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Income Tax - Case Laws
Showing 281 to 300 of 515 Records
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2013 (8) TMI 624 - ITAT MUMBAI
Penalty u/s 271AAA - Penalty where search has been initiated - Held that:- assessee was asked to explain the entries in the 'work-in-progress sheet' and assessee in the course of statement offered the income with a plea not to initiate penalty proceedings. The assessee was not asked about the manner in which such income was earned and also to substantiate the manner in which undisclosed income was derived - Following decision of CIT vs. Radha Kishan Goel [2005 (4) TMI 47 - ALLAHABAD High Court] and CIT vs. Mahendra C. Shah [2008 (2) TMI 32 - GUJARAT HIGH COURT] - No Penalty - Decided against Revenue.
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2013 (8) TMI 623 - ITAT AGRA
Valuation - Sale value being stamp value of the property by invoking section 50C of the Income Tax Act - Jurisdiction of DVO under section 50C for passing the order and others – Held that:- This action of reference to the D.V.O. has been taken by the A.O. on the direction of the I.T.A.T. Action taken by the A.O. on the direction of the I.T.A.T. is not incorrect rather it is in accordance with law.
Correctness of valuation done by D.V.O. - The A.O. taken circle rate in calculation of capital gain on the ground that the D.V.O. inspite of valuing the plot has valued it as a constructed area on the plot - Held that:- Value of the plot depends upon a number of factors including location, size, road on which the plot is situated, area and others. The Stamp Valuation Authorities have also certain criteria and basis for determining the circle rate - The ld. Authorised Representative is not correct in submitting that the D.V.O. estimated the value of the plot as it is a constructed area - The D.V.O. is correct in estimating the value of the plot as per the building byelaws of Agra Development Authority, Agra because that plot is having potentiality for constructing of many floors suitable for Nursing Home, Multi storey flat etc. Certainly, these are part and parcel of valuation of the plot – No infirmity in the valuation made by D.V.O – Decided against the Assessee.
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2013 (8) TMI 622 - ITAT MUMBAI
Disallowance u/s. 14A - A.O. computed the disallowance by applying Rule 8D - CIT(A)held that applicability of Rule 8D is prospective - Held that:- Following decision of Godrej & Boyce Mfg. Co. Ltd. Vs DCIT [2010 (8) TMI 77 - BOMBAY HIGH COURT] - Decided against Revenue.
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2013 (8) TMI 599 - ALLAHABAD HIGH COURT
Failure to obtain PAN and Qutore PAN of deductees as provided u/s 139-A(5B) - TDS returns / certificates - Penalty u/s 272B - Relied u/s 273B - reasonable cause - Respondent-assessee has not mentioned Permanent Account Number in Form-16-A issued to contractors – Held that:- A bare reading of Section 272B, 273-B and section 139A(5A) and 139A (5B) of the Act itself makes it clear that the penalty under section 272-B will not ordinarily be imposed unless the assessee has either acted deliberately in defiance of law or was guilty of conduct which is contumacious, dishonest or acted in conscious disregard to its obligation. The penalty under section 272B cannot be imposed merely because it is lawful to do so. It can be imposed for failure to perform statutory obligation. The imposition of penalty for failure to perform a statutory obligation is a matter of discretion of the authority to be exercised judicially, after considering the explanation of reasonable cause submitted by the assessee and on a consideration of all the relevant circumstances.
Law laid down by the Hon'ble Supreme Court in the case of Hindustan Steels Ltd. Vs. State of Orissa [1969 (8) TMI 31 - SUPREME Court]. is applicable looking to the provisions of Section 272-B read with Section 273B of the Act – There is no revenue loss and mere technical breach, clearly satisfies the test of reasonable cause under section 273B of the Act – Decided against the Revenue.
