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Income Tax - Case Laws
Showing 121 to 140 of 667 Records
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2013 (10) TMI 1350 - PUNJAB & HARYANA HIGH COURT
Deduction on account of interest on sticky loans - denial of claim being the interest doubtful of recovery and having been credited to suspense account - system of accounting - Held that:- The assessee was following the mercantile system of accountancy wherein any income accruing even though not received was subject to tax. The assessee had not claimed any amount by way of bad debts under the provisions of the Act and in such a situation, the interest accrued thereon also cannot be said to be not arising to the assessee. Moreover, the findings recorded by the Assessing Officer, CIT (A) and the Tribunal have not been shown to be erroneous or perverse in any manner. - Decided against assessee
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2013 (10) TMI 1349 - SC ORDER
India-UK DTAA - income on account of slot chartering - Taxability u/s 44 B OR 28 to 43 - Whether on the facts and circumstances of the case and in law the income of the assessee by way of slot chartering would form a part of income from operations of ships exempt under Article 9 of the Tax Treaty between India and UK.
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2013 (10) TMI 1341 - ALLAHABAD HIGH COURT
Maintainability of appeal - Whether the Tribunal has committed substantial illegality while interpreting instruction No. 5 of 2008 dated 15th May, 2008 without taking into account the loss, notional tax effect in case of loss? - disallowance of bad debt and its interest claimed under Section 36(1)(viia)delted by CIT(A) - Held that:- The assessee is enjoying the benefit of Section 80P of the Act and as such the tax on an income is exempted. Even if the addition is sustained, there will be no tax demand as the tax effect will be NIL. In view of the Instruction No.5 of the CBDT dated 10.7.2014, the present appeal is not maintainable.
In the case of CIT v. Manglam Ricinus Ltd. [2008 (5) TMI 640 - DELHI HIGH COURT] the Hon'ble Delhi High Court observed that in such type of cases, the exercise shall be merely academic exercise - Decided against revenue.
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2013 (10) TMI 1334 - ITAT DELHI
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... ... ..... e or purchase in a/c books; no proof of unrecorded purchases or sales having been brought on record, we see no justification for rejection of books of the assessee. In view thereof, in the peculiar facts and circumstances of this case we uphold the book results and G.P. disclosed by the assessee being satisfactory no addition is called for. The rejection of books by lower authorities is only on surmises and not supported by any cogent or objective reasons. Consequently, we delete the additions in respect of rejection of books, estimation of sales/ purchases and consequent estimation of GP in the result assessee's ground in this respect succeeds. Revenue's grounds in this respect fail. 17.8. The charging of interest u/s 234B is consequential. 18. To sum up, assessee's appeal for A.Y. 1994-95 is allowed and for A.Y. 1996-97 is partly allowed. Revenue's appeals for both the assessment years in question are dismissed. Order pronounced in open court on 18-10-2013.
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2013 (10) TMI 1327 - ITAT CHENNAI
Penalty under 271D and 271E - accepting of loans and repayment of loans in cash have resulted in violation of the provisions of law stated in Sections 269SS and 269T - CIT(A) deleted the penalties levied under Section 271D - Held that:- In the present case, all the transactions have been duly recorded in the books of the creditor as well as in the books of the assessees. The loans accepted by the assessees have been merged in the business finance of the assessees reflecting in their books of account. The funds required for repayment of loans were also generated out of the business as reflected in their books of account. The details of the parties are available on record.
The assessees as well as lenders are all regularly assessed to income-tax. The identity of the parties are beyond doubt. The factum of loan and repayments are beyond doubt. The genuineness of the transactions is also not in doubt. It is also established by the assessees that there existed similar emergency for repaying the loan in cash, as the emergency which prompted them to take loans in cash. Therefore, this is a case where there is a reasonable cause for the assessees to repay the loans in cash. In such circumstances, it is to be seen that the violation of Section 269T is technical. Therefore, we find that the Commissioner of Income Tax (Appeals) ought have deleted the penalties levied under Section 271E, when in fact, for good reasons, he was deleting the penalties levied under Section 271D. - Decided in favour of assessee.
