web viewmumbai bench itat in lsg sky chef ... in light of the definition of the word...

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IN THE HIGH COURT OF GUJARAT AT AHMEDABADTAX APPEAL No. 1162 of 201 DIRECTOR OF INCOME TAX

(EXEMPTION)....Appellant(s)Versus

SABARMATI ASHRAM GAUSHALA TRUST....Opponent(s) 15th January 2014

Term “Charitable Trust” is defined in Section 2 (15) of the Actwhich includes the relief to the poor, education, medical relief, preservationof environment; including watersheds, forests and wildlife andpreservation of monuments or places or objections of artistic or historicinterest and advancement of any other object of general public utility.Proviso to Section 2 (15) and further proviso whereof inserted by FinanceAct 2010 w.e.f 1st April 2009.

The legal controversy in the present Tax Appeal centers around thefirst proviso. In the plain terms, the proviso provides for exclusion fromthe main object of the definition of the term “Charitable purposes” andapplies only to cases of advancement of any other object of general publicutility. If the conditions provided under the proviso are satisfied, anyentity, even if involved in advancement of any other object of generalpublic utility by virtue to proviso, would be excluded from the definition of“charitable trust”. However, for the application of the proviso, what isnecessary is that the entity should be involved in carrying on activities inthe nature of trade, commerce or business, or any activity of renderingservices in relation to any trade, commerce or business, for a cess or fee orany other consideration. In such a situation, the nature, use or

Kapil Goel FCA LLB (9910272806) [email protected]

mailto:[email protected]

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application, or retention of income from such activities would not be relevant. Under the circumstances, the important elements of applicationof proviso are that the entity should be involved in carrying on theactivities of any trade, commerce or business or any activities of renderingservice in relation to any trade, commerce or business, for a cess or fee orany other consideration. Such statutory amendment was explained by theFinance Minister’s speech in the Parliament. In consonance with such assurance given by the Finance Minister on the floor of the House, CBDT issued a Circular No. 11 of 2008 dated 19th December 2008 explaining the amendment.

What thus emerges from the statutory provisions, as explained inthe speech of Finance Minister and the CBDT Circular, is that the activityof a trust would be excluded from the term ‘charitable purpose’ if it isengaged in any activity in the nature of trade, commerce or business orrenders any service in relation to trade, commerce or business for a cess,fee and/or any other consideration. It is not aimed at excluding thegenuine charitable trusts of general public utility but is aimed atexcluding activities in the nature of trade, commerce or business whichare masked as ‘charitable purpose’.

Many activities of genuine charitable purposes which are not in the nature of trade, commerce or business may still generate marketable products. After setting off of the cost, for production of such marketable products from the sale consideration, the activity may leave a surplus. The law does not expect the Trust to dispose of its produce at any consideration less than the market value. If there is any surplus generated at



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the end of the year, that by itself would not be the sole consideration for judging whether any activity is trade, commerce or business particularlyif generating ‘surplus’ is wholly incidental to the principal activities of the trust; which is otherwise for general publicutility, and therefore, of charitable nature.

The Tribunal also noted that the objects were admittedly charitable in nature. The surplus generated was wholly secondary. It was, therefore, that the Tribunal held that the proviso to section 2 (15) of the Act would not apply. We are wholly in agreement with the view of the Tribunal. Merely because while carrying out the activities for the purpose of achieving the objects of the Trust, certain incidental surpluses were generated, would not render the activity in the nature of trade, commerce or business.Delhi High Court in case of Institute of Chartered Accountants of India & Anr. vs. Director General of IncomeTax [Exemption] & Ors., reported in [2012] 347 ITR 99 (Delhi) considered these very provisions in the context of activities of the Institute of Chartered Accountants holding that the fundamental or dominant function of theInstitute was to exercise overall control and regulate the activities of the members/enrolled chartered accountants and merely because the Institutewas holding coaching classes which also generate income, the Court heldthat proviso to Section 2 (15) of the Act would not be applicable.

IN THE HIGH COURT OF GUJARAT AT AHMEDABADTAX APPEAL NO. 596 of 2013WithCIVIL APPLICATION NO. 585 of 2013



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InTAX APPEAL NO. 596 of 2013=================================================PANASONIC ENERGY INDIA CO. LTD....Appellant(s)VersusASST. COMMISSIONER OF INCOME TAX CIRCLE FOUR....Opponent(s)================================================= Date : 07/01/2014 “ Whether on the facts and in the circumstances of the case, the Tribunal was right in law in disallowing totally section 80IB claim of the appellant only because Form 10CCB was not submitted during the course of assessment proceedings?”

It is true that the Tribunal has made observations, which may suggest that if report in Form 10CCB is not filed before the Assessing Officer before completion of the assessment, the entire claim under section 80IB of the Act, necessarily has to fail. Had this been the sole factual matrix, we would have certainly examined the question further and as prima facie advised, also would have accepted the assessee’s contention that even at the appellate stage, such report could be furnished if valid grounds are made out for doing so.However, we enquired with the counsel for the appellant whether and at what stage, the report was presented before the Appellate Commissioner or the Tribunal. We may recall that the Commissioner allowed the appeal of the assessee and granted deduction by merely referring to his own orders inthe earlier years without commenting on whether at least before him such report was filed by the assessee or not. Likewise, the Tribunal merely proceeded on the footing that such report not having been furnished before the Assessing Officer till the assessment was completed, the claim should be disallowed. It was, therefore, that we had raised the said question to the counsel. Counsel candidly said that there is nothing on record to suggest that any such report wasfurnished on record either before the Commissioner(Appeals) or before the Tribunal. He, therefore, urged us to examine the question on the admitted premise that no such report was presented till the Tribunal decided the appeal of the Revenue. We have accordingly proceeded on such factual basis.

11. If this be the question, a serious consideration must be bestowed on whether the assessee, who had not previously furnished the report either before the Assessing Officer before completion of the assessment proceedings, failed to doso before the Appellate Commissioner or before the Tribunal till the second appeal was finally decided, at the appellate stage before the



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High Court can present a report requesting that the claim be granted. We have serious difficulty in accepting such a situation. Before giving our reasons we must record the opposition of learned counsel Mr. Shah to take this factor into consideration. He urged that the question must be decided as framed in view of the conclusion of the Tribunal. We are afraid we cannot be pinned down to answering the question only as raised by the appellant. Section 260A of the Act itself gives sufficient scope and liberty to the Court to frame such question as may be found necessary.