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2013 (8) TMI 598 - ITAT MUMBAI
TDS u/s 194I of the Income Tax Act - Lease premium - assessee has capitalized the lease premium in its books of accounts and treated the same as capital expenditure for tax purposes - Assessee in default u/s 201(1) and 201(1A) of the Act for not deducting tax u/s 194-I of the Act of lease premium paid by it - Lease premium paid by assessee to The City and Industrial Development Corporation of Maharashtra Ltd. (CIDCO) for acquiring development and lease-hold rights for a period of 60 years under the Lease Deed(s) is rent within the meaning of section 194-I of the Income Tax Act, 1961 (the Act) and hence liable for deduction of tax at source – Held that:- As per Hon'ble Apex Court in the case of Enterprising Enterprises V/s DCIT [2006 (12) TMI 138 - SUPREME Court], it was held that the assessee which had taken a quarry on lease, the lease rent paid was capital expenditure and the Hon'ble High Court also affirmed the decision of the Tribunal.
The Hon'ble Apex Court while confirming the decision of the Hon'ble High Court held that premium for lease or any lumpsum payment for obtaining a lease for a long period is a payment for enduring advantage, so that it is a capital expenditure which is not deductible – In the present case it is held that lease premium paid by assessee to CIDCO is not in the nature of rent as contemplated u/s 194-I of the Act - Provisions of section 194-I of the Act to deduct TDS on the lease premium paid by the assessee is not attracted - Deleted the demand raised by the AO u/s 201(1) and 201(1A) of the Act by rejecting the grounds of appeal taken by the department – Decided against the Revenue.
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2013 (8) TMI 597 - ITAT MUMBAI
Disallowance u/s 14 A of the Income Tax Act – Held that:- Initial onus to make a claim in respect of the expenditure incurred in relation to the income that does not form part of the total income, is on the assessee - Once the assessee makes such a claim with reference to its accounts, the A.O. is bound to examine the same for the purpose of satisfying himself with regard to its correctness or otherwise, and where not satisfied, determine the same in - Though there is no specific requirement of recording dissatisfaction, it is incumbent on A.O. to do so, as in its absence it cannot be ascertained if he had actually examined the assessee's claim or proceeded mechanically – In the present case, assessee's claim is without reference to the expenses incurred and claimed, much less as to which expenditure is included and to what extent - No indication of interest, if any, included therein, and which could be both in the form of direct and/or indirect expenditure.
In the instant case, the said initial onus having been clearly not discharged by the assessee, which finding has been endorsed by revenue, the disallowance cannot be impugned for want of non-compliance of the procedure laid down u/s.14A(2). Again, however, none of the parties or their representatives have even as much as cared to look at the facts, which prima facie reflect an apparent case of bank borrowings having been availed for and utilized for specified purposes, so that the interest thereon could not be subject to apportionment on the basis of general pool of funds hypothesis, which would otherwise prevail. The matter, therefore, travelled back to the file of the A.O.
Penalty u/s 271(1)(c) under Income Tax Act - The assessee, per its return, made an estimated disallowance at 10% of the dividend income received for the year, as accepted in the past, i.e., the two immediately preceding years. In fact, for the years prior thereto, a lower percentage by half, i.e., @ 5%, was found acceptable, with the matter having travelled upto the tribunal – Held that:- In this view of the matter, so that there was a suo motu disallowance u/s.14A as found acceptable for the preceding years, coupled with complete disclosure of facts, it would take the case away from the ambit of levy of penalty for concealment and/or furnishing inaccurate particulars of income – Reliance is place upon the decision in the case of CIT vs. Reliance Petroproducts (P.) Ltd.[2010 (3) TMI 80 - SUPREME COURT ].
