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Showing 81 to 100 of 1478 Records
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2016 (6) TMI 1401 - ITAT CHENNAI
Disallowance of payment incurred for the transfer of land paid to the Bank of Baroda and payment of workmen compensation for settlement - Company is in the process of winding up - HELD THAT:- It cannot be disputed that the property in dispute was mortgaged with Bank of Baroda. They also taken the symbolic possession of the assets charged to them under the provisions of SARFAESI 2002 which is evidenced from the letter dated 7.7.2007 kept. Further, they have also given possession notice vide letter dated 7.7.2007 which is kept on record at page 3 of the paper book. Thus, it cannot be disputed that unless the assessee had settled the dispute with Bank of Baroda, the sale transaction with M/s. Alliance Mall Developers Co. Pvt. Ltd. vide sale deed dated 11th June, 2008 could not have materialized, there would perhaps have no question of capital gains.
The expression “in connection with such transfer” is, in our opinion, certainly wider than the expression “for the transfer”. Once again, we are of the view that any amount the payment of which is absolutely necessary to effect the transfer will be an expenditure covered by this clause. In other words, if, without removing any encumbrance, sale or transfer could not be effected, the amount paid for removing that encumbrance will fall under clause (i). In this case, sale of transfer could not be effected and the amount paid for removing that encumbrance will fall under clause (i) of sec.48 of the Act.
We are of the opinion that the above two payments to be allowed. It is needless to say that had the assessee not paid to the workmen, who had taken the possession of factory premises of the assessee could not be allowed to transfer the said capital asset. However, if the assessee had claimed any amount out of this, in any assessment year , same to be reduced from this amount by AO while giving effect to this order. Accordingly, the grounds relating to these issues are allowed.
Disallowance of commission payment - contention of the ld. DR is that these payments are not properly vouched and doubted the services rendered by the recipient - HELD THAT:- CIT(Appeals) has given a finding that the assessee has not produced brokers to show that they have rendered services. The power of the CIT(Appeals) is coterminous that of the AO and he should have issued summons, once the assessee has furnished the names and addresses of the parties. This exercise has not been done by the revenue authorities. Hence, out rightly disallowing the entire commission payment is not appropriate. However, there is lapse on the assessee also as noticed by the AO as mentioned in earlier para. In our opinion, the payment of commission is very excessive. As per trade practice, when the transaction of such volumes took place, usually in real estate field, commission payment is at one percent of the sale value of the property would be paid. Accordingly, we direct the AO to allow one percent of the total sale value of the property as commission payment towards transfer of property. This ground is partly allowed.
Disallowance of claim of set off of business expenditure against long term capital gains - According to the revenue authorities, the assessee has stopped manufacturing of yarn since 1993 and the liabilities and expenditure relating to those earlier years have been claimed as expenditure in the assessment year 2009-10 - HELD THAT:- There is nothing on record to show that the assessee has completely closed the business of the assessee. However, the copy of the assessment order for the assessment year 2012-13 to show that wherein the AO taxed the cessation of liability u/s.41(1) of the Act. The ld. AR submitted that the expenditure claimed by the assessee was capitalized in the assessment year under consideration. Being so, in our opinion, this issue requires re-examination by the AO. Since the above evidence was brought on record, we suggest that the company only withhold the business activity due to strike and other factors and there was no intention to carry on the business activity, for the time being and it was not wound up the business. Therefore, issue is to be reexamined by the AO, whether it is reasonable or excessive. Accordingly, he is directed to disallow only that portion of the expenditure if he finds any amount excessive or unreasonable. Further, regarding the claim of bad debts, the same to be examined in terms of sec.36(1)(vii) r.w.sec. 36(2) of the Act. With regard to statutory liability like sales tax, ESI, PF etc., is to be allowed on actual payment basis in the assessment year under consideration in terms of sec.43B of the Act. Hence, we remit this issue to the file of the AO for fresh consideration.
Business income in the form of interest receipts - business loss arising out of the business activities should be set off against the capital gain on sale of business assets - HELD THAT:- The assessee deposited certain fund out of the amount received from sale of land and interest earned from that deposit as income from other sources and in view of the judgment in the case of Tuticorin Alkali Chemicals And Fertilizers Ltd. v. CIT [1997 (7) TMI 4 - SUPREME COURT] wherein it was held that interest earned by the assessee on short term deposit in bank out of term loan is income under the head ‘other sources’. Hence, this issue is dismissed.
Disallowance of the claim of expenditure towards payment of commission at 100% and site clearing charges at 75% while calculating long term capital gains - HELD THAT:- The assessee had to engage personnel specially skilled in doing such kind of jobs who were illiterate and working in an unorganized manner. These personnel did not normally come and work regularly but were coming and working erratically. Besides they had to be paid in cash only. However the CIT (A) has allowed only 25% of the expenditure for the cleaning charges. The CIT (A) ought to have allowed fully the expenditure. According to the ld. AR the CIT (A) wrongly allowed only 25% Learned Assessing Officer has grossly erred in disallowing all the claims of the Assessee on the commission payment made to facilitate conclusion of the sale of immovable property u/s 48(i) and site clearing charges also under sec. 48(i) of the Act, drawing untenable non-existent inference, purely based on suspicions, surmises, conjectures, presumption of bad faith etc., which runs contrary to the facts obtaining very much from the return of income and explanations offered.
