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Income Tax - Case Laws

Showing 381 to 400 of 695 Records

• 2012 (11) TMI 588
  

  Deduction u/s 80IB – Held that:- As the assessee had produced the completion certificate in respect of the projects Jains Sagarika, MRC Nagar, Chennai and Jains Swarnakamal, Vadapalani, Chennai and the projects at Velacherry, Chitlapakkam and Virugambakkam. As far as the projects at Manapakkam and Pallavaram are concerned, if the assessee had submitted certificates from sewerage and Electricity Board, which according to the Commissioner would not satisfy the requirement of the Rules, as already pointed out, in the absence of any requirement under Section 80IB(10)(a) of the Income Tax Act and going by the provision, as it stood during relevant assessment year, 2004-05, it is difficult to accept the contention of the Revenue that the claim for deduction rested on the assessee's production of completion certificates - appeal filed by the Revenue is rejected.

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• 2012 (11) TMI 587
  

  MAT - Deduction for gains on sale of investment - disallowance as profits from insurance business are to be taken to be balance of the profits as disclosed by annual accounts subject to the adjustments provided in clause 5(a) to (c) - Held that:- The assessee, being an Insurance Company is not required to prepare its accounts as per Part II & III of Schedule VI of the Companies Act 1956. The proviso to sub. Sec (2) of sec. 211 of the Companies Act creates an exemption of applicability of sub. Sec. (2) of sec 211 which requires that every P&L accounts of the Companies shall be prepared as per the requirement of Part II of Schedule VI inter-alia in respect of Insurance companies or banking companies or any other companies engaged in generation and supply of electricity for which a form of profit and loss account has been specified in or under the Act governing such class of company.

  Even if an Insurance Company does not disclose any matter in the Balance Sheet and P&L account because the same is not required to be disclosed by the Insurance Act shall not be treated non-disclosure of a true and fair view of the state of affairs of the company as the said condition has been relaxed by sub sec 5 of sec 211 of the Companies Act.

  Thus when the insurance companies, banking companies and electricity generation and distributions companies are treated in the same class as per the provisions of sec. 211 of the Companies Act in preparing their final accounts, then these companies cannot be treated differently for the purpose of sec. 115JB and accordingly, the provisions of sec. 115JB are not applicable in the case of the assessee - in favour of assessee.

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• 2012 (11) TMI 586
  

  Expenditure on improvement of lease hold premises - Revenue v/s Capital - Held that:- If the Revenue's request for remitting the matter for examination of the entire expenditure, including what was allowed by the AO himself, were to be acceded to the assessee would be worse off having regard to the fact that the AO himself has allowed its claim and permitted deduction of Rs. 70 odd lakhs. Thus as the Tribunal made a limited remand to the lower authorities to determine the exact nature and quantum of brick work which would entitle the assessee to the deduction claimed u/S 37 limited to Rs. 2.75 crores no substantial question of law arises - in favour of the assessee.

  Deduction u/s 10A - disallowance as services rendered by the assessee were not "computer software" - assessee granted the benefit of Section 80HHE - Held that:- The AO's order has alluded to the CBDT Circular dated 26.09.2000 which explains the services as including back-office, operations, call centres, content development or animation, data processing engineering and design, geographic information system services, human resource services, insurance claim processing, legal databases, medical transcription, pay roll, remote maintenance, revenue accounting, support centres, web-site services etc. It is apparent that the CBDT itself had interpreted the term "computer software" occurring in Explanation 2 to Section 10A in an expansive rather than a narrow manner as was done in the present case by the AO. In this case the materials placed by the assessee on record reveal that its "program management system" was nothing but a development of software which assisted in management services. The assessee's "program management services" which is a method of providing software to achieve a particular end cannot be said to be excluded from the term "computer software". This Court accordingly holds that the findings of the Tribunal are sound and do not require any interference - in favour of assessee.

