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Income Tax - Case Laws
Showing 41 to 60 of 678 Records
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2016 (2) TMI 1298 - KARNATAKA HIGH COURT
Deduction u/s 80IB(10) - Tribunal directing the assessing authority to give deduction under section 80IB(10) of the Act if the assessee has completed construction as guided by the decision of this Court in case of Ittina Properties [2014 (8) TMI 388 - KARNATAKA HIGH COURT] - as per revenue the assessee had failed to file audit report in Form-10CCB along with the completion certificate obtained from the Local Authority showing the completion of construction of the building/apartment as required under the law to claim deduction under section 80IB(10) - HELD THAT:- This Court, in the case of Ittina Properties [Supra] did not take the view only because completion certificate from Panchayat was produced, but on the contrary, in the said decision it was found by this Court that neither in the Income Tax Act nor in Karnataka Municipal Corporations Act, is there any provision for issuance of completion certificate by the local authorities and therefore, Revenue ought not have insisted for production of such certificate for getting benefit under the Income Tax Act. Therefore, distinction as sought to be canvassed by the learned counsel for the appellant-Revenue would not dilute the legal position as held by this Court in the above appeal.In any event, for examination as to whether the construction was completed or not, the matter is remanded by the Tribunal. When the Tribunal had followed the decision of this Court, we do not find that any substantial question of law would arise for consideration as sought to be canvassed. Hence, the appeals are dismissed.
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2016 (2) TMI 1297 - ITAT KOLKATA
Rectification of mistake u/s 254 - specific ground no. 2 raised for jurisdiction that assessment framed u/s. 144/147 of the Act is bad in law has not been adjudicated - HELD THAT:- We found that ground no.2 raised by assessee is not at all adjudicated by the Tribunal and hence, qua this ground we recall the order. The registry will fix this appeal in regular course for hearing ground no.2 only.
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2016 (2) TMI 1295 - ITAT HYDERABAD
TP Adjustment - assessee had applied Resale Price Method (“RPM”) to submit that the transaction was at ALP - whether it should be RPM or TNMM for determination of the ALP? - HELD THAT:- After taking note of the Tribunal’s order in assessee’s own case for the A.Y. 2009-10 [2015 (9) TMI 1701 - ITAT HYDERABAD]and also taking note that the issue arising in this year is also similar, we deem it fit and proper to remit these issues to the file of the TPO for re-determination of the most appropriate method for determination of the ALP and we also direct the TPO to consider the comparables adopted by the assessee in addition to the companies selected by him for determination of the ALP if it is held that the RPM is the most appropriate method. Accordingly, ground Nos. 1 to 13 are treated as allowed for statistical purposes.
Disallowance u/s 36(1)(5) - contribution is to employees superannuation fund which has not been approved by the appropriate authority - HELD THAT:- As this is a legal issue, we deem it fit and proper to admit the additional evidence filed by the assessee and remit this issue also to the file of the A.O, to examine the issue relating to the contribution made to the LIC and consider the same in the light of the judgment of the Hon’ble Supreme Court in the case of Tex Tool Company Limited. [2009 (9) TMI 66 - SUPREME COURT] Accordingly, Ground of the assessee is allowed for statistical purposes.
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2016 (2) TMI 1293 - ITAT KOLKATA
Denial of claim of deduction u/s. 80IA(4)(iii) - new industrial undertaking with development of industrial park - controversy regarding the date on which the project was completed - According to AO, the assessee is not eligible for deduction u/s.80IA(4)(iii) on the income earned from software park as completion certificate of the building of Bangalore Development Authority was not furnished and the appellant has constructed 15 units instead of 3 units approved by the Ministry of Commerce when the appellant himself has admitted in IPSII before the appropriate authority as on 1st July, 2007 - HELD THAT:- The infrastructure for the electrical connection in the industrial park was ready on 20.03.2007. The date of occupation certificate issued by the Bangalore Development Authority on 23.06.2007 for which the assessee had Bangalore Development Authority on 29.12.2006 with a provisional Completion Certificate issued by the Architect. It is not within the control of the assessee company to obtain completion certificate from Bangalore Development Authority and the contention of the assessing authority is not correct.
The contention of the AO that the fresh approval was required under the non-automatic route for more than the minimum number of units required to be established in the industrial park is not correct because the approval was for minimum number of units and there was no restriction imposed for increasing the number of units and hence no fresh approval is required under the current scenario. Further, assessee sent all the details to CBDT for notification on the basis of the first approval as well as after receipt of the renewed approval. The new notification and the Industrial policy 2008 has come subsequently. Assessee has given a representation to the Chairman of Empowered Committee & the Director of CBDT for giving an opportunity to assessee. The Empowered Committee has still not withdrawn the approval granted and hence its validity cannot be disputed. As regards the approval issued by the DIPP, Ministry of Commerce and Industry, we are of the view that the said approval was for non-automatic route and the said approval so granted by the Ministry of Commerce and Industry has not been cancelled till date.
Such change has been duly intimated vide IPS- II dt. 01.01.2008 and on consideration of the same the approval dated16.03.2009 has been granted and further the said approval remains in force till date and has not been withdrawn.
