The contention urged by the Applicant that the Scheme of Demerger must necessarily comply with Section 2(19AA) which is meant for availing tax concession cannot be read as a mandatory requirement for all schemes of amalgamation / arrangement/de-merger under Sections 391/392/394 of 1956 Act . The said provision cannot be read and interpreted to include assets/units/undertakings/business belonging to the respondent-IRSL which were never transferred or intended to be transferred to IRTL and which are not mentioned in the Scheme of Arrangement.
The provision made for advance tax of Rs.23,50, 000/- debited in the P&L account not added back to income is bonafide mistake. Assessee paid advance tax in the month of March only. It is the first time that provision was debited in P&L account. Had there been any intention to file inaccurate particulars then the assessee could not have paid the advance tax in the last month of assessment year. The assessee concern is a firm which is not having expert chartered accountants at its payroll. Further, this was the first year in which the provision for taxation was debited to the P&L account.
The Assessing Officer had asked the respondent-assessee, as to why Rs. 1,63,37,365/- should not be taxed under Section 41(1) of the Act on account of cessation of liability payable to sundry creditors. The assessee on the same date Was asked to furnish details with regard to the change in address and to furnish the proof of payment made to Makkar Traders in the following years and to explain the current status.
This also appears to be a case where the petitioner has not come to the Court with clean hands; submission of the respondent that the petitioner has learnt about the one time settlement arrived at by the respondent with the Bank; and it was only then that he approached the CLB this is clear from the fact that he had filed the contempt application before the CLB on 01.03.2007 but he did not choose to mention it before the Board till more than two months later;
Section 14A states that for the purpose of computing total income under Chapter IV, no deduction shall be allowed in respect of expenditure incurred in relation to the income which does not form part of the total income under this Act. It does not state that income which is entitled to deduction under Chapter VIA has to be excluded for the purpose of the said Section.
A perusal of the reasons recorded by the AO in the present case shows that there was no rational or intelligible nexus between the reasons recorded by him and the belief entertained about the escapement of income of the assessee company. There was nothing in the said reasons to show existence of any positive income arising to the assessee company which was assessable in his hands and the belief entertained by the AO was based merely on assumption and surmises.
An assessment order passed by an Assessing Officer can be rectified or amended under Section 154 or Section 155 or reopened under Section 148 only by him, and by no other income-tax authority. Similarly, an assessment by way of settlement of a case, which is made by the (Income Tax Settlement Commission) ITSC, can be reopened only by the ITSC and that too only in certain circumstances. Applying this general principle that runs through the Act, an assessment by way of a settlement order passed by the ITSC cannot be reopened by a different authority, viz., the Assessing Officer.
On reading of Section 10 (15A) of the Act it is apparent to us that for this Section, an Indian company engaged in the business of operation of aircrafts should have acquired aircraft(s) on lease under an agreement. It is only when an Indian company acquires aircraft on lease under an agreement, which was entered into on or before the 1st day of April, 2007, benefit under the said Section is available. Thus, the twin conditions; that the agreement should have been entered into on or before 1st April, 2007 and there should be acquisition of aircraft under the lease before the said date, have to be satisfied.
In the present case, what is apparent is that the lessee (assessee) paid a substantial amount (Rs. 2.53 crores) in 1989 at the time of entering into the transaction. It was a precondition for securing possession; the amount was one-time consideration in terms of the lease condition. In addition, the lessee has to pay 2.5% of the said amount as annual rent, which is subject to increase periodically. No doubt, the assessee argues that the annual rent is depressed, and does not reflect the market rent.
1. That part of the enhancement of lease rent, which is attributable to Mehta Charitable Trust surrendering its right to purchase khair wood in favour of the assessee company constitutes revenue expenditure. 2. That part of the enhancement of lease rent, which is attributable to improvement and modernization of plant and machinery carried out by the Trust in the year 1989-90, constitutes revenue expenditure. 3. The enhancement in lease rent, if any, which is attributable to normal appreciation, if any, in line with the lease rentals prevailing in the market constitutes revenue expenditure.