Disallowance of expenses which was no nexus with manufacturing of yarn - HELD THAT:- This issue is remitted to the AO to disallow only the expenditure which he finds excessive or unreasonable.
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2016 (6) TMI 1400 - CALCUTTA HIGH COURT
Sanction of Amalgamation Scheme - HELD THAT:- In the event, the petitioners supply a legible computerized printout of the scheme and the Schedule of assets in acceptable form to the department, the department will append such computerized printout, upon verification, to the certified copy of the order without insisting on a handwritten copy thereof.
Affidavit of service, notice to petition and paper publication filed in Court be kept on record - Petition disposed off.
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2016 (6) TMI 1399 - ITAT MUMBAI
Taxable income - interest income credited to Work-in- process (i.e. WIP) (on the ongoing phase) - as attributable to the WIP, and should be reduced from amount of WIP of the project undertaken by the assessee in its proprietorship unit namely M/s Silver Developers - HELD THAT:- Impugned interest is a period item. Under these circumstances, it can clearly be said that assessee had earned pre-decided amount of interest as the time passed. It is further noted by us that factually also GIPL had paid interest to the assessee as was stipulated in the agreement and that too after deducting tax at source. The said amount of TDS has been admittedly claimed by the assessee in its return of income.
As clearly establish that the impugned interest amount should be treated as income of the assessee for the period under consideration. It is also noted that with respect to interest amount received from M/s Industrial Finance Securities Pvt Ltd, Ld. Counsel fairly stated during the hearing that this company is an independent party unconnected with this project, and therefore this interest income is not relatable to WIP, but it was inadvertently reduced from WIP, but it should be separately taxed as business income. We uphold the order of the Ld. CIT(A) for treating the total interest income as taxable in the year under consideration and also uphold his action in treating same as ‘income from business’ in the given facts and circumstances of the case. Thus, this ground is dismissed.
Addition on account of interest expenses holding the same as business expenditure as against the capital expenses attributable to WIP - HELD THAT:- As already held in earlier part of our order that interest income is not part of WIP and it was assessable separately as business income of the period under consideration. Thus, drawing same analogy, we find that interest expense is also not part of WIP but business expense of the assessee for the period under consideration. The AO had also unfortunately followed double standards while passing the assessment order. When he had treated the ‘interest income’ as separate income and did not choose to reduce it from the cost of WIP, then there was no justification on his part to treat ‘interest expense’ as part of WIP and disallow the same. Thus, taking into totality of facts and circumstances of the case, we find that order of Ld. CIT(A) is well reasoned and thus Ld CIT(A) is justified in treating the interest expenses as having been incurred in the regular course of business and deductible in full as business expense of the period under consideration. We do not find any need to interfere in the findings of the Ld. CIT(A) and the same are upheld. This ground of revenue is dismissed.
Notional interest attributable to interest free deposits while computing the income under the head House Property of the assessee during the year - HELD THAT:- AO nowhere held that actual rent received by the assessee was not annual let out value and nowhere he had given any other comparables to determine the ALV. Actual rent received was required to be accepted as ALV. The law does not permit the addition of notional interest on the ground of interest-free deposits received from the tenant. The law in this regard has been clearly explained in the various judgments as has been relied upon by the CIT(A), as reproduced above. No contrary judgment was brought to our notice by the Ld. DR. Under these circumstances, we do not find any reason to interfere in the order of Ld. CIT(A) and therefore same is upheld ground no.2 of revenue’s appeal is dismissed.
Treatment to hire charges income received - “income from house property” or “income from other sources” - AO treated the rent receipts towards amenities from the tenant in the form of hire charges as income from other sources as the assessee had entered into separate agreements for the hiring amenities and therefore the amount received by the assessee was towards utilization of amenities and not for the utilization of house property - HELD THAT:- The perusal of particulars of items provided under the amenities, as has been discussed by the Ld. CIT(A) in his order, show that these amenities are of the nature that they constitute integral part of the house building e.g. Electrical Panels, AHU rooms and fire control system, water tanks, elevator, etc. In our considered view, all these items are nowadays considered as items of basic necessities. It has been contended before us that the impugned premises could not have been put to use without these amenities. In any case, the main intention of the assessee was stated to be for exploiting the property and not to render any service with the help of these amenities. We do not find anything indicating that services provided with the help of these amenities were in any manner distinct from letting out of the property. Under these circumstances, hire charges need not necessarily be separately assessed from rental income. Thus, both of these can be assessed under the head “income from house property” as part of total rental income. We find that the order of Ld. CIT(A) is justified on facts and law both.
Proportionate disallowance of expenses which would have been incurred towards the property which was either let out or gifted - AO made disallowance @ of 25% of the total expenses on the basis of area occupied by the let out properties - HELD THAT:- CIT(A) has made item wise analysis of all the expenses and found that none of these expenses were related to the let out properties or gifted properties. If any expenses were incurred on such type of properties then the same were recovered. It is further noted that Ld. CIT(A) has analysed other expenses also for example professional fee and various other expenses before giving the factual findings that none of these expenses related to let out properties.
