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Income Tax - Case Laws
Showing 381 to 400 of 515 Records
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2013 (8) TMI 366 - ITAT DELHI
Disallowance of interest paid on loan - CIT deleted disallowance - Held that:- once it is established that there was nexus between the expenditure and the purpose of the business (which need not necessarily be the business of the assessee itself), the Revenue cannot justifiably claim to put itself in the arm-chair of the businessman or in the position of the board of directors and assume the role to decide how much is reasonable expenditure having regard to the circumstances of the case. No businessman can be compelled to maximize his profit. The income-tax authorities must put themselves in the shoes of the assessee and see how a prudent businessman would act. The authorities must not look at the matter from their own view point but that of a prudent businessman - Following decision of CIT v. Dalmia Cement (B.) Ltd. [2001 (9) TMI 48 - DELHI High Court] and Munjal Sales Corporation Vs. CIT [2008 (2) TMI 19 - Supreme Court] - Decided in favour of assessee.
Disallowance u/s. 14A - CIT upheld partial diallowance - Held that:- The assessee has sufficient interest free funds and hence no inference could be drawn that these investments were made out of borrowed funds - Commissioner of Income Tax (A) has decided the issue by restricting the addition u/s. 14A to ₹ 20,000/- which is the total value of investment, the income from which is exempt from tax. No contrary decision to the above has been shown - Decided against Assessee.
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2013 (8) TMI 365 - ITAT KOLKATA
Notice u/s 148 - Deduction allowed u/s 80IA and 80HHC - CIT quashed notice holding that no new material found - Held that:- All details were available before the Assessing Officer at the time of original assessment proceedings and assessee has filed these details along with return of income and AO has allowed the claim of the assessee after examining all these documents and passed a speaking order - AO has not pointed out any specific defect or omission on the part of the assessee - AO in original assessment allowed the claim of the assessee for deduction u/s.80HHD and 80-IA of the Act after examining the relevant details and even the computation made by AO in respect of the claim of these deductions are as per the provisions of Chapter-VI referred to now by the AO were very much available at the time of original assessment also - AO could not bring any new material which was not disclosed earlier nor there was an error in the computation of income filed along with the return of income - Following decision of CIT Vs. Kelvinator of India Ltd. [2010 (1) TMI 11 - SUPREME COURT OF INDIA] - Decided against Revenue.
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2013 (8) TMI 364 - ITAT CHANDIGARH
Long Term Capital Gain u/s 45 - transfer u/s 2(47) - vacant land - Possession given by the society to the developer under joint development agreement - Advance Received or Actual Sales Held that:- As per Section 45 of IT Act, income-tax was to be charged under the head "capital gain" on transfer of a capital asset and shall be deemed to be the income of the previous year in which transfer took place - The year of transfer was the crucial year and not the time of the receipt - 'Accrue' means 'to arise or spring as a natural growth or result', to come by way of increase' - 'Arising' means 'coming into existence or notice or presenting itself' both the words were used in contradistinction to the word 'receive' and indicate a right to receive - They represent a stage anterior to the point of time when the income becomes receivable and connote a character of the income, which was more or less inchoate and which was something less than a receipt - An unenforceable claim to receive an undetermined or undefined sum does not give rise to accrual - it was not only the money which has been received by the assessee which was required to be taxed but the consideration which had accrued to the assessee was also required to be taxed.
Deemed transfer of property u/s 2(47) section 2(47)(v) r.w. section 45 indicates that capital gains was taxable in the year in which such transactions were entered into even if the transfer of immovable property was not effective or complete under the general law Held that:- Charging an item of income under the head 'Capital gains" require that there should be some profit, Such profit must be arising on account of transfer and there should be capital asset which has been transferred - There was no dispute that a capital asset was involved and there was some profit also Capital gain would be computed by considering the full value of consideration whether received or accruing as a result of the transfer - relying upon Mysore Minerals Ltd. v. CIT [1999 (9) TMI 1 - SUPREME Court] it was not only the consideration received which was relevant but the consideration which had accrued was also relevant - irrevocable general power of attorney which leads to over all control of the property in the hands of the Developer, even if that means no exclusive possession by the Developer would constitute transfer - It can be said that it had to be construed as 'possession' u/s 2(47).
