2013-TIOL-603-ITAT-CUTTACK
IN THE INCOME TAX APPELLATE TRIBUNAL
BENCH, CUTTTACK
BENCH, CUTTTACK
ITA Nos.142 & 143/CTK/2010
Assessment Years: 2006-07 to & 2007-08
Assessment Years: 2006-07 to & 2007-08
ITA Nos.483 & 484/CTK/2011
Assessment Years: 2006-07 to & 2007-08
Assessment Years: 2006-07 to & 2007-08
ARSS INFRASTRUCTURE PROJECTS LTD
PAN NO:AADCA4203D
PAN NO:AADCA4203D
Vs
ASSISTANT COMMISSIONER OF INCOME TAX
CIRCLE-2(1), BHUBANESWAR
CIRCLE-2(1), BHUBANESWAR
K K Gupta, AM and George Mathan, JM
Dated: June 13, 2013
Appellant Rep by: Shri P S Panda and K Agarwalla, ARs
Respondent Rep by: Shri P K Dash, CIT, DR
Respondent Rep by: Shri P K Dash, CIT, DR
Income Tax - Sections 80IA(4), 143(3), 263 - Whether the CIT is justified in invoking jurisdiction u/s 263 to revise the assessment order passed u/s. 143(3) allowing the assessee's claim of deduction u/s. 80IA(4) when the agreement between the assessee and the government was for the development of the infrastructure facility being roads and rail systems and bridges by participating in the tenders.
The CIT invoked his powers u/s. 263 to revise the assessment order passed u/s. 143(3) allowing the assessee's claim of deduction u/s. 80IA(4) on the ground that the assessee was not doing the development work but was only doing the contract and hence not entitle to deduction u/s. 80IA(4).
On Appeal before the Tribunal the AR submitted that in the course of the original assessment, the AO had called for the explanation of the assessee along with proof in respect of its claim of deduction u/s 80IA(4) .It was the submission that the AO had after examination drawn a conclusion that the assessee was entitled to the deduction u/s. 80IA(4) and this being one of the two views possible the CIT should not invoke his powers u/s. 263 just because he was of the opinion that another view was possible. It was further submitted that the development work done by the assessee was works contract liable for deduction of TDS and that was why the TDS has also been deducted. The DR submitted that the Act had been amended and the explanation has been introduced whereby works contract was held to be not eligible for deduction u/s. 80IA(4).
Having heard the parties, the Tribunal held that,
++ it may be mentioned here that the submissions by the DR that the Act does not provide in the provisions of section 263 that the CIT has to sign the show cause notice is accepted;
++ as it is noticed that the AO has chosen one of the two views in respect of the claim of deduction u/s. 80IA(4) , we are of the considered view that the order passed u/s. 263 is not sustainable in law and consequently, the same stands annulled;
++ though the assessee is doing a works contract the same would not fall within the meaning of the word 'works contract' for the purpose of the Act due to the exclusion provided in the meaning of 'work' in section 194C of the Act;
++ development encompasses within itself contract work. The agreement between the assessee and the customer being the government is for the development of the infrastructure facility being roads and rail systems and bridges by participating in the tenders. Under these circumstances, the AO was right in law in granting the assessee the benefit of deduction u/s. 80IA(4). On this ground also, the CIT's order passed u/s. 263 is unsustainable and is liable to be quashed;
++ in view of the fact that the explanation to section 80IA(4) of the Act which has been substituted by the Finance, Act, 2009 with retrospective effect of 01.04.2000 is attempting to take away the statutory benefit granted to the assessee u/s. 80IA(4) without making any amendment to the explanation to section 80IA(4), the said explanation substituted by the Finance Act, 2009 w.e.f. 01.04.2000 being an hindrance to the statutory deduction available to the assessee under the provisions of section 80IA(4), the said explanation would have to stand down.
The CIT invoked his powers u/s. 263 to revise the assessment order passed u/s. 143(3) allowing the assessee's claim of deduction u/s. 80IA(4) on the ground that the assessee was not doing the development work but was only doing the contract and hence not entitle to deduction u/s. 80IA(4).
On Appeal before the Tribunal the AR submitted that in the course of the original assessment, the AO had called for the explanation of the assessee along with proof in respect of its claim of deduction u/s 80IA(4) .It was the submission that the AO had after examination drawn a conclusion that the assessee was entitled to the deduction u/s. 80IA(4) and this being one of the two views possible the CIT should not invoke his powers u/s. 263 just because he was of the opinion that another view was possible. It was further submitted that the development work done by the assessee was works contract liable for deduction of TDS and that was why the TDS has also been deducted. The DR submitted that the Act had been amended and the explanation has been introduced whereby works contract was held to be not eligible for deduction u/s. 80IA(4).
Having heard the parties, the Tribunal held that,
++ it may be mentioned here that the submissions by the DR that the Act does not provide in the provisions of section 263 that the CIT has to sign the show cause notice is accepted;
++ as it is noticed that the AO has chosen one of the two views in respect of the claim of deduction u/s. 80IA(4) , we are of the considered view that the order passed u/s. 263 is not sustainable in law and consequently, the same stands annulled;
++ though the assessee is doing a works contract the same would not fall within the meaning of the word 'works contract' for the purpose of the Act due to the exclusion provided in the meaning of 'work' in section 194C of the Act;
++ development encompasses within itself contract work. The agreement between the assessee and the customer being the government is for the development of the infrastructure facility being roads and rail systems and bridges by participating in the tenders. Under these circumstances, the AO was right in law in granting the assessee the benefit of deduction u/s. 80IA(4). On this ground also, the CIT's order passed u/s. 263 is unsustainable and is liable to be quashed;
++ in view of the fact that the explanation to section 80IA(4) of the Act which has been substituted by the Finance, Act, 2009 with retrospective effect of 01.04.2000 is attempting to take away the statutory benefit granted to the assessee u/s. 80IA(4) without making any amendment to the explanation to section 80IA(4), the said explanation substituted by the Finance Act, 2009 w.e.f. 01.04.2000 being an hindrance to the statutory deduction available to the assessee under the provisions of section 80IA(4), the said explanation would have to stand down.
Asseessee's appeal allowed
Cases followed:
CIT Vs. Asish Rajpal reported in (2010) 320 ITR 674
CIT Vs. Electro House (1971) 82 ITR 824
Gita Devi Aggarwal Vs. CIT (1970) 76 ITR 496
CIT Vs. Gokuldas Exports & Ors. reported in (2011) 333 ITR 214 (Kar.)
Ranka Jewellers Vs. Addl. CIT (2010-TIOL-231-HC-MUM-IT)
S. Sundaram Pillai & Ors reported in AIR (1985) SC 582.
CIT Vs. Asish Rajpal reported in (2010) 320 ITR 674
CIT Vs. Electro House (1971) 82 ITR 824
Gita Devi Aggarwal Vs. CIT (1970) 76 ITR 496
CIT Vs. Gokuldas Exports & Ors. reported in (2011) 333 ITR 214 (Kar.)
Ranka Jewellers Vs. Addl. CIT (2010-TIOL-231-HC-MUM-IT)
S. Sundaram Pillai & Ors reported in AIR (1985) SC 582.
ORDER
Per Bench:
ITA Nos. 142 & 143/CTK/2010 filed by the assessee against the separate orders of CIT, Bhubaneswar passed u/s. 263 of the Income-tax Act, 1961 (hereinafter referred to as the Act) in Memo Nos. CIT/BBSR/Tech./263/13/2009-10/9089-91 and CIT/BBSR/Tech./263/13/2009-10/9086-77 both dated 18/23.03.2010 respectively. ITA Nos., 483 & 484/CTK/2011 filed by the assessee against the separate orders of CIT(A)-II, Bhubaneswar passed in Appeal No.0019/10-11 and 0155/09-10 both dated 14.09.2011 respectively.
2. S/Shri P. S. Panda and K. Agarwalla, ARs appeared for the assessee and Shri P. K. Dash, CIT, DR appeared for the revenue.
3. In both the appeals i.e. ITA Nos. 142 & 143/CTK/2010, the only issue is against the action of the Ld. CIT, Bhubaneswar in invoking his powers u/s. 263 of the Act to revise the assessment order passed u/s. 143(3) of the Act allowing the assessee's claim of deduction u/s. 80IA(4) of the Act. It was submitted by the Ld. AR that for the AY 2006-07, the original assessment order came to be passed u/s. 143(3) of the Act on 12.11.2008 and for AY 2007-08 on 02.12.2009. It was the submission that in the course of the original assessment, the AO had called for the explanation of the assessee along with proof in respect of its claim of deduction u/s. 80IA(4) of the Act. It was the submission that the assessee had replied vide its letter dated 12.11.2009 and 18.08.2008. It was the submission that discussion on the same had also been done in the course of the assessment as was evidenced in the order sheet noting. The Ld. AR drew our attention to pages 15 to 18 of the paper book and pages 34 to 42 of the paper book, which were the copies of the replies filed by the assessee before the AO in the course of the original assessment u/s. 143(3) of the Act for both the assessment years. He also drew our attention to the order sheet noting at pages 36 to 39 of the paper book. The Ld. AR further drew our attention to page 17 of the paper book, which was a copy of the requisition made by the AO vide his letter dated nil wherein the AO has directed the assessee to provide the details for examination the basis of the claim of deduction u/s. 80IA of the Act along with proof. It was the submission that the AO having verified the claim of deduction u/s. 80IA(4) of the Act and had allowed the assessee's claim of deduction u/s. 80IA(4) of the Act. The Ld. AR further drew our attention to the show cause notice issued u/s. 263 by the CIT, Bhubaneswar. In the said notice, Ld. CIT had invoked his powers u/s. 263 of the Act asking the assessee to show cause as to why deduction u/s. 80IA(4) of the Act was not liable to be withdrawn, as it was noticed that the assessee had not fulfilled all the conditions laid down u/s. 80IA(4) of the Act.
4. At this point, it was noticed by the Bench that the show cause notice was not signed by the Ld. CIT, Bhubaneswar but has been signed by the Income-tax Officer (Tech.) for the Ld. CIT, Bhubaneswar. When the Ld. CIT, DR was confronted as to why the show cause notice should not be quashed, it was submitted by the Ld. CIT, DR that in the Act no where it was provided that a show cause notice is to issue by the Ld. CIT u/s. 263 of the Act. It was the submission that the assessee should be informed of the proposal and the issue on which the Ld. CIT proposed to invoke his powers u/s. 263 of the Act. He also relied on the decision of the Hon'ble Delhi High Court in the case of Asish Rajpal reported in 320 ITR 674 (Del.).
5. It was further submitted by the Ld. AR that the Ld. CIT had passed his order u/s. 263 of the Act wherein in para 4 of his order the Ld. CIT had held that the assessee was doing a work contract and was consequently not eligible for the deduction u/s. 80IA(4) of the Act. It was further submission that the Ld. CIT had invoked the provisions of explanation to section 80IA which had been substituted by the Finance Act 2009 with retrospective effect from 01.04.2000. It was the submission that when the AO had passed his assessment order for AY 2007-08 the explanation was available in the statute still the AO had drawn a conclusion that the work done by the assessee was development of an infrastructure facility and was entitled to the deduction u/s. 80IA(4) of the Act. It was the submission that the AO had formed an opinion on the basis of the explanation given by the assessee and this information having not been shown to be wrong, a change of opinion by the Ld. CIT did not give the Ld. CIT the powers to invoke the provisions of section 263 to revise the assessment. The Ld. AR drew our attention to the decision of the Hon'ble Karnataka High Court in the case of CIT Vs. Gokuldas Exports & Ors. reported in (2011) 333 ITR 214 (Kar.) wherein it has been held that where two views are possible and one view has been adopted by the AO then the existence of another view alone would not be sufficient to exercise the powers u/s. 263 of the Act by the CIT. It was the submission that the AO had after examination drawn a conclusion that the assessee was entitled to the deduction u/s. 80IA(4) of the Act and this being one of the two views possible the Ld. CIT should not invoke his powers u/s. 263 just because he was of the opinion that another view was possible.
6. It was the submission that the assessee is doing the business of laying of railway tracks, bridges thereof as also building roads. It was the submission that as per the Explanation to section 80IA(4), the assessee was doing the business of developing infrastructure facilities. It was the submission that the assessee is using its own material and not the materials supplied by the Government or its customers. It was the further submission that the assessee was doing the work of development according to the requirements or specifications of the government or its customers. It was the submission that during the relevant assessment years under appeal, the assessee was doing only development of infrastructure facility as prescribed in the explanation to section 80IA(4) of the Act. The Ld. AR further submitted that the explanation to section 80IA of the Act wherein it has been declared that the said section would not apply in relation to the business referred to in sub-section (4) of section 80IA of the Act, which is in the nature of works contract could not survive in view of the fact that the Hon'ble Supreme Court has categorically held that an explanation added to a statutory provision is not a substantive provision and it cannot take away a statutory right with which any person under a statute has been cloaked or set at naught the working of the provision nor cause hindrance in the interpretation of the same. He relied on the decision of the Hon'ble Supreme Court in the case of S. Sundaram Pillai & Ors reported in AIR (1985) SC 582. It was the submission that the development work done by the assessee is works contract liable for deduction of TDS and that was why the TDS has also been deducted. Before us, it was the submission that the assessee was rightly held to be eligible for deduction u/s. 80IA(4) of the Act by the AO and consequently, order of the Ld. CIT passed u/s. 263 of the Act was liable to be quashed.
7. In reply, the Ld. CIT, DR submitted that the Act had been amended and the explanation has been introduced whereby works contract was held to be not eligible for deduction u/s. 80IA(4) of the Act. It was the submission that works contract for the said explanation meant any work taken on contract. It was the submission that the legislative intent was to give benefit only to Build, Operate and Transfer contracts (BOT). It was the submission that in view of the explanation to section 80IA of the Act, the AO had no option but to follow the provisions of section as controlled by the explanation to sec. 80IA. It was the submission that as this was not done by the AO, the order was erroneous and prejudicial to the interest of revenue and the order of the Ld. CIT in revising the order u/s. 263 of the Act was liable to be upheld.
8. We have heard rival submissions. At the out set, it may be mentioned here that the submissions by the Ld. CIT, DR that the Act does not provide in the provisions of section 263 that it is the CIT who has to give sign the show cause notice is accepted. This is because as per the provisions of section 263 the assessee needs only to be given intimation as to the issues on which the Ld. CIT is proposing to revise the order passed by the AO. The view that a show cause notice need not to be signed by the Ld. CIT u/s. 263 is supported by the decision of the Hon'ble Delhi High Court in the case of CIT Vs. Asish Rajpal reported in (2010) 320 ITR 674 as also the Hon'ble Supreme Court in the case of reported in CIT Vs. Electro House (1971) 82 ITR 824 and in the case of reported in Gita Devi Aggarwal Vs. CIT (1970) 76 ITR 496.
9. Now, coming to the merits as also the submissions as made by the assessee. Admittedly, the AO in the course of original assessment proceedings u/s. 143(3) of the Act has called for the explanation of the assessee as also directed the assessee to prove its claim for deduction u/s. 80IA(4) of the Act. The assessee has responded to the AO. The AO after considering the explanation and the proofs as produced by the assessee found that the assessee was eligible for deduction u/s. 80IA(4) of the Act. A perusal of the order of the Ld. CIT u/s. 263 of the Act does not any where show as to what is the specific error that the AO has committed when granting the assessee the deduction u/s. 80IA(4) of the Act. It is true that the Ld. CIT has referred to the provisions of explanation substituted by the Finance Act, 2009 with retrospective effect from 01.04.2000. However, this explanation was available to the AO when the assessment for AY 2007-08 was being completed. Still the AO held that the assessee was entitled to the deduction u/s. 80IA(4) of the Act. The said explanation admittedly was not available when the assessment for AY 2006-07 was being completed u/s. 143(3) of the Act. For AY 2006-07, the order passed u/s. 263 of the Act could not be used for making order treating an assessment order erroneous on account of a subsequent amendment or substitution done to the provision. Under this circumstances, as it is noticed that the AO has chosen one of the two views in respect of the claim of deduction u/s. 80IA(4) of the Act and in view of the decision of the Hon'ble Karnataka High Court in the case of Gokuldas Exports & Ors., referred to supra, we are of the considered view that the order passed u/s. 263 of the Act is not sustainable in law and consequently, the same stands annulled. This view of ours also find support from the decision of the Hon'ble Bombay High Court in the case of Ranka Jewellers Vs. Addl. CIT (2010) 328 ITR 148 = (2010-TIOL-231-HC-MUM-IT).