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2013 (8) TMI 596 - ITAT MUMBAI
Deduction u/s 80IB of the Income Tax Act - Assessee-firm had constructed buildings A, B, C and D on a plot admeasuring 2.36 acres - Plot was proportionately divided between five buildings, the land pertaining to building 'E' would be less than one acre' and that two flats on the ground floor of building 'E' were found to be merged into one flat and the area of the merged flat exceeded 1000 square feet – Assessee constructed only residential block 'Eden Garden' which was commenced on 30.2.2006 and completed on 16.10.2008 as per the date of commencement certificate and occupation certificate granted by the authority - The commercial project developed by M/s. Pyramid Developers, sanctioned by CIDCO has commenced on 18.10.2006 but completed after completion of this project, much later on 04.08.2010 - Held that:- There is no definition of housing project in the provisions and there can be more than one approval for the project and even if there is common approval, assessee is entitled for deduction on the project undertaken by it, provided the project satisfies the other conditions - The project is separate and not contiguous to the part of the building developed by assessee. The same is entirely separate block and in no way connected to the assessee project, except approved on the same plot of land. Moreover, the development rights were sold in March, 2009 and other party developed much later. Nothing was brought on record to indicate that assessee developed commercial project as well - Assessee has completed the residential project which satisfies the conditions, it is eligible for deduction u/s 80IB(10).
The AO after satisfying the conditions has in fact allowed deduction in A.Y. 2007-08 and AY 2008-09 on the same project - Thus, the AO and ld.CIT(A) erred in disallowing the claim this year on the reason that commercial project is part of the same housing project and that portion exceeded the 5% or 2000 sq ft whichever is less - Commercial building is a separate project and assessee project satisfies the conditions prescribed – Deduction allowed – Decided in favor of Assessee.
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2013 (8) TMI 595 - ITAT CHENNAI
Land sold is agricultural land or it is to be treated as a capital asset in the terms of section 2(14) of the Act – Held that:- If a land is situated within 8 kms of the municipal limits of a city even if it is recorded as agricultural land in the revenue records, it is to be treated as non-agricultural land and for that matter an Asset but in this case, the admitted fact is that this land falls beyond 8 kms from the notified limit.
It is true that as per revenue records, the land has been recorded as agricultural land - Assessee has been showing agricultural income from this very land and the same has been accepted by the Revenue as such year after year – Assessee’s land has been agricultural land for the past many years and has been classified as such in the records of the revenue Department – Even if no agricultural production was done by the assessee on this land, this mere fact will not take out the land out of the nomenclature of 'agricultural land' – agricultural land to be held as agricultural land – Decided in favor of Assessee.
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2013 (8) TMI 594 - ITAT DELHI
Transfer pricing adjustment on account of royalty for brand name Rs. 981,406,624/- - Assessee in this case is a license manufacturer of cars in India of its Associated Enterprise SMC - In terms of the license assessee has paid lumpsum royalty as well as running royalty SMC. TPO was of the opinion that the royalty paid should be split towards technical assistance and brand – TPO concluded Suzuki brand was weak/worthless – Held that:- TPO has imputed a very large T.P. adjustment in respect of AMP expenses on the basis that the said expenses incurred by the assessee year after year since 1982 have resulted in a significant increase in Suzuki's brand value - Suzuki cannot be considered to be a weak brand which is only reinforcing on Maruti's brand and taking away value from it - TPO was not justified in making adjustment of Rs. 98,13,53,745/- Payment of above sum as royalty to SMC was attributable to use of brand name is not sustainable - No disallowance is required in payment of royalty by MSIL to SMC – Decided in favor of assessee.
Transfer Pricing Adjustment on account of AMP amounting to Rs. 1,54,12,00,000/- in relation to advertisement, marketing and sales promotion expenses (AMP expenses) incurred by the assessee – Held that:- Relying upon the decision in the case of M/s L.G. Electronics India (P) Ltd. Vs. ACIT [2013 (6) TMI 217 - ITAT DELHI], expenses in connection with the sales do not lead to brand promotion and thus cannot be brought within the ambit of advertisement, marketing and promotion expenses for determining the cost/value of the international transaction - Assessing officer to exclude the expenses incurred by the assessee in connection with the sales as the same do not fall within the ambit of AMP expenses and hence not to be considered for computing the cost/ value of international transaction - The TPO has to decide the rate of AMP expenses by applying the proper comparables after hearing the assessee, in view of the Special Bench directions in this behalf in the case of of M/s L.G. Electronics India (P) Ltd. (2013 (6) TMI 217 - ITAT DELHI) - Issue remitted with regard to the transfer pricing adjustment in respect of AMP expenses to the file of the TPO.