Receipt of consideration and registration of property relevant or not - Entitlement for Exemption u/s 54EC - Agreement subject to approvals and permissions Condition for transfer of land conditions and encumbrances Past consideration recievable towards the proposed transfer - Computation of Capital Gain Part performance of contract u/s 53A of TPA registration of the terms of agreement - Held that:- It was not necessary to get the instrument of transfer registered for the purpose of Income-tax Act when a person had got a valid legally conveyed after complying with the requirements of the law - Technically it can be said that the developer had purchased the membership of the Members in the society which would lead to enjoyment of the property and in that technical sense, clause (vi) of Section 2(47) is applicable - reference has been made only to Section 54 and Section 54EC - Section 54 deals with deduction in case the assessee being an individual or HUF, transfers the residential house - the assessee had transferred the plot thus it cannot be said that deduction u/s 54F and 54 was same - no ground had been raised for deduction u/s 54F.
When the plots remain unallotted and obviously legal ownership and beneficial ownership belonged to the society. Had the plots been allotted to some members before entering into the JDA then it could have been said that the plots have already been allotted and therefore, the society was not responsible for the same. Once the plots were owned by the assessee obviously the transfer of the same would lead to arising of profit which has to be taxed u/s 45. We are of the opinion that lower authorities have correctly rejected the arguments that income from such plots, if any, should be charged under the head "business profits" because it is a settled law that if an income falls under specific head of income contained in Section 14 under Chapter IV then the same has to be taxed under that head.
Revised Return u/s 139(5) Whether CIT(A) erred on facts and in law in sustaining the action of the AO in rejecting the revised return filed during the course of assessment proceedings without assigning reasons Held that:- Revised return can be filed at any time before the expiry of one year from the end of relevant A.Y. or before completion of assessment whichever is earlier - limitation of one year would expire on 31.3.2009 whereas revised return had been filed on 7.10.2009 which was clearly beyond the limitation prescribed u/s 139(5) In any case no disadvantage had occurred to the assessee because in the revised return the assessee had included a sum on account of capital gain and the whole dispute in the assessment relates to capital gain arising out of sale.
Introduction of Additional Grounds - Whether the CIT(A) failed to appreciate that the income could have been assessed in the hands of the Society and not the appellant Held that:- Two additional grounds in respect of charging of capital gain, have been raised which had been argued the same are admitted both the parties adopted identical arguments - the issue raised and additional grounds i.e. issue of chargeability of capital gain decided against the assesse.
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2013 (8) TMI 363 - ITAT MUMBAI
TDS u/s 195 - Nature of payment made to parent compnay - PE - Purchases of Online advertisement space - Article 7 of DTAA with USA - Disallowance u/s 40(a)(i)(A) - Held that:- neither of the party is acting or doing the business activity on behalf of other but the transactions are independent business transaction wherein the respective margins are recover from each other. Moreover, the transaction of payment towards purchase of space on foreign website by the assessee for its client in any case does not constitute a transaction carried out by the assessee on behalf of its parent company. The assessee is doing the business transaction on behalf of its client and offering the income earned from the said business transaction which has been accepted by the AO. Therefore nothing has been brought on record by the Assessing Officer to show that the transaction of purchase of space on foreign website by the assessee from its parent company constitutes the assessee as PE - merely because one of the directors is common in both the companies does not constitute the assessee as PE - risk and reward of the business carried out by the assessee is born by the assessee which itself shows that it is the assessee who is answerable to the customers and therefore the activity of purchase of space on website from the parent company is on principle to principle basis - Decided against Revenue.
Nature of payment was made towards sharing of cost for a third party server platform and use of licence - Held that:- When the payment is not towards the cost of any services or supply by the parent company to the assessee but the payment is towards the use of server platform and licence belongs to the third party. Therefore, such payment relates to the use of server and licence of third party routed through its parent company. When the Assessing Officer has disallowed this payment for none withholding of tax by invoking the provision of Section 40(a)(i)(A) then we do not agree with the contention of the assessee that this is a new issue raised by the Ld. DR.
This issue requires a proper verification of the real nature of payment and withholding of tax u/s 195. - Issue remmitted back - Decided against assessee
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2013 (8) TMI 362 - ITAT AGRA
Unexplained credit u/s 68 - Share application Money - CIT deleted addition partially - Held that:- Company concerned cannot be expected to know every detail pertaining to the identity as well as financial worth of each of its subscribers - Assessee company made available relevant material before the A.O. and the A.O. has failed to unearth any wrong or illegal dealings - Once it is established that the amount has been invested by a particular person, be it a partner or an individual, then the responsibility of the assessee is over.
