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Income Tax - Case Laws
Showing 41 to 60 of 9210 Records
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2016 (12) TMI 1833 - ITAT AHMEDABAD
Disallowance of interest expenses - interest @ 15% p.a. on advances given to various parties on which no interest has been charged - HELD THAT:- Interest-free own funds available at the disposal of the assessee stands at ₹ 352.91 lakhs as on 31/03/2008 and ₹ 507.94 lakhs as on 31/03/2009. The corresponding interest-free advance as on 31/03/2009 stands at ₹ 21.10 lakhs. In such a situation, where interest-free own funds available to the assessee are far in excess of the interest-free advance, the presumption would arise in favour of assessee that the advances were made from interest-free funds available with the assessee.
On this issue, we find guidance from the judgement of Hon’ble Bombay High Court in the case of CIT vs. Reliance Utilities and Power Ltd. [2009 (1) TMI 4 - BOMBAY HIGH COURT] - In view of the huge funds available with the assessee without any interest liability - Thus, the disallowance of interest towards interest-free advance is uncalled for - Decided in favour of assessee.
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2016 (12) TMI 1831 - ITAT CHENNAI
Disallowance of interest paid on loans - Assessee claimed interest on accrual basis - Right to claim deduction on the basis of earlier assessment - Whether said interest was accrued on the loans borrowed in earlier years and there is no actual payment of this interest to the parties? - as per AO assessee has not shown the parties for which the loans were borrowed and the interest was disallowed - HELD THAT:- Assessee has borrowed the amount for the purpose of investment in other firms as capital of the assessee - when the assessee borrowed funds for the purpose of investment in other partner firms, it cannot be allowed as deduction as income earned from firm is not feasible while computing the income of the assessee.
This view is fortified by the judgment of Popular Vehicles and Services Ltd.[2009 (10) TMI 574 - KERALA HIGH COURT] - in earlier assessment years, there was no assessment u/s.143(3) and the return was accepted only u/s.143(1) of the Act without any scrutiny. It cannot be said that the right is vested with the assessee to claim such deduction on the basis of earlier assessment. Accordingly, the grounds raised by the assessee are dismissed.
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2016 (12) TMI 1830 - ITAT CHENNAI
Carry forward of additional depreciation - Additional depreciation of 10% on plant and machinery as purchased and put to use in the previous year u/s 32(1)(iia) - HELD THAT:- In so far as claim of carry forward of additional depreciation to the extent it could not be allowed in earlier year due to use lesser than 180 days, no doubt there are decisions of Co-ordinate Bench which are for and against the assessee. In our opinion the issue is no more res integra due to the judgment in the case of Rittal India Pvt. Ltd [2016 (1) TMI 81 - KARNATAKA HIGH COURT].
Intention of the legislation is absolutely clear, that the assessee shall be allowed certain additional benefit, which was restricted by the proviso to only half of the same being granted in one assessment year, if certain condition was not fulfilled. But, that, in our considered view, would not restrain the assessee from claiming the balance of the benefit in the subsequent assessment year. Tribunal, in our view, has rightly held, that additional depreciation allowed under section 32(1)(iia) of the Act is a one-time benefit to encourage industrialisation, and the provisions related to it have to be construed reasonably, liberally and purposively, to make the provision meaningful while granting the additional allowance. - Decided against revenue.
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2016 (12) TMI 1829 - ITAT JAIPUR
Treatment of the interest received prior to commencement of commercial operations of the specified mega road projects - Income from other sources or capital gain - As per the assessee, it is in the nature of capital receipt and will be required to be set off against the pre-operative expenditure capitalized under the head “Capital work in progress” and the same cannot be brought to tax under the head “income from other sources.”- HELD THAT:- Respectfully following the decision of Coordinate Bench in assessee’s own case [2016 (9) TMI 957 - ITAT JAIPUR] we hold that the interest received prior to commencement of commercial operations of the specified mega road projects will be in the nature of capital receipt and will be required to be set off against the pre-operative expenditure capitalized under the head “Capital work in progress” and the same cannot be brought to tax under the head “income from other sources”. - Decided in favour of assessee.