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2013 (8) TMI 593 - ITAT AMRITSAR
Penalty u/s 271AAA of the Income Tax Act - Immunity - Penalty where search has been initiated - Penalty has been imposed only because of alleged non compliance with the provisions of section 271AAA(2)(iii) which stipulates the payment of tax alongwith interest in respect of the undisclosed income. The only issue is that the assessee was levied interest u/s 234B for short payment of advance tax due on the income return which in turn was caused by inaction on the part of the A.O. to adjust the seized cash towards advance tax liability as requested by the assessee – Held that:- While payment of taxes, along with interest, by the assessee is one of the conditions precedent for availing the immunity under section 271AAA(2), there is no time limit set out for such payments by the assessee. Once a time limit for payment of tax and interest has not been set out by the statute, it cannot indeed be open to the Assessing Officer to read such a time limit into the scheme of the Section or to infer one. There is thus no legally sustainable basis for the stand of the Assessing Officer that in a situation in which due tax and interest has not been paid in full before filing of the relevant income tax return, the assessee will not be eligible for immunity under section 271 AAA(2).
Relying on the judgment in the case of CIT Vs Mahendra C Shah [2008 (2) TMI 32 - GUJARAT HIGH COURT], wherein it was held that Penalty provisions under section 271(1)(c) wherein Assessing Officer has to record the satisfaction in the course of assessment proceedings itself – something which is not a condition precedent for imposition of penalty under section 271 AAA - Outer limit has to be the point of time when the assessment proceedings are undertaken by the Assessing Officer because the opening portion of section 271(1) of the Act requires the Assessing Officer to record satisfaction in the course of such proceedings - Section 271 AAA, as the statute unambiguously provides, does not require any subjective satisfaction of the Asessing Officer to be arrived at during the assessment roceedings, and, therefore, the outer limit of payment before the conclusion of assessment proceedings will not come into play - On the facts of the present case wherein entire tax and interest has been duly adjusted out of seized cash or otherwise paid in deference to notices of demand, well before the penalty proceedings were concluded, the assessee could not be denied the immunity under section 271AAA(2) only because entire tax, along with interest, was not paid before filing of income tax return or, for that purpose, before concluding the assessment proceedings – Reliance is placed on the case DCIT vs. Pioneer Online Ltd in [2012 (5) TMI 6 - ITAT KOLKATA] – Decided in favor of Assessee.
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2013 (8) TMI 592 - ITAT DELHI
Addition on account of bogus sale of amount Rs.20,58,255/- - Assessee had made claim that the scrap of 18,970 kgs. was sold for Rs.20,58,245/- in cash - This scrap was stated to have been purchased from Times International on four different dates in October 2004 to December 2004. The payment for the same remained outstanding. The payment was shown as made in May 2005 - The Proprietor of Times International, Shri Mohd. Karim has also not produced details before Assessing Officer as evident from Note Sheet noting - The assessee has claimed that it has sold this brass scrap in cash on 23.12.2004 and 25.12.2004 and payment was shown as received in cash. These alleged sales are claimed to have been made to persons located at Delhi but no full name and address was given in these sale bills - Held that:- There was no sufficient storage facility available with the assessee to accommodate such huge quantity of brass scrap as the shop of assessee located in Manav Lane in Shanker Gali, Kali Masjid, Delhi. Assessee’s claim regarding purchase of scrap is not established - Assessee has failed to produce any credible evidence to establish that cash sales were effected of brass scrap. The surrounding circumstances with regard to not debiting cartage expenses and other expenditure like salary or wages also show that there was no man-power available with the assessee to deal with the huge quantity of brass scrap.
The assessee’s claim that transportation charges made to the Thelawalas is not recorded in the books of account makes the claim of assessee of sale of brass scrap as more doubtful. Thus, the assessee has failed to produce any credible evidence to establish the cash sales of the brass scrap. There is mismatch of dates appearing on the sale bills. Bill nos. 67 and 68 are dated 27.12.2004 and 28.12.2004 respectively while bill nos. 69 an 70 are dated 23.12.2004 and 25.12.2004. These facts also show that sales transactions were a covered up action of the assessee and were not genuine. There is no scope to treat this mistake as clerical mistake. Considering all records and factual aspects, the addition of Rs.20,58,255/- is confirmed – Decided against the Assessee.
