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Income Tax - Case Laws
Showing 241 to 260 of 667 Records
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2013 (10) TMI 984 - GAUHATI HIGH COURT
Monetary limits for filing an appeal before High court by the department - Whether penalty can be imposed on the assessee under section 271B of the Income-tax Act, 1961, when it was mandatory to get the accounts audited under section 44AB of the said Act, even if the books of account have not been properly maintained Held that:- There is no dispute that Instruction No. 5 of 2008, dated May 15, 2008, imposes a monetary limit of Rs. 4,00,000 for preferring an appeal under section 260A of the Act nor is it in dispute before us that the net tax effect in the case at hand, is less than Rs. 4,00,000 - Instructions issued by the Central Board of Direct Taxes, are binding on the Revenue except where (a) the constitutional validity of the provisions of an Act or Rule is under challenge ; (b) the Board's order, notification, instruction or circular has been held to be illegal or ultra vires ; and (c) a Revenue audit objection in the case has been accepted by the Department.
The Memorandum Explaining the Provisions of the Finance Bill, 2008, while highlighting the underlying object of section 268A, clearly reflected the anxiety of Parliament to reduce the litigation in small cases and regulate the right of the Revenue to file or not to file an appeal under section 260A. Consequently, there is an inherent limitation on the Revenue's right to file appeal under section 260A inasmuch as the condition precedent for preferring an appeal is existence of a substantial question of law. Section 260A does not, however, contemplate any monetary limit. This monetary limit has been imposed a indicated above by the Central Board of Direct Taxes in exercise of its power under section 268A - Parliament has nevertheless deemed it necessary to vest in the Central Board of Direct Taxes, by enacting section 268A, the power to regulate appeal by prescribing the monetary limit Decided against the revenue.
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2013 (10) TMI 983 - PUNJAB AND HARYANA HIGH COURT
Penalty ou/s 271D - The appellant-company could not disburse the bonus due on Diwali to its workers and promised to make the payment of bonus in the first week of March, 1991. - Acceptance of cash loan in violation of section 269SS of the Income-tax Act, 1961. - Held that:- The question arises as to why the assessee issued cheques on November 16, 1990,. and November 17, 1990 to the Excise Department, when the assessee did not have sufficient balance in its bank account. Even if it was so then why it waited till December 5, 1990, and not arranged the amount immediately after the issue of the cheques. Had the assessee done so then it could have done it by taking this amount of Rs. 92,000 from the promoters of the company, through account payee cheques or draft which could have enabled the assessee to genuinely avoid penal action of the Excise Department, as well as penalty of the Income-tax Department, which had now to suffer on account of violation of section 269SS of the Income-tax Act, 1961 Decided against the Assessee.
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2013 (10) TMI 982 - GUJARAT HIGH COURT
Transfer of cases at Central place for co-ordinated and effective investigation - Petitioners belonged to the same family or group. They were subjected to common search operation. Their assessments were, therefore, under proposal for transfer Commissioner transferred the case to Ahmedabad Held that:- Commissioner not committed any error either in law or in facts. Reason for transfer was clearly indicated in the show-cause notice, namely, for centralisation of cases and for effective and co-ordinated investigation. Such reasons were further elaborated while dealing with and disposing of the objections of the petitioners in the final order of the transfer - Authorised representative of the petitioners was offered three other alternatives-Rajkot, Baroda and Surat where the Department had centralized wing.
Several places of the company were subjected to common search operation, it is but natural that it would be in the interests of the Revenue and perhaps also in the interests of the assessees that cases be consolidated and be placed before one single Assessing Officer. This would avoid duplication of collection of evidence and assessment of evidence. This would also avoid conflict of opinions. The reason that being search cases they had to be placed before a centralised circle office also cannot be stated to be irrelevant. The Department for internal convenience and efficient functioning, it has created a special branch for dealing with search cases and has decided to conduct assessments of such cases under such wing, surely the assessee cannot have any objection to the same. The assessee has no right in law to insist that his case be kept out of consideration of such branch Petition dismissed Decided against the Assessee.
