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Income Tax - Case Laws

Showing 261 to 280 of 654 Records

• 2014 (2) TMI 903
  

  Search conducted u/s 132 of the Act - Warrant issued in the name of the assessee - Whether there was a search in the premises of the assessee and the search warrant was made in the name of the assessee – Held that:- The assessment was made consequent on the seizure of materials in the course of search operation under Section 132 of the Act - The search operation resulted in seizure of various documents pertaining to the assessee's transactions too - the assessee is clear in his understanding of the provisions, under which the block assessment was made and was quite aware of the fact that the assessment under Chapter XIVB was as a result of seizure of materials in the course of search operation in the premises where the assessee lived along with two other persons on whom the search warrant was issued – thus, there is no justifiable ground to accept the plea of the assessee that the assessment made is bad in law.

  Jurisdiction for block assessment u/s 158BC of the Act – Held that:- The procedure given u/s 158BC is the only procedure given under Chapter XIV-B for making block assessment, the reference to Section 143(3) notice read with proceedings under Section 158BC does not make the assessment as the one not falling under Section 158BD – thus, as per the procedure laid down u/s 158BC there is no confusion in the mind of the Officer as to the provision it is proceeded against nor in the mind of the assessee that the assessment was made consequent on the seizure of materials in the course of search operation in the premises – the Tribunal had already remitted the matter back to the AO – thus, the AO id directed to expedite the matter without any further delay – Decided against Assessee.

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• 2014 (2) TMI 902
  

  Nature of services provided - Existence of Permanent Establishment – DTAA between India and Brazil - Held that:- The services provided by the non-resident companies to the applicant company are line production services – it is been held in the applicant’s own case that the payments of similar nature are specifically characterized as work for the purpose of section 194C by Explanation to that section – thus, following the same ruling, the payments made by the applicant to the non-resident company specifically falls under the definition of work under section 194C of the IT Act and they will not be taxable without Permanent Establishment in India - the payment will not suffer withholding of tax under section 195 of the Income-tax Act, 1961.

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• 2014 (2) TMI 901
  

  Determination of Residential status u/s 6 of the Act - Taxability of the receipts – Held that:- When the assessee has come to India after leaving his employment outside India, the Explanation (a) to section 6(1)(c) will not be applicable - The total stay in India of the applicant for the preceding four years is for a period amounting to more than 365 days and total stay in India for the FY 2010-11 is for a period amounting in all to 119 days which is more than 60 days, requirements of sub-section (c) of section 6(1) is met by the applicant to become a resident in India.

  Taxability of proceeds received in India – Conversion of ESOPs and RSUs – Held that:- Explanation (a) to section 6(1)(c) is applicable only in a particular year when a person leaves India - The activities mentioned need not be necessarily proof of a visit, even a person staying permanently in India also does those activities - If a person returns to India after a long period of absence there is all the more reason he or she will like to go to visit relatives and friends in different places - Those activities are not necessarily indicators of a visit - When the applicant resigns from her employment in China, the reason for return to India does not seem to be only for a visit – the contention that the applicant came to India only for a visit cannot be accepted – thus, Explanation (b) to section 6(1)(c) of the Act is also not applicable - the applicant's case does not fall under Explanation (a) or (b) to section 6(1)(c) of the Act and having fulfilled the requirements of section 6(1)(c) of the Act her status will be resident in India - the amount of proceeds received in India on conversion of ESOPs and RSUs awarded to her by her employer in China will be taxable in India – Decided against Assessee.

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• 2014 (2) TMI 900
  

  Presumption of service of Notice u/ 148 of the Act – Held that:- The aspect that the assessee had responded to a notice issued under Section 142(1) was not pursuant to the original notice dated 31.03.2006 - being a pure issue of fact, the Court disinclined to investigate the matter further given that no other question of law arises for consideration as to whether notice was served or deemed to have been served is “ subject to other conditions “ ordinarily a question of law – there is no reason to believe that it is otherwise in the facts of the case – Decided against Revenue.

