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Income Tax - Case Laws

Showing 201 to 220 of 654 Records

• 2014 (2) TMI 1036
  

  Recall of order – Opportunity of being heard – Held that:- Assessee contended that the his version could not be put forth with - Order 41 Rule 21 of the Code of Civil Procedure provides that where an appeal is heard ex parte and judgment is pronounced against the respondent, he may apply to the Appellate Court to re-hear the appeal - if he satisfies the court that the notice was not duly served or that he was prevented by sufficient cause from appearing when the appeal was called on for hearing, the court shall re-hear the appeal on such terms as to costs or otherwise as it thinks fit to impose upon him - the Court has power to exercise the inherent power - The cause shown by the applicant is satisfactory and as such, to secure the ends of justice, it would be apt to recall the judgment and order dated dated 27.8.2013 – thus, all the applications are allowed with a cost - The judgment and order dated 27.8.2013 passed in the aforesaid appeals is recalled subject to payment of the cost – Decided in favour of Assessee.

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• 2014 (2) TMI 1035
  

  Validity of direction for special audit of accounts u/s 142(2A) of the Act – Transfer pricing adjustments - Held that:- There is no merit in the petition of the assessee - in the petitioner’s letter dated 31.10.2011, addressed to the respondent in response to various notices issued by the latter and with reference to the subsequent discussions held in the course of the hearing which took place on 19.10.2011, the petitioner has submitted an elaborate reply in paragraph 9 of the letter under the caption “show cause as to why special audit under Section 142(2A) of the Act should not be conducted in the instant case” - The paragraph clearly refers to the request made by the respondent on 19.10.2011 to the petitioner to show cause as to why special audit should not be conducted because of the nature and complexity in the financial statements.

  The inclusion of the last mile charges in the profit and loss account as a debit, when the capitalised infrastructure cost is eligible also to depreciation, may amount to double deduction - The approval was accorded by the CIT on 23.12.2011 - It cannot be said that the CIT did not apply his mind to the proposal for special audit - The assessing officer referred the matter to the Transfer Pricing Officer under Section 92CA of the Act on which the latter did make an addition on account of transactions with the petitioner’s associated enterprises and it was at that stage the assessing officer made a reference to special audit; the suggestion was that the exercise was uncalled for since the direction of the TPO was binding on the AO in any case - the AO is empowered to refer the accounts to the special auditor “at any stage of the proceedings” S.142(2A) - there is no bar, and there is nothing in the sub-section which makes its provisions subject to the powers of the TPO - The reference to special audit cannot be held to be contrary to law on that score – Decided against Assessee.

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• 2014 (2) TMI 1034
  

  Nature of Income – sale of land - Business income OR Capital gain – Held that:- CIT(A) held that the activity of business has not been established conclusively - The conduct of the appellant in the previous years, their actions as apparent from the balance sheet of the previous years and their source of income in the previous years, all point to the fact that there was no business activity and the land was sold during the year on which income had been derived could not be considered to be a business activity – thus, the sale of land be treated as capital gain and not business income – Tribunal upheld the decision of CIT(A) - Whether the income arose out of any business activity or out of capital gain is essentially a question of fact or a mixed questions of law and fact - Both the CIT (Appeals) and the learned Tribunal agreed as regards the fact that the income arose out of capital gain - revenue could not point out any infirmity in the view taken by the CIT (Appeals) and the Tribunal – there is no question of law arises in the appeal to be entertained – Decided against Revenue.

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• 2014 (2) TMI 1033
  

  Power of Commissioner u/s 263 of the Act – Held that:- The decision in MALABAR INDUSTRIAL CO. LIMITED v/s COMMISSIONER OF INCOME TAX [2000 (2) TMI 10 - SUPREME Court] followed – commissioner cannot exercise the power of revision solely on the ground that the order passed is erroneous - He gets jurisdiction only if such erroneous order is prejudicial to the interest of the Revenue - for attracting Section 263, the condition precedent has to be abide - if one of the requirements for satisfaction of taking action under Section 263 of the Act is absent, then recourse cannot be made to Section 263 of the Act - The Commissioner cannot invoke his revisional power to correct each and every type of mistakes committed by the Assessing Officer – Decided against Revenue.

