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Income Tax - Case Laws
Showing 321 to 340 of 743 Records
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2012 (9) TMI 698 - ITAT DELHI
Charge on receipts - Diversion of income by overriding title - whether the amount paid by the assessee to wife of deceased partner of the firm is first charge on receipts of the firm in terms of clause 13 of the partnership deed executed on 1.4.2003 - Held that:- As decided in P. Bhumi Sudhar Nigam Vs. Commissioner of Income-tax (2004 (12) TMI 17 - ALLAHABAD HIGH COURT) that the principles relating to diversion of income by overriding title are (i) if a third person becomes entitled to receive an amount under an obligation of an assessee even before he could claim to receive it as his income, there would be a diversion of income by overriding title but when after receipt of the income by the assessee, the same is passed on to a third person in discharge of the obligation of the assessee, it will be a case of application of income by the assessee and not of diversion of income by overriding title - As in the present case there being an absolute contractual obligation imposed on the continuing firm/partners in terms of clause 13 of the partnership deed executed on 1.4.2003, the assessee firm is required to pay the amount @ 2% of the gross receipts subject to maximum of 3 lacs pa to Mrs. Mehru Menoo Shroof, wife of deceased partner of the firm and this amount being the first charge on receipts of the continuing firm/partners ,apparently, there would be a diversion of income by overriding title. Indisputably, a similar claim has already been accepted by the AO in the AY 2004-05 & 2006-07 no alternative but to allow ground in the appeal - in favour of assessee.
Disallowance of General Repairs & maintenance expenses - Held that:- As the assessee has merely submitted a copy of ledger account in respect of expenditure exceeding above Rs.20,000/- each amounting to Rs.12,05,946/- while the details of expenditure below Rs.20,000/- are not available . Neither the AR nor the DR could explain the basis for disallowing the amount on repairs nor the impugned order is speaking one. Even the nature of repairs is not brought out in the impugned order nor it is stated that these repairs were current or otherwise. - Thus the order passed by the CIT(A) is cryptic and grossly violative of facets of the rules of natural justice for not passing a reasoned order, which should reflect application of mind by the concerned authority to the issues/points raised before it - issue remitted back to CIT(A) to pass a speaking order, keeping in mind the mandate of provisions of sec. 250(6) bringing out clearly the nature of repairs ,whether current or otherwise - in favour of assessee by way of remand.
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2012 (9) TMI 697 - ITAT AHMEDABAD
Disallowance of frauds loss - assessee a Banking company - Held that:- As per the contract between the investors and the broker, the broker was required to deliver the securities to the investors contracted for. During the year out of 27 syndication deals 12 deals could not be completed and remained outstanding. In all these cases the contract notes were issued to the investors by the broker. The assessee had only acted as a facilitator between the investor and the broker. In all these cases the broking firm failed to deliver securities after taking funds from the investors.
As the assessee is in the business of Merchant banking activities and the expenditure has been incurred during the course of business and also a fact that the assessee was not legally liable to make the payment and compensate the investors but the assessee had compensated the investors, in these circumstances it cannot be said that the expenditure is not relating to the assessee’s business only for the reason that it was legally not liable to pay. Thus it can be considered to have been made as a matter of business expediency. The payment was made by the assessee to keep up the reputation of the assessee bank, to avoid long protracted litigation, to continue the business relationship with the PSUs and their employees, to increase the business in the long run, promoting its business and in the interest of business the compensation payments were made. Thus it can be said that the amount of compensation of ₹ 15.62 crores is an expenditure has been incurred wholly and exclusively for the purpose of assessee’s business - As far as the payment of penalty of ₹ 5 lacs pursuant to the order of RBI is concerned, relying on the decision of Apex Court in the Maddi Vankataraman (1997 (12) TMI 3 - SUPREME COURT) held that expenditure incurred for evading the provisions of the Act and also the penalty levied for such evasion cannot be allowed as deduction u/s 37 and in view of the fact that the penalty was levied for violation of Banking Regulation Act, the same cannot be allowed as deduction - partly in favour of assessee.
