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Income Tax - Case Laws
Showing 141 to 160 of 934 Records
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2019 (3) TMI 1752 - ITAT PUNE
Reopening of assessment u/s 147 - addition in the hands of assessee for 50% share in investments - acquisition of land by HUF OR individual members - whether owners of land in question were two HUFs and not the assessee in his individual capacity - HELD THAT:- The assessee has time and again stressed that the said property does not belong to him but is the asset of HUF and other 50% is owned by Jugalkishore Kundanmal Rathi (HUF). The assessee has filed on record sufficient evidence to establish its case in this regard. Merely because the document was recorded in the individual names does not change the status of its holding by HUF. This aspect of acquisition of land by HUF and thereafter on completion of construction on the aforesaid land, the profits being offered by respective HUFs needs deliberation by the Assessing Officer. Accordingly, we remit this issue back to the file of Assessing Officer, who shall decide the issue after affording reasonable opportunity of hearing to the assessee. Even the assessee is directed to co-operate and furnish the complete information before the Assessing Officer with supporting evidence in order to establish its case. AO shall decide the issue in accordance with law. Hence, the grounds of appeal raised by assessee are allowed for statistical purposes.
Re-assessment u/s 147/148 - reasons recorded for reopening of assessment are on the basis of opinion of the DVO, which could not be constituted sufficient material to reopen the assessment in the hands of assessee - assessment years 2008-09, 2009-10 and 2011-12 - HELD THAT:- Assessment has been reopened in the hands of assessee on the basis of DVO report vis-à-vis unexplained investment into construction of apartment building and hospital building by the assessee, can the reopening be sustained. The answer to the said is ‘No’.
In ACIT Vs. Dhariya Construction Company [2010 (2) TMI 612 - SC ORDER]has laid down the proposition that where the Department had sought reopening of assessment based on the opinion given by the DVO; the opinion of DVO perse was not information for the purpose of reopening the assessment under section 147 of the Act. AO had to apply his mind to the information, if any, collected and must form a belief thereon. Department was not entitled to reopen the assessment.
In the facts of present case before us, the issue is identical where the basis for reopening the assessment by the Assessing Officer is opinion of the DVO i.e. valuation report of the DVO estimating cost of construction of the property by the assessee in the respective years. AO on the basis of such report of the DVO has reopened the assessment and has proceeded to complete assessment proceedings against the assessee. Where the basis for reopening is report of the DVO, then applying the ratio laid down by the Hon’ble Apex Court in ACIT Vs. Dhariya Construction Company (supra), we hold that the AO is not entitled to reopen the assessment on the basis of such opinion of the DVO.- Decided in favour of assessee.
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2019 (3) TMI 1745 - ITAT MUMBAI
Disallowance u/s.14A of the Act read with Rule 8D(2)(iii) - HELD THAT:- It is not in dispute that the AO had duly recorded his satisfaction for ignoring the said workings and resorted to computation mechanism under rule 8D of the rules. The arguments advanced by the AR before us has got lot of force in as much as the investments made in foreign companies should be excluded ; the disallowance voluntarily made by the assessee should be excluded while computing the final disallowance u/s.14A and disallowance under third limb of rule 8D of the rules should be restricted to only those investments which had actually fetched dividend income by the assessee during the year. We find that the issue of investments made in the category of strategic investment have already been held against the assessee by the recent decision of Hon’ble Supreme Court in the case of Maxopp Investments Ltd., vs CIT [2018 (3) TMI 805 - SUPREME COURT]
We direct the Ld. AO to consider only those investments which had actually yielded dividend income to the assessee during the year for computing the disallowance under third limb of rule 8D(2) towards administrative expenses and from the figure arrived thereon, the Ld. AO should reduce the disallowance already made in the sum of ₹ 27,70,985/- while giving effect to this order. The disallowance however, should be restricted to the minimum of ₹ 27,70,985/- made voluntarily by the assessee. Accordingly, grounds Nos.1 to 4 raised by the assessee are partly allowed for statistical purposes.
Disallowance u/s.14A of the Act while computing book profits u/s.115JB - HELD THAT:- In the instant case, the assessee had culled out the actual expenses incurred in the sum of ₹ 27,70,985/- as being expenditure incurred for the purpose of earning exempt income, which, in our considered opinion, should be disallowed while computing the book profits u/s.115JB of the Act.
We find that the assessee placed reliance on certain orders of this Tribunal in its own case for the earlier years wherein disallowance at certain percentage of dividend income had been sought to be disallowed u/s.14A. We find that in the instant case, the Ld. AO had duly recorded his satisfaction and resorted to computation mechanism provided in the statement under Rule 8D(2) of the rules which cannot be found fault in the facts of instant case. Accordingly, the arguments advanced by the assessee and the Ld. AR in this regard are dismissed. Accordingly, the grounds raised by the assessee are partly allowed for statistical purposes.
