|
Advanced Search Options
Income Tax - Case Laws
Showing 181 to 200 of 1116 Records
-
2015 (10) TMI 2497 - ITAT CHANDIGARH
Penalty u/s 271(1)(c) - claim of capital gain tax, property tax and fringe benefit tax not an allowable deduction - CIT(A) deleted the penalty - Held that:- It is observed that the assessee is a Cooperative society and an undertaking to Government of Punjab. It is claimed that the assessee had engaged a professional for preparing and filing of the income tax return. It is stated that assessee has submitted revised computation during the course of assessment proceedings and there was no intention to conceal the income.
Furthermore, the assessee had duly paid tax on the impugned amounts of capital gains tax and property tax sue motto, but due to inadvertent mistake on the part of the counsel, this amount of capital gains tax and property tax paid were not added back resulting into refund. In our view, the Ld. CIT(A) has correctly observed that the mistake of not adding back the impugned amounts in the statement of income was of the then counsel and moreover it cannot be said that anyone had been benefitted by not adding back the impugned amount, since the assessee is an undertaking of Government of Punjab. In our opinion, the order of CIT(A) is based on appreciation of facts and therefore, we decline to interfere with the order of CIT(A). - Decided against revenue
-
2015 (10) TMI 2496 - ITAT PUNE
Disallowance of interest for allegedly advancing interest bearing fund towards interest free advances - Held that:- Undisputedly, the assessee has advanced ₹ 75,00,000/- in the month of August. The advance received by the assessee on account of transfer of rights in land is more than sufficient to fund the advances made by the assessee to Shri N.V. Jadhav during that period.
Thus, in view of the fact that the assessee was having sufficient funds for advancing to Shri N.V. Jadhav from the transfer of rights in the land. We are of the considered view that the authorities below have erred in making disallowance of ₹ 6,56,250/-. We find merit in the appeal of the assessee. Accordingly, we allow the appeal of the assessee and delete the addition - Decided in favour of assessee
-
2015 (10) TMI 2495 - ITAT HYDERABAD
Transfer pricing adjustment - selection of comparable - Held that:- E infochips Bangalore Ltd. company is functionally different from Assessee’s activities and in the absence of segmental information, we direct AO/TPO to exclude the above while working out the comparability analysis. We uphold the plea of Assessee in this regard.
Comp-U-Learn Tech India Ltd. - the issue of selection of this company is a comparable should be restored to the file of AO/TPO to examine the available data in public domain/or obtaining information U/s. 133(6) of the Act for segmental information pertaining to software development services and then decide after giving due opportunity to Assessee whether the said company can be selected as comparable.
Kals Information Systems Ltd comparable was not objected to earlier by Assessee, therefore, there is no discussion on Assessee’s objections either in TPO’s order or in DRP’s order. Since there is no analysis on the objections of Assessee by TPO as Assessee has not objected earlier, we are of the opinion that Assessee’s objections require re-examination by TPO. Therefore, without giving any opinion, whether the company can be selected as comparable or not issue of selection of this company as comparable is restored to the file of TPO to re-examine afresh. Therefore, it is restored to the file of TPO for fresh examination.
Tata Elxsi Ltd (Seg) - Since no segmental data is available, considering the software development services as a segment by TPO cannot be considered as segmental data, unless the services rendered by that company are similar to the services rendered by Assessee. In view of this, we are of the opinion that this company cannot be selected as comparable. AO is directed to exclude the same.
Sasken Communication Technologies Ltd - since AO/TPO did not have the opportunity to analyse the objections of Assessee as they have not objected earlier, we are of the opinion that inclusion of this company as comparable company is to be analysed afresh by taking the objections from Assessee and then after due analysis, TPO should consider whether the same can be included as a comparable company. Therefore, without expressing any opinion or finding in this regard, we remit the issue relating comparability of this company for fresh adjudication by TPO.
L&T Infotech Ltd. cannot be selected as a comparable company. AO/TPO is directed to exclude the same from the list of comparables.
Akshay Software Technologies Ltd - there is no segmental data of software services and products and since the above company is also into products, the company cannot be selected as a comparable.
