CASE STORIES

Kerala VAT - Prohibition on revision of returns where penalty proceeds were initiated, will not apply to cases seeking revision to correct bona fide errors: HC

VAT - Bank acting as financier & selling hypothecated goods classifies as 'dealer' under Kerala VAT Act 2003: HC

CASE LAWS

2018-TIOL-1222-HC-MUM-NDPS

NDPS - Petitioner has been proceeded against for being involved in an offence punishable under NDPS Act, 1985 - A copy of remand application is annexed and it is urged that circumstances in which the arrest was effected and petitioner was to be produced before Special Judge are elaborately set out therein - The premise on which Court proceeded was that a writ of habeas corpus can be issued provided the detention of person concerned is by the police - If, detention is pursuant to a judicial act or order then such a writ would not lie and that very important distinction has to be borne in mind - If initial direction to remand the person concerned/accused to custody is issued by a Court without jurisdiction but subsequently that person is produced before the Competent Court and the Judge continues that detention, then, the defect is an irregularity but not illegality going to the root of the matter - It is not disputed that the petitioner was subsequently produced before Competent Court and was dealt with by that Court - All the more therefore court is not inclined to grant any relief in this petition: HC

Petition dismissed

MARJAN Vs CC: MADRAS HIGH COURT (Dated: June 6, 2018)

Cus - According to petitioner, she let her car to her friend, wherein the vehicle was involved in some illegal activities of smuggling gold without her knowledge - Said vehicle was seized - A direction was issued to pay a fine in lieu of confiscation under Section 125 of Customs Act, 1962 to redeem the vehicle - In compliance with order of second respondent, petitioner remitted the fine in TR-6 Challan - In spite of payment of fine amount, the vehicle was not released - Once the payment is made, confiscation order under Section 125 of Customs Act, 1962 will go - The petitioner is the owner of vehicle and she is nothing to do with illegal act committed by other persons - Admittedly, vehicle is lying with respondents from 29.05.2017 onwards - In view of the order of second respondent, she is entitled to get release of vehicle - Accordingly, respondents are directed to release the vehicle in question to petitioner within a period of two weeks: HC

Petition disposed of

2018-TIOL-1220-HC-AHM-CX

CX - Whether Tribunal is right in law to rely upon the decision of Ahmedabad Tribunal in case of M/s Mercedes Benz India (P) Ltd. - Department has filed an appeal before the High Court of Bombay which is still pending and hence the matter is required to be contested on said grounds - On the very point, there is already a decision of Bombay High Court in case of Mercedes Benz India Pvt. Ltd. 2016-TIOL-105-HC-MUM-CX - No substantial question of law arises in the present appeal - Even otherwise, it is required to be noted and as observed by Tribunal in impugned order, in fact immediately on receipt of SCN, assessee have reversed the Cenvat credit: HC

Appeal dismissed

2018-TIOL-1219-HC-AHM-CX

CX - Whether the Tribunal is correct in adjudicating that Cenvat Credit is permissible on material viz; M.S.Plates, S.S.Plates, H.R.Plates, H.R.Coils, Aluminum Coils and G.I. Earthing Strips; which are neither covered under definition of 'Capital Goods' under Rule 2(a)(A) of CCR, 2004 nor covered under definition of ‘Input’ under Rule(k) of CCR, 2004 - Issue is now not res integra in view of decisions in Kisan Sahkari Chini Mills Ltd., Ambuja Cement Eastern Ltd. 2010-TIOL-309-HC-CHHATTISGARH-CX and the decision of Karnataka High Court in case of Alfred Herbert (I) Ltd. 2010-TIOL-427-HC-KAR-CX - No substantial question of law arises as proposed and hence, appeal dismissed: HC

Appeal dismissed

2018-TIOL-1214-HC-KERALA-VAT + Case Story

Kerala VAT Act, 2003 - Sections 21 & 22 - Writ - Kerala Value Added Tax Rules, 2005 - Rule 13.

Keywords: Bona fide mistake - Penal proceedings - Prohibition - Revised returns.

The assessee, a registered dealer under the Kerala VAT Act, purchased a machinery as capital equipment for its business in March, 2014. However, in the return, he failed show the same. Accordingly, the assessee sought to revise the return showing the purchase of machinery as capital. However, the AO failed to take any action on the application filed by the assessee. It was the contention of the Revenue that if assessee was permitted, he would be entitled to claim input tax credit as per Rule 13 of the Kerala VAT Rules. Therefore, the assessee filed writ petition against the decision of the Revenue and the same was allowed by the Single Judge. The Single Judge found that the possible claim by the assessee for input tax credit could not stand against the request for revision, especially since there was no penal action initiated against the assessee for the said period.

