In case of Rotork Controls India (P.) Ltd. v. CIT [2009] 314 ITR 62, the Supreme Court in the context of an assessee making provision for estimated expenditure towards warranty observed that provision is a liability which can be measured only by using substantial degree of estimation. Such provision is recognized when an assessee had a present obligation as a result of past events, and it is possible that any outflow of resources will be required to settle the obligation and further a reliable estimate can be made of the amount of obligation.
Whether the Income-tax Appellate Tribunal was right in law in coming to the conclusion that when on the ground on which the reopening of assessment is based, no additions are made by the Assessing Officer in the order of assessment, he cannot make additions on some other grounds which did not form part of the reasons recorded by him.
The CBDT, through its circular, could have brought certain aspects to the notice of the Assessing Officer, insofar as assessment was concerned. It had to be the opinion of the Assessing Officer alone which would prevail. In that view of the matter, the circular of CBDT may be a trigger, on the basis of which, the Assessing Officer may himself be satisfied that income chargeable to tax in a given case had escaped assessment.
In the opinion of this court, having regard to the provisions of section 78 of the Act and more particularly the first and the fifth proviso thereto as referred to hereinabove, the Tribunal was not justified in directing the petitioner to deposit the entire amount of penalties in addition to the service tax and interest. In the light of the above provisions, this court is of the view that impugned order dated 10th January, 2012 passed by the Tribunal deserves to be modified to the extent the petitioner has been directed to deposit the entire amount of the penalties under sections 76 and 78 of the Act.
Section 65(105)(j) makes services rendered to a client by a C & F Agent in relation to clearing and forwarding agent in any manner a taxable service. Term ‘Clearing and Forwarding Agent’ is defined under section 65(25) to mean any person who is engaged in providing any service either directly or indirectly connected with clearing and forwarding operation in any manner to any other person and includes a consignment agent. Thus, though the definition of Clearing and Forwarding Agent is quite wide, essentially what is a taxable service is a service rendered by a Clearing and Forwarding Agent to a client in relation to clearing and forwarding operation.
On a plain reading of Clause (33) of Section 65 of the Act, it is apparent that the same envisages actual transportation of time-sensitive documents, goods or articles by a person, who utilises the services of a person, either directly or indirectly, to carry or accompany such documents, goods or articles. In the facts of the present case, the assessees are handed over cash in the form of Indian currency at the recipient branch, which issues instructions to the delivery branch, which, in turn, makes payment from the corpus available with it.
The garden expenditure was for the purpose of maintaining garden to control the pollution. The company had put up an affluent treatment plant and pollution used to generate because of release of pollutants. The maintaining a garden helped in controlling pollution arising from the pollutants. It cannot be gainsaid that the expenses for garden had nexus with business activity.
In the present case, therefore, the assessee failed to offer any explanation in not offering a particular amount to tax. This was finding of the Assessing Officer as confirmed by the Commissioner (Appeals) and the Tribunal. Even if the speculation profit was eligible for set off against carry forward speculation loss, the same would have effect of diminishing such speculation loss which would be carry forwarded for future years. It is by now well settled through statutory provisions as well as decisions of the Apex Court in case of loss return also, the penalty could be imposed if by virtue of wrong claim not made bona fide, computation of loss is likely to reduce.
We find from the order of Ld. Commissioner of Income Tax (Appeals) and the argument of the assessee that if the addition is confirmed, if any trading result should be allowed to be set off against unaccounted income of Rs. 1,90,000/- introduced in garb of guess deposits. The Ld. Commissioner of Income Tax (Appeals) has upheld the addition of Rs. 75,916/-. Therefore, telescoping effect of this addition was allowed.
In case of transfer of capital asset forming part of block of assets in respect of which depreciation has been allowed, mode of computation and cost of acquisition shall be as per modifications provided in section 50. Thus, special provision made for computation of capital assets in respect of which depreciation has been allowed, is confined for the purpose of section 50 in relation to sections 48 and 49 only.