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2016 (12) TMI 1828 - BOMBAY HIGH COURT
Addition u/s 14A r/w Rule 8D - Tribunal held that no investment is made by the assessee in shares and securities (Mutual funds) out of interest bearing funds - HELD THAT:- By an order [2014 (7) TMI 1328 - BOMBAY HIGH COURT] this Court refused to entertain the Revenue's two appeals on an identical issue as not giving rise to any substantial question of law. The Revenue has not been able to point out any distinguishing features in the present appeal visa-vis the facts and law involved/existing in the Assessment Years 2006-07 and 2007-08, which would warrant a different view. No substantial question of law.
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2016 (12) TMI 1827 - BOMBAY HIGH COURT
TP Adjustment - comparability - whether Tribunal was justified in accepting the comparables merely on the basis that they have been considered comparable in earlier years? - HELD THAT:- So far as ICRA Management Consulting Services Ltd. is concerned, the impugned order on examination of the functional profile held that it was comparable to the respondent-assessee for the subject Assessment Year. This was further supported by the fact that for the immediately preceding Assessment Year the parties had accepted ICRA Management Consulting Services Ltd. to be a comparable for the purpose of determination of arms length price. Therefore, as far as ICRA Management Consulting Services Ltd. is concerned no interference is called for.
In the above view the appeal is admitted on the following re-framed substantial question of law:
“Whether on the facts and in the circumstances of the case and in law the Tribunal was justified in accepting EDCIL as comparable to determine the arms length price in the face of rule 10B(4) of the Act only on the basis that for the earlier Assessment Year , the same were also used as comparable.”
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2016 (12) TMI 1825 - ITAT MUMBAI
Penalty u/s 271(1)(c) -Tribunal has held that the commission should be taken at 0.15% and the expenditure claimed should be restricted and allowed to the extent of 50% from such income - HELD THAT:- We find that the co-ordinate Bench of the Tribunal has directed the AO to take commission at the rate of 0.15% and allow the expenses to the tune of 50% of the said commission and bring to tax the amount so worked out. Further, we find that on the identical facts the penalty has been deleted by the co-ordinate Bench of the Tribunal in M/S. GOLDSTAR FINVEST PVT. LTD. VERSUS THE DCIT- CENTRAL CIRCLE -46, MUMBAI2016 (8) TMI 1502 - ITAT MUMBAI]. Accordingly, we set aside the order of the ld.CIT(A) and direct the AO to delete the penalty. Appeal of the assessee is allowed.
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2016 (12) TMI 1822 - BOMBAY HIGH COURT
TP Adjustment - Tribunal restricting the adjustment only on International Transactions where the assessee has selected TNMM and applied the same on entity level - HELD THAT:- Transfer Pricing Adjustment has to be done only in respect of the transaction entered into with the Associated Enterprises and not in respect of all transactions of the entity. See The Commissioner of Income Tax1, Mumbai v/s. Hindustan Unilever Ltd. [2016 (7) TMI 1245 - BOMBAY HIGH COURT] AND CIT v/s. Alstom Projects India Ltd [2016 (12) TMI 1408 - BOMBAY HIGH COURT]
Delhi High Court has also in CIT v/s. Keihin Panalfa Ltd [2016 (5) TMI 203 - DELHI HIGH COURT] has also independently taken the same view. - Decided against revenue
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2016 (12) TMI 1819 - ITAT CHENNAI
Transfer Pricing adjustments - engineering services rendered by the assessee to its Associated Enterprises abroad - imputing of interest on alleged delay in collection of receivables from Associated Enterprises. - Disallowances of employee’s contribution to Provident Fund - Disallowance u/s.14A - working capital adjustment - HELD THAT:- In so far as imputing interest on delayed payment from Associated Enterprise was concerned, observation of the ld. DRP was that the extended payment terms given to Associated Enterprise without charging interest was exigible to a transfer pricing adjustment, even if commercial expediency was shown by the assessee. As for assessee’s claim for depreciation on goodwill, observation of the ld. DRP was that no such disallowance made by the ld. Assessing Officer and no claim was preferred by the assessee during the assessment proceedings.
