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Income Tax - Case Laws
Showing 81 to 100 of 825 Records
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2015 (12) TMI 1791 - ITAT PUNE
Monetary limit - maintainability of appeal - “tax effect” - HELD THAT:- Instructions of CBDT where the tax effect is less than ₹ 10 lakhs, the appeals filed by the Revenue, which are pending before the Tribunal, are not to be pressed or withdrawn by the Revenue authorities. Since the tax effect in the above appeals filed by the Revenue is admittedly less than ₹ 10 lakhs in each case, therefore, in view of the instructions of CBDT and the entirety of facts, we dismiss the appeals filed by the Revenue as not maintainable. All the above appeals filed by the Revenue are dismissed.
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2015 (12) TMI 1790 - ITAT DELHI
Payments made by ONGC and received by the non-resident assessee or foreign companies - taxable u/s 44BB or 44D - receipts of Boots and Coots International Well Control Inc., USA - Providing various services in connection with prospecting, extraction or production of mineral oil - Fees for technical services under Section 44D read with Explanation 2 to Section 9(1)(vii) OR payments be taxable on a presumptive basis under Section 44BB - HELD THAT:- The said issue has already been decided in favour of the assessee by the Hon’ble Supreme Court of India in assessee’s own case [2015 (7) TMI 91 - SUPREME COURT] held that the dominant purpose of each of such agreement is for prospecting, extraction or production of mineral oils though there may be certain ancillary works contemplated there-under. If that be so, we will have no hesitation in holding that the payments made by ONGC and received by the non-resident assesses or foreign companies under the said contracts is more appropriately assessable under the provisions of section 44BB and not section 44D. - decided in favour of assessee
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2015 (12) TMI 1788 - ITAT MUMBAI
Disallowance u/s. 14A read with Rule 8D(2)(iii) - CIT(A) upholding the disallowance of administrative expenses made by AO on investment in shares - whether the entire administrative expenses was incurred by the assessee for the purpose of investment in shares? - HELD THAT:- We compared the heads of accounts of the expenses of the administrative and other expenses and in comparison we find majority of expenses claimed by the assessee are more or less on same accounts, i.e., auditors remuneration, depreciation, legal and professional fees, business support fees etc.
On perusing the schedule “L” related to administrative expenses we find none of the accounts are prima facie directly identifiable as one meant for earning the exempt of income. Some of the expenses so claimed in the schedule related to other business expenses. Similar is the case with the other appeals under consideration as well.AO mechanically applied the provisions of Rule 8D(2)(iii) without examining the books of accounts of assessee and therefore, the addition is unsustainable in law. See CAPE TRADING P. LTD. VERSUS ASSTT. COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE – 29, MUMBAI [2015 (8) TMI 211 - ITAT MUMBAI] - Decided in favour of assessee
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2015 (12) TMI 1787 - BOMBAY HIGH COURT
Interest paid on borrowings disallowance - HELD THAT:- This question stands concluded against the revenue as decided in earlier AY 1999-00
Treatment to sales tax incentive subsidy - revenue or capital subsidy - HELD THAT:- As the entire issue for the A.Y.2000-01 is still at large to be decided by the Assessing Officer consequent to the impugned order of the Tribunal the question as proposed does not give rise to any substantial question of law. Hence not entertained.
Transfer to Debenture Redemption Reserve to be excluded in computing book profits u/s 115JA - MAT - HELD THAT:- Issue covered against the revenue by the decision of this Court in CIT vs Raymond Ltd [2012 (4) TMI 127 - BOMBAY HIGH COURT]. In the above view, the question as proposed does not give rise to any substantial question of law
Allowability of sum paid by the Assessee Company to Himachal Pradesh State Electricity Board for setting up of Kangoo Power Sub-station - HELD THAT:- The revenue having accepted the decision of the Tribunal for assessment year 1999-00 on this issue by not having challenged the same, cannot now challenge the impugned order in the absence of any specific ground being made out justifying challenging the impugned order on this issue, when it is accepted for A.Y.1999-00. Accordingly, question G does not give rise to any substantial question of law.
