In this case during the course of assessment proceedings, it was noticed by the Assessing Officer that the assessee company had incurred loss of Rs. 1,15,880/- in respect of derivative transaction during the period under consideration. Assessing Officer further noticed that the transactions in question have been made on National Stock Exchange and Bombay Stock Exchange which were not recognized for the purpose of Rule 6DDA and the notification to recognize these stock exchanges was issued only on 25.1.2006.
Delhi High Court in the case of Rajiv Tondon vs. ACIT 294 ITR 488 has held that in a case where two donors had absolutely no connection with the assessee and they made gifts to the assessee only because he needed money to buy a house and they wanted to help him. It was held that this was not only quite unusual but also quite unnatural. It was incredible that a complete stranger would want to gift lakhs of rupees to a person only because that person wanted the amount for purchasing a house.
Income from deferred guarantee commission did not accrue or arise in the year in which guarantee agreements were entered’. It was held that such income should be spread over the period to which the guarantee commission related and should be assessed proportionately.
The learned Counsel for the assessee submitted that section 234D cannot apply to the extant case because refund was granted on 24.04.2003 which is well before the date of insertion of section 234D itself. Referring to the language of sub-section (1) : ‘… where any refund is granted …….’, it was stated that since the only word ‘is’ used which is not accompanied by ‘or has been’, it would mean that if the refund is granted after 01.06.2003, the provision shall fail.
The old flat had been sold on 7.3.2006 and therefore the assessee was required to construct a new residential house by 6.3.2009. The purpose of section 54 is to allow exemption to the assessee of long term capital gain arising from sale of residential house if the capital gain is invested in construction of new residential house within a period of three years from the date of transfer and, therefore, in case, the assessee had invested the capital gains in construction of a new residential house within a period of three years, this should be treated as sufficient compliance of the provisions.
High Court of Madras in the case of CIT v. M/s. High Energy Batteries (India) Ltd. (supra), which in our view is distinguishable. In that case the Hon’ble Court held that the mere fact that the asset purchased had been leased back and vendor had undertaken to pay lease charges can not per se lead to the conclusion that the transaction is sham in the absence of any other material.
As regard the provisions of sec.28(va), the Tribunal held that with the insertion of the said provisions w.e.f. 01.40.2003, receipts on account of giving up right to carry on business even if it is capital receipt would now be charged to tax as ‘income from business’. It was held that if the compensation is paid for ‘not carrying out any activity in relation to any business’ which the ‘transferor’ is not carrying on, the same would be chargeable u/s.28(va) of the Act.
We have considered submissions of ld representatives of parties and orders of authorities below. We agree that ld CIT(A) is justified to hold that the entire sales which are unaccounted cannot be the undisclosed income of the assessee. It is a fact that department has not disputed that there is unaccounted purchases. Therefore, all the purchases are accounted for. If the sales are unaccounted, which is outside the books of account, only net profit rate should be taken as income of the assessee, as rightly held by ld CIT(A). Therefore, we uphold the order of ld CIT(A) and reject ground of appeal taken by department.
Deduction of payment of employees’ contribution towards provident fund and ESI cannot be disallowed under section 43B, if paid before the due date of filing the return. ACIT Vs. M/s. Shakti Bhog Foods Pvt. Ltd.
While computing book profits the AO added Provision for Doubtful debts of Rs.3,53,35,020/- debited to the profit and loss account to the profits arrived at in the profit and loss account prepared in accordance with the provisions of Sec.115JA(2) of the Act. The question whether provision for doubtful debts and provision for doubtful advances have to be added while computing book profits u/s.115JA of the Act has to be answered in favour of the revenue and against the assessee because of the retrospective amendment introduced in Section 115JA of the said Act.
