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2011 (7) TMI 1220
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... ... ..... rk on plain cloth. After the embroidery work, the end-product is known as a commodity different from plain cloth. We are, therefore, of the view that the ld. CIT(A) rightly took the view that the assessee is engaged in manufacturing so as to entitle depreciation under section 32(1)(iia) in respect of new embroidery machine purchased in the previous year relevant to the assessment year under appeal. This view is supported by the ratio in judgement of the Hon’ble Karnataka High Court in the case of Darshak Ltd. (supra). 6.2 In view of the foregoing, we incline to uphold the order of the ld. CIT(A) whereby he directed the AO to allow additional depreciation under section 371(1)(iia) of the I.T. Act in respect of embroidery machine purchased during the previous year relevant to the assessment year under appeal. Resultantly, the appeal of the Revenue is dismissed. 7. In the result, the appeal filed by the Revenue is dismissed. The Order pronounced in the Court on 08.07.2011
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2011 (7) TMI 1219
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... ... ..... td. and M/s.Aswani Industries, Surat respectively. I, therefore, relying upon the above decisions and my order in appeal No.CAS-11/328/09-10 hold that embroidery work done on the embroidery machine is an activity of manufacturing. The appellant is, therefore, entitled to additional depreciation u/s.32(1)(iia) of the Act, and I direct the Assessing Officer to allow the same. This ground of appeal is allowed.” 3. Now before us, the following decisions are placed on record - Sl.No(s) Decision in the case of … In ITA No(s)… 1. ITO vs. M/s.Aswani Industries, Surat 213/Ahd/2010 A.Y. 2007-08 Dated 29/10/2010 2. ITO vs. Haripriya Processors Pvt.Ltd. 1569/Ahd/2010 A.Y. 2007-08 Dated08/09/2009 4. Respectfully following these decisions, we find no fallacy in the view taken by the Learned CIT(Appeals). Revenue’s this ground is dismissed. 5. In the result, the appeal of the Revenue is dismissed. Order signed, dated and pronounced in the Court on 22nd July, 2011.
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2011 (7) TMI 1218
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... ... ..... me of the company or in the name of the director and it covers all the tax payable by the assessee. As per Rule 37BA of the Income-tax Rules, 1962 the Assessing Officer is required to give credit for the TDS certificate filed by the assessee company either in the name of the assessee or in the name of the director. Being so when due credit has been given to this TDS certificate there would be no balance of tax payable by the assessee. Accordingly, the assessee is not liable for interest under section 234B and 234C of the Act. The grounds raised by the Revenue are devoid of merit and the same are dismissed. Respectfully following the above and the facts and the circumstances of both these cases are quite similar and identical, we uphold the findings of the CIT (A) for the years under consideration and reject the grounds raised by the Revenue in these appeals. 3. In the result, all the appeals filed by the Revenue are dismissed. Order pronounced in the Open Court on 28-7-2011.
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2011 (7) TMI 1217
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... ... ..... e of the appeals by setting aside the orders of the Tribunal and that of the first appellate authority on this issue and remand all the assessments back to the Assessing Officer for reworking disallowance under Section 14A in the case of each assessee for each assessment year. The proportionate disallowance under Section 14A should be limited to only interest liability and not overheads or administrative expenditure; which should be considered for disallowance under Rule 8D from 2007-2008 onwards.” o p /o p The assessment year involved in the present appeal is 2006-07. We, therefore, following the decision of the Hon’ble Kerala High Court, hold that no disallowance can be made prior to 2007-08. Hence, the disallowance of ₹ 2,38,430/-made by the AO is deleted. o p /o p 13. In the result, the appeal filed by the Revenue is dismissed whereas the Cross- Objection filed by the assessee is allowed. o p /o p The Order pronounced in the Court on 08.07.2011 o p /o p
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2011 (7) TMI 1216
Unexplained Cash Credits u/s 68 - No independent Inquiry by AO - Principal of Natural Jusitice - AO made an addition u/s 68 by treating the share application money as asssessee’s own income as bogus cash credit - AO relied upon some statements of directors of Kolkata Based companies for investigation
HELD THAT: - It is evident from the assessment order that the AO has not conducted any independent enquiry during the assessment proceedings; but simply relied upon the report as well as the statements of the directors of various Kolkata based companies, who have paid the application money.
