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Income Tax - Case Laws
Showing 421 to 440 of 695 Records
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2012 (11) TMI 508
Deduction u/s 80IB - disallowance as built up area of the project did not have the approval of the local authority - CIT(A) allowed the claim - Held that:- Refering to the clarification of the CBDT in a letter vide F.No.205/3/2001/ITA-II dt.4.5.2001 addressed to the Maharashtra Chamber of Housing Industry in which it has been stated that approval of any project as a housing project by the local authority would be adequate for the purposes of section 80IB of the Act. Although, the learned Departmental Representative has contended that aforesaid clarifications were given in the context of the commercial areas being constructed along with the housing project, it is viewed that the scope cannot be considered to be restricted to that circumstance alone. This is due to the fact that the definition of a housing project is not given under the Act and therefore the view of the CBDT that a housing project is one which is approved by a local authority requires to be given full effect to. Therefore, it cannot be construed that what the assessee has constructed is not a housing project.
CIT(A) has rightly placed reliance on the decisions of Petron Engineering Construction Private Limited And Another Versus CBDT And Others [1988 (12) TMI 1 - SUPREME COURT] to arrive at the view that the tax incentive by way of deduction 80IB is predominantly for the purpose of augmenting affordable dwelling and ought to be interpreted in that light. The fact that the assessee has obtained approval for the housing project cannot be lost sight of. As for the excess area constructed it is for the BBMP to look into the violations if any in the construction of the housing project. That however does not authorize the AO to hold that the assessee has not got approval for the housing project OR that the conditions laid down in section 80IB (10) stated violated - in favour of assessee.
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2012 (11) TMI 507
Deduction u/s 80IA - denial of claim - assessee also claimed deduction u/s.80HHC - Held that:- The gross total income of the assessee is at ₹ 8,03,26,598 lakhs after adjusting the losses suffered by it in the eligible as well as profits of the non-eligible units. There are no brought forward losses or unabsorbed depreciation. The claim of deduction under section 80-IA was in respect of eligible unit 4.14 MW wind energy division at ₹ 4,72,28,143 and the deduction u/s.80HHC was claimed in respect of other units at ₹ 15,51,440. Even if both the deductions are added the sum total is obviously less than the gross total income. Thus CIT(A) erred in interpreting the relevant provision when he held that the losses suffered by the assessee in two eligible units be reduced from the income of the other eligible unit before granting the deduction under section 80-IA - The assessee is allowed deduction under section 80-IA on the profit derived by it from eligible unit 4.14 MW wind energy unit at ₹ 4,72,28,143.
In the case of Meera Cotton & Synthetic Mills (P.) Ltd. Versus Assistant Commissioner of Income-tax, Ward 9(2), Mumbai [2009 (2) TMI 506 - ITAT MUMBAI] after considering the decision of the Hon'ble Supreme Court in the case of M/s Synco Industries Ltd Versus Assessing Officer [2008 (3) TMI 13 - SUPREME COURT ] clearly held that the stage at which set off has to be done is only after aggregation of income under all heads. The CIT(A) did not agree with this reasoning of the ITAT which is held to be bad as the CIT(A) being an authority lower in the tier of authorities under the Act to that of the ITAT, is bound to follow the decision of the ITAT and cannot refuse it without any valid reasons - in favour of assessee.
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2012 (11) TMI 506
Reassessment proceedings - period extending four years - assessee contested against notice as without obtaining prior sanction as required u/s 151 - Held that:- No substance in the submission of DR because section 124 primarily deals with the territorial jurisdiction of AO. Section 151 deals with sanction for issue of notice u/s 148 and it nowhere refers to section 124. The sanction by competent authority, as mentioned in section 151 only, can assign proper jurisdiction to the AO and if such sanction was not obtained, the AO lacked the jurisdiction to complete the reassessment proceedings. When the legislature has specifically assigned jurisdiction to a particular authority under the Act to grant sanction then, if all other conditions are fulfilled, the sanction has to be granted by that very authority. This function cannot be delegated to any other authority.