Coming to the disallowance for delayed remittance of employee’s contribution of Provident Fund, observation of the ld. DRP was that judgment of Hon’ble Jurisdictional High Court in the case of CIT vs. Madras Radiators and Pressing Ltd [2002 (12) TMI 36 - MADRAS HIGH COURT] went in favour of the Revenue and it was rightly disallowed by the ld. Assessing Officer. In so far as disallowance u/s.14A of the Act was concerned, ld. DRP held that such disallowance was justified even though assessee had not earned any exempted income.
DRP had disposed off the grounds taken by the assessee in a summary manner without properly considering the objections raised by the assessee. As for the comparables sought to be excluded/included by the assessee, the ld. DRP had not compared the functional profile of those companies with that of the assessee before deciding on the desirability of their exclusion /inclusion.
Working capital adjustment sought by the assessee was concerned, ld. DRP had not considered the present position of law as laid by a plethora of decisions of this Tribunal which mandated such adjustment as a necessary one while computing profit level indicator. As for interest on delayed receivables, ld. DRP had not dealt with the objections of the assessee against comparing the receivables with pure loans, without considering the commercial expediency factor. On the claim of depreciation of goodwill, ld. DRP had not given any finding why the claim made for the first time before it could not be considered. As for the remittances to employer contribution to Provident Fund, ld. Departmental Representative had not considered the effect of Section 43B on such claim, where remittances of the deducted amount were made before the due date of filing the return. Coming to the disallowance made u/sec. 14A of the Act, the ld. DRP had not adjudicated as to how such disallowance could be made where the claim of the assessee was that it had not earned any exempt income.
We are of the opinion that all the issues raised by the assessee requires a fresh look by the ld. DRP. We therefore set aside the orders of the ld. DRP as well as ld. Assessing Officer and remit all the issues raised by the assessee to the ld. DPR for consideration afresh in accordance with law. Thereafter, ld. Assessing Officer shall reframe the assessment for the impugned assessment year considering such directions.
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2016 (12) TMI 1816 - ITAT DELHI
Reopening of assessment - Addition u/s 68 - non independent application of mind - HELD THAT:- AO had issued notice u/s 148 of the Act only on the basis of information received from CIT, Central-1, New Delhi and not on the basis of reasons recorded by him by applying his own mind.
Therefore notice issued u/s 148 of the Act was not valid and the reassessment framed deserves to be quashed. As regards to the merit of the case is concerned, it is not in dispute that the assessee furnished the confirmation from the share applicants to whom shares were allotted, the amount was received by the assessee through banking channels.
The addition was made simply on this basis that the notice issued u/s 133(6) were received back and the assessee was unable to produce principal officer/director of the investor companies. However, the explanation of the assessee that the shares earlier allotted to the companies M/s MARRASS Industries Pvt. Ltd. and M/s BSA Fincap Pvt. Ltd. were already sold to other parties and those companies were not the shareholders of the assessee at the time of date of inquiry, was brushed aside.
In the instant case, the assessee furnished documentary evidences in support of the receipt of the share application money which was through banking channels from the companies and also stated that those corporate entities were duly assessed to tax. But the AO held that even when the share capital had been received through banking channels and from corporate entities who were duly assessed to tax was not enough to accept the claim of the assessee. However, it was not brought on record to substantiate that the share application money was in fact the money of the assessee which rotated through banking channels. Therefore, the addition made by the AO and sustained by the ld. CIT(A) was not justified. Accordingly, the same is deleted. In the result, the appeal filed by the assessee is allowed.
