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Income Tax - Case Laws
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2018 (12) TMI 1990
Assessment u/s 153A - Proceedings on the basis of the statement made by one K. Srinivasalu, who was linked with the business concern under the name and style of SRS Mining - petitioner further contend that he was aware that the said K. Srinivasalu had retracted his statement and he was doubly sure that the entire proceedings of the Department were baseless - HELD THAT:- The fact that the witness had turned hostile would only stand to the benefit of the petitioner as the entire evidence of the witness could be considered and this Court is unable to understand as to how it would be adverse to that of the petitioner. Even if the respondent was to rely on that part of the evidence of K. Srinivasalu which is in their favour they have to let in other reliable evidence to corroborate the same. During the course of the arguments, it was informed by the learned Senior Counsel that copies of the evidence had not been provided to the petitioner and this Court directs the respondents to give copies of the evidence to the petitioner.
No infirmity in the order of the respondent in refusing the request for cross examination since the witness had turned hostile to the respondent's contentions. Needless to state that in the light of the amendment to Section 154 by insertion of Sub Section (2) by Act 2 of 2006 w.e.f. 16.04.2006, it is well open to the petitioner to work out his right in accordance with law on receipt of the evidence directed to be given. WP dismissed.
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2018 (12) TMI 1985
TP Adjustment - international transaction pertaining to availing support and management services by the Appellant from its Associated Enterprise (“AE”) - HELD THAT:- It is noticed that a similar issue having identical facts was a subject matter of the assessee’s appeals for the preceding assessment years 2012-13 and 2013-14 [2018 (8) TMI 126 - ITAT DELHI] respectively wherein the matter has been restored to the file of the TPO wherein TPO is directed to decide the issue afresh after considering the detailed submissions/documentary evidences furnished by the assessee. Assessee is directed to furnish the details of services utilised by it for which it has made the payments to its AEs. Assessee is further directed to demonstrate what benefits it has received from its AEs. TPO is directed to consider the same and decide the issue afresh after giving reasonable opportunity of being heard to the assessee. Appeal of the assessee is allowed for statistical purposes.
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2018 (12) TMI 1977
Non perusal of appeal by assessee - notice of hearing was duly served on the assessee, but none appeared on the said date nor was an application filed for adjournment - HELD THAT:- As held in the case of B.N. Bhttachargee & Anr. [1979 (5) TMI 4 - SUPREME COURT] that appeal does not mean only filing of memo of appeal but also pursuing it effectively. In cases where the assessee does not want to pursue the appeal, Court/Tribunal have inherent power to dismiss the appeal for non-prosecution as held in the case of M/s Chemipol Vs. Union of India [2009 (9) TMI 177 - BOMBAY HIGH COURT].
Therefore, respectfully following decision and also of the Tribunal in the case of Multiplan (India) Ltd., [1991 (5) TMI 120 - ITAT DELHI-D] and Late Tukojirao Holkar [1996 (3) TMI 92 - MADHYA PRADESH HIGH COURT] we dismiss the appeal of the assessee for want of prosecution.
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2018 (12) TMI 1976
Nature of receipt - Refund of excise duty claimed from DGFT - Business receipt or capital gain - whether is not income under Section 5 read with Section 28(iii)(b) in the hands of Assessee Company as held by ITAT? - HELD THAT:- The issue raised in the present appeal by Revenue which relates to assessment year 2011-12 is covered against them by decision of MAITHON POWER LTD. [2015 (7) TMI 784 - DELHI HIGH COURT] as held refund or drawback would go to ultimately reduce the cost of the project and had therefore to be treated as a capital receipt.
This being the accepted and admitted position, no substantial question of law arises for consideration before this Court.
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2018 (12) TMI 1975
Reopening of assessment u/s 147 - notice beyond a period of four years - long term capital gain on listed securities and claimed exemption under section 10(38) - Assessee submitted that in the absence of failure on the part of the petitioner to disclose fully and truly all material facts necessary for its assessment, the assumption of jurisdiction on the part of the AO is invalid - Also AO has proceeded on a factually incorrect premise insofar as the value of Alpha Graphics Scrip is concerned as well as on the incorrect premise that no scrutiny assessment was made in the year under consideration.