Violation of Principle of Natural Justice - There is gross violation of Natural Justice when the AO asked the assessee to produce the directors for availing opportunity of cross examination. Therefore, there is a total denial of opportunity to the assessee to cross examine the persons, whose statements are used against the assessee.
In the case of COMMISSIONER OF INCOME TAX VERSUS ASHWANI GUPTA [2010 (2) TMI 42 - DELHI HIGH COURT], it was held that, AO had passed the assessment order in violation of the principles of natural justice in as much as he had neither provided copies of the seized material to the assessee nor had he allowed the assessee to cross-examine.
Regarding unexplained cash credit - It is cleared from the decision of the Hon’ble Delhi High Court in the case of COMMISSIONER OF INCOME TAX VERSUS OASIS HOSPITALITIES (PVT.) LTD & UP BONE MILLS INDIA LTD. & VIJAY POWER GENERATORS LTD. & DIRECTOR OF INCOME-TAX [2011 (1) TMI 194 - DELHI HIGH COURT], that "once the assessee filed copy of PAN, Acknowledgement coy of the return of income of the investing companies, their bank accounts statements for the relevant period; then even the parties were not produced in spite of the specific directions of the Assessing Officer, the addition could not be sustained as the primary onus was discharged by the assessee by producing the PAN, balance sheet, copy of the acknowledgement copy of return of the applicants etc."
The case of the revenue is that the cash moved from the assesse routed though various leveland then reached to the assesse in the form of share application money. The stand of the revenue is not in consonance with the statements of the directors of the investing companies which is the basis of the investigation report as well as addition by the AO. The said statements do not support the case of the revenue and the reliance place by the AO on such statements is highly misplaced and improper.
When the stand of the revenue is in total contraction of the material on record then then in view of the latest decision of the Hon’ble Delhi High Court in the case of Oasis Hospitalities P Ltd, we are of the considered opinion that the issue can be decided on merit and need not to be remand to the record of the AO because at the time of the order for the AY 2005-06, the coordinate Bench of the Tribunal was not having the benefit of the decision of the Oasis Hospitalities P Ltd. Further in view of the decision of hon’ble Gujrat High Court in case of RAJESH BABUBHAI DAMANIA VERSUS COMMISSIONER OF INCOME TAX. [2000 (6) TMI 5 - GUJARAT HIGH COURT], we see no reason for giving the A.O. any further innings to fill up the lacunas or lapses in the assessment which would cause a great injustice to the assesse.