It is the legal duty cost upon that authority to perform the said function. If that authority fails in performing his legal functions and the same is performed by the other authority then it goes to the very root of proper assumption of jurisdiction by the authority which was required to take that sanction. This is purely legal issue and can be raised at any stage of proceeding - Hon'ble Delhi High Court in the case of CIT VERSUS SPL‟S SIDDHARTHA LTD (2011 (9) TMI 640 - DELHI HIGH COURT) has quashed the reassessment proceedings for want of sanction of Joint Commissioner of Income tax when it was so required as per section 151(2) - appeal decided in favour of assessee.
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2012 (11) TMI 505
Provision for bad and doubtful debts - disallowance - Held that:- Allowance under Section 36(1)(viia) is not a standard allowance which is given but the allowance is subject to the actual provision made by the assessee, which in no case shall exceed 7.5% of the gross total income. Therefore, the argument of the assessee that whatever the provision it had actually made in its books, a provision of 7.5% of the gross total income had to be allowed, is not in accordance with law - against assessee.
Provision for standard assets also has to be considered for applying the condition set out under Section 36(1)(viia) - Held that:- Admittedly a provision on standard assets is not against any debts which had become doubtful. Standard assets are always considered recoverable, in the sense, bank has no doubt of recoverability. When the bank itself has treated such assets as good and recoverable, any provision made on such assets cannot be considered as a provision for bad and doubtful debts. The debt itself being good, a provision made on good debt cannot be considered as a provision for bad and doubtful debts. May be, the RBI has made a regulation for 10% provision for standard assets also a prudential norm but this can however be considered as a measure prescribed in abundant caution, to deal with a situation where banks are not to suffer shock of sudden delinquency that could happen in future. Nevertheless, possibility of happening of such a contingency cannot be a sufficient reason to consider a provision made on standard assets also as a provision for bad and doubtful debts. Therefore, claim of the assessee that provision for standard assets also has to be considered for applying the condition set out under Section 36(1)(viia) is not in accordance with law - against assessee.
As here there was no enquiry made during the course of assessment proceedings. Therefore, the order which was silent on the claim made by the assessee, and allowing such claim, without any discussion, will definitely render it erroneous and prejudicial to the interests of Revenue as confirmed by CIT.
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2012 (11) TMI 504
Income from Undisclosed Sources - Validity of Gifts - In the present case gift was made by unrelated donor to the assessee. There was no relationship between the assessee and the donor and no occasion was also specified for making the gifts. Furthermore, the Assessing Officer has noted that no evidence has been furnished with the original return of income proving the identity, creditworthiness and genuineness of the alleged gift.. Under the circumstances, the inference made by the authorities below that gifts were bogus is quite cogent enough. Burden is on the assessee to rebut the same, and, if he fails to rebut it, it can be held against the assessee that it was a receipt of an income nature.
As decided in case of [Rajiv Tondon v. Asstt. CIT 2007 (7) TMI 40 - HIGH COURT , DELHI] held that:- The taxing authorities were entitled to look into the surrounding circumstances, which they did, and come to the conclusion that the gifts could not be said to be genuine. The reason offered by the assessee did not appear to be reasonable, much less acceptable. Therefore, there was no error in the view taken by the Tribunal.The burden is on the assessee to take the plea that, even if the explanation is not acceptable, the material and attending circumstances available on record do not justify the sum found credited in the books being treated as a receipt of income nature." There is no infirmity in the order of the lower authorities on this issue and accordingly, addition is sustained - In the result, Appeal filed by the Assessee stand dismissed.