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• 2014 (2) TMI 899
  

  Remission made by Tribunal - Liability to deduct TDS u/s 194C of the Act – Liability to pay interest u/s 201(1) of the Act – Held that:- There is no finding as such rendered by the Tribunal and the purpose of the remit to the Assessing Officer is only with a view to enable him to make a proper determination of the facts -The assessee had not appeared before the Assessing Officer in the first instance - The Tribunal observed that the AO should obtain information whether the NGO's to whom payments were made are duly registered under Section 12(A) of the Income Tax Act, 1961 and whether they are liable to pay tax under the provisions of the Act - the Tribunal has clarified that if the payees were not Charitable Institutions whose income is exempted, the Assessing Officer would be at liberty to pass an appropriate order in accordance with law - the Tribunal has not issued a specific direction in regard to the provisions of Section 194C – the appeal does not gave rise to any substantial question of law – Decided against Revenue.

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• 2014 (2) TMI 898
  

  Reference made to Valuation Officer u/s 142A(1) of the Act -Valuation of investment in the construction/renovation of the property - Whether the requirements of exercising such powers u/s 142A calling for DVO’s report are satisfied – Held that:- The scheme of the provisions read harmoniously would lead to a situation where in case the Assessing Officer, during the pendency of assessment or reassessment, is of the opinion that sections 69, 69A and 69B of the Act can be invoked, in order to estimate such unexplained investment or expenditure in acquisition of bullion, jewellery or valuable article, he can resort to valuation by the Valuation Officer in terms of sub-section (1) of section 142A of the Act.

  No such material emerges from the record - neither from the order of reference nor from any other material, the revenue could point out that the Assessing Officer had invoked the provisions of sections 69,69A or 69B of the Act and in the process desired to obtain the estimate of unexplained investment or expenditure and for which purpose DVO’s report was called - He simply gave no reasons in the order - No independent reasons, either flowing from the file or even in the form of an affidavit assuming the same would be permissible, are brought to notice – the Assessing Officer merely acted under the directives of the superior and did not, on his own application of mind, desire to call for the report – thus, in absence of any valid reasons for making a reference the order cannot be sustained – Decided in favour of Assessee.

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• 2014 (2) TMI 897
  

  Valuation u/s 50C of the Act – application of circle rate on leasehold rights - Held that:- The contrast in language, given that Section 50C is a specific provision, which seeks to enact a presumption is significant - The valuation of the concerned State agency or the government that the cost of the land is, in the circumstances, higher, is determinative - there has been no such valuation in the present case - the Tribunal adopted an approach which appears to be correct, in that it took note of the proportionate transfer of leasehold rights for 54 years.

  If the Revenue’s contentions were to be conceded, then in the given facts of case, if the leasehold rights for residual period of 3 or 4 years were to be valued at par with the cost of acquisition of the full tenure of the lease of 90 years, absurd and anomalous results would ensue. - the contention of the revenue cannot be accepted – there is no substantial question of law arises – Decided against Revenue.

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• 2014 (2) TMI 896
  

  Power of Settlement Commission u/s 245H of the Act - Immunity from imposition of penalty and prosecution – Held that:- The criticism levelled by the revenue against the majority opinion of the ITSC granting immunity to the assessee is well-founded - Immunity can be granted only within the parameters of Section 245H(1) which requires full and true disclosure of income and co-operation from the assessee in the proceedings before the ITSC – Co-operation implies an act of volition on the part of the assessee - the present assessee “co-operated” in the proceedings before the ITSC only when faced with the reports submitted by the CIT – The ITSC was not justified in taking a charitable view towards the assessee - assessee did not make a full and true disclosure in the settlement application - it waited till the ITSC called for reports from the CIT which reiterated the facts established by the seized material.

  There was no spirit of settlement that ought to have been exhibited by the assessee in the application filed before the ITSC - it is not enough if it is shown in proceedings before the ITSC after being confronted with adverse reports, to which it had no answer – Relying upon Ajmera Housing Co-operation and another v. CIT [2010 (8) TMI 35 - SUPREME COURT OF INDIA] - the fact that the assessee kept revising its application for settlement by disclosing higher income in the revised applications established that it did not make a full and true disclosure of income which it did not disclose to the assessing authority - the assessee cannot be said to have “co-operated” in the proceedings before the ITSC - The assessee ought to have offered the entire amount being the bogus purchases of cement and steel - It was only at that stage, when cornered and when it was unable to rebut the evidence and the facts established by the evidence, that the assessee came forward with the additional income which when added in the settlement applications – thus, the assessee has failed to satisfy the twin conditions of Section 245H (1) and was, therefore, not entitled to the immunity.

