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2016-TIOL-1728-HC-MAD-IT + Story
ALL ANGELS EDUCATIONAL SOCIETY Vs CCIT: MADRAS HIGH COURT (Dated: July 28, 2016)
Income tax - Sections 2(9), 10(23C) & 12A
Keywords - barred by limitation - charitable society - delay in filing application & merits of the matter
Whether where the authority takes a decision to reject the application u/s 10(23C) on the ground of limitation, it is but proper for the authority to refrain from rendering finding on the merits of the matter - YES: HC
Whether an application filed u/s 10(23C) before the Chief CIT is liable to be considered as an application for subsequent A.Y, in case the application for current A.Y is still pending - YES: HC
The assessee is a Society registered under the Societies Registration Act, which has established and administering an Educational Institution under the name and style of All Angels Matriculation Higher Secondary School. During A.Y 2012-2013, the assessee filed an application in Form No.56D seeking exemption u/s 10(23C)(vi). The Chief CIT called upon the assessee to show cause as to why their application should not be rejected on two grounds; (a) it was not filed within the time period specified in the 14th Proviso to Section 10(23C)(vi); and (b) the assessee society could not be said to be existing solely for educational purpose, since the objects of the Society include other charitable object clauses. After considering assessee's submissions, the CIT rejected the assessee's application on the ground that it was filed beyond the time prescribed under 14th Proviso to Section 10(23C)(vi) and also on the ground that the assessee did not fulfill the requirements of Section 10(23C)(vi).
Having heard the parties, the High Court held that,
++ the issue to be considered is whether the Chief CIT could have proceeded to decide the merits of the matter when he chose to reject the application on the ground of delay. An identical issue was considered by the Division Bench of this Court in the case of Centre for Individual and Corporate Action (CICA) v. Asst CIT and it was held that the ITAT in that case adopted a procedure which is highly prejudicial to the assessee inasmuch as it having decided not to proceed with the matter on the ground of delay, cannot unilaterally decide the appeal on merits, moreso when the assessee was not given proper opportunity to contest the matter in the main appeal on merits. It may be true that the show cause notice issued by the CIT pointed out two grounds; (i) the application was filed beyond the time limit specified under the 14th Proviso to Section 10(23C)(vi) and (ii) the assessee society did not exist solely for educational purpose. In my view, when the authority takes a decision to reject the application on the ground of limitation, it is but proper for the authority to refrain from rendering finding on the merits of the matter. On the question of delay, the contention of the revenue is that there is no power conferred on the CIT to condone the delay. Nevertheless, this Court, while exercising jurisdiction under Article 226 of the Constitution of India, had examined the facts and circumstances of each case and when it is convinced that the peculiar facts called for exercise of discretion, the delay was condoned;
++ coming back to the facts, on receipt of show cause notice, the assessee submitted their first reply, wherein they have pointed out that they could not finalise the accounts for the year 2012-2013 earlier and could do it only by the end of September, 2012, as they were entrusted with huge responsibility of organizing and conducting a sports event by the Education Department of the Government of Tamil Nadu in July, 2012, and it was the first time, the institution was entrusted with such a task. After enclosing the relevant Government Orders in that regard, the assessee pointed out that the event comprised of conducting team sport events and field events for both boys and girls of 28 schools in South Chennai District and the entire staff of the school and the society members had worked hard from July'2012 and completed the sports meet on 04.09.2012. Therefore, the assessee stated that due to the maiden responsibility entrusted to their institution by the Education Department, it had taken some time for them to finalise the accounts. Therefore, the delay, they pleaded, neither willful nor wanton and assured that henceforth they would file returns on time without fail. Subsequently, by another representation, the assessee stated that in event the Chief CIT does not condone the delay in filing the application, they requested to consider the application for approval u/s 10(23C)(vi) for the subsequent A.Y namely, 2013-2014;
++ after receipt of the reply and written submission and after affording an opportunity of personal hearing, the Chief CIT pointed out that there is no power for condoning the delay in filing the application in Form No.56D and with regard to alternative prayer, the same was also rejected stating that the A.Y is defined u/s 2(9) to mean the period of 12 months commencing on the 1st April of every year and therefore, the application cannot be treated as application for the A.Y 2013-2014. Ultimately, in the impugned order, the application was rejected as out of time. However, without stopping there, the Chief CIT thereafter, proceeded to analyze the objective of the Society, which was an exercise not called for. Having rejected the application on the ground of limitation, the question of examining the merits of the matter would not arise and it is a superseded exercise. Therefore, to that extent, this Court is inclined to accept the submissions of the assessee's counsel. However, considering the legal position that there is no power to condone the delay in filing an application u/s 10(23C), this Court is not inclined to exercise its extraordinary jurisdiction to condone the delay. However, this Court is inclined to give appropriate direction to the Chief CIT to consider the assessee's application as an application for the subsequent assessment year, in accordance with law. Such direction is issued considering the peculiar facts and circumstances of the case and that the assessee could not have made an application for the subsequent A.Y, since their application for A.Y 2012-2013 was still pending consideration and the impugned order came to be passed only on 13.11.2013.