Deduction in respect of professional fees paid for implementation of Visa Module and FM support to base 24 switches & upgradation of ATMs - allowed depreciation at the applicable rates - Held that:- On perusing the Assessment order it has stated that the assessee is allowed depreciation at the applicable rates depending upon the date put to use. In view of these facts the AO is directed to verify the records and grant depreciation on the additions made, if not already allowed - in favour of assessee for statistical purposes.
Disallowance u/s. 14A - Held that:- As during the year the assessee has earned interest of ₹ 17.45 crore on tax free bond and debentures as against which the assessee had suo moto disallowed ₹ 5.53 crore being the interest expenses u/s 14A as against which the AO has worked out the disallowance of ₹ 32.76 crore. After giving the credit of disallowance of ₹ 5.53 crore made by the Assessee, the AO disallowed ₹ 27.23 crore u/s 14A. As on 31st March 2003, the interest free funds available with the assessee was to the tune of ₹ 3404 crore (comprising of share capital of ₹ 230 crore, Reserves of ₹ 689 crores and interest free demand deposits of ₹ 2485 crores) as against which the tax free investments were to the tune of ₹ 589 crore. Thus the interest free funds were far in excess of the investments - as the assessee has suo moto disallowed ₹ 5.53 crore u/s 14A no further disallowance over and above than what has been disallowed by the Assessee is called for - in favour of assessee.
Disallowance of deduction of bad and doubtful debts u/s. 36(1)(vii) - Held that:- As decided in assessee's own case that while working out the deduction u/s 36(1)(vii), the opening credit balance i.e balance brought forward as on 1st April of the relevant accounting period needs to be reduced - Since the issue in the present appeal is identical to that of AY 2001- 02 similar view is to be taken and accordingly direct the AO to examine the matter and allow the claim in accordance with the order of the tribunal - in favour of assessee for statistical purposes.
Disallowance of Compensation for non occupation of the premises - Held that:- The assessee had contracted with landlord to take a premise on lease for opening its branch though no formal agreement with the landlord was entered into & before the construction was completed the assessee was of the view that the overbridge will cause hindrance to conduct the business and services accordingly it decided to terminate the understanding with the assessee compensated the landlord by making a payment of ₹ 6 lacs in full and final settlement of all its claims. Thus from the facts it is clear that the transaction in respect of which the compensation was paid arose during the course of business and was for the purpose of business. The expense has been incurred by the assessee to protect its interest and in lieu of the claims that could have been raised by the landlord - in favour of assessee.
Disallowance of fees paid to KPMG and traveling expenses - no prior permission was received from RBI before incurring such expenses - Held that:- As the submissions and case laws relied by the assessee CIT (A) has given a finding that the expenses are of revenue nature and were incurred for the expansion of existing business and accordingly deleted the addition made by the AO and the Revenue has not controverted the findings of CIT(A) nor has brought on record any material to the contrary - in favour of assessee.
Disallowance of computer cabling expenses - Held that:- CIT(A) has given a finding that the expenses on shifting of telephone line from one leased premise to another does not result into any new advantage to the assessee and the lease is liable to termination in case of default of assessee. No reason to interefere in the order of CIT(A) arises - in favour of assessee.
Disallowance of professional services - Held that:- Considering the assessee's submission that that the payments are in the nature of annual subscription, service charges and for expenses similar to AMC charges & analyzing the vouchers of the expenses CIT(A) deleted the disallowance except of ₹ 34.35 lacs paid to FSSPL and as Revenue has neither been in a position to controvert the findings of CIT (A) nor has brought any material to the contrary - in favour of assessee.
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2012 (9) TMI 696 - ITAT AHMEDABAD
Capital introduced by the partners added u/s.68 - CIT(A) deleted it - Held that:- CIT (A) has given a finding that the capital was brought by cheques, both the partners were assessed to tax and the assessee has discharged the primary onus in respect of such amount shown in the capital account. The Revenue has not been in a position to controvert the findings of CIT (A) nor could it bring any material to the contrary on record. In view of these facts no interference is called to the order of CIT (A). Since the ground of addition of capital of Rs.9.5 lacs is deleted - in favour of assessee.