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2019 (3) TMI 1744 - ITAT PUNE
Claim u/s. 36(1)(vii) on account of write off of debts by non rural branches of assessee Bank disallowed - HELD THAT:- Since, the issue in present appeal is identical to the one already considered by the Co-ordinate Bench in assessee‟s own case [2014 (10) TMI 210 - ITAT PUNE] and there has been no change in the facts, we deem it appropriate to restore the issue to Assessing Officer for re-adjudication with similar directions. The ground No. 1 of the appeal is allowed for statistical purpose in the same terms.
Deduction u/s. 36(1)(viia) to the extent of provision made in the books of account for bad and doubtful debts u/s. 36(1)(viia) of the Act to be allowed.
Disallowance of the claim of loss as per securities trading account held under HTM category - HELD THAT:- In assessee‟s own case [2014 (10) TMI 210 - ITAT PUNE] Plea of the learned CIT-DR is quite untenable primarily because the very nature of banking activities allowed as per the Banking Regulation Act, 1949 are in the sphere of business / trade activities; and, accordingly the recognition of investments in HTM category as “stock-in-trade‟ is not dependent on the frequency of their sale / purchase carried out by the assessee-bank. We, therefore, conclude by holding that in the present case the method of valuation of the closing stock adopted by the assessee i.e. cost or market value, whichever is lower is fair and proper and the income-tax authorities have erred in not accepting the same. The orders of the authorities below on this aspect are hereby reversed.
As decided in BANK OF MAHARASHTRA [2018 (3) TMI 316 - BOMBAY HIGH COURT] Tribunal was justified in deleting the addition in allowing loss of valuation of Held to Maturity (HTM) securities, when HTM securities are capital in nature
Disallowance u/s. 14A - contention of the assessee is that the investments were held by the assessee as stock in trade, therefore, no disallowance u/s. 14A was required to be made in respect of exempt income earned on shares held as “Stock in trade” - HELD THAT:- The Hon‟ble Apex Court in the case of Maxopp Investment Ltd. Vs. Commissioner of Income Tax [2018 (3) TMI 805 - SUPREME COURT] has approved the judgment rendered in the case of Pr. Commissioner of Income Tax Vs. State Bank of Patiala [2017 (2) TMI 125 - PUNJAB AND HARYANA HIGH COURT] Therefore, in view of the law settled by the Hon‟ble Apex Court, no disallowance u/s. 14A is warranted in respect of shares held by the assessee as stock in trade.
Since, the disallowance u/s. 14A has been set at naught on the ground of assessee holding the investment as “stock in trade‟, the alternate contention of assessee with regard to disallowance made under Rule 8D(2)(ii) in respect of interest expenditure has become academic. Thus, in view of our above findings ground No. 6 raised in the appeal by the assessee is allowed.
Disallowance of provision for wage revision - wage revision liability is not ascertained as on 31-03-2010 - HELD THAT:- In the present case the authorities below have erred in coming to the conclusion that the liability has not crystallized in the assessment year under appeal as there was no quantification of payment of wages. The creation of liability and quantification of liability are two different stages. As soon as the liability is crystallized, it is no more contingent. The quantification and discharge of liability is the second stage which can happen in future. Thus, we find merit in the ground raised by assessee. Accordingly, the claim of assessee in respect of provision for wage arrears is accepted.
Eligibility for claiming deduction u/s. 36(1)(viii) - HELD THAT:- The deduction has been denied to the assessee for the reason that the assessee has failed to furnish relevant documents to claim such deduction. On the contrary the contention of the assessee is that all the relevant documents were furnished before the Assessing Officer. Without further going into the merits, the Assessing Officer is directed to examine the documents furnished by the assessee and thereafter decide the issue de novo, after affording reasonable opportunity of hearing to the assessee, in accordance with law. Thus, the ground No. 8 is allowed for statistical purpose.
Disallowance u/s. 40(a)(ia) - short deduction of tax at source - HELD THAT:- Hon‟ble Calcutta High Court in the case of Commissioner of Income Tax Vs. S K Tekriwal [2012 (12) TMI 873 - CALCUTTA HIGH COURT] has held that the provision of section 40(a)(ia) are not attracted where there is short deduction of tax. The provision of section 40(a)(ia) apply where no tax has been deducted at source. Thus, in view of the law laid down in the case of Commissioner of Income Tax Vs. S K Tekriwal (supra) no disallowance u/s. 40(a)(ia) is warranted.