Further the admitted fact being that no such report was ever filed till the stage of Tribunal, it would be futile to decide the question framed by the appellantwhich completely ignores this factual aspect. The issue can be looked from a slightly different angle. The Tribunal’s order can be supported by the respondent independently of the grounds mentioned by the Tribunal. Therefore, if the reportwas never filed till the Tribunal decided the appeal, surely, the Revenue had to succeed. Simply because the Tribunal mentioned this for allowing the appeal would not mean that we must also ignore the same. 12. In that view of the matter, we have considered whether the appellant can claim deduction under section 80IB of the Act having previously not filed the audit report under Form10CCB. In the present case, the appellant has not made out any ground why such report could not be filed earlier In the application filed for taking into account the additional document on record also, no valid grounds are made out.Even before the first appellate stage before the Commissioner, though the rules permit production of additional evidence, the same is hedged with certainconditions. (Rule 46A of the Income Tax Rules, 1962)

Under the circumstance, without any justification andwithout any indication of reasons why such report could notbe presented earlier, the assessee simply cannot for the firsttime present such document before the High Court and seekbenefit of the deduction on the basis of such document

IN THE HIGH COURT OF GUJARAT AT AHMEDABADTAX APPEAL No. 793 of 2013



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================================================================

COMMISSIONER OF INCOME TAX AHMEDABAD IV....Appellant(s)Versus

DAHYABHAI VELJIBHAI PATEL....Opponent(s) 6th January 2014

Having heard learned counsel for the appellant and having perused the judgment under challenge, we see no scope for interference. The Tribunal applied the decision of the apex Court in case of Reliance Petroproducts Private Limited, reported in 322 ITR 158 (SC) and observed that merely on account of disallowance of certain claim, penaltycannot be imposed. The Tribunal also recorded that the question of disallowance under section 40[a](ia) of the Act in respect of transporters had given rise to diversified opinion. CIT [A] has further recorded that the department did not question genuineness of the expenditure but butdisallowed the same merely on the ground that TDS was not deducted.Such being the factual position, no question of law arises. Tax Appeal is,therefore, dismissed.

IN THE HIGH COURT OF GUJARAT AT AHMEDABADTAX APPEAL No. 1151 of 2013WithTAX APPEAL No. 1152 of 2013================================================================COMMISSIONER OF INCOME TAX III....Appellant(s)VersusGUJARAT NARMADA VALLEY FERTILIZERS CO LTD....Opponent(s) 10th January 2014 We could notice from the material on the record that both the authorities have correctly approached the issue in as much as the recordclearly had reflected from the balance sheet of the assesseecompanythatthe interest free funds available was much larger to the extent of Rs.84,45,567/= lakhs as compared to the investment which was only Rs.22.707 lakhs. Both the authorities have also noted faultnessly that thedividend income which was earned out of the investments made in theearlier years and there was no investment made in the year under



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consideration. With the availability of the huge interest free funds in the form of share capital, reserves, etc., the Assessing Officer had not correctlyapplied the provisions of law to the issue. Such findings are also supportedby the decision rendered by this Court in case of Commissioner ofIncomeTaxv. Gujarat State Fertilizers & Chemicals Limited,reported in [2013] 358 ITR 323 (Guj) where identical question of law hadcome up before this Court.

IN THE HIGH COURT OF GUJARAT AT AHMEDABADTAX APPEAL NO. 575 of 2009 COMMISSIONER OF INCOME TAX-I....Appellant(s)VersusKANDLA PORT TRUST Date : 23/04/2014 Various provisions noted above leave no manner ofdoubt that the port trust under the said Act wouldcontrol the activities at a major port for utilizingand creating facilities. Agencies utilizing suchfacilities would pay charges to the port trust at therates specified with prior sanction of the Government.It would be open for the Board to utilize the moneycredited to the general account for the purposesmentioned in sub-section(1) of section 88. Such purposes include the administrative expenses andsalary and other benefits to be paid to the employeesand also the cost of repairs and maintenance of theproperty of the Board and other expenses. The Boardwould also be allowed to create reserve fund for thepurpose of replacement or for meeting expenditurearising from loss or damage from fire, cyclones,shipwreck or other accident or for any other emergencyarising in the ordinary conduct of its work under thisAct. Thus creating an autonomous body under the MajorPort Trusts Act still envisages the involvement of theCentral Government in important decision making. Forexample under section 92 the Board would have to takeprior sanction of the Central Government to chargeexpenditure to capital. Under section 96 beforewriting off any loss as irrecoverable the Board wouldhave to obtain prior approval of the CentralGovernment.22. Thus the fact that the respondent is involved inan activity which is of general public utility is



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doubtless. Further the fact that there is no profitmaking or motive to make profit is equally clear fromthe said provisions of the Act of 1963.

Refer: Additional Commissioner of Incometax, Gujarat vs. Surat Art Silk Cloth Manufacturers Association reported in [1980]121 ITR 1; Commissioner of Income-tax, Madras vs. Andhra Chamber of Commerce reported in [1965]55 ITR 722, Commissioner of Income-tax, A.P. vs.Andhra Pradesh State Road Transport Corporation reported in [1986] 159 ITR 1

To the same effect are latest decisions in:

i) ITAT HYDERABAD BENCHES “B” in ITA 549/2013 Andhra Pradesh Urban Infrastructure fund (order dated 9/5/2014)

ii) ITAT “A” BENCH, CHENNAI in M/s.Madras Craft Foundation I.T.A. No. 2266/Mds/2013 Date of Pronouncement : 21-04-2014

iii) ITAT ‘I’ BENCH MUMBAI Indian Institute of Banking & Finance, ITA No. 674/Mum/2012 order 07- 05- 2014

IN THE HIGH COURT OF GUJARAT AT AHMEDABADSPECIAL CIVIL APPLICATION NO. 3955 of 2014 SAHKARI KHAND UDYOG MANDAL LTD.....Petitioner(s)VersusASSTT. COMMISSIONER OF INCOME TAX....Respondent(s) Date : 31/03/2014

Under the circumstances, following directions are issued:

(1)Once the Assessing Officer serves to an assessee a notice of reopening of assessment under section 148 of the Income TaxAct, 1961, and within the time permitted in such notice, theassessee files his return of income in response to such notice,the Assessing Officer shall supply the reasons recorded by him



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for issuing such notice within 30 days of the filing of thereturn by the assessee without waiting for the assessee todemand such reasons.