10. Now coming to the merits of the deduction u/s. 80IA(4) of the Act. A perusal of the provisions of section 80IA(4) of the Act shows that in the explanation 'infrastructure facility' has been specified to mean a road including a toll road, a bridge or a rail system. Admittedly, the assessee is doing the business of development of railway tracks and bridges thereof as also roads. If, we are to accept the contention of the Ld. CIT that the provisions of section 80IA(4) of the Act after the substitution of the explanation to section 80IA of the Act was introduced was only for the purpose of giving the benefit to BOT contracts then, the explanation to section 80IA(4) of the Act becomes otiose. This is as explanation to section 80IA(4) of the Act specifically provides for the road to include a toll road, a bridge or a rail system. BOT contract in respect of the railway system can never exist. Further, a perusal of the provisions of section 80IA of the Act shows that the term 'works contract' is not defined in the said section. However, the terms 'works' and 'contract' is defined in the provisions of section 194C of the Act. If a particular word or term is not defined in the specific section then, one could go to other sections in the said Act where the definition would be available to draw a meaning to the said terms. In the provisions of section 194C of the Act, work has been given an inclusive definition but in the subsequent portion it has excluded the manufacturing or supplying a product according to requirement or specification of a customer by using material purchased from a person other than such customer. As has been specified by the Ld. AR, the assessee is doing contract work but that work is according to the requirement and specification of the customer and the same has been done by using materials purchase from third parties other than the customers. Thus, though the assessee is doing a works contract the same would not fall within the meaning of the word 'works contract' for the purpose of the Act due to the exclusion provided in the meaning of 'work' in section 194C of the Act. The issue raised by the Ld. CIT that the assessee is not doing the development work but is only doing the contract also does not stand to test as the assessee admittedly is developing the roads and railway lines and the bridges thereof. Development encompasses within itself contract work. The agreement between the assessee and the customer being the government is for the development of the infrastructure facility being roads and rail systems and bridges by participating in the tenders. Under these circumstances, we are of the view that the AO was right in law in granting the assessee the benefit of deduction u/s. 80IA(4) of the Act. On this ground also, we are of the view that the Ld. CIT's order passed u/s. 263 of the Act is unsustainable and is liable to be quashed and we do so. Here, we may specifically mention that in view of the fact that the explanation to section 80IA(4) of the Act which has been substituted by the Finance, Act, 2009 with retrospective effect of 01.04.2000 is attempting to take away the statutory benefit granted to the assessee u/s. 80IA(4) of the Act without making any amendment to the explanation to section 80IA(4) of the Act, the said explanation substituted by the Finance Act, 2009 w.e.f. 01.04.2000 being an hindrance to the statutory deduction available to the assessee under the provisions of section 80IA(4), the said explanation would have to stand down in view of the decision of the Hon'ble Supreme Court in the case of S. Sundaram Pillai, referred to supra. Consequently, on this ground also the order passed u/s. 263 of the Act by the Ld. CIT for AY 2006-07 and 2007-08 stands quashed. Appeals of the assessee are allowed.
11. As we have allowed the assessee's appeal in ITA Nos. 142 and 143/CTK/2010 the appeals filed by the assessee in ITA Nos. 483 & 484/CTK/2011 which has its foundation on the order giving effect to the order passed u/s. 263 of the Act by the Ld. CIT, which have been quashed in the appeals of the assessee in ITA No. 142 & 143/CTK/2010, the same stand allowed. The ITA No. 483 & 484/CTK/2011 is consequential in nature and stand allowed.
8. In the result, appeals of the assessee stand allowed.
9. Order is dictated and pronounced in the open court.
2013-TIOL-604-ITAT-AHM
IN THE INCOME TAX APPELLATE TRIBUNAL
BENCH 'B' AHMEDABAD
BENCH 'B' AHMEDABAD
ITA No.2456/Ahd/2010
Assessment Year: 2006-07
Assessment Year: 2006-07
ITO
WARD-5(1), SURAT
WARD-5(1), SURAT
Vs
M/s BHADREH YARN TRADERS
203, PRATIK CHAMEBRS
HATHI FALIA, ZAMPA BAZAR, SURAT
PAN NO:AACFB6104A
203, PRATIK CHAMEBRS
HATHI FALIA, ZAMPA BAZAR, SURAT
PAN NO:AACFB6104A
G C Gupta, VP and Tej Ram Meena, AM
Dated: June 21, 2013
Appellant Rep by: Shri Y P Verma, Sr. (DR)
Respondent Rep by: Shri Mehul R Shah
Respondent Rep by: Shri Mehul R Shah
Income Tax - Section 40(a)(ia) - Whether the assessee is liable to deduct TDS on the payment made for purchases as well as services - Whether the CIT(A) is justified in deleting the addition made on account of disallowance of cooli & cartage expenses u/s.40(a)(ia) when the AO made no inquiry or examined the labourer - Whether the CIT(A) is justified in deleting the addition on account of disallowance of interest expenses when the AO had made general observations without pointing out any specific instance where an interest bearing borrowing utilised for non-business purpose by the assessee.
The assessee was engaged in the business of trading yarn and was mostly purchased through imports. The AO made various additions, which were deleted by the CIT(A).
On Appeal before the Tribunal the DR submitted that the assessee has made payment of transport expenses to a single transport contractor directly and no TDS was deducted therefrom as per law. However, the finding of the CIT(A) that there was no contract between the assessee and the transporter, and the impugned payment was for purchases as well as services, which is not tenable, as the assessee has not furnished any documentary evidences . The AR submitted that since there was no contract between the assessee and the transporter, and therefore, the assessee was not liable to deduct TDS on the payment paid for purchases of materials.
Having heard the parties, the Tribunal held that,
++ there is no contract between the assessee and the transporter and the section 194C is applicable to work contract. In the absence of any documentary proof to establish that there is an agreement between the assessee and the transporter for carriage of goods, we are not inclined to interfere with the order of the CIT(A) on this issue;
++ on the issue of the CIT(A) deleting the addition made on account of disallowance of cooli & cartage expenses u/s.40(a)(ia) ,if the AO has doubted the vouchers and bills, then the AO should have inquired and examined with the labourer. This has not been done by the AO. In a business, expenses of this type do happen in all regularity, which is a business necessity. The CIT(A) order confirmed;
++ on the issue of the CIT(A) deleting the addition on account of disallowance of interest expenses,the AO had made general observations without pointing out any specific instance where an interest bearing borrowing utilised for non-business purpose by the assessee. The CIT(A) has justified in deleting the addition on account of disallowance of interest expenses by the AO, which we confirm;
++ on the issue of the CIT(A) deleting the addition made on account of disallowance of brokerage expenses, the assessee has established with explanations and the accounts that the claim of the assessee is genuine and reasonable, and therefore CIT(A) is justified in deleting the disallowance made by the AO.
The assessee was engaged in the business of trading yarn and was mostly purchased through imports. The AO made various additions, which were deleted by the CIT(A).
On Appeal before the Tribunal the DR submitted that the assessee has made payment of transport expenses to a single transport contractor directly and no TDS was deducted therefrom as per law. However, the finding of the CIT(A) that there was no contract between the assessee and the transporter, and the impugned payment was for purchases as well as services, which is not tenable, as the assessee has not furnished any documentary evidences . The AR submitted that since there was no contract between the assessee and the transporter, and therefore, the assessee was not liable to deduct TDS on the payment paid for purchases of materials.
Having heard the parties, the Tribunal held that,
++ there is no contract between the assessee and the transporter and the section 194C is applicable to work contract. In the absence of any documentary proof to establish that there is an agreement between the assessee and the transporter for carriage of goods, we are not inclined to interfere with the order of the CIT(A) on this issue;
++ on the issue of the CIT(A) deleting the addition made on account of disallowance of cooli & cartage expenses u/s.40(a)(ia) ,if the AO has doubted the vouchers and bills, then the AO should have inquired and examined with the labourer. This has not been done by the AO. In a business, expenses of this type do happen in all regularity, which is a business necessity. The CIT(A) order confirmed;
++ on the issue of the CIT(A) deleting the addition on account of disallowance of interest expenses,the AO had made general observations without pointing out any specific instance where an interest bearing borrowing utilised for non-business purpose by the assessee. The CIT(A) has justified in deleting the addition on account of disallowance of interest expenses by the AO, which we confirm;
++ on the issue of the CIT(A) deleting the addition made on account of disallowance of brokerage expenses, the assessee has established with explanations and the accounts that the claim of the assessee is genuine and reasonable, and therefore CIT(A) is justified in deleting the disallowance made by the AO.
Revenue's appeal dismissed
ORDER
Per: T R Meena:
This appeal by the Revenue for the assessment year 2006-2007 is directed against the order of the CIT(A)-IV, Surat dated 17.5.2010.
2. The ground no.1 of the Revenue's appeal is as under:
"1. On the facts and in the circumstances of the case and in law, the ld.CIT(A) has erred in deleting the addition of Rs.4,74,650/- made on account of disallowance u/s.40(a)(ia) of the Act."
3. The brief facts as emerged from the relevant orders are that the assessee is engaged in the business of trading yarn and are mostly purchased through imports. The assessment under section 43(3) of the IT Act was completed determining total income at Rs.19,04,050/-. In the assessment so finalised, the AO made various additions, which were deleted by the learned CIT(A). With regard to first ground, the learned DR submitted that the assessee has made payment of transport expenses to a single transport contractor directly and no TDS was deducted therefrom as per law. However, the finding of the CIT(A) that there is no contract between the assessee and the transporter, and the impugned payment is for purchases as well as services, which is not tenable, as the assessee has not furnished any documentary evidences that the transporter was appointed by the clearing and forwarding agent. The learned AR of the assessee, on the other hand, submitted that since there is no contract between the assessee and the transporter, and therefore, the assessee is not liable to deduct TDS on the payment paid for purchases of materials, and it is the clearing and forwarding agent who engaged the transporter, and the assessee to pay the charges on receipts of goods and services. This fact has been appreciated by the learned CIT(A), and therefore, his order on this issue may be confirmed and that of the Revenue be rejected. Reliance was placed on the decision of Hon'ble Punjab & Harryana High Court in the case ofCIT Vs United Rice Land Ltd., 322 ITR 594 = (2008-TIOL-281-HC-P-H-IT) to the proposition that the assessee was not liable to deduct tax under section 194C from the payments made to the transporters, in the absence of any oral or written agreement.
4. We have heard rival submissions and perused the material on record and also the orders of the revenue authorities. We find that there is no contract between the assessee and the transporter and the section 194C is applicable to work contract. The learned CIT(A) has found that in the instant case the clearing and forwarding contractor appoints for transportation of goods, and hence the only responsibility of the assessee was to make payment on receipts of goods. Admittedly, the assessee is engaged in purchase of yarn and trading thereon, and receive the goods from transporters, through clearing and forwarding agents. The AO has made the impugned addition on the assumption that the assessee was having agreement with the transporter for transportation of its goods, was not based on any evidence on record. Therefore, in the absence of any documentary proof to establish that there is an agreement between the assessee and the transporter for carriage of goods, we are not inclined to interfere with the order of the CIT(A) on this issue, which is confirmed and this ground no.1 of the Revenue is dismissed.
5. The ground no.2 of the Revenue's appeal is as under:
"2. On the facts and in the circumstances of the case and in law, the ld.CIT(A) has erred in deleting the addition of Rs.1,36,276/- made on account of disallowance of cooli & cartage expenses paid to Shri T.V. Patil u/s.40(a)(ia) of the Act."
6. We have heard both the parties on this issue and perused the orders of the Revenue authorities. The assessee has claimed coolie and cartage expenses of Rs.1,36,276/- paid to Shri T.V.Patil in cash. We find that this addition was made by the AO on the assumption that there is a contract between the head of the labourers and that the vouchers are self-generated without any supporting evidences. The CIT(A) has observed that these types of expenses are very petty in nature and incurred in the day-to-day running of any business, and that payments to labourers, who are usually illiterate and normally do not provide any bill or vouchers for the payment they receive. The AO has not doubted the payment made to Shri T.V.Patil, and has not made any inquiry with him as the genuineness of the payment, and has not put on record any evidence to show that any contract between Shri T.V.Patil and the assessee. If the AO has doubted the vouchers and bills, then the AO should have inquired and examined with the labourer. This has not been done by the AO. In a business, expenses of this type do happen in all regularity, which is a business necessity. Therefore, we are not convinced with the findings of the AO on this issue, as there is nothing more has been brought on record by the Revenue before us. Accordingly, we confirm the order of the CIT(A) on this issue, and dismiss the ground no.2 of the Revenue.
7. The ground no.3 of the Revenue reads as under:
"3. On the facts and in the circumstances of the case and in law, the ld.CIT(A) has erred in deleting the addition of Rs.1,11,813/- made on account of disallowance of bad debts expenses."
8. We have heard both the parties on the issue, and perused the orders of the Revenue authorities. As the facts emerge from the record, the assessee claimed bad debts of Rs.1,11,813/- for the money advanced to Vector Divisas for import of goods and claimed as deduction. The AO denied the same on the ground that the same was not incurred in the previous year and was incurred fully and exclusively for the purpose of business. The learned CIT(A) allowed the claim of the assessee on the ground that the AO has accepted in his order the fact that the bad debts was on account of advance for supply of raw-materials, and the party to whom the payment was being weak, the said bad debts became bad in nature. The CIT(A) has recorded that the assessee has succeeded in proving that the advances for the purpose of business and that the debt has been written off in the books of accounts, and following the judgment of the Hon'ble Supreme Court in the case of T.R.F. Ltd. Vs. CIT, allowed the claim of the assessee. This finding of the learned CIT(A) has not been controverted by the Revenue before us, and therefore, we are not inclined to interfere with this order of the learned CIT(A) on this issue, which is accordingly confirmed and this ground of the Revenue is also dismissed.
9. The ground no.4 of the Revenue is as under:
"4. On the fatcs and in the circumstances of the case in law, the ld.CIT(A) has erred in deleting the addition of Rs.6,33,828/- on account of disallowance of interest expenses."
