|
Advanced Search Options
Income Tax - Case Laws
Showing 201 to 220 of 515 Records
-
2013 (8) TMI 814
Deduction u/s 37 - Stamping fee and ROC fee for increase in authorized share capital - CIT disallowed deduction - Held that:- , these two expenses are incurred for authorized share capital, and hence even after call off of public issue by the assessee, the benefit is available to the assessee in respect of this increase in authorized share capital, and hence these expenses cannot be said to be expenses in connection with right issue and public issue, and therefore these expenses are to be disallowed - Following decision of Brooke Bond India Limited Versus Commissioner of Income-Tax [1997 (2) TMI 11 - SUPREME Court] - Decided against assessee.
Deduction u/s 37 - Expenditure for raising capital through composite issue - CIT disallowed deduction - Held that:- With the approval of SEBI, the assessee was to increase the share capital and thereby promote its business activity. However, the same got aborted due to reasons beyond its control - Following decision of Commissioner of Income Tax Vs. M/s. Essar Oil Limited [2008 (10) TMI 387 - Bombay High Court] - Decided in favour of assessee.
-
2013 (8) TMI 813
Penalty u/s 271(1)(c) - Addition in long term capital gain - Held that:- When for the addition made by the A.O. which is confirmed by the Tribunal, a substantial question of law is admitted that the issue is not free from debate - It cannot be said that the assessee has concealed his income or furnished inaccurate particulars of income and, therefore, penalty is not justified - Decided in favour of assessee
-
2013 (8) TMI 812
Difference in the arm's length price of the 'international transaction' - TPO evaluated the international transactions applying TNMM at entity level by comparing the net operating profit margin of the assessee with uncontrolled net operating profit margin of comparable uncontrolled enterprises - DRP confirmed additon made by TPO - Held that:- The most direct comparison has been provided by way of comparable uncontrolled transactions entered into by the associated enterprise with unrelated parties, in India, for rendering similar software development services. The internal comparison undisputedly provides the most reliable and direct benchmark for establishing the arm's length price of such international transactions of rendering software development services entered into by the appellant - CUP could appropriately be applied considering internal comparable uncontrolled transactions entered into by the appellant with unrelated parties - The TPO was not justified in ignoring the aforesaid comparable uncontrolled transactions placed on record and instead embarking upon a less direct benchmarking exercise by resorting to comparison of profits of external comparables - The internal comparables available in case of an assessee are to be preferred for the purpose of benchmarking of international transactions even in the case where TNMM is applied, instead of relying on external comparables - Decided in favour of assessee.
The revenue derived from unrelated party transactions at 20.30% of the aggregate revenue of the appellant, cannot be the reason for disregarding internal comparability analysis undertaken by the appellant. It would be appreciated that the appellant in the course of its business enters into several software development contracts of small volume.
TPO in his order, while conducting fresh search has selected companies with turnover in excess of 1 crore. However, the TPO himself has rejected the internal comparable with a turnover of 2.97 crores used by the appellant for benchmarking analysis, holding is to be very small as against the sales made to associated enterprise. Since the TPO himself has accepted companies with turnover more than 1 crore, this argument of the TPO seems inconsistent with his own approach.
The internal benchmarking analysis undertaken by the appellant, therefore, has wrongly been rejected by the TPO and the Transfer Pricing adjustment made in respect of the international transaction of software development services rendered to the associated enterprise, calls for being deleted.
Transfer Pricing adjustment in respect of international transactions of payment of marketing and management support services - Held that:- Assessee does not have any sales or marketing office outside India and therefore the entire third party business of the appellant is generated as a result of the market support services provided by HSC, USA. The increase in revenue of more than 3 times of the revenue of immediately preceding year is pursuant to the significant marketing activity undertaken by HSC, USA - The associated enterprise, HSC USA, does not undertake any business activity of its own and was created solely for the purpose of rendering marketing and aforesaid management support services to the appellant. The operating costs incurred by the HSC USA relate entirely to the operations of the appellant in India and there is no other revenue reflected in the profit and loss account of the associated enterprise. Nature of costs being incurred by HSC USA for the aforesaid services, are, payroll, insurance, general office running expenses, etc. - The international transactions of rendering of marketing and management support services by the associated enterprise has independently been demonstrated to be at arm's length applying TNMM, taking associated enterprise as the tested party. Such international transactions undertaken in the Transfer Pricing study, has otherwise not been disputed by the TPO - Transfer Pricing adjustment made by the TPO in respect of international transactions of payment of marketing and management support services is not sustainable and is liable to be deleted - Decided in favour of assessee.