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2013 (10) TMI 981 - ITAT AHMEDABAD
Allowance of deduction u/s 80IB of the Income Tax Act construction of housing and other projects - asssessee was not the owner of land - Held that:- Reliance has been placed on the decision in the case of M/s. Radhe Developers, wherein it has been held that assessee developer is having dominant control over the land in question Also, assessee developer was bearing entire risk and entitled to the entire reward Assessee in the past has been allowed the benefit of deduction u/s. 80IB(10) and the benefit has not been withdrawn by the court . Further, since the facts of the case in the year under appeal are identical to that of earlier years, respectfully following the aforesaid order of the Co-ordinate Bench of earlier years, deduction allowed Decided against the Revenue.
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2013 (10) TMI 980 - ITAT HYDERABAD
Deduction under section 80IB Held that:- In Commissioner of Income Tax Central-I, Chennai. Versus M/s. Jain Housing & Constructions Ltd., [2012 (11) TMI 588 - MADRAS HIGH COURT], it was observed that From the substitution of Section 801B(10)(1) of the Act, prior to the amendment, there was no such requirement as regards furnishing of completion certificate and the deduction provision pointed out to the grant of 100% deduction on the profits derived from a housing project, if the undertaking had commenced development and construction of the housing project on or after 1st October, 1998 - till 2005, there was no clause dealing with completion, in which event, one cannot read into the provision as a condition, which is not specifically provided.
In the present case the approval by the Hyderabad Urban Development Authority has been obtained on 26.06.2004 only for which the relevant assessment year is 2005-2006 and hence the decision in the case of Jain Housing & Constructions Ltd. (supra) goes against the assessee Decided against Assessee.
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2013 (10) TMI 979 - ITAT MUMBAI
Income to be assessed in the hands of Others Whether legal ground can be admitted, if no new facts are to be brought on record Held that:- As per Hon'ble Apex Court in the case of National Thermal Power Co. Ltd. Vs. CIT, reported in [1996 (12) TMI 7 - SUPREME Court], the legal ground can be admitted, if no new facts are to be brought on record - The decision of the Hon'ble Apex Court is law of land, which has to be followed by every authority. Therefore no direction is to be required to be given to the AO in this respect because if the Hon'ble Apex Court decides that all the income belongs to Shri Harshad S. Mehta, then the income has to be assessed in the hands of Shri Harshad S. Mehta, not in the hands of any other person.
Levy of interest u/s 234A, 234B & 234C of the Income Tax Act Held that:- As per Hon'ble High Court in the case of CIT vs. Divine Holdings Pvt. Ltd.[ 2012 (4) TMI 100 - BOMBAY HIGH COURT]. Accordingly, it was held that levy of interest u/s. 234A, 234B and 234C is mandatory Decided in favor of Revenue.
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2013 (10) TMI 978 - ITAT MUMBAI
Accrual of income - Whether enhancement of its income by Rs.4,90,512/- by making an addition in respect of mark to market profit of Rs.7,92,365/- in respect of derivative transactions outstanding as at the year-end, is correct Held that:- Without doubt, the loss of Rs.3.02 lacs on the unsettled derivative contracts has not crystallized - Prudence is a fundamental accounting assumption, duly recognized by law per Accounting Standard (AS I) issued by the CBDT u/s.145(2) of the Act. The same prescribes booking of all known liabilities and losses, while at the same time not booking, similarly, unrealized profits or income - The closing rate in respect of the security transactions for which loss has been booked/accounted for is substituted for the cost price, so that it is only the price, plus or minus, with reference to the said rate, that would be/is considered while booking the profit and loss on the settlement of the transaction. As such, the matter has to be regarded not with reference to inconsistency, but with regard to the prudence, which, as aforesaid, is a fundamental accounting assumption/principle and, therefore, is to inform all accounting statements.
