9911796707
TMI Blog2003 (1) TMI 53X X X X Extracts X X X X X X X X Extracts X X X X ..... tax (Appeals), deleting the addition made under section 143(1)(a) of the Income-tax Act as it then stood, relying on the ratio of the judgment in the case of Khatau Junkar Ltd. v. K.S. Pathania [1992] 196 ITR 55 (Bom), without appreciating the Board Circular No. 689, dated August 24, 1994, which permits prima facie disallowance on the basis of the information available in the return, accounts and documents annexed to it?" Facts: In the computation of the income for the assessment year 1995-96, the assessee-company claimed a loss of Rs. 17,74,85,826, after claiming expenditure of Rs. 18 crores. The assessee-company entered into entertainment business on and from September 1, 1994. Prior thereto, the main income of the assessee was by way o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... indings: Under section 143(1) of the Income-tax Act, as it stood at the relevant time, the Income-tax Officer was required to make a summary assessment. There fore, if the Income-tax Officer wanted to make such an assessment on the basis of the return, he had to take the return on its face value. However, under section 143(1) the Income-tax Officer had no power to make adjustments. There fore, after April 1, 1971, section 143(1)(a) was brought on the statute book and as a result, if the Income-tax Officer wanted to make an assessment on the basis of the return, as filed, he was entitled to make certain adjustments to the income or loss declared in the return. Under section 143(1)(a), the Income-tax Officer could rectify arithmetical errors ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f facts and circumstances of each case. In the present case, the assessee is in entertainment business. In the present case, the brand is acquired for ten years and the outlay has been shown as miscellaneous expenditure. In the note to accounts, the auditors have certified that the brands are charged to revenue over the period of agreement. This is disbelieved by the Income-tax Officer, who has come to the conclusion that the note of the auditor was not correct because it was an outlay incurred for acquiring a benefit of enduring nature. The narrow question which we are required to decide in this case is whether, on the facts and circumstances of the case, the Assessing Officer was justified in disallowing expenditure of Rs. 18 crores as p ..... X X X X Extracts X X X X X X X X Extracts X X X X
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