-
2013 (8) TMI 811
Penalty u/s 271(1)(a) of the Income Tax Act – Claim of loss on account of transfer of units of US-64 and and also carry forward and set-off of loss in subsequent years - Disallowance of the loss on the transfer of units of US-64 - Conversion of the units into tax-free bonds by the UTI, the issuer, at a per unit price of Rs.12/- as against the face value (cost) of Rs.10/- per unit - Assessee had in its return of income filed a note with its computation of income disclosing all details about the sale of US 64 units, the loss and resultant carry forward – Held that:- Reliance is placed upon the judgment in the case of Sandvik Asia Ltd. vs. CIT [2004 (1) TMI 45 - BOMBAY High Court] and it was held that at the highest it can be said that the assessee's claim is not sustainable in law, and which would not make it susceptible to penalty, and which is without doubt the ratio of the decision in the case of Reliance Petroproducts Pvt. Ltd. [2010 (3) TMI 80 - SUPREME COURT ].
Further, decision by the hon'ble high court in the case of Nalin P. Shah & Othrs.[2013 (8) TMI 496 - ITAT MUMBAI] is rendered in an identical fact situation, wherein it has been held that the impugned claim is not liable to be visited with penalty u/s. 271(1)(c) as there is under the circumstances no furnishing of inaccurate particulars of income. The fact situation in the instant case being identical, therefore, constrained on the ground of consistency to adopt the same view as has found approval by the hon'ble jurisdictional high court – Decided in favor of Assessee.
-
2013 (8) TMI 810
Capital expenditure or Revenue expenditure - Expenditure on acquiring fire fighting equipments and on safety measures - CIT allowed expenditure as Revenue expenditure - Held that:- even if the expenses are incurred in respect of fire fighting equipments in the present year and in A.Y. 2006-07, it is to be seen as to whether the same is in respect of acquiring new equipments or in acquiring some parts of the existing equipments - No evidence available for previous year - Matter remitted back - Decided in favour of Revenue.
Disallowance u/s 14(A) - Held that:- no such disallowance is called for when the own interest free funds is far in excess of investment in tax free securities and the A.O. could not prove any nexus between interest bearing borrowed funds and such investment in tax free securities - However, in previous year disallowance was made therefore - Decided in favour of Revenue.
Deduction u/s 80IA(4) - Held that:- assessee is entitled to deduction u/s 80IA(4) of the Income-tax Act 1961 irrespective of whether the product is sold in the market or is used by the assessee itself. This was also held that market value of such own consumption should be considered for working out profits and gains for the purpose of allowing deduction u/s 80IA of the Act. So, this goes to show that the assessee is eligible for deduction u/s 80IA for the power used for own plant as captive consumption - A.O. has compared the rate by which various power supplying companies are purchasing power from the power generating companies whereas the assessee has adopted the price at which electric supplying companies are supplying power to the power consumers - where two views are possible, the view favourable to the assessee should be followed - if own power production was not there, the assessee was required to pay for such power at the same rate at which power is sold by GEB. Hence, because of own power production, the assessee has that much saving in power cost which is the income of power plant - Following decision of CIT vs. Ahmedabad Manufacturing Calico Printing Co. Ltd. [1986 (3) TMI 46 - GUJARAT High Court] - Decided against Revenue.