Assessee has failed miserably to prove with any supporting documentary evidence in its support for rest deletion - The assessee has furnished only share application money through cheques - Assessee has failed to discharge the burden in respect of Section 68 - Partial addition made by CIT confirmed - Following decisions of CIT Vs. Divine Leading & Finance Ltd. [2006 (11) TMI 121 - DELHI HIGH COURT], Hindustan Tea Trading Co. Vs. CIT [2003 (3) TMI 53 - CALCUTTA High Court], CIT Vs. Metachem Industries [1999 (9) TMI 21 - MADHYA PRADESH High Court] and CIT Vs. Lovely Exports P. Ltd. [2008 (1) TMI 575 - SUPREME COURT OF INDIA] - Decided partly in favour of assessee.
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2013 (8) TMI 361 - ITAT AHMEDABAD
Capital expenditure or Revenue expenditure - Demutualization expenses - CIT treated expenses as capital in nature - Held that:- If expenditure may help in the business of the assessee company and may also help in profit making but since the expenditure was directly related to the expansion of the capital base of the company, the same is capital expenditure - The dilution of 51% of shares of the assessee company to outsiders was achieved by resorting to further issues of share capital to outsiders and hence, this is correct that the expenditure is directly related to expansion of the capital base of the company. It is true that such expansion of the capital base of the company was required to fulfill the requirements of SEBI but still the fact remains that the expenditure has resulted into expansion of the capital base of the assessee company - Following decisions of Brooke Bond India Limited Versus Commissioner Of Income-Tax, West Bengal III [1981 (8) TMI 27 - CALCUTTA High Court] and Punjab State Industrial Development Corporation Limited Versus Commissioner of Income-Tax [1996 (12) TMI 6 - SUPREME Court] - Decided against assessee.
Disallowance u/s 14A - CIT confirmed disallowance - Held that:- AO has stated in the assessment order that he is not satisfied with the correctness of the claim of the assessee in respect of expenditure, in respect of exempt income - Because of movement or otherwise in the investments of the assessee company as per which investment in three mutual funds were sold, one such investment was retained and two such investment were increased, it is clear that sufficient time was devoted by the top management of the assessee company to monitor the investment and therefore, it is not acceptable that no expenditure was incurred by the assessee company for earning dividend income. Once it is found that the claim of the assessee is not correct regarding not incurring of expenditure for earning dividend income or any other exempt income, Rule 8D has to be applied and the AO had done the same - Following decision of DCIT Vs. Ashish Jhunjhunwala [2013 (6) TMI 545 - ITAT KOLKATA] - Decided against assessee.
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2013 (8) TMI 360 - ITAT AHMEDABAD
Notice u/s 148 - income escaping assessment - AO failed to take note of exempted dividend income for disallowance of expenses u/s 14A - Held that:- From these reasons recorded by the AO, it shows that the reasons given by the AO were vague, and even there is no mention that any expenses was incurred by the assessee for earning the dividend income. This is also a fact that reasons are recorded by the AO on the basis of profit and loss account, which was filed before the AO at the time of original assessment also, and no new material is available before the AO as per the reasons recorded by the AO - Following decision of Commissioner of Income-tax v. Kelvinator of India Ltd. [2010 (1) TMI 11 - SUPREME COURT OF INDIA] - Decided in favour of assessee.
Deduction u/s 36(1)(xii) - deduction given on account of Grant Given to societies - Held that:- the grant is allowable as an expenditure under section 36(1)(xii) of the Act, and the matter was sent back to the AO for verification (i) whether the alleged non-refundable grants are given from grants received or not, and (ii) non-refundable grants sanctioned, are claimed as deduction only when fund are already utilised/ fund utilisation report are received.
Rate of Depreciation on rail mil tankers - Held that:- depreciation rate of 30% is allowable in the case of motor taxi and motor bus, but admittedly in the present case, the rail milk tanker cannot move of its own, and hence, the same cannot be classified as motor bus or motor taxi, and therefore, the same is not eligible for depreciation at the rate of 30%, and the AO has rightly allowed the depreciation at the rate of 15%, by treating the same as plant & machinery - Decided against assessee.