Depreciation on UPS is restricted to 60% - See M/S. SARASWAT INFOTECH LTD. [2013 (1) TMI 861 - BOMBAY HIGH COURT]
Disallowance of interest on NPAs - HELD THAT:- The issue is no more res integra. The assessee has created a provision in the P & L account on account of interest on NPAs and has claimed the same during the period relevant to the assessment year under appeal. The issue is squarely covered in favour of the assessee by the decision rendered in the case of Commissioner of Income Tax Vs. Deogiri Nagari Sahakari Bank Ltd. [2015 (1) TMI 1218 - BOMBAY HIGH COURT] . The Hon‟ble High Court following the decision of Hon‟ble Apex Court in the case of UCO Bank Vs. Commissioner of Income Tax [1999 (5) TMI 3 - SUPREME COURT] held that interest on sticky loans has to be allowed. Thus, in view of the aforesaid decision the ground No. 11 raised in the appeal by the assessee is allowed.
Applicability of MAT provisions u/s. 115 JB on assessee bank - HELD THAT:- The said provisions are invoked only in respect of companies. The assessee is a Bank and is not governed by Companies Act, 1956. Hence, the said provisions would not apply in the case of a Bank. Assessee, being a banking company, does not fall within the purview of section 115JB
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2019 (3) TMI 1741 - ITAT AHMEDABAD
Royalty payment to the Associated Enterprises (AEs) - HELD THAT:- We find that the ITAT in assessee’s own case involving identical issue has deleted the addition made by the TPO [2018 (8) TMI 1943 - ITAT AHMEDABAD] as held that 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 exfactory sale value, without deducting various expenses, such as dealer commission, special commission, warranty etc., as has been noted by the learned CIT(A) at page no.4 of his order, then the effective rate worked out is only 2.3% on sale, as against 3% paid by oilier group entities.
Addition on account of provisions for warranty - HELD THAT:- As decided in own case the assessee has satisfied the relevant conditions for claiming the impugned warranty provisions as deduction. We accordingly accept assessee’s substantive ground seeking to claim the impugned warranty provision qua both five years and one year (supra) as computed on scientific basis as per its forgoing experience.
Deduction u/s 80IB(10) on account of Foreign Exchange Fluctuation gain in respect of its Jammu Unit - HELD THAT:- In the instant case, the assessee claimed that it had earned foreign exchange gain in connection with the raw-material imported and working capital borrowed in foreign currency and the Assessing Officer has not doubted this fact. Therefore, we can safely presume that assessee has earned foreign exchange gain from the activities carried out in connection with the business. The purchase of raw materials and working capital loan are an integral part and has direct nexus with the business. Therefore, any gain arising in the course of business are eligible for deduction u/s 80IB(10)
It is also important to note that the assessee in the succeeding year has incurred a loss of ₹ 4,20,47,705/- which was accepted as a business loss by the Revenue. Therefore, we hold that the impugned gain is a business income and eligible for deduction u/s. 80IB(10) of the Act. In this regard, we find support and guidance from the judgment of Hon’ble Gujarat High Court in the case of Metrochem Industries Ltd. [2016 (7) TMI 1374 - GUJARAT HIGH COURT]
Deduction u/s 80IB(4) in respect of Jammu Units - HELD THAT:- Excise duty refund has a live link with the business activities of the assessee. Therefore, we hold that the excise duty refund is eligible u/s. 80IB(4) - Assessee is eligible for deduction u/s 80IB(4) of the Act in respect of excise duty refund. Accordingly, we do not find any reason to interfere with the order of the Ld. CIT(A).
There remains no ambiguity that the amount of excise duty is capital receipt not chargeable to tax. No reason to disturb the findings of the Ld. CIT(A), therefore the ground of appeal raised by the Revenue is dismissed, and the ground of appeal of the assessee in the application filed under Rule No. 27 of ITAT is allowed.
Allow MAT credit u/s 115JAA of the Act as increased by the amount of surcharge and education cess - HELD THAT:- We note that the issue of MAT credit u/s. 115JAA of the Act has been settled by the judgment of Hon’ble Calcutta High Court in the case of Shree S.R.EI Infrastructure Finance [2016 (8) TMI 967 - CALCUTTA HIGH COURT] wherein it was held as Tribunal was right in confirming the set off of MAT Credit under section 115JAA brought forward from earlier years against tax on total income including surcharge and education cess instead of adjusting the same from tax on total income before charging such surcharge and education cess.
Disallowance of royalty expenses is connected with the adjustment on account of transfer pricing under section 92CA(4) which has also been added in determining the income under section 115JB - HELD THAT:- upward adjustment on account of royalty payment has already been deleted by us in the Para No. 53 of this order. Therefore, in our considered view, there is no need to make any addition in the book profit under section 115JB of the Act. Hence the ground of appeal of the Revenue being consequential in nature is dismissed.
No addition in the book profit under section 115JB of the Act on account of warranty expenses.
