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TMI Blog2004 (7) TMI 274X X X X Extracts X X X X X X X X Extracts X X X X ..... to reduce its tax liability by adopting a device.Thus, learned Judicial Member confirmed the levy of penalty. The learned Vice President (Accountant Member) - concluded that the assessee cannot be held guilty of concealment of income or furnishing inaccurate particulars of income thereof either under the main provision of section 271(1)(c) or under deeming provision of Explanation 1 thereto. In his opinion, the appeals were required to be allowed. Third Member - The revenue has justified disallowance of interest of Rs. 62 and levy of penalty as the assessee paid interest for six years when it could pay only for 7 days in the relevant period. It has been over emphasized by the revenue that interest for period other than 7 days, did not accrue to the assessee; the excess amount was paid as advance interest only on account of close relationship between the assessee and the recipients. In adopting the above approach the revenue has totally disregarded the agreement between the parties, which as noted in details was given effect to and implemented. Finding that the liability to pay interest other than for 7 days had not accrued is contrary to well-settled principle of law. A liability ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (1)(c) of the Income-tax Act. I fully agree with the view expressed by the learned VP. In view of the Majority decision, the penalties levied u/s 271(1)(c) of the IT Act, 1961 are deleted and the appeals are allowed . X X X X Extracts X X X X X X X X Extracts X X X X ..... ia. The schemes of the debenture and interest etc. were as under:- "Interest Rate and manner of payment Each debenture shall carry interest @ Rs.62.00 payable up front on the date of allotment. Redemption The company agrees and undertake to redeem the Debentures at par in one instalment at the end of 6th year from the date of allotment." The details of debentures issued, amounts received by respective companies and net interest paid and the net inflow off funds of the company are reproduced below for the sake of convenience. Name of the Company Mohit Marketing Abhinav Mercantile Rupam Mercantile Preeti Mercantile Name of Deb. Holder Rakesh Rasik Rakesh Rajiv No. of debentures 4,25,000 5,50,000 2,50,000 4,40,000 Date of issue 31-3-1995 31-3-1995 31-3-1995 31-3-1995 Face Value 100 100 100 100 Amt. of purported loan 4.25 cr. 5.50 cr. 2.50 cr. 4.00 cr. Date of receipt of amount by Company 25-3-1995 25-3-1995 25-3-1995 25-3-1995 Int. on Deb. 2.635 cr. 3.41 cr. 1.55 cr. 2.48 cr. Int. (net of TDS) paid 2.3715 cr. 3.069 cr. 1.395 cr. 2.232 cr. Net inflow of funds to Co. 1.615 cr. 2.09 cr. 0.95 cr. 1.52 cr. Date of payme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessees and in favour of the Revenue." The figure of Rs. 1,39,50,000 was the actual amount received by the assessee company, Rupam Mercantiles Ltd. in FY 1994-95 after deduction of TDS. This figure in the case of other three assessees are reproduced in the chart tabulated in the opening para. The Assessing Officer took a view that the said expenses cannot be allowed in FY 1994-95 in totality and accordingly allowed interest on proportionate amount for the period of 7 days only works out to Rs. 49,543 in the case of Rupam Mercantiles Ltd. The balance was disallowed as per the assessment order in the case of Rupam Mercantiles Ltd. dated 23-3-1998. Similarly proportionate interest for 7 days were allowed by the Assessing Officer in the case of other three companies and the balance was disallowed. The assessee went in appeal to the CIT(A) VI, Ahmedabad who upheld the disallowance made by the assessee as per order dated 22-3-1999 No. CIT(A)-VI/CC-2(2)/10/98-99. The following findings were given by the CIT(A) while dismiss the appeal: "I have considered the contention of the appellant as also the observations of the Assessing Officer. I agree with the reasons given by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... round taken by the four assessee companies, as the issue is squarely covered by the decision of the Supreme Court in Madras Industrial Investment Corporation. Accordingly, we adjudicate ground No. 1 in all the appeals against the assessees and in favour of the Revenue." Meanwhile, the Assessing Officer had also initiated proceedings under section 271(1)(c) in respect of assessment orders passed under section 143(3) in the cases of the four assessees discussed earlier. In particular, the assessees were issued show-cause notices as to why penalty not be imposed relating to disallowance made out of debenture interest held to be not pertinent to assessment year 1995-96. After considering the various submissions made by the assessees before him and also considering the various judicial decisions cited by the assessees, discussed in detail in penalty orders dated 31-5-2000 in the cases of four assessees under section 271(1)(c), the Assessing Officer imposed minimum penalty at the rate of 100% as indicated in Col. No. 6 of above chart. The above four assessees went in appeal before CIT(A) against penalty orders under section 271(1)(c) dated 31-5-2000 amounting to Rs. 72,00,000, Rs. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... alty would be wholly rendered invalid in law. In other words, the above extracts show that the penalty was initiated on the basis that the appellant had furnished inaccurate particulars. Thus the ld. Assessing Officer while imposing penalty has dovetailed two concepts, namely, concealment of income and furnishing of inaccurate particulars of income. In short, the final conclusion reached by the ld. Assessing Officer while imposing penalty is clearly contrary to the satisfaction recorded by the ld. Assessing Officer in course of assessment proceedings." Reference was also made to the decision of Gujarat High Court in CIT v. Nanu Engg. Works [1980] 122 ITR 306 and KM. Bhatia v. CIT [1992] 193 ITR 379. The plea of the assessee is not tenable since it is a case of the appellants that the Assessing Officer has not imposed penalty for concealment for furnishing of inaccurate particulars. The view taken by the assessees is not correct since in clear terms the Assessing Officer has held that the appellants have concealed income by wrongly claiming deductions which were not admissible as referred by the assessee above also. The said observations were verified by the CIT(A) from the r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ture which is not relevant to the facts of the case. Similarly reference to Gujarat High Court's decision in the case of CIT v. Maneklal Harilal Spg. & Mfg. Co. Ltd. [1977] 106 ITR 24 is also not applicable since they all relate to retrospective amendment which was not the case before him. Other case laws also discussed in paras 14,15,16 & 17 are also not relevant and are on similar lines and relate to imposition of penalty with reference to retrospective amendment of law. It was further submitted by the ld. counsel for the assessee that the Assessing Officer has relied on the decision of Supreme Court in the case of Madras Industrial Investment Corpn. Ltd. It was submitted by the ld. AR that the decision was rendered on 4-4-1997 whereas the return was filed on 29-11-1995. It was therefore submitted that the same cannot be relied on by the Assessing Officer while considering the explanation as unsatisfactory of mala fide. The CIT(A) observed that he had perused the case laws cited and discussed by the Assessing Officer including in the case of Sir Kikabhai Premchand