Penalty u/s 271(1)(c) – Held that:- Following the decision of court in case of [ Hindustan Steel v. State of Orissa 1969 (8) TMI 31 - SUPREME COURT] held that :- "An order imposing penalty for failure to carry out a statutory obligation is the result of a quasi-criminal proceedings, and penalty will not ordinarily be imposed unless the party obliged either acted deliberately in defiance of law or was guilty of conduct contumacious or dishonest, or acted in conscious disregard of its obligation. Penalty will not also be imposed merely because it is lawful to do so. Whether penalty should be imposed for failure to perform a statutory obligation is a matter of discretion of the authority to be exercised judicially and on a consideration of all the relevant circumstances. Even if a minimum penalty is prescribed, the authority competent to impose the penalty will be justified in refusing to impose penalty, when there is a technical or venial breach of the provisions of the Act, or where the breach flows from a bonafide belief that the offender is not liable to act in the manner prescribed by the statute." – levy of penalty is dismissed – in favour of assessee.
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2012 (11) TMI 503
Depreciation allowance - additional legal submissions before the appellate authorities - revised return filled by assessee - Held that:- The depreciation allowance under Explanation 5 of section 32 is mandatory allowable if the said asset is used for the purpose of business of the assessee. Whether the assessee makes a claim of depreciation or not in his return of income, AO is duty bound to grant depreciation allowance by virtue of Explanation 5 to section 32(1) of the Act (Inserted by Finance Act, 2001 w.e.f. 1/4/2002). Circular No.14 (XI-35) of 1955, dated April 11, 1955 provides that the officers of the department must not take advantage of the ignorance of an assessee as to his rights and that although the responsibility for claiming refunds and reliefs rests with the assessee on whom it is imposed by law, yet the officers should draw the attention of the assessees to any refund or relief to which they are entitled to but which they have omitted to claim for some reason or other, and freely advise them when approached by them as to their rights and liabilities and as to the procedure to be adopted for claiming refunds and reliefs.
As decided in CIT v Kanpur Coal Syndicate [1964 (4) TMI 18 - SUPREME COURT] the declaration of law is clear that the power of the Appellate Assistant Commissioner is co-terminus with that of the ITO, if that be so, there appears to be no reason as to why the appellate authority cannot modify the assessment order on an additional ground even if not raised before the ITO. No exception could be taken to this view as the Act does not place any restriction or limitation on the exercise of appellate power. Therefore, that an assessee is entitled to raise not merely additional legal submissions before the appellate authorities, but is also entitled to raise additional claims before them.
Thus CIT (A) has not examined the issue in correct perspective taking into consideration the Explanation 5 to section 32(1) and the Board's Circular mentioned supra. The CIT (A) is empowered to consider additional claim made before him, though not made in the return filed. Therefore, in the interest of justice and equity, the case is restored to the file of the CIT (A) to consider the issues afresh and to take appropriate action in accordance with the provisions of the Act - appeal of the assessee is allowed for statistical purposes.
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2012 (11) TMI 502
Penalty u/s 271 (1) (c) - disallowance of amortization claim written off in relation to membership fee paid to stock exchanges - Held that:- As decided in Ananthraman Veerasinghaiah & Co. v. CIT [1980 (4) TMI 2 - SUPREME COURT] the findings in the assessment proceedings cannot be regarded as conclusive for the purposes of the penalty proceedings. It is also well settled that the criterion and yardsticks for the purpose of imposing penalty u/s 271(1)(c) of the Act are different than those applied for making or confirming the additions.
Entitlement to depreciation on the membership fee of stock exchange u/s 32 is allowed to assessee as upheld by the Hon'ble Apex Court in M/s Techno Shares & Stocks Ltd. Versus The Commissioner of Income Tax IV [2010 (9) TMI 6 - SUPREME COURT OF INDIA ] as the AO has not been able to establish that the claim of the assessee for deduction of depreciation u/s 32 was not bona fide or that any specific particulars were concealed or furnished inaccurate. Thus a mere disallowance of a claim of deduction does not necessarily imply concealment or furnishing of inaccurate particulars because the issue regarding allowability of deduction of depreciation on membership fee of stock exchange u/s 32 was debatable issue. A mere rejection of the claim of the assessee by relying on different interpretations does not amount to concealment of the particulars of income or furnishing inaccurate particulars thereof by the assessee as confirmed in CIT v. Reliance Petro Products Pvt. Ltd. [2010 (3) TMI 80 - SUPREME COURT]. It can at best be a "wrong claim" not "a false claim" - in favour of assessee.
