It is undisputable fact that though the Assessing Officer had concluded the assessment way back in 1999, the assessment reaches its finality in all respects only when the appellate forum decided the issues on such an assessment. Consequent on the final findings recorded by the appellate authorities, there was no liability to pay tax under section 207 for the assessment year under consideration and, therefore, levy of interest under section 234C for deferment of advance-tax payable by the assessee does not arise when the income of the assessee had finally been arrived at a loss of Rs. 1.6 crores. Interest paid under section 234C is for deferment of advance tax. When advance-tax paid is refunded and also interest paid under section 234B, there is no logic in making the assessee liable for interest under section 234C, namely, for deferment of payment of advance tax. Therefore, the Commissioner (Appeals) was justified in directing the Assessing Officer to refund interest levied under section 234C.
Courts have laid down principles for deciding the question as to when income from sale of shares can be said to be income from business. The following are some of the important decisions in this regard: (a) Whether a transaction of sale and purchase of shares were trading transactions or whether they were in the nature of investments is mixed question of law and fact. Learned CIT(A) v. H. Holck Larsen, [1986] 60 ITR 67.
The assessee has made huge payments on account of weaving and processing charges to various parties including one S. Such an outsourcing of work amounts to work done in pursuance of a contract, even though it may not be written. There has to be some terms and conditions for processing and weaving of the cloths for doing it in a certain manner and also there has to be some kind of understanding for the quality and design.
In the above ruling, fees paid to a resident of Canada as consideration for analysis of samples and ores conducted from technical lab was held as fees for technical services u/s.9(1)(vii) and Article 12 of the India-Canada Treaty. No arguments were made on the aspect of ‘make available’ requirement present in the definition of ‘fees for technical services’ under Article 12 of the Treaty and the AAR also did not consider this. Thus, the decision relied on by the learned Departmental Representative is distinguishable.
A perusal of the assessment order clearly shows that the Assessing Officer questioned the assessee why there is a difference in the rate of discount. Assessee replied to the questions raised by the Assessing Officer. However, the Assessing Officer has proceeded to compute the discount by hypothetical calculation to arrive at discount rate for the whole year and then asessee applied on monthly sale basis. This obviously is not permissible in so far as the discount granted by the assessee is not a constant every month. The average rate of discount would be a highly impractical method. In the circumstances, the addition in respect of discount as made by the Assessing Officer and confirmed by the learned Commissioner of Income-tax(Appeals) stands deleted.
A perusal of the order of the learned Commissioner of Income-tax (Appeals) clearly shows that the assessee had written off bad debt in the books. Further, it is noticed that the Learned Commissioner of Income-tax (Appeals) had followed the decision of the Hon’ble Bombay High Court in the case of Director of Income-tax (International Taxation) Vs. Oman International Bank (refer to supra) on this issue. The finding of the learned Commissioner of Income-tax (Appeals) that the bad debt written off in the books has not been disputed by the revenue. In the circumstances, the finding of the learned Commissioner of Incometax (Appeals) on this issue is on right footing and does not call for any interference.
Decision of the Mumbai Bench of the Tribunal in the case of Homi K. Bhabha Vs. ITO was brought to our notice by the learned DR wherein it was held that Portfolio Management Scheme fees is not deductible against capital gains. The decision of the Pune Bench of the Tribunal in the case of KRA Holding & Trading was not followed by the Mumbai Bench in the above cited decision.
It is very clear that the assessee consciously split up the payments in whole of the year, which is impracticable, illogical as noted above and it was done just to circumvent the provisions of law. There was no justification for the assessee to split up the transactions of crores of rupees in small payments of Rs. 15,000/- to Rs. 20,000/- everyday. Whatever plea was taken before the authorities below was not supported by any evidence.
Ld. CIT(A) on pages 51-52 of his order that the assessee could not provide even the names and addresses of those parties to whom cash sales were claimed to have been made. This is the main basis on which Ld. CIT(A) has confirmed the decision of the A.O. In our considered opinion, it cannot be said that in the case of cash sales, the assessee is bound to keep record of the names and addresses of the buyers. The judgement of Hon’ble Bombay High Court cited by the Ld. A.R. rendered in the case of R B Gurnam Fatehchand vs ACIT as reported in 75 ITR 33 also supports the case of the assessee. In that case also, the assessee was not in a position to give the addresses of the customers to whom cash sales were made. Under these facts, it was held by the Hon’ble Bombay High Court that this cannot be the basis to reject the book results.
Tribunal decision in the case of ITO Vs Gyani Exports as reported in 94 TTJ 557 wherein, it was held that gain from foreign exchange fluctuation as eligible for deduction u/s 80HHC. No contrary decision was brought to our notice by Ld. D.R. and hence, on this issue also, we decline to interfere in the order of Ld. CIT(A).