CIT(A) has directed the AO to verify the claim of the assessee that the claim made by the assessee for deduction in respect of LTC was disallowed in earlier year and only to the extent, the liability created by the assessee but disallowed in the assessment only, the writing back of liability can be excluded from income. The matter is restored back by Ld. CIT(A) to the file of A.O. for a decision after verifying the facts.
-
2013 (8) TMI 809
Exemption u/s 10(23FB) - Conditions laid by SEBI not fulfilled - CIT granted exemption - Held that:- assessee has filed consent application and the alleged violation of provisions of regulations has been settled according to the consent terms and the fact remains that the approval granted by the SEBI has not been withdrawn - AO is duty bound to enquire whether the assessee trust is registered under the Registration Act, 1908 and has been granted certificate of registration by SEBI under SEBI (Venture Capital Funds) Regulations, 1996. But his role is confined to satisfy himself with such certificates granted and not beyond - entries made in the register of independent body should be accepted as true and they should not be questioned while deciding the issue relating to the matters concluded by the entries made in such registers - Following decision of ITO Vs. Gujarat Information Technology Fund [2011 (5) TMI 572 - ITAT AHMEDABAD] - Decided against Revenue.
Amendment to Section 10(23FB) - restriction or requirement regarding the source of income for grant of exemption u/s. 10(23FB) - Held that:- There is no restriction or requirement regarding the source of income for grant of exemption u/s. 10(23FB). It is only by Finance Act, 2007, w.e.f. 1 s t April, 2008, an amendment to section 10(23FB) was brought about restricting the exemption under that section to income from Investment by the Venture Capital Fund in a venture capital undertaking. For this purpose, the said clause (c) of Explanation 1 has also been amended to define "Venture Capital Undertaking". This amendment was made effective from 1.4.2008. By no stretch of imagination can this amendment can be considered as clarificatory applicable to earlier Assessment Year. - Decided against the revenue.
Disallowance of Trusteeship and Management Fees - Non fulfillment of Venture Capital Fund Regulations - CIT deleted addition - Held that:- assessee has incurred expenditure as per the terms of the Deed and the AO has not brought out any material on record to prove that the assessee has not incurred genuine expenditure - Decided against Revenue.
-
2013 (8) TMI 767
Addition on account of abandonment of interest on interest free loan given to sister concern – Addition made u/s 4(1)(c) of the Gift Tax Act - Assessee has taken the advances/loans on the interest @ 18%. Equal interest was charged from some of the sister concerns. But no interest was charged from a few selected sister concerns. For this discrimination, neither any reason was given by the assessee nor the authorities below including the Tribunal have examined this aspect. Undoubtedly, the assessees are the financial concerns and their main object is to earn interest, then, why the interest was not earned from a few selected sister concerns – Held that :- The matter need to be examined on the basis of judgment in the case of Kamla Ganpati v Controller of State Duty, [2001 (2) TMI 132 - SUPREME Court] as well as in the case of M. Janardan vs. Joint CIT, [2005 (1) TMI 14 - SUPREME Court] . Examination to be done by the Hon’ble Tribunal to establish the bonafied action on the part of the assessee – Impugned order/judgment set aside and restored back the matter to the Tribunal to pass a fresh orders in the light of above discussions as per law.
-
2013 (8) TMI 766
Current repairs - Capital expenditure vs. Revenue expenditure – Replacement of entire marble floor was done – Allowable expenditure u/s 30 of the Income Tax Act - Held that:- Applying the tests of “current repairs” and capital expenditure to the present case the expenditure in question was a capital expenditure and even otherwise cannot be classified as “current repairs”. The earlier flooring was removed and completely replaced by marble flooring in an area of 9000 sq. ft. consisting of basement, ground floor, first and second floor. The effect thereof was that an entirely new flooring came into existence. It was not mere “repair” or “current repair”, as is understood in commercial sense or in terms of the tests specified above. The said expenditure was not necessary for maintaining or preserving the building but was done with the view to make distinct improvement and upgrade the appearance and ambience. The expenditure incurred would have entailed specific benefits and a new advantage. The word “repair” involves “renewal” of existing or replacement of a part or a supporting part and not complete replacement or reconstruction.
