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Income Tax - Case Laws
Showing 41 to 60 of 141 Records
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2006 (10) TMI 213 - ITAT PUNE-B
Interest On Borrowed Capital ... ... ... ... ..... rowed for the purpose of the business . The amount borrowed must continue to be used for the purposes of the business and the fact that it was used for some point of time, but later diverted would not entitle the assessee to claim the interest paid on the borrowing as a deduction even after such diversion, that any view to the contrary would not in the least sub serve the object of the provision, but it would only open the gates for the assessees to borrow merrily and after ostensibly using it in the business for a short period at a subsequent point of time divert the funds in whole or part, for non-business purposes and continue to claim the interest on the borrowing as a deductible item of expenditure. This judgment of the Madras High Court also supports the view that we have taken in para 12.2 above. 18. The ground No. 3 is accordingly rejected for the reasons discussed in paras 12, 12.1 and 12.2 above. 19. In the result, the appeal filed by the assessee is partly allowed.
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2006 (10) TMI 211 - ITAT NAGPUR
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... ... ..... o invoke provisions of s. 147 the AO should merely have reason to believe that any income chargeable to tax has escaped assessment. Since the AO has formed an opinion on the basis of facts available to him and in respect of which proper reasons are recorded, this ground raised by assessee in cross-objections is to fail. 12. The next ground in cross-objection is against charging of interest under ss. 234A and 234B of the Act. As held by various Courts, charging of interest is compensatory and mandatory in nature. The same is consequent to the assessment. The assessee is not denying his liability to file return of income. If the return is not filed within due date prescribed under s. 139(1), interest under s. 234A is chargeable. Similarly the assessee is not denying his liability to pay advance tax. Thus charging of interest under s. 234B is consequential in nature. This ground accordingly fails. 13. In the result, the appeals are allowed and the cross-objections are dismissed.
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2006 (10) TMI 209 - ITAT NAGPUR
Income Escaping Assessment ... ... ... ... ..... er should merely have reason to believe that any income chargeable to tax has escaped assessment. Since the Assessing Officer has formed an opinion on the basis of facts available to him and in respect of which proper reasons are recorded, this ground raised by assessee in cross objections is to fail. 12. The next ground in cross objection is against charging of interest under sections 234A and 234B of the Act. As held by various Courts, charging of interest is compensatory and mandatory in nature. The same is consequent to the assessment. The assessee is not denying his liability to file return of income. If the return is not filed within due date prescribed under section 139(1) interest under section 234A is chargeable. Similarly the assessee is not denying his liability to pay advance tax. Thus charging of interest under section 234B is consequential in nature. This ground accordingly fails. 13. In the result, the appeals are allowed and the cross objections are dismissed.
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2006 (10) TMI 206 - ITAT MADRAS-B
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... ... ..... l writing in creating the text content of this portal is excellent. 10. It is seen that this development work is highly specialized work which includes state-of-the-art programming, technical writing, imaging and animation skills having original ideas, artistic as well as intuitive. In view of the above technical aspects, this development work involved in the creation of web portal www.city4u.com is a highly creative and challenging task and in no circumstances, the same can be equated to the data entry jobs, where the prime focus is to digitize the given content from paper into a text/image format without introducing any changes to the content. In view of this, we hold that creation of website is designing within the definition of the word design for the purpose of claiming of deduction under section 80-O of the Act. Accordingly, we allow the claim of the assessee and the orders of the lower authorities ate set aside. 11. In the result, the appeal of the assessee is allowed.
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2006 (10) TMI 203 - ITAT JODHPUR
Change Of Opinion ... ... ... ... ..... under s. 148 unless there is another material on record to show that the treatment given by the assessee is false. It is observed that the AO has ventured to scrutinise the return of the assessee beyond the period prescribed under s. 143(2) in the garb of the proceedings under s. 147. The AO was well within his competence to consider and examine these aspects within the stipulated period in making the regular assessment. Having not done so, he could not give time and do the same again in the pretext of reassessment proceedings. I am, therefore, of the considered opinion that all the reasons taken note of by the AO do not justify the initiation of the reassessment proceedings. My view is fortified by the aforenoted decision of the Division Bench of the Tribunal in the case of Dy. CIT vs. Yakub Ali Gopal Singh and Party. By setting aside the impugned order, I quash the notice under s. 148 and the resultant proceedings flowing therefrom. 7. In the result, the appeal is allowed.
