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Income Tax - Case Laws
Showing 281 to 300 of 743 Records
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2012 (9) TMI 763 - ITAT DELHI
Payments made for hiring of buses - applicability of Section 194C or 194I - assessee contended it to be payment for contract of service whereas Revenue contended it to be rent for hiring a plant - Held that:- It is observed that assessee has not taken the buses simplicitor on lease as a plant and machinery rather it entered into a work permit whereby buses were taken for transportation of the passengers. The bus owner is responsible for upkeep as well as operation of the bus. He kept his own driver and helper. The buses remained in the possession of the owners. Hence, CIT(A) has rightly held that it was a service contract and hence applicability of Section 194C - Decided against Revenue.
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2012 (9) TMI 762 - ITAT DELHI
Dis-allowance of professional charges claimed against professional receipts in absence of any agreement between the parties - assessee contended that due to unavoidable circumstances, it was not in a position to complete the work and it has assigned the work to M/s Dayal - Held that:- When the explanation of an assessee is based on number of facts supported by evidence and circumstances required considerations, whether the explanation is sound or not must be determined, not by considering the weight to be attached to each single fact in isolation but by assessing the cumulative effect of all the fact in their setting as a whole. Availability of agreement is one corroborative factor which would eliminate the doubts, but in the absence of that agreement, the other circumstances ought to have been evaluated, which can goad the adjudicating authority towards a firm conclusion. CIT(A) order of deleting dis-allowance upheld
Notional interest on Interest free advances - addition - Held that:- CIT(A) rightly deleted the addition on observation that assessee has not claimed any interest expenditure in the P/L A/c, therefore, no interest bearing funds were given to the parties without charging any interest.
Dis-allowance of payments made for delay in filing the various statutory returns with ROC on ground of it being penal - Held that:- Payments made by assessee on account of delay in submitting certain statutory returns are compensatory in nature and not on account of fraction of any law. These are not penal in nature. Therefore, CIT(A) has rightly deleted the addition - Decided in favor of assessee
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2012 (9) TMI 761 - ITAT DELHI
Assessee in default u/s 201 and 201 (1A) – accommodation provided by university to its employees against license fees – Revenue contended deduction of TDS on the value of perquisite of the rent free accommodation as per the procedure provided in Rule 3 of the Income-tax Rules, 1962 - Held that:- On reading the findings of the ITAT in the case of Financial Officer, Maharishi Dayanand University, Rohtak (2007 (12) TMI 247 - ITAT DELHI-I), which covers issue in favor of assesse, along with the finding of the AO in the light of the law propounded by the Supreme Court in case of Arun Kumar Vs. Union of India(2006 (9) TMI 115 - SUPREME COURT ) upholding validity of the Rule 3, it gets revealed that AO has nowhere held in the impugned order that any concession was given by the employer to its employees and they have provided the accommodation on a concessional rates. AO straightway applied Rule 3 without first establishing the case that the appellants have provided any concession in the shape of accommodation to its employees. Assessees cannot be treated in default without factually establishing that they have extended any concession to their employees. Revenue authorities have also not looked into the dispute with this angle. In view of the above discussion, it is held that assesse is not in default u/s 201(1) and 201(1A) - Decided in favor of assessee
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2012 (9) TMI 760 - ITAT DELHI
Denial of registration u/s 12AA - original trust deed was modified - Held that:- CIT has held that those supplementary trust deed submitted by assessee are not in accordance with the provisions of Indian Trust Act 1882 and judicial decision but has not pointed out any provision of the Indian Trust Act 1882 or any judicial decision which shows as to how the supplementary trust deeds dated 5.9.2008 and 22.9.2008 are not in accordance with law.
As both the supplementary trust deeds are duly registered by the Sub-registrar, Faridabad and there is no reason to doubt the explanation of the appellant that modifications were made in the original trust deed to make the objects of the trust more clear. It is not the case of the revenue that in the supplementary trust deed some non-charitable objects have been introduced. In absence of such observation by the revenue no reason to doubt the validity of the supplementary trust deed executed on 22nd Sep. 2008 which is the finally amended trust deed. The Ld. CIT has not specified as to how the supplementary trust deed dated 22.9.2008 is not in accordance with law. The finding of Ld. CIT in this regard is thus not justified - no substance in the contention of the DR that while making alteration in the trust deed the appellant has violated the provisions laid down in clause 17 of the original deed which provides the manner of making, altering or rescinding Rules and Regulations - direction to grant registration u/s 12A - in favour of assessee.
