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2015 (5) TMI 906 - ITAT DELHI

DCIT, Circle 10 (1) , New Delhi Versus Dusk Valley Technologies Ltd.

Sections:- 028, 036, 271,

Dated: 08/05/2015

ITA No. 4432/Del/2013

Penalty u/s 271(1)(c) - interest income received from fixed deposits was shown as business income - Held that:- Revenue have not brought out any fact or allegation on record that the information given by the assessee in its return of income was either bogus or incorrect and hence the same is prescribed as correct which was not disputed by the AO. The CIT(A) also observed that the interest income received from fixed deposits was shown as business income on the basis of earlier years assessment orders under the bonafide belief that such income is assessable as business income which was treated by the AO as income from other sources instead of business income during the quantum proceedings. In this situation, the addition was based on difference of opinion and when two views are possible the penalty u/s 271(1)(c) of the Act cannot be levied.

Consultancy fee payment - The CIT(A) rightly accepted the explanation of the assessee that it has engaged a consultant to advise the assessee in business matters and also to advise about the sale of shares to a foreign entity or party. Therefore, the impugned amount of consultancy fee was debited under the head of legal and professional expenses which was claimed as business expenditure under a bonafide belief that the expenditure was incurred for business and the same was allowable against the business income. However, during the quantum proceedings, the claim of consultancy fee was allowed against the income of capital gains instead of income from business. In this situation, we safely observed that the claim of the assessee was not disallowed and the same was allowed against the income of capital gains instead of business income and thus, it cannot be held that either assessee has furnished inaccurate particulars of income or had concealed particulars of its taxable income with an intention to evade tax. Thus respectfully follow the decision of CIT vs. Reliance Petro Products (supra), wherein held that merely because the assessee had claimed the expenditure which claim was not accepted or was not acceptable to the Revenue, that, by itself, would not attract penalty u/s 271(1)(c). However, in the present case, the claim of the assessee on both the counts was not dismissed at the threshold but both the claims of the assessee was allowed in a different head of income instead of the head of income adopted by the assessee in its return of income. Thus penalty deleted - Decided in favour of assesse.


2015 (5) TMI 905 - ITAT BANGALORE

Dy. Commissioner of Income Tax Versus Shri Vivek Pius Fernandes

Sections:- 037, 040, 153C,

Dated: 24/04/2015

I.T.A. No.1458/Bang/2012, C.O. No.64/Bang/2013, S.P. No.177/Bang/2014

Difference between the income declared - Disallowance u/s 40A(3) OR Section 37(1) - assessee has also challenged the jurisdiction invoked under Section 153C - Held that:- it would be in the interest of justice and equity if the matter of assessment is restored to the file of the Assessing Officer, who shall consider the aforesaid issues afresh and pass orders in accordance with law after affording the assessee adequate opportunity of being heard and to file details and submissions required. We make it absolutely clear that the assessee is at liberty to urge all contentions before the Assessing Officer including the validity of assumption of jurisdiction under Section 153C of the Act by the Assessing Officer and similarly the Assessing Officer is also at liberty to cause such enquiry to be made as is required to arrive at the proper determination of income on the facts and circumstances of the case. The Assessing Officer shall, thereafter, pass the order of assessment afresh being uninfluenced by any of the earlier orders and shall conclude the proceedings in accordance with law. It is ordered accordingly. - Decided both in favour of assesse and revenue for statistical purposes.


2015 (5) TMI 904 - ITAT DELHI

M/s. Business Park Overseas (P) Ltd. Versus ACIT

Sections:- 036, 037, 040A,

Dated: 24/04/2015

I.T.A. No.1731 /Del/2013, I.T.A.No. 1403/Del/2013

Disallowance u/s 40A(3) - Held that:- Similar disallowance made by the A.O. in another group company namely Westland Developments Pvt. Ltd was deleted by Tribunal and hold the fact that the additional payments were warranted in order to avoid potential disputes amongst the claimants of the land holding which have been passed through to the land holders from generation to generation wherein there may be informal arrangements of ownership and or the payments were for commercial expediency to facilitate peaceful possession and registration of the land holding; where by the time Registry was made the landholders felt a higher payment was necessitated due to increase in value are issues which are not required to be adduced in the present proceedings. The assessee had not routed the additional payment through P & L account and the facts and circumstances in the present case are similar. Therefore respectfully following the above tribunal order issue herein is decided in favour of the assesse.

Reimbursement of expenses - whether cannot be treated to be a Revenue receipt? - Held that:- The assessee had made payment on behalf of country vide developers which was reimbursed to the assessee and it had not claimed any expenditure for these payments - Decided in favour of assesse.