Case remanded
2016-TIOL-1727-HC-AHM-IT
DEEP RECYCLING INDUSTRIES Vs DCIT: GUJARAT HIGH COURT (Dated: August 02, 2016)
Income Tax - Sections 10B, 143(3), 147, 148, 269SS & 271D.
Keywords - acceptance of loan - inflation of profit - interest on capital - penalty - reasons to believe & unpaid remuneration
Whether the fact that no interest has been allowed to partners of the assessee firm, can become a ground for reopening of assessment, even if the partners’ capital account was presented before the AO during the assessment proceedings - NO: HC
Whether an assessment once finalised, can be reopened merely on the basis of desire of the AO to scrutinize a decided issue further, even if there is no other finding recorded by such AO on that account - NO: HC
The assessee is a partnership firm. For the AY 2006-07, it had filed a return of income declaring total income of Rs.56.98 lacs (rounded off). AO passed an assessment order. To reopen such assessment, the a notice was issued. The AO had recorded various reasons for issuing the notice. The assessee raised objections to the notice for reopening under a communication dated 7.3.2013. These objections were, however, rejected by AO. Notice for reopening of the assessment had been issued beyond the 4 years from the end of relevant AY. The reasons recorded by AO cited two grounds for issuing the notice for reopening. The AO's first ground was with respect to assessee’s claim of deduction u/s 10B. The AO in the reasons recorded pointed out that as per the partnership deed, there was a provision for payment of interest to the partners’ capital contribution to the fund of the firm. Similarly, the deed also envisaged remuneration being paid to the partners. In the present case, the firm had not paid interest on a capital of Rs.1.31 crores invested by the partners and had also not remunerated the partners as provided in the partnership deed. According to AO, such interest worked out at Rs.15.77 lacs and total remuneration payable to the partners was Rs.60.74 lacs and thus, the assessee firm inflated the profit of the eligible business to the extent of Rs.89.80 lacs being a total of unpaid remuneration and interest to the partners. The deduction proportionate to this amount for the purpose of Section 10B came to Rs.59.06 lacs. According to the AO, this deduction was not allowable.
The second ground cited by AO in the reasons recorded pertained to a loan of Rs.18.42 lacs accepted by assessee from one M/s.Ratilal Patel-HUF. The mode of acceptance of the loan was not mentioned. The auditor had put a footnote that in business all necessary evidence the mode of taking or accepting the loan could not be verified and no bank statement was available from which this transaction could be verified. According to AO therefore, the assessee was liable to penalty u/s 271D for failure to comply with the provisions of Section 269SS i.e. acceptance of loan or deposit otherwise than by account payee cheque or bank draft. In this context, AO further recorded that the assessee while repaying the said loan, there was no reflection of the entries in the bank account as per the details furnished by the assessee which needs to be scrutinized further.
