|
Advanced Search Options
Income Tax - Case Laws
Showing 81 to 100 of 802 Records
-
2018 (6) TMI 1738 - ITAT MUMBAI
Addition u/s 14A r.w.r. - Non recording of satisfaction by AO - HELD THAT:- A.O while dislodging the claim of the assessee that as no part of the expenses debited in the profit and loss account was relatable to earning of the exempt dividend income, thus no disallowance under Sec. 14A was called for in its hands, had failed to record his satisfaction as regards the correctness of such claim, having regard to the accounts of the assessee. Rather, we find that the A.O had dislodged the claim of the assessee that no disallowance under Sec. 14A was liable to be made in its hands by holding a conviction that it was beyond comprehension that no expense incurred by the assessee could be related to earning of exempt dividend income.
We are of the considered view that in the backdrop of the judgment in the case of Godrej & Boyce Manufacturing Co. Ltd. [2017 (5) TMI 403 - SUPREME COURT] it was obligatory on the part of the A.O to have recorded his satisfaction, having regard to the accounts of the assessee, as to why the latter claim that no expenditure was attributable to earning of the exempt dividend income was not to be accepted. - Decided in favour of assessee.
Addition on account of difference in the account of M/s Continental Warehousing Corporation (NS) Ltd. - CIT-A deleted the addition - HELD THAT:- The difference had arisen on account of non-posting of a TDS entry by the aforementioned party viz. Continental Warehousing Corporation (NS) Ltd, in the account of the assessee as appearing in its books of accounts. We find ourselves to be in agreement with the contention of the ld. A.R that the failure on the part of the aforesaid party to post the TDS entry leading to the impugned variance to the said extent, as against the balance shown by the assessee to be payable to the said party, will not have any bearing on the income of the assessee for the year under consideration - no addition in respect of the impugned variance was called for in the hands of the assessee.
Addition on account of “Opening balance" - difference in the account of the aforementioned party viz. M/s Continental Warehousing Corporation (NS) Ltd - HELD THAT:- We are of the considered view that as the difference in the opening balance had emerged on account of transactions pertaining to the preceding year/years, thus the same shall in no way have any bearing on the income of the assessee for the year under consideration. We thus, not finding ourselves to be in agreement with the view taken by the CIT(A), delete the addition.- Decided in favour of assessee.
Addition of the administrative expenses - on verification of the bills and vouchers pertaining to the administrative expenses, some bills/vouchers were found to be undated or unsigned and many vouchers were not supported with relevant bills - HELD THAT:- We find that though there is a mention by the lower authorities that some bills/vouchers pertaining to the administrative expenses were found to be undated or unsigned and many vouchers were not supported with relevant bills, but surprisingly there is not a mention of a single such bill/voucher which is found to be suffering from any such alleged infirmity. We are of the considered view that in the case before us, as there is no evidence which could support the claim of the A.O that some of the bills/vouchers were found to be undated or unsigned or not backed by relevant bills, it is difficult for us to subscribe to the disallowance made by him in the thin air. We thus, in the backdrop of our aforesaid observations are unable to uphold the adhoc disallowance - Decided in favour of assessee.
-
2018 (6) TMI 1736 - ITAT DELHI
TDS u/s 194J - TDS on discount and roaming charges - default u/s 201(1) - HELD THAT:- As decided in own case [2018 (5) TMI 582 - ITAT DELHI] in absence of any human intervention during the actual roaming process, payment would not be Fees for Technical services - Thus, payment made to other telecom operators should not be regarded as payment towards fees for technical service. No Tds liability - Decided in favour of assessee.
-
2018 (6) TMI 1735 - ITAT MUMBAI
Addition made on account of interest expenditure - advancement of loans - HELD THAT:- We find that the assessee had advanced loan to AHPL for its business, that the financial institutions had advanced loans for a specific purpose, that the borrowed funds were utilised for those purposes only. It appears that the AO had not understood the real character of the loans availed by the assessee. He had not also considered overall availability of the loans sanctioned by the financial institutions.
FAA had given a finding of fact that borrowed funds were not utilised for the specific purposes and that the assessee had used its own funds for making investments. The available funds with it were in excess of the investments. Considering these facts, we are of the opinion that there is no need to interfere with the order of the FAA. So, confirming his order we decide the first effective ground of appeal against the AO.