Refusal in granting approval u/s 80 G - Held that:- As grant of registration u/s 12A has been allowed application for exemption u/s 80 G too need to be allowed - in favour of assessee.
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2012 (9) TMI 759 - ITAT MUMBAI
Deemed Dividend - receiving of loan from company in which assessee hold more than 10% of the shares - assessee contesting the order on ground that company had advanced the loan to the assessee in ordinary course of business of granting loans and advances - Held that:- There is no dispute that lending and advancing of money is one of the objects of the company. The said company had been receiving interest from loans and advances given which had been offered as business income and it was also being accepted by the department u/s 143(1). Therefore, having accepted the interest income received by the company as business income, the Revenue cannot argue that lending and advancing of money is not the business of the company. Therefore, amount was received as loan from the company in the ordinary course of business of the company and hence cannot be assessed as deemed dividend - Decided in favor of assessee
Addition u/s 68 of Rs 16.50 lacs being cash deposited in the bank account of the assessee on the ground that source had not been explained satisfactorily - Held that:- Assessee had explained the source as sale proceeds of land at Madurai, in which the share of assessee was Rs. 14,63,459 and income had been offered as capital gains. There is no dispute about sale of land. Cash received on account of sale was duly reflected in the balance sheet for AYs 2005–06 and 2006–07. Further, assessee had shown cash in hand of Rs. 16,46,701, as on 31st March 2006 in the balance sheet for that year which has been carried forward to the current year in which the cash was deposited in the bank. In view of aforesaid facts, AO was not justified in rejecting the explanation of the assessee only on the ground that cash had been held for a long time. There is no legal ban for keeping the money in cash. Order of Commissioner (Appeals) in deleting the addition is upheld - Decided in favor of assessee.
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2012 (9) TMI 758 - ITAT MUMBAI
Presumptive taxation - Builder/Developer - assessee following the ‘project completion method’ for recognising income from such projects - Revenue estimated business income at the rate of 8% on booking advance collected by the assessee during the year on the basis of Revised AS 7(Construction Contracts) issued by ICAI - AY 06-07 - Held that:- It is noted that the project of the assessee had commenced on 9-1-2005 by execution of development agreement and the project was approved on 17-2-2005. It is also admitted that the project was mostly completed in the FY 2006-2007 (i.e. AY 2007-08), and income was shown in AY 07-08. Tribunal in case of Unique Enterprises has held that assessees, who are following ‘project completion method’ and have offered income-tax in the year in which substantial work has been completed, the same should be accepted.
In view of aforesaid it is held that no income can be assessed on presumptive basis in the AY 2006-2007 as the assessee has already shown the income in the subsequent year 2007-2008 as per the regular accounting method of project completion employed by the assessee. Addition confirmed by the CIT(A) stands deleted - Decided in favor of assessee
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2012 (9) TMI 757 - ITAT MUMBAI
Dis-allowance of expenditure on adhoc basis on ground of it being excessive - Pharmaceutical Sales Representative (PSR) expenses and PSR salary - assessee company engaged in the business of trading of pharmaceutical products - Held that:- It is observed that AO though doubted higher percentages of expenditure claimed by the assessee; however, no enquiry or investigation has been made to find out the genuineness of the claim of the assessee. Nature of business is such expenditure on marketing of pharmaceutical products is bound to happen, which is not disputed by Department. Without giving a finding that the claim of the assessee is bogus, the same cannot be disallowed merely on the ground that the claim of the assessee is excessive.