Denial of natural justice - addition debited under the head purchases deleted by CIT-A - CIT(A) had considered additional evidences in violation of Rule 46A of Income Tax Rule 1962 - HELD THAT:- During the course of hearing, it was put to the Ld. DR by point out that what are those additional evidences which have been referred by the Ld. CIT(A) in his order. Ld. DR was not able to point out any additional evidences. Even on merits Ld. DR was not able to controvert or contradict the factual findings given by the Ld. CIT(A). It is seen that Ld. CIT(A) has analysed entire facts and similar expenses have been allowed in earlier year A.Y. 2008-09 in the order passed u/s 143(3) by the AO himself. It was further found by the Ld. CIT(A) that the impugned expenses were not related to the joint venture project and therefore there were no reasons for transferring these expenses to the WIP account. Under these facts, we find that Ld. CIT(A) has rightly deleted the disallowance made by the AO. We do not find any reasons to interfere in the findings recorded by the Ld. CIT(A) and therefore these are upheld and consequently ground no.1 of Revenue’s appeal is dismissed.
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2016 (6) TMI 1398 - ITAT RAIPUR
Levy of processing fees u/s 234E - intimation u/s 200A - HELD THAT:- As decided in Sibia Healthcare Private Limited vs. DCIT [2015 (6) TMI 437 - ITAT AMRITSAR] issue is whether such a levy could be effected in the course of intimation under section 200A. The answer is clearly in negative. No other provision enabling a demand in respect of this levy has been pointed out to us and it is thus an admitted position that in the absence of the enabling provision under section 200A, no such levy could be effected. As intimation under section 200A, raising a demand or directing a refund to the tax deductor, can only be passed within one year from the end of the financial year within which the related TDS statement is filed, and as the related TDS statement was filed on 19th February 2014, such a levy could only have been made at best within 31st March 2015. That time has already elapsed and the defect is thus not curable even at this stage. In view of these discussions, as also bearing in mind entirety of the case, the impugned levy of fees under section 234 E is unsustainable in law. We, therefore, uphold the grievance of the assessee and delete the impugned levy of fee under section 234E - Decided in favour of assessee.
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2016 (6) TMI 1397 - ITAT MUMBAI
Maintainability of appeal - low tax effect - tax effect below prescribed monetary limit - HELD THAT:- Since, the tax effect is less than ₹ 10,00,000/- for filing the appeal before the Tribunal, as contained in CBDT instruction No.21 of 2015, dated 10/12/2015 (F No.279/Misc./142/2007IT(PT), applicable with retrospective effect, the appeal of the Revenue is not maintainable, therefore, dismissed.
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2016 (6) TMI 1396 - ITAT BANGALORE
Gain on sale of Land - LTCG or business income - whether hares held as investments in the books of the appellants and was never converted into stock-in-trade - HELD THAT:- As per Tribunal’s order for the assessment year 2005-06 [2010 (10) TMI 1205 - ITAT BANGALORE], all the shares which were held by the assessee as stock-in-trade up to that year were converted into investments and nothing has been brought on record by the revenue to establish that after this assessment year, any purchase of shares by the assessee was for the purpose of dealing in shares.
Under these facts, hold that the shares were held by the assessee as investments and therefore, the gain arising to the assessee in the present two years on sale of shares is liable to tax as capital gains and not as business income, but whether such capital gain is short term capital gains or long term capital gains, it depends upon the holding period of shares and for that, it is required to examine the date of purchase and date of sale of the shares. Since this aspect was never examined by the lower authorities and facts are not available before me on this aspect,feel it fit and proper to restore back this factual aspect to the file of the AO and accordingly, restore this matter back to the file of the AO for the limited purpose of examining the date of acquisition of shares and date of sale of shares to decide as to whether the gain arising on sale of such shares is short term capital gains or long terms capital gains - Appeals of the assessee are allowed for statistical purposes
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2016 (6) TMI 1395 - KERALA HIGH COURT
Deduction u/s 36(1)(iii) - interest expenses relatable to interest free advances - ITAT allowed the deduction - HELD THAT:- In the judgment in CIT v. V.I.Baby and Co. [2001 (10) TMI 58 - KERALA HIGH COURT] a Division Bench of this court considered this provision and held that in a case where interest free advance was given by the assessee and deduction is claimed, the question to be considered is what is the benefit that is derived by the assessee by giving such interest free advance. It was also held that so long as the assessee is not the beneficiary of the investments made by the partners, their relatives and the sister concerns from out of the interest free advances, the Assessing Officer is perfectly justified in disallowing interest in proportion to the advances made.
Subsequently, the Honourable Supreme Court also had occasion to consider the provisions of Section 36(1)(iii) in the judgment in S.A.Builders Ltd. v. CIT (Appeals) [2006 (12) TMI 82 - SUPREME COURT]. In that case, after a detailed examination of the provisions, the Supreme Court held that when a claim for deduction under Section 36(1)(iii) is made, the authorities should enquire as to whether the interest free loan was given as a measure of commercial expediency and on facts if it is so found, deduction is liable to be allowed. The court also explained that the expression “commercial expediency” is an expression of wide import and includes such expenditure that a prudent businessman incurs for the purpose of business and that such expenditure may not have been incurred under any legal obligation.
We set aside the orders impugned and answering the questions of law in favour of the revenue, these appeals are disposed of remitting the matter to the AO who shall reconsider the cases of the assessee, after issuing notice to the parties.