Reliance had been placed upon the decision in the case Commissioner of Income Tax vs. Modi Industries Ltd. [2010 (9) TMI 162 - DELHI HIGH COURT] apart from various other decisions – In the instant case, the assessee has in fact averred that enduring benefit has accrued to him as it would help in long term since the foreign clients visit his factory/ office. A new asset of enduring benefit in form of completely new flooring of marble, different and distinct from the earlier flooring, has come into existence – Decided against the Assessee.
-
2013 (8) TMI 765
‘Reasons to believe’ for re-opening of assessment u/s 147 of the Income Tax Act – Notice issued u/s 148 of the Income tax act – Held that:- Relying upon the judgment in the case of Assistant Commissioner of Income-tax Vs. Rajesh Jhaveri Stock Brokers P. Ltd. [ 2007 (5) TMI 197 - SUPREME Court ]; Commissioner of Income-Tax Vs. Kelvinator of India Ltd., [2010 (1) TMI 11 – SUPREME COURT OF INDIA] , it is held that the language of Section 147 of the Act stipulates that there should be reasons coupled with the belief and both the conditions have to be satisfied. Law requires that there should be rational connection between the reason and the belief that income chargeable to tax had escaped assessment. Reasons to believe as recorded in the present case are vague, unreasonable, incomplete and irrational. No rational or reasonable person can form or decipher from the reasons that income had escaped assessment - Petitioner is entitled to succeed - Impugned order dated 23rd August, 2007 issued under Section 148 read with Section 147 of the Act for the assessment year 2002-03 is hereby set aside – Decided in favor of Assessee.
-
2013 (8) TMI 764
Reopening of assessment - Deduction claimed u/s 80IB - CIT held proceeding u/s 147 as valid - Held that:- Assessing Officer having nowhere alleged that income chargeable to tax for the relevant Assessment Year has escaped assessment on account of failure or omission on the part of the assessee to disclose truly and fully all material facts necessary for assessment, the impugned notice u/s 148 issued after expiry of period of four years from the end of the relevant Assessment Year is liable to be quashed - assessee furnished all the details relating to its claim for deduction u/s 80IB of the Act and the Assessing Officer thoroughly examined the claim while framing the assessment u/s 143(3) and on being satisfied the claim was allowed. Therefore, in the present case, reopening of the assessment by issuing notice u/s 148 of the Act is definitely a change of opinion which is not maintainable and therefore, the reassessment framed by the Assessing Officer u/s 147 of by issuing notice u/s 148 of the Act after completing the assessment u/s 143(3) of the Act is not valid - Following decision of Commissioner of Income-tax Versus Steel Tubes of India Ltd. [2010 (1) TMI 406 - MADHYA PRADESH HIGH COURT] - Decided against Revenue.
-
2013 (8) TMI 763
Deduction u/s 37 - Provision for Suraksha Fund - Suraksha Fund created by the order of Office of the Registrar, Co-operative Societies, Rajasthan - diversion by overriding title - Held that:- Any contribution made by the assessee to a fund which directly connected or related to carrying on assesee's business or which results in benefit to the assesee's business has to be regarded as deduction allowable u/s 37 of the Act. The decision of Hon'ble Apex Court in the case of Associated Power Co. Ltd. vs CIT (1995 (11) TMI 5 - SUPREME Court) is not applicable. - Decided in favour of assessee.
Deduction u/s 37 - Premium paid to LIC leave encashment group scheme - CIT upheld disallowance - Held that:- Leave encashment is not a statutory liability and even in the case of provision being made the deduction was allowed as business expenditure, when the liability was not actually incurred in the previous year. It was not a provision which was disowned but an actual liability towards premium paid on insurance policy and the liability was allowable as a deduction u/s 37 being an expenditure incurred for the purpose of business - The CIT proceeded on a totally wrong premise in finding the claim to be only u/s 43B(f) and then disallowing it. The order of AO allowing deduction to assessee in the case of premium paid towards the valid insurance policy, ensuring the satisfaction of liability for leave encashment by the insurer cannot be held to be erroneous and was not liable to be revised u/s 263 for the reason of being prejudicial to the revenue - Following decision of CIT vs. Hindustan Latex Ltd. [2012 (6) TMI 713 - KERALA HIGH COURT] - Decided in favour of assessee.