Sale of Carbon Credits - capital receipts or business receipts - HELD THAT:- “Carbon credit” is not an offshoot of business but an offshoot of environmental concerns. No asset is generated in the course of business but it is generated due to environmental concern. ITAT agree with this factual analysis as the assessee is carrying on the business of power generation. The carbon credit is not even directly linked with power generation. On the sale of excess carbon credits, the income was received and hence as correctly held by the Tribunal it is capital receipt and it cannot be business receipt or income. See M/S. MY HOME POWER LTD., [2014 (6) TMI 82 - ANDHRA PRADESH HIGH COURT] . - Decided against revenue.
-
2018 (6) TMI 1734 - ITAT BANGALORE
Admission made in the assessment proceedings by authorised representative - Whether admission made by the authorised representative is not binding on the assessee, is not absolute and correct proposition of law? - HELD THAT:- Admission made by the authorised representative in the proceedings having expressly or implied authority binds the assessee and therefore we have no iota of doubt that the statement made by the authorised representative binds the assessee - in our view, the jurist entity like the assessee before us, shall always be represented either through the Director or the MD or the Company Secretary or by any other person including the authorised person through a Board Resolution. If we hold that the Act of the representative does not bind the assessee, the very basis of working of the judicial system would collapse. Accordingly the judgment relied upon by the assessee is not binding - the statement made by the authorised representative, who has been expressly authorised by the assessee, binds the assessee.
If we look into the facts of the present case, the CIT (A), despite having adjudication, by the AO, on merit albeit reordering admission, has not adjudicated the grounds on merit and has decided the appeal merely on the basis of the admission made by the authorised representative. In the fitness of present case and peculiar facts of the case, we are of the opinion that the matter is required to be re-examined by the CIT (A) on merit as AO had decided the issues on merit and thereafter had recorded admission . Therefore we remand the matter back to the file of the CIT (A) for de-novo decision on all the grounds - Appeal of the assessee is allowed for statistical purposes.
-
2018 (6) TMI 1733 - ITAT AMRITSAR
Validity of the notice u/s. 143(2) - issue of notice by AO not having jurisdiction to assess assessee in terms of the territorial area assigned to him u/s. 120 - transfer of the assessee’s return by ITO, Ward II(3), Jalandhar to another ITO (at Jalandhar, where the assessee’s office is locate - HELD THAT:- The whole purport of law, as we see it, is from the standpoint as to whether any prejudice is caused to the assessee. The transfer of the assessee’s return by ITO, Ward II(3), Jalandhar to another ITO (at Jalandhar, where the assessee’s office is locate, and in fact, the ITO with whom he filed his return) would not make the issue of notice u/s. 143(2) by him on 15.09.2010 (or 21.09.2010) invalid. This is irrespective of whether the said transfer is prompted by the assessee’s objection-as contended by the assessee, or the transfer of the assessee’s PAN to the transferee ITO, as stated by the ld.CIT(A). There is no challenge, nor possibly could be, to the inherent competence of the ITO, Ward II(3) Jalandhar to issue a notice u/s. 143(2), which competence is in fact the same as that of any other ITO at Jalandhar or Kapurthala. Once, therefore, there is a valid assumption of jurisdiction to frame the assessment u/s. 143(3), by service of a valid notice u/s. 143(2) in time, the proceedings are to be taken to their logical conclusion.
The assessment by the ITO, Ward IV-(1), Jalandhar, with whom the assessee filed his return, and who received the assessee’s return from ITO, Ward II(3) Jalandhar on 21.07.2011, cannot therefore be faulted with. In fact, no further objection was raised by the assessee, with he rather participating in the assessment proceedings. How, then, could he challenge the jurisdiction of the ITO, Ward IV(1) Jalandhar – with whom he has in fact filed his return for the year, as his AO, in the appellate proceedings. The issue of notices u/ss. 142(1) and 143(2) by ITO, Ward IV(1) Jalandhar on 21.07.2011 is again in consonance with the law which contemplates issue of such notices on change of incumbency or succession in jurisdiction. The same is only an administrative mechanism to accord with the principles of natural justice, with section 129 even granting the assessee the right to insist on being reheard in the matter, i.e., to the extent already heard by the previous officer/s. - Decided against assessee.
-
2018 (6) TMI 1732 - KARNATAKA HIGH COURT
Disallowance of provision of warranty - system of making of the provision for warranty by the Assessee-Company was not scientific and the reversal of the provision at the year end in view of the actual claims made by the customers was huge, varying from 23% to 100% and therefore, since the Assessee has not followed the scientific system of making a provision in this regard, the entire amount of provision deserves to be disallowed - HELD THAT:- As is well settled, the appeal u/s 260-A of the Act lies before this Court only on substantial questions of law. The final fact findings of the Tribunal under the Act are binding on this Court and cannot be disturbed unless they are found to be perverse on the basis of established material on record. We do not find any such case of Revenue in the present appeal.
