It is not in dispute that amount of Rs. 1,95,26,116/- was spent for participating in Hannover Fair held in Germany and for such participation, Steering Committee under the chairmanship of Commerce Secretary was constituted and modalities of participation was decided by the Organizing Committee under the Chairmanship of Additional Secretary, Ministry of Commerce & Industry, and as stated, the entire control was with the Ministry.
U/s 194-I, Income Tax is required to be deducted at source at the time of payment of any income by way of rent @’ 10% for the use of any machinery or plant or equipment. U/s 194C, tax is required to be deducted @’ 2% for carrying out any work which, inter alia, includes carriage of goods and passengers by any mode of transport other than by railways. Though generally speaking all types of machinery, plant and equipment given on hire get covered u/s. 194-I but hiring of transport vehicles get specifically covered u/s. 194-C as far as Tax Deduction at source is concerned. Transport vehicles used for carriage of goods and passengers are to be subjected to TDS provisions as per clause (c) of Explanation III of sub-section (2) of section 194C of the I.T. Act.
Assessee has submitted in this case that advance was given amounting to Rs. 39,36,860/- to M/s Kohinoor International and interest was charged @ 6%. It was further claimed that the said advances were given out of the partners capital which was Rs. 30,91,322/- as on 31.3.2007. Furthermore, assessee has contended that there were commercial expediency involved in granting of the said advance as the assessee was to obtained distributorship from M/s Kohinoor International. I have carefully considered the submissions. In my considered opinion, submission of the assessee has considerable cogency that there was commercial expediency involved in granting of the said loan.
The assessee’s claim of exemption u/s 54 is devoid of merits as the concept of mutuality has not been extended to the assessee besides the constructed houses or the properties of the respective members cannot be deemed to be purchased or construction of the houses belonging to the society. In view thereof, the claim u/s 54 has been rightly denied by AO and CIT(A).
It has not been disputed that the four sellers of the agricultural lands were neither examined nor their statements recorded, nor sec. 50C was invoked against them. Under these circumstances, the addition on the basis of a presumption which according to I.T. Act can only be raised against seller, cannot be made in the hands of the purchaser. Besides, we find merit in the argument of learned counsel for the assessee that provisions of sec. 142A cannot be applied against a transaction which is stock in trade. Order of CIT(A) is upheld as being on just and proper observation.
Where the capital asset became the property of the assessee by succession, inheritance or devaluation, the cost of acquisition of asset shall be deemed to be the cost for which the previous owner of the property acquired it, as increased by the cost of any improvement of the assets incurred or borne by the previous owner or the assessee, as the case may be. In the case before us, the assessee became owner of property by inheritance.
The assessee has not advanced any arguments with regard to the proposition that on interest income deduction under sec. 80-IC is admissible, therefore, there is no idea to examine the provisions of sec. 80-IC and in what condition the computation for such deduction has to be made. According to the judgment of Hon’ble Delhi High Court in the case of CIT vs. Sri Ram Honda, interest income has to be assessed as a income from other sources. In paragraph 26 of the judgment, Hon’ble Court has observed that interest income on fixed deposit for the purpose of availing of credit facility from the bank does not have an immediate nexus with the export business and, therefore, it has to necessarily be treated as income from other sources and not business income.
The assessee had also challenged that in the assessment order the AO has not recorded finding that there was concealment of income. He has placed reliance on the decision of Hon’ble Delhi High Court in the case of Madhu Shree Gupta while examining the constitutional validity of sub-sec.1B of section 271(1)(c) has held that the presence of prima facie satisfaction for initiation of penalty proceedings was and remains a jurisdictional fact which cannot be wished away as the provision stands even today, i.e., post-amendment.
Hon’ble Bombay High Court in Amitabh Bachan Corporation Ltd.,(supra) held that whether an expenditure was on revenue account or capital account is required to be examined in the light of the totality of all facts for this purpose. Evidence would be required in the form of documents and accounts and that, by merely looking at the balance-sheet and profit and loss account, one cannot infer the nature of the expenditure. Accordingly, relying upon their decision in Khatau Junkar Ltd. [1992] 196 ITR 55 ,Hon’ble High Court concluded that such an exercise generally cannot be done by way of adjustments to the returns under section 143(1)(a) of the Act.
Case of the revenue is that the intention of the donor apart from the gift deed not to be seen for concluding that it was a corpus donation. On the other hand, case of the assessee is that if discussion between the donor and the donee in the shape of correspondence etc. is seen then it would reveal that donation was made by the donor in order to establish an engineering and a management college in the name of his grand-father. The donor has specifically mentioned in this connection.