(2)Once the assessee receives such reasons, he would beexpected to raise his objections, if he so desires, within 60days of receipt of such reasons.

(3)If objections are received by the Assessing Officer from theassessee within the time permitted hereinabove, the AssessingOfficer would dispose of the objections, as far as possible,within four months of date of receipt of the objections filedby the assessee.

(4)This is being done in order to ensure that sufficient time isavailable with the Assessing Officer to frame the assessmentafter carrying out proper scrutiny. The requirement and thetime-frame for supplying the reasons without being demandedby the assessee would be applicable only if the assessee fileshis return of income within the period permitted in the noticefor reopening. Likewise the time frame for the AssessingOfficer to dispose of the objections would apply only if theassessee raises objections within the time provided hereinabove. This, however, would not mean that if in eithercase, the assessee misses the time limit, the procedureprovided by the Supreme Court in the case of GKNDriveshafts (India) Ltd (supra) would not apply. It onlymeans that the time frame provided hereinabove would notapply in such cases.

(5)In the communication supplying the reasons recorded by theAssessing Officer, he shall intimate to the assessee that he isexpected to raise the objections within 60 days of receipt of



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the reasons and shall reproduce the directions contained insub-para 1 to 4 hereinabove giving reference to thisjudgment of the High Court

(6)The Chief Commissioner of Income Tax and CadreControlling Authority of the Gujarat State, shall issue acircular to all the Assessing Officers for scrupulously carryingout the directions contained in this judgment.

IN THE HIGH COURT OF GUJARAT AT AHMEDABADTAX APPEAL No. 325 of 2014

COMMISSIONER OF INCOME TAX AHMEDABAD IV....Appellant(s)Versus MAA KHODIYAR CONSTRUCTION....Opponent(s) 28th April 2014

It is contended by the Revenue that though the genuineness of thetransactions had not been doubted and assuming that these agriculturists wereresiding in the remote areas that would not permit the respondent to make anybreach of provision of Section 269SS of the Act. Any transaction above a sum ofRs. 20,000/= in cash would invite the rigor of levying of penalty. It is alsoargued that a huge amount of Rs. 42.75 lakhs had been taken in cash, andtherefore, both the authorities committed error in deleting the penalty. Reliance is placed on the decisions of Delhi High Court in case of Commissioner ofIncome Tax v. Samora Hotels (P) Limited, reported in [2012] 19 taxmann.com285 (Delhi) and of Kerala High Court in case of K.V George v. Commissioner ofIncometax, reported in [2014] Taxmann.com 261 (Kerala).

What is therefore necessary to prove is the reasonable cause by the assessee on its having failed to abide by the conditions incorporated in the said provision of Section 269SS.

Reverting to the facts of the instant case, a sum of Rs. 42.75 lakhs has been taken by way of loan by the respondent from ten different persons. Admittedly, this was by way of loan in cash exceeding rupees twenty



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thousands and the same therefore contravenes the provision of Section 269SS of the Act. For not inviting the rigour of penalty u/s. 271D of the Act as consequence, on the part of the assessee, the reasonable cause needs to be shown. What is pleaded by the respondent was that all these persons wereagriculturists and that the genuineness of the transactions at no point of timehad been doubted by the Revenue. They stayed in remote areas. Both theauthorities, therefore, were of the opinion that reasonable cause had beensufficiently made out and when the very transactions were never doubted bythe Revenue authorities, the breach is to be treated as a mere technical or venialbreach.

We notice that the requirement of Section 273B is for the assessee toprove that there was a reasonable cause for its having failed to abide by theprovisions of Section 269SS. As emerges from the record, not only thesubstantiating evidence like 7/12 Extracts were produced, but, alsoadditionally, transactions were reflected in the accounts of assessee and theadvancement of loan to the assessee had been reflected in the books of accountof those persons from whom the loan had been received. The identity of thosepersons has also been well established. The assessee also had given satisfactoryreason for taking such loan. His bona fide belief that such transactions would not attract provision of Section 269SS on the ground that they were agriculturistsand lived in remote villages also was one of the grounds which has weighedwith both the authorities.

Reliance placed on the decision in case of Hindustan Steel Limited v.State of Orissa [Supra] also requires a specific reproduction at this stage wherethe Apex Court has held that, “...An order imposing penalty for failure to carry outa statutory obligation is the result of a quasi criminal proceeding, and penalty will notordinarily be imposed unless the party obliged, either acted deliberately in defiance oflaw or was guilty of conduct contumacious or dishonest, or act in conscious disregardto its obligation. Penalty will not also be imposed merely because it is lawful to do so.



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Whether penalty should be imposed for failure to perform a statutory obligation is amatter of discretion of the authority to be exercised judicially and on a consideration ofall the relevant circumstances. Even if a minimum penalty is prescribed, the authoritycompetent to impose the penalty will be justified in refusing to impose penalty, whenthere is a technical or venial breach of the provisions of the Act or where the breachflows from a bona fide belief that the offender is not liable to act in the mannerprescribed by the statute.”

We find that both the authorities have rightly construed the provisionsand applied the law to the facts and the surrounding circumstances aptly. TaxAppeal, resultantly, deserves no further consideration and hence, the same isdismissed.

IN THE HIGH COURT OF GUJARAT AT AHMEDABADTAX APPEAL No. 1071 of 2013================================================================COMMISSIONER OF INCOME TAX I....Appellant(s)VersusINDU NISSAN OXO CHEMICAL INDUSTRIES LTD....Opponent(s) 28th January 2014

This brings us to the sole surviving Question No. 1. We admit thefollowing substantial question for our consideration :{1} “Whether on the facts and in the circumstances of thecase and in law, the Tribunal was correct in upholding thedecision of CIT (A), which was perverse on fact in so far ashis finding that assessee had furnished required informationbefore the A.O was not supporting facts on record as held byAssessing Officer in assessment order ?”

