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Income Tax - Case Laws
Showing 1 to 20 of 8820 Records
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2017 (12) TMI 1880
Capital Gains - year of transfer of asset - Transfer of Property Act by irrevocable Power of Attorney - transfer of the 14,307 sq.ft. of the land by applying the provisions of Sec. 50C for the AY 2010-11 - assessee had not been able to produce any documentary evidence, any proof of the transaction claimed, to have taken place during the year 2002 - as submitted that the property having already been transferred by a registered Power of Attorney and possession in respect of the said land having been handed over through the registered irrevocable Power of Attorney, the Capital Gains was not liable to be assessed for the AY 2010-11 - as argued same transaction could not be taxed again in the AY 2010-11, just because, the Sale Deed was registered only during the said assessment year
HELD THAT:- As in view of the principles laid down by the Hon’ble Supreme Court in the case of Shri Balbir Singh Maini 2017 (10) TMI 323 - SUPREME COURT it is held that the Capital Gains, if any, in respect of the transfer of the 14,307 sq.ft. of the land is assessable only during the year 2002 as has been rightly disclosed by the assessee in their returns for the AY 2002-03. Even otherwise, a perusal of the proviso to Sec. 50C(1) inserted by Finance Act 2016 w.e.f. 01.04.2017 clearly admits that the provisions of Sec. 50C are not to apply in the event that the date of agreement fixing the amount of consideration and the date of registration for transfer of the capital asset are not the same, then the value adopted or assessed or assessable by Stamp Valuation Authority on the date of agreement, may be taken for the purpose of computing the full value of the consideration of such transfer subject to conditions.
In the present case, admittedly, the Power of Attorney is considered as the agreement and the Sale Deed executed are in two different assessment years and the consideration having already been received by the assessee on the execution of the irrevocable registered Power of Attorney and the same having been offered to tax during the AY 2002-03, the provisions of Sec. 50C itself cannot be brought to play in the case of the assessees. Assessee appeal allowed.
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2017 (12) TMI 1879
Undisclosed income declared at the time of search - argument of Non considering disclosure made by the assessee in his statement recorded u/s. 132(4) - assessee vehemently stated that the disclosure made by the group was bifurcated in the hands of different Members of the group and the disclosure was honoured by including the undisclosed income declared at the time of search in the hands of the other assessees of the group.
HELD THAT:- We find that nobody attended during the assessment proceedings of the assessee nor anybody attended proceedings before the First Appellate Authority. Therefore, it appears that the assessments made in the cases of other assessees of the group were not verified and the entire disclosure amount has been added in the hands of the appellant assessee.
In our considered opinion, a grave prejudiced has been caused to the assessee by such non verification. Therefore, in the interest of justice, we restore these appeals to the files of the A.O.
A.O. is directed to verify from the assessment records of Shreem Developers and Others, The amount of undisclosed income offered during the course of the search proceedings as per the statement mentioned hereinabove. If the A.O. is satisfied that the undisclosed income has been taxed in the hands of other members of the group then there is no reason why the same income should be taxed in the hands of the assessee. The assessee is directed to furnish necessary details and substantiate its claim before the AO. Assessee appeal allowed for statistical purpose.
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2017 (12) TMI 1873
Applicability of provisions of section 115JB - assessee is a Corporation, which is mainly engaged in the business of manufacturing of Cold Rolled & High Tensile Steel - HELD THAT:- As agreed by the representative of both the sides, the solitary issue involved in this appeal of the Revenue is squarely covered by the decision of the Coordinate Bench of this Tribunal rendered in assessee’s own case vide its common order [2016 (2) TMI 458 - ITAT KOLKATA] wherein a similar issue was decided after discussing all the relevant aspects as well as case laws in details by the Tribunal before summarising its conclusion.
We respectfully follow the order of the Coordinate Bench of this Tribunal for the said years and uphold the impugned order of the ld. CIT(Appeals) in directing the AO not to assess the total income of the assessee by application of section 115JB of the Act. Appeal of the Revenue is dismissed.
