Home Case Index All Cases Income Tax Income Tax + AT Income Tax - 2014 (9) TMI AT This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2014 (9) TMI 84 - AT - Income TaxLTCG on sale of wood – Sale of timber out of shade trees - Business income or not – Held that:- Following the decision in Tata Coffee Ltd. Versus Joint Commissioner of Income-tax, Special Range-2, Bangalore [2012 (11) TMI 512 - KARNATAKA HIGH COURT] - the trees are held to be the capital asset and part of the fixed structure of a coffee or tea plantation - When the trees have been cut and removed, the capital gain has to be assessed on the basis of Section 48 but in the instant case, the cost of acquisition of the assets has not been properly examined by the authorities below - Solely on the basis of some letter written by the Officer of the Government Department, the cost of acquisition of the assets cannot be assessed. The CIT (A) while setting aside the order passed by the Assessing Authority directed the Assessing Authority to work out the market value of the assets as on 01-04-1981 after obtaining the specific notification from the office of the Conservator of Forests with regard to market value in respect of rosewood and silver oak trees as on 01-04-1981 and to work out the capital gain by working out the indexed market value - Except the letter dated 31-3-1981, no other materials has been produced before the authorities - the order passed by the ITAT in setting aside the order passed by the CIT (A) wherein the Commissioner has directed the Assessing Authority to reconsider the matter is contrary to law - The Appellate Tribunal has also not examined the market value of the assets as on 01-04-1981 the order passed by the Appellate Tribunal cannot be sustained - The matter has to be re-examined by the Assessing Authority by working out the indexed market value in respect of rosewood and silver oak trees – Decided in favour of revenue. Value of timber lying with the Govt. for auction deleted – Held that:- The contention of the assessee is that merely transmitting the wood to the auction depot would not entitle it to recognize the income from the sale of rosewood in its book, because up to that stage it cannot claim such income has received or a right entitling it to receive has been accrued – the FAA has appreciated this aspect in right perspective, because no right was accrued to the assessee by the time the wood was handed over to the Govt. Depot - Only on finalization of its auction and deposit made by the bidder, its sale can be recognized - CIT (A) has rightly deleted the addition – Decided against revenue. Restriction of 50% of wood processing charges – Held that:- It is nowhere discernible what specific defect was noticed by him in the details of expenditure maintained by the assessee - In a very vague way, he observed that no supporting material was available - The contention of the assessee is that payments were made on the basis of the invoices raised by the Contractor - He has not directed the assessee to bring confirmation from the contractor or he himself has not directly verified from the contractor about the invoice - It is not justifiable to disallow 50% of the expenditure claimed by the assessee by making such observation – Decided against Revenue. Loss claimed on supply division – Held that:- The FAA has erred in confirming the disallowance - The assessee has offered an income of ₹ 8.22 crores - There could not be any reason to inflate the expenses of such a small nature in one of the Division - The AO in the findings failed to assign any reason, how the claim made by the assessee is not reliable - Merely loss has occurred in such a Division, does not mean that such a loss is to be disallowed by just disbelieving the accounts – Decided in favour of assessee. Marketing expenses disallowed – Held that:- If any expenditure which is to be incurred wholly and exclusively for the purpose of the business which is not in the nature of capital expenditure or any other expenditure provided in section 30 to 36, that can be claimed under the residuary provision of section 37 – the details of expenditure are not directly relatable to each head - The AO has bifurcated the expenditure claimed by the assessee under various heads and then pointed out why expenses meant for a particular head has been debited in a different head namely "other marketing expenses" - The assessee failed to give any reply to this aspect - accounts under this head did not give correct picture - Some disallowance on an adhoc basis has to be made, because of unsatisfactory explanation given by the assessee - CIT (A) has restricted the disallowance at ₹ 25.00 lakhs – Decided in favour of assessee. Restriction of 10% out of car hire charges – Held that:- The assessee has not been maintaining the log book of the vehicles, exhibiting their exclusive usage – the FAA has rightly observed that possibility of users other than for business purpose cannot be ruled out - 10% disallowance out of the total expenses cannot be termed on higher side – Decided against Assessee. Miscellaneous expenditure disallowed – Entertainment expenses – Held that:- Except stating that the expenditure was incurred for the purpose of business the appellant company was unable to furnish any further details in respect of this expenditure - the AO and the addition made by the AO to the extent of ₹ 5.00 lakhs is confirmed – claim of any expenditure can be allowed to an assessee, if it is proved on the record that expenditure was incurred wholly and exclusively for the purpose of the business - There is a lacuna in the claim made by the assessee - It could not substantiate all the expenses with supporting vouchers - AO has observed that during the course of hearing, defects were noticed and pointed out – the order of the CIT(A) is upheld – Decided against assessee.
|