Assessee has submitted in this case that advance was given amounting to Rs. 39,36,860/- to M/s Kohinoor International and interest was charged @ 6%. It was further claimed that the said advances were given out of the partners capital which was Rs. 30,91,322/- as on 31.3.2007. Furthermore, assessee has contended that there were commercial expediency involved in granting of the said advance as the assessee was to obtained distributorship from M/s Kohinoor International. I have carefully considered the submissions. In my considered opinion, submission of the assessee has considerable cogency that there was commercial expediency involved in granting of the said loan.
Assessee is a firm engaged in business of builder and promoter. The issue before us is regarding allowability of deduction u/s.80IB(10) of the Act on partially complete project. The Assessing Officer has denied the deduction on the ground that project was not complete within the stipulated time. There is no dispute with regard to other conditions laid u/s.80IB(10) of the Act,
During the year under consideration, the assessee company had made a payment of 1,09,35,108/- to Google Ireland Ltd. and the said amount was claimed as ‘advertisement expenditure’. While making the said payment, no tax at source was deducted by the assessee on the ground that the amount paid to Google Ireland Ltd. constituted business profits of the said company and since the said company did not have a permanent establishment (PE) in India, the amount paid was not chargeable to tax in India.
It is a fact that assessee has not booked the lease rentals as noted by the AO but on the reason that the assessee being NBFC is following the guidelines issued by RBI and guidelines states that once the party has become a defaulter for at least twelve months that party can be declared as NPA and no income on that part can be booked from the source after failure to get any income.
The assessee’s claim of exemption u/s 54 is devoid of merits as the concept of mutuality has not been extended to the assessee besides the constructed houses or the properties of the respective members cannot be deemed to be purchased or construction of the houses belonging to the society. In view thereof, the claim u/s 54 has been rightly denied by AO and CIT(A).
Rebate under section 88E was to be allowed from the tax computed as per provisions of section 115JB to find out whether after set off of rebate under section 88E, any tax liability remained or not. Admittedly the tax liability as per MAT provisions was Rs.7,56,694/- and rebate admissible under section 88E was Rs.26,98,260/-. Therefore, in any view of the matter, no prejudice was caused to the revenue by non-consideration of provisions of section 115JB by Assessing Officer. Therefore, ld. CIT’s order cannot be sustained.
The case of the assessee is that the statement/admission was made under the mistaken belief of law that Rs. 50 lakhs represents the sale value of stock found short was undisclosed income of the assessee instead of the correct legal position that the gross profit on suppressed sale is the income of the assessee.
Ostensibly, while denying the assessee’s claim of carried forward unabsorbed loss/depreciation assessed under the normal provisions of the Act, the Assessing Officer has proceeded on the basis that section 10A of the Act provides an exemption and, therefore, loss suffered in such unit is not allowed to be set off or carried forward for further set off against other normal business income.
According to us for charging capital gains, the assets must have been acquired by incurring cost. In the instant case, the assessee has not incurred any cost for the acquisition of asset because the same was allotted to the assessee’s father by Government of India being refugee from Pakistan at relevant point of time.
The fact that the assessee has received the amount in the capacity of beneficiaries has also not been controverted, therefore, the amount received by the trust is in pursuance of dissolution of trust. The amount received in pursuance of dissolution of trust cannot be termed to be an amount received by the beneficiaries “without consideration”. The fact that the trust had borne the tax at maximum marginal rate on its income has also not been controverted. Therefore, in our considered opinion, the addition cannot be upheld on the applicability of clause (vi) of sub-section (2) of section 56 of the Act, as the money received by the assessee is not “without consideration”