Disallowance of interest on PDCS - CIT(A) deleted the disallowance - Held that:- After examining the loose papers seized at the time of search at the assessee's premises, it was noticed that Interest Is paid on the PDCs only during the period of extension of PDCs and, therefore, he directed the Assessing Officer to recompute the interest on PDCs at the time of extension of the PDCs. He has further observed that if it is not possible to work out the extension of PDCs In each case, then the Assessing Officer is directed to recompute interest on PDCs after six months from the date of Issue of the PDCs. Therefore, the ground of appeal of the Revenue that the CIT(A) deleted the addition of ₹ 5,06.625/- made by the Assessing Officer on account of Interest on PDCs is factually incorrect and contrary to the order of the CIT(A). - Decided against revenue.


2015 (5) TMI 903 - ITAT AHMEDABAD

ITO Versus M/s. Jyotindra Brothers

Sections:- 036, 145,

Dated: 24/04/2015

ITA No. 2936/Ahd/2011, CO No. 05/Ahd/2012

Rejection of the books results u/s 145(3) - fall in Gross Profit / difference in sales - CIT(A) deleted the addition - Held that:- CIT(A), while deleting the addition, has given a finding that the amount of loss of ₹ 15,15,785/- represented loss of 43,555 Kgs of Ispaghula Seeds which have been duly accounted for in the audited accounts of the assessee and the assessee had also submitted the proper reconciliation and reasons for the fall in Gross Profit. Before us, the Revenue has not brought any material on record to controvert the findings of the ld. CIT(A). We, therefore, find no reason to interfere with the order of the CIT(A). Hence, this ground of appeal of the Revenue is dismissed - Decided against revenue.

Disallowance on account of interest expenses - CIT(A) deleted the addition - Held that:- It is undisputed fact that during the year under consideration, the assessee has earned net interest income of ₹ 11,81,410/-. Before us, the ld. Authorized Representative also pointed out to the cost of fund, the rate at which it has lent and from the statement submitted by the ld. AR, it is seen that the amount which has been lent to M/s. Swati Autolink Pvt Ltd is at a higher rate than the weighted average cost of funds. Before us, it is also the assessee’s submission that the amounts were advanced in earlier years also and no disallowance was made in the earlier years, for which reliance was placed on judgment of Sridev Enterprises (1991 (1) TMI 52 - KARNATAKA High Court). Before us, the Revenue has not brought any material on record to controvert the above submissions made by the assessee nor has brought any contrary binding decisions in its support nor could point out any distinguishable features of the decisions cited by ld. AR. In view of the above facts, we are of the view that no disallowance on account of interest could be made in the present case. - Decided in favour of assesse.


2015 (5) TMI 902 - ITAT DELHI

Sona Somic Lemforder Components Ltd. Versus Deputy Commissioner of Income Tax, New Delhi

Sections:- 271,

Dated: 24/04/2015

ITA No. 3503/Del/2012

Penalty u/s 271(1)(c) - as no documents in support of any meetings set up with the M/s Mavel Manufacturing Inc. was placed on record the CIT(A) confirmed the penalty order - Held that:- CIT(A) has not even cared to address the fact that M/s Mavel Manufacturing Incorporation was a customer of the assessee and not a supplier. It is further seen that the export sales of the assessee have increased over the years which to some extent can be said to be on account of continued customer satisfaction and the rationale though not being good enough for quantum proceedings can be a relevant argument in the penalty proceedings in the peculiar nature of assessee's business. We note that no doubt the claim put forth by the assessee was not allowed however it cannot be said considering the judicial precedent cited that there was any filing of inaccurate particulars or non-disclosure on the part of the assessee. It is merely a case of claim not allowed. It is also seen that in the peculiar facts and circumstances of the case, the penalty has been imposed and upheld purely on account of the findings arrived at in the quantum proceedings which is not the mandate of law. The explanation offered by the assessee in the penalty proceedings has to be considered independently and judiciously and only thereafter a finding has to be recorded. This exercise is found missing both in the penalty order as well as the impugned order. Thus impugned order is set aside and by allowing the appeal of the assessee, the penalty order is quashed. - Decided in favour of assesse.


2015 (5) TMI 901 - ITAT DELHI

Amit Gupta Versus Assistant Commissioner of Income Tax

Sections:- 054, 054F, 147, 148, 149,

Dated: 22/04/2015

ITA No. 1323/Del/2014 : Asstt. Year : 2009-10

Reopening of assessment - denial of deduction u/s 54/54F in respect on new residential property bought against sale of commercial property as alleged by the Learned Assessing Officer - Held that:- It is clear that the ld. CIT(A) justified the reopening for only on this basis that the notice issued u/s 148 of the Act was within the time limit laid down u/s 149 of the Act and that the AO recorded the reason on the basis of information received from the Directorate of Investigation, Gurgaon, however, he neither discussed the submissions of the assessee nor gave the reasons for rejecting the same.