We are satisfied that the practice of making a provision for warranty in the present case has been found to be consistent, scientific and regular by the two Appellate Authorities below in consonance with the judgment in the case of Rotork Controls India (P) Ltd. [2009 (5) TMI 16 - SUPREME COURT] - The Hon'ble Supreme Court in the aforesaid case, discussed in detail how the accounting entries for product warranty are to be made by the Assessees.
We are, therefore, satisfied that both the Appellate Authorities below were justified in returning the proper findings of facts on the relevant material before them and have rightly found that the provisions of warranty made by the Respondent-Assessee Company was on the basis of the scientific and consistent method and therefore, the present appeal of the Revenue does not give rise to any substantial question of law and the same deserves to be dismissed and is accordingly dismissed.
-
2018 (6) TMI 1731 - ITAT PUNE
Unaccounted transaction of undisclosed receipts and undisputedly undisclosed expenditure outside the books of account - survey action u/s.133A - discovery of incriminating information and the papers/ documents relating to both the assessee under consideration - disclosure of additional income includes that the assessee earned unaccounted income on sale of stock and incurred unaccounted expenditure outside the books - HELD THAT:- Demand for the said adjustment in principle has the basis of the figures emanating from the impounded papers during the survey action. Assessee already offered the additional income of ₹ 2.06 crores and paid taxes on this. Over and above the same, AO made addition of ₹ 1.61 crores and the same is the subject of all this litigation. Therefore, there is no justification for rejecting the claim of adjustments.
It is well settled legal proposition that the contents of the incriminating papers have to be considered as a whole and not in a piece meal. AO cannot selectively consider some of the entries on said pages and not the others. It is also well observed practice of business that the Managing Director of the company do receive unaccounted receipts from the clients/company and keep with him in safe custody. Managing Director returns or spends the same for the company too. It is also not uncommon that such receipts are sometimes recouped outside the books of account, although the same constitutes unaccounted transactions. It is not correct to ignore these facts in business when we need to determine the net unaccounted income of the assessee.
Grant of benefit of contra entries allegedly kept with the Managing Director - In the absence of any other corroborative evidences, on the issue of one to one correlation, the end of the previous year-net figures need to be considered after set off of cash receipts and return after safe keeping is considered. As such, there is no legal requirement of establishing such one to one correlation of figures. Therefore, in the absence of any incriminating information with the AO to establish that cash given to Managing Director for safe keeping is not for business purposes, the safe keeping-centric explanation of the assessee needs to be accepted. Hence, in that case, the net expenditure figure of ₹ 3.28 crores is proper. To that extent, the order of the CIT(A) needs to be reversed.
Undisclosed expenditure u/s 69C - Excess undisclosed expenditure of ₹ 15,46,095/-, we find this amount needs to be added to the income returned by the assessee and not ₹ 1.61 crores as done originally in the assessment. Assessee has no objection on this issue. To that extent, the arguments of Ld. Counsel are allowed. Thus, the sum of ₹ 15,46,095/- is confirmed in place of ₹ 1.61 crores.
Cash flow in and out is the part of safe keeping and the request for adjustment of undisclosed expenditure to the tune of ₹ 82,94,744/- is allowed. Therefore, the undisclosed expenditure works out to ₹ 3.28 crores only (i.e. ₹ 4.11 cr – 0.83 cr) and not ₹ 4.11 crores (rounded off). Further, also, the excess expenditure spent works out to ₹ 15,46,095/-. At the end, we confirm to the extent of ₹ 15,46,095/- only in place of ₹ 1.61 crores. To that extent, the order of the CIT(A) stands reversed. Thus, relevant grounds of the assessee are partly allowed.
Applicability of the provisions of section 40A(3) to the undisclosed expenditure - We examined the list of expenses of ₹ 48,59,292/- and find most of them are paid to local bodies towards PMC taxes and electrical charges etc. Other expenses are found to be below the specified limit of ₹ 10,000/- or ₹ 20,000/-, as the case may be. Accordingly, the arguments of Ld. DR are dismissed on technical grounds.