In the facts and circumstances of the case when the actual expenditure incurred by the assessee has not been doubted and the payment has been made to the various Medical Representatives, who are not related parties of the assessee, than no adhoc disallowance is called for on account of excess PSR expenses and PSR salary. Dis-allowance deleted – Decided in favor of assessee
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2012 (9) TMI 756 - ITAT HYDERABAD
Addition u/s 68 in respect of deposit accepted by the assessee - Revenue contended that assessee not produced the details namely, address of the depositor or any particulars of the depositor - co-operative society carrying on banking business for its members - Held that:- In the present case, assessee is a Society carrying on the Banking business to its own members and the business is carried on with certain set of guidelines and procedures. It is operating through 23 branches and each of the branches is headed by a Branch Manager and other staff. Deposits were accepted by staff along with the application at the counters. To the extent of the maintenance of the records is concerned, it is already seen that a systematic record was maintained by the assessee with regard to the transactions by the Bank. It has accepted all the documents as required under KYC norms. From the above facts it is proved that the assesses has proved the identity of the depositor. When the Society is having members of 63,000, one cannot come to a conclusion that the bank does not have furnished identity and proof of depositor by verifying few numbers.
Being so, amounts in the accounts maintained by the assessee are deposits of the customers and/or not under the control of the assessee, and therefore, provisions of S. 68 are not applicable to the Bank. Further, Society/Bank not required to go for detailed verification of address/whereabouts of the customers and therefore, addition u/s 68 cannot be made merely because the address of the customers are incomplete. CIT(A) rightly deleted the addition - Decided in favor of assessee
Deduction u/s 80P(2)(a)(i) - denial - Held that:- It is the fact that certain activities carried on by the assessee not complying with the requirements of the principles of Cooperative Society, more so, the assessee also engaged in the activity of bill discounting, providing accommodation cheques by taking cash from the member, being so, for the AY 2006-07 the claim of the assessee u/s 80P(2)(a)(i) cannot be allowed. For AY 2007-08 & 2008-09, it is observed that Society is carrying on the Banking business and for all practical purpose it acts like a co-op bank. It is governed by the Banking Regulations Act. Therefore the Society being a co-op bank providing banking facilities to members is not eligible to claim the deduction u/s 80P(2)(i)(a) after the introduction of sub-section (4) to section 80P, hence entitled for deduction u/s 80P(2)(a)(i) for AY 2007-08 & 2008-09 - Decided in favor of Revenue.
Dis-allowance of advertisement expenditure u/s 40a(i)(a) for no deduction of TDS - Held that:- Section 40(a)(ia) of the Act is applicable only to the expenditure which is payable on 31st March of every year and cannot be invoked to disallow the amounts which are already been paid during the previous year, without deducting tax at sources. see Merilyn Shipping & Transports (2012 (4) TMI 290 - ITAT VISAKHAPATNAM). Accordingly, this issue set aside to the file of the assessing officer for reconsideration.
Interest on account of interest receivable on the loans advanced which are pending recovery for more than 6 months - assessee contesting direction of CIT(A) to AO for verification of claim - Held that:- CIT(A) was justified in issuing directions to verify the nature of interest whether it is on non performing assets or not and decide thereupon, since Supreme Court in the case of UCO Bank v. CIT [1999 (5) TMI 3 - SUPREME COURT ] held that interest credited to the suspense account and NPAs is to be excluded from the income - Appeal of assessee dismissed
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2012 (9) TMI 755 - MADRAS HIGH COURT
Whether loss arising from purchase and sale of units is not allowable as the transaction is a colourable device to avoid tax despite the fact that the actual purchase and sale has taken place and the assessee has actually incurred the loss - Assessee had purchased units of the UTI from Bank of America – Sold back the same units to Bank of America on very next day – Assessee receive dividend and incurred a STCL, set off with LTCG and carried forward the balance STCL – AO point was that the units sold by them on 31.5.1991 were in the name of the assessee - Bank had purchased these units from the assessee earlier in two lots in 1990’s remained in the name the assessee – UTI confirmed that the transfers were registered in the name of the assessee from 31.5.1990 till 14.5.1994 and assessee received dividends till 1994 - Held that:- As the revenue does not dispute that the transactions in fact had taken place between the assessee and the Bank of America. Revenue’s only point is that there was no registration of the units in the actual holder's name. If the Revenue had questioned the transaction as not legal, and not based on the amendment to Section 94, which came into existence only with effect from 1.4.2002, then Section 94 would not have come into play in considering the merits of the claim. Thus, on principle, when the Revenue had accepted the transfer, the sole ground on which the transaction was held to be a colourable one could not be sustained. Appeal decides in favour of assessee
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2012 (9) TMI 754 - ITAT, KOLKATA
Disallowance of interest expense in relation to advance given to sister concern - Assessee has not charged any interest on its advance to a 100% subsidiary and to a group company – Assessee contended that such amount was given in the ordinary course of the business – Subsidiary company have no other business and only having land on which construction is not permissible – No increase in share capital & reserves but secured loan has been raised - Held that:- As concluded from the facts of case the interest free funds available with the assessee are far more than the interest free advances. Interest free advance granted by the assessee to the subsidiary company was less than cash profit generated by the assessee. Therefore, it should be presumed that the subsidiaries were paid out of the profit of the assessee which is far in excess of the amount paid to the subsidiaries. Decision in favour of assessee
Disallowance of employees' contribution to P.F – Assessee contended that these payments have been made within the due date of filing of return u/s. 139(1) – Held that:- As the dates provided by assessee are not available in either of the orders of the authorities below. Therefore for verification issue remand back to AO.