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2016 (12) TMI 1815 - ITAT CHENNAI
Nature of loss - Loss arising swap currency forex derivative - swap currency forex derivative entered into with Axis Bank Ltd. relating to principal amount of loan of ₹.10 crores - speculative loss or business loss - HELD THAT:- In this case, the value of loan was taken into consideration at exchange rate of ₹.43.1200 for US Dollar, US Dollar to Swiss Franc 1.2206 and from Swiss Franc to Indian rupees at 35.3269. The term loan was converted as a forex derivative for operation of the forex derivatives and while converting for operation of currency swap, the assessee has claimed loss of ₹.1,95,56,190/-. The assessee has also earned interest of ₹.10,39,561/- and had to pay as a settlement for currency swap amount of ₹.1,32,90,556/- and on account of currency option i.e., against US Dollar ₹.73,05,194/- to Axis Bank. Being so, the expenditure incurred on issue of debentures/equity shares, whether convertible or non-convertible is an allowable deduction as revenue expenditure in view of the decision of the Hon’ble Jurisdictional High Court in the case of CIT v. First Leasing Co. of India Ltd. [2007 (7) TMI 222 - MADRAS HIGH COURT] . Further, in the case of CIT v. Secure Meters Ltd. [2008 (11) TMI 66 - HIGH COURT RAJASTHAN] has also held that the debentures when issued were a loan and, therefore, whether they were convertible or non-convertible did not militate against the nature of the debenture, being loan and, therefore, the expenditure incurred would be admissible as revenue expenditure.
In this case, it is not clear from the orders of authorities below for which purpose; the assessee has entered into currency swap forex derivatives. If the assessee has entered into forex derivatives contract for the purpose of issue of debentures/equity shares, then the loss claimed by it would be admissible as revenue expenditure and otherwise not. The Assessing Officer is directed to verify the same and decide in accordance with law. Thus, the ground raised by the assessee is allowed for statistical purposes.
Interest receipts as income of the assessee - assessee credited the interest receipts to Capital Work in Progress - HELD THAT:- Under the terms of loan, the funds availed/drawn and brought into India had to be utilized immediately for the units and were not available for other purposes. Accordingly, the loan funds were withdrawn in tranches. The unutilized amounts were held by the lending bankers as short term deposits on which interest has been received by the assessee company for the period it was so held. On the other hand for the loan amounts so involved, the assessee was charged interest by the lending Banks. Interest on ECB loan paid during the year was ₹.10,01,57,046/- which has been capitalized and included in the capital work in progress as required under Accounting Standard 16. The interest received on the unutilized funds parked outside has also been taken to the same account. The gross interest of ₹.1,95,02,045/- so received from short term deposits were credited to capital work in progress. However, the Assessing Officer treated the same as income of the assessee and brought to tax. The ld. CIT(A) confirmed the order of the Assessing Officer. As relying on ARASAN ALUMINIUM INDUSTRIES PRIVATE LIMITED [1995 (9) TMI 25 - MADRAS HIGH COURT] we confirm the order of the ld. CIT(A) on this issue and dismiss the ground raised by the assessee.
Admission of additional ground of appeal raised for the first time before the Tribunal - amount realized by transferring Carbon Credits – Certified Emission Reductions [CER], which is not liable to be included in the total income of the assessee was inadvertently credited in the profit and loss account as income in Co-Generation Division and added to the total income of the assessee - HELD THAT:-The additional ground raised by the assessee for the first time before the Tribunal is entertained. However, the matter is remitted back to the file of the Assessing Officer to examine and decide the issue in accordance with law after allowing opportunity of hearing to the assessee.
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2016 (12) TMI 1814 - BOMBAY HIGH COURT
Recovery proceedings - Notices of Motion - communication received by the Income Tax Recovery Officer from the original petitioner (Stock Exchange) - Stock Exchange to prohibitory and attachment orders issued by the Revenue in regard to membership card licensed to Mr. Bharat S. Khona and Mr. Akhil Dalal - Auction proceeds of their membership rights and the Stock Exchange is in the process of releasing these surplus amounts to the two defaulting members - HELD THAT:- This Court followed the decision of the Apex Court in Bombay Stock Exchange vs. V.S.Kandalgaonkar & Ors.[ 2014 (10) TMI 368 - SUPREME COURT] wherein it is held that the member has no right to Stock Exchange membership card as it is only a personal privilege. Consequent to the disposal of the petitions by this Court it is a settled position in law that this Court becomes Functus Officio. Therefore an application relating the disposed of petition cannot be entertained.