No eligible for deduction u/s 80IB of the Act for the enhanced amount
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2019 (3) TMI 1738 - ITAT DELHI
Exemption u/s 11 - Charitable activity u/s 2(15) - assessee society has been constituted by the Ministry of Textile for promoting the handloom sector by procuring the orders from all government departments and further giving it to the member societies - HELD THAT:- Activity of the assessee are of advancement of any other object of the general public unity, which falls under the definition of the charitable purpose as defined under section 2(15) of the act. But the contention of the Assessing Officer is that said object of general public utility shall not be charitable because the assessee is engaged in the activity in the nature of trade, commerce or business or rendering any service in relation to any trade, commerce and business for cess or fee.
We find that activity of the assessee are primarily motivated with the objective of promoting handloom sector in India and said activity are not for gain or profit of an individual. The executive committee of the Society also consist of all government officials with no motive of profit sharing or personal interest. The member subscription is received by the assessee in proportion of the supply by the agency and the rate decided. The said subscription fee received cannot be equated with the cess or fee against services rendered. Assessing Officer has not appreciated the activities and objective of the society properly and therefore he is not justified in holding that provision to section 2(15) will be attracted in the case of the assessee. Finding of the Ld. CIT(A) on the issue in dispute is well reasoned, and we do not find any error in the same. Accordingly we uphold the same. The ground of the appeal of the Revenue is accordingly dismissed.
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2019 (3) TMI 1734 - ITAT PUNE
Deduction u/s 10A - HELD THAT:- As decided in own case AY 2006-07 and 2007-08 the profits earned by Kandla division of the respondent-assessee is not abnormally high due to any arrangement between the respondent-assessee and its German Principal. The Tribunal correctly held that extraordinary profits cannot lead to the conclusion that there is an arrangement between the parties. This would penalize efficient functioning. Further, the authorities have also recorded a finding that the industrial sewing machine needles imported and traded by the Mumbai division are different from those manufactured & exported by the Kandla division. Consequently, this also negatives any arrangement between the parties to show extraordinary profits in respect of its Kandla division so as to claim deduction under section 10A of the Act. These are findings one of fact. The appellant-revenue have not been able to show that the findings are perverse or arbitrary.
Addition on account of reconciliation of receipts with Form 26AS - HELD THAT:- Assessee has stated that whatever receipts are acquired, they have reflected in their books of account. If there is any discrepancy, it is upon the Department to reconcile the same and that burden is shifted to the Department. However, while saying so, the assessee accepts TDS components involved in the transactions. If Form 26AS reveals ₹ 100/- as received by the assessee while in the books account, the assessee has recorded ₹ 90/- and there is discrepancy of ₹ 10/-. However, for getting the benefit of TDS, the assessee accepts TDS with regard to ₹ 100/- and not ₹ 90/-. If the TDS benefit is availed by the assessee of ₹ 100/- then it is also onus on the assessee to prove and reconcile the said difference of ₹ 10/- as to how ₹ 90/- is recorded in their books of account.
In the instant case, while the assessee is claiming benefit of entire TDS components involved in the transactions, however, records different amount in his books of account as appearing in Form 26AS. As examined earlier, since the assessee is taking benefit of entire TDS components, the burden of reconciliation also lies on the assessee.
We remand this matter to the file of AO for adjudication and direct the assessee to provide reconciliation of statement between Form 26AS and their books of account. The burden is clearly on the assessee since on TDS component benefit, they are taking it entirety. If the assessee is not able to reconcile the difference, then the AO may add the amount in difference to the income of the assessee. With these observations, this ground is set aside to the file of the AO for adjudication.
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2019 (3) TMI 1733 - ITAT DELHI
Unaccounted sales - Addition on the basis of contents of the documents impounded during the course of survey - HELD THAT:- Since the premises where the loose sheets were impounded belong to M/s Intime Promoters Pvt Ltd, the CIT(A) has rightly considered the same in the hands of the right person. Therefore, there is no occasion to make addition in the hands of M/s Taneja Developers & Infrastructure Ltd.
In the hands of M/s Intime Promoters Pvt Ltd., the Assessing Officer himself has verified the entries in the books of account and since the entries were found recorded in the regular books of account there is no reason why the addition could be made. The addition has been rightly deleted by the CIT(A) and, therefore, no interference is called for. Accordingly, the common grievance raised in both the appeals is dismissed.
Unexplained credits u/s 68 - investigation made in respect of accommodation entry provider and oaon receiving no plausible reply AO made the addition - HELD THAT:- No doubt, the initial onus is upon the assessee to explain the credit transaction in its books of account in the light of provisions of section 68 of the Act. However, this burden of proof is not permanent but keeps oscillating, meaning thereby, that once the initial burden has been discharged by the assessee, the burden shifts upon the revenue to make further enquiry. The letter written by the CIT(A) to the Assessing Officer, which is exhibited elsewhere, clearly shows that the CIT(A) has directed the Assessing Officer to make necessary enquiry from the two creditors.
