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It appears that all facts were available on record and according to the respondents was only erroneously granted. This is a clear case of review of an order. The application of law or interpretation of a statue leading to a particular conclusion cannot lead to a conclusion that tax has escaped assessment for this would then certainly amount to review of an order which is not permitted unless so specified in a statue.
At the outset, what is evident is that a perusal of the order of the ld.CIT(A) shows that the ld. CIT(A) has accepted the balance sheet as filed before the bank whose finding of the ld. CIT(A) has not been challenged by the assessee. Obviously the finding of ld. CIT(A) and the balance sheet filed with the bank stands good. Once the difference found with the balance sheet filed before the bank authorities and the reconciliation of the same with the books of accounts would have to be done. How the assessee has arrived at the figures as shown in the balance sheet with the bank would have to be reconciled with the bank as maintained by the assessee. For this purpose we are of the view that the issue in this appeal must be restored to the file of AO for re-adjudication. The AO shall give assessee adequate opportunity to reconcile the difference. It is further directed that just because there is a difference addition should not be made if there are positive difference or negative which can be considered also. In the circumstances and with this direction in this appeal this issue is restored to the file of AO for re-adjudication after granting an opportunity to substantiate its claim.
Under section 254(2), the appellate Tribunal may, ‘with a view to rectify any mistake apparent from the record’, amend any order passed by it under sub-section (1) within the time prescribed therein. It is an accepted position that the appellate Tribunal does not have any power to review its own orders under the provisions of the Act.
By Finance Act of 2001, the Parliament enacted section 14A of the Income-tax Act, 1961 with retrospective effect from 1.04.1962. Prior to insertion of sec. 14A, the Revenue had sought to disallow expenditure incurred in relation to exempt income. However, the Hon’ble Supreme Court in the case of Rajasthan State Warehousing Corporation vs. CIT, 242 ITR 450, held that where there was one indivisible business giving rise to taxable income as well as exempt income, the entire expenditure incurred in relation to that business would have to e allowed even if a part of income earned from the business was exempt.
Delhi High Court held that whether the prior period expenses were shown separately or not, the assessee would nevertheless be entitled to have the adjustment of the prior period expenses in the matter of computing the net profit of the assessee. Thus on mere fact that the assessee had shown its prior period expenses in the extraordinary items separately, did not mean the net profit was arrived at de hors these items. The Delhi High Court further pointed out that the assessee had not claimed any deduction with the net profit on the basis of any clauses given in the Explanation to section 115JA(2). Consequently the question was answered in favour of the assessee. The view expressed by the Delhi High Court is agreed with and is applied to the instant case.
The Tribunal ignored that the role of the assessee with regard to the goods supplied by supplier was only that of a bailee and so the value of goods cannot constitute income in its hands. The entire contention of the revenue rested on the wrong premise that the payment had been made by the owner NSTL, a fact which was totally against the agreed terms of the contract between the assessee and NSTL.
Hon’ble Bombay High Court in the case of Prashant S Joshi (supra) has also noted the omission of section 47(ii) of the Act and insertion of section 45(4) of the Act with effect from 1.4.1988. Considering the entirety of the legal position, it has been affirmed by the Hon’ble High Court that amounts received by the partner on his retirement, are exempt from capital gains tax.
Section 44AB of the Act becomes operative where there is computation of profits and gains of business or profession as a part of total income. In other words, it has no applicability where the assessee is not involved in or has no income from profits and gains from business or profession.
Short facts apropos are that assessee engaged in the business of transport of spirit and Molasses had acquired a new wind mill during the previous year. The total cost of the wind mill was Rs. 1,58,00,000/- and it was commissioned on 27.03.2005. Since wind mill was used for less than 180 days, depreciation was claimed at 50% of the normal rate.
Expenses having been incurred for the IPO through which assessees were also able to sell their shares, the expenses necessarily were, in our opinion, in connection with sale of such shares. Assessees could take advantage of clause (1) of Section 48 of the Act. Assessees had produced evidence in the form of Escrow Account to show that it had received only net amount after incurring the expenses. Assessees also produced Prospectus of IPO which clearly shows that they were obliged to meet pro rata share of IPO expenses. There is no case for the Revenue that any of the assessees claimed more than their share of expenses based on the ratio of shares sold. We are, therefore, of the opinion that the deduction claimed by the assessees for expenses incurred was unjustly disallowed. This disallowance is deleted.