We find that in similar facts and circumstances in the case of CIT Vs. Ittina Properties (P) Ltd. [2014 (8) TMI 388 - KARNATAKA HIGH COURT] held in respect to controversy regarding the date on which the project was completed to be eligible for the benefit of section 80IB that Tribunal has recorded a finding that the building was completed within the stipulated period and therefore de hors this certificate issued by the Panchayat after the building is completed, the assessee is entitled to the said benefit. In that view of the matter, we do not see any merit in these appeals. Accordingly the appeals are dismissed.
Similarly, Hon’ble Gujarat High Court in the case of Creative Infocity Ltd. Vs. Under Secretary [2012 (4) TMI 117 - GUJARAT HIGH COURT] also held that , once Industrial Park was approved by Ministry of Commerce & Industry, CBDT has to suo motto issue notification and if there is delay on the part of the CBDT in issuing notification, it would not warrant assessee being denied benefit of deduction u/s. 80IA(4)(iii) - Decided in favour of assessee.
Disallowance of interest on interest free advances - enhancement u/s. 251(1) of disallowance of interest - HELD THAT:- Assessee has advanced for acquisition of real estate properties, loans to sister concerns and share application money in associate concerns, which were in same business as that of the assessee i.e. real estate business and hence, the said sum advanced are only in the nature of business of the assessee and are out of commercial expediency. Further, there is no nexus established between interest bearing funds borrowed and interest free funds advanced to sister concerns, no disallowance can be attributed to the assessee on account of interest bearing borrowed funds. Accordingly, this issue is decided in favour of assessee and against revenue.
Disallowance of depreciation - assets used in the business - HELD THAT:- AO has not responded to CIT(A) and accordingly, CIT(A) directed the AO to allow depreciation on assets used in the business but after verification of facts and figures claimed now vis-à-vis the relevant rate of depreciation as applicable. We find that the assessee’s issue is covered as per explanation 5 to sec. 32 of the Act which makes it very clear that the allowance of depreciation is mandatory and has to be considered whether or not the assessee makes a claim in this respect or not. Even otherwise, the CIT(A) after admitting additional issue has remitted the matter back to the file of the AO for verification of facts and figure and applicable rates for claim of depreciation and also verification on assets used in the business only. We find no infirmity in the order of CIT(A) and hence, the same is confirmed. This issue in both the years, of revenue’s appeal is dismissed.
Addition on account of difference in the statement of accounts declared by assessee - AO has made addition on account of difference on the disclosure made by assessee as per the actual receipt and as per the rent received as per TDS certificate - HELD THAT:- Petitioner has received a total of ₹ 57,43,973/- and this rent of ₹ 5,91,292/- was received only in next year. Similar is the explanation in the case of M/s. Carrier Net Technologies Pvt. Ltd. amounting to ₹ 18,62,059/-. It was explained to the AO that the assessee was entitled to receive rent w.e.f. 19.03.2007 @ ₹ 11,76,100/-, which amounts to ₹ 1,40,95,533/- for whole of the year but the AO computed the rent in view of the TDS Certificate at ₹ 1,58,57,591/-. Hence, difference. Similar is the position in respect to Arivana Networks India Pvt. Ltd. being the difference of ₹ 17,93,381/-. It was explained that a sum of ₹ 1,63,02,907/- was shown in the TDS certificate included service tax @ 12.36% on actual rent of ₹ 1,45,09,600/- and this difference was on account of service tax at ₹ 17,93,387/-. Hence the entire difference of ₹ 56,66,732/- was explained. The CIT(A) accepted the explanation of the assessee. Now before us Ld. CIT, DR fairly conceded the position. Accordingly, we feel that factually the assessee has not received excess rent of ₹ 56,66,732/- added by the AO. We find that the CIT(A) has rightly deleted the addition in the given facts and circumstances of the case and we confirm the same. This issue of revenue’s appeal is dismissed.
Correct head of income - treating the receipt from the occupants of Industrial Parks and income from house property instead of the same as assessable as income from business - HELD THAT:- Assessee was not letting out bare structure but was providing whole lot of services/amenities for software and allied industries as eligible for use of such Industrial Park. In such circumstances, the assessee claimed the rental receipts from the occupants of the Industrial park as business income. We find that this issue is covered by the decision of Hon’ble Supreme Court in the case of Chennai Properties & Investments Ltd.[2015 (5) TMI 46 - SUPREME COURT] - In this case, letting of the properties is in fact is the business of the assessee. The assessee, therefore, rightly disclosed the income under the head "Income from business". It cannot be treated as "Income from the house property".
Appeal of assessee allowed.
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2016 (2) TMI 1291 - KARNATAKA HIGH COURT
Exemption u/s 11 - entitled for registration u/s 12A - Whether on the facts and in the circumstances of the case, the Tribunal was correct in law in holding that the assessee is entitled for registration under section 12A of the Act, even when the objects of KSRTC will fall under the limb "any other object of General Public Utility" under section 2(15) of the IT Act and the activities of BMTC under this limb will be hit by the proviso to section 2(15) of IT Act amended w.e.f. 1 .4.2009 as the transport Services are provided to all sections of the society on - commercial basis like any other private transporter and generating such huge surplus year after year and is running its activities on commercial basis?
