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Income Tax - Case Laws
Showing 141 to 160 of 515 Records
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2013 (8) TMI 957
Provision for contractual obligations - Provision for doubtful debts in the P&L Accounts - Held that:- Matter be restored back to the file of the Assessing Officer to examine the issue de novo
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2013 (8) TMI 954
Depreciation on the securities claimed by the assessee bank - Held that:- The securities held under HTM category are part of stockin- trade of the bank and there is no justification to decline the claim of depreciation/loss on the valuation of the said securities.
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2013 (8) TMI 952
Re-assessment u/s 147 r.w.s 148 - Period of limitation - Royalty - Article 12(3) DTAA with USA - The assessee is a foreign company incorporated in USA and is also a tax resident of US. Assessee contended that re assessment was made merely on the change of opinion of AO. - HELD THAT:- Nothing is there on record even to suggest that the A.O made any inquiry whether the said receipt was taxable in the hands of the assessee under the normal provision of the Act and particularly u/s 9(1)(iv) of the Act as well as under Article 12 of the DTAA between India and USA - He initiated re-assessment proceeding within limitation period as mentioned in Section 147.
Royalty - HELD THAT:- The agreement is for the “Licence or Sub-Licence for use of certain software rights” as described in Exhibit ‘A’ of the agreement. There is a clause for payment of fees and the fees are provided in schedule B.
Relying on the judgement of Hon’ble Karnataka High Court in the case of Samsung Electronics co. Ltd. oths [2011 (10) TMI 195 - KARNATAKA HIGH COURT] payment made by the respondents to the non-resident supplier amounts to royalty and is rightly brought to tax in India. The assessee is not entitled to get the immunity of the DTAA between India and USA.
When the decision of the Hon’ble High Court of Karnataka is available then it is not necessary for the Tribunal to show more wisdom unless some contrary decision on the issue of another High Court or the Supreme Court has been brought to our notice. In our opinion, all the decisions relied upon by the assessee are not helpful to decide the nature of payment received by the assessee in present case which is described as licence fee but in fact it is the royalty only.
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2013 (8) TMI 950
Profit charged on accommodation entries transactions - Held that:- As the facts emerge, the assessee has filed his returns of income u/s 153A on the basis of audited statements which are found to be bogus and unreliable. Therefore, the income offered by the assessee in such returns becomes assessee’s own offer. Apropos assessee’s business, it has not been disputed that the assessee was actually engaged in providing accommodation entries and not in real business transactions. The findings of assessing officer and CIT(A) that assessee could not substantiate his claim about accommodation entries and assessment of profit @ 0.5%. Assessee has not been able to substantiate the rate of income from accommodation entries except making a general assertion that the profit charged on accommodation entries transactions is generally 0.5%.
The providing of accommodation entries amounts to running a parallel economy and is a sort of money laundering, which is against public policy. Therefore, assessee in any case cannot get any deduction for any estimated expenses in this behalf. Since assessee could not substantiate the rate of providing accommodation entries, the assessing officer is well within his rights to estimate the income of the assessee. This estimate in ordinary circumstances cannot be interfered with unless the assessee makes out a case of arbitrariness and unreasonable estimate, which has not been established.
The estimate as arrived at by assessing officer @ 2% and confirmed by CIT(A) is reasonable and cannot be called arbitrary.
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2013 (8) TMI 949
Deduction u/s. 80P(2)(a)(i) eligibility - Held that:- Sub-sec. (4) of Sec. 80P has withdrawn the deduction to the cooperative bank other than primary agricultural credit society or a primary co-operative agricultural and rural development bank w.e.f. the A.Y. 2007-08. The said provision is applicable to the Aurangabad District Central Co-operative Bank (ADCCB) in which the assessee society has kept deposit. The withdrawal of deduction by insertion of Sub-section (4) of Sec. 80P does not change “status” of Aurangabad District Central Co-operative Bank “as a co-operative society which is contemplated in Sec. 80P(1) of the Act. We, therefore, hold that the interest received on the deposit with the Aurangabad District Central Cooperative Bank by the assessee on the deposits are squarely covered u/s. 80P(1)(d) and the interest received on deposit kept with the Aurangabad District Central Co-operative Bank is an allowable deduction. - Decided against revenue
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2013 (8) TMI 948
Disallowance of interest - Held that:- Once interest is paid in respect of funds used for purposes of business there is no question of its disallowance under Section 36(1)(iii) of the Act and there would not be a necessity to see as to whether the funds advanced to sister concern are out of interest-bearing borrowings or not.