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2016 (6) TMI 1394 - ITAT KOLKATA
TDS u/s 194A - Non deduction of TDS u/s 40(a)(ia) on bill discounting charges - According to the AO, this bill/discounting charges are interest expenses as per the provision of section 2(28A) of the Act and therefore the assessee was liable to deduct TDS - HELD THAT:- As decided in own case [2014 (1) TMI 1484 - ITAT KOLKATA] discounting charges of Bill of Exchange or. factoring charges of sale cannot be termed as interest. The assessee in the present case is acting as an agent. Now what is this is to be seen. According to us, a Del Credere is an agent, who, selling goods for his principal on credit, undertakes for an additional commission to sell only to persons for whom he can stand guarantee. His position is thus that of a surety who is liable to his principal should the vendee make default. The agreement between him and his principal need not be reduced to or evidenced by writing, for is undertaking is a guarantee.
A Del Credere Agent is an agent who not only establishes a privity of contract between his principal and the third party, but who also guarantees to his principal the due performance of the contract by the third party. He is liable, however, only when the third party fails to carry out his contract, e.g., by insolvency. He is not liable to his principal if the third party refuses to carry out his contract, for example, if the buyer refuses to take delivery. In the present case before us the assessee has assessed the income as Del Credere being trading in goods and merchandise and also dealing in securities and which is assessed as income from business and not income from other sources. The expenditure incurred is also on account of business expenditure and not interest expenditure in the nature of interest falling u/s. 194A of the Act. Accordingly, these discount/factoring charges do not come within the purview of section 194A and assessee is not liable to TDS on these charges. - Decided in favour of assessee.
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2016 (6) TMI 1393 - ITAT CHENNAI
Unearned income as per sec. 145(2) - any class of income to be disclosed and notified in the Central Government by Official Gazette - HELD THAT:- Revenue earned by the assessee from software and consultancy services was recognized on delivery of goods / services, that as per the existing scheme, M/s. Satyam Education Services Limited was assigned the responsibility to 'sign off’ on completion of the project in the case of all customers, that the assessee-company was following the AS 9 prescribed by the Institute which was in conformity with the provisions of section 145(2) of the Act. The assessee was regularly following the 'project completion method, which is a recognized method. The completion of each project is determined by 'sign off’. There is nothing on record to show that there was any inconsistency in this regard. The CIT(A) found that the deferred income amounting to ₹ 39,68,208 was carried forward and was duly taken into account in the next assessment year. In the circumstances, therefore, we see no reason to interfere with the conclusions reached by the CIT(A)
There is no difference pointed out by the Revenue, we are of the opinion that the CIT(A) has rightly deleted the addition under the head "unearned income”. The mere submission on the part of Revenue that the same has not attained finality is no ground in itself for not placing reliance upon the same. Accordingly, the findings of the CIT(A) are upheld and the ground is decided against the Revenue.
TDS u/s 195 - expenditure incurred on networking - remittance towards overseas services - assessee explained the networking and communication cost and the category of expenditure incurred outside India and the said provisions shall not apply - AO relied on the legal provisions of Sec. 40(a) (i) of the Act and double taxation u/s.90(2) of the Act considered the provisions of TDS are mandatory in respect of networking, communication were services are outside India - HELD THAT:- As decided in own case [2012 (11) TMI 1151 - ITAT CHENNAI] payments made for connectivity for transmission of data would not fall into the category 'royalty' or 'fees for technical - there is no iota of doubt that the payments in question made by the assessee cannot be subjected to the applicability of TDS provisions contained in the “Act”. Therefore, in view of the same and in order to maintain consistency, we rely on the above said order of the ITAT and decide the grounds against the Revenue.
TDS u/s 195 - Overseas expenditure on recruitment - Departmental Representative explained that assessee has not proved the nature of expenditure incurred outside India and also no evidence was produced. AR explained that is expenditure in incurred for Branch Office at Australia which do not have permanent establishment in India and such payments are not in the nature of technical services or technical knowledge. We on perusal of the assessment order, found that the ld. Assessing Officer has not discussed on the permanent establishment or the type of expenditure incurred with complete details and the findings of assessment order that the assessee has failed to provide details of TDS and summary of expenditure incurred - matter has to be re-examined to verify to the expenditure and genuineness of permanent establishment and business connection of the assessee. Hence, we remit entire issue to the file of Assessing Officer to verify the claim and pass the order. This ground of the Revenue is allowed for statistical purpose.
Allowability of Employee Stock Option Cost (ESOP) - revenue or capital expenditure - only contention of the Department that the expenditure is in the nature of capital in nature and the decision relied by the CIT (Appeals) has not attained finality - HELD THAT:- We perused the order of CIT (Appeals) and the submissions of both counsels and found that ESOP are in the nature of business expenditure and it takes the characteristic of staff welfare and the shares are issued to the employees to work in the best interest of the assessee. These shares are allotted through SEBI guidelines and expenditure is in the nature of Revenue expenditure and claimed deduction and ld. Authorised Representative supported his arguments with decision of Jurisdictional High Court in the case of CIT vs. PVP Ventures Ltd [2012 (7) TMI 696 - MADRAS HIGH COURT] wherein it held that staff welfare expenditure incurred by the assessee in respect of Employees Staff Option Plan as per SEBI guidelines is an ascertained liability and is allowable as expenditure in computation of income. Considering the jurisdictional High Court decision, we uphold the order of Commissioner of Income Tax (Appeals) and allow the expenditure. The ground of the Revenue is dismissed.
