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Income Tax - Case Laws
Showing 41 to 60 of 182 Records
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2009 (3) TMI 900 - ITAT COCHIN
... ...
... ... ..... ble Delhi High Court has also made it clear in the case of DIT (Exemption) v. Raunaq Education Foundation 2004 294 ITR 76 that the word income as occurring in section 10(22) cannot be given a restrictive meaning and must be given its natural meaning or the meaning ascribed to it in section 2(24). The court held, therefore, that the assessee is entitled to exemption under section 10(22) and can claim the benefit thereof for the purpose of income deemed to be chargeable to tax under section 68. In view of the argument of the learned chartered accountant and more particularly, in the light of the above judicial pronouncement, we find that the order of the Commissioner of Income-tax (Appeals) is sustainable in law and the assessee is entitled to the benefit under section 10(23C) which is in respect of the income covered under section 68. In the result, the appeal filed by the Revenue is accordingly dismissed. The order pronounced in the open court on this day 31st of March 2009.
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2009 (3) TMI 899 - ITAT MUMBAI
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... ... ..... not be upheld. The Revenue would thus succeed partly in its appeal. Before parting, we may have to deal with the judgment of the hon ble High Court of Delhi in the case of L. N. Gadodia and Sons P. Ltd. 2007 207 CTR (Delhi) 669 relied upon by the learned authorised representative. The said case in our opinion is distinguishable. Though full facts have not been given in the order, it appears, in that case, the Settlement Commission had given a detailed computation and therefore, on the facts of the case, it was held that the Assessing Officer had to follow the order of the Commission strictly and could not charge interest under section 220(2) separately. The said case therefore cannot be applied to the specific issue raised in this appeal, which we have decided on the basis of the judgment of the hon ble Supreme Court in the case of Damani Brothers 2003 259 ITR 475. In the result appeal of the Revenue is partly allowed. The order pronounced in the open court on March 26, 2009
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2009 (3) TMI 654 - ITAT JODHPUR
Unexplained investments ... ... ... ... ..... cer in relying on the material gathered behind the back of the assessee and without giving an opportunity to be explained by the assessee regarding the said material 4s nothing but violation of principles of natural justice that is required to be followed by a quasi judicial authority such as an ITO under the Act. Therefore, we are of the considered opinion that the .assessment order passed by the Assessing Officer in making the impugned addition is not sustainable for legal scrutiny as it having been done in violation of principles of natural justice. Such an order passed by the Assessing Officer was upheld by the CIT(A). Accordingly the impugned order is also not sustainable for legal scrutiny. Under the facts and circumstances of the case, we are of the considered opinion that the impugned addition is not at all sustainable under law. Hence the same is hereby directed to be deleted by allowing the appeal of the assessee. 8. In the result, appeal of the assessee is allowed.
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2009 (3) TMI 653 - ITAT MUMBAI
Shipping business ... ... ... ... ..... Officer to decide the same afresh. The CIT(A) for assessment year 2001-02 allowed the claim of the assessee by holding that the expenditure in question was allowable on actual basis. The appeal of the department was dismissed by the Tribunal. However, the facts in the present case has to be seen whether the expenditure claimed has incurred during the year or not as the ld. CIT(A) for assessment year 2001-02 has allowed the issue in favour of the assessee on the basis of actual incurring of expenditure. This aspect has to be examined. Accordingly, we set aside the order of the authorities below and restore this issue to the file of the Assessing Officer to examine the same afresh in light of the above observation and in view of the decision the Tribunal for assessment year 2001-02. We order accordingly. 16. In the result, all the appeals of the assessee are allowed in full except the appeal for assessment year 2002-03 which is allowed partly and partly for statistical purpose.
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2009 (3) TMI 652 - ITAT INDORE
Application for condonation of delay - inordinate delay of one year and 92 days - sufficient cause - HELD THAT:- The Hon’ble Supreme Court in the case of Collector, Land Acquisition v. Mst. Katiji [1987 (2) TMI 61 - SUPREME COURT] held that ordinarily, a litigant does not stand to benefit by lodging an appeal late. The Hon’ble Supreme Court further held that "every day’s delay must be explained" does not mean that a pedantic approach should be made. Why not every hour’s delay, every second’s delay ? The doctrine must be applied in a rational, common sense and pragmatic manner. It is also well-settled law that length of delay is not to matter in the context of condonation of delay. At this stage, we may point out that the revenue has not brought any material on record to controvert the facts stated in the application of condonation of delay.