In our view, CIT [A] as well as the Tribunal committed an error in allowing the expenditure without its full verification.Surely, the foreign travelling expenses, if incurred for the purpose of business,



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would be allowable as the business expenditure. However, the assessee has toestablish that the travelling was undertaken for the purpose of business, andtherefore, the expenditure was “business expenditure”. Merely because on thebasis of material for the earlier years, the Commissioner [A] and the Tribunalallowed such expenditure would not by itself mean that in the later years also,any expenditure under the same head must be automatically allowed. Theassessee owed a duty to establish the basic facts to demonstrate, particularlywhen called upon by the Assessing Officer that the expenditure was in factincurred for the purpose of business. committed an error in allowing the expenditure without its full verification.Surely, the foreign travelling expenses, if incurred for the purpose of business,would be allowable as the business expenditure. However, the assessee has toestablish that the travelling was undertaken for the purpose of business, andtherefore, the expenditure was “business expenditure”. Merely because on thebasis of material for the earlier years, the Commissioner [A] and the Tribunalallowed such expenditure would not by itself mean that in the later years also,any expenditure under the same head must be automatically allowed. Theassessee owed a duty to establish the basic facts to demonstrate, particularlywhen called upon by the Assessing Officer that the expenditure was in fact incurred for the purpose of business.

IN THE HIGH COURT OF GUJARAT AT AHMEDABADTAX APPEAL NO. 588 of 2013================================================================COMMISSIONER OF INCOME TAX III....Appellant(s)VersusBHOGILAL RAMJIBHAI ATARA....Opponent(s) Date : 04/02/2014

On the other hand, learned counsel Shri Soparkar for the assesseesupported the order of the Tribunal contending that there had been no



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cessation of liability. Section 41(1) of the Act would not apply. In anycase, it was not established that such liability ceased during the yearunder consideration.The counsel relied on following decisions: In the case of CIT v. Miraa Processors (P) Ltd. (2012) 208 Taxman 93 (Guj.); In the case of CIT v. Nitin S. Garg, (2012) 208 Taxman 16 (Guj.), In the case of CIT v. G.K. Patel & Co. (2013) 212 Taxman 384 (Guj).;

We are in agreement with the view of the Tribunal. Section 41(1)of the Act as discussed in the above three decisions would apply in acase where there has been remission or cessation of liability during theyear under consideration subject to the conditions contained in the statute being fulfilled. Additionally, such cessation or remission has to beduring the previous year relevant to the assessment year underconsideration. In the present case, both elements are missing. Therewas nothing on record to suggest there was remission or cessation ofliability that too during the previous year relevant to the assessment year2007-08 which was the year under consideration.

Even the liability itself seems under serious doubt. TheAssessing Officer undertook the exercise to verify the records of the socalled creditors. Many of them were not found at all in the givenaddress. Some of them stated that they had no dealing with the assessee.In one or two cases, the response was that they had no dealing with theassessee nor did they know him. Of course, these inquiries were made ex



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parte and in that view of the matter, the assessee would be allowed tocontest such findings. Nevertheless, even if such facts were establishedthrough bi-parte inquiries, the liability as it stands perhaps holds thatthere was no cessation or remission of liability and that therefore, theamount in question cannot be added back as a deemed income undersection 41(c) f the Act. This is one of the strange cases where even ifthe debt itself is found to be non-genuine from the very inception, atleast in terms of section 41(1) of the Act there is no cure for it. Be thatas it may, insofar as the orders of the Revenue authorities are concerned,the Tribunal not having made any error, this Tax Appeal is dismissed

IN THE HIGH COURT OF GUJARAT AT AHMEDABADTAX APPEAL No. 556 of 2013ANUPAM TELE SERVICES....Appellant(s)VersusINCOME TAX OFFICER....Opponent(s) 22nd January 2014================================================================

“Whether on the facts and in the circumstances of the case, the Tribunal was right in law in holding that Section 40A(3) applies to the payment of Rs. 33,10,194/=deposited by the Appellant in the bank account of Tata Tele Services Limited ?”

It could be appreciated that Section 40A and in particular subclause (3) thereof aims at curbing the possibility of onmoney transactions by insisting that all payments where expenditure in excess of a certain sum [in the presentcase twenty thousand rupees] must be made by way of account payee cheque



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drawn on a bank or account payee bank draft. In the present case , neither the genuineness of the payment nor theidentity of the payee were in any case doubted. These were the conclusions onfacts drawn by the Appellate Commissioner. The Tribunal also did not disturbsuch facts but relied solely on Rule 6DD (j) of the Rules to hold that since thecase of the assessee did not fall under the said exclusion clause nor wascovered under any of the clauses of Rule 6DD, consequences envisaged inSection 40A(3) of the Act must follow.In our opinion, the Tribunal committed an error in coming to such aconclusion. We would base our conclusions on the following reasons :[

[a] The paramount consideration of Section 40A(3) is to curb and reduce thepossibilities of black money transactions. As held by the Supreme Court in Attar Singh Gurmukh Singh [Supra], section 40A(3) of the Act does not eliminateconsiderations of business expediencies;[b] In the present case, the appellant assessee was compelled to make cashpayments on account of peculiar situation. Such situation was as follow [i] the principal company, to which the assessee was a distributor, insisted that cheque payment from a cooperative bank would not do, since the realization takes a longer time; [ii] the assessee was, therefore, required to make cash payments only;[iii] Tata Teleservices Limited assured the assessee that such amount shall be deposited in their bank account on behalf of the assessee;[iv] It is not disputed that the Tata Teleservices Limited did not act on such promise;[v] if the assessee had not made cash payment and relied on cheque payments alone, it would have received the recharge vouchers delayed by 4/5 days and thereby severely affecting its business operations;

We would find that the payments between the assessee and the TataTeleservices Limited were genuine. The Tata Teleservices Limited had insisted that such payments be made in cash, which Tata Teleservices Limited in turnassured and deposited the amount in a bank account. In the facts of the presentcase, rigors of section 40A(3) of the Act must be lifted. We notice that the Division Bench of the Rajasthan High Court in case of Smt. Harshila Chordia vs. IncomeTaxOfficer, reported in [2008] 298 ITR 349 (Raj) had observed that the exceptions contained in Rule 6DD are not exhaustive and that the said rule must be interpreted liberally.In the result, the question is answered in favour of the appellantassessee and against the Revenue. Judgment of the Tribunal is reversed. Tax



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Appeal is allowed. Order accordingly.

N THE INCOME TAX APPELLATE TRIBUNAL , ‘A’ BENCH, CHENNAII .T.A.Nos.1339 & 1340/Mds/2011 & C.O.No.136/Mds/2011

( In ITA No.1340/Mds/2011) Assessment Years : 2006-07 & 2007-08 Mr . K.M. Vidyasagar ,

Flat No.8, 2nd f loor ,

‘Sapthaswara’

57, 1s t Avenue, Ashok Nagar

Chennai -600 083.