In any case, the cause of action of the Revenue, if any, in respect of the communication dated 4th May, 2016 arises post disposal of the Writ Petitions by Order dated 15th October, 2015. Consequently the cause of action on the basis of which this application is filed is a separate and distinct cause of action. Therefore the Revenue is free to adopt such proceedings as they deem fit in respect of letter dated 4th May, 2016. However, the present applications seeking to modify the order dated 15th October, 2015 by taking out this Notice of Motion cannot be entertained by us in a disposed of petition. Moreover it appears the communication dated 4th May, 2016 is separate cause of action and the present application filed by the Revenue is inappropriate.
Learned Counsel appearing for the original Petitioner– Stock Exchange on instruction states that for a period of eight weeks from today, the original petitioner – Stock Exchange will not part with the surplus amount of ₹ 1,57,06,642.26 and ₹ 11,09,849.93 or any part thereof received on sale of the membership card to the defaulting members Mr. Bharat Khona and Mr. Akhil K. Dalal. This should give more than sufficient time to the Revenue to consider its position in law and take appropriate proceedings, in law if so advised. Both the Notices of Motion are dismissed.
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2016 (12) TMI 1813 - ITAT AHMEDABAD
TP Adjustment - rejection of CUP as the most appropriate method - Comparable selection - selection of Petronet LNG Limited and Gas Authority of India Ltd. as comparables for RPM - HELD THAT:- In consideration of the criteria prescribed by the Rules, nature, class of the services rendered and the availability, coverage and reliability of data necessary, and guidelines issued by the OECD in this regard, inter alia, RPM is considered was being the “most appropriate method” to determine the arm’s length value of the transaction pertaining to purchase of LNG.
The assessee and Indian Oil, Bharat Petroleum, ONGC and GAIL, or, for that purpose, any other public sector undertaking, cannot be said to be associated enterprises. In the cases of public sector companies, even as all or majority of shareholdings may be by the Union or State Governments, these companies, for that reason alone, cannot be said to be associated enterprises for the purposes of Section 92A. In view of this finding, the issue regarding related party transactions ceases to hold good in law.
Nothing on record to substantiate the claim of the learned Departmental Representative that the PLL was charging separate fees for regasification. In our considered view, regasification is an integral part of assessee’s trading activity as unpacking of a consignment to put the same in a saleable state and fit for transportation by the available mode. The process of regasification cannot be seen in isolation with the main activity carried on by the assessee. What has been sold by the assessee is regasified LNG (R-LNG) as is evident from the financial statements of the assessee. The business models of HLPL and PLL are similar in the sense that the entire cost, whether it is a long term or a short term contract, is passed on to the customer in India as no trader will keep the cost to itself including the foreign exchange fluctuation. To that extent, leaned Departmental Representative indeed seems to have erred in observing that in the case of PLL, the entire fuel cost including the exchange rate fluctuation is passed on to the customers, whereas the same is not the case of HLPL as it is a full risk distributor. In any case, as a plain look at the financial statements of PLL would show the PLL has booked, in its profit and loss account, foreign loss exchange loss separately to the tune of ₹ 33 crores approximately, and thus it cannot be said that the PLL had passed on entire foreign exchange fluctuation risk to its customers. It has also been noted that sale to customers in India by both PLL as also the assesse is foreign currency (USD) denominated and, therefore, the foreign currency risk is a pass through costs for both HLPL and PLL to that extent.
We agree that the mere fact that PLL also has long term arrangements for purchases of LNG, it does not cease to be a valid comparable for this reason alone.
