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Showing 421 to 440 of 772 Records
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2005 (2) TMI 452 - ITAT CALCUTTA-C
Business Expenditure - business of share & stock brokerage - Nature of expenditure - Whether, the expenditure incurred by the assessee towards development fee and fees for operating on the floor paid to Calcutta Stock Exchange Association, towards admission fee and technology cost paid to OTC Exchange of India and towards Non-adjustable deposit for Membership subscription and deposit for Very Small Aperture Terminal (VSAT) paid to National Stock Exchange of India could be treated as revenue or capital expenditure? - HELD THAT:- There is no doubt that with a view to carry on business of share trading and share brokerage more efficiently and profitably in the present scenario of the Stock Market and working of Stock Exchanges, the operating on the floor of Stock Exchange is very much essential without which it would be difficult to manage and conduct the business of share trading and share brokerage more efficiently or more profitably. The payment is not related or connected to any capital asset which might have acquired by the assessee. It is closely linked to the business of share-trading or share-brokerage carried on by the assessee during the year under consideration.
The payment is not of the same nature as of the development fee paid to Calcutta Stock Exchange to become a member thereof by acquiring one or more share of the said Calcutta Stock Exchange Corporation Ltd. The "member" as defined in Article 1 of the Articles of Association of the Calcutta Stock Exchange Association Ltd. means any individual or a company or a Financial Corporation registered in the Register as the owner of the one or more shares in the Association. Thus, the payment of development fee to become a member of the Association and to acquire one or more shares in the Calcutta Stock is on different footing than that of making payment to operate on the floor of the Stock Exchange. Applying the cumulative effect of all the decisions referred to above in foregoing papers and the principles emerging therefrom to the facts of the present case, and having regard to the nature and object of the payment of fee for operating on the floor of the Stock Exchange, we hold that the payment of Rs. 1,50,000 made to Calcutta Stock Exchange for operating on the floor of the Exchange is allowable as being of revenue in nature. Payment of admission fee and technology cost to OTC Exchange of India
It is not in dispute that the said dealership was not transferable and neither the admission fee was refundable in any case. Even if the assessee decides or force to terminate the dealership or if the OTC Exchange of India terminates the dealership, the fee as admission fee was not refundable to the assessee as is clearly evident from the terms and conditions of appointment as a dealer of OTC Exchange of India. Similarly the payment of technology cost for providing training to the assessee's employees for the purpose of making them qualified as per OTC Exchange of India's qualification procedure is found to be necessary or condition precedent for carrying on day-to-day business as a dealer on OTC Exchange of India and to operate the counter thereof. The aim and object of the aforesaid expenditures are thus for carrying on the assessee's business and as such these are of revenue in nature. On the facts of this case, we find no reason to hold that the assessee has derived an advantage of enduring nature on capital field or otherwise has acquired any capital asset.
Deposit for Very Small Aperture Terminals (VSATs) - On perusal of the details of the deposit for installation of VSATs equipments, it is thus clear that an amount towards charges for VSATs services and facilities availed by the assessee is related to the period relevant to the assessment year under consideration. Therefore, the assessee's claim being revenue expenditure is only found to be allowable in the present assessment year under consideration and rest of the amount are allowable in subsequent years to the extent of such amount as relatable to the respective years. We order accordingly.
In the result, we answer the question referred to the Special Bench in the manner as indicated above, and thus held as under:
(i) The expenditure towards development fee paid to Calcutta Stock Exchange Association Limited is of capital in nature.
(ii) The expenditure towards fee for operating on the floor paid to Calcutta Stock Exchange Association is of revenue in nature.
(iii) The expenditure towards admission fee as a dealer on OTC Exchange of India, and payment of technology cost for providing training to the assessee's employees paid to OTC Exchange of India are of revenue in nature.
(iv) The expenditure towards non-adjustable deposit for admission as a Trading Member of the wholesale Debt market of National Stock Exchange of India and the expenditure towards Very Small Aperture Terminals (VSATs) paid to NSEIL are of revenue in nature.
Since there are other grounds of appeal in this case, the records will now be placed before the Division Bench for disposal in accordance with law.