HELD THAT:- Having regard to the submissions advanced by the learned advocate for the petitioner, Issue Notice returnable on 5th February, 2019. By way of ad-interim relief, the respondent is permitted to proceed further with the assessment; he, however, shall not pass the final order without the permission of this court.
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2018 (12) TMI 1974
Rectification u/s 154 - disagreement with the determination of book profit made by the assessee under Section 115JB - book profit u/s 115JB determined at amount as against NIL determined by the assessee - dHELD THAT:- When the assessee carried the matter in appeal before the CIT(A), he assailed the action of the AO on points of law as also on facts. In particular, assessee pointed out that the necessary computation of book profit u/s 115JB was duly available in Form 29B at the time of assessment before the AO and in terms thereof, no liability arose.
Therefore, if AO was to take a different view, the same could not be done by invoking Sec. 154 of the Act, which permitted the AO merely to rectify apparent mistakes. Points of difference between computation of book profit made by the Assessing Officer and that by the assessee were such, which involved debatable issues, and thus was outside the purview of Sec. 154 of the Act.
So far as the assessee was concerned, it had cleared its stand which was very much before the Assessing Officer when he passed the original assessment order. Thus, the error of assessee not having declared its manner of computation of book profit under Section 115JB of the Act is not something which is reflected by the record.
No doubt, the CIT(A) is justified in referring to the amendment made by the Finance (No. 2) Act, 2009 prescribing that Provision for bad and doubtful debt is not deductible for computing book profit, yet that is not the basis on which the Assessing Officer invoked the jurisdiction under Section 154 of the Act. Secondly, even if this aspect of the matter is held in favour of the Revenue, yet the other two aspects brought out by the assessee before the CIT(A), namely, non-consideration of prior period items of expenses and non-consideration of adjustment for lower of depreciation or loss, are issues which are well supported and consistent with the requirement of Sec. 115JB of the Act; and, the same have been unjustly denied by the lower authorities. If these aspects are kept in mind, the determination of book profit made by the Assessing Officer under Section 115JB of the Act is clearly untenable.Appeal of the assessee is allowed.
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2018 (12) TMI 1973
Capital gain computation - application of Section 50C by AO for the purpose of the valuation of the land assessee has got interest in the said property to the extent of 1/12th as been acquired as executor of will of her mother - assessee had not taken full value of consideration as per Section 50C resulting in to short disclosure of LTCG HELD - THAT:- As conveyance deed as executed between the vendors and THPCL was inextricably linked with Sale Agreement dated 10/03/1971. The purchaser had acquired certain rights in the said property in the year 1971 when the possession was also handed over by the seller acting for himself as well for other owners. In other words, the seller had already transferred certain rights out of bundle of rights in the said property in favor of the purchaser in the year 1971 by entering into sale agreement as well as by handing over the possession of the property.
Therefore, the assessee had inherited only the remaining rights in the aforesaid property and not an absolute owner of the property. The conveyance deed was one of the right attached to the property which has been transferred by the assessee in favor of the purchaser against certain consideration and therefore, the same could not be attributed towards sale of land as concluded by lower authorities. Assessee had received compensation against sale of residuary rights in the said property. This being the case, the provisions of Section 50C had no applicability to the facts of the case.
Having reached aforesaid conclusion, we are of the considered opinion that the cost of acquisition of the said right in the hand of the assessee was to be taken as Nil since the property under question was acquired by the owner way back in 1966 and the same was sold by the owner in the year 1971 and it was that time when the benefit of cost of acquisition was available to the seller.
We hold that the LTCG earned by the assessee during the year being net sale consideration received by the assessee upon conveyance. The benefit of cost of acquisition was not available to the assessee. The Ld. AO is directed to recompute the income of the assessee in terms of our above order.
