|
Advanced Search Options
Income Tax - Case Laws
Showing 61 to 80 of 825 Records
-
2015 (12) TMI 1813 - ITAT KOLKATA
Penalty u/s 271(1)(c) - assessment proceedings u/s 153A - treat the LTCG declared by the Assessee as “Income from other sources” - HELD THAT:- It is not disputed before us that income returned by the assessee in the return of income u/s 139(1) of the Act, the return filed u/s 153A of the Act and the income brought to tax in the order of assessment u/s 153A of the Act are one and the same. In such circumstances we are of the view that no penalty can be imposed on the assessee. If at all the revenue wants to impose penalty in the present case, then, it has to take recourse to Explanation 5A to section 271(1)(c).
As rightly contended by the learned counsel for the assessee, Explanation 5A would be attracted only in the case where there is difference in the income returned u/s 139(1) of the Act and the income ultimately brought to tax in the order of assessment u/s 153A of the Act. We, therefore, are of the view that the penalty could not have been imposed in this case.
We also are of the view that in the light of the admitted fact that no incriminating material was found in the course of search the impugned addition could not have been made in the proceedings u/s 153A.
The law is well settled that assessment proceedings and penalty proceedings are two independent proceedings and that the assessee in penalty proceedings is entitled to show that the very addition for which penalty is sought to be imposed ought not to have been made in the assessment proceedings. We, therefore, are of the view that even on this ground penalty imposed on the assessee deserves to be cancelled. - Decided in favour of assessee.
-
2015 (12) TMI 1812 - KARNATAKA HIGH COURT
TDS provisions of section 194A(3)(v) - application to all co-operative societies including co-operative society engaged in the business of banking? - HELD THAT:- It is brought to the notice of this Court by the learned counsel appearing for the Assessee that vide Circular No.19/2015 in F.No.142/14/2015-TPL, the Ministry of Finance, Government of India, has clarified as under:
“42.5 In view of this, the provisions of the section 194A(3)(v) of the Income-tax Act have been amended so as to expressly provide that the exemption provided from deduction of tax from payment of interest to members by a co-operative society under section 194A(3)(v) of the Income-tax Act shall not apply to the payment of interest on time deposits by the co-operative banks to its members. As this amendment is effective from the prospective date of 1st June, 2015, the co-operative bank shall be required to deduct tax from the payment of interest on time deposits of its members, on or after the 1st June, 2015. Hence, a cooperative bank was not required to deduct tax from the payment of interest on time deposits of its members paid or credited before 1st June, 2015.”
Consequently, the finding of the Tribunal that the Cooperative banks were required to deduct tax at source is unsustainable. Accordingly, this appeal filed by the revenue stands dismissed.
-
2015 (12) TMI 1811 - ITAT DELHI
TP adjustment - actual margin earned by AE - MAM - application of TNMM - HELD THAT:- We take note that as per the chart placed on record AE has charged revenue of ₹ 26.63 crores from the customer, whereas value of ALP as determined by the TPO considering the adjustment in the case of appellant and M/s Interra Information Technologies India (P) Ltd. is ₹ 31.21 crores. Thus total value of ALP exceeds the revenue charged by AE from customer. Moreover it is also noticed that AE has incurred loss of ₹ 4.34 crores and there is no margin retained at the end of AE on value of international transactions.
Adjustment in no case can exceed the amount received by the AE from third party. However since the details of AE available on record are only upto 31.3.2007 and not upto 31.3.2008, we restore the matter to the file of the AO since the learned counsel has during the course of hearing stated that appellant company will cooperate and provide all documents to find out the revenue earned by the AE upto 31.3.2008 including production of books of accounts.
Accordingly AO is directed to verify the actual margin earned by AE and make an addition, if any considering the principle stated above. The appellant company is directed to produce the entire accounts of AE for verification of its income. Needless to state fair and proper opportunity will be provided by TPO/AO to the appellant company. Ground No. 2.9 is therefore allowed for statistical purposes.
-
2015 (12) TMI 1810 - ALLAHABAD HIGH COURT
Reopening of assessment u/s 147 - reopening after four years - HELD THAT:- Department has issued a notice dated 10.9.2015 under Section 148 of the Act proposing to re-assess the income for the assessment year 2011-12. The reasons to believe proposes that the petitioner has failed to disclose truly and fully all material facts which are necessary for making the assessment for the relevant assessment year. The petitioner has challenged the present reassessment proceeding contending that all the necessary material had been disclosed while filing the return for the assessment year 2011- 12.
The proviso to Section 147 indicates that if reassessment proceedings are reopened after the expiry of four years, it is essential that an assertion is required to be made that the assessee has failed to disclose fully and truly all the material facts necessary for the assessment for that assessment year.
