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Income Tax - Case Laws
Showing 361 to 380 of 515 Records
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2013 (8) TMI 411 - ITAT AGRA
Initiation of re-assessment proceedings u/s 147 of the Income Tax Act - reason to believe or reason to suspect - The assessee filed return of income declaring total income of Rs.11,35,776/- which was accepted by the AO while computing income of the assessee Held that:- The profit and loss account and balance sheet are filed in the paper book of these concerns to show that the assessee did not deal in real estate and was also not colonizer in assessment year under appeal - Nature of business of these concerns held by the assessee would also support the submissions of the assessee that in the year under consideration, the assessee was not colonizer and dealer in real estate - The AO had not examined this information before recording his satisfaction of escaped income and initiated the re-assessment proceedings. The AO had acted only on the basis of suspicion that the assessee was a colonizer and dealer in real estate. The AO was having no material or evidence with him to support his belief that the assessee acted as colonizer or dealer in real estate in the assessment year under appeal. The reasons recorded by the AO for reopening of the assessment are factually incorrect and non-existent.
Section 40A(3) applies in the case of expenditure claimed by the assessee while computing business income, but in this case, the assessee did not claim any expenditure in the profit and loss account of all the concerns held by him - The AO had to act on the basis of reason to believe and not on reason to suspect - The AO had failed to incorporate any material for his satisfaction for re- opening of assessment. There was no foundation to his reasons to believe that there was escapement of income in the assessment year under appeal. Therefore, the issuance of notice u/s. 148 of the IT Act for re-assessment proceedings was not valid Appeal allowed Decided in favor of Assessee.
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2013 (8) TMI 410 - ITAT AGRA
Mistake apparent from record for invocation of section 154 of Income Tax Act,1961 - Minimum Alternate Tax (MAT) - Adjustment to book profit u/s 115JB - Adjustment of loss to sick industrial company - Held that:- The Auditor of the assessee in Annexure-A also reduced the loss of sick industrial company from the profit. Therefore, assessee has disclosed all the particulars regarding income to be computed under Section 115JB while filing return of income. The certificate regarding assessee is sick industrial company issued by BIFR was also filed at the assessment stage - There was no scope for the A.O. to have resorted to the provision of Section 154 of the Act for the purpose of enhancing the income of the assessee. The ld. CIT(A) gave specific finding of fact that the assessee is sick industrial company during the year under consideration.
A.O. on long drawn process of reasoning should not have passed the order under Section 154 of the Act - Assessee also correctly demonstrated from the provision of Section 115JB(2) of the Act that whatever amount was reduced from the profit of business on account of loss to sick industrial company were in accordance with law. Therefore, there was no justification for A.O. to pass the order under Section 154 of the Act - No merit in the appeal of the Revenue Decided against the Revenue.
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2013 (8) TMI 409 - ITAT AHMEDABAD
Allowance of carry forward of loss on account of provisions of section 79 of the Income Tax Act Held that:- Issue of carry forward would depend upon the finality of order for earlier years as it would have bearing on the year under appeal Issue is remitted to the file of AO to determine the carry forward losses based on the outcome to the decision for the earlier years.
Allowability of warranty expenses - Assessee debited expenses on account of warranty expenses - H'ble Apex Court in the case of Rotork Controls [2009 (5) TMI 16 - SUPREME COURT OF INDIA] has laid down the conditions which are required to be satisfied for making claim in respect of post sale customer service and has laid down the principle pertaining to the same - The Hon'ble Apex Court in Rotork Controls case noted that provision made for warranty based on past experience (historical trend) was most appropriate as it fulfilled accrual concept as well as matching concept. A detailed assessment of the warranty provisioning policy is required particularly if the experiences suggests that warranty provisions are generally reversed if they remained unutilized at the end of the period prescribed in the warranty Held that:- There is no finding with respect to the compliance of aforesaid guidelines of Apex Court by assessee in the order of AO or DRP - Matter needs to be examined in the light of the principles laid down by Hon'ble Apex Court Matter remitted to the file of AO for deciding the issue afresh in the light of the decision of Hon'ble Apex Court in the case of Rotork Controls case.
