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Income Tax - Case Laws
Showing 161 to 180 of 515 Records
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2013 (8) TMI 932
Capital gain - assessment year - Held that:- No capital gain can be charged in the impugned assessment year and since such decision of the CIT(A) has not been challenged by the Department, the other issue with regard to adoption of rate of construction has actually become inconsequential as it is purely academic in nature. Even otherwise also, the finding of the CIT(A) with regard to cost of construction adopted at ₹ 450/- per sq.ft. for car parking is reasonable as in our view the rate adopted by the Assessing Officer is high and excessive and without any basis. The Assessing Officer without bringing on record any comparable case has simply adopted the rate, out of his own imagination. In the aforesaid circumstances, we do not find any reason to interfere with the order of the CIT(A) in this regard. Accordingly, we uphold the order of the CIT(A) and dismiss the grounds raised by the revenue
Transfer within the meaning of section 53A of Transfer of Property Act read with section 2(47(v) of the IT Act - Held that:- it is a fact on record that the developer was handed over the possession of the property after obtaining permission from GHMC on 05/08/2008 and further the second development agreement executed on 11/02/2011 with RBD Legend, though, is an unregistered document, however, clearly reveals that the earlier developer i.e. Legend Estates Pt. Ltd. had not only taken possession of the property but has also started construction of the project. Furthermore, the registered development agreement with the developer M/s Legend Estates P. Ltd. has not been cancelled. Therefore, it cannot be said that the developer M/s Legend Estates P. Ltd. has backed out or expressed its unwillingness in carrying out the development activity. The development agreement executed on 11.02/2011 being an unregistered document it cannot have much relevance. In the aforesaid circumstances, therefore, the conclusion arrived at by the CIT(A) to the effect that there is a transfer within the meaning of section 53A read with section 2(47)(v) of the Act, cannot be held to be without any substance.
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2013 (8) TMI 931
Disallowance of Advertisement Expenses - Held that:- The Tribunal held that by incurring expenditure on advertisement and sales promotion, assessee had not acquired any fixed capital asset but these expenditures were incurred for earning better profits for facilitating assessee’s operation of providing cellular mobile services. The action of the Ld. CIT (A) has been upheld with this finding that the Ld. CIT(A) had rightly allowed assessee’s claim in respect of expenditure so incurred.
Addition on account of Recruitment & Training Expenses - Held that:- Identical issue was raised before the Delhi Bench of the Tribunal in the case of Sapient Corporation Ltd Vs. DCIT (2011 (5) TMI 499 - ITAT, DELHI ), wherein after discussing the case in detail, the Tribunal has held that the expenditure incurred on account of recruitment and training expenses cannot be said to be capital expenditure. The issue is thus covered in favour of the assessee.
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2013 (8) TMI 928
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... ... ..... he judgment relied upon is on its own facts and not in respect of claim for deduction under Section 80HHC of the Act. In any case, from the facts of the present case, the assessee cannot be held to be entitled to claim income surrendered as a result of unexplained stocks as Income from exports.” 9. Adverting to the judgments relied upon by the counsel for the assessee, it may be noticed that in those cases, the finding was recorded that the income which was unaccounted in the books of account was the result of business activity. In other words, the income was derived from the industrial undertaking on which the assessee was entitled to deduction under Section 80IB of the Act. Such is not the position here. The judgments being based on individual fact situation, no benefit could be drawn by the assessee. 10. In view of the above, the substantial questions of law are answered against the assessee and in favour of the revenue. 11. As a result, the appeal stands dismissed.
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2013 (8) TMI 926
Transfer pricing adjustment - MAM - whether CPM is to be considered as the most appropriate method for determining ALP and suitable adjustments should be made an account for differences between the export and domestic segment? - Held that:- The entire marketing cost is pertaining to domestic segment and the same should be reduced from the selling price. Similarly, there are no bad debts in export segments and therefore, the amount of bad debts should be reduced from the selling price of the domestic segment. According to the Id. DR the assessee has not quantified any adjustments for volume difference. While assessee had enclosed a letter wherein it was mentioned that if the target achieved is upto 20%, turnover discount of 1% was to be given. On that basis, the assessee had requested for an adjustment of about 20% considering the fact that the top five AEs had cumulatively placed orders of more than ₹ 180 Crs. In this regard, we find that there are so many differences in the two segments and considering the fact that suitable adjustments are not possible, CPM has to be rejected, There are differences as accepted by the Transfer Pricing Officer and therefore, in view of the decision of Drilbits International Pvt. Ltd.,[2011 (8) TMI 1083 - ITAT PUNE ] CPM should not be applied, according to us.