Directed the deletion of the addition of Rs.7.92 lacs made by the ld. CIT(A). Needless to add, the said income would stand to be deleted, and the loss of Rs.3.02 lacs claimed and allowed to the assessee, adjusted against the income, speculative or non-speculative, as the case may be, under which the income from derivatives stands classified for the year of settlement Decided in favor of Assessee.
Rebate u/s 88E to be adjusted in computation of MAT profit u/s 115JB of the Income Tax Act Held that:- Reliance has been placed on the decision in the case of CIT vs. Horizon Capital Ltd. [2011 (10) TMI 489 - KARNATAKA HIGH COURT] - Rebate u/s.88E could not be confined to the tax under regular provisions of the Act, and would, therefore, extend also to that payable on the book profit u/s.115JB. Accordingly, once a comparison between the higher of the two tax payables, i.e., on the income assessed on the regular provisions as well as on the basis of the book-profit, is made to determine the tax exigible, the rebate as exigible under law u/s.88E would have to be allowed irrespective of whether the tax is payable under the regular provisions of the Act or under the book profit Decided in favor of Assessee.
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2013 (10) TMI 977 - ITAT MUMBAI
Review u/s 263 after income escaping assessment done u/s 147 of the Income Tax Act Held that:- Action u/s 263 is justified as the action the AO in droppings the proceedings initiated u/s 147 and accepting the returned income during the year under consideration is erroneous and prejudicial to the interest of the Revenue AO has been directed to make a fresh assessment u/s 143(3) read with section 263 on the impugned additions/disallowances made/enhanced by the Ld.CIT(A) keeping in view of the scope of reassessment proceedings and after giving a reasonable opportunity of being heard to the assessee.
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2013 (10) TMI 976 - ITAT HYDERABAD
Mistake apparent from record in the order of Tribunal within the scope u/s 254(2) Held that:- From the order of the Tribunal dated 20th December, 2012, it is evident that the Tribunal considered the arguments of the assessee's counsel as well as the ratio of the decisions of the Supreme Court elaborately discussing the same in the order. Hence, it cannot be said that the Tribunal has not considered the case-law cited by the learned AR for the assessee as alleged in the Miscellaneous Application. On the contrary, the Tribunal in the order, after taking note of the case-law relied upon by the learned AR for the assessee, gave reasoning why it was not relevant to consider the same. The averment of the assessee is that the decision of the Apex Court relied on by him has not been applied by the Tribunal while coming to the conclusion in the Tribunal order, is not a mistake apparent on record falling within the scope of section 254(2) of the IT Act Miscellaneous Application filed by the assessee is dismissed Decided against the Assessee.
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2013 (10) TMI 975 - ITAT AHMEDABAD
Allowability of rate of interest in case of loan from related party Held that:- There is no thumb rule of allowability of interest rate. It depends upon case to case and business expediency. Therefore, 20% rate reasonable for A.Y 09-10 for the related parties - Decided the issue in the light of peculiar facts and circumstances of the case and it shall not became Precedent for all cases. In this case, since company and the depositors were assessed at highest tax rate and no loss of revenue. Deposit from outside parties is very meager as compared to related party and also business turn over and profit have increased substantially and there is no finding of lower authorities that the amount of loan received from loan creditors were not used for business purposes Decided in favor of Assessee.
Addition on account of late payment of Provident fund account Held that:- assessee had paid this amount on 25.06.2007 relevant to month of May, 2007 before due date of return file on 30.09.2008. As various Courts held if the payment is made before due date of return filed, is allowable expenditure Decided in favor of Assessee.
CENVAT Credit to be included in the closing stock u/s 145A of the Act Held that:- As per Apex Court judgment in the case of ACIT vs. Torrent Cables Ltd.[ 2012 (11) TMI 190 - SUPREME COURT], wherein it was held that assessee had been following the net method of valuing the closing stock Following the judgment, CENVAT not to be included in the closing stock.