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2017 (12) TMI 1870
Disallowance u/s 14A read with Rule 8D - mandation to recording satisfaction - ITAT upholding CIT(A)'s order of deleting addition - ITAT deleted addition - HELD THAT:- Whether the satisfaction of the Assessing Officer u/s 14A(2) that the disallowance offered by the Assessee, having regard to the Accounts, is not correct, is a sine-qua-non before invoking Rule 8D(2) of the Income Tax Rules. It is also an agreed position that it is so, in view of the decision of the Supreme Court in Godrej & Boyce Manufacturing Co. Ltd[2017 (5) TMI 403 - SUPREME COURT] - Thus, no fault can be found with the impugned order.
Character of the income derived - income derived from letting out of the premises of the I.T. Park - 'Business Income' or income from property - HELD THAT:- Revenue states that he is not pressing this question in view of the CBDT Circular No.16 of 2017 dated 25th April, 2017 as clarified that income arising from the letting out of the premises in an Industrial Park/ SEZ, are to be charged under the head 'Profits and gains of business' and not under the head 'Income from house property'
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2017 (12) TMI 1869
Reopening of assessment u/s 147 - assessee has shown dividend income from Rajkot Nagrik Sahkari Bank as exempt income - exemption u/s 10(34) of the act on dividend income received from the bank was not available - HELD THAT:- As submissions made by the appellant are insufficient to conclude that there was 'change of opinion' on the issue of dividend income while reopening of the assessment u/s. 147 of the Act. After considering the entire facts of the case reopening of assessment is valid and justified as per the provisions of the Income Tax Act, 1961
We observed that according to the provision of section 10(34) of the act the income received by way of dividend is exempted if dividend distribution tax has been paid as per the provision of section 115-0 of the acts. We have further observed that Rajkot Nagrik Sahkari Bank being not a company is not subject to payment of dividend distribution tax.
We noticed that the assessee has shown dividend income from Rajkot Nagrik Sahkari Bank claimed as exempt income but the assessee has not provided information about the nature of the impugned dividend income. The assessing officer observed that exemption u/s 10(34) of the act on dividend income received from the AOP which is not subject to payment of dividend distribution tax according to provision of section 115-O are not available. The assessee has not provided sufficient details which could have demonstrated the actual nature of the dividend income received by the assessee. Therefore, to examine the issue of availability of exemption on dividend income the case of the assessee was reopened u/s 147 of the act. Consequently during the reassessment proceedings the claim of the assessee that dividend income was exempt as per section 10(34) of the act was found to be invalid.
Therefore, after considering the above facts and material on record, we are inclined with the decision of the Ld. CIT(A). Therefore, this ground of appeal of the assessee is dismissed.
Disallowance u/s. 40A(2)(b) - Assessee failed to substantiate the payment of interest at an exorbitant rate to related parties as against prevailing market rate of interest of 12% - HELD THAT:- AO has disallowed out of the excess payment of interest to the friends and relatives on the unsecured loans in the proportionate and equivalent to an amount excess to the prevalent market rates. The assessee has failed to substantiate the payment of interest @ 24% on the loans to the relatives in comparison to the rate of 12% prevalent market rate of interest. The assessee had also paid the interest @ 12% on unsecured loans to many other parties.
After considering the facts in this regard, we observed that out of the interest paid to the relatives disallowance made u/s. 40A(2)(b) by the assessing Officer is reasonable and justified. Therefore, we do not find any error in the decision of the Ld. CIT(A). This ground of appeal is dismissed.
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2017 (12) TMI 1867
TP Adjustment - determination of the Arms’ Length Price to the TPO u/s 92CA - considering only operating profit and operating cost relating to the AE transactions - MAM - DRP rejected the assessee’s contention of internal TNMM because the assessee did not submit the segmental results before the TPO or DRP - Whether TPO had erred in arriving at ALP by applying the Profit Level Indicator (PLI) on the total cost which includes cost attributable to non AEs also and the total receipts from both AEs and non-AEs? - HELD THAT:- We find that where the assessee has both the AE as well as non-AE transactions, the operating profit and operating cost relating to the AE transactions alone ought to be considered for arriving at the ALP and thereafter the fixed cost attributable to both the transactions ought to be apportioned. When the TPO has adopted the TNMM as the most appropriate method and the assessee has rendered similar services to both the AEs and non- AEs, and the non-AE transaction satisfy the internal TNMM. The AO, therefore, ought to have considered them for arriving at the ALP. Therefore, we deem it fit and proper to remit this issue to the file of the AO with a direction to consider only the operating profit/operating cost of AE transactions and also to consider internal TNMM where the services rendered by the assessee are similar both to AEs and non-AEs. Accordingly, grounds of appeal Nos.3 to 3.4 are treated as allowed for statistical purposes.