Addition u/s 14A - Held that:- Most of dividend received was under the Reinvest operation i.e. the dividend was automatically reinvested by the respective mutual fund. No portion of salary paid to staff and other expenses were incurred in relation to exempt dividend. According to assessee, there is nothing on record to suggest that assessee had incurred expenditure for earning of exempt income. Taking all facts and circumstances disallowance u/s 14A is restricted to ₹ 2,50,000/-. Assessing Officer is directed accordingly.
Disallowance of EDP service charges - Held that:- Assessee claims to have made this payment to its Associated Enterprises for usage of service and assessee is not aware of software's or licences as well as infrastructure which is acquired by associated enterprises in rendering the service. This issue need disapprove until the matter. Let this expenditure be looked in light of above and submissions of assessee. Assessing Officer can also look into fact whether this expenditure is made for usage of service and has not acquired any asset of enduring nature. Assessing Officer is directed to decide this issue as per fact and law after giving opportunity of hearing to the assessee.
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2013 (8) TMI 925
Addition made on account of premium amortization expenses - Held that:- The allowability of amortized expenses on premium on Government Securities has been provided u/s. 36(1)(ii) of the provisions have been clarified and explained by CBDT, New Delhi vide Instruction No. 17 of 2008 dated 26.11.2008. As per this clarification, investments of banks classified under HTM (Held to Maturity) category need not be marked to market and are carried at acquisition cost unless these are more than the face value, in which case, the premium should be amortized over the period remaining to maturity. On the basis of this Instruction, different Tribunals, as mentioned above by assessee, have allowed the amortized expenditure. The AO has ignored the provisions of Instruction which is binding on him while discussing the issue and disallowing the expenditure. Since, the Instructions and Circulars are binding in nature on AOs and different Tribunals have given decisions against the revenue, respectfully following the same, ground of appeal of assessee is allowed
Addition made on account of Gift expenses - Held that:- As in the case Taluka Co-op. & Sale Union Ltd. (1980 (9) TMI 85 - GUJARAT High Court) where expenditure incurred for purchase of articles for presentation only to its members for keeping alive good image among members and for generating goodwill and ensuring continuity of business with member societies was geld to be expenditure incurred wholly and exclusively for the purpose of business.
Addition made on account of Staff Ex-Gratia - Held that:- Since Ld. CIT(A) has given relief to the assessee in view of the fact that expenses being regularly incurred and claimed by the assessee and worked out on the basis of Memorandum of Understanding it is ascertainable liability which is allowable as per the provision of the Act, we are not inclined to interfere with the order passed by Ld. CIT(A) and the same is hereby upheld
Addition made on account of disallowance of Special Long Term Finance Fund claimed u/s. 36(1)(vii) - Held that:- Since the finding of the Ld. CIT(A) that assessee has credited a sum of ₹ 17,50,000/- to the special reserve which is less than 20% of the profit remained uncontroverted at the time of hearing before us, we feel no need to interfere with the order passed by him and the same is hereby upheld. This ground of the revenue is also dismissed.
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2013 (8) TMI 924
Reopening of assessment - Held that:- The admitted fact that 143(2) notice was neither issued nor served on the assessee, we see no infirmity in the order of CIT(A) holding the case as void ab-initio. See case Alpine Electronics Asia Pvt. Ltd. [2012 (1) TMI 100 - DELHI HIGH COURT] - Decided in favour of assessee
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2013 (8) TMI 923
TDS u/s 194I - deduct tax at source from the payment of lease premium made to MMRDA - Held that:- The lease premium paid by the assessee to MMRDA not being in the nature of rent as contemplated in section 194-I of the Act, the assessee was not liable to deduct tax at source from the said payment and hence could not be treated as the assessee in default u/s 201(1) & 201(1A) of the Act. The appeal filed by the Revenue is accordingly dismissed.