Prima facie, in the instant case, we find that all necessary material was disclosed by the petitioner when a return was filed on 13.12.2013 which was considered in the original assessment order.
Another question which arises for consideration is, whether the notice issued under Section 148 of the Act is justifiable after the assessment under Section 143(3) of the Act made by the assessing officer is quashed.
We accordingly direct Sri Ashok Kumar, the learned counsel for the Income Tax Department along with Sri Shubham Agarwal and Sri Ashok Mehta, the learned senior counsel to file a counter affidavit by 10.1.2016. Sri P. Chidambaram, the learned senior counsel along with Abhinav Mehrotra, Advocate for the petitioner will file a rejoinder affidavit within a week thereafter.
-
2015 (12) TMI 1809 - BOMBAY HIGH COURT
TPA - Comparable selection - HELD THAT:- Merely stating that the issue of comparable is factual in nature and cannot be applied as a matter of general principle would not be sufficient to distinguish the reliance placed by the Appellant on the Tribunal's decision in M/s. Frost & Sullivan [2012 (4) TMI 120 - ITAT MUMBAI] . When according to the Tribunal, the facts are different in the case relied upon, it should be pointed out in the impugned order and not ignored on the basis of generality. The facts as demonstrated by the Appellant is that both in case of M/s. Frost & Sullivan (supra) and that of the Appellant, prima facie, appear to be identical.
Tribunal in the impugned order ought to have considered the decision of the Tribunal in the case of M/s. Frost & Sullivan (supra) in some greater detail pointing out the distinctions before coming to the conclusion that the same cannot be applied in the case of the Appellant.
Tribunal on consideration of the facts pointed out by the Appellant could most certainly for reasons to be recorded yet come to conclusion that the decision in case of M/s. Frost & Sullivan (supra) is not applicable to the present facts. Before coming to the conclusion, the contention of the Appellant must be dealt with so as to ensure that the assessee concerned does not leave the portals of the Tribunal with a feeling that he has received unfair treatment, inasmuch as his submission of being covered by the decision of Coordinate Bench of the Tribunal was not considered.
The substantial question of law as formulated is answered in the affirmative i.e. in favour of the Appellant-Assessee and against the Respondent-Revenue only to the extent of the issue of transfer pricing.
We set aside the order of the Tribunal to the extent it disposes of the Revenue's appeal with regard to the issue of transfer pricing and restore the issue of transfer pricing to the Tribunal for fresh disposal in accordance with law by a reasoned order. Needless to state that the Tribunal would consider the applicability of the decision of the Tribunal dated 24th February, 2012 rendered in the case of M/s. Frost & Sullivan (supra) to the fact of the present case.
-
2015 (12) TMI 1807 - ITAT MUMBAI
TP Adjustment - comparable selection - HELD THAT:- The undisputed facts on record are that the aforesaid company was having RPT transactions which appear to be well above the accepted limits. Requisite documents evidencing these facts are already held on record. But, these facts were not examined by the lower authorities.
In view of the judgments relied upon by the Ld. Counsel, we find that since this issue goes to the root of the matter, the assessee should be given opportunity to raise a legal plea even at this stage before the Tribunal. In all fairness and to meet ends of justice, we find it appropriate to send this issue back to the file of AO/TPO for a fresh decision with respect to the said company.
The assessee shall put forth all requisite material before the AO/ TPO in support of its claim, for which proper opportunity should be provided. With these directions, we send this issue back to the file of the AO/TPO. Thus, additional ground is treated to be allowed for statistical purposes.
-
2015 (12) TMI 1806 - ITAT KOLKATA
TDS u/s 195 - addition u/s 40(a)(i) - payments made towards professional charges, consultancy charges and amounts paid on behalf of other units in respect of services rendered only outside India - retrospectivity of act - HELD THAT:- The payments made towards professional charges, consultancy charges and amounts paid on behalf of other units in respect of services rendered only outside India and were not utilized in India, are not chargeable to tax in India in terms of s. 195(1) of the Act and hence, there is no obligation that could be cast on the assessee to deduct tax at source.
Even otherwise, the payments are governed by the provisions of art. 14 of DTAA which would prevail over the other provisions of the Act, wherein the said payments are liable to be taxed only abroad and not in India. A retrospective amendment in statute does change the tax liability in respect of an income, with retrospective effect, but it cannot change the tax withholding liability with retrospective effect.- Decided in favour of assessee.