Denial of deduction u/s 10A on the ground that Form No.56F was not filed along with the return of income - HELD THAT:- It is seen from the assessment order, that the assessee has filed e-return and there is no possibility of filing Form No.56F along with the e-return of income. It is also seen that the assessee has filed Form No.56F during the assessment proceedings and before completion of the assessment.
As in the case of American Data Solutions India (P) Ltd [2014 (2) TMI 128 - KARNATAKA HIGH COURT] has held that the appellate proceedings are the continuation of the assessment proceedings and if Form No.56F is filed during the course of appellate proceedings, the same should be considered, as the requirement to file the Form 56F along with the return of income is only directory and not mandatory.AO is directed to consider Form No.56F and allow deduction u/s 10A of the Act, provided the assessee, otherwise fulfills all the other conditions prescribed u/s 10A of the Act. Thus, ground of appeal No.4 is treated as allowed for statistical purposes.
Bad debts claim - amount is outstanding from “Collins & Aikman Litigation Trust Distribution Account” as on 31.03.2004 and since the said company has become bankrupt during the year, the assessee has written it off as bad debt - HELD THAT:- As it is the case of the assessee that the assessee has offered it as income in the relevant A.Y. in which it has received the amount - Subject to verification of this fact by the AO, i.e. whether the assessee has offered this income to tax in the relevant A.Y, i.e. 2013-14, this issue is decided in favour of the assessee. If the assessee has offered this income to tax in the relevant A.Y, the claim of the assessee for the A.Y 2009-10 shall be allowed, as it is not disputed that Collins & Aikman Corporation has become bankrupt during the relevant financial year. As regards the amount receivable from SCSL and written off by the assessee, the assessee has not been able to produce any evidence in support of the same either before the authorities below or before us. Therefore, this addition is confirmed. Thus, ground of appeal No.5 is partly allowed.
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2017 (12) TMI 1864
Addition u/s 68 - unexplained unsecured loans - HELD THAT:- As carefully gone through the copy of ledger account of all the creditors. We find that inadvertently the tax auditor has treated the aforementioned persons under the head “unsecured loan” whereas, in fact, all the above persons are “trade creditors” and with whom the assessee has done some contract business including supply of labourers on contractual payments. We find that tax has been deducted at source as per the provisions of law. On given facts, we do not find this to be a fit case for the additions u/s 68.
Disallowance of 5% of the expenses claimed in trading account - CIT(A) deleted the addition - HELD THAT:- It is true that the assessee did not file all the details of expenditure during the course of assessment proceedings. It is equally true that all the necessary details were furnished before the CIT(A) who had called for a remand report from the Assessing Officer. Once the details have been furnished and transmitted to the AO, and the same were examined by the CIT(A), we do not find any reason to interfere with the findings of the CIT(A).
Appeal of revenue dismissed.
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2017 (12) TMI 1862
Addition of “on money” towards purchase of the property (including commission) - HELD THAT:- As the details mentioned against the amount are clearly at variance as against that of the property under consideration, therefore, there was no occasion for the A.O to have acted upon the said impugned notings in context of the purchase of the property under consideration. We have further perused the notings marked as “Commission” of the impounded document, and though find that as against the term “Commission” certain amounts are found mentioned, but are unable to comprehend as to how such dumb notings have been related to the purchase of the property under consideration.
Thus here is no basis for relating the notings in the impounded document with the purchase of Flat by the assessee, therefore, are of the considered view that the addition made by the A.O u/s 69 and sustained by the CIT(A), cannot be upheld. Decided in favour of assessee.
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2017 (12) TMI 1861
Accommodation entries estimation - Estimation @0.15% of the accommodation entries against which 50% expenses were allowable to the assessee - HELD THAT:- Upon perusal of Tribunal’s order for various years as placed on record, we find that the Tribunal in the case of the assessee as well as his associated concerns has estimated the additions @0.15% of the accommodation entries and the same rate have been adopted by the lower authorities. The assessee has claimed expenditure of Rs.59,334/- which has been allowed to the extent of 20% by Ld. CIT(A). Since the Tribunal has allowed expenses to the extent of 50%, taking the same stand, we hold that the assessee shall be eligible for expenses to the extent of 50%.