CG VAK Software and Exports Ltd - we cannot give any finding whether the company is comparable or not? As seen from the annual report placed on record, it shows income from software development services and products both the overseas the domestic, whereas in schedule-XII, the income is shown only from software services. Whereas the Director’s report indicate that Assessee has software services comprising 84% of revenue, BPO services at 15% and training at 1%. This indicates that Assessee has different activities, therefore, it is difficult to analyse whether the company is strictly comparable to Assessee’s software development services. However, to give a fair opportunity to Assessee, we remit the matter to the file of TPO to obtain necessary information if required and take Assessee’s objections and analyse whether the company can be selected as comparable or not?
Interest on outstanding receivables - incorrect computation of interest - Held that:- Addition on account of notional interest relating to alleged delayed payment in collection of receivables from the AEs is uncalled for on the facts of the present case. We were informed that no such addition was made in the later year on Assessee’s receivables. As rightly pointed out by the Ld. Counsel, the outstanding receivables on account of services cannot be equated with capital financing as provided for in the Explanation by the amendment by Finance Act, 2012 retrospectively. We are of the opinion that both on the facts of the case and principles of law, there is no need for bringing to tax the notional interest on the outstanding receivables
Addition towards communication expenses by AO invoking the Explanation 2 to Section 10A - Held that:- tThe communication cost does not have the element of profit and hence it is necessarily required to be excluded both from the total turnover and export turnover. Accordingly, AO is directed to reduce communication cost not only from export turnover but also from the total turnover for the purpose of computation of deduction U/s. 10AA
-
2015 (10) TMI 2494 - ITAT CHANDIGARH
Addition u/s 68 - share capital and share premium received from non-resident company - Held that:- In the present case, assessee company had received money on allotment of shares from M/s Glacis Investment Limited through banking channel and furnished complete details of the shareholder, no addition would be made under section 68 of the Act, in the absence of any positive material or evidence to indicate that the shareholder company was benamidar or fictitious company or that any part of the share capital represented the assessee's own income from undisclosed sources. The assessee on the basis of the documentary evidence on record has been able to prove that Non Resident Company i.e. M/s Glacis Investment Limited was an existing company and that the shareholder company made investment in the assessee company would prove that assessee received genuine share application money from this non-resident company. Thus, assessee had established the identity of the shareholder company and that transaction was genuine. The assessee has also proved the credit worthiness of the shareholder company, therefore, authorities below were not justified in making the huge addition against the assessee. We are of the view that assessee has been able to prove the identity of the creditor which is not in dispute, credit worthiness of the shareholder company and genuineness of the transaction in the matter. Therefore, addition under section 68 of the Act is wholly unjustified. - Decided in favour of assessee
Disallowance of amount paid for up- gradation of Power Station required for supply of power to the assessee company - Held that:- Assessee has explained the scheme formulated by Ministry of Textiles, Government of India, the aim of the scheme of Integrated Textile Parks was to encourage group of entrepreneurs to come together and establish Integrated Textile Parks with world class infrastructure under a public private partnership frame work. Therefore, the scheme in the case of the assessee was intended to encourage the group of entrepreneurs to come together and establish Integrated Textile Parks with world class infrastructure under a public private partnership frame work and the grant-in-aid was given for setting up of the industries/textile parks in the State, therefore, the grant-in-aid could not be considered as a payment directly or indirectly to meet any portion of actual cost and thus, it would fall outside the purview of Explanation 10 to Section 43(1) of the Act. All the decisions relied upon by ld. counsel for the assessee are on identical point and support the contention of the assessee that assessee is entitled for depreciation on the same amount.
Considering the above discussion in the light of the scheme formulated by the Government of India we set aside the orders of authorities below and direct them to grant depreciation to assessee on the amount of ₹ 3 Cr being the capital expenditure. - Decided in favour of assessee
Disallowance of depreciation - Held that:- Expenditure 10 to Section 43 (1) is not applicable in this case because the scheme of the Government was to encourage group of entrepreneurs to come together and establish integrated textile parks with worth class infrastructure under a Public Private partnership frame work. The grant-in-aid was granted to the entrepreneurs to develop textile parks under the scheme. Following the reasons for decision on ground No. 2 above, we set aside the orders of authorities below and direct the authorities below to grant depreciation to the assessee without reducing the grant received from Ministry of Textiles.- Decided in favour of assessee
Disallowance of proportionate interest on interest free advances - Held that:- The details furnished by the assessee show that assessee was having sufficient funds to make advances out of its own sources. The details of capital advances have also been filed which according to the ld. CIT(Appeals), were not filed before the authorities below. The authorities below should also give a finding whether amounts are advanced for commercial exigencies. Therefore matter should be remanded to Assessing Officer. - Decided in favour of assessee for statistical purposes.