Claim of expenditure in respect of temporary structures - revenue or capital expenditure - HELD THAT:- We find that both the CIT (A) as well as the Tribunal have rendered a finding of fact that the structure was constructed at the client's site and was temporary in nature. Further they have also rendered a finding that the temporary structure is necessary for the purpose of carrying out its business more efficiently and would be considered being an integral part of its profit earning process. Thus there is no advantage of enduring nature.
Expenditure incurred on construction of stadium - HELD THAT:- We find that the test of allowing such expenditure as laid down by the Supreme Court in SRI VENKATA SATYANARAYANA RICE MILL CONTRACTORS VS. CIT [1996 (10) TMI 2 - SUPREME COURT] that where the payment is out of commercial expediency and above board such expenses are to be considered to have been incurred in the course of business. Therefore allowable as an expenditure under Section 37 (1) of the Act as allowing an expenditure of commercial expediency and not whether it is compulsory or voluntary. On application of the above test, the view taken by the impugned order of the Tribunal is a possible view.
Appeal admitted on Questions nos. A, B and E.
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2015 (12) TMI 1786 - ITAT DELHI
Maintainability of appeal - monetary limit - HELD THAT:- CBDT has issued Circular No.21 of 2015 dated 10.12.2015, vide which it has revised the monetary limit to ₹ 10,00,000/- for not filing the appeal before the Tribunal.
From Clause 10 of the above circular it is clear that these instructions are applicable to the pending appeals also and there is clear cut instruction to the department to withdraw or not to press the appeals filed before the ITAT wherein tax effect is less than ₹ 10,00,000/-. These instructions are operative retrospectively to the pending appeals.
CBDT Circular No.21 of 2015 dated 10.12.2015 and also the provisions of Section 268A of Income Tax Act, 1961, we are of the view that the Revenue should not have filed the instant appeal before the Tribunal - We dismiss the appeal filed by the department.
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2015 (12) TMI 1785 - ITAT DELHI
Maintainability of appeal - monetary limit - tax effect involved in the appeals of the Revenue is less than ₹ 10 lac - Held that:- There is no necessity for adjourning the appeals as the tax effect involved in the appeals of the Revenue is less than ₹ 10 lac the oral request was rejected. However, by way of abundant caution liberty is granted to the Revenue that in case on receipt of the order the Assessing Officer finds that the tax effect is above ₹ 10 lac or in any other manner the Circular is not applicable, he would be at liberty to file a Miscellaneous Application pointing out these facts. We also taking note of the concerns expressed by the ld.CIT, DR and make it clear that as a result of the dismissal of the Revenue’s appeals on the ground of tax effect the said order would not act as a precedent where the tax effect is more in any subsequent or prior year where the Revenue would want to agitate the issues on similar grounds before the ITAT on merit. - Decided against revenue
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2015 (12) TMI 1784 - ITAT MUMBAI
Disallowance on account of film preview expenses - Held that:- AO has not pointed out that the expenditure claimed by the assessee is excessive or abnormal in comparison to the normal expenditure being incurred on such exhibition of movie in the pre-release preview. The assessee produced complete details of the expenses though most or the expenses are incurred in cash, We find that keeping in view the nature of the expenses the payment in cash is inevitable for certain expenses which are on spot and for the purpose of snakes, refreshment, etc. The assessee has produced the vouchers which includes sell-made vouchers as well as the third party vouchers wherein the name of the movie is given. When the name of the movie and name of the theater is given, then the vouchers issued by the third party cannot be doubted. It is worth to be noted that the disallowance is restricted by the DRP is not based on the ground that it is excessive but for want of proper vouchers therefore, we find that the ad-hoc disallowance is not justified when the expenditure is not found to be excessive and the purpose and the occasion on which the expenditure was incurred is not disputed.