Whether on the facts and in the circumstances of the case, the Tribunal was correct in law in holding that the assessee is entitled for registration under section 12A of the Act, even when the functions of BMTC include providing casual contract and chartered services, including luxury buses like Volvo and Mercedes fully air-conditioned are run as well as provided on hire for the occasions like wedding, excursion, pilgrimage and rallies or whenever the general public needs dedicated buses for their travel and these are charged on commercial basis. it is also seen that BMTC is providing Advertisement space on buses to the private sector charging substantial fee, which activity is nothing but commercial activity and there is a deviation from its predominant object of providing transport service?
Whether, on the facts and in the circumstances of the case, the Tribunal was correct in law in holding that the assessee is entitled for registration under section 12A of the Act, even when the KSRTC under the head "Non operating revenue –“Non-traffic Revenue, has accounted a receipt of ₹ 135.58 crores as miscellaneous Income -which are mainly from advertisement and transportation of luggage and goods are obviously out of its commercial purpose is involved and is charging for every services provided?
Whether Tribunal was correct in law in holding that the assessee is entitled for registration under section 12A of the Act. when BMTC was formed by the Government of Karnataka as a Corporation by a legislative Act and is a public limited company under section 25 of Indian Companies Act and in view of the amended provisions of Section 2(15) and as BMTC is run on commercial basis like any other private transporter, the registration granted under section 12A is rightly been cancelled?
Whether Hon'ble. Tribunal was right in following the judgment of Hon'ble High Court in the case of the KIADB wherein it is held that the first proviso to section 2(15), which was introduced by Finance Act, 2008 w.e.f. 01.04.2009, cannot be invoked by the registering authority for the purpose of cancellation of registration under section, 12AA(3) even if the assessee is found to be carrying on of any activity in the nature of trade, commerce or business?
HELD THAT:- As counsel appearing for appellant and learned counsel appearing for. Learned counsel appearing for both the parties, submitted that, subject matter involved in this appeal.
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2016 (2) TMI 1290 - ITAT MUMBAI
Disallowance u/s.14A on account of expenses attributable to earning of the exempt income - AR submitted before us that the assessee’s own funds are sufficient to cover up the value of investments and hence no interest disallowance is required to be made u/s.14A - HELD THAT:- As relying on Reliance Utilities and Power Ltd. [2009 (1) TMI 4 - BOMBAY HIGH COURT] we delete disallowance made by the AO u/s.14A holding that the assessee’s own funds are sufficient to cover up the value of investments in question. Accordingly, Ground No.1 of the appeal is allowed.
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2016 (2) TMI 1288 - ITAT AHMEDABAD
Product development expenses - Revenue or capital expenditure - HELD THAT:- We find that ld. CIT(A) while deciding the appeal for A.Y. 2002-03 and following it has given a finding that due to incurring of product development expenses, the installation capacity did not increase and assessee did not set up a separate and independent unit from manufacturing and no capital asset was brought into existence. He has further held that entries in the books of account were not determinative of the allowability or otherwise of the expenditure. Before us, Revenue has not brought any material on record to controvert the finding of ld. CIT(A). In view of the aforesaid facts, we find no reason to interfere with the order of ld. CIT(A). - Decided against revenue.
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2016 (2) TMI 1286 - ITAT MUMBAI
Disallowance of interest expenditure - HELD THAT:- We set aside the issue to the file of the CIT(A) , who is directed to adjudicate the matter afresh in accordance with law and in the lines indicated in the aforementioned orders of the Tribunal. Needless to say that the assessee company shall be granted a reasonable opportunity of being heard by the CIT(A).
MAT - calculating of book profit u/s 115JB - HELD THAT:- We have observed that this ground relating to the calculating of book profit u/s 115JB is consequential to our decision in the ground no 4 raised by the assessee company, which we have adjudicated in preceding para’s of this order.
Levy of interest u/s 234A, 234B and 234C - HELD THAT:- Restore the issue back to the file of learned assessing officer who would levy interest as per provisions of Section 234 of the Act and give credit for the TDS amount.
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2016 (2) TMI 1281 - ITAT AHMEDABAD
Revision u/s 263 - Bogus purchases - no inquiry v/s inadequate inquiry - According to CIT AO has not made any enquiry with Sales Tax authorities whether the concerns were registered with them or obtained copy of their Sales Tax Returns to verify the transactions shown therein - Departmental Representative submitted that in Gujarat VAT/ST is 4% and the amount of VAT/ST shown to be debited in their profit and loss account by the concerns casts doubt about the genuineness of the transactions undertaken by these concerns - HELD THAT:- So-called bogus purchase in show-cause notice wherein there was no such finding/show cause notice in reference to the seized material found and survey taken place as well as various finding given by the CIT in a finding portion of the order. In the show-cause notice paragraph 4 regarding Avadhesh International and Harsh Fashion, in reference to non-filing of invoices, it was said that no such invoices was asked for because the payment has been made by account payee cheques as per assessee’s bank account submitted and as per the confirmation and address filed during the course of original assessment.