The remand report of the Assessing Officer clearly reveals that he did make enquiry from M/s Rangoli Buildtech Pvt Ltd and came to the conclusion that M/s Rangoli Buildtech vpt Ltd is, in fact, a debtor of the assessee and not a creditor. In so far as M/s Epic Developers Pvt Ltd is concerned, the bank statements clearly show that there was no cash found to be deposited before issuing cheque to the assessee company. Moreover, the balance sheet of M/s Epic Developers Pvt Ltd clearly shows that they have received ₹ 17.35 crores from Benda Amtek Ltd and Amtek Auto Ltd and from this, ₹ 17.35 crores, have lended ₹ 14.50 crores to the assessee.
If the CIT(A) has exercised his power vested upon him by provisions of section 250(4) of the Act, the same cannot be faulted with. The CIT(A) has gone one step further in examining the availability of funds with M/s Epic Developers Pvt Ltd and subsequently found that M/s Epic Developers Pvt Ltd had sufficient available funds to lend money to the assessee. No adverse inference can be drawn from such findings of the CIT(A). The contention of the ld. DR that the first appellate authority has admitted some additional evidences is without any basis.
Assessee has successfully explained the transaction with M/s Epic Developers Pvt Ltd and in so far as M/s Rangoli Buildtech Pvt. Ltd is concerned, it being a debtor of the assessee, section 68 of the Act is clearly not applicable. We, therefore, do not find any merit in the grievance of the revenue. The findings of the CIT(A) are upheld. This ground of the revenue is dismissed.
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2019 (3) TMI 1731 - BOMBAY HIGH COURT
Assessment u/s 153C - additions made u/s 68 on account of share application money - absence of any incriminating material found during search - HELD THAT:- The question framed itself clearly brings out the controversy that the additions made by the Assessing Officer were deleted by the Income Tax Appellate Tribunal on the ground that during the search, no incriminating material was found to support such additions. This issue is squarely covered by the judgment of this Court in the case CIT V/s. Continental Warehousing Corporation [2015 (5) TMI 656 - BOMBAY HIGH COURT] and CIT V/s. Gurinder Singh Bawa [2015 (10) TMI 1761 - BOMBAY HIGH COURT] - Decided against revenue.
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2019 (3) TMI 1730 - ITAT CHENNAI
Revision u/s 263 - Capital gain on sale of land - HELD THAT:- Non application of mind could have been considered as a valid ground for revision, if the assessee had returned any income other than the capital gains arising on the sale of land. Assessee having only one head of income, we cannot say that ld. Assessing Officer was oblivious of the computation of such income in a scrutiny assessment. It is specifically stated by the ld. Assessing Officer that he had examined the details filed by the assessee while completing the assessment accepting returned income.
Thus though assessment order is cryptic, we cannot say that the AO had not applied his mind while accepting the income returned by the assessee. Assessee had also pointed out before ld. PCIT that the Audit Objection by itself could not be a reason to come to a concussion that order of the ld. Assessing Officer was erroneous and prejudicial to the interest of the Revenue. It is also not disputed that erstwhile share holders of M/s. ECCI Koya Ltd as it was known earlier had paid capital gains on the consideration received by them from sale of shares, after reckoning the revised value of the land in the hands of the assessee company. In such a situation, we cannot say that acceptance of the returned income by AO was based on an erroneous view of law. By virtue of the judgment of Hon’ble Apex Court in the case of Max India Ltd, [2007 (11) TMI 12 - SUPREME COURT] where two views are possible and the ld. Assessing Officer had taken one of such views, to which CIT did not agree, would not be a reason for treating the order of the Assessing Officer as one erroneous and prejudicial to the interest of the Revenue. We cannot say that the view taken by the ld. Assessing Officer in the case before us was unsustainable in law. The order of the ld. PCIT is set aside. - Decided in favour of assessee
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2019 (3) TMI 1729 - ITAT CHANDIGARH
Rectification u/s 254 - as contended that the CBDT in its Circular No.5/2014 has clarified that the disallowance of expenses u/s 14A of the Act would be attracted even if no exempt income is earned - HELD THAT:- Revenue has challenged the said order vide this Miscellaneous Application filed u/s 254(2) of the Act , raising several grounds before us, as reproduced above from the application filed by the Revenue before us, stating that the order was perverse and could not have been dismissed on account of low tax effect involved since it was covered under except ion specified by CBDT for dismissal on account of low tax effect , and had been passed ignoring the legislative intent expressed in CBDT Circular No.5/2014 dated 11-02-14 and principal laid down in various decisions that apportionment of expenses has been to be done regardless of exempt income earned. The same, we hold, is not tenable in law since it is only apparent mistakes which can be rectified by way of the present proceedings and for challenging orders passed by the ITAT there is legal recourse available which definitely does not include challenging it by way of the present Miscellaneous Application under section 254(2) of the Act. The Miscellaneous Application is liable to be dismissed for the aforesaid reason.