  Power to review the order of ITSC – Held that:- The decision in R.B. Shreeram Durga Prasad v. Settlement Commission [1989 (1) TMI 4 - SUPREME Court] followed - The sole overall limitation upon the Commission appears to be that it should act in accordance with the provisions of the Act - The scope of enquiry, whether by High Court under article 226 or by this court under article 136 is also the same – the order of the ITSC (majority view) is contrary to the provisions of Section 245H(1) of the Act – Decided in favour of Revenue.

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• 2014 (2) TMI 895
  

  Status of the Assessee – Whether the assesseee is a resident or non-resident under section 6 of the Act – A.O. found that assessee was not regularly employed abroad, but worked as a consultant for a foreign company - Held that:- The argument of the CIT(A) that assessee did not leave India and stationed outside the country is not material, as nowhere the section specifies that assessee should leave India permanently so as to reside outside the country - Even visit outside India for a period of or periods accounting in all to 60 days/181 days (as the case may be) will satisfy the condition specified in section 6(1) - Since the plain meaning is very clear, the argument of the CIT(A) that assessee has not left India permanently has no meaning - as working out the period of stay in India, Assessing Officer worked in one way and the learned CIT(A) analyzed the period in a different way - Relying upon CBDT v. Aditya Birla [1987 (11) TMI 5 - SUPREME Court] employment does not mean salaried employment but also includes self-employed/professional work - assessee's earning for consultancy fees from foreign enterprise and visit abroad for rendering consultation can be considered for the purpose of examining whether assessee's is resident or not.

  The Assessing Officer has calculated the period of stay in one particular manner which the learned CIT(A) examined and determined in another manner by excluding the travel to two places which are not supported by evidence to consider for the purposes of employment - going abroad for the purpose of employment only means that the visit and stay abroad should not be for other purposes such as a tourist or for medical treatment or for studies or the like - assessee has visited number of places but in some of the stampings, the visa was granted as 'tourist visa' and some of them are 'pass through visa's.

  Unless assessee travels on business visa or for the purpose of business/consultation, the entire period of travel abroad cannot be considered as 'going abroad for the purpose of employment' - Since these details have not been examined by the Assessing Officer on the basis of the visas obtained - this aspect requires examination by the Assessing Officer, to verify whether the visits are for the purpose of employment or for the purpose of tour or for any other reason and only to the extent of visits for the purpose of employment can be considered, while determining status of assessee as per the provisions of law - thus, the matter should be re-examined by the Assessing Officer to establish the number of days assessee was outside the Country so as to consider whether he is the resident or non-resident as per the provisions of the Act – thus, the matter remitted back to the AO for fresh examination – Decided in favour of Assesse.

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• 2014 (2) TMI 894
  

  Determination of Arm’s Length Price – Management fees paid – Held that:- Assessee has given a detailed write-up as well as the services provided and benefit obtained which were not contradicted - The Assessing Officer did not believe the same in the absence of concrete evidence. Unless the Assessing Officer steps into assessee's business premises and observes the role of these companies/ assessee's business transactions, it will be difficult to place on record the sort of advice given in day-to-day operations - What sort of evidence satisfies the AO is also not specified - Assessee has already placed lot of evidence in support of claims - The decision in CIT Versus EKL APPLIANCES LTD [2012 (4) TMI 346 - DELHI HIGH COURT] followed - So long as the expenditure or payment has been demonstrated to have been incurred or laid out for the purposes of business, it is no concern of the TPO to disallow the same on any extraneous reasoning.

  Assessee has furnished copious material and valid reasons as to why it was suffering losses continuously and these have been referred to by us earlier - Full justification supported by facts and figures have been given to demonstrate that the increase in the employees cost, finance charges, administrative expenses, depreciation cost and capacity increase have contributed to the continuous losses – thus, the TPO went beyond his jurisdiction in denying the payment out-rightly, whereas, his role is limited to determining the ALP - In the guise of determination of ALP, the TPO cannot question the business decision of payment and determine that no services were rendered – thus, the direction of the TPO cannot be upheld at all - while allowing the ground on the question of claim of management fees as such, the quantification thereof is restored to the Assessing Officer to examine with reference to the agreement between the parties – Decided in favour of Assessee.