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2006 (10) TMI 202 - ITAT JODHPUR
Income From Undisclosed Sources ... ... ... ... ..... o, as the figure of Rs. 43,050 taken note of by the AO comprised of this amount of Rs. 28,050 also. It is noted from the assessment order that the AO based his finding for estimating household expenses at Rs. 5,000 per month on the basis of the finding of the learned CIT(A) in the case of assessee s brother, Shri Pushpendra Pokharna, to the effect that the household expenses could not have been less than Rs. 5,000 per month. No material has been placed on record to show that this finding has been reversed or modified in the subsequent appellate proceedings. We are, therefore, of the considered opinion that the estimate of household expenses made by the AO is justified at Rs. 5,000 per month and the sustenance of the addition to the tune of Rs. 16,590 as originally made by the AO is warranted. By setting aside the impugned order, we restore the finding of the AO on this count. 12. In the result, the appeal of the Revenue is partly allowed and that of the assessee is dismissed.
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2006 (10) TMI 201 - ITAT JODHPUR
Mistake Apparent ... ... ... ... ..... d. He further observed that a claim, which was not claimed, cannot be allowed under s. 154 of the Act. But before us, it is established that the assessee did make the payment of sales-tax in question in this year. The disallowance of Rs. 3,40,491 was made in asst. yr. 1995-96, being the amount of unpaid sales-tax being hit by s. 43B. It is true that no such claim was made in this year. But, we do not agree that if the claim was eligible and could not be made, as it was made in another year, this claim cannot be allowed in the year in which it becomes allowable as per the provisions of s. 43B. 9. The deduction under s. 43B is allowable on actual payment. We may refer to the decision of Berger Paints India Ltd. vs. CIT (2004) 187 CTR (SC) 193 (2004) 226 ITR 99 (SC), amongst others. Therefore, we allow the appeal of the assessee by allowing the relief as claimed by it. We direct the AO to rectify his order accordingly to that extent. 10. In the result, the appeal stands allowed.
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2006 (10) TMI 197 - ITAT JODHPUR
Block Assessment ... ... ... ... ..... declared to not belong to Shri Ramesh Chand Soni. Had that been the case, this protective addition could have been considered and added substantially if it was found to belong to protective assessee . We don t say that no protective addition can be made under Chapter XIV-B of the Act. 7. From the above observation, it follows that when there is no substantive addition, there can be no protective evidence as well. When the very base of income goes , the addition in this assessee s hands, who was treated as protective , would also not survive. Consequently, we accept the appeal, on this legal ground and quash the assessment order in this case also. Having come to above conclusion, there is no need to further decide, any other ground of appeal. 8. In the result, the assessment order is quashed following the Tribunal order and the jurisdictional High Court order. Hence, all the additions stand deleted. The appeal succeeds. 9. In the result, the appeal of the assessee is allowed.
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2006 (10) TMI 196 - ITAT JODHPUR
Business Expenditure ... ... ... ... ..... disposed of the ground on merits. The learned Departmental Representative fairly conceded that this issue may be sent back to the learned CIT(A) for passing a speaking order on this point. 8. Having regard to the facts of the case and the rival but common submissions, we set aside the impugned order on this score and remit the matter to the file of the first appellate authority for passing a reasoned order on this aspect of the mater as per law after allowing reasonable opportunity of being heard to the assessee. It is however made clear that the additional income-tax under s. 143(1A) levied at the time of processing the return under s. 143(1)(a) will not be the subject-matter of reconsideration as the assessee had admittedly not filed any appeal against intimation. The question for consideration will be restricted only to the examining of the additions on merits, as if these have been made in regular assessment under s. 143(3). 9. In the result the appeal is partly allowed.