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2013 (10) TMI 1326 - PUNJAB AND HARYANA HIGH COURT
Commercial expediency in giving interest free loans to M/s HMGB which was a joint venture company of the assessee with Hindustan Antibiotics Limited - Held that:- CIT (A) and the Tribunal had concluded that there was commercial expediency in giving interest free loan to HMGB and the deduction was admissible under Section 36(1) (iii) of the Act.
There is sufficient material to show that the relationship of the assessee with its subsidiary, HMGB was based on commercial expediency and the advancing of the amount was for business purpose. In this regard, we may make a reference to the order of the CIT(A) for assessment year 2004-05 which is also subject mater of appeal before us. The CIT(A) has tabulated the price advantage to the assessee on purchases made from HMGB, an uncontroverted fact, which clearly indicates commercial prudence apart from ensuring continuous and timely supplies. Thus, on the grounds of consistency and commercial expediency, the deduction claimed by the assessee company is in accordance with law and the CIT) (A) correctly allowed the claim of the assessee.
In view of the findings of fact recorded by CIT(A) and the Tribunal that there existed commercial expediency in giving interest free loan to HMGB, which findings are not shown to be against the record, no advantage can be derived by the revenue from the pronouncement reported in Abhishek Industries Limited's case (2006 (8) TMI 123 - PUNJAB AND HARYANA High Court). In so far as Motor General Finance Limited [2001 (12) TMI 62 - DELHI High Court] and Indian Shavings Products Limited's cases (2003 (3) TMI 33 - RAJASTHAN High Court ) are concerned, these pronouncements were prior to judgment of the Apex Court in S.A.Builders's case (2006 (12) TMI 82 - SUPREME COURT ). Further, on factual matrix therein, no commercial expediency was shown to be existing and therefore, in view of distinguishable circumstances involved, these do not advance the case of the revenue. - Decided in favour of assessee.
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2013 (10) TMI 1304 - ITAT MUMBAI
Disallowance under section 14A - quantifying the borrowing attributable to the balance investment in shares and units (Rs. 156.12 lakhs), i.e., after deducting the amount of borrowings for the said investment made from Kotak Mahindra Prime Ltd. at ₹ 205 lakhs - Held that:- CIT(A) has in applying the average method, erred inasmuch as he has adopted the figure of the total investment (at ₹ 795 lakhs), i.e., as per balance-sheet, even as investment to the extent of ₹ 205 lakhs stands already confirmed to be sourced from the borrowings from Kotak Mahindra Prime Ltd., so that it is only the balance investment in business that is to be taken into account, i.e., in the denominator, excluding ₹ 205 lakhs both from the value of the exempt investment as well as the total investment. Needless to add, if the bank loans are dedicated funds, toward financing working capital, application of which is demonstrated, the same would also warrant a similar exclusion to the extent it is funding by borrowed capital is established. Unless, however, the same is perceptibly demonstrated, the common pool of funds hypothesis, could apply, being reasonable, so that all the funds, howsoever derived, are construed as having financed the relevant investments proportionately.
Thus consider it fit and proper that the matter qua the disallowance under section 14A with reference to the interest attributable to the balance investment of ₹ 156.12 lakhs is restored back to the file of the learned Commissioner of Income-tax (Appeals), so as to allow the assessee an opportunity to present its case before him, and who shall decide the same in accordance with law, issuing definite findings of fact, and after hearing both parties, giving the assessing authority due opportunity to examine and rebut the assessee's case. Decided in favour of assesse by way of remand.
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2013 (10) TMI 1295 - ITAT PUNE
Deduction u/s.80-IB(10) denied - profits derived from developing and building a housing project - 'SWRH' and 'S3' projects could not be considered as separate projects undertaken by the assessee as held by revenue - Held that:- The decision of the Pune Bench of the Tribunal in the case of Hindustan Samuha Awas Ltd. (2011 (8) TMI 1061 - ITAT PUNE) is clearly applicable in the present case inasmuch as the assessee applied for obtaining completion certificate for the two row houses before 31.03.2008 i.e. on 26.03.2008 and the said application was based on a certificate issued by the Architect. Factually also, the facts on record, supported by the Property Tax bills, Architect's certificate, occupation by users, etc. support the position that prior to 31.03.2008 construction of the two row houses was complete. Pertinently, the completion certificate of PCMC regarding the two row houses in question which is dated 28.06.2012, clearly states that it is issued with effect from 26.03.2008. Therefore, even the PCMC certification supports the position that the construction was complete as on 26.03.2008 which, in our view, is in substantive compliance with the requirements of section 80-IB(10)(a)(i) read with Explanation (ii) thereof.