Disallowance of depreciation on good will - assessee claimed depreciation on the goodwill @25% under the block of assets - HELD THAT:- The goodwill takes the characteristic of separate block and assessee has paid the money over and above the value of the assets to the seller and such excess amount is the goodwill classified and falls within the explanation of Sec. 32(1)(ii) of the Act. The Hon’ble Apex Court in the case of CIT vs. SMIFS Securities Ltd [2012 (8) TMI 713 - SUPREME COURT] has held that principle of ejusdem generis would strictly apply while interpreting said expression which finds place in Explanation 3(b). “Goodwill’’ is an asset under Explanation 3(b) to Sec. 32(1) of the Act and dismissed the appeal’’. We, respectfully following the Apex Court decision, upheld the order of Commissioner of Income Tax (Appeals) and dismiss the ground of the Revenue.
Profit on IP/VPN Business sold to Sify Communications Ltd (SCL) - business income OR long term capital gains on slump sale - HELD THAT:- We on perusal of order of Commissioner of Income Tax (Appeals) found that the assessee has placed more reliance on the valuation report of Deloitte Haskins & Sells and sold the units to subsidiary company M/s. Sify Communications (SCL) and it was explained that sale consideration is based on future earning capacity and earning before interest and depreciation but not on individual value of assets. Under sec. 2(42C) of the Act, the slump sale is defined as ‘’sale for lumpsum consideration without assigning any value to he individual assets’’. At the time of hearing, the ld. Authorised Representative argued that even if some assets and liabilities are not transferred it will be a slump sale. Prime facie it is not clear whether sale is by a lock, stock and barrel or assigning the value of individual assets. Considering apparent facts, valuation report and decisions, we are of the opinion that the matter has to be reexamined. We remit the disputed issue to the file of the Assessing Officer to consider afresh the grounds of the Revenue and allow the ground for statistical purpose.
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2016 (6) TMI 1392 - KARNATAKA HIGH COURT
Set off losses (depreciation/business) pertaining to non-10A unit against profit of 10A unit - HELD THAT:- Question of law is covered by the judgment of this Court in the case of Commissioner of Income-Tax & Another vs. Yokogawa India Ltd. & Ors. [2011 (8) TMI 845 - KARNATAKA HIGH COURT]
When the question is already covered by the decision of this Court, we do not find any substantial question of law would arise for consideration. Hence, the present appeal is dismissed.
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2016 (6) TMI 1391 - ITAT AHMEDABAD
Addition u/s 14A r.w.s. 8D - HELD THAT:- Disallowance u/s 14A of the Act without examining the facts referred above which were very crucial to reach at the final disallowance u/s 14A of the Act. There are series of judgments of the co-ordinate benches that the disallowance u/s 14A should not exceed the exempt income earned during the year and also decisions wherein the disallowance u/s 14A of the Act on account of interest expenditure are held to be incorrect if the assessee has sufficient equity and general reserve to cover the investments.
Applying the decision of the co-ordinate bench in assessee’s own case in [2014 (6) TMI 1041 - ITAT AHMEDABAD] the matter is set aside to the file of Assessing Officer to examine the facts and figures of the case in the light of our observations made above in order to arrive at a final conclusion as to whether disallowance u/s 14A is to be made and if so, then the amount thereof which in no case should exceed the exempted income earned by assessee during the year under appeal. It is needless to mention that AO shall allow reasonable and sufficient opportunity of hearing to the assessee before adjudicating the same. These grounds of assessee and the Revenue are allowed for statistical purposes.
Enhancement of Book Profit computed u/s 115JB - disallowance made under section 14A - HELD THAT:- We set aside the matter referred in this ground to the file of Assessing Officer to recomputed book profit u/s 115JB of the Act on the basis of disallowance, if any, to be made by ld. Assessing Officer as referred in ground no.1 above for calculating the disallowance, if any, u/s 14A of the Act. Accordingly, this ground is also allowed for statistical purposes.
Disallowance of depreciation on the basis that certain items included under the head computers @ 60% - HELD THAT:- We find that during the assessment proceedings assessee has himself submitted the revised computation of depreciation on the computers and has agreed that depreciation has been claimed excess by ₹ 9174986/-. Thereafter the matter which was almost closed due to the submission made by assessee, was revived back by the assessee by raising ground against this addition before CIT(A) and gave various details and documents supporting the ground that depreciation disallowed needs to be re-worked as various types of expenditure which are fully allowable during the year are included in addition of block of assets, computers and similarly there are various machines which are actually eligible for depreciation @ 60% have been subjected to depreciation @ 15% only. We further observe that ld. CIT(A) has looked into this aspect and has open the way for examining the relates facts towards calculation of correct depreciation in the block of assets relating to computers by way of observing the related facts in his decision.
Assessing Officer for re-examination and calculation of depreciation on computers in the light of submissions made by assessee before ld. CIT(A) after giving sufficient and reasonable opportunity to the assessee for providing necessary details so as to arrive at the correct amount of depreciation on computers for which the assessee is eligible. Accordingly this ground is allowed for statistical purposes.
Claim of guarantee fees paid to Government of Gujarat - expenditure of capital in nature or revenue in nature - HELD THAT:- Issue raised in this ground is squarely covered by the decision of co-ordinate bench referred above in the case of Gujarat Energy Transmission Corpn. [2015 (6) TMI 1096 - ITAT AHMEDABAD] and respectfully following the same, we find no reason to interfere with the order of ld. CIT(A) and uphold the same. This ground of Revenue is dismissed.
