When there was intensive examination in the first instance in respect of the issue, which was the basis for re-opening of assessment, it was necessary for the AO to indicate, what other material, or objective facts, constituted reasons to believe that the assessee had failed to disclose a material fact, necessitating reassessment proceedings.
The Petitioner Company had entered into Franchisee Agreements with several companies, situated inside and outside Kerala and also abroad, as per which, on mutually agreed terms and conditions, these companies were allowed to use the Trademark owned by the petitioner.
We may notice the judgment of Apex Court in CIT v. United Trading & Construction Co., [2001] 247 ITR 819 that there is nothing in Section 24 of the Finance (no. 2) Act which prevents the Income Tax officer, if he is not satisfied with the explanation of the assessee about the genuineness of sources of amounts found credited in his books to add them to the assessee’s income amount in spite of these having already been made the subject matter of the declaration made by the depositors/creditors. This point, thus, also goes against the appellant.
As held in D. Ananda Basappa’s case (1 supra) by the Karnataka High Court, the expression a residential house in Section 54 (1) of the Act has to be understood in a sense that the building should be of residential nature and a should not be understood to indicate a singular number
The respondent-assessee, in the present case, had in its return of income tax, claimed deduction under Section 80IA at Rs. 12.01 crores and Section 80HHC of the IT Act at Rs. 5.75 crores and declared the total income of Rs. 82.47 lacs. The AO allowed the deduction under Section 80IA to the tune of Rs. 14.04 crores and deduction under Section 80HHC to the tune of Rs. 2.42 crores.
The company was in business of publishing newspaper for almost a century. The main ingredient required for the purpose is news print. Hence, it is expected, the company would know the prevalent market rate. In any event, when the respondent agreed to give rebate, the company did not raise any protest. Their protest came when the respondent insisted payment and threatened legal action. The defence so advanced was not bona fide.
At time when query was raised under the head ‘Selling & Distribution Expenditure’, had there been insistence that TDS was required to be deducted and the amount specified to the tune of Rs. 22,70,869 was not required to be allowed as Trade Incentive without deducting TDS, the same ought to have been reflected somewhere in the computation of income and that would have bearing on the computation itself.
Normally where a transaction is undertaken by a person who is a businessman, the question as to whether investment in shares is an income from the line of business could be taken as adventure in the nature of trade and it should not pose a problem, since such transactions would be either incidental or ancillary to the business, although the transactions undertaken may not have a direct bearing to the business already undertaken by the assessee.
The assessee, a chamber of commerce and industry, in the course of pursuing its objects rendered several services, such as, certification, committee room services, secretarial services and facilities, energy audit, etc. to its members and non-members for a fee. It was registered under section 12A. From the assessment year 1996-97 up to the assessment year 2005-06, it was granted exemption under section 11.
HC held that CIT had rightly rejected the application of the petitioner for approval under Section 10 (23C) (iv) of the Act on the ground that the petitioner has not rendered its services directly to the farmers but is rendering its services directly to its clients/agents who are engaged in trading of the certified seeds with profit motive and therefore its activities are not for the ‘advancement of any other object of general public utility’ and hence not for ‘charitable purpose’ in view of second limb of the first proviso to Section 2 (15) of the Act.