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2012 (11) TMI 501
Undisclosed income u/s 158BC – Discrepancy in stock of finished products and work in progress – Addition on account of inter-se stock position at various stages in the production line - Held that:- As the stock register of furnished goods is kept for central excise purpose and products are not 100% pure & require further processing. Pre-shipment goods pending approval are recorded for MIS purposes but not for central excise purposes as it may require further processing in case the sample was not approved. As search occurred during the middle of year and sales made out of the stock of finished products have been only recorded later and exported and have been duly accounted for in books, there is no need to treat the value as undisclosed income. In favour of assessee
Discrepancy in stock of raw materials – Assessee accepting that there is a discrepancy of 730 kgs in an item – But the AO was not agree with the view of assessee – Held that:- After considering the arguments and examining the documents placed on record, only addition of 730kgs value of HCO was required to be confirmed. Even though assessee explanation was that the stock could be out of earlier issued for process, the same cannot be accepted in the absence of reconciliation, so to that extent the addition required to be confirmed. Partly allowed in favour of assessee
Discrepancy in stock valuation – Between MIS statement and books - No variation in quantities mentioned but only in valuation of the stock - Difference arose due to different valuation rate adopted – Held that:- Just because MIS statement prepared by factory manager was found, no addition can be made without examining whether the rates adopted on the quantity was not according to the accounting principles. No such exercise was undertaken by AO. Since assessee accounted the stock according to the principle of accountancy being followed and certified by management and auditors, we agree with the argument that variation cannot be brought to tax as undisclosed income on the basis of difference in valuation in books. In favour of assessee
Deduction u/s 80HHC – AO argued that there are sales proceeds includes proceeds other then export proceeds - Held that:- Where book results can neither be altered nor have been rejected/altered by the revenue authority and which show export proceeds being received by the assessee. Therefore, the deduction as claimed u/s 80HHC should be allowed to the assessee, within the premise of section 158BH. In favour of assessee
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2012 (11) TMI 500
Registration u/s 12AA - CIT granted registration from A.Y 2009-10 and not from A.Y 2007-08 - rectification application filled by assessee against CIT(A)'s order - Held that:- A bare perusal of the provisions of section 154 clearly reveals that mistake apparent from record must be obvious and patent mistake and not something which can be established by a long drawn process of reasoning, on points on which there may be conceivably two opinions. A decision on merit on a debatable issue does not constitute mistake apparent from record u/s 154 as confirmed in T.S. Balaram, ITO v. Volkart Bros.[1971 (8) TMI 3 - SUPREME COURT]. The assessee or the revenue is not entitled to seek review and reversal of the issues decided, in the order, on merit, in the guise of rectification application u/s 154.
In the present case there does not exist rectifiable mistake in the impugned order of the CIT, thus the provisions of section 154 cannot be invoked. The rectification application of the appellant has been rightly rejected by the CIT, as the issue has been considered and decided by him in consonance with the fact situation and the provisions of section 12A(2) r.w. second proviso to Section 12A(1)and its sub-clause (aa). A drastic amendment has been made curbing the power of condonation for registration covering the past years by addition of a proviso and sub-clause (aa) to Section 12A(1)(ii) and substitution clause (b) in the proviso w.e.f. 1.6.2007 by the Finance Act, 2007. Any application filed on or after 1.6.2007 is entitled to registration only for the F.Y during which registration is filed. Further, no merit in the appeal filed by the assessee, as the CIT has granted registration u/s 12AA w.e.f. A.Y 2009-10, having regard to the fresh application dated 14.4.2008, filed by the appellant. The issue involved in the rectification application filed by the assessee, before the CIT(A) is highly debatable much less the mistake apparent from record - Also the condonation of delay application of the assessee is dismissed in absence of proving 'sufficient cause' - against assessee.