Disallowance of expenses incurred towards overseas office maintenance, sales promotion, sales office expenses, aircraft maintenance expenses and others - HELD THAT:- major expenditure has been incurred in respect of cost of spare parts for maintenance of aircrafts, import of articles such as mineral water, raw meat, liquor etc., expenditure incurred for obtaining fitness certificate after every hours of flying as per international aviation rules, import of spare parts from abroad, promotion and marketing expenses abroad, charges, sales promotion expenses towards redemption of points under Oberoi Top programme, participation fee of IN ASIA MILES programme, expenses for media coverage of the programme, cost of space and stand for ITB Berlin in Germany, charges for stand and space booked for Arabia Travel Market in Dubai, charges for stand decoration for IBTM Exhibition at Geneva, cost of space and stand for WTM in London, entire expenses incurred in foreign sales offices in London, New York, Sydney, Singapore and Dammam on various dates throughout the year etc. From the details furnished, we also see that the entire foreign sales office receipts and expenses and statement of assets and liabilities were duly subjected to an independent audit by a chartered accountant in order to give comfort level to the assessee herein for adoption of those figures in the consolidated financial statements of the assessee.
We find lot of force in the arguments of AR that no disallowance on this count was made in the earlier years and also in subsequent years by the Revenue. Hence, we hold that the principle of consistency should be followed by the Revenue. Reliance in this regard is placed on the decision of the Hon'ble apex Court in the case of Radhasoami Satsang v. CIT [1991 (11) TMI 2 - SUPREME COURT] . From the details furnished, we are completely satisfied that the entire expenditures are incurred wholly and exclusively for the purpose of business of the assessee and accordingly, direct the learned AO to grant deduction for the whole amount as deduction.
Disallowance u/s 80HHC - export of food and beverages to out bound flights of foreign airlines, the payments for which were received in convertible foreign exchange - HELD THAT:- We hold that the assessee is entitled for deduction under s. 80HHC of the Act in respect of export of food and beverages to outbound flights of International Airlines and for the proceeds received thereon in convertible foreign exchange and hold that the assessee had complied with the provisions of s. 80HHC of the Act in this regard. Accordingly, the ground raised by the assessee is allowed.
Disallowance of 50 per cent of aggregate expenditure incurred on running and maintenance of aircraft - HELD THAT:- We hold that no addition need to be made on an estimated basis towards running and maintenance of aircrafts. Accordingly, the ground raised by the assessee are allowed
Disallowance of interest on borrowed capital to the extent of interest-free advances made to Associated Enterprises - HELD THAT:- Interest-free advances were made by the assessee to various parties during the course of its business and are strategic investments - that the borrowed funds were not diverted for non-business purposes as sufficient own funds were available with the assessee to make interest-free advances to its group concerns.
When borrowed funds and own funds were inextricably mixed in the same bank account and if the own funds are more than the amounts advanced interest-free to sister concerns, then the presumption could be drawn in favour of the assessee that those advances were made only out of own funds of the assessee - from the aforesaid facts available on record, the assessee had advanced monies to various concerns during the course of its business to further strengthen its business interests with the said parties and as a measure of commercial expediency. In applying the test of commercial expediency whether the expenditure was excessively laid down for the purpose of business, reasonableness of the expenditure is to be judged from the point of view of a businessman and not that of the Revenue.
Disallowance of depreciation on addition to fixed assets - HELD THAT:- Entire additions together with the income-tax depreciation figures were duly subjected to certification by the tax auditor in the tax audit report and the AO had indeed granted income-tax depreciation for other assets except ₹ 7,84,550 being depreciation on buildings and computers. We find that this action of the learned AO is not appreciated and it is also stated in the grounds that the assessee had submitted the bills before the learned AO. No hesitation to delete this addition made in the sum of ₹ 7,84,550 towards depreciation on buildings and computers and accordingly, the ground raised by the assessee is allowed.
Disallowance of notional foreign exchange loss on foreign currency loan - HELD THAT:- As decided in assessee's own case [2015 (10) TMI 2022 - ITAT KOLKATA] addition to be deleted.
Disallowance of General Charges - HELD THAT:- Assessee had submitted before the learned CIT(A) that the amounts debited in head office represents amounts paid to different associations like Hotel Association of India, World Economic Forum, membership fees and annual subscription for various Stock Exchanges. These are expenses incurred wholly and exclusively for the purpose of business of the assessee. We also find that this disallowance is not made by the learned AO for the asst. yr. 2002-03 (i.e. the earlier year) and in asst. yr. 2005-06 (in subsequent year). Moreover, there is absolutely no basis for making the disallowance at the rate of 25 per cent of total general charges by the learned AO. Accordingly, we find no infirmity in the order of the learned CIT(A) and hence, the ground No. 9 raised by the Revenue is dismissed.
Disallowance of Prior Period Expenses - HELD THAT:- We are aware at this juncture that any claim could be made only by filing a valid return as has been held by the Hon'ble apex Court in the case of Goetze India Ltd. [2006 (3) TMI 75 - SUPREME COURT] . But the same judgment states in the last para that the said finding is not applicable to appellate authorities more especially to Tribunals. Hence, respectfully following the judgment of the Hon'ble apex Court (supra) and in view of the fact that the said expenditure of ₹ 1,00,000 is genuinely incurred by the assessee for the purpose of its business, we hold that the action of the learned CIT(A) does not require any interference in this regard.