Acceptability of DRP Order for making assessment - DRP has not dealt with the objections raised by the assessee by giving any cogent reasons as to why these objections are not acceptable to them - DRP has simply approved the adjustments made by the TPO. This has resulted in DRP's order being non-speaking Held that:- Ld. DR has tried very hard to meet these objections by referring to various relevant income tax rules and the case laws but this effort of Ld. DR is not arising out of the order of the DRP. Therefore assessment orders passed by assessing officer in consequence to the DRP's order have to be set aside relying upon the decision in the case of Vodafone Essar Ltd vs. Dispute Resolution Panel reported in [2011 (12) TMI 22 - Delhi High Court], wherein it has been held that when quasi-judicial forum like DRP deals with section 144C of the Act then it is obligatory on its part to ascribe cogent and germane reasons as reasons are the heart and soul of the matter and facilitate the appreciation of the order when the matter is called in question either before a superior or appellate forum - Accordingly the DRP's order along with the impugned order is set aside in respect of transfer pricing adjustments to the file of DRP with the direction to pass a speaking order after taking into consideration the submissions of both the parties.
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2013 (8) TMI 408 - ITAT MUMBAI
Tax Planning versus Tax Avoidance - Finance Lease / Operating lease - Sale and Lease back transaction, whether genuine transaction or sham transaction - Appellant purchased energy meters of different makes for measuring electrical energy for a consideration from Gujarat State Electricity Board , referred to as GEB. These meters (assets) were then immediately leased back to GEB vide lease agreement. After deduction of lease management fee and first month's rental, the appellant paid balance to GEB. In the P & L A/c, the appellant has credited lease rental income and lease management fees and at the same time it has claimed depreciation @ 100% of the cost of assets, under proviso to Section 32(1) of the I.T. Act, on the ground that the cost of each meters was below Rs.5,000/- - Held that Considering the numerous case laws viz. McDowell & Company. Ltd.- [1985 (4) TMI 64 - SUPREME Court] ; B.M. Karwar [1968 (8) TMI 14 - SUPREME Court] etc., it has been well observed that in none of the authorities it has been held that each case of Sale and Lease back transaction or of thelease whether claimed to be operative or financial, the depreciation or the deduction or relief under the Income Tax act is to be allowed or disallowed. In each of the authorities as mentioned above, it is only after considering the facts and the evidence on the file, the various courts have given finding in the respective authorities to the effect that transactions in question were genuine transactions or sham transactions - Whether a transaction or the agreement etc. is genuine or sham cannot be a question of law but the question of fact only - No straight jacket formula can be adopted to say that every case of sale and lease back transactions is sham or genuine - For the purpose of deciding whether a particular transaction is a lease or not, the question of intentions of the parties is to be determined and the intention has to be inferred from the circumstances of each case.
In the case in hand the sole motive or object of the agreement in question is to defeat the provisions of Income Tax Act,1961 so as to enable the assessee to claim depreciation @ 100% on the value of goods worth Rs.49972800.00 to which it otherwise is not entitled to and, further, to get mutual benefit of this wrongful claim by making wrongful loss to the revenue - Tax avoidance by way of tax planning or structuring the transactions so as to reap the largest tax benefit may be permissible under law but fraudulent transfer of assets or income or engaging in sham transactions with the object of reducing the tax liability cannot be said to be a case of tax avoidance but of tax evasion - In the case in hand, whole of the effort has been made to transfer the right to claim depreciation on the assets to the assessee for the purpose of the Income Tax Act, but not the assets itself. It is always the goods or the assets itself which are the primary subject of a valid transfer, not the incidental benefits, which automatically pass to the transferee with the transferred asset. In the case in hand, only the incidental tax benefits are intended to be transferred without any intention to transfer the asset itself - In Para 13 of the notes to the Annual Accounts of GEB for F.Y. 1993-94, as reproduced in para which has been reproduced in Para 3.(P) indicates that the real intention was to enter into transaction of loan/finance only and the assessee was never intended to be the real and legal owner of the assets Depreciation not allowed Decided against the Assessee.
Lease rental income in the Sale and lease back transaction, whether includible in income under the head profits and gains from business and profession Held that:- Transaction in question is held to be a finance transaction, the principal component in the lease rent received cannot be treated as income. Evidently, since the transaction was held to be for financing the electric meters, only that portion of the lease rent which represents interest/finance charges can be treated as income. The capital component included in the lease rent being return of capital investment cannot be treated as income.