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2012 (11) TMI 499
Deduction for head office expenses towards Indian branch - Held that:- Once the amount is found to be exclusive expenditure incurred by the head office towards the Indian branch, the same is required to be allowed in terms of Sec 37(1), without clubbing it with shared head office expenses as per sec. 44C. Accordingly, we hold that no adverse inference can be drawn against the assessee on this issue and such exclusive expenses incurred by the assessee are required to be allowed as deduction u/s 37(1) without any reference to section 44C. In favour of assessee
Disallowance of expenses towards earning exempt income – Whether Sec. 14A is applicable on securities on which exempt income was earned held as stock-in-trade - Assessee is an Indian branch of foreign bank - Interest was claimed as exempt u/s 10(15)(iv) earned on tax free bonds - Held that:- Following the decision in case of Godrej & Boyce Mfg. Co. Ltd. (2010 (8) TMI 77 - BOMBAY HIGH COURT) that contention raised by the assessee for not applying the provisions of 14A is not accepted. Issue remits back with direction to decides on the basis of above mention judgment. Issue remand back to AO
Disallowance of expenses towards earning interest & dividend income – Whether provision of Sec. 14A is applicable where income is chargeable to tax on gross basis at special rate u/s 115A - Held that:- Following the decision in case of Rajasthan State Warehousing Corporation (2000 (2) TMI 5 - SUPREME COURT) that if an assessee is carrying an indivisible business then the entire expenditure including that which was incurred for earning the tax free income would be a permissible deduction. Section 14A does not provide that if income is liable to tax at a lower rate then also the proportionate expenditure should not be allowed as deduction against the other business income. Section 14A is the deduction of expenses incurred by the assessee in relation to income not at all chargeable to tax and not the income chargeable to tax at lower rate of tax. In favour of assessee
Assessee received from and paid interest to overseas branches – Whether the provision of interest by a PE of a foreign enterprise payable to HO and/or other branches outside India is allowable deduction - AO argued that assessee is covered by section 9(1)(v)(c) - Interest paid by the HO is taxable in India - Held that:- Following the decision in case of ABN AMRO BANK, N.V. (2005 (8) TMI 294 - ITAT CALCUTTA-E) neither any deduction is allowed for the interest paid to HO or foreign branches nor income is recognized in respect of the interest earned in transactions between the HO and PE. Therefore we hold that hold that no deduction be allowed for interest paid to HO at ₹ 19,09,987 and at the same time no income can be taxed on account of interest earned from HO. Issue of assessee partly allowed in favour of assessee
Disallowance of deduction claimed u/s 43D - In respect of interest on bad or doubtful debts where assessee is a Scheduled Bank - AO argued that the claim of the assessee is not tenable because the assessee has credited such amount in the RFDI Account – Held that:- Assessee is entitled to claim of such interest u/s 43D and the claim of the assessee cannot be rejected simply on the ground that interest has been credited on such type of debts in the reserve account. However, for the verification of the figures, we direct the AO to see that what has actually received by the assessee during the year has been offered to tax. Issue decides in favour of assessee and remand back to AO
Interest Tax Act. 1974 – Interest Tax on amount of interest received - Interest on non-performing assets as described in section 43D can be assessed only in a condition that either they are credited to P&L Account or it is actually received - Whatever interest is actually received on such assets is taxable – Held that:- AO has to recompute the assessable interest after giving the assessee a reasonable opportunity of hearing and if there is incorrectness in the interest computed as assessable the same may also be removed. Issue decides in favour of assessee & remand back to AO
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2012 (11) TMI 498
Deduction u/s 80IB(8A) - AO argued that assessee sold services that was output of its research to the pharmaceutical companies – without prior permission of the prescribed authority - Violation of Rule 18DA(2)(a) – Held that:- As per Rule 18DA, if at any stage it is found that any provisions of the Act or the rules have been violated, the prescribed authority specified may withdraw the approval so granted. The authority has not withdrawn the approval of the assessee for the assessment year under consideration but has further granted the extension of the approval for a further period of three years. AO himself in the subsequent year i.e. 2009-10 in the order passed u/s 143(3) has discussed at length Sec. 80IB(8A) & Rule 18DA(1) and has finally concluded that the assessee is entitled to deduction u/s 80IB(8A). Appeal decides in favour of assessee
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2012 (11) TMI 497
Unaccounted Money – fact finding authority - evidentiary value of the seized paper - during the search operation, a note was seized from the business premises of the assessee. Such note was written in his own handwriting. In the note several amounts were written and against each figure, names of persons connected with such amount was mentioned. On both sides of the page, all figures were totalled up. In his statement during the search, the assessee admitted that such amounts represented unaccounted money. - Only during the course of the assessment proceeding, the assessee produced a note written by Shri Bhanwarlal suggesting that he had never received any money from the assessee.