10. We have heard both the parties on the issue, and perused the orders of the Revenue authorities. The assessee claimed Rs.6,33,828/- on account of interest expenses on borrowed money. The AO rejected the claim of the assessee on the ground that the assessee failed prove that the "interest free advances" made by him were out of "interest free funds" and not from the "interest bearing funds" and the claim of the assessee was not reasonable and excessive, and that instead of exhausting the credit facility from the banks, the assessee borrowed the funds from the persons specified under section 40A(2)(b) of the Act. It was the contention of the assessee before the learned CIT(A) that since the assessee is a trader and most of the goods are being purchased through imports from other countries, and the payments were to be made either by opening LC or by TT/DP, which has to be made 100% immediately to release the documents otherwise heavy charges have to be paid. It was further submitted that payment to the importers/suppliers have to be made within the time contracted otherwise the deal would be cancelled. Besides this, the assessee has to make payment for custom duty immediately for clearance of goods from customs department for avoiding heavy demurrage charges. It is submitted that for all these purposes, the assessee has to keep the funds ready to make timely payments which could not be generated in a single day or within a single week. FDRs. are kept in the bank as security for granting of LC for import of the goods and payment to the suppliers, and these FDRs. cannot be utilised for other routine and regular purposes of the business need. It is further submitted that the assessee firm had no cash credit account but had overdraft account against FDRs. Therefore, borrowing made by the assessee from other persons is wholly and exclusively for the purpose of its business only and therefore, the payment of interest on such loans allowable as deduction. We find that the CIT(A) while allowing the claim of the assessee has recorded that the AO was not justified in making addition based on the balance sheet figures or merely assumption of his own but to marshal concrete evidence for his findings. Accordingly, the CIT(A) held that the rate of interest of 12% of borrowed funds should not have been considered as excessive. We find that the assessee has satisfactorily explained the business exigencies for raising loan from other parties, and utilising the same wholly and exclusively for the purpose of business, and the rationale for keeping funds with the banks in the form of FDRs, which in our opinion are valid points as a prudent businessman does normal course of business. These submissions of the assessee were not disputed by the Revenue. The Revenue has mainly disputed the rate of interest and payment of interest made to some 'specific persons'. In the circumstances narrated hereinabove, we do not find that the rate of interest @12% claimed by the assessee was too excessive or unreasonable, so as to prohibit the assessee from claiming the deduction in respect of loan taken from the relatives or for that matter, 'specified persons.' The Assessing Officer had made general observations without pointing out any specific instance where an interest bearing borrowing utilised for non-business purpose by the assessee. Therefore, in our view, the CIT(A) has justified in deleting the addition of Rs.6,33,828/- on account of disallowance of interest expenses by the AO, which we confirm, and this ground of the Revenue is also rejected.
11. The fifth and last ground of the Revenue's appeal is as under:
"5. On the facts and in the circumstances of the case in law, the ld.CIT(A) has erred in deleting the addition of Rs.3,74,449/- made on account of disallowance of brokerage expenses."
12. Both the parties relied on the respective orders of the Revenue authorities to support their cases.
13. Having heard rival submissions and gone through the orders of the Revenue authorities, we find that the assessee claimed brokerage expenses of Rs.3,74,449/- which was rejected by the AO on the ground that the claim of the brokerage was increased substantially from Rs.1,74,752 to Rs.5,49,201/- as compared to the last year, but no improvement in the sales of the current year, and that majority of payment of brokers were outstanding at the end of the year, and that brokers have only rendered services but did not receive payment of their services during the year and thereby there were no further scope for any brokerage payment as has been claimed by the assessee, and that the assessee failed to establish the actual nature of services rendered by the brokers. We find that the CIT(A) has recorded that the AO was not justified disallowance of brokerage charges especially when such elements of expenditure can never be static and change from year to year, and that the additions seems to be made only on assumption and hurried generalization. The learned counsel for the assessee has drawn our attention to page no.10 of the paper book, containing reply of the assessee dated 14.11.2008 to the show cause notice of the AO dated 7.11.2008, wherein the assessee has clarified on the issue of claim of brokerage raised by the AO in the assessment proceedings. With regard to necessity of engaging brokers for the sale goods, it was clarified by the assessee in the reply that in the earlier year total sales were not made through brokers, but during the year the entire sales were made through brokers, looking to the market situations and to avoid possibilities of bad debts. The assessee has also given reason for variation in brokerage rate in the items of sales viz. viscos yarn and nylon yarn. The assessee has furnished before the AO the copies of sales register and other records to prove its case, as is evident from its reply and the observations of the CIT(A) in the impugned order. The assessee has also produced before us the copies of ledger account of brokerage expenses and bills and ledger account of parties at page no.16 to 84 of the paper book. This has not been disputed by the Revenue before us. The learned CIT(A) has observed that the addition was made only on assumption and hurried generalisation of the fact and observed that appellant has duly discharged his burden. The Revenue has not brought any material to convince us that the impugned expenditure was not genuine or reasonable for the business purpose, on the other hand, the assessee has established with explanations and the accounts that the claim of the assessee is genuine and reasonable, and therefore CIT(A) is justified in deleting the disallowance made by the AO. In this view of the matter, we uphold the finding of the CIT(A) on this issue, and reject this ground no.5 of the Revenue.
14. In the result, appeal of the Revenue is dismissed.
2013-TIOL-608-ITAT-COCHIN
IN THE INCOME TAX APPELLATE TRIBUNAL
BENCH COCHIN
BENCH COCHIN
ITA No.237/Coch/2012
Assessment Year: 2007-08
Assessment Year: 2007-08
M/s KINFRA EXPORTS PROMOTION INDUSTRIAL PARKS LTD
KAKKANAD, KOCHI-30
PAN NO:AABCK0004G
KAKKANAD, KOCHI-30
PAN NO:AABCK0004G
Vs
THE DEPUTY COMMISSIONER OF INCOME TAX
CIRCLE-1(3), ERNAKULAM
CIRCLE-1(3), ERNAKULAM
N R S Ganesan, JM And B R Baskaran, AM
Dated: June 28, 2013
Appellant Rep by: Smt. Preetha S Nair, Adv.
Respondents Rep by: Shri M Anil Kumar, CIT (DR), And Smt Susan George Varghese, Sr. (DR)
Respondents Rep by: Shri M Anil Kumar, CIT (DR), And Smt Susan George Varghese, Sr. (DR)
Income Tax - Sections 56, 80IA(4)(iv)(b) - Whether the assessee is eligible for deduction u/s 80IA(4)(iv)(b) in respect of the profits derived from distribution of power through a new network - Whether the AO is justified in treating interest from bank deposits and security deposits as income from other sources.
The assessee was a Kerala State owned public limited company engaged in the business of providing infrastructural facilities to industries. The assessee was granted licence by the Government of Kerala for distribution of power within the industrial park area. The assessee laid a network of new distribution lines and allied equipments to facilitate power distribution to the units located in the park and claimed deduction u/s. 80IA(4)(iv)(b) in respect of income generated from the activity of distribution of power. The AO took the view that the assessee has to cumulatively comply with clauses (a) to (c) of sec. 80IA(4)(iv) in order to become eligible for deduction u/s 80IA. Since the assessee was not generating power as specified in clause (a), the assessee becomes ineligible to claim deduction u/s 80IA . The CIT(A) rejected the claim of the assessee on the ground that the mere distribution of power does not make the assessee to be eligible to claim deduction u/s 80IA within the meaning of sec. 80IA(4)(iv). The AO treated interest from bank deposits and security deposits as income from other sources and assessed accordingly. The CIT(A) also confirmed the said decision of the AO.
On Appeal before the Tribunal the AR submitted that it was covered by clause (b) of sec. 80IA(4)(iv), since it is transmitting or distributing electricity by laying a net work of new transmission or distribution lines. The D.R contended that the assessee can claim deduction u/s 80IA only if it complies with all the three clauses, viz., Clauses (a), (b) and (c) of sec. 80IA(4)(iv).
Having heard the parties, the Tribunal held that,
++ the legislative intention was to afford the tax benefit to all undertakings which were engaged in any of the three activities. The clauses (a) and (b) of sub. Sec. 4(iv) to sec. 80IA was introduced with effect from 1.4.2000 and clause (c) was introduced only with effect from 1.4.2005, i.e., they were not introduced in one go. Accordingly, in our view, the three clauses, referred above are mutually exclusive to each other;
++ it is a well established rule of construction that a "proviso" cannot enable something to be done which is not to be found in the enacting clause itself, on the ground that otherwise the proviso would be meaningless and senseless.. It cannot be used as a lever to force plain words in the enactment to which it is appended, away from their natural meaning. Where the language of the main enactment is clear, a proviso can have no repercussion on its interpretation so as to exclude from it by implication what clearly falls within it terms. The harmonious construction of clause (b) and the proviso there under, would be that the deduction u/s 80IA shall be allowed in respect of the profits derived from transmission or distribution of power through the new network. Had the intention of the parliament was to give deduction only to the undertaking which undertakes the work of laying network of new transmission or distribution lines and not to the undertaking which transmits or distributes the power, then clause (b) would have been worded accordingly and there would have been no necessity to insert a proviso for the said purpose. The assessee is eligible for deduction u/s 80IA(4)(iv)(b) in respect of the profits derived from distribution of power though the new network;
++ on the issue related to the deduction claimed by the assessee u/s 80IA in respect of interest income earned from bank deposits and security deposits, for application of the words "derived from", there must be a direct nexus between the profits and gains and the undertaking. In the instant case, the nexus of interest income with the business of the undertaking is not direct but incidental. The source of interest income is only bank deposits and security deposits. Hence, in our view, the CIT(A) was right in law in rejecting the claim of deduction u/s 80IA in respect of interest income.
The assessee was a Kerala State owned public limited company engaged in the business of providing infrastructural facilities to industries. The assessee was granted licence by the Government of Kerala for distribution of power within the industrial park area. The assessee laid a network of new distribution lines and allied equipments to facilitate power distribution to the units located in the park and claimed deduction u/s. 80IA(4)(iv)(b) in respect of income generated from the activity of distribution of power. The AO took the view that the assessee has to cumulatively comply with clauses (a) to (c) of sec. 80IA(4)(iv) in order to become eligible for deduction u/s 80IA. Since the assessee was not generating power as specified in clause (a), the assessee becomes ineligible to claim deduction u/s 80IA . The CIT(A) rejected the claim of the assessee on the ground that the mere distribution of power does not make the assessee to be eligible to claim deduction u/s 80IA within the meaning of sec. 80IA(4)(iv). The AO treated interest from bank deposits and security deposits as income from other sources and assessed accordingly. The CIT(A) also confirmed the said decision of the AO.
On Appeal before the Tribunal the AR submitted that it was covered by clause (b) of sec. 80IA(4)(iv), since it is transmitting or distributing electricity by laying a net work of new transmission or distribution lines. The D.R contended that the assessee can claim deduction u/s 80IA only if it complies with all the three clauses, viz., Clauses (a), (b) and (c) of sec. 80IA(4)(iv).
Having heard the parties, the Tribunal held that,
++ the legislative intention was to afford the tax benefit to all undertakings which were engaged in any of the three activities. The clauses (a) and (b) of sub. Sec. 4(iv) to sec. 80IA was introduced with effect from 1.4.2000 and clause (c) was introduced only with effect from 1.4.2005, i.e., they were not introduced in one go. Accordingly, in our view, the three clauses, referred above are mutually exclusive to each other;
++ it is a well established rule of construction that a "proviso" cannot enable something to be done which is not to be found in the enacting clause itself, on the ground that otherwise the proviso would be meaningless and senseless.. It cannot be used as a lever to force plain words in the enactment to which it is appended, away from their natural meaning. Where the language of the main enactment is clear, a proviso can have no repercussion on its interpretation so as to exclude from it by implication what clearly falls within it terms. The harmonious construction of clause (b) and the proviso there under, would be that the deduction u/s 80IA shall be allowed in respect of the profits derived from transmission or distribution of power through the new network. Had the intention of the parliament was to give deduction only to the undertaking which undertakes the work of laying network of new transmission or distribution lines and not to the undertaking which transmits or distributes the power, then clause (b) would have been worded accordingly and there would have been no necessity to insert a proviso for the said purpose. The assessee is eligible for deduction u/s 80IA(4)(iv)(b) in respect of the profits derived from distribution of power though the new network;
++ on the issue related to the deduction claimed by the assessee u/s 80IA in respect of interest income earned from bank deposits and security deposits, for application of the words "derived from", there must be a direct nexus between the profits and gains and the undertaking. In the instant case, the nexus of interest income with the business of the undertaking is not direct but incidental. The source of interest income is only bank deposits and security deposits. Hence, in our view, the CIT(A) was right in law in rejecting the claim of deduction u/s 80IA in respect of interest income.
Assessee's appeal partly allowed
Cases followed:
DCIT Vs. Maharaja Shree Umaid Mills Ltd., reported in (2009) 29 SOT 278
West Derby Union Vs. Metropolitan Life Assurance Society 1897 AC 647
IRC Vs. Johan Daw Staurt Ltd 91950) 931 TC 274 (HL)
M.S.M. Railway Vs. Bezwada Municipality AIR 1944 PC 71
CIT Vs. Murlidhar Mathurawalla Mahajan Association (1948) (16 ITR 146 (Bom))
CIT Vs. Sterling foods (2002-TIOL-222-SC-IT)
DCIT Vs. Maharaja Shree Umaid Mills Ltd., reported in (2009) 29 SOT 278
West Derby Union Vs. Metropolitan Life Assurance Society 1897 AC 647
IRC Vs. Johan Daw Staurt Ltd 91950) 931 TC 274 (HL)
M.S.M. Railway Vs. Bezwada Municipality AIR 1944 PC 71
CIT Vs. Murlidhar Mathurawalla Mahajan Association (1948) (16 ITR 146 (Bom))
CIT Vs. Sterling foods (2002-TIOL-222-SC-IT)
ORDER
Per: B R Baskaran:
The appeal filed by the as is directed against the order dated 29-06-2012 passed by the Ld. CIT(A)-II, Kochi and it relates to the assessment year 2007-08.
2. The grounds of appeal urged by the assessee give rise to the following two issues:
(a) Whether the Ld. CIT(A) was justified in holding that the assessee is not eligible for deduction u/s. 80IA of the Act.(b) Whether the Ld. CIT(A) was justified in holding the interest income is assessable under income from other sources and hence, impliedly, not eligible for deduction u/s 80IA of the Act
3. The facts relating to the two issues are stated in brief. The assessee is a Kerala State owned public limited company, engaged in the business of providing infrastructural facilities to industries. It runs an industrial park at Kakkanad, Kochi. The assessee was granted licence by the Government of Kerala for distribution of power within the industrial park area. Accordingly, during the financial year 2004-05, the assessee laid a network of new distribution lines and allied equipments to facilitate power distribution to the units located in the park. During the year under consideration, the assessee claimed deduction u/s. 80IA(4)(iv)(b) of the Act in respect of income generated from the activity of distribution of power. Both the tax authorities rejected the claim of the assessee, though for different reasons, which are discussed infra in a subsequent paragraph. The assessee received a sum of Rs.82,31,289/- as interest from bank deposits and security deposits. The assessee treated the same as its business income and accordingly claimed deduction u/s. 80IA of the Act. The Assessing Officer, by relying on the following case laws, held that interest is assessable under the head income from other sources and assessed accordingly.
(a) Collis Line (P) Ltd. vs. ITO (135 ITR 390).(b) CIT vs. Dr. V. Gopinathan (248 ITR 449).(c) Tuticorin Alkali Chemicals & Fertilizers Ltd. vs. CIT (227 ITR 172) = (2002-TIOL-489-SC-IT-LB).
The Ld CIT(A) also confirmed the said decision of the Assessing Officer. Thus the deduction claimed by the assessee u/s 80IA in respect of interest income was rejected by both the authorities. Aggrieved, the assessee has filed this appeal before us.