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2013 (8) TMI 922
Amortization of premium on investments - Held that:- CBDT Circular No.17 dated 26-11-2008 states that the investments classified under HTM category need not be marked to market and could be carried at acquisition cost unless it was more than the face value, in such case premium should be amortized over the period remaining to the maturity.
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2013 (8) TMI 919
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... ... ..... the Hon’ble Gujarat High Court or it may be restored back to the file of the ld. CWT(A) for fresh decision in the light of this retrospective amendment. 4. We have considered rival submissions. We find that a recent amendment had been made in Finance Act, 2003 with retrospective effect from 1.4.1993, and therefore, such amendment is applicable in the present year under consideration. The order of the ld. CWT(A) is dated 19.10.2012 which is prior to this retrospective amendment. Hence, we feel it proper that the learned CWT(A) should decide this issue afresh in the light of the retrospective amendment, and hence, we set aside the order of the ld. CWT(A), and restore this matter back to his file for fresh decision in light of the retrospective amendment, as per which clause (ea) of section 2 of Wealth Tax Act, 1957 was amended. 5. In the result, the appeal of the Revenue is allowed for statistical purpose. Order pronounced in Open Court on the date mentioned hereinabove.
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2013 (8) TMI 897
Addition u/s 41 - Held that:- There is no infirmity in the order of the ld.CIT(A) by holding that no cessation or remission of liability had occurred in appellant’s case.
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2013 (8) TMI 895
Estimation of rent - income from house property - CIT(A) held that the ALV was to be determined on the basis of municipal value and not some estimated rent - Held that:- Assessing Officer has relied on the case of Shri Puneet R.Gupta,another assessee in the same charge, for assessment year 2005-2006 has been placed on record in which income from house property has been reflected at ₹ 84,000. Similar order for assessment year 2006-2007 in the case of Shri Puneet R.Gupta has also been placed on record disclosing income from house property at ₹ 84,000 which stood accepted as such. The case of the learned AR is that the assessee gave its property on rent in the year 1992 and it was at the same rate of rent that the property continued to be let out. When we consider the facts in totality, being the assessee earning rent of ₹ 7,500 per month since 1992 and Shri Puneet R.Gupta earning rent from similar property at ₹ 10,000 per month from calendar year 2004, there hardly remains any dispute about the correctness of the value declared by the assessee. Respectfully following the precedents given in the case of Estate of Late Sadajiwatlal Chandulal (Indl.) v. ITO. [2013 (5) TMI 223 - ITAT MUMBAI] the Tribunal has held that the municipal ratable value represents fair rental value and the same needs to be adopted for determining the annual letting value u/s 23 of the Act.
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2013 (8) TMI 876
Penalty under section 271(1)(c) - addition u/s 68 - Held that:- Imposition of penalty under section 271(1)(c) is not simply a consequence of an addition being made to the income of the appellant. Penalty under section 271(1)(c) irrespective of whether it is a civil liability or criminal liability can only be imposed when the scheme of the Act permits or requires so. It is not an automatic consequence of an addition being made to the income. An addition made during the course of assessment proceedings, by itself cannot be enough to initiate, leave aside conclude penalty proceedings. See Rupam Mercantile Ltd. v. Deputy CIT [2004 (7) TMI 274 - ITAT AHMEDABAD-A ] - Penalty deleted - Decided in favour of assessee.
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2013 (8) TMI 875
Corpus donation - whether is taxable as income or not even in the cases in which the trust is not registered under section 12AA ? - CIT(A) deleted the addition - Held that:- The corpus donation is in the nature of a capital receipt and are not taxable, irrespective of the fact whether the trust is registered under section 12AA or not. The facts of the case under consideration are identical to the facts of the case decided by the Income-tax Appellate Tribunal, Delhi Bench in the case of Smt. Basanti Devi and Shri Chakhan Lal Garg Education Trust and other [2011 (1) TMI 1320 - ITAT DELHI] orders of the Income-tax Appellate Tribunal. Since facts are identical, therefore, to maintain consistency, we follow the above orders of the Income-tax Appellate Tribunal and the light of facts we do not find any infirmity in the order of the Commissioner of Income-tax (Appeals). The order of the Commissioner of Income-tax (Appeals) is confirmed. - Decided against revenue.