Disallowing legal expenses - disallowance made on the ground that the assessee was not able to substantiate these expenses with the help of complete evidences - Held that:- It is noted that this issue has been sent back by the Tribunal in A.Y. 2009-10 to the file of the AO with some directions. We find it appropriate to send this issue back to the file of the AO in pursuance to the order. We also direct the AO to follow the directions as given by the Tribunal in A.Y. 2009-10 as far as may be applicable on the facts of the case of this year. With these directions this issue is sent back to the file of the AO. Thus, ground no. 2 is allowed for statistical purposes.
Disallowance of expenses incurred by the assessee on foreign travelling - Held that:- It is noted by us that these expenses pertained to the foreign visit of Mr. Sanjay Gupta, director, of the company, on the ground that no evidence was submitted to establish business purpose for incurring these expenses. Before us also no such evidence has been produced and therefore, we have no option but to confirm the disallowance. Accordingly, disallowance is confirmed and Ground No. 3 is dismissed.
Disallowing incurred on Travelling, Advertising and Printing & Stationery expenses @ 5% on ad hoc basis by treating the same as personal expenditure - Held that:- We find that the assessee has submitted bills/vouchers as were maintained by it in regular course of business. If the AO was not satisfied with any particular items of expenses, he could have pointed it out to the assessee for inviting its response. In case AO was not satisfied with response of the assessee, then the same could have been considered for the disallowance. There should not be a practice of making an ad-hoc disallowance on the ground of personal expenditure, because there is no concept of personal expenditure in the case of a company. The company is a separate legal juristic person. In case any expenses are incurred on behalf of director or any other senior employees, then the same is liable to be taxed in the hands of the said person as part of perquisite/remuneration, as per law. In our considered view, disallowance had been made beyond the provision of law and therefore same is directed to be deleted. We find our support from the judgment in the case of Sayaji Iron and Engg. Co. (2001 (7) TMI 70 - GUJARAT HIGH COURT). Thus ground no. 4 is allowed.
Disallowing u/s 36(1)(iii) on proportionate interest expenditure - Held that:- We find that there being sufficient interest free own funds in possession of the assessee, no presumption should be drawn that the assessee has given the disallowance out of interest bearing funds only. Further, the amount has been invested with subsidiary of the assessee company and thus taking support from the judgment of Hon'ble Supreme Court in the case of S.A. Builders Ltd. (2006 (12) TMI 82 - SUPREME COURT) it can be said that no disallowance would be made if the amount has been advanced for the strategic business needs. The assessee has submitted copy of resolution signifying its business necessity. Taking in to account all the aforesaid facts and circumstances of the case, we find that the said disallowance is not sustainable as per law.
Disallowance u/s 14A, read with rule 8D - Held that:- We find that all these issues go to the root of the matter. These have not been properly dealt with by the DRP. The mind of the AO could also not be applied on all these issues at all. The assessee also could not get proper opportunity to explain this issue with proper evidences. There has been lot of development in the legal position with respect to all the contentions raised by the Ld. Counsel. These judgments which have been relied upon by the Ld. Counsel were not available before the AO/DRP. Therefore, for thrashing out the facts properly, and to meet ends of justice and in all fairness, we deem it appropriate to send this issue back to the file of the AO who shall decide this issue afresh. Needless to add, the AO shall offer proper opportunity to the assessee to file requisite details and documents, as per law. The AO shall take into account complete factual material and shall also consider the judgments as may be available at the time of deciding this issue afresh. With these directions, this issue is sent back to the file of the AO. This ground is allowed for statistical purposes.