Considering the facts and the fact that the FIR has been lodged by the assessee and also considering the assessee’s explanation for delay and the settled legal position, we are of the view that there was sufficient cause, which prevented the assessee from filing the appeal before the Tribunal within time. Therefore, we condone the delay in filing the appeal.
Jurisdiction to any authorities mentioned in the definition by the CBDT under the provisions of section 120 of the Income-tax Act, 1961, to act as an AO - DDIT made reference to the DVO before completing the construction of the house property - no proceeding was pending in the case of the assessee before making reference to the DVO by the DDIT - Validity of assessment order passed on the basis of such valuation report -
HELD THAT:- The authorities mentioned in the definition of AO in section 2(7A), must be assigned the jurisdiction to any authorities mentioned in the definition by the CBDT under the provisions of section 120, to act as an AO. Only in that circumstances that Assistant Commissioner or Dy. Director of Income-tax, other authorities mentioned in the definition u/s 2(7A), can act as AO.
In this case, the DDIT (Investigation II), Indore, who issued the commission u/s 131(1)(d) has not been assigned jurisdiction to act as an AO of the assessee Shri Rajeev Mewara. Therefore, the finding of CIT(A) that the DDIT (Investigation II), Indore, is an AO by virtue of the provisions of section 2(7A), is not valid.
Further, the DDIT (Investigation) has made reference to the DVO by virtue of powers conferred on him under sub-section (1A) of section 131. However, such reference by the DDIT(Investigation), Indore, is illegal and he has exaggerated his jurisdiction as the power under sub-section (1A) of section 131 has been conferred on the DDIT(Investigation) for entirely different purposes and not for the purpose of valuation of the house property. it is noted that none of the condition mentioned in sub-clauses (i) to ( v) of sub-section (1) of section 132 has been mentioned for reference to the DVO to value a house property as has been done in the instant case by the ld. DDIT (Investigation - II), Indore.
We hold that reference made by the DDIT(Investigaiton-II), Indore, for valuation of the house property to the DVO u/s 131(1)(d) is itself illegal and beyond the power of the Dy. Director of Income-tax (Investigation), Indore. Therefore, subsequent action, i.e., valuation of the property and assessment order passed on the basis of such valuation report also had become illegal and void ab initio. This view is also supported by the decision of ITAT, Allahabad Bench in the case of Baldev Plaza [2004 (6) TMI 239 - ITAT ALLAHABAD] . Hence, this ground of appeal of the assessee is allowed.
Cost of construction of house property estimated by the DVO - assessee also got valued the property by the approved valuer, who estimated the cost - AO allowed reduction @ 20 per cent on the cost determined by the DVO - balance excess added as unexplained investment in the construction of the said building - CPWD rates were adopted - claimed for deduction @ 25 per cent - HELD THAT:- The ld AR contended that after adopting the cost of the house on the basis of the CPWD rates, no further addition has to be made by the DVO as added above which are not called for. That after adding the addition, DVO arrived at the cost of construction and thereafter, he added 1.5 per cent for builders’ effort, the amount on account of builders’ effort should have been reduced from the total cost of construction arrived by the DVO and cannot be added.
Therefore, the report of the DVO is not reliable at all. It is further argued that the DVO has worked out the cost of construction at the rate of Rs. 582 per sq.ft. After allowing deduction at the rate of 20 per cent by AO, the cost of construction comes at Rs. 466 per sq.ft. We agree with the submission of the ld AR in view of the infrastructure used by the assessee of his own business in the construction of the house property under consideration. Therefore, further deduction of Rs. 25 per cent is allowable.
Thus, the difference arrived only at 6.9 per cent, which is negligible. Hence, the additions sustained by the ld. CIT(A) are deleted. Thus, all the three grounds of appeal are allowed.
In the result, the appeal of the assessee is allowed both on account legality and on merits.