PAN:AADPV3326K: 21st March, 2014 Heard both sides. Perused orders of lower authorities

and decisions relied on. The Assessing Officer disallowed

cash payments made by the assessee under section 40A(3)

of the Act. There is no dispute that all these transactions are

made in the course of assessee’s business of purchase and

sale of plots and the transactions are all genuine. The

question now for consideration is whether assessee made

these payments in the course of carrying on the business of

purchase and sale of plots and considerations of business

expediency and other relevant factors are relevant for the

purpose of section 40A(3) or not?

6. The Hon’ble Gujarat High Court in the case of Anupam

Tele Services (supra) held that provisions of Rule 6DD(j) are

not exhaustive and considerations of business expediency



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and other relevant factors are not excluded from the

provisions of section 40A(3) of the Act. This is also clear on

reading from the provisions of section 40A(3) of the Act. The

Commissioner of Income Tax (Appeals) elaborately

considered the submissions of the assessee as well as case laws and came to the conclusion that provisions of section

40A(3) are not attracted in the assessee’s case….

7. On going through the above order of the

Commissioner of Income Tax (Appeals), we find that assessee has made payments to various parties for

purchase of plots / paid brokerage in the course of

carrying on its business of purchase & sale of plots/flats.

All these payments were made in view of business

expediency and transactions are genuine. The Hon’ble High Court observed that the Hon’be Supreme

Court in the case of Attar Singh Gurmukh Singh Vs. ITO (191

ITR 667) held that the provisions of section 40A(3) are not

intended to restrict the business activities. There is no

restriction on the assessee on his trading activities. The

terms of section 40A(3) are not absolute. The genuine and

bonafide transactions are not taken out of the sweep of the

section and considerations of business expediency and other



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relevant factors are not excluded. The provisions of section

40A(3) and Rule 6DD are intended to regulate business

transactions and the prevent the use of unaccounted money

or reduce the chances to use black money for business

transactions.

9. Here in the present case, it is not the contention of the

Revenue that transactions are not genuine and payments were all undisclosed money. It is not the case of Revenue that

payee was not identified or payee denied the receipt of

money. Therefore, taking totality of the facts and

circumstances of the case into consideration and the case

laws, we are of the view that Commissioner of Income Tax

(Appeals) has rightly deleted the disallowance following

various decisions. We sustain the order of the Commissioner

of Income Tax (Appeals) and dismiss the grounds raised in

both the appeals of the Revenue

IN THE HIGH COURT OF GUJARAT AT AHMEDABADTAX APPEAL NO. 41 of 2014================================================================COMMISSIONER OF INCOME TAX (TDS)....Appellant(s)VersusASSISTANT GEOLOGIST....Opponent(s) Date : 30/01/2014

5. It is a matter of record that the payment of sum of Rs.3.51 crores (rounded off)and the amount of Rs. 3.42 crores (rounded off) to GMDC and



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GMRDS respectively by the respondent were not for construction activity carried out by them. Budgetary provision made to the tune of Rs.351.76 lakhs for such projects at Ambaji and Dhangadra. For executing such scheme, proposal was to be made to the Commissioner, Department of Industry and Mining by the assessee. Thus respondent acted as intermediary forrelease of funds and on sanction, the same were disbursed. Thus, both the elements necessary for deduction of tax at source were lacking. There was no contract with both these corporations nor was such payment made towards the construction work carriedout by them. These we re the amounts towards grantinaid.6. We are therefore, of the firm opinion that the tribunal committed no mistake nor any error in adjudicating the dispute before it. There was no contractual obligation as is apparent from the record. It is the Government department which had paid to GMDC and GMRDS for construction of the Marble Park and such amounts being grantinaid,the requirement of deducting the tax at source under section 194C, as rightly held by the tribunal, did not arise.

IN THE HIGH COURT OF GUJARAT AT AHMEDABADTAX APPEAL NO. 347 of 2013 COMMISSIONER OF INCOME TAX II....Appellant(s)VersusRAMESH D PATEL....Opponent(s) Date : 21/01/2014 “Whether the ITAT was justified in law and in facts in annulling the assessment finalized u/s.153A(b) on technical ground that in absence of search warrant, no order can be passed u/s.153A(b) of the Act, without appreciating fact that the assessee did not challenge issue of statutory notice calling for return u/s.153A of Income Tax Act, 1961 within stipulated time or before completion of assessment, in view of section 124(3) of Income TaxAct,1961?”

Having heard the learned counsel for the parties, we find from therecord that the Assessing Officer had made contradictory statements withrespect to the assessee being subjected to search. In one order, he notedthat no search warrant was issued against the assessee, while in another



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order, he recorded that not only M/s.J.K.Securities Group, but theassessee was also subjected to search. To clear this confusion, theTribunal gave multiple opportunities to the Revenue to produce therecord of search and authorization. Despite sufficient opportunities, theRevenue could not produce the same. The Tribunal, therefore, concludedthat there was no search warrant against the assessee. The Tribunal,therefore held that in absence of any search warrant, the orders passed bythe Assessing Officer under section 153B of the Act were invalid.We have no reason to interfere with the order passed by theTribunal. Section 153A of the Act pertains to assessment in case ofsearch or requisition. Sub-section (1) thereof provides thatnotwithstanding anything contained in sections 139, 147, 148, 149, 151and 153 of the Act, in case of a person where a search is initiated undersection 132 or books of account, other documents or any assets arerequisitioned under section 132A after 31st of May 2003, the AssessingOfficer shall issue a notice to such person requiring him to furnish thereturn of income and assess or reassess the total income of sixassessment years immediately preceding the assessment year relevant tothe previous year in which such search is conducted or requisition ismade. Section 153B of the Act provides for time limit for completion ofassessment under section 153A.Learned counsel for the assessee has rightly relied on a decision of



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the Orissa High Court in the case of Siksha ‘O’ Anusandhan v. CIT,336 ITR 112 (Orissa) in which it was held that provisions of section153A make it clear that only in the case of a person where a search wasinitiated under section 132 or books of account or other documents orany assets were requisitioned under section 132A after 31.3.2002, theAssessing Officer could after issuing a notice, assess or reassess the totalincome of such person for six assessment years immediately precedingthe assessment year relevant to the previous year in which such searchwas conduced or requisition was made.In the present case, the Tribunal came to a factual finding that nosearch authorization was produced. This was necessary because theAssessing Officer had made contradictory references to the assesseebeing subjected to search or not. In absence of a search authorization,the Tribunal correctly held that assessment orders under section 153Acould not have been passed. Reliance of the Revenue to section 124(3)of the Act would be of no avail. Interms of sub-section (3) of section 124, right to raise such objection shallbe foregone beyond the stages mentioned therein. The said provisionsare clearly concerning with the dispute of the assessee with respect to theterritorial jurisdiction of the Assessing Officer and has no relevance inso far as the inherent jurisdiction for passing an order of assessment