Regarding the CIT order with regard to the advances from debtors/creditors, there was no such showcause notice in reference to this finding. In view of the above, the order passed by the CIT u/s 263 is prejudicial to the interest of assessee, more particularly, when CIT has given contradictory finding in the order passed in comparison to the show-cause notice issued. Various evidences and seized materials have not been relied upon in the show-cause notice. In such situation, action u/s 263 is not justified.
The enquiry has been made by the Assessing Officer at the relevant point of time. It is not the case of no enquiry but it is a case of insufficient enquiry. In the absence of any adverse material, except a statement recorded under s. 133A(3)(iii) the view taken by the Assessing Officer could not be said to be a view impermissible in law and hence, it could not also be said that the order passed by the Assessing Officer was prejudicial to the interest of the Revenue.
All details with regard to the purchases were filed before the lower authorities, as held by the Hon’ble Delhi High Court in the case of CIT vs. Sunbeam Auto Ltd, [2009 (9) TMI 633 - DELHI HIGH COURT]. Since all the parties are assessed to tax, inquiries were made, confirmations were filed and the order was passed u/s 143(3) after considering the survey report and other material; in such situation invoking provisions of Section 263 of the Act are not justified. - Decided in favour of assessee.
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2016 (2) TMI 1280 - ITAT CHANDIGARH
TDS u/s 194C - default fur non-deduction of tax on payments made to the transport cooperative societies for carrying out transportation work - payments made to the Himachal Pradesh Road Transport Corporation (HRTC) as a trust registered u/s 12A - CIT- A treating the appellant as an assessee in default fur non-deduction of tax u/s 194C - HELD THAT:- CIT(A) has taken a correct view that that there is no provision in the Income Tax Act, 1961 to the effect that tax is deductable at source in case of exempt income. The assessee claimed that the deductee HRTC is registered as a Trust and enjoyed the benefit of exempt income as per sections 11 & 12 - In our opinion, the taxability of income or exemptions u/s 11 & 12 is subject to various conditions and subject to assessment of income by the Assessing officer.
Deductor (assessee) cannot assume that since HRTC is a Trust / Charitable Institution registered u/s 12A of the Act and its income is non-taxable. We do not see any infirmit y to the above extent in the order of the CIT(A) on this issue as he has correctl y directed the ITO (TDS) to find out the extent of quantum of tax paid by the payees.
CIT(A) has also directed the ITO (TDS) that if entire tax amount has been claimed from the deductor has been paid by the deductees, then for that amount the deductor cannot be treated as assessee in default. Accordingly, the CIT(A) has directed the AO to give relief subject to verification as above. In our opinion, before deciding the issue the Assessing officer should give an opportunity of being heard to the assessee. AO is further directed to decide the issue keeping in view the relevant provisions of Income-tax Act, 1961 applicable to the facts of the present case. Remand this issue to the Assessing officer for a fresh decision. Accordingly, the order of the C IT(A) is modified to the above extent. Ground allowed for statistical purposes.
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2016 (2) TMI 1279 - ITAT DELHI
Deduction u/s 80lC - interest income - HELD THAT:- The deduction u/s. 80IC on the impugned interest income can be allowed only if it is established that it is arose on account of compulsion of business. Therefore, the issues are set aside to the file of the AO for fresh adjudication for examining the assessee’s claim of nexus of interest income with business. The AO shall provide proper opportunity to the assessee. Accordingly, the ground no. 4 & 5 are allowed for statistical purposes.
Entitled to exemption u/s 80 IC - whether assessee has satisfied all the conditions specified in the section and that there is substantial expansion during the year as per requirement of the section - HELD THAT:- As decided in LPG Industries Ltd. vs. DCIT [2014 (1) TMI 1689 - ITAT DELHI] on a plain reading of the section and interpretation of the term initial Assessment Year, we conclude that the claim of the assessee is admissible. Even if a view is taken that there is some ambiguity in the language of the section, then, being an incentive provision - benefit given to the assessee. We also make it clear that the deduction cannot be extended beyond the period of 10 years from the A.Y. 2004-05. - Decided in favour of assessee.
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2016 (2) TMI 1278 - ITAT CHENNAI
Disallowance of additional depreciation claimed u/s.32(1)(iia) - depreciation was claimed during the year at the rate of 7.5% (before 50% depreciation) in respect of second half of the year on the additions to plant and machinery in the assessment year 2005-06 - HELD THAT:- Since the asset was purchased during the second half of financial year 2004-05 and only 50% of depreciation was allowed and pleaded for carry forward of balance 50% to be claimed in the assessment year 2006-07. On perusal of the judicial decisions and objections of Finance Minister speech Additional depreciation has to be allowed only in the case of new plant and machinery and not WDV value on subsequent years. The assessee also relied on the decision Cosmos Films Ltd. [2012 (9) TMI 281 - ITAT DELHI] where the Tribunal has allowed the claim of assessee for 50% of additional depreciation u/s.32(i)(iia) in respect of new Plant & Machinery installed at the new eligible industrial undertaking where Plant & Machinery were put to use for less than 180 days in the year of installation and the assessee had claimed only 50% of the additional depreciation and the balance amount was claimed in the next year. Respectfully following the Tribunal decisions, we direct the Assessing Officer to allow additional depreciation claimed by the assessee. This ground of the assessee is allowed.