In so far as the balance of 293 row houses is concerned there is no dispute that the completion certificate has been issued by PCMC prior to 31.03.2008. Therefore, considered in respect of entire 295 units comprised in 'SWRH' project, the date of completion of construction is to be understood as on or before 31.03.2008 thereby complying with the requirement of section 80-IB(10)(a)(i) read with Explanation (ii) thereof. We therefore hold that assessee is eligible for deduction u/s. 80-IB(10) of the Act of ₹ 12,76,88,137/- with respect to the profits derived from 'SWRH' project for assessment year 2006-07. - Decided in favour of assessee.
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2013 (10) TMI 1294 - ITAT LUCKNOW
Anullment of assessment order passed - requirement of issue of notice u/s 143(2) where return filed in pursuance of notice u/s 148 - Held that:- Notice under section 148 of the Act was issued on August 29, 2006. Thereafter notices under sections 143(2) and 142(1) of the Act were issued, in response to which the assessee has also filed an objection with assumption of jurisdiction which was disposed of by the Assessing Officer vide order dated November 26, 2007 and the assessee was asked to file the return of income - after receipt of return in response to notices under sections 148 and 142(1) of the Act, the Assessing Officer is required to issue notice under section 143(2) of the Act for completing the assessment. If the Assessing Officer is failed to issue notice under section 143(2) of the Act, it would vitiate the reassessment proceedings. It makes no difference whether the assessee files a separate return in response to notice under section 148 or 142(1) of the Act or the assessee files a letter stating therein that the return filed earlier may be treated as return filed in response to the notice.
Undeniably after filing of the letter by the assessee with a request to treat the return filed under section 139(1) of the Act as the return in response to notice under section 148 of the Act or section 142(1) of the Act, no notice under section 143(2) of the Act was issued by the Assessing Officer and assessment was completed under section 143(3) read with section 147 of the Act. Therefore, the assessment framed by the Assessing Officer without issue of notice under section 143(2) of the Act is invalid and deserves to be annulled. The learned Commissioner of Income- tax (Appeals), following this judgment of the jurisdictional High Court in the case of CIT v. Rajeev Sharma [2010 (5) TMI 600 - ALLAHABAD HIGH COURT], annulled the assessment. - No infirmity impugned order - Decided against Revenue.
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2013 (10) TMI 1293 - ITAT CUTTACK
Disallowance of unexplained investment - difference in purchases made by the assessee - Held that:- The burden lay on the Department to prove that the assessee made the purchases. In our opinion no addition can be made merely on the basis of assumption and presumption. There may be various reasons that other party might have shown sales to the assessee and in fact assessee would have not made purchases. Subjection whatever wrong may be, it cannot take the shape of actuality. If the Assessing Officer did not agree with the purchases made by the assessee, the onus is on the Assessing Officer to prove by bringing relevant material that in fact the assessee has made purchases. Merely there is a difference in the reconciliation of the accounts of the suppliers and the assessee, it cannot be presumed that the assessee has made purchases outside the books of account. Under these facts and circumstance, we are of the opinion that it is not a fit case that the addition can be sustained.