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under section 153A of the Act is concerned, when no search authorization under section 132 was issued or requisition under section132A of the Act was made

IN THE HIGH COURT OF GUJARAT AT AHMEDABAD M/S. AMARSHIV CONSTRUCTION PVT. LTD.....Appellant(s) Versus THE DEPUTY COMMISSIONER OF INCOME TAX....Opponent(s) 19th March 2014 TAX APPEAL No. 554 of 2003

Mere fact that the amount was received by the assessee would not

mean that income had accrued. Whether income did accrue or not would

depend on the fact whether the right to receive said amount had accrued or not.

The fact that tax was deducted at source on said amount also would be of no

consequence. Tax was deducted by SSNNL. The assessee had no control over

such deduction. Merely whether tax was deductible or not would not decide

the taxability of certain receipts.

The manner in which the assessee accounted for such receipt in its books of account can also not determine its tax liability, as held by the Supreme Court in case of Kedarnath Jute Mfg. Company Limited v. Commissioner of IncomeTax

[Central], Calcutta reported in 82 ITR 36.

The assessee claiming entire expenditure and not excluding expenditure relatable to the withheld security deposit also would not be fatal to the



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interest of the assessee. The expenditure in toto was incurred. The expenditure incurred by the assessee could not be proportionately divided into that covering the assessee’s ninety per cent of the bill amount and relatable to the rest ten percent.

In Commissioner of IncomeTax v. Punjab Tractors Cooperative Multi

Purpose Society Limited, reported in {1998} 234 ITR 105, the Punjab & Haryana

High Court observed that, “...it is only receipt as “income” which would attract tax.

Every receipt by the assessee is, therefore, not necessarily income in his hands. It bears the character of income at the time when it accrues in the hands of the assessee and then it become exigible to tax.”

(Supreme Court rendered in case of

Commissioner of Income Tax v. Excel Industries Limited & Anr., reported in

(2013) 358 ITR 295 (SC).;)

INCOME TAX APPELLATE TRIBUNAL MUMBAI - ‘C’ BENCH MUMBAI ITA Nos.

3408 Mum 2010 & 3559/Mum/2011 Poddar Ashish Developers Date of Pronouncement : 12- 03 - 2014

7.We have heard the rival submissions and perused the material before us.We have also carefully considered the guidance notes issued by ICAI as well as Accounting Standards AS-7&9 in the light of provision of section 145 of Act.Principles applicable with regard to the method of accounting can be summarised as under:



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i.Section 145 of the Act,deals with the method of accounting.It is for the assessee to adopt any recognised method of accounting for his business.Income shall be computed in accordance with the method of accounting regularly employed by the assessee.In other words,it is open to the assessee to opt for such method of accounting as he deems reasonable and appropriate.The proviso to sub-section(1) empowers the AO to compute the income on such basis and in such manner as he determines if the accounts are correct and complete but the method adopted is such that, in his opinion, the income cannot properly be deduced therefrom. The jurisdiction can beinvoked where he is of the opinion that the income cannot properly be deduced therefrom. He cannot exercise the jurisdiction merely on the ground that the method adopted, which is otherwise regular or fair,is detrimental to the Revenue or advantageous to the assessee.(200 ITR 496-Doom

Dooma India Ltd.-Gau.)

ii.Every assessee is entitled to arrange its affairs and follow the method of accounting, which the Department has earlier accepted.It is only in those cases where the Department records a finding that the method adopted by the assessee results in distortion of profits that the Department can insist on substitution of the existing method.(Bilahari Investment P. Ltd.-299ITR1-SC)



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iii.The AO’s power to choose the basis and manner of computation of income is not an arbitrary power to assess the income, but he must exercise his discretion and judgment judicially.

iv.The accounts which are regularly maintained in the course of business and are duly audited, free from any qualification by the auditors, should normally be taken as correct unless there are adequate reasons to indicate that they are incorrect or unreliable. The onus is upon the AO to show that either the books of account maintained by the assessee were incorrect or incomplete or that the method of accounting adopted by him was such that true profits of the assessee cannot be deduced therefrom.(325ITR13,Paradise Holidays-Del.)

v.If a particular accounting system has been followed and accepted and there is no acceptable reason to differ with it,the doctrine of consistency would come into play.(339ITR382-Jagatjit Industries Ltd.,Del.)

We find that the assessee had constructed the complete building over a period of time and

received the purchase consideration from time to time from the purchasers and handed over the possession of the building when the building was fully



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completed and occupancy certificate was received.It was only at that time that the proverbial risks and rewards were transferred to the purchaser.Therefore,in our opinion PCM followed by the assessee-AOP was in order and the action of the FAA to reject the stand taken by the AO was justified.Only objection of the AO,as stated by the FAA was that the assessee has deferred the taxes to subsequent years.But,as held the Hon’ble Gauhati High Court it cannot be basis for rejecting the method of accounting regularly followed by the assessee.Therefore,confirming the order of the FAA we decide ground no.1 against the AO.

Mumbai bench ITAT in LSG Sky Chef (India) Pvt. Ltd.

C/o. Kalyaniwalla & Mistry ./I.T.A. No. 4828/Mum/2012 Assessment Year: 2009-10) 27.03.2014 ___. / O R D E R

1. We have given our careful and anxious consideration to the matter. In our view, though Form 26AS (r/w r.31AB and ss. 203AA and 206C(5)) represents a part of a wholesome procedure designed by the Revenue for accounting of TDS (and TCS), the burden of proving as to why the said Form (Statement) does not reflect the details of the entire tax deducted at source for and on behalf of a deductee cannot be placed on an assessee-deductee.

2. The assessee, by furnishing the TDS certificate/s bearing the full details of the tax deducted at source, credit for which is being claimed, has in our view discharged the primary onus on it toward claiming credit in its respect. He, accordingly, cannot be burdened any further in the matter. The Revenue is fully entitled to conduct proper verification in the matter and satisfy itself with regard to the veracity of the assessee’s claim/s, but cannot deny the assessee credit in respect of TDS without specifying any infirmity in its claim/s.