The share application money cannot be treated as income of the assessee company until and unless it is proved beyond doubt that the assessee’s own money has come back through some closely related applicant. Once the identity of the applicant is disclosed and found as correct, then, even if the said transaction is suspected by the revenue authorities, the same cannot be treated as income of the assessee company which is a public limited company. Accordingly, we delete the addition made by the Assessing Officer - Decision in favour of Assessee
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2011 (7) TMI 1215
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... ... ..... interest included in the amount received from ECGS/DIGC? Thus what is the grievance of the Revenue against such direction of the ld. CIT(A). The ld. D.R. could not point out any error in the order of the ld. CIT(A) and therefore, this ground of appeal of the Revenue is dismissed. o p /o p 70. To sum up, in the result, appeal of the assessee for Assessment Year 2002-03 stands dismissed, for Assessment Year 2006-07 stands partly allowed for statistical purposes and for Assessment Year 2007- 08 stands allowed, appeal filed by the Revenue in ITA No 770/Mds/10 for Assessment Year 2007-08 stands dismissed. Appeal filed by the Revenue in ITA No 235/Mds/10 for Assessment Year 2002-03 is partly allowed for statistical purposes and appeal filed by the Revenue in ITA No 939/Mds/10 for Assessment Year 2005-06, ITA No 940/Mds/10 for Assessment Year 2006-07 and ITA No 937/Mds/10 for Assessment Year 2004-05 stand dismissed. o p /o p Order pronounced in the court on 8th July 2011. o p /o p
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2011 (7) TMI 1214
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... ... ..... any application for admission of additional ground before the Tribunal. On consideration of the above facts, are not inclined to admit the above ground. Ground No.1 of the appeal was not raised before the authorities below and no findings have been given on the same. The learned Counsel for the assessee admitted that it is an additional ground in nature for which no proper request is made for admission of the additional ground of appeal. Moreover, we find that only addition is made by the AO against the assessee was ₹ 30,93,000/- which we have already deleted on grounds No.2 and 3 of the appeal. o p /o p Therefore, this ground has become academic in nature. Considering the above facts, we are not inclined to admit the additional grounds of appeal. The same is accordingly dismissed. o p /o p 8. No other point is argued or pressed. o p /o p 9. In the result, the Assessee’s appeal is partly allowed. o p /o p Order pronounced in the open Court on 01-07-2011. o p /o p
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2011 (7) TMI 1213
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... ... ..... absence of any additional material, only on basis of an isolated answer by one of the Directors of the company, the Assessing Officer could not have come to the conclusion that the process loss was artificially inflated. Tribunal had also relied on certificate given by the supplier of machine who stated that typically the process loss ranges between 2.65 to 4.20 . 11. In addition to above, we also notice that in earlier years, orders passed by the tribunal were accepted by the Revenue and not carried in appeal. 12. Sum total of above discussion is that we do not find that the decision of the tribunal requires reconsideration. Question No.(1) is therefore, answered against Revenue.” 5. As nothing is pointed out by the Revenue before this Court to take a different view than already taken in case of this very assessee, the issue proposed in the present case also is being answered in favour of the assessee and against the Revenue. 6. In the result, Tax Appeal is dismissed.
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2011 (7) TMI 1212
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... ... ..... entry tax paid by the assessee under protest. The case made out before us is that the issue is similar to the issue of payment of customs duty, paid under protest on provisional basis. Both the items are covered u/s 43B, which have to be allowed on the basis of actual payment. The fact that the payment is made on provisional basis is also immaterial because it has been made on the basis of rules and regulations under the relevant Statute. We are of the view that deduction in respect of either of the aforesaid items depends upon the language of section 43B, which permits the deduction of duty or tax on cash basis. If any amount is found refundable subsequently, the same is liable to be taxed u/s 41(1) in the year of refund. Accordingly, it is held that the assessee is entitled to deduct this amount in computing the income. 9. In result, the appeal of the revenue is dismissed and cross objection of the assessee is allowed. This order was pronounced in open court on 22.07.2011.
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2011 (7) TMI 1211
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... ... ..... he shortfall in cash on its books, routed in its accounts through the advance account, which finding, emanating from the assessee’s books, has not been met by it in any manner, and factually disproves the assessee’s claims. Further still, as observed during the hearing by the Bench, to no satisfactory answer by the ld. AR, the impugned credit balance (which is the outstanding in the advance a/c as at the year-end) represents the receipt for the last 5 months, i.e., the few’ days stated by him extend to 150 days. It is for these reasons that we stated of the asssessee’s case/explanation as bizzare. o p /o p Without doubt, the explanation is wholly unsatisfactory, and de hors any factual inputs/materials. Sec. 68 of the Act accordingly stands rightly invoked and applied, as also confirmed, by the assessing and the first appellate authority respectively. We decide accordingly. o p /o p 11. In the result, the assessee’s appeal is dismissed. o p /o p
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2011 (7) TMI 1210
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... ... ..... in it was held that in case of a limited company expenditure incurred on telephone, vehicle etc. which are certified by the auditors of the Company as also the auditors under the Income Tax Act cannot be disallowed. There is nothing on record to suggest that the revenue has challenged the decision of the Tribunal in the case of Kirloskar Engines Ltd. (Supra). In these circumstances, we see no merit in the question raised by the revenue, especially when the genuineness of the expenditure is not doubted by the assessing officer. 3. As regards the question Nos. ii and iii are concerned, the Tribunal relying upon its decision in the case of Kirloskar Pneumatic Co. in ITA No.6/PN/2007 for the A.Y. 2003-04 held that even if the expenditure is incurred in the earlier year but the demand is raised and accepted in the subsequent year, then the expenditure would be allowable in the subsequent year. We see no infirmity in the above order passed by ITAT. Accordingly appeal is dismissed.