Jurisdiction under section 263 can be invoked if both conditions, i.e., that the order passed by the Assessing Officer is erroneous and it is prejudicial to the interests of the Revenue. If only one of the conditions is satisfied, the jurisdiction under section 263 cannot be invoked. We noted from the assessment order that the Assessing Officer has not made any disallowance under section 40A(3) of the Act. It is apparent from the provisions of section 40A(3) that prior to substitution of this provision by the Finance Act, 2008, with effect from April 1, 2009, this provision does not require that the aggregate of the payment "made to" a person in a day has to be taken into account for the purpose of computing the limit of ₹ 20,000. - there is no violation of the provisions of section 40A(3) and, therefore, there is no error in the order of the Assessing Officer. We also noted from the assessment order that the Assessing Officer at page 4 had duly considered the discount given by the assessee and on this account, the Assessing Officer made the disallowance to the extent of ₹ 31,458. It is settled law in view of the decision of the hon'ble Supreme Court in the case of Malabar Industrial Co. Ltd v. CIT [2000 (2) TMI 10 - SUPREME Court] that unless a view taken by the Assessing Officer is unsustainable in law, it cannot be said that the order passed by the Assessing Officer is erroneous and prejudicial to the interests of the Revenue. No error in the order of the Assessing Officer - order under section 263 is quashed - Decided in favour of assessee.
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2013 (10) TMI 1292 - ITAT DELHI
Disallowance of amount paid towards house tax - Duty paid under protest - Held that:- demand of property tax was raised during the accounting year relevant to the assessment year under consideration, it pertained to the previous year under consideration and the payment for the same has also been made during the year under consideration - Though at the time of hearing it is stated by learned counsel that in the forwarding letter only the assessee has mentioned that the demand raised is contrary to law and the assessee is making payment under protest, however, thereafter, the assessee has not challenged the above demand before any court of law. However, in view of the decision of the hon'ble apex court [1971 (8) TMI 10 - SUPREME Court], it is evident that even if the assessee has disputed the liability, it will be no bar in allowing the deduction for the same unless and until the assessee got relief in this regard. It is not in dispute that there was no reduction in liability of property tax during the accounting year relevant to the assessment year under consideration - Decided against Revenue.
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2013 (10) TMI 1291 - ITAT DELHI
Suspense, individual and Society - CIT(A) deleted the addition - Held that:- The issues raised in the ground are fully covered in favour of the assessee by the decision of ACIT vs. Rohtak Central Co-op. Bank Ltd. [2011 (6) TMI 728 - ITAT DELHI] wherein also the assessee was a cooperative society engaged in accepting deposits and giving loans as per guidelines of NABARD. If the amount deposited in the said account belong to the various depositors, who intended to open the bank account with the assessee, then the said amount cannot attain the character of 'income' in the hands of the assesee unless it is shown that the said amount has become the income of the assesee. If the said amount does not belong to the assessee and the assessee has utilized the same until the said amount is refunded back, no notional interest can be added to that amount as either the assesee has to pay interst if the said amount is credited to the saving account or the amount itself has to be refunded back in case the account is not opened. There is no question of assessing any notional interest on the said amount.- Decided in favour of assessee.
Suspense interest realized - CIT(A) deleted the addition - Held that:- Submission of the assessee which is well supported by RBI / NABARD circular dated 17.8.2002 vide para No. 3.1 clearly states that the policy of income recognition should be based on record of recovery and therefore unrealized income should not be taken into profit and loss account by State Co-op Bank / Central Co-op Banks and that the provisions of Section 43D of the Act are clear regarding the recognition of interest income on NPA. The Ld. CIT(A) in our view has thus rightly held that overdue interest not realized during the year and credited to suspense interest account cannot be taken tobe the income of the assessee. Thus the Ld. CIT(A) has thus rightly deleted the addition in question. - Decided in favour of assessee.
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2013 (10) TMI 1290 - ITAT CHENNAI
Capital expenditure or Revenue Expenditure - assessee has incurred huge expenditure in laying cables for providing cable connections to domestic viewers - Commissioner of Income-tax (Appeals) held that the cable laying expenditure was revenue in nature and therefore, deductible while computing the income of the assessee - held that:- even though the cables are laid by the assessee for carrying on business, the cables laid down by the assessee did not satisfy the basic features of a capital asset. The question of enduring benefit in the present case is only "relative". It is related to safeguarding and protection of the cable laid down underground or drawn over the electric poles. If an external agency interferes and the cables are damaged, the assessee has no course of action. The assessee can neither retrieve the cable profitably, nor can it protect the cables by itself. In these circumstances, the cost involved in laying the cables is a sunk cost even though the assessee may get the benefit out of the cable for a period of more than one year. That longevity of the facility alone cannot make the cable as a capital asset in the hands of the assessee. The assessee does not have physical possession of the cable and once laid down, it is gone for all. - cable laying expenditure in the hands of the assessee is revenue in nature. - Decided against Revenue.