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2018 (12) TMI 1968
Initiation of provisions u/s 153C - absence of the satisfaction recorded by the A.O. of the searched person - HELD THAT:- Satisfaction of the A.O. of the searched person is a sine-qua-non to the effect that “(a) any money, bullion, jewellery or other valuable article or thing, seized or requisitioned belongs to; or (b) any books of accounts or documents, seized or requisitioned pertains or pertain to, for any information contained thereto, relates to a person other than person referred to in sub section 153A of the Act.
Admittedly, in the present case, no satisfaction note by the A.O. of the searched person is furnished by revenue, despite categorical directions given by this Tribunal. However, a satisfaction note in the case of assessee has been furnished by the revenue - Ld. CIT(DR) fairly conceded the fact that despite various reminders, the satisfaction note by A.O. of searched person i.e. M/s. Phoenix Devcons Pvt. Ltd., 434, Orbit Mall, Indore is not made available.
The revenue has not brought to our notice any other binding precedent by the Hon'ble Supreme Court or the Hon'ble jurisdictional High Court. We therefore, respectfully following the Hon'ble High Court of Madhya Pradesh in the case of CIT Vs. Mechmen 11-C [2015 (7) TMI 538 - MADHYA PRADESH HIGH COURT] hold that the proceedings u/s 153C of the Act is not validly initiated and is contrary to settled position of law and the same is therefore hereby quashed. Assessee appeal allowed.
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2018 (12) TMI 1965
TDS u/s 195 - payment made to BASF SE, Germany, is in the nature of fees for technical services and further direction to deduct tax at source @ 10% on gross basis - assessee, an Indian company, is part of BASF Group of companies having its Headquarters in Germany and the holding company of the entire group is BASF SE, Germany - HELD THAT:- Before concluding that the remittances are in the nature of fees for technical services and chargeable to tax at the hands of the recipient in India, all necessary and relevant documents including the cost sharing agreement, the auditor’s report as well as other additional evidences filed by the assessee before us needs to be properly analysed and examined. Further, contention of learned Sr. Counsel that BASF SE having not rendered any services to the assessee, payment made cannot be treated as fees for technical services as per Explanation–2 to section 9(1)(vii) has not been considered by the Departmental Authorities both factually and legally.
The contention of the assessee that when another Indian company of BASF group, a party to the same cost sharing agreement has been issued a no deduction certificate under section 195(2) why a differential treatment should be meted out to the assessee also needs to be considered with proper reasoning.
Since, the aforesaid aspects have not been considered by the Departmental Authorities and many of the documentary evidences were furnished for the first time before us by way of additional evidences and were not before the Departmental Authorities, though we are of the opinion that the additional evidences furnished by the assessee require to be admitted as they will have a crucial bearing for deciding the issue, however, to afford a fair opportunity to the Department to examine such documents, we are inclined to restore the issues raised in the aforesaid grounds to the Assessing Officer for de novo adjudication after due opportunity of being heard to the assessee. While doing so, the Assessing Officer must consider the ratio laid down in the decisions to be cited before him - Assessee’s appeals are allowed for statistical purposes.
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2018 (12) TMI 1964
Reopening of assessment u/s 147 - Deduction u/s 80IA(4) - application under rule 27 of ITAT Rules vide letter contending the validity of the reopening u/s 147 - HELD THAT:- There was an amendment under the Act by the Finance Act 2009 with retrospective effect from 01.04.2000. AO was of the view that the assessee who is acting as a work contractor is not entitled to the benefit of deduction u/s 80IA(4) - Accordingly, the AO on the basis of such retrospective amendment reopened the case of the assessee under section 147 - The reason for the reopening has already been discussed in the preceding paragraph.
It is settled law that reopening of the assessment under section 147 of the Act cannot be done on account of retrospective amendment in view of the judgment of Hon’ble Gujarat High Court in the case of Sadbhav Engineering Ltd. [2014 (6) TMI 296 - GUJARAT HIGH COURT]
The principles laid down by the Hon’ble Gujarat High Court as discussed above are squarely applicable to the facts of the present case on hand. Therefore respectfully following the same we are not inclined to uphold the reassessment proceedings under section 147 of the Act. Thus we hold that the order framed under section 147 of the Act is not sustainable in the given facts and circumstances.