Claim of deduction of an amount Disallowed earlier on account of non TDS - u/s 40(a)(ia) - Held that:- As per the proviso to section 40(a)(ia) of the Act, if the tax has been deducted in a subsequent year or if already deducted in the earlier year, has been paid after the due date specified in section 139(1), such sum shall be allowed as deduction in computing the income of the previous year in which such tax has been paid - The requirement of proviso is satisfied by the assessee, but the learned CIT(A) has put one more condition that, unit for which this expenditure was incurred, is not being owned by the assessee in the present year, in which the payment of TDS was made - Decided in favour of assessee.
Determination of opening WDV - Held that:- It is settled position of law that the closing WDV of the preceding year has to be adopted as opening WDV of the present year to work out the depreciation allowable to the assessee - Decided in favour of assessee.
Disallowance u/s 41(1) - provision written back - deemed income - Held that:- when provision was made, the assessee was not liable to tax, hence, if the provision is reversed in the year of making the provision, it is not resulting into any tax liability, because the assessee was not taxable in that year, and therefore, reversal of such a liability cannot give rise to tax in the year of reversal, when it is not giving any benefit to the assessee, in the year of making the provision - even if it is held that income has to be assessed in the year of making the provision, then this deduction on account of provision under section 36(1)(vii) is not allowable deduction in that year, because under this section, actual write off is allowable and not the provision. This is a pre-requirement of section 41(1) that where the allowance or deduction has been made in the assessment for any year, in respect of loss, expenditure or trade liability incurred by the assessee, and the same is subsequently ceased or has been remitted, then there is income under section 41(1) - Decided in favour of assessee.
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2013 (8) TMI 341 - ITAT DELHI
Disallowance u/s 14A - Deduction of interest u/s 36(1)(iii) - Interest expenditure paid to bankers - Held that:- First Appellate Authority has deleted the disallowance on the ground that assessee has more surplus interest free funds than the advances and investment. In other words on the record Assessing Officer failed to establish that interest bearing funds were used either for making advances to the sister concern or for investment in the mutual funds. If that be so, then how disallowance can be made. The stand of the Assessing Officer is that assessee should have used its own fund instead of interest bearing borrowings for running the business. In our opinion, Assessing Officer cannot force the assessee to earn interest income or save interest expenses for running the business. The Assessing Officer was unable to demonstrate that interest bearing loans were used by the assessee other than business purpose - Following decision of S.A. Builders Ltd. Vs. CIT [2006 (12) TMI 82 - SUPREME COURT] - Decided against Revenue.
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2013 (8) TMI 332 - ITAT AHMEDABAD
Arm Length Price adjustment Revenue has made upward adjustment on the basis of Arms Length Price Held that:- Adjustment must be deleted for the short reason that it was part of the arrangement that specified credit period was allowed and thus the cost of funds blocked in the credit period was inbuilt in the sale price. There is no dispute that similar products are not sold to any other concern, at same price or even any other price, and interest is levied on the similar credit period allowed to those independent parties but not to Micro USA - The very foundation of impugned addition in arm's length price on account of excess credit period is thus devoid of any legally sustainable merits or factual basis Directed the Assessing Officer to delete ALP adjustment Decided in favor of Assessee.
Cost of fund in an International transaction between associated enterprise -Relationship between the assessee and its step down subsidiary Micro USA was simply that of a lender and a borrower - Not only the Micro USA was a significant part of the marketing apparatus of the assessee, and the assessee and the Micro USA had significant commercial relationship on that count, the assessee was a de facto and de jure promoter of the Micro USA Held that:- Relying upon the decision in the case of VVF Ltd. Versus DCIT [ 2010 (1) TMI 781 - ITAT, Mumbai ] costs of funds have no relevance and it is only the rate applicable for comparable uncontrolled transaction that is to be taken into account Decided in favor of Assessee.
