It was contended by the ld. counsel for the assessee that since the AO has passed an order u/s. 195(2) of the Act allowing the assessee to issue shares without tax deduction at source, the issue of shares made by the assessee on 30.03.2004 and 30.09.2004 cannot be the subject-matter of proceedings u/s. 201(1) & 201(1A) of the Act.
Discount under ESOP is in the nature of employees cost and is hence deductible during the vesting period w.r.t. the market price of shares at the time of grant of options to the employees. The amount of discount claimed as deduction during the vesting period is required to be reversed in relation to the unvesting/lapsing options at the appropriate time.
In the present case, admittedly there is no past demand which has remained unpaid. Therefore only when the Assessee files a return of income quantifying his total income for the assessment years in question can it be said that there has arisen tax liability for the relevant AYs. The due date for filing return of income or the fact that advance tax was due on a particular date will not make the liability of the Assessee an “existing tax liability” on those dates. The Hon’ble Karnataka High Court in the case of CIT v. R.V. Raibagy & Co. & others ITR Case Nos. 4 to 10 of 2003 dated 29.3.2005 has also taken the view that adjustment of seized cash against tax due u/s.140A of the Act, on income declared in a return of income filed should be allowed.
We find force in the submission of the learned counsel that payments to the government are to be paid once the mining lease is obtained and such payments are governed by various Acts along with the Apex Court making a ruling for State Governments to participate in the granting of mining lease by recovering compensation when their forests are uprooted. Therefore for this purpose, the funds are used for a natural regeneration which the assessee participates indirectly. Therefore at no point of time could it be said that the assessee had incurred a capital expenditure giving the assessee a benefit of enduring nature for the purpose of earning segmented income to render the same to income tax. In other words, the authorities below have not pointed out the income generated against the purported deferred Revenue expenditure so proposed by them in their impugned orders. The amount was incurred as a Revenue expenditure and is directed tobe allowed in the year it has been incurred
It is not disputed by revenue that the said lease agreement dt.29.6.2006 entered into by the assessee give rise to a lease in favour of the assessee and no other legal rights in the hospital building are granted to the assessee. As such, the view of the Assessing Officer that the said lease agreement brings into existence an asset of enduring nature is, in our opinion, misplaced. The Hon’ble Apex Court in the case of Empire Jute Co. Ltd. v. CIT [1980] 124 ITR 1 has laid down certain guidelines to determine whether, in a given case, the expenditure incurred is in the nature of revenue or capital expenditure.
There can be no concealment or non-disclosure, as the assessee had made a complete disclosure in the IT return and offered the surrendered amount for the purposes of tax and therefore no penalty under s. 271(1)(c) could be levied. The words ‘in the course of any proceedings under this Act’ in Sec. 271(1)(c ) of the Act are prefaced by the satisfaction of the AO or the CIT(A).
From the fact that the income of the society comprised of receipts from the activity of letting out a kalyana mantapa owned by it on rent, fees received from the members on sale of liquor in the bar run by the assesse, it does not follow that the activities of the Assessee are not genuine or that the activities are not being carried out in accordance with the objects of the Assessee.
That apart, the learned counsel for the assessee has rightly contended that the provisions of section 80IA(5) of the Act applies in computing the profits of an eligible business for the purposes of working out the quantum of deduction for the initial assessment year and for every subsequent year thereafter. The incentive deductions both under section 80 IA and 80 IB of the Act have the concept of initial assessment year in respect of almost all eligible business.
It is after the deduction under Chapter VI-A that the total income of an assessee is arrived at. Chapter VI-A deductions are the last stage of giving effect to all types of deductions permissible under the Act. At the end of this exercise, the total income is arrived at. Total income is thus, a figure arrived at after giving effect to all deductions under the Act. There cannot be any further deduction from the total income as the total income is itself arrived at after all deductions.
As regards the data used by the TPO while determining the ALP, we find that it is to be as per the provisions of section 92D of the Act that every person who has entered into international transactions is required to maintain information and documentation thereof. Rule 10B(4) provides that the information and documents as specified under Rule 10B(1) and 10B(2) should as far as possible be contemporaneous and should exist latest by the “specified date” referred to in section 92F(4) which has the same meaning as ‘due date’ in Explanation 2 to section 139(1) of the Act. In the assessee’s case, this would be ’30th day of September’ as it is a company.