Allowability of undisclosed expenditure for business purposes - HELD THAT:- As from the list furnished before us that expenditure was incurred on account of PMC taxes, electrical charges, sales promotion, marketing charges etc. All these accounts broadly falls in revenue zone and for the business expenses of the assessee. Infact, the major expenditure of ₹ 2,79,46,095/- was incurred in connection with the purchase of land and there is no dispute about this transaction. The dispute is only on the sum of ₹ 48,59,292/-. In our view, the proviso to section 37(1) of the Act will not come to this picture as no contravention of any law is made out by the AO. Therefore, AO shall note that these expenses are allowable for working out the excess expenditure spent outside the books of account. Therefore, this part of the arguments of Ld. DR stands dismissed.
Benefit of set off of the brought forward losses pertaining to A.Y. 2004-05 against the income of this year - HELD THAT:- Since the direction of the CIT(A) is to allow set off brought forward losses ‘in accordance with law’, no corrigendum is necessary in the matter. When there are no brought forward losses pertaining to A.Y. 2004-05 as on date, question of set off of brought forward loss of that year against the income of A.Y. 2005-06 does not arise as per law and even otherwise such brought forward business loss, if any, cannot be set off against the ‘deemed income’ assessed for A.Y. 2005-06.
Addition on account of entire expenditure incurred on the capital asset - HELD THAT:- No dispute about the sale of shops to Mr. Dheeraj Keshwani for a sum of ₹ 1,99,00,000/- with extra works specified in the sale agreement. Assessee could not complete those works and the same works out to ₹ 56,20,400/-. We find that the said amount has to be borne by the assessee. Since the works are not done by the assessee, the assessee reimbursed the same to Mr. Dheeraj Keshwani. Therefore, assessee claimed the same as Revenue expenditure in his account. However, the same was claimed as Capital expenditure in the revised return of income.
CIT(A) gave a categorical finding in stating that the assessee paid the amount in account payee cheque to Mr. Dheeraj Keshwani and there is no dispute about it. As such, assessee also did not claim the said expenditure as the Revenue expenditure finally. Therefore, in our view, the decision of CIT(A) given in Para No.5.1 of his order above is favour of the Revenue and it does not call for any interference. Accordingly, the grounds raised by the Revenue are dismissed.
-
2018 (6) TMI 1730 - ITAT BANGALORE
Disallowance of interest payment on belated TDS payment - case of the appellant inter-alia that interest on late payment of TDS is compensatoryand not penal in nature; that TDS is not a liability in the hands of the deductor; that interest paid on account belated TDS payment is only to compensate the loss, if any; etc, and therefore, the same is allowable - HELD THAT:- As decided in Narayani Ispat Pvt. Ltd. [2017 (10) TMI 67 - ITAT KOLKATA] AO has wrongly applied the principle laid down by the Hon'ble Supreme Court in the case of Bharat Commerce Industries Ltd [1998 (3) TMI 2 - SUPREME COURT] We also find that the Hon'ble Supreme Court in the case of Lachmandas Mathura [1997 (12) TMI 16 - SUPREME COURT] has allowed the deduction on account of interest on late deposit of sales tax u/s 37(1) of the Act. In view of the above, we conclude that the interest expenses claimed by the assessee on account of delayed deposit of service tax as well as TDS liability are allowable expenses u/s 37(1).
We find that in that case also, the issue involved was regarding allowability of interest on belated payment of service tax and TDS whereas in the present case, the issue in dispute is regarding interest payment on belated payment of TDS. Hence it is seen that the facts and dispute are similar and therefore, by respectfully following this Tribunal order, we decide the issue in favour of the assessee.
-
2018 (6) TMI 1729 - ITAT PUNE
Deemed income u/s.69/69B - Income disclosed in survey action u/s.133A - taxation for discrepancies in the stock of gold and silver - HELD THAT:- There was survey action on the assessee and the same resulted in the disclosure of additional income of ₹ 1.25 crores on account of excess stock of gold and jewellery. It is also a fact that the assessee reflected the said income in the profit and loss account while filing the return of income. The requisite taxes were also paid on the said income. We find disclosure of said additional income is closely linked to the excess closing stock of assessee and consequently the business nature of the said additional income.
As decided in M/S. SUREKH JEWELLERS [2016 (8) TMI 1140 - ITAT PUNE] additional income disclosed by the assessee in the survey action u/s.133A partakes the character of business and therefore, the assessee is entitled to the benefits of excess remuneration qua the additional income as per the provisions of section 40(b).
The excess stock linked additional income partakes not only the character of business profit but the same is eligible, for quantifying the remuneration u/s.40(b) of the Act. Therefore, we are of the considered view that the order of the CIT(A) needs to be reversed. Consequently, the grounds/additional grounds raised by the assessee are allowed.