Disallowance of expenditure paid towards stamp duty on and in respect of the merger - Held that:- The income-tax authorities have disallowed the expenditure on the ground that it was in the nature of capital expenditure. On this aspect, we find that there is no material to hold that the expenditure is not in the nature of capital expenditure. Admittedly the expenditure was incurred by way of stamp duty paid on land owned Trinity Thermal Pvt. Ltd. which had since merged with the assessee in terms of an amalgamation scheme. The orders of the authorities below in this regard are affirmed as assessee has not made out any credible argument against the orders of the authorities below holding the impugned expenditure to be capital in nature. Thus, assessee fails on this Ground.
Depreciation on buildings - Held that:- ere was no evidence to show that the building was complete and put to use during the year under consideration. The CIT(A) has also denied the claim primarily basing on the contents of the Director’s report of the assessee company which indicated that the building was still under construction as on 31.03.2008. The CIT(A) further noticed from the Director’s report an averment that the company would start installation of equipments in the building from October, 2008. There is no material brought on record to negate the findings of the Assessing Officer as well as the CIT(A) and for that reason we are unable to interfere with the conclusion drawn.
Disallowance of Telephone Expenses on the ground that the same was for personal use
Disallowance on the basis of ITS data - Held that:- We restore the matter back to the file of the Assessing Officer who shall allow a reasonable opportunity to the assessee to reconcile the ITS data and thereafter he shall examine the impugned addition afresh as per law.
Ad-hoc disallowance of Welfare Expenses - Held that:- Notably, both the authorities below have launched into a statistical exercise to arrive at a disallowance out of staff welfare expenses, when there is no iota of material or evidence to say or pint-point any expenditure of non-business nature. Nevertheless, we also find that the explanation rendered by the assessee with regard to the increase in the expenditure on account of regrouping of expenses, incurrence of expenditure for entire period as compared to for a lesser period in the preceding year, increase in turnover etc. have not been faulted at all. Considering the explanation furnished as also the absence of any material to doubt the genuineness of the expenditure claimed, we find no reasons to uphold the impugned disallowance.
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2013 (8) TMI 947
Depreciation on goodwill - Held that:- Claim of depreciation on goodwill, intangible asset, allowed by the decision of ITAT in assessee’s own case for AY 2004-05 & 2005- 06 wherein held that ‘Goodwill’ is an asset under Explanation 3(b) to Section 32(1) of the Act
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2013 (8) TMI 946
Estimation of income at the rate of 5% net profit on gross receipt - Held that:- No infirmity in the findings of the AO in rejecting the books of account. Therefore, the rejection of books of accounts is upheld. We further noted that the assessee did not maintain proper vouchers etc. and, therefore, no recourse was left with the AO except applying the profit on the basis of best judgment. In immediately preceding year, the turn over of the assessee on which the profit was shown at 3.37%, whereas in the year under consideration the AO applied 5%. In our view, the net profit rate applied by the AO is not exorbitant. Therefore, we confirm the application of NP rate of 5% on the facts of the present case.
Addition under Section 41(1) - Held that:- We found that the assessee deserves to succeed in this ground. Firstly, once the AO has applied the net profit rate then no further addition can be made as held by the Hon’ble Allahabad High Court in the case of CIT Vs. Banwari Lal Banshidhar (1997 (5) TMI 37 - ALLAHABAD High Court ). Even on merit, we noted that how the liability on account of sundry creditor is ceased to exist is not borne out from the facts of the case. Therefore, for this reason also, the application of provision of Section 41(1) were not justified.
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2013 (8) TMI 945
Addition on account of cessation of liability u/s 41(1) - Held that:- First party is Jagruti Corporation with an opening balance of ₹ 8.52 lakh. Page 35 of the paper book shows the payment of ₹ 1.45 lakh made by the assessee to this party thereby bringing closing balance down to ₹ 7.07 lakh. We fail to appreciate as to how this closing balance can be considered as remission or cessation by the party, even after three years of outstanding balance, so as to qualify as income u/s 41(1) when the assessee is paying the liability and there is nothing to indicate, even remotely, that the creditor has given up his claim. The assessee was supposed to pay ₹ 8.52 lakh to the party, out of which a sum of ₹ 1.45 lakh has paid either by cheque or by cash. When the position is so and the assessee is regularly making payment to such party, there can be no question of treating the closing balance as income u/s 41(1) of the Act.