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2009 (3) TMI 651 - ITAT AGRA
Deduction of tax at source ... ... ... ... ..... assessee canvassed its specifications to the manufacturers and under what circumstances and subject to what terms and conditions, the manufacturers supply these packing materials to the assessee. These are the very basic facts, which are very much germane to the controversial issue. The ld. AR started with supporting decisions and hesitated in submitting the true and full facts before the Bench despite being pointed out to first recite the facts of the given case. It is only after culling out full and final facts of a given case that the legal interpretations/provisions can be applied to them. Accordingly, we allow all these appeals of the Revenue for statistical purposes and after setting aside the finding of ld. CIT(A), we restore back the entire appeals to the file of ld. Assessing Officer with a direction that he will decide the true nature of the contract between the assessee-company and the payee. 13. In the result, all the appeals are allowed for statistical purposes.
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2009 (3) TMI 650 - ITAT KOLKATA
Deductions - Income of co-operative societies ... ... ... ... ..... re allowed to the above extent. 29. Ground No. 6 - In view of our decision in the appeal for the assessment year 2003-04 we direct the Assessing Officer to determine the gross total income of the assessee and the income includible in such gross total income out of the various activities carried on by the assessee. If the assessee fulfils the conditions as laid down by us in this order, then only such amounts are to be deducted under the relevant provisions of section 80P of the Act. 30. Ground No. 7 of the assessee is allowed and it is held that the ld. CIT(A) was not within his jurisdiction to issue direction to the Assessing Officer to reopen the assessments of the earlier years. 31. Ground Nos. 8 and 9 are general in nature and the same do not require any adjudication. 32. The appeal of the assessee is allowed to the extent mentioned above. 33. In the result, the appeals of the assessee for the assessment years 2003-04 and 2004-05 are allowed to the extent mentioned above.
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2009 (3) TMI 649 - ITAT AGRA
Revision - Of orders prejudicial to interest of revenue ... ... ... ... ..... . 23. The above finding is true in all the other cases before us and, the aforesaid reasoning are also applicable to them. The facts, the circumstances, the reasons for reopening and the involvement of gift(s), etc., the nature and extent of examination of evidences so produced and the notice under section 263 and the reasons given in the order under appeal are all, mutatis mutandis, identical, therefore, the arguments, reasons given in the above case would also apply to all other cases. All these cases are fully covered by the decisions of this Bench rendered in the cases referred to above. Therefore, by respectfully following the above cases, referred to in the former part of this order, we accept all these appeals. Accordingly, we allow all the above captioned appeals of the assessee and set aside the impugned order(s) of ld. CIT passed in all these cases, and restore the order(s) revised thereby. 24. In the result, all the above appeals of all the assessees stand allowed.
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2009 (3) TMI 648 - ITAT MUMBAI
Deduction of tax at source ... ... ... ... ..... complete identity of facts with those considered by Hon rsquo ble Jurisdictional High Court inasmuch as that the goods were manufactured by the manufacturers in their own establishments in accordance with the specifications given by the assessee. The raw material cost and other expenses incurred by their own. Even the excise duty was paid by them when the goods are sold the sales tax also paid by the manufacturers. When the goods are sold to the assessee the property in them passed over to the assessee. Under these circumstances, we are of the considered opinion that the agreements of the assessee with the manufacturers cannot be termed as lsquo works contract rsquo . The impugned order is therefore set aside and the application of section 194C is ruled out. That being the position there cannot be any question of treating the assessee as in default under section 201(1) or charging any interest under section 201(1A). 24. In the result, appeal filed by the assessee is allowed.
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2009 (3) TMI 647 - ITAT MUMBAI
Income from house property, Appellate Tribunal ... ... ... ... ..... authenticated particularly when those details were not given to assessee by the Assessing Officer, nor opportunity was given to the assessee to cross-examine Mr. A.G. Kataria. The details collected behind the back of the assessee and the same is used against assessee is not permissible in the eyes of law. One more aspect of the matter that we would like to refer that when the Assessing Officer found that on the basis of information collected, the annual value is more than actual rent received then why the Assessing Officer did not take that higher annual value and why he reached to conclusion simply adding 10 per cent of deposit to the actual amount received by the assessee. Thus we find that approach of the Assessing Officer was not in accordance with law, therefore, his assessment orders are liable to be quashed. We, accordingly, confirm the orders of CIT(A). 6. In the result, all the appeals filed by the revenue are dismissed and the C.O. filed by the assessee is allowed.