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2017 (12) TMI 1860
TP Adjustment - TPO/AO adopting the ALP in respect of management and marketing support services fees paid by the appellant to its AE at Rs.Nil - payment for said services was made in terms of master agreement entered by the appellant with Volvo Truck Corporation, Sweden, i.e., its AE, which is a holding company.
HELD THAT:- Only valid reasons assigned by the TPO which remain uncontroverted for determining the ALP of the transaction of payment of management and marketing support services fees at Rs.Nil is that there was no evidence in support of rendering of services by the AE and the failure to substantiate real nature of services actually rendered by the AE .
We hold that the TPO was justified in determining the ALP of transaction of marketing and management support fees at ‘nil’.
When the case is covered against the assessee in its own case for the earlier assessment year, we find no reason for assessee to seek adjournment of the case, especially in the matters of very old matters i.e., 2010. It is for the assessee to arrange for its own affairs. The court cannot come to the rescue of an assessee who keeps changing counsel from time to time in order to gain time. We do not approve of this kind of practice of frequent change of counsel.
When the application for admission of additional evidence was rejected, the assessee again started pleading adjournment of the case. In any case, once the issue is duly covered against assessee, there was no occasion for the bench to adjourn the matter and further it is not befitting the stature of the counsel, to seek for adjournment in a covered matter.
It is a classic example of shifting of profit base outside the country. The appellant has also not controverted the findings of the TPO that it adopted a colourable device to shift the tax base of this country.
When the other transactions are accepted to be at arm’s length under the TNMM method, the TPO is not justified in adopting the CUP method for the purpose of benchmarking the transaction of payment of management and marketing support services fee, is not correct in asmuchas the TPO had not examined the other transactions under the TNMM method.
Deduction u/s 10A - AO in reducing the tele-communication expenses incurred in India from 'export turnover' while computing deduction under section 10A as 'expenditure attributable to delivery of software outside India' under Explanation 2(iv) to Section 10A - HELD THAT:- We find that this issue is squarely covered in favour of the assessee by the decision of Tata Elxsi (2011 (8) TMI 782 - KARNATAKA HIGH COURT). We direct the AO to reduce telecommunication expenses both from export turnover as well as total turnover.
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2017 (12) TMI 1859
Reopening of assessment u/s 147 - deductions u/s. 80IA - Notice after expiry of four years - HELD THAT:- In this case, along with the return of income filed originally by the assessee the assessee had filed the audited accounts, tax audit report and auditor’s certificates certifying the amounts eligible for deductions u/s. 80IA - Later on, the assessment was completed u/s.143(3) after thorough examination of the details, documents and evidences furnished in the course of scrutiny assessment proceedings and the total income was determined after allowing deductions u/s 80IA and 80IC of the Act respectively
When all the facts have been disclosed which were necessary for the assessment at the original stage itself, after four years after scrutiny assessment has been done in this case, cannot be revisited by the AO without pointing out specifically as to which primary evidence was non-disclosed by the assessee during original 143(3) proceedings. Since the AO has failed to even point out remotely as to the failure of the assessee in not disclosing of primary facts during original assessment which was completed u/s. 143(3) of the Act, which is sine qua non and essential jurisdictional fact, for the AO to reopen after four years the scrutiny assessment, thereby in this case, the A.O lacks jurisdiction to reopen and so is fragile in the eyes of law - Appeal of revenue is dismissed.
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2017 (12) TMI 1858
Revision u/s 263 - difference between lack of enquiries and inadequate enquiries - HELD THAT:- Deeming fiction has been created in section 263 of the Act by the amendment made by Finance Act, 2015 w.e.f. 01.06.15 wherein it has been mentioned that where the Commissioner is of the opinion that the AO had passed the order without making enquiries or verifications which should have been made or a relief has been allowed without enquiring into the claim or that the same is not in accordance with any order or direction or instruction issued by CBDT, that shall be deemed to be erroneous in so far as its prejudicial to the interest of Revenue. The said deeming provisions, in our view, are not applicable for the assessment year under consideration.