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2011 (7) TMI 1209
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... ... ..... ces to the estimations and expenditure, etc. of the properties belonging to the assessee. Nevertheless, we cannot hold that such document belonged to the assessee. When we find that the very foundation for instituting the proceedings by the Assessing Officer was missing, the consequential actions and orders must fail. In the result, only on this ground we are inclined to dismiss the appeals. In view of our conclusion noted above, we do not find it necessary to examine other controversial issues. Tax Appeals are therefore dismissed.” 15. In light of discussion held hereinabove, it can be said that in the facts and circumstances of the case also, none of the material seized belonged to the assessee, and therefore, a very edifice of the Assessing Officer order has gone. Resultantly, the orders of both the Adjudicating Authorities required to be sustained with no questions of law with nothing further to be decided on the question of law. This group of appeals is dismissed.
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2011 (7) TMI 1208
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... ... ..... jor portion pertained to the two parties i.e. M/s Dhawal Tex and M/s Kruti Textiles. It was further found that these loans have been carried forward from the preceding years wherein the genuineness and business purpose of the interest payment made have not been disputed by the AO in the assessments completed u/s 143(3) of the Act. As the business purpose of the funds borrowed from these parties was already accepted in earlier years, the same cannot be held to be for non-business purposes in the year under consideration. In the light of these undisputed facts there was no justification in disallowance of interest payment of ₹ 95,429/- claimed by the assessee u/s 36(1)(iii) of the Act and, therefore, the ld. CIT(A) has rightly deleted this addition so made by the AO. The order of ld. CIT(A) is upheld on this issue also. This ground of the Revenue is also dismissed. 13. In the result, the appeal filed by the Revenue is dismissed. Order pronounced in open Court on 28/7/11.
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2011 (7) TMI 1207
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... ... ..... 1 and also in the Mumbai Tribunal’s decision in the case of Trustees of Sri Sathya Sai Trust (33 ITD 320)”? o p /o p 2. As regards question nos. 1 to 4 are concerned, Counsel for the parties state that similar questions raised by the Revenue in the assessee’s own case being Income Tax Appeal No. 2415 of 2010 has been dismissed by us today. For the reasons recorded therein, question nos. 1 to 4 cannot be entertained. o p /o p 3. As regards question nos. 5 is concerned, Counsel for the parties state that the Tribunal has decided the said question by relying upon a decision of this Court in the case of C.I.T. vs. Institute of Banking reported in 264 ITR 110 (Bom). Since the decision of the Tribunal is based on a decision of this Court, we do not propose to entertain question nos. 5. o p /o p 4. Question no. 6 being a consequential question, the said question cannot be entertained. o p /o p 5. Accordingly, the appeal is dismissed. No order as to costs. o p /o p
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2011 (7) TMI 1206
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... ... ..... for earning some profit by the business but the activity is incidental to the objects. U/s. 11(4A) there are two conditions, a) the business activity should be incidental to the objectives and b) the separate books of accounts should be maintained. The Tribunal has already held that the activities of the assessee for exhibition are incidental to the objectives. In para - 5 of assessment order it is so mentioned that separate books of accounts for exhibition are maintained by the assessee. I, therefore, find that all the conditions U/s. 11 (4A) are satisfied. The assessee is entitled for exemption u/s. 11 on exhibition of income also. The A.O. is directed to recompute the total income considering the exemption u/s. 11 to the assessee.” o p /o p 3. The order of the Commissioner of Income-Tax has been confirmed by the Income Tax Appellate Tribunal. In our opinion the decision of the Tribunal is based on appreciation of facts. No question of law arises. Dismissed. o p /o p