  Interpretation of section 13(1)(d) of the Act - Whether the Tribunal is correct in holding that when a part of income is held to be violative of the provisions of Section 13(1)(d) only to the said extent maximum marginal rate of tax is to be levied and not for the whole income more particularly when there is violation of provisions of Section 11(5) of the Act – Held that:- It is only the income from such investment or deposit which has been made in violation of Section 11(5) of the Act that is liable to be taxed and that violation under Section 13(1)(d) does not tantamount to denial of exemption under Section 11 on the total income of the assessee – the decision in Director Of Income-Tax (Exemptions) Versus Sheth Mafatlal Gagalbhai Foundation Trust [2000 (10) TMI 26 - BOMBAY High Court] followed - in case of contravention of Section 13(1)(d), maximum marginal rate of tax under Section 164(2), proviso is applicable only to that part of income of the Trust which has forfeited exemption and not the entire income – thus, the entire income of the respondent-Trust cannot be assessed for the tax – Decided against Revenue.

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• 2014 (2) TMI 1032
  

  Retrospective effect of Section 14A and Rule 8D of the Act - Disallowance of Expenses - Whether the Tribunal was justified in holding that the provisions of sub-sections (2) and (3) inserted in Section 14A of the Income Tax Act, 1961 with effect from April 1, 2007 and rule 8D inserted in the Income Tax Rules, 1962 on March 24, 2008 were procedural and retrospective and were applicable for the assessment years 2001-02, 2004-05 and 2005-06 – Held that:- Assessee contended that Rule 8D cannot, by any stretch of imagination, be said to be retrospective in nature – Relying upon Godrej and Boyce Mfg. Co. Ltd. Vs. Deputy Commissioner of Income Tax and Anr. [2010 (8) TMI 77 - BOMBAY HIGH COURT] - The provisions of rule 8D of the Income Tax Rules which have been notified with effect from March 24, 2008, shall apply with effect from the assessment year 2008-09 – the Assessing Officer is duty bound to determine the expenditure which has been incurred in relation to income which does not form part of the total income under the Act - the department must be deemed to have accepted the position that Rule 8D is only prospective in nature - the department has to have some consistency in its views and it cannot blow hot and cold at its sweet-will – Decided in favour of Assessee.

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• 2014 (2) TMI 1031
  

  Order of CIT(A) - Proper examination not done – CIT(A) deleted various additions as opening Capital Balance, Gift from parents & sister, outstanding expenses, unsecured loans, disallowance of expenses and agricultural Income returned - Revenue objected for deleting various additions by CIT(A) without evidence or giving opportunity to the A.O - The matters raised before require re-examination by AO - As seen from the balance sheet placed on record, there are no immovable properties, even the so-called agricultural land purchased in 2005 - As stated by AO no books of accounts or vouchers are furnished - The confirmation of gift letters signed and filed also are devoid of any information about date of gift, mode of gift and amount advanced by each person - Opening capital claimed also require confirmation about sources - CIT(A) without examining this issue, deleted them without proper reasons - Whether assessee has any other Balance Sheet reflecting assets is also not on record - Rule 46A violation is also there – thus, the matter remitted back to the AO for fresh adjudication – Decided in favour of Revenue.

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• 2014 (2) TMI 1030
  

  Disallowance of foreign exchange loss – Held that:- The assessee has taken FCNR (B) loan from banks on 27.01.2000 and the same was utilized for repayment of 15% Unsecured Redeemable Non-Convertible Debentures of Rs.10 crores - The amount was an actual expenditure incurred by the assessee for the purchase of forward contracts for repayment of FCNR (B) loan – thus, it was not a notional or contingent but actual expenditure - by taking FCNR (B) loan, the assessee has not acquired any fixed asset in foreign currency either in earlier years or in the current years - The provisions of section 43A of the Act could not apply to the facts of the case as the provisions can be invoked only when assets are acquired by raising the FCNR (B) loan by taking the payment in foreign currency on acquisition of capital assets on account of these borrowings – Relying upon Radhasoami Satsang vs CIT [1991 (11) TMI 2 - SUPREME Court] the amount has been utilized for repayment of debentures - The purpose of loan was to swap the costlier loan with the cheaper loan - similar expenditure has been allowed in the preceding and succeeding years – Decided against Revenue.