As regards GAIL as a comparable As for the point that the GAIL is selling natural gas on administered prices, this objection is found to be incorrect inasmuch asin response to the RTI application dated June 24, 2013, it has been clarified that Government that it does not regulate / fix / control the prices of imported LNG. In any event, even if GAIL is to be excluded from comparables, it does not make any difference to the conclusion that the margin earned by the assessee are well within the comparable margin earned by PLL. As for the point that the GAIL is selling natural gas on administered prices, this objection is found to be incorrect inasmuch asin response to the RTI application dated June 24, 2013, it has been clarified that Government that it does not regulate / fix / control the prices of imported LNG. In any event, even if GAIL is to be excluded from comparables, it does not make any difference to the conclusion that the margin earned by the assessee are well within the comparable margin earned by PLL.
We hold that the comparables adopted by the assessee are appropriate.
There is a specific finding in the order of the Dispute Resolution Panel that in the light of this Tribunal’s decision in the case of Liberty Agri Products [2011 (8) TMI 737 - ITAT, CHENNAI] even for the purposes of CUP, the prices prevailing on the day of transaction can only be compared with the comparable uncontrolled prices prevailing on that day only and not on some other dates, and that in none of the cases the TPO has used the prices prevailing on that particular day. This finding remains unchallenged and this principle has not been called into question by the appellant. Therefore, even if CUP method is to be applied, the impugned adjustment will have to be deleted anyway. Viewed thus, the grievances raised in this appeal may be viewed as somewhat academic and of no practical consequence. However, without any offence or prejudice to this line of reasoning, we have dealt with the issue on merits and given our categorical findings on the same.
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2016 (12) TMI 1812 - ITAT MUMBAI
Depreciation on assets leased - Whether such transactions to be finance transactions instead of lease transactions? - HELD THAT:- As decided in own case [2015 (4) TMI 725 - ITAT MUMBAI] in the absence of any proper material and record to come to such a finding, we are of the opinion that this matter needs to be restored back to the file of the Assessing Officer to examine it afresh. Thus the claim of depreciation on the assets pertaining to the aforesaid three sale and leaseback transactions which have been entered into this year is set aside to the file of the Assessing Officer to decide the issue afresh - Decided partly in favour of assessee for statistical purposes.
Addition of remission of loan both under the normal provision and also u/s.115JB - HELD THAT:- Neither the provisions of Section 41(1) is applicable nor assessee’s income was liable to tax u/s.28(iv) of the IT Act. The CIT(A) has also called remand report and after considering the same and applying various proposition of the law, reached to the conclusion that remission of loan would not be chargeable to tax either u/s.41(1) or u/s.28(iv) of the IT Act. The detailed finding so recorded by CIT(A) has not been controverted by DR by bringing any positive material on record. Accordingly, we do not find any reason to interfere in the order of the CIT(A) deleting the addition made on account of remission of loan.
MAT computation for remission of loan - We found that there was a remission of principal amount of loan - As decided in NILGIRI TEA ESTATES LTD. [2012 (2) TMI 553 - ITAT COCHIN] profit from sale of agricultural land, which is not a “Capital Asset”, cannot be included for the purpose of computing book profit u/s 115JB - we restore the matter back to the file of the AO for deciding afresh
Charging of interest u/s.234B where income is assessed u/s.115JB - HELD THAT:- As relying on KWALITY BISCUITS LIMITED [2006 (4) TMI 121 - SC ORDER] we direct the AO to delete the interest charged u/s.234B
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2016 (12) TMI 1811 - ITAT CHANDIGARH
Penalty levied u/s 271CA - default in collection of tax at source - ITAT concurred with the findings of the CIT(A) and held that the belief of the assessee that the goods sold by it were not covered in the definition of scrap though not accepted by the CIT(Appeals) on merit, constituted reasonable cause for failure to comply with the provisions of law - HELD THAT:- Where as a matter of fact it has not been categorically established that the goods were scrap and waste as such which could not be used further, the facts narrated by the assessee, which we find had not been controverted by the revenue, reveal that the assessee harboured an honest belief based on reasonable grounds that the goods sold were not scrap. The same constituted reasonable cause for not collecting tax at source even though the Ld. CIT(appeal) did not accept this content ion of the assessee on merit.