4. We have heard the rival contentions and perused the record. The controversy in the first issue surrounds around the provisions of sec. 80IA(4)(iv) of the Act. Hence, it is necessary to refer to the said provision and for the sake of convenience, we extract the relevant portions of the same below:-
"80IA (1) Where the gross total income of an assessee includes any profits and gains derived by an undertaking or an enterprise from any business referred to in sub-section (4) (such business being hereinafter referred to as the eligible business), there shall, in accordance with and subject to the provisions of this section, be allowed, in computing the total income of the assessee, a deduction of an amount equal to hundred percent of the profits and gains derived from such business for ten consecutive assessment years......(4) This section applies to---(i) ....(ii) .....(iii) ......(iv) an undertaking which, -(a) is set up in any part of India for the generation or generation and distribution of power if it begins to generate power at any time during the period beginning on the 1st day of April, 1993 and ending on the 31st day of March, 2009 (amended later as 2011)(b) starts transmission or distribution by laying a network of new transmission or distribution lines at any time during the period beginning on the 1st day of April, 1999 and ending on the 31st day of March, 2009 (amended later as 2011)Provided that the deduction under this section to an undertaking under sub-clause (b) shall be allowed only in relation to the profits derived from laying of such network of new lines for transmission or distribution;(c) undertakes substantial renovation and modernisation of the existing network of transmission or distribution lines at any time during the period beginning on the 1st day of April, 2004 and ending on the 31st day of March 2011.Explanation - For the purposes of this sub-clause, "substantial renovation and modernisation" means an increase in the plant and machinery in the network of transmission or distribution lines by at least fifty per cent of the book value of such plant and machinery as on the 1st day of April, 2004".
5. The case of the assessee is that it is covered by clause (b) of sec. 80IA(4)(iv), since it is transmitting or distributing electricity by laying a net work of new transmission or distribution lines. There is no dispute with regard to the fact that that the assessee has laid the net work of transmission or distribution lines during the time period specified in the above said section. The assessing officer took the view that the assessee has to cumulatively comply with clauses (a) to (c) of sec. 80IA(4)(iv) in order to become eligible for deduction u/s 80IA of the Act. Since the assessee is not generating power as specified in clause (a), the has taken that view that the assessee becomes ineligible to claim deduction u/s 80IA of the Act, since there is a failure on the part of the assessee to comply with clause (a). Accordingly, the assessing officer rejected the claim made by the assessee. The Ld CIT(A), however, held that the clauses (a) to (c) of sec. 80IA(4)(iv) are mutually exclusive and accordingly he did not agree with the view entertained by the assessing officer. However, the Ld CIT(A), by placing reliance to the proviso under clause (b) of sec. 80IA(4)(iv) of the Act, held that the deduction u/s 80IA has to be restricted to the profits derived from laying of such network of new lines of transmission or distribution. Accordingly, the Ld CIT(A) held that the mere distribution of power does not make the assessee to be eligible to claim deduction u/s 80IA of the Act within the meaning of sec. 80IA(4)(iv) of the Act. Since the assessee has claimed deduction u/s 80IA in respect of profit derived from sale of electricity purchased from Kerala State Electricity Board, the Ld CIT(A) also rejected the claim of the assessee.
6. Before us, the Ld D.R supported the view taken by the AO and accordingly contended that the assessee can claim deduction u/s 80IA only if it complies with all the three clauses, viz., Clauses (a), (b) and (c) of sec. 80IA(4)(iv) of the Act. Now the question that arise for our consideration is whether the three clauses enumerated in sub section 4(iv) of section 80-lA are mutually exclusive. In this regard, it is worth referring to the budget speech rendered by the then Finance Minister in Parliament on 27.02.1999, (236 ITR (St.) 25), which reads as under:-
"The financial condition of most of State Electricity Boards is extremely precarious. Many of the State Electricity Boards wish to remedy the situation by unbundling generation, transmission and distribution activities to separate companies. I propose to treat the activities of transmission and distribution of power, set up after 1.4.1999, as eligible activities for fiscal incentives available to infrastructure units. I am sanguine that this proposal will facilitate the restructuring and rehabilitation of the State Electricity Boards."
Thus it is seen that the legislative intention was to afford the tax benefit to all undertakings which were engaged in any of the three activities. We also notice that the clauses (a) and (b) of sub. Sec. 4(iv) to sec. 80IA was introduced with effect from 1.4.2000 and clause (c) was introduced only with effect from 1.4.2005, i.e., they were not introduced in one go. Accordingly, in our view, the three clauses, referred above are mutually exclusive to each other. Our view finds support from the decision of the Jaipur Bench of the Hon'ble ITAT in the case of DCIT Vs. Maharaja Shree Umaid Mills Ltd., reported in (2009) 29 SOT 278, wherein the has observed as under:-
"These three types of undertakings referred to in the said sub-clauses (a), (b) and (c) are different and independent of each other. Thus while dealing with one sub-clause, inference need not and cannot be drawn from the other sub- clause."
Accordingly, we uphold the view taken by Ld CIT(A) that clauses (a), (b) and (c) of sec. 80IA(4)(iv) are mutually exclusive.
7. The next issue relates to the interpretation of clause (b) of sec. 80IA(4)(iv) of the Act. The Ld CIT(A) has taken the view that the said clause provides exemption only to the profit derived from laying a network of new transmission or distribution lines. Since the assessee was deriving income from sale of electricity, the Ld CIT(A) has held that the assessee is not eligible for deduction u/s 80IA in respect of profit derived from distribution of power. For arriving such a conclusion, the Ld CIT(A) has placed reliance on the proviso to clause (b) of sec. 80IA(4)(iv) of the Act.
8. At the cost of repetition, we extract below clause (b) and the proviso there under to sec. 80IA(4)(iv) of the Act.
(iv) an undertaking which,----(a) …….;(b) starts transmission or distribution by laying a network of new transmission or distribution lines at any time during the period beginning on the 1st day of April, 1999 and ending on the 31st day of March, 2009 (amended later as 2011)Provided that the deduction under this section to an undertaking under sub-clause (b) shall be allowed only in relation to the profits derived from laying of such network of new lines for transmission or distribution;
A plain reading of clause (b) suggests that an undertaking which starts transmission or distribution by laying a network of new transmission or distribution lines during the time period specified above shall be eligible for deduction u/s 80IA of the Act. However, the confusion starts on reading of the proviso. A plain reading of the proviso suggests that the deduction shall be allowed in relation to the profits derived from laying of such network of new lines for transmission or distribution.
9. For an undertaking, which has started the activity of distribution of power, the expenditure incurred on laying a network of new transmission or distribution lines would be a capital expenditure and hence the question of making any profit there from shall not arise. Hence, in order to understand the legislative intention and also the view of the revenue, we may refer to the Circular issued by the Central Board of Direct Taxes (CBDT). The Ld Counsel for the assessee invited our attention to Circular No.779 dated 14.9.1999 issued by the CBDT, which is reported in (1999)(240 ITR (St.) 3). Paragraph 39.3.2 of the said circular explains the amendment brought in by Finance Act, 1999 by inserting sec. 80IA of the Act. For the sake of convenience, we extract below the relevant portions of the Circular, referred above.
"39.3.2 To augment transmission and distribution of power in the country, similar benefits are also extended to undertakings setting up new transmission or distribution lines on or after 1-4-1999 on profits derived there from, as are available for generation or generation and distribution of power. The profits thereof shall be eligible for deduction if the undertaking sets up network of new transmission or distribution lines on or after 1-4-1999 but before 31-3-2003 under the restructured provisions of section 80-IA of the Income-tax Act. The deduction shall be confined to the profits derived from transmission or distribution of power through the new network".
As per the Circular, the intention of the proviso is to restrict the deduction u/s 80IA only in respect of profit derived from transmission or distribution of power through the new network of transmission or distribution lines.
10. We shall also try to understand the meaning of the proviso to clause (b), extracted above. Sub-sec. (1) of sec. 80IA provides that the profits and gains derived by an undertaking referred to sub-section (4) are eligible for deduction u/s 80IA of the Act. Clause (iv) of sub-section (4) of sec. 80IA includes an undertaking which starts transmission or distribution by laying a network of new transmission or distribution lines at any time during the time period specified in that clause. Hence profits and gains derived by such kind of undertaking are eligible for deduction under sub-sec. (1) of sec. 80IA of the Act upon satisfying the main condition that the transmission or distribution was carried out by laying a network of new transmission or distribution lines. The proviso, however, states that the deduction shall be allowed only in relation to the profits derived from laying of such network of new lines for transmission or distribution. The proviso appears to throttle down the benefit given by the main enactment.
11. At this stage, we feel it pertinent to discuss about the implications of a "proviso" inserted to an enactment. It is a well established rule of construction that a "proviso" cannot enable something to be done which is not to be found in the enacting clause itself, on the ground that otherwise the proviso would be meaningless and senseless (West Derby Union Vs. Metropolitan Life Assurance Society 1897 AC 647). It cannot be used as a lever to force plain words in the enactment to which it is appended, away from their natural meaning (IRC Vs. Johan Daw Staurt Ltd 91950)9 31 TC 274 (HL)). Where the language of the main enactment is clear, a proviso can have no repercussion on its interpretation so as to exclude from it by implication what clearly falls within it terms. (M.S.M. Railway Vs. Bezwada Municipality AIR 1944 PC 71; CIT Vs. Murlidhar Mathurawalla Mahajan Association (1948) (16 ITR 146 (Bom)).
12. In the preceding paragraphs, we have extracted relevant portions from the speech of the Finance Minister and also relevant portions from the circular issued by CBDT explaining the provisions of clause (b) of sec. 80IA(4)(iv) of the Act. On consideration of the same and also the legal effect of the proviso discussed above, in our view, the harmonious construction of clause (b) and the proviso there under, would be that the deduction u/s 80IA of the Act shall be allowed in respect of the profits derived from transmission or distribution of power through the new network. Had the intention of the parliament was to give deduction only to the undertaking which undertakes the work of laying network of new transmission or distribution lines and not to the undertaking which transmits or distributes the power, then clause (b) would have been worded accordingly and there would have been no necessity to insert a proviso for the said purpose.
13. In view of the foregoing discussions, we are not able to agree with the view entertained by the Ld CIT(A) with regard to the proviso to clause (b) of sec. 80IA(4)(iv) of the Act. Accordingly, we set aside the order of ld CIT(A) and hold that the assessee is eligible for deduction u/s 80IA(4)(iv)(b) of the Act in respect of the profits derived from distribution of power though the new network.
14. During the course of hearing, the ld D.R submitted that the assessee was not entitled to charge more than the rates prescribed by the KSEB and accordingly expressed the view that the possibility of making profit from distribution of power is remote. The Ld A.R, in response thereto, filed an extract of the financial statement showing following details:-
| Sale of Electricity | 135048010 | |
| Electricity connection charges | 455351 | |
135503361 | ||
| Purchase of power | 104639853 | |
| Electricity Duty | 5869037 | |
| Operation & Maintenance | 935068 | |
--------------- | 111443958 | |
| Net income | 24059403 |
The ld D.R pointed out that the assessing officer did not examine the above said workings, since he took the view that the assessee is not eligible for deduction u/s 80IA of the Act. We find force in the submissions made by Ld D.R. As pointed out by Ld D.R, there was no occasion for the AO to verify the computation made by the assessee, since he had rejected the claim of the assessee outright. We notice that there was no occasion for the Ld CIT(A) also to examine the workings made by the assessee. Accordingly, in our view, the workings furnished by the assessee require examination at the end of the assessing officer. Accordingly we set aside this issue relating to examination of the workings furnished by the assessee for claiming deduction u/s 80IA of the Act to the file of the assessing officer with the direction to examine the working furnished by the assessee and take appropriate decision with regard to the quantum of deduction in accordance with the law.
15. The next issue relates to the deduction claimed by the assessee u/s 80IA of the Act in respect of interest income earned from bank deposits and security deposits. Both the tax authorities rejected the said claim made by the assessee. The Ld CIT(A), in this regard, has placed reliance on the decision of Hon'ble Supreme Court in the case of Pandian Chemicals (262 ITR 278) = (2003-TIOL-51-SC-IT) and also on the decision of Hon'ble Punjab Haryana High Court in the case of Nahar Exports Ltd (288 ITR 494) = (2006-TIOL-325-HC-P&H-IT).
16. The Ld A.R contended before us that the interest income was earned on the deposits made in the regular course of business. However, the moot point is that the deduction u/s 80IA is allowed in respect of "Profits and gains" derived from the eligible undertaking. The question is whether the interest income can be considered as "Profits and gains derived from the eligible undertaking" or not, even if it is assumed for a moment that interest income was assessed as business income. There is a difference between "income from business" and "Profits and gains derived from the eligible undertaking". Not all the business income can be classified as "Profits and gains derived from the eligible undertaking". As explained by the Hon'ble Supreme Court in the case of CIT Vs. Sterling foods (237 ITR 579) = (2002-TIOL-222-SC-IT), for application of the words "derived from", there must be a direct nexus between the profits and gains and the undertaking. In the instant case, the nexus of interest income with the business of the undertaking is not direct but incidental. The source of interest income is only bank deposits and security deposits. Hence, in our view, the Ld CIT(A) was right in law in rejecting the claim of deduction u/s 80IA of the Act in respect of interest income.
17. In the result, the appeal filed by the assessee is treated as partly allowed.
(Pronounced accordingly on 28.6.2013)
2013-TIOL-522-HC-MP-IT
IN THE HIGH COURT OF MADHYA PRADESH
AT JABALPUR
ITA No.80/2012
THE COMMISSIONER OF INCOME TAX
BHOPAL (MP)
BHOPAL (MP)
Vs
FUJISTU OPTEL LTD
MANDIDEEP, BHOPAL (MP),
B-6, NEW INDUSTRIAL AREA,
MANDIDEEP, BHOPAL
MANDIDEEP, BHOPAL (MP),
B-6, NEW INDUSTRIAL AREA,
MANDIDEEP, BHOPAL
ITA No.81/2012
THE COMMISSIONER OF INCOME TAX
BHOPAL (MP)
BHOPAL (MP)
Vs
FUJISTU OPTEL LTD
MANDIDEEP, BHOPAL (MP),
B-6, NEW INDUSTRIAL AREA,
MANDIDEEP, BHOPAL
MANDIDEEP, BHOPAL (MP),
B-6, NEW INDUSTRIAL AREA,
MANDIDEEP, BHOPAL
Krishn Kumar Lahoti, Acting CJ and M A Siddiqui, J
Dated: June 28, 2013
Appellant Rep by: Shri Sanjay Lal, Adv.
Respondent Rep by: None
Respondent Rep by: None
Income Tax - Sections 115JB, 147, 148 - Whether a reassessment is warranted on the same existing set of facts, when a return was already scrutinized and the initial assessment order was passed on thorough examination of those facts - Whether it a case of change of opinion, if the assessing officer is of the view that income has escaped assessment although there are no new materials on record.
Assessee is having a joint venture with Government of Madhya Pradesh, and declared its total income as nil for the AY 2001-2002 and 2002-2003. The book profit was calculated u/s 115JB. The case was selected for scrutiny, and thereafter, the assessment was completed. Subsequently, a notice u/s 148 was issued in 2007 for reopening the assessment on the ground that the assessee had wrongly claimed depreciation of brought forward loss while as per the provisions as contained in Section 115JB which required to be adjusted from the lower of brought forward loss or unabsorbed depreciation. The AO had formed an opinion that the assessee had not disclosed truly and fully all material facts necessary for the assessment so the income to be reassessed u/s 147. On appeal, the CIT(A) reversed the order of the AO. On further appeal, the Tribunal held that while working out the book profit, the assessee had reduced the unabsorbed depreciation which was lower out of the two i.e. brought forward business loss and unabsorbed depreciation and that there was no error in the calculation of the assessee and it was not a case of escapement of income.
Still aggrieved, the Revenue has filed this present appeal before the High Court.
Having heard the parties, the High Court held that,
+ we find that it is a case in which after filing of the return by the assessee the matter was scrutinized and on thorough examination of the facts, the initial assessment order was passed. On the basis of same set of facts, if the assessing officer was of the view that it was a case of escaped assessment, then it was a case of change of opinion and not a case for reassessment. In the present case, there was no new material before the assessing officer to record a finding that on the basis of some new material, he had formed an opinion that it was a case of escaped assessment and the assessee had not disclosed the fact truly and rightly. On the basis of the material on which the assessment order was passed, the assessing officer could not form another opinion that the original assessment order was an escaped assessment and case deserves to be reassessed under section 147(b), then it was a case of change of opinion and not a case for reassessment as is required under section 147(b) of the Act.