Disallowance on account of legal expenses on ad hoc basis - HELD THAT:- It is not clear that whether the entire details of legal expenses were filed before the lower authorities for their verification. Hence, we deem it fit and appropriate, in the interest of justice and fairplay, to set aside this issue to the file of the learned AO to decide this issue afresh in accordance with law. The assessee is directed to submit all these details before the learned AO and such other evidences and documents as may be required in support of its contentions. Hence, the ground raised by the assessee is allowed for statistical purposes.
Disallowance u/s14A towards proportionate management expenses - HELD THAT:- It is not in dispute that the assessee had derived taxable income as well as tax free income and incurred expenditure for deriving both the incomes and hence, disallowance is definitely warranted in terms of s. 14A which is brought in the statute book with retrospective effect from 1st April, 1962. The disallowance had to be made only on an estimated basis with regard to the expenditure incurred for the purpose of earning tax free income. We direct the learned AO to disallow 1 per cent of exempt income under this issue
Disallowance on account of specific general charges - HELD THAT:- We direct the learned AO to restrict the disallowance as not relatable to the business of the assessee. Hence, the ground raised by the assessee is partly allowed.
-
2015 (12) TMI 1805 - ITAT CHANDIGARH
Unexplained investment in purchase of land - HELD THAT:- The assessee has produced copies of Sale Deeds in respect of the transactions carried out through these agreement to sell and the sale deeds have been executed between the sellers and one Mr. Deepak Chauhan, Veena Jindal, Vijay Jain etc. and all the payments are made through cheques. Therefore, the copies of sale deed would disclose that assessee was not a party to any of the transactions otherwise the sale deed of 50% as alleged by Revenue Department should be executed in the name of the assessee as well.
The assessee also filed copies of the jamabandi of the property in question which shows that after the sale of properties in question, mutation have been made in the name of purchasers and the name of the assessee did not contain in any the jamabandi. This fact would also strengthen the case of the assessee that assessee was not party to any of the agreement in question and did not make any investment.
Case of AO had been that assessee made investments in these properties having half shares of investment i.e. 50% of the entire transaction. 50% transaction was considered as undisclosed investment in the case of M/s Basera Realtors P.Ltd. and their Directors.
AO passed the orders in the case of the company and later on, the orders in the case of the company have been set aside by the CIT u/s 263 and AO was directed to consider entire investments/passing of the consideration for purchase of the properties in the hands of M/s Basera Realtors P.Ltd.. M/s Basera Realtors P.Ltd. filed appeal before ITAT Chandigarh against the order under section 263 of the Act and their appeals have been dismissed.
AO in pursuance to the order passed under section 263 again had taken the assessment proceedings in the case of M/s Basera Realtors P.Ltd., copy of the assessment order is filed at page 133 of the Paper Book in which again, same facts have been considered and Assessing Officer did not accept contention of the company that 50% of the shares belong to Shri Harinder Singh, assessee because M/s Basera Realtors P.Ltd. has not submitted any evidence of 50% shares of assessee for the purpose of making the addition. AO, therefore, made entire addition of undisclosed investment in the case of M/s Basera Realtors P.Ltd. Thus, Revenue Department has taken a very clear and specific stand on the identical facts that the entire undisclosed investment in property through these agreements in question relate to M/s Basera Realtors P.Ltd. therefore, no addition could be made in the hands of the present assessee otherwise, it would also amount to double addition.
Considering all, we are of the view authorities below are not justified in making and confirming the addition on account of undisclosed investment in purchase of the land in question through these agreements. The orders of authorities below are accordingly, set aside and addition is deleted in assessment year 2006-07.
-
2015 (12) TMI 1803 - ITAT MUMBAI
Disallowance u/s. 14A r.w. Rule 8D - exempt income earned by the assessee is by way of single dividend warrant - HELD THAT:- There is no dispute that the only exempt income earned by the assessee is by way of single dividend warrant. As gone through the computation of estimation of expenses made by the assessee. We find that computation at ₹ 917/- is quite reasonable. AO has simply rubbished this computation made by the assessee without assigning any specific reason or fallacy in the computation. Addition made by the AO is unwarranted, we, accordingly, direct the AO to delete the addition - Decided in favour of assessee
Short term capital gain computation - Additions made u/s. 50C - DVOs report acceptance at its face value - property is an undeveloped property connected with a kaccha road with a slaughter house in the vicinity - HELD THAT:- Assessee’s Valuation Officer has reported the rate for Plot No. 14/1 at ₹ 272/-per Sq. mtr and for Plot No. 177 at ₹ 261/- per Sq. mtr. The same has been taken by the DVO at ₹ 623/- and ₹ 722/- per Sq. mtr respectively. A perusal of both the Valuation Report shows that none of the report is based on comparable cases being sale deeds in or near the impugned properties. Thus, there is no sale incidence to support the value taken by the respective valuation authorities.