Applicability of Section 234B of the IT Act Held that:- As per explanation 2 to section 234B, it has been provided that where an assessment is made for the first time under section 147 or section 153A, the assessment so made shall be regarded as a regular assessment for the purpose of this section. Section 234(3) is to be read in conjunction with and not in isolation to section 234(1) of the Act. Hence the contention of the assessee is also not found to be tenable
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2013 (8) TMI 407 - ITAT CHANDIGARH
Cancellation of registration of Trust granted under section 12AA of the Income Tax Act, 1961 - The assessee had given donations to other charitable institutions in line with one of its objects Held that:- It is not the case of the revenue that the trust was not carrying on its activities in accordance with its objects - Assessee had followed the procedure of law and registered itself with the Registrar of Societies before moving the application for registration under section 12A of the Act. In the totality of the facts and circumstances of the case, the supplementary Trust Deed executed by the assessee on 25.05.2007 is nothing but the combination of the all clauses of the earlier two Trust Deeds and the aims and objects in all the deeds remain the same. In the absence of the Commissioner of Income-tax bringing on record any evidence to establish that the assessee was not carrying on its activities in accordance with its objects, we find no merit in the order passed by the Commissioner of Income-tax in withdrawing the registration granted to the Trust.
Merely because the Settler of the trust has claimed deduction under section 80G of the Act on the donations made to the assessee Trust, does not merit the cancellation of registration granted to the Trust - No merit in the objections raised by the Assessing Officer that the trust was running its activities from where another trust was also being run under the name and style of M/s Durga Mani Foundation, which is the second assessee before us and also another concern was operating from the said address. In the totality of the facts and circumstances of the case, we reverse the order of Commissioner of Income-tax passed under section 12AA(3) of the Act and hold that the assessee is entitled to the registration already granted to it under section 12AA of the Act - Grounds of appeal raised by the assessee are allowed Decided in favor of Assessee.
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2013 (8) TMI 406 - ITAT AGRA
Assessment u/s 153A - Addition under section 68 of Income Tax Act, as unexplained expenditure - There are entries of deposits of cash and cheques in the denominations of Rs.49,000/- and Rs.54,000/- in ICICI and IDBI Banks - The details of deposit of Rs.70,14,083/- was not pointed out by the assessee nor such details are available on record Held that:- Unless contrary materials are put on record, the fact recorded by the A.O. is to be taken as correct which is that the assessee has deposited cash and cheques in the denomination of Rs.49,000/- and Rs.54,000/- totaling to Rs.70,14,083/- in both the Bank accounts. The CIT(A) without appreciating the facts recorded by the A.O. and without verifying the Bank accounts, deleted the addition - The CIT(A) is not correct in observing that during the course of search, no incriminating documents were found, therefore, addition cannot be made because the order of the A.O. is in consonance with provisions of section 153A of the Act. The CIT(A) has wrongly accepted alternate contention of the assessee and allowed telescoping benefit against the profit from M/s Deepak Security of Rs.81,94,000/- - The assessee has to establish by pointing out the relevant entries that the amount of Rs.70,14,083/- is on account of profit from M/s. Deepak Security of Rs.81,94,000. The assessee has failed to furnish such reconciliation before the CIT(A) as well as before us - Onus is on the assessee as it was contention of the assessee that the amount of Rs.70,14,083/- was out of the transaction of Rs.81,94,000/- but the assessee has failed to discharge the onus by not furnishing relevant records and relevant reconciliation.
As per the judgment by Hon'ble Madras High Court in the case of CIT vs. Krishnaveni Ammal, [1983 (1) TMI 3 - MADRAS High Court] wherein it was held that the law of evidence mandates that if the best evidence is not placed before the Court, an adverse inference can be drawn against the person who ought to have produced it - In the case under consideration, assessee were asked to furnish copies of Bank accounts but the same were not produced. In the light of the facts of the case and failure on the part of the assessee, the addition made by the A.O. while making assessment under section 153A is correct and in accordance with law Revenue appeal allowed Decided in favor of Revenue.
Allowability of household expenses - A.O. made addition of Rs.88,000/- on account of house hold expenses. The CIT(A) has deleted the said addition following his orders for earlier years Held that:- In the absence of any material on record in favour of the revenue, we do not find any justification to interfere with the order of the ld. CIT(A). - Decided against the revenue.