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• 2014 (2) TMI 1029
  

  Penalty u/s. 271(1)(c) of the Act - Disallowance of technical know-how expenditure U/s. 35AB of the Act – Held that:- A case for levy of penalty for concealment of income has to be evaluated in terms of provisions of Explanation. 1 to Section. 271(1)(c) - Penalty proceedings are different from assessment proceedings and the findings given in the assessment though it may constitute good evidence but same is not conclusive in the penalty proceedings - merely because additions have been confirmed in appeal it cannot be the sole ground for coming to the conclusion that the assessee had concealed any income - in the absence of complete and convincing corroborative evidence, the Revenue may justify addition, but in the matter of penalty proceedings, the onus lies heavily on the Revenue to prove that the assessee had concealed its income or has filed inaccurate particulars of its income – Relying upon Reliance Petroproducts 2010 (3) TMI 80 - SUPREME COURT] – thus, no penalty is leviable u/s 271(1)(c) – Decided in favour of Assessee.

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• 2014 (2) TMI 1028
  

  Applicability of Section 50C of the Act - Whether the provisions of section 50C of the Act are applicable or not to the sale of development rights – Held that:- The decision in The decision in ITO Versus SHRI CHANDULAL P PATEL [2013 (12) TMI 946 - ITAT MUMBAI] followed - during the course of assessment proceedings for earlier year i.e. assessment year 2006-07, the AO, himself observed that the assessee was in the business of construction and development rights purchased by the assessee is part of stock in trade - the property was affected with innumerable court proceedings and the assessee could not get possession of the said property till the date the assessee transferred his rights in the property -the assessee was never in possession of the said property.

  The assessee has not claimed any benefit of indexation in the cost of acquisition - the assessee has treated the said property as stock in trade - There is no dispute to the fact that if a property is in the nature of stock in trade, the provisions of section 50C are not applicable as it applies only in respect of capital assets being land or building or both - On perusal of above section 50C, shows that the provisions are applicable only in respect of capital asset, being land or building or both and there is no reference that the said provisions is applicable to stock in trade - There is no infirmity in the order of the CIT(A) to hold that the provisions of section 50C are not applicable to the property under consideration - The department has also not brought any material on record that the sale value as per agreement for sale of development rights under the facts and circumstances of the case is not genuine – thus, the order of the CIT(A) upheld – Decided against Revenue.

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• 2014 (2) TMI 1027
  

  Revenue or capital expenditure - Operate, Maintain, Develop, Design, Construct, Develop, Modernize and Maintain the Airport - nature upfront fees and various other expenses – Held that:- the CIT(A) has rightly held that the payment of upfront fee of Rs.150 crores paid by assessee to “AAI” has created capital assets in the form of license to develop and modernize the Airport and collect charges as per terms and conditions as prescribed under the agreement entered into which is an “intangible assets” to the assessee - Thus assessee is entitled for depreciation – Decided against revenue.

  Deletion of Operating and Administrative expenses – Expenses treated as capital expenditure – Held that:- the CIT(A) examined the chart and the details of the expenses item-wise and after considering the same he has held that no disallowance is called for – Revenue has not been able to point out any infirmity in the findings of CIT(A), the order is upheld – Decided against Revenue.

  Deletion of disallowance of payments – Payment made to group concerns and sister concern – Held that:- CIT(A) after considering the said details has stated that over all expenditures were reimbursed to GVK and/or the assessee filed the copies of invoices and the details of the transactions with sister concern of the payment made by assessee to substantiate the expenditure – the contention of the assessee is allowed that the disallowance have been made by AO merely on assumptions and without controverting the facts furnished by assessee before the authorities – thus, there is no reason to interfere in the findings of the CIT(A) – Decided against Revenue.