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2005 (2) TMI 451 - ITAT CALCUTTA-A
Business Expenditure ... ... ... ... ..... of the Hon ble Supreme Court, we dismiss the said ground No. 3 of the appeal relating to the asst. yr. 1999-2000. 17. The last issue left for being considered in the appeal pertains to ground No. 2 relating to the asst. yr. 2000-01. We find that the relief prayed for by the assessee in this ground is with respect to the computation of interest under s. 234C of the Act after giving full credit for the TDS certificates submitted during the assessment. We restore the issue to the file of the AO for computing the interest under s. 234C of the Act in accordance with law and after taking into account all prepaid taxes in the form of TDS and advance taxes. Accordingly, ground No. 2 of the appeal relating to the asst. yr. 2000-01 is treated as allowed for statistical purposes. 18. In the result, the appeals relating to the asst. yr. 1998-99 (ITA No. 59/Kol/2004), 1999-2000 (ITA No. 667/Kol/2004) and 2000-01 (ITA No. 788/Kol/2004) stand partly allowed in the manners referred to above.
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2005 (2) TMI 450 - ITAT CALCUTTA-A
Tax deductible at source - Payment To Non-Residents - services rendered for providing technical plan, design and finalizing construction of the water systems - DTAA between India and USA - Whether it was falling under article 7 or article 12 of DTAA - HELD THAT:- We are of the opinion that the payments effected under the agreement with the American company squarely fell within the definition of "fees for included services" and therefore the assessee was liable to deduct tax @ of 15% of the amount payable, under section 195 of the Act. In the case of Raymond Ltd. [2002 (4) TMI 891 - ITAT MUMBAI] the payment was effected by the assessee to a company, Resident of U.K.
The nature of activities contemplated in the contract between the Indian company and the U.K. company were totally different as the question was whether the amount so paid were fees for technical services. In that case although Tribunal held that services rendered were technical services; due to specific clauses of DTAA between U.K and India, income was not taxable. Moreover, since there is a specific clause included in article 12(4) of DTAA with the USA which defines the term fees for included services and further since the payment made under the agreement in the present case falls within the said definition, the assessee cannot get benefit of the decision of the Mumbai Bench which was rendered in the context of DTAA between India and U.K.
On the contrary we find that the substance of the present agreement envisaged that the American company shall not only advice the Indian company but in fact it will prepare all the designs and drawings necessary for implementing the Water Features and also assist the Indian company in actual erection and commissioning of water features. We thus find that from the very inception of preparing schematic designs and drawings till the actual implementation and commissioning of the water features the American company was intimately connected with the project and in fact the whole project was intended to be conducted at the behest direction and supervision of the American company. In the circumstances the decision of the Coordinate Bench in the case of CESE Ltd. [2003 (8) TMI 538 - ITAT KOLKATA] cannot be applied.
We, therefore, agree with the view taken by the CIT(A) that the amounts payable to American company were "fees for included services" within the meaning of article 12(4)(b) of the DTAA with the USA and therefore liable for withholding of tax u/s 195 of the Act. Accordingly, we dismiss the appeal of the assessee.
In the result, the appeal is dismissed.
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2005 (2) TMI 449 - ITAT BOMBAY-J
Reason To Believe ... ... ... ... ..... caped assessment. The underlying reason for that is that instances of concealed income or other income escaping assessment in a large number of cases come to the notice of the IT authorities after the assessment has been completed. 15. Having regard to the facts and circumstances of the case, we find that there is no reason to believe that income has escaped assessment and reopening has been done solely to re-estimate the hedging loss. This, in our opinion, cannot be done because the cl. (c) of Expln. 2 to s. 147 is to be read in conjunction with main s. 147 which continues to contain the phrase AO has reasons to believe . In this case, there is no reasons to believe but mere reasons to suspect that the estimate made by the AO in the original assessment was on the lower side and in the assessment reframed, the AO on same facts made a higher estimate, which is not permissible. We, therefore, incline to uphold the order of the CIT(A). 16. In the result, the appeal is dismissed.