-
2015 (10) TMI 2490 - ITAT MUMBAI
Disallowance of service charges paid for procurement of raw material - no TDS was deducted from the said amount - Held that:- In view of the certificate of the accountant under first proviso to subsection (1) of section 201 certifying furnishing of return of income and payment of tax, etc, we remand this issue to the file of the ld. Assessing Officer to examine the factual matrix and then decide in accordance with law. The assessee be given opportunity of being heard. Even otherwise, insertion of second proviso to section 40(a)(ia) with effect from 01/04/2003 is declaratory and curative in nature with retrospective effect from 01/04/2005, inserted by Finance (No.2) Act, 2004, thus, the Assessing Officer is directed to examine the claim of the assessee whether the said amount has been included as income of the payee.
Suppression of sales - Addition on process loss - Held that:- The Assessing Officer noticed that Tijiya Steel debited the amount of commission on sale of 400 kgs ascorbic acid vide letter dated 15/08/2008 and 1000 kgs on 12/08/2008, whereas, in the case of standard pharmaceutical, 500 kgs in the month of August and 750 kgs in the month of September. The assessee did not show any purchases in the month of August and September of ascorbic acid. The Assessing Officer found defects in the books of accounts as there was suppression of sales in comparison to raw material purchased, therefore, the books were rejected, being, found unreliable. From the quantity details filed by the assessed, there is a clear difference/shortage of material. Even the assessee admitted before the Assessing Officer that there was shortage of the yield/end product. Therefore, we find no infirmity in the conclusion drawn by the ld. Commissioner of Income Tax (Appeals) and the factual finding recorded in the assessment order.
So far as, the contention of the ld. counsel for the assessee that proper opportunity was provided to the assessee, is concerned, we find no merit in the contention as sufficient opportunity was provided to the assessee during assessment proceedings as well as during first appellate stage. Even it is presumed that lesser time was provided during assessment proceedings, nothing prevented the assessee to file necessary details before the ld. Commissioner of Income Tax (Appeals) as well as before this Tribunal. The assessee is merely harping that proper opportunity was not provided. The assessee has to explain as to how opportunity was not provided. The facts, clearly indicates that the assessee was unable to substantiate its claim with documentary evidence, thus, we find on infirmity in the conclusion drawn by the ld. Commissioner of Income Tax (Appeals) - Decided against assessee
-
2015 (10) TMI 2488 - ITAT JAIPUR
G.P. rate determination - Held that:- Looking on the facts on record, interest of justice will be served if the trading addition is restricted to Rs. One lac instead of ₹ 2 lacs retained by the ld CIT(A). This ground is partly allowed in favour of assessee.
Disallowance U/s 40a(ia) on account of commission expenses claimed - Held that: - As it has not been disputed that the entire amount of commission was paid during the year and there was no payable amount at the end of the year. In view thereof, the Hon’ble Allahabad High Court judgment in case of Vector Shipping Services Pvt. Ltd. (2013 (7) TMI 622 - ALLAHABAD HIGH COURT ) is fully applicable. CIT(A) correctly deleted the addition - Decided in favour of assessee.
-
2015 (10) TMI 2487 - HIGH COURT OF BOMBAY
Transfer u/s 2(47) - satisfaction of essential ingredients - effect of amendments - intention of the assessee to control the telecommunication business of HEL in India through the TII and downstream companies - Held that:- One deal cannot be picked up in isolation so as to hold that it is a deliberate and intentional act of parties to circumvent Indian tax structure. The deals and agreements are but part of a larger and bigger picture to gain entry in Indian Telecom market and Multinational Corporations to adopt a mode by which they firmly establish themselves by taking support from Indian partners. On the same transactions and same set of facts reaching a different conclusion than that of the Hon'ble Supreme Court is not possible and rather impermissible.
None of these amendments and post the Supreme Court judgment would enable the Revenue to urge that the position as noted in the Supreme Court judgment no longer subsists. Even if there was a change therein on the basis of the Revenue's stand itself the Tribunal concluded quite contrary to what is now urged before us. Apart therefrom, we find that the essential ingredients of the definitions as amended are not satisfied and the conflicting and shifting stand of the Revenue worsens the position.