Addition made on account of booking deposit u/s. 68 - CIT(A) deleted it - Held that:- As during the course of appellate proceedings before CIT (A) the copies of registered sale deeds were filed and the same were admitted as additional evidence. CIT (A) has given a finding that the A.O. has not brought any material on record to show that the assessee has siphoned off the booking deposits. A. O. had made addition for the sole reason that no confirmatory letters were filed and some booking deposits were received in cash. Before CIT (A) the copy of registered sale deed showing names, addresses, attested photographs, signatures etc., of the members were filed which proves the identity and genuineness of the depositors - in favour of assessee.
Disallowance of non-agricultural use conversion Charges - payment maid after the year end and was paid by the Seller Trust - CIT(A) allowed it - Held that:- CIT (A) has given a finding that assessee maintains its books on mercantile basis which obliges it to make provision for all known liabilities, the expenses have been incurred wholly for the purpose of business and the full sale price has been offered to tax and as per the development agreement the assessee is entitled to deduction. These facts have not been controverted by the Revenue nor it has brought on record any material to the contrary - in favour of assessee.
Disallowance of interest paid to partners - Held that:- Since the ground of addition of capital of Rs.9.5 lacs is deleted, the disallowance with respect to interest on the capital also does not survive - in favour of assessee.
Disallowance on account of Puran expenses (land filling) - Held that:- These expenses were estimated @ Rs.150/- per sq. yd. CIT (A) has given a finding that the provision for puran expenses is ascertained liability estimated by assessee and has to be allowed as deduction prorata in respect of plots sold as the gross sale price has been credited and offered to tax. Considering all the facts, CIT (A) has upheld the addition of 15% i.e. of Rs.1,63,832/-. The Revenue could not bring any material to controvert the findings of CIT (A) - in favour of assessee.
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2012 (9) TMI 695 - ITAT AHMEDABAD
Disallowance of remuneration paid to the Director - Held that:- The director deemed to be receiving the remuneration here has done nothing substantive for the appellant so as to make it entitle for the remuneration to the extent of Rs.4.80 lacs as the total income shown by the assessee company is ‘nil’ in its return of income. The remuneration paid to director concerned is excessive and unreasonable but does not commensurate to the benefits derived by the appellant therefrom. As the disallowance of Rs.3,60,000/- made by the A.O. and confirmed by Ld. CIT(A) is excessive the disallowance to the extent of Rs.2 lacs is justified to meet the ends of justice - partly in favour of assessee.
Disallowance of expenses incurred on electricity, telephone and salary - Held that:- The A.O. disallowed the expenses incurred on Krishna Kunj, Shahibaug of Rs.33,157/- on the ground that it is a residential property not being used for the purpose of business and the CIT(A) has confirmed this disallowance at Rs.17,000/- on account of expenses incurred for non business purposes, no infirmity in the order of Ld. CIT(A) as 50% of the expenses were incurred on electricity of Krishna Kunj - against assessee.
Disallowance of traveling & entertainment expense - Held that:- As no justification to travel to Delhi has not been established before the A.O. that the same was for business purpose & likewise entertainment expenses was incurred by Mrs. Neena Parekh on self made vouchers for entertaining the guests in restaurants but before the A.O., the assessee could not establish business connection of these expenses no infirmity in the order of Ld. CIT(A) in disallowing the expenses - against assessee.
Disallowance of set off of brought forward business losses and security transaction tax (STT) - Held that:- As on verification of CIT(A)’s order, both these grounds have not been found place in the appellate order and the same were left unadjudicated. Sr. DR has fairly conceded that these two grounds of appeal had been lapsed by Ld. CIT(A) unadjudicated. Therefore, Ld. CIT(A) is directed to consider both these grounds and give specific finding as per law - in favour of assessee for statistical purposes.
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2012 (9) TMI 694 - ITAT AHMEDABAD
Invoking jurisdiction u/s.263 by CIT(A)- disallow business expenses claimed against undisclosed income - order passed after scrutiny u/s.143(3) is erroneous - Held that:- The survey disclosure has been considered by the A.O. considering unpaid freight and liability and no addition was made on account of outstanding liability from unaccounted income u/s 69C whereas the CIT has passed the order u/s 263 on the basis of liability of Rs.1,03,24,530/- has been shown as unpaid freight as on 31.03.2006 and liability paid Rs.77,01,958/- during the F.Y. 05-06, which has been considered by the A.O. Thus the CIT has framed different opinion on similar facts considered by the A.O. in assessment order. Therefore, the CIT order u/s 263 is a change of opinion - set aside the order of CIT - in favour of assessee.