Adding the provisions for gratuity to the book profit calculated u/s 115JB - HELD THAT:- Provision for gratuity based upon acturial valuation was not an unascertained liability which could be added back while computing the book profit for the purpose of Section 115JB. See GUJARAT URJA VIKAS NIGAM LTD [2014 (6) TMI 1041 - ITAT AHMEDABAD]
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2016 (6) TMI 1390 - GUJARAT HIGH COURT
Addition u/s 68 - unexplained share capital - HELD THAT:- Supreme Court has in the case of Commissioner of Income – tax v. Lovely Exports (P) Ltd., [2008 (1) TMI 575 - SC ORDER] held that if the share application money is received by the assessee company from alleged bogus shareholders, whose names are given to the Assessing Officer, then the Department is free to proceed to reopen the individual assessments in accordance with law. Such amounts cannot be regarded as undisclosed income u/s 68 of the assessee company.
Applying the said principles to the facts of the present case, the Assessing Officer having traced out the source of funds to specific persons who had invested the same in share of the assessee company, it was open for the Assessing Officer to proceed against the said persons. The funds not having emanated from the assessee company, there was no warrant for making addition of the said amount as undisclosed income under section 68 of the act in its hands. In the circumstances, the tribunal was justified in deleting the addition made under section 68 - Decided in favour of the assessee
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2016 (6) TMI 1389 - ITAT DELHI
Exemption u/s. 11 denied - assessee is involved in commercial activities as the assessee receives coaching fees from the students of CA while giving coaching to the CA students - HELD THAT:- As decided in own case [2014 (4) TMI 962 - ITAT DELHI ] The Institute as such merely it is receiving coaching fee from students for imparting education, cannot be said to have been carrying on business and accordingly it is not required to maintain separate books of accounts as alleged by DIT(E). The income of the coaching classes earned by the assessee institute is within its objects and its Regulations and further these activities are educational activity within the definition of section 2(15) of the Income Tax Act, 1961, and consequently therefore cannot be activity of business for which separate books of accounts are required to be maintained. The order of the ld.DIT(E) is therefore, not sustainable as the income of the Institute is exempt not only u/s 10(23C)(iv) but also under section 11. The institute is an educational institute and hence its income will also be exempt under section 11 as education falls within the meaning of charitable purpose under section 2(15) of the Act. - Decided in favour of assessee.
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2016 (6) TMI 1388 - ITAT CHENNAI
Correct head of income - lumpsum consideration towards sale of Drum Plant (giving up right to manufacture) - business income or capital gains - HELD THAT:- In an identical issue raised on similar facts and circumstances, by following the decision of the Hon’ble Supreme Court in the case of Guffic Chem Pvt. Ltd [2011 (3) TMI 6 - SUPREME COURT] the Ahmedabad Bench of the Tribunal has decided the issue in favour of the assessee in the case of DCIT v. M/s. Gufic Limited [2012 (1) TMI 379 - ITAT AHMEDABAD] as held prior to April 1, 2003, when Parliament stepped in to specifically tax such receipts, the payment was in the nature of a capital receipt - Decided in favour of assessee.
Capital gain computation - Adoption of guideline value for the purpose of computation of capital gain under section 50C - HELD THAT:- When the provisions of section 50C of the Act was not at all available at the time of sale agreement dated 27.06.2002, the provisions of Chapter XXC of the Act was available with the avowed object of ensuring the payment of tax properly payable on the market value of the immovable property transferred inter-vivo and for the purpose of computation of capital gains, the consideration shown by the assessee in the sale agreement for which NOC was granted by the Appropriate Authority under Chapter XXC of the Act, both the penal provisions of Chapter XXC of the Act and the provisions of section 50C of the Act, which came into effect at a later date should not affect jointly. Under the above facts and circumstances, we are of the considered opinion that when the penal provisions of Chapter XXC of the Act was very much available at the time of transaction taken place and when the provisions of section 50C of the Act came into effect in the subsequent financial year, the Assessing Officer was not correct in applying the provisions of section 50C of the Act. Similar ratio was laid down by the Kolkata Benches of the Tribunal in the case of Neville De Noranha v. ACIT [2008 (2) TMI 447 - ITAT CALCUTTA-C] . However, any final judgement against the stay on operation of the order of the Inspector General of Registration, which is pending before the Hon’ble Jurisdictional High Court, would be final. The ground raised by the assessee is allowed subject to the decision of the Hon’ble Madras High Court.
Disallowance of provisions for gratuity - section 40A applicability - HELD THAT:- Gratuity to be deductible, the conditions laid down in section 40A(7) had to be fulfilled. The deduction could not be allowed on general principles under any other section of the Act, because sub-section (1) of section 40A made it clear that the provisions of the section had effect notwithstanding anything to the contrary contained in any other provisions of the Act relating to the computation of income under the head “Profits and gains of business or profession”. In other words, section 40A had effect notwithstanding anything contained in ss. 30 to 39 of the Act. In view of the above observation, the Assessing Officer is directed to follow the decision in the case of Shree Sajjan Mills Ltd. v. CIT [1985 (10) TMI 2 - SUPREME COURT] and also the decision in the case of South Madras Electric Supply Corporation Ltd. v. CIT [1998 (4) TMI 46 - MADRAS HIGH COURT] and decide the issue afresh. Accordingly, we set aside the order of the ld. CIT(A) on this issue and the ground raised by the assessee is allowed for statistical purposes.