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2013 (8) TMI 405 - ITAT AHMEDABAD
Disallowance u/s 36(1) (viia) - creation of reserve for bad debts - Held that:- as per the provision of section 36(1)(viia), the deduction is allowable in respect of provision for bad and doubtful debts - But assessee has made reserve for bad and doubtful debts towards standard assets, and therefore, the same cannot be said to be akin to the provision for bad and doubtful debts - assessee is not eligible for any further deduction, in the absence of any extra provision for bad and doubtful debts, having been created by the assessee as per the audited accounts available in the paper book - Decided against assessee.
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2013 (8) TMI 404 - ITAT COCHIN
Penalty u/s 271D - violation of section 269SS - Reasonable Cause u/s 273B - receipt of loan by cash exceeding ₹ 20,000/- Held that:- no penalty shall be imposable on the assessee for receiving or accepting loan or deposit otherwise than by account payee cheque or by account payee demand draft, if there was genuine and bonafide transaction and the taxpayer could not get a loan or deposit by account payee cheque or account payee demand drat for some bonafide reason, the authority vested with the power to impose penalty has a discretionary power not to levy the penalty - assessee is not claiming that cash was received due to reasonable cause.
The claim of the assessee is that receipt of money by way of cash itself is a reasonable cause - mere receipt of cash, itself cannot be a reasonable cause. The assessee is expected to demonstrate the reasonable cause for not receiving the loan by account payee cheque or demand draft - Decided in against the assessee.
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2013 (8) TMI 403 - ITAT MUMBAI
Transfer pricing adjustments - Book profit for the purpose of MAT (Minimum alternate Tax) - Adjustment for the difference in capacity utilization - Selection of comparables for Transfer Pricing Held that:- Out of the two comparables identified by Assessee company , relevant financial data of Sanmar Speciality Chemicals Ltd. for the year under consideration was not available in public domain as admitted by the assessee company also. Therefore, the said company was rejected as comparable.
Adjustment for the capacity utilization Held that:- The issue of difference in capacity utilisation generally comes in the case of manufacturing concern and like any other business undertaking, the manufacturing concern has mainly two types of overheads i.e. fixed overheads and variable overheads - The variable overheads vary in proportion to the sales and they therefore do not have any effect on the profit margin as a result of difference in capacity utilization. The fixed overheads, on the other hand, do not vary with the volume of sales and since they remain by and large static irrespective of level of capacity utilization, the profit margin gets affected as a result of difference in capacity utilization on this count.
Further, the difference in capacity utilization materially affects the profit margin and if there is a difference in the level of capacity utilization of the assessee and the level of capacity utilization of the comparable companies, adjustment is required to be made to the profit margin of the comparables on account of difference in capacity utilization as per clause (e)(iii) of sub-rule (1) of Rule 10-B of the Income Tax Rules, 1962.
Value of closing stock on account of Excise Duty in terms of provisions of section 145A of the Act Held that:- Relying upon the decision in the case of CIT v. Mahalaxmi Glass Works Pvt. Ltd. [2009 (4) TMI 182 - BOMBAY HIGH COURT ], it was held that the adjustment on account of Excise/Modvat credit is required to be made as per the provisions of section 145A of the Act in respect of closing stock as well as opening stock.
For the purpose of clause (iii) of Explanation 1 to section 115 JB of the Act, one consolidated figure of brought forward losses or unabsorbed depreciation for the earlier years is to be taken or the same is to be considered on year to year basis Held that:- Relying upon the decision in the case of Amline Textiles (P) Ltd. v. TPO reported in [2008 (11) TMI 438 - ITAT MUMBAI], it is held that by using the words 'amount' and 'loss' in clause (iii) of Explanation 1 to section 115 JB of the Act, the point has been made clear that it is a composite figure each of the unabsorbed depreciaion and brought forward loss, that merits consideration. - There is nothing in the language of section, which could suggest, even remotely, that the Legislature intended to consider year-wise figures.
The lower of the solitary figures of the unabsorbed depreciation or loss brought forward for all the earlier years taken together is to be reduced for the purposes of computing book profit u/s 115 JB of the Act. - Decided against the revenue.