v. CIT [1953] 24 ITR 506 in the case of P.M. Mohd. Meerakhan v. CIT [1969] 73 ITR 735 in the case of State Ba ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... en submissions relates to the fact that before the Supreme Court in the case of Madras Industrial Investment Corpn. the subject-matter was deduction under section 37 whereas in the case of the assessees the claim has been made under section 36(1)(iii). It is, therefore, pleaded that the same cannot be relied upon. On examination of the said decision and also on perusal of the case laws cited earlier above, it is clear that the general legal position which stands established is that expenditure which does not accrue in reality for the relevant previous year is not admissible under the income-lax Act, 1961. It is immaterial and of academic nature whether the claim was made under section 37 or section 36. Having regard to the findings and the ratio of the above decisions this argument of the assessees would be of little help and it is therefore held that the same would not be allowable under any above sections. The next argument taken in the written submissions before the CIT(A) by the assessees was that the Assessing Officer in the case of recipients i.e., Rakesh Mardia, Rasik Mardia and Rajeev Mardia have added the respective debenture interest in their assessment orders on protec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... efore, established that it was not a bona fide or unilateral act of the assessees which had led to the inference drawn by the CIT(A). The claim that the explanation is bona fide is therefore not acceptable on this account also. The CIT(A) after considering the other case laws mentioned by the assessees observed that it is a case of the assessees that in respect of issue which are debatable, no penalty can be imposed and have relied on the decision of the Supreme Court in the case of CIT v. Vegetable Products Ltd. [1973] 88 ITR 192. The first appellate authority further observed that as held earlier, there has been a series of decisions by the Apex Court cited earlier in this order where it has been held that the expenditure which actually relates to the year can be allowed on accrual basis for the relevant previous year and it has been observed that there has been no diversity or difference this aspect in the above referred decisions of the Apex Court. The case law cited by the assessees have no applicability as discussed earlier. Having regard to the above reasons, the CIT(A) held that the penalty imposed by the Assessing Officer in the cases of all the four assessees is fully jus ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h have been held to be mere advance payments only. (6) As referred earlier, the Apex Court in the case of State Bank of India referred in 157 ITR 67 have clearly observed that the substance of transaction has to be seen and not the form. Mere recording of entries in the books in itself cannot justify the stand taken by the appellants or make the explanation bona fide or taking on argument that liability for interest be accrued on the basis of the scheme and the said debentures between the appellant and recipients. Since the said schemes were clearly devised in one go for all the four companies around the same time within the small group of family members of Mardia Group, it is obvious that the transaction is in the nature of colourable device, as discussed earlier also in CIT(A)'s order, (7) The Assessing Officer has already taken the most lenient view in the matter and imposed minimum penalty of 100 per cent as against 300 per cent (maximum). In view of above discussion, the CIT(A) confirmed the penalty under section 271(1)(c) in respect of all the assessees. 4. Before us the ld. AR submitted that the CIT(A) is not justified in upholding the impugned order imposing pena ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d not tenable both in law and on facts of the cases. The ld. AR further contended that the CIT(A) erred in not appreciating the distinction between the claim of the asses-sees which was made under section 36(1)(iii) and the claim for deduction under section 37 of the Act which was subject-matter of adjudication before the Hon'ble Supreme Court in the case of Madras Industrial Investment Corpn. Ltd. The ld. AR contended that the CIT(A) is wrong in not appreciating the claim of the assessees founded on the decision of the Hon'ble Supreme Court in the case of Vegetable Products Ltd. to the effect that when two views are conceivably possible, no penalty is imposable. 4.1 The ld. counsel for the assessee submitted detailed paper book containing the following documents: Rupam Mercantiles Ltd. (in Liquidation) 1. Written submissions before CIT(A) dated 11-1-2002. 2. Reply to penalty notice under section 271(1)(c) dated 8-4-2002. 3. Letter from Assessing Officer under section 271(1)(c) dated 5-1-2002. 4. Reply to Original Notice under section 271(1)(c) dated 7-4-1998. 5. Notice initiating penalty proceedings under section 271(1)(c) dated 23-3-1998. 6. Order of Hon ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Supreme Court or the jurisdictional High Court must have been made after the end of the relevant year stands withdrawn. 3. If any petition in the past has been rejected because the Board had not issued this modification, the same may be reconsidered and decided in accordance with this modification read with the order dated 23rd May, 1996. Income-tax Act, 1961 : Notification under section 119(2)(a): Reduction or waiver of penalty interest for late filing of return of income, etc.: authorisation of powers to Chief Commissioners and Director-General (Investigation) NOTIFICATION NO. . . . DATED, 23RD MAY, 1996 1. In exercise of the powers conferred under clause (a) of sub-section (2) of section 119 of the Income-tax Act, 1961, the Central Board of Direct Taxes, hereby direct the Chief Commissioner of Income-tax and Director-General of Income-tax may reduce or waive interest charged under section 234A, or section 234B or section 234C of the Act in the classes of cases or classes of income specified in paragraph 2 of this order for the period and to the extent the Chief Commissioner of Income-tax/Director-General of Income-tax deem fit. However, no reduction or waiver of s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... der passed in the case of an assessee by the High Court within whose jurisdiction he is assessable to income-tax, and as a result, he did not pay income-tax in relation to such income in any previous year and subsequently, in consequence of any retrospective amendment of law or, as the case may be, the decision of the Supreme Court in his own case, which event has taken place after the end of any such previous year, in any assessment or reassessment proceedings the advance tax paid by the assessee during the financial year immediately preceding the relevant assessment year is found to be less than the amount of advance tax payable on his current income, the assessee is chargeable to interest under section 234B or section 234C and the Chief Commissioner or Director General is satisfied that this is a fit case for reduction or waiver of such interest. (e) Where a return of income could not be filed by the assessee due to unavoidable circumstances and such return of income is filed voluntarily by the assessee or his legal heirs without detection by the Assessing Officer. 