We find that the Hon’ble Supreme court and various other High Courts including our Jurisdictional High Court have been almost unanimous in holding that before enhancing or annulling or modifying or cancelling the assessment while exercising his powers under section 263 of the Act, the Commissioner must record a finding of fact or of law that the order of the AO is erroneous and is also prejudicial to the interest of Revenue as discussed above.
In the case in hand, this prerequisite condition has not been satisfied as the Commissioner after calling for the explanation from the assessee has failed to make necessary exercise in examining or cause to examine the explanation/details submitted by the assessee for the justification of its claim and even without any further enquiry, directed the AO to make additions of the entire deposits into the income of the assessee. Hence, in the light of the various case laws as analyzed above, the order of the Commissioner exercising jurisdiction u/s 263 of the Act cannot be held to be sustainable in law. Appeal of the assessee is hereby allowed.
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2017 (12) TMI 1857
Disallowance of provision for obsolescence of spares - reliance on audit objection - addition made as not actual expenditure incurred by the assessee company; and two that this liability was unascertainable in the hands of the assessee company - CIT-A deleted the addition - HELD THAT:- The coordinate Bench of the Tribunal in M/s. Jet Airways (I) Ltd. [2010 (10) TMI 1243 - ITAT MUMBAI] while dealing with identical issue has held that the provision for obsolescence of spares is not an ad hoc claim for deduction rather it is a claim in respect of normal wear and tear acceptable in the aeronautic industry and as such, claim is based on provision of Schedule XIV of the Companies Act, 1956 which deals with the rate of depreciation.
CIT (A) vide impugned order has thrashed the issue at length to reach at the conclusion that the provision for obsolescence of spares is not an ad hoc provision but on the basis of actual uses of aircraft on hourly basis and maintenance is due after the prescribed hours of uses. It is ascertained liability which is charged as per airline industry practice and standard norms.
CIT (A) has rightly deleted an addition made by the AO on account of the provision for obsolescence of spares, being genuine expenditure to run the airline business. So, finding no illegality or perversity in the impugned order, present appeal filed by the Revenue is hereby dismissed.
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2017 (12) TMI 1855
Rectification of the mistake - DR has submitted that the ground no.7 of the Revenue appeal has not been adjudicated by the Tribunal - Whether DRP erred in directing to exclude E-Infochips Ltd., from the list of comparables holding that no segmental information is available and that it fails 75% service revenue filter? - HELD THAT:- AR has not rebutted the submissions of DR regarding non-adjudication of this ground and has fairly conceded that the Tribunal may recall the order for the limited purpose of adjudicating ground no.7 of the Revenue’s appeal.
Tribunal has committed mistake apparent from the record as the Tribunal has not adjudicated the ground number 7, therefore we deem it appropriate to recall the decision for the limited purpose of adjudicating ground 7 of the Revenue’s appeal. Miscellaneous petition filed by the Revenue is allowed.
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2017 (12) TMI 1852
Exemption u/s 54B - whether land transferred was agricultural land? - D.R said that the Adangal extract and other documents said to be obtained from the Village Administrative Officer cannot conclude that the land in question is agricultural land - HELD THAT:- From material available on record it appears that the assessee planted some coconut trees in the land in question. The assessee has also produced copies of Adangal extract to establish that the land was used for cultivation. Adangal extract otherwise known as Village Account No.2 was maintained by the Village Administrative Officer in the regular course of performing his official function. The Village Administrative Officer being the field level officer, has a duty to record the cultivation in Village Account No.2 / Adangal extract.
To establish the cultivation, the only document available is the Adangal extract. Therefore, the Adangal extract cannot be brushed aside so lightly when the assessee produced the same to establish his case that the land in question was used for agricultural activities.
Assessing Officer has not examined whether the assessee invested the money and actually purchased the property as claimed. A reference about the advance given by the assessee was found in the assessment order. However, there was no reference about the purchase of property. The assessee now claims that he is ready and willing to produce the copy of sale deed before the AO. Therefore, this Tribunal is of the considered opinion that the Assessing Officer shall re-examine the issue afresh.Appeal filed by the Revenue is allowed for statistical purposes.
