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Showing 1 to 20 of 1505 Records
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2016 (1) TMI 1505 - ITAT KOLKATA
Accrual of income - real income - Amalgamation reserve treated as income u/s. 28(iv) r.w.s. 2(24)(vd) - HELD THAT:- We find that this is a simple case of accounting reserve which is created in the books of the amalgamated company to give accounting effect to the amalgamation. According to us, this is nothing but an entry passed in the Balance Sheet with a sole object to balance the accounts which are maintained on double entry system of accounting. This view of ours is supported by the decision of Bharat Development P. Ltd. [1980 (8) TMI 18 - DELHI HIGH COURT] wherein held an accounting reserve which is created in the books of the amalgamated company to give accounting effect to the amalgamation is nothing but an entry passed with the sole object to balance the books of account which are maintained on the principle of double entry system of book keeping.
As such, when the exchange of shares was based on fair valuation basis, there was no question of any benefit or perquisite being earned by the assessee or by the amalgamating companies. In our view section 28(iv) of the Act therefore had no application in the assessee’s case.
AO was not justified in assessing this amount as income of the assessee u/s 28(iv) of the Act because such reserve did not represent real income and secondly it did not constitute any benefit or perquisite arising from the business activity of the assessee. Hence we confirm the order of CIT(A) and this issue of revenue’s appeal is dismissed.
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2016 (1) TMI 1504 - MADRAS HIGH COURT
Impleadment of subsequent purchaser as party to the proceeding - suit for bare injunction in respect of 4 items of the suit property - application filed under Order 9 Rule 9 CPC to set aside the ex-parte dismissal of the suit and to restore the same - HELD THAT:- One Parijathammal as plaintiff has filed the suit for permanent injunction in respect of 4 items of property against 3 defendants. Admittedly, the said Parijathammal died on 09.07.2006 and the suit was dismissed for default on 14.07.2006. Thereafter, the respondent herein who is none other than the sister of the deceased plaintiff as well as the deceased first defendant/first revision petitioner filed application under Order 9 Rule 9 CPC to set aside the ex-parte dismissal of the suit and to restore the same and also an application under Order 1 Rule 10 r/w Order 22 Rule 5 CPC to implead herself as party to the proceeding. On perusal of the plaint it is seen that the cause of action has been mentioned as "The cause of action for the suit arose on 27.01.1967 when the suit property was purchased and on 17.05.2004, 20.03.2005 the defendants made an attempt to trespass into the suit property". But according to the respondent/proposed party, she has purchased the property only on 26.04.2006 and so, as on the date of filing of the suit, there is no cause of action and she was not the person in possession.
But in the instant case, the suit is only for bare injunction and the respondent/proposed party has purchased the 1st item of the suit scheduled property only after the filing of the suit. So, the contention raised by the learned counsel for the revision petitioner that there is no cause of action involved for the proposed party to adjudicate the suit is acceptable one.
The respondent/proposed party has no locus standi to file an application to restore the suit because the respondent herein has purchased only the 1st item of the suit property. Further, since the suit is for bare injunction, there arose no cause of action for the proposed party because she has purchased the property only after the filing of the suit. The Trial Court without considering these aspects in proper perspective has allowed the application filed by the respondent. Hence, the order of the Trial Court is perverse and the same is liable to the set aside and accordingly set aside and the Civil Revision Petition stands allowed.
These Civil Revision Petitions are allowed.
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2016 (1) TMI 1503 - DELHI HIGH COURT
Seeking quashing of proceedings arising out of the FIR in question - dispute between the parties has been amicably resolved - offences under Sections 365,364A, 328,174A IPC are non-compoundable offences - HELD THAT:- It is a well settled law that where the High Court is convinced that the offences are entirely personal in nature and therefore do not affect public peace or tranquillity and where it feels that quashing of such proceedings on account of compromise would bring about peace and would secure ends of justice, it should not hesitate to quash them. In such cases, pursuing prosecution would be waste of time and energy. Non-compoundable offences are basically an obstruction in entering into compromise. In certain cases, the main offence is compoundable but the connected offences are not.