In our opinion the order of the ld. CIT(A) while rejecting the ground raised by the assessee against reopening of assessment u/s 147 of the Act is a non-speaking order particularly when he has not discussed the submissions of the assessee and also did not give the reason in support of his conclusion. As regards to the issue relating to the admission of the legal grounds, it is noticed that the ld. CIT(A) without considering this fact that those grounds raised were purely legal in nature and go to the root of the matter, dismissed the same by stating that there was no reasonable cause for adding the additional grounds of appeal at stage of Appellate Proceedings. In our opinion the ld. CIT(A) ought to have admitted the additional grounds and thereafter he should have decided the same by considering the submissions of the assessee. We, therefore, considering the totality of the facts of the present case, deem it appropriate to set aside this case back to the file of the ld. CIT(A) to be adjudicated afresh in accordance with law after providing due and reasonable opportunity of being heard to the assessee. He should pass a speaking order on the additional grounds raised before him as well as the grounds agitated for reopening u/s 147 of the Act. - Decided in favour of assesse.


2015 (5) TMI 900 - ITAT MUMBAI

The Dy. Commissioner of Income Tax Versus M/s. Nomura Services India Pvt. Ltd.

Sections:- 092C, 144C,

Dated: 21/04/2015

ITA No.3675/M/2014, CO No.122/M/2014

TP addition - Dispute Resolution Panel deleting the addition of TP regarding super normal profit of one comparable company having variation in PLI ranging from (-) 13.55% to 113.49% and in TNNM - whether AO erred in filing an appeal against the directions of DRP passed under section 144C(5)? - Held that:- There is no dispute that the objections against the draft order of the Assessing Officer were filed by the assessee on 23.12.2010 which were rejected by the DRP in-liminie on a technical ground that the same were not signed by the Managing Director of the assessee. On further appeal, the Tribunal restored the matter to the record of the DRP for deciding the objections on merits. Therefore, it is not a case of filing of fresh objection before the DRP but the matter was restored by the Tribunal to the record of the DRP for consideration of the objections filed by the assessee on 23.12.2010 on merits.

In the case in hand, the objections were filed on 23.12.2010, therefore, the directions passed by the DRP on the objections filed by the assessee are binding on the Assessing Officer. The order of this Tribunal restoring the matter to the record of the DRP for deciding the objections filed by the assessee on merits would not change the factum of filing the objections by the assessee on 23.12.2010 and therefore the direction of the DRP dated 11.03.2014 are in respect of the objections dated 23.12.2010 can’t be challenged by the Assessing Officer. The appeal filed by the Assessing Officer is not maintainable as the Assessing Officer is not permitted to file the appeal against the directions of the DRP in respect of the objections filed by the assessee dated 23.12.2010 which is prior to 01.07.2012 - Decided against revenue.


2015 (5) TMI 899 - ITAT DELHI

ACIT Versus M/s. Bharti Infotel Ltd.

Sections:- 009, 147, 148,

Dated: 20/04/2015

ITA No.6343/Del./2012

Re-opening of assessment - Technical know-how fees - CIT(A) deleted the addition holding that because at the time of initiation of proceeding u/s 147 the AO had not recorded reason towards claim of incorrect technical knowhow fees, the addition made on this ground subsequently in the assessment order could not survive - Held that:- The above issue for our consideration is no longer res integra, since in the case of Ranbaxy Laboratories Ltd. vs. CIT (2011 (6) TMI 4 - DELHI HIGH COURT) wherein held that when reasons are recorded for bringing to tax ‘X’ income and no assessment is made on the ‘X’ income, the AO does not possess the jurisdiction to tax any other income in the reassessment order. Thus the CIT (A) is justified in quashing the reassessment proceedings - Decided in favour of assesse.


2015 (5) TMI 898 - ITAT DELHI

Mrs. Brij Mohini Behl Versus ITO

Sections:- 045, 050C,

Dated: 20/04/2015

ITA No.2278/Del./2013

Capital gains computation - adopting the circle rate u/s 50C or documented price in sale deed - Held that:- In the instant case, the assessee had raised a plea that the fair market value of the impugned property is below the circle rate. Moreover, we find that the assessee had taken up a specific ground before the CIT (A) that the impugned property sold ought to have been referred for valuation since the fair market value was less than the circle rate. In the instant case, since specific claim was raised by the assessee as regards fair market value being less than the circle rate, going by the dictum laid down by the Tribunal in the case of Sarwan Kumar vs. ITO (2014 (1) TMI 1625 - ITAT DELHI), the Assessing Officer ought to have referred the matter to the DVO for valuation of the impugned property. Therefore, this issue is restored to Assessing Officer for the purpose of referring the impugned property for valuation u/s 50C(2) of the Act and thereafter proceed to determine the capital gains on the property in question - Decided in favour of assesse for statistical purposes.