In another matter, the assessee by itself had approached the AO for revision of returns for the period from April, 2015 to March, 2016. In that case, monthly returns were filed by the assessee as stipulated under the Act. However, on the basis of audit report, the assessee noticed that there were some discrepancies in the returns which were detected and accordingly, the assessee sought for permission to revise the returns. However, the Revenue, rejected the same and issued notice for re-opening of the assessment for the year 2015-16. However, on assessee's writ petition, the Single Judge allowed the claim of the assessee directing the revision to be permitted, especially since the issuance of notice u/s 25(1) could not be treated as initiation of a penal action.

For AY 2011-12, the assessee filed annual returns on time. However, after the receipt of audit report u/s 42, the assessee noticed some discrepancies and sought the same to be incorporated in the return by way of revision. However, the same was kept without any action and hence the assessee filed writ petition. The Revenue contended that since the time permitted under the statute for revising return had already expired, there could be no revision effected, especially since limitation as brought in by a statute had to be scrupulously followed and strictly construed. The Single Judge found that the assessee on detecting an omission in the returns originally filed had voluntarily come forward to rectify the defects and pay the differential tax as also interest, which necessarily had to be considered favorably by the Department. Accordingly, the Single Judge permitted revision of returns.

For the AY 2009-10, the assessee filed return. Thereafter, the Data Mining Officers of the Intelligence Wing made a report, after examination of the annual return of the assessee and the audited statement pointing out certain discrepancies. The assessee on receipt of intimation from the AO sought to explain the discrepancies and also filed application seeking revision of returns. The assessee admitted the discrepancies and sought for revision incorporating the figures as available in the audited statement. However, the AO later issued notice u/s 25(1) not on the discrepancies in the audit report, but on the question of mis-classification of certain goods. In the meanwhile, Intelligence Officer had already issued summons for production of books of accounts as also explanation for the discrepancies found by the Data Mining Team, on the purchase details of exempted sales turnover of Rs.1223.25 lakhs and thereafter, proceeded with the penalty proceedings and concluded the same by levying penalty at twice the amount of tax sought to be evaded purely based on the discrepancies noticed by the Data Mining Team. However, the AO neither taken into account the report of the Data Mining Team, nor responded to the application of the assessee for revision of returns. On assessee's writ petition, the Single Judge allowed the same. Therefore, the Revenue filed instant writ appeals, challenging the decision of the Single Judge.

On hearing the matter, the High Court held that,

Whether prohibition on revision of returns where penalty proceedings were initiated, would also apply to cases seeking revision to correct bona fide errors - NO: HC

++ under section 21(2), the dealer, on detecting any omission or mistake in the monthly return, can file a revised return rectifying the same within two months from the last day of the return period. Sub-section (9) of Section 22 prohibits any such revision of return if an offense has been detected or other proceedings initiated. Sub-section (10) of Section 22 permits a revised return incorporating the turnover covered in the penal proceedings after the proceedings are finalized and compounded, upon which again the assessment is deemed to be completed subject to the provisions of Sections 24 and 25. The proviso to sub-section (10) provides for a best judgment assessment in accordance with the provisions of Sections 24 and 25 when a pattern of suppression is detected. Sub-section (2) of Section 42 enables a revision of return on detection of any omission or mistake in the annual return with respect to the audited figures. The revised annual return shall be filed along with the audit certificate, accompanied with proof of payment of tax and any interest and penal interest calculated at twice the rate specified under sub-section (5) of Section 31. The proviso to such provision also prohibits any revision by a dealer against whom penal action is initiated. Section 79B is a non obstante clause, by which also there is a prohibition in filing a revised return when instances of tax evasion has been detected and proceedings are initiated against such evasion;