  Deferred revenue expenditure – Held that:- It could not be arrives at whether it is a capital expenditure or revenue expenditure - assessee has purchased certain photosets from Hindustan Lever for its business - In view of the conflicting nature of findings, any finding whether the expenditure is capital or revenue cannot be given - the contention of assessee is accepted to direct the allowance of depreciation for the balance of the period until the life of the asset in accordance with the provisions of the Act – thus, the Assessing Officer is directed to allow depreciation in later years if not, already given to the asset capitalized by the Assessing Officer himself in this assessment year – Decided partly in favour of Assessee.

  Outstanding service tax liability – Disallowance u/s 43B of the Act – Held that:- the claim of the assessee is accepted that so much of the service tax not paid/payable cannot be disallowed under section 43B - there is nothing on record to examine whether the claim of service tax has been charged to P & L account - If the same is claimed as an expenditure in the P & L account, the amount to that extent cannot be claimed as an expenditure and to that extent, whether the amount is disallowable under section 43B or under section 37(1), the disallowance is required - The reversal of entry even though happened in the books of accounts in the later year, does not affect the computation of income during the year and the same also does not come within the purview of disallowance under section 43B as the amount is not claimed otherwise – thus, the matter is remitted back to the AO for examination – Decided in favour of assessee.

  Disallowance of deduction u/s 80HHE of the Act – Held that:- In the absence of any contrary material brought on record by the Revenue against the finding of the learned CIT(A) and keeping in view the fact that there is no dispute that assessee company is simply carrying on market survey and that survey is complied as a data and such data is processed and sent to other countries - in view of the CBDT Notification No.S.O.890(E) dated 26.9.2000, assessee is engaged in the export of data processing and accordingly he is entitled to deduction u/s 80HHE of the Act - the order of the CIT(A) upheld - Decided against Revenue.

  Confirmation of Penalty u/s 271(1)(c) of the Act - Disallowance of management fees at NIL - Held that:- Mere disallowance of an amount that too on transfer pricing provisions does not attract penalty under section 271(1)(c), as it cannot be considered as either the concealment of income or furnishing of inaccurate particulars - Relying upon DCIT vs. RBS Equities India Ltd. [2011 (8) TMI 459 - ITAT MUMBAI] - payment of management fees is genuine and to be allowed and the matter is restored to the file of Assessing Officer to examine the quantification of the fee claimed as per the agreements – thus, there cannot be any issue of levy of penalty – thus, the penalty levied is unwarranted and cancelled – Decided in favour of Assessee.

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• 2014 (2) TMI 893
  

  Restriction u/s 14A of the Act – Held that:- Where the assessee had own interest free funds many times over the investment made in Indian subsidiaries and further there was no direct nexus between interest bearing borrowed funds and such investment, no disallowance of interest expenditure could be made u/s 14A of the Act - where the Revenue failed to establish that the assessee had incurred any expenses for earning dividend income from amount borrowed, no addition could be made by invoking the provisions of Section 14A of the Act - The assessee had substantial interest free fund in the form of share capital and reserves - the AO has brought no material on record to show that any interest bearing borrowed funds were utilized by the assessee for making investment in shares in any of the years under consideration – The decision in CIT Vs. Suzlon Energy Limited [2013 (7) TMI 697 - GUJARAT HIGH COURT] followed - the assessee has substantial interest free fund to meet his tax free investments yielding exempt income, it can be presumed that such investments were made from interest free funds and not loan funds - the order of the CIT(A) confirmed – Decided against Revenue.

  Deletion of interest expenditure made u/s 36 of the Act – Held that:- The decision in The Commissioner of Income Tax Versus Reliance Utilities & Power Ltd [2009 (1) TMI 4 - HIGH COURT BOMBAY] followed - a global position of the availability of funds has to be examined and after sufficiency of non-interest bearing funds is established then only claim can be allowed and directed the AO to take this decision also in consideration - none of the lower authorities have found that on global examination of availability of interest free funds with the assessee was not sufficient for advancing interest free advance to the subsidiaries - the disallowance of interest again was not warranted – thus, the disallowance of interest expenditure of both the years is set aside – Decided against Revenue.