Notional interest on the amount routed by the assessee company through its Dubai subsidiary for the purpose of its business - Held that:- This issue is entirely dependent upon the A.Y.2009-10 which has been disposed by the Tribunal. We have gone through the order of the Tribunal and find that the disallowance was made in the assessment year2009-10 on loan given to the same party. In this year, no fresh loan has been given rather amount of loan has been reduced on account of part payments received back from the said party. It is noted from the order of the DRP that opening balance due from the said party at the beginning of the year was ₹ 106.52 crores which was reduced to ₹ 73.96 crores at the end of the year. It is further noted that Hon'ble Tribunal in A.Y. 2009-10, after making detailed discussion held that the addition was illegal and therefore the same was deleted
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2015 (12) TMI 1783 - ITAT MUMBAI
Nature of receipt - incentive/subsidy received from the Central & State government - to be treated as revenue receipt or capital receipt - Held that:- The schemes launched was for setting up of new industries in the district of Kutch for the purpose of new employment opportunities and to make industrial and economic environment live. Thus, the scheme of incentives provided by the respective Governments was setting-up of a new unit and not for running of the business more profitably.
As said in PONNI SUGARS & CHEMICALS LTD. [2008 (9) TMI 14 - SUPREME COURT] the form and the source of subsidy are immaterial and what is material is whether the subsidy is for setting up for a industrial unit or running it for profitability. Similarly, the Central Excise exemption was given in the public interest for setting up of a new industrial unit in the Kutch District. Accordingly on the facts of the present case, we conclude that the incentive given by the State Government and the Central Government is nothing but capital receipts, because applying the “purpose test” the incentive / subsidy was given only for setting up of new industrial unit and economic development and generation of new employment opportunities in the Kutch District and not for running the industry for augmenting the profit on day-to-day business. Thus, We hold that the amount of incentive received by the assessee cannot be taxed as revenue receipt as it is purely on capital account.
Other plea raised by the AO in the order passed u/s 143(3) r.w.s. 153A, we agree with the contention of the Ld. Counsel that, none of the plant and machinery installed by the assessee for setting up of a new industrial unit has been funded by the Government subsidy. The subsidy here in this case is not specifically intended to subsidies the cost of capital or plant & machinery. The incentive in the form of subsidy by the government here in this case cannot be considered as payment directly or indirectly to meet any portion of the actual cost and hence it does not fall within the purview of Explanation 10 to section 43(1). Thus, this alternative plea as raised by Ld. AO is rejected - Decided n favour of assessee
Claim of prior period expenses - Held that:- Whole issue relating to prior period expenses is set aside to the file of the AO to be decided afresh after giving due opportunity to represent its case.
Disallowance u/s 14A - Held that:- We agree in principle with the Ld. Counsel that in case, assessee has own surplus fund which are in far excess of investment made, then no disallowance of interest should be made and this view stands covered by the decision of Hon’ble Bombay High Court in the case of HDFC bank Ltd.[2014 (8) TMI 119 - BOMBAY HIGH COURT]. Accordingly, the AO is directed to verify this contention and grant relief so far as interest disallowance is concerned. Further, the AO is also directed to apply the principles laid down by Delhi High Court in the case Chem Invest [2015 (9) TMI 238 - DELHI HIGH COURT] inasmuch as if there is no exempt income then, no disallowance should be made. - Appeal allowed for statistical purposes.
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2015 (12) TMI 1781 - ITAT MUMBAI
TPA - comparable selection - ‘M/s. Man Diesel India Limited’, as comparable company - Held that:- The undisputed facts on record are that the aforesaid company was having RPT transactions which appear to be well above the accepted limits. Requisite documents evidencing these facts are already held on record. But, these facts were not examined by the lower authorities. In view of the judgments relied upon by the Ld. Counsel, we find that since this issue goes to the root of the matter, the assessee should be given opportunity to raise a legal plea even at this stage before the Tribunal. In all fairness and to meet ends of justice, we find it appropriate to send this issue back to the file of AO/TPO for a fresh decision with respect to the said company.
The assessee shall put forth all requisite material before the AO/ TPO in support of its claim, for which proper opportunity should be provided. With these directions, we send this issue back to the file of the AO/TPO. Thus, additional ground is treated to be allowed for statistical purposes.