No doubt, the DVOs report is based on the circle rate but then the stamp duty is also assessed on the circle rate. So the DVOs report cannot be accepted at its face value. As mentioned elsewhere, the valuation report furnished by the assessee is also devoid of any sample sale in or around impugned property, therefore the value taken by the Valuation Officer also cannot be accepted.
To put an end to the litigation, the value for plot No. 14/1 taken by the DVO at ₹ 623/- is to be reduced by 40%, the value now should be adopted is ₹ 374/-. Similarly, the value adopted for Plot No. 177 at ₹ 722/- is to be reduced by 35%, the value now should be adopted is ₹ 470/-. AO is accordingly directed to consider these two values and recompute the Short term capital gains as per the provisions of the law.
-
2015 (12) TMI 1802 - ITAT MUMBAI
Addition made on protective basis - amounts deposited in the joint bank account with Ms Chandbibi Zaidi - assessee is a student studying outside India, with no independent source of income - Held that:- As considered the remand report in the cases of assessee as well as Ms Chandbibi Zaidi and also the other material placed before us during the course of hearing. We find that the CIT(A) has decided the appeals of assessee for three assessment years i.e. 2005-06 to 2007-08 by common order and the appeal of the assessee for the assessment year 2007-08 has already been decided by the Tribunal in favour of the assessee by dismissing the appeal of the Revenue.
We find that the issue before us and in the decision of Tribunal for AY 2007-08 are identical and nothing contrary to the findings of the Tribunal or CIT(A) has been placed by the ld. DR to deviate from the finding of the ld. CIT(A) or the Tribunal.
The remand report in the case of Ms Chamndbibi Zaidi has also been considered by the Ld. CIT(A) while deciding the issue in favour of the assessee. On perusal of the remand report, we find that the AO had made verification of all the amounts for which the additions were made by him in the assessment order, and nothing wrong has been reported by the AO in his remand report. It was alleged by the AO in the assessment order that the impugned amounts for which the addition had been made in the hands of the assessee, actually belonged to Ms. Chandbibi Zaidi. Thus, as per the AO’s own assertion, these amounts did not belong to the assessee. Thus, no addition deserves to be made in the hands of the assessee, in any case. - Decided against revenue
-
2015 (12) TMI 1801 - ITAT CHANDIGARH
Taxability of surrendered income - deemed income u/s 69A - HELD THAT:- In the present case, we see that the AO has nowhere disputed the business losses incurred by the assessee. The books have not been rejected. As stated at the Bar that even at the time of survey, in the trading account prepared by the survey team, there were losses incurred by the assessee. All these facts have not been disputed by the AO. The surrender made by the assessee was on account of cash found during the course of survey, discrepancy in the cost of construction of building, discrepancy in stock and discrepancy in advances and receivables. By no stretch of imagination, any of these incomes apart from cash can be considered as income under any head other that the ‘business income’.
Nowhere in his order the AO has been able to bring on record the fact that the income surrendered during the course of survey was not out of the business of the assessee. Also nowhere he has objected to the heads under which the assessee had surrendered these amounts, i.e. cash, construction of building, discrepancy in stock and discrepancy in advances and receivable.
Even the survey team has not found any source of income except the business income. Now, following the judgment of Jurisdictional High Court, in the background of the facts of the present case, we can safely infer that apart from cash all other income surrendered may be brought to tax under the head ‘business income’ while the cash has to be taxed under the head deemed income u/s 69A.
As regards the business losses incurred by the assessee during the year, these can be set off against the income surrendered during the course of survey except for the amount of cash surrendered, as per the mandate of section 71. No loss can be set off against the cash surrendered as the same has already been held to be taxed under a different head. AO is hereby directed to set off business losses suffered by the assessee out of the surrendered income except the element of cash surrendered.
Allow business losses suffered by the assessee out of surrendered income on account of sundry receivables only and not out of surrendered cash.
Amount surrendered on account of sundry receivables is to be assessed under the head ‘business income’, AO is hereby directed to allow the benefit of current year depreciation to the assessee out of the same, as per law - Appeal of the assessee is partly allowed.
-
2015 (12) TMI 1800 - ITAT JAIPUR
Transfer pricing adjustment - payment for business services to the AE’s - As per the Form 3 CEB, the payment was in respect of services rendered by the AE’s to the assessee vide Business services Agreement at Cost Plus 7% mark-up based on the group’s transfer pricing policy - HELD THAT:- 6 Given that there is no change in the facts and circumstances of the case, respectfully following the decision of the Coordinate Bench in assessee own case that A.Y 2007-08 . [2015 (9) TMI 19 - ITAT JAIPUR] , adjustment u/s 93C(3) of the Act in respect of payment for business services to AEs of the assessee is deleted. Hence the ground No.1 of the assessee is allowed.