Disallowance of prior period expenses – Assessee argued that said expenditure related to the electricity charge – Held that:- Only expenditure which is related to the accounting year under consideration has to be allowed against the declared receipts except the expenditure which was not crystallized in earlier accounting years. Further assessee has failed to prove that the expenditure in question was crystallized only in the accounting year. Appeal decides in favour of revenue
Depreciation on Hotel building – Assessee claim depreciation on hotel building claimed by assessee at 15% - AO allow 10% - Held that:- As decided in earlier years by CIT(A)that depreciation for hotel building will be allowable only @ 10%. Appeal decided in favour of revenue
Ad-hoc disallowance of interest expenses against dividend income u/s 14A – Held that:- The AO must adopt reasonable basis for effecting the apportionment with reasonable opportunity of being heard provide to assessee. Disallowance should be restricted to 1% of dividend income. Therefore, earning exempt dividend income should be restricted to 1% of dividend income. Decision in favour of assessee
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2012 (9) TMI 753 - ITAT, BANGALORE
Addition on account of valuation of investment portfolio – Assessee is a Bank treating the investments as stock-in-trade – Bank showing opening and closing stock securities valued at cost or market value whichever is lower as prescribed by RBI for the purpose of books of accounts – AO observe that assessee has followed RBI guidelines for the purpose of books of account, but not for computation of income for the purpose of income tax purposes – Held that:- Following the decision in case of United Commercial Bank (1999 (9) TMI 4 - SUPREME COURT) assessee Bank is entitled to value all the investment at cost prices or market value whichever is lower by treating such investment as stock-in-trade. Decision in favour of assessee
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2012 (9) TMI 752 - ITAT, BANGALORE
TDS u/s 195 - Whether the payment made for import of software or supply of software by the non-resident companies was royalty or not - Assessee imported certain software products from UK for onward distribution – Held that:- Following the order in case of Samsung Electronics Co. Ltd.(2012 (8) TMI 112 - ITAT BANGALORE) payment made by the assessee to non-resident companies would amount to royalty within the meaning of Article 12 of the DTAA with the respective countries and there was obligation on the part of the assessee to deduct tax at source u/s. 195 of the I.T. Act. Appeal decided in favour of revenue
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2012 (9) TMI 751 - ITAT, BANGALORE
Monetary limit for appeal in Tax related matters before ITAT – Appeal filed with Tribunal prior to the instruction regarding the minimum monetary limit stipulated by the Board – Revenue contended that the amount in appeal is above the minimum prescribed limit as per previous instruction – Held that:- Following the decision in case of Seedi Builders (2011 (11) TMI 402 - KARNATAKA HIGH COURT) it is clear that the instructions issued in the Circulars by CBDT are applicable for pending cases also. Appeal decides in favour of revenue
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2012 (9) TMI 750 - ITAT, BANGALORE
Disallowance of provision made for leave encashment - Assessee in the relevant period had made a provision for encashment of privilege leave on the basis of actuarial valuation - AO holding that it is contingent liability which had not crystallized and therefore not allowable as a deduction - Held that:- Following the decision in case of BEML(2000 (8) TMI 4 - SUPREME COURT) and Exide Industries Ltd.(2007 (6) TMI 175 - CALCUTTA High Court ) struck down the provisions of section 43B(F), that the assessee’s claim for deduction of the provision for privilege leave encashment is not a contingent liability and is to be allowed. Issue decided in favour of assessee
Amortization of premium paid on Government securities – Following the decision in case of Sir M. Vishveswaraya Co-operative Bank Ltd. (2012 (9) TMI 774 - ITAT, BANGALORE) hold that the assessee is entitled to deduction on account of amortization of premium on Govt. securities over its life. Decision in favour of assessee