Allowability of excise duty as deduction u/s 43B of the Act in the year under consideration Held that:- Assessee had paid excise duty on closing stock at the time of removal of goods from the factory before due date of filing of return. Accordingly, such excise duty is allowable as deduction u/s. 43B of the IT Act.
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2013 (10) TMI 974 - ITAT AHMEDABAD
Addition made on account of debit entries because of investment in bunglows and set-off allowed out of this addition - Set-off allowed of the amount of Rs.10,56,530/- representing the addition made on account of loan amounts to be recovered from various parties as also certain unexplained expenses against the addition of Rs.40 lakhs Held that:- Addition was made by the AO and confirmed by ld.CIT(A) on this basis that these amounts were mostly in the form of credits and, therefore, the addition is sustained, but set off is allowed against the addition of Rs.40 lakhs on account of investment in bungalow - Addition is already confirmed by ld.CIT(A) and set off allowed by him of this addition against addition sustained by him in respect of investment in bungalow cannot be faulted because this addition is on account of credit entries and addition in respect of bungalow is on account of debit entries and, therefore, the set off allowed by the ld.CIT(A) cannot be faulted without showing that this amount was used elsewhere and not in the bungalow Decided against the Revenue.
Addition on the basis of loose papers Held that:- Addition made by the AO are without any particulars or date or name etc. and, therefore, these are dump-papers and cannot be made the basis for addition. This finding of the ld.CIT(A) could not be controverted by the ld.DR of the Revenue by bringing any evidence on record to show that this essential information such as date, name or particulars are available on the seized paper on the basis of which the addition was made by the AO and, hence, the ground of revenue is rejected Decided against the Revenue.
Addition on account of cheque received from Mr. Bakshi - A cheque of Rs.50 lacs was given by Shri K.I.Bakshi of Bombay to the assessee for a loan @ 15%. The said cheque should never be encashed Held that:- As per newspaper report, Shri K.I.Bakshi has already died during earthquake in Bhuj. Under these facts, in our considered opinion, no such addition is justified because the AO could not establish that any amount was received by the assessee from Shri K.I.Bhakshi or any amount was given by the assessee to Shri Bhakshi.
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2013 (10) TMI 973 - ITAT AHMEDABAD
Allowability of expense of prior period Held that:- Expense, related to prior period, should be either allowed in the present year or if it is not allowed in the present year, then the same should be allowed in the earlier year, to which such expenses are related to - The assessee has disclosed a loss of Rs.6,92,700/- in the present year, and in A.Y.2000-2001, the assessee has filed return of income disclosing NIL income after setting off of brought forward loss of earlier years to the extent of Rs.303.11 lakhs. Hence, even if this expenses are allowed in the earlier years i.e. A.Y. 2000-2001, it will ultimately be adjusted in the present year, by way of set off of brought forward loss, and therefore, it will make no difference even if deduction is allowed in the present year Decided against the Revenue.
ALP in an international transaction to be decided by Appellate authorities Held that:- Adjustments made on account of ALP by tax authorities can he deleted in appeal al only if the appellate authorities are satisfied and record finding that ALP submitted by the assessee is fair and reasonable. Merely finding faults with the transfer price determined by the revenue authorities (AO/TPO) addition on account of 'adjustments' cannot he deleted. This is because the mandate of section 92(1) is that in every case of international transaction, income has to be determined having regard to ALP. Therefore, unless ALP furnished by the taxpayer is specifically accepted, the appellate authorities on the basis of material available on record have to determine ALP themselves. Subject to statutory Provisions, appellate authorities can direct lower revenue authorities to carne this exercise in accordance with law. The matter cannot he left hanging in between. ALP of international transaction has to he determined in every case.