The second party is M/s Samidha Engineering. It had opening balance of ₹ 1.77 lakh. A sum of ₹ 10,000 was paid by cheque during the year under question bringing down the balance payable at ₹ 1.67 lakh at the end of the year. It is further relevant to note that the assessee made payments to this party in the immediately succeeding year for the full amount. Copy of this account for the financial year 2009-2010 is available showing nil balance as at the end of the subsequent year. By no stretch of imagination, this amount can be considered as income u/s 41(1) of the Act for the year relevant to the assessment year under consideration.
Similar is the position regarding Universal Enterprises. It had opening balance of ₹ 8.52 lakh. Though no amount was paid during the year but in subsequent year the entire amount has been paid. Copy of account of this party for the financial year 2009-2010 is available on pages 40 and 41 of the paper book showing nil balance. We cannot consider the outstanding amount at the end of the year as income chargeable to tax u/s 41(1).
The last is M/s Argass Chemicals. It had opening balance of ₹ 25.67 lakh. Page 32 of the paper book is the copy of account of this party which shows various debits and credits in this account leaving closing balance at ₹ 26.54 lakh. Page 33 of the paper book is copy of account of this party for the subsequent year again having several debits and credits with closing balance of ₹ 14.02 lakh. The assessee is having regular transactions with this party and the amount is payable because of regular purchase transactions.
Amount in respect of these four parties cannot be considered as income u/s 41(1) of the Act
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2013 (8) TMI 944
Benefit of exemption to the assessee u/s. 54 - Held that:- Under section 54F of the Act, the same conditions as are envisaged u/s. 54(1) of the Act are required to be met for claiming exemption from tax on capital gain on transfer of a certain capital asset. The assessee on sale of shares, derived capital gain and paid part of the consideration to the developer for construction of residential house. The construction could not be completed within a period of three years. The Hon’ble Court took the view that the assessee had made entire payment, but did not get a registered sale deed and the fact that the construction was not fully completed in all respects cannot be a ground to deny the benefit of exemption u/s. 54F of the Act.
In the light of the facts and circumstances of the present case and the precedents on the issue, we are of the view that the assessee was entitled to benefit of exemption us. 54(1) of the Act as claimed by the assessee. - Decided in favour of assessee
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2013 (8) TMI 943
Addition 40(a)(ia) - retrospectivity - Held that:- Amendment to section 40(a)(ia) permitting the deductor to remit the TDS to Government account on or before the due date of filing return under section 139(1) is retrospective and therefore, applicable to the assessment year 2009-10 as in the present case.
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2013 (8) TMI 942
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... ... ..... ed in India. Even under Article 15 also, the income cannot be said to be taxable in India as under this Article, a person has to be in the other State for a period or periods aggregating to 90 days in the relevant fiscal year. In the case of the person to whom the Assessee made the payment, the person had remained in India only for 22 days. Therefore, this income cannot be taxable. We have also gone through the provisions of Sec. 9(1)(vii). Even if the provisions of Sec. 9(1)(vii) are applicable, but due to the DTAA between India and Portugal if the income is not chargeable to tax, we are of the firm view that the DTAA will prevail and the income will not be chargeable to tax in India. Since the income is not chargeable to tax in India, the Assessee was not under an obligation to deduct the TDS. We, accordingly, set aside the order of CIT(A) and quash the order passed u/s 201(1) and 201(1A) of the Income Tax Act. 3. In the result, the appeal filed by the Assessee is allowed.
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2013 (8) TMI 941
“marked to market” loss on forward covers outstanding as on 31-3-2008 - assessee is entitled to claim the loss
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2013 (8) TMI 940
Disallowance under section 14A - Held that:- The assessee has not filed the break-up before the Assessing Officer. He has filed only before the ld. CIT(Appeals) and based on the break-up, the ld. CIT(Appeals) has calculated the disallowance under section 14A r.w. Rule 8D. The specific submissions made by the ld. DR is that no such break-up were filed before the Assessing Officer and the Assessing Officer had no occasion to see the break-up of the interest and the issue requires to be remitted back to the Assessing Officer. Under these circumstances, we set aside the order passed by the ld. CIT(Appeals) and remit the matter back to the file of the Assessing Officer and direct the Assessing Officer to calculate the disallowance under section 14A r.w. Rule 8D after examining the break-up of the investments in accordance with law after allowing sufficient opportunity of hearing to the assessee.