2015 (5) TMI 897 - ITAT HYDERABAD

M/s Cybermate Infotek Ltd & Others Versus Asstt Commissioner Of Income Tax & Others

Sections:- 010A, 037, 040,

Dated: 17/04/2015

ITA No.474/Hyd/2014, ITA No.631/Hyd/2014

Claim of deduction u/s.10A - Held that:- this matter requires re-examination by the AO. It is stated that assessee was claiming 10A deduction in earlier years and as per the provisions, assessee is eligible for continuation of claim for a period of ten years. Therefore, it is necessary that the eligibility of assessee should be examined. As seen from the assessment order, the AO seems to have been carried away by the amount of claim made against export turnover and no other conditions/details seems to have been examined. Before us, Ld. Counsel filed a copy of form 56F which is stated to have been filed before the authorities but not acknowledged. Therefore, in the interest of justice and noting that assessee's claim was made in earlier years, we are of the opinion that matter requires re-examination by the AO. AO also should examine the eligibility of the claim and the amount claimed towards deduction, keeping in view the eligible unit and its profits as per the provisions of the Act. - Decided in favour of assesse for staitsical purposes.

Claim of capital work in progress - held that:- First of all, the entire amount of ₹ 6,75,96,165/- was disallowed by the AO, therefore question of enhancing the amount does not arise. The issue whether capital work in progress can be reduced or not was not an issue before the AO and this aspect was not examined at all. Since the AO put it to CIT(A), with reference to claim of ₹ 1,96,28,459/- and capital work in progress reduced in the computation, which the Ld. CIT(A) directed to be enhanced by an amount of ₹ 6,75,96,165/- , that too without giving opportunity to assessee as contended, we are of the opinion that this capital work in progress issue also requires re-examination. - Decided in favour of assesse for staitsical purposes.

Investment written-off disallowed - AO noted that investment written-off cannot be treated as an allowable deduction as it is not a revenue expenditure - Held that:- This claim also requires re-examination. Assessee's claim that amounts are originally offered as income, subsequently converted to equity of the subsidiary and written-off on the basis of the circulars of RBI requires examination by AO, as none of the figures are comparable on the basis of the annual reports filed before us. In order to examine the issue and to give one more opportunity to assessee to substantiate the claim, matter is restored to the file of AO with a direction to examine the factual aspect of the contentions of assessee and then decide whether the amount can be allowed as revenue expenditure or not as per the provisions of Act.- Decided in favour of assesse for staitsical purposes.

Software purchases - revenue v/s capital expenditure - Held that:- As seen from the assessment order, the issue raised by AO is only with reference to non-furnishing of vouchers with respect of purchases claimed in the P&L A/c. There is no dispute before the AO as the software purchases are on revenue account. Only for lack of proof of software purchase, AO disallowed the amount. The said proof was furnished before the Ld. CIT(A) which was also sent on Remand Report to the AO. We are surprised to see that Ld. CIT(A) directing the AO to treat as capital purchase which issue not all raised by AO nor by assessee. In view of this, we modify the order of CIT(A) and direct the AO to allow the amount as revenue expenditure..- Decided in favour of assesse.

Non deduction of TDS on audit fee - Held that:- Invoking the provisions of Section 40(a)(ia) entire amount of ₹ 1 Lakh was disallowed. Before the Ld. CIT(A), assessee submitted that amount of TDS paid of ₹ 87,857/- on 27-08-2008 involves TDS on audit of fee of ₹ 1 Lakh. Ld. CIT(A) directed the AO to verify and allow the amount. Since the CIT(A)'s direction is only with reference to direction given to the AO, we reiterate the same direction. - Decided against revenue.

Salary paid to overseas employees disallowed - Held that:- Before the Ld. CIT(A), assessee made detailed submissions and furnished various details including various contracts and man power employed organization-wise. This information was also sent to AO in the Remand Report. In view of this, CIT(A) was correctly of the opinion that the disallowance made by the AO is not warranted and accordingly deleted. - Decided against revenue.


2015 (5) TMI 896 - ITAT DELHI

Assistant Commissioner of Income Tax Versus M/s Shrim Investment Solution (P) Ltd. & Deputy Commissioner of Income Tax

Sections:- 068, 153A, 153C,

Dated: 17/04/2015

I.T.A. Nos. 5262 & 5254/Del/2013, C.O. NOS. 26 & 25/Del/2014

Unexplained credits - jurisdiction of provisions of section 153C r.w.s. 153A - CIT(A) deleted addition - Held that:- CIT(A) has deleted the addition in dispute contrary to the principle of natural justice. It is very clear from the submission of the assessee that the AO has made the addition on the basis of statement given by SK Gupta. It is also admitted position that the AO has neither provided the statement of Sh. SK Gupta not provided an opportunity of cross examination to the assessee.

Ld. CIT(A) has wrongly deleted the addition, in dispute. He should have called the Remand Report from the AO. We know that Ld. CIT(A) has no power to set aside the issue in dispute to the AO, but the deletion of the addition is also not permissible, in view of the facts and circumstances of the case, as explained in the impugned order. In the interest of justice, we are setting aside the issue in dispute to the file of the AO with the direction to provide the copy of the statement given by Sh.SK Gupta to the assessee and also provide an opportunity for cross examining him and decide the issue in dispute, afresh under the law, after giving adequate opportunity of being heard to the assessee for substantiating its claim before the AO. - Decided in favour of revenue for statistical purposes.