Addition of Rs.7,51,946/- made on account of purchases shown from Shiva Sanitary, Jam Nagar – Held that:- Onus was on the assessee to prove the genuineness of the purchases debited in the books of account - The investigation made by the Assessing Officer shows that the party was bogus and non-existent. Further this fact has also been proved by the investigations made by the ADIT (Inv.), Rajkot. The assessee has simply expressed surprise but has not proved the purchases debited in the books of account. The investigation further proves that the assessee was indulging in providing accommodation entries – Decided against the Assessee.
Only the peak amount in respect of the cash deposited with bank account in Indus ind Bank Rs.33,40,657/-and cheque amounting Rs.15,30,450/- be added ignoring the explanation of the assessee that only commission @ 1 % need to be added – Held that:- Assessee has claimed that these were the third party cheques and cashed for 1% commission. However, no details, even names and addresses of such parties, were provided to the income-tax authorities to substantiate the claim - Addition of the peak amount only of this concealed bank account held with Indus Ind Bank Ltd was completely justified - The source of the deposits as well as the destination of the withdrawals remains unknown and unexplained. The possibility of the same money being used for deposits as well as withdrawals cannot be ruled out – Decided against the Assessee.
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2013 (8) TMI 591 - ITAT AGRA
Bogus purchase - AO letters u/s. 133(6) have been sent to various parties on the address made available with the assessee. Out of total such letters, 32 have been received back un-served. - Held that:- AO has not issued the letters u/s. 133(6) on the correct address supplied by the assessee. Therefore, no fault could be found with the explanation of the assessee. The assessee has given complete details of the parties from whom the purchases have been made. Purchase bills are supported by bank statements which have not been doubted by the AO. The account books of the assessee are audited. Sales are accepted by the AO which have been accepted by the Sales Tax Department also in their assessment. Profit rate of assessee is better is compared to the earlier years. Therefore, there is no question of holding that the assessee made bogus purchases. All the purchases are recorded in the books of account - The assessee has satisfactorily reconciled the discrepancies in the accounts of the parties except for amount upheld by CIT - Decided against Revenue.
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2013 (8) TMI 590 - ITAT AGRA
Cancellation of registration provided u/s 12AA of the IT Act, as a charitable institution – Held that:- As per para 19 of the order of ITAT in the case of Agra Development Authority [2013 (8) TMI 549 - ITAT AGRA], wherein it was stated that for exercising power of cancellation of registration under section 12AA read with section 12AA(3) of the Act by the CIT only on the condition that the CIT subsequently found and satisfied that the activities of such trust or institution are not genuine, or are not being carried out in accordance with the objects of the trust or institution – In the instant case, CIT did not give any such finding that the assessee's activities are not genuine or are not being carried out in accordance with the objects of the trust as the assessee, Mathura Vrindavan Development Authority, carried out activities which were existing at the time of allowing registration under section 12AA of the Act - Set aside the order of CIT and restore the registration under section 12AA of the Act which has been cancelled – Appeal allowed – Decided in favor of Assessee.
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2013 (8) TMI 589 - ITAT DELHI
Disallowance of fee paid to the Registrar of Companies - Amortization u/s. 35D - CIT upheld disallowance - Held that:- Fee paid to the Registrar for expansion of the capital base of the company - directly related to the capital expenditure incurred by the company - Amount paid to the Registrar of Companies, as filing fee for enhancement of capital was not revenue expenditure - Following decision of Punjab State Industrial Development Corporation Limited Versus Commissioner of Income-Tax [1996 (12) TMI 6 - SUPREME Court] - Decided against Assessee.
