9911796707
TMI Blog2018 (9) TMI 1749X X X X Extracts X X X X X X X X Extracts X X X X ..... led to any extension of limitation u/s 153(2A) of the Income Tax Act, 1961. 2. That the learned CIT (A) erred in not annulling/quashing the fresh assessment order dated 12.07.2007 passed in pursuance to the order of the Hon'ble M.P. High Court as the said assessment order is barred by limitation u/s 153(2A) of the Income Tax Act, 1961. That on the facts and in the circumstances of the case, the said assessment order being illegal and bad in law, it is therefore, prayed that the same may very kindly be now annulled/quashed. That the learned CIT(A) also erred in overlooking the fact that in the absence of any stay granted by any court as envisaged under clause (ii) of Explanation 1 to section 153, the period of limitation had to be reckoned from the date of the ITAT order of 11.12.2000. That on the facts and in the circumstances of the case the period of limitation having expired, the assessment order thus barred by limitation is illegal, without jurisdiction and bad in law and hence deserves to be annulled/quashed. 3. Without prejudice to the above, assuming though not admitting, even if the period of limitation is reckoned from the judgment of the Hon'ble M.P. High Co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r and demand notice till the date of fresh assessment order irrespective of the fact that the original assessment order had reached finality post ITAT setting it aside and in absence of any challenge to the contrary. That on the facts and in the circumstances of the case the interest charged u/s 220(2) is not only contrary to the provisions of section 220(2) but also to CBDT Circular No.334 of 03.04.1982 and it is prayed that interest u/s 220(2), if any, be charged in accordance with law. 2. Ground Nos.1 to 3 in the present appeal are related to limitation. These grounds of the assessee's appeal were decided by a separate order dated 24.4.2012, whereby the grounds of the assessee's appeals were rejected. Ground Nos.4 to 6 are against disallowing the claim of depreciation on leased assets i.e. milk cans. 3. Briefly stated facts are that the case of the assessee was picked up for scrutiny assessment and the assessment u/s 143(3) of the Income Tax Act, 1961 (hereinafter called as 'the Act'). In the earlier ground of litigation, matter travelled to the stage of the Hon'ble M.P. High Court against order of the Tribunal. The Tribunal in the earlier round of litigation has quashed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... found, the assessee's claim to have purchased the asset was not capable of manufacturing such asset. He submitted that assesee instead of rebutting evidences gathered during the enquiry is making an attempt to find an escape route. 6. We have heard the rival submissions, perused the materials available on record and gone through the orders of the authorities below. The Ld. CIT(A) has given his finding of facts which are as under: "4.2 Now coming to the core issue of disallowance of depreciation on lease of milk canes of Rs. 1,08,27,800/-, it is to be stated at the very beginning itself that the enquiry conducted by AO in course of assessment proceedings and subsequent detailed enquiry conducted by this office, by which the appellant was confronted by detailed and specific show cause letter dated 24.8.2011, as has been extracted in para 3 above, have conclusively established beyond any doubt that no purchases of milk canes what so ever were made by the appellant company from Shri Mukesh Pantangiya. The appellant in response to such specific show cause notice issued, which is supported by banking enquiries referred in such show cause letter, instead of rebutting such findings wit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... corporate personality of the appellant assessee, which is an instrumentality and a creation of Shri S.K. Bandi for his own vicious tax planning directly hit by the Apex Court judgement in the case of McDowel & Co. Ltd. Vs. CTO (1985) 154 ITR 148 (SC) and (iv) Depreciation on the assets viz. the milk cans as claimed by the appellant @ 100% of the alleged cost which has been refused by the A.O. is quite in order, the said assets having never been acquired nor therefore, owned and used by the appellant company for its business; and 4.2.1 Before concluding it would be further appropriate to extract observations made by Hon'ble High Court of M.P. in this behalf in para 18 of its order: "What was more a matter of serious concern was the forged and bogus claims made by assessee in claiming depreciation. All these claims on a detailed inquiry made by Director of Investigation at Bombay exposed the assessee in indulging in evading payment of tax. The assessee was given full opportunity to defend. They did avail of full opportunity and contested the case by filing documents and written submission. We are not however concerned on this issue because the Tribunal has remanded the ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssment year 1995-96. Such a claim cannot be entertained both in facts and in law, during the year under consideration as the fact whether such expenses were genuinely incurred were never examined in the relevant assessment year and looking to the state of affairs of the appellant company in absence of proper scrutiny and examination of such claim of expenses in the relevant assessment year, such claim cannot be accepted in the present assessment year, more so when such claim was not pressed for deduction for 1/5th of expenses in the previous assessment year. The appellant apart from furnishing break up of expenses has failed to establish admissibility of 20% of such expenses during the year under consideration, as in the then prevailing position of law the concept of deferred revenue expenses was not recognised. The claim has to be examined in view of the law as applicable in the relevant assessment year and on that count such claim fails and is accordingly second part of ground no.4 is hereby dismissed." 11. From the above finding of the Ld. CIT(A), it is evident that the assessee has given breakup of the expenses at pg.40 of its submissions. This requires verification at the en ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a) Disallowance u/s 35D Rs. 5,57,761/- b) Depreciation on milk canes Rs.1,08,27,800/- The above two disallowances were in dispute before the Appellate Authority apart from other claims raised by the assessee company at appeal stage. The above two disallowances were set aside by the ITAT, vide Para 31,32,33 & 35 of ITAT's order dated 11/12/2000 and only other hand annulled the assessment for want of valid service of notice u/s. 143(2). Thus, it is clear that entire assessment has been set aside and was restored to the file of AO for reconsideration 4) Against the said order of the IT AT and aggrieved by annulment of assessment, the department preferred appeal u/s 260A of the IT Act before the Hon'ble High Court of MP, Indore Bench, Indore. It is important to note that the department did not challenge the order of the IT AT setting aside the assessment on merits .The said part of setting aside of the assessment order by IT AT thus became final in absence of any challenge to that part of order by department before the High Court. The Hon'ble High court allowed the appeal of the department on the point of annulment and reversed the order of ITAT to the exten ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... charged only after the expiry of 35 days from the date of service of demand notice pursuant to such fresh assessment order. ii) Where the assessment made originally by the ITO is either varied or even set aside by one appellate authority but, on further appeal, the original order of the ITO is restored either in part or wholly, the interest payable under s. 220(2) will be computed with reference to the due date reckoned from the original deemed notice and with reference to the tax finally determined,. The fact that during an intervening period, there was no tax payable by the assessee under any operative order would make no difference to this position. The forgoing legal position will apply mutatis mutandis to the proceedings under other direct taxes also. These instructions may be brought to the notice of all the officers working in your charge". According to the said CBDT circular, in a situation like this when the assessment order is cancelled I set aside by appellate revisional authority and the cancellation I setting aside becomes final, no interest u/s 220(2) can be charged pursuant to the original demand notice . The CBDT has clarified that the necessary corollar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t is charged only in respect of the demand raised as per the fresh assessment order. In support of this, Ld. Counsel for the assessee had relied upon the decision of the coordinate bench of M/s. Narad Investment & Trading Pvt. Ltd. Vs. DCIT and also the CBDT circular No.334 dated 3.4.1982. 15. We find merit in the contention of the Ld. Counsel for the assessee. In view of the CBDT circular No.334 dated 3.4.1982 and the decision of the coordinate bench in the case of M/s. Narad Investment & Trading Pvt. Ltd. Vs. DCIT, we direct the assessing officer to charge interest from the date when fresh assessment is made. This ground of the assessee's appeal is allowed. 16. Ground No.9 is general in nature and needs no separate adjudication. 17. In the result, appeal of the assessee is partly allowed for statistical purposes. 18. Now we take up the revenue's appeal in ITA No.390/Ind/2012. The Revenue has raised following grounds of appeal: 1. Deleting the lease rent income of Rs. 20,57,148/- without properly appreciating the facts of the case and findings given by the A.O. in assessment order. 