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2012 (9) TMI 693 - ITAT AHMEDABAD
Ascertaining the fair market value of a capital asset for determining capital gain - revenue appeal against CIT(A) not considering the applicability of the provisions of section 55A by referring the valuation to Valuation Officer - Held that:- The appellant had shown sale value as a result of transfer at Rs.14,00,000/- whereas stamp authority has taken this value at Rs.13,83,600/- it means that assessee had shown more sale consideration in sale deed, thus, this case cannot be referred u/s 50C (2) to the DVO. The capital gain can be calculated under chapter – IV of computation of income from capital gain.
Section 48 empowered to AO to calculate the capital gain. For calculation of capital gain full value of the transaction received or accruing as a result of the transfer of the capital assets following amount is to be deducted (i) expenditure incurred wholly and exclusive in connection with such transfer (ii) the cost of acquisition of the assets and the cost of any improvement there on. Further, indexation on cost of acquisition and cost of improvement is to be allowed. The various High Courts have held that full value of consideration u/s 48 cannot be construed fair market value as per Section 55A of the IT Act, thus A.O. was not justified in substituting the fair market value in place of full value of consideration - against revenue.
Wrong computation of LTCG by adopting incorrect indexation - assessee had constructed additional floor at different times - Held that:- As the appellant had admitted the fact during the course of assessment proceeding that A.O. computed the capital gain on the basis of indexation on construction in different years at the time of assessment which was not challenged by the appellant before the CIT(A) & CIT(A) also had not given any findings in his appeal order on cost of improvement and indexation there on. Thus, this ground of Revenue appeal is dismissed - against revenue.
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2012 (9) TMI 692 - ITAT AHMEDABAD
Penalty u/s 271(1)(c) - disallowances of repair expenses on building & 80 IB and 80 HHC - CIT(A) deleted the addition - Held that:- The A.O. had simply initiated the penalty proceedings u/s 271(1)(c) without mentioning whether the penalty was initiated for concealment of income or for furnishing inaccurate particulars of income. The building expenses claimed by the assessee were disallowed by the A.O., which were capitalized and depreciation was allowed by the A.O. Deduction u/s 80-IB and 80HHC were claimed in prescribed proforma on the basis of audit report in the return of income. The A.O. recalculated both the deductions according to him but particulars of income and/or concealment of income, has not been brought on record by the A.O., which is an essential ingredient to levy penalty u/s 271(1)(c).
A s decided in CIT Versus RELIANCE PETROPRODUCTS FVT. LTD. [2010 (3) TMI 80 - SUPREME COURT] mere making of a claim, which is not sustainable in law, by itself, will not amount to furnishing inaccurate particulars regarding the income of the assessee. Such a claim made in the return cannot amount to furnishing inaccurate particulars - deletion of penalty is thus warranted - in favour of revenue.
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2012 (9) TMI 691 - ITAT, DELHI
Addition of amount reflected as amounts received towards job work and commission from M/s M as income from others on ground of it being accommodation entries - assessment reopened on ground that statement recorded during assessment proceedings of M/s M admits that M/s M was engaged in the business of giving bogus/accommodation entries - Held that:- AO as well as the CIT(A) have not provided the assessee with the statement recorded from director of M/s M in the assessment proceedings of another company i.e. M/s M. No opportunity of cross examination was also granted. Under the circumstances the assessee has not been confronted with the evidence gathered behind its back, hence, the statement cannot be the basis on which a conclusion can be drawn that the amounts received from these two companies are infact accommodation entries. In absence of any other evidence, addition made is directed to be deleted
Dis-allowance of expenditure on surmise that sales may have been suppressed and the amounts were routed through these two companies - Held that:- If this is the case of the A.O, then the question of disallowance of expenditure on the ground that these are accommodation entries and hence do not have any expenditure does not arise. Expenditure incurred on manufacture and sales has to be allowed - Decided in favor of assessee
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2012 (9) TMI 690 - ITAT, DELHI
Since the matters cannot be decided before order of Settlement Commission and issues or grounds taken in these appeals in hand can only be decided by the assessing officer in the light of the order of the Settlement Commission which is still awaited. Therefore, all these three appeals are disposed of and these are treated as allowed for statistical purposes.