Disallowance of restructuring expenses - revenue or capital expenditure - as per AO these are one time expenditure which resulted in enduring benefit to the assessee, hence the same are in nature of capital expenditure and cannot be allowed as revenue expenditure - HELD THAT:- As decided in assessee;s own case merely because expenditure results in some enduring benefit is not alone decisive of its being capital in nature. If the same increases the revenue generating apparatus then it will fall in the category of revenue expenditure despite giving enduring benefit - Merely because once for all payment is made it does not ipso facto amount to capital expenditure.
Assessee incurred these expenses for shifting of Corporate office from Gurgaon to Mumbai wholly and exclusively for its business. Besides, Hon’ble High Court gave the permission for charging of these expenses against amalgamation reserves. In assessment year 2006-07, similar expenditure were allowed by the AO in assessment framed u/s 143(3) after considering the details as such expenditure reflected in the notes to the accounts. Thus assessee’s claim falls in the category of revenue expenses and deserves to be allowed.
Disallowance of advertisement expenses - whether the assessee has done TDS on the said expenditure or not ? - HELD THAT:- authorities need to taken into consideration the fact that the assessee as in the instant case which have diversed operations and transactions running into thousands crores, it is practically impossible to get each and every expenditure, verified which has been incurred during the year. The authorities should taken into consideration the fact that the books have been statutorily audited under the requirements of the Company Law followed by the tax audit as per I.T. Act which should be taken into consideration and due weightage should be given. Further it is noted that the assessee has submitted complete party-wise detail chart on which TDS is deducted. Further detailed explanation on advertisement expenses and sample invoices were also filed vide letter dated 19.12.2011 which has apparently missed the attention of the AO. In light of that, we are of the considered view that there is no basis for disallowance of advertisement expenses on purely adhoc basis, hence the said addition is deleted.
Disallowance on account of write off inventories - HELD THAT:- It is noted that the assesee has given details about the inventory write off alongwith the ledger codes whereby the identified items of inventory are written off in the books of accounts. Further it is noted that there is no change in the accounting policy which has been followed by the assessee in respect of inventory write off as compared to earlier years. Thus addition made by the AO on account of inventories write off is deleted
Disallowance of Travelling and Conveyance expenses - HELD THAT:- The disallowance of travelling and conveyance expenses to the extent of 10% of the total expenditure is clearly on adhoc basis as confirmed by the ld. CIT(A). We see no infirmity in the order of the ld. CIT(A) who has deleted the said disallowances.
Disallowance on account of misc. expenses - Ad hoc addition - HELD THAT:- The disallowance of Misc. expenses to the extent of 10% of the total expenditure is clearly on adhoc basis as confirmed by the ld. CIT(A). We see no infirmity in the order of the ld. CIT(A) who has deleted the said disallowances.
-
2015 (12) TMI 1799 - ITAT MUMBAI
Permanent establishment in India under Article 5(2)(k) of DTAA between India and the UK - profits attributable to the PE - HELD THAT:- As decided in assessee's own case [2015 (9) TMI 1532 - ITAT MUMBAI] while we agree with the learned counsel that art. 15 will not be applicable on the facts of the present case, this finding does not really come to the rescue of the assessee since, as we have already held, the assessee did have a PE in India under art. 5(2)(k) of the India-UK tax treaty, and, accordingly, profits attributable to the PE are taxable under art. 7 of the India-UK tax treaty.
In view of the above discussions, we are unable to uphold the plea so strenuously argued by the learned counsel for the assessee, and we hold that the authorities below have rightly invoked the provisions of art. 5(2)(k). We approve the same, and decline to interfere in the matter. On adjustments required claimed by the assessee in earnings of the PE, on the basis of prevailing market prices of similar services, in view of independence fiction of art. 7(2).
Reimbursement of the expenses as part of the income of the assessee - HELD THAT:- As decided in assessee's own case [2015 (9) TMI 1532 - ITAT MUMBAI] the reimbursements received by the assessee are in respect of specific and actual expenses incurred by the assessee and do not involve any markup, there is reasonable control mechanism in place to ensure that these claims are not inflated, and the assessee has furnished sufficient evidence to demonstrate the incurring of expenses. There is thus no good reason to make any addition to income in respect of these reimbursements of expenses. The action of the CIT(A), as learned counsel rightly contends, on pure surmises and conjectures.