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2013 (10) TMI 1240 - ITAT HYDERABAD
Exemption u/s 10B The assessee failed to furnish the approval of the Board appointed by the Central Government in exercise of power conferred by section 14 of the Industries - The assessee also failed to submit the ratification by the Development Commissioner as envisaged in the Instruction dated March 9, 2009 - Held that:- The assessee produced the registration from Software Technology Park of India which was notified by the Ministry of Commerce, Government of India vide Notification No. 33/(RE)/92-97 dated March 22, 1994. The notification states that the Software Technology Park (STP) Scheme is a 100 per cent. export-oriented undertaking scheme The registration certificate was produced only before CIT(A) but not before AO The issue set aside for fresh adjudication after consideration of necessary material.
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2013 (10) TMI 1238 - ALLAHABAD HIGH COURT
Classification as Revenue or Capital Expenditure Expenses for transmission - Establishment and maintenance expenditure Disallowance of Rs.14,92,70,091/- by the assessing officer as capital expenditure Held that:- In the facts and circumstances of the case and also as matter of general practice adopted by all electricity boards to bifurcate its establishment and general expenses in between capital and revenue expenses depending on the extent of capital work going on in each particular unit/division. It is only in respect of construction and the maintenance units where major part of work is maintenance of distribution, the assessee uniformly adopted 12/1/2% of such expenditure as capital expenses - In other electricity boards much lesser percentage of expenses is being capitalised in similar circumstances and at the same time the assessee having adopted the uniform method of capitalizing 12/1/2% of the expenditure ever since study undertaken by the Board in the year 1968, the accounts prepared by the assessee should have been accepted Decided against the Revenue.
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2013 (10) TMI 1237 - ALLAHABAD HIGH COURT
Deduction u/s 80HH of the Income Tax Act - Non-furnishing of Form-C along with return of income Held that:- Reliance has been placed upon the judgment of Honble Andhra Pradesh High Court in the case of Commissioner of Income Tax Vs. Hemsons Industries [2001 (7) TMI 109 - ANDHRA PRADESH High Court], wherein it has been held that the mere fact that the assessee failed to enclose the audit report along with the return itself would not disentitle it the benefit under Section 80 HH of the Act, if it files the audit report before the assessment order is passed.
If the accounts have not been audited, Form-C, even it is submitted subsequently may not be accepted for benefit. The non-furnishing of Form-C along with return of income where the accounts have been actually audited by filing the return is a technical defect for which the assessee cannot be denied the benefit of deduction under Section 80HH of the Act, if the defect is removed subsequently - In the present case, we find from the assessment order that the audited balance sheet was filed and was relied on by the AO for making assessment. The assessee in response to the notice under Section 154 of the Act, filed Form 10C, in which no defect was found by the AO Decided against the Revenue.
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2013 (10) TMI 1236 - BOMBAY HIGH COURT
Genuineness of long term capital loss - tax planning - Whether transaction of transferring the shares of the group companies at low price causing long term capital loss and sale of shares of Mackhinon & Mackenzie Co. Ltd., at high price, making short term capital gains, thereby setting off the short term capital gains against the long term capital loss, is a colourable device to evade tax Held that:- Price at which the Respondents had purchased the shares and thereafter has sold the shares, is not in dispute - The transaction in respect of the sale of shares of Hede Navigation Ltd, resulting in long term capital loss had preceded the transaction involving the short term capital gains selling the shares of Mackinon & Mackenzie Ltd. The Commissioner also noted that the loss transactions therefore cannot be said to have been influenced by the gain transactions - Assessment Officer has not disputed about any of the transactions that have been duly completed under the law nor that the consideration received was not the market price. It is further noted that the shares of Mackinon & Mackenzie Ltd., were sold at the price quoted at the Stock Exchange whereas low price of M/s. Hede Navigation Ltd., shares at the rate of 10 paisa per share stands explained by the fact admitted by the Assessing Officer that the said Company was in red. The Commissioner also noted that even in case the second transaction had not taken place, the long term capital loss would have been accepted by the Assessing Officer and the Company would have been allowed to carry forward the said loss - Where transactions were genuine, such long term capital loss can be allowed to be set off.