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2005 (2) TMI 448 - ITAT BOMBAY-J
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... ... ..... that the appellant has nowhere produced evidence to prove that Shri N. Mahalingam was a regular employee of the company. On the contrary, from the facts brought on record, it appears he was only authorized to operate the bank accounts of the company. Unless a person is a regular employee of the company and there is a master and servant relationships, such claims are not allowable. We, therefore, decline to interfere. 37. The appellant s last ground of appeal is against charging of interest under s. 234B of the Act on the ground that the AO did not specifically direct this in his assessment order. We are of the view that Supreme Court s order in the case of CIT vs. Anjum H. Ghaswala has made charging of interest mandatory Non-mention of the direction in the assessment order by the AO is only a technical omission which cannot prevent the mandatory provisions of the Act to come into operation. We, therefore, decline to interfere. 38. In the result, the appeal is partly allowed.
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2005 (2) TMI 447 - ITAT BOMBAY-J
Challenged the revision order passed u/s 263 - erroneous and prejudicial to the interest of Revenue - reducing the DEPB entitlements from profits of the business - HELD THAT:- We are of the view that on the given facts and circumstances of the case, it cannot be said that the order of the AO is erroneous and prejudicial to the interest of Revenue. The AO has passed the order under s. 143(3) after taking all the necessary details and after discussing the case with the representative of the assessee. Now, the learned CIT has a different view on the issue involved. Under the circumstances, the decision of Hon'ble Supreme Court in the case of Malabar Industries Co. Ltd. [2000 (2) TMI 10 - SUPREME COURT], comes to the help of the assessee.
Thus, we hold that on the given facts and circumstances of the case, the learned CIT was not justified in invoking the jurisdiction u/s 263. Accordingly, the order of the learned CIT is quashed.
In the result, the appeal filed by the assessee is allowed.
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2005 (2) TMI 446 - ITAT BOMBAY-I
Business Income ... ... ... ... ..... While computing taxable income, the assessee estimated the cost of construction of 24 flats and claimed the same as deduction. The assessing authority disallowed the claim but the CIT(A) held that the construction and sale of flats were subject to the liability attached to it in the form of construction of other sets of flats and shopping complex, and the income of the assessee could be rightly worked out only if the expenditures towards construction of those flats and shopping complex also were taken into consideration. The above position of the CIT(A) was confirmed by the Tribunal in the said order holding that the liability was real and had to be deducted in computing the taxable income of the assessee. 21. In the facts and the circumstances of the case, we direct the assessing authority to allow the amount of Rs. 1,08,16,500 as deduction in computing the taxable income of the assessee-company. 22. In result, this appeal filed by the assessee is allowed. Order accordingly.
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2005 (2) TMI 445 - ITAT BOMBAY-I
Maintainability ... ... ... ... ..... isfied and the conditions were fulfilled. So according to us, at that stage, it was catastrophic to withdraw the exemption already granted under s. 10(15)(iv)(f). Due to the withdrawal of the exemption the impugned order under s. 195(2). now under dispute was passed directing to deduct withholding tax at the rate of 20 per cent. To arrive at a logical conclusion first we hold that, considering the totality of the facts, circumstances, conditions of the scheme, evidences of utility of the funds and the legal matrix of the case the withdrawal of exemption was unwarranted. Consequent thereupon we also hold that the appellant-company was not liable to deduct withholding tax at the rate of 20 per cent in respect of the interest payment of US 105,902 to M/s Deutsche Bank-AG. With the result, we hereby quash the order passed under s. 195(2) of the IT Act as well as reverse the findings of learned CIT(A). We order accordingly. 23. In the result, the appeal of the assessee is allowed.
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2005 (2) TMI 444 - ITAT BOMBAY-I
Additional Ground ... ... ... ... ..... y, the impugned block assessment is liable to be set aside. 68. In the facts and circumstances, the impugned block assessment order is set aside on the following short grounds (i) The search has not brought out any evidence and material to hold that the deductions claimed by the assessee-firm under ss. 80HHC and 80-IA were false. (ii) The deductions allowed under ss. 80HHC and 80-IA have been withdrawn by the assessing authority on the basis of materials already disclosed to the Department in the course of regular assessments. 69. As the block assessment order is set aside on the grounds stated above, we do not find it necessary to consider the other grounds, both of law and of facts, raised by the assessee-firm. 70. As the impugned assessment is held as bad in law and set aside, the grounds raised by the Revenue in its appeal become infructuous. 71. In the result, the appeal filed by the assessee is allowed and the appeal filed by the Revenue is dismissed. Order accordingly.