Revenue's appeal dismissed
JUDGEMENT
Per: Krishn Kumar Lahoti:
As the facts of both the cases are identical, both the cases are being decided by this common order.
2. These appeals have been preferred by the Revenue against the orders passed by the Commissioner of Income Tax (Appeals) and the Income Tax Appellate Tribunal, Indore by which the assessment orders framed under section 147/143(3) of the Income Tax Act were set aside by the authorities.
3. Brief facts of the case are that the respondent is a joint venture with Government of Madhya Pradesh, declared its total income nil in its return filed for the assessment year 2001-2002 and 2002-2003. The book profit was calculated under section 115JB of the Act. The case was selected for scrutiny, notices were issued and the assessment order was framed under section 143(3) of the Act on 27.02.2004. Subsequently a notice under Section 148 of the Act was issued on 09.04.2007 to the assessee. Reasons for re-assessment supplied to the assessee were that the assessee had not disclosed the income correctly, had wrongly claimed depreciation of brought forward loss while as per the provisions as contained in Section 115JB of the Act the same was required to be adjusted from the lower of brought forward loss or unabsorbed depreciation. The assessing officer was of the opinion that the aforesaid adjustment was wrongly made by the assessee and on the aforesaid ground the assessing officer was of the opinion that the income of the assessee was wrongly shown in the return. The assessment order was an escaped assessment within the meaning of provisions of section 147 of the Act. On the aforesaid reasons, the assessing officer had formed an opinion that the assessee had not disclosed truly and fully all material facts necessary for the assessment so the income to be reassessed under section 147 read with section 148 of the Income Tax Act. On the aforesaid ground, the assessment order was re-framed. This order was assailed by the assessee before the Commissioner of Income Tax (Appeals).
4. The appellate authority found that if there was some falsity in the return, only then the reassessment can be done as there was no true and full disclosure of facts by the assessee. On the contrary, the assessee had disclosed all the material facts to the assessing officer and the assessing officer after considering the facts by applying its mind, as the matter was in the scrutiny, passed an order of assessment, so it was not an escaped assessment. The income was truly and correctly disclosed with all material facts by the assessee, so the notice under section 148 could not have been issued. On the aforesaid ground, the appellate authority allowed the appeal.
5. The Revenue challenged the order of the Commissioner of Income Tax (Appeals) before the Income Tax Appellate Tribunal by filing an appeal. The Tribunal considered the matter and found that sub-section (5) of section 115JB of the Act provides that "save as otherwise provided in this section, all other provisions of this Act shall apply to every assessee being a company mentioned in that section". In other words, except for substitution of tax payable under the provision and the manner of computation of book profits, all the provisions of the tax including the provision relating to charge, definitions, recoveries, payment assessment, etc. would apply in respect of the provisions of section 115JB. The ITAT relied on the judgment of JCIT vs. Rolta India Limited, 330 ITR 470 (SC) = (2011-TIOL-02-SC-IT-LB), held that while working out the book profit, the assessee reduced the unabsorbed depreciation which was lower out of the two i.e. brought forward business loss and unabsorbed depreciation and that there was no error in the calculation of the assessee and it was not a case of escapement of income and the initiation of proceedings under section 148 were not justified. On the aforesaid grounds, the appeal has been dismissed by the ITAT.
6. Learned counsel for the appellant submits that these appeals involve substantial questions of law for consideration of this Court. The assessing officer had assumed valid jurisdiction under section 148 and notices were rightly issued to the assessee and these appeals may be admitted on the aforesaid substantial questions of law.
7. We have considered the case and find that it is a case in which after filing of the return by the assessee the matter was scrutinized and on thorough examination of the facts, the initial assessment order was passed. On the basis of same set of facts, if the assessing officer was of the view that it was a case of escaped assessment, then it was a case of change of opinion and not a case for reassessment. In the present case, there was no new material before the assessing officer to record a finding that on the basis of some new material, he had formed an opinion that it was a case of escaped assessment and the assessee had not disclosed the fact truly and rightly. On the basis of the material on which the assessment order was passed, the assessing officer could not form another opinion that the original assessment order was an escaped assessment and case deserves to be reassessed under section 147(b), then it was a case of change of opinion and not a case for reassessment as is required under section 147(b) of the Act.
8. In view of the aforesaid settled position, we are of the view that these appeals do not involve any substantial question of law for our consideration, devoid of any merit and are dismissed at admission stage, without notice to the other side.
IT : Where assessee paid interest to State Government on delayed payment of instalment of loan, said interest not being penal in nature, was to be allowed as deduction under section 37(1)
■■■
[2013] 35 taxmann.com 64 (Gujarat)
HIGH COURT OF GUJARAT
Commissioner of Income-tax-II
v.
Gujarat State Financial Corporation*
AKIL KURESHI AND MS. SONIA GOKANI, JJ.
TAX APPEAL NO. 327 OF 2013†
APRIL 9, 2013
Section 37(1) of the Income-tax Act, 1961 - Business expenditure - Allowability of [Penalty] - Assessee received loans and advances from State Government - It paid certain amount to State Government towards interest as delayed payment of instalments of loan - Revenue authorities held that such payment of interest was penal in nature and, thus, it could not be allowed as deduction - Tribunal, however, allowed assessee's claim in respect of payment of said interest - Whether merely because agreement referred to interest in question as a penal interest, any such payment would not partake character of penalty - Held, yes - Whether even otherwise, since it was not case of revenue that amount paid by assessee was for payment of penalty rather it was simplicitor liability of interest on delayed payment of instalments, Tribunal was justified in allowing said payment as business expenditure - Held, yes [Para 4] [In favour of assessee]
M.R. Bhatt and Mrs. Mauna M. Bhatt for the Appellant.
ORDER
Akil Kureshi, J. - Revenue is in appeal against the judgment of the Income-tax Appellate Tribunal ("the Tribunal" for short) dated 5-10-2012 raising following question for our consideration:-
"Whether the Tribunal is right in law and on facts in deleting the disallowance of penal interest paid to Government of Gujarat amounting to Rs.51,14,787/- without appreciating the fact that levy of penal interest @ 2% p.m. cannot be called a compensatory payment for delay in payment of instalment. Such late payment is hence against public policy and the amount paid for the same cannot be allowed as deductible expenses under Section 37(1) in view of the Explanation to Section 37(1) of the Act?"
2. Short issue is whether the Revenue is right in contending that the sum of Rs. 51.14 lakhs (rounded off) paid by the respondent assessee by way of interest on delayed payment of instalments can be treated to be in the nature of penalty and therefore not leviable by way of deduction under Section 37(1) of the Act. Admitted facts are that the respondent assessee had paid the said sum of Rs.51.14 lakhs to the Government of Gujarat on loans and advances made to the respondent assessee towards interest on delayed payment of instalments. The respondent assessee itself is a public sector undertaking. Having taken loan from the Government it also agreed to a repayment schedule. The terms of agreement provided that delayed payment would incur interest at the rate of 2% per month. When the assessee expended the sum of Rs.15.14 lakhs towards such liability and claimed deduction thereof under Section 37(1) of the Act, the Revenue contested the claim on the terms that such interest is penal in nature and the same cannot be permitted deduction of.
3. CIT (Appeals) held in favour of the Revenue. Thereupon, the assessee approached the Tribunal. The Tribunal reversed the decision of CIT (Appeals) making following observations:-
"16. We have considered rival submissions. We find that a perusal of the Resolution No.JNV-1099-2023-A of the Govt. of Gujarat (supra) makes it clear that the Govt. of Gujarat has prescribed rates of interest on loans for the public sector undertaking, which is clearly in the nature of "penal interest" and not in the nature of penalty. The assessee is in the business of finance and interest was paid by the assessee-company on account of late payment of amount payable to the State Government. There is no infringement of law and there is no Act on the part of the assessee which can be said to be against the public policy. The assessee had advanced finance by way of term loans, leave finance etc. for the industrial units in the State of Gujarat during the relevant period and has earned interest thereon. The penal interest in the nature of finance charges for late payment of instalment/amount could not be equated with penalty imposable due to some infringement of law. The use of the word "penal interest" as a nomenclature does not mean any penalty for infringement of law. We find that the observations of the CIT(A) that such late payment is against the public policy and amount paid by the same could not be allowed as deductible expenses under Section 37(1A) in view of Explanation to section 37(1), is not sustainable in law. The interest charged at the rate of 2% per month for delayed payment of instalment by the assessee-company could not be equated with payment made against the public policy or payment made in contravention of law. We are of the considered view that the interest paid by the assessee on delayed payment of instalment to the State of Gujarat is in the nature of financial charged for late payment of instalment. In view of the matter, we hold that no case of disallowance by holding the payment of penal interest as against the public policy could be made out by the department, and accordingly, the issue is decided in favour of the assessee and the grounds of the appeal of the assessee are allowed."
4. From the decision of the Tribunal and other documents on record, it emerges that the payment in question concerned interest for delayed payment of instalments. Though the agreement referred to as penal interest, the same was rightly not treated by the Tribunal as penalty. Merely because the agreement referred to such interest as a penal interest, any such payment would not partake the character of penalty. It is not even the case of the Revenue that the sum expended by the assessee was for payment of penalty. It was simplicitor liability of interest on delayed paymentof instalments.
5. In the result, no question of law arises. Tax Appeal is dismissed.
IT : Mother's sister's son is not a relative as per section 56(2)(v) and gift received from him is taxable
■■■
[2013] 34 taxmann.com 267 (Chennai - Trib.)
IN THE ITAT CHENNAI BENCH 'A'
Assistant Commissioner of Income-tax, Company Circle - IV(3)
v.
Masanam Veerakumar*
ABRAHAM P. GEORGE, ACCOUNTANT MEMBER
AND VIKAS AWASTHY, JUDICIAL MEMBER
AND VIKAS AWASTHY, JUDICIAL MEMBER
IT APPEAL NO. 1275 (MDS.) OF 2011
[ASSESSMENT YEAR 2006-07]
[ASSESSMENT YEAR 2006-07]
MARCH 14, 2013
Section 56 of the Income-tax Act, 1961 - Income from other sources - Chargeable as [Gift] - Assessment year 2006-07 - Whether mother's sister's son is a relative as per section 56(2)(v) - Held, no - Whether, therefore, gift received from him is taxable - Held, yes [Para 6] [In favour of revenue]
Words and Phrases : 'Relative' as appearing in Explanation to section 56(2)(v) of the Income tax Act, 1961
FACTS
| ■ | The assessee received gift from his mother's sisters son which was added to income by the Assessing Officer on ground that maternal cousin was not a relative as per section 56(2)(v). | |
| ■ | On appeal, the Commissioner (Appeals) deleted addition, holding that amount had been receive from a lineal ascendant or descendant. | |
| ■ | On revenue's appeal : |
HELD
| ■ | The term used in proviso to section 56(2)(v) is 'relative' which has been further elaborated in the Explanation to clause (v) of section 56(2). The Commissioner (Appeals) erred in equating the term 'lineal ascendant or lineal descendant' to relative to include mother's sister's son. When the meaning of the term relative is defined in the Act itself, to derive meaning of the word relative from term 'lineal ascendant or lineal descendant' and bring the relationship with the purview of the section to grant benefit is unjustified and bad in law. When the definition has been provided in the Act itself, it is not appropriate to import dictionary meaning of the term. A perusal of the term 'relative' used in the section clearly shows that mother's sister's son does not fall within the definition of relative. Therefore, the amount received by the assessee from mother's sister's son does not qualify for the benefit. | |
| ■ | Therefore, the finding of the Commissioner (Appeals) on this issue is reversed and the ground of appeal of the revenue is allowed. [Para 6] |
Shaji P. Jacob for the Appellant. G. Baskar for the Respondent.
ORDER
Vikas Awasthy, Judicial Member - The appeal has been filed by the Revenue impugning the order of the CIT(A)-V, Chennai dated 11.04.2011.
2. The brief facts of the case are that the assessee filed his return of income for the assessment year 2006-07 on 4.3.2008 declaring total income of Rs. 2,58,961/-. The assessee is alleged to be a Director of M/s. Models Bright Future Personality Development P. Ltd. The case of the assessee was selected for scrutiny and notice under section 143(2) was issued to the assessee on 11.9.2008. During the course of assessment, the Assessing Officer made additions in the income returned by the assessee on account of gifts amounting to Rs. 4,80,920/- received from mother's sister's son, loan from Mr. Iliaz amounting to Rs. 8,80,072/- and from Mr. Sakthvel to the tune of Rs. 5,04,000/- and cash deposits amounting to Rs. 13,00,000/-.
3. The Assessing Officer held that mother's sister's son does not fall within the definition of 'relative' as provided under Explanation to section 56(2)(v), therefore, the gift received from him is disallowed. As regards loans, identity of the persons who have given loans have not been proved. The Assessing Officer rejected confirmations received by the assessee through e-mail and made additions of the said alleged loans in the income returned by the assessee. As regards cash deposits, the Assessing Officer held that the assessee has failed to give clear source of deposits in the bank. The Assessing Officer vide his assessment order dated 30.12.2008 rejected the explanation furnished by the assessee and proceeded on to make addition of the said amount.
Aggrieved against the assessment order dated 30.12.2008, the assessee preferred an appeal before the CIT(A). The CIT(A) vide impugned order accepted the contentions of the assessee and allowed the appeal in full. Now, the Revenue has come in second appeal before the Tribunal assailing the order of the CIT(A).
4. Shri Shaji P. Jacob appearing on behalf of the Revenue submitted that the CIT(A) has erred in deleting the addition of Rs. 4,80,920/-, which the assessee has alleged to have received as gift from his mother's sister's son. As per the definition of relative given in Explanation to section 56(2)(v), mother's sister's son do not fall within the meaning of the term relative used in the section. The DR submitted that with regard to the alleged loans received from Mr. Iliaz and Mr. Sakthivel, the CIT(A) without affording any opportunity of hearing to the Assessing Officer has accepted the appeal of the assessee. In respect of cash deposits amounting to Rs. 13,00,000/-, the DR contended that the assessee has failed to produce any documentary evidence to substantiate his claim that the amount has been received as a loan. The identity of the lenders was neither established before the Assessing Officer or before the CIT(A). The DR submitted that except for the bald statement of the assessee, the assessee could not substantiate his claim with regard to cash deposits. The CIT(A) has drawn adverse inference from the order of the Assessing Officer wherein the Assessing Officer has made reference to what the assessee has stated before him.
5. On the other hand, the counsel for the assessee submitted that the order of the CIT(A) is a well-reasoned and detailed order. The amount of Rs. 4,80,920/- has been received by the assessee from his cousin. The CIT(A) has allowed the same after considering the fact that the gift has been received from lineal ascendant or lineal descendant which means 'relative'. With regard to the loan amounts received from Mr. Iliaz and Mr. Sakthivel, the counsel submitted that confirmations received through e-mail from the aforesaid persons were submitted before the Assessing Officer. The Assessing Officer in an arbitrary and unjustified manner refused to consider the same and went on to make addition of the said amount. The counsel further contended that an amount of Rs. 13,00,000/- was not a single transaction. The said amount was deposited over a period of one year. He contended that all the statements were produced before the Assessing Officer as well as CIT(A). The Assessing Officer without considering the documentary evidence produced by the assessee made addition of Rs. 13,00,000/- in the income returned by the assessee.