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2013 (8) TMI 872
Revision u/s 263 - Assessing Officer did not examine the status of the assessee in the course of assessment proceedings - taxation of Indian salary along with U.S.A. salary - global income rectification of the order to exclude double addition as the global income of ₹ 7,18,15,365 taken as income from the U.S.A. in fact includes the Indian salary already brought to tax at ₹ 3,24,45,350 - Held that:- If the proceedings under section 263 are on assessment order dated December 29, 2008, obviously there cannot be any prejudice caused to the Revenue, as the Assessing Officer not only brought to tax the Indian component but also the entire global component of the salary. Therefore, the proceedings under section 263 can only be considered to be against the order dated February 24, 2009 under section 154 in which the Assessing Officer by mistake excluded ₹ 7,18,15,365 instead of ₹ 3,24,45,350 included in the above amount.Since the proceedings are initiated against the order under section 154 dated February 24, 2009, question of considering amount of ₹ 53,19,253 does not arise at all, as issue of perquisite was originally concluded by the order dated January 24, 2006 and subsequent proceedings under section 263 did not make it as an issue. Therefore, CIT(A) raising an issue of taxability of perquisite out of the entire tax deducted at source does not arise at all, as this is not an issue considered in the order under section 154. Therefore to that extent the direction of the Commissioner of Income-tax to bring the amount to tax is beyond jurisdiction.
Even on the merits, the assessee, from the beginning has submitted before the Assessing Officer that the tax refund if any does not belong to him and belongs to employer. Based on the above submissions, the issue of perquisite would not have been raised by the Assessing Officer. Be that as it may, the assessee placed evidence on record that already refund to the extent of ₹ 40,41,172 was returned to the employer and balance refund, if any arising to the assessee, would also be returned to the employer. Therefore, in our opinion, there is no error in the order and certainly no prejudice to the Revenue.
Whether there is any prejudice caused to the Revenue in the order under section 154 - Held that:- The amendment to section 6(6)(a) has come with effect from April 1, 2004, therefore, the same is not applicable to the assessment year under consideration. In view of the interpretation given in the case of Pradip J. Mehta v. CIT [2008 (4) TMI 6 - Supreme Court]to the then existing law, in a way the Assessing Officer excluded the income earned outside India and ultimately the assessee was taxed in the income earned in India. Therefore, to that extent there is no prejudice caused to the Revenue on the basis of interpretation of law relevant for the assessment year 2003-04. Therefore, in our opinion the order under section 263 by the Commissioner of Income-tax is bad in law even though there was a mistake committed in the order under section 154 as stated earlier. - Decided in favour of assesse.
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2013 (8) TMI 870
Penalty u/s 271(1)(c) - advances of dormant contracts received - whether Commissioner of Income-tax (Appeals) is justified in law in deleting the penalty levied under section 271(1)(c) disregarding the fact that, the advances received by the assessee on dormant contracts was shown under the head 'current liabilities' and were only offered to tax in subsequent assessment years 2008-09 and 2009-10 after the objection was raised by the Assessing Officer - Held that:- first appellate authority has rightly deleted the penalty - assessee had offered the advances for taxation in subsequent assessment years before the Assessing Officer made any inquiry about them. The first appellate authority has given a categorical finding about the dates of inquiry initiated by the Assessing Officer and offering of advances for subsequent years and from his order it is clear that the assessee had on its own paid tax on the amounts-in-question. It is not a case where the assessee had concealed the facts of earning of income rather it is a case where the year of taxability of income was in dispute. The Assessing Officer and the assessee had different opinions about the year in which the same should be taxed. In our opinion, in such matters penalty under section 271(1)(c) cannot be levied. - Decided against Revenue.