In the case of B.S. JOSHI & ORS. VERSUS STATE OF HARYANA & ANR. [2003 (3) TMI 721 - SUPREME COURT] the Hon'ble Apex Court observed that even though the provisions of Section 320 Cr.P.C. would not apply to such offences which are not compoundable, it did not limit or affect the powers under Section 482 Cr.P.C. The Hon'ble Apex Court laid down that if for the purpose of securing the ends of justice, quashing of FIR becomes necessary, section 320 Cr.P.C. would not be a bar to the exercise of power of quashing. In the nutshell, the Hon'ble Apex Court justified the exercise of powers under Section 482 Cr.P.C. to quash the proceedings to secure the ends of justice in view of the special facts and circumstances of the case, even where the offences were non- compoundable.
This Court is of the view that notwithstanding the fact the offences under Sections 365,364A, 328,174A IPC are non-compoundable offences, there should be no impediment in quashing the FIR under these sections, if the Court is otherwise satisfied that the facts and circumstances of the case so warrant.
In the facts and circumstances of this case and in view of statement made by the respondent No. 2, the FIR in question warrants to be put to an end and proceedings emanating thereupon need to be quashed - Petition allowed.
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2016 (1) TMI 1502 - MADRAS HIGH COURT
Legality of will - main contention of the applicants is that the Will dated 11.12.1996 is not genuine one and it has been forged by the petitioners 1 and 2, viz., the sons of the deceased testator - Time Limitation - HELD THAT:- It is quite apparent that all that is required in the eventuality of the Letters of Administration being applied for after a lapse of three years from the date of death of the deceased, is that there should be an explanation forthcoming for the delay in presentation of the application and not that it would be a bar to institution of such proceedings - such a requirement is so stipulated on account of there being a continuous right, and long delays would throw suspicion on the Will. However, if this delay is explained and the Will proved in accordance with law, there would be no impediment to the grant of Letters of Administration in respect of the Will.
In the instant case, a perusal of the materials would show that even after the legal notice for partition was issued in 2003, no steps were taken. Nor after the suit was filed in 2007, steps could have been taken to apply for issuance of letters of administration. Therefore, it is clear that the petitioners deliberately waited for the suit to be over and only when the judgment was reserved in the suit in the year 2011, they have preferred the petition for grant of letters of administration.
It cannot be stated that Letters Patent and Rules made thereunder by the High Court for regulating the procedure on the original side, are subordinate legislation and, therefore, only Limitation Act which is a superior legislation will prevail - the finding of the learned single Judge holding that Article 137 of the Limitation Act is not applicable to probate proceedings and dismissal of the Original Applications, in our considered opinion, require no interference.
Appeal dismissed.
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2016 (1) TMI 1501 - ITAT CHANDIGARH
MAT computation u/s 115JB - disallowance of prior period items in the net profit of the company for the purpose of working out the book profit of the company u/s 115JB - whether Prior Period Expenses are to be adjusted to the net profit to arrive at the book profits? - HELD THAT:- As per Schedule –VI, Part –II and the prescribed Accounting Standards, net profit for the current year is to be arrived after adjusting prior period items.
In the present case the undisputed fact is that the Net Profit shown in the profit & loss account has been arrived at after reducing the prior period expenses - this Net Profit, is in compliance with Schedule-VI Part-II of the Companies Act and the prescribed Accounting Standard, i.e. AS-5. No adjustment, on account of prior period expenses, is required to be made to the same. Moreover, even as per Explanation—1 to section 115JB, no adjustment on account of prior period expenses is required to be made to the net profits reflected in the profit and loss account of the assessee.
Therefore we hold that no adjustment of prior period expenses is to be made by the assessee to arrive at the book profits for the purpose of levying tax u/s 115JB. Decided in favour of assessee.
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2016 (1) TMI 1500 - DELHI HIGH COURT
Benami transactions - requisite legal cause of action of existence of HUF and its properties made out or not? - HELD THAT:- In a case such as the present, besides ipse dixit of the plaintiff being a partner, it is necessary in law as per Order VI Rule 4 of the Code of Civil Procedure, 1908 (CPC) to make specific reference to the partnership deed as per which plaintiff is a partner in M/s. Khurana Associates and M/s. Khurana Sales Corporation. This however has not been done and the plaint is conspicuously silent in this regard.
It is also seen that there is only ipse dixit of the plaintiff of joint funds and joint properties being purchased from the joint funds, however, 'joint funds' or joint properties are not in law equal to HUF funds/HUF properties or businesses. It is also further required to be noted that 'joint funds' is an expression which is not in law equal to joint Hindu family property. 'Working together' is not equivalent to existence of a joint Hindu family.