  Nature of expenses – Disallowance on expenses incurred on resurfacing of runway, replacement of floors tiles and regularizing storm water drains – Held that:- the assessee is to redesign, upgrade, modernize and also to operate and maintain Airport but the expenditure under consideration has been incurred only to ensure that the existing assets continued to be used for use safely and as per norms to enable assessee to run its activity - the expenditure is incurred to facilitate of carrying on by the assessee its main business for which the assessee has been engaged and pending the expansion of the Airport etc. – thus, expenditure is a revenue in nature and cannot be said to be capital in nature irrespective of the fact that the assessee in its books of account has given treatment of it as capital in nature - the assessee will not be entitled for depreciation as it is held to be revenue in nature – Decided in favour of Assessee.

  Restriction of depreciation allowance – Held that:- The decision in The Hon’ble Bombay High Court in the case of CIT V/s Mazagaon Dock Ltd [1991 (3) TMI 114 - BOMBAY High Court] and Commissioner Of Income-Tax Versus Karnataka Power Corporation [2000 (7) TMI 72 - SUPREME Court] followed - dry dock and wet dock created for ships are to be treated as plant and not building - power generating station building is not a simply concrete structure but a specially designed building and is to be treated as part of plant – thus, taxiways and aprons, parking bays cannot be said to be merely concrete structures but are necessary tools for operating/using the Airport –the same are to be considered as part of plant and machinery – thus, assessee is entitled for depreciation at the rate as applicable on plant and machinery in respect of taxiways, aprons, parking bays etc. – Decided in favour of Assessee.

  Reduction in amount debited to capital work in progress – Confirmation from the vendor not furnished – Held that:- The CIT(A) itself has mentioned that the assessee filed during the course of appellate proceedings before him forwarding note of running bill for reduced amount and also interalia submitted account for the period 1.4.2006 to 31.3.2007 - the execution of the work by L&T has not been accepted merely because M/s L&T had not sent its reply to the notice issued u/s 133(6) of the Act by AO – thus, the execution of work by L&T for an amount cannot be considered as not genuine merely because there was no reply from M/s L&T in response to notice issued u/s 133(6) of the Act - in the absence of any other evidence on record, the enhancement of the CWIP is directed in respect of the work executed by M/s L&T – Decided in favour of Assessee.

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• 2014 (2) TMI 1026
  

  Search u/s 132 of the Act – Protective Assessment made - Jurisdiction of AO u/s 153 r.w section 154 of the Act – Held that:- Though the ground was raised before CIT(A) but CIT(A) has not adjudicated it as there is no finding of CIT(A) on the same - the ground needs to be adjudicated by CIT(A) – thus, the matter is remitted back to the CIT(A) for fresh adjudication – Decided in favour of Assessee.

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• 2014 (2) TMI 1025
  

  TDS u/s 192 - Demand u/s 201(1) of the Act – TDS not deducted on various charges u/s 201(1) and Interest u/s 201(1A) of the Act – Held that:- The assessee was specifically asked whether during the year under appeal any "uniform for the employees was prescribed by the company" and the answer was in negative - any allowance given by the company to its employees in the name of uniform allowance cannot be said to be exempt under Rule 2BB(1)(f) r.w.s 10(14)(i) of the Income Tax Act - tax at source is deductable from payments in the nature of uniform allowance – Decided against Assessee.