Disallowance under section 40(a)(i) on account of commission paid to overseas agencies - Held that:- It is an admitted fact that the assessee had paid selling commission to the nonresident /overseas agent for procurement of orders from overseas buyers. This expenses incurred by the assessee for a service rendered by a non-resident outside India. In this case, since the commission was paid to a non-resident agents for the services rendered outside India, such payments are not chargeable to tax in India and therefore, the provisions of section 195 are not applicable.
Foreign exchange fluctuation loss - Held that:- We find that the assessee has incurred loss relating to its business only and in view of the decision of CIT v. Panchmahal Steel Ltd. [2013 (5) TMI 686 - GUJARAT HIGH COURT]this ground of appeal raised by the Revenue is dismissed.
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2013 (8) TMI 939
Addition u/s 68 - Held that:- The amount of ₹ 10,10,000/- was given by Shri Jigar A. Patel staying at U.K. Vide cheque no. 481971 drawn on ICICI Bank dated 27/03/2008 and the said amount was from NRI Account No.008501014581 of ICICI Bank at Vallabh Vidyanagar and considering the fact that even the aforesaid was confirmed by Shri Jigar A. Patel, both the CIT(A) as well as ITAT have rightly held that the same cannot be said to be unexplained cash deposit and have rightly deleted the addition - Decided in favour of assessee
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2013 (8) TMI 938
Addition u/s 43B - non payment of PPF contribution - Held that:- It is evident that the assessee had not paid the employee’s contribution within the due date under the PF Act or other relevant Acts. In this case, the issue was involving payment made u/s 43B of the Act on assessee’s contribution, not contribution of the employee. Thus, we uphold the order of the learned CIT(A). Accordingly, assessee’s ground No.1 stands dismissed.
Disallownce on account of authorized share capital - Held that:- The payment made to ROC for increase of authorized share capital is a capital expenditure. It was incurred by the assessee company to expand the capital base of the company. The character of the expenses is capital expenses. The case laws cited by the assessee are not applicable as the expenses directly related to bonus share as held by the Hon’ble Apex Court as revenue expenditure. However, the nature of payment i.e. payment to ROC for increase of share capital is capital expenditure. Section 35D of the Act is also not applicable in the case of the assessee as it pertained to expenditure incurred before commencing of the business, it does not cover the ROC fees. Thus, we uphold the order of the learned CIT(A). Resultantly, this ground of appeal of the assessee is dismissed.
Disallowance of business development expenses - Held that:- As education expenses of a son of the director was incurred for personal gain and not for the business purpose. Keeping in view of the factual position as well as legal position on this issue, we uphold the order of the learned CIT(A) and dismiss this ground of appeal of the assessee.
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2013 (8) TMI 937
MAT - addition to the book profit shall be made on account of alleged expenditure incurred to earn exempt income while computing the income under section 115JB - Held that:- No addition to the book profit shall be made on account of alleged expenditure incurred to earn exempt income while computing the income under section 115JB
Provisions for operation and maintenance - Held that:- As decided in assessee's own case for the assessment year 2009-10 without doubt, the amounts whether claimed as provision or outstanding, if worked out strictly in accordance with agreements, has to be allowed. This is because assessee is legally bound to pay to M/s GE Inc. USA the amounts due to it as per the agreements. Actual date of payment is irrelevant. Though assessee has argued that the provisioning done by it was in accordance with such agreements, the table extracted above, does not substantiate such contention. We are, therefore, of the opinion that the matter requires re-visit by the A.O. We set aside the orders of authorities below and remit the issue back to Assessing Officer for verifying the provisioning done by assessee vis-à-vis the agreements entered with M/s GE Inc. USA. If it is strictly in accordance with agreements, the amount shown as provision has to be allowed. Amounts in excess of what is payable as per the agreements, can be disallowed. Thus we set aside the orders of authorities below on this aspect and remit the issue back to the file of A.O. for consideration afresh, in accordance with law.”