Conclusion arrived at:
(i) The plaint only talks of 'joint funds', 'joint properties' and 'working together' without the necessary legal ingredients averred to make a complete existence of a cause of action of joint Hindu family/HUF with its properties and businesses.
(ii) Joint funds, joint businesses or working together etc do not mean averments which are complete and as required in law for existence of HUF and its properties have been made, and, joint funds and joint properties do not necessarily have automatic nexus for they being taken as with joint Hindu family/HUF properties.
(iii) In view of the specific bar contained in Sections 4(1) and (2) of the Benami Act, once properties in which rights sought by the plaintiff are not by title deeds/documents in the name of the plaintiff but are in the name of defendants, the plaintiff is barred under Section 4(1) of the Benami Act from claiming any right to these properties and the only way in which the right could have been claimed was if there was an existence of an HUF and its properties, but, the plaint does not contain the legally required ingredients for existence of HUF and its properties.
(iv) With respect to the properties lacking in exact details with the complete address, no reliefs can be claimed or granted with respect to the vague properties.
The suit plaint does not contain the necessary averments as required by law for existence of joint Hindu family/HUF properties and its businesses and thus in fact the suit plaint would be barred by Section 4(1) of the Benami Act as the necessary facts to bring the case within the exceptions contained in Section 4(3) of the Benami Act are not found to be pleaded/existing in the plaint.
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2016 (1) TMI 1499 - ITAT MUMBAI
Deduction u/s. 80P(2)(d) - interest received from investment with non-cooperative institutions was not allowable as deduction - HELD THAT:- Similar issue had arisen in the appeal filed by the AO for the AY. 2009-10 [2015 (9) TMI 1751 - ITAT MUMBAI], that the Tribunal had dismissed the appeal filed by the AO. He also relied upon the case of Jaoli Taluka Sahakari Patpedhi Maryadit [2015 (9) TMI 170 - ITAT MUMBAI], Mehsana District Cooperative Bank Ltd. [2001 (8) TMI 15 - SUPREME COURT]. Decided in favour of assessee.
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2016 (1) TMI 1498 - CALCUTTA HIGH COURT
Violation of principles of Natural Justice (audi alterem partem) - opportunity to cross-examine not provided - entire order is founded on the statement made by one Buppa Biswas without the petitioner being afforded an opportunity to cross-examine Buppa Biswas - HELD THAT:- No real issue of breach of natural justice or jurisdictional error is urged. The petitioner says that the entire order is founded on the statement made by one Buppa Biswas without the petitioner being afforded an opportunity to cross-examine Buppa Biswas. Such allegation does not amount to a breach of the principles of natural justice as it amounts to an irregularity or illegality in the procedure which can be conveniently canvassed in appeal.
Petition disposed off.
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2016 (1) TMI 1497 - ITAT MUMBAI
Penalty proceedings u/s. 271D - violations of Section 269SS - cash loan received - HELD THAT:- It is our considered view that provisions of Section 269SS of the Act are strict provisions making taxpayer liable for penalty for taking loan or deposit of ₹ 20,000/- or more in cash .
There are provisions u/s 273B of the Act when the reasonable cause is shown , then the penalty is not exigible. The provisions were enacted to check the menace of tax evasion so that the taxpayer is not allowed to give a false explanation for his un-accounted money or if has introduced some false entries in his accounts, he shall not escape by giving false explanations. Thus, it is not only the loan transaction which should be genuine but the taxpayer should come forward with reasonable cause as provided u/s 273B of the Act to get out of clutches of Section 269SS of the Act read with Section 271D of the Act. Thus, both the above conditions are to be cumulatively satisfied by the taxpayer.
As assessee firm is not able to show the reasonable cause as is referred to in Section 273B of the Act for taking the loan in cash from M/s Lakshmi Trading Company in violation of Section 269SS of the Act read with Section 271D of the Act, thus, in our considered view the penalty imposed by the authorities below need to be confirmed to that extent while the penalty remaining for reasons and manner of deletion as stated above in preceding para’s is hereby deleted.
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2016 (1) TMI 1496 - ITAT DELHI
Unexplained cash credit u/s 68 - inability of the creditors to explain the source of source - Assessee argued unsecured loans had been received by account payee cheques from identifiable parties who had duly confirmed in their statement that loans had been advanced to the appellant - HELD THAT:- It is well settled position of law and as stated above that appellant is not obliged to prove source of source of the credits. The burden of the assessee is to restrict himself to prove and explain the source of the credit; and once creditor has appeared and accepted that he has provided loan and, there is nothing to prove that money received by the appellant is his own money.