  Deletion of Demand u/s 201(1) and 201(1A) of the Act – TDS not deducted on various charges u/s 201(1) – Held that:- The decision in assessee’s own case followed - CMRE was actually not a reimbursement and had and had no correlation with actual expenditure on vehicles - Rule 2BB(i)(c) & not Rule 3 would govern taxability of CMRE payments in employee's hands due to CMRE having no correlation with 'actual running & maintenance charges' of motor car which is the condition required to be satisfied for application of Rule 3(2), Table II(2) - due to declaration by employees of having utilized CMRE for official work – the appellant cannot be treated as assessee in default u/s 201(1) even for AY 2010-11 - As far as assessments of employees in A.Y. 2010-11 are concerned, tax liability is to be determined on case to case basis by applying Rule 2BB(l)(c) – thus, appellant cannot be treated as assessee in default u/s.201(1) for non-deduction of tax at source from CMRE payments for A.Y.s when FBT was in force, i.e. 2006-07 to 2009-10 as well as AY 2010-11, when FBT was not in force – the order of the CIT(A) upheld – Decided against Revenue.

  Scope of taxable income in addition to the salary u/s. 17(1) (iv) of the Act - Whether the AO was justified in treating assessee as assessee in default u/s. 201(1) for non-deducting tax from the amount of advance disbursed under a Scheme to the employees by considering it to be from salary – Held that:- As per rule 3(7)(vii) of Income Tax rules where employer provides movable assets to its employees for their personal use perquisite value to be taxed as salary is determined @ 10% per annum of the actual cost of asset - the position remained same as envisaged under rule 3(7)(vii)/(viii) of Income Tax Rule, even though instead of assessee-company itself purchasing the goods the same were purchased by the employee in the name of assessee-company out of advance given by the assessee-company - The scheme was designed in accordance with provisions of rule 3(7)(vii)/(viii)of Income Tax Rule and was implemented accordingly by the assessee for the benefit of its employees - The revenue has not brought any material on record to show that the advance was not utilized in accordance with the scheme – thus, the order of the CIT(A) upheld in holding that assessee company was not assessee in default u/s. 201(1) for not deducting tax from the amount of advance given under the scheme to the employees by considering the same to be their salary – Decided against Revenue.

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• 2014 (2) TMI 1024
  

  Application of Net profit rate - Assessment framed u/s 144 of the Act - Deduction by way of any payment of interest, salary to be allowed or not u/s 185(5) of the Act – Estimation of income in the absence of evidences - Held that:- Even in the remand proceedings before the AO and the CIT(A), the claim has not been substantiated by the assessee - As regards the increase in the cost of building material and fall in net profit, no cogent explanation or supporting evidence has been brought on record before any of the authorities and even in the remand proceedings before the AO and the CIT(A) – Thus, the CIT(A) has rightly has rightly confirmed the provisions of section 145(3) of the Act though that have not been challenged by the assessee either in the cross appeal or in the cross objection – There is great possibility of leakage and therefore, the past history cannot be the guide for application of net profit rate.

  The facts and circumstances of the concerned year have to be taken into consideration for estimation of income - The assessee has not produced copies of the bills of the assets purchased by him and has not brought on record whether assets have been put to use for the purpose of business during the year – the AO who has rightly applied net profit rate of 7% on the gross receipts by the assessee - no separate allowance or depreciation is made and the application of net profit rate is inclusive of depreciation and interest and salary to the partners - Once the said estimation has been held to be correctly made and assessment having been made u/s 144 of the Act and with clear provisions of section 184(5), the ld. CIT(A) is not justified in allowing interest and salary to the partners.

  Allowability of Depreciation u/s 32 of the Act – Held that:- The assessee has not brought on record that the assets purchased by him have been put to use during the year – the CIT(A) is not justified in allowing depreciation – the order of the CIT(A) set aside and order of the AO is restored – Decided in favour of Revenue.

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• 2014 (2) TMI 1023
  

  Disallowance u/s 14A of the Act r.w. Rule 8D of the Rules – Held that:- The decision in Godrej & Boyce Mfg. Co. Ltd. v/s DCIT [2010 (8) TMI 77 - BOMBAY HIGH COURT] followed – rule 8D is not applicable prior to the assessment year 2008–09 – thus, the order set aside and the matter remitted back to the AO for fresh adjudication – If the assessee has sufficient interest free funds for making the investment in shares of subsidiary company, then no disallowance of interest expenditure should be made - The Assessing Officer is also directed not to apply the provisions of Rule-8D for the assessment year - Decided in favour of Assessee.