2. Deleting the addition of Rs. 8,88,593/- though capital allowing as business expenditure ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ogus claim of acquisition of milk cans 2. Regarding Ground No. 2 for deleting the addition of Rs. 8,88,593/- In this respect we would like to mention that the company during that year took on lease office premises at Mumbai w.e.f from 01/04/95 and paid rent of Rs. 5,41,6501- which has been capitalized, since the office premises were being furnished. Brokerage of Rs. 1,04,3701- was paid to Shri Sanjay Ahuja for getting the premises on rent. Since the company was already in business during the year, the said expenses are allowable as regular business expenses. In this respect we may submit that the Calcutta High Court in the case of CIT V /S Orient Beverage Ltd. reported in 203 ITR 553 held that brokerage expenses for getting a tenant were allowable as deductible expenditure even from property income which is being taxed on notional basis. This view has been upheld by the ITAT Indore Bench and in cases reported in 62 TTJ 185,25 ITC 438 and 25 BCA 239. In the present case the assesses having incurred this expenditure not for purchase of an immovable property but only for getting office premises on lease, the said expenses are allowable as business expenses. This view is also ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... td. An MOU was entered into between the appellant company and MIs Alaska Capital Market Pvt Ltd on 20.09.1995. such MOV was conditional and was effective only if Public issue of MIs Vikas Spinning & Weaving Mills Ltd is opened before 31. 03 .l996 otherwise it will be terminated and the appellant will have no rights and/or obligations.Public issue of Rs. 48.50 lacs equity shares of Rs.l 0/- each of MIs Vikas Spinning & Weaving Mills Ltd. Was opened on 11.06.l996 i.e. much after 31.03.1996. After opening of the issue, it was under subscribed and only 74% of the issue was validly subscribed. The MP Stock Exchange and SEBI vide their letters dated 27.07.1996 and 05.08.1996 directed to refund the amount to the investors as required uls 73 of Companies Act. Thus not only the issue was opened much after 31.03.1996 but the same did not materialize due to under subscription from the investors. Mis Alaska Capital Market Pvt Ltd, who was the consultant and advisor to the said Public issue of Mis Vikas Spinning & Weaving Mills Ltd, refused to pay the amount of merchant banker fee. The primary condition of opening of issue before 31.03.1996 was not fulfilled hence the appellant did not becom ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... deleting the lease rent income of Rs. 20,57,148/-. 21. We have heard the rival submissions, perused the materials available on record and gone through the orders of the authorities below. After considering the totality of the facts and materials placed before us, we do not find any infirmity in the order passed by the Ld. CIT(A) as the assessing officer itself has considered the lease transaction as bogus and disallowed the depreciation. Under these facts, the revenue cannot now claim that the assessee has earned income from lease rent. This ground of the revenue's appeal is dismissed. 22. Ground No.2 is against deleting the addition of Rs. 8,88,593/-. The Ld. CIT(A) has given his findings on this ground as under: "4.4.2 The detailed findings arrived in the matter of bogus claim of depreciation on leased assets at Rs. 1.08 crore clearly establishes that the above company not only resorted to dubious claim but also resorted to offer bogus income and simultaneously chose to capitalize regular expenses incurred which were clearly admissible as deduction, though capitalized to show better profitability, for ulterior motives. Once the facts have come in open, then while any bogus c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re and resorted to disclose highly inflated income by pressing a non genuine claim of lease rent of bogus purchases of milk cans on which a bogus claim of depreciation at Rs. 1.08 crores was pressed making abuse of provisions of 100% depreciation of assets valuing less than Rs. 5000/- each. Further even the genuine claim of deduction for business expenses at Rs. 8.8 lacs were capitalized to do so to show higher profitability. The said income from Merchant banking offered at Rs. 27 lakhs, as emerges from the facts on record was not real income accrued. The A.O. while banking on technical issues and relying on audit report, which in the facts of the case could not have been relied upon in any manner, ignored the reply filed by the said company 'Alankar' dated 20.12.99 which is enclosed with appeal order as Annexure A categorically stating the facts as advanced by appellant and denying the claim of the appellant company in following words: "We have to confirm that we have neither paid, debited or provided above fees in our books of Accounts nor we have claimed the payment of above fees of Rs. 27.00 lacs in our Income Tax Return filed for assessment year 1996-97. As this fees was no ..... X X X X Extracts X X X X X X X X Extracts X X X X
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