3. The Chief Commissioner of Income-tax/Director General of Income-tax may order the waiver or reduction of int ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e issued, amount received by respective companies and net interest paid and the net inflow of funds of companies are reproduced in form of chart on page of this order. Modus operandi in all lour cases is similar. The entire interest amounting to Rs. 62 for period of 6 years from date of issue were shown as interest paid and accrued in financial year 1994-95 itself in case of all four assessee companies. The assessee companies considered this amount as up front amount as discussed above. Assessing Officer observed that since the debentures were issued for a period of 6 years from date of allotment, the interest element has to be spread over the period of 6 years and that the claim of assessee companies of said Rs. 62 per issue to recipients of the family members of the Mardia group is not admissible in financial year 1994-95. Matter in quantum appeal traveled upto the Tribunal wherein the Tribunal observed as under: "Accordingly, the Hon'ble Supreme Court relying on the aforesaid decision of the M.P. High Court in the case of M.P. Financial Corporation 165 ITR 765 held that the assessee was correct in claiming deduction only in respect of the proportionate part of discoun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ial Investment Corporation Ltd. wherein the Tribunal has observed as under: "Accordingly, the Hon'ble Supreme Court relying on the aforesaid decision of the M.P. High Court in the case of M.P. Financial Corporation 165 ITR 765 held that the assessee was correct in claiming deduction only in respect of the proportionate part of discount of Rs. 12,500 over the relevant accounting period in question. The Supreme Court further noted that the view taken by them was in conformity with the accounting practice of showing the discount in the "Discount of Debenture Account" which is written off over the period of debentures. The facts of the case before us are similar to the facts of the case of Mardia Industrial Investment Corporation and accordingly we do not find any merit in the ground taken by the four assessee companies, as the issue is squarely covered by the decision of the Supreme Court in Madras Industrial Investment Corporation Ltd.'s case. Accordingly, we adjudicate ground No. 1 in all the appeals against the assessees and in favour of the Revenue." Meanwhile the Assessing Officer initiated penalty proceedings under section 271(1)(c) in respect of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... all, for the purpose of clause (c) of this sub-section, be deemed to represent the income in respect of which particulars have been concealed." Penalty under section 271(1)(c) is leviable even assessee fails to substantiate explanation given by him during course of assessment. The assessees have not been able to make out the case that either the explanation regarding its claims of interest was bona fide or claim of interest was justified. It is clear from ratio laid down by Hon'ble Supreme Court in the case of Madras Industrial Investment Corpn. It is also abundantly clear from various decisions that income has to be assessed under sections 4 & 5 of Income-tax Act having taken into account the total income which actually is received or accrued during the year after taking into account the expenses which are justifiable relating to earning of said income and relating to relevant financial year. It is pertinent to discuss the ratio laid down by Hon'ble Supreme Court in State Bank of India's case wherein on similar issue the Court observed as under:- "Any liability incurred for the business of obtaining a loan would be revenue expenditure. Ordinarily, reven ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ear from the facts narrated above that in all the four appellant cases, the transactions are within the closely knit Mardia Group of companies and their Directors, and that have been arranged only with a view to reduce the tax liability of the appellant companies. The transactions relating to issue of debentures are also between the appellant and only one person who is either a director of the appellant companies or is a relative of the director of the appellant. The decision of Supreme Court in the case of Mc Dowell & Co. reported in 154 ITR 148 is also clearly applicable to the facts of the case. (4) As discussed by the Assessing Officer, the transactions in reality are only in the nature of advance payments paid to the respective recipients by the appellant companies for which the actual interest was accrued in a period spread over 6 years and not for this financial year (except for a period of only 7 days). (5) It would be absurd to accept the proposition that liability to pay interest on the debentures can accrue to the appellant on the first date when the debentures are issued to the recipients. The view taken by the Assessing Officer is, therefore, in full conformity wit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... xplanation 1 to section 271(1)(c) of the Act has application under circumstances of cases and levy of penalty was justified. Under the provisions of Explanation to section 271(1)(c) there is presumption of concealment when assessee is unable to explain items of credit The burden is on the assessee to rebut the presumption where there is no satisfactory explanation regarding credit imposing of penalty was justified as laid down in K.P. Madhusudan's case. In the instant cases assessees could not discharge their burden cast upon them by virtue of Explanation 1 to section 271(1)(c) that their claim of interest of Rs. 6.2 crores was bonafide or genuine. It was neither found genuine nor bona fide which is evident from the fact that the additions have been sustained by the Tribunal by observing that assessees were reducing tax liabilities by adopting such devices. Thus assessees tried for wrongful gain at the cost of revenue which should not be encouraged in any manner. In fact and circumstances we are not inclined to interfere in the order of CIT(A) who has upheld the penalty orders of Assessing Officer in case of all four assessee companies as discussed above. It is pertinent to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt in one instalment at the end of sixth year from the date of allotment." 7. The assessment order was made by the Assessing Officer on 23-3-1998. He allowed interest for seven days which according to him pertained to the previous year under consideration by relying upon the decision of the Supreme Court in the case of Madras Industrial Investment (P.) Ltd., a decision dated 4-4-1997. Para 11 of the order of the Assessing Officer reads as under: "11. Thus, the issue is beyond any doubt that the assessee can only get the deduction to the extent of interest pertaining to the year under consideration for a period of 7 days. Still, further the judgment of Hon'ble Supreme Court in the case of Madras Industrial Inv. Ltd. v. CIT 225 ITR 802 settles the issue once and for all. The assessee's contention that the issue before the Hon'ble Supreme Court in this case was premium payable after expiry of terms of the securities is patently wrong and the same become clear from the aforesaid findings of the Hon'ble Supreme Court which squarely applies to the facts of the present case. The relevant portion of the judgment is reproduced below: 'Any liability incurre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t Corporation Ltd. v. CIT squarely applies to the case of the appellant. In view of the above, the disallowance made of Rs. 1,54,50,457 is upheld." 