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• 2014 (2) TMI 892
  

  Deletion on account of pre-operative expenses – Business not commenced – Held that:- The business would commence when the activity which is first in point of time and which must necessarily precedes the other activities is started - Relying upon CIT Vs. Saurashtra Cement and Chemical Industries ltd. [1972 (8) TMI 19 - GUJARAT High Court ] - one of the essential activity namely license/ right to explore the blocks has been granted and exploration of blocks has already been started without which no production can take place - business had commenced at the stage when licence to explore the respective blocks was granted by the Govt. of India to assessee company.

  The CIT(A) has rightly made a finding that the assessee have commenced its business, when the appellant has carried the first activity being assignment of the right to explore the block awarded in the New Exploration and Licensing Policy (NELP) and commencement of exploration activities thereafter incurred an expense of more than Rs. 258 crores - None of the expenses mentioned are of personal in nature and the expenses are of revenue in nature - the assessee has capitalized all the exploration cost and the same have been reflected as “capital work for progress” in the balance-sheet - The assessee has only claimed deduction of the expenses which have been incurred for day to day operation of the business which are eligible for deduction u/s 37(1) of the Act – thus, there is no infirmity in the order of the CIT(A) – Decided against Revenue.

  Deletion made u/s 35D of the Act - Expenses incurred for increasing the authorized share capital – Held that:- The assessee company has commenced its business and already commenced exploration activities on the blocks awarded to it in the relevant Assessment Year – as in the preceding years too the said claim of the assessee company was allowed by the Assessing Officer - there is no material on record to suggest or support any change in the character or nature of the said expense incurred by the assessee company –there is no infirmity in the order of the CIT(A) directing the Assessing Officer to allow the deduction u/s 35D of the Act in respect of expenses incurred for increasing the authorized share capital – Decided against Revenue.

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• 2014 (2) TMI 891
  

  Transfer Pricing Adjustment - Determination of ALP - Method for benchmarking the transaction for payment of management cost contributions – Held that:- The record shows that the issue before the TPO and the DRP as far as the assessee is concerned has been contested in the light of the stand taken that TNMM was the most appropriate method - assailing the TPO's stand before the DRP that CUP is the most appropriate method the assessee did lead evidence and arguments and documentation in order to justify that no adjustment was required to be done even if CUP is taken as the most appropriate method - the relevant documentation Agreements etc. for deciding the issue have not been considered either by the TPO or by the DRP as the focus of the department's attention necessarily has remained assailing the assessee's stand that TNMM is the most appropriate method - The department justifying its stand and assailing the stand of the assessee has accordingly remained focused on the position that CUP is the most appropriate method.

  The decision in CIT Versus EKL APPLIANCES LTD [2012 (4) TMI 346 - DELHI HIGH COURT] followed - The departmental stand cannot be approved when the issue is considered from the aspect of appropriateness of the expendituring - the need and necessity for the assessee to incur the expendituring also cannot be held to be an acceptable criteria - Nor can the necessity of the expenditure from the benefit accrued to the assessee point of view has been approved as a relevant criteria - the finding given by the Co-ordinate Bench, is based on a peculiar set of facts namely that the assessee in the facts of that case consistently failed to provide a cost allocation key not only before the TPO/DRP but even before the Tribunal - the issue pertained to direct expenses which admittedly are easier to demonstrate and verify - the expenses are not direct expenses however the order of the Co-ordinate Bench in Dresser Rand's has considered indirect expenses which position apparently has not been upset by any Higher Forum - in the absence of any serious discussion on facts specifically addressing the detailed documentation placed on record by the assessee, it would be appropriate to restore the issue back to the TPO – Thus, the matter remitted back to the TPO for fresh adjudication – Decided in favour of Assessee.

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• 2014 (2) TMI 890
  

  Nature of Surplus - Whether the surplus arising to the assessee on account of purchases and sales of Mutual Fund Units is to be considered under the head “income from capital gains” or “income from business” – Held that:- The assessee had all along shown the units purchased by it under the head “investment” - Assessee was engaged in the business of manufacturing and exporting of leather goods – the CIT(Appeals) finding that assessee held the Mutual Fund units as investments has not been effectively rebutted by the Revenue - When the intention of the assessee was only to make investment, sale thereof would only result in capital gains - There is no case for the Revenue that assessee's main business was trading in Mutual Fund Units or shares - the surplus arising to the assessee was rightly considered as income from capital gains – there is no reason to interfere in the findings of the CIT(Appeals).