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2005 (2) TMI 443 - ITAT BOMBAY-G
Interest On Borrowed Capital ... ... ... ... ..... ide para 13 hereinabove, we delete the addition of Rs. 66,220 sustained by the CIT(A) for the asst. yr. 1991-92 as well and allow the grounds of the assessee on this issue. 28. The next grievance of the assessee in this appeal is that the CIT(A) erred in sustaining disallowance of interest amount of Rs. 5,640 on account of alleged cash balance held by the assessee. Facts and circumstances leading to the disallowance in question are similar to those considered by us while considering corresponding disallowance made by the AO and sustained by the CIT(A) for the asst. yr. 1989-90. Hence, following our decision for that year vide para 5 hereinabove, we delete the addition of Rs. 66,220 sustained by the CIT(A) for the asst. yr. 1991-92 as well and allow the grounds of the assessee on this issue. 29. In the result, appeal of the assessee for the asst. yr. 1991-92 is allowed. 30. To sum up, both the appeals of the assessee are allowed and the only appeal of the Revenue is dismissed.
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2005 (2) TMI 442 - ITAT BOMBAY-F
Income From Other Sources - interest income earned during the pre-operative period - deductible u/s 57(iii) - HELD THAT:- Since consolidated details of expenses have been maintained, apportionment has been done by the assessee on pro-rata basis. It is seen that the assessee-company has also taken into account the various administrative expenses. On estimate basis, the assessee-company has apportioned these administrative expenses as pertaining to earning of interest income. In our view, all administrative expenses have been primarily incurred for the purpose of the assessee's business and the assessee-company is not required to incur such administrative expenses for earning interest income, which flows from the term deposits made with the banks. Therefore, in our view, the administrative expenses or part thereof cannot be allowed u/s 57(iii).
Only interest expenditure is required to be apportioned to the investment which are yielding interest income to the assessee. The Assessing Officer is, therefore, directed to work out the quantum of interest expenditure, which is allowable u/s 57(iii) on pro-rata basis as per the details already made available by the assessee and reproduced by the ld. CIT(A) in his order, in respect of all the three assessment years. Opportunity shall be allowed to the assessee.
In the result, while the appeals are allowed.
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2005 (2) TMI 441 - ITAT BOMBAY-E
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... ... ..... sessee are not applicable because either they pertain to assessment year prior to 1993-94, insertion of section 64(1A) of the Act or regarding allowance of deduction which are to be allowed for computing the income under a particular head of income for example the decision of Karnataka High Court in the case of S.K. Nuyak the issue was regarding allowance of standard deduction for the purpose of including income from salary of spouses in the hands of husband (assessee). 19. For the aforesaid reasons, we hold that prima facie adjustment for both assessment under appeal was correctly made by the Assessing Officer and Learned CIT(A) clearly erred in deleting the same on the ground that issue regarding allowance of addition under section 80L of income of minor child clubbed under section 64(1A) is of debatable nature. We, therefore reverse the order of the CIT(A) and prima facie adjustment made by the Assessing Officer are restored. 20. In the result both the appeals are allowed.
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2005 (2) TMI 440 - ITAT BANGALORE-A
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... ... ..... g different provisions of the IT Act, 1961. In the present case, the assessee has furnished the details regarding her business, investments in such businesses, sources of income, etc. Through her letter dt. 15th May, 1995, in compliance of the notice issued by the ADI, Madurai, under s. 131 of the IT Act. Disclosing certain details and particulars in compliance of a requisition made by an appropriate authority under s. 131 of the IT Act amounts to disclosure of such particulars and details for the purposes of the IT Act, 1961. In view of our finding above and relying on the decision of Hon ble Supreme Court in the Tarsem Kumar case and decision of Tribunal, Chennai, addition of Rs. 50 lacs is required to be deleted. 7. The grounds relating to validity of notice, charging of interest under s. 158BFA(1) and initiating proceedings under s. 158BFA(2) were not pressed before us. The same are therefore dismissed for want of prosecution. In the result, the appeal is partly allowed.