9. The Tribunal also upheld the disallowance by observing in paragraph 7.1 of its order in ITA No. 1102/Ahd./1999 and others dated 28-10-1999 as under: "7.1 Accordingly, the Hon'ble Supreme Court relying on the aforesaid decision of the M.P. High Court in the case of M.P. Financial Corporation 165 ITR 765 held that the assessee was correct in claiming deduction only in respect of the proportionate part of discount of Rs. 12,500 over the relevant accounting period in question. The Supreme Court further noted that the view taken by them was in conformity with the accounting practice of showing the discount in the "Discount of Debenture Account" which is written off over the period of the debentures. The facts of the case before us are similar to the facts of the case of Madras Industrial Investment Corporation and accordingly we do not find any merit in the ground taken by the four assessee companies, as the issue is squarely covered by the decision of the Supreme Court in Madras Industrial Investment Corporatio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ection 271(1)(c) under which penalty is levied reads as under: "271. (1) If the Assessing Officer or the Commissioner (Appeals) or the Commissioner in the course of any proceedings under this Act, is satisfied that any person- (c) has concealed the particulars of his income or furnished inaccurate particulars of such income. he may direct that such person shall pay by way of penalty,- (i) " (ii) " (iii) In the cases referred to in clause (c), in addition to any tax payable by him, a sum which shall not be less than, but which shall not exceed three times, the amount of tax sought to be evaded by reason of the concealment of particulars of his income or the furnishing of inaccurate particulars of such income. Explanation 1 - Where in respect of any facts material to the computation of the total income of any person under this Act,- (A) such person falls to offer an explanation or offers an explanation which is found by the Assessing Officer or the Commissioner (Appeals) or the Commissioner to be false, or (B) such person offers an explanation which he is not able to substantiate and fails to prove that such explanation is bona fide and that all the f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... which he could not substantiate in those proceedings was (i) bona fide and (ii) if he had disclosed all the facts relating to the same and material to the computation of his total income. In cases where explanation was offered, but was rejected as it could not be substantiated by the assessee, there would arise no presumption of concealment of the particulars of income that was added or disallowed and such assessee can show that the said explanation offered by him was a bona fide one and that he had disclosed all facts relating to such explanation and material to the computation of his total income during the quantum proceedings." 16. It is not the case of revenue that the assessee had failed to offer an explanation or that its explanation was found to be false. The allegation against the assessee is that it furnished inaccurate particulars of its income by making a wrong claim as per the Assessing Officer and that its explanation and the claim of expenditure was not bona fide as per the CIT(A) and therefore liable by virtue Part B of the Explanation. 17. Let us examine this part B of the provision of Explanation little minutely. (I) The first sentence of this part B is &q ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the mischief of clause (B) of the Explanation 1 to section 271(1)(c) of the Act. Here it is pertinent to note that it is a trite law that the penalty proceedings are two separate and distinct proceedings. Therefore, the fact that some addition is made in the assessment would not automatically justify the imposition of penalty under section 271(1)(c) of the Act. It is an undisputed fact that in his return as well as along with his return the assessee has filed all material in respect of the computation of his total income under the Act. Not only that the assessee had supported with documentary evidence his explanation that he had received Rs. 2,64,781 by way of gift from his sister. We, therefore, entirely agree with the stand taken on behalf of the assessee that the provisions of clause (B) of the Explanation 1 to section 271(1)(c) of the Act would not be attracted in the instant case. Even assuming for the sake of argument that the said clause would be attracted in the instant case, it is difficult to hold that the explanation given by (lie assessee regarding the nature and source of Rs. 2,64,781 was not a bona fide. We have come to this conclusion as the CIT(A) had accepted the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... te of allotment of debenture falls. The claim of interest settled subsequently was allowed in one year in the case before the High Court as against from year to year because the interest liability was settled in later years and the entire claim of many years interest was allowed in that later year. Similarly, in the present case it was the liability settled by the terms of the debenture deed in the 1st year itself. Assessee took the view that irrespective of the period to which it pertained, a liability of interest can be claimed in the year when it accrues or settled as per agreement or by the law. When a liability can be allowed in a subsequent year though it relate to an earlier year or to so many of earlier years, the assessee in my opinion cannot be said to be lacking bona fides if he claims the same in the 1st year itself as per terms of the deed of debenture fixing the liability of future years as well in that 1st year itself. (III) The third sentence is "and that all the facts relating to the same and material to the computation of his total income have been disclosed by him". As narrated above, all the material which are relevant for computing the income of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion 1 to section 271(1)(c), as recast while the expression 'failure to return the total assessed income as not arising on account of any fraud or wilful negligence on the part of assessee' does not find place but clause (b) read with proviso (ii) makes it abundantly clear that where difference in the assessed income and returned income is not arising on account of any gross or wilful negligence on the part of the assessee, still no penalty is leviable. The statute has clearly drawn distinction between furnishing a deliberate false explanation by the assessee and an explanation, which may not be false but is not accepted because assessee was not able to substantiate it. While there is no relaxation in the rigour of explanation. In raising presumption against the assessee in the former case, in the latter class of cases, the statute itself relaxes its rigour by directing that where in respect of any amount, added or disallowed and any explanation is offered by such person (assessee) which is not accepted because the assessee has failed to substantiate the same, but which explanation is bona fide and all the facts relating to same and material to the computation of total incom ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e penalty the conduct of the appellant at the time of filing the return has to be seen and not subsequent developments which have been taken place after filing of the return. In other-words, the appellant has filed the return bona fide then a subsequent decision of the Hon'ble Supreme Court or even the amendment of law retrospectively would not render the return which is filed originally bona fide into a mala fide one. Reference, in this connection may be had to the decision of the Hon'ble Supreme Court in the case of Hindustan Electro Graphites Ltd. In this case the assessee had received certain amount by way of cash compensatory support which it did not include this income in its return which was filed on 29-12-1989. The Assessing Officer treated cash compensatory support receipt as Income in view of Insertion of clause (iiib) to section 28 by the Finance Act, 1990 with retrospective effect from 1 -4-1967, and levied addition al tax under section 143(1A). The Supreme Court observed: "One has to see the law on the date of filing the return. To attract penal provisions, there has to be some element of lack of bona fide unless the law specifically provides otherwise. Le ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... down by the Supreme Court cannot be said to have retrospective operation in the sense that although a debate or conflict of judicial opinion is resolved and settled by the Supreme Court, it does not obliterate the existence of such debate or conflict prior to such decision." 