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2015 (3) TMI 967 - AT - Income Tax
Entitlement to the benefit of section 11 - assessee advanced monies to other trusts and this is in violation of section 13(1)(d) of the Act - CIT(A) allowed the exemption - Held that:- The monies advanced by the assessee to the other trusts which are registered under section 12A and having similar objects cannot be said to be in violation of provisions of section 13(1) of the Act. Therefore, we direct the Assessing Officer to examine whether other organizations to whom the assessee has lent monies are registered under section 12A and in case, such organizations are registered under section 12A, the exemption under section 11 cannot be denied on this ground.
Assessee deriving substantial income from letting out of its auditorium, Esplanade hall, rooms at Vepery and Royapettah ground as held by DR - violated provisions of section 11(4A) of the Act as no separate books of accounts were maintained by the assessee - Held that:- As far as violation under section 11(4A) is concerned, the same can be applied only in case the assessee is engaged in business activities. It is the contention of the assessee that income from letting out of the properties is income from house property and therefore such income is exempt under section 11 of the Act. Application of section 11(4A) arises only when the assessee carries on business. Therefore the question of maintaining separate books of accounts comes only when the assessee is carrying on business activity. Hence, it is the contention of the assessee that it is not carrying on any business activity and the income earned on letting out of property is only incidental and is income from property and exempt under section 11 of the Act. Therefore, the question of maintaining separate books of account does not arise when the assessee is earning income from letting out of property and when such income is exempt under section 11 of the Act, as income from house property. Since we have already directed the Assessing Officer to examine the nature of activity and its income i.e. whether the income is derived as incidental to the objects of the assessee or as a separate business, this can be examined by the Assessing Officer in the light of our above observations. - Decided in favour of revenue for statistical purposes.
Enhancement of income - CIT(A) directing the Assessing Officer to treat the cash credits of ₹ 1.00 crore as income from other sources - Held that:- As could be seen from the order of the Commissioner of Income Tax (Appeals) that the assessee has introduced ₹ 1.00 crore in its books of accounts as credits from unknown persons. As the assessee could not explain the source for the said credits or the persons from whom the loans were taken, the same were treated as unexplained credits assessable under the head 'income from other sources'. The Commissioner of Income Tax (Appeals) also held that the said ₹ 1.00 crore introduced by the assessee as credits also cannot be considered as application of income since this amount is not received by the assessee by way of any donation. This income is treated as deemed income under section 68 of the Act.On going through the above observations of the Commissioner of Income Tax (Appeals), we find no good reason to interfere with the order of the Commissioner of Income Tax (Appeals) in sustaining the addition. - Decided against assessee.
Penalty levied under section 271D / 271E - CIT(A) deleted the levy - AO while completing the assessment assessed the cash loans as unexplained credit under section 68 - Held that:- On going through the submissions of the assessee and the order of the Commissioner of Income Tax (Appeals), we find there is no good reason to interfere with the order of the Commissioner of Income Tax (Appeals) in deleting the penalty levied under section 271D / 271E especially when the Assessing Officer has treated the cash loans as unexplained credits and at the same time, invoking the provisions of section 269SS / 269T of the Act. This view is also supported by the Hon'ble Delhi High Court in the case of CIT Vs. Standard Brands Ltd., (2006 (7) TMI 126 - DELHI High Court ), wherein the Hon'ble High Court has held that "when the cash deposits were treated as undisclosed income of the assessee, the Assessing Officer could not resort to proceedings under section 269SS read with section 271D of the Act." - Decided in favour of assessee.
Penalty levied under section 271D - cash loan from Smt. Meenakshi - CIT(A) deleted the penalty - Held that:- The assessee has obtained cash loan from Smt. Meenakshi, who is an assessee, the identity is proved, the genuineness of the transaction is proved, therefore, it cannot be said that the loan amount of ₹ 25,00,000/- is unaccounted income of the assessee. We also notice from the assessment order that the cash loans introduced by the assessee from other than Smt. Meenakshi have been considered as unexplained credits by the Assessing Officer which shows that the cash loans obtained from Smt. Meenakshi is genuine loan and no such treatment was given to this loan of ₹ 25,00,000/- by the Assessing Officer while completing the assessment. We also find that the assessee was forced to avail cash loans in order to meet the requirements of payments to bank for reducing the credit limit and to honour the cheques already issued. The Department has not filed any evidence to rebut the findings of the Commissioner of Income Tax (Appeals). In the circumstances, we sustain the order of the Commissioner of Income Tax (Appeals) in deleting the penalty levied under section 271D of the Act and no interference is called for. - Decided in favour of assessee.