  Disallowance of Bad debts - Held that:- Once the CIT (Appeals) after satisfying himself about the correctness of the findings by the AO, held that the latter had made additions wrongly by not actually seeing that the amount was written off, a finding that was endorsed by the Tribunal that finding of fact cannot be interfered with by the High Court exercising its jurisdiction under Section 260A. The Revenue's arguments cannot also be accepted as it would amount to accepting their position, plainly not permitted in an appeal to this Court under Section 260A, which his confined in its consideration to substantial question of law - in favour of assessee.

  Interest u/s 234D - Held that:- As decided in IT v. Jacabs Civil Incorporated, Mitsubishi Corpn. [2010 (8) TMI 37 - DELHI HIGH COURT] this provision came into force on 01.06.2003 and was applicable only from the assessment year 2004-05. Thus it could not have been applied as it was done by the AO in the present case - in favour of assessee.

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• 2012 (11) TMI 584
  

  Taxability of mobilization revenue attributable to the operation of the vessel beyond 200 nautical miles from the Indian costline. - Payments made to assessee outside India – Following the decision of court in case of [SEDCO FOREX INTERNATIONAL INC.(formerly known as Forex Neptune International Inc.) Versus CIT 2007 (9) TMI 196 - UTTARAKHAND HIGH COURT] held that:- Mobilization charges paid to assessee by ONGC had no nexus with the actual amount incurred by assessee for transportation of drilling units of rigs to India – thus, mobilization charges weren’t reimbursement of expenditure – in view of fictional taxing provision u/s 44BB, AO is justified in adding the amount received by assessee towards mobilization charges for the purpose of imposing income tax - grievance sought to be raised by the assessee is rejected - In the result, appeal filed by the assessee is dismissed.

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• 2012 (11) TMI 583
  

  Eligibility of prorata claim u/s.80IB(10) with reference to area of residential portion of housing project – Whether assessee’s housing project undisputedly including some residential units, which are of an area exceeding 1,000 sq.ft. (built-up),the whole of the profit of the housing project is not eligible for deduction under section 80IB(10)- Deduction under section 80IB(10) allowed earlier is hereby withdrawn. Since the assessee has furnished inaccurate particulars of income and concealed the particulars of income, the penalty proceedings are initiated under section 271(1)(c) for wrong claim of deduction under section 80IB(10).

  As decided by Tribunal that, in case, some residential house have a built up area in excess of 1,000 sq.ft., the assessee would not lose the total exemption under section 80IB(10) in its entirety but will only lose the proportionate exemption, under section 80IB(10). Hon'ble High Court has observed that when the local authority approved a plan as a housing project or a residential cum commercial project, the assessee would be entitled to claim for deduction under section 80IB(10)even if the project had commercial element in excess of 10%. section 80IB(10) allows deduction to the entire project approved by the local authority and not to a part of the project. If the conditions set out in section 80IB(10) are satisfied, then deduction is allowable on the entire project approved by the local authority and there is no question of allowing deduction to a part of the project.In the present case hold that assessee is entitled for deduction under section 80IB on pro-rata basis. The A.O. is therefore, directed to allow the deduction under section 80IB(10) on pro-rata basis as discussed above. This ground of appeal is allowed. In the result, Revenue’s appeal is dismissed.

  Rectification order – Court has specifically mentioned that the writ petition was misconceived and therefore liable to be dismissed. The ratio laid down by the High Court in the said case was that writ petition against order under s. 254(2) cannot be rejected on the ground of availability of alternate remedy. The Madras High Court has not considered anything concerning the merit of the issue that whether in the circumstances stated above the assessee could claim deduction under s.80IB(10) or not. the judicial result is the same that the High Court has upheld the reasonings and findings given by the Tribunal in its order. Lower authorities were not having advantage of above legal decision to apply to the facts of the assessee’s case to reach a conclusion. So in the interest of justice Order of the CIT(A)is set aside on the issue and restore the same to the Assessing Officer with a direction to decide the same as per fact and law after providing due opportunity to the assessee of being heard - both the appeals filed by the assessee are allowed for statistical purposes.