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2017 (12) TMI 1850
Depreciation on hoardings - whether the hoardings were temporary or permanent structure - Depreciation @ 100% treated as temporary structures as against the treatment given by the AO as plant and machinery allowing depreciation @ 15% - depreciation on hoardings claimed by the Assessee and disallowed by the AO depreciation on Hoarding Structures (Bus Shelters) on additions for more than 180 days - HELD THAT:- As in the Assessment Order for the AY. 2009-10, AO disallowed Rs. 57,73,114 out of total depreciation claimed of Rs. 1,94,65,631 @ 100% on the additions of more than 180 days to the Hoarding Structures ( Bus Shelters). He further disallowed 50% depreciation amounting to Rs.7,74,495/- on additions of Rs.15,48,990/- Hoarding structures (Bus Shelters) for less than 180 days in Paragraph 3 on page 2 of the order. He allowed the balance 50% of the claim for depreciation of Rs.18,77,500/- on Hoarding Structures that was disallowed in A.Y. 2008-09 in paragraph 3 on page 3 of the order.
It is thus clear from the order of CIT(A) that the depreciation disallowed by the AO of Rs.57,73,114 was depreciation on hoardings and structures which were used for more than 180 days. Therefore there is no merit in ground No.2 raised by the revenue before us.
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2017 (12) TMI 1845
Disallowance of provision for contractual obligations - HELD THAT:- As it is apodictic that actual payments against the provisions made by the assessee for earlier year were negligible upto assessment year 2013-14. Assessee was unable to furnish any details regarding the projects so far completed by the assessee with delay and the actual amount of liquidated damages paid for such overrun.
While there can be no quarrel on the claim of the assessee that actual liquidated damages payable on account of delay attributable to it, is a crystallized liability, in our opinion requisite details for supporting the claim made by the assessee is not on record. Not only the assessee has to show that there was indeed a delay, it is also required to show what part of such delay was attributable to its own fault and what claim was made by the client as per contractual provision, for such damages. In the facts and circumstances of the case, we are of the opinion that the issue requires a fresh look by AO. We therefore set aside the orders of the lower authorities and remit the issue back to the file of the ld. Assessing Officer for consideration afresh in accordance with law.
Disallowance being provision for warranty - HELD THAT:- What we find is that for assessment year 2009-10 though the claim was allowed by the ld. Commissioner of Income Tax (Appeals), the Tribunal had reversed such finding of the ld. Commissioner of Income Tax (Appeals) and upheld the disallowance for warranty provisions. Nothing was shown before us to take a different view for the impugned assessment year. Ground of the assessee stands dismissed.
Disallowance u/s.14A - HELD THAT:- Hon’ble Delhi High Court in the case of Joint Investment P. Ltd [2015 (3) TMI 155 - DELHI HIGH COURT] disallowance u/s.14A of the Act cannot exceed the exempt income claimed by the assessee. We restrict the disallowance accordingly.
Addition of retention money - Accrual of income in which year ? - HELD THAT:- We find that the question whether retention money could be considered as part of income had come up before the Hyderabad Bench of the Tribunal in assessee’s own case for assessment year 2007-08 [2013 (9) TMI 372 - ITAT HYDERABAD] Tribunal had set aside the issue to the file of the ld. Assessing Officer for verifying the correctness of the claim of the assessee that retention money was offered as income in the years in which these were received. Accordingly, for the impugned assessment year also, we give similar directions as given by the Tribunal - Ground of the Revenue is partly allowed for statistical purpose.
Allowance of depreciation on technical know-how - HELD THAT:- No doubt, Revenue has claimed that assessee had not become absolute owner of the technical know-how and the supplier company continued to enjoy the ownership of such technical know-how.
However, in our opinion, once assessee had paid the money and acquired the technical know-how, it become an intangible asset, eligible for claiming depreciation u/s.32(ii) of the Act. The question whether the same vendor had given the same technical know-how for other persons, is in our opinion, irrelevant in deciding the question of eligibility of the assessee for claiming depreciation. We therefore do not find any reason to interfere with the order of the ld. Commissioner of Income Tax (Appeals) in this regard. Ground stands dismissed.