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2019 (3) TMI 1727 - ITAT DELHI
Disallowance of site expenses and consumables - HELD THAT:- Some of the vouchers in claim of the expenditures were missing. However, as per Section 37 of the Act, the deduction is allowed when the expenditure is incurred wholly and exclusively for the purpose of business / profession. The primary onus of proving such expense are incurred wholly and exclusively for the purpose of the business lies on the assessee. In this case some of the bills/ vouchers were not produced during the assessment proceedings.
AO is justified in disallowing a fraction of these expenditures for want of proper verification. Hence, the case law cited by the Ld. Counsel for the assessee are on distinguished facts. It is further noted that AO has only disallowed ₹ 5 lacs out of ₹ 2.10 crore claimed as site expenses and ₹ 3 lakhs out of ₹ 1.24 crore claimed as expenses on account of consumables, hence, the amount of disallowances are quite justified and accordingly, the Ld. CIT(A) has correctly confirmed the additions on these counts, which does not need any interference on our part, hence, we uphold the action of the Ld. CIT(A) on these additions and accordingly, the ground no. 1 raised by the assessee stand dismissed.
Addition u/s. 68 - differences in the receipts declared by the assessee and the receipts shown in Form 26AS - HELD THAT:- Difference is mainly on account of mobilization advance which is taken into receipts as and when settled. However, the assessee has not filed any such details. In absence of proper reconciliation, the AO was justified in making the addition on account of difference as compared to the Form 26AS.
Accordingly, Ld. CIT(A) has rightly did not interfere in the findings of the AO and upheld his action by dismissing the issue raised by the Assessee before him. In our considered opinion, the action of the Ld. CIT(A) in confirming the addition in dispute does not require any interference, on our part, hence, we uphold the action of the Ld. CIT(A) on the issue in dispute and reject the ground no. 2 raised by the Assessee.
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2019 (3) TMI 1721 - CALCUTTA HIGH COURT
Subsidy or incentive - characterization of income - capital or revenue receipt - HELD THAT:- Tribunal has simply referred to the subsidy scheme without specifying the scope, purport or the details of it. Simply because the subsidy scheme has been declared by the Tribunal to be capital receipt in the case of other assessees, it pronounced the decision in this case that it was to be treated as such.
In our view, that was not the correct approach. The subsidy scheme had to be analysed threadbare. The question whether the subsidy incentive was being utilized for the purpose of meeting the interest liability of the company on loans and advances taken by it to set up its plant and machinery had to be investigated and a firm conclusion ought to have been arrived at. Only if it was so utilized, possibly, the subsidy incentive could be described as a capital receipt. Otherwise it had to be treated as a revenue receipt.
We remand the matter back to the Tribunal to decide this particular issue upon hearing the parties and by a reasoned order within three months from the date of communication of this order.
Tribunal will not be bound by its earlier factual finding on any scheme for subsidy/incentive whatsoever and will make its own enquiry and decision on the scheme in question and come to a legal conclusion. The impugned order of the tribunal on this issue is set aside.
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2019 (3) TMI 1719 - ITAT MUMBAI
Penalty u/s 271D and 271E - genuineness of the transaction made through journal entries - Bonafide belief - HELD THAT:- As the assessee had remained under a bonafide belief that the acceptance and repayment of loans by journal entries did not involve any contravention of the provisions of Sec. 269SS and Sec. 269T of the I.T Act, therefore, we are in agreement with the view taken by the CIT(A) that in the backdrop of the said “reasonable cause‟ within the meaning of Sec. 273B of the I.T Act, no penalty under Sec. 271D and Sec. 271E could have been imposed on the assessee. We thus finding no infirmity in the order of the CIT(A) who had in terms of his aforesaid observations vacated the penalty levied - Decided in favour of assessee
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2019 (3) TMI 1717 - ITAT DELHI
Disallowance of loss on rate settlement (contracts) - perusal of the order of the CIT(A) shows that while deciding the appeal the FAA has considered certain documents - HELD THAT:- When these documents were filed for the first time before the CIT(A) the least he could have done was to call for a remand report from the Assessing Officer. In our understanding of the facts the CIT(A) has violated the basic principles of natural justice. Therefore, this issue is restored to the files of the Assessing Officer. The assessee is directed to furnish all the necessary evidences before the Assessing Officer and the Assessing Officer is directed to verify the same and decide this issue afresh after giving a reasonable opportunity of being heard to the assessee. Ground No.1 is allowed for statistical purpose.
