Assessment framed by AO on a non-existent company is a nullity in the eyes of law and void and the provisions of section 292 B cannot rescue the Income Tax Department: Sony India case
The present appeals have been filed by assessee against the order dated 21.07.2014 of the Ld. Commissioner of Income Tax (Appeals)-VI, New Delhi pertaining to the Assessment Years (A.Y.) 2007-08 and 2008-09 on the following common grounds.
Mere hand written paper could not be construed as books of account or documents in terms of section 153C and such documents having no signature of assessee-company or its employees could not be stated as belonging to assessee, so as to invoke section 153C.
Where assessee did not have any exempt income during the year and investments being held by it were in the nature of Strategic Investments, no disallowance under section 14A could be made.
Where AO had issued the notice of penalty without specifying the grounds of the same, imposition of penalty was unjustified, because this being a mandatory requirement could not be construed as a mere technical error.
otwithstanding the fact that the TPO determined nil ALP of royalty payment and franchisee fee, the amount paid as R&D Cess on these payments has to be allowed as deduction since it is a statutory payment to the Government.
Since in the present case also the assessee had taken the loan from his wife for the purchase of house which is for the benefit of the whole family, therefore, following the decision cited [supra], we hold that penalty levied u/s 271D of the Act in the instant case is not justified.
Since the assessee’s profit and loss account showed only one item of expenditure which had been booked in the accounts and there was no exempt income earned by the assessee, the question of disallowance under section 14A did not arise.
Treating the receipt of huge share application money by an investor-company as unexplained investment, merely due to the reason that low income was declared by such investor in its income-tax return, was not justified, since balance sheet of the investor produced by assessee had proved creditworthiness, genuineness and identity of the investor.
If the parties to the agreement are bound by the terms and conditions mentioned therein and the Revenue cannot interpret the said agreement in its own way to include the other costs: Coca-Cola India Inc. case