-
2013 (8) TMI 762
Deduction u/s 35(2AB) - Weighted deduction - expenditure on R & D facilities - whether CIT(A) erred in restricting disallowance of the expenditure on R&D to 50% from 150% made by the AO. - The assessee contended that the Assessing Officer disallowed the claim u/s 35(2AB) without correspondingly allowing the revenue expenditure which was added to the computation of income, which tantamounts to double addition - Held that:- matter remanded back to the file of the AO to grant weighted deduction u/s 35(2AB). The balance expenditure if any not approved by the DSIR will have to be considered for deduction under section 35(1) or under normal provisions of the Act. The expenditure has been incurred by the R & D facility of the assessee approved by the Government of India. Merely because part of the expenditure incurred by the approved R & D facilities is not considered for weighted deduction under Section 35(2AB) would not render that expenditure is not towards R & D or not for the purposes of the business. Allowability of such expenditure u/s 35(1) or under other appropriate provisions of the Act will have to be considered. - Decided against Revenue.
-
2013 (8) TMI 761
Revision u/s 263 - erroneous and prejudice to revenue order – Held that:- As held in the case of Malabar Industries Co. Ltd., Vs. CIT [2000 (2) TMI 10 - SUPREME Court], the Commissioner can exercise revision jurisdictional u/s 263 if he is satisfied that the order of the assessing officer sought to be revised is (i)erroneous; and also (ii) prejudicial to the interests of the revenue – Assessing officer should be fair not only to the assessee but also to the Public Exchequer. The Assessing Officer has got to protect, on one hand, the interest of the assessee in the sense that he is not subjected to any amount of tax in excess of what is legitimately due from him, and on the other hand, he has a duty to protect the interests of the revenue and to see that no one dodged the revenue and escaped without paying the legitimate tax. The Assessing Officer is not expected to put blinkers on his eyes and mechanically accept what the assessee claims before him - The Commissioner may consider an order of the Assessing Officer to be erroneous not only when it contains some apparent error of reasoning or of law or of fact on the face of it but also when it is a stereo-typed order which simply accepts what the assessee has stated in his return and fails to make enquiries or examine the genuineness of the claim which are called for in the circumstances of the case.
Arbitrariness in decision- making would always need correction regardless of whether it causes prejudice to an assessee or to the State Exchequer - While making an assessment, the ITO has a varied role to play. He is the investigator, prosecutor as well as adjudicator. As an adjudicator he is an arbitrator between the revenue and the taxpayer and he has to be fair to both. His duty to act fairly requires that when he enquires into a substantial matter like the present one, he must record a finding on the relevant issue giving, howsoever briefly, his reasons therefor.
In the present case, there is no description what enquiry he has caused to come to the conclusion that the assessee is entitled for deduction u/s. 80IC of the Act - Regarding allowability of deduction u/s. 80IC of the Act from Assessing Officer's order. The assessee produced copy of letter dated November 6, 2006 addressed to the Assessing Officer and one more letter dated 15.12.2008. There is one more letter regarding claim of the assessee u/s. 80IC of the Act. It has to be noted that these letters do not bear any acknowledgement from the Assessing Officer or from the Inward section of the Department - In these circumstances, we are of the opinion that the CIT is justified in exercising his powers u/s. 263 of the Act.