++ it is clear that the sole prohibition as available in the various Sections is only against revision of returns when the dealer has been proceeded against for a defalcation or offense. This is specifically to not enable a dealer who had by his contumacious conduct attempted evasion, to wriggle out of the consequences of penalty. When there is a penal proceeding initiated, permission of revision of return, incorporating such figures in the return, which would efface the offense thus absolving the dealer from the liability of penalty, is alone prohibited. The other provisions, which permits revision of returns, are enabling provisions facilitating such revision on specified contingencies within a time limit. Merely based on the said enabling provision, there cannot be inferred an interdiction or prohibition from filing a revised return in circumstances where a mistake is detected after the period specified. If such a prohibition is inferred, then it will lead to even an honest dealer being inhibited from pointing out a bona fide mistake; thus depriving the State of the tax actually due and keeping himself on tender-hooks as to when and if the Assessing Officer detects such mistake. Again on such detection, there would be necessary penal consequences, which, if the dealer had been given a free play, permitting a voluntary disclosure of the mistake and revision of returns, in which event the dealer would not be visited with penalty;

++ the enabling provision mandates that on a revision of return being attempted to as provided therein, the Assessing Authority is obliged to accept it. At the risk of repetition, it has to be stated that there is no prohibition in attempting a revision of return after the time specified, if no penal proceeding is initiated. What would be required in such circumstances, as was earlier noticed, is a practical and pragmatic approach, wherein the Assessing Authority looks into the bona fides of the claim and decides whether a permission can be granted or not. The Assessing Officer definitely would have the authority to examine such claims even beyond the period and decide the question in accordance with well established principles of law and ensure that the attempt is not to cover up or get over a penal provision or avoid the penal consequences of detection;

++ in W.A.No.2636 of 2017 an application for revision of return was made along with the filing of audited statement; on which the Assessing Authority took no action and then proceedings under Section 25(1) was initiated. Similar are the facts in W.A.No.208 of 2018, wherein no action was taken on the application of the assessee; upon which the assessee was before this Court. W.A.No.2541 of 2017 was a case in which the assessee purchased a machinery as capital equipment in March, 2014 and failed to disclose it in the return. In September, 2015, the assessee applied for revision, which was resisted by the Department on the ground that this would lead to a claim of input tax credit;

++ in W.A.No.270 of 2018 has peculiar facts insofar as after initiation of penalty proceedings, the assessment was re-opened and completed without taking into account the alleged offense. The Intelligence Officer proceeded independently and finalised the penalty, on which again a re-opening was attempted, by the Assessing Authority. All this while, an application for revision of return, on the basis of the discrepancies noticed in the Data Mining Report, was pending with the Assessing Authority. The penalty proceedings were only on the basis of the Data Mining Report, which proceedings were initiated after the assessee requested for revision. There is definite lack of coordination between the Officers resulted from the anxiety to meet individual targets. All these cases bring forth bona fide claims for revision of returns, wherein no penal proceedings were pending at the time when the applications were made; the existence of which alone is the sole prohibition available under the KVAT Act. There is no need to interfere with, in the judgments of the Single Judge. However, even on such revision of returns, the same would be subject to Sections 22, 24 and 25; the limitation for which commences in the instant cases from the time when the revised return is filed by the assessee(s).

Revenue's writ appeals dismissed

2018-TIOL-1213-HC-KERALA-VAT + Case Story

Kerala VAT Act, 2003 - Section 67; Motor Vehicles Act, 1988 - Section 51.

Keywords: Contractual right - Contumacious conduct - Deferred payment - Hypothecation agreement - Hypothecated vehicle - Incorrect return - Original owner - Pledge - Re-possession of vehicle - Right of possession

The assessee bank, had preferred the present revision petition. The issue was restricted to the transaction of the assessee towards re-possession of vehicles and sale of such vehicle. The original registered owner had hypothecated the vehicles in favour of the assessee (financier). The original owner had purchased the vehicle after availing finance, the financier exercises its right to possess the vehicle as conferred by the contract and sold the same. However, the vehicle being registered in the name of the loanee, the sale was effected with the owner's sale letter which was obtained during disbursing the finance to purchase the vehicle. The sale was also effected on the terms of the contract which permitted such re-possession and sale of the vehicle in satisfaction of the liability.

Having heard the parties, the High Court held that,

Whether a bank acting as a financier & engaged in selling hypothecated goods will come within the ambit of the term 'dealer' under the Kerala VAT Act, 2003 - YES: HC

Whether a bank being a financier can escape its liability to include the consideration received in the turnover merely because it has facilitated the sale of a second hand vehicle which is taxable under the Kerala VAT Act - NO: HC

++ the definition of 'dealer' includes any person who is engaged in a system of payment by installments and in pursuance to that, transfer right to use any goods or supply by way of or as part of a service, directly or otherwise whether for cash or for deferred payment or for other valuable consideration. Sale includes any transfer whether in pursuance of a contract or not of the property in goods by one person to another in the course of trade or business for cash or deferred payment or valuable consideration. The sale made by the financier would, in any event, fall under the said Explanation. The definition of 'turnover' also takes within its ambit any sale made by the dealer on his own account or on account of others whether for cash or for deferred payment or for other valuable consideration;