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2017 (12) TMI 1841
Disallowance u/s 14A r.w.r. 8D - assessee did not make any disallowance of the expenses incurred in relation to such exempted income - HELD THAT:- AO can make the disallowances of the expenses incurred in relation to exempt income in pursuance to the provisions as specified u/s 14A - On perusal of the facts of the present case, we note that the assessee has claimed indirect/administrative expenses during the year to the tune of Rs.51,669/- only. Thus, it is undoubtedly clear that actual expenses claimed by the assessee are much less then the expenses disallowed under Rule 8D(2)(iii) of the I.T. Rules by the AO - we are of the view that the expenses to be disallowed under Rule 8D(2)(iii) cannot exceed the actual expenses incurred by the assessee. However, the AO has made the disallowance of the expenses under rule 8D(iii) exceeding the actual expenses.
The act of making the disallowance by the AO under rule 8D(iii) shows that no reference has been made to the books of accounts of the assessee. In such a situation we are of the view that the disallowance u/s 14A viz a viz Rule 8D of the I.T Rules has been made without complying the provisions of law. Thus the addition cannot be sustained in the instant case. Thus, we direct the Assessing Officer to delete the impugned addition. Thus, first issue in grounds of appeal filed by the assessee is allowed.
Addition u/s 115JB for disallowance u/s 14A r.w.r 8D - HELD THAT:- As in recent judgment of Special Bench of Hon’ble Delhi Tribunal in the case of ACIT vs. Vireet Investment Pvt. Ltd. [2017 (6) TMI 1124 - ITAT DELHI] that the disallowances made u/s 14A r.w.r. 8D cannot be the subject matter of disallowances while determining the net profit u/s 115JB - Thus it can be concluded that the disallowance made under section 14A r.w.r. 8D cannot be resorted while determining the expenses as mentioned under clause (f) to explanation 1 of section 115JB - However it is also clear that the disallowance needs to be made in terms of the provisions of clause (f) to section 115JB of the Act while determining the book profit. In holding so we draw our support from the judgment of Hon’ble Calcutta High Court in the case of CIT Vs. Jayshree Tea Industries Ltd [2014 (11) TMI 1169 - CALCUTTA HIGH COURT]
We hold that the disallowances made under the provisions of Sec. 14A r.w.s 8D of the IT Rules, cannot be applied to the provision of Sec. 115JB - AO shall work out the disallowances in terms of the clause (f) to Explanation-1 of Sec. 115JB of the Act independently after considering the expenses debited in the profit & loss account as mandated under the provisions of law.
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2017 (12) TMI 1838
Deduction u/s.80P of the Act on the interest income earned from nationalized banks - CIT (Appeals)-3 confirming the order of the AO holding that the amount of interest income earned on fixed deposits made with nationalized banks and co operative bank is not profits and gains attributable to the activity of providing credit facilities to members and hence not eligible for deduction under section 80P of the Act and thereby considering the amount of interest as income from other sources liable to be taxed under section 56 of the Act.- HELD THAT:- In this case, interest amount was received form Allahabad bank, Bank of Baroda and Baroda center Co-op. Bank respectively. From the details, it can be seen that the receipts of interest has been received from other than Co-operative organization i.e. from nationalized banks on FDRs, which is nothing but interest earned on surplus funds invested in bank deposits i.e. FDRs..
We direct the Assessing Officer to verify the assessee’s claims of pro rata expenses by examination the record to be shown for verification by the assessee and accordingly, netting of to be allowed. Appeal of assessee allowed.
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2017 (12) TMI 1836
Depreciation from the estimation of income - AO completed the assessment estimating the income @ 8% on impugned contracts, 6% on sub contracts, 2% on sub contracts given, however, the A.O. has not allowed the statutory allowance of depreciation - HELD THAT:- In the instant case there is no dispute that facts are similar to that of the assessee’s case for the assessment year 2009-10.D.R. did not bring any other case law or distinguished the facts of the case. Therefore, respectfully following the view taken by the ITAT for the earlier year in the assessee’s own case [2015 (11) TMI 1530 - ITAT VISAKHAPATNAM], we direct the A.O. to allow the depreciation against the income estimated from the contract receipts. However, the income so computed shall not be less than the returned income. Accordingly, the appeal of the assessee is partly allowed.
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