When the order was passed by the Tribunal on 09.10.2000, the Revenue had only remedy of seeking reference in terms of the then Section 35-G of the Act from the Tribunal. If the Tribunal does not refer the questions of law for the opinion of this Court, the aggrieved party could invoke jurisdiction of this Court under Section 35-H of the Act. It was in these terms, the jurisdiction of this Court was invoked by the Revenue against the order dated 09.10.2000 passed by the Tribunal. The opinion rendered by the High Court, on such reference sought by the Revenue, is binding on the authorities under the Act. The Tribunal is to give effect to the order passed by this Court. We find that the appellant has sought to confuse the provisions then existing and after amendment with effect from 14.5.2003 substituting Section 35-G by Section 144 of the Finance Act, 2003.
We do not find any merit in such argument. The Commissioner of Income Tax (Appeals), Ludhiana, recorded a finding that the Assessing Officer has reported that the voluminous nature of entries cannot be verified. Once the Assessing Officer himself has failed to verify the entries, there is no reason to disallow the distribution expenses. It is a rule of thumb which was applied by the Commissioner of Income Tax (Appeals), Ludhiana to allow expenses to the tune of 40%, which has been found to be unjustified by the Tribunal.
It is well settled in law that a tax withholding liability is a vicarious liability, as a part of tax collection mechanism, in the sense that when there is no primary liability of the taxpayer, proxy liability of the tax deductor also does not survive. In a situation like the one, we are in seisin of, in which the CBDT itself accepts that there is hardly any primary tax liability of the recipients of income.
Whether the material obtained during search showing a variation in expenditure may be considered as evidence for disallowance of expenditure for a block period u/s 158BB of the Act and would not amount to assessment on estimation basis?
Assessing Officer of the contractors have furnished certificate under Section 197 of the Act to the Principal Officer of the Parle Biscuits Pvt Ltd, Mumbai. Such certificate is in terms of clause (iii) of Section 204 of the Act. Such certificate mandates the persons to whom such certificate is issued to deduct tax at a rate lower than the prescribed rate under Section 194C of the Act. Merely because the assessee has got separate TAN for Bahadurgarh unit and for Mumbai unit, will not render the certificate issued under Section 197(2) as redundant. Such certificate is to be issued to the Principal Officer of the Company as the person responsible for deduction of tax and not to any other person or unit of the assessee. Therefore, the order passed by the Commissioner of Income Tax (Appeals) Rohtak and affirmed by the Tribunal cannot be said to be suffering from any illegality in any manner.
No authority taking a contrary view that the Revenue is entitled to reduce from ‘gross dividend’ received, the presumptive expenditure in the absence of actual expenditure for determining the ‘net dividend’ income, has been cited. The Revenue did not conduct an enquiry to determine the actual expenditure incurred in earning the dividend income by the assessee, which is a manufacturing concern and also deals in trading of the hosiery goods.
Expenditure should bring into existence an asset or an advantage for the enduring benefit of a trade. In the present case, the corporate membership of Rs.6 lacs was for a limited period of 5 years.
The expenditure is incurred by the assessee not for generation of the scrap but for generation of the finished product. There is and cannot be any expenses which are incurred for generation of scrap. Scrap is bi-product of the manufacturing activity. Therefore, there are no expenses which could be excluded from the sale of scrap.
Since assessee had not removed defects/objections within a reasonable period therefrom and had taken more than 6 years to remove defects, memorandum of appeal was rightly rejected being barred by limitation.
Payment of Rs. 24 crores to Group A is to equalize the inequalities in partition of the assets of M/s Hind Samachar Ltd. The amount so paid is immovable property. If such amount is to be treated as income liable to tax, the inequalities would set in as the share of the recipient will diminish to the extent of tax.