Depreciation of goodwill - CIT disallowed goodwill - Held that:- figure of the goodwill in the assessee's case has arisen when the existing running unit was transferred by Minda Industries Ltd. to the assessee newly firm company i.e. the assessee for a consolidated consideration of Rs. 2.75 crores and the difference between the net value of assets, which assets were recorded at book value, was recognized as 'goodwill' in the books of accounts - transaction took place in the preceding assessment years and the figure of goodwill is coming from the previous balance sheet - Addition of the words “business or commercial rights of similar nature” after the specified intangible assets clearly demonstrates intention of Legislature to provide depreciation to other categories of intangible assets which are not exhaustively enumerated. It is observed that in case of the assessee, intangible assets being Business claims; business information; business records; contracts; skilled employees; knowhow were invaluable and resulted in carrying on the transmission and distribution business by the assessee, without any interruption - Therefore, specified intangible assets acquired under slump sale agreement were in the nature of “business or commercial rights of similar nature” specified in Section 32(1)(ii) and were accordingly eligible for depreciation. It is not necessary to decide the alternative submission made on behalf of the assessee that goodwill per se is eligible for depreciation u/s 32(1)(ii) – Following decision of AREVA T & D INDIA LTD. Versus THE DEPUTY COMMISSIONER OF INCOME-TAX [2012 (4) TMI 79 - DELHI HIGH COURT] - Decided in favor of assessee.
Disallowance u/s 40A(2)(b) - Payment made to sister concern - Held that:- assessee has not supported the expenditure in this regard with proper details and supporting. Assessee has merely stated that certain list of services were being rendered for which payment is made @ 2% of the sales of the assessee company - assessee has not given any submission in this regard that the expenditure incurred by the assessee were commensurate with the market rates - matter in this regard needs to be remitted back to the file of the Assessing Officer - Decided against assessee.
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2013 (8) TMI 588 - ITAT PUNE
Depreciation on intangible asset - CIT refused to grant depreciation - Held that:- The 'Right to collect the Toll' is emerging as a result of the costs incurred by the assessee on development, construction and maintenance of the infrastructure facility. Such a right has been adjudicated by the Tribunal in the aforesaid precedents to be in the nature of 'intangible asset' falling within the purview of section 32(1)(ii) of the Act and has been found eligible for claim of depreciation - section 32(1)(ii) permits allowance of depreciation on assets specified therein being 'intangible assets' which are wholly or partly owned by the assessee and used for the purposes of its business. The aforesaid condition is fully satisfied by the assessee - Decided in favour of assessee.
Depreciation on the infrastructure facility - Held that:- Once the assessee was found not eligible for the claim for depreciation @ 25% on 'License to collect Toll' in terms of Section 32(1)(ii) of the Act, the CIT(A) proceeded to allow the depreciation on the road facility @ 10%, treating it to be in the nature of 'building' - It was a common point between the parties that the aforesaid issue is rendered infructuous as assessee has succeeded in its substantive claim of depreciation on 'License to collect Toll' @ 25% in terms of Section 32(1)(ii) - Decided in favour of assessee.
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2013 (8) TMI 587 - ITAT CHENNAI
Deduction u/s 80IC - Manufacturing activity - CIT allowed deduction - Held that:- The assessee has detailed the procedure followed to bring into existence the final product. The process being carried out by the assessee in assembling of 'Torch Light' amounts to manufacturing activity. A new and distinct product comes into existence after integration of various small components into one product having distinct name, character and use - Therefore assessee is carrying a manufacturing activity - Decided against Revenue.
Deduction u/s 80IC - Manufacturing activity in Dehradun - Held that:- The assessee in order to claim benefit u/s. 80IC of the Act, has either invoiced finished goods manufactured at Chennai from Dehradun or has debited the expenses relating to Dehradun unit to Chennai unit - Despite the fact that there are two units at Chennai, the volume of sales from Dehradun unit is seven times more than the combined sale of units at Chennai - assessee is misusing the benevolent provisions of law at the cost of Government exchequer. The deduction u/s. 80IC is being granted to the units set up in certain specified areas which are industrially backward - assessee is invoicing majority of finished goods from Dehradun whereas that substantial production is carried out at Chennai. The assessee has adopted colourable devise to take undue advantage of benevolent provisions of the Act - Decided in favour of Revenue.