23. The principle laid down in these decisions came up for consideration before the Tribunal in the case of Soorajmull Nagarmull v. CIT [1984] 320 TTJ (Cal.) 145. The Tribunal following the Supreme Court decision in the case of CIT v. Maheshwari Devi Jute Milk Ltd. [1965] 57 ITR 36 as well as the decision of the Calcutta High Court in the case of CIT v. Empire Jute Co. Ltd. [1974] 97 ITR 581 (Cal.) disallowed the claim of the assessee holding that expenditure incurred on the purchase of loom hours was not revenue in nature. The assessee then filed a miscellaneous application dated 16-8-1983 submitting that after the service of the said order dated 14-4-1975, the assessee was informed that in view of the later judgment of the Hon'ble Supreme Court in the case of Empire Jute Co. Ltd., the said sum should have been allowed as revenue expenditure. The Tribunal held that the decision in the case of Empire ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... te deduction of Rs. 12,500 out of Rs. 3,00,000 being the discount of debenture repayable after a period of 12 years. Assessing Officer held it to be not allowable at all. On appeal, the AAC held that discount allowed at the time of issue of the debenture was an allowable deduction. Before the Tribunal assessee claimed the entire amount of discount as a deduction and the Tribunal allowed it by stating the expenditure was incurred by the assessee in the relevant previous year. The High Court though held that the Tribunal was right in permitting the assessee to raise the contention of claiming the entire amount upheld the disallowance on the ground that it was not an expenditure at all. This view of the High Court was reversed by the Supreme Court. It also held on pages 812 and 813 of its judgment in Madras Industrial Investment Corpn. Ltd. as under:- "The Tribunal, however, held that since the entire liability to pay the discount had been incurred in the accounting year in question, the assessee was entitled to deduct the entire amount of Rs. 3,00,000 in that accounting year. This conclusion does not appear to be justified looking to the nature of the liability. It is true tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ction the contrary decisions: (i) CIT v. British India Corpn. Ltd. [1987] 165 ITR 51 (SC) in this case the assessee carrying on, inter alia, the business of tanning hides and manufacture of leather products, entered into an agreement with CW and Co., of London who agreed to permit the respondent to use a number of registered trademarks and to disclose the technique, practices and application of specialized tanning processes. The agreement was for seven years and technical fees agreed was 5 per cent, of the selling price of its products Assessee was to appoint TGS, a private company, as its distributor for sale of industrial leather manufactured by it for the period of the agreement at a discount of 15 per cent, and in addition to pay the distributor Rs. 50,000 for meeting initial expenses of establishing the distributorship. The assessee claimed deduction of the sum of Rs. 50,000 paid to TGS as revenue expenditure. The Department and the Tribunal rejected the claim but, on a reference, the High Court held that the expenditure was not of a capital nature and allowed the entire expenditure as a deduction. On appeal the Supreme Court affirmed. (ii) CIT v. Gujarat Mineral Developme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... penditure; and that, assuming that the sums of Rs. 89,870 and Rs. 24,675 were expenses incurred wholly and exclusively for the purpose of the business, they were in the nature of revenue expenditure and were admissible deductions under section 10(2)(xv). 29. Can the assessee be said to have concealed particulars on his income by making that claim? In my view it is not a case of concealment of income or furnishing inaccurate particulars thereof either under the main provision of section 271(1)(c) factually or under the deeming provisions of Explanation 1 thereto, fictionally. The appeal in my opinion is to be allowed. 30. Let us now discuss the seven point reasoning given by the CIT(A) as found approval of the Ld. Judicial Member. These are extracted in his proposed order in paragraph 6. In my opinion, none of them have any substance in holding the assessee to guilty of concealment. (i) The 1st point is as under:- "(1) As discussed above, the Explanation to section 271(1)(c) is clearly applicable. Even though the Assessing Officer has not been specifically mentioned this in the body of the order, it has been held by the Supreme Court in the case of Madhusudan and others r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aracter of that payment in the hands of the recipient. (iii) The third point is as under:- "(3) It is clear from the facts narrated above that in all the four appellants cases, the transactions arc within the closely knit Mardia Group of Companies and their Directors and that have been arranged only with a view to reduce the tax liability of the appellant-companies. The transactions relating to issue of debentures are also between the appellant and only one person who is either a director of the appellant companies or is a relative of the director of the appellant. The decision of Supreme Court in the case of McDowell and Co. reported in 154 ITR 148 is also clearly applicable to the facts of the case." The mere fact that the transaction was between the closely knit Mardia group of companies and their directors would not be sufficient to bring the case of the assessee within the ken of Macdowell. If that be the case the Assessing Officer could not have even allowed the interest for 7 days. Furthermore the contours of Macdowell have been ironed out by the recent later decision of the Supreme Court in the case of Azadi Bachao Andolan. "With respect, therefore, w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... equirements, his wishes in the manner of doing any trade, activity or planning his affairs with circumspection, within the framework of law, unless the same fall in the category of colourable device which may properly be called a device or a dubious method or a subterfuge clothed with apparent dignity." This accords with our own view of the matter. In CIT v. Arvind Narottam [1988] 173 ITR 479 (SC), a case under the Wealth-tax Act, three trust deeds for the benefit of the assessee, his wife and children in identical terms were prepared under section 21(2) of the Wealth-tax Act. The Revenue placed reliance on McDowell's case [1985] 154 ITR 148 (SC). Both