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1 - 4 of 4 (0.25 seconds)Bikaner Gypsums Ltd vs Commissioner Of Income Tax, Rajasthan on 23 October, 1990
The ld. Authorities below have
distinguished the decision of Hon'ble Apex Court in Bikaner Gypsum Ltd.
(supra) stating that in that case, the issue of expenditure incurred during the
course of continuing business of mining was dealt in, whereas in the present
case the impugned expenditure were not incurred for the purpose of any
existing business. In view of all these facts, there appears no bona fide in the
explanation of the assessee, as contemplated in Explanation 1 to section
271(1)(c) of the Act. The ld. CIT(A) has also mentioned that in the tax audit
report in form No. 3CD, there is no mention of this expenditure of
Rs.73,60,000/-. The ld. CIT(A) further observed that in the notes to account
also, there is no mention of the payment of Rs.73,60,000/- and the reasons for
making this payment. No rebuttal has been given by the assessee to these
findings of fact, which go to suggest that the appellant has not made a
complete disclosure in terms of Explanation 1 to section 271(1)(c) of the Act.
We therefore, find no justification to disregard the finding of the ld. CIT(A)
that the assessee had made a false claim that he is engaged in the hotel
business with motive to claim deduction of impugned expenditure falsely as
revenue expenses. The explanation offered by the assessee being not bona
7 ITA No.754/Del./2011
fide, the ld. Authorities below have rightly applied Explanation 1 to section
271(1)(c) of the Act in the peculiar facts and circumstances of the present
case. In view of above discussion, it follows that it is not a case where the
explanation given by assessee was bona fide and there was full disclosure of
facts. The assessee has also not been able to substantiate the explanation
offered by any credible evidence. Therefore, the penalty sustained by the ld.
CIT(A) does not call for any interference in view of catena of other decisions
relied by the first appellate authority.
The Commr. Of Income Tax Delhi Iv vs M/S. Escorts Finance Ltd. on 26 August, 2015
It is worthwhile to note that the assessee
vide letter dated 08.08.2008 given to the AO, has stated that the business of
hotel stood discontinued immediately on taking over the hotel premises,
whereas in column No. 15 of the return regarding the nature of business or
profession, the appellant has written "running of hotel business". Such a
statement given by the assessee is false and contradictory to the statements
made before AO vide letter dated 08.08.2008. Moreover, in our considered
opinion, it is not a case where two opinions about the applicability of section
37(1) or deductibility of impugned expenditure u/s. 37(1) were possible in
view of unambiguous language of the section. Had it been so, the assessee
would have challenged the disallowance in further appeal, which he failed to
do. The ld. CIT(A) has relied upon the decision of Hon'ble jurisdictional High
Court in the case of CIT vs. Escorts Finance Ltd., 328 ITR 44 (Del.) in this
regard, which deals with the similar situation though about applicability of
section 35D of the Act, against which no contrary decision is brought on
record by the ld. Counsel for the assessee. The expenditure so incurred by the
assessee are not on revenue account for the simple reason that it was not in
6 ITA No.754/Del./2011
respect of any continuing business, but in respect of making asset in a
condition to be fit to be utilized for the new business and hence, such
expenditure were clearly of capital nature.
Section 35D in The Income Tax Act, 1961 [Entire Act]
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