Another agreement between a co-subsidiary of the appellant CGP Mauritius and AG and AS and their companies which allegedly had yet another set of call options in favour of CGP. - Held that:- this is only an intention of the parties. It has never translated, even according to the Tribunal, into anything beyond what is concluded by the Tribunal and to be termed as a transfer.
Applicability of section 92B(2) - Held that:- The Tribunal does not indicate in any of the foregoing paragraphs which we have referred or reproduced above that the transaction in question is in the nature of purchase, sale or lease of tangible or intangible property. The Revenue itself understands that this provision does not necessarily require a transfer or assignment of a property or creating any right or interest in the same, but attempts to justify the conclusion reached by the Tribunal and to be found in the foregoing paragraphs. For the purpose of applicability of section 92B itself we will have to draw an inference but without some concrete primary facts being established. Mere receipt of incidental benefits may not be sufficient to attract transfer pricing provisions.
In the ultimate analysis, the requirements of section 92B read with section 92F are fulfilled according to the Tribunal because the 2007 Framework Agreement is an arrangement, understanding or action in concert between the assessee and VIH BV for grant of call option by AG and AS to the assessee against the agreed consideration paid by VIH BV. If that is how the matter is approached, then, we do not see any basis for the subsequent observations.
The Hon'ble Supreme Court has categorically held that there is no capital gain which can be taxed in terms of Indian tax regime. This is as far as the transfer of a share. The Court holds that there is no transfer of asset. As far as the above transactions are concerned, that is termed as arrangement creating an interest in option rights under the Framework Agreement of 2007. As already held this is also not covered by section 2(47) as amended retrospectively.
Regarding Call Centre Business:
Applicability of section 92B(2) - whether appellant and HWP India were associated enterprises? - whether any capital tax gain was attracted in the hands of HTIL when it transferred its 67% VIL shares to VIH BV - Held that:- In this case, it is an admitted position that before signing of the SPA, HTIL, appellant and HWP (India) are associated enterprises. HTIL is a non-resident. Since the transaction is between associated enterprises and one of them is a non-resident, the condition specified in section 92B(1) is satisfied. Further, the transaction involves sale of call centre business which is a capital asset. The capital asset of the assessee is getting transferred which in turn affects the income or profits and assets of the appellant. Hence this transaction of sale of call centre satisfies the condition specified in section 92B(1) and constitutes an international transaction even if the assessee's contention that the BTA was signed before the implementation of the SPA is assumed to be correct for the sake of argument.
There was no warrant for the Tribunal to have rendered a conflicting conclusion on the applicability of the two provisions, namely, sections 92B(1) and 92B(2). In any event, the Tribunal committed a basic and fundamental error in not referring to Chapter X, its title and subsection (1) of section 92 before applying the mechanism devised therein. If Chapter X has been inserted to make special provisions relating to avoidance of tax and by section (1) of section 92 computation of income from international transaction having regard to arm's length price has to be done, then, there ought to be an income arising from an international transaction. That only would enable applying further provisions in this Chapter. That being not the position even on this aspect, we are unable to agree with Mr. Setalvad. Thus Tribunal's order is vitiated by serious errors of law apparent on the face of the record.
Tribunal's order contains inconsistent and contradictory findings on the issue discussed above. We have also indicated the contradictions and inconsistencies in these findings in the foregoing paragraphs. We have found that the Tribunal's attempt to get over the binding judgment of the Hon'ble Supreme Court in the manner done also cannot be sustained. - Decided in favor of assessee.
-
2015 (10) TMI 2486 - DELHI HIGH COURT
Deduction under Section 80-IC - Held that:- For the preceding AY 2008-09 also the reduction attributable to the brand had been restricted to 10% by the AO and had been deleted by the ITAT. In the absence of any distinguishing feature having been brought out by the Revenue, the ITAT held that no deduction could be made from the eligible profits on account of the 'brand'.