  Addition on account of CENVAT credit in valuation of stock – Held that:- The component of CENVAT has to be added to the closing stock and adjustment has to be made accordingly in the opening stock - The assessee submitted that the adjustment has to be made on the purchases also – the contention of the assessee is accepted for the purpose of valuation of purchase and sale of goods and inventories adjustment on account of tax, duty, cess or fee, actually paid or incurred by the assessee has to be made in view of the provisions of section 145A of the Act – thus, the Assessing Officer is directed to make necessary adjustment and give CENVAT credit on account of purchases also – Decided partly in favour of Assessee.

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• 2014 (2) TMI 1022
  

  Disallowance u/s 10(10B) of the Act - Premium paid on Keyman Insurance Policies - Revenue was of the view that the policies were not Keyman Insurance Policies as given in the Explanation to section 10(10D) of the Act – Held that:- Once the assessee has bought a policy under a life insurance scheme, then whether the insurance company is making investment in mutual funds for capital appreciation or under any other investment scheme, will not make any material difference - it is clearly evident from the clauses of that it is these policies that it is for life insurance only - if the assessee surrenders the policy within the period of three years, then there is no surrender or maturity value.

  Under both the policies, the maturity value up to three years is zero - Once it is an admitted fact that the policy has been surrendered and it has been assigned to the policy holders on which no maturity amount or surrender value has been received, then such an observation of the CIT (A) does not make any difference - once the assessee after nursing these policies for some time by paying premium thereupon, has been assigned to the partners, then also the payment of such a premium has to be allowed as deduction – Relying upon Commissioner of Income-tax Versus Rajan Nanda [2011 (12) TMI 392 - DELHI HIGH COURT] – thus, the order of the CIT(A) set aside and the assessee is eligible for claiming deduction towards premium paid in respect of Keyman insurance policy and should be allowed accordingly – Decided in favour of Assessee.

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• 2014 (2) TMI 1021
  

  Addition made u/s 40A(3) of the Act - Claim of exemption in respect of cash payments – Held that:- The decision in Sahitya Housing Pvt. Ltd. vs. DCIT [2014 (2) TMI 811 - ITAT HYDERABAD] followed - There was no choice for the assessee except to make the payments in cash due to exceptional or unavoidable circumstances as provided under Rule 6DD - since there is no evidence brought on record by the AO to suggest the availability of banking facility in the place where the properties were purchased by the assessee - as per Rule 6DD(g) the disallowance cannot be made u/s 40A(3) of the Act – thus, the CIT(A) is justified in deleting the addition.

  Addition of payments were made to agents – Held that:- The strong contention of the Department is that the above agents worked for other persons as agents and they cannot be agents to the assessee - There is no prohibition or restriction on a middleman to work as agent of different parties, if he was acting on behalf of the assessee as agent - The assessee's case falls under the purview of clause 6DD(k) of IT Rules, 1962 – thus, exemption is to be given and addition cannot be made u/s 40A(3) of the Act - The reasons advanced by the Department are not appropriate – thus, the claim of the assessee is allowed – Decided partly in favour of Assessee.

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• 2014 (2) TMI 1020
  

  Disallowance made u/s.14A r.w.s. rule 8D of the Act – Held that:- No disallowance can be made by applying the provisions of rule 8D - A.O. had disallowed 1% of the interest expenses on adhoc basis and the same was enhanced by CIT (A) by following the method prescribed under Rule 8D - AO has not pin pointed any expenditure which the assessee has incurred for earning exempt income – Relying upon Maxopp Investment Ltd. & Others Versus Commissioner of Income Tax [2011 (11) TMI 267 - Delhi High Court] – thus, the addition set aside – Decided in favour of Assessee.