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2005 (2) TMI 439 - ITAT BANGALORE-A
Rectification of mistakes ... ... ... ... ..... e case of Volkart Brothers and Ors., an order cannot be rectified under s. 154 when two views are possible on the subject-matter. Hon ble Karnataka High Court in God Granites case held that prima facie adjustment is not permissible in an intimation under s. 143(1)(a) where two plausible views are existing. In the present case, it is seen that rectification under s. 154 was effected to an intimation under s. 143(1)(a). What cannot be made by way of prima facie adjustment in s. 143(1)(a) cannot be done indirectly by resorting to s. 154. We accordingly set aside the order passed under s. 154. 5.1 Learned Departmental Representative relied on the Hon ble Karnataka High Court in the case of Nicco Corporation Ltd. From the facts it is not clear whether the said company was distributing dividend or not. In absence of the said fact which is very relevant for the issue on hand, we are unable to apply the said decision to hold against the assessee. In the result, the appeal is allowed.
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2005 (2) TMI 438 - ITAT BANGALORE-A
Double Taxation Relief - purchase of software - payment made to the foreign companies - Whether, the payment is royalty or not - HELD THAT:- According to the ITO (TDS), the payment made by the assessee-company to the foreign companies for purchase of software is to be treated as royalty u/s 9(1)(vi) of the IT Act read with section DTAA of relevant countries.
In view of the provisions of section 90(2) of the Act, we have to give preference to the definition as provided in the treaties. Apart from the provisions of the treaties, we have to consider the licence agreement entered into by the assessee with foreign companies which has been quoted at page 17 of the paper book filed by the revenue. It has been submitted by the revenue that under such an agreement, the developer of the software licences its intellectual property in the software in favour of the licensee. As a result of such agreement, the licensor of the software retains ownership over the copyright in the software and protects such copyright in the licence
On perusal of the agreement between the parties, we are of the view that in the present case also what the assessee had acquired is only a copy of the copyrighted articles i.e., software, whereas the copyright remains with the owner, i.e., foreign parties.
We find that the incorporeal right to software i.e., copyright remained with the owner and the same was not transferred to the assessee. We have also noticed the definition of 'royalty' in the DTAA, which has been quoted above. The primary condition for bringing within the definition of 'royalty' in DTAA is that the payments of any kind received as consideration for the use of or right to use any copyright of a literary, artistic or scientific work etc., Right to use of a copyright is totally different from right to use the programme embedded in a cassette or CD or it may be a software.
In this case, the assessee had acquired a ready made off the shelf computer programme for being used in its business. No right was granted to the assessee to utilize the copyright of the computer programme. The assessee had merely purchased a copy of the copyrighted article, namely, a computer programme which is called 'software'. Looking to the circumstances of the case and considering the fact that the definition of 'royalty' as provided in the treaties does not apply to the facts of the case. We are of the view that the finding recorded by the authorities below cannot be sustained. Accordingly, we hold that the remittance made by the appellant for purchase of software is not an income in India, hence, no tax is to be deducted in India under section 195 of the Income-tax Act, 1961. Since we have decided the issue on merit, therefore, we are not going into the technical objections raised on behalf of the assessee.
In the result, the appeals are allowed.
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2005 (2) TMI 437 - ITAT AMRITSAR
Jurisdiction ... ... ... ... ..... d to be let out. Considering the above discussion and the case law referred to above, we set aside the orders of the authorities below. The addition is uncalled for in the matter. The same is accordingly deleted. As a result, the appeal of the assessee is partly allowed. 24. ITA No. 386/Asr/2002-(Assessee s appeal-Asst. yr. 1999-2000) This appeal is filed by the assessee on merits. There is no challenge to the jurisdiction of the AO. In this case, the AO estimated the ALV at Rs. 81,451 and the CIT(A) allowed the appeal of the assessee partly restricting the AL V of the property at Rs. 54,000. The facts and the circumstances are identical as are decided in ITA No. 491/Asr/2001. By following our earlier order, we set aside the orders of the authorities below, delete addition and allow the appeal of the assessee. 25. Considering the facts of the case, parties shall bear their own costs. 26. As a result, ITA No. 491/Asr/2001 is partly allowed and ITA No. 386/ Asr/2002 is allowed.