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2013 (8) TMI 586 - ITAT MUMBAI
TDS u/s 194H - Impugned retention by banks/credit card agencies - Held that:- banks make payments to the assessee after deducting certain fees as per the terms and conditions in the credit card and it is not a commission but a fee deducted by the banks - assessee only receives the payment form the bank/credit card companies concerned, after deduction of commission thereon, and thus, this is only in the nature of a post facto accounting and does not involve any payment or crediting of the account of the banks or any other account before such payment by the assessee - liability to make TDS under the said section arises only when a person acts on behalf of another person. In the case of commission retained by the credit card companies however, it cannot be said that the bank acts on behalf of the merchant establishment or that even the merchant establishment conducts the transaction for the bank. The sale made on the basis of a credit card is clearly a transaction of the merchants establishment only and the credit card company only facilitates the electronic payment, for a certain charge. The commission retained by the credit card company is therefore in the nature of normal bank charges and not in the nature of commission/brokerage for acting on behalf of the merchant establishment - payments made to the banks on account of utilization of credit card facilities would be in the nature of bank charges and not in the nature of commission within the meaning of section 194H of the Act and hence no TDS is required to be deducted u/s 194 H of the Act - Following decision of DCIT V/s M/s Vah Magna Retail (P) Ltd [2013 (8) TMI 299 - ITAT HYDERABAD] - Decided against Revenue.
Withhold of tax u/s 195(3) - Held that:- assessee has also filed a copy of certificates issued by the AO u/s 195(3) of the Act dated 27.4.2006, 30.3.2007, 31.3.2008 and 31.3.2008 which are addressed to Citibank N.A. for Financial Years 2006-07 to 2008-09 respectively. On perusal of the said certificates it is specifically mentioned that the said bank is authorized to receive the payments, interests without deduction of income tax u/s 195(1) of the Act in the respective Financial Years. Similarly, the assessee has also placed on record the copy of certificates dated 27.4.2006 and 28.4.2007 which are addressed to American Express Bank Ltd authorizing the said bank to receive interalia any sum without deduction of income tax under sub-section (1) of Section 195 of the Act for Financial Years 2006-07 and 2007-08 respectively - certificates issued u/s 195(3) of the Act are applicable for the concerned Financial Years and will not be effected only from the date of issuance as stated by the AO - Decided against Revenue.
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2013 (8) TMI 585 - ITAT MUMBAI
Benefit of DTAA between India and UAE - whether time charter and hiring of slots fell within the Article 8 of the Treaty or not. - CIT granted benefit - Held that:- a tax treaty not only prevents current' but also potential' double taxation. - assessee, who is tax resident of UAE, but has not paid taxes there - assessee is 'otherwise liable to tax' in UAE. Simply because there is no tax incidence in UAE, does not mean that the assessee ceases to be 'otherwise liable to tax', as per Article 4. Once the assessee, gets within the expression 'otherwise liable to tax' in UAE Treaty, DTAA becomes operative - Order of CIT set aside.
The case of Balaji Shipping (2008 (8) TMI 389 - ITAT BOMBAY-L) cannot be relied upon, simply because Article 8 is differently worded. - the wordings used in Article 8 in UAE Treaty is pari materia to the language used in US Treaty - there is no detailed reasoning in the orders of the revenue authorities, giving the nature of the receipts from shipping business - matter remanded back.
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2013 (8) TMI 562 - ALLAHABAD HIGH COURT
Disallowance of Advertisement expenditure – enduring benefit - Held that:- Neither the Assessing Officer nor the CIT(A) has disputed the revenue nature of the advertisement expenses of Rs.77,16,120/-. There is no dispute that such expenses is allowable expenditure. Merely because the assessee has firstly shown the entire amount in the books of accounts as deferred revenue expenditure and thereafter debited Rs.29,51,909/- in the profit and loss account cannot be made a ground to disallow the advertisement expenses of Rs.77,16,120/- when indisputably in the computation of income, the assessee has claimed the entire sum of Rs.77,16,120/- after adding back Rs.29,51,909/- to the profit as per profit and loss account. - Decided in favor of assessee.