Excess payment of royalty - Payment of royalty at the rate of 3.75% to the AE by the assessee, as against the royalty at the rate of 3% by other group entities Held that:- Explained by the assessee before the AO that the royalty at 3.75% was applied after reducing various expenses from ex-factory sale value of the concerned products. It was also explained before the learned CIT(A) that if the effective rate is considered, then the effective rate of royalty is less than the royalty paid by other AEs to Hitachi Limited i.e. parent company - Only stated rate is not decisive and effective rate has to be considered, and when the amount of royalty paid by the assessee is considered with ex-factory sale value, without deducting various expenses, such as dealer commission, special commission, warranty etc., as has been noted by the learned CIT(A), then the effective rate worked out is only 2.3% on sale, as against 3% paid by other group entities - This finding of the fact given by learned CIT(A) could not be controverted by the learned DR of the Revenue Decided against the Revenue.
Refund of excess TDS deducted Held that:- Appellant had made a wrong calculation of royalty for the period from 1.4.2003 to 30.6.2003 and deducted excess TDS and had paid the same. Therefore, the excess TDS to be recovered from the Income tax Department was worked to be Rs.16,25,243/- and the same was shown on the asset side of the balance sheet. This amount was not debited to P & L account but the appellant had wrongly disallowed the same in the statement of total income and it was claimed as deduction before the A.O. but the A.O. has not discussed the same in the assessment order and had not allowed the deduction. The A.O. is directed to allow the same as deduction Decided against the Revenue.
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2013 (10) TMI 972 - ITAT JODHPUR
Validity of search u/s 132(1) of the Income Tax Act Validity of assessment order passed on the basis of invalid search Held that:- Search was conducted only on the basis of the information received from S.P. C.B.I. that undisclosed cash being carried out by the assessee, but no such cash or any other incriminating documents, books of accounts, money, bullion, jewellery or other valuable article or thing were found in the possession of the assessee. Therefore, the authorization to conduct search based on reason under section 132(1) of the Act did not exist and the search became invalid. Therefore, the assessment order based on the said search cannot stand and to be set aside - Assessment orders passed by the Assessing Officer on the basis of invalid search deserve to be set aside and quashed Decided in favor of Assessee.
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2013 (10) TMI 971 - ITAT HYDERABAD
Allowability of registration u/s 12AA of the income tax act Held that:- Relying upon the judgment of the Honble High Court in the case of Agricultural Market Committee [2011 (3) TMI 1265 - Andhra Pradesh High Court], held that the assessees have to be granted registration In the abovementioned case it was held that Agricultural Marketing Acts provide for establishment of notified market areas/yards for purchase and sale of agricultural produce and livestock and for better regulation of such markets. The purpose of marketing legislation is to enable purchasers to get a fair price for the commodities by eliminating middlemen and provide a regulating market with facilities for correct weighments, storage, accommodation and equal powers of bargain for reasonable price to the growers and the consumers. Agricultural marketing committees discharge an important duty and function of protecting the interest of a large body of persons, namely, agriculturists, farmers and growers of agricultural produce and livestock.
Further, in the said judgment it was held that Agricultural marketing committees were entitled to seek exemption under section 10(20) read with section 10(29) till March 31,2003 but by reason of amendment to section 10(20) and deletion of section 10(29) with effect from April 1, 2003, they, for the purpose of the Act, ceased to be "local authorities". This itself would not disqualify them from claiming exemption under sections 11(1) and 12 provided they are considered as institutions established for advancement of objects of general public utility, because the Parliamentary benefit under section 10(20) is altogether different from the benefit granted By the tax machinery subject to statutory conditions contained in sections 11 to 13.
An agricultural marketing committee is constituted under the State Act for the sole purpose of protecting the interest of agriculturists, farmers and growers. Secondly, the agricultural marketing committee is under legal obligation to provide all necessary infrastructure and market facilities within the market place/yard in a notified market area, including water, electricity, auction/trading platforms, facilities for receiving, paying and depositing money, and resolving disputes. Thirdly, the income of the agricultural marketing committee from different sources- licence fees, market fees, loans, etc., which is derived without any profit motive is to be used to meet the expenditure for providing market facilities. Fourthly, all the income has to be deposited in the market committee fund, out of which ten per cent. shall be, contributed to the Central Market Fund which shall vest in the Government, which exercises power of supervision and superintendence over the market committees.