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2005 (2) TMI 436 - ITAT AMRITSAR
Reason To Believe ... ... ... ... ..... e submitted that the assessee got the benefit of TDS certificate in the asst. yr. 2000-01 as the whole amount of interest of Rs 8,54,764 was shown in the asst. yr. 2000-01. The contention of the learned Departmental Representative regarding filing of the revised return is liable to be rejected because of the finding given above. 14. Considering the above discussion and the case law referred to above, we set aside the orders of the authorities below and hold that the interest income did not accrue in favour of the assessee on the debit balance of M/s Arihant Cotsyn Ltd. for the assessment year under appeal, i.e., 1999-2000. The addition of Rs. 8,54,764 is, therefore, unwarranted. We delete the same. The appeal of the assessee is accordingly allowed on this issue. 15. The learned counsel for the assessee submitted that other grounds are consequential in nature and as such call for no interference. 16. As a result, the appeal of the assessee is allowed partly as indicated above.
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2005 (2) TMI 435 - ITAT AMRITSAR
Condonation Of Delay ... ... ... ... ..... and for promoting the cause of justice, I am of the view that the CIT(A) ought to have condoned. the delay in filing the appeal I, therefore, set aside the order of CIT(A) and direct him to treat the appeal on time. This ground of appeal is allowed. 6. The next ground relates to sustaining the penalty imposed by the AO under s. 271(1)(c) of the IT Act. The learned CIT(A) has dismissed the appeal in summary manner without dealing with submissions of the assessee probably the reason that delay in filing the appeal was not condoned. Since the delay in filing the appeal is now condoned, I set aside the order of the CIT(A) and restore the matter on his file for deciding the same de novo after allowing proper opportunity to both the parties. Needless to say that CIT(A) shall pass a speaking and reasoned order while re-deciding the matter. This ground of appeal is treated as allowed for statistical purpose. 7. In the result, the appeal is treated as allowed for statistical purposes.
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2005 (2) TMI 434 - ITAT AMRITSAR
Reassessment ... ... ... ... ..... d ab initio. Before parting with this issue, it must be mentioned that even though the assessment year involved was 1988-89 and amended provisions came into being only w.e.f. 1st April, 1989, i.e., asst. yr. 1989-90, the law applicable would be one, as it existed on the date of issue of notice. Reliance in this regard is placed on the judgment of Hon ble Jharkhand High Court in the case of Navketan Enterprises vs. CIT (2001) 169 CTR (Jharkhand) 562 (2001) 250 ITR 508 (Jharkhand). In the light of these facts and circumstances of the case and legal position discussed above, I quash the assessment order as bad in law and resultant order of the CIT(A) is also quashed. Accordingly, all the grounds of appeal are allowed. 9. As regards the merits of the case, it is mentioned that since the assessment order has been quashed, I do not consider it necessary to discuss the merits of the case. Therefore, this ground is disposed of in these terms. 10. In the result, the appeal is allowed.
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2005 (2) TMI 433 - ITAT AMRITSAR
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... ... ..... 978) 111 ITR 248 (P and H), the Hon ble Punjab and Haryana High Court has held that doctrine of mens rea has no application to the taxing statutes. Where the assessee had failed to furnish a return of income without a reasonable cause, this was sufficient for the imposition of penalty under s. 271(1)(a) of the IT Act. In the present case, the assessee has failed to do so. Therefore, it is clear that the assessee has no explanation to offer for such inordinate delay. Accordingly, the submission of the assessee that the penalty has been imposed without allowing an opportunity is without any merit. This ground of appeal is also rejected. 10. In the light of these facts and circumstances of the case and the above legal position, I am of the considered opinion that the learned CIT(A) has rightly sustained the impugned penalty. The order of the CIT(A) is upheld and the grounds of appeal of the assessee are rejected. 11. In the result, the appeal filed by the assessee is dismissed.
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