The assessee succeeds on the technical ground raised by it in the application filed under rule 27 of ITAT rules. Thus we are not inclined to decide the issue on the grounds raised by the Revenue on merit. Hence the ground of appeal of the Revenue is dismissed.
Eligible for deduction u/s 80IA(4) - As there is no ambiguity that the issue whether the assessee is acting as developer or works contractor has already been decided by the Tribunal in the own case of the assessee for the assessment year 2007-08 after considering explanation added in subsection 13 to section 80IA(4) of the Act which has already been discussed in the preceding paragraph. Therefore we are of the view that the impugned issue stands decided in favor of the assessee.
There was no change in the facts and circumstances in the case of the assessee in the year under consideration. Therefore in our considered view, the principle of consistency will be applied in the case on hand as held by the Hon’ble Supreme Court in the case of Radhasoami Satsang [1991 (11) TMI 2 - SUPREME COURT]
We hold that the assessee is very much eligible for deduction u/s 80IA(4) of the Act. Accordingly, we set aside the order of the CIT-A and direct the AO to delete the addition made by him by making the disallowance under section 80IA(4) of the Act. Thus, the ground of appeal of the assessee is allowed.
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2018 (12) TMI 1963
Addition on deemed income from house property lying in stock in trade - unsold flats and shops in stock in trade - HELD THAT:- It is an undisputed fact the assessee has shown the properties as stock in trade in the books of accounts. The shops and flats sold by the assessee were assessed under head income from business. There were certain unsold flats and shops in stock in trade which the AO treated the property assessable under the head Income from House Property and computed notional annual netting value on such unsold flats placing reliance in the case of Ansal Housing Finance & Leasing Co. Ltd.[2012 (11) TMI 323 - DELHI HIGH COURT]
The Hon'ble Gujarat High Court in the case of Neha Builders Pvt. Ltd. [2006 (8) TMI 105 - GUJARAT HIGH COURT]considered the question whether the rental income received from any property in the construction business can be claimed under the head ‘income from property’ even though the said property was included in the closing stock. The Hon'ble Gujarat High Court held that if the business of the assessee is to construct the property and sell it or to construct and let out the same, then that would be the business and the business stocks, which may include movable and immovable, would be taken to be stock in trade and any income derived from such stocks cannot be termed as income from house property.
As in the case of Runwal Builders Pvt. Ltd. [2018 (2) TMI 1707 - ITAT MUMBAI] has considered similar issue as to whether the unsold property which is held as stock in trade by the assessee can be assessed under the head ‘income from house property’ by notionally computing the annual letting value from such property and the Coordinate Bench considering the decision of Ansal Housing Finance & Leasing Co. Ltd. (supra) which the AO relied upon and the decision of the Hon'ble Supreme Court in the case of Chennai Properties & Investments Ltd. [2015 (5) TMI 46 - SUPREME COURT] held that unsold flats which are in stock in trade should be assessed under the head ‘business income’ and there is no justification in estimating rental income from those flats are notionally computing annual letting value under Section 23.
We are of the considered opinion that provisions of section 23 of the Act are not applicable in the case of the assessee. Accordingly, the AO is directed to delete the addition made by estimating letting value of the flats u/s.23.
Disallowance of interest payment - AO found that the assessee could not furnish any details regarding the interest expenses - HELD THAT:- We find that the assessee has sufficient capitals to invest in non-business investment, therefore disallowance of interest expenditure made by the AO is without any basis in the light of decision of Jurisdiction High Court of Gujarat in the case of Nirma Credit and Capital Pvt. Ltd.[2017 (9) TMI 485 - GUJARAT HIGH COURT] accordingly disallowance of interest is deleted. Appeal of the assessee is allowed.