We agree with the Ld. CIT(A) that the assessee had reasonable cause for not collecting tax at source, the absence of which is essential for levying penalty as held in the case of Wood ward governor [2001 (4) TMI 34 - DELHI HIGH COURT] . We therefore uphold the order of the CIT(Appeals) deleting the levy of penalty under section 271CA of the Act. The appeal of the revenue is accordingly dismissed.
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2016 (12) TMI 1809 - ITAT VISAKHAPATNAM
Penalty u/s 271(1)(c) - excess depreciation claim - assessee engaged in development of integrated Textile Park in the Special Economic Zone Visakhapatnam, installed water supply and treatment plant for the benefit of users and claimed 100% depreciation on such water treatment plant and equipments - HELD THAT:- Whether the assessee is developing exclusive infrastructure facility of water treatment plants is eligible for 100% depreciation or providing in house water supply project or water treatment plant in a integrated infrastructure facility being Textile park in Special Economic Zone is a debatable issue which involves two possible views. The assessee had taken one of the possible view which was supported by sound legal contention and also certified by the tax auditor cannot be considered as furnishing of inaccurate particulars of income within the meaning explanation 1 to sec. 271(1)(c) of the Act. Moreover, even after disallowance of excess depreciation, the returned loss continued to be in loss and which does not results into taxable income, so as to claim that the assessee has claimed excess depreciation to evade payment of tax.
Excess depreciation claim made by the assessee is a bonafied claim without any fraudulent intention to evade tax, which does not tantamount to furnishing inaccurate particulars of income warrants levy of penalty u/s 271(1)(c) of the Act. The CIT(A), after considering relevant facts, rightly deleted penalty levied by the A.O. We do not see any reasons to interfere with order of the CIT(A). Therefore, we upheld the CIT(A) order and dismissed appeal filed by the revenue.
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2016 (12) TMI 1806 - CHHATTISGARH HIGH COURT
Validity of reopening of assessment - notice for re-assessment being based solely on the report of DVO - HELD THAT:- In the case at hand, notice u/s 147(2)/148 has been assailed only on the ground that the same is based on report of DVO, therefore, it is illegal and void. Jurisdiction of the Assessing Officer to issue notice has not been assailed on the ground that the notice is barred by limitation. As earlier discussed, notice is not based merely on the report of the DVO but having mentioned the same, the Assessing Officer has recorded its own satisfaction of existence of reason to believe that the income of the relevant assessment year has escaped assessment. Thus, the notice cannot be treated as without jurisdiction. Even otherwise, the petitioner would get full opportunity before the Assessing Officer to present his case as to why it is not a case of escapement of income.
All the writ petitions being not maintainable against show cause notice deserve to be and are hereby dismissed.
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2016 (12) TMI 1804 - ITAT CHANDIGARH
Penalty u/s 271CA for default in collecting tax at Sources(TCS) - Reasonable belief - CIT (Appeals) rejected assessee’s contention that the goods sold did not qualify as scrap and that the assessee harbored a bonafide belief that the goods were not scrap and hence not exigible to TCS but at the same time the Ld. CIT (Appeals) agreed with the assessee’s contention that there was a reasonable cause for not levying penalty - HELD THAT:- The belief harboured by the assessee, considering the facts narrated above constituted a reasonable belief which an ordinary person in the prevailing circumstances would have harboured. It is not the case that the assessee was found liable to collect tax at source on the goods sold by it since the goods were categorically found to qualify as scrap as such, as provided in the definition of the same in the Explanation to section 206C. In fact the assessee was found liable to collect tax at source since the assessee had accepted the same as scrap having paid taxes on the same while purchasing the goods and having not categorically established that the goods were not in the nature of scrap.
In such circumstances, where as a matter of fact it has not been categorically established that the goods were scrap and waste as such which could not be used further, the facts narrated by the assessee , which we find had not been controverted by the revenue, reveal that the assessee harboured an honest belief based on reasonable grounds that the goods sold were not scrap. The same constituted reasonable cause for not collecting tax at source even though the Ld. CIT( appeal) did not accept this contention of the assessee on merit.