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2013 (8) TMI 402 - ITAT MUMBAI
Income from house property or business income - Property let out on lease - Held that:- income realized by the owner by way of rental income from a building, whether commercial building or residential, is assessable under the head income from house property. Therefore, to the extent of leave and license amounts received by the assessee by letting out the commercial building is concerned, the CIT(A) has correctly analysed and came to a conclusion that the income is assessable under the head income from House Property - Following decision of Shambhu Investment Pvt. Ltd. vs. CIT [2003 (1) TMI 99 - SUPREME Court] - Decided in favour of assessee.
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2013 (8) TMI 401 - ITAT MUMBAI
Sale of shares - short term capital gain v/s income from business - Held that:- Both the authorities below have themselves drawn support from the assessment for the earlier years, implying the facts to be the same. No separate case, by analyzing the facts for this year has been made out by the authorities below - Following decisions of ASSTT COMMISSIONER OF INCOME TAX VERSUS HITESH S BHAGAT [2013 (7) TMI 474 - ITAT MUMBAI] and New Jehangir Vakil Mills Co. Ltd. vs. CIT [1963 (4) TMI 60 - SUPREME COURT] - Decided in favour of assessee.
Disallowance u/s 14A - CIT upheld disallowance order following Rule 8D - Held that:- total expenditure incurred by the assessee during the relevant year, as per its profit and loss account, forming part of its return of income for the year is less than the sum of disallowance - no disallowance qua the interest expenditure stood made by the A.O.; the assessee having not incurred any interest expenditure; rather returned a positive interest income of ₹ 1,22,380/-, and which, as apparent from the computation of the income, is the gross and not the net interest earned by her - Rule 8D is toward estimating the expenditure that can be attributed to the tax exempt income and, thus, could not, in any case, exceed the actual expenditure incurred and claimed by the assessee - Decided in favour of assessee.
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2013 (8) TMI 382 - CALCUTTA HIGH COURT
Deduction u/s 80IB - Audit report not furnished - Held that:- interpretation merely permits the assessee to produce the said report even after the date of the filing of the return as passed; it does not wholly do away with the requirement of filing the report altogether - assessee having produced the necessary reports at the necessity time - Following decision of Commissioner of Income Tax vs. Berger Paints (India) Ltd. [2002 (2) TMI 97 - CALCUTTA High Court] - Decided against Revenue.
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2013 (8) TMI 381 - GUJARAT HIGH COURT
Depreciation on intangible assets - CIT(A) deleted the disallowance - Held that:- CIT (A) on proper examination of evidences and material rightly came to the conclusion that software is intangible asset and was loaded in the system of machine. The learned CIT (A) also rightly held that installation of software could be checked by the technical person whether it was loaded in the system or not. Therefore, the finding in the survey cannot be relied upon. Even the AO has accepted the fact that some of the software were developed locally and installed in the system. The finding of fact recorded by learned CIT (A) find support from the valuation report of assets prepared by Dalai Mott Macdonald which was found in survey which indicated that software developed and installed by the assessee in the system. The assessee produced all the vouchers and receipt for the same which was also examined by learned CIT(A) - Unless perversity is pointed out, no question of law arises for this Court to interfere as both have dealt with the issues elaborately giving sound and cogent reasons - Decided against Revenue.
Deduction u/s. 80HHC and 80IA - CIT allowed deduction - Held that:- Such deduction would be available only there was positive income. The Assessing Officer, while framing the assessment, made certain additions and thereby converted the return of the assessee of one of loss into the assessment order computing positive income. Only at that stage, the question of the assessee pressing for the deductions under Sections 80HHC or 80-IA of the Act arose. This would be known and available to the assessee only once the Assessing Officer passes his order. Under the circumstances, the assessee in the appeal before the Commissioner in addition to questioning the validity of the additions themselves, also raised an alternative legal contention of deductions under the said provisions - Commissioner committed no error He only entertained such an contention but remanded ,the proceedings for verification of facts to the Assessing Officer - occasion to press for deduction under the said provision arose only when once the Assessing Officer passed an order of assessment - Decided against Revenue.