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2018 (12) TMI 1962
Bogus LTCG - onus to prove - bogus share transactions - whether transaction of sale of shares by the assessee was duly backed up by material/evidence including contract notes, de-mat statement, bank account reflecting transactions, the shares having been sold on the online platform of the stock exchange and each trade of sale of shares were having unique trade number and trade time? - HELD THAT:- AO has not brought anything on record to show that assessee or the broker on instruction from assessee took part in or entered into transactions in scrips with the intention to artificially raise or depress the price and thereby automatically induced the innocent investors in the market to buy/sell their stock. It is not the case of the AO that assessee or broker as per instruction from assessee has manipulated the prices of the scrip.
Even the market regular SEBI has not made any such specific finding in its report against the assessee. In any case, if the AO had any adverse material against the assessee, he was duty bound to furnish a copy to assessee and granted her an opportunity to rebut the same and also provided an opportunity to cross examine if the material adverse to assessee is used against the assessee to draw adverse inference.
We also note that the coordinate benches in the case of Gautam Pincha [2018 (10) TMI 1969 - ITAT KOLKATA] have upheld the assessee’s claim of LTCG on purchase and sale of shares of M/s. NCL Research & Financial Services Ltd. for AY 2014- 15, as in the instant case before us.
So respectfully following the aforesaid decision and also taking note of the documents filed before us from which we note that assessee has discharged its onus to prove the genuineness of the transaction by filing the contract note of Purchase through registered broker of Bombay Stock Exchange and transaction happened through banking transaction
Coordinate bench of this Tribunal in the case of Prakash Chand Bhutoria [2018 (7) TMI 46 - ITAT KOLKATA] upheld the assessee’s claim of LTCG on sale of shares as in the instant case before us so respectfully following the decision and also taking note of the documents filed before us from which we note that assessee has discharged its onus to prove the genuineness of the transaction of the purchase of shares by filing the share certificate along with share transfer advice and the purchases having taken place through bank transaction and later bonus share allotment letter - The addition based on a common/general report of DIT (Inv.) and there is nothing in the report specifically against the assessee, cannot be the basis for making the addition or draw adverse inference against the assessee. So the action of AO/Ld. CIT(A) cannot be sustained and therefore, the claim of exempt income on LTCG on sale of scrips of M/s. NCL has to be allowed and, therefore, the addition on this issue is directed to be deleted. Appeal of assessee allowed.
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2018 (12) TMI 1961
Exemption u/s 11 - claim of the assessee for set off and carry forward of deficit of earlier years - HELD THAT:- is covered by virtue of Judgment in case of CIT (Exemptions) v/s. Subros Educational Society [2018 (4) TMI 1622 - SC ORDER]. This question is also, therefore, not entertained. Appeal is dismissed.
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2018 (12) TMI 1960
Bogus Long Term Capital Gains (LTCG) - unexplained cash credits u/s 68 - HELD THAT:- The assessee's paper book comprising of all details of its LTCG, copy of its bill in connection with purchase of shares of M/s Surabhi Chemicals & Investments Ltd. and Panchshul Marketing Ltd, bank statement. The said latter entities amalgamated regarding merger with M/s Kailash Auto Finance, contract notes in respect of sale of share of M/s Surabhi Chemicals & Investments Ltd.
Similar contract notes regarding M/s Kailash Auto shares sold, bank statement reflecting payment receipts alongwith corresponding demat statements stand perused. Mr. Choudhury relies on hon'ble apex court's decision in Sumati Dayal [1995 (3) TMI 3 - SUPREME COURT] and Durga Prasad More [1971 (8) TMI 17 - SUPREME COURT] that the assessee's explanation in the corresponding backdrop of facts pin-pointing suspicious circumstances has been rightly rejected in both the lower proceedings. It is vehemently argued that assessee has taken LTCG entry in collusion with dubious entry operators. We find no merit in any of these arguments. The fact that remains right from assessment till date is that no such entry operator has named the assessee in any of his such statement nor the Revenue has filed any such evidence to this effect.
We adopt the above detailed reasoning mutatis mutandis to delete the impugned sec. 68 addition of bogus LTCG. - Appeal of assessee allowed.