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2012 (9) TMI 749 - ITAT, KOLKATA
Disallowance of interest – AO made disallowance of interest on borrowed funds because the same were utilized in making interest free advances to two of its subsidiary companies – Held that:- As concluded from the facts the amounts advanced by assessee to the above mentioned five concerns are out of internal accruals or out of profits earned by assessee by way of sale of shares or by way of consideration received on account of sale of shares. Therefore, assessee is entitled for allowance of interest on borrowed capital which is used for the purpose of business. Appeal decides in favour of assessee
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2012 (9) TMI 748 - KERALA HIGH COURT
Agricultural income - plantation company engaged in rubber cultivation - assessee is also buying latex from small planters convert into centrifuged latex and sell the same - assessee returned 100% of income from their plantation obtained on sale after conversion of field latex into centrifuged latex for assessment under the Kerala Agricultural Income Tax Act and no part was offered for assessment under the Central Income Tax Act – Held that:- Circular No.5 of 2003 dated 22/05/2003 prohibiting reopening of assessment under Section 147 as well as under Section 263 of the Income Tax Act for any assessment year prior to the assessment year 2002-03 - Assessees who have paid agricultural income tax on 100% of the income from centrifuged latex, will not be reassessed under the Central Act for any year prior to the assessment year 2002-03 - assessee's case is covered by the circular and the assessee cannot be called upon to pay tax again under the Central Income Tax Act on that part of the income assessed under Rule 7 over which also tax was paid under AIT Act
Charging provision of assessment of part of the income from the sale of items of rubber covered by Rule 7A should be deemed to have come into force only when Rule 7A was introduced i.e. with effect from 01/04/2002 - from the assessment year 2002-03 onwards, income from centrifuged latex could be assessed under Rule 7A of the Rules.
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2012 (9) TMI 734 - ITAT AHMEDABAD
Disallowance of transport and octroi charges u/s 40(a)(ia)r.w.s. 194C - A.Y. 2005-06 - Held that:- On perusing the records of assessee there is nothing on record to show that the assessee has paid the entire sum of transportation charges before 31st March,2005 and there is nothing payable as on 31st March, 2005 - As the allowability of deduction u/s. 40(a)(ia) has not been examined by the A.O. in the light of decision of Special Bench in the case of Merilyn Shipping (2012 (4) TMI 290 - ITAT VISAKHAPATNAM) the issue needs to be re examined, thus the matter should be remitted back to the file of A.O. for verification - in favour of remand by way of remand.
Disallowance of wages - Held that:- As A.O. had not pin pointed any defect in wage register & has merely disallowed the payment for the reason that there were no signatures of the recipient on revenue stamp in the wage register and has further presumed that the assessee has inflated expenses on wages without pin pointing to any specific instance no disallowance on adhoc basis can be made - in favour of assessee.
Addition in respect of valuation of closing stock - partial relief by CIT(A)- Held that:- As the assessee had not considered stock of work in process while valuing the closing stock and the assessee has submitted that it does the job of dyeing and printing on job work charges and while valuing the closing stock, the stock of WIP is already included based on that CIT (A) has granted partial relief - As assessee here has not pin-pointed the working of valuation of closing stock which would show that valuation of work in process is also included in it & has also not been in a position to demonstrate as to what was the break up of own material and that received for processing on job work basis no reason to interfere with the order of CIT (A) - against assessee.