Assessee has discharged the primary onus on him to prove the identity, creditworthiness and genuineness of the transaction. Thereafter, it was the duty of the AO to investigate and found fault with the aforesaid documents that was produced before him. Without doing so, simply by taking one statement of an old man of 79 years that he has sold the agricultural produce to one firm – M/s. Girdhari Lal Ramesh Chander cannot be a sole ground that entire statement of Faquir Chand and documents which have corroborated the statement of Faquir Chand, cannot be countenanced.
AO has failed to bring on record any deficiency or could challenge the veracity of the documents filed before him. We find that Faquir Chand had enough creditworthiness and the transactions being through account payee need to be taken as genuine in the absence of any other evidences which is not on record. Therefore, we delete the disallowance.
For Joginder Mongia, the assessee had brought the creditor before the AO and has also produced the aforesaid documents to discharge its primary onus. We find that the authorities below have not been able to point out any discrepancy or defect in any of these documents produced by the assessee. In the absence of same, simply disallowing and making an assertion by just saying that it is bogus transaction, is legally untenable, therefore, we are inclined to delete the addition.
In respect of Satayawanti, we find that she is the mother of the assessee and she deposed before the AO that she is receiving money from M/s. Shree Gian Chand, a commission agent -However, during assessment proceedings, we find that the partner / proprietor of M/s. Shree Gian Chand denied to have any transaction with the said Satayawanti. Satayawanti’s contention is that the amount of ₹ 1,50,000/- has accumulated from her past savings and also she earns ₹ 25,000/- per annum from stitching works. The AO has also taken note of the fact that cash was deposited on the same date before issuance of cheque by Satayawanti to assessee - No infirmity in the order passed by the authorities below with regard to this creditor.
Decided partly in favour of assessee.
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2016 (1) TMI 1495 - ITAT KOLKATA
Bogus expenses - non-production of supporting evidence and necessary details in relation to various expenses - AO disallowed the expenses on estimate basis @ 30% of all the expenses - HELD THAT:- We find that the AO has disallowed the various expenses on adhoc basis on the ground of non-availability of the supporting documents. The expenses are in agreement with the earlier year expenses. No disallowance of such expenses has made in the earlier year assessment orders.
AR has explained all the expenses and submitted the necessary supporting details in the form of paper book which is placed on record. AO failed to point out the specific disallowances from the books of accounts of the assessee. Revenue’s appeal is dismissed.
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2016 (1) TMI 1494 - DELHI HIGH COURT
Depreciation u/s 32(1) - amounts of car loan advanced to employees for the purchase of vehicle under terms and conditions as laid down in “Car Policy” of the Assessee company - whether employee of the Assessee is to be considered as owner of the vehicle for the granting deprecation as per the provisions of the Act? - HELD THAT:- AO acknowledges that the asset is in fact in the name of the Assessee but “that mere fact” does not make the Assessee eligible for the claim of depreciation. In the considered view of the Court, this amounts to re-characterization of a factual aspect which cannot be permitted. Admittedly, the vehicles are in the name of the Assessee and merely because the employee may be given an option of buying the vehicle from the Assessee at a subsequent point in time at the depreciated value, would not disentitle the Assessee to claim depreciation on the vehicle as long as they continued to be in the ownership of the Assessee. Consequently, the Court declines to frame question nos.1 and 2 as urged by the Revenue.
Disallowance of car running expenses u/s 37(1) - Assessee had not discharged its onus u/s 37(1) of the Act that the expenditure was actually laid out or expended wholly and exclusively for the purposes of the business - HELD THAT:- Court again finds that the ITAT has not agreed with the contention of the Revenue that the running and maintenance expenses of the vehicles used by the employees of the Assessee were not for the business purposes of the Assessee. This is consistent with the view that has been adopted by the ITAT in the Assessee’s own case for the earlier AY 2006-07. This Court is not persuaded to hold that only because the vehicles were used by the employees for their personal use, the car maintenance expenses would not be for the business purposes of the Assessee. The Court, accordingly, declines to frame the question on this issue.