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2013 (8) TMI 839
Deduction claimed u/s 10B - Reassessment - notice u/s 148 - reason to believe - change of opinion - Held that:- when there was intensive examination in the first instance in respect of the issue, which was the basis for re-opening of assessment, it was necessary for the AO to indicate, what other material, or objective facts, constituted reasons to believe that the assessee had failed to disclose a material fact, necessitating reassessment proceedings. That is precisely the "tangible material" which have to exist on the record for the "reasons". When the assessment is completed, as in the present instance, under Section 143 (3), after the AO goes through all the necessary steps of inquiring into the same issue, the reasons for concluding that reassessment is necessary, have to be strong, compelling, and in all cases objective tangible material - There is no such tangible materials which have a live link that can validate a legitimate formation of opinion - It is not enough that the AO in the previous instance followed a view which no longer finds favour, or if the latter view is suitable to the revenue; those would squarely be change in opinion. Perhaps, in given fact situations, they can be legitimate grounds for revising an order of assessment under Section 263; but not for re-opening it, under proviso to Section 147 - assessee cannot be held to have failed to disclose truly and fully all the material facts. It is also not a case where fresh tangible material has come to the knowledge of the Assessing Officer. The Assessing Officer, at the time of original assessment, clearly formed an opinion on both the issues and a notice under Section 148 seeking to reopen the assessment is clearly an instance of change of opinion, which is impressible in law - Following decision of MOSER BAER INDIA LIMITED Versus DEPUTY COMMISSIONER OF INCOME TAX & ORS [2012 (12) TMI 456 - DELHI HIGH COURT] - Decided in favour of assessee.
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2013 (8) TMI 838
Penalty u/s 271(1)(c) - Compensation from Castrol UK, for delay in payment of proceeds of shares - Held that:- It is clear that the payment of interest was directed by the SEBI under regulations 22 and therefore it was held that this is not a penalty but the payment of interest on account of failure to make the payment by the acquirer as per the time schedule prescribed under SEBI regulations. It is clear that this payment of interest @ 15% was not on account of any accretion in the value of the asset in question because the market price of the share is determine as per the rates prevailing on stock exchange. The consideration for acquiring the shares under open offer was determined at Rs. 350.02 which was the market price as on 14.3.2000 when the holding company made a public announcement of acquisition. However, the case in hand the interest received by the assessee is for the period prior to the tendering of shares and acceptance of the same therefore, the interest relates to the delay in completing the process of buy back of shares under open offer. There is a difference between the interest which can be treated at par of consideration and the interest which is different form compensations or consideration. If the interest is paid for delay in making the payment then it cannot be treated as part of consideration. In the case in hand the delay for which the interest has been received by the assessee is in the process of buy back of shares in the open offer after announcement of the intention of acquiring of shares. It is not a case of delay in making the payment of the determined consideration after the transaction of purchase of sale is over - amount of interest which relates to the period prior to tendering and acceptance of the shares falls within the ambit of consideration received by the assessee against the shares tendered in the open offer - interest is received in pursuance to the directions of the SEBI and due to delay in completion of the process of buy back of shares as prescribed under the SEBI regulations. The real acquisition of shares took place only in the month of November 2001 and prior to the said date it cannot be said that the interest was paid due to delay in the payment of consideration - additional amount received by the assessee being 15% interest from 8.8.2000 to 22.11.2001 is part of sale consideration and accordingly will be treated as part of capital gain and not the income from interest - Decided in favour of assessee.
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2013 (8) TMI 837
Whether the expenditure regarding club membership and entrance fee is revenue in nature or capital – Deduction u/s 37 of the Income Tax Act - Club membership has been taken for the purpose of the business of the assessee as the directors of the assessee company conduct meeting/conference with the clients, suppliers and business associates – Held that:- Relying upon the judgment in the case of Otis Elevator Co. (India) Ltd. Vs CIT [1991 (4) TMI 53 - BOMBAY High Court]; CIT Vs Samtel Color Ltd [2009 (1) TMI 26 - DELHI HIGH COURT], it was held that the nature of the expenditure was one for the benefit of the assessee. The “business purpose” basis adopted for eligibility of expenditure under section 37 of the Act was the correct approach.