++ in the present case, we are concerned with an agreement of hypothecation wherein the original owner is the borrower. The borrower purchases the vehicle with the amounts advanced by the financier, on specific terms as entered into between the parties, inter alia as to the repayment of the loan advanced and the rights of the financier in the event of default. The financier reserves to itself the right to possess the vehicle and sell it on default being committed. It is also an admitted fact that the original owner who is the loanee at the time of availing finance itself as a pre-condition of finance, executes sale letters and hands it over to the Bank with a specific condition that the Bank on default would be entitled to re-possess the vehicle and sell it. The Counsel would specifically point out that Federal Bank Limited was grounded on the premise that the pledgee-Bank had a statutory right to sell the pledged ornaments under the Contract Act; while in hypothecation there is no statutory right and the contractual right if at all does not digress from the fact that the sale is by the registered owner to the purchaser;

++ no distinction could be found from the definition of "pledge" and "hypothecation" insofar as the liability to tax on sale of goods is concerned. "Hypothecation" also confers on the creditor the right to a thing belonging to another and encompass the power to cause it to be sold in order to be paid his claim out of the proceeds. The only distinction probably is that in a "pledge", the goods remain with the financier while in a "hypothecation" it is with the original owner who is the loanee who availed the finance. The sale, in the present case, is of a second hand vehicle which is taxable under the KVAT Act at that point of time @4%; on the consideration. The fact that the financier had merely facilitated the sale cannot be a cause for absolving itself from the liability to include the consideration received in the turnover of the financier; exigible to tax on sale of goods. As was noticed, the KVAT Act, takes within the definition of dealer, any person involved in transactions where there is a system of payment by installments and definition of sale and turnover includes a sale made by one on behalf of another where the latter is the owner; on which tax is payable as has been specified in the schedules;

++ in the event of the registered owner refusing to deliver the certificate of registration, on any of the contingencies, on application made by the person who has entered into the agreement, the registration certificate is liable to be canceled after issuing notice to the registered owner and considering representation if any, filed by him. The proviso also enable issuance of a fresh certificate of registration to that person who validly repossessed the vehicle. Just as in the case of a pledge here too the financier has a right over the hypothecated vehicle flowing from the terms of the agreement and recognised by statute, the provisions of which enable a transfer of the ownership and registration in favour of the financier. The financier however does not avail this measure of first transfer of ownership and registration in their name and a subsequent sale because often the registered owner from whom the vehicle is repossessed does not challenge the action of the financier or has voluntarily surrendered the vehicle, on default. The borrower also realises the futility of a challenge in view of the specific provisions under the Motor Vehicles Act. Either way the sale is one carried out by the financier on behalf of the registered owner and it comes within the ambit of sale of goods as defined in the KVAT Act. The financier falls under the definition of dealer and so is the consideration liable to be included as turnover of sale of goods. We do not find any reason to come to a different conclusion insofar as the transactions are concerned, either on the distinction attempted to be drawn by the Counsel or on the specific provisions available in the KVAT Act and the Motor Vehicles Act;

++ the Bank is not the owner of the vehicle at the time of sale. But however, after re-possession, sells the vehicles and effects transfer and delivery of the goods (vehicle) to the purchaser after receiving consideration, by effecting such transfer on delivery of the vehicle and handing over the sale letter executed by the registered owner which was received by the Bank as per the specific terms of the contract of finance; the right being recognised by the Motor Vehicles Act too. Hence, this issue is answered in favour of the Revenue. We have already found that the Bank acting as a financier and selling hypothecated goods would come within the definition of dealer; the second question is also answered in favour of the Revenue. We have found that there is no distinction insofar as a pledge or hypothecation is concerned and sale effected on default of payment, especially in the context of the financier exercising the right to sell the goods, which belongs to another, either under a statute or on the specific terms of the contract, would be effecting sale of goods exigible to tax. The third question is also answered in favour of the Revenue;

++ on the question of penalty, we find force in the submission of the Counsel that the issue is one debatable and there could be no penalty imposed especially since there is no suppression and the turnover was discernible from the books of accounts. The Intelligence Officer himself had found out the turnover from the books of account to so levy the penalty on proceeding further u/s 67. We noticed the fact that in the case of Federal Bank Limited, the amendment which brought in the sale of pledged ornaments within the definition of sale of goods was challenged before the High Court and a decision came only in the year 2003 dated 03.04.2003. The fact that the amendment was brought in and there was a challenge to it indicates that there was a debatable issue even with respect to the pledge of ornaments. In the present case, the transaction was hypothecation and the possession was with the registered owner who is the loanee. The assessee bonafide claimed a distinction insofar as pledge and hypothecation which however is negatived by this Court in the said judgment. That does not lead to a conclusion that there was any contumacious conduct on the part of the assessee.