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2009 (3) TMI 646 - ITAT MUMBAI
Addition u/s 41(1) on sundry creditors - Remission or cessation of trading liability - written back liabilities - AO noticed that outstanding balances under the sundry creditor accounts and they are old balances and for period of more than 3 years - On finding there is neither a pending litigation in existence nor any correspondence from the eleven parties demanding for clearing the liabilities, AO invoked the provisions of section 41(1) - AO deemed the liabilities of the sundry creditors as the profits and gains of business or profession and charged them to income-tax as the income of the year - As per assessee provisions of section 41(1) do not apply, as the alleged liabilities are still payable to the creditors and the same is evident from the fact that they are still reflected in the books of the assessee.
HELD THAT:- We shall proceed to analyse one by one in the succeeding paragraphs.
(a)Regarding the issue of limitation of three years - it is noticed that there is no such limitation provided in section 41(1) or its Explanation 1. Most probably, the revenue has considered the period of three years as reasonable duration for deciding the cessation of liabilities on ad hoc basis. Otherwise the revenue orders do not contain any rationale in support of such period. Delhi Bench decision in the case of Dy. CIT v. Himalaya Refrigeration & Air Conditioning Co. (P.) Ltd.[2003 (6) TMI 195 - ITAT DELHI-F] is found relevant in this regard and the said order concluded by stating that in the absence of any evidence of cessation of liabilities, mere fact that the liabilities were outstanding for more than three years and were time barred, was not sufficient ground for addition u/s 41(1).
Thus, the revenue’s proposal is favoured by us, it will effectively amounts to supporting a proposition that all the unclaimed liabilities, which are reflected in the books for the period longer than three years case, shall be the deemed profits of the assessee u/s 41(1) and this view does not have the support of the Income-tax Act. As such the limitation of time is not a determining factor in the matters relating to remission or cessation of liabilities, the view supported by the Apex Court’s judgment in the case of Kesaria Tea Co. Ltd.[2002 (3) TMI 1 - SUPREME COURT].
(b)Regarding the issue of discharging of the onus, it is noticed that the provisions of section 41(1) provides for charging of certain benefits, which are obtained by the assessee in an year as deemed profits. Under the circumstances, where the assessee disputes the obtaining of the benefits, AO is under statutory obligation to establish the same by gathering evidences in favour of such accrual of benefits. AO is under the obligation to discharge the onus in this regard. This view is supported by the decisions of the Tribunal in the cases of Shri Vardhman Overseas Ltd. v. Asstt. CIT [2008 (7) TMI 617 - ITAT DELHI].
(c)Regarding the issue of unilateral write off for the assessments of the post amendment period, i.e., 1-4-1997, it is noticed that the Explanation 1 was brought into statute by the Finance (No 2) Act, 1996 with effect from 1-4-1997. The judgments of Apex Court’s judgment in the case of Kesaria Tea Co. Ltd. (supra) and Sugauli Sugar Works (P.) Ltd.[1999 (2) TMI 5 - SUPREME COURT] or Jurisdictional High Court’s judgment in the case of CIT v. Chougule & Co. (P.) Ltd.[1990 (8) TMI 60 - BOMBAY HIGH COURT] and other cases cited by the assessee, were delivered involving the assessment years prior to pre-amendment period. All the judgments uniformly conclude that the mere unilateral transfer entry in the accounts does not confer any benefit to the assessee and therefore, revenue cannot invoke section 41(1).
We find the said judgments have application to the present appeal insofar as the effect of such unilateral transfer entries in the books. In the absence such unilateral entries in books of the instant assessee, it cannot be held that AO has correctly applied the provisions of section 14(1) and its Explanation 1.
Further, AO has neither disproved the assessee’s claims relating to the impugned liabilities nor discharged its onus to prove that there is cessation of liabilities and the assessee obtained the benefits finally. Therefore, the arguments of the revenue have to be dismissed. In such circumstances and when the assessee has not unilaterally written off the said liabilities, the question of taking such outstanding liabilities as deemed profits of the year does not arise. Therefore, the order of CIT(A) has to be set aside in this regard.