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2012 (9) TMI 689 - ITAT INDORE
Disallowance of construction expense – Assessee is in business of civil construction – AO disallow expense on ground that - Assessee has shown work in progress on estimate basis, no proper bills, vouchers – Addition was made on the basis of specific inquiries establishing non-existent sub-contractors especially when the assessee could not produce such sub-contractors to prove their identity and genuineness – Labour contractors shown as creditor were not found at given address - CIT(A) restrict disallowance of 25% of disallowed amount in its order - Held that:- As books of accounts, cash books, ledger, vouchers for such expenses were produced and the same were test checked by AO. If the AO was not satisfied with such record, nothing prevented her either to ask the assessee to furnish more information or to bring on record any evidence controverting the claim of the assessee. Even otherwise, the inquiries were conducted by the A.O. nearly about after 2 ½ years from the end of the relevant FY, therefore, the labour contractors cannot be expected to be available at the given address after lapse of such period because they keep on shifting as per the availability of the work. Upheld the order of CIT(A). Appeal decides in favour of assessee.
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2012 (9) TMI 688 - ITAT INDORE
Disallowance of Claim u/s 80IB(10) - The assessee is engaged in the business of construction and sale of residential house - Assessee constructed houses claiming deduction u/s 80IB(10) with built-up area of less than 1500 sq. ft. – One house measured by registered valuer found to be more than 1500 sq. ft. – Project has been completed but Municipal Corporation has not issued completion certificate - Held that:- As the local municipal authority has not issued the completion certificate till date which clearly shows that the required conditions were not fulfilled. It is worth mentioning here that as per certificate of the architect, a general letter “To Whom It May Concern” has been mentioned and it is not addressed to the Municipal authorities. Even otherwise, there is no signature/seal of the Municipal authorities evidencing that this letter was in fact filed before the Municipal authorities. Appeal decides in favour of assessee
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2012 (9) TMI 687 - ITAT INDORE
Assessee held agriculture land – Whether sale of shops, duplex & bungalow developed on agriculture land by developer under agreement amount to business income under head PGBP or Capital Gain - Assessee enter into agreement with 2 builders for construction of housing complex on such land and receive advance - In consideration of land, the builder has agreed to give 35% & 33% of constructed area – AO made addition on sale consideration as business income treat it as trading activity – Held that:- Since land was used for agricultural purpose hence capital asset. Once the assessee has entered into agreement with the builder for construction of housing complex on such lands, the same amounts to business, therefore, any gain arising out of sale of such building is business receipts liable to tax as business profit. The benefit of long term capital gain till the date of transfer of such capital assets into stock in trade i.e. year in which agreement with the builder is entered into. As per Sec. 45(2), such capital gain is liable to tax in the previous year in which such stock in trade is sold or otherwise transferred by the assessee. Issue remands back to AO for recompute capital gain and business income.
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2012 (9) TMI 686 - ITAT MUMBAI
Capital Gain - Assessee is a Dealer in shares - Whether the person is a Dealer in shares or an Investor - Whether the transaction of sale and purchase of shares is a trading transaction or whether it is in the nature of investment – Held that:- As it is not a case where the assessee is holding large number of shares or volume of transaction is high. Assessee is carrying on the sale and purchase of shares activity in an organized way to characterize it as a trading activity. Whereas holding period of the script pertains to major value in capital gain is eight months and there is not a repetitive transaction in the script. Therefore the profit thereon should be considered as short term capital gain. Decision in favour of assessee
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2012 (9) TMI 685 - ITAT MUMBAI
Addition on account profits from share transaction as trading activity - Whether profits out of share transactions, treat it as investment activity or trading activity – Shares sold without taking delivery, same has been shown as speculative gains - Where the part of delivery has been taken, the same has been shown as short term capital gains – Held that:- Following the test laid down by Hon’ble Gujarat HC in the case of Rewashanker A Kothari (2006 (1) TMI 80) that the most important test is volume, frequency, continuity and regularity of transactions of purchase and sale of goods concern, on the basis of which, an inference can be drawn whether the activity is in the nature of business or not. Assessee has ploughed back or rolled back the available capital almost 7 to 8 times in order to earn income out of purchase and sale of shares. Assessee sold 91.6% shares purchased during the year. 40% of overall transactions are those scripts in which the holding period was 30 days or less. 10% of overall transactions where the period of holding is more than 6 months. Therefore, shares transactions from which assessee has earned short term capital gains were in the nature of trading activity of the assessee. Decision in favour of revenue.