Disallowance of additional depreciation claimed on assets eligible for 100% deduction - assessee has claimed additional depreciation on the assets entitled for 100% depreciation though used for less than 180 days - HELD THAT:- The legislature is clear where the assets itself is allowed 100% depreciation which have been used for less than for 180 days. The claim for additional depreciation does not satisfy the provisions under Sec. 32(1)(iia). Therefore, we are of the opinion that the Assessing Officer has examined and correctly disallowed and we uphold the findings of the Assessing Officer and dismiss the assessee ground.
Disallowance of additional depreciation on the leased assets (windmill) - assessee during the year has acquired windmills and leased out and claimed additional depreciation - HELD THAT:- Prima facie the assessee is in the business of manufacture of commercial vehicles and engines and additional depreciation is claimed on leased asset of windmills. During the previous year the assessee has purchased windmills leased out to others and claimed additional depreciation on such leased assets. On perusal of provisions u/s.32(1)(iia) and the decisions relied by the assessee which are in leasing business and cannot be brought into category of manufacture of commercial vehicles. The provisions are very clear on this issue. The claim of additional depreciation is in violation of provisions u/s.32 of the Act were depreciation is allowed - allow the ground in favour of the Revenue.
Disallowance of depreciation on residential building - HELD THAT:- As per the Income Tax Rules the depreciation on building shall be allowed at 5% instead of 10% claimed by the assessee. The contention of the assessee that CIT (Appeals) in earlier assessment year has allowed higher depreciation cannot be accepted and on reference to the provisions of the Acts buildings used for residential purpose depreciation allowed @ 5% as per Income Tax Rules. Hence, we uphold the order of the Assessing Officer and dismiss the ground of the assessee.
Disallowance u/s.14A r.w.r. 8D - HELD THAT:- The action of the AO applying Rule 8D is not correct as the provisions of Rule 8D are introduced effective from 24.03.2008 and applicable from the assessment year 2008-09 and direct the Assessing Officer to disallow 2% of exempt income as disallowance u/s.14A of the Act. This ground of the assessee is partly allowed.
Disallowance of Wealth Tax paid on business assets - HELD THAT:- The arguments of the ld. Authorised Representative are not convincing and the provisions are very clear u/s.40(iia) as any sum paid on account of Wealth Tax is not deductable. Considering the apparent facts, we confirm the disallowance of the Assessing Officer and dismiss the assessee ground.
Disallowance u/s.92C - international transactions and specific domestic transactions based on the documents prescribed and maintained by the assessee in respect of international transactions - HELD THAT:- Chartered Accountant report is based on the Audited books of account maintained by the assessee were the international transaction have been incorporated and are authenticated. The report of the Chartered Accountant cannot be ruled out and also factual position has to be considered to correct any mistake in calculating of Arms Length Price(ALP) for valuation, and it is evident that the revised form 3CEB includes the proper comparables in respect of vehicles, parts which are integral product of commercial vehicles. DR vehemently argued against filing of revised form 3CEB and limitation period, we consider the apparent facts, provisions of law, evidence and the action of TPO in rejecting the revised form 3CEB is not proper as factual comparables certified by the Chartered Accountant in Revised form 3CEB cannot be ignored and we in the interest of justice, remit the disputed issue to the file of the Assessing Officer and to consider Revised form 3CEB filed by the assessee for assessment and calculation of Arms Length Price. Assessing Officer should provide adequate opportunity of hearing to the assessee and pass the order. We set aside the order of the Assessing Officer and partly allow the grounds of assessee for statistical purpose.
Disallowance u/s. 43B relating to units sold as slump sale of the Act - Contention of AR that since there is netting of liability and such discharge of liability is treated as deemed payment u/s 43B - HELD THAT:-Before us the assessee has not produced any evidence to show that such payments are made to the concerned Government Departments and also there is no liability in the books of account of the assessee. Considering the circumstances, we are of the opinion if assessee company makes the payment of statutory dues and produced challans, proof of payments, deduction shall be allowed. Therefore, we remit the issue to the file of the Assessing Officer for verification of claim u/sec 43B of the Act. The Assessing Officer is directed to verify and examine the discharge of statutory payments and allow the deduction. Accordingly, the ground of the assessee is partly allowed for statistical purpose.
Disallowance of depreciation on UPS - Assessee claimed depreciation @ 80% treating UPS as energy saving device - HELD THAT:- The claim of the assessee UPS is a energy saving device and alternative claim that it is a integral part of computer cannot fit into the block. The UPS system is only supporting the system and is like other plant and machinery and has separate identity on its own. Therefore, we follow the co-ordinate bench decision of the Tribunal and allow depreciation 25% only and accordingly the appeal is partly allowed.
Disallowance of Securities Transaction Tax - AR submitted that sale of securities are covered under transaction tax and contract notes are inclusive of securities transaction tax on sale or purchase of securities - HELD THAT:- The fact that the securities transaction tax is automatic in stock exchange transactions. The assessee has considered profit after deducting securities transaction tax (STT) and reflected in the Books of Account. The assessee has not claimed deduction as a business expenditure as the income on sale of securities offered under capital gains in computation of income. Considering the circumstances, we direct the Assessing Officer to verify the computation of income and delete the addition of Securities Transaction Tax after verification.