Qualification of the expenditure under section 37 of the Act is that expenditure incurred should not be on capital account - Expenditure which gives enduring benefit is by itself not conclusive as regards the nature of the expenditure - The true test for qualification of expenditure under section 37 of the Act is that it should be incurred wholly and exclusively for the purposes of business and the expenditure should not be towards capital account - In the instant case, the admission fee paid towards corporate membership is an expenditure incurred wholly and exclusively for the purposes of business and not towards capital account as it only facilitates smooth and efficient running of a business enterprise and does not add to the profitearning apparatus of a business enterprise.
Expenditure made as donation for religious purposes – On souvenirs /booklets assessee name appeared on the religious occasion – Expenditure as advertisement expenditure – Held that:- These so called souvenirs/booklets are not the publication of any institution, industrial organisation or other association or institutions as permanent in nature and related to the business of the assessee. Accordingly, no merit in the assessee’s contention that the expenditure incurred for advertisement in souvenirs of all these parties is an allowable expenditure – Decided against the Assessee.
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2013 (8) TMI 836
Disallowance u/s 14A - Expenditure incurred for earning of exempt income - Held that:- It is not in dispute that the assessee has earned huge dividend income which has been claimed as exempt and for the purpose of disallowance under section 14A, it has disallowed a sum of Rs.5,46,16,385. The assessee’s working of disallowance was too based on rule 8D. However, in its working, the assessee has not considered those investments which have not yielded any income. In our opinion, such a working is not correct, as once the expenditure has been incurred in relation to an income which do not form part of the total income, then the provisions of section 14A, comes into play - it has been held that disallowance under section 14A can also be made in the year in which no exempt income has been earned or received by the assessee. When the expenditure is incurred in relation to income which does not form part of the total income, it has to suffer the disallowance under section 14A, irrespective of the fact that whether or not any income has been earned by the assessee. The section itself does not carve out any such exception - Once it is not disputed that the provision of rule 8D are applicable on the conditions stated therein, then disallowance has to be made as per the formula given in rule 8D, except when the assessee brings out cogent material on record to show that a particular expenditure as provided in the formula was not attributable to earning of the exempt income - Following decision of Cheminvest Limited. Versus Income Tax Officer, Ward 3(3), New Delhi. [2009 (8) TMI 126 - ITAT DELHI-B] - Decided against assessee.
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2013 (8) TMI 835
Capital or Revenue expenditure - Expenditure on acquisition of software - CIT held it as Revenue expenditure - Held that:- When the assessee acquires a computer software or for that matter the license to use such software, he acquires a tangible asset and becomes owner - software becomes obsolete with technological innovation and advancement within a short span of time. It can be said that where the life of the computer software is shorter (say less than 2 years), it may be treated as revenue expenditure. Any software having its utility to the assessee for a period beyond two years can be considered as accrual of benefit of enduring nature. However, that by itself will not make the expenditure incurred on software as capital in nature - Once the tests of ownership and enduring benefit are satisfied, the question whether expenditure incurred on computer software is capital or revenue has to be seen from the point of view of its utility to a businessman and how important an economic or functional role it plays in his business. In other words, the functional test becomes more important and relevant because of the peculiar nature of the computer software and its possible use in different areas of business touching either capital, or revenue Held or its utility to a businessman which may touch either capital or revenue field - CIT has not mentioned what is the exact span of life of the software and whether it satisfies the functional test to be treated as revenue expenditure - Following decision of Amway India Enterprises Versus Deputy Commissioner of Income-tax, Circle 1(1), New Delhi [2008 (11) TMI 432 - ITAT DELHI] - Matter remitted back - Decided in favour of Revenue.
Disallowance of lab development charges - Held that:- assessee has failed to reconcile before the Assessing Officer not only at the time of assessment but also during the remand whether actually the amount of Rs. 48,95,925 was included in the lab maintenance charges of Rs. 1,37,86,523 and has been included in the gross income of the impugned assessment year - Therefore, matter is remitted back to A.O. - Decided in favour of Revenue.
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