THE main point raised in this appeal is against the reduction in the claim of deduction u/s. 80HHC. The facts are that the return of income was filed claiming deduction u/s. 80HHC at Rs. 7,38,416/-. During the course of assessment proceedings the Assessing Officer noted that there was a net profit of Rs. 14,54,272/- on total export turnover of Rs. 2,48,26,964/ -. The net profit included Duty draw back turnover of Rs. 21,10,298/- and DEPB of Rs. 6,63,942/-. The Assessing Officer on verification of export in Form No. 10CCAC observed that the assessee has Loss on export turnover at Rs. 10,19,985/-.

Disallowance of travel by employees: the assessee had calculated the disallowance under Rule 6D with total number of travels undertaken by each employee during the year. This means that the disallowance was worked after setting off disallowables on one trip against the deficit in another trip in respect of each employee. However, the Assessing Officer observed that this disallowance under Rule 6D has to be computed with respect to each travel and ultimately, made an addition of Rs.2,00,000/ – which was confirmed by the ld. CIT(A).

Whether, a Provision for Non Performing Assets (‘NPA’) debited to profit and loss account and claimed as a deduction in accordance with the prudential norms issued by the RBI in exercise of powers conferred on it under section 45JA of the RBI Act, 1934, called the Non Banking Financial Companies Prudential Norms (Reserve Bank) Directions, 1998, should be allowed as deduction while computing income from business under the provisions of the Income-tax Act, 1961?

THE assessee company was incorporated with the main object of acquiring a holding of equity and preference shares of companies engaged in the business of cement, ready mix and aggregate and to provide financial management. It was the first return of the assessee company. The Assessing Officer noted that the total capital was at Rs.209.33 crores which was raised during this year, out of which a sum of Rs.207.78 crores was invested in the shares of Lafarge India Ltd. The assessee company also earned interest on fixed deposits of Rs.2,28,000/ – against which, it had claimed administrative and other expenses to the tune of Rs.2,69,85,000/ -.

IT is now an axiomatic law that Board circulars are binding on the Department, even if they are wrong or against decisions of the Supreme Court. But our Boards do not have the habit of tracking down the multitude of circulars they issue and considering whether they are relevant after the Law has been amended and the Apex Court had already ruled on the issue. In the Dhiren Chemicals case (2002-TIOL-83- SC-CX), the Supreme Court had held that if there was a Board Circular which was not in tune with the views of the Supreme Court, the Board Circular would prevail. The whole idea is that the Department should not be seen arguing that the Board was wrong – even if it is wrong, the Departmental officers should be bound by it.

IN the present case which was referred to the Third Member of the Tribunal, the dispute revolves around the issue of, whether interest u/s 201(1A) is payable on the ”usance interest” from the date of payment or from the date of pronouncement of High Court decision in the Vijay Ship Breaking Corpn case

Need for notice u/s 143(2) cannot be dispensed with in a case where AO proceeds to make inquiry for assessment, and determination of taxes payable after issuing notice u/s 143(1) as well – ITAT

“It is true that the Division Bench of the High Court has borrowed extensively from the orders of the Tribunal and the Commissioner and passed them off as if they were themselves the author’s,” noted the apex court. “We feel that quoting from an order of some authority particularly a specialised one cannot per se be faulted as this procedure can often help in making for brevity and precision, but we agree with Mr Vahanavati to the extent that any `borrowed words’ used in a judgment must be acknowledged as such in any appropriate manner as a courtesy to the true author(s).”

IT all started with search and seizure operation conducted at the premises of Friends Portfolio. In the course of the search, statements of Shri Manoj Agarwal and other persons were recorded and thereafter assessment was completed in their cases. It was found that all the transactions undertaken by Shri Manoj Agarwal through Friends Portfolio and his other concerns were bogus transactions, in the nature of merely providing entries without any real physical transactions relatable to those entries. Such entries were taken by a number of persons, namely, S/Shri C.P. Khanna, Puneet Khanna, Rajiv Aggarwal, Dhanraj Singh, Harjoot Singh, M/s Ramco Steel (P) Ltd. etc. The last named company filed petition to the Settlement Commission for settlement of its case in respect of entries taken from Shri Manoj Agarwal. In the statement Shri Manoj Agarwal admitted that all the entries given by him through Friends Portfolio and his other companies were in the nature of accommodation entries, which could be grouped into six categories as under:-

As no notice issued by the Assessing Officer u/s 143(2) in the present case as admitted by the AO himself in the remand report submitted to the learned CIT(A) as clearly mentioned by the learned CIT(A) in paragraph No. 17 on page 12 of his impugned order, the assessment order passed by him u/s 158BC suffered from a jurisdictional error and the same, therefore, was not valid in the eye of law.