BHARATI SAPRU,J. - (1.) Heard Sri Gaurav Mahajan, learned counsel for the appellant and Sri Amitabh Agarwal, learned counsel for the respondent.
(2.) This appeal under Section 260-A of the Income Tax Act, 1961 (hereinafter referred to as the 'Act') has been filed by the department against the order of the Income Tax Appellate Tribunal dated 03.01.2012 for the Assessment Year 2007-08 raising the following questions of law:- "(i) Whether the finding of the ITAT that the amount of 1 crore was never shown in the profit and loss account, hence assessee is entitle to relief without examining the fact that the assessee had suppressed the sales intentionally by not revising the price per unit fixed in the year, 2011? (ii) Whether on the facts and circumstances of the case, the Hon'ble ITAT was justified in law as well as in fact upholding the finding of the CIT (Appeals) that the transaction of Rs. 1,00,00,000/- could be categorized as cessation of liability in terms of provisions of Section 41(1) of the Act without appreciating the fact that the assessee company is a wholly owned subsidiary of Widecom Group Inc, Canada? (iii) Whether on the facts and circumstances of the case, the order passed by Hon'ble ITAT is perverse and had been passed without appreciating all the facts correctly because the modus operandi of the assessee is to supply products at a lesser price and declare loss leading to avoidance of tax incidence, which the holding company compensates by funding in cash, which assessee is regularly showing it under the head 'Payment received/Other Transaction?" During the assessment proceedings the assessing officer had issued notice to the assessee to verify the claim of loss of Rs. 8,15,14,476/-. According to the assessing officer the assessee had disclosed M/s Widecom Group INC. as a sundry creditor for Rs. 8,87,43,228/-.
(3.) During financial year 1999-2000, assessee had received Rs. one crore by way of 'share application money' from its holding company M/s Widecom Group INC. Admittedly, that money continued to remain available to the assessee during subsequent years without allotment of any shares being made by it. Subsequently, the assessee made sales to M/s Widecom Group INC. Then, on 01.04.2005, the assessee appears to have adjusted the aforesaid amount of Rs. one crore against the aforesaid sales made by it to M/s Widecom Group INC. and made book entries to transfer that amount of Rs. one crore to the 'general account' under a narration 'share application money transfer' and thus adjusted the share application money to sale price realisable from M/s Widecom Group INC.;