Disallowance of speculative loss on derivative trading on MCX - Whether it was not an approved stock exchange within the meaning of proviso (d) of section 43(5) ? - HELD THAT:- There is some confusion over the exchange where the loss has arisen. The Assessing Officer has proceeded by considering that the transaction was done, through multi commodity stock exchange of India Limited whereas the FAA has proceeded on the premise that the transaction has been done through multi commodity stock exchange. Since the recognition has been given to MCX and not Multi commodity stock exchange of India limited, therefore, in our opinion this has to be verified again. We, therefore, restore this issue to the files of the Assessing Officer. The assessee is directed to demonstrate that his transactions were done, through the exchange which was subsequently notified as a recognized exchange. The Assessing Officer is directed to examine the evidences and decide the issue afresh. The ground No.2 is also allowed for statistical purpose.
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2019 (3) TMI 1714 - ITAT PUNE
Disallowance u/s 40(A)(2)(b) - assessee during the year had purchased land worth ₹ 1.75 crores from one of the Directors namely Ranjit Shitole - payment made in excess to the fair market value of the land - HELD THAT:- Undoubtedly, the plots which are so developed are smaller in size and would fetch higher price as compared to the price paid for the large plots of land. There is no dispute to the same. However, we must consider the sale transaction entered into by the assessee, wherein the said plot of land measuring 300 square meters was sold for ₹ 9,90,165/- i.e. sale price agreed upon between the parties. The market value of said piece of land as per stamp duty valuation was ₹ 49,940/-. The sale consideration has been accepted by the AO in toto and adopted for working the income in the hands of assessee. However, if we consider the totality of facts, we find that the market value as determined by stamp duty and sale consideration received by the assessee had huge difference in value. The fair market value of the property was much higher than the Government / Stamp duty valuation.
On such simile, plot which was purchased by the assessee for ₹ 1.75 crores as negotiated and for business needs of assessee, wherein on its sale (partial), the assessee had already received ₹ 17.85 crores, it cannot be said that the assessee has paid more than the market value of plot of land to the Director and hence, provisions of section 40A(2)(b) of the Act are attracted / applied.
There is no merit in the stand of authorities below in this regard.
Another aspect which needs to be kept in mind is that person Shri Ranjit Shitole from whom the said plot of land was purchased was taken as Director / shareholder and also given option to share the profits by the assessee company, since it was not in a position to pay huge amount to the said person.
No merit in the orders of authorities below in applying the provisions of section 40A(2)(b) of the Act on the ground that transaction is with related party as defined in section 40A(2)(b). - Decided in favour of assessee.
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2019 (3) TMI 1713 - ITAT MUMBAI
Bogus Short Term Capital Loss - AO was of the view that assessee had created a colourable device with a motive to avoid the tax and that is why, the entire short term capital loss was generated to avoid the tax on the long term capital gain - HELD THAT:- AO had not been able to substantiate the conclusion drawn by him because from the factual findings we noticed that the entire long term gain or substantial long term gain was not wiped out by the short term capital loss. The Long Term Capital Gains was to the tune of ₹ 911.84 crores, whereas the short term capital loss which had been set-off was only to the tue of ₹ 81.69 crores. Hence, in the circumstances, it is difficult to ipso-facto attribute any motive to the assessee for avoiding the Tax.
Purchase of shares were bona-fide as shares were transferred in name of Assessee and assessee has paid the actual consideration. In this respect, the assessee had entered into a duly executed share purchase agreement with the above companies so as to buy out their stake. The said transfers was duly recorded in the Annual Returns of the companies for the year, filed with the ROC (Registrar of Companies). Thus, in this way, as per the assessee, the transfer of shares had taken place within the four corners of law. It is important to mention here that the share Purchase agreements bear the signature of witnesses and in case the AO doubted the genuineness of the said share purchase agreements, then he could have verified the same by examining the witnesses, but the said exercise had not been done by the AO.
The other objection raised by the AO was that no actual consideration was paid for the purchase of the shares but the transfer was by merely passing a journal entry and thus there was a book loss or paper loss. In this respect, we find from the records that purchase consideration was paid through “banking channels‟ and was thus not merely by passing journal entries. Therefore this objection raised by the AO is factually incorrect.
In the present case, the shares were purchased out of moneys provided by M/s SVJ holdings which is a third party and further shares were purchased at cost to group company and not at a premium. Also, such circuitous nature of transactions are not involved in the facts of the present case.
We are of the view that the treatment of short term capital loss as not genuine is not in accordance with law. Thus, the findings of Lower authorities are based on assumptions and without considering the facts and events in correct perspective. Therefore, keeping in view the totality of facts and circumstances of the present case, we are of the considered view that the disallowance of short term capital loss is not justified. Resultantly, this ground raised by the assessee stands allowed.