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2016 (1) TMI 1493 - DELHI HIGH COURT
TP Adjustment - comparable selection - exclusion of M/s. Cosmic Global Ltd. (‘CGL’) as a comparable by the Assessee - HELD THAT:- A perusal of the impugned order of the ITAT reveals that the ITAT was conscious of this fact and proceeded to assess on merits whether the Assessee was justified in seeking the exclusion of CGL as a comparable. The ITAT has set out detailed reasons why the said plea of the Assessee was justified. Inter alia it was noticed that CGL’s functional profile did not match that of the Assessee and a substantial portion of its earnings was on account of translation charges whereas the Assessee was not in that line of business at all. This being a purely factual determination, the Court is not persuaded to hold that any substantial question of law arises from the impugned order of the ITAT.
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2016 (1) TMI 1492 - ITAT COCHIN
Revision u/s 263 by - exemption u/s 11 - grant 15% accumulation on the gross income - need to file Form 10 - whether 15% of the accumulation permitted u/s 11(1)(a) of the Act is to be calculated on the gross income or on the net income? - HELD THAT:- On a plain reading of section 11(1)(a) of the Act, it can be seen that 85% of the income of the trust to be applied for charitable/religious purposes and upto15% is permitted for accumulation in order to avail full exemption. There is no condition stated/s 11(1)(a) of the act to invest the 15% accumulated income in the modes specified as per section 11(5) of the Act. Section 11(2) of the Act is for giving relief to unapplied income which is short of 85% with a condition of keeping such surplus in the specified mode as per section 11(5) of the Act. This is to be done after giving notice to the AO by the assessee in Form No.10 of the Income Tax Rules.
In the instant case, if the 15% of the gross total income is set apart u/s 11(1)(a) of the Act, it comes to Rs. 2,03,50,121/- (15% of Rs. 13,56,67,475/-). After incurring of capital expenditure, the surplus was only Rs. 92,71,940/-. Therefore, there is no need to file Form 10 before the AO nor for any investment as mentioned u/s 11(5) of the Act, since the entire excess would be within 15% of the income accumulated as per Sec. 11(1)(a) of the Act. Hence we hold that CIT is not justified in invoking his revisionary jurisdiction u/s 263 of the Act and the same is quashed. Decided in favour of assessee.
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2016 (1) TMI 1491 - ITAT MUMBAI
Calculation of liability - Incremental liability for payment of pension under the Voluntary retirement scheme (VRS) created on an actuarial basis in computing the assessee’s total income - HELD THAT:- Tribunal in assessee’s own case for A.Y. 1994-95 [2013 (2) TMI 95 - ITAT MUMBAI] followed the findings given by the Tribunal in A.Y. 1993-94 [2012 (8) TMI 492 - ITAT, MUMBAI] and has restored this issue back to the file of AO to examine and verify the actuary valuation certificate and the agreement with the company and the employee and if he finds that the liability has been calculated on a scientific basis, may allow the claim of the assessee - Ground of appeal No.1 is decided in favour of the assessee.
Nature of expenses - disallowance of 20% of foreign traveling expenses - revenue or capital expenditure - HELD THAT:- As decided in own case disallowance has been made on assumptions and presumptions. The very basis on which the disallowance has been made is found to be not correct. In fact in AY 74-75, 64-65 76-77 and 77-78 similar disallowance of expenses has been deleted by the Tribunal. Ground of appeal No.2 is decided in favour of the assessee.
Disallowance of entertainment expenses - HELD THAT:- Tribunal had dealt with the said issue in the assessee’s own case for the AY.1995-96 [2013 (10) TMI 1039 - ITAT MUMBAI]. we direct the AO to allow the lunch expenses on employees during the outdoor duty, business meeting expenses, expenses on AGM fully and we confirmed disallowance out of the total canteen expenses - Ground No.3,raised by the assessee, is partly allowed.
Disallowance of hotel expenses and air fares of foreign visitors coming/visiting to India - HELD THAT:- As decided in own case as held foreign victors came to India for purposes of attending the board meetings, general discussion, finance, reporting etc. It is considered that the expenditure represented predominantly business expenditure.