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2006 (10) TMI 193 - ITAT JODHPUR
Exemption u/s 10B Or Deduction u/s 80HHC - Manufacture Or Production - manufacturing/exporting of Iron/Wooden Handicrafts - 100% Export Oriented Undertaking - Exim Policy 1997-2002 - Revision u/s 263 - whether the ld. CIT was justified in holding that the assessee had not manufactured or produced any article or thing and hence the claim for exemption u/s 10B was not sustainable? - HELD THAT:- We find that the assessee has purchased fully manufactured but unpolished handicraft items, such as dining table, almirah, T.V. cabinet etc., on which it undertook the processes of surface smoothening, drying and polishing etc. On careful consideration we find that the activities carried out by the assessee are in the nature of different stages of polishing and packing. Thus, the activities carried out by the assessee though amount to 'processing', but fall short of 'manufacture or producing an article or thing'.
If the contention of the ld. A.R. for adoption of term 'manufacture' given by Exim Policy is accepted, and such a wider meaning is assigned to include the processing not amounting to manufacture within its purview, the provisions of Explanation 4 to section 10B would be rendered a nullity, which obviously cannot be the case.
The presence of Explanation 4 in this section makes it explicitly clear that the word 'manufacture' has to be read in the sense excluding the mere processing of goods, that does not amount to manufacturing or bringing a new article in existence. In the like manner, the further contention that under the Sales Tax Act the term 'manufacture' has been used in a different manner does not hold good when the term 'manufacture' comes up for interpretation in the context of section 10B. Similar view has been expressed in the case of Arihant Tiles & Marbles (P.) Ltd. [2006 (6) TMI 157 - ITAT JODHPUR] in the context of section 80-IA.
We, therefore, hold that the assessee was not manufacturing or producing any article or thing as contemplated u/s 10B but was simply engaged in the polishing and finishing of the fully manufactured items purchased by it. Consequently, the benefit of exemption u/s 10B was rightly not available to the assessee and the ld. CIT was fully justified in his view on this aspect of the matter.
Conditions of section 10B(2)(ii) and (iii) - Here we find that an incorrect finding has been recorded- by the ld. CIT for the reason that the assessee was in existence since 1997 and was doing business of purchase and sale of items by getting the processing done from outside parties. It is in the preceding year that the assessee claimed to have set up its own unit, obtained certificate from competent authority on 28-3-2000. We have further gone through the relevant material on record from which it is manifest that the assessee was already in existence as can be seen from the copy of trading, P&L account etc., for assessment years 1999-2000 and 2000-01. On the contrary, M/s. Kwal Pro International, taken note of by the ld. CIT as having been availing deduction under section 80HHC in the past, in fact came to be established only on 11-8-2000 as is evident from the copy of its partnership deed onwards of the PB. The ld. D.R. has not controverted this factual position. Thus, we find no difficulty in holding that the ld. CIT erred in coming to the conclusion that the second condition laid down in section 10B was not fulfilled.
The ld. D.R. can elucidate the points considered by the ld. CIT, but no new point, different from those considered by the ld. CIT can be argued at the appellate stage to drive home the contention that the assessment order is erroneous, as it would amount to the ld. D.R. stepping into the shoes of the ld. CIT. Hence we refuse to consider this aspect of the matter.
We, therefore, find that out of the three issues, on the basis of which revisional proceedings were started and order was passed u/s 263, the latter two are without any force but the impugned order is sustainable on the non-fulfilment of first condition, viz., no manufacture or production of an article or thing by the assessee.
Whether the revisional power was properly exercised - We reiterate the settled legal position that in order to take action u/s 263, the order of the Assessing Officer should not only be erroneous but also prejudicial to the interest of the Revenue. The twin conditions are to be satisfied simultaneously. First condition is that the order passed by the Assessing Officer should be erroneous. By erroneous we refer not only to the wrong decision by the Assessing Officer but also to the instances in which he has not applied his mind to the material placed before him before accepting the assessee's claim. The Hon'ble Supreme Court in the case of Malabar Industrial Co. Ltd. v. CIT [2000 (2) TMI 10 - SUPREME COURT] held that an incorrect assumption of facts or an incorrect application of law will satisfy the requirements of the order being erroneous.