Manufacture of water purifiers - Assembly - Deduction u/s 80IC of the Income Tax Act, 1961 - The case of the assessee is that the assessee is engaged in the manufacturing activity and hence, the assessee is entitled for deduction u/s 80IC of the Act. The case of the DR is that the assessee is not engaged in the manufacture and it is only engaged in the work of assembling of various parts of purifier and joining them so as to make water purifier an there is no value addition to this product – Held that:- In the case under consideration, the assessee company does the assembling work to prepare water filter cum purifiers. It purchases various components like, 'chassis, body, top cover, back cover, pumps, PCB, wire harness, some hardware and plastic components from different vendors from all over India, assembles these components to get a finished product - A new distinct article which is called 'water purifier' came into existence having commercial market and the original commodity no longer remained and the new product has recognized as distinct commodity - Assessee is engaged in the manufacture of water purifiers and therefore entitled for deduction u/s 80IC.
-
2013 (8) TMI 760
Land to be agricultural land or not – Non cultivation – Held that:- the land in question was acquired in the year 1959. Even the Village Administrative Officer had certified the same to be agricultural but not cultivated for more than two years as in the year 2007. Hence, it is held that once a parcel of land is agricultural, the mere fact that it is lying uncultivated for a short span of time would not change its nature in the absence of any other material contrary to the same. Therefore, no merit in the argument raised by the Revenue – Decided against the Revenue.
Date of agreement to sale land – Date of execution of the agreement – Held that:- On 20.4.2007, the assessee had executed unregistered agreement with the vendee delivering possession of the property in question. Even in the agreement dated 20.8.2007, the parties reiterated that possession had already been exchanged on 20.4.2007 – Relying upon the judgment in the case of Bakthavatsalam Gowtham [2013 (8) TMI 759 - ITAT CHENNAI], it has been held that as per sec.2(47)(v) of the Act, mere parting of possession of an immovable property under sec.53A of the Act in case of unregistered agreement amounts to a valid transfer - Merely because an agreement to sale has not been registered, which otherwise is in the nature of agreement referred to in section 53A cannot be taken out of ambit of section 2(47)(v) of the Act when parting of the possession of immovable property has taken place.
Distance of land from the municipal limit for deciding the land to be agricultural land – Method to be adopted - Method of straight line on horizontal plane or as per crow's flight - Contention of the Revenue that the land fell within the notified area as the distance was within 4.5 KMs by following ‘crow fly’ method - Assessee’s specific contention was that actual road distance between municipality and the land transferred was 5.1 kms ie. more than the notified area limit of 5 KMs – Held that:- The reckoning of urbanization as a factor for prescribing the distance is of significant which would yield to the principle of measuring distance in terms of approach road rather than by straight line on horizontal plane - Once the statutory guidance of taking into account the extent and scope of urbanization of the area has to be reckoned while issuing any such notification then it would be incongruous to the argument of the Revenue that the distance of land should be measured by the method of straight line on horizontal plane or as per crow's flight because any measurement by crow's flight is bound to ignore the urbanization which has taken place – Reliance has been placed upon the judgment in the case of Radhasoawami Satsang v. CIT(1992) [1991 (11) TMI 2 - SUPREME Court] – Decided against the Revenue.
-
2013 (8) TMI 759
Capital gain - transfer u/s 2(47) - taxability in the year in which agreement took place or in the year in which sale deed registered - Held that:- merely because an agreement to sale has not been registered, which otherwise is in the nature of agreement referred to in section 53A cannot be taken out of ambit of section 2(47)(v) of the Act when parting of the possession of immovable property has taken place - The sale deed in respect of above transaction was registered in financial year 2006-07 relevant to the year under consideration and on which stamp duty was charged on the value of Rs. 23,50,85,500/-. The assessee offered capital gains in respect of the above transaction in assessment year 2004-05 which was duly assessed by the Assessing Officer u/s 143(3) in the assessment of the assessment year 2004-05 - Therefore, property in question has already been treated as transfer by the assessee in assessment year 2004-05 and therefore, in respect of that transfer, capital gains cannot be assessed in the assessment of assessment year 2007-08 - Decided against Revenue.
-
2013 (8) TMI 758
Penalty under section 158BFA (2) - Block assessment u/s 158BC - Determination of Undisclosed income – Held that:- Pre-condition for the imposition of penalty under Section 158 BFA (2) is that there must be a determination of the undisclosed income by the Assessing Officer under clause (c) of Section 158 BC of the said Act. If this is not satisfied, then there would be no question of imposing any penalty.