Deduction u/s 80HHC - reducing the loss on export of trading goods from deduction computed under section 80HHC(3) in respect of manufactured goods - HELD THAT:- As decided in own case in reducing the loss on export of trading goods from the deduction computed u/s.80HHC(3)of the Act in respect of manufactured goods. AR fairly conceded that issue is decided in favour of the department in view of the judgment of Hon’ble Apex Court delivered in the case of Ipca Laboratories
Deduction u/s.80O on net research income earned after deducting expenses - HELD THAT:- Representatives of both the sides agreed, before us, that the issue stands covered against the assessee by the orders of Asian Cable [2003 (3) TMI 87 - BOMBAY HIGH COURT], Petroleum India International [1999 (6) TMI 458 - ITAT MUMBAI] and M.N. Dastur & Co. [2000 (1) TMI 29 - CALCUTTA HIGH COURT]. Respectfully, following the above orders, we decide the issue against the assessee.
Entitlement of the assessee to interest u/s.244A on the amount of Self Assessment (SA)tax paid by it - Decided in favour of assessee.
Eligibility of the assessee for depreciation on assets that stood vested in Ciba Speciality Chemicals (India) Ltd.(CSCIL) - demerger of company - AO came to the conclusion that the book value of the transferred assets shall be adopted from block of assets for the purpose of depreciation and since consideration had flowed to the assessee for the transfer of assets to CSCIL the assessee was not entitled to claim of depreciation - HELD THAT:- As relying on Kasturi & Sons [1999 (3) TMI 6 - SUPREME COURT]. we find that what was transferred, in the transaction in question, was not money. In our opinion, facts of the above case are quite similar to the case under appeal.We have also taken note of fact that it is a case of demerger,not of sale or exchange.Last ground of appeal,raised by the assessee, is decided in its favour.
Nature of expenses - Disallowance of expenses incurred on amalgamation/demerger and in holding that the expenditure was of revenue nature - HELD THAT:- As decided in Bombay Dyeing & Mfg. Co. Ltd [1996 (2) TMI 8 - SUPREME COURT] expenditure incurred towards professional charges of the solicitors firm for the services rendered in connection with the said amalgamation was in the course of carrying on of the assessee’s business and, therefore, deductible as a revenue expenditure - Decided in favour of assessee.
Expenditure incurred on computer software - HELD THAT:- As application software are of revenue in nature as the AO has not doubted that the expenses were on application software. See Asahi Safety Glass ltd. [2011 (11) TMI 2 - DELHI HIGH COURT]
Estimated freight components in the closing stock - HELD THAT:- As decided in own case 1996-97 there is no impediment to the deduction of true profits and gains of the business because of the method of valuation followed by the assessee consistently and which has also been accepted by the departmental authorities. A stray departure just for one year tends to upset the calculations. When the method has not been found fault with for a long period of years. It acquires fundamental character and forms a sound basis for the assessment of the profits especially when the method followed is not patently false or unacceptable, and any accepted fundamental feature of an assessment cannot be lightly tinkered with as held by the Supreme Court in the case of Radhasaomi Satsang Sabha [1991 (11) TMI 2 - SUPREME COURT]
Exclude the sales tax and excise duty for the purpose of computing deduction u/s. 80HHC - HELD THAT:- .The Hon’ble Apex Court and the Jurisdictional High Court have in the cases of Laxmi Machine Works [2007 (4) TMI 202 - SUPREME COURT] and Sudershan Chemical Industries Ltd. [2000 (8) TMI 73 - BOMBAY HIGH COURT], held that sales tax and excise duty cannot be included for the purpose of computing the 80HHC deduction.
Disallowance u/s 14A - HELD THAT:- We restrict disallowance to 0.05% of the exempt income.
Deduction u/s.43B on delayed payment of ESIC - HELD THAT:- We find that the assessee had paid the dues before the due date of filing of return and there was only delay of one day in depositing the amount.In our opinion,there is no need to interfere with the order of the FAA.Confirming the same,Ground No.8 is decided against the AO.
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2016 (1) TMI 1490 - ITAT INDORE
Addition on account of commission payments debited to the profit and loss account - CIT-A deleted the addition - HELD THAT:- We find that the assessee has submitted detailed evidences like names of the agents, PAN numbers, describing services rendered by the Agents, confirming the transaction, details of the TDS made, Bank account details with returns of income of agents. However, the AO has failed to examine or crossexamine these evidences by calling the concerned Agents.
We also note that the question framed by the AO to various Government Agents like Madhya Pradesh Agro Industries Development Corporation Limited and Madhya Pradesh State Co-operative Marketing Federation etc. was whether such purchases were made through any commission agents ? If yes, the names and addresses of such commission agents. Therefore, the reply to this question had to be in negative as the commission agents were appointed by the assessee and not by the Government nodal agencies.
