M/s Modi Rubber Ltd. vs ACIT, Circle-17(1), New Delhi

Parties Involved

Facts Summary

The assessee, M/s Modi Rubber Ltd., filed its return of income declaring a loss of Rs. 17,49,80,674/-. The case was selected for scrutiny under CASS notice u/s. 143(2) & 142(1). The Assessing Officer (AO) noted that the assessee company had not carried out any business activity during the year despite claiming huge expenses. The assessee was asked to substantiate the claim of depreciation and expenses when there was no manufacturing or trading activity. The assessee filed details and explanations, which were not accepted by the AO. The AO assessed the income at a loss of Rs. 11,65,42,500/- vide order dated 18.12.2009. The assessee appealed before the Commissioner of Income Tax (Appeals) (CIT(A)), who partly allowed the appeal. Both the Revenue and the assessee are aggrieved by the CIT(A)'s order and have filed cross appeals.…

Legal Issues

• 1. Whether the CIT(A) is legally justified in allowing expenses of Rs. 32,43,94,310/- by ignoring the findings of the AO and the assessee's failure to discharge its initial onus.
• 2. Whether the CIT(A) is legally justified in deleting the disallowance of Rs. 1,77,30,644/- on account of depreciation on assets.
• 3. Whether the CIT(A) is legally justified in deleting the addition of Rs. 3,91,74,000/- out of total addition of Rs. 4,72,66,000/- made on account of write-off of advances/debts.
• 4. Whether the CIT(A) is legally justified in holding that the income from letting out of some of assets of closed business of the assessee company was in nature of business.
• 5. Whether the CIT(A) is legally justified in allowing relief to the assesse on the basis of its order in the assessee’s own case by ignoring the fact that principle of res-judicata is not applicable to income tax proceedings.

Judgment Outcome

Decided in favour of Partly Assessee / Partly Revenue.

Precedents Relied Upon

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