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2013 (8) TMI 331 - ITAT AGRA
Deduction u/s 10(23C)(iiiad) - Assessee claimed deduction u/s 11 and 12 but CIT allowed deduction u/s 10(23C)(iiiad) also - Held that:- The assessee submitted the complete details before the authorities below and made a claim that it was running school - The assessee also claimed that the assessee exists solely for educational purpose.Claim of the assessee was not disputed by the AO. It is also not in dispute that total receipts of the assessee in the assessment year under appeal were less than ₹ 1 crore. Therefore, the claim of the assessee for exemption u/s. 10(23C)(iiiad) on additional ground was correctly raised. The issue was legal in nature, therefore, the ld. CIT(A) correctly admitted the additional ground for the purpose of hearing - assessee has been able to prove that apart from claiming deduction u/s. 11 & 12 of the IT Act, the assessee would be entitled for exemption u/s. 10(23C) of the IT Act. The ld. CIT(A) has given specific finding that the conditions of above provisions are fulfilled in the case of assessee - Following decision of Bar Council of Uttar Pradesh vs. CIT [1982 (9) TMI 37 - ALLAHABAD High Court] and CIT vs. Mayur Foundation [2004 (12) TMI 48 - GUJARAT High Court] - Decided against Revenue.
Condonation of delay u/s. 11(2) - Failure to spend 85% of its total income - Held that:- The assessee has produced sufficient evidences and material on record to show that the assessee made full compliance of provisions of section 11(2) & (5) of the IT Act because resolution was passed to the effect of accumulation of surplus fund in the assessment year under appeal by way of converting the amount into FDR with Nationalized Bank, which was to be used for the purpose of construction of school building. Copies of the resolution, balance sheet and auditreport are filed to indicate the intention of the assessee to accumulate the funds for the purpose of making construction in the subsequent assessment year. The assessee also later on made a request for condonation of delay in filing Form No. 10 belatedly before the AO as well as CIT. Therefore, in the facts and circumstances of the case, particularly when surplus funds were accumulated and deposited with the Nationalized Bank, the delay in filing Form No. 10 should have been condoned - Decided against Revenue.
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2013 (8) TMI 330 - ITAT DELHI
Deduction u/s 80IAB - transfer of bare shell building as an unauthorized operation under the SEZ Act. - co-developer agreement - A.O. and ACIT allowed deduction to assessee - CIT exercising power u/s 263 reversed order of ACIT holding that it is pre-judicial to Revenue's interest and proper inquiry was not done by A.O. - Held that:- assessing officer asked for justification of 80-IAB claim, which is duly responded by assessee. The assessment record means the proceedings sheets, material available on record and the replies of the assessee. Considering these aspects it emerges that all the required documents were filed and considered by assessing officer and on being satisfied, deduction u/s 80-IAB was allowed which is mentioned in the assessment order -Order is appear to be made while approving the co- developer agreement. This is possibly applicable to co-developer and not the assessee as the condition was put during the course of approval of the agreement between assessee and the co-developer. Be that as it may, in any case, the assessing officer having considered all these pleading and submissions, it cannot be held that he did not examine the allowability of the claim by proper inquiry - It clearly emerges from assessment record that relevant queries were raised by assessing officer, detailed submissions, developers and co-developers agreements were filed, justification of 80-IAB claim as provided by the assessee and the nature of debts owed by DLF Assets consequent to such transfer was also asked for by assessing officer - Following decision of CIT v. Anil kumar Sharma [2010 (2) TMI 75 - DELHI HIGH COURT] - Decided in favour of assessee.
No fault attributable to assessee for causing hiatus to the proceedings was found. Assessee's detailed reply covering all the aspects was filed as back as 25-7-2011 i.e. 8 months prior to the proceedings. The CIT himself called the assessing officer in hearing and asked him to submit a report and ensure that the report is filed. Non-seeking of assessing officer's remand report also is not attributable to assessee.
CIT failed to discharge his statutory duty and instead of taking a clear call and demonstrating errors made by assessing officer and prejudice caused to the revenue, the buck has been passed on to assessing officer by setting aside assessment order, which is against the letter and spirit of provisions of sec.263. Where the authority fails to carry out its statutory obligation, the order cannot be held as tenable and is liable to be quashed.
SEZ Act authorizes activities include construction of bare shell/ cold shell/ warm shall buildings and transfer thereof. BOA has approved it and clarified the same. There is enough material on the record to hold that the transfer of bare shell buildings to co- developers constitute authorized activity.
Merely because CIT in his perception held another possible view about claim u/s 80-IAB, the assessment order does neither become erroneous nor prejudicial to the interests of revenue - Following decision of Malabar Industrial Company Ltd vs. CIT [2000 (2) TMI 10 - SUPREME Court] and CIT vs. Max India Ltd. [2007 (11) TMI 12 - Supreme Court of India] - Decided in favour of assessee.