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• 2012 (11) TMI 582
  

  Condonation of delay in filling appeal – Delay of 86 days - CIT(A) has mainly dismissed the appeal on the point of limitation – Held that:- As the brother of assessee was under treatment for his accident at the relevant point of time so he could not file the appeal in time. It is possible that in case brother of assessee is fighting for his life after accident, his priority for filing the appeal in time may be disturbed. According to us, the assessee was prevented by reasonable cause in filing the appeal and so the delay is directed to be condoned. Issue remand back to AO - In favour of assessee

  Disallowance of petrol expenses of vehicle – Whether assessee can claim expense incurred in relation to income earned from partnership firm u/s 10(2A) - AO argued that there was absence of nexus of the expenditure with remunerations received by the assessee from partnership firm as a working partner – Assessee claim expense after deducting 20% of the vehicle expenses as personal expenses - Expenses on car are incurred u/s 37(1) for earning income in the form of remuneration and interest – Held that:- In such a situation, provision contained in section 14A will come into operation and any expenditure incurred in earning the share income will have to be disallowed. We find that the CIT(A) at relevant point of time was not having the benefit of the Special Bench decision in case of Shri Vishnu Anant Mahajan (2012 (6) TMI 297 - ITAT, AHMEDABAD). Issue Remand back to AO

  Disallowance of Depreciation on vehicle against income u/s 10(2A) – Held that:- Section 14A deals only with the expenditure and not any statutory allowance admissible to the assessee. A statutory allowance u/s 32 is not an expenditure, hence it cannot be subject matter of dis-allowance u/s 14A. Following the decision in case of Hoshang D. Nanavati (2011 (3) TMI 89 (Tri)) – Remand back to AO

  Addition on account of Agricultural Income – AO observed that books seems to have been written in one sitting, self-made bills – AO made reject agricultural income and consider the same as Income from other source - Held that:- The claim of the assessee has been rejected mainly on account that earning from the crops shown by the assessee were not tallying with the 7/12 extract which is the record of crop on the agricultural holding of the assessee. Thus, the assessee could not correlate the income from its agricultural holding by cogent reasoning. Addition justified. In favour of revenue

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• 2012 (11) TMI 581
  

  Deduction u/s 80-IA of the Income Tax Act, 1961 – industrial undertaking versus works contract - Held that:- Assessee did not satisfy the conditions prescribed under the said section as he has not set up any power plant but only operating and maintaining the power plant set up and is a contractor for the purpose of rendering services and hence the charges received by the assessee cannot be treated as profits derived from the industrial undertaking for the purpose of section 80-IA of the Act - Decision of Supreme Court in case of [A.M. Moosa vs. CIT 2007 (9) TMI 24 - SUPREME COURT OF INDIA] followed – Order of Commissioner of Income-tax (Appeals) is confirmed – appeal of assessee is dismissed.

  Whether Reserve created for plant maintenance expenditure is an application of Income - Held that:- Following the decision of court in case of [CIT v. Shiv Prakash Janak Raj And Co. Pvt. Ltd 1996 (9) TMI 5 - SUPREME COURT] Held that: - AO has not examined the contract agreement entered into by the assessee which is for a period of 15 years and has only considered the quantification of fee as for one year - therefore, in the interest of justice this issue needs detailed examination by the AO - Order passed by the learned CIT(A) is set aside and remit the matter back to the file of the AO to examine the entire issue de novo - appeal raised by the assessee is allowed for statistical purposes.

  Interest u/s 234 D – Following the decision of court in case of [CIT v. infrastructure Development Finance Co. Ltd.2011 (9) TMI 591 - MADRAS HIGH COURT] - Held that:- As Regular assessment had been completed on March 30, 2004 and section 234D came into operation on and from June 1, 2003, which was prior to the completion of the regular assessment, the assessee was liable to pay interest on the excess refund amount received as contemplated under section 234D of the Act. It is not the year of assessment that falls for consideration in such circumstances, but the date on which the regular assessment order has been passed - appeal raised by the assessee for the assessment year 2003- 04 is dismissed.