Addition towards claim of ERP expenses - Allowable revenue expenses - diversified views - HELD THAT:- Though the two Coordinate Benches of the Tribunal have observed that the ERP expenses incurred by the assessee is of revenue in nature, the Assessing Officer has not passed speaking order as to whether the software was an outright purchase of computer programme which relates to technical “know-how”. According to the Assessing the expenditure on computer software gives an enduring benefit to an assessee, but he has not stated the duration of time for which the assessee right to use the software or the software can be used permanently then it can be said that the assessee can enjoy enduring benefit, but if the life span of the software is shorter or less than two years, the expenditure incurred for the purchase of software should be treated as revenue expenditure. With the above observations, we set aside the order of the ld. CIT(A) and direct the Assessing Officer to examine the issue in line of the decisions of the Coordinate Benches of the Tribunal as referred herein above. Accordingly, the ground raised by the assessee for the assessment years 2006-07 and 2007-08 is allowed for statistical purposes.
Contribution to benevolent fund under section 40A(9) - HELD THAT:- by following his own order for earlier assessment years, the ld. CIT(A) has deleted the addition made by the Assessing Officer for the assessment year 2003-04 and for the assessment years 2004-05, 2005-06, 2006-07 and 2007-08 also the ld. CIT(A) deleted the addition made by the Assessing Officer. The only contention of the Department is that the earlier order of the ld. CIT(A) in assessee’s own case has not become final cannot be accepted since the Department has not filed any order of higher forum having modified or reversed the above decision of the Coordinate Bench of the Tribunal. Under the above facts and circumstances, we sustain the order of the ld. CIT(A) on this issue for all the above assessment years under appeal and dismiss the ground raised by the Revenue.
Deduction u/s 80IA on captive power consumption - over 96% of the power generated has been captively consumed in the assessee’s factory itself - HELD THAT:- As relying on TANFAC INDUSTRIES LTD. [2009 (7) TMI 1260 - SUPREME COURT] we confirm the order passed by the ld. CIT(A) holding that the assessee is entitled to claim deduction under section 80IA of the Act and accordingly, the ground raised by the Revenue for the assessment years 2003-04, 2004-05, 2005-06, 2006-07 and 2007-08 is dismissed.
Upfront fee and guarantee commission paid by the assessee - allowable business expenditure - HELD THAT:- In the case of CIT v. Meenakshi Mills Ltd. [2006 (9) TMI 139 - MADRAS HIGH COURT] has held that the amount paid by the assessee to the Bank as upfront fees was deductible as business expenditure. In the case of DCIT v. Gujarat Alkalies and Chemicals Ltd. . [2008 (2) TMI 11 - SUPREME COURT] has held that the commitment charges, which are in the nature of upfront fees are allowable as revenue expenditure. Further in the case of CIT v. Madras Cements Ltd. [2001 (11) TMI 62 - MADRAS HIGH COURT] has allowed the appeal of the assessee, wherein the assessee has paid guarantee commission to the bank for purchase of machinery. Moreover, in the case of CIT v. Sivakami Mills Ltd. [1997 (2) TMI 13 - SUPREME COURT] has also held that guarantee commission paid was allowable as business expenditure. CIT(A) has rightly allowed the ground raised by the assessee with regard to the claim of deduction of upfront fees and guarantee commission. - Decided against revenue
MAT Computation - whether provision for gratuity made on actuarial basis should not be added back while computing the book profits - HELD THAT:- In the case of DCIT Vs Eicher Motors Ltd [2002 (5) TMI 221 - ITAT INDORE] has held that the provision for gratuity, made on actuarial valuation was an ascertained liability and the same could not be added back to the book profit. Also in case of Greaves Chitram Ud Vs DCIT [2006 (3) TMI 563 - ITAT MUMBAI] also held that the gratuity liability, which was based on actuarial valuation, was deductible from the book profits as ascertained liability. CIT(A) not erred in holding that the provision for gratuity made on actuarial basis should not be added back while computing the book profits.
Non compete fees paid - allowable deferred revenue expenditure - HELD THAT:- As relying on CARBORANDUM UNIVERSAL LTD. VERSUS JCIT [2012 (10) TMI 178 - MADRAS HIGH COURT] we find no infirmity in the order passed by the ld. CIT(A) CIT(A) directing the Assessing Officer to treat the non-compete fees paid as deferred revenue expenditure and allow 1/10th of the expenditure as deduction for every year.
Repairs in the form of renovation to building - HELD THAT:- In view of the ratio laid down by the Hon’ble Jurisdictional High Court in the case of CIT v. Ooty Dasaprakash [1998 (2) TMI 77 - MADRAS HIGH COURT] , we remit the issue back to the file of the Assessing Officer to segregate the total expenditure as capital and revenue and consider the same appropriately. This ground of appeal of the Revenue is remitted to the Assessing Officer for fresh consideration.
Disallowance of royalty paid - HELD THAT:- By following the decision in the case of Gotan Lime Syndicate v. CIT [1965 (11) TMI 35 - SUPREME COURT] the ld. CIT(A) allowed the ground raised by the assessee as held in the absence of material to show that any part of the royalty had to be treated as premium and referable to the acquisition of the mining lease, the royalty payment, including the dead rent, had relation only the lime deposits to be gat and had therefore to be treated as revenue expenditure. Although the appellant did derive an advantage-assuming that that advantage was to last at least for a period of five years-there was no payment once for all. No lump sum payment was ever settled or paid; there was only an annual payment of royalty or dead rent. The royalty was not a direct payment for securing an enduring advantage; it had relation to the raw material to be obtained - ground raised by the Revenue is dismissed.