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2015 (12) TMI 1780 - KARNATAKA HIGH COURT
Depreciation on investments on government securities "held to maturity" - whether such securities were held as a investments and not as 'stock-in-trade'? - Held that:- Appearing for the parties agree that the point in issue is covered by the decision of this Court in KARNATAKA VIKAS GRAMEEN BANK [2015 (12) TMI 1420 - KARNATAKA HIGH COURT] as held assessee was following the method of accounting namely, "at cost or market value, whichever is lower". It is not in dispute that this practice was accepted by the Revenue throughout - notwithstanding the preparation of the balance sheet and describing the security under a particular nomenclature in compliance with the directions/instructions issued by the RBI, the assessee would be lawfully entitled to submit the tax returns on the real taxable income in accordance with the method of accounting consistently and regularly adopted.- Decided in favour of assessee.
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2015 (12) TMI 1779 - ITAT DELHI
TPA - whether the internal comparables should be adopted over external comparables for the purposes of computing ALP, in respect of transaction pertaining to export of goods - TNMM has been accepted by both the parties as MAM - Held that:- Internal comparables are to be preferred to external comparables. There is no dispute that the assessee has internal comparables. Geographical differences are not relevant when FOB price is considered.
Set aside the matter to the TPO with a direction to consider the sale in respect of export to AE’s at FOB value. Even otherwise, except for export to Germany, there are no geographical variations. The ld.TPO is directed to apply internal comparables, at FOB value, as in his view, this value is the comparable value. The assessee is directed to furnish the audited financials of the segmental accounts - Restore the issue to the files of the TPO/AO, for fresh adjudication of the ALP, as per the directions given herein - Decided in favour of assessee for statistical purposes.
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2015 (12) TMI 1777 - ITAT CHENNAI
Maintainability of appeal - tax effect - Held that:- On hearing the Ld. Departmental Representative, we find that the tax effect in these cases is less than ₹ 10 lakhs. The CBDT in its Circular No.21/2015 dated 10.12.2015 instructed its officers to withdraw all the appeals pending before the ITAT where the tax effect is less than ₹ 10 lakhs. This Tribunal is of the considered opinion that this Circular of CBDT is binding on the officers of the Department. Therefore, the Revenue cannot proceed further in these appeals. Accordingly, these appeals stand dismissed. - Decided against revenue.
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2015 (12) TMI 1771 - TELANGANA AND ANDHRA PRADESH HIGH COURT
Recovery of tax dues - income tax demand of ₹ 1468.64 crores - attachment of stock stocks of beer, foreign liquor (FL), and Indian made foreign liquor (foreign liquor), lying in the various godowns of APBCL. - Companies, which manufacture and supply beer, foreign liquor and Indian made foreign liquor to APBCL, invoked the jurisdiction of this court, under article 226 of the Constitution of India, contending that the stocks lying in the godowns of APBCL (which were attached by the Income-tax Department) belonged to them ; and any delay in the sale of the attached stock of beer would result in wastage of the entire stock. - The sale of the attached property (beer, foreign liquor and Indian made foreign liquor), in terms of the interim orders passed by this court, yielded ₹ 489.07 crores.
Under the guise of deducting manufacturing expenses, and incidental expenses for delivery, almost the entire sale proceeds of ₹ 489.07 crores has been handed over by APBCL to the petitioners and the Government of A.P, leaving a paltry sum of ₹ 3.44 lakhs (rupees three lakhs forty-four thousand only) as the balance remaining in the separate account being maintained in terms of the interim orders passed by the Division Bench. - These acts of subterfuge has rendered the attachment order, passed by the Tax Recovery Officer, redundant for, even if the writ petitions were to be dismissed later, the Income-tax Department would be left only with ₹ 3.44 lakhs
Whether an interlocutory order, which travels beyond even the main relief sought for in these writ petitions and, in effect, results in the writ petitions being allowed, without even a counter-affidavit being filed by the respondent-Income-tax Department, can be passed at the stage of admission of the writ petitions?
Held that:- Power to grant ad interim ex parte orders should be exercised with great circumspection - Ordinarily ad interim orders, which have the effect of granting the main relief itself, should not be passed - Interim orders should not be passed for the mere asking.