2015 (5) TMI 895 - ITAT KOLKATA

Deputy Commissioner of Income Tax Versus M/s. Techno Electric & Engineering Co. Ltd

Sections:- 014A, 028, 037,

Dated: 13/04/2015

I.T.A. No. 409/KOL/ 2011, I.T.A. No. 287/KOL/ 2011

Disallowance on account of retention money - money retained by the various Government contractees out of the contract value till the establishment of specific performances as specified and issuance of taking over certificate - CIT(A) deleted the addition - Held that:- The issue involved is duly covered by the decision CIT -vs.- Simplex Concrete piles (India) Pvt. Ltd. [1988 (12) TMI 52 - CALCUTTA High Court] wherein held that the payment of retention money is d eferred and is contingent on satisfactory completion of the work and removal of defects and payment of damages, if any. Till then, there is no admission of liability and right to receive any part of the retention money accrues to the assesse - Decided against revenue.

Disallowance of interest accrued upto end of the previous year on Government Bonds - CIT(A) deleted the addition admitting fresh evidences without giving the Assessing Officer an opportunity to examine the same - Held that:- The issue in this appeal is duly covered by the decision of Canara Bank [1991 (7) TMI 38 - KARNATAKA High Court] in which it was held that the interest ac crues or arises only on the record date or on the maturity date for the purpose of taxability. In the case of the assessee the interest on Bonds were payable on 31s t day of December and 30th day of June and, therefore, the interest for the period ended on 31s t March has not accrued and due to the assessee. In view of this fact, we do not find any infirmity or illegality in the order of the ld. CIT(Appeals).- Decided against revenue.

disallowance invoking Rule 8D read with section 14A - CIT(Appeals) in rest ricting the disallowance to 1% of the dividend income - Held that:- Rule 8D has been inserted by the Income Tax (5t h Amendment ) Rules, 2008 w.e.f. 24th March, 2008. Hon’ble Mumbai High Court in the caes of Godrej & Boyce Mfg. Co. Ltd. -vs.- DCIT [2010 (8) TMI 77 - BOMBAY HIGH COURT] has clearly held that Rule 8D is not ret retrospective but prospective. The impugned assessment is the assessment year 2007-08 while Rule 8D has been inserted w.e. f. 24th March, 2008. Therefore, the Assessing Officer, in our opinion, is not correct in law in allowing the disallowance by applying Rule 8D. We further noted that in the case of Sanjiv Jajodia -vs. - DCIT [2010 (9) TMI 1026 - ITAT KOLKATA] has taken the view that the disallowance under sec tion 14A out of the expenses should be rest ricted only to 1% of the dividend income. Ld. CIT(Appeals) respec tfully following the said decision has rest ricted the disallowance to ₹ 1,36,794/-. In view of this fact, in our opinion, no interference is called for in the order of the ld. CIT(Appeals) in rest ricting the disallowance to 1% of the dividend income - Decided against revenue.

Discrepancies found in the figures of sale disclosed in the return - CIT(A) deleted part addition - Held that:- CIT(Appeals) has duly examined the reconciliation made by the assessee along wi th the supporting documents and came to the conclusion that in respect of three parties, namely Steel Products Limited, Rukmani Elect ricals, and Unique St ructure amounting to ₹ 43,202/-, ₹ 21/-, ₹ 54,771/- respectively, documents are unreconciled. He, therefore, sustained the addition to that extent.D.R. before us even though vehemently relied on the order of the Assessing officer but could not brought to our knowledge how there is a mistake in the reconciliation as has been examined by the ld. CIT(Appeals), thus in our opinion, ld. CIT(Appeals) was justified in sustaining the addition as made by the Assessing Officer. - Decided against revenue.

Disallowance on account of the insurance expenses - Held that:- when we asked the copy of the bill to prove that the deductions have been made towards the insurance expenses, the ld. A.R. expressed his inability to produce the same. In our opinion, when the assessee claims the expendi ture, the onus lies on the assessee to prove the genuinity of the expenses. In view of this fact, we do not find any infirmity or illegality in the order of the ld. CIT(Appeals) sustaining the addition - Decided against assesse.

Disallowance of the commission payment - Held that:- Ld. A.R. even though vehemently contended that the commission paid by the assessee in the subsequent year has been allowed by the Assessing officer while determining the taxable income of the assessee, but he could not adduce any cogent material or evidence before us, which may prove that the commission has been paid by the assessee to the same very person. Even ld. A.R. could not adduce any evidence which may prove that the assessee has paid the commission to M/s. Kidar Sons Industries (P) Ltd. in respect of the services rendered by him. - Decided against assesse.