Income accrued in India - income relatable to work performed in India in liable for taxation in India - profit as attributable to the PE, can only be assessed in India - HELD THAT:- This issue also stands covered in favour of the assessee on the basis of orders of the Tribunal passed in the case of the assessee for A.Y. 1997-98 wherein it was held that only income related to services rendered in India, is liable to tax in India. Further, reliance was also placed by him upon the judgment of Hon’ble Mumbai Special Bench of the Tribunal in the case of Clifford Chance [2013 (6) TMI 544 - ITAT MUMBAI] - income in respect of services rendered in India, which are attributable to PE only, would be taxable in India. Thus, ground no. raised by the Revenue stands dismissed.
85% of disbursement claim proportionate to the fee related to the services rendered in India as compared to total fees - HELD THAT:- As relying on assessee's own case [2015 (9) TMI 1532 - ITAT MUMBAI] no amount should be disallowed. Thus, ground no.2 of the Revenue’s appeal stands dismissed.
-
2015 (12) TMI 1798 - DELHI HIGH COURT
Accrual of income - Interest received from banks on amounts of share capital temporarily deposited and on account of forfeiture of earnest money - CIT differed from that view and directed the deletion of the amount from the assessment also confirmed by ITAT - HELD THAT:- CIT differed from that view and directed the deletion of the amount from the assessment also confirmed by ITAT as followed the decision of this Court in Indian Oil Panipat Power Consortium Limited v. Income Tax Officer [2009 (2) TMI 32 - DELHI HIGH COURT] and the later decision of this Court in the case of NTPC Sail Power Company Private Limited v. CIT [2015 (7) TMI 193 - ITAT DELHI] .
-
2015 (12) TMI 1797 - ITAT MUMBAI
Long Term Capital Gain on sale of land - HELD THAT:- The appellant's case does not call for any interference in so far as treatment of land as investment is concerned. Therefore, the action of the AO in interfering with the entries made w.e.f. 1.4.2000 was completely uncalled for without bringing anything to the contrary on record to suggest that the appellant was a dealer in land. The said piece of land has been held for over 20 years without any development potential or even laying of an inch of brick on the same and therefore, in all fairness, claim made by the appellant regarding LTCGs cannot be faulted.
Gain arising on sale of plot as capital gains rather than business income - HELD THAT:- Plots held for development purposes were shown separately in the assessee’s Balance Sheet as WIP and the plots held for investment were shown as investment even in the balance sheets for A.Y.2006-07 to 2008-09. We also found that these plots were always valued at cost year after year and not at cost or market price whichever was lower and hence, the same could not be treated as stock in trade. The detailed finding recorded by CIT(A) to the effect that land was held as investment, is as per material on record. We, therefore, do not find any reason to interfere in the findings of the CIT(A). Nothing was brought on record by DR to controvert the finding of the CIT(A). No reason to interfere in the findings of CIT(A) so as to tax the gain arising on sale of plot as capital gains rather than business income - Revenue is dismissed.
-
2015 (12) TMI 1796 - ITAT PUNE
Renewal of approval u/s. 80G(5), grant of continuation of registration u/s. 12A and application for fresh registration u/s. 12A rejected - assessee has not been able to show that the assessee was earlier granted registration u/s. 12A - HELD THAT:- Assessee had furnished sufficient evidence in support of his claim that it has been earlier enjoying the benefit u/s. 80G in the past and categoric statement of the assessee that the original registration certificate issued u/s. 12A has been misplaced, there was no occasion for the Commissioner of Income Tax to ask for any further document in support of earlier registration granted u/s. 12A of the Act.
Revenue has not been able to explain as to how the assessee was granted approval/extension u/s. 80G on regular intervals in the absence of registration u/s. 12A of the Act. Thus, we are of the considered view that the Commissioner of Income Tax has erred in rejecting the application of the assessee for issuing certificate of registration u/s. 12A of the Act as well as rejecting application for approval/renewal u/s. 80G of the Act.
Commissioner of Income Tax is directed to issue registration u/s. 12A and approval u/s. 80G w.e.f. assessment year 2010-11, i.e. the assessment year in which the benefit of section 80G was first denied to the assessee by the Assessing Officer.
-
2015 (12) TMI 1795 - ITAT INDORE
Assessment u/s 153A - Addition u/s 68 - share application Money received - unsecured loan - HELD THAT:- Once notice u/s 153A of the Act issued, then assessment for six years shall be at large both for Assessing Officer and assessee have no warrant of law. It has been also held that in the assessment years where assessments have been abated in terms of second proviso to section 153A then AO acts under original jurisdiction and one assessment is made for total income including the addition made on the basis of seized material.
But where there is no abatement of assessments and assessments were completed on the date of search then addition can be made only on the basis of incriminating documents or undisclosed assets, etc. In these cases there was no incriminating document found and seized in relation to sale and repurchase of shares of Adroit India Ltd. No assessment proceedings were abated in these assessment years of these assessees. Thus assessments for these assessment years were completed on the date of search. The assessments were completed u/s 143(3) of the Act read with section 153A/153C of the Act after the search.