Are the parameters for grant of, and in continuing, the interim orders, fulfilled in the present cases? - Held that:- Courts have to strike a balance between two extreme positions, on the one hand whether the writ petition would itself become infructuous if interim order is refused, and the enormity of losses and hardships which may be suffered by others if an interim order is granted, particularly having regard to the fact that, in such an event, the losses sustained by the affected parties thereby may not be possible to be redeemed - Before an interim order is passed, the court must consider the question as regards existence of a prima facie case, balance of convenience, and whether the Writ petitioners would suffer irreparable injury, if the interim relief sought for is refused.
Has a prima facie case been made out in the present batch of writ petitions? - Held that:- As the writ petitions have already been admitted, it must, necessarily, be presumed that the petitioners have made out a prima facie case. The fact, however, remains that a strong prima facie case, of a standard much higher than just a prima facie case, must be made out for an interim order to be passed, which would amount to granting the final relief in the writ petition. We are afraid that the petitioners have not made out a strong prima facie case for the grant of such relief.
Does the balance of convenience lie in favour of the petitioners, and would they suffer irreparable injury if the interim orders are vacated? - Held that:- Considerations of balance of convenience, and irreparable injury, forcefully tilting the balance totally in favour of the petitioners, would alone justify granting a final relief by way of an interim order. While the balance of convenience may be in favour of retaining the sale proceeds in a separate account, and the amount therein to be paid to the person held entitled thereto on the writ petitions being finally heard and decided, it is certainly not in favour of the petitioners being paid the entire sale proceeds even without an adjudication of their claim that they continue to retain title over the goods even after its delivery to APBCL - As the petitioners could have been paid these amounts later also, there were no compelling circumstances, for APBCL not to retain the sale proceeds in a separate bank account, otherwise than on account of the interim orders passed by this court earlier. The interim orders, to the extent it permitted the manufacturing expenses and incidental expenses for delivery, to be adjusted from the sale proceeds must be, and is hereby, vacated.
As a substantial part of the sale proceeds have already been paid by APBCL to the petitioners and the Government of Andhra Pradesh, what orders can this court pass consequent upon the interim orders, passed earlier, being vacated in part ? An order of stay, granted pending disposal of a writ petition or other proceeding, comes to an end with the dismissal of the substantive proceeding. It is the duty of the court, in such a case, to put the parties in the same position they would have been but for the interim order of the court, applying the doctrine of restitution. The jurisdiction to make restitution is inherent in every court, and should be exercised whenever justice of the case demands.
The petitioners herein and the Government of Andhra Pradesh shall forthwith and, in any event, on or before January 20, 2016, redeposit the amounts received by them from APBCL on the sale of the stocks (beer, foreign liquor and Indian made foreign liquor) attached by the Income-tax Department. Such redeposit would ensure that the entire sale proceeds (i.e., ₹ 489.07 crores less the TDS of ₹ 4.81 crores) remain in the separate account directed to be maintained by this court. The interests of the petitioners, the Income-tax Department, and the Government of Andhra Pradesh would be secured thereby as, after the writ petitions are finally heard and decided, these amounts can be paid to those entitled thereto. - The amount lying in the separate account, after redeposit of the amounts as directed hereinabove, shall be invested by the APBCL in short- term cumulative fixed deposits, and proof thereof shall be furnished to the Income-tax Department latest by January 26, 2016. The amounts invested in fixed deposits shall be subject to the result of the writ petition.
Petition disposed off.
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2015 (12) TMI 1770 - BOMBAY HIGH COURT
Assessment of income from the sale of 18 flats - selection of assessment year - “transfer” in terms of Section 2(47) - Held that:- Tribunal was justified in holding that the income from the sale of 18 flats to M/s Audi Constructions Pvt. Ltd., is not assessable in the year 2008-2009 as on the basis of the facts on record, the learned Tribunal found that the assessee had not delivered the possession of the flats to M/s Audi Constructions Pvt. Ltd. in the subject year. Tribunal also found that it is not the case of the appellant that the agreements executed by assessee are bogus or fictitious upon appreciating the evidence on record and as such, there is no substantial question of law which can arise in the above appeals as this Court in the present appeals cannot reappreciate the evidence on record.