6. We have heard the submissions of both the sides and have perused the orders of the authorities below. The CIT(A) has allowed gift of Rs. 4,80,920/- received from mother's sister's son on the ground that the amount has been received from the lineal ascendant or lineal descendant which means relative. The term relative has been defined in Explanation to section 56(2)(v) which is reproduced herein below:-
"56(2)(v):-……
Explanation.—For the purposes of this clause, "relative" means—
| (i) | spouse of the individual; | |
| (ii) | brother or sister of the individual; | |
| (iii) | brother or sister of the spouse of the individual; | |
| (iv) | brother or sister of either of the parents of the individual; | |
| (v) | any lineal ascendant or descendant of the individual; | |
| (vi) | any lineal ascendant or descendant of the spouse of the individual; | |
| (vii) | spouse of the person referred to in clauses (ii) to (vi);" |
The term used in proviso to section 56(2)(v) is "relative" which has been further elaborated in the Explanation to clause (v) of Section 56(2). The CIT(A) has erred in equating the term "lineal ascendant or lineal descendant" to relative to include mother's sister's son. When the meaning of the term relative is defined in the Act itself, to derive meaning of the word relative from term "lineal ascendant or lineal descendant" and bring the relationship with the purview of the section to grant benefit is unjustified and bad in law. When the definition has been provided in the Act itself, it is not appropriate to import dictionary meaning of the term. A perusal of the term "relative" used in the section clearly shows that mother's sister's son does not fall within the definition of 'relative'. Therefore, the amount received by the assessee from mother's sister's son does not qualify for the benefit. Therefore, we reverse the finding of the CIT(A) on this issue and allow the ground of appeal of the Revenue.
7. In respect of other two additions, the DR has contended that the assessee has failed to substantiate his claim with documentary evidence either during the assessment proceedings or appellate proceedings with respect to identity and genuineness of the lenders of the loan. The DR has contended that before deleting the addition made by the Assessing Officer the CIT(A) has not afforded any opportunity to the Assessing Officer to defend the assessment order. The documents which were produced before the CIT(A) were never submitted by the assessee before the Assessing Officer, which is in violation of Rule 46A of the Income Tax Act.
8. In respect of these two additions deleted by CIT(A), we deem it appropriate to remit the matter back to the Assessing Officer to decide the issues afresh after taking into consideration the evidence submitted by the assessee with regard to genuineness of the lenders of the loan and the evidence furnished by the assessee explaining cash deposits of Rs. 13,00,000/-. Thus, these two grounds of appeal assailing the order of the CIT(A) are allowed for statistical purposes.
9. In the result, the impugned order of the CIT(A) is set aside and the appeal of the Revenue is partly allowed in the aforesaid terms.
Good issue for 220(2)interest. A hefty amount can be recovered from such a big assessee.
IT : Where assessee claimed excess depreciation on machinery on basis that machinery was of foreign origin but facts showed that such machinery was of Indian make and excess claim was only withdrawn in view of action initiated by department, penalty under section 271(1)(c) was justified
■■■
[2013] 35 taxmann.com 65 (Madras)
HIGH COURT OF MADRAS
Commissioner of Income-tax
v.
Sundaram Finance Ltd.*
ELIPE DHARMA RAO AND M. VENUGOPAL, JJ.
T.C. APPEAL NO. 108 OF 2008†
DECEMBER 21, 2012
Section 271(1)(c), read with section 32, of the Income-tax Act, 1961 - Penalty - For concealment of income [Wrong claim, effect of] - Assessment year 1999-2000 - Assessee claimed 50 per cent of 100 per cent depreciation allowable on a sum being cost of a machinery leased to 'Softech' - During inspection on premises of 'Softech' it was found that machinery imported by lessee jointly with assessee was not a genuine transaction and said machinery was of Indian make but same was claimed as of foreign origin - Accordingly, excess depreciation claimed was disallowed and penalty under section 271(1)(c) was levied on assessee - Whether in view of fact that valuer had informed director of lessee that machinery in question seemed to be of Indian make only and this would not cost much and further assessee had collected huge sum as collateral, assessee could not plead ignorance of fact - Held, yes - Whether further, assessee withdrew excess claim only in view of action initiated by department, there being lack of bona fide on part of assessee, penalty under section 271(1)(c) levied on assessee could not be deleted - Held, yes [Paras 10,12 & 19] [In favour of revenue]
FACTS
| ■ | The assessee-company was engaged in the business of hire purchase financing and leasing and allied activities. The assessee has claimed 50 per cent of 100 per cent depreciation on a sum of Rs. 30.53 crore alleged to be the cost of solar moulds for solar heater system, venturi scrubber and wet oxidation equipment leased to 'Softech'. | |
| ■ | The officers of the Directorate of Revenue Intelligence, on inspection of the premises of 'Softech' found that the said machinery imported by 'Softech', jointly with the assessee was not a genuine transaction and the said machinery was of Indian origin but misdeclared as of foreign origin. Accordingly, the Assessing Officer came to a conclusion that the real value of the machinery was concealed by claiming 100 per cent depreciation and furnished inaccurate particulars and, therefore, levied penalty under section271(1)(c)(iii). | |
| ■ | The Commissioner (Appeals) affirmed the order of the Assessing Officer. | |
| ■ | The Tribunal reversed the findings of the authorities by holding that the documentary evidence and the sequence of events leading to the assessee's providing finance to the transaction did not prove that the assessee had colluded with the lessee to finance a sham transaction and the mens rea was not palpable in this case. | |
| ■ | On appeal: |
HELD
| ■ | The valuation report for the plant and machinery dated 13-12-1999, was given by one 'A', whereunder the fair market value of the plant and machinery was assessed at Rs. 30.30 crore. After inspection by the DRI authorities, the aforesaid 'A' was examined and he had made the statement to the effect that he had told director of 'softech' that the machinery seemed to be of Indian make only and this won't cost much. [Para 9] | |
| ■ | Hence, the assessee cannot plead ignorance of the fact that they were kept in dark. It is also pertinent to note that after this inspection and after disclosure of the said fact to the director of 'Softech', and after a consultation in the committee room with the officials of the assessee-company, whose presence is not denied by the assessee, the assessee had submitted its return on 31-12-1999, claiming depreciation. It is also to be noted that one of the officials of the assessee-company who had inspected the machinery along with the valuer was examined by the DRI in August, 1999, and his statement was recorded on 9-8-1999. It is also to be seen that while extending lease finance to the extent of Rs. 30.53 crore to the lessee, the assessee had collected Rs. 24 crore as collateral. This attitude of the assessee shows that the assessee may be knowing the fact that machinery is not of much cost as it was shown in the valuation report and the Court can even go to an extent of assuming that the assessee knowing that the machinery is of lesser cost and of Indian make had collected a huge sum of Rs. 24 crore towards the lease amount of Rs. 30.53 crore as collateral and later adjusted towards the dues from the lessee. [Para 10] | |
| ■ | Apart from above, the fact of withdrawal of the claim of depreciation appears to be artificial instead of natural as stated by the revenue. The assessee had chosen to issue withdrawal notice on 22-9-2000, whereas, even, according to the assessee, the Department had issued scrutiny notice on 25-9-2000 (according to the Department, the said notice was dated 20-9-2000), three days prior to issuance of notice. This would only go to show that, after the Department had thought it fit to initiate action against the assessee, the assessee had issued the withdrawal notice and, even without waiting for the result of the enquiry, had volunteered to deposit a sum of Rs. 5.35 crore towards additional tax liability. In the above background of facts the only presumption would be that the assessee being well aware that after the enquiry it would be liable to pay additional tax and penalty, was forced to make payment voluntarily. Therefore, the contention that in order to show the bona fide of the assessee, the assessee had volunteered to make payment even before the enquiry proceedings are completed was not acceptable. [Para 12] | |
| ■ | Thus, the Tribunal, without appreciating the facts of the case in an appropriate manner, had came to a strange conclusion that the Departmental presumption is only based upon the statement given by the valuer and such valuation cannot be the basis for levy of penalty. The finding of the authorities based on the evidence of the valuer, which was corroborated by the circumstantial evidence and the background of the case, are not presumptive as has been concluded by the Tribunal, and, therefore, the decision of the Tribunal is liable to be set aside. [Para 19] |
CASE REVIEW
Dilip N. Shroff v. Jt. CIT [2007] 291 ITR 519/161 Taxman 218 (SC); Union of India v. Dharamendra Textile Processors [2008] 306 ITR 277/174 Taxman 571 (SC); Union of India v. Rajasthan Spinning and Weaving Mills [2009] 180 Taxman 609 (SC) and CIT v. Reliance Petroproducts Pvt. Ltd. [2010] 322 ITR 158/189 Taxman 322 (SC) (para 18) distinguished.
CASES REFERRED TO
K.P. Madhusudhanan v. CIT [2001] 251 ITR 99/118 Taxman 324 (SC) (para 1), Dilip N. Shroff v. Jt. CIT [2007] 291 ITR 519/161 Taxman 218 (SC) (para 13), Union of India v. Dharamendra Textile Processors [2008] 306 ITR 277/174 Taxman 571 (SC) (para 13), Union of India v.Rajasthan Spg. & Wvg. Mills [2009] 180 Taxman 609 (SC) (para 13) and CIT v. Reliance Petroproducts (P.) Ltd. [2010] 322 ITT 158/189 Taxman 322 (SC) (para 13).
K. Subramaniam for the Appellant. P.S. Raman and Subbaraya Aiyar for the Respondent.
JUDGMENT
Elipe Dharma Rao, J. - The assessee-company is engaged in the business of hire purchase financing and leasing and allied activities. The assessee has claimed 50 per cent. of 100 per cent. depreciation on a sum of Rs.30,52,84,527 alleged to be the cost of solar moulds for solar heater system, venturi scrubber and wet oxidation equipment leased to EPK Softech Pvt. Ltd. The officers of the Directorate of Revenue Intelligence, on inspection of the premises of EPK Softech Ltd. found that the said machinery imported by EPK Softech Pvt. Ltd., jointly with the assessee was not a genuine transaction and the said machinery was assembled at Ranipet and exported by EPK International Ferrites to Singapore and therefrom it was imported by EPK Softech Pvt. Ltd, to Tuticorin Port and, thus, the machinery received from Singapore was of Indian origin but misdeclared as of foreign origin. On the basis of the marks and numbers found in the containers and the materials available on record, the Assessing Officer came to a conclusion that the real value of the machinery was concealed by claiming 100 per cent. depreciation and furnished inaccurate particulars and, therefore, levied penalty under section 271(1)(c)(iii) of the Income-tax Act, 1961. It was the further conclusion of the Assessing Officer that the so-called import was made by the assessee only for the purpose of availing of 100 per cent. depreciation. The order of the Assessing Officer was challenged unsuccessfully by the assessee before the Commissioner of Income-tax (Appeals). It was the contention of the assessee before the appellate authority that M/s. ETK Softech Pvt. Ltd., and ETK International Ferrities Ltd., have cheated the assessee and they came to know about the sham import only at the time of enquiry by the DRI and, thereafter, they withdrew the claim of depreciation, vide letter dated September 22, 2000, and treated the same as a loan transaction. The appellate authority rejected the aforesaid contention of the assessee and held that the appellant knew before filing of the return that the leased machinery's value was much less and yet the appellant had chosen to claim 100 per cent. depreciation on much higher price. Ultimately, by relying on the decision of the Supreme Court in K. P. Madhusudhanan v. CIT [2001] 251 ITR 99/118 Taxman 324 (SC), upheld the order of the Assessing Officer. The assessee took the matter in appeal before the Income-tax Appellate Tribunal. The Tribunal reversed the findings of the authorities by holding that the documentary evidence and the sequence of events leading to the assessee's providing finance to the transaction do not prove that the assessee had colluded with the lessee to finance a sham transaction and the mens rea is not palpable in this case. Aggrieved by the order of the Tribunal, the Revenue has come forward with the present appeal.
2. At the time of admission of this appeal, the following substantial question of law have been framed for consideration :
"Whether, on the facts and in the circumstances of the case, the Income-tax Appellate Tribunal was right in law in setting aside the orders of the authorities below and deleted the penalty under section 271(1)(c) of the Income-tax Act, even though the withdrawal of claim of depreciation was not a voluntary act of the assessee-company is valid ?"
3. According to the Department, the assessee has imported machinery along with ETK International Ferrities Ltd., Ranipet, and it was leased to ETK Softech (P.) Ltd., by extending lease finance to an extent of Rs. 30.53 crore. Out of the said amount, the assessee had claimed 50 per cent. as depreciation. However, on the inspection made by the Directorate of Revenue Intelligence, it was found that the machinery imported by ETK Softech (P.) Ltd. was not a genuine transaction and the machinery was assembled at Ranipet and exported by ETK International Ferrities Ltd., through Chennai Port to Singapore and that even the one time seal affixed on the counter stuffed with the goods from Chennai port was found intact at the time of import at Tuticorin Port. On the aforesaid basis, they came to a conclusion that the machinery received from Singapore was of Indian origin, but was misdeclared as foreign origin. Therefore, the authorities thought it fit to levy penalty. On the other hand, it was the case of the assessee that when the DRI had questioned about the transaction in question, the assessee without waiting for the final outcome of the enquiry, put forth all the facts before the Department and paid an ad hoc amount of Rs. 5.35 (sic) and also requested the authorities to treat the entire transaction as a loan transaction to show their bona fides and, therefore, there is no concealment or furnishing of inaccurate particulars in the return as alleged by the Department.
4. The Department had mainly relied on the statement of one Shri Sivasankaran of M/s. Anbu Shivam Valuers, who has inspected the machinery on behalf of the assessee and gave a statement dated March 7, 2000, recorded by the DRI to the effect that the machinery was of Indian make and would not cost much. The Tribunal has heavily come down on the statement given by the said person as the statement given by the said officer before the DRI was to safeguard his skin and the assessee genuinely believed the valuation report given by the valuer much earlier. The main reason for reversing the decision of the authorities by the Tribunal is that the import documents, clearance by the Customs Department, valuation report of the valuer, all prove that mens rea is not palpable in this case and the Departmental presumption is only based upon the statement given by the valuer to the DRI.
5. Learned standing counsel appearing for the Revenue submitted that the assessee-company has claimed 100 per cent. depreciation on the cost of solar moulds for solar heater system leased to one EPK Softech P. Ltd. and, on inspection, when it was found by the officials of the Directorate of Revenue Intelligence that the machinery received from Singapore was of Indian origin but wrongly declared as of foreign origin, the assessee withdrawn the claim of depreciation. Such act of the assessee, according to the Revenue, was not a voluntary act, and, therefore, penalty was rightly imposed by the authorities and such concurrent finding ought not to have been interfered with by the Tribunal on the ground that the Departmental presumption is only based upon the statement given by the valuer of the DRI and such presumption cannot be the basis of levy of penalty. In support of the aforesaid contention learned standing counsel placed reliance upon the decisions.
6. Learned senior counsel appearing for the assessee contended that the finding of the Tribunal on the voluntary nature of the assessee's withdrawal of the claim was clearly borne out by the fact that prior to the letter dated September 22, 2000, the Department has no iota of knowledge regarding the present transaction and there is no logical reason for the assessee to make a claim in December, 1999, only to withdraw the same in September, 2000, and suffer huge interest liability on such tax, when there was no intervention by the Department to this transaction. He has attacked the findings of the Assessing Officer as well as the Commissioner of Income-tax (Appeals) that they were based on surmises and presumption as if the assessee had knowledge of the fraud or that they were in complicity with the lessee in the fraud played on the import transaction. According to the learned senior counsel, the Tribunal has rightly held that there is no documentary evidence to conclude that the assessee had concealed any transaction and, on the other hand, the documentary evidence and the sequence of events leading to the asseessee's providing finance to the transaction do not prove that the assessee had colluded with the lessee to finance a sham transaction and the aforesaid finding of the Tribunal being a factual finding based on documentary evidence, this court, sitting in appeal, should not disturb such finding and the present appeal is liable to be dismissed.