Disallowance of weighed deduction on a expenditure incurred on Department of Scientific and Industrial Research u/s. 35(2AB) - Rectification u/s 154 - HELD THAT:- Assessing Officer has granted relief under Rectification order dated 10.03.2011 on submission of Form 3CL and weighted deduction was allowed. Since the Assessing Officer has rectified the order and allowed the deduction, the assessee has not pressed the ground and treated as dismissed.
Denying of TDS credit - HELD THAT:- We direct the Assessing Officer to allow TDS credit as per form 16A after verification of TDS deducted by the deductor in accordance with law and this ground of the assessee is allowed.
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2016 (2) TMI 1277 - ITAT JAIPUR
Condonation of delay - registration 12AA denied - delay of 1868 days in filing the appeal - HELD THAT:- If we apply the test of a prudent litigant, it cannot be held that once the applicant came to know about the dismissal of the application for registration it will remain silent for a long period of more than 5 years. If we accept the contention of the appellant on the basis of the factually incorrect affidavit, an unsettling situation will emerge and the proceedings will be taken casually by the statutory bodies.
The legislative mandate in stipulating a limitation to file an appeal within the period of limitation and the provision for condonation of delay cannot be permitted to be mis-used by statutory agencies like the appellant before us. The appellant being a statutory body is required to be more careful and prudent in pursuing a legal remedy.
Non-filing of the appeal in time before the Tribunal shows total lack of coordination and sluggishness by the officials of the appellant. We deprecate the same. Assessee is required to explain the delay in filing the appeal. The assessee has failed to satisfy the conscious of this Tribunal that the assessee was bonafidely pursuing its legal remedies, and not filing the appeal in time was beyond its control. There is a huge delay of 1868 days in filing the appeal before us. We deem it inappropriate to condone the delay. Accordingly, we hereby dismiss the application for condonation of delay and accordingly the appeal preferred by the appellant is also dismissed.
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2016 (2) TMI 1274 - ITAT MUMBAI
Addition u/s 68 - unexplained Cash deposits found in the bank account of the assessee - Estimation of profit from spare parts business - As per CIT-A Deposits made by the assessee in the bank account represents business transactions pertaining to spare parts business and accordingly estimated profit there from at the rate of 12%, since the assessee had admitted in the statement that he has been making profit at 10 to 12% from trading in spare part - HELD THAT:- Since the assessee is carrying on business in the mixer grinders and spare parts and since there has been successive deposits and withdrawals, we are of the view that the ld. CIT(A) was justified in considering the bank deposits as relating to business transactions. However, we are unable to understand as to why he considered them as relating to spare parts business and not related to mixer grinder business. Be that as it may, we notice that the Ld CIT(A) has estimated the rate of profit on the basis of statement given by the assessee and hence we do not find any reason to interfere with his order on this issue.
Estimation of profit from sale of mixer-grinders - This addition has also been made on the basis of statement given by the assessee, wherein he had stated that he is selling approximately 1500 pieces of mixer-grinders in a year - AO has placed full reliance on the statement given by the assessee, which he has given on approximate basis - AO has not allowed any deduction towards expenses - assessee has also stated that his income from spare parts business ranges from ₹ 5000 to 6000/- per month approximately, meaning thereby he is earning a sum of ₹ 60,000/- to 72,000/- per year from the business of spare parts. CIT(A) has, however, estimated the income from spare parts at ₹ 1,27,560/-, which is contrary to the statement given by the assessee.
CIT(A) has not explained as to why he has considered the bank deposits as representing the transactions relating to spare parts business alone - possibility of depositing the sale proceeds relating to mixer grinders cannot be ruled out. We are of the view the income of the assessee has to be estimated by considering all the facts in a holistic manner. Accordingly, we proceed to estimate the profit of assessee as under:
(a) We adopt the net profit on sale of one piece of mixer-grinder at ₹ 225/- after allowing administrative expenses @ 30%, i.e., ₹ 75/- per mixer-grinder. Accordingly, the profit earned from sale of mixer– grinder shall be (1500 x ₹ 225/-=3,37,500).
(b) The income from sale of spare parts business is estimated at ₹ 65,000/- based on the statement given by the assessee.
(c) Aggregate of both the income shall work out to ₹ 4,02,500/-.
(d) Since we have estimated the income from the business activities, we are of the view that the income of ₹ 1,27,560/- estimated by the ld. CIT(A) out of bank deposits is required to be telescoped against the above said income estimated by us.
We modify the order of Ld CIT(A) and direct the AO to restrict the addition relating to bank deposits and sale of mixer grinders to ₹ 4,02,500/-.