Tribunal also refused the contention of the appellant upon appreciating the evidence on record to come to the conclusion that the provisions of Section 2(47) have not been satisfied. Substantial questions of law proposed by the appellant as such would require re-appreciation of evidence which exercise cannot be done in the above appeals under Section 260A of the Income Tax Act as the learned counsel appearing for the appellant as pointed out herein above has failed to show that there is any perversity in such findings or that any material evidence has been discarded or that the learned Tribunal has come to such conclusion by misreading the evidence on record.
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2015 (12) TMI 1769 - DELHI HIGH COURT
Claim of loss for the diminution in value of fertilizer bonds against the sale of fertilizers - Held that:- The assessment order itself shows that in its books, the Assessee categorised the bonds under the head ‘current investment assets’. In that view of the matter, the diminishing value of the bonds not being held as long term investment was in the nature of a revenue loss and could have been claimed as such by the Assessee. The stand of the Revenue that this was only a notional loss and not allowable, is not tenable since bonds held as stock-in-trade can be valued at market rate or cost whichever is less.
Disallowance u/s 14A - claim of the Assessee that it incurred no expenditure, other than the administrative expenses, for earning dividend income - Held that:- Under Section 14A(2) of the Act read with Rule 8D of the Income Tax Rules, 1962 the Assessing Officer is required to make an enquiry if he is not satisfied with the correctness of the claim of the Assessee in respect of such expenditure in relation to income which does not form part of the total income. In the present case it has been averred by the Assessee, and not contradicted by the Revenue, that no interest expenditure has been incurred by it for earning the exempt income. There was no basis for the AO to have disallowed any part of such income on that score. No substantial question of law arises
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2015 (12) TMI 1768 - ITAT AHMEDABAD
Disallowance of 50% of the indirect expenses incurred in cash - AO has passed ex parte assessment order u/s 144 - Best Judgement assessment - Held that:- Assessing Officer must not act dishonestly or vindictively or capriciously. He must make, what he honestly believe to be a fair estimate of the proper figure of assessment and for this purpose he must be able to take into consideration, local knowledge, reputation of the assessee about his business, the previous history of the assessee or the similarly situated assessee. It is also pertinent to mention that judgment is a faculty to decide matter with wisdom, truly and legally. Judgment does not depend upon the arbitrary, caprice of an adjudicator, but on settled and invariably principles of justice. Thus, in a best judgment, even if, there is an element of guess work, it should not be a wild one, but shall have reasonable nexus to the available material and circumstances of each assessee.
Admittedly the assessee was not in a position to produce supporting evidence, then ad hoc disallowance on account of such failure ought not to be made more than 20% of the expenses. - Decided partly in favor of assessee.
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2015 (12) TMI 1767 - ITAT PUNE
Scrutiny / regular assessment u/s 143(3) - validity of issue of notice - effect of revision of belated return - section 139(4) r.w.s. 139(5) - period of limitation - additions towards capital gains - long term or short term capital gain - Held that:- A perusal of sub-section (5) of section 139 would show that the provisions relating to filing of revised return are applicable only to the return filed u/s. 139(1) or return of income filed in pursuance to notice u/s. 142(1) of the Act. A bare reading of the provisions of sub-section (5) of section 139 makes it unambiguously clear that belated return filed under the provisions of section 139(4) cannot be revised.
Since, the revised return filed by the assessee is invalid and non-est in eye of law, the period of limitation for issuing notice u/s. 143(2) has to be calculated from the date of filing of original return. The original return was filed on 12-12-2008 i.e. in the financial year 2008-09 the period of limitation for issuing notice u/s. 143(2) with reference to original return comes to an end on 30-09-2009. Therefore, the notice was clearly issued beyond the statutory period of limitation.