Whether the income generating activity was only at the works units at Haridwar and not at the head office or branch offices? - Held that:- Learned counsel for the Assessee placed before the Court the profit and loss account for the Assessee as a whole for the years ending 31st March 2008 and 31st March 2009. He has also placed the details of the schedule of fixed assets of the head office and the works at Haridwar as well as statement of expenses and salaries and wages statement of the branches. As far as the head office is concerned, the net block as on 31st March 2008 was ₹ 13,22,101.14 whereas the net block for the works at Haridwar was ₹ 1,26,80,393.35. The corresponding figures for the year ending 31s March 2009 were ₹ 43,62,243.40 and ₹ 1,20,87,372.35. As regards the branch offices at Bangalore, Mumbai and Kolkatta, the total expenditure figures for the year ending 31st March 2009 were ₹ 2,86,690; ₹ 5,98,981 and ₹ 5,12,949 respectively which even in the aggregate was insignificant in comparison with the expenses of the entire company which was ₹ 9,08,34,838.18 for the same period. Likewise the expenses towards salaries and wages of the branches constitutes a small percentage of the total expenditure of the Assessee on that head. These figures bear out the contention of the Assessee that the income generating activity was only at the works units at Haridwar and not at the head office or branch offices. Therefore, on facts the Court is unable to find any perversity vitiating the impugned order of the ITAT.
-
2015 (10) TMI 2485 - ITAT DELHI
Assessment u/s 153A - Held that:- Assessments in both these cases passed u/s. 153A r.w.s. 143(3) were not made, based on any incriminating material found or seized during the course of search of thereafter. The addtions are purely based on the material already avaiblae on record. Hence, all the additions in both the cases are deleted - Decided in favour of assessee
-
2015 (10) TMI 2481 - ITAT AHMEDABAD
Reopening of assessment - Held that:- Assessing Officer has simply reopened the assessment for the purpose of verification of the certain transactions. In our opinion, when the Revenue wanted to verify the correctness of certain transactions, the proper course is to issue the notice u/s 143(2) within time. If the Revenue failed to issue notice u/s 143(2), it cannot resort to section 148 for the purpose of verification of certain transactions. Notice u/s 148 can be issued only when the Assessing officer records his satisfaction with regard to escapement of income. In the reasons recorded, there is no mention of the escapement of income; therefore, in our opinion, reopening of assessment is not valid and the same is quashed and consequentially, the assessment order passed in pursuance to such notice is also quashed. - Decided in favour of assessee
-
2015 (10) TMI 2479 - ITAT DELHI
Addition u/s 68 - there is a gap of 5 months between the withdrawal of the cash from the Bank account and re-deposit of the same in the Bank account - Held that:- No addition can be made u/s. 68 of the I.T. Act on the sole reason that there is a time gap of 5 months between the date of withdrawal from bank account of the cash in question and the redeposit of the same in the Bank Account, unless the AO demonstrates that the amount in question has been used by the assessee for any other purpose. In my view the addition is made on inferences and presumptions, which is bad in law. Hence, the addition in question is deleted. See AICT vs. Baldev Raj Charla [2008 (12) TMI 241 - ITAT DELHI-C ] - Decided in favor of assessee
-
2015 (10) TMI 2478 - SC ORDER
Assessmnt u/s 153C - Held that:- Special leave granted and admitted appeal of Revenue against the Hon’ble Bombay High Court [2015 (5) TMI 656 - BOMBAY HIGH COURT] ruling that no addition can be made in respect of assessment which has become final if no incriminating material is found during the course of search.
-
2015 (10) TMI 2477 - ITAT AHMEDABAD
Levy of fees under section 234E - intimation issued under section 200A in respect of processing of TDS - Held that:- We find that the issue in all these appeals is now squarely covered in favour of the assessee by the decision of ITAT Amritsar Bench in the case of Sibia Healthcare Private Limited vs. DCIT [2015 (6) TMI 437 - ITAT AMRITSAR] adjustment in respect of levy of fees under section 234E was indeed beyond the scope of permissible adjustments contemplated under section 200A.
As intimation under section 200A, raising a demand or directing a refund to the tax deductor, can only be passed within one year from the end of the financial year within which the related TDS statement is filed, and as the related TDS statement was filed on 19th February 2014, such a levy could only have been made at best within 31st March 2015. That time has already elapsed and the defect is thus not curable even at this stage. In view of these discussions, as also bearing in mind entirety of the case, the impugned levy of fees under section 234E is unsustainable in law. We, therefore, delete the impugned levy of fee under section 234E of the Act. - Decided in favour of assessee.