In the result, appeal of the assessee is partly allowed.
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2009 (3) TMI 645 - ITAT MUMBAI
Deductions - Profits and gains from industrial undertakings other than infrastructure development undertakings
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2009 (3) TMI 644 - ITAT DELHI
Interest, chargeable as ... ... ... ... ..... ly, that there were conflicting decisions of the Tribunal in the matter and that the levy was made without hearing the assessee. These factors do not exist in this case. The finding of the court was that the imposition of interest under section 234B was not justified inter alia because the tax payable in advance has to be reduced by the amount of tax which was deductible at source. Looking to the provisions contained in sections 209 and 195 and the aforesaid decisions, it is clear that the assessee was not liable to pay any advance-tax. In such circumstances, there would also be no liability to pay interest under section 234B notwithstanding the fact that this provision, for the purpose of assessed tax, uses the words any tax deducted or collected at source . In other words, the charge of interest will follow only if there is a default of non-payment of advance-tax. In absence of the default, the interest cannot be charged. 4. In the result, all the three appeals are allowed.
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2009 (3) TMI 643 - ITAT MUMBAI
Disallowance of expenditure on scientific research - claim deduction u/s 35(1)(iv) - Whether the assessee is entitled to depreciation claim u/s 32 in the later previous years in respect of the expenditure already allowed u/s 35 in a previous year - business of scientific research and investment in joint venture - assessee submitted copies of their foreign collaboration approvals and the MOA as well as the research agreement between and the sister concerns, i.e., CIBA Basle to substantiate that the doing specialized research is the principal business of the assessee - As per the assessee, the provisions of section 35(1)(iv) allow the capital expenditure on scientific research related to the business of the assessee as deduction - AO denied the deduction u/s 35(1)(iv) holding that it is allowable only in respect of the capital expenditure on scientific research related to the business of the assessee - he thrust the depreciation u/s 32 @ 25 per cent and 60 per cent on plant and machinery and on computers respectively instead.
HELD THAT:- The assessee, in our considered opinion, cannot be said to have two distinct activities, i.e., business activity on one side and related scientific research activity on the other. In other words, the assessee does not have the business activity to absorb the developed scientific research. Further, it is also not the case of the assessee that he is covered by section 43(4)(iii)( a), i.e., the cases of scientific research, which may ‘lead to or to facilitate an extension of that business’.
Thus, by conducting the said research, the assessee generates a marketable product or stock-in-trade in the form of the scientific research. In these circumstances, we are of the opinion that the provisions of section 35(1)(iv) have no applicable to assessee’s case and, accordingly, this part of the arguments of the assessee’s counsel is dismissed.
The assessee incurred capital expenditure on the scientific research and undisputedly it is related to the subsidiary company such as CIBA Basle. Assessee does not have any active business activity carried on by him to which the said research relate to. Further, we find that this is not a case of cacus omicus after the amendment to section 35(2)(iv) to suppress the effects of the Tribunal decision in the case of Vickers Sperry of India [1979 (10) TMI 100 - ITAT BOMBAY]. Consequently, the recent Co-ordinate Bench decision in assessee’s own case for AY 2001-02 is applicable and binding.
Regarding the AO’s decision in thrusting of the depreciation u/s 32, in the facts and circumstances of the issue where the expenditure on plant and machinery and on computers is undisputedly capital in nature and the same assets were undisputedly owned and used for the business, we find AO’s decision is fair and found valid. Accordingly, the ground of assessee’s appeal is dismissed.
In the result of the appeal of the assessee is dismissed.
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2009 (3) TMI 642 - ITAT LUCKNOW
Reassessment u/s 147 - Validity of notice issued u/s.148 before expiry of time limit for issue of notice u/s.143(2) - Income escaping assessment - HELD THAT:- We hold that notice issued u/s 148(1) can be issued even where notice u/s 143(2) has been pending and not closed. We hold that by processing the return and by issuing acknowledgement as token of accepting the return, the proceedings initiated by filing the return are terminated and no proceedings, therefore, remain pending. It has been held by the Hon’ble Supreme Court in the case of Rajesh Jhaveri [2007 (5) TMI 197 - SUPREME COURT] itself that intimation is not an assessment.