  Allowability of Bad debts - Held that:- Claim of bad debt amount claimed as bad was offered for earlier taxation - assessee is eligible to claim bad debt - order passed by the learned CIT(A) is set aside and remit the matter back to the AO with the direction to examine sec. 36(1)(vii) of the Act and decide the issue afresh in accordance with law – appeal allowed for statistical purposes.

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• 2012 (11) TMI 580
  

  Capital Gain – Agricultural land purchase for commercial use and sold without use, constitute capital asset or not - Assessee purchase land for setting up the power plant – Later on due to some constraints assessee sold part of land and incurred loss - AO argued that the concerned agricultural land not being a capital asset - Loss on the sale of the same would not result in any long term capital loss - No such loss would be permitted to be carried forward for purposes of set off in future years – Held that:- As the assessee purchased this land with no intention to use it for carrying out any agricultural operations, but to set up a power plant. Right from its acquisition and upto the date of its sale, no agricultural operations were carried out on this land by the assessee or by any person on behalf of the assessee. Consequently, as on the date of sale, the concerned land cannot be treated as an agricultural land. It was definitely a business asset held as such in the books of the assessee hence, loss on sale of such land would constitute a long term capital loss and would be eligible for carry forward for set off to future years. In favour of assessee

  Interest u/s 234D – Interest on excess refund - Assessee contended that the provisions of Sec. 234D came into force in June 2003 and cannot have the application in respect of the A.Y. 2003-04 – Held that:- Following the decision in case of Infrastructure Development Finance Co. Ltd. (2011 (9) TMI 591 - MADRAS HIGH COURT) that since the regular assessment had been completed on March 30, 2004 and section 234D came into operation on and from June 1, 2003, which was prior to the completion of the regular assessment, the assessee was liable to pay interest on the excess refund amount received as contemplated u/s 234D. It is not the year of assessment that falls for consideration in such circumstances, but the date on which the regular assessment order has been passed. In favour of revenue

  Recognition of income - Whether in case where receipt is uncertain and is subject to the outcome of the events in future, can be treated as accrued during the relevant period – Held that:- If a receipt is uncertain and is subject to the outcome of the events in future, it cannot be treated as having accrued during the relevant period. Since TNEB has refused to accept as its liability the start up fuel cost incurred by the assessee the income in respect of start up fuel cost based on the invoices raise by the assessee cannot be treated as having accrued to the company even it has been following mercantile system of accounting. In favour of assessee

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• 2012 (11) TMI 579
  

  CIT's revisionary powers u/s 263 - disallowance of privilege fee, Special privilege fee and special privilege fee as allowed by AO - Held that:- The amount of privilege fee is a balancing charge on the P&L account being variable and not based on quid pro quo. Also, only the amount that remains out of margins after deducing expenditure including income tax would be the sum to be paid as privilege fee.

  The amendments passed by the Andhra Pradesh Legislature on 16-04-2012 to the Andhra Pradesh Excise and Andhra Pradesh (Regulation of trade in Indian made foreign liquor, Foreign Liquor) Acts, (Amendment) Act, 2012(Andhra Pradesh Act No. 5 of 2012), has to be examined and analyzed with respect to newly inserted section 4C, it only reaffirms the fact that it is the profit that is sought to be appropriated. The new amendment to Excise Act, clearly establishes the fact that the entire income of the assessee is not that of the State and only the amounts specified as privilege fees is income of the State.

  With respect to newly inserted section 4A, the invoices raised by the assessee do not indicate separate amounts as privilege fee or special privilege fee or sports privilege fee.