-
2015 (10) TMI 2476 - ITAT AHMEDABAD
Penalty u/s 271(1)(c) - cash credit taken from the sister concern - Held that:- Relying upon the decisions of Hon’ble Jurisdictional High Court in case of National Textile vs. CIT (2000 (10) TMI 19 - GUJARAT High Court ) and CIT vs. Jalaram Oil Mills (2001 (6) TMI 15 - GUJARAT High Court) as well as to discussions made it is of the confirmed view that proceedings u/s. 271(1)(c) of the Act are separate proceedings and the observations and findings made during the original assessment proceedings, should not shadow over the proceedings u/s.271(1)(c) of the Act and the A.O. ought to have analyzed the evidences and supporting documents furnished before him during the penalty proceedings u/s.271(1)(c) and examined them in consonance to the provisions of Section 271(1)(c) and only if he is not satisfied with them, then only he should initiate the penalty against the assessee.
We, therefore, remit back the issue to the file of A.O. with clear directions to examine on merit the evidences and supporting documents to be submitted by assessee before him for proving the identity, creditworthiness and genuineness of the cash credit taken from its sister concern M/s Poonam Dyeing & Printing Mills Pvt. Ltd. and accordingly, should decide the issue of imposing penalty u/s.271(1)(c) of the Act. - Decided in favour of assessee for statistical purposes.
-
2015 (10) TMI 2474 - ITAT MUMBAI
Entitlement to exemption u/s 11 - non maintaining separate books of accounts as required under provision of section 11(4A) - CIT(A) allowed the claim - Held that:- There is no dispute that right from inception, the assessee trust was granted exemption u/s 11 of the Act by the tax authorities. Even, if, the property is under dispute with the BMC authorities, cannot be the sole bases for denying exemption to the assessee. So far as, non-maintenance of separate books of accounts for different sports is concerned, we are in agreement with the finding of the ld. Commissioner of Income Tax (Appeals) that different sports are single activity of sports, therefore, cannot be treated as different activities of the trust. This view find support from the ratio laid down from Hon’ble Apex Court in Thanthi Trust (2001 (1) TMI 80 - SUPREME Court). There is further uncontroverted finding in the impugned order that the assessee trust is not running restaurant, bar, etc, thus, there is no question of maintaining separate registers. The activities of the assessee trust are for the attainment of objects of the trust enshrined in the trust deed. Thus, the assessee is having a valid registration u/s 12A of the Act, granted by the Director of Income Tax (Exemption) and the Assessing Officer has not specifically pointed out any violation of the trust deed as well as the provision of section 12 & 13, therefore, we find no infirmity in the conclusion drawn by the ld. Commissioner of Income Tax (Appeals). - Decided against revenue
-
2015 (10) TMI 2473 - ITAT MUMBAI
Non-compete fees received on divesture of 'Leader' business - taxable as "Short Term Capital Gains" OR "Long Term Capital Gains" - Held that:- In the present case, we are dealing with a situation where the non-compete fee has been received by the assessee-company for not carrying on the business of what herbicide manufacturing (i.e. Leader business), which it was hitherto carrying on. Thus, what is transferred is right to carry on business, which is a capital asset. Thus, such sum is to be regarded as Capital gain, the cost of acquisition being determined in accordance with section 55(2)(a) of the Act. Accordingly, we are unable to uphold the stand of the Assessing Officer that non-compete fee is taxable as business income on account of section 28(va) of the Act.
Whether such capital gain is a long term capital gain or short term capital gain? - Held that:- CIT(A) has erred in treating the non-compete fee as a short term capital gain. In our considered opinion, the CIT(A) misdirected himself in considering as to when the “……. Right of not to compete came into existence….”; and, not taking into consideration the fact that the covenant of not to carry on business was (i) attached alongwith the transfer of leader business, which was being carried on by the assessee since 1997; and, (ii) for a period of 10 years, which is a fairly long period. Under these circumstances, the non-compete fee is to be assessed as long term capital gain. - Decided in favour of assessee