2015 (5) TMI 894 - ITAT MUMBAI

DCIT Versus Shri Haresh R. Majethia

Sections:- 068, 069A,

Dated: 10/04/2015

I.T.A. No. 3772/Mum/2011, C.O. No. 192/Mum/2011, I .T.A. No.2220/Mum/2011, I.T.A. No.3773/Mum/2011

Unaccounted cash - search and seizure procedings - Held that:- As during search statement of assessee’s mother Smt. Jashodaben Ravji Majethia from whose possession cash was found, was recorded. In the statement Smt. Jashodaben Ravji Majethia stated the source of cash of ₹ 8,50,000/- out of savings for a period of over 25 years. Since the daughter of Smt. Jashodaben Ravji Majethia Miss Banuben Ravji Majethia, aged 50 years was un-married, money was saved keeping in mind for her future of un-married daughter. As per the statement, husband of the assessee is also aged 85-87 years and therefore looking to the old age and her daughter’s condition being un-married, the amount was saved for a period of last 20-25 years from her husband as well as from son’s income. The explanation given by Smt. Jashodaben Ravji Majethia during the course of search was not found to be in-correct. Accordingly we do not find any merit in the additions made in the hands of the assessee. - Decided in favour of assesse.

Unaccounted jewellery - Held that:- The jewellery was found in the cupboard of the mother kept in her room. During the course of preliminary statement itself the mother and sister of the assessee had owned the jewellery and explained the source of the same. The jewellery found is ladies jewellery and hence it cannot belong to the assessee. Further the assessee is a bachelor and hence no addition can be made in the hands of the assessee. Also the statement of Mrs. Jashodaben Ravji Majethia was recorded during the course of search which shows that the jewellery is only out of gifts and never purchased - Decided in favour of assesse

Unaccounted cash credit - Held that:- Similar addition made on account of creditors in the A.Y. 2008-09 were deleted by the ld. CIT(A) as relying on CIT vs. Computer Force [2010 (7) TMI 831 - ITAT AHMEDABAD] wherein held that if the receipt and repayment of the loan is corroborated by the ledger accounts and bank entries, additions in respect of such credits cannot be made. Following the same reasoning given above in the A.Y. 2009-10, we do not find any reason to interfere in the order of ld. CIT(A) deleting the addition made on account of creditors.- Decided in favour of assesse.


2015 (5) TMI 893 - ITAT BANGALORE

Mrs. Nanjaiah Nagamani Versus Asst. Commissioner of Income Tax,

Sections:- 271, 274,

Dated: 10/04/2015

I.T.A. No.1198/Bang/2014

Penalty under Section 271(1)(c) - validity of the notice issued under Section 274 rws 271 of the Act dt.20.10.2010 for initiating penalty proceedings under Section 271(1)(c) - Held that:- A perusal of the notice issued under Section 274 r.w.s. 271 of the Act dt.20.10.2010, reveals that the Assessing Officer has not deleted the inappropriate words and parts of the notice, whereby it is not clear as to the default committed by the assessee; i.e. whether it is the concealment of particulars of income or furnishing of inaccurate particulars of income that the penalty under Section 271(1)(c) of the Act is sought to be levied. We find that the Hon'ble High Court of Karnataka in its order in the case of M/s. Manjunatha Cotton & Ginning Factory in [2013 (7) TMI 620 - KARNATAKA HIGH COURT] has held that such a notice, as has also been issued in the case on hand, is invalid and the consequential penalty proceedings are also not valid. - Decided in favour of assesse.


2015 (5) TMI 892 - ITAT HYDERABAD

Dy. Commissioner of Income tax Versus M/s. Vicky Realtors

Sections:- 069B, 147, 148,

Dated: 10/04/2015

ITA No.146/Hyd/14, Cross Objection No.25/Hyd/2014

Reopening of assessememt - valuation of closing stock of property - Held that:- The assessee during the year under consideration purchased one property situated at Panjagutta, Hyderabad for ₹ 13.13 cores and sold a portion of the said property, i.e. ground floor for consideration of ₹ 11 crores. The cost of the portion of the said property sold during the year under consideration was taken by the assessee as ₹ 7.6 crores, on the basis of a valuation report and the balance amount of ₹ 5.53 crores being cost of the remaining portion of the property continued to be held by the assessee was shown as closing stock. During the course of original assessment proceedings under S.143(3), the relevant details and documents relating to these transactions were called for by the Assessing Officer, as is evident from the relevant order sheet entries, and since the issue relating to the valuation of closing stock adopted by the assessee was directly linked with these transactions, we find it difficult to accept the contention of the Learned Departmental Representative that the same was not examined by the Assessing Officer during the course of original proceedings Moreover, the Assessing Officer himself in the letters written to the audit team as well as to the concerned Addl.CIT had stated in very clear terms that the issue relating to the valuation of closing stock was duly examined during the course of original assessment proceedings.

Thus find ourselves in agreement with the learned CIT(A) that the issue relating to the valuation of closing stock having been examined by the Assessing Officer during the course of original assessment proceedings under S.143(3), the reopening of the assessment on the same issue was based on a mere change of opinion, which is not permissible in law, as held inter alia in the case of Kelivinator India Ltd. (2010 (1) TMI 11 - SUPREME COURT OF INDIA ). We therefore, find no infirmity in the impugned order of the learned CIT(A) holding the assessment made by the Assessing Officer under S.143(3) read with S.147 as invalid and upholding the same, we dismiss the appeal filed by the Revenue. - Decided in favour of assesse.