The Government administers and applies the Central Market Fund, inter alia, for providing grants to needy agricultural marketing committees. Fifthly, agricultural marketing committees serve an important aspect of rural economy, i.e., providing facilities for marketing agricultural produce and products of livestock. Section 14(1) of the Agricultural Marketing Committee Act read with rule 8 of the Rules mandate that "all moneys received by an agricultural marketing committee shall be deposited in a single banking account with the nearest Government treasury, or with the sanction of the Government in a bank" out of which all the expenditure of the agricultural marketing committee shall be defrayed. Under section 11 (5)(iii), deposit of the moneys in a scheduled bank is substantial compliance with the law Therefore, agricultural marketing committee is entitled to be registered under section 12A/12AA Decided in favor of Assessee.
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2013 (10) TMI 970 - ITAT CHENNAI
Validity of re-opening u/s 147 of the Income Tax Act Held that:- Assessing Officer had considered the aspect of the difference between the amounts shown in the TDS certificates issued by M/s. Deutsche Bank and what was accounted by the assessee. Explanation in this regard was furnished by the assessee. Once a query was raised and a reply was given and the extract of such reply was stated in the assessment order, therefore, it cannot be said that the Assessing Officer had not applied his mind. He had indeed applied his mind and came to a conclusion that the difference stood reconciled. There is no new tangible material available with the Assessing Officer for coming to a conclusion that reconciliation given by the assessee was wrong or incorrect.
Based on the very same set of records, AO had formed a different opinion for initiating a reassessment. Change of opinion cannot be a basis for reopening as held by the Hon'ble Full Bench of the Delhi High Court in the case of CIT Vs. Kelvinator of India Ltd. [2002 (4) TMI 37 - DELHI High Court] which was affirmed later by the Hon'ble Supreme Court in CIT VS. Kelvinator of India Ltd. [2010 (1) TMI 11 - SUPREME COURT OF INDIA]. Especially so, where four years had elapsed from the end of the assessment year. There is no case for the Revenue that the assessee had failed to furnish full and true information as required under the Act Re-opening of assessment has rightly been quashed Decided against the Revenue.
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2013 (10) TMI 969 - ITAT AHMEDABAD
Deduction of 1/5 of expenditure in the present year - assessee company had spent major amount and the benefit of which was expected to be derived for next five years and, therefore, in the books of account, the same expenditure was debited to miscellaneous expenses and l/5th of the same i.e. Rs.116.64 lacs is written off every year Held that:- There is nothing on record in this regard as to whether in the assessment year 2003-04, full deduction was allowed or only l/5th deduction was allowed in that year. It may be there that in the books of account, the assessee has debited only l/5th of the amount in that year but in the computation of income, the entire amount can be claimed as deduction and the same might have been allowed in that year to the extent of 100%. Without examining this aspect, allowing any further deduction in the present year will result into allowing the double deduction - Restored back this matter to the file of the A.O. for a fresh decision.
Computation of deduction u/s 80IA of the Income Tax Act Held that:- A.O. has to consider the interest income as well as interest expenditure which is connected with the same and rework the deduction u/s 80IA as may be necessary. It goes to show that to the extent the assessee is eligible to establish the nexus of interest expenditure with interest income by showing that the interest expenditure was incurred for earning interest income, netting has to be allowed and only such net interest income has to be excluded from business profits for the purpose of computation of deduction allowable u/s 80IA - Revenue could not bring on record any contrary facts to the above observation Decided against the Revenue.