Following the above proposition of law, as sending of intimation or issuing acknowledgement is not an assessment, proceedings initiated by filing the return of income are concluded when return is processed and/or acknowledgement is issued as token of acceptance of the return. No proceeding is pending thereafter and also no assessment is made in view of interpretation of the term ‘intimation’ by Apex Court. This situation is directly covered in Explanation 2(b) to section 147 and, therefore, issuance of notice u/s 148(1) after processing is completed/acknowledgement issued would be covered by the deeming provision in Explanation 2(b).
The argument of ld. AR that reassessment presupposes that assessment should have been framed and intimation is not an assessment, therefore, assessment is not framed and, therefore, reassessment could not be initiated is not acceptable because deeming provision of Explanation 2(b) to section 147 does not contemplate that an assessment of the nature as done u/s 143(3) should be completed for invoking that clause of the explanation. It only says that the assessee has understated the income or has claimed excessive loss, deduction, allowance or relief in the return.
Thus, AO has to only point out, or it should come to his notice on the basis of examination of the return that assessee has under-stated the income or claimed excessive loss, deduction, allowance or relief. It nowhere presupposes that assessment of the type prescribed u/s 143(3) should have been completed for deeming escapement of income.
The word ‘assessment’ has not been used at all in Explanation 2(b), therefore, it will over all the situations where assessment is not framed. This situation will include the situation where only intimation is sent or processing is done or even nothing is done after filing the return. The opening words of section 147 "if AO has reason to believe that any income chargeable to tax has escaped the assessment for any assessment year....." cannot be read without considering Explanation 2 which defines and prescribes the scope and limit of all deemed escapement of income under the situation mentioned in three clauses.
Thus, we reject the contention of the ld. AR for the assessee AO could not have issued the notice u/s 148(1) within twelve months of filing of the return which is the period when AP should have issued notice u/s 143(2) which has not been issued. There is one more aspect in this issue which requires consideration. One more condition is apparently proposed to be inserted in section 147 by reading into it the provisions of section 143(2) that, if time period for issuance of notice u/s 143(2) has not expired then notice u/s 148(1) could not be issued.
Section 147 is a procedure for assessing escaped income (original or deemed) and for this, it has prescribed condition for conferring jurisdiction on AO. This is a complete code in itself and if conditions laid down in section 147 are satisfied then to look elsewhere as to whether other conditions laid down in other provisions are fulfilled or not and thereby to decide whether the AO could have assumed jurisdiction u/s 147/148 in spite of conditions laid down in this section is totally fulfilled will not be legally correct.
In our considered view, in the matter of jurisdiction, the provision should be construed strictly. It can neither be extended nor reduced by reading other provisions into the provisions of section 147, unless it is so specifically provided either in other sections or in section 147. As a result, we hold that issuance of notice u/s 148(1) was valid. The appeals will be posted for hearing on merits.
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2009 (3) TMI 641 - ITAT MUMBAI
Charitable or religious trust - Registration procedure ... ... ... ... ..... ineness of the activities carried on by the assessee. In line with the ratio laid down by the Delhi Tribunal in Dharma Sansthapak Sangh (Niyas) (supra), we find no merit in the observations of the CIT regarding the genuineness of the activities carried on by the assessee. 14. Following the ratio laid down by the Special Bench in Bhagwad Swarup Shri Shri Devraha Baba Memorial Shri Hari Parmarth Dham Trust (supra), as the CIT in the present case has failed to initiate the enquiry in-time to complete the process of grant of registration within the stipulated period of six months and as the order has not been passed within the time limit prescribed, the application is deemed to have been granted. We accordingly hold that the order of CIT refusing the registration is a nullity and is quashed. The registration is deemed to have been granted to the assessee. The grounds of appeal raised by the assessee are thus allowed. 15. In the result, the appeal filed by the assessee is allowed.