Held that:- Mere note purported to have been given by Shri Bhanwarlal would not dislodge other voluminous and material evidence. The Tribunal found that the contents of the note cannot be readily believed. Tribunal had taken into account all relevant factors, examined evidence on record and came to the conclusions which are purely factual in nature.
The High Court should not have taken upon itself the responsibility to go into the question whether the findings of facts reached by the tribunal are correct. The only question that the High Court was called upon to determine was whether on the facts found by the tribunal, the receipt in question should not have been considered by the tribunal as Revenue receipt. Tribunal committed an error in appreciating the evidence on record and in particular the answers given by the assessee in his statement recorded by the Revenue Authority during the search and thereafter.
Even if two views were possible, it would not be possible for to overturn the findings of fact arrived at by the Tribunal particularly when Tribunal had taken into consideration all relevant evidence. It is not a case of no evidence and in that view of the matter, the findings of the Tribunal cannot be categorized as perverse - In the result, Appeal is decided against the assessee and in favour of the Revenue.
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2012 (11) TMI 496
Penalty u/s 271 - suppression of turnover - Held that:- The suppression of turnover is different from the suppression of income. If there is suppression of turn-over, there is liability to pay excise duty. Merely because the excise duty is paid, there is no presumption that it leads to taxable income in the hands of the assessee. The tax under the Income Tax Act is payable for the income in excess of the limit prescribed under the Act.
It is in this context, after the Settlement Commissioner under the Excise Act resolved the dispute between the parties, which waived the penalty, then whether he had income or not, he was forced to file revised returns and then pay tax as well as the interest for delayed payment of tax. All this was done prior to issue of notice u/s 148 or may be after the survey was conducted by the Income Tax Department. That by itself would not lead to a conclusion that there was concealment of income, as rightly held by the Tribunal - no substantial question of law which arise for consideration - in favour of assessee.
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2012 (11) TMI 474
Reassessment proceedings - block assessment under section 158BC - unaccounted gold ornaments - Held that:- On plain reading of the reasons recorded, the stock of gold ornaments valued at Rs.29,77,726/- was subject matter of block assessment under section 158BC. AO after considering the material on record in fact made an addition of Rs.29,77,726/- as undisclosed income of the petitioner. Such addition was set aside by the Commissioner (Appeals). The order of Commissioner (Appeals) deleting such addition was upheld by the Tribunal. Thus, when the undisclosed income determined by the AO included Rs.29,77,726/- being the value of gold ornaments which the assessee claimed to be belonging to its customers was subject matter of block assessment, the same cannot be made the subject matter of regular assessment under Chapter XIV of the Act. Under the circumstances, the reopening of assessment in relation to a matter which was subject matter of block assessment is evidently without jurisdiction.
When the Commissioner (Appeals) as well as the Tribunal have examined the issue on merits and have held in favour of the petitioner, the AO can have no reason to believe that income chargeable to tax has escaped assessment. For this reason also, the reopening of assessment under section 147 is without jurisdiction - in favour of assessee.
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2012 (11) TMI 473
Gross profit on sale of stock - additional income deleted by CIT(A) - Held that:- The assessee had transferred the stock of old stock of cloth at book value to its sister concern which according to the A.O. should have been transferred at cost plus profit. The assessee’s submission is that the stock was old and non-moveable stock which it had been carrying forward from earlier years has not been disputed by the Revenue by bringing any material to the contrary on record. Further, it is a settled law that Revenue cannot claim to put itself in the armchair of the businessman and assume the role to decide as to how to run the business. A businessman cannot be compelled to maximise its profits.