In the Mcdowells case [2009 (5) TMI 27 - SUPREME COURT ], it has been held that approach of both the corporate and tax laws, particularly in the matter of corporate taxation, generally is founded on separate entity principle i.e. treat a company as a separate person. The Income Tax Act, 1961, in the matter of corporate taxation, is founded on the principle of the independence of companies and other entities subject to income tax. Companies and other entities are viewed as economic entities with legal independence vis-ΰ-vis their shareholders/participants. It is fairly well accepted that a subsidiary and its parent are totally distinct taxpayers. Consequently, the entities subject to income tax are taxed on profits derived by them on stand-alone basis, irrespective of their actual degree of economic independence and regardless of whether profits are reserved or distributed to the shareholders/participants. Furthermore, shareholders/participants that are subject to (personal or corporate) income tax, are generally taxed on profits derived in consideration of their shareholding/ participations, such as capital gains. Nowadays, it is fairly well settled that for tax treaty purposes a subsidiary and its parent are also totally separate and distinct taxpayers.
In the present case, Tribunal has not committed any error in coming to the conclusion that the transaction arrived at by the Respondents was legitimate within the framework of law. As such, there is nothing on record to assume that the transaction was dubious and that the exercise was to avoid tax by a colourable device. The Tribunal found that the transactions were in accordance with law and have been duly implemented Decided against the Revenue.
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2013 (10) TMI 1235 - KERALA HIGH COURT
Genuineness of loan - additions made in the absence of confirmation letters from the parties - Held that:- the persons who appeared before the authorities have confirmed having given loans to the assessee in their sworn statements. Once such statements had been given and merely because they have not given any confirmation letter, the said credits cannot be excluded appears to be wrong. - decided against the revenue.
Disallowance of Commission paid - Increase the commission from 1% to 2.5% - AO had permitted commission in the absence of any other evidence to prove the same at 1% of the total turnover taking into account the commission paid by similar agencies. - Held that:- It is not in dispute that none of the vouchers produced by the assessee was signed by any of the persons who had received the commission. Therefore, normally such amounts are to be added to the income of the assessee. For deletion of such income, necessarily evidence has to be adduced. No evidence worth appreciating was available other than a general contention that commission had been paid - Assessing Officer permitted allowance of 1% as commission and there is no any reason for the appellate authority to have increased the said commission to 2.5% - Such an approach has been made purely based on surmises Decided in favor of Revenue.
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2013 (10) TMI 1234 - GUJARAT HIGH COURT
Dismissal of appeal solely on the ground that the departmental representative when asked could not point out any infirmities in the order of the learned CIT(A) Non-speaking order passed by the Honble Tribunal Held that:- Ld. Tribunal has not given its own independent finding with respect to the order passed by the CIT(A) impugned before it. It appears that there is no independent application of mind by the learned tribunal with respect to the order passed by the CIT(A) impugned in the appeal before it. The impugned order passed by the tribunal is absolutely a nonspeaking order with respect to legality and validity of the order passed by the CIT(A) impugned in the appeal before it. Under the circumstances, the impugned order passed by the ITAT cannot be sustained and the same deserves to be quashed and set aside - Matter is restored to file of learned tribunal for fresh adjudication on merits Decided in favor of Revenue.
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2013 (10) TMI 1233 - KERALA HIGH COURT
Validity of revisionary order u/s 263 passed by the CIT Held that:- Order of the Commissioner passed under Section 263 of the Act is a detailed order discussing each of the nine points raised by the revisional authority - Ultimately, following the decision of Apex Court in Malabar Industrial Co. Ltd. v. CIT [ 2000 (2) TMI 10 - SUPREME Court], Tribunal also confirmed the opinion of the Commissioner that there was no application of mind while considering the assessment under Section 143(3) of the Act, therefore, it is not only erroneous, but also prejudicial to the interest of revenue Decided against the Assessee.
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