Addition on adhoc basis treating share transaction as trading activity – CIT(A) upheld the 17% addition out of transaction in shares treated as investment – And balance as trading activity on basis of opening & closing stock, shares turnover – Held that:- As the part of the profit should be considered in the nature of short term capital gains but no reason has been given which could be set to fit in the principles laid down in judgement of various cases of Hon’ble Supreme Court as well as Hon’ble High Courts to support the said observation of ld CIT(A). Therefore, hold that the entire profits shown by the assessee on purchase and sale of shares has rightly been considered by AO as profit from business and not short term capital gains. Decision in favour of revenue
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2012 (9) TMI 684 - ITAT MUMBAI
Disallowance of expenditure on adhoc basis - AO disallow 12% of the entire expenditure claimed by the assessee under various heads – Held that:- As the disallowance of 10% out of the expenditure claimed as ‘Transportation Charges”, for which the assessee could not produce evidence - Disallowance of the expenditure claimed as “Petrol, Diesel and Oil Charges” which were made in cash - 10% of the cash payment in respect of the expenditure claimed as “Tyre Replacement Charges” - Expense claimed as “Vehicle Repair & Maintenance Charges” that the assessee furnished bills only 1/3rd of total amount and for the remaining he could not produce the bills, disallow the 10% of claimed expense - In respect of expenses on “wages and salaries”, no details have been produced and the entire payment has been made in cash and assessee has not been able to substantiate the claim of the said amount, therefore upheld the addition made by AO @ 12% - In respect of claim of petrol, telephone and other maintenance charges, sustain the addition @ 12 % by AO. Decision appeal is partly allowed in favour of assessee
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2012 (9) TMI 683 - ITAT MUMBAI
Maintainability of appeals filed before Tribunal u/s 253 – Department file appeals for six A.Y in respect to claim of deduction u/s 80IA & 80IB - Held that:- As per the instruction of CBDT 3/2011 dated 09-02-2011 read with instruction No. 5/2008 dated 15-05-2008, the tax effect has been less than Rs. 3 lacs in each of four A.Y. Therefore, appeals filed by the department for four A.Y are not maintainable, falling within the purview of the aforesaid instructions. And for another two A.Y, following the decision of Bombay HC in case of Patel Stationers Pvt. Ltd. decided in favour of assessee. Hence all the six common appeal decided in favour of assessee
Deduction u/s 80IA – Whether the “assembly” of sharpeners would qualify for the deduction u/s 80IA - Assembling of sharpener is a totally manual process and no machinery is required for the same – Held that:- Following the decision in case of Chiranjjeevi Wind Energy (2011 (1) TMI 421 - MADRAS HIGH COURT), there is no merit in the argument of AO that it is a “simple manual process”, which does not qualify for the deduction. It is so, because a manufacturing process shall always remain a manufacturing process even if that “simple process” brings into existence a distinct marketable product, and once a distinct product comes into being, by way of name, character and use, it would definitely qualify to come under the definition of manufacture. Appeal decided in favour of assessee
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2012 (9) TMI 682 - ITAT MUMBAI
Capital Gain – AO compute sales consideration u/s 50C - Whether the AO was within his legal authority to import the figure of stamp duty valuation without actually referring to authority – Assessee enter into MOU regarding sale of property on 31/7/1998 – Registration of the property in year 2000 – AO applied the prevalent Stamp Duty rate though no such valuation was made by the local Stamp Duty authorities in respect of the said property - Assessee give possession of land after getting certification from CG u/s 269UL (3) – Held that:- As the AO transpires that the valuation as per stamp authority, which is prescribed Sec. 50C can be one of the parameters to arrive at the full value of the property that is to be transferred. The transfer of the land has to be considered on occurring in the year 2000, when the provisions of Sec. 50C were not in force. Decision in favour of assessee
Capital Gain – Assessee has conveyed the property to buyer prior to 2001-02 along with 90% payment - Only the 10% final part payment which was made during the year along with the formal documentation – As per AO property was actually transferred in the instant year – Held that:- As the fact that the property in question was agreed to be sold and conveyance done even prior to F.Y 2001-02 is not disputed even in the assessment order. AO is using is the final payment and documentation and on that basis, the application of Sec. 50C. It is clear from the fact that except for the last installment everything was completed prior to 2001-02. Therefore, Sec. 50C were neither there nor could have been applied. Appeal decides in favour of assessee.