3. Form 26AS is a statement generated at the end of the Revenue, and the assessee cannot be in any manner held responsible for any discrepancy therein or for the non-matching of TDS reflected therein with the assessee’s claim/s. Where so, no doubt a matter of concern, is one which is to be investigated and pursued by the Revenue, which is suitably



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armed by law therefor. The plea that the deductor may have specified a wrong TAN, so that the TDS may stand reflected in the account of another deductee, is no reason or ground for not allowing credit for the TDS in the hands of the proper deductee. The onus for the purpose lies squarely at the door of the Revenue.\

IN THE INCOME TAX APPELLATE TRIBUNAL

“A” BENCH, AHMEDABAD ITA No.297/Ahd/2011

A.Y. 2006-07 Shri Ravi Hansraj

Gouthi (HUF), Date of Pronouncement: 17/04/2014 We have also examined the relevant provision, according to which

Section 140A(3) says that if an assessee fails to pay the whole or any part

of tax or interest in accordance with provision of sub Section (1) of

Section 140A then he shall be deemed to put an assessee in default.

Section 221 has defined penalty when the assessee is in default. Sub

Section 1 of Section 221 prescribes that when an assessee is in default or

is deemed to be in default in making a payment of tax then he shall in

addition to the amount of the arrears be liable by way of penalty to pay

such amount as AO may direct. Thus, the second proviso prescribes that in a situation when the



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assessee proves that there was a good and sufficient reason then no

penalty is to be levied on the assessee. To ascertain whether there was

good and sufficient reason we have inquired from the assessee that

whether losses were incurred before the date of filing of the return or the date on which actually the return was filed. We have been informed that

as per the order/intimation made u/s.143(1) the due date of filing of

return for A.Y. 2006-07 was 31.12.2006, however, the return was filed

on 29th of March, 2007. The assessment u/s.143(1) was made on 26th of

March, 2008. The assessee has furnished a balance sheet drawn as on 31st

of December, 2006 and demonstrated that there was heavy losses

incurred in share trading to the tune of Rs.1,36,46,928/-. The assessee

had cash in hand of only Rs.47,873/-. Likewise, in the bank accounts, the

balance was only Rs.8,848/-. There was heavy current liabilities against

the investment in shares. Due to the said reason, the assessee has no



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liquid funds to make the payment of self-assessment although he had

earned profit in the financial year 2005-06 but by the time he was

required to file the return, he had suffered heavy losses and the entire

profit had washed away due to losses in share trading. In support of the

facts and the legal position, reliance was placed on the following

decisions:“1. Safari Mercantile (P) Ltd. Vs. ACIT, (2008) 21 SOT 531

2. CIT Vs Pure Drinks (New Delhi) Ltd., (2013) 37 taxmann.com 30

(P&H.)”

3. V. Govinda Chetty Vs. CIT, (1998) 231 ITR 615 (Madras)

4. Diamondstar Exports Ltd. Vs. ITO, (2013) 40 taxmann. com 460

5. M/s. Lok Housing and Construction Ltd. Vs. Additional CIT, ITA

No.5224 & 5225/Mum/2009.”

5. Considering the totality of the facts and circumstances of the case,

we are of the view that the assessee has satisfied us that there was a good

and sufficient reason for the said default; hence, no penalty should be

levied in such circumstances, especially, when the assessee has later on

deposited the entire amount, as detailed above. Resultantly, we herebyKapil Goel FCA LLB (9910272806) [email protected]


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affirm the findings of learned CIT(A) and we find no force in this ground

of the Revenue.

IN THE INCOME TAX APPELLATE TRIBUNAL“C” BENCH, AHMEDABAD Shri Haresh R. Vasani Date of Pronouncement : 04/04/2014PAN: AAKPV9716K

The said document does not bear signature of any person. The document also does not specify the name of party to whom this document or noting made therein relates to. The said document does not specify the nature of the transaction whether the transaction, if made at all, was a revenue transaction or was capital transaction. We find that no material has been brought on record by the revenue by making proper inquiry in relation to thesaid seized document to show the identity of the party and nature of transaction for which the said document was drawn or made. 28. In our considered opinion, merely from the above document it cannot be concluded that the assessee in fact received Rs 10,00,000/- on 03.06.2005 from any unspecified person and that too in respect of his business on revenue account. We find that no material could be brought on record by the revenue bymaking a proper inquiry in respect of the said seized document to show that the said seized document shows business receipt of Rs 10,00,000/- by the assessee on 03.06.2005. In absence of any such material having been brought on record by the Assessing Officer by making specific inquiry, we do not find any good reason to interfere with the order of the Ld. CIT(A). It is confirmed. The ground of appeal of the Revenue is dismissed.(i) Decision of Delhi tribunal in case of Mahan Foods Ltd. v. CIT (2009) 27 DTR 185, wherein the Hon'ble IT AT have held as under: Search and Seizure — Block assessment - Computation of undisclosed income -Although the contents of the relevant seized documents show that the amounts mentioned therein relate to some expenditure, in the absence of any other evidence found during the course of search or brought on record by the AO to show that the said expenditure was actually incurred by the assessee, the same cannot be added to the undisclosed income of the assessee by invoking provisions of s. 69C — Assessee explained that the said entries represented estimates made by employees in respect of proposed expenditure — There is no evidence on record to rebut/controvert the said explanation — Additions not sustainable

(ii) Decision of Gujarat High Court in case of DCIT v. Jivanlal Nebhumal (HUF) [2004] 134 TAXMAN 660 (GUJ.) wherein the Hon'ble High Court have held as under, Section 69 of the Income-tax Act, 1961 – Unexplained investments - Tribunal having found that there



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was no material on record to indicate that assessee - HUF, whose family had 50 per cent share in J company, had in fact paid any 'on-money' to said J company in respect of shops purchased by them over and above amount recorded in their books of account, deleted addition made by Assessing Officer and confirmed byCommissioner (Appeals), on account of unexplained investments and also reduced addition in respect of low household expenses - Further, question with regard to levy of interest under section 139(8)/215 was restored back to file of Assessing Officer for fresh adjudication in accordance with law after giving opportunity of hearing to assessee - Whether since Tribunal had appreciated facts and evidence on record and had come to conclusion, no substantial question of-law, much less any question of law, arose out of Tribunal's order - Held, yes

(iii) The appellant further submits that as far as the addition made on the basis of the notings on the loose paper is concerned the Gujarat High Court has recently in case of CIT vs. Maulik Kumar K. Shah 307 1TR 137 had held that loose papers containing .rough estimates cannot be relied upon to make addition on account of undisclosed income in the absence of any independent' evidence.