Assessee's Revision petition dismissed 

2018-TIOL-1212-HC-KOL-IT

Income tax - Section 43(5)

Keywords - Cancellation of contracts - Claim for damages - Speculative transaction.

During the year under consideration, the assessee did not honour its commitment to take delivery against some purchase orders placed on foreign sellers consequent upon the price of palm oil declining. The assessee, however, accepted the foreign sellers’ claims for damages and settled the matter and claimed the same as a loss. There were several transactions which the AO referred to as speculative transactions within the meaning of the relevant expression u/s 43(5). On appeal, the Tribunal noticed that international price of crude palm oil and related products had declined during the relevant year and the same affected the Indian market. The Tribunal also found that the assessee wanted to guard against further loss by not taking delivery of the palm oil that had been ordered, but by accepting the claims for damages upon the cancellation of contracts.

On appeal, the HC held that,

Whether damages suffered by a retailer on account of breach of contract as an initiative to prevent further losses, is allowable loss in the hands of retailer - YES: HC

++ the Tribunal referred to Section 43(5) of the Act and the judgments of several High Courts, including one of Delhi reported at 247 ITR 79, wherein under similar circumstances, the assessee had not taken delivery of a consignment of sugar and the assessee suffered damages as a consequence thereof. The Appellate Tribunal in the present case relied on the reasoning in the Delhi judgement that what the assessee had done was to act in derogation of the terms of the relevant contract or commit a breach thereof as a consequence whereof it was liable to pay damages. Even if a party in breach accepts the claim for damages that the other party to the contract may put forward, what actually happens is the disposal of a dispute and not any settlement of the kind that is envisaged by the word "settled" used u/s 43(5). Since the Appellate Tribunal relied on a legal proposition that has held the field for a considerable period, the order impugned does not warrant any interference on such score.

Case disposed of

2018-TIOL-1211-HC-MUM-IT

Income Tax - Sections 55(2)(a) & (b).

Keywords: Capital gains - Cost of acquisition - Fair market value - Tenancy rights.

The assessees had inherited tenancy rights in an immovable property which acquired by their father prior to 1st April, 1981. The assessees had sold their tenancy rights pertaining to the alleged property for Rs.3.17 crores during the relevant AY. While filing returns, the assessees while offering their share of income on sale of their tenancy rights under the head 'capital gains', sought indexation of the cost of acquisition i.e. the fair market value of the property as on 1st April, 1981. However, the AO denied such indexation benefits u/s 55(2)(a) and while computing capital gains treated the cost of acquisition of tenancy rights as 'Nil'. The CIT(A) affirmed the views of the AO. On further appeal, the Tribunal remanded the matter for the limited purposes to determine the cost of acquisition to the file of the AO, thereby stating that the cost of acquisition of tenancy, cannot be substituted by the fair market value as on 1st April, 1981.

On appeal, the High Court held that,

Whether writ court's interference is warranted where the assessee seeks liberty to challenge the remand report passed by AO before appellate authorities under the Act - NO: HC

++ the Tribunal after holding that the cost of acquisition of tenancy, cannot be substituted by the fair market value as on 1st April, 1981, restored the issue to the AO for the limited purposes to determine the cost of acquisition. This, in terms of Sec.55(3) i.e. cost of acquisition to the previous owners or the market value on the date on which the capital asset become the property of the previous owner for the purposes of determining the income chargeable under the head 'capital gain' in respect of the sale of tenancy rights;

++ counsel for the Revenue in support of the appeal, states that an order giving effect to the disputed order has been passed by the AO in one case and is likely to be passed soon even in the other case. The assessees seek liberty to challenge the same before the appellate authorities under the Act. This court sees no impediment in the assessees challenging the order passed by the AO, before the appellate authorities, consequent to the remand by the disputed order of the Tribunal under the Act and in accordance with law. No liberty for the same is required. Accordingly, both the Appeals are dismissed.

