Delhi HC upholds deduction claim under Section 80HHC, dismissing penalty. Ruling based on Supreme Court decisions. Full analysis of ITA 47/2013 judgment.
The entire case is based on principal claim of revenue neutrality and non-applicability of the principle of unjust enrichment. It is undisputed fact that the duty amount was not paid on the due date in relation to the period for which the authority had found short-payment essentially because there was subsequent payment of the said amount, that cannot ipso facto result in revenue neutrality, merely because the appellants are entitled to avail credit in respect of the duty paid.
Section 115J/115JB targeted corporate entities for imposing a Minimum Alternate Tax on their book profit. It was noticed by the legislature that as a result of various tax concessions and incentives certain companies making huge profits and also declaring substantial dividends have been managing their affairs in such a way as to avoid payment of income tax.
It is urged by PSPC, on the strength of the decision in Rajasthan Housing Board v. Krishna Kumari [2005] 13 SCC 151, that since the electricity connection was restored to the factory premises in terms of the order dated 18th December 2008 of the Court, the dues of PSPC ought to be directed to be paid straightway by CBL and PSPC should not be relegated to the OL for its dues. The above submission is untenable for more than one reason.
it is well settled by the judgment of the Supreme court in ITO v. M.K. Mohammed Kunhi [1969] 71 ITR 815 that the Tribunal, while exercising its appellate powers under the Income Tax Act has also the power to ensure that the fruits of success are not rendered futile or nugatory and for this purpose it is empowered, to pass appropriate orders including orders of stay. In ITO v. Khalid Mehdi Khan [1977] 110 ITR 79 the Andhra Pradesh High Court, applying the rule laid down in M.K. Mohammed Kunhi (supra), stayed the assessment proceedings pending before the Assessing Officer consequent to the directions of the CIT given in orders passed under Section 263 of the Act.
It is also pertinent to note that he had only made verbal inquiries with regard to the prevailing market rate of the property and had not collected any instances of actual sales in the said areas. Furthermore, the inquiry that he made was as on the date of his visit, that is on 02.03.2006, whereas the sales had taken place in the financial year ending 31.03.2003.
After the company petition before the Bombay High Court was withdrawn on 11th November, 2011, notice under section 434(1)(a) was issued on 15th December, 2011 at the registered office of the respondent company. Section 434(1)(a) requires issue of 21 days notice for deeming fiction created by the provision to apply. However, section 434(1)(a) cannot be strictly equated with mandatory statutory notice like the one required under section 80 of the Code of Civil Procedure, 1908, when a suit is to be filed against the Government. For initiating civil proceedings for recovery of a debt, no notice under section 434(1)(a) is required to be issued.
Observations of the assessing officer to the effect that no one makes a loss in real estate business and that the market perceptions indicate that the prices of the immoveable properties are always on the upward trend. These observations have, inter alia, formed the basis of the additions made by the assessing officer. It was even suggested before us on behalf of the revenue that it is a “notorious practice” prevailing in real estate circles that in all property transactions there is non-disclosure of the full consideration. As pointed out earlier, this cannot per se constitute the basis of the addition, though we must hasten to add that it can very well be a starting point for further investigation. In Lalchand Bhagat Ambica Ram v. CIT [1959] 37 ITR 288, the Supreme Court disapproved the practice of making additions in the assessment on mere suspicion and surmises or by taking note of the “notorious practice” prevailing in trade circles.
If income arises out of the transfer of a long term capital asset being an equity share in a listed company, the said income would be exempt under section 10(38) of the said Act. There is no doubt that the shares of Goodyear India Limited are listed shares and therefore even if a consideration had been charged for the transfer of the 74% share, the income arising therefrom would be exempt by virtue of the provisions of section 10(38) of the said Act.
Insofar as the other assessment years are concerned where the issue of limitation of four years does not arise, the position would not be any different. This would be so because on a reasonable interpretation of the provisions of section 80-IC(2) read with serial No. 20 of the 13th schedule of the said Act read with the first schedule to the Central Excise Tariff Act, 1985