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2013 (8) TMI 936
Addition by the A.O. merely on the basis of statement recorded u/s 132(4) - Held that:- The ingredient for retraction of statement made during the search, therefore, stand duly satisfied as the assessee is found to have made retraction within a reasonable time immediately after the copies of statement were provided to him. Furthermore, there being no material or evidence on record to show that appellant has carried any business outside the books for sale and purchase of items of pharmaceutical companies that could give rise to income to the extent of ₹ 30,00,000/-, addition merely on the basis of such statement which stood validly retracted could not have been made. On similar basis and reasoning in the case of Suresh Medical Agency another assessee of the group who were also searched on the same day along with this appellant, vide our order dated 21.8.2013 in ITA No. 443/JP/2012 have found the retraction made as valid and also deleted the addition. We, therefore, find no factual or legal justification in sustenance of addition by Ld. CIT (A) in this regard.
Unexplained jewellery found at the time of search - Held that:- The search party did not ask any further question in this regard and no further detail was required from him. The Assessing Officer also did not make any enquiry after he received the explanation of the assessee claiming that 240 gms jewellery belongs to his brother in law Shri Mukti Lal Agarwal. The explanation filed by the assessee, however, has been rejected by the Assessing Officer without making any further enquiry or requiring the appellant to adduce further evidence. The explanation so given has not been found false. Therefore, the claim of 240 gms jewellery explained by the assessee as belonging to Shri Mukti Lal Agarwal cannot be rejected on surmises and conjectures. We, therefore, direct deletion of addition on this account.
As regards the claim of jewellery belonging to his son Shri Praful Mittal Assessing Officer rejected this claim by saying that the said paper is a dumb document and without any date and in the absence of any bill for purchase of jewellery claim was not allowed. On the peculiar facts of surrender of income by Shri Praful Mittal and entries showing purchase of jewellery in the seized documents the valid explanation ought to have been accepted. We, therefore, do not find any justification in sustenance of addition on this basis and direct deletion thereof.
As regards jewellery weighing 300 gms belonging to Shri Lal Chand Mittal and Shri Madan Lal Mittal embark any enquiry from the appellant on this issue after the appellant had explained that jewellery weighing 150 gms each belong to such two persons, namely, Shri Lal Chand Mittal and Shri Madan Lal Mittal nor he was required to produce both these persons for cross examination or verification of facts stated by the appellant. If the claim made by these two persons for their jewellery having been left in the house of Shri Radheyshyam Mittal who was residing next door was to be taken as wrong claim, the Assessing Officer could have made addition as of unexplained investment in jewellery in their respective hands. This, however, has not been done. The appellant having furnished a reasonable explanation and considering the peculiar facts of the case, we do not find any justification in sustenance of addition on account of the jewellery weighing 300 gms in the hands of the appellant as unexplained investment. We, therefore, direct deletion thereof and allow relief to the appellant. As a result assessee’s appeal stands allowed.
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2013 (8) TMI 935
Revenue outgo incurred on Compact Drafting System allowed as revenue expenditure.
Expenditure of carding machines gave enduring benefit to the assessee and was a capital outgo.
Claim of the assessee under Section 80-IA - Held that:- Initial assessment year could only be considered as the first year in which assessee had claimed deduction under Section 80-IA of the Act, and by virtue of the decision of Hon'ble jurisdictional High Court in the case of Velayudhaswamy Spinning Mills v. ACIT (2010 (3) TMI 860 - Madras High Court), for the purpose of claiming deduction under Section 80-IA, each unit has to be considered independently.
Lower authorities fell in error in considering the Carbon Credit as revenue receipts.
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2013 (8) TMI 934
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... ... ..... e properties allotted to the other group. To offset the difference in value, one group paid the other group money equivalent of the difference in value. The question before the Hon'ble Court was as to whether the amount of compensation paid to settle inequalities in partition represents immovable property and is not an income exigible to tax? The Hon'ble Court held that when a dispute between two groups was settled amicably as a result of which assessee as a member of one group receives certain property and an amount in cash to settle inequalities in partition, the amount so received could not be taxed as capital gains. 18. For the reasons given above, we are of the view that the revenue authorities were not justified in bringing to tax the sum of ₹ 89,16,667 as capital gain in the hands of the Assessee. We hold that the sum in question is not chargeable to tax and allow the appeal of the Assessee. 19. In the result, the appeal filed by the Assessee is allowed.
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