We also note that the assessee is dealing in supplies of equipments to the farmers in as many as three states spread over a large geographical area. Therefore, requirement of Representatives for doing such jobs cannot be denied. Further, M.P. State Agro State Marketing Development Corporation Limited vide their letter dated 21.02.2014 placed at paper book page no. 53, prescribes the various formalities and services required to be handled by the assessee or representatives of the agents. Therefore, we are of the considered opinion that the ld. CIT(A) was justified in deleting the addition on account of commission payments debited to the profit and loss account. Appeal of the Revenue is dismissed.
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2016 (1) TMI 1489 - DELHI HIGH COURT
Territorial Jurisdiction - Maintainability of suit - suit has been dismissed on the ground that this court does not have the territorial jurisdiction to entertain the same - infringement of trademark - HELD THAT:- The appellant / plaintiff has its principal office in Delhi (place A). Its subordinate office is at Deogarh, Jharkhand (place B) where it runs one of its hotels (Amrapali Clarks Inn), albeit in collaboration with Clarks Inn hotels. The alleged cause of action has accrued at Deogarh, Jharkhand (place B). Therefore, the appellant/plaintiff could, in respect of the alleged cause of action in this suit, institute a suit against the defendants at Deogarh, Jharkhand (place B) but not in Delhi. Thus, the conclusion arrived at by the learned single judge that this court did not have the territorial jurisdiction to entertain the suit cannot be faulted.
Interestingly, in the present case, even if the deeming fiction of the Explanation in section 20 of the Code is not imported into either of the said sections 134(2) or 62(2), on the basis of the averments made in the plaint itself it becomes clear that the plaintiff carries on business at, inter alia, Deogarh.
The appellant / plaintiff carries on business in Deogarh, Jharkhand. It may also carry on business at Delhi. But, because the cause of action has allegedly arisen in Deogarh, Jharkhand, and not in Delhi, the appellant/plaintiff cannot sue the defendants/respondents in Delhi - this court does not have the territorial jurisdiction to entertain the suit. And, on this count, the decision of the learned single judge cannot be faulted. But, the suit ought not to have been dismissed. As this court did not have jurisdiction, the plaint ought to have been returned under order 7 rule 10 CPC. Only to that extent, the learned single judge had erred.
The dismissal of the suit is set aside. Since this court does not have the territorial jurisdiction to entertain the suit, the plaint is directed to be returned to the appellant/plaintiff for presentation before the proper court - Appeal disposed off.
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2016 (1) TMI 1488 - ITAT JAIPUR
Disallowance of 50% of Misc. Expenses including poojan expenses - HELD THAT:- We find merit in the contentions of assessee, these expenditure being in the field of customary expenses, labour welfare having been allowed in past year should be allowed. Our view is fortified by Honble Delhi High Court and Madras High Court judgments in the cases of Mohan Meakin Ltd [2009 (10) TMI 894 - DELHI HIGH COURT] and Aruna Sugars [1977 (1) TMI 8 - MADRAS HIGH COURT]
Disallowance of compensation paid to taparies for vacating the unauthorized construction / kacchi taparies - HELD THAT:- Expenditure on compensation and payment to facilitators for removal of encroachment to ensure smooth mining activities related to business of the assessee are to be held as allowable expenditure. Our view is fortified by Hon’ble Supreme Court judgments in the case of Dalmia Jain and Co. [1971 (7) TMI 2 - SUPREME COURT] and Empire Jute Co [1980 (5) TMI 1 - SUPREME COURT] and other judgments. This ground of the assessee is allowed.
Disallowance of membership fee paid to rotary club on behalf of director - HELD THAT:- Apropos meager amount incurred on club membership fee is allowable in view of various ITAT judgments including Sony India [2005 (5) TMI 557 - ITAT DELHI]. As a result this ground of the assessee is allowed.