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2016 (2) TMI 1273 - ITAT MUMBAI
Income from house property computation - municipal taxes and maintenance charges deductibility while determining the income from house property - HELD THAT:- The factum of payment of taxes/maintenance charges is not in dispute. It is also noted from para 2 of the assessment order itself that the assessee furnished the necessary details as called for and after due verification, the same were kept on record. In the same breath, the ld. Assessing Officer and also the ld. DR, asserts that necessary details were not furnished. This assertion is contradicted by the finding contained in para -2 of the assessment order itself. Keeping in view, the totality of facts and the circumstances, we are of the view that income from house property is required to be computed on the basis of actual/bonafide rental value of letting out of the property. The municipal taxes and maintenance charges, which the assessee has undisputedly paid, has to be reduced from the rental income. Thereby, to ascertain the actual value such charges has to be excluded from the rent. Our view find support from the decision in the case Neelam Cable Manufacturing Company [1997 (8) TMI 102 - ITAT DELHI-A] and another decision of the Mumbai Bench of the Tribunal in Bombay Oil Industries [2000 (11) TMI 1225 - ITAT MUMBAI] in Sherrif Construction [2008 (12) TMI 761 - ITAT, BANGALORE]. The ratio laid down in CIT vs Dalhousie Properties Ltd. [1984 (8) TMI 2 - SUPREME COURT] holding that liability in respect of municipal of taxes which an owner has to discharge is eligible for deduction.
Disallow interest paid for housing loan - Non following the procedure laid down in section 251(2) denying opportunity to the assessee of being heard - HELD THAT:- As per section 251, which deals with power of the Ld. First Appellate Authority, sub-section (2) says that the Commissioner (Appeals) shall not enhance an assessment or a penalty or reduce the amount of refund, unless the appellant has had a reasonable opportunity of showing cause against such enhancements or reduction. It is also noted that in the impugned order, even there is no whisper to the effect that any show-cause notice was issued to the assessee. Even, from Form No.35, no such ground was raised. The Ld. Commissioner of Income Tax (Appeals) has committed jurisdictional error while coming to a particular conclusion. The Ld. Commissioner of Income Tax (Appeals) neither called a remand report from the Assessing Officer nor asked the assessee to substantiate the issue, if, he was not satisfied with the assessment so framed. Even otherwise, no person should be condemned unheard unless and until opportunity is provided to him. The ratio laid down in Anusuya Suren Mirchandani vs ACIT [2013 (11) TMI 1660 - ITAT MUMBAI]supports the case of the assessee. Identical ratio was laid down in Dr. Yogiraj Sharma vs ACIT [2014 (11) TMI 1191 - ITAT INDORE]. Following the aforesaid decisions, this ground of the assessee is allowed.
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2016 (2) TMI 1270 - KARNATAKA HIGH COURT
No notice u/s 143(2) on the revised return furnished - HELD THAT:- Learned counsel appearing for the appellants are unable to produce the acknowledgement for having served the notice to the respondent-assessee as required under the relevant provisions of the Act and Rules. Therefore, answering the substantial questions of law does not arise for consideration.
The Appellate Authority has taken into consideration all these aspects of the matter and recorded a clear finding of fact by assigning valid and cogent reasons, holding that no acknowledgment as such has been produced by the revenue, inspite of affording sufficient opportunity. Therefore, the reasoning given by the appellate authority and the appellate Tribunal is strictly in consonance with Section 143(2) of Income Tax Act. Therefore, interference by this Court is not called for.
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2016 (2) TMI 1269 - ITAT CHANDIGARH
Suppression of sales of cloth - application of the assessee filed for admission of additional evidence under Rule 46A of the I.T. Rules - HELD THAT:- It is apparent from the records that in spite of the repeated opportunities provided by the Assessing officer, the assessee failed to furnish the requisite evidence in support of its claim. It is also observed by the CIT(A) that the assessee took the plea that instead of sales figure of 15722.590 kgs was taken by the Assessing officer for computing closing stock, the actual sales were to the tune of 20273.73 kg. It is relevant to observe here that the assessee himself admitted in its letter dated 30.4.2007 that the total sales of cloth during the year under consideration was 15722.590 kg. Thus, the assessee has taken entirely a new stand in this case stating that actual sales figure is 20223.73 kg instead of 15722.590 kg. In such circumstances, the CIT(A) was fully justified in rejecting the application of the assessee filed for admission of additional evidence under Rule 46A of the I.T. Rules.
As regards, merits of the case, we are also in agreement with the observations of the CIT(A) that admittedly the assessee vide its letter dated 30.4.2007 claimed that total sales of cloth during the year was at 15722.590 kgs. The assessee had purchased 27277 kgs of yarn out of which it produced 23886.86 kgs of cloth and sold cloth of 15722.590 kgs and declared 8435.823 kgs of cloth as its closing stock as on 31.3.2005. It is observed that before the CIT(A) the assessee had taken altogether a new plea that actual sales figures is 20223.73 kgs which appears to be an afterthought. In view of the assessee’s letter dated 30.4.2007 addressed to the Assessing officer, we are of the view that the CIT(A) was fully justified in rejecting the ground raised by the assessee on merits. Accordingly, we uphold the order of CIT(A) in confirming the addition of ₹ 7,70,013/- made on account of suppression of sales of cloth. Consequently, we reject ground Nos. 1 and 2 of the appeal.
Addition for want of proof from the assessee - amount as being payable to its ex-partners - HELD THAT:- Assessee has contended that the Assessing officer disallowed the amount on account of cessation of trading liabilities ignoring the fact produced during the assessment proceedings that assessee itself has written off the balance amount of ₹ 1,44,966/- payable to M/s Nice Grip Tools & Exports in the assessment year 2006-07 and the assessment for which was finalized vide order dated 23.12.2008 without making any adverse inference in this regard. Taking into consideration the above contention of the assessee, we think it appropriate to set aside the findings of the CIT(A) on this issue and remand the matter to the Assessing officer with a direction to consider the above submissions of the assessee and decide the issue afresh in accordance with law after providing due and reasonable opportunity of being heard to the assessee. Ground of appeal is allowed for statistical purposes.