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2013 (8) TMI 329 - ITAT DELHI
Difference between amount shown in agreement to sale and sale deed - Block assessment - 158BC - Addition u/s 69 - Addition made on account of purchase of property - CIT upheld addition - Held that:- When the document shows a fixed price, there will be a presumption that it is the correct price agreed upon by the parties. It is true that on the basis of the agreement the sale deed was executed. But it is not necessary that the price stated in the agreement will be the price shown in the sale deed. Sometimes, it may be higher and sometimes it may be lower. Sometimes intentionally a lesser value may be shown in the sale deed. Even if it is assumed to be so, unless it is proved that the agreement was acted upon and unless the amount stated in the agreement was paid for the sale one cannot come to the conclusion that the price mentioned in the sale deed is not correct -There is no rule that the amount shown in the receipt was the actual amount paid - Following decision of CIT vs. Smt. K.C. Agnes [1996 (4) TMI 76 - KERALA High Court] - Decided in favour of assessee.
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2013 (8) TMI 328 - ITAT DELHI
Penalty u/s 271(1)(c) - Assessee claimed deduction u/s 80IC - CIT deleted penalty u/s 271(1)(c) but disloowed deduction u/s 80IC - Held that:- deduction u/s 80IC of the Act was disallowed by the CIT (A), not on the ground of old machinery having been used in the business, but on the ground of the assessee having failed to comply with the requirement of substantial expansion. This ground, it is pertinent to note, had never been invoked by the Assessing Officer for making the disallowance for the year. This disallowance was not challenged by the assessee before the Tribunal. However, this fact of the addition not having been challenged before the Tribunal, by itself does not lead to any inevitable conclusion of leviability of concealment penalty.
Penalty proceedings and assessment proceedings are separate. Though the findings in assessment proceedings may be relevant for the purposes of levy of concealment penalty, they are not material for such levy, on a stand alone basis. The requirement u/s 271 (1)(c) of the Act is either concealment of particulars of income or furnishing of inaccurate particulars thereof, neither of which is the case herein. Even under Explanation-1 to Section 271 (1)(c), a presumption is raised, which is a rebuttable presumption. In the present case, even this presumption is not, at the outset, even available against the assessee, inasmuch as the explanation offered by the assessee has neither been found to be false, nor has the assessee not been able to substantiate the same, nor has such explanation been shown to be not bona fide - all facts relating to the explanation and material to the computation of the assessee's total income stood duly disclosed by the assessee.
where in the return of income filed, the assessee had duly disclosed all the details regarding the claim of deduction u/s 80IC of the Act, which claim was supported by the Tax Audit Report and the Tax Audit Report contained all the facts relating to the substantial expansion as required by Section 80IC, the Assessing Officer nowhere alleged the assessee to have withheld any information or to have furnished any false information, the disallowance had been made merely on account of a bona fide difference of opinion between the assessee and the department regarding the manner of determining substantial expansion for the purpose of the allowability of deduction u/s 80IC of the Act, which determination, undoubtedly, is a highly debatable/vexed legal issue, beside the fact that the disallowance had been made by the Assessing Officer on one issue, whereas that made by the CIT (A) was entirely on a different issue, no penalty u/s 271(1)(c) of the Act is leviable - Following decisions of 'CIT vs. Nalwa Sons Investment Ltd. [2010 (8) TMI 40 - DELHI HIGH COURT], CIT vs. Dharam Pal Prem Chand Ltd. [2010 (9) TMI 155 - DELHI HIGH COURT] and CIT vs. Harshwardhan Chemicals and Minerals Ltd. [2002 (5) TMI 15 - RAJASTHAN High Court] - Decided against Revenue.
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2013 (8) TMI 327 - ITAT CHENNAI
Notice u/s 148 - Reasons given for reassessment - CIT held reasons not sufficient and quashed reassessment proceedings - Held that:- Assessee had given a detailed reply along with tariff order of CERC justifying the reversal. It was after considering all these aspects, that the original assessment order was passed by the Assessing Officer - When specific queries were raised and detailed answers were given, it would be naοve to presume that Assessing Officer had not applied his mind - There was no new material with Assessing Officer for taking a view that claim of the assessee was incorrectly allowed. There was no new tangible material, for resorting to reopening - Following decision of DEPUTY COMMISSIONER OF INCOME TAX Versus M/s NEYVELI LIGNITE CORPORATION LTD [2012 (8) TMI 190 - ITAT, CHENNAI] - Decided against Revenue.