Disallowance of professional charges paid to consultant for preparing project report to set up new power plant which did not materialize - HELD THAT:- As it is not disputed that the opportunity of allotment of a coal mine along with establishment of 600 MW Coal based Power Plant in Raigarh District, Chhattisgarh was offered to assessee. Neither the genuineness of expenditure nor the shelving of the power plant project due to non allotment of coal block is doubted by authorities below. The expenditure has been disallowed only by holding it to be capital in nature. As in the case of CIT v. Expanded Metal Mfrs [1991 (2) TMI 99 - ALLAHABAD HIGH COURT] held that - Where assessee firm, carrying on business of expenditure of iron metal by mechanical process and its supply, started a new business of manufacture of rubber products and for that purpose raised loan interest was allowable for relevant period even though during that period assessee's rubber factory did not work. The facts of the assessee case are similar and further supported by a catena of judgments as mentioned above. In these facts and circumstances respectfully following the se judgment we hold that assessee is eligible for claim of expenditure as revenue expenditure incurred for feasibility of new power project which could not commence.
Appeal of the assessee is allowed.
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2016 (1) TMI 1487 - DELHI HIGH COURT
Disallowance u/s 10B - receipts from international recruitment services - whether receipts were covered within the meaning of export of article or things or computer software and were not eligible for deduction under Section 10B of the Act? - HELD THAT:- Issue stands answered in the Assessee’s own case in its favour by the decision of this Court in Commissioner of Income Tax-II v. M. L. Outsourcing Services (P) Ltd. [2014 (9) TMI 396 - DELHI HIGH COURT] for AY 2007-08. The ITAT has, in fact, followed the said decision while deciding the question in favour of the Assessee. It is stated that the Revenue has gone in an appeal against the said decision to the Supreme Court and the said appeal is pending. Consequently, the Court declines to frame a question on this issue.
Delayed Employees contribution to the Employees Provident Fund (EPF) and the Employees State Insurance Scheme (ESI) - deemed as the employer’s income u/s 2(24)(x) of the Act and which is subject to deduction u/s 36(1)(va) of the Act is also governed by section 43B of the Act - HELD THAT:- Revenue seeks to place reliance on the decision of the Gujarat High Court in CIT v. Gujarat State Road Transport Corporation [2014 (1) TMI 502 - GUJARAT HIGH COURT] which according to him decides the issue in favour of the Revenue. However, there are numerous decisions of this Court that have answered the very question in favour of the Assessee. These include CIT v. AIMIL Ltd. [2009 (12) TMI 38 - DELHI HIGH COURT], CIT v. P.M. Electronics Ltd. [2008 (11) TMI 3 - DELHI HIGH COURT], CIT v. Vinay Cement Ltd. [2007 (3) TMI 346 - SC ORDER] and CIT v. Dharmendra Sharma [2007 (11) TMI 39 - DELHI HIGH COURT] - Consequently, the Court declines to frame the question.
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2016 (1) TMI 1486 - ITAT AMRITSAR
Admission of additional evidence by CIT-A - CIT(A) refused to admit the additional evidence and rejected the same - HELD THAT:- As in “Shahrukh Khan” [2006 (7) TMI 532 - ITAT MUMBAI] under similar circumstances, the Tribunal found from the record that it was not discernible whether the ld. CIT(A) had granted permission to adduce additional evidence by recording reasons in writing under Rule 46A(2) of the I.T. Rules. However, the ld. CIT(A) had directly sent it to the AO under Rule 46A(3), for verification. The Tribunal held that it was implied that the additional evidence was relevant material and that the ld. CIT(A) had entertained it and had only thereafter sent it to the AO for verification, calling for a remand report on merits.
On this, it was held that after doing so, the ld. CIT(A) was precluded from refusing to admit the additional evidence. It was observed that the ld. CIT(A) could have at that stage, rejected the evidence as not sufficient, or not proved, but it had to be construed that the evidence had been taken on record. It was observed that this apart, as per Rule 46A(4), the ld. CIT(A) has vast powers under which he can exercise his discretion for entertaining any evidence, even if the case of the assessee does not fall within the exceptions provided under Rule 46A(1)(a) to (d). It was observed that the moment the ld. CIT(A) arrives at a conclusion that the evidence sought to be produced by the assessee is essential for the just decision of the appeal, or for the cause of substantial justice,. it is necessary to call such material on record and that in that situation, the interdiction provided in Rules 46A(1) and (2) would not come in the way.
Since the matter requires fresh adjudication on merits right from the stage of assessment in the light of the additional evidence filed by the assessee, as admitted by me and the AO’s comments thereon, as made in the remand report, which was never put to the assessee, I remit the matter to the AO, to be decided afresh in accordance with law. Appeal of the assessee is treated as allowed for statistical purposes.
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