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2011 (7) TMI 1205
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... ... ..... ssee. Rule 46A of the Income-tax Rules requires him to dispose of the request made by an assessee for admission of additional evidence by order in writing. The ld. CIT(A) has not followed the prescription of Rule 46A. The order of the ld. CIT(Appeals) in this behalf is therefore set aside. He is directed to adjudicate upon the application seeking admission of additional evidence in terms of the provisions of Rule 46A of the Income-tax Rules. In this view of the matter, his consequential order as contained in para 10.1 of his appellate order is also set aside. The matter is restored to the file of the CIT(A) with the direction to dispose of the issue under appeal as also consequential issues arising there-from afresh in conformity with law. Reasonable opportunity of hearing shall be given to both the parties. Ground No.3 taken by the assessee is treated as allowed for statistical purposes. 10. Appeal filed by the assessee is partly allowed. Order pronounced on 29th July 2011.
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2011 (7) TMI 1204
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... ... ..... s on which the revision order has been passed. o p /o p When the AO passed an order without application of mind, the order so passed by him is erroneous and exercise of jurisdiction by the CIT u/s. 263 is proper and justified. In view of the above discussion, we are of the considered opinion that there is no error or illegality in the impugned order of CIT passed while exercising jurisdiction u/s.263. The case relied upon by the ld. A.R. does not help the case of the assessee because in the case in hand the AO has not made even an attempt to verify and adjudicate the issue. Further, the assessee has also not been able to show that the relevant record or explanation has been produced before the AO on this issue. Accordingly, the said decision is not applicable to the facts of the present case. The appeal of the assessee is devoid of merits. o p /o p 7. In the result, the appeal of the assessee stands dismissed. o p /o p Order pronounced on the 27th day of July, 2011. o p /o p
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2011 (7) TMI 1203
Disallowance u/s 40(a)(ia) - non deduction of TDS - Expenditure paid to Advocate - The assessee said that the amount paid to the advocate is towards reimbursement of expenses for publishing public notices - Such amount was disallowed by CIT(A) - HELD THAT:- No bills issued by such newspapers or of any agent has been filed either before the AO or before the Ld. CIT(A) or even before us. The AO had already given a finding that the public notices issued in three separate news papers were issued by Advocate on behalf of her client. Under these circumstances, the payment made to advocate towards reimbursement of expenses appears doubtful. We, therefore, concur with the findings of the lower authorities that the same is towards professional fees paid to the advocate. The bill issued by advocate, in our opinion, is merely a self securing document. Since the payment made to advocate is liable for deduction of tax, therefore, the lower authorities are justified in disallowing the same u/s.40(a)(ia) of the Act. Accordingly the order of the Ld. CIT(A) on this issue is upheld - Decision against Assessee.
Advertisement Expediture - Expenditure was made on advertisements and TDS was not deducted for the same - HELD THAT:- On the basis of facts and emails, the said expenditure is clearly towards advertisement of the product. Since the assessee has violated the provisions of law by not deducting tax, the same is liable for disallowance u/s.40(a)(ia). Further, apart from an email no other document has been filed. Even otherwise also the same is towards keeping the goods of the company in the display box which in our opinion amounts to advertisement. We, therefore, uphold the order of the Ld. CIT(A) on this issue - Decision against Assessee.