Disallowance of expenditure related to Tsunami relief - Allowable revenue expenses - HELD THAT:- CIT(A), clearly mentioning that “The appellant fails on this ground”, we are unable to understand as to how the Department is aggrieved by the above order of the ld. CIT(A), who has not allowed the ground raised by the assessee. Thus, the ground raised by the Revenue is not maintainable and accordingly, the same stands dismissed.
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2016 (6) TMI 1387 - ITAT MUMBAI
Exemption u/s 11 denied - appellant’s primary activities were not for the benefit of the public at large and were also not of charitable nature - HELD THAT:- The order for the A.Y. of 2008-09 [2015 (2) TMI 449 - ITAT MUMBAI] has been passed under the similar circumstances hence the same is applicable in this assessment year also. No distinguishable material was produced before us to which it can be assumed that the activity of the institute has now being changed. The object and activity of the institute are quite similar with the assessment year of 2008-09 vide which the above mentioned order has been passed. We found no ground to deviate with the finding of the order of the Tribunal mentioned above. Therefore, in the said circumstances we are of the opinion that the assessee is charitable organization and eligible for deduction u/s.11&12 of the Act. - Decided in favour of assessee
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2016 (6) TMI 1386 - ITAT MUMBAI
TP Adjustment - TPO attributed 100 percent of the loan syndication fee income to the Appellant and Nil to the AE - assessee submits that in similar type of cases, the Hon’ble Tribunal held that only 20 to 25% loan syndication fee is attributable to the assessee but not 100% as was done by the Assessing Officer - HELD THAT:- As relying on Calyon Bank Vs DDIT [2014 (3) TMI 1158 - ITAT MUMBAI] and M/s. Credit Lyonnais Vs ADIT [2014 (7) TMI 1 - ITAT MUMBAI] we restore this issue to the file of the Assessing Officer to follow the decisions and decide the issue in line with the above decisions for allocation of loan syndication fee between the assessee and its AE after giving opportunity of being heard to the assessee.
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2016 (6) TMI 1385 - MADRAS HIGH COURT
Consideration of petitioner's refund claim - time limitation - HELD THAT:- Admittedly, the order passed by the Tribunal, is dated 05.01.2016, signed by the Officer on 12.01.2016. Even going by the said date, limitation period of six months expires only in the middle of July, 2016. Secondly, according to the reply obtained by the petitioner, under the Right to Information Act, respondent/Department has received the order on 31.05.2016. If that be the case, then, they have got six months from the said date, to file an appeal against such order. Therefore, at this juncture, the prayer sought for by the petitioner, in these Writ Petitions cannot be granted.
Petition disposed off.
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2016 (6) TMI 1384 - ITAT CHANDIGARH
Penalty u/s 271CA - non deduction of TCS - HELD THAT:- As decided in case of ITO (TDS) Vs Om Parkash Gupta (HUF) [2016 (6) TMI 938 - ITAT CHANDIGARH]. Since, there is no demand arises against the assessee and all taxes have been paid and no loss to revenue have been caused, therefore, it is not a fit case for levy of penalty against the assessee.
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2016 (6) TMI 1383 - ITAT JAIPUR
Penalty u/s 271(1)(c) - bogus/non genuine agricultural income - HELD THAT:- In absence of any specific charge, the assessee does not get proper opportunity to defend its case and violate the principles of natural justice. The Hon’ble Karnataka High Court in the case of CIT Vs M/s Manjunath Cotton & Ginning Factory & Ors. [2013 (7) TMI 620 - KARNATAKA HIGH COURT] has held that sending printed form where all the grounds mentioned in section 271 are mentioned would not satisfy the requirement of law. The assessee should know the ground which he has to meet specifically, otherwise, the principle of natural justice is offended on the basis of such proceedings, no penalty could be imposed to the assessee. Ticking of the penalty proceedings on one limb and finding the assessee guilty of another limb is bad in law. Penalty imposed by the ld Assessing Officer confirmed by the ld CIT(A) is not justified. Accordingly, we allow the assessee’s appeal.
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2016 (6) TMI 1382 - ITAT JAIPUR
Penalty u/s 271(1)(c) - trading additions made on account of cessation of liability by invoking provisions of section 41(1) - HELD THAT:- It is settled proposition of law that the penalty proceedings and quantum proceedings are two different and distinct proceedings. By way of penalty proceedings, the revenue is forcing the tax payer to pay additional amount of tax in addition to the tax assessed and interest charged in the form of penalty for concealment of particulars of his income or furnishing of inaccurate particulars of such income. It is settled position of law that the assessee is to be put to notice for the specific charge. The Hon’ble Karnataka High Court in the case of Manjunatha Cotton and Ginning Factory,[2013 (7) TMI 620 - KARNATAKA HIGH COURT] has held that the notice under section 274 of the Act should specifically state the grounds mentioned in section 271(1)(c) as to whether it is for concealment or furnishing inaccurate particulars of income.
Notice under section 274 was on the printed format. The AO has not given any specific charge. Therefore, the penalty proceedings as initiated are vitiated for want of procedural compliance. Thus the penalty order is quashed being bad in law. This ground of the assessee is allowed.
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