Disallowance u/s 40(a)(ia) of the Income Tax Act - Rebate given is in the nature of discount or interest Held that:- Entire sales of the Assessee is to GUVNL and the payments received by the Assessee from it are towards sales from the customer. Nothing has been brought on record by the Revenue to demonstrate that the rebate given is not in the nature of discount but is in the nature of interest - Rebate is in the nature of discount no TDS u/s 194A is deductible on the same, as has been held by the Commissioner(A) Decided against the Revenue.
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2013 (10) TMI 968 - ITAT AHMEDABAD
Benefit to the concern falling u/s 13(3)(c) is right or not - Eligibility of exemption u/s 11 and 12 of the Income Tax Act - Assessee is a company registered u/s 25 of the Companies Act 1956 and also registered u/s 12AA of the Act - Held that:- As per sub-section (6) a trust running an educational institution or a medical institution or a hospital shall not lose the benefit of exemption of any income other than the value of benefits of educational or medical facilities provided to the specified persons, solely on the ground that such benefits have been provided to specified persons. It should be noted that the sub-section covers,-(i) only those trusts running an educational institution or a medical institution or a hospital; (ii) the benefit extends only in respect of educational or medical facilities and not any other facility.
In the present case, Assessee has entered transactions with the related concerns - Assessee is not an educational institution or a hospital or medical institution as it is not engaged in dispensing medical facility though it is engaged in running a blood bank - Assessee cannot be considered to be engaged in medical facilities so as to be entitled to exemption of income Decided against the Assessee.
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2013 (10) TMI 967 - ITAT HYDERABAD
Allowance of interest u/s 36(1)(iii) and processing charges Held that:- Seen from the sanction letter, the loan has been availed by the assessee for the purpose of construction of the project. In other words, it is for working of the assessee company and it cannot be said that the loan was availed for the purpose of acquisition of land. Even otherwise, if the loan amount used for the purpose of its project, it cannot be said that the assessee used the fund for acquisition of fixed asset. The land on which the assessee is constructing the building is to be treated as business asset of the assessee company - Allowed the claim of the assessee towards the interest and processing charges incurred on loan. The proviso to section 36(1)(iii) cannot be applied to the facts of the present case Decided against the Revenue.
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2013 (10) TMI 937 - ALLAHABAD HIGH COURT
Interest u/s 234-B and 234-C of the Income Tax Act, when the income was assessed u/s 115 JB of the Act as the advance tax is not paid Held that:- Relying upon the judgment of Joint Commissioner of Income-tax vs. Rolta India Ltd [2011 (1) TMI 5 - SUPREME COURT OF INDIA], it was held that Section 115JB, is a self-contained code pertaining to MAT, which imposed liability for payment of advance tax on MAT companies and, therefore, where such companies defaulted in payment of advance tax in respect of tax payable under Section 115JB, it was liable to pay interest under Sections 234B and 234C of the Act.
Interest under Sections 234B and 234C shall be payable on failure to pay advance tax in respect of tax payable under Section 115JA/115JB. For the aforestated reasons, Circular No. 13/2001 dated 9.11.2001 issued by CBDT has no application. Moreover, in any event, para 2 of that Circular itself indicates that a large number of companies liable to be taxed under MAT provisions of Section 115JB were not making advance tax payments. In the said circular, it has been clarified that Section 115JB is a self-contained code and thus, all companies were liable for payment of advance tax under Section 115JB and consequently provisions of Sections 234B and 234C imposing interest on default in payment of advance tax were also applicable Decided against the Assessee.
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2013 (10) TMI 936 - MADRAS HIGH COURT
Whether ship comes under the fold of word ‘Plant’ – Held that:- Plant would include any article or object fixed or movable, live or dead, used by a business man for carrying on his business and it is not necessarily confined to an apparatus which is used for mechanical or industrial business. Thus, plant includes every tool, apparatus, equipment or machinery, not limited to machinery used in tool. In fact, even in Section 43(3) of the Income Tax Act, the expression used is "unless the context otherwise requires". Thus, when the context does not require "otherwise", the meaning of the word "plant" as defined under Section 43(3) would be relevant to understand what 'equipment' would mean. Thus, with the inclusive definition on plant embracing within its fold so diverse a matter from a ship to a book, or medical equipment, every tool, apparatus, 'plant' includes 'all equipment' used by a business man for carrying on his business – Therefore, ship comes under the fold of plant.