We, therefore, hold that the ld. CIT was fully justified in assuming revisional jurisdiction.
Exemption u/s 10B v. Deduction u/s 80HHC - We are not inclined to accept the opinion of the ld. CIT for denying deduction u/s 80HHC simply on the ground that the assessee had claimed exemption u/sn 10B, which was not allowed by him. We further note that the parameters for the grant of deduction u/s 80HHC are different from those of section 10B. Moreover, the ld. CIT has himself mentioned in the impugned order that the assessee was allowed deduction u/s 80HHC in the past. By setting aside the impugned order on this score and without expressing opinion on the availability of deduction, we direct the ld. CIT to examine the assessee's claim for the benefit u/s 80HHC subject to the fulfilment of the conditions laid down under the section. Needless to say the assessee would be allowed reasonable opportunity of being heard.
In the result, the appeal is partly allowed for statistical purposes.
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2006 (10) TMI 191 - ITAT JAIPUR-A
Reason To Believe ... ... ... ... ..... maintaining regular books of account. There is also substance in the argument that there is no evidence in the note sheet mentioned by the AO in respect of issue of direction vide letter dt. 27th Feb., 2003. Hence after considering the totality of the facts, circumstances and the case law cited by the learned Authorised Representative in his various submissions made during the course of appeal proceedings, I am of the considered view that the notice under s. 148 r/w s. 147 was not as per law. The proceedings under s. 142(2A) was also not as per the law laid down and lastly the assessment order was barred by limitation. The order is not as per law hence it is ab initio void. 4.4 The first appellate order on the issue is comprehensive and reasoned one, thus, we are not inclined to interfere therewith. We subscribe our view with first appellate authority. The first appellate orders are upheld. The ground Nos. 4 and 5 are, thus, rejected. 5. In result, the appeals are dismissed.
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2006 (10) TMI 189 - ITAT DELHI-H
Block Assessment in search case ... ... ... ... ..... essee was liable to pay interest under section 158BFA for the default of late filing of the return for the block period. No particular argument was made by the learned counsel before us in this matter. The Assessing Officer has recorded that notice under section 158BC dated 7 -10-2003 was served on the assessee, in response to which the return was filed on 12-11-2003. The return was required to be filed within 30 days of the receipt of the notice. Thus, there was a delay in filing the return. It was also mentioned in the order that interest be charged under section 158BFA(1). The learned CIT(A) confirmed the levy of the interest by pointing out that it is mandatory as per the statute and the Assessing Officer had no discretion in the matter. Looking to these facts and absence of any argument from the learned counsel, we do not see any reason to interfere with the order of the learned CIT(Appeals) in this matter also. 12. In the result, the appeal of the assessee is dismissed.
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2006 (10) TMI 188 - ITAT DELHI-G
Income From House Property ... ... ... ... ..... tment by bringing any positive material on record. Out of work done by the assessee during the immediately preceding year ended on 31st March, 1999, there was a recovery to be made against the bills issued in that year and the assessee s help was required for this work, insofar as the assessee has received commission on such income, which was carried out from the said premises during the assessment year under consideration. As per the normal business practice when a bill is sent for services rendered the client raises numerous objections and asks for clarifications and grievances for the services rendered, which generally takes time for settlement after the matters are explained to the client s satisfaction. 9. In view of the above, we do not find any infirmity in the order of the learned CIT(A) for deleting the addition of Rs. 19.80 lakhs being ALV of house property at RZ-293, A Block, Mahipalpur. 10. In the result, appeal of the assessee is allowed and Revenue is dismissed.
