There is no rider u/s 54F that no deduction would be allowed in respect of investment of capital gains made on acquisition of land appurtenant to the building or on the investment on land on which building is being constructed.
Even if an asset is described as goodwill but it fits in the description of section 32(1)(ii), depreciation is to be granted on the same; the true basis of depreciation allowance is the character of the asset and not it’s description.
According to section 68 where any sum is found credited in the books of assessee maintained for any previous year, and the assessee offers no explanation about the nature and source thereof or the explanation offered by him is not, in the opinion of the Assessing Officer, satisfactory, the sum so credited may be charged to Income-tax as the income of the assessee for that previous year.
Expl. 7 to s. 271 (1) (c) provides that in the case of an assessee who has entered into an international transaction, any amount added or disallowed in computing the total income u/s 92C (4) shall for purposes of s. 271 (1) (c) be deemed to represent income in respect of which particulars have been concealed or inaccurate particulars furnished unless the assessee shows that the s. 92C computation was made in good faith and with due diligence.
I have duly considered the rival contentions and the material en record. The perception of the CIT that the profit is low prompted him to issue show cause notice to the assessee. Profit before taxation of the company as a whole for the year under consideration
A perusal of section 14A (2)(supra), evinces that the amount of expenditure incurred in relation to income not includible in the total income shall be determined by the AO if the AO is not satisfied with the correctness of the claim of the assessee in respect of such expenditure in relation to income not includible in the total income.
Admittedly there was no DTAA with Hongkong for the relevant year. As such we will restrict ourselves in examining the provisions of section 9(l)(vii) in order to ascertain the deductibility or otherwise of tax at source from the payment so made to the firm of legal advisors at Hongkong.
Provided further that the provisions of the preceding proviso shall not apply where the undisclosed income determined by the Assessing Officer is in excess of the income show in the return and in such cases the penalty shall be imposed on that portion of undisclosed income determined which is in excess of the amount of undisclosed income shown in the return.”
Whether, in the facts and circumstances of the case, the CIT(Appeals) is justified in holding that no addition can be made in the hands of the assessee towards undisclosed income from the liquor business carried on by the firms M/s. Malabar Associates.
The facts leading up to the levy of penalty have been stated in the dissenting orders and there is no dispute regarding their accuracy. The only question is whether on these facts there was reasonable cause within the meaning of sec.273B preventing the assessee from accepting the sum of Rs. 15,00,000 from N.K. Chemist by account payee cheque or draft as required by sec.269SS.