2015 (5) TMI 891 - ITAT MUMBAI

M/s. Bristlecone India Ltd. Versus The ACIT

Sections:- 010A, 271,

Dated: 10/04/2015

I.T.A. No. 6511/Mum/2013

Penalty u/s. 271(1)(c) - claim of deduction u/s. 10A - Held that:- It can be safely concluded that when the assessee has filed the return for the year under consideration, it was well aware of the view taken by the department in earlier assessment years, in so far as the allocation of expenses is concerned, yet the assessee did not allocate the expenses in the manner in which they were allocated in the earlier assessment years by the AO.

The claim of the assessee that it received the appellate order for A.Y. 2006-07 after filing the return is not acceptable for the simple reason that the assessee was well aware of the contentious issue of earlier assessment year just because the AO did not levy penalty in earlier assessment year does not exonerate the assessee from the levy of penalty for the year under consideration. This is the third year of allocation of expenses therefore it cannot be said that the assessee was not aware of the allocation of expenses, the basis of which was taken as turnover of the respective unit. Taking the liberty for the third time on the same set of facts is nothing but filing of inaccurate particulars by concealment of income by increasing the expenses of non STP unit vis-à-vis STP units.

The assessee has deliberately inflated the expenses of taxable units keeping in mind that this issue was not accepted in earlier assessment years yet the assessee took a chance because it was well aware that hardly 2-3% of the returns are selected for scrutiny assessment, which means that such persons can make irregular and excessive claim of the nature of the case in hand and would get away without paying the tax legally payable by them, if their cases are not picked up for scrutiny, thereby discriminating with the good taxpayers and law abiding tax payers. Such inequity takes away deterrent effect from the penal provisions which have been enacted in the Act. As decided in Reliance Petroproducts (2010 (3) TMI 80 - SUPREME COURT ) has held that everything would depend upon the return filed because that is the only document, where the appellant can furnish the particulars of his income. When such particulars are found to be inaccurate, the liability of penalty u/s. 271(1)(c) would arise. In the instant case, the assessee has repeatedly claimed the skewed allocation of common expenses between the STP unit and the non STP unit so as to artificially inflate the claim of deduction u/s. 10A of the Act. - penalty confirmed - Decided against assesse.


2015 (5) TMI 890 - ITAT BANGALORE

The Assistant Commissioner of Income Tax Versus M/s. Pragya Enterprises

Sections:- 010(38),

Dated: 10/04/2015

ITA No.1580/Bang/2013, C.O. No.55/Bang/2014

Exemption u/s. 10(38) of long term capital gain - genuineness of transaction in shares - CIT(A) allowed the claim - Held that:- Issue raised by the AO in the order of assessment has already been decided in the case of Bhoruka Engineering Industries Ltd. (2013 (7) TMI 543 - KARNATAKA HIGH COURT). The Hon’ble ITAT in the case of Bhoruka Engineering Industries Ltd. [2013 (7) TMI 646 - ITAT BANGALORE] had upheld the order of the AO holding that the sale of shares by the various entities of Bhoruka group was a colorable device to evade tax and the capital gain on sale of shares was to be regarded as short term capital gain and exemption u/s.10(38) of the Act was not to be allowed. The assessee had carried the matter to the Hon’ble High Court of Karnataka. The Hon’ble High Court of Karnataka was pleased to set aside the order of the Tribunal and held that the transaction of sale of shares were real, genuine and for valuable consideration and were within the framework of law. Consequently, exemption u/s. 10(38) of the Act had to be allowed.

It is not in dispute that the facts in the case of assessee are identical with that of the case of Bhoruka Engineering Industries Ltd., (supra) and therefore the decision of the Hon’ble High Court of Karnataka will squarely apply to the facts of the present case. We are therefore of the view that the order of the CIT(Appeals) has to be upheld and the claim of the assessee for exemption u/s. 10(38) of the Act has to be allowed. - Decided in favour of assesse.


2015 (5) TMI 889 - ITAT BANGALORE

Shri BP. Ravi Versus The Income Tax Officer

Sections:- 037, 069A,

Dated: 10/04/2015

ITA No.33/Bang/2014

Unaccounted Opening cash - Held that:- The entries made at cash book are not supported by the credit card statement and therefore the claim of the assessee that the cash withdrawals using credit card were repaid by cheque issued from the assessee’s bank account and therefore cash withdrawn using credit card should be considered as being available to the assessee to explain the cash deposit of ₹ 16.15 lakhs in his bank account cannot be accepted. The request of the ld. counsel for the assessee for a remand to the AO can also not be accepted because the CIT(A) had rejected the claim of assessee for absence of credit card statement and even before the Tribunal, the assessee did not make any attempts to file the same as additional evidence. In these circumstances, we uphold the order of the CIT(Appeals) on this issue. - Decided against assesse.