We agree with the Ld.CIT(A) that the assessee had reasonable cause for not collecting tax at source ,the absence of which is essential for levying penalty as held by the Delhi High Court in the case of Woodward governor [ 2001 (4) TMI 34 - DELHI HIGH COURT] . We therefore uphold the order of the Ld. CIT( appeal) deleting the levy of penalty under section 271CA - Decided in favour of assessee.
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2016 (12) TMI 1803 - ITAT AHMEDABAD
Disallowance of wages paid considering the same as excessive - HELD THAT:- AO simply disallowed 20% of the wage payment as excessive without supporting material and evidences to prove that the payment made to skilled workers was excessive. AO has not disproved the supporting vouchers and registers maintained by the assessee and other related supporting record maintained like provident fund and ESI contributions indicating the genuineness of these expenses.
The observation made by the AO about excessive wage payment was of general nature ignoring the fact that wages were paid on the basis of number of working days. AO had not considered the fact that the nature of the business of the assessee relate to job work of mechanical and engineering on contract basis with organization like refineries, petrochemicals such as IPCL IOCL Gail. Some of the jobs were of highly labor intensive involving skilled and experienced physical labour force at the site of the work. - Thus AO is not justified in making disallowance - Decided against revenue.
Payment of hiring charges for Hydra Machine at Barauni site - CIT (A) has deleted the disallowance made stating that the party to whom the payments was made not a related party and there was nothing on record to show that the part of the payment had been received back by the assessee - HELD THAT:- Disallowance made by the assessing officer in respect of hiring of crane payment to M/s Upendra Prasad Singh Hitech Construction Pvt. Ltd, in this connection we noticed that this disallowance was not based on cogent or justifiable reasons. We find that the hiring charges paid was not related to the persons covered under section 40A(2)(b) of the act and the assessing officer had made this disallowance on estimated basis without any supporting evidences to prove that the same was excessive and unreasonable. Considering the above facts and findings, we are not inclined to interfere in the findings of the Ld. Commissioner of Income Tax(A). - Decided against revenue.
Disallowance u/s. 43B of service tax payable - HELD THAT:- Out of total service tax liability of ₹ 22,07,221/- only amount of ₹ 18,25,992/- service tax was paid on 5th July, 2008 and there was remark in the audit report that the sum for ₹ 3,81,229/- service tax was not due and hence not paid. We considered that there was no liability of the assessee to pay the above referred service tax as on 31-03-2008 and this service tax of ₹ 3,81,229/- was also not debited to the P & L a/c , therefore, the Ld. Commissioner of Income Tax(A) is justified in deleting the addition made by the assessing officer. - Decided against revenue.
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2016 (12) TMI 1802 - BOMBAY HIGH COURT
Assessment of income of the Appellant in India - HELD THAT:- Appeal admitted on the following substantial questions of law: :
(i) Whether on the facts and in the circumstances of the case and in law, the Tribunal was correct in holding that the profits earned by the Appellant from its Oman branch are required to be included in the total income of the Appellant in India?
(ii) Whether on the facts and in the circumstances of the case and in law, the Tribunal was correct in holding that the capital gains arising to the Appellant from the sale of its Oman and Qatar branches are required to be included in the total income of the Appellant in India?
(iii) Whether a Notification issued on 28th August 2008 could have any application for the assessment year 2004¬05?
(iv) Whether, on the facts and in the circumstances of the case and in law, Notification No.91 dated 28th August 2008 was beyond the scope of section 90(3)?
(v) Whether, on the facts and in the circumstances of the case and in law, the Notification issued under the erstwhile section 90(3) can still be regarded as operative?
In the light of the limited controversy, liberty is granted to seek for an early date of hearing. We record the statement made by Shri Dastur, learned Senior Counsel appearing for the appellant that the questions (iii) and (iv) at page 19 of the Appeal memo are not being pressed for the reasons that they are covered by questions (i) and (ii), and some decisions in the field.
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