the learned judges of the Bench of this court gave separate opinions. Chief Justice Pathak, in his opinion said: "Reliance was also placed by learned counsel for the Revenue on McDowell and Co. Ltd v. CTO [1985] 154 ITR 148 (SC). That decision cannot advance the case of the Revenue because the language of the deeds of settlement is plain and admits of no ambiguity." Justice S. Mukherji said, after noticing McDowell [1985] 154 ITR 148 (SC) case: "Where the true effect on the construction of the deed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to pay interest on the debentures can accrue to the appellant on the first date when the debentures are issued to the recipients. The view taken by the Assessing Officer is, therefore, in full conformity with established principles of Accountancy as well as provision of the Income-tax Act, 1961 duly supported by ratio of the Apex Courts as discussed earlier in this order. As the appellant(s) having followed mercantile system it cannot change the real nature of the transaction by claiming a deduction on the basis of cash payments which have been held to be mere advance payments only." The applicability of the Supreme Court decision the facts of the case is subject-matter of scrutiny of the High Court which had admitted the appeal of the assessee, it being a substantial question of law on this very issue of disallowance of interest on debenture. The Supreme Court decision is a case for a claim of discount on debenture, whereas the present is a case of interest payable upfront on the date of allotment of debenture in the previous year itself for the entire period of debenture holding. (vi) The sixth point is as under:- "(6) As referred earlier, the Apex Court in the c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r (Appeals) and by the Tribunal in the return income of the assessee would establish that the assessee had concealed the particulars of his income. The assessee's explanation that it had reduced the price of liquor to enhance the sales was disbelieved by all the assessing authorities when an addition was made to the income returned by the assessee. Therefore, the provisions of Explanation 1 to section 271(1)(c) had application and the penalty levied against the assessee was justified." No much help can be had by the department from this decision as these observations are contrary to the observations of jurisdictional Gujarat High Court in the case of National Textiles which observed as under: "The newly introduced Explanation 1 considerably reduces, but does not altogether remove the department's onus to prove concealment in assessment based on unexplained cash credit or unexplained investment and like. (See Addl CIT v. Mangalsen Mohanlal [1982] 136 ITR 905 (All.) There has not been any significant difference by the introduction of new Explanation 1 in place of original Explanation 1 with effect from 1-4-1976. The previous Explanation used the expression 'de ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ust be held to have proved that there was no mens rea or guilty mind on his part. Even in this view of the matter, the Explanation alone cannot justify the levy of penalty. Absence of proof acceptable to the department cannot be equated with fraud or wilful default. As we find no material difference between the original Explanation 1 and Explanation I as substituted, in our opinion, it has to be so construed as to harmonise it with basic principles of justice and fairness, as in the case of original Explanation. We are guided by the commentaries of the learned authors Kanga and Palkhiwala Law and Practice of Income-tax Vol. 1, pages 1637, 1639 to 1640." The provisions of the Explanation 1 to section 271(1)(c) in my opinion saves the assessee from levy of penalty rather than to hold it guilty of concealment. The assessee by giving all the material as were necessary for computation of its income even at the time of filing its return of income and also in the course of assessment proceeding cannot be accused of lack of bona fide. 32. In the case of CIT v. Suleman Abdul Sattar [1983] 139 ITR 8 (Guj.), relied upon by the ld. DR, though the assessee indicated in Part IV of his re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s no evidence to show that the assessee had included the said shares in its stock-in-trade; the assessee had subsequently sold the shares at greatly reduced prices to members of the K family who were in control of the assessee and that the revaluation of the shares by the assessee in the relevant assessment year was without any basis and had no relationship with the break-up value of the shares. All the facts were known to the assessee in spite of which the assessee consciously and deliberately claimed a loss on revaluation of the said shares and thereby deliberately reduced its income for the assessment year in question. Accordingly, the assessee was held to be guilty of concealment. The Tribunal confirmed the order of penalty. On a reference the High Court held there was sufficient material before the Tribunal to come to the conclusion that the assessee was guilty of deliberate concealment and furnishing of inaccurate particulars of income. The levy of penalty was held valid." 34. In the result the concealment penalties in all the four cases are to be deleted and appeal of the assessees are to be allowed. REFERENCE UNDER SECTION 255(4) OF THE INCOME-TAX ACT, 1961 As there ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... interest @ Rs. 62 per debenture on the basis of following condition of redemption of debenture agreed to between the parties:- "2. Interest:- (A) Rate and manner of payment. Each Debenture shall carry interest at Rs. 62 - payable upfront on the date of allotment. (3) Repayment; The company agrees and undertakes to redeem the debentures on payment in one instalment at the end of sixth year from the date of allotment." 7. The Assessing Officer during the course of assessment proceedings held that interest on debenture could be allowed only for 7 days relating to the assessment year under consideration. The balance interest claimed was held not to pertain to the year of account and accordingly not deductible. The Assessing Officer held that issue before him was fully settled against the assessee as per decision of the Hon'ble Supreme Court in the case of Madras Industrial Investment Ltd. Relevant portion of the above decision is reproduced in the assessment order. It is also extracted by the learned Vice-President (Accountant Member) in para 7 of his proposed order. 8. On appeal the CIT(A) upheld the view of the Assessing Officer with the following observatio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ide order dated 27-9-2000 and the following substantial question of law is pending adjudication:- "Whether, in the facts and circumstances of the case, the ITAT was right in law in holding that the assessee was not entitled to the deduction of interest paid by it on debentures issued by it?" 11. At this stage it is relevant to mention that recipients of interest on debentures namely Shri Rasik Lal, Rajiv & Rakesh in their returns showed interest only for the period ending 31-3-1995 and claimed that remaining interest was income of subsequent five years. However, the Assessing Officer held that entire interest @ Rs. 62 per debenture was income of the assessee and made assessment accordingly. The recipients challenged above assessment in appeal but remained unsuccessful. On further appeal in their cases (ITA Nos. 1142, 1145 & 1101/Ahd./1999) vide order dated 28-10-1999 the ITAT held that only preportionate amount receivable till the end of 31-3-1995 was assessable. The balance amount in quantum appeal was deleted by the Tribunal. The revenue challenged above order of the Tribunal in appeal before the High Court under section 260A of Income-tax Act and following substanti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... front on the date of allotment. Therefore, the liability to pay interest accrued on the date of allotment and was rightly claimed. (6) The assessee further pointed out that the decision of Hon'ble Supreme Court in the case of Madras Industrial Investment Corporation Ltd. rendered only on 4-4-1997 whereas return of income was filed by the assessee company on 30th November, 1995. In other words, the decision applied against the assessee was not available to the assessee when the return was filed. 