In the scheme of block assessments, it is settled position of law that the income for the block period has to be determined on the basis of the seized material found during the course of search. The seized material is to be supplied to the assessee and it is supposed to compute true undisclosed income from the seized material - The ultimate income which is to be assessed as an income for the block period is the reduced amount than what has been computed by Assessing officer - Facts suggest that there was no attempt of concealment or furnishing inaccurate particulars, it is difference of the opinion about the income assessable from the material - There was no deliberate attempt at the end of assessee in computing wrong income from the seized material.
Penalty imposed in the present case is not sustainable because the enhancement of undisclosed income by the Assessing Officer has been made on estimated basis and we are unable to see any reason or material which proves beyond the shadow of doubt that there was actual income in the hands of assessee and further that the income was not disclosed in the return filed u/s 158BC of the Act. - Decision in ACIT vs Shanti Kumar Chhabra [2007 (10) TMI 334 - ITAT JAIPUR-A] followed - No penalty - decided in favor of assessee.
-
2013 (8) TMI 757
Exemption u/s 54 - scope of the term 'a residential house' – construction of 7 flats - building development agreement in respect of existing dwelling house - Held that:- Relying upon the judgment in the case of CIT vs. Smt. K.G. Rukmini Amma[ 2010 (8) TMI 482 - Karnataka High Court ]following its earlier decision in case of CIT vs. D.Anand Basappa [2008 (10) TMI 99 - KARNATAKA HIGH COURT], in which it have been held that the expression "a residential house" as appears in section 54 of the Act, cannot be interpreted in a manner to suggest that the exemption would be restricted to a single residential unit – In the present case, considering the totality of the facts and circumstances in the light of consistent view of different High Courts including the jurisdictional High Court, lower authorities were not correct in restricting the exemption under section 54F of the Act to only one flat by interpreting the words "a residential house" in a manner which has been held to be an incorrect interpretation
The assessee is entitled for exemption under section 54F of the Act in respect of all the seven flats - Assessing Officer, therefore directed to compute capital gain, if any, after allowing exemption under section 54F of the Act in respect of all the seven flats which were received by the assessee under the development agreement. In view of our aforesaid finding, the other issue as to whether the long term capital asset transferred by the assessee under development agreement was simply a land as held by the department or a residential house along with land as claimed by the assessee so as to entitle it for exemption under section 54 of the Act has become inconsequential and therefore, not required to be adjudicated upon – Decided in favor of Assessee.
-
2013 (8) TMI 756
Unexplained credit u/s 68 of the Income Tax Act – credit worthiness of lender - genuineness of transaction - onus to prove - Held that:- In the present case, the assessee did not able to establish the cash credits mentioned above as genuine credits. The assessee's stand from the beginning and also before us is that the cash credits are genuine. The assessee never took specific stand that these unexplained cash credits are referable to the income from disclosed sources - In order to delete this addition, the assessee is bound to explain the source of credit, genuineness of the transaction and the capacity of the lender to advance the same. As the assessee failed to explained these criteria – confirmation of order of Commissioner(A) has been done – Reliance is placed upon the CIT v. Maduri Rajaiahgari Kistaiah [1975 (12) TMI 8 - ANDHRA PRADESH High Court] -and in the case of CIT v. Devi Prasad Viswanath Prasad [1968 (8) TMI 5 - SUPREME Court] wherein held that on rejection of books of account, business income estimated, addition towards unexplained cash credit separately valued – Decided against the Assessee.
Whether Intangible addition in the past would take care of the unexplained credit in the present – Held that:- When the alternate plea that tangible additions in the past could take care of cash credits of current year is not taken at the earlier stage and no materials are placed on record to substantiate the same, rejection of such plea would be justified – Reliance is placed upon the judgment of R. Dalmia (Decd.) Versus Commissioner of Income Tax.[2001 (8) TMI 26 - DELHI High Court] – Decided against the Assessee.