  And with respect to the newly inserted section 4B, the manner of computation is not specified under 4B and the computation needs to be made u/s 23A and the implication of AS-22 is to be examined.

  As the CIT has no occasion to consider the amendments passed by the Andhra Pradesh Legislature on 16-04-2012 as the said amendments came after the CIT passed the order u/s 263 on 29/03/2011 the order of the CIT is to be set aside and restore the issue back to his file with a direction to decide the issue de-novo after examining the said amendments and in accordance with law - in favour of assessee for statistical purposes.

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• 2012 (11) TMI 578
  

  Revision of orders prejudicial to Revenue – Following the decision of court in case of [CIT vs. M/s. Sundeam Auto Ltd 2009 (9) TMI 633 - DELHI HIGH COURT] Held that:- Once there is any enquiry, may be inadequate inquiry, it cannot give an occasion to the Ld. CIT to pass order under section 263, merely because he has a different opinion in the matter. CIT is not justified in canceling the assessment made by the AO u/s 143(3) of the Act. The order of the Ld. CIT is, therefore, bad in law and is therefore, set aside. Thus, all the grounds of the assessee are allowed.

  Set off and carry forward of losses – Held that:- alternative plea taken by the assessee before the Ld. CIT that the assessee is having a carry forward loss and does not have any business income in coming years, is an alternative argument only, which was to claim the loss in the future years – in favour of assessee.

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• 2012 (11) TMI 577
  

  Registration u/s 12AA – Held that:- At the stage of processing application under section 12AA of the Act is limited to whether the activities are genuine and in consonance with the objects of the trust or institution and where education is being imparted as per the rules and the factum of the establishment and running of schools is not disputed, then the activity is said to be genuine activity and the enquiry regarding genuineness of the activities cannot be stretched beyond that. As regards Surplus of Trust nothing has been brought on record whether any surplus has been used for non charitable activities - CIT is directed to allow Registration to the assessee-trust under section 12AA(a) of the Act. Thus, all the grounds of the assessee are allowed.

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• 2012 (11) TMI 576
  

  Whether CIT(A) was justified in upholding the AO's action of curtailing deduction u/s 80HHC as claimed by assessee, on an erroneous interpretation of provisions of section 28(iiid)and section 80HHC – Held that:- Following the decision of court in case of [M/s Topman Exports Versus Commissioner of Income Tax, Mumbai 2012 (2) TMI 100 - SUPREME COURT OF INDIA] Entire amount received on sale of the Duty Entitlement Pass Book (DEPB) represents profit on transfer of DEPB for the purpose of the computation of deduction u/s 80HHC. DEPB has direct nexus with the cost of imports for manufacturing an export product, any amount realized by the assessees over and above the DEPB on transfer of the DEPB would represent profit on the transfer of DEPB and while the face value of the DEPB will fall under clause (iiib) of Section 28, difference between the sale value and the face value of the DEPB will fall under clause (iiid) of Section 28 and is taxable accordingly - Assessing Officer is directed to recompute deduction under section 80HHC of the Act in line with the directions of the Hon'ble Apex Court – In the result, appeal filed by the assessee are allowed for statistical purposes

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• 2012 (11) TMI 556
  

  Depreciation on toll road/bridge - assessee establish, finance, design, construct, operate and maintains a NOIDA-Bridge across the river 'Yamuna' under the BOOT basis - Held that:- As decided in Mysore Mineral Limited v. CIT [1999 (9) TMI 1 - SUPREME COURT] that any one in possession of property in his own title exercising such dominion over the property as would enable others being excluded there from and having the right to use and occupy the property and/or to enjoy its usufruct in his own right would be the owner of the buildings, though a formal deed of title may not have been executed and registered as contemplated by the Transfer of Property Act, the Registration Act etc. The person, who having acquired possession over the building in his own right, uses the same for the purposes of the business or profession though a legal title has not been conveyed to him, but nevertheless is entitled to hold the property to the exclusion of all others.

