important thing to appreciate here is that the provision created is on account of ascertained liability and the same should logically be excluded out of the calculation of book profits Clause (c) of Explanation (1) of Section 115JB. If the argument of the AO is accepted then every creation of provision will lead to dilution/reduction in the value of assets as a general class and therefore would not be deductible from book profit.
In the instant case, the assessee had claimed set off and carry forward of unabsorbed depreciation to be made against the profits and gains of the business of the succeeding year. The said claim of the assessee was rejected by the Assessing Officer as the return of income in the assessment year was filed late by the assessee and provisions of section 139(3) were invoked and applied.
The Assessing Officer was of the view that the claim of CENVAT irrecoverable does not fall as an expense under any of the above said sections. The Assessing Officer referred to sub-section of sections 36 and 37 at length and was of the view that the claim of the assessee had to be justified either under section 36(1)(iii)/36(2) (bad debts) or section 37(1) of the Act.
he charging of interest is compensatory in nature. If a tax demand raised by the Assessing Officer is varied by an appellate or revisionary authority, it is the appellate and revisional order and not the assessment order, that would hold the field under the doctrine of merger and, hence, fresh notice of demand is to be issued accordingly. An increase in tax liability would correspondingly reduce the amount refundable and also the interest payable on such reduced refund. Provisions of section 244A(3) clearly cover such a situation. If the contention of the assessee is accepted, it would lead to irrational and absurd consequences, which would make the provisions of section 244A(3) inoperative and redundant. The Assessing Officer merely gave effect to these relevant and clear provisions of the Act.
This is undisputed fact that the interest has been paid by the assessee, as is evident from perusal of the profit and loss account, as mentioned by the AO. It is also undisputed fact that the assessee had purchase assets. Therefore, the provisions of section 36(1)(iii) and proviso thereunder, which is inserted w.e.f. 1.4.2004 vide Finance Act, 2003 are applicable. It is evident that the interest on borrowed capital cannot be allowed unless such asset was first put to use.
Though the incomes assessable under them are part of total income as defined in sections 2(45)/4/5 yet that does not mean that the income assessable under section 68 has to be assessed under section 56. In the instant case, source of unexplained cash credits was not known therefore same be linked to any known source/head of income including income from other sources. In order to constitute income from ‘other sources’, the source, namely, the ‘other sources’, has to be identified. Income from unexplained or unknown sources cannot therefore be considered or taxed as income from other sources.
Payment paid by company to ESI department for delay in payments was nothing but compensation and was compensatory in nature. Thus, the impugned amount was to be allowed u/s 37(1).
The assessee in the present case has also raised the plea of reasonable cause, that the person advancing the loan was agriculturist and had no bank account. Accordingly, we delete the penalty levied under sections 271D and 271E of the Act.
If it is to be held that the assessee has incurred certain expenditure and the source of expenditure remains unexplained, the amount can be added under section 69C of the Act. However, if on one hand the amount is added as unexplained expenditure, still it retains the character of the expenditure incurred on the object of trust.
ITO (TDS) Panchkula Vs. Bharat Electronics Ltd. (ITAT Chandigarh) it is apparent from the record that the assessee deducted TDS correctly and revised the PAN and filed revised statement in Form No. 26Q, hence there was sufficient compliance of the provisions of section 139A of the Act. Even otherwise the assessee did not derive any benefit whatsoever, by filing the wrong PANs and PAN was corrected after ascertaining the same from the respective deductees. In our view the assessee has proved that there was reasonable cause for alleged failure and hence no penalty is leviable
