The primary condition for rejecting the book results as laid down under section 145 of the Income-tax Act, 1961 (the Act) is that the Assessing Officer should be satisfied that the books of account maintained by the assessee are not complete and correct. As can be seen from the findings given by the Assessing Officer in the order of assessment, the Assessing Officer has merely proceeded on a surmise that the profits of the assessee are sought to be reduced by selling its products to M/s. Pragathi Automation P. Ltd., the assessee’s sister-concern at a lesser price.
The assessee AOP in the present case has been assessed as AOP and found to have fulfilled the condition laid down in section 80 IB(10) and has been held to be eligible for such deduction. The quantum of deduction under section 80 IB (10) will depend on the income earned from eligible project. The quantum of deduction will not depend upon the mode of distribution of shares amongst the members of AOP as income of AOP is taxable at maximum marginal rate.
In a case where assessee voluntarily deducted tax and claimed refund directly, grant of interest under section 244A may not arise and the Board Circulars on this issue are applicable, whereas in a case where AO demand the tax / interest consequent to an order under section 195/201 or 201A, and the refund arose consequent to the orders of the CIT (A)/ITAT, then interest under section 244A has to be granted. In the present case, the assessee has been found entitled to refund in accordance with the provisions of the Act and section 244A provides for payment of interest on the amount of refund which becomes due to assessee under the Act. We have no doubt in our mind to hold that the assessee is entitled to interest u/s 244A.
Hon’ble Jurisdictional High Court of Bombay in the case of John D’Souza (supra) has also held that any payment for not carrying out any activity or for refraining from carrying out activity in relation to business which otherwise was being allowed to be carried out by the assessee, by the erstwhile owner was assessable u/s. 28(va), squarely applies. The Hon’ble Jurisdictional High Court further held that question of capital gains did not arise as the assessee was not owner of any asset in the first place and there is no transfer of such alleged capital asset during the previous year.
While deciding Revenue’s appeal in ITA No. 6747/M/2011, this Bench had the occasion to consider the Circular issued by CBDT being Circular No. 8/2005 dt. 29.8.2005 wherein this Bench has held that employer/employee relationship is a pre-requisite for the levy of FBT. Rationale for introduction of FBT is that it is difficult to isolate the “personal element” if the benefits are collectively enjoyed by the people which means that the provisions of FBT will be applicable only in respect of those expenses which contain or atleast are likely to contain an element of personal benefit to employees. We do not find any such thing present on the facts of the present case. The subscription amount has been paid as per contractual agreement between the assessee and M/s. Tata Sons Ltd. The invoice raised by M/s. Tata Sons Ltd. is for the services provided for it. As no employer/employee relationship exists between the assessee and M/s. Tata Sons Ltd., we agree with the findings of the Ld. CIT(A) that subscription payment deserves to be kept outside the purview of FBT.
From the above it is clear that unabsorbed depreciation for the block of Assessment year 1997-98 to 2001-02 which could not have been set off earlier, cannot be allowed to be set off now. Therefore, we set aside the order of the ld. CIT(A) and remit the matter back to the file of Assessing Officer with a direction to only allow set off of unabsorbed depreciation which is outside the block of Assessment year 1997-98 to 2001-02.
On a plain reading of the provisions of section 54F of the Act, we do not find anything therein to suggest that the new residential house acquired should be situated in India. The jurisdictional High Court in the case of Mrs. Jennifer Bhide (supra) has held that introducing a word which is not there into a section amounts to legislating when Parliament has not used these words in the said section.
It is a well settled law that when two different views of the different jurisdictional High Courts are available, the decision favourable to the assessee is to b03e followed. The hon’ble Supreme Court of India in the case of CIT v. Vegetable Products Ltd. [1973] 88 ITR 192 (SC) has held that (page 195) “if two reasonable constructions of a taxing provisions are possible, that construction which favours the assessee must be adopted. This is a well-accepted rule of constructions recognized by this court in several of its decisions”. Therefore, in view of the above, the Tribunal has been following the judgment of the hon’ble Karnataka High Court in the case of Yokogawa India Ltd. (supra) in various cases holding that exemption under section 10B is to be allowed without setting off brought forward unabsorbed loss and depreciation from earlier assessment year or the current assessment year. A similar view has been taken by the Tribunal in the following cases as well :
We observe that the assessee can either captively consume the electricity generated or can sell the same to the Tamil Nadu Electricity Board at Rs. 2.70 per unit. The assessee is refrained from directly selling generated electricity to the consumers. The assessee has no other option but to sell the electricity generated to the Tamil Nadu Electricity Board at the predetermined rates.
The above factual matrix of the case nowhere proves that the assessee had either concealed the income or furnished any inaccurate particulars. The very fact that it had duly mentioned the consideration in the year of receipt itself proves its bona fides. In this regard, we fortify our opinion from the hon’ble Bombay High Court judgment in the case of Metal Rolling Works Ltd. (supra).