  With the insertion of the Explanation-I to Section 32 w.e.f. 1.4.1998 there is no doubt that where the assessee is the lessee of the building in which he carries on business which is not owned by him but in respect of which the assessee holds a lease or other right of occupancy and any capital expenditure is incurred by the assessee of any structure or doing of any work in or in relation to by way of renovation, extension or for improvement to the building, then the provisions of the Income Tax Act, will apply as if the said structure or work is a building owned by the assessee. Explanation-I may apply to renovation or extension or improvement to the building to extend the application of depreciation, if such buildings which are not owned by the assessee but in which the assessee holds a lease or other right of occupancy.

  The present case stands on a better footing, in which the land is held on lease and the road as capital asset has been built on it with exclusive ownership of the road, and the bridge in the assessee-company for the concession period, and which also includes the right to collect tolls and to regulate use of the bridge. Section 32 would, therefore, apply for the purpose of providing depreciation to be worked out in accordance with the law - in favour of assessee.

  The payment in connection of “take out assistance fee” for redemption of Deep Discount Bonds this Court has already decided the question between the same parties relating to the assessment year 2002- 03 in favour of the assessee.

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• 2012 (11) TMI 555
  

  Deletion of addition on account of Interest – Held that:- Addition due to Interest paid on purchase of securities by the assessee-company for the broken period as per DTAA be deleted as decided in assesses own case earlier - impugned order is upheld to this extent. This ground is, therefore, not allowed.

  Advisory fee/Commission - Accrual of Income - Following the decision of court in case of [Kerala Urban Development Finance Corporation Ltd. Versus Commissioner Of Income-Tax ,2002 (12) TMI 18 - KERALA HIGH COURT] Held that:- Income accrued to the assessee at the time of disbursal of loan and hence assessable to tax in the year in which the loan amount was disbursed. Income accrued at that very stage itself and could not have been deferred over the life of loan - CIT(A) was not justified in directing the spread over of the advisory fee over the period of loan - impugned order on this issue is vacated and restore the action taken by the A.O - In the result, the appeal of the assessee is allowed and that of the Revenue is partly allowed.

  Disallowance of Interest - Assessee in its appeal are similar to those for assessment year 2000-2001 but for change in the amount of Rs. 2,03,34,257 being the interest disallowed u/s 40(a)(i) and also charged to tax under Article 11 of the DTAA. Both the sides are in agreement that the facts and circumstances of the instant year are mutatis mutandis similar to those of the preceding year – in favour of assessee.

  Advisory Fee - Held that:- In reversing the order of the CIT(A) and restoring the action of the AO in bringing the entire amount to tax in the preceding year, the amount already voluntarily offered by the assessee for taxation in the current year, on the strength of its treatment as deferred income in earlier year, cannot be taxed once again, if the entire amount has been taxed in a year, then no part of the same can be charged to tax in the subsequent year - As the necessary facts in this regard are not available on record impugned order on this issue is set aside and remit the matter to the file of A.O. for examining as to whether the amount of Rs. 24.36 lakh taxed in the current year is part of the amount of advisory fee taxed in assessment year 2000-2001 - partly allowed for statistical purposes.

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• 2012 (11) TMI 554
  

  Transfer pricing adjustment and levy of interest under section 234B – Whether transfer pricing adjustment should be computed with respect to gross turnover of the assessee or should be limited to volume of transaction entered into with the associate enterprises – Held that:- Claim of the assessee is very reasonable as the adjustment has to be made only with respect to transactions with associate enterprises based on arms-length price and not with respect to total purchases/sales. This view is supported by several decisions of the Tribunal - issue restored to the file of AO/TPO for fresh computation of transfer pricing adjustment after necessary examination and after allowing opportunity of hearing to the assessee - In the result, appeal of the assessee is allowed for statistical purposes.