Gain on transfer of Distribution Network, Registration and Licenses, Copyrights and Goodwill - taxable as "Short Term Capital Gains" OR "Long Term Capital Gains" - Held that:- Regarding Distribution Network it has been explained that the sales of ‘Leader’ products were being made by the assessee-company through a dealer Distribution Network. The assessee company had entered into contracts/ arrangements with several distributors for sale and distribution of their products covered under Leader business. On transfer of leader business to Sumitumo, all the rights of the assessee company under such contracts/businesses arrangements in relation to leader business were transmitted in favour of Sumitomo as per the Business Transfer agreement. Since the Distribution Network was in the nature of business right existing for more than three years, in our view, the same has been rightly held by the CIT(A) to be taxable as long term capital gain.Regarding “Goodwill”, it was quite clear that the same is inseparable from business, which was in existence for more than three years, and it gets automatically transferred alongwith the business. Thus, the gain on transfer of Goodwill has to be assessed as long term capital gain. The stand of the CIT(A) is affirmed on this aspect also. Similarly, in relation to the gain on transfer of Registration and licenses and copyrights are concerned, the same have also been rightly treated by the CITA) as long term capital gains. - Decided against revenue
Disallowance u/s. 14A - assessee-company had earned dividend income which was claimed exempt u/s. 10(35) - Held that:- Assessing Officer has not complied with the jurisdictional prescription of section 14A(2) of the Act in as much as there is no objective satisfaction recorded by the Assessing Officer that the claim of the assessee made in the return of income was incorrect. Notably, in the present case assessee had suo-moto disallowed certain expenditure under section 14A of the Act and the Assessing Officer is empowered to disagree with it only after he was “not satisfied with the correctness of the claim…….” made by the assessee, having regard to the accounts of the assessee. Thus, in the absence of the recording of such satisfaction the disallowance over and above ₹ 20,39,893/- made out of administrative expenses is untenable and is hereby directed to be deleted. Apart therefrom we also find that even otherwise the disallowance estimated by the assessee at ₹ 20,39,893/- is reasonable considering that the same was even more than the estimation of 2% of dividend income canvassed by the CIT(A). In this manner, we hereby set aside the order of CIT(A) and direct the Assessing Officer to restrict the disallowance under section 14A of the Act to ₹ 20,39,893/- made in the return of income - Decided in favour of assessee
Recomputing value of closing inventory in accordance with the provisions of section 145A - Held that:- Apart from pointing out that even after applying the provisions of section 145A r.w. section 43B of the Act there would be no effect on profit, the assessee company has not substantiated the said plea. In any case we find that the direction of the CIT(A) to the Assessing Officer for adopting the value of opening stock in consonance with the value of closing stock adopted for the immediately preceding year does not require any interference, and is hereby affirmed. - Decided against assessee
Income derived from growing and selling of Hybrid Seeds - whether is to be considered as agricultural income so as to be eligible for deduction under section 10(1) as held by CIT(A) - Held that:- No merit in the ground raised by the Revenue as no fault can be found with the decision of the CIT(A), which is in consonance with the precedents in assessee’s own case - Decided against revenue
-
2015 (10) TMI 2472 - ITAT HYDERABAD
Disallowance for depreciation in respect of assets, the cost of which is claimed as application - Computation of income u/s 11(1)(a) - Held that:- Similar to the case of AP Olympic Association (2014 (2) TMI 988 - ITAT HYDERABAD ), we respectfully follow the decision rendered by the coordinate bench of this Tribunal in the said case, and direct the Assessing Officer to allow the claim of the assessee for depreciation in respect of the assets, the cost of which is claimed by the assessee as application. - Decided in favour of assessee
-
2015 (10) TMI 2470 - ITAT HYDERABAD
Penalty under S.271(1)(c) - assessment completed u/s 153A - Held that:- Considering all the aspects and the fact that the assessee has a good case on merits and that the provisions of Explanation 5A to S.271(1)(c) are not applicable on the date of filing of the original return, we are of the opinion that Explanation 5A as it stood on the date of filing the return in response to notice under S.153A by the assessee would not cover the case of the assessee, so as to warrant levy penalty under S.271(1)(c). Since the assessee bona-fidely declared the additional income in the course of search and filed return and paid taxes thereon, we are of the opinion that penalty levied on such amount cannot be sustained. Accordingly, we allow the appeal of the assessee and delete the penalty sustained by the CIT(A). See Dilip Kedia Versus Assistant Commissioner of Income-Tax, Central Circle-4 [2013 (7) TMI 934 - ITAT HYDERABAD ] - Decided in favour of assessee.