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2013 (8) TMI 380 - ITAT AGRA
Disallowance u/s 40(a)(ia) - Payment to consignment agents - Non deduction of TDS - Commission versus reimbursement of expenses - Held that:- The commission is said to be payment of commission if it is evident that it is being paid for service of a person provided in respect of sale of product of the assessee - The concerned parties have also furnished the sale Patti along with claim of the expenses on sale of consignment goods the claim of expenses given detail the expenses pertaining to the monthly selling expenses loading and unloading dealing with expenses. These expenses have been adjusted and accounted for in the account of respective parties - impugned payment is reimbursement of the expenses and are not the commission as the concerned party did not give any services in respect of the payment of expenditures made. Providing services is essentially requirement of the nature of transaction of a commission. Since this condition is not satisfied in the case under consideration therefore it is a case of reimbursement of the expenses incurred by the concerned party on behalf of the assessee - Decided in favour of assessee.
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2013 (8) TMI 379 - ITAT AGRA
Disallowance u/s 36(1)(iii) - CIT partly deleted disallowance - Use of interest bearing borrowed funds in the investment of shares - Held that:- The deduction contemplated by the section is in relation to the expenditure which could properly be regarded as necessary for the purpose of the business or profession. Expenditure incurred on account of commercial expediency for the purpose of business would be allowable under this provision. The expenditure to be allowed must have a nexus with the business of the Assessee. If the expenditure incurred is ostensibly incurred for the business, but if in reality is not for the purpose of business then such expenditure is not allowable - assessee has right to replace his own capital with borrowed funds which were already used for the purpose of business in acquiring assets and other - for the purpose of ascertaining profit and gains, the normal principles of commercial accounting should be applied, so long as they do not conflict with any express statutory provisions - The onus is on the assessee to furnish the relevant material regarding replacement of borrowed funds by own capital and interest free funds available with the assessee - Following decision of Commissioner of Income-Tax Versus Prem Heavy Engineering Works P. Limited [2005 (4) TMI 32 - ALLAHABAD High Court] - Decided in favour of assessee.
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2013 (8) TMI 371 - RAJASTHAN HIGH COURT
Reason to believe for income escaping assessment under section 147 of the Income Tax Act, 1961 Held that:- It is also not for this court to examine those reasons from the stand point whether the material on which they are found conclusively proved the escapement of income as formation of such belief by the assessing officer is in the realm of the subjective satisfaction. Moreover, in this case, the assessing officer has not proceeded merely on the basis of report of the Valuer but also considered that such valuation was got done by a third party i.e. the ICICI Bank, which has advanced loan of Rs.1.25 crore to the petitioner on the land being valued by their valuer at Rs.3,53,29,230/- as against Rs.1.20 crores - The reasons were such which would impel an ordinary person of reasonable prudence to hold that the income escaped assessment. Those reasons do not fall merely within the realm of 'mere suspicion' so to say. There does exist some material with the assessing officer for issuance of notice under Section 147 read with Section 148 of the Act of 1961 for formation of requisite belief as to the escapement of income Decided against the Assessee.
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2013 (8) TMI 370 - GUJARAT HIGH COURT
TDS Credit - Revenue missed out giving credit of the TDS - Rectification of mistake u/s 154 of the Income Tax Act, 1961 When assesse failed in furnishing necessary details which would have entitled the Department to discard the total amount of TDS, while computing the return of the petitioner, when all the details of TDS are available with the Department Held that:- Respondent no. 2 has failed to perform its duty as provided under section 154 of the Act. When a glaring mistake was pointed out to the authority, it ought to have amended the order of assessment by exercising powers under section 154 of the Act - Respondents are directed to take into account the total sum of TDS as is reflected in Form 26AS and after computing such TDS amount, issue refund in the name of the petitioner Assessee Petitioner is also being permitted to make additional claim of refund, which shall be considered by the respondents in accordance with law and permit him more refund; if he is entitled to. The exercise of granting refund to the petitioner must be completed within four weeks from the date of receipt of this order Decided in favor of Assessee.
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2013 (8) TMI 369 - ITAT MUMBAI
Administrative expenses for earning dividend income from mutual fund Disallowance under Section 14A of the Income tax act Investment in units of mutual funds made by the assessee stood at Rs. 6.03 crores as on 31-03-2001 which was increased to Rs. 18.32 crores as on 03-03-2002 Held that:- Although the investment in mutual funds had been made by the assessee out of its own funds and there was no interest expenditure incurred in relation to the earning of dividend income, the portion of administrative expenses incurred by the assessee was certainly attributable to the earning of the said income - Since no working whatsoever was given by the assessee showing the expenses attributable to the earning of dividend income, estimation of such expenses on proportionate basis to quantify the disallowance u/s 14A of the Act was very much called for - 2% of the dividend income has been held to be reasonable consistently by the Tribunal in various cases - Restrict the disallowance u/s 14A of the Act at 2% of the dividend income.