Capitalizing the Expenses to Work-in-Progress - CIT(A) confirmed the addition by disallowing the expenses and treating the same as work in progress - Assessee contended that he entered into Joint venture Agreement and according to the joint venture, he was not to do any construction activity but was to only finance the project. As such there was not work in progress with him - HELD THAT:- The clauses in the Development agreement, Supplementary agreement and the Cancellation agreement supports the contention of the Ld. Counsel for the assessee that the assessee is only a Financer and not a Developer. Further, from the details of expenses furnished in the paper book, we find force in the submission of the Ld. Counsel for the assessee that these are nothing to do with the development of property. We also find force in the submission of the Ld. Counsel for the assessee that even if the expenditure has to be capitalized, the same has to be capitalized in the books of the Joint venture account and not in the books of the assessee. We, therefore, concur with the submission of the Ld. Counsel for the assessee that the lower authorities were not justified in capitalizing the various expenses to work- in- progress - Decision in favour of Assessee.
Interest on Presumed Accrual Basis - Assessee has credited an amount as interest income which the assesses has actually received during the year. CIT(A) held that the interest has been received on the advance made and this is prior to commencement of business of construction. Since the project has not yet commenced, the action of the AO in treating the expenses as capital in nature is correct - HELD THAT:- Following the decisions in the judgement of SUSHILA SHANTILAL JHAVERI VERSUS UNION OF INDIA AND ANOTHER. [2006 (7) TMI 136 - BOMBAY HIGH COURT] and COMMISSIONER OF INCOME-TAX VERSUS BALARAMPUR COMMERCIAL ENTERPRISES LTD. [2003 (3) TMI 83 - CALCUTTA HIGH COURT], when the assessee is aware that it is not going to receive anything over and above what has already been received and credited in the book of accounts, and when the agreements and correspondences between the parties do indicate such things, although after the balance sheet date, therefore, income on notional basis in our opinion, cannot be brought to tax. In this view of the matter, we set aside the order of the Ld. CIT(A) and direct the AO to allow the various expenses in the question claimed by the assessee.
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2011 (7) TMI 1202
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... ... ..... of the authorities below have been perused. 18. In the case of CIT vs. BSES Yamuna Powers Ltd. (ITA No.1267/2010), dated 31st August, 2010, the Hon’ble High Court has upheld the order of the Tribunal in allowing the depreciation 60 on computer peripherals and accessories such as printers, scanners and server etc. In that case, the Tribunal had followed the decision of coordinate Bench of the Tribunal in the case of ITO vs. Samiran Majumdar (2006) 98 ITD 119 (Kol.) and in the case of Expeditors International (India) (P) Ltd. (supra). 19. Respectfully following the aforesaid decision of the Hon’ble Delhi High Court confirming the Tribunal’s order, we uphold the order of the learned CIT(A) in accepting the assessee’s claim of depreciation 60 on UPS ad LAN/WAN. Thus, this ground No.2 raised by the revenue is also rejected. 20. In the result, the appeal filed by the revenue is dismissed. 21. This decision is pronounced in the Open Court on 15th July, 2011.
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2011 (7) TMI 1201
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... ... ..... was in respect of bonus shares and held that bonus shares come into existence when a resolution is passed by company at a general meeting for capitalizing as fully paid up and Board of Directors allotted fully paid up bonus shares to the share-holders in the proportion of their respective holdings. Till then, it could not be said that the bonus shares came in existence. An important observation was made by the Hon'ble Court that the bonus shares could not be said to be acquired by a shareholder before they come into existence by allotment. Meaning thereby, the allotment of a share is a day when an investor acquired the domain over the shares and the date of allotment is therefore is the date of acquisition. Therefore in totality this judgment also supports the view expressed hereinabove, with the result this ground of the revenue stands dismissed. 8. In the result, the appeal of the Revenue is dismissed. Order signed, dated and pronounced in the Court on 29th July, 2011.
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