Assessees' appeals dismissed 

2018-TIOL-1210-HC-KERALA-IT

Income Tax - Sections 80(IA) & 148(2).

Keywords: Business expenditure - Change of opinion - Escaped income - Finance Act (No.2) of 2009.

The assessee company, had returned income for the AY 1999-2000. The case was selected for scrutiny assessment and was accordingly processed. Later, the assessment was again re-opened and a revised total income was determined. On appeal before the FAA, the assessee had submitted that the AO had overlooked into other issues and found escaped assessment on those issues which were never recorded as reasons for re-opening of assessment u/s 148(2). The claim u/s 80(IA) was revised by the AO after taking into account the gains from business of each of the units and apportioning it proportionally. Accordingly, the FAA directed to re-compute the deduction u/s 80(IA) to the extent it was conceded by the assessee. On further appeal, the ITAT cancelled the re-assessment.

On appeal, the High Court held that,

Whether an assessment can be re-opened where it is not based on new material found after completion of original assessment proceedings - NO: HC

Whether re-assessment proceedings u/s 147 can be used to review order passed in original assessment proceedings - NO: HC

++ the Division Bench of the Bombay High Court in the case of Jet Airways (I) Ltd., was considering the effect of the Explanation 3 insofar as reopening of assessment u/s 148. The Bench found if on the original reasons recorded, there are no additions made, then necessarily, for the other issues detected in the course of the re-opening proceedings, there should be a fresh notice u/s 148 with reasons recorded u/s 148(2). We have our own doubts about the dictum so laid down, but however, we need not express ourselves on the issue in the present case, since the said issue would not arise at all here. There were four reasons recorded for re-opening of assessment u/s 148(2) of which two were eventually added on as escaped income. The other issues detected in the course of re-assessment proceedings were put to the assessee and reply obtained from the assessee. There is no ground urged of violation of principles of natural justice. It is after looking into the explanation offered by the assessee that the additions were made. This is not a case in which additions made, on the issues not originally recorded u/s 148(2) could be deleted, merely on the ground of original reasons recorded having not concluded in an assessment of escaped income. Two of the reasons recorded did conclude in assessment of escaped income. It definitely cannot be a preposition that only if all the recorded reasons ended in assessment of escaped income, could there be assessment made on issues of escapement; detected during the course of re-opening. We, hence, answer the questions of law framed in favour of the Revenue and against the assessee;

++ the deletions were made on the assumption that there could be no other issues dealt with on re-opening other than what was recorded as reasons u/s 148(2). We have found otherwise based on the Full Bench judgment as also the judgment of the Division Bench of the Bombay High Court. In such circumstances, we would have remanded the matter for consideration of the quantum appeal. The issues requiring fresh consideration are (i) Sec. 80(IA), (ii) deemed dividend and (iii) expenditure with respect to Mammen Mappillai Hall;

++ in the present case, which is a reassessment proceeding, quite surprisingly, the AO proceeded to assess the escapement of income by stating that the assessee failed to explain as to why there was discrepancy in the sales as per the old statement and the new statement except for the discrepancy in Trichur. This definitely is not permissible and falls foul of the principles of re-assessment for reason of it being a mere 'change of opinion'. The power conferred u/s 147 is not one of review and is of re-assessment for reasons recorded. These reasons recorded has to emanate from some material coming to the notice of the AO after the original assessment; which is absent at this instance. On the ground of binding precedents, inter-parties, in the other AYs as also on the ground of the re-assessment proceedings being incompetent, we are of the opinion that the direction of the FAA on the issue of Sec. 80(IA), need not be touched. We affirm the order to that extent and the consequences flowing from the said directions necessarily follow;

++ there would be no purpose served in remanding those issues. What remains is the expense incurred for maintaining Mammen Mappilai Hall. The expenses is in the nature of salary paid to a sweeper for cleaning the premises. Though the Hall is in the name of the founder of the assessee, it is not owned by the assessee. The claim is that in keeping the hall clean, the assessse's business gets enhanced good will. A similar claim for business expenditure, was held to be not permissible in a binding precedent in the asessee's own case for another AY. The amount is also only Rs.2,45,33/- and there can be no dispute on quantum looking at the facts pleaded. Hence there is no reason for a remand.

Revenue's appeal partly allowed

2018-TIOL-1206-HC-KAR-CX

2018-TIOL-1205-HC-KAR-CX

2018-TIOL-1204-HC-KAR-CX

2018-TIOL-1203-HC-KAR-CX