13. In order to support the claim that no penalty under section 271(1)(c) was exigible in this case, the assessee relied upon large number of decisions reproduced in the penalty order. 14. The Assessing Officer in the penalty order took into account observations made in the assessment order as well as by higher authorities on appeal. He held that out of total claim of expenditure, only Rs. 49,543 i.e. interest for 7 days related to the year under consideration and the balance amount pertained to later years; it was only advance payment of interest. Thus under mercantile system of accounting only interest of 7 days could be allowed. He held that entire amount did not pertain to the y ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y issue raised before him was whether imposition of penalty was not justified as assessee neither concealed income nor furnished inaccurate particulars of any income. The learned CIT(A) rejected above contention by observing that the Assessing Officer has held in clear terms that the assessee concealed income by wrongfully claiming deduction which was not admissible. The CIT(A) extensively quoted from decision of Madras Industrial Investment Corpn. Ltd. Explanation I to section 271(1)(c) of Income-tax Act was also held to be applicable to the case of the assessee. The directors of Mardia Group of Companies have arranged their affairs with a view to reduce the tax liability of the appellant companies. The manner in which debentures were issued only to persons who were directors of the appellant-company or relative of such directors, clearly showed that a device was adopted. The decision of the Hon'ble Supreme Court in the case of McDowell & Co., Ltd. was applicable in this case. 17. The learned CIT(A) took note of Explanation I to section 271(1)(c) of Income-tax Act and held that the assessee failed to substantiate explanation given by him during the course of assessment procee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vice on which decision of the Hon'ble Supreme Court in the case of McDowell & Co. Ltd. was clearly applicable. The CIT(A) accordingly held that Assessing Officer took a very lenient view in imposing penalty of 100% against maximum penalty of 300%. The order of penalty was accordingly confirmed. 18. All the assessees carried the matter in appeal before the Appellate Tribunal. After hearing the case, the learned Judicial Member in the proposed order confirmed the levy of penalty. His reasoning is as under:- (A) All the four companies under consideration belonged to Mardia Group and were controlled by Shri Rakesh Mardia, Shri Rasik Mardia and Shri Rajiv Mardia to whom debentures were issued by the company. (B) The interest @ Rs. 62 per debenture of face value of Rs. 100 was allowed on the date of allotment of debentures. The learned JM noted the amount of loan allowed through debentures as also interest accrued to the debenture holders on the date of issue of debentures. (C) He noted that ITAT in the case of these assessees as per order dated 28-10-1999 had only allowed deduction of interest on proportionate basis i.e. Rs. 49,543 for a period of seven days in the accounting ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... his order. As the appellant(s) having followed mercantile system it cannot change the real nature of the transaction by claiming a deduction on the basis of cash payments which have been held to be mere advance payments only. (6) As referred earlier, the Apex Court in the case of State Bank of India referred in 157 ITR 67 have clearly observed that the substance of transaction has to be seen and not the form. Mere recording of entries in the books in itself cannot justify the stand taken by the appellants or make the explanation bona fide or taking on argument that liability for interest be accrued on the basis of the scheme and the said debentures between the appellant and recipients. Since the said schemes were clearly devised in one go for all the four companies around the same time within the small group of family members of Mardia Group, it is obvious that the transaction is in the nature of a colourable device, as discussed earlier also in CIT(A)'s order. (7) The Assessing Officer has already taken the most lenient view in the matter and imposed minimum penalty of 100% as against 300% (maximum)." 19. The learned JM further supported his conclusion by referring t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... further noted that both the assessee as well as the revenue have challenged the orders of the ITAT. The substantial question of law pending in the case of the assessee-company and in the appeal of the revenue are noted by the learned V.P. 22. The learned VP has referred to the provision of section 271(1)(c) along with Explanation 1. He has observed that above provision is penal in character and mere rejection of assessee's claim would not be sufficient to hold that the assessee is guilty of concealment. He has referred to decisions of Hon'ble Supreme Court wherein above propositions have been laid down in para 14 of his proposed order. 23. The learned VP then discussed various limbs of Part-B of Explanation 1 to section 271(1)(c). The above provision has been minutely analyzed by the leaned VP. He has split above Part-B to examine import of the provision which is held to be as under:- (i) Such person (to be penalized) offers an explanation which he is not able to substantiate; (ii) And fails to prove that such explanation is bona fide; (iii) And that all the facts relating to the same and material to the computation of his total income have not been disclosed by him ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... #39;ble Rajasthan High Court in the case of Shiv Lal Tak. Relevant extracts of the above decision are quoted in para 18 of the order. Other decisions taking the same view are available in para 19 of the proposed order of the learned V.P. 27. The learned VP further noted that the decision of Supreme Court in the case of Madras Industrial Investment Corpn. Ltd. was rendered on 4-4-1997 and thus was not available to the assessee on 29-11-1995 when the assessee filed the return. The learned VP has emphasized that act and conduct of the assessee as on the date of submission of the return is to be seen and therefore, a subsequent decision of Hon'ble Supreme Court or retrospective amendment of law would not affect the case of the assessee as far as bona fide conduct is concerned. The learned VP has supported his view with reference to the decision of Hon'ble Supreme Court in the case of Hindustan Electro Graphites Ltd. On effect of subsequent decision of Hon'ble Supreme Court, the learned VP reproduced the following observation of the Hon'ble Gujarat High Court in the case of