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2006 (10) TMI 187 - ITAT DELHI-G
Erroneous And Prejudicial Order ... ... ... ... ..... CIT under s. 263. Under these circumstances, the theory of merger will not apply, so as to restrain the powers vested under s. 263. With respect to the specific direction given by the CIT for taking 12.5 per cent interest, on the interest-free security deposit given to the assessee, we are inclined to agree with the learned Authorised Representative that the issue is covered by the order of the Tribunal, therefore, this specific direction of the CIT is not sustainable. We are, therefore, inclined to modify the direction of CIT and direct the AO to determine the annual letting value of property as per provisions of s. 23 of the Act, AO is further directed for not making any addition on account of interest at 12.5 per cent on the interest-free security deposit given to the assessee, while arriving at annual letting value as per provisions of s. 23 of the Act. We direct accordingly. 17. In the result, the appeal of the assessee is allowed in part in terms indicated hereinabove.
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2006 (10) TMI 186 - ITAT DELHI-F
Applicability of the provisions of sections 11 and 12 - Objects of the society are wholly charitable in nature or not u/s 2(15) - derived income by way of tuition fee, admission fee, science laboratory fee, bus fee, breakage fee and hostel fee from the students - whether profits earned from the school constituted income from property held under trust - HELD THAT:- We are of the considered view that relief of poor, education and medical relief are charitable activities per se and if any institution is carrying out any of these objects, then, such an institution will be pursing a charitable purpose. Thus, it follows that all objects mentioned in the memorandum of the assessee-society are charitable purposes.
On perusal of the objects, it is seen that one object is for providing a school with nursery and kindergarten classes. This object relates to educational activities. We have already held that this is a charitable purpose. However, the activities are being run in the manner in which a commercial enterprise is being run, as is clear from the facts that the assessee has been earning profits from year to year and any loss in the subsidiary activities is also recouped from "Children Welfare Fund".
In our view, sub-section (4A) creates a dichotomy between the trust and a business activity which is incidental to attainment of the objects of the trust, and make profits from such activity exempt from tax if separate books of account are maintained. Needless to say that such profits ought to be in the public domain as pointed out in the case of Loka Shikshana [1975 (8) TMI 1 - SUPREME COURT]. We may add that is a necessary ingredient for any activity to be termed as charitable purpose, as such purpose, by its inherent nature, excludes private gain from its ambit. Unfortunately, neither the Assessing Officer nor the learned CIT (Appeals) have examined this aspect of the matter.
Therefore, the matter is restored to the file of the Assessing Officer to consider the issue whether separate books of account are maintained in respect of the schools run by the trust and thereafter examine whether provisions of section 11(4A) are applicable to the facts of the case. The net profit earned from these schools, and not gross receipts, will then be considered for exemption u/s 11(1)(a).
It is a fact that the assessee has been running schools and such activities constitute "charitable purpose". But running schools in a systematic manner and generating profits from year to year also constitute a business activity. The only saving grace in this case is that such an activity is incidental to attainment of the object No.5 of the society for the simple reason that running of schools is incidental to educational purpose. Thus, the case is covered u/s 11(4A). On the facts, it cannot be said that expenditure incurred in a commercial activity is entitled to exemption u/s 11(1)(a).
Thus, the appeal of the revenue is treated as allowed only for statistical purposes with a direction that the Assessing Officer shall frame a fresh assessment after granting reasonable opportunity of being heard to the assessee on the issue of applicability of provisions of section 11(4A) of the Act and grant of exemption u/s 11(1)(a) from net profit of the schools in respect of amounts applied for charitable purposes, mentioned in the Memorandum.
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2006 (10) TMI 185 - ITAT DELHI-E
Charitable Trust ... ... ... ... ..... ome. However, we find that the direction of the learned CIT(A) to allow the expenses reflected in the income and expenditure account amounting to Rs. 9,28,83,209 are not justified inasmuch as the same needs to be verified, which has not been done by the learned CIT(A). As regard the direction of learned CIT(A) to tax the resulting income of Rs. 3,62,64,825 the assessee has placed no material on record to rebut the finding of learned CIT(A) made in this regard. Hence, we find no reason to interfere with the order of learned CIT(A) so far the direction to tax the said amount of Rs. 3,62,64,825. In the circumstance for the limited purpose we set aside the matter to the file of the AO to examine the genuineness of the expenditure of Rs. 9,28,83,209 shown by the assessee. Needless to mention the assessee may be provided an opportunity of being heard. 8. In the result, the appeal of the Revenue is allowed for statistical purpose and the cross-objection of the assessee is dismissed.