-
2013 (8) TMI 755
Unexplained Credit – Addition u/s 68 - Assessee is a Public Limited Company. - Money borrowed through fixed deposit in a scheme under the Company (acceptance of deposit) Rule, 1975. credit worthiness - genuineness of transaction - onus to prove – Held that:- The Hon'ble Calcutta High Court in the case of C. Kant and Company vs. CIT (1980 (6) TMI 21 - CALCUTTA High Court) held that in respect of credit entry it is necessary for the assessee to prove not only the identity of the creditors but also to prove the capacity of the creditors, the advance money and genuineness of the transactions. Similar view has been taken by the Hon'ble Rajasthan High Court in the case of Kamal Motor vs. CIT 131 Taxman 155 (Raj.). - mere filing of the confirmatory letters will not discharge the onus that lies on the assessee.
In the case under consideration, the assessee failed to furnish even confirmation of the depositors for which the CIT(A) has sustained the addition. The Hon'ble Calcutta High Court in the case of CIT vs. Precision Finance Pvt. Ltd. held that mere payment by account payee cheque was not sacrosanct nor could it make a non-genuine transaction as genuine.
As per the judgment in the case of CIT vs. United Commercial and Industrial Co. (P) Ltd.[1989 (5) TMI 18 - CALCUTTA High Court], wherein it was held that The primary onus lies on the assessee to prove the nature and source of credits in its accounts. It is necessary for the assessee to prove prima facie the identity of his creditors, the capacity of such creditors to advance the money and lastly the genuineness of the transactions. Only when these things are proved by the assessee prima facie and only after the assessee has adduced evidence to establish the aforesaid facts does the onus shift on to the Department. - Decided against the assessee.
Additin where fixed deposits taken during the earlier years - fixed deposits renewed during the year - Held that:- In the instant case, fixed deposits which were renewed during the year - In fact these fixed deposits were taken in earlier year, therefore, to that extent addition is not warranted - The assessee has furnished a chart of such 244 depositors amounting to Rs.29,84,000/- which has been placed in the Paper Book – Accepted the contention of the Assessee that section 68 requires that credit must be in the previous year and not of earlier year for the purpose of making addition in the income since renewal of fixed deposits are not credit of this year, therefore, addition cannot be made in the year under consideration - Balance addition of Rs.23,98,000/- (Rs.53,82,000.00 - Rs.29,84,000.00) sustained and confirmed and matter pertaining to addition of Rs.29,84,000/- is being sent back to the file of the A.O – Appeal of the assessee is partly allowed for statistical purpose.
-
2013 (8) TMI 754
Deduction u/s.54 - Joint ownership in property - assessee was owner of 50%. - Though the capital gain was computed in the hands of the assessee but exemption under section 54 was not granted in the assessment order passed under section 143(3) of the Act on the ground that assessee is not owner of the house property which was sold and no income has been assessed relating to the said property in the hands of the assessee under the head "house property".
Held that:- assessee is owner of the land upon which building was constructed by the funds made available by the husband of the assessee in pursuance to an agreement - If the terms of aforementioned agreement are kept in mind then it cannot be said that assessee was not owner of the building which was sold by her. Upon the basis of aforementioned agreement revenue has assessed the husband of the assessee and has computed long term capital gain on 50% of the sale proceeds and exemption has also been granted under section 54 - AO after verifying the evidences filed by the assessee has accepted the claim of the assessee regarding deductibility of Rs.25.00 lacs, which was paid to the tenant as compensation. This fact itself has established that the property of the assessee was occupied by the tenant.
The requirement of section 54 is that the income of the building which is being sold should be chargeable under the head "income from house property". The requirement of section is not that the assessee must earn income from said property. If there was a tenant then the income from the property was chargeable to tax. Therefore, exemption also cannot be denied to the assessee on the ground that assessee did not show any income chargeable under the head income from house property - Decided in favour of assessee.
............
|