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2018 (12) TMI 1958
Revision u/s 263 - Revision based on the basis of audit objection - assessee had claimed deduction of interest on housing loan and assessee had also taken interest free deposits over and above the rental income - HELD THAT:- We find that on identical issue in the case of Inderchand Amarchand Chopda [2011 (10) TMI 772 - ITAT PUNE], the Co-ordinate Bench of the Tribunal after relying on the decision in the case of B & A Plantation & Industries Ltd. [2006 (12) TMI 101 - GAUHATI HIGH COURT] has held that when PCIT assumed jurisdiction u/s 263 to give effect to the audit objection, the assumption of jurisdiction to be not valid.
On the merits of considering the interest free deposits for determining A.L.V. we find in the case of CIT Vs. Tip Top Typography [2014 (8) TMI 356 - BOMBAY HIGH COURT] has held that the notional rent on security deposits cannot be taken into account for determination of Annual Letting Value. Similar view has also been taken in the case of CIT Vs. J K Investors (Bombay) Ltd. [2000 (6) TMI 9 - BOMBAY HIGH COURT]
We further find that no addition on 9 the issue on which the present proceedings u/s 263 has been initiated, has been made by the AO in the assessment order passed u/s 143(3) for A.Y. 2010-11 and for subsequent assessment orders i.e., A.Y. 2012-13, and 2014-15. Here, it would be relevant to point out that the order for A.Y. 2014-15 was passed u/s 143(3) of the Act on 27.02.2014 which was much after the order passed by PCIT u/s 263 for A.Y. 2011-12.
Before us, Revenue has not placed any material on record to demonstrate that the view taken by the AO while framing the assessment u/s 143(3) of the Act was an impermissible view or was upon erroneous application of legal principles necessitating the exercising of revisionary powers u/s 263 - the cases laws relied upon by D.R. are distinguishable on facts and are not applicable to the present facts.
We are of the view that in the present case, PCIT was not justified in resorting to revisionary powers u/s 263. - We therefore set aside the order and thus, the ground of the assessee is allowed.
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2018 (12) TMI 1952
Reopening of assessment u/s 147 OR proceedings u/s 153C - HELD THAT:- As substantial questions of law arise for consideration:
(i) Whether on the facts and in the circumstances of this case, the Income Tax Appellate Tribunal was justified in upholding the validity of the proceedings under section 147 of the Income Tax Act, 1961?
(ii) Whether on the facts and in the circumstances of this case, the Income Tax Appellate Tribunal was justified in holding that the proceedings under section 147 were rightly taken instead of proceedings under section 153C of the Income Tax Act, 1961?
(iii) Whether on the facts and in the circumstances of this case, the Income Tax Appellate Tribunal was justified in upholding the reopening for the assessment year 2012- 13?
(iv) Whether on the facts and in the circumstances of this case, the Income Tax Appellate Tribunal was justified in upholding the addition of Rs.1,22,24,800/- in the assessment year 2012-13, despite the fact that the appellant was not a seller or even the confirming party in the sale deed?
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2018 (12) TMI 1951
LTCG on sale of land - AO found that assessee is a 'Consentor' and not the owner of the lands sold - legal owner of land - HELD THAT:- We find from the records that assessee had purchased the land through the registered sale deeds and sold the said land for a total consideration of Rs. 1,55,00,000/- through registered sale deed dated 21.04.12. The said sale deed executed by the assessee has shown as a 'Consentor' because the name of the assessee was not mutated in the government record and the purchaser was not ready to purchase the agricultural land without authenticity of land owner. Therefore in such circumstances, there was no alternative that the assessee how to sell the lands with original owners and therefore, assessee executed the sale deed in favour of purchaser in the capacity of owners and had infer the possession of said land.
As correctly appreciated by Ld. CIT(A) that the previous owners of the land after execution of sale deeds in favour of assessee in the year 1998-99 had no locus standi &s regards the owner of the land once they had preferred their right title and interest in the said lands in favour of the assessee in the year 1998-99 and till the possession by executing registered sale deed - CIT(A) had correctly concluded that the assessee as Such was the legal owner of both the lands as on execution of sale deed in the year 2012, had earned capital gains and thus allowed the said transaction. The assessee had correctly held to have earned capital gains and was liable to be taxed. - Decided in favour of assessee.