Disallowance of the claim paid towards software consultancy charges - Allowable revenue expenditure u/s 37(1) - HELD THAT: - We are of the view that the expenses incurred by the assessee for carrying out business activity were not personal expenses and were incurred for expanding the business and thus in this way, the same were incurred in connection with the business of the assessee. Therefore the same are allowed as revenue expenses.
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2019 (3) TMI 1712 - ITAT DELHI
Reopening of assessment - addition u/s 68 - HELD THAT:- A perusal of the notice issued under section 148 shows that the notice has been issued in a very casual manner - Similarly, a perusal of the bank account maintained with Vijaya Bank account no. 004427 shows that an amount of ₹ 2,50,000/- was by way of clearing of Cheque No. 719443 and not cash deposit. If the same is excluded from the total deposits made during the year from the two bank accounts then there is no such cash deposit of ₹ 4,97,452/- in the two bank accounts maintained by the assessee. Therefore, find force in the argument of assessee that the reasons recorded are either vague reasons or not based on any application of mind. In any case, the assessee has explained the source of each deposit made both in cash as well as in cheque and therefore, even on merit also no addition is called for. Therefore, set aside the order of the learned CIT(A) and direct the AO to delete the addition - Decided in favour of assessee
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2019 (3) TMI 1711 - SC ORDER
Penalty levied u/s. 271(1)(c) - ITAT deleted the penalty levied as relying on own case - HELD THAT:- SLP Dismissed.
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2019 (3) TMI 1705 - ITAT MUMBAI
Royalty receipt - Receipts towards access to use software and IT support services being reimbursement of cost - India-Netherland DTAA - HELD THAT:- As decided in assessee's own case [2020 (1) TMI 573 - ITAT MUMBAI] and [2018 (5) TMI 1957 - ITAT MUMBAI] no merit in the action of lower authorities for holding that payment received by assessee constitutes income or alternatively treating the same as royalty under Article 12(4) of India-Netherland DTAA.
IT Support Services treated as Fees for Technical Services (FTS) under the Income-tax Act as well as in India-Netherlands DTAA - HELD THAT:- As decided in assessee's own case [2020 (1) TMI 573 - ITAT MUMBAI] and [2018 (5) TMI 1957 - ITAT MUMBAI]No merit in the action of lower authorities for treating the receipt as fees for technical services despite the concept of ‘make available’ clause contained in article 13(4)(c) of the treaty. Accordingly, AO is directed to delete the addition so made.
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2019 (3) TMI 1702 - ITAT KOLKATA
Depreciation on tippers - @30% OR @ 15% on the vehicles - assessee being a civil contractor, had to deploy various kinds of plant and machinery which includes several machines like JCB, Excavator etc. and goods transport vehicles like tippers for carrying raw materials etc. to different sites across the country - HELD THAT:- Tippers are vehicles and are registered under the Motor Vehicle Act,1988.
A.O. could not bring any material on record, to dispute the assessee’s claim, that the vehicles and other equipments were deployed in difficult areas and therefore, entitle to higher rate of depreciation. The A.O’s contention, that the explanation given by the assessee, is an afterthought, and that no hiring charges have been received, is not supported by facts. The tippers used by the assessee in its business are registered under the Motor Vehicles Act, 1988. They met the functional test as the basis for grant of 30% depreciation, and also on the ground that the higher depreciation is on account of rigorous and hard use of commercial vehicles, in comparison to the stationery and permanently installed machinery. These views, find support in the decision in the case of CIT vs. Rakesh Jain [2012 (5) TMI 7 - PUNJAB & HARYANA HIGH COURT] . Therefore, addition made by AO, on account of additional depreciation claim on higher rate,should be deleted.That being so, we decline to interfere with the order of Id. C.I T.(A) in deleting the aforesaid addition.
Addition being deduction from the secured loan and deletion of hire purchase suspense account - A.O. has added back hire purchase interest suspense - HELD THAT:- In the balance sheet as on 31.03.2011, hire purchase interest suspense account has been deducted from amount of term loan for disclosure compliance of schedule V1 of the Companies Act, 1956 and the same is supported by the audit report and certification of the Auditor. Therefore, we are of the view that the said amount of ₹ 36.00,000/- does not represent income. It is just re-grouped, reworked, re-arranged, reclassification of the figures in the balance sheet of the assessee for the purpose of presentation in the balance sheet and no any unaccounted money was introduced by the assessee company. Hence, after a careful consideration of the submission of the ld Counsel and relevant assessment records, the addition of ₹ 36,00,000-, made by AO on account of hire purchase interest suspense account is not justified. The asset side of the balance sheet and liability side of the balance sheet both are diagnosed and we note that this is just an accounting entry and presentation in the balance sheet therefore, addition made by the Assessing Officer needs to be deleted. That being so, we decline to interfere in the order of the ld. CIT(A), on this issue, his order is hereby upheld and grounds of appeal raised by the revenue is dismissed.
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