Maneklal Harilal Spg. & Mfg. Co. Ltd.: "Though the effect of the Supreme Court decision by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... I have heard both the parties in this case. The learned counsel for the assessee supported the order of the learned VP whereas the learned DR supported the order of the learned JM as also of the revenue authorities. The learned DR argued that the assessee adopted a device to hoodwink She revenue and furnished inaccurate particulars of income. Therefore, levy of penalty was fully justified under main section 271(1)(c) of the Income-tax Act. 32. After careful consideration of rival submissions of parties I see no good ground to take a view different from one taken by the learned VP. In fact the order of the learned VP is so comprehensive that I find u difficult to add anything to what has already been stated by him. The learned JM in his proposed order has merely relied upon what has been stated by the revenue authorities. The basis given or making disallowance and for holding that the assessee is guilty of concealment and furnishing inaccurate particulars of income, is that only interest for 7 days had accrued to the assessee and interest of balance period was wrongly claimed as a deduction. This was a device which the assessee-company along with its directors adopted to evade tax ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iture incurred" and the assessee would be entitled to the beneficial construction of the provision. The Calcutta High Court differed in that case from the view taken by the Madras High Court in the judgment which is under challenge before us. Therefore, although expenditure primarily denotes the idea of spending or paying out, it may, in given circumstances, also cover an amount of loss which has not gone out of the assessee's pocket but which is all the same, an amount which the assessee has had to give up. It also covers a liability which the assessee has incurred in praesenti although it is payable in future. A continent liability that may arise in future is, however, not "expenditure". It would also cover not just a one-time payment but a liability spread out over a number of years." Their Lordships further quoted and relied upon decision of the Hon'ble Supreme Court in the case of Calcutta Co. Ltd. v. CIT [1959] 37 ITR 1 and after noting that decision derived following conclusion from the authorities:- "Thus "expenditure" is not necessarily confined to the money which has been actually paid out. It covers a liability which has ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nding itself absolutely to carry out the same. It was not dependent on any condition being fulfilled or the happening of any event, the only condition being that it was to be carried out within six months which in view of the fact that the time was not of the essence of the contract meant a reasonable time. Whatever may be considered a reasonable time under the circumstances of the case, the case, the setting up of that time limit did not prescribe any condition for the carrying out of that undertaking and the undertaking was absolute in terms. If that undertaking imported any liability on the appellant the liability had already accrued on the dates of the deeds of sale, though that liability was to be discharged at a future date. It was thus an accrued liability and the estimated expenditure which would be incurred in discharging the same could very well be deducted from the profits and gains of the business. Inasmuch as the liability which had thus accrued during the accounting year was to be discharged at a future date the amount to be expended in the discharge of that liability would have to be estimated in order that under the mercantile system of accounting the amount could ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ability accrues under an agreement and is fastened with the obligation to be discharged. There is no dispute that under the agreement the assessee was obliged to pay Rs. 62 upfront on the date of issue of the debentures. Thus there was an accrued liability to pay whole of the interest and such a liability could legitimately be claimed as a deduction. I have already referred to the decision of the Hon'ble Supreme Court in the case of Calcutta Co. Ltd. and the learned VP in his proposed order, has referred to several other decisions to support the conclusion that the entire liability of @ Rs. 62 per debenture paid under agreement was accrued liability. The revenue authorities while holding to the contrary took into account the treatment given to the interest income by the receipts in their returns. They had shown interest only for 7 days and rest of the amount was claimed to be taxable in the subsequent years. Thus different treatment give to interest income by the payer and recipients and this had been taken in account to draw an adverse opinion against the assessee. In my considered opinion, action of the assessee was separate and distinct from that of recipients/directors or t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... particular item of expenditure. The term "commercial expediency" is not a term of art. It means everything that serves to promote commerce and includes every means suitable to that end. In applying the test of commercial expediency, for determining whether the expenditure was wholly and exclusively laid out for the purpose of the business the reasonableness of the expenditure has to be judged from the point of view of the businessman and not the Revenue (See CIT v. Walchand and Co. (P.) Ltd. [1967] 65 ITR 381 (SC); J.K. Woollen Manufacturers v. CIT [1969] 72 ITR 612 (SC); Aluminium Corporation of India Ltd. v. CIT [1972] 86 ITR 11 (SC) and CIT v. Panipat Woollen and General Mills Co. Ltd. [1976] 103 ITR 66 (SC)." 39. Assuming against the settled law that revenue is entitled to go behind the ostensible transaction to find out the real intention as also to see whether the purpose of the transaction is to avoid taxation by diversion of income, nobody in the present case asked the assessee to justify how it was prudent for the assessee to pay Rs. 62 upfront as interest to debenture-holder of face value of Rs. 100 on the date of issue of the debenture. There is no discus ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ar. This conclusion does not appear to be justified looking to the nature of the liability. It is true that the liability has been incurred in the accounting year. But the liability is a continuing liability which stretches over a period of 12 years. It is, therefore, a liability' spread over a period of 12 years. Ordinarily revenue expenditure which is incurred wholly and exclusively for the purpose of business must be allowed in its entirety in the year in which it is incurred. It cannot be spread over a number of years even if the assessee has written it off m his books over a period of years. However, the facts may justify an assessee who has incurred expenditure in a particular year to spread and claim it over a period of ensuing years. In fact, allowing the entire expenditure in one year might give a very distorted picture of the profits of a particular year. Thus in the case of Hindustan Aluminium; Corporation Ltd. v. CIT [1983] 144 ITR 474, the Calcutta High Court upheld the claim of the assessee to spread out a lump sum payment to secure technical assistance and training over a number of years and allowed a proportionate deduction in the accounting year in question &qu ..... X X X X Extracts X X X X X X X X Extracts X X X X
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