-
2015 (10) TMI 2469 - ITAT MUMBAI
Determination of rent at fair market value - Held that:- Both the parties agreed that the same requires fresh examination at the end of the AO by duly considering the decision rendered by the Hon’ble jurisdictional Bombay High Court in the case of Tip Top Typography (2014 (8) TMI 356 - BOMBAY HIGH COURT ). Accordingly, we set aside the order of Ld CIT(A) on this issue and restore the same to the file of the AO with the direction to examine this issue afresh
Assessment of gains arising on sale of plot as business income - Held that:- We notice that the assessee has been holding various plots for quiet a reasonable time and hence he has declared long term capital gain on sale of two adjacent plots. We also notice that the assessee continues to hold other plots as his investments only. The long holding period, in our view, supports the case of the assessee. Further, it is not shown to us that the assessee has been indulging in repetitive transactions of purchase and sale in plots. It was also not shown that the assessee has borrowed funds for the purpose of purchasing plots. Since the AO has not brought on record any valid reason to support his case, we are of the view that the tax authorities are not justified in assessing the capital gain as his business income. Hence, we are not able to agree with the view taken by the Ld CIT(A) on this issue. Accordingly, we set aside the order of Ld CIT(A) on this issue and direct the AO to assess the profit arising on sale of plots as Capital gains.
-
2015 (10) TMI 2468 - ITAT KOLKATA
Addition u/s 41 - increase in the capital reserve on waiver of loans - Held that:- The correlation of the loans borrowed by the assessee and the purpose for which they were borrowed and the loans waived to the assessee has to be established by the assessee. In the absence of correlation it is not possible to decide the purpose for which the loan has been availed by the assessee. It is only when the purpose of the loan is ascertained it can be decided as to whether the provision of section 41(1) of the Act will be attracted or not. We therefore set aside the order of the CIT(A) in so far as the addition sustained by the CIT(A) and remand the issue to the AO for fresh consideration in the light of the observations made above. The assessee is at liberty to file the required documents to substantiate its case regarding non applicability of the provision of section 41(1) of the Act or section 28(iv) of the Act.
In so far as the appeal of the revenue is concerned it is quite clear that from the order of the CIT(A) that the interest which was waived was not claimed as an expenditure by the assessee in the past and therefore the addition of the said sum u/s 41(1) of the Act cannot be sustained. In so far as the applicability of the provision of section 28(iv) of the Act is concerned the benefit in question was not received in kind and therefore the addition on the above said provision cannot be sustained. The decision referred to by the CIT(A) in the impugned order on this issue clearly support the conclusion arrived at by the CIT(A). We therefore do not find any ground to interfere. Consequently the appeal filed by the revenue is dismissed. - Decided in favour of assessee for statistical purposes.
Unexplained share application money - Held that:- In the light of the letter of the AO to Saurabjh Agrotech (P) Ltd., a copy of which is placed at pages 32 to 39 of the assessee’s paper book No.2, the additions sustained by the CIT(A) deserves to be deleted. It is clear from the evidence that identity, capacity and genuineness of the transaction of the receipt of share application money of the assessee has been clearly established. In fact the additional evidence in the form of confirmation from the share applicant ought to have admitted by the CIT(A) as additional evidence and in the light of the enquiry carried out by the AO which clearly established the receipt of share application money as genuine, the addition ought to have been deleted. We therefore direct that the addition sustained by the CIT(A) in this regard should be deleted.- Decided in favour of assessee.
Disallowance on account of alleged excess consumption of Hexane in Solvent Extraction Plant - Held that:- The AO did not reject the book results before resorting to an estimation of income. For rejecting the book results, the provisions of Sec.145(3) of the Act requires that the Assessing Officer should be not be satisfied about the correctness or completeness of the accounts of the assessee, or where the method of accounting provided u/s.145(1) of the Act or accounting standards as notified under Section 145(2) of the Act have not been regularly followed by the Assessee. The AO has to compute income from business accounting to the books of accounts of the Assessee. It is only when the book results are rejected the question of estimation of income arises for consideration. The AO has to specifically point out the defects in the books or incomplete and incorrectness in the books of accounts and call upon the Assessee as to why the books of accounts should not be rejected.
The above principle is applicable even when the AO doubts the correctness of the claim of expenditure made in the Profit and Loss Account. The AO has not doubted the purchase of Hexane. He has indulged in a guess work regarding the quantity of Hexane that is to be consumed in the process of manufacture of oil from oil cake. The AO has done this on the basis of a report of an expert. As to whether the report of the expert can be applied to all manufacturers of oil from oil cake and as to whether these are ideal quantity of consumption, is not spelt out in the order of the AO. The entries in the regular books of accounts which are duly audited have not been shown to be suffering from any infirmities. The past history of consumption of Hexane compares favourably with the consumption in the past and the AO has nothing to say about the past history. No such addition has been made in the past. In such circumstances, we are of the view that the addition made by the AO and confirmed by the CIT(A) was without any basis and cannot be sustained. - Decided in favour of assessee.
............
|