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2006 (10) TMI 184 - ITAT DELHI-D
Business Income ... ... ... ... ..... ng-term liabilities should be restated and the loss should be charged to the P and L a/c of each year. The liability on the date of the balance sheet has to be reckoned in the accounts on the basis of the fluctuations in the rate of exchange during the year, and not merely when the loan is repaid, where the assessee is following the mercantile system of accounting. In the light of the binding precedents, which have been followed subsequently in several decisions such as Dy. CIT vs. Maruti Udyog Ltd. (2006) 101 TTJ (Del) 760 (2006) 99 ITD 666 (Del) we are unable to accept the orders of the Departmental authorities as correct on this issue. The AO is directed to allow the loss as claimed by the assessee. The grounds are allowed. 5. Ground No. 4 which is directed against the disallowance of Rs. 1,57,699 on the ground that it is capital expenditure is dismissed as not pressed. Ground Nos. 5 and 6 are general and require no decision. 6. In the result, the appeal is partly allowed.
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2006 (10) TMI 183 - ITAT DELHI-A
Deemed To Accrue Or Arise In India.
... ... ... ... ..... s entered into between them and whole of the amount received as contribution under these programmes was to be given back to the members in the form of various rewards through SCI Points as per the scheme itself as is evident from the relevant programme guide. In these circumstances, the amount received by the assessee-company from the Indian hotels/clients in respect of the said programmes could not be treated as royalty or fees for technical or included services either under the relevant provisions of the Income-tax Act or even under the DTAA as rightly held by the learned CIT(A). We, therefore, uphold his impugned orders on this issue and dismiss the relevant grounds raised by the Revenue in its appeals. 115. In the result (a) the appeals of the assessee for assessment years 1997-98 and 1998-99 are allowed (b) the appeals of the assessee for assessment years 1995-96, 1996-97, 1999-2000 and 2000-01 are partly allowed and (c) all the four appeals of the Revenue are dismissed.
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2006 (10) TMI 182 - ITAT DELHI
Charitable Trust ... ... ... ... ..... le purposes. In this case, undisputedly the income has been utilized for charitable purposes. The trust is registered under s. 12A of the IT Act, 1961 and has been allowed exemption under s. 80G upto 31st March, 2004. This proves the charitable character of the trust. In the instant case, the AO in his order has accepted that free meditation is being organized but was not justified in drawing an inference that this activity of organizing meditation camps is the activity of Osho Resorts Meditation Centre and not of the appellant trust. The ,Celebration Hall belongs to Mrs. Sulekha Sondhi, proprietor Osho Resorts Meditation Centre which runs a library for meditation books and cassettes. Since this Celebration Hall is not used by them, the same has been given on lease by her to the assessee trust. 9. In view of the above, we do not find any infirmity in the order of the CIT(A) and dismiss the appeal filed by the Revenue. 10. In the result, the appeal of the Revenue is dismissed.
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2006 (10) TMI 181 - ITAT CHANDIGARH-A
Concealment ... ... ... ... ..... d to non-genuineness of the purchase transactions from M/s A.R. Traders. The CIT(A) has further ignored the fact that even if the certificate of letting out of godown to M/s A.R. Traders was to be accepted at its face value than the said letting out was for a limited period from June, 1997 to March, 1998. This also does not inspire confidence that M/s A.R. Traders were having any regular business premises. 17. Taking the totality of the facts and circumstances of this case into consideration, we are of the considered view that the assessee having failed to establish the genuineness of the loss claimed in the transaction of purchases made from M/s A.R. Traders, penalty under s. 271(1)(c) was justified in the absence of any satisfactory explanation by the assessee in regard to the finding of the AO and, therefore, the CIT(A) was not right in law in deleting the penalty. The penalty of Rs. 4,22,772 is accordingly restored. 18. In the result, the appeal of the Revenue is allowed.
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