  Deletion of addition – Differences in purchase of Mutual Funds – Held that:- Revenue has not been able to bring out anything to show that any of the explanations were erroneous or wrong - the Assessing Officer found that the differences in purchases highlighted by him in the assessment order stood explained - CIT(Appeals) has given a finding that discrepancies pointed out by the Assessing Officer were on account of non-application of mind while preparing remand report - Assessee had clearly explained it as Units of Prudential ICICI Floating Rate Fund – there is no reason to disbelieve it – thus, none of the discrepancies alleged by the Assessing Officer existed – the CIT(Appeals) was justified in holding that there was no difference in purchase of units or closing stock of investment in Mutual Fund Units and the additions deleted by the CIT(A) also upheld – Decided against Revenue.

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• 2014 (2) TMI 889
  

  Nature of Transaction – Investment OR Trading - The CIT(A) has rightly held that the assessee has treated the shares as investment and not Stock in Trade - the volume of transactions, frequency of transaction and period of holding etc., would not alter the nature of transaction from investment to trading - The assessee cannot be held an investor for the shares sold during the year under consideration, as the activities carried out him for the year clearly indicate that he wanted to maximise the profit and not to make long term investments - assessee was carrying out business of shares in a systematic and organised manner - Short holding period, volume of the scrips and frequency of the transactions are measure factors to decide the issue as whether an assessee is an investor or doing a business of shares and securities – thus, the order of the FAA does not suffer from any infirmity – Decided against Assessee.

  Long Term Capital Gain – Held that:- Neither the AO nor the FAA had analysed the pattern of holding period of shares that were held for more than one year - Assessee had a specific claim that some of the shares were held since FY. 2002-03 - FAA has completely ignored the submissions made by the assessee in this regard - Without assigning any reasons for treating the income of LTCG as business income, he has confirmed the order of the AO – the matter needs further verification – thus, the matter remitted back to the FAA for adjudication – Decided partly in favour of Assessee.

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• 2014 (2) TMI 888
  

  Requirement for Depositing taxes u/s 249(4) of the Act - Whether the CIT(A) is correct in dismissing the appeal quoting the provisions of section 249(4) of the Act – Held that:- At the time of filing of the appeal before the CIT(A) the tax due on the income returned was not paid - The objective of section 249(4) is to ensure payment of tax on income returned before the admission of the appeal - CIT(A) cannot be faulted with in not treating the appeal as admitted - if the appeal is filed without payment of tax on returned income but subsequently the required amount of tax is paid, the appeal should be treated as admitted on payment of tax and taken up for hearing on merits - The payment of tax after the filling of appeal before it is taken up for disposal, would be sufficient to validate the defective appeal - the requirement of the payment of prescribed tax at the stage of filing of the appeal before the First Appellate is only directory and not mandatory - thus, the order of the CIT(A) is set aside and the matter is remitted back to the CIT(A) for adjudication – Decided in favour of Assessee.

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• 2014 (2) TMI 887
  

  Eligibility for exemption u/s 11 - Approval u/s 10(23C) of the Act not granted - Educational institution – Charitable purpose - Held that:- The decision in Ass. DIT Versus Sri Chaitanya Memorial Education Society [2014 (2) TMI 670 - ITAT HYDERABAD] followed - The appellant would be eligible for the claim of exemption u/s 11, even if the conditions u/s 10(23C)(vi) had not been complied with, subject to the fulfilment of the conditions u/s 11 to 13 – there is no finding of any charging of donation etc. in the case of the appellant by the Assessing Officer, the Assessing Officer is directed to verify this aspect while giving effect to this order - The institutions falling u/s. 10(23C)(vi) are eligible for exemption u/s. 11 also - Merely because section 10(23C)(vi) of the Act provides for exemption of the income of an educational institution it does not follow that such institution cannot avail exemption u/s. 11 subject to fulfilment of the conditions laid down.

  Whether the approval under sub-section (vi) to section 10(23C) is distinct from registration u/s 12A of the IT Act – Held that:- It is mandatory on the part of the assessee in terms of section 11(4A) of the Act to maintain separate set of books of account for letting out of function hall - The assessee taken a plea that the assessee has maintained separate books of account - if the assessee maintained separate books of account for letting out the function hall it has to be produced before the Assessing Officer.

