ITAT held that Revenue has not disputed the fact that effective rate of interest paid by assessee in India was 6.62% on loans whereas Interest paid by assessee on loans taken from AE abroad was 5%. This was below the rate of interest assessee was paying on loans taken within India.
We are of the considered view that assuming of jurisdiction by the AO in this case is bad in law for the reasons inter alia that when the assessee has specifically claimed exemption u/s 10BA on the sum of duty drawback of Rs.3,72,186/- and the AO after applying its mind allowed the same, there was no tenable material with the AO to reopen the assessment;
The books of accounts are duly audited and no defect has been pointed out vis-a-vis the sales, purchase or profit. The purported defects are confined to cash book, which have no nexus with the trading results.
It is held that requirement of getting books of account audited can arise only where the books of account are maintained. In the absence of the maintenance of books of account, there can be no penalty u/s 271B of the Act.
In the absence of any addition having been made on incomes which the AO had reason to believe had escaped assessment, no addition of any other income could have been made and that the AO had exceeded his jurisdiction in passing the impugned order u/s 147.
It is crystal clear that the terms of Section 40A(3) are not absolute and that the genuine and bonafide transactions are not taken out of the sweep and it is open to the assessee to furnish to the satisfaction of the AO, the circumstances under which the payment in the manner prescribed u/s 40A(3) was not practicable or would have caused to the genuine difficulty to the payee.
ITAT held that the rate of profit @15% on estimated unaccounted sale is an arbitrary rate without any comparable cases. The best comparison is also available of the business of the assessee himself wherein he has shown net profit at the rate of 6%.
Section 14A contains the expression ‘in relation to income which does not form part of the total income’. The said decision cannot be used in the reverse to contend that even if no income has been received, the expenditure incurred can be disallowed u/s 14A.
ITAT held that it is not in dispute that the receipt representing forfeiture of share warrants is only a capital receipt & not chargeable to tax. However, the same has been duly credited in the profit and loss account as an extraordinary item.
The Tribunal granted 100 percent stay of demand because (a) the assessed income was more than 10 times the returned income. (Instruction 96 of 1969 was relied upon) & (b) The stand taken by the AO was at variance with the stand taken by TPO.