Non deduction of TDS - Disallowance of labour charges u/s 40(a)(ia)- A.Y. 2006-07 - Held that:- As decided in M/s. Alpha Projects Versus DCIT, Ci rcle-1(1) [2012 (4) TMI 466 - ITAT, AHMEDABAD] since the TDS has been paid to the account of Govt. before filing of return of income, no disallowance is called for - as in this case assessee has credited the amount on 31-3-2005 and tax was also deducted on that date. The TDS of RS.17,728/- was deposited in the Govt. account on 24-5-2005 i.e. before the date of filing of the return. (return was filed on 29-10-2005) no addition seems to be warranted - in favour of assessee.
Addition on account of inflated purchases - Held that:- Difference of Rs.4,33,130/- was observed in the purchase register and the A.O. made addition on the basis of the difference and the statement of Accountant of assessee - As it is undisputed fact that the books of accounts of the assessee are audited by the auditors. CIT (A) had primarily agreed with the contention of the assessee and therefore directed the A.O. verify the reconciliation and delete the addition if the assessee’s contention was found correct. No infirmity in the directions of CIT (A) to the A.O. to verify and then delete if the assessee’s contention is found correct, thus no interference is called for in the order of the CIT (A) - in favour of assessee.
Disallowance of transport and octroi charges u/s 40(a)(ia) - Held that:- The provisions of section 40(a)(ia) are applicable only to the amounts of expenditure which are payable as on the date 31st March of every year and it cannot be invoked to disallow which had been actually paid during the previous year, without deduction of TDS as in the present case, since there is no sum payable as on 31-3-2006, following the decision of Special Bench in the case of Merilyn Shipping (2012 (4) TMI 290 - ITAT VISAKHAPATNAM) we delete the addition made by A.O. - in favour of assessee.
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2012 (9) TMI 733 - ITAT AHMEDABAD
Penalty u/s. 271(1)(c)- unaccounted money - A.Y. 2002-03 - Held that:- As initially addition of Rs.4,61,500/- was made u/s. 68 which has been finally made of Rs.1,27,500/ - as the addition on which the penalty u/s. 271(1)(c) has been levied has itself been reduced from Rs.4,61,500/- to Rs.1,27,500/- the present penalty cannot survive. However, since the addition of Rs.1,27,500/- u/s. 68 has been sustained issue of penalty on the addition be restored back to the file of A.O. for deciding it afresh - in favour of assessee for statistical purposes.
Penalty u/s. 271(1) (c ) - gift as unexplained cash credit u/s.68 - A.Y. 2003-04 - Held that:- Merely because the assessee could not prove the credit-worthiness of the donors, it does not justify the imposition of the penalty under section 271(1) (c). The facts of the case may justify the additions of the gift amounts for taxation purpose in the assessment of the assessee, but are not sufficient to justify the imposition of the penalty under section 271(1) (c) - in favour of assessee.
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2012 (9) TMI 732 - ITAT AHMEDABAD
Disallowance u/s. 14A - CIT(A) deleted the addition - Held that:- As decided in Maxopp Investment Ltd. & Others Versus Commissioner of Income Tax [2011 (11) TMI 267 - DELHI HIGH COURT] as under the expression “expenditure incurred” refers to actual expenditure and not to some imagined expenditure. The “actual” expenditure that is in contemplation u/s. 14A(1) of the Act is the “actual” expenditure in relation to or in connection with or pertaining to exempt income - as in the present case A.O. had made the disallowance for interest and other expenses pertaining to the investments on an estimate basis at 10% of the dividend income A.O. has not given any finding with respect to incurring of expenses for earning tax free income. Thus disallowance of expenses on adhoc basis @ 10% of dividend income without giving any finding of fact warrants to be deleted - in favour of assessee.
Inclusion of amount of sales tax and excise duty while computing the total turnover for the purpose of deduction u/s. 80HHC - CIT (A) directed to reduce the addition - Held that:- As decided in CIT Versus Lakshmi Machine Works [2007 (4) TMI 202 - SUPREME COURT] excise duty and sales tax were includible in the "total turnover", which was the denominator in the formula contained in section 80HHC(3) as it stood in the material time whereas amendments to section 80HHC(3) indicate exclusion of book profits but reasoning in this judgment is confined to the workability of the formula in section 80HHC(3) as it stood at the material time - in favour of assessee.