Reimbursement of foreign tour expense disallowed - Held that:- the credit card statement evidences purchase of air tickets from Indian Airlines on 20.11.2008, 23.12.2008 and 26.4.2008. As to how these purchases of air ticket is linked with the visits of the assessee to Sri Lanka, China, Hongkong and Bangladesh is not clear. There is no evidence filed by the assessee to show that these expenses were reimbursed by the employer. In these circumstances, we are of the view that the claim made by the assessee was rightly rejected by the CIT(A). - Decided against assesse.

Gift from mother of ₹ 1 lakh disallowed - Held that:- As that there was no evidence to show how the assessee’s mother came into possession of the RD maturity proceeds which stood in the name of Shri Sanjeevarayudu. The CIT(A) held that even if the maturity proceeds are accepted as belonging to the assessee’s mother, it was improbable to believe that the RD maturity proceeds which were received on 30.3.2005 would have been retained by the assessee’s mother and given as gift to the assessee in the F.Y. 2008-09. The CIT(A) was of the view that it was highly improbable that the assessee’s mother would have retained cash with her for 3 years and given it as gift to the assessee. - Decided against assessee.


2015 (5) TMI 888 - ITAT MUMBAI

Smt. Maya A. Ajwani Versus ITO-7 (2) (4) , Mumbai

Sections:- 054F,

Dated: 10/04/2015

I.T.A. No. 7091/Mum/2012

Exemption u/s.54F - investment in second residential house - previous residential property gifted to her husband - Held that:- We find no provision in law for the assessee to continue to be regarded as the owner or even a part owner of the property (the Sion residential flat) gifted by her to her husband on 03.10.2008. Even if the same is for the purpose of enabling availing benefit under section 54F, we cannot by any score treat as not valid in the eyes of law. The gift deed, duly registered, has to be given its full legal effect, which is of a change in its ownership from the assessee to her husband, Shri Ashok Vishindas Ajwani. Pinning on some altruistic notion, as we observe the Revenue to, cannot entitle it to the read the law except in terms of its clear and unambiguous language, so that only what stands specifically provided is to be excluded. There is no stipulation in law with regard to the ownership pattern, or its quantification, i.e., of the assessee’s other family members, including spouse, or even of the transferee/s. The same clearly provides for consideration of the ownership of residential house/s only of the assessee, and on a particular date.

Thus no warrant in law and, accordingly, no merit in the Revenue’s case for disregarding the gift of a house property by the assessee to her spouse prior to the transfer date (of the original asset) for the purpose of reckoning eligibility to exemption u/s.54F of the Act. We decide accordingly. - Decided in favour of assesse.


2015 (5) TMI 887 - ITAT MUMBAI

Sea Glimpse Investments Pvt. Ltd. Versus Income Tax Officer2 (3) -3, Mumbai

Sections:- 037, 073,

Dated: 08/04/2015

ITA No. 7480/Mum/2010

Treatment of the loss on share trading - the specified income under Explanation to section 73 Held that:- In the admitted facts of the case, the assessee has income from advisory charges and brokerage at ₹ 121.81 lacs and ₹ 14.93 lacs respectively. Its other incomes are rent; dividend; and capital gains (long-term), at ₹ 6.39 lacs, ₹ 3.41 lacs and ₹ 19.68 lacs respectively. Quite plainly, the assessee's GTI, whichever way one may reckon it, cannot be considered as consisting mainly of the incomes under the heads specified under Explanation to section 73, viz. 'income from house property', 'capital gains' and 'income from other sources'. Even though we do not subscribe thereto, and is also not consistent with the forgoing discussion, the difference is so huge and apparent, that even the set off of loss on trading in shares, again a business income, incurred at ₹ 44.16 lacs, would not alter this position and the assessee's principal source of income would be business income. Accordingly, the said loss is a loss from a speculation business in terms of Explanation to section 73, and is to be treated as such. We, thus, find no infirmity in the treatment of the same as a speculative loss by the Revenue. Decided against assessee.

Allocation of the expenditure - Held that:- A reading of the orders by the authorities below, show the A.O. to have made the allocation of the expenditure at para 2.2 of his order, so that the basis of the allocation of the commission expenditure by the A.O. has been clarified. No infirmity therein, which found confirmation with the ld. CIT(A), was brought to our notice during hearing, so that we have no reason to disturb the same. We decide accordingly. We may also clarify that in finally computing the loss on speculation business, the A.O. has also considered the said expenses as well as the dividend relatable to the speculation business, and which aspects have not been impugned by the assessee. We decide accordingly. - Decided against assesse.

Assessment of the rental income as 'income from other sources' - Held that:-This matter stands covered against the assessee by the order by the tribunal in the assessee's own case for the immediately preceding year, i.e., A.Y. 2003- 04, with the ld. CIT(A). - Decided against assesse.


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