Unabsorbed brought forward depreciation - HELD THAT:- It is relevant to observe there that the orders of the lower authorities on this issue are cryptic and non-speaking. It is not clear as to whether assessment to the assessment year 2004-05 was framed u/s 143(3) of the Act or the return for that year was processed u/s 143(1) of the Income-tax Act, 1961. In our opinion, the issue needs to be decided at the level of the Assessing officer. Accordingly, we set aside the findings of the CIT(A) on this issue and remand the matter to the file of the Assessing officer with a direction to decide the issue afresh in accordance with law after affording due and reasonable opportunity of being heard to the assessee.
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2016 (2) TMI 1268 - ITAT DELHI
Disallowance u/s 14A r.w.r. 8D - suo moto disallowance by assessee - non recording of satisfaction - HELD THAT:- After recording that satisfaction only AO can proceed to compute for determination of amount of expenditure incurred which is disallowable u/s 14A(2) of the Act. We could not find any such exercise made by the AO in the course of assessment proceedings. He has merely stated that the assessee company had disclosed expenditure at 10% of the exempt income disallowable u/s 14A is not proper. Therefore without putting across and questioning the reasoning of 10% and without regard to the books of accounts and after that failure to record satisfaction, straight way invoking provision of section 14A and Rule 8D of the Income Tax Rules 1962 is not permissible.
Recharacterizing the short-term capital gain as business income - Whether short-term capital gain arising as per investment in portfolio management scheme could not be said to be business income? - HELD THAT:- On appreciation of cumulative facts are of the view that income of sale of mutual funds cannot be taxed under head business income but is chargeable to tax under the head capital gains. Furthermore, regarding the short-term capital gains of shares which is ₹ 762840/- we could not note that in most of the cases the period of holding is more than 100 days. The numbers of shares bought and sold were approximately 10 strips. The amount of turnover was also small. Looking at the turnover and overall facts of the case, we are of the view that profit on sale of share and mutual fund is chargeable to tax under the head capital gain only and not as business income. In view of the above facts, we reverse the finding of the learned Commissioner of Income tax (Appeals) and direct the AO to charge profit on sale of mutual fund and shares including gain arising on mutual fund held in portfolio management scheme of the brokers under the head capital gain only. - Decided in favour of assessee.
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2016 (2) TMI 1266 - ITAT AMRITSAR
Additions u/s 40(a)(ia) - assessee is entitled to deduction u/s 80IB of the Act and that no tax can be imposed on these additions - HELD THAT:- In “Sun Pharmaceuticals” (2013 (9) TMI 598 - ITAT, AMRITSAR), however, consequential higher deduction u/s 80IB of the Act on account of disallowance u/s 40(a)(ia) of the Act has been allowed, holding, inter-alia, that addition of income u/s 40(a)(ia) results into increase in the income of the assessee, which income would be profit derived from the industrial undertaking. The provision contained under section 80IB for computation of income was found to contain a mandate that where any deduction is required to be made or allowed under any law, included in this Chapter under the heading, “C.- deductions in respect of certain income” in respect of any income of the nature specified in that section, which is included in the gross income of the assessee, then, notwithstanding anything contained in that section, for the purpose of computing deduction under that section, the amount of income of that nature as computed in accordance with the provisions of this Act ( before making any deduction under this Chapter) shall alone to be deemed to the amount of income of that nature which is derived or received by the assessee and which is included in his gross total income.
The decision of the Tribunal in the case of “Sun Pharmaceuticals” (supra), as noted, was followed by the Tribunal in the assessee’s own case for the AY 2008-09. The facts in the present case of the assessee for the AY 2008-09 have not been shown to be any different from those present in the assessee’s case for the year under consideration, i.e., 2009-10. Moreover, the order of the Tribunal in the assessee’s case for the AY 2008-09 has also not shown to have been accepted on appeal. It has also not been shown to have even been stayed. - Appeal of the assessee is allowed.
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2016 (2) TMI 1263 - ITAT RAIPUR
Non-payment of liability of service tax u/s.43B - HELD THAT:- In a situation when deduction has not been claimed and a separate account has been maintained, then disallowance u/s 43B of the IT Act should not be made. In the case of CIT Vs Noble & Hewitt (India) (P) Ltd. [2007 (9) TMI 238 - DELHI HIGH COURT] the case of Chowringhee Sales Bureau P. Ltd. Vs CIT [1974 (6) TMI 5 - CALCUTTA HIGH COURT] has been distinguished and it was held that when the amount of tax has not been debited to profit & loss account as an expenditure nor claimed any deduction in respect of the said amount then, the question of disallowance u/s 43B of the IT Act does not arise. Respectfully, following this decision, we hereby hold that there was no fallacy in the view taken by the learned CIT (A). The same is hereby confirmed and ground No.1 of the appeal of the Revenue is, therefore, dismissed.
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