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• 2012 (11) TMI 553
  

  Revision Order u/s 263 - Following the decision of Bombay High Court in the case of [CIT vs. Gabriel India Ltd. 1993 (4) TMI 55 - BOMBAY HIGH COURT] Held that:- Unless commissioner comes to a categorical finding that the stand of the Assessing Officer is erroneous, he can not remit the matter back to the file of the Assessing Officer for fresh adjudication. in the instant case, the Commissioner himself, even after initiating proceedings for revision and hearing the assessee, could not say that the allowance of the claim of the assessee was erroneous and that the expenditure was not revenue expenditure but an expenditure of capital nature. He simply asked the ITO to re-examine the matter that, in our opinion, is not permissible. Further inquiry and/or fresh determination can be directed by the Commissioner only after coming to the conclusion that the earlier finding of the ITO was erroneous and prejudicial to the interests of the revenue. Without doing so, he does not get the power to set aside the assessment. The revision has been done on an altogether different ground of deeming fiction u/s. 68 which was not even touched upon by the Commissioner at notice stage - Impugned revision order is set aside - The assessee gets the relief accordingly - In the result the appeal filed by the assessee is allowed.

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• 2012 (11) TMI 552
  

  Referring matter to Valuation officer - Following the judgement of Supreme court in case of [Sargam Cinema V CIT, 2009 (10) TMI 569 - SUPREME COURT OF INDIA ] Held that:- Asessing authority could not have referred the matter to the Departmental Valuation Officer (DVO) without the books of account being rejected. Even if the books were not produced at least the Assessing Officer should have referred to the valuation officer. Even after that it was not done at atleast at the time when the ld. CIT(A) had forwarded the report for his remand he should have made some comments but nothing was done though it was contended by the ld. DR for the revenue that there was no remand report available but the ld. CIT(A) has given clear finding that report was forwarded to the Assessing Officer and the Assessing Officer in his report has not rebutted the same - order of the ld. CIT(A)is confirmed.

  Disallowance of Expenses in full or part – Held that:- Expenses debited to profit and loss account in respect of telephone expenses, charity and donation, car expenses, rebate and discount, printing and stationery, labour welfare & cartage, accounting charges, traveling expenses, entertainment and salary confirmed the disallowance to 25% of the expenses for non production of vouchers – order of CIT(A) is confirmed.

  Profit margin – Held that:- Although Fall in gross profit is only marginal but it has to be noted that the assessee has not made any compliance before the Assessing Officer and the Assessing Officer pointed out serious defects in the books. Therefore, considering overall circumstances of the case, trading addition should be made at Rs. 10,000/- Order of the ld. CIT(A) is set aside and direct the Assessing Officer to make addition on account of lower gross profit at Rs. 10.00 lakhs - In the result, appeal filed by the revenue is partly allowed

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• 2012 (11) TMI 551
  

  Write -off of Bad debts – revision u/s 263 - Held that:- Sum debited to the Profit & Loss Account under the head ‘bad debts’ in the name of M/s Narang General Stores. AO, has not made any investigation for the justification of the said claim, CIT treated this issue covered u/s 263 of the Act. However, the assessee has filed relevant submission on the issue in question. Therefore, this issue cannot be said to have been not considered by the AO. In view of this, to this extent the order of CIT is not sustainable.

  Interest free advance – Following the judgement of court in case of [M/s Malabar Industrial Co. V CIT 2000 (2) TMI 10 - SUPREME COURT ] Held that:- CIT has jurisdiction u/s 263 of the Act, if twin conditions are satisfied, namely; (i) the order of the AO, sought to be revised is erroneous; and (ii) it is prejudicial to the interest of revenue. In the present case Assessee had paid interest to the bank and P.F.C. and had raised interest bearing loans and on the other hand, assessee had given interest free advances. The CIT recorded finding that AO had not made any investigation at the time of assessment proceedings in the matter regarding allowability of the claim made by the assessee - having regard to the entirety of the facts and circumstances of the case, speaks about the non-applicability of mind, and non investigation into the issue raised by the CIT - order passed by the CIT u/s 263 of the Act, on this issue is upheld - appeal is disposed of - In the result, appeal of the assessee is partly allowed.