Nature of expenditure as Revenue expenditure of Capital expenditure – Royalty u/s 9(1)(vi) of Act - Whether payment made to the owner of vessel is in the nature of royalty charges or in the nature of purchase – Held that:- Till the last month of the payment or the option exercised, the assessee was not the owner of the vessel. The assessee opted to make the balloon payment of US $2.75 million on 12.1.2005. A sale certificate was issued only on 12.01.2005. The consideration paid periodically was in the nature of hire charges for the use of the Vessel, as described in the agreement and not sale consideration – Hire charges to be treated as revenue expenditure - By the exclusion Clause in Clause (iva) referring to cases falling under Sec 44 BB of the Income Tax Act. A payment made for the use or the right to use an equipment thus qualifies as 'royalty' and in this case, considering the nature of time charter agreement and the rights and obligations of the charterer, for the privilege of using the ship, the fee paid is royalty, falling under Clause (iva) of Explanation (2) to Section 9(1)(vi) of the Income Tax Act
Meaning of Permanent establishment in india as the place of business – Held that:- For permanent establishment, there must be a place for the business to be carried on through that fixed place. The concept of permanent establishment assumes significance in the context of the determination of the rights of the Contracting State to tax the profits of an undertaking of the other Contracting state. In the context of the various business activities, in the case of equipment, a fixed place can be found to exist even though the equipment by the nature of business may be relocated from one site to another for a single customer under one integrated contract. A movable place of business is thus treated as fixed place of business and most of the equipment is used at fixed points within a proximate area on a repetitive continuous basis for sufficient period of time as required by the business. Thus, when the business activities are peripatetic and the equipment is moved between neighbouring location, a single place of business could be considered to exist where the location to which the equipment is moved.
Thus the submission of the Revenue that the moving ship has a place of business in the place where the ship is docked and the fact that the ship moved from one point to another is the result of the nature of business contract and the movement is an integrated one having business and geographical coherence leads to the inference that the foreign enterprise has the place of permanent establishment in this Country. The foreign enterprise thus satisfying the presence a permanent establishment.
Whether the penal provisions u/s 201 and 201A of the Income Tax act apply on the agents of Non-residents u/s 160 & 163 of the Income Tax Act :- Held that:- Section 195 relates to TDS on payment to a non-resident. The Section states "any person" responsible for paying to a non-resident would has to deduct tax at source. Section 195(2) states that the person responsible for deduction of tax at source can apply to the Assessing Officer for general or special order for determination of appropriate proportion of tax deductible, where the amount paid could not be fully taxable, the assessee responsible for TDS can ask for nil certificate. The non-resident or the agent could make an application for a certificate of 'nil' deduction at a lesser rate. Thus, as far as Section 160 is concerned, this is a procedural and enabling Section for the determination of the quantum of income of the non-resident assessee and the tax to be demanded.
Reliance has been placed upon the judgment in the case of Transmission Corporation of A.P. Ltd. and another V. CIT reported in [1999 (8) TMI 2 - SUPREME Court] - Proceedings under Section 201 and 201A of the Income Tax act has nothing to do with the status of the assessee as an agent under Section 160 and 163 which would assume significance only for assessment purposes. Thus so long as the Revenue is able to show the receipt as falling under Section 9 of the Income Tax Act, provisions of Section 160 of the Income Tax Act would stand attracted - The contention that Sections 163 and 201 of the Income Tax Act cannot go together is not correct for the reason that they operate on different spheres. Section 195 casts an obligation on TDS on any person responsible for paying, whereas Section 163 is for assessment purposes.
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