CIT (A) has also given a finding that the case of the Revenue is that it is of a sale to sister concern at a price which is less than its market value. The Revenue has not brought any specific material on record to show a particular sale price. No deeming provision of the nature of section 40A(2)(b) for sales transaction. The Revenue has also not been able to controvert the findings of the CIT (A) or rebut his observations. Thus no reason to interfere in the order of CIT (A) - in favour of assessee.
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2012 (11) TMI 472
Bogus creditors - CIT(A) deleted the addition - Held that:- Balances of sundry creditors appearing in the balance sheet could not have been assessed as income in the hands of the assessee without proving them to be non-genuine. There is no finding of the AO that the assessee has paid these creditors out of unaccounted money or the balance shown in the balance sheet as sundry creditors were fictitious entries.
Assessee has submitted before the CIT(A) that these balances consisted of earlier years’ balances also but the AO has not made further inquiries in the matter by issuing summons etc. to the creditor parties to verify the genuineness or otherwise of balances in the trade accounts - addition made was rightly deleted by the CIT(A) - in favour of assessee.
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2012 (11) TMI 471
Personal expenses - Disallowance of Traveling, Telephone and Mobile Expenses - Held that:- The assessee could not produce supporting vouchers for each and every item of expenses claimed under the head “Travelling, Telephone and Mobile Expenses”. The disallowance made on account of personal element involved under this head of the expenses at the rate of 10% at Rs.58,929/- could not be said to be excessive - against assessee.
Disallowance of Credit card expenses & penalty for delayed payments - Held that:- As assessee has not made any submissions before the CIT(A), there is no mistake in the order of the CIT(A) in confirming the disallowance - against assessee.
Disallowance u/s.40(a)(ia) - Held that:- As decided in Merilyn Shipping & Transports Vs. ACIT [2012 (4) TMI 290 - ITAT VISAKHAPATNAM] the provision of section 40(a)(ia) are applicable only to the amount of expenditure which is payable on 31st March of every year and it cannot be effected to disallow which had been actually paid during the previous year, without deduction of TDS - thus disallowance is restricted to Rs.4,85,252/- amount payable as on 31-3-2005 and the balance disallowance is deleted - partly in favour of assessee.
Addition on estimation of closing stock - CIT(A) deleted the addition - Held that:- The method of accounting of the assessee was same as adopted by the assessee in the earlier period and has been accepted throughout by the department. There is no valid reason for disallowance of 50% of the purchases and the AO has not taken into consideration RA bill for the month of March, as also payment received during the month. In the facts and circumstances of the case, there being no valid reason for making the addition on account of estimation of closing stock - in favour of assessee.
Disallowance on account of site expenses - CIT(A) deleted the addition - Held that:- The assessee could not file site-wise break-up of the site expenses, and therefore the disallowance made at Rs.32,448/- by the AO was quite justified - against assessee.
Disallowance of office expenses - Held that:- There is no finding of any non-genuineness of the expense claimed under the head “salary & wages”. These expenses incurred under the head “salary & wages” by nature did not allow any personal use of the assessee, and therefore the CIT(A) was justified in restricting the disallowance to the extent of 10% of the traveling expenses and of telephone and mobile expenses claimed by the assessee - partly in favour of assessee.
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2012 (11) TMI 470
Reopening of assessment - claimed exemption u/s 10B for the assessment year 2004-05 which is the 11th year - Held that:- In the present case, it is not the case of the Revenue that the assessee had not furnished the relevant documents or the information at the time of the assessment. The original assessment order was passed on 29.9.2006. Thereafter, the order was revised by the AO on 23.3.2007. Subsequently, after the elapse of four years notice u/s 148 was issued. The reason for reopening does not fall within the ambit of the provisions leading to escapement of assessment as the assessee had started claiming deduction u/s 10B from the assessment year 1995-96 and not from the assessment year 1994-95. Therefore, 10th and the last year for claiming deduction under the provisions of section 10B is assessment year 2004-05 and not assessment year 2003-04 as has been wrongly held by the AO as well as the first appellate authority - in favour of assessee.