Computation of deduction u/s 80HHC - 90% exclusion of net interest/rent or gross interest/rent - Held that:- As the facts in the year under appeal are identical to that of earlier year wherein the co-ordinate Bench has taken a view with respect to interest income and held that 90% of not the gross interest/rent but only the net interest/rent have to be reduced from business profits while computing deduction u/s. 80HHC. Further in the case of ACG Associates Capsules (P) Ltd. (2012 (2) TMI 101 - SUPREME COURT OF INDIA) the Hon’ble Apex Court has held that net interest needs to be reduced under Cl.(1) of Explanation(baa) to Sec. 80HHC for determining profits of business. Thus 90% of the net interest be reduced for determining profit for the purpose of deduction u/s. 80HHC. We therefore direct the A.O. to allow the deduction after verification - in favour of assessee.
Computation of deduction u/s. 80HHC - receipt of insurance claim - Held that:- there is no profit element involved in insurance receipts, as the insurance claim is purely for the recovery of loss of material and asset of the company due to damage to the material and assets. We are of the view that the expenditure incurred by the assessee on material and assets lost due to damage is more than the insurance claim and there was no income to the assessee in the nature of insurance claim - the same will not be included either in the total turnover nor in the business profits of the assessee for the purpose of computation of deduction u/s. 80HHC of the Act - in favour of assessee.
Computation of deduction u/s. 80HHC - brokerage of investment - Held that:- As this brokerage income in any way is not related to export earning but the expenditure relating to this brokerage income of any expenditure, the same will be reduced and only net income has to be excluded to the extent of 90% under clause (baa) while computing deduction u/s. 80HHC - partly in favour of assessee.
Adhoc disallowance of 5% of Sales promotion - Held that:- The co-ordinate Bench on identical matter, in assessee’s own case, in earlier year has decided the matter by holding that the assessee has not vouched the expenses and the AO on scrutiny found that these expenses include the office expenses incurred at its branches at Madras, Bombay, Delhi and Kolkata and on scrutiny of these expenses finds that there are many expenses which have been incurred in providing tea, coffee, refreshments cold drinks, etc. to various visitors but nature of all these expenses reveals that these are many expenses which are not subject to verification and not properly vouched also - even now before that the assessee could not adduce anything to controvert that the expenses are vouched fully and there is no personal element in these expenditures accordingly the disallowance is confirmed - against assessee.
Disallowance of Interest on loan - loan is for nonbusiness purpose - Held that:- That Revenue has not brought any nexus of borrowed funds being used for investments and the basis of the conclusion is on the basis of assumption. On the other hand the assessee has demonstrated with the help of details and its accounts that the investments have been made out of the sale of investments and out of free reserves. It has not utilized unsecured loans for the purpose of making investments - as Revenue has not been in a position to rebut the facts by bringing any material on record no disallowance can be warranted - in favour of assessee.
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2012 (9) TMI 731 - ITAT AHMEDABAD
Non deduction of TDS on payment of transport charges - Disallowance u/s.40(a)(ia) - Held that:- Nothing has been brought on record the goods were transported in pursuance of any sub-contract so as to apply the provisions of Sec.194C(2), thus in the absence of transfer or pass-over of any contractual responsibility to transporters as a sub-contractor, the assessee being an individual was not responsible for the deduction of tax at source as prescribed u/s.194C(2).
As the AO has recorded a finding that the impugned amount was paid to truck-owners. The AO has noted that when the payments were made to various truck-owners, no TDS was deducted. In this regard, the Respected Special Bench has taken a view in the case of Merilyn Shipping & Transports, Visakhapatnam vs. Addl.CIT (2012 (4) TMI 290 - ITAT VISAKHAPATNAM) that the word quote “ “payable” used in section 40(a)(ia) has to be given its natural meaning and, going by a strict interpretation, section 40(a)(ia) is applicable only to expenditure which is payable as on March 31 of every year and cannot be invoked to disallow the amounts which have already been paid during the previous year, without deducting tax at source.”. Thus,the provisions of section 40(a)(ia) are not applicable under this situation, hence the impugned disallowance is hereby deleted - in favour of assessee.
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