Having heard the parties, the High Court held that,
++ duty of the assessee is to disclose primary facts and on the basis of such facts, what legal conclusions should be arrived at would be within the purview of the Assessing Officer. It is not the duty of the assessee to advise the Assessing Officer on what legal conclusions should be arrived at on the basis of necessary facts the partnership deed was available on record, from which itself the Assessing Officer has recorded that there were provisions for payment of interest on capital and remuneration to the partners. The fact that no such payments were made during the year under consideration was also part of the record so disclosed by the assessee. The partners’ capital account was also part of the assessment proceedings. There was no failure on the part of assessee to disclose truly and fully all material facts. Even if the assessee’s claim of deduction under Section 10B was artificially inflated, it was well within the powers of the Assessing Officer to deny such claim while framing the assessment. The reopening of the assessment beyond the 4 years would not be permissible;
++ coming to the second ground recorded by AO in the reasons, it has two elements. First is acceptance of loan without disclosing the mode of acceptance and second, the repayment of the said loan. Regarding acceptance of loan, AO refers to penalty u/s 271D which would be imposable for violation of provisions of Section 269SS. In this context, AO does not record that any income chargeable to tax had escaped assessment, the prime requirement for reopening the assessment but refers to possible penalty being imposed on the assessee. Regarding repayment of such loan though we recall that reference to the details of the cheque under which the repayment so made have been recorded, he desires to scrutinize the same further. It is held by series of judgments of this Court and other Courts that for mere scrutiny, reopening of the assessment would not be permissible. The reopening of assessment could be made if AO had formed a belief that income chargeable to tax had escaped assessment. In order to do so, the AO must have some tangible material having live link with the escapement of the income on the basis of which he can form a bonafide belief of escapement of income chargeable to tax. Reopening cannot be resorted to for fishing or rowing inquiry on mere suspicion that income chargeable to tax may have escaped assessment. In the result, both grounds cited by AO in the reasons recorded fail. The impugned notice dated 8.8.2011 is quashed and set aside. The petition is allowed and disposed of.
Assessee's appeal allowed
2016-TIOL-1726-HC-MAD-VAT
ATLANTIS ENGINEERING Vs CTO: MADRAS HIGH COURT (Dated: July 28, 2016)
Tamil Nadu GST Act, 1959 - Section 7-C.
Keywords - ex parte assessment - pre assessment notice - reopening & works contractor.
Whether if on a mere reading of the order as well as the pre-assessment notice, it is evidently clear that Revenue issued the notice not on his own volition but on account of an audit report, this would be considered as a case of change of opinion - YES: HC
The assessee who is a registered dealer on the file of the respondent under the erstwhile TN GST Act, 1959, had filed this writ petition challenging the revised assessment orders passed by the respondent for the AY 2004-05 and 2005-06. The case of the assessee was that he was a works contractor and procure several items and install, erect, assemble and commission diesel generators on the site and on the platform provided by the customers. The assessees return was accepted and assessment was completed by assessment order dated 15.06.2006. This assessment was made u/s 7-C, accepting the case of the assessee that the nature of activity done by them was a works contract. Thus, AO was satisfied about the nature of the activity of the assessee on the documents placed by the assessee before the AO. While so, after about three years, the respondent issued notices dated 12.05.2009 stating that from the audit report for the year 2004-05, there was certain discrepancy in the declaration made and it shows that assessee themselves had declared that they had effected only sales of Generators with its acoustic enclosures and not manufactured any product or executed works contract and that the installation and commissioning are only incidental to the supply of Generators. Thus, the Revenue proposed to revise the assessment already made at 4% u/s 7-C and proposed to assess the turn over at 16%. Though such pre-assessment notice was issued to the assessee, it appears that the petitioner did not file their objections which resulted in the assessment being framed exparte, which are impugned in the writ petition.
Having heard the parties, the High Court held that,
++ the SC quashed the show cause notices which were issued taking recourse to re-open the assessment. Therefore, it is submitted that the nature of activity should have been considered as a works contract and the question of re-opening or re-assessing the concluded assessment proceedings does not arise. After elaborately hearing the parties and perusing the materials placed on record, before going into the question as to whether the decision of the Supreme Court in the case of Kone Elevators should be made applicable to the case on hand, it has to be seen under what basis the revision of assessment was proposed by the respondent. On a mere reading of the impugned order as well as the pre-assessment notice dated 12.05.2009, it is evidently clear that the respondent issued the notice not on his own volition but on account of an audit report. If that be the case, then it is a clear case of change of opinion which has resulted in the issuance of the revised assessment proceedings. It is a well settled legal position that mere change of opinion cannot be a reason for reopening. This is sufficient to hold that the impugned order is unsustainable in law and therefore, the effect of the decision of the Supreme Court in the case of Kone Elevators on the facts of the present case are not gone into. Accordingly, the the impugned orders are quashed.