  Assessee had collected money over and above prescribed by concerned authority for admission of student, such an amount was to be classified as capitation fee and it could be said that assessee's case was a clear case of sale of education by assessee – thus, it could not be considered as charitable institution under section 2(15) of the Act because the purpose of the organisation as a whole was to make profit - The issue remitted back to the AO to consider the entire facts and verify the records whether the assessee collected capitation fees from students for the purpose of giving admission – Decided partly in favour of Revenue.

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• 2014 (2) TMI 886
  

  Reopening of Assessment u/s 148 of the Act – Requirement to issue notice – Held that:-The decision in CIT Vs. Usha International Ltd.[ 2012 (9) TMI 767 - DELHI HIGH COURT] followed - The reasons recorded or the documents available must show nexus that in fact they are germane and relevant to the subjective opinion formed by the Assessing Officer regarding escapement of income - The final ascertainment takes place when the final or reassessment order is passed - It is enough if the Assessing Officer can show tentatively or prima facie on the basis of the reasons recorded and with reference to the documents available on record that income has escaped assessment - The aspects and questions examined during the course of assessment proceedings itself may indicate that the Assessing Officer must have applied his mind on the entry, claim or deduction etc. - It may be apparent and obvious to hold that the Assessing Officer would not have gone into the said question or applied his mind - The CIT(A) has rightly quashed the reopening of assessment made by the Assessing Officer u/s 147 of the Act by observing that there was absolutely no fresh information provided or collected – thus, the order of the CIT(A) upheld – Decided against Revenue.

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• 2014 (2) TMI 885
  

  Receipt of unsecured loan - Cash credit – Held that:- The Assessee has demonstrated before the lower authorities and even before us the identity and creditworthiness of the creditors and genuineness of the transaction as the transaction done through banking channel - There is also no incriminating material found in the search proceedings – Thus, the addition made by the AO and confirmed by the CIT(A) set aside – Decided in favour of Assessee.

  Disallowance of transport expenditure – Held that:- Out of the claim of transportation charges, the AO disallowed 10% on the ground that the claim is on higher side and vouchers maintained by Assessee for the same are not verifiable - The CIT(A) restricted the disallowance on the ground that the disallowance made by the AO is on higher side - there is unaccounted turnover in the case of asessee unearthed in the search - Once addition was made on the basis of GP disallowance of various expenditures should not arise – thus, the addition made by CIT(A) aside – Decided in favour of Assessee.

  Disallowance of interest – Held that:- Assessee contended that he has not received any additional interest nor there was any claim in the hands of the firm - The decision in G. Venkat Rao & Others Versus Asstt. Commissioner of Income-tax, Circle 8(1), Hyderabad [2012 (10) TMI 530 - ITAT HYDERABAD] followed - Interest paid to partners, which has been disallowed in the hands of the partnership firms cannot be assessed in the hands of the partners – the order set aside and the matter remitted back to the AO for determination of correct amount – Decided in favour of Assessee.

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• 2014 (2) TMI 884
  

  Claim of deduction u/s 10B - Alternative deduction u/s 10A - Assessee is running the business of software development and export is a 100% Exported Oriented Unit – Held that:- The assessee has not been approved as a 100% EOU by the Board appointed in this behalf by the Central Government in exercise of powers conferred by section 14 of the Industries (Development and Regulation) Act, 1951 and rules made there under - The assessee having not fulfilled this pre-condition as provided under explanation-2 (iv) of section 10B, it is not entitled to avail deduction u/s 10B of the Act.

  Deduction u/s 10A of the Act – Held that:- For the entitlement for deduction u/s 10A as such no approval of the Board is necessary - The only requirement for claiming exemption u/s 10A of the Act is the assessee is required to submit a certificate from the auditor in form 56F as per section 10A(5) of the IT Act read with Rule 16D of Income-tax Rules - the contention of the assessee is accepted that there was no occasion on his part to submit the auditor’s certificate in Form 56F before the CIT (A) - Form 56F submitted is allowed as an additional evidence – the matter remitted back to the AO for fresh adjudication – Decided in favour of Revenue.

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