There is no seized material belonging to the assessee which was found and seized in relation to additions made. In view of this fact, there is no justification for action u/s 153C of the Act that too without recording satisfaction. In our considered view, the Assessing Officer must have some material to prima facie satisfy himself to record the satisfaction prior to issue of notice u/s 153C .
Addition u/s 68 - It is not a simple case of taxing of share application money under section u/s 68 as the assessee has tried to project. It is a case of unaccounted income brought back into the books of accounts of the assessee company in a systematic & organized manner which can be evidenced from the pattern of cash deposits in the bank accounts of the companies discussed above in detail from whom share application money were received by the assessee. These companies have been used as mere conduit companies for routing of unaccounted money into the business in the grab of share application money. During the assessment proceeding in Asst.Year 2005-06 in the case of the companies from whom the assessee companies received share application money, it was reveal that cash deposits were found in their bank accounts but source of cash deposited were not properly explained by the above companies. Hence, the source of share application money as received by the assessee company can not be treated as properly explained.
Share application money as received by the assessee in the year under consideration be added to the income of the assessee U/s 68 of the Income Tax Act.
Chargeability of interest u/s 234B is mandatory, therefore, dismissed on merit.
Disallowance of income u/s 40(ia) - AO disallowed fright payment on the ground that no TDS was deducted - The assessee has taken the ground that by virtue of Finance Act, 2008 w.e.f. 1.4.2005, the said section was amended which says that if the amount so deducted is deposited by the assessee till due date of filing of return is allowable deduction prior to March in that case - HELD THAT:- In this case, TDS was deducted and payment was made prior to March, hence, assessee has paid the tax on time, therefore, he requested the Bench to allow this additional ground. It is the legal claim of the assessee, therefore, it may be allowed. We find that this claim is a legal claim of the assessee, which is allowable claim, therefore, in the interest of justice and fair play, we allow the ground of the assessee and restore this matter to the file of the Assessing Officer with direction to the Assessing Officer to decide the issue as per amended section as per law. Thus, ground of appeal is allowed for statistical purposes.
-
2015 (12) TMI 1794 - ITAT DELHI
Penalty u/s 271(1)(c) - non specifying under which limb the Assessing Officer is satisfied for levying the penalty - Defective notice - HELD THAT:- The notice issued u/s 274 read with section 271(1)(c) did not specify the limb under which the penalty proceedings has been initiated.
Entire penalty proceedings have been initiated on the ground that the notice issued was not in accordance with law. We, therefore, following the case of the Hon’ble Karnataka High Court in the case of CIT vs. Manju Natha Cotton and Ginning Factory & Others [2013 (7) TMI 620 - KARNATAKA HIGH COURT] hold that the penalty proceedings suffers from grave illegalities. Merely because the addition made by the ld. Assessing Officer has been confirmed by this Tribunal is not conclusive to levy the penalty u/s 271(1)(c) as both the penalty proceedings as well as the quantum proceedings are independent from each other. We, therefore, allow the grounds of appeal filed by the assessee.
-
2015 (12) TMI 1793 - ITAT DELHI
Levy of education cess on the payments made to non-resident - addition to the tax rates prescribed in DTAA entered by India with Germany, China and the United States of America (USA) - HELD THAT:- As relying on DIC ASIA PACIFIC PTE LTD VERSUS ASSISTANT DIRECTOR OF INCOME TAX [2012 (6) TMI 686 - ITAT, KOLKATA] direct the AO not to levy the education cess in respect of tax liability of the assessee company. - Decided in favour of assessee.
-
2015 (12) TMI 1792 - ITAT CHENNAI
Reopening of assessment u/s 147 - Disallowance of deduction u/s 10A - assessee’s business of medical consulting services to pharmaceutical companies does not come under the services eligible for deduction u/s 10A/10B - HELD THAT:- Assessee-company produced the work orders from New Zealand and Switzerland companies who have entered into agreements on certain terms and conditions in compliance of laws of both the countries and also furnished the invoices made in foreign currency in respect of work orders for specified period.
AO, for assessment year 2011-12 has recorded the statement of the Director and acquainted with working procedure. Even after recording the statement, the Assessing Officer applies his own working system and overlooked evidential material produced in the assessment proceedings and judicial decisions of the Tribunal in the case of Accurum India P Ltd (2009 (11) TMI 550 - ITAT MADRAS-A). CIT(A) has examined the quality of evidence available on record vis-à-vis the explanations made by the assessee, and therefore, we do not see any reason to interfere with the order of the CIT(A). Accordingly, we uphold the CIT(A)’s order on this issue and dismiss the grounds of appeal raised by the Revenue.
........
|