Assessee's petition allowed
2016-TIOL-1725-HC-MAD-CUS
K M KNITWEAR Vs CC : MADRAS HIGH COURT (Dated: July 29, 2016)
Cus - Penalty for alleged misuse of exemption Notification No. 12/2012-Customs, dated 17.3.2012 - Petitioner before High Court and putting forth a case that opportunity of personal hearing was not granted to them. Held: A cursory perusal of the impugned order reveals that opportunity of personal hearing was granted, however, Court cannot examine the disputed question since there were several noticees and several of them had engaged the same counsel and record of the proceedings shows that opportunity of personal hearing has been granted to the noticees and their names are mentioned - In any event, the petitioner has an effective alternate remedy under Section 129A of the Customs Act, 1962, where, against the impugned order, the petitioner can prefer an appeal - It is a settled legal position that the Customs Act and other Taxation Statutes are a complete Code by themselves - The enactment provides for a hierarchy of remedies and an aggrieved person should not be permitted to bypass the statutory remedy available under the Act, especially when the matter relates to a taxation Statute - Court cannot exercise its extraordinary jurisdiction to interfere with the impugned order and allow the petitioner to bypass the appeal remedy - Writ petition is dismissed as not maintainable: High Court [para 7 to 9]
Petition dismissed
2016-TIOL-1724-HC-MAD-VAT
AMMAN BALAJI TWO WHEELERS PVT LTD Vs ACCT: MADRAS HIGH COURT (Dated: August 4, 2016)
Tamil Nadu VAT Act, 2006: adverse observations - fresh investigation - opportunity of being heard - penalty & remand of case.
Whether when the Appellate Authority has come to the conclusion that the matter requires to be re examined, he should have refrained from making any adverse observations on the merits of the assessment - YES: HC
The assessee is a company. It had challenged the order passed by the Appellate Deputy Commissioner (CT) Salem, in respect of the Appeals filed by them against the orders of assessment passed by the first respondent, under the provisions of Tamil Nadu Value Added Tax Act, 2006, for the AYs 2012-13 and 2013-14, dated 01.12.2014. It may not be necessary to go into the merits of the contentions raised by the petitioner with regard to the manner, in which, assessment was completed by the first respondent, since the petitioner had challenged the same before the second respondent. Therefore, the second respondent, being the Appellate Authority, was required to examine the grounds raised by the petitioner, as to its tenability and acceptance. On a reading of the impugned orders, it was seen that the Appellate Authority did not agree with the assessee, and the findings recorded by him appear to be the findings, which were virtually rejecting all the pleas raised by the assessee. If that be the case, then, the Appellate Authority ought to have dismissed the Appeals. Appellate Authority held that the case requires fresh investigation in order to sustain the assessment, and that the assessee had not produced documents in support of their contention, and one more opportunity may be provided to the assessee to produce all the documents and the AO to verify records and genuineness of the transaction, and therefore, the Appellate Authority proceeded to set aside the assessment, including the penalty, and remanded the case back to AO for thorough verification.
Having heard the parties, the High Court held that,
++ it is evidently clear that the second respondent has committed error while passing the impugned orders. If the Appellate Authority is of the view that the matter requires reconsideration, then, he ought to have rendered findings to the said effect, and then remanded the matter to AO, to redo the assessment in accordance with law. However, in the instant cases, the Appellate Authority has recorded certain findings, which are against the petitioner, yet, remanded the matter for thorough verification. Both these conclusions cannot sail together. If the Appellate Authority has rejected all the grounds raised by the petitioner in the Appeals, which according to the petitioner has been erroneously done, and remanded the matter to the Assessing Officer, obviously, the Assessing Officer, who is a Subordinate Officer to the Appellate Authority, will be guided by those findings rendered by the Superior Authority. Therefore, when the Appellate Authority has come to the conclusion that the matter requires to be reexamined, he should have refrained from making any adverse observations on the merits of the assessment. In the light of the above, the Writ Petitions are partly allowed, the findings recorded by the Appellate Authority are vacated, and the matter is remanded to the first respondent for fresh consideration, who shall redo the assessment after thorough verification of the records and after affording opportunity of personal hearing to the petitioner. It is made clear that the first respondent should not be, in any manner, influenced by any of the observations made by the Appellate Authority in the impugned orders, as this Court has already eschewed those findings of the Appellate Authority, and the impugned orders are confirmed only to the extent of the remand portion. Consequently, connected Miscellaneous Petitions are closed.
Case remanded
2016-TIOL-1723-HC-MAD-VAT
BATA INDIA LTD Vs ACCT: MADRAS HIGH COURT (Dated: August 01, 2016)
Tamil Nadu VAT Act - inter State transfer - revised turnover - revisional assessment - recording of statement & VAT audit.