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• 2012 (11) TMI 550
  

  Unexplained accretion in the capital account - CIT(A) deleted the addition - Held that:- Findings of the CIT(A) clearly demonstrate that requisite evidences were filed by the assessee in the form of copies of account and the movement of funds. The CIT(A) has examined the copies of account and relevant bank accounts and deleted the addition - no infirmity in the findings of the CIT(A) found - in favour of assessee.

  Unaccounted cash credit - Held that:- The evidences under Rule 46A filed by the assessee, deserve to be admitted, with a view to further the cause of justice and, hence, the same are admitted. Further, the submission filed by the appellant that the parties are existing assessee and evidences filed by the appellant are sufficient, to prove the case within the meaning of Section 68 are to be looked into by the CIT(A) - issue restored to the file of the CIT(A) for fresh adjudication in the light of fresh evidences - in favour of assessee for statistical purposes.

  Surrender of additional income - Additional income u/s 69B - Held that:- If at the time of survey an assessee himself concedes that the stocks are short and even comes to an agreement regarding the extent of shortage, unless it can be established that such consents or agreement was given or arrived at under threat, coercion, undue influence, misrepresentation or wrong understanding of facts or law, it would bring all efforts put in survey operations to nought if the assessees are allowed to retract from whatever they had stated or agreed to at the time of survey. Thus in view of the factual and legal position it is held that the additional income of Rs.30 Lakh declared by the appellant on account of unexplained investment in construction of factory building of M/s Oscar Remedies is to be taken as unexplained investment and accordingly is to be added to the income of the appellant. The action of the AO is therefore confirmed and ground of appeal is as such rejected - against assessee.

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• 2012 (11) TMI 549
  

  Interest on Advance against Sister Concern for Non - Business Purposes - Held that:- Addition of Rs. 16,510/- (12% of Rs.1,37,577/-) made on account of interest on amount outstanding against the sister concerns of the assesseee considering it advance for non business purposes has to be disallowed – Onus is on the assessee to prove the advance for Business purpose - appeal of the revenue is allowed.

  Disallowance of Rs.7,68,000/- made on account of interest not declared by the assessee on undisclosed investment of Rs.64 lacs not declared in the books of account - that the impugned addition is consequential in nature and hence, in view of the findings recorded by the ld. CIT(A) and decision of the ITAT in assessee's own case for assessment year 2006-07, the ground of appeal is dismissed.

  Addition of Rs.4,08,835/- on account of loss of stock - ssessee failed to prove genuineness of the claim - Held that:- Considering totality of circumstances in which claim of loss has been made does not point out to anything other than genuine business loss and therefore the same is allowed - deductible loss – Order of CIT(A) is confirmed.

  Addition of Rs.18,200/- made u/s 14A – Held that:- Having regard to the exigency of business and the non-optional investment to be made by the assessee on the direction of the Punjab government, the impugned addition cannot be made, as held by the CIT(A ) - ground of appeal of appeal of the revenue is dismissed.

  Addition of Rs.2,84,420/- made on account of interest capitalized on proportionate basis, pertaining to the pre-operative period - fund borrowed for the purchase of machinery – Held that:- following the decision on identical issue in assessee's own case, this ground of appeal of the revenue is dismissed.

  Assessee's claim worth Rs. 7,09,457/- in respect of reducing the income Valuation of Closing Stock - CIT(A) considered that if an addition on consistent application of method of accounting is made in any particular year, then allowance for depletion in closing stock worked out on the basis of some accounting method, deserves to be allowed. Accordingly, the claim of the assessee was allowed by the CIT(A) - No infirmity in the findings of the CIT(A), and therefore, the same are upheld. Ground of appeal of the revenue is dismissed - In the result, appeal of the revenue is partly allowed.

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