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2012 (9) TMI 681 - ITAT INDORE
Rejection of books of account u/s 145 - AO apply GP rate to calculate Net profit – Held that:- As the books was not produced before the AO nor before CIT(A) for verification and the audit report mentioning fact that there was no requirement for deduction of TDS on hire charges paid which was below the prescribed limit, cannot be accepted in the absence of books of account and payment vouchers. Therefore, the action of the AO for rejection of books of account was correct.
Disallowance u/s 40(a)(ia) - Assessee is engaged in the business of transport contract - Takes transport contract and give contracts to truck operators for transporting the goods - The assessee did not file reply to the queries or documents asked for by the AO - The books of account and bills and vouchers were also not produced - AO rejected the books of account and estimated the net profit @ 8% of total receipts – Held that:- Once the books of account are rejected and profit is estimated, there is no reason to make further disallowance of any of the expenditure. Where profit is assessed on estimated basis by applying net profit rate, the expenses are deemed to be considered and no further deduction is to be allowed or disallowed. Appeal decides in favour of assessee
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2012 (9) TMI 680 - ITAT INDORE
Disallowance u/s 40(a)(ia) - Assessee took on vehicles on lease and paid lease money – By invoking Sec. 40(a)(ia), assessee have to deduct TDS from the lease money shown as payable - Held that:- Following the decision in case of Merilyn Shipping & Transport (2012 (4) TMI 290 - ITAT VISAKHAPATNAM) the provisions of sec. 40(a)(ia) are applicable only to the amounts of expenditure which are payable as on 31st March of every year and it cannot be invoked to disallow the expenditure which had been actually paid during the previous year without deduction of TDS. Therefore to recompute the amount of disallowance issue remand back to AO
Capital Gain – AO compute capital gain u/s 50C adopting the stamp duty value as sales consideration – Original return was accepted u/s 143(1), therefore AO invoke Sec. 147 – Held that:- AO was well within his powers to compute the capital gain during the u/s 147 proceedings. Matter has not been controverted by the assessee by bringing any positive material on record. Therefore appeal decides in favour of revenue.
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2012 (9) TMI 665 - ALLAHABAD HIGH COURT
Reopening of assessment - undisclosed benefit of accommodation entries - Held that:- The findings recorded by the AO, CIT (A) and ITAT in proceedings u/s 148 are findings of fact. The assessee could not satisfy the Income-tax authorities regarding the identity of Shri Trilok Chand Bansal, the Director of M/s Performance Trading and Investment Company Pvt Ltd and the genuineness of transactions.
The story set up by the assessee, that Shri Trilok Chand Bansal executed the agreement paid three demand drafts totaling Rs. 15, 02, 700/- and thereafter did not claim either the property or the amount, and consequently the amount was forfeited, was not established and was not worthy of belief. The Income Tax Authorities did not commit any error in adding the amount to the income of the assessee as unaccounted undisclosed income. The findings recorded by the Income-tax authorities, that the three demand drafts were by way of accommodation entries of the unaccounted moneys of the assessee, thus, does not suffer from any error of law - aginst assessee.
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