Since, the notice issued u/s. 143(2) is barred by limitation, no valid assessment could have been made on the assessee by Assessing Officer in the absence of valid notice u/s. 143(2) of the Act.
Decided in favor of assessee.
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2015 (12) TMI 1766 - ITAT MUMBAI
Disallowance u/s 14A - expenses related to exempt incomes - assessee company received interest income on tax free bonds, income tax refund and fixed deposits - assessee company also claimed divided income - The assessee company submitted that out of abundant caution and to buy peace of mind and to avoid litigation , the assessee company has voluntarily offered for disallowance of expenditure of ₹ 14,42,900/- us/ 14A of the Act which includes ₹ 5,13,278/- suo moto disallowed in the return of income filed with the Revenue .The assessee company submitted that AO erred in saying that the assessee company has not offered for disallowance any expenditure u/s 14A of the Act in the return of income filed with the Revenue while fact of the matter is that the assessee company disallowed expenditure of ₹ 5,13,278/- u/s 14A of the Act.
Held that:- The contentions of the assessee company that the CIT(A) has accepted the method of computation adopted by the assessee company for assessment year 2005-06 and 2006-07 can not be accepted as first of all principles of res-judicata are not applicable to income tax proceedings, Secondly Rule 8D of Income tax Rules, 1962 is applicable from assessment year 2008-09.
On merits based on facts and circumstances of the case , we have observed above that the substantial activity of the assessee company is to make investments and substantial amount of revenue stream for the assessee company is from dividends and interest income which are exempt from tax. Thus, most humbly we reject the contentions of the assessee company and we uphold the disallowance of total expenditure of ₹ 43,48,277/- made by the AO under Section 14A of the Act read with Rule 8D of Income Tax Rules, 1962 , in the case of the assessee company keeping in view the peculiar facts and circumstances of the case.
Decided against the assessee.
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2015 (12) TMI 1764 - DELHI HIGH COURT
Claim of assessee with respect to club charges (one time entry fees) - revenue v/s capital expenditure - Held that:- Revenue does not dispute that Issue (iv) concerning one time club entry charges has been held to be a revenue expenditure and is covered in favour of the Assessee by the decision of this Court in CIT v. Samtel Color Ltd. [2009 (1) TMI 26 - DELHI HIGH COURT].
Rate of depreciation on computers and peripherals is covered in favour of the Assessee by the decision of this Court in Commissioner of Income Tax v. BSES Yamuna [2010 (8) TMI 58 - DELHI HIGH COURT].
TPA - ITAT allowing the exclusion of Vapi and WAPCOS as comparables and holding that they are not functionally comparable - Held that:- Court finds that while the Assessee provides marketing support services, the first excluded company WASCOS, as a comparable, provides engineering consultancy services and the second excluded company Vapi provides consultancy for water resource management. The reasons given by the ITAT for exclusion of those two entities as comparables appears, therefore, to be fully justified on facts as well as in law. No substantial question of law arises.
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2015 (12) TMI 1763 - PUNJAB AND HARYANA HIGH COURT
Addition made on account of interest income from investment in Co-Operative Societies u/s. 80P(2)(d) - A.O. computed the disallowance u/s. 14A r.w.r. 8D - Held that:- The matter is no longer res integra. This Court in The Punjab State Cooperative Milk Producers Federation Limited vs. Commissioner of Income Tax II [2011 (3) TMI 615 - PUNJAB AND HARYANA HIGH COURT] as held as per the bye-laws of the appellant- Federation, deductions were admissible to it under section 80P(2)(a)(i) of the Act on the income derived by it from its members by way of interest on its investments as loan and advances for their working capital - assessee is entitled to deduction under section 80P(2)(d) of the Act after excluding the expenditure attributable to the earning of such income - It may be noticed that section 80P was inserted in place of section 81 which was simultaneously deleted by Finance (No. 2) Act, 1967, with effect from 1-4-1968
Regarding Section 14A - on consideration of facts involved therein had concluded that there was no expenditure which had been incurred by the assessee for earning the income and the same did not form part of total income - Decided against the assessee
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