As far as the assessee’s claim on payment of additional interest is concerned, while confirming the Assessing Officer’s view that the payments were contrary to the RBI guidelines, the First Appellate Authority as well as the Income Tax Appellate Tribunal held that all that the assessee could pay as per the RBI guidelines was 8% interest only and any amount paid over and above the permissible limit was against the public policy, hence, hit by Explanation 237 of the Income Tax Act, 1961. As far as this line of reasoning is concerned, we find from the Circular issued by the RBI that there is ceiling on interest payable in current account/saving bank account and discretion is available on interest to be paid on term deposits. The circular reads as under:-
While working out the profits and gains which qualify for deduction under Section 80HH, one has to necessarily restrict the income which is derived from the industrial undertaking and nothing beyond. Thus, for the purpose of Section 80HH, the income of that industrial undertaking which got into the reckoning of the book profit for the purposes of Section 32AB has to be identified and that alone would be included in the profits and gains of the industrial undertaking for the purpose of working out the relief under Chapter VIA.
The payment by CRS & Sons Co. Ltd., on the basis of franchise agreement to various persons cannot be treated as payment to Directors who have substantial interest in the company and Section 2 (24) (iv) cannot be invoked.
Learned counsel appearing for the assessee placed reliance on the decision of this court in CIT v. Ayesha Hospitals (P.) Ltd. [2007] 292 ITR 266 (Mad.), wherein in respect of the claim made for the assessment year 1991-92, the assessee claimed the amounts spent on painting, relaying of the damaged floors, partitions, etc., as revenue expenditure. On an appeal before this court by the Revenue, it was pointed out that the assessee incurred expenditure for relaying of the damaged floors, painting and partition in respect of the leased property. Referring to the decision of the apex court in CIT v. Madras Auto Service (P.) Ltd. [1998] 233 ITR 468, this court pointed out that the expenditure incurred in respect of the maintenance of the leased premises was deductible as revenue expenditure.
In the absence of any material to show that said amount was sent by the assessee’s mother and brothers from Singapore, the claim of the assessee does not merit any consideration. Thus the amount of Rs. 78 lakhs treated as unexplained investment under section 69 and assessable as undisclosed income for the block period stands confirmed.
Going by the admitted facts herein, as noticed in the assessment order that the assessee was also subjected to search on 19.1.1996 and the case of the assessee falling under Section 158BC, the relevant provision for limitation would be only as per Section 158BE(1)(a). That being the case, the file noting has no significance for the purpose of working out the limitation. Thus, on the search conducted on 19.1.1996 the notice of assessment was issued on 20.9.1996.
Customs, Excise and Service Tax Appellate Tribunal the third respondent herein, is requested to dispose of the waiver/stay applications filed by the petitioner as early as possible, preferably, on or before 1.2.2013. The respondents are directed not to take coercive steps till the waiver/stay applications of the petitioner are disposed of by the Tribunal.
Considering the low tax effect in the case on hand and the substantial questions of law of general importance are not established, the appeal is liable to be dismissed and accordingly dismissed.
Despite filing of the stay application, the direction for recovery makes it mandatory for the authority to recover the amount within a period of 30 days after the filing of the appeal even if there is a stay application pending and has not been disposed of. The plea taken is that the proviso to Section 35-F of the Central Excise Act does not specify any time limit. In such view of the matter, it is pleaded that the circular overreaches the provisions.
As regards investment made in thandal business, there are no materials seized at the time of search of the assessee’s premises, to make this as a subject matter of block assessment. When the revenue does not dispute the fact that the assessee had been doing the business along with two others, there was no justifiable ground to assess Rs. 27 lakhs at the hands of the assessee.