7. It is very unfortunate case where the Tribunal has upset the concurrent findings of the authorities on the flimsy ground that the Revenue has failed to establish mens rea in the transaction held between the assessee and the lessee and the conclusion arrived at by the authorities is based on presumption. The appeal relate to the assessment year 1999-2000. During the course of assessment proceedings under section 143(3), it was found that the assessee had claimed 50 per cent. of 100 per cent. depreciation allowable on a sum of Rs. 30,52,84,527, being the cost of solar modules for solar heater system, venturi and wet oxidation equipment leased to ETK Softech (P.) Ltd. The assessee had imported machinery along with ETK International Ferrities Ltd., Ranipet, and the said machinery was leased to ETK Softech (P.) Ltd., to the extent of Rs. 30.53 crore and collected an amount of Rs. 24 crore as collateral and held the same as lease deposit. The assessee claimed depreciation of Rs. 15,26,42,264 on this machinery and returned the lease rent of Rs. 2,14,20,525 as income. During the inspection made by DRI on the premises of the lessee, namely, ETK Softech (P.) Ltd., it was found that the so-called machinery imported by the lessee jointly with the assessee was not a genuine transaction and the said machinery was assembled at Ranipet and exported by ETK International Ferrities Ltd., through Chennai port to Singapore and therefrom it was imported by ETK International Ferrities Ltd., to Turicorin Port.
8. It is the case of the Revenue that the assessee has imported the machinery on account of M/s. Softech (P.) Ltd., without verifying the genuineness of the import and, even after the import, its worthiness and technical feasibility, though duty-bound as an importer, were not verified by the assessee and further the valuer appointed by the assessee was aware that the machinery imported was of Indian origin. This statement of the Revenue was denied by the assessee by stating that its act of extending lease finance to the lessee was within the framework of the Import and Export Policy, it had been furnished technical feasibility/financial viability report by the members of the appraisal committee, that all necessary import documents were obtained, that since the lessee alone is the importer, the assessee-company was not enjoined with any duty to verify the worthiness of the capital goods and that the assessee had no reason to entertain any doubt with regard to the goods which came to India would be of quality different from that one intended to be imported. On the aforesaid background, the question arises for consideration is whether the assessee had an hand in such transaction and it had deliberately made false claim for deduction of tax.
9. It is not in dispute that the machinery which was sought to be leased out by the assessee to the lessee M/s. Softech (P.) Ltd., was imported from Ranipet to Singapore and from there it was exported to Tuticorin Port and the FOB value of US $ 171300. The assessee had filed its return of income on December 31, 1999, claiming 100 per cent. depreciation on the machinery. In order to appreciate the contention of the assessee, we have carefully gone through the valuation report and the sworn statement made by the valuer before the customs authorities on March 7, 2000. The valuation report for the plant and machinery dated December 13, 1999, was given by one Mr. A. Sivasankaran of M/s. Anbusivam Valuers, whereunder the fair market value of the plant and machinery was assessed at Rs. 30.30 crore. After inspection by the DRI authorities, the aforesaid Mr. A. Sivasankaran was examined and he had made the following statement (extract is made from the typed document furnished on behalf of the respondent) :
"I am giving the truthful statement. You have asked me about the 'valuation report' given for M/s. ETK Softech Pvt Ltd, Ranipet. Sri Shankar, DGM, Sundaram Finance Ltd. contacted me and gave me the work order on January 10, 1999, to value the equipment leased by them to M/s. ETK Softech Pvt Ltd, Ranipet. Accordingly on December 11, 1999, myself and other engineers V. Sekar (Mech.), V. Govindasamy (Software), Gajalakshmi (Elec. dip.) came along with me and proceeded for inspection. We reached at Ranipet at 10.15 am. Mr. Kannan, director, Softech Pvt Ltd and Govindarajan, ETK IF were present and they asked me to wait for Sri Parthasarathy. We waited there after inspection up to 2.30 p.m. At 12.30, Sri Srinivasan, GM and Shankar, DGM, Sundaram Finance also came. This, they have not informed to our team of valuers. They also inspected the factory and joined us in the committee room. All of us expecting Sri Parthasarathy who is having a engagement not turned till we leave the place at 2.30 p.m. All of us returned to Chennai same day. You asked about the inspection conducted by us for our valuation report. The equipment given in the work order, we have verified after identification by Kannan and I have told him that this materials seems to be of Indian make only and this won't cost much."
10. From the above statement it is apparent that the valuer Mr. A. Sivasankaran had inspected the machinery and, while he was waiting, Mr. Srinivasan, GM and Shankar, DGM of Sundaram Finance had come to the factory at 12.30 and they after inspection joined Mr. A. Sivasankaran at the committee room and had a discussion. Since Mr. A. Sivasankaran was of the opinion that the machinery is of Indian make and it would not cost much, he would have necessarily disclosed the said fact with the aforesaid officials of the assessee-company in the committee room and further when he had also informed this material fact to Mr. Kannan, the director of M/s. Softech Pvt. Ltd., the assessee cannot plead ignorance of the fact that they were kept in dark. It is also pertinent to note that after this inspection and after disclosure of the said fact to the director of M/s. Softech Pvt Ltd., and after a consultation in the committee room with the officials of the assessee-company, whose presence is not denied by the assessee, the assessee had submitted its return on December 31, 1999, claiming depreciation. It is also to be noted that one of the officials of the assessee-company who had inspected the machinery along with the valuer, namely, Mr. K. M. Shankar, DGM., was examined by the DRI in August, 1999, and his statement was recorded on August 9, 1999. It is also to be seen that while extending lease finance to the extent of Rs. 30.53 crore to the lessee, the assessee had collected Rs. 24 crore as collateral. This attitude of the assessee shows that the assessee may be knowing the fact that machinery is not of much cost as it was shown in the valuation report and we can even go to an extent of assuming that the assessee knowing that the machinery is of lesser cost and of Indian make had collected a huge sum of Rs. 24 crore towards the lease amount of Rs.30.53 crore as collateral and later adjusted towards the dues from the lessee.
11. The learned senior counsel has vehemently contended that the assessee knowing that in May, 2000, after the assessee was given information by the Customs Department that the equipment was actually of Indian origin and that the lessee and its sister concern had manipulated the transaction, immediately, without waiting for the notice issued by the Department, had voluntarily gave a letter dated September 22, 2000, withdrawing the claim of depreciation to show their bona fides and, therefore, the assessee cannot be found fault with.
12. This contention, though appears to be prima facie attractive, it cannot be accepted for the reasons stated by us in the preceding paragraphs. Apart from above, the fact of withdrawal of the claim of depreciation appears to be artificial instead of natural as stated by the learned senior counsel. The assessee had chosen to issue withdrawal notice on September 22, 2000, whereas, even, according to the assessee, the Department had issued scrutiny notice on September 25, 2000 (according to the Department, the said notice was dated September 20, 2000), three days prior to issuance of notice. This would only go to show that, after the Department had thought it fit to initiate action against the assessee, the assessee had issued the withdrawal notice and, even without waiting for the result of the enquiry, had volunteered to deposit a sum of Rs. 5.35 crore towards additional tax liability. In the above background of facts the only presumption would be that the assessee being well aware that after the enquiry it would be liable to pay additional tax and penalty, was forced to make payment voluntarily. Therefore, we are unable to appreciate the contention of the learned senior counsel that in order to show the bona fide of the assessee, the assessee had volunteered to make payment even before the enquiry proceedings are completed.
13. Now, the stage is set to examine the decisions relied on by the assessee in support of his contentions. Learned senior counsel has mainly relied on the following decisions of the hon'ble Supreme Court :
| (1) | Dilip N. Shroff v. Jt. CIT [2007] 291 ITR 519/161 Taxman 218 (SC) ; | |
| (2) | Union of India v. Dharamendra Textile Processors [2008] 306 ITR 277/174 Taxman 571 (SC) ; | |
| (3) | Union of India v. Rajasthan Spg. & Wvg. Mills [2009] 180 Taxman 609 (SC) | |
| (4) | CIT v. Reliance Petroproducts (P.) Ltd. [2010] 322 ITR 158/189 Taxman 322 (SC). |
14. We have perused all the aforesaid decisions relied on by the learned senior counsel. The first cited decision in Dilip N. Shroff's case was disapproved by the hon'ble Supreme Court in the second cited decision in Dharamendra Textiles' case. This decision was relied on by the counsel to contend that the penalty under section 271(1)(c) is a civil liability and wilful concealment is not an essential ingredient for attracting civil liability. The relevant paragraph which was pressed into service is as follows (page 302 of 306 ITR) :
"27. The Explanations appended to section 271(1)(c) of the Income-tax Act entirely indicate the element of strict liability on the assessee for concealment or for giving inaccurate particulars while filing the return. The judgment in Dilip N. Shroff's case [2007] 291 ITR 519 (SC) ; [2007] 8 Scale 304 (SC) has not considered the effect and relevance of section 276C of the Income-tax Act. The object behind the enactment of section 271(1)(c) read with the Explanations indicates that the said section has been enacted to provide for a remedy for loss of revenue. The penalty under that provision is a civil liability. Wilful concealment is not an essential ingredient for attracting civil liability as is the case in the matter of prosecution under section 276C of the Income-tax Act."
15. A reading of the aforesaid paragraph makes it clear that the penalty under section 271(1)(c) is a civil liability, but it does not relieve the assessee from the liability as the object behind the enactment of the said section is to provide for a remedy for loss of revenue.
16. The aforesaid decision came to be further clarified by the hon'ble Supreme Court in Rajasthan Spg. & Wvg. Mills' case (supra), whereunder the hon'ble apex court has held that application of section 11AC of the Central Excise Act would depend upon the existence or otherwise of the conditions expressly stated in the section, once the section is applicable in a case the concerned authority would have no discretion in quantifying the amount and penalty must be imposed equal to the duty determined under sub-section (2) of section 11A. Ultimately, the hon'ble apex court had not made any observations with regard to section 271(1)(c) or other statutory provisions that came up for consideration.
17. In the last cited case, Reliance Petroproducts Pvt. Ltd. (supra), after considering the aforesaid decisions, the hon'ble Supreme Court came to the conclusion that merely because the assessee had claimed the expenditure, which claim was not accepted or was not acceptable to the Revenue, that by itself would not, attract the penalty under section 271(1)(c) and, when such contention of the Revenue is accepted, then in every return where the claim made is not accepted by the Assessing Officer for any reason, the assessee will invite penalty under section 271(1)(c), which is clearly not the intendment of the Legislature.
18. It is no doubt true that in every case where the claim made by the assessee is not accepted by the Assessing Officer for any reason, the assessee will be levied penalty is not the intend of the Legislature and it would depend upon the facts of every case. But, the aforesaid decision will not come to the aid of the assessee as in the said case no fault was found in the particulars furnished by the assessee, whereas it is not so in the case on hand. Therefore, with respect, the aforesaid cases would not apply to the facts of the present case.
19. In view of the above, we are of the considered opinion that the Tribunal, without appreciating the facts of the case in an appropriate manner, had come to a strange conclusion that the Departmental presumption is only based upon the statement given by the valuer and such valuation cannot be the basis for levy of penalty. In the preceding paragraphs, we have concluded that the finding of the authorities based on the evidence of the valuer, which was corroborated by the circumstantial evidence and the background of the case, are not presumptive as has been concluded by the Tribunal. And, therefore, the decision of the Tribunal is liable to be interfered with.
20. For the reasons stated above, the substantial questions of law raised in these appeal is answered in favour of the Revenue and against the assessee. Accordingly, the appeal is allowed. No costs.
IT : When an earlier order stood annulled on ground of lack of fulfilment of basic requirement for exercise of jurisdiction under section 147, there is no bar against reopening assessment once again on same grounds after following due procedure in accordance with law
■■■
[2013] 35 taxmann.com 48 (Gujarat)
HIGH COURT OF GUJARAT
A G Group Corporation
v.
Harsh Prakash*
MS. HARSHA DEVANI AND H.B. ANTANI, JJ.
SPECIAL CIVIL APPLICATION NO. 2891 OF 2001
MARCH 3, 2011
Section 147, read with section 148, of the Income-tax Act, 1961 - Income escaping assessment - Non-disclosure of primary facts [To value closing stock] - Assessment year 1994-95 - Assessing Officer reopened assessment of assessee on ground that assessee had suppressed its closing stock with respect to four generator sets and certain barrels of oil which required to be added to assessee's income - Commissioner (Appeals) set aside reassessment order for want of recording any reason for reopening of completed assessment - Subsequently reassessment proceedings were again initiated on same grounds - Whether when earlier order stood annulled on ground of lack of fulfilment of basic requirement for exercise of jurisdiction under section 147, there was no bar against reopening assessment once again on same grounds after following due procedure in accordance with law - Held, yes - Whether further, income chargeable to tax had escaped assessment because assessee had suppressed closing stock of generator sets as well as certain barrels of oil, and contention of assessee that requirements for reopening assessment after expiry of a period of four years from end of relevant assessment year were not satisfied was misconceived and did not merit acceptance - Held, yes [Paras 6 & 10] [In favour of revenue]
B.D. Karia and R.K. Patel for the Petitioner. Mrs. Mauna M. Bhatt for the Respondent.
JUDGMENT
Ms. Harsha Devani, J.-By this petition under article 226 of the Constitution of India, the petitioner has challenged the notice dated March 29, 2001, issued under section 148 of the Income-tax Act, 1961 ("the Act"), whereby the petitioner's assessment for the assessment year 1994-95 has been reopened.
2. The petitioner, a registered firm, filed return of income for the assessment year 1994-95 along with statement of income and necessary supporting evidence on October 31, 1994. During the course of assessment proceedings, a show-cause notice dated September 8, 1995, came to be issued to the petitioner calling for information on different aspects for the purpose of finalizing the assessment. The petitioner gave all explanatory details during the course of hearing as well as by way of submissions. Thereafter, the Assessing Officer finalized the assessment under section 143(3) of the Act, vide order dated March 29, 1996, after making certain additions and disallowances. The assessee preferred an appeal before the Commissioner (Appeals), who partly allowed the same, vide order dated February 20, 1997. Against the said order, the petitioner preferred a second appeal before the Income-tax Appellate Tribunal which was pending for hearing at the relevant time when the petition was filed. Subsequently, the Deputy Commissioner of Income-tax, Special Range-II, Rajkot, issued notice dated December 24, 1997, under section 148 of the Act. The petitioner filed the same return as per the original return since no reasons were communicated in spite of the best efforts of the petitioner. On February 3, 2000, the Joint Commissioner of Income-tax, issued notice under section 143(2) and 142(1) of the Act asking for information on various aspects specified on the reverse side of the notice under section 142(1) of the Act. The petitioner objected to the reopening of the assessment in view of the fact that the original assessment had been finalized after detailed scrutiny under section 143(3) of the Act. However, the Joint Commissioner of Income-tax, Special Range-II, Rajkot, once again passed a second assessment order by way of reassessment under section 143(3) read with section 147 of the Act, vide order dated March 28, 2000, making several additions and disallowances. Against the said order, the petitioner preferred a first appeal before the Commissioner of Income-tax (Appeals) who allowed the appeal, vide order dated January 30, 2001. Thereafter, the Assessing Officer issued the impugned notice dated March 29, 2001, under section 148 of the Act. Being aggrieved, the petitioner has filed the present petition challenging the aforesaid notice.
3. Mr. B. D. Karia, learned advocate appearing on behalf of the petitioner, submitted that in this case, original assessment was framed after a thorough scrutiny of details filed by the petitioner and after several explanations and evidence were furnished by the petitioner during the course of assessment as required by the Income-tax Department. Over and above the original assessment, the reassessment under section 143(3) read with section 147 of the Act has also been completed. Despite the existing factual position, the respondent issued notice under section 148 of the Act. The learned advocate invited the attention to the earlier assessment order framed under section 143(3) read with section 147 of the Act as well as to the reasons recorded, to submit that the assessment is sought to be reopened again on the very same grounds on which the assessment was reopened by issuance of notice under section 148 of the Act on December 24, 1997. It was submitted that on the same grounds in respect of which assessment was also reopened and set aside by the Commissioner (Appeals), it is not permissible for the respondent to reopen the assessment.