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2013 (8) TMI 326 - ITAT DELHI
Expenditure u/s 37(1) - lottery business - A.O. made addition on account of bogus commission - whether payment of commission is against the public policy - CIT deleted addition - Held that:- any expenditure incurred for any purpose which is an offence or which is prohibited by law shall not be allowed to be deducted in computing the income - Nothing has been brought on record that the activities of the agents of making representations and mobilizing public opinion for not exercising option under s. 5 of the Central Act was an offence or was prohibited by law - The State Governments were carrying on their respective lottery businesses and the purpose of the Central Act was to limit such activities within the territories of the States at the option of the States. Thus, there was nothing illegal about carrying on the lottery business or mobilizing opinion for continuation of sale of lottery tickets of other States within the State of Madhya Pradesh. Nothing has been brought on record to show that it was even against the public policy - Following decision of CIT Vs. Khemchand Motilal Jain, P. Ltd. [2011 (8) TMI 70 - MADHYA PRADESH HIGH COURT] - Decided against Revenue.
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2013 (8) TMI 324 - ITAT DELHI
Addition u/s 68 - Corpus donation - Donor was a non-resident - Proof and identity of donor - Held that:- The assessee was a charitable trust and was engaged in charitable activities as held by CIT (A). This fact has been admitted by the Assessing Officer himself in the Assessment Year 2005-06. CIT (A) granted the relief to the assessee for the year under consideration for claim of exemption u/s 11 of the Act. During the year, the voluntary contribution of corpus donation was received which was clear from the computation of income submitted to the income-tax department - During the relevant period, the assessee enjoying the status of a Trust registered u/s 12A read with section 12AA of the Income-tax Act, 1961. During this period, the assessee was also enjoying the benefit of exemption under section 80G(5)(vi) of the Act. The assessee produced the all details before the Assessing Officer with regard to the corpus donations received by it - The Assessing Officer insisted for the presence of the donor which could not be done for the reason that the donor was located outside India during the relevant period. Donor was a non-resident - To strengthen the claim of the assessee regarding the genuineness of the corpus donation further documents like bank statement of the donor and ITR of donor were filed as additional evidence which had not been admitted by the CIT (A). This stand of CIT (A) was without any cogent reason. The donations were received by cheques from none other than the settler of the trust - assessee was able to discharge the onus by proving the identity of the donor and also the genuineness of the transaction. No adverse inference can be drawn regarding the capacity of the donor - Decided in favour of assessee.
Exemption u/s 11 & 12 - Charitable activity or not - Held that:- assessee trust was doing charitable activities during the relevant period also. The Assessing Officer himself conducted thorough examination of the activities for the Assessment Year 2005-06 and 2007-08. There is no change in the facts for this year and the Assessing Officer has not brought out any specific instance which goes contrary to the finding of the Assessing Officer for Assessment Years 2005-06 and 2007-08 - The assessee is a trust enjoying the benefit of registration u/s 12A of the Income-tax Act, 1961 and was also granted exemption u/s 80G of the Act. The Trust was engaged in the various charitable activities during the year under consideration. During the year, the assessee trust entered into a property transaction - Decide in favour of assessee.
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2013 (8) TMI 323 - ITAT DELHI
Deduction u/s 14A - Share trading - CIT partly deleted addition - Held that:- assessee has not filed any paper book or the statements of accounts - Therefore, it is not possible to factually verify the veracity of the claim and ascertainment of assessee's business, the amount of stock in trade, investment etc. and the satisfaction about applicability of Rule 8D - Following decision of Esquire Private Limited, Versus DCIT, Range-2 (1), Mumbai [2012 (9) TMI 134 - ITAT MUMBAI] - Matter remitted back.