Disallowance of deduction u/s 10B - Held that:- As decided in CIT Vs. DSL Software Ltd. [2011 (10) TMI 423 - KARNATAKA HIGH COURT] The said denial of the benefit runs counter to the spirit of section 10B and it would negate the object with which the amended provision was brought in. The assessee is entitled to the benefit of extension from 5 years to 10 years tax holiday as provided under the amended provision for 10 consecutive years from the date of commencement of production.
The order has been passed by the CIT(A) in a non-judicious and arbitrary manner. The order is not only against the law laid down by the Hon’ble High Court but smacks malafide on the part of the CIT(A). As CIT(A) has committed "intellectual dishonesty" extending it to the limit of perversity. The impugned order has burdened the assessee with the avoidable cost of litigation before the Tribunal and harassment. The appeal of the assessee is allowed with costs of Rs.25,000/- - appeal in favour of assessee.
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2012 (11) TMI 469
Reopening of assessment - undisclosed commission and interest paid to branches period beyond four years - Held that:- The perusal of the computation of total income filed along with return of income that the assessee has disclosed the interest and commission paid to the head offices and branches and also interest earned from head offices and branches. Once these primary facts have been disclosed before the Assessing Officer and has also been accepted by him after verifying them in scrutiny proceedings, it cannot be held that there was any failure on the part of the assessee to disclose fully and truly all material facts on these issues. Even though, the AO has mentioned about the failure on the part of the assessee in the "reasons recorded", however, such a failure cannot be ascribed or inferred from the material placed on record for the simple reason as to what the Assessing Officer is contending in the reasons recorded is the legal inference of taxability of such income.
It is not in dispute that the AO on September 15, 2003, had himself carried the file to the CIT(A) and on the very same day, rather the same moment in the presence of the AO, CIT(A) granted approval. As a matter of fact, while granting approval it was obligatory on his part to verify whether there was any failure on the part of the assessee to disclose full and true relevant facts in the return of income filed for the assessment of income of that assessment year. It was also obligatory on the part of the Commissioner to consider whether or not power to reopen is being invoked within a period of four years from the end of the assessment year to which they relate. None of these aspects have been considered by him which is sufficient to justify the contention raised by the petitioner that the approval granted suffers from non-application of mind. Thus re-assessment proceedings u/s 147 are treated as void ab initio - in favour of assessee.
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2012 (11) TMI 468
Rectification of order - assessee seeking rectification in the order of the Tribunal confirming valid service of notice u/s. 148 - Held that:- In this case the Tribunal after considering the entire facts and circumstances of the case held that there is valid service of notice u/s. 148. The order of the Tribunal may not be drafted in a manner as the assessee wanted. Because the order is not in favour of the assessee that cannot be said to be an error having mistake apparent on record. The Tribunal cannot be said to be committed an error as the Tribunal not elaborately given the finding that the order of the Tribunal relied upon by the assessee's counsel is not analysed. The Tribunal after taking due care taken a conscious decision that there is a valid service of notice u/s. 148.
Recalling the entire order obviously would mean passing of a fresh order. That does not appear to be the legislative intent. The order passed by the Tribunal under s. 254(1) is the effective order so far as the appeal is concerned. The words used in s. 254(2) are 'shall make such amendment, if the mistake is brought to its notice'. Clearly, if there is a mistake, then an amendment is required to be carried out in the original order to correct that particular mistake. The provision does not indicate that the Tribunal can recall the entire order and pass a fresh decision - The power to rectify a mistake under s. 254(2) cannot be used for recalling the entire order. No power of review has been given to the Tribunal under the IT Act. Thus, what it could not do directly could not be allowed to be done indirectly - no infirmity in the order of the Tribunal and the petition filed by the assessee cannot be said to be falls under the purview of section 254 - against assessee.
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