4. Next it was submitted that the assessment year is 1994-95 whereas, notice under section 148 of the Act has been issued on March 29, 2001, which is clearly beyond the period of four years from the end of the relevant assessment year and as such, in the absence of any failure on the part of the petitioner to disclose fully and truly all material facts, the assumption of jurisdiction under section 147 of the Act is invalid. Inviting attention to the reasons recorded, it was submitted that there is not even a whisper as regards any failure on the part of the petitioner to disclose fully and truly all material facts.
5. Opposing the petition, Mr. M. R. Bhatt, learned senior advocate appearing on behalf of the respondent, invited attention to the order passed by the Commissioner (Appeals) in respect of the assessment framed under section 143(3) read with section 147 of the Act, to submit that the entire assessment had been set aside on the ground that the Assessing Officer, at the relevant time had not recorded any reasons for reopening of the completed assessment. It was submitted that in the circumstances, there is no bar against the respondent in initiating proceedings under section 147 on the same ground in respect of which the assessment was sought to be reopened earlier. Inviting attention to the reasons recorded, it was submitted that it is apparent that the same duly reflect that income chargeable to tax has escaped assessment on account of failure on the part of the petitioner to disclose fully and truly all material facts and as such, the requirements of section 147 are duly satisfied. It was, accordingly, urged that the petition being devoid of any merit, deserves to be dismissed.
6. A perusal of the earlier assessment order framed under section 143(3) read with section 147 of the Act along with the reasons recorded in the present case makes it apparent that the grounds for reopening the assessment are similar. In the circumstances, the first question which is required to be considered is as to whether it was permissible for the Assessing Officer to reopen the assessment on the same grounds on which the assessment was reopened earlier and was quashed by the Commissioner (Appeals) in the assessee's appeal. From the order dated January 30, 2001, passed by the Commissioner (Appeals), it is apparent that the earlier assessment was set aside on the ground that the Assessing Officer had not recorded reasons for reopening the assessment which is a condition precedent for issuing notice under section 148(2) of the Act. Thus, proceedings initiated earlier had been set aside on the ground that the same were initiated without compliance with the mandatory provisions of section 148(2) of the Act. In the circumstances, when earlier order stood annulled on the ground of lack of fulfilment of the basic requirement for exercise of jurisdiction under section 147, there is no bar against reopening the assessment once again on the same grounds after following due procedure in accordance with law.
7. The next question that arises for consideration is as to whether the reopening of assessment beyond a period of four years from the end of the relevant assessment year is valid. In the light of the proviso to section 147 of the Act, for the purpose of reopening assessment after the expiry of a period of four years from the end of the relevant assessment year, in a case where earlier the assessment had been made under section 143(3) of the Act, the Assessing Officer is required to record two fold satisfaction. Firstly, that income chargeable to tax has escaped assessment ; and, secondly, that such escapement is by reason of failure on the part of the assessee to disclose fully and truly all material facts necessary for its assessment for that assessment year. A perusal of the reasons recorded for reopening the assessment, inter alia, indicates that upon a scrutiny of the record, it was found that there was irregularity in valuation of closing stock as per the details filed in the last year in the audited accounts. The closing stock was shown at Rs. 31,17,091 in the audited report. The machinery as enumerated in the reasons recorded was shown as machinery in the closing stock. Thus, on March 31, 1994, machinery of the value of Rs. 16,03,820 was shown in the closing stock. However, in the current year, such machinery and its value had not been shown in the opening stock. The Assessing Officer, therefore, was of the opinion that it was clear that such machinery shown as closing stock in the last year acquired after dismantling of four ships had been sold outside the books during the year.
8. Another ground for reopening is that on verification of copies of accounts furnished by the petitioner, it was found that the petitioner had shown receipt of 745 barrels of oil from the ships referred to therein. Out of such stock, 449 barrels were sold during the year for Rs. 4,99,423 and the remaining 301 barrels were stated to have been sold in the subsequent year. Value of the sales in the subsequent year was shown at Rs. 3,14,442. According to the Assessing Officer, since 301 barrels were shown to have been sold in the subsequent year, the same should have been shown as closing stock in the assessment year 1994-95. However, on detailed examination of the closing stock, break-up furnished in the audited accounts, as well as copies of accounts, it was found that the assessee had ignored the value of 301 barrels in its closing stock.
9. The Assessing Officer was, therefore, of the view that the petitioner has suppressed its closing stock with respect to four generator sets valued at Rs. 16,03,820 and 301 barrels of oil valued at Rs. 2,83,000 which was required to be added to the petitioner's income and, therefore, income had escaped assessment. The Assessing Officer has recorded other grounds for reopening also. However, it is not necessary to refer to all the grounds individually inasmuch as it is settled legal position that if the reopening is valid on one ground, the same would be sustainable.
10. From the facts noted hereinabove, it is apparent that the Assessing Officer has recorded twin satisfaction as required under the proviso to section 147 of the Act. From the reasons recorded it is clear that income chargeable to tax has escaped assessment. Considering the fact that such income has escaped assessment because the petitioner had suppressed the closing stock of generator sets as well as barrels of oil as referred to hereinabove, the logical conclusion is that such escapement is by reason of failure on the part of the petitioner to disclose fully and truly all material facts necessary for its assessment. When there is suppression, it goes without saying that there is failure to disclose fully and truly all material facts, even if the same is not expressly stated in such terms. In the circumstances, the contention raised on behalf of the petitioner that the requirements for reopening assessment after the expiry of a period of four years from the end of the relevant assessment year are not satisfied is misconceived and does not merit acceptance.
11. For the foregoing reasons, there being no infirmity in the action of the respondent in reopening the petitioner's assessment for the assessment year under consideration by issuance of notice under section 148 of the Act, the petition fails and is accordingly dismissed. Rule is discharged with no order as to costs. Interim relief granted earlier stands vacated.
USPSECTION 244A OF THE INCOME-TAX ACT, 1961 - REFUNDS - INTEREST ON - PAYMENT OF INTEREST UNDER SECTION 244A WHEN ASSESSEE IS NOT AT FAULT
INSTRUCTION NO. 7/2013 [F.NO.312/54/2013-OT], DATED 15-7-2013
Hon'ble Delhi High Court vide its judgment in case of Court On its Own Motion v. UOI in W.P.(C) 2659/2012 dated 14-3-2013 [2013] 31 taxmann.com 31 (Delhi) has issued seven Mandamus for necessary action by the Income-tax Department. One Mandamus is on payment of interest under section 244A of Income-tax Act 1961 when the assessee is not at fault.
2. On this issue, the Hon'ble Court has observed as under:
"31. In the affidavit filed on 29th January, 2013, the respondents have stated as under:-
'Where an assessee makes a mistake in the claim of TDS in the e-return and the return is processed and a demand is raised and subsequently, the assessee rectifies the mistake in the claim and files an online rectification application, the same is processed and on any excess TDS is refunded, the interest under section 244A is granted as per the I.T. Act after excluding the period of delay attributable to the assessee in terms of sub-section (2) of section 244A of the Income-tax Act, 1961.'.
32. An assessee can be certainly denied interest if delay is attributable to him in terms of sub-section (2) to section 244A. However, when the delay is not attributable to the assessee but due to the fault of the Revenue, then interest should be paid under the said section. False or wrong uploading of past arrears and failure to follow the mandate before adjustment is made under section 245 of the Act, cannot be attributed and treated as fault of the assessee. These are lapses on the part of the Assessing Officer i.e. the Revenue. Interest cannot be denied to the assessees when the twin conditions are satisfied and in favour of the assessee. However, even in such cases Assessing Officer may deny interest for reasons to be recorded in writing if the assessee was in fault and responsible for the delay. This is the fourth mandamus which we have issued. "
3. In view of the direction of the Hon'ble Court, I am directed to convey that in no case should interest u/s 244A of the Act be denied to the assessee where the assessee is not at fault. The observation of the Hon'ble High Court in Para 32 above be strictly kept in mind while dealing with such matters.
4. I am further directed to state that the above be brought to the notice of all officers working under your jurisdiction for necessary and strict compliance.
Synopsis:
The CBDT has issued a Circular dated 16th July 2013 giving its view on the controversial issue as to whether the profit of a unit eligible for deduction u/s 10A/ 10B has to be first set-off against the loss suffered by an ineligible unit before computing the available deduction u/s 10A/10B. The CBDT has expressed the view that as s. 10A/10B is now a "deduction" provision, first, the income/loss from various sources i.e. eligible and ineligible units, under the same head have to be aggregated in accordance with s. 70 of the Act and thereafter, the income from one ahead has to be aggregated with the income or loss of the other head in accordance with section 71 of the Act. If after giving effect to the provisions of sections 70 and 71 there is any income (where there is no brought forward loss to be set off in accordance with the provisions of section 72 of the Act) and the same is eligible for deduction in accordance with the provisions of Chapter VI-A or sections 10A, 10B etc, the same shall be allowed in computing the total income of the assessee.
Contrast with the view taken in Scientific Atlanta vs. ACIT 129 TTJ 273 (Che)(SB), CIT vs. Yokogawa India Ltd341 ITR 385 (Kar), CIT vs. Black & Veatch Consulting 348 ITR 72 (Bom), CIT vs. TEI Technologies 78 DTR 225 (Del) and other judgements
(Departmental View)File No: 279/Misc./M-116/2012-ITJGovernment of IndiaMinistry of FinanceDepartment of RevenueCentral Board of Direct TaxesNew Delhi, the 16th July' 2013Sub: Circular on Sections 10A, 10AA, 10B and 10BA.It has been brought to the notice of the Board that the provisions of 10A/10AA/10B/10BA of the Income-tax Act, with regard to applicability of Chapter TV of the Act and set off and carry forward of losses, are being interpreted differently by the Officers of the Department as well as by different High Courts.2. The two sections 10A and 10B of the Act were initially placed on statute in 1981 and 1988 respectively, and continued with some modifications and amendments till 31.03.2001. Section 10A as inserted by Finance Act, 1981 read as under:"Section 10A. Special provision in respect of newly established industrial undertakings in the free trade zones.- (1) Subject to the provisions of this section, any profits and gains derived by an assessee from an industrial undertaking to which this section applies shall not be included in the total income of the assessee."2.1. Similarly section 10B as inserted by Finance Act, 1988 read as under:"10B: Special provision in respect of newly established hundred percent export oriented undertakings.- Subject to the provisions of this section, any profits and gains derived by an assessee from a hundred per cent export oriented undertaking (hereafter in this section referred to as the undertaking) to which this section applies shall not be included in the total income of the assessee."3. Vide Finance Act, 2000 section 10A and 10B of the Act were substituted. Section 10A as substituted by Finance Act, 2000 reads as under:-"Section 10A.(1) Subject to the provisions of this section, a deduction of such profits and gains as are derived by an undertaking from the export of articles or things or computer software for a period of ten consecutive assessment years beginning with the assessment year relevant to the previous year in which the undertaking begins to manufacture or produce such articles or things or computer software, as the case may be, shall be allowed from the total income of the assessee...:3.1 Similarly, section 10B as substituted by Finance Act, 2000 reads as under:-"10B. (1) Subject to the provisions of this section, a deduction of such profits and gains as are derived by a hundred per cent export-oriented undertaking from the export of articles or things or computer software for a period of ten consecutive assessment years beginning with the assessment year relevant to the previous year in which the undertaking begins to manufacture or produce articles or things or computer software, as the case may be, shall be allowed from the total income of the assessee...."3.2 The effect of the substitution of section 10A and 10B of the Act has been elaborated in Circular No. 794 dated 9.8.2000 which clearly provides that the new provisions provide for deduction in respect of profits and gains derived by an undertaking from export of articles or things or computer software.4. Sub-sections (6) of sections 10A and 10B were amended by Finance Act, 2003 with retrospective effect from 1. 4. 2001. Circular no.7/2003 dated 5.9.2003 explains the amendments brought by Finance Act, 2003. The relevant paragraph is reproduced below:"20. Providing for carry forward of business losses and unabsorbed depreciation to units in Special Economic Zones and 100% Export Oriented Units20.1 Under the existing provisions of sections 10A and 10B, the undertakings operating in a Special Economic Zone (under section 10A) and 200% Export Oriented Units (EOU's) (under section 10B) are not permitted to carry forward their business losses and unabsorbed depreciation.20.2 With a view to rationalize the existing tax incentives in respect of such units, sub-section (6) in sections 10A and 10B has been amended to do away with the restrictions on the carry forward of business losses and unabsorbed depreciation.20.3 The amendments have been brought into effect retrospectively from 1-4-2001 and have been made applicable to business losses or unabsorbed depreciation arising in the assessment year 2001-02 and subsequent years."???? deduction of the profits and gains derived from the export of articles or things or computer software for a period of 10 consecutive assessment years beginning with the assessment year relevant to the previous year in which the undertaking begins to manufacture or produce such article or thing or computer software. The deduction is to be allowed from the total income of the assessee. The term 'total income' has been defined in section 2 (45) of the IT Act and it means the total amount of income referred to in section 5, computed in the manner laid down in the Income-tax Act.5.1 All income for the purposes of computation of total income is to be classifiedunder the following heads of income and computed in accordance with the provisions of Chapter IV of the Act-• Salaries• Income from house property• Profits and gains of business and profession• Capital gains• Income from other sources5.2 The income computed under various heads of income in accordance with the provisions of Chapter IV of the IT Act shall be aggregated in accordance with the provisions of Chapter VI of the IT Act, 1961. This means that first the income/loss from various sources i.e. eligible and ineligible units, under the same head are aggregated in accordance with the provisions of section 70 of the Act. Thereafter, the income from one ahead is aggregated with the income or loss of the other head in accordance with the provisions of section 71 of the Act. If after giving effect to the provisions of section 70 and 71 of the Act there is any income (where there is no brought forward loss to be set off in accordance with the provisions of section 72 of the Act) and the same is eligible for deduction in accordance with the provisions of Chapter VI-A or section 10A, 10B etc. of the Act, the same shall be allowed in computing the total income of the assessee.5.3 If after aggregation of income in accordance with the provisions of section 70 and 71 of the Act, the resultant amount is a loss (pertaining to AY 2001-02 and any subsequent year) from eligible unit it shall be eligible for carry forward and set off in accordance with the provisions of section 72 of the Act. Similarly, if there is a loss from an ineligible unit, it shall be carried forward and may be set off against the profits of eligible unit or ineligible unit as the case may be, in accordance with the provisions of section 72 of the Act.???? income for the purpose or deduction under sections IUAA and 1013A or the Act subject to the conditions specified in the said sections.S/d(Hemant Gupta)Under Secretary to the Govt. of IndiaCopy to:1. The Chairperson, Members and all other officers of the CBDT of the rank of Under Secretary and above.2. All Chief Commissioners of Income-tax (CCA) & All Directors General of Income-tax with a request to bring it to the attention of all officers under his/her Charge.3. The Director General of Income-tax, NADT, Nagpur.4. The DGIT(Systems), ARA Centre, Jhandewalan Extension, New Delhi.5. The DGIT(Vigilance), New Delhi.6. The Director (PR, PP & OL), Mayur Bhawan, New Delhi for printing in thequarterly tax bulletin and for circulation as per usual mailing list (100 copies).7. The Comptroller and Auditor General of India (40 copies).8. NIC, Mkt Finance for uploading on the Department's website.9. Guard file.(Hemant Gupta)Under Secretary to the Govt. of India
Regards,
Pawan Singla
BA (Hon's), LLB
Audit Officer
__._,_.___
No comments:
Post a Comment