Eligibility of expenses for deduction in under section 80IB Held that:- There has to be a direct or first degree connection of the income and the business of the eligible undertaking in order to be eligible for deduction u/s 80IB of the Act - Three items of other income are such that the immediate source thereof cannot be said to be the business of eligible undertaking and this being so, all these items of income cannot be said to be eligible for deduction u/s 80IB of the Act Decided against the Assessee.
Reducing the amount eligible for deduction u/s 80IB of the Act while computing profits of the business for the purposes of deduction u/s 80HHC of the Act Relying upon the decision in the case of Hon'ble Bombay High Court in the case of Associated Capsules (P.) Ltd. vs. DCIT [2011 (1) TMI 787 - BOMBAY HIGH COURT], it was held that profits of business for computation of deduction u/s 80HHC of the Act are not to be reduced by the profits of business allowed u/s 80IA of the Act Decided in favor of Assessee.
Deduction under section 80IB - Assessee is engaged in the business of manufacturing of agro chemical products and seeds and processing charges received by the assessee Held that:- Nature of processing charges received by the assessee is not very clear as neither the A.O. nor the ld. CIT(A) has given any finding in this regard so as to ascertain as to whether the processing charges were received by the assessee for manufacture of agro chemical products and seeds on job work basis with material supplied by the customers - Claimed by the ld. Counsel for the assessee - While arguing a similar issue in earlier years that the recovery of processing charges was nothing but reimbursement of expenses - Contention raised by the ld. Counsel for the assessee relying on the decision of Hon'ble Madras High Court in the case of Taj Fire Works Industries [2006 (6) TMI 60 - MADRAS HIGH COURT] which involved different facts. Accordingly, it is held that all the four items in question of other income are such that they cannot be said to be profit derived from the eligible undertaking of the assessee eligible for deduction u/s 80IB Decided against the Assessee.
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2013 (8) TMI 368 - ITAT MUMBAI
Disallowance of loss incurred on sale of investment - Bogus purchase - CIT upheld disllowance - Held that:- The assessee has filed each and every detail before the AO. The purchase price of shares of was paid through proper banking channel, which were purchased in the year 1996-97. Investments were shown in the balance sheet of the assessee. The investment made in the financial year 1996-97 was not doubted as the assessment for assessment year 1997-98 was completed under Section 143(3) - CIT(A) merely observing that the assessee could not file any further evidence in respect of claim of loss, has rejected the claim of the assessee. Once all relevant details are on record, then learned CIT(A) should have considered all these details on merit and the decision should have taken as to whether the loss is allowable or not - Decided in favour of assessee.
Capital receipt of Revenue receipt - swap income from forward contract in foreign currency - CIT held income as capital receipt - Held that:- the income earned in the account of swapping of forward rate contract of foreign currency booked for the purpose of capital assets for its Jamnagar refinery project, was earned on account of contract for buying the capital asset. The explanation to Section 43A is also applicable on the facts of the present case - if the foreign exchange loss is on account of purchase of capital asset, then it goes to capital account and if the loss is on account of loan for working capital, then it goes to revenue account - Following decision of Commissioner Of Income-Tax Versus Bharat Heavy Electricals Ltd. [1999 (8) TMI 62 - DELHI High Court] and Sutlej Cotton Mills Limited Versus Commissioner of Income-Tax, West Bengal [1978 (9) TMI 1 - SUPREME Court] - Decided in favour of assessee.
Disallowance u/s 14A - Held that:- The demat account relates to purchase and sale of shares. The assessee himself has accepted that there is dividend income which is exempt to tax. The demat account was opened for the purpose of holding the shares in a particular account as per guidelines of the appropriate authority. On opening the demat account etc., the amounts were incurred on that directly linked with purchase and sale of shares on which dividend income is earned, which is exempt to tax. Therefore, it cannot be said that these expenses are for any other purpose and not related to exempted income. If the shares are purchased and sold and they are kept in a particular account and any expenditure incurred on account of that account, it has to be taken that they are directly linked with the purchase and sale of shares - expenses incurred on demat account is directly linked with the earning of exempted income. Accordingly, the provisions of Section 14A are applicable - Rule 8D is prospective in nature - Decided against assessee.
