd. Hence adding the same to the total income is not justified and highly uncalled for. This fact has clearly been disclosed in the books of accounts and mentioned in the notes to the accounts, a copy of which is enclosed in annexure 2. Moreover this accounting treatment is very much effected in the books and explained to the learned AO during assessment which ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tal reserve against investments was already rendered to tax in the earlier years. Therefore, this amount remaining with the assessee on account of investment diluted by the assessee rendered as income was nobody's case for taxation again in the impugned Assessment Year. Similarly, the enhancement by 0.5% the commission receivable and payable as was also considered in the case of other Companies as dealt with by us and heard along with this appeal, we are of the consistent view that the enhancement on account of commission rate against stipulated would be business norms part of commission on behalf of some body else will not incur any loss to the Revenue insofar as the assessee being in the nature of holding investment on behalf of some othe ..... X X X X Extracts X X X X X X X X Extracts X X X X
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