(iv) Further there are also certain other legal precedent which clarifies that loose papers alone cannot be made basis for addition. Where loose sheets are found, there is the usual inference of the Assessing officer, that they represent concealed transactions such inference does not readily follow. Such inference can be positively made only after identification of papers and after due verifications. Figures therein could not be lightly inferred to represent unaccounted income, unless there is something more to it. It was so held by a third member on a difference between the other members of the tribunal in Goyal (S.P.) v DCIT (2004) 269 ITR 496 (HP). A similar view was taken again by aThird Member in Babros Machinery Manufactures Pvt Ltd v DCIT (2004) 269 TTR (AT) 36 (Ahd).

(v) Further, the Honorable Supreme Court in the case of Mohd. Yusuf & ANR. & ANR. AIR 1968 Bom 112 has observed that the contents contained in the document is hearsay evidence unless the writer thereof is examined before the Court The Honourable Court, therefore, held that attempt to prove the contents of the document by proving the signature of the handwriting of the author thereof is to set at nought, the well recognized rule that hearsay evidence cannot be admitted. If we consider the said piece of paper seized during search in light of the definition of the word "document" is given in the Indian Evidence Act and General Clauses Act and truthfulness of the intents thereof in light of the aforecited decisions of the Honourable Supreme Court, we find that the said paper contains jottings of certain figures the same does not describe or express the substance of any transaction and even if the said paper has been seized from the possession of the assessee the contentsthereof are not capable of the describing the transactions the way the Assessing Officer hasdeciphered them without support of corroborative evidence of the parties attributed to the allegedtransaction. The said paper, therefore, does not come within the compass of the definition of the word "document to be used as evidence. The paper seized, therefore, has no evidentiary value and accordingly the same cannot form the basis for assessing the undisclosed income.

(vi) Decision of Delhi Tribunal in case of SK Gupta v/s DCIT 63 TTJ 532 wherein ITAT has held that addition made on the basis of loose sheets cannot be sustained as same does



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not indicate that any transaction ever took place arid does not contain any information in relation to nature and party to the transaction in question.

(vii) Decision of Delhi ITAT in case of SMC Brokers Limited V/s DCIT 109 TTJ (700 wherein Tribunal has held that diary seized was not containing any [evidence regarding any receipts of money by way of cheques of Rs. 50,00,000 each and also the diary was not written by assessee or his employees. There was no evidence on record to substantiate that assessee has earned any undisclosed income hence addition based on dumb document is deleted. The appellant states that in its case, also no evidence is present except the notings on the loose paper so as to allege that the appellant has made any investment outside the books of accounts. And hence in view of the abovementioned judicial pronouncements and the facts of the case of the appellant, it is submitted that the addition made by the assessing officer only on the basis of presumptions andwithout bringing on any corroborative evidence in support of the same, is unwarranted and unjustified and hence the same deserves to be deleted."

IN THE INCOME TAX APPELLATE TRIBUNAL

“C” BENCH, AHMEDABAD ITA No. 2691 & 2692/Ahd/2009

A.Ys. 2005-06 & 2006 M/s. Jayesh Finance 31/10/2013

It is an

established way of computation of income where ever there is

recycling of cash in a financial business to work out the peak

credit. Particularly in a situation, when no regular or proper books

of account are maintained by the assessee then a cash flow

statement is generally prepared. The department then makes an

addition on the basis of the peak credit, as appearing in the cashflow-

statement, if there is recycling of cash. That peak credit is

thus treated as an unexplained income of the assessee. But that



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working ought not to be final. Certain other factors are also required to be taken into account, as suggested in the Grounds of

Appeal by the Revenue. As far as the assessee is concerned, the

undisputed fact is that on the basis of the seized material a cash

follow statement was prepared which was supplied to the AO.

After the search, the working of the said cash flow statement was,

therefore, required to be examined by the AO, that too after due

verification from the seized material. We are of the view that a

cash flow statement which was prepared on the basis of the

seized material must not be ignored. Once the assessee is in the

business of finance then the assessee is required to furnish the cash

flow statement, so as to arrive at the figure of the incremental book

credit, as per the prevalent practice. We are taking this view on

the basis of decision of Hon’ble Gujarat High Court pronounced in the case of Pipush Kumar O. Desai, 247 ITR 568 (Guj.),

wherein a cash flow was prepared by the assessee after the

conclusion of the search. That was directed to be considered,

especially when there was absence of books of account. On the

basis of the cash flow statement the availability of cash was

accepted.



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Next, in the case of Swaroop Chandra Kojuram, 235

ITR 732, wherein the question before the Hon’ble High Court was

whether the benefit of peak credit theory could or could not be

granted to the assessee. The Hon’ble Court has held that it was not

a referable question of law. It was pleaded, quote “it was

submitted that a refinement or extension of the peak theory

occurs where the credits appear not in the same account but in

the accounts of different persons. If the genuineness of all the persons is disbelieved and all the credits appearing in the

different accounts are held to be assessee’s own money, the

assessee will be entitled to a set off and a determination of the

peak credit after arranging all the credits in chronological order.

It was admitted that these propositions should not, however, be

treated as propositions of law. They are inferences based on

normal probabilities and can be displaced by material on record

which may indicate facts to the contrary.” unquote. It was held by



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the Hon’ble Court that the theory of peak credit presupposes an

adverse finding against the petitioner that certain borrowings made

by the petitioner from the cash creditor were the borrowings from

non-genuine creditors and therefore the same is to be treated as

unexplained fund-borrowing to the assessee. Having found, the

borrowings had been made from various characters which were not genuine, the question of law arises so as to determine the

quantum of the addition to be made under the theory of

incremental peak credit to be applied so as to ascertain the

maximum amount which the petitioner had in the books of account

at particular date during the year which is to be treated as nongenuine.

So the logic behind the applicability of the peak credit

theory is that if the borrowing from various persons is to be treated as non-genuine then systematic repayment to such person should

also be treated as non-genuine. Such recycling thus constituted

unexplained credits and unexplained debits, thus, accordingly a

netting of the two is required to be worked out from the cash flow

statement.



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