  Depreciation on lease-hold land – Held that:- The land in question was not acquired by the assessee - Merely because the deed was registered the transaction in question would not assume a different character - By obtaining the land on lease the assessee has acquired a facility to carry on business by paying nominal lease rent, therefore, lease rent paid was held allowable as Revenue expenditure – Relying upon DCIT vs. Sun Pharmaceuticals Industry Ltd. [2009 (3) TMI 587 - Gujarat High Court] - thus, the matter has been remitted back to the file of AO for fresh adjudication – Decided In favour of Assessee.

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• 2014 (2) TMI 1019
  

  Addition u/s 68 of the Act – Cash deposit out of undisclosed sources of income – No documentary evidences furnished - Held that:- The assessee has claimed that there was planning to purchase the land jointly with his father Shri Subhash Chand Jain for group housing complex at G.T. Road, Sonepat, Haryana - Assessee had not filed any documentary evidence in this regard. Assessee’s claim that the amount was withdrawn for initial payments to land owners though Satbir Singh with whom the assessee was negotiating to purchase the land but assessee failed to produce the same - It is claimed that agreements to sell were prepared with respect of the deal with the intended sellers - no evidence was filed in this regard.

  The assessee also claims that he came to know at later stage that the land, which was intended to be purchased, was already identified by the HUDA for the purposes of housing complex for M/s. Omaxe Limited - None of the claims of the assessee as made in letter are substantiated by any documentary evidence - Even the concerned persons with whom the transaction were made or negotiated were not produced – thus, the claim of assessee that cash withdrawal was not utilized for other purposes have remained unproved - Primary onus is on assessee to substantiate the claim of failure of land deals due to which cash remained unutilized - Assessee had not discharged onus by filing any evidence either documentary or oral in this regard - thus, the matter remitted back to the AO for fresh adjudication – Decided in favour of Assessee.

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• 2014 (2) TMI 996
  

  Restriction of addition on account of difference in stock - During the course of survey difference in physical stock as compared to the book stock was found. AO has noted that the assessee could not reconcile the difference - the contention of Assessee cannot be accepted that there was mistake in stock taking - with respect to addition made on account of difference in stock, when the difference in stock is found, addition on account of gross/Net profit of such difference can be made instead of the entire difference being added to the income - the AO was not justified in making the addition of the entire difference found in the stocks as income of the Assessee - the gross profit declared by the Assessee for the year under consideration is 22.96% , the addition is restricted made on the basis of gross profit – Decided partly in favour of Revenue.

  Addition made on account of construction of godown – Held that:- The expenditure in construction of godown was done by Assessee in the year under appeal and earlier years - The percentage of expense, incurred during the year works out to around 26% - valuation is a subjective exercise and in which case the estimates made of construction would differ from valuer to valuer - the Assessee has not maintained books of account with respect to the cost of construction – thus, the estimate of addition of Rs. 7,00,000/- would meet the ends of justice – the AO is directed to restrict the addition to 7,00,000 – Decided partly in favour of Assessee.

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• 2014 (2) TMI 995
  

  Addition u/s 68 of the Act – Burden to prove – Furnishing of Satisfactory explanation - Whether the Tribunal fall into an error in holding that the assessee had not discharged the initial onus cast upon it under Section 68 and furnishing satisfactory explanation – Held that:- There is no need for any authority for the proposition that the scope of enquiry of lower authority or Court in the face of a remand is confined to the points required of it to return a finding - Having regard to this aspect, once the Tribunal had spelt out what was expected of the assessee, it was not now open for the latter to contend that the requirement was unreasonable - The assessee did not appeal against the remand nor seek dilution of points on which the Tribunal recollected finding after due enquiry - it is now not open for the assessee to state that even though it could afford explanations by way of affidavits of the two individuals and the foreign national, its inability to secure any confirmation or documentary proof in support of its contention that the two foreign remitters did not have any independent transaction carries no consequence - Since the aspect goes to the root of the second requirement under Section 68 - the genuineness of the transaction by the assessee cannot be said to have been shown by it in discharge of the initial burden placed on it by Section 68 of the Income Tax Act – Decided against Assessee.

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