Reliance is placed upon the Apex court judgment in the case of Empire Jute Co. Ltd. Vs. CIT [1980 (5) TMI 1 - SUPREME Court] - Test of enduring benefit alone is not conclusive for treating any expenditure as capital expenditure and it is relevant to find out or ascertain as to whether such expenditure results into an advantage of enduring nature to the assessee in the capital filed or revenue filed so as to decide the exact nature of the said expenditure and allowability of the same under the Income-tax Act.
Disallowance for provision of warranties - One year warranty is offered on each computer manufactured and sold by it to purchasers and in terms thereof the assessee provide free maintenance including replacement of parts within one year from the date of sale / installation of computers – Held that:- Provision for warranty is rightly made by the appellant-enterprise because it has incurred a present obligation as a result of past events. There is also an outflow of resources. A reliable estimate of the obligation was also possible. Therefore, the appellant has incurred a liability, on the facts and circumstances of this case, during the relevant assessment year which was entitled to deduction under Section 37 of the 1961 Act – Applying the decisions in the cases Bharat Earth Movers Ltd. Vs. CIT [2000 (8) TMI 4 - SUPREME Court]; Rotork Controls India Private Limited Vs. Commissioner of Income Tax, Chennai [2009 (5) TMI 16 - SUPREME COURT OF INDIA], it was held that provision for warranty is allowed as expenditure – Decided against the Revenue.
Disallowance of provision of royalty, ignoring the provisions of Section 40(a)(i) of the Income Tax Act, 1961 - Section 40(a)(i) of the Act provides that royalty payable out side India shall not be deducted in computing the income chargeable under the head of "profits and gains of business or profession" on which tax has not been paid or deducted under Chapter XIII B – Held that:- Liability to pay royalty had accrued and was not contingent has held by the assessing officer, while making the provision the assessee had also made book entries in respect of tax deductible. Thus, out of two conditions as mentioned in Section 40(a)(i), namely, "tax has not been paid" or "deducted", one condition, namely, "not deducted" do not exist inasmuch as the tax has been deducted and therefore, the provision of Section 40(a)(i) will not be attracted.
In the present case the tax has been deducted and thus in that event the provision of Section 40(a)(i) stands satisfied - Provision of Section 40(a)(i) was substituted by Finance Act (No.2), of 2004 which puts the condition that where tax is deductible at source under Chapter XVII B, and such tax has not been deducted or, after deduction, has not been paid during the previous year, or in the subsequent year before the expiry of the time prescribed under sub-Section (1) of Section 200, then the royalty shall not be deducted in computing the income chargeable under the head "Profits and gains of business of profession". Thus, subsequent amendment making specific provision of deduction and payment thereof in the previous year or in the subsequent year was not available under Section 40(a)(i) as it existed during the relevant assessment year i.e. Assessment Year 1991-92 - Assessee has deducted the tax during the previous year relevant to the assessment year in question i.e. A.Y. 1991-92, the conditionality of Section 40(a)(i) stands satisfied - Royalty as claimed by the Assessee-Respondent was unascertained liability, has been found to be incorrect – Expenditure under the head provision for royalty allowed – Decided against the Revenue.
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2013 (8) TMI 561 - MADRAS HIGH COURT
Exemption under Section 10B - Establishment or revival of a new Export Oriented Unit - Whether on the facts and circumstances of the case, the Income Tax Appellate Tribunal was right in holding that the assessee company had established a new Export Oriented Unit which was not a revival or reconstruction of the old unit disregarding the facts narrated by the Assessing Officer? - Held that:- The orders passed by the Commissioner as well as by the Tribunal were thus based on the order passed by the Tribunal for the assessment year 1994-95 and there are no materials placed before this Court to contend that the assessee had violated the conditions of licence, thereby disentitling the assessee to have the benefit of deduction under Section 10B of the Act - Decided against Revenue.
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