Whether the assessing authority is statutorily obligated to assess as to whether the assessee's explanation sought to be given to the pre-revision notice is justified or not - YES: HC
Whether a Commercial Tax Officer can act as a mere mouthpiece of the Enforcement Wing, while disposing of a dealer's objections against revisional assessment - NO: HC
The assessee is a registered dealer under Tamil Nadu VAT Act, 2006 and Central Sales Tax Act, 1956. During the concerned year, a VAT audit was conducted by the officials of the Enforcement Wing in the assessee's place of business and a statement was obtained from the officer of the assessee company, wherein the Enforcement Wing had directed the officer concerned to record a statement that they effected inter-state stock transfer for Rs.589,15,53,759/- for the year 2013-14 i.e upto December 2014 and this was not related to the turnover as per the revised returns filed for the year 2013-14. Therefore, the officials of the Enforcement Wing gave a report that inter-state stock transfer amount reported in the annual return in Form WW for the year 2013-14 is not related and did not tally with the revised turnover furnished at the time of VAT audit. This report of the officials of the Enforcement Wing led to the issuance of notice proposing to revise the assessment.
Having heard the parties, the High Court held that,
++ on a perusal of the impugned order, it is evidently clear that the first paragraph of the order speaks about the VAT audit, which was conducted by the officials of the Enforcement Wing. The second paragraph deals with the reason for issuing the notice and the third paragraph is a verbatim repetition of the assessee's objections. The fourth paragraph is in the nature of a tabulated statement. After referring to the relevant months, the e-returns filed, Form WW submitted and Form F declarations filed, it has been stated that the stock transfer valued upto December 2013 deposed to the Enforcement Wing on 7.2.2014 is Rs.5,89,15,53,759/-. After mentioning the above details in the tabulated format, all that the Asst CCT has stated is that the statement proves beyond doubt that the dealers have not maintained correct and complete accounts. The manner, in which, the Asst CCT finalized the assessment, is a clear abdication of the statutory duties. The allegation against the assessee was based on a VAT audit conducted by the officials of the Enforcement Wing, in which, a statement has been recorded and in that statement, the figures pertaining to stock transfer have been obtained. The petitioner specifically disputed that statement;
++ therefore, there was a statutory duty on the part of the Asst CCT to assess as to whether the assessee's explanation sought to be given to the pre-revision notice was justified or not. The coomercial Tax Officer cannot be a mere mouthpiece of the Enforcement Wing. At best, the report of the officials of the Enforcement Wing can be a starting point for issuing a notice and after the dealer files objections, it is incumbent on the part of the AO to examine the objections in letter and spirit, call for records and specify as to whether there is any escapement of turnover or there are any sales suppression or variation in stock transfer, etc. However, such exercise was not done by the AO. This itself is a sufficient ground to remit the matter for fresh consideration.
Case reamnded
2016-TIOL-1722-HC-AHM-IT
NATIONAL DAIRY DEVELOPMENT BOARD Vs ACIT : GUJARAT HIGH COURT (Dated: August 03, 2016)
Income Tax Act - sections 36(2)(ii), 37, 147, 148, 114JF(4) & 115JB
Keywords - bad debts - business purpose - escaped assessment - legal fees - professional services & reopening
Whether reopening of assessment is sustainable where in the final order of assessment, the AO has made no disallowance against the claim of assessee and without giving reasons he has accepted assessee's version of written off of the bad debts - No: HC
Whether reopening of assessment is sustainable, where the amount which the AO disputes by way of expenditure, was never claimed as such in the original return itself - No: HC
A) The assessee filed the return for the A.Y 2009-10 declaring Nil income and carried forward long term capital loss. Return was taken under scrutiny by the AO, who passed the order of assessment under Section 143(3) computing assessee's income. Later, Assessing Officer issued the impugned notice u/s 148 on the ground that assessee was assessed as company and as per provision of Section 114JF(4) every company is required to furnish a report in the prescribed from 29B. It was observed that the assessee company failed to compute book profit and failed to furnish report in prescribed form 29B from the chartered accountant. Since the tax liability the assessee as per income assessed under normal provision of the act was more than the tax liability under MAT, there was presently no tax liability however MAT liability was to be worked out as per provision of section 115JB which would be tax liability of the assessee in the event of assessee succeeding in appeal.
B) It was also found that the assessee had claimed deduction of Rs.11,18,81,780/- on account of bed debts. It was further noticed that an amount of Rs.8,51,00,000/- was received by the assessee as a one-time final settlement of this loan which was required to be deducted from the claim of bad debts. Therefore, bad debts to the extent of Rs.2,67,81,780/- was only allowable u/s. 36(2)(ii) and an amount of Rs.8,51,00,000/- was required to be disallowed out of claim of bad debts.