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2018 (12) TMI 1949
Depreciation on enclosed withering trough - whether Tribunal was justified in holding that an enclosed withering trough machine is not an energy saving device or a pollution control equipment ? - tribunal justification to hold that enclosed withering trough is not covered under new Appendix-I of the Income Tax Rules, 1962 and is not entitled for higher rate of depreciation - Whether the claim for depreciation on intangible assets acquired on purchase of the Dulabh Cherra Tea Estate, as a going concern, and used while carrying business is allowable under the provisions of the Income Tax Act, 1961? - applicability of section 115JB - HELD THAT:- Since the respondents are represented by learned counsel in Court issuance and service of the notice of appeal are dispensed with.
Let informal paper books be filed by the Advocate-on-Record for the appellant by 25th January, 2019. The contents of the paper book filed before the tribunal may constitute the paper book in this appeal. A copy thereof should be served on the Advocate-on-Record for the respondent at least four days before the date of hearing of the appeal. All other formalities are dispensed with.
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2018 (12) TMI 1948
Estimation of income - Bogus purchases - assessee has failed to furnish relevant documentary evidences to conclusively prove the genuineness of purchases made from the concerned party - HELD THAT:- It is a fact on record that the sales turnover shown by the assessee has not been disputed or doubted by the departmental authorities Addition of the entire non genuine purchases would be improper. In such circumstances what the assessee might have suppressed is the profit element embedded in such purchases, which may also include the local tax payable. Therefore, to take care of any leakage in revenue, only the profit element embedded in such purchases can be considered for addition. Thus, considering the overall facts and circumstances of the present case we are of the view that addition at the rate of 12.5% of the non genuine purchases would be reasonable and serve the interests of justice. Accordingly, we direct the assessing officer to restrict the addition to 12.5% of the non genuine purchases. Ground raised is partly allowed.
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2018 (12) TMI 1947
Gain on sale of property - Capital gain computation v/s Business income - addition invoking the provisions of section 50C - whether the sale of property was capital gains or business income? - HELD THAT:- Assessee was carrying the business of construction. The plot which has been sold during the year was part of stock-in-trade in earlier years. The assessee for assessment years 2008-09 to 2010-11 had filed the returns of income in response to notices issued under section 148 of the Act and even the tax audit report, wherever applicable, were filed for all these years and the sale of unit in Gurudev Towers was accepted as business income of assessee. In such scenario, there is no reason to treat the said income differently in the year under consideration.
The assessee had sold one of the units of Gurudev Towers in the year and just because the assessee declared the same as short term capital gains but later pointed out that the same was by way of an inadvertent mistake, then such declaration made by assessee cannot be held against the assessee. It is the duty of Assessing Officer to examine the facts in proper perspective and assess the income in the hands of assessee as per law. CBDT vide Circular No.14(XL-35) of 1955, dated 11.04.1955 had laid down the said directions for AO and the same merits to be applied in assessing the income in the hands of assessee. Accordingly, we find no merit in the grounds of appeal raised by Revenue and we hold that income arising on sale of unit in Gurudev Towers is to be assessed as ‘Income from business’ and the provisions of section 50C of the Act are thus, not applicable.
Addition u/s 68 by assessing peak cash balance in assessee’s bank account - HELD THAT:- AO made the addition which was the peak of cash balance as per Cash Book, but which also included opening cash - The said opening cash balance has been accepted in the hands of assessee and once the same has been accepted in earlier years, there is no merit in including the same as addition under section 68 of the Act. So, upholding the order of CIT(A) in this regard, we dismiss the ground of appeal No.3 raised by Revenue.
Addition made on account of loan received from wife of assessee - said addition was made in the hands of assessee on the ground that wife of assessee was not assessable to tax - HELD THAT:- The assessee has filed complete evidence in this regard before the CIT(A) and even before us that wife of assessee has been taxed to all years and had sufficient funds to make the aforesaid advances. Accordingly, we find no merit in the ground of appeal No.4 raised by Revenue and the same is dismissed.
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