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2013 (8) TMI 322 - ITAT DELHI
Exemption u/s 54 - Transfer of property - investment of capital gains in the new house property - deduction of expenditure in connection with sale - Held that:- Payments were made by cheques to people and were duly acknowledged through receipts wherein the payees has admitted of having received these payments - as the expenditure necessarily represented cost incurred by the assessee for effecting the sale of property as without settlement of earlier deal, the assessee was not in a position to execute the sale deed. Without terminating the agreement to sell, the assessee could not have sold this property to any other person. Therefore, the assessee has incurred these expenditure to finalize the sale transaction, therefore, expenses incurred by the assessee in connection with the said property for the purpose of final sale is to be treated as expenditure in connection with such transfer - assessee had necessarily complied with the conditions for allowability of claim as assessee had entered into an agreement for purchase of house and had invested more than capital gain in the said house property - possession of property is not necessary within the prescribed time, the only condition is the investment which in the present case the assessee has made - Decided in favour of assessee.
Addition u/s 69C - Low withdrawals for household expenses - CIT upheld additions - Held that:- in the immediately preceding year, the assessee along with his family members had made total withdrawals of Rs.3,62,868/- and assessment of the assessee was completed u/s 143(3), copy of which is placed at page 60 and there was no addition made by the Assessing Officer on account of low withdrawals. Though principle of res judicata does not apply to Income tax proceedings and every year is considered a separate year yet on the basis of consistency the facts and circumstances of the present year remains same as Assessing Officer did not point out any specific circumstances by which he assumed that assessee had made low withdrawals as against the assumed expenses of Rs.15 lakhs p.a. However, on the basis of financial position of the assessee, withdrawals made by him do not match with his probable actual expenditure. The addition made by the Assessing Officer by assuming an annual expenditure of Rs.15 lakhs is also on a higher side, therefore additions are reduced - Decided partly in favour of assessee.
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2013 (8) TMI 321 - ITAT DELHI
Registration u/s 12A - benefits of the research of the assessee's society was made available to the other two societies without any amounts being charged from them - Held that:- the benefit of the judgement of the Hon'ble High Court DIRECTOR OF INCOME TAX Versus SOCIETY FOR DEVELOPMENT ALTERNATIVES [2012 (1) TMI 77 - DELHI HIGH COURT] was not available to the DIT(E) considering the consequent contradictions in the orders passed by the DIT(E) and assessment order namely non-maintenance of separate books of accounts which issue has traveled to the higher forums needs to be taken into consideration. The Hon'ble High Court has considered the issue of offering funds of Rs. 12,00,000/- as collateral security and also the fact that the grants were not voluntary contribution as per section 12 of the Act and were tied up grants monitored by the funding agencies. However, it is also seen that the detailed findings that the benefits of the research of the assessee's society was made available to the other two societies without any amounts being charged from them and those societies were as such allowed to commercially exploit, the same have not been discussed or considered in the order of the Tribunal nor the judgement of the Hon'ble High Court since facts need to be re-considered and reconciled with the finding in the light of the judgement of the Hon'ble High Court in assessee's own case. - Matter remanded back.
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2013 (8) TMI 320 - ITAT DELHI
Interest expenditure paid to bankers - user of interest bearing funds for non-business activities - Held that:- First Appellate Authority has deleted the disallowance on the ground that assessee has more surplus interest free funds than the advances and investment. In other words on the record Assessing Officer failed to establish that interest bearing funds were used either for making advances to the sister concern or for investment in the mutual funds. If that be so, then how disallowance can be made. The stand of the Assessing Officer is that assessee should have used its own fund instead of interest bearing borrowings for running the business. In our opinion, Assessing Officer cannot force the assessee to earn interest income or save interest expenses for running the business. The Assessing Officer was unable to demonstrate that interest bearing loans were used by the assessee other than business purpose - Decided against Revenue.
Disallowance u/s 14A - CIT deleted addition - Held that:- section 14A, even prior to the introduction of sub-sections (2) & (3) would require the assessing officer to first reject the claim of the assessee with regard to the extent of such expenditure and such rejection must be for disclosed cogent reasons. It is then that the question of determination of such expenditure by the assessing officer would arise. The requirement of adopting a specific method of determining such expenditure has been introduced by virtue of sub-section (2) of section 14A. Prior to that, the assessing was free to adopt any reasonable and acceptable method - Following decision of C. I. T., Mumbai Versus M/s. Walfort Share & Stock Brokers P. Ltd. [2010 (7) TMI 15 - SUPREME COURT] and Maxopp Investment Ltd. vs. CIT [2011 (11) TMI 267 - Delhi High Court] - Decided against Revenue.
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