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2009 (3) TMI 640 - ITAT MUMBAI
Free trade zone ... ... ... ... ..... f a formal letter for approval, in our view, cannot be held against the assessee for none of its faults. The assessee having applied for extension and the same having been impliedly granted in substance, the benefit of section 10A has got to be allowed to the assessee on the ground that the extension is deemed to have been granted. Once the assessee has completed all the formalities and the request of the assessee for extension of time not having been rejected, it can be presumed after a reasonable time that the extension has been granted. This view is supported by the decision of the jurisdictional High Court in the case of Lachman Chaturbhuj Java (supra). In the light of the facts of this case, we are of the view that the assessee is entitled to deduction under section 10A even in respect of the remittances of Rs. 2,20,36,235. The Assessing Officer is directed to recompute the exemption under section 10A accordingly. 10. In the result, the appeal of the assessee is allowed.
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2009 (3) TMI 639 - ITAT MUMBAI
Penalty levied u/s 271(1) - inaccurate particulars of income or concealment of particulars of income - Whether penalty u/s 271(1)(c) r/w Explanation 1 of section 271(1) is applicable - AO noticed that the assessee has wrongly claimed deduction u/s 80-I and u/s 80HH - CIT(A) deleted the deduction of addition made by AO u/s 80HHC and the additions on account of sections 80-I and 80HHC has not been agitated by the assessee against CIT(A). AO levied penalty.
HELD THAT:- The proceedings u/s 271(1)(c) can be initiated only if the AO or the first Appellate Authority is satisfied in the course of any proceedings under the Act. If he is satisfied as per clause (c) that any person has concealed the particulars of his income or has furnished inaccurate particulars of such income, he may direct that such person shall pay by way of penalty the sum mentioned in sub-clause (iii) of clause (c).
The expressions "has concealed the particulars of income" and "has furnished inaccurate particulars of income" have not been defined either in section 271(1)(c) or elsewhere in the Act. One thing is certain that these two circumstances are not identical in detail although they may lead to the same effect, namely, keeping off a certain portion of income. The former is direct and the latter may be indirect in its execution.
The word "conceal" is derived from the latin concelare which implies con+celare to hide. Webster in his New International Dictionary equates its meaning "to hide or withdraw from observation, to cover or keep from sight; to prevent the discovery of; to withhold knowledge of".
The offence of concealment is thus a direct attempt to hide an item of income or a portion thereof from the knowledge of the income-tax authorities. The duty is enjoined upon him to make a complete disclosure of his income as well as a correct disclosure. Therefore, if the disclosure made of the particulars of income is incorrect, then also he commits breach of his duty. Such defaults entail the penal consequences contemplated by section 271(1)(c)( iii).
We notice that the assessee has furnished all the particulars of income and AO has calculated the total income on the basis of those particulars filed by the assessee. The assessee has right to claim all deductions which according to him are permissible in law. It is the duty of AO to calculate correct income in accordance with law. If AO found otherwise on considering the material filed by the assessee, we do not find that in such cases where
AO computed the different total income than the total income declared by the assessee is amount to furnishing of inaccurate particulars of income concealment of particulars of income. In the case under consideration, the assessee has claimed deduction u/s 80-IA for one more year i.e., for assessment year 1998-99 whereas he was eligible for deduction u/s 80-IA up to 1997-98. There is a simple calculation of total years of the allowability which appears to be a prima facie mistake in calculation of the period. Before completion of the assessment, the assessee has pointed out this mistake and filed a revised return though it is filed after stipulated period prescribed u/s 139(5).
Still we find that it is not a case of furnishing inaccurate particulars of income or concealment of particulars of income. In the light of the above discussion, we find that it is not a fit case for penalty leviable u/s 271(1)(c).
The appeal of the assessee is allowed.
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2009 (3) TMI 638 - ITAT MUMBAI
Penalty levied u/s 271(1)(c) - For concealment of income - business of hire purchase, leasing, finance and investment in shares and securities - claimed loss from trading shares - Whether penalty u/s 271(1)(c) r/w the Explanation 1 of section 271(1) is applicable? - AO treated the said loss under Explanation to section 73 and treated the said loss as deemed speculation loss and levied penalty u/s 271(1)(c) - CIT(A) cancelled the penalty, holding that the assessee has disclosed all the material facts and it was only under a deeming provisions that the loss was to be treated as speculative loss.