C) It was also found that the assessee had claimed expenditure under the head professional services & legal fees and which are of personal in nature and not expended wholly and exclusively for the purpose of business of the assessee. The expenditure of Rs.75,000/- was in the nature of personal expenditure and of Rs.93,55,633/- was in the nature of expenditure relatable to the other assessee. Accordingly, the expenditure amounting to Rs.94,30,633/- is not an allowable expenditure in terms of provisions of section 37 of the Act and is required to be disallowed.
D) It was also found that the assessee had claimed expenditure on account of the premium paid on purchases of debenture/bond in govt. companies / financial institution and debited the same against interest income. The said expenditure was claimed by the assessee as revenue expenditure whereas it was required to be capitalized to the cost of investment since the assessee is not a bank and there is no mandatory requirement for the assessee to make such investment. Accordingly, the non capitalization of said expenditure as resulted in under assessment to tune of Rs.3,15,90,000/-. Thus, Assessing Officer had reason to believe that income has escaped assessment within the meaning of Sec.147. Assessee’s objections were rejected by the Assessing Officer.
Having heard the parties, the Court held that,
MAT Liability
++ it was noted by the AO noted that in the order of assessment, book profit of the assessee was worked out at Rs.51.85 crores. The MAT liability would work out to Rs.57.1 crores. Since the tax liability on the assessee as per the normal computations is higher than the tax liability under the MAT provisions, at present there is no tax liability arising. However, if the assessee succeeds in appeal against the order of assessment, the question of applying MAT provisions would arise. These reasons by itself would not be sufficient to permit reopening of the assessment as was held by this Court in identical situation concerning this very assessee in SCA No.2524 of 2016 wherein it was held that even as per the Assessing Officer, presently there is no escapement of income chargeable to tax. Secondly, and equally importantly, if the assessee succeeds in appeal, by virtue of which, the normal tax computation comes to below the prescribed limit so as to kicking MAT provisions, the same can always be applied as a consequence of the appellate order or by way of giving effect to the order in appeal. Thus, this ground of the Assessing Officer for reopening is turned down; (paras 7 & 8)
Bad debts
++ as per the case of the assessee, the principal sum of the loan was Rs.11.18 crores and there was accumulated unpaid interest of Rs.11.13 crores on such loan. Thus, when the debtor paid Rs.8.51 crores, he discharged only partially the interest liability. The entire principal sum of Rs.1.11 crores remains outstanding and was written off and was in addition to the interest amount of Rs.2.62 crores which also remained unpaid and was written off. (para 12)
++ in the final order of assessment, the Assessing Officer made no disallowance against this claim. In other words, without giving reasons he accepted the assessee's version of written off of the bad debts of Rs.11.18 crores. The Assessing Officer having scrutinized the claim in the final order of assessment accepted the claim though without stating the reasons. Any attempt on his part to reopen the issue is based on change of opinion. (para 16)
Professional fees
++ all legal and professional fees paid by the assessee during the year under consideration in excess of Rs.50,000/- and Rs.1 lacs respectively, came up for consideration of the Assessing Officer when he called upon the assessee to supply partywise details along with full name, complete communication address, PAN and TDS deducted and/or paid to such parties. If in the final order of assessment he made no disallowance without giving reasons, surely it cannot be argued that he had not scrutinized the issue. The assessee had pointed out that sum of Rs.75,000/- was paid to an Advocate and sum of Rs.80.92 lacs was paid regarding professional fees which was by way of reimbursement to the Mother Dairy since it had engaged the services of SBI Capital Markets and other professionals on behalf of NDDB. If the Assessing Officer was of the opinion that what are the reasons these expenditures were not required to be allowed, it was well within his rights to do so in the order of assessment. (para 21)
Capitalization of expenditure
++ this amount of Rs.3.15 crores which the Assessing Officer disputes by way of expenditure was never claimed as such in the original return itself. The audited account referred to a larger sum of Rs.4.38 crores which was amortised and the break up of premium amortised during the period under consideration includes a total of Rs.3.15 crores which is a total of premium with respect to 5 different investments. This precise figure which the Assessing Officer wants to take into consideration for the purpose of disallowance as capital expenditure. No such claim of revenue expenditure was made, the essential requirement of income chargeable to tax having escaped assessment on this ground fails. (para 24)
Assessee’s Petition allowed