Computation of gross total income manner of claiming special deduction under chapter VI-A deduction of depreciation allowance Held that:- quantum of deduction under Section 80IA is not dependent upon the assessee claiming or not claiming depreciation, because, under Section 80IA the quantum of deduction has to be determined by computing total income from business after deducting all deductions allowable under Section 30 to 43D of the Act - for the purposes of deduction under Chapter VIA, the gross total income has to be computed inter alia by deducting the deductions allowable under section 30 to 43D of the Act, including depreciation allowable under section 32 of the Act, even though the assessee has computed the total income under Chapter IV by disclaiming the current depreciation - Following decision of Plastiblends India Limited Versus Additional Commissioner of Income-Tax [2009 (10) TMI 39 - BOMBAY HIGH COURT] - Decided against assessee.
Penalty under Section 271(1)(c) - Held that:- penalty on the amount of disallowance under Section 14A is not leviable because the assessee has furnished each and every detail. This is assessee's claim that demat charges are for the purpose of holding the shares, which is a source of income but not directly link with the exempted income - at least penalty on this amount is not leviable as there was no case of furnishing inaccurate particulars. This is a claim of assessee whether the same is allowable or not allowable, is the subject matter of dispute - Decided in favour of assessee.
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2013 (8) TMI 367 - ITAT DELHI
Adjustment in arm's length price - Adjustment in regard to advertisement, marketing and sales proportion expenditure - A.O. made addition in reference to difference of arm's length price - Held that:- a fresh exercise has to be undertaken, both by the assessee, as well as by the TPO, to arrive at the arm's length price, based on the principle and propositions of law - assessee should be granted liberty to furnish fresh transfer pricing study report, with comparables obtain by undertaking of fresh search. The TPO should also be at liberty to conduct a fresh search and arrive at appropriate comparable/conclusions - Following decision of Asstt. Commissioner of Income Versus M/s LG Electronics India Pvt. Ltd. [2013 (5) TMI 633 - ITAT DELHI] - Decided in favour of assessee.
Depreciation on Plant and Machinery - Held that:- assessee has not claimed depreciation on goods which have been sold / scraped in the earlier years. Moreover, it is a fact that the assessee was engaged in the business of selling air- conditioners. This by itself is sufficient to prove that during the year under consideration relevant block assets is used by the assessee in its business - individual usage of the asset is only relevant in the first year when the asset was put to use and not subsequent years after it has formed part of the block of assets - Decided in favour of assessee.
Depreciation on computer peripherals - A.O. disallowed depreciation - Held that:- computer accessories and peripherals such as, printers, scanners and server etc. form an integral part of the computer system. In fact, the computer accessories and peripherals cannot be used without the computer. Consequently, as they are the part of the computer system, they are entitled to depreciation at the higher rate of 60% - Following decision of COMMISSIONER OF INCOME TAX Versus BSES YAMUNA POWERS LLD. / BSES RAJDHANI POWERS LTD. [2010 (8) TMI 58 - DELHI HIGH COURT] - Decided in favour of assessee.
Devaluation of stock - A.O. disallowed 20% of the amount of devaluation of stock - Held that:- The assessee has been following his method of valuation of stock during all the previous year as well as the subsequent years - When the revenue has been accepting this method of valuation for many years, there is no reason as to how the same can be disturbed during the year, the disallowance in question is made on ad hoc basis - opening stock of succeeding year is increased by the said adjustment to the value of stock and consequently the profits of the subsequent year get effected to that extent. If the closing stock is valued by applying a particular yardstick or method, then, the opening stock of the year would also be required to be adjusted - Following decision of CIT Vs. Triveni Engineering and Industries Ltd. [2010 (11) TMI 90 - DELHI HIGH COURT] - Decided in favour of assessee.
Disallowance of installation expenses - A.O. disallowed expenditure on the ground that the sale has not crystallized - Held that:- income attributable to the installation expenses has been recognized during the year and on the principle of matching income with expenditure, this claim has to be allowed - Decided in favour of assessee.
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