HELD THAT:- CIT(A) has cancelled the penalty after considering the facts on merit of the case. He has not cancelled the penalty on the ground of ‘wilful’ concealment or on the ground of ‘mens rea’. Thus, the law laid down by the Apex Court in the case of Dharamendra Textiles Processors [2007 (7) TMI 307 - SUPREME COURT] does not help to the revenue. As said above that the CIT (A) has decided the case on facts and we also decide this case considering the totality of the case with reference to above discussions, we find that it is simple case of fighting in between duty and rights which automatic do not amount to a case of concealing particulars or furnishing inaccurate particulars of income, neither there is finding of the Assessing Officer that explanation furnished by the assessee is found to be false.
In our considered view it is not a fit case for levy of penalty u/s 271(1)(c). Therefore, we uphold the order of CIT(A) on this count.
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2009 (3) TMI 637 - ITAT DELHI
TP Adjustment - ALP determination - business of providing call centre/IT enabled services to the customers of the American holding company - international transactions with associate enterprise - addition made by AO was confirmed by CIT(A) - action of the authorities below in not allowing the option exercised by it in determining the arms’ length price by adjusting the arithmetical mean by 5 per cent as stipulated in the proviso to section 92C(2).
HELD THAT:- Both the sides have agreed that the issue raised is squarely covered in its favour by the decision of the Tribunal in the case of Sony India (P.) Ltd. v. Dy. CIT [2008 (9) TMI 420 - ITAT DELHI-H] wherein it was held that the second limb/portion of proviso to section 92C(2) allows marginal relief to the assessee at his option to take ALP not exceeding 5 per cent of the arithmetical mean and the said benefit is available to all assessees irrespective of the fact that price of international transaction disclosed by them exceeds the margin provided in the proviso.
Respectfully following the said decision of the Tribunal, we direct AO to allow 5 per cent adjustment to the arms’ length price determined by the TPO as per the option exercised by the assessee in accordance with the proviso to section 92C(2) and allow ground of the assessee’s appeal.
Comparable analysis - determination of ALP - assessee-company had applied quantitative filters on the prowess database on data pertaining to two financial years 2000-01 and 2001-02 for selecting the potential comparables whereas the international transactions took place during the financial year 2002-03 - OP/TC ratios of the comparables by using financial data pertaining to financial year 2002-03 was furnished - TPO took the data pertaining to the financial years 2000-01 and 2001-02 and ignored the data of the current financial year i.e., 2002-03 - application u/s 154 r/w section 92CA(5) filled before AO, requesting to make the necessary rectification by using the contemporaneous current year data - dismissed by TPO - CIT(A) erred in holding that TPO was not justified in using the prior years’ data for conducting comparability analysis for determination of ALP without assigning any reasons for such deviation
HELD THAT:- As submitted by the ld counsel for the assessee, Rule 10B(4) is quite clear in this context which specifies that the data to be used in analyzing the comparability of an uncontrolled transaction with an international transaction shall be the data relating to the financial year in which the international transaction has been entered into. It is no doubt true that an exception has been carved out in the proviso to Rule 10B(4) which allows that data relating to a period not being more than two years prior to such financial year may also be considered if such data reveals facts which could have an influence on the determination of transfer prices in relation to the transactions being compared.
As held by CIT(A) in this context, the TPO, however, had not brought on record any cogent, relevant and reliable evidence to prove that the data for preceding two years revealed facts which could have had an influence on the determination of ALP and this position has not been controverted or rebutted by the learned DR at the time of hearing before us.
There was thus no case made out by the TPO to justify the use of prior years’ data by invoking the proviso to Rule 10B(4) and this being so, we are of the view CIT(A) was fully justified in holding that the main Rule 10B(4) was applicable in the facts of the assessee’s case and it was mandatory on the part of the TPO to use the data relating to financial year 2002-03 in which the international transactions were admittedly entered into by the assessee-company with the associated enterprise. In that view of the matter, we uphold the impugned order of CIT(A) on this issue and dismiss this appeal filed by the revenue.
At the time of hearing before us, the learned counsel for the assessee has not pressed any of the grounds raised by the assessee-company in its cross-objection. Accordingly, the said cross-objection filed by the assessee is dismissed as not pressed.
In the result, the appeal of the assessee is partly allowed whereas the appeal of the revenue and cross-objection of the assessee are dismissed.
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