-
2018 (6) TMI 1725 - ITAT MUMBAI
Correct head of income - fixed deposit interest income - Income from Business & Profession or Income from Other Sources - FAA had allowed the claim made by the assessee on the grounds that it was in the business of production of films that the completion of films would take time that during the intervening period the advances were deposited with bank resulting in accrual of interest income - HELD THAT:- We find that these basic finding of the FAA have not been challenged by the Department. It is also a fact that Government of India was 100% shareholder of the assessee-company and the deposit of advances with the banks was directly and inextricably linked with the business of the assessee,so the interest earned by it had to be treated as income earned from business and cannot not be treated as income from other sources - interest earned by the assessee was obviously attributable and incidental to the business carried on by it that it would not be correct to say that this interest was totally de hors the business carried on by it.
Interest can be assessed under the head Income from other sources only if it cannot be brought within one or the other of the specific heads of charge.In the case before us the interest income is clearly and justifiably assessed as business income - case under consideration is not a case of depositing unutilized and surplus money by the assessee to earn interest and therefore the interest earned by the assessee cannot be assessed as Income from other sources.
Thus we hold that the order of the FAA does not suffer from any legal or factual infirmity and that it does not require any interference from our side - Decided against revenue.
-
2018 (6) TMI 1724 - ITAT DELHI
TDS u/s 195 - disallowance u/s. 40(a)(i) for non-deduction of TDS - payment made by the assessee to a non- resident as agency commission - CIT(A) deleted the addition - HELD THAT:- CIT(A) has rightly deleted the addition in dispute by following the various case laws as well as following the Ld. CIT(A)-XII, New Delhi Order passed in assessment year 2009-10 in assessee’s own case wherein relying WELSPUN CORPORATION LIMITED AND VICE-VERSA [2017 (1) TMI 1084 - ITAT AHMEDABAD] held that on payments made by assessee for services rendered by non-resident agents could not be held to be fees for payment for technical services, these payments were in nature of commission earned from services rendered outside India which had no tax implications in India.
Decision of Hon’ble Madras High Court in the case of CIT vs. Kikani Exports Pvt. Ltd. [2014 (9) TMI 96 - MADRAS HIGH COURT]wherein it was held that the services rendered by the non-resident agent could at best be called as a service for completion of the export commitment and would not fall within the definition of “fees for technical services” and, therefore, section 9 was not applicable and, consequently, section 195 did not come into play. Therefore, the disallowance made by the AO towards export commission paid by the assessee to the non-resident was rightly deleted. - Decided against revenue.
-
2018 (6) TMI 1723 - ITAT MUMBAI
Disallowance of excess claim of depreciation - HELD THAT:- As decided in own case [2014 (5) TMI 926 - ITAT MUMBAI] direct the AO to allow the depreciation on the machinery that had been acquired from Bilag, and also include incidental expenses incurred on acquisition of assets.
Depreciation on goodwill - HELD THAT:- As decided in own case [2014 (5) TMI 926 - ITAT MUMBAI] relying on Smifs Securities Ltd. [2012 (8) TMI 713 - SUPREME COURT] - intangibles like goodwill are eligible for depreciation - non compete fee is in the nature of the payment and is now covered u/s 28(va) of the Act, it would be revenue in nature - AO is directed to allow the depreciation on goodwill as per law and consider the payment of non-compete fee, in terms of section 28(va) – Decided in favour of Assessee.
-
2018 (6) TMI 1721 - ITAT CHENNAI
Interest receipt - Income from other sources or Capital gain - whether assessee is not entitled to set off of business expenses against the income shown under the head ‘income from other sources’ as the business of the assessee has not commenced ? - HELD THAT:- The assessee has parked the loan amount in short term deposits with Banks and other financial institution and earned interest income, which has no direct nexus and the interest income is directly attributable to the deposits made out of funds generated by way of term loans. We are of the considered opinion that the interest earned by the assessee has to be treated as income on commercial principles.
Having regard to the judgment in the case of Tuticorin Alkali Chemicals and Fertilisers Ltd v CIT [1997 (7) TMI 4 - SUPREME COURT] AND in the case of CIT v. Autokast Ltd. [2000 (11) TMI 7 - SC ORDER] the Hon’ble Supreme Court has held that the interest income is assessable to tax in the hands of the assessee.
Hon’ble Supreme Court in the above decisions that the income tax is attracted at the point when the income is earned from the fixed deposits/short term deposits and taxability of income is not dependent upon its destination or the manner of its utilization and respectfully following the above decisions, we confirm the order of the ld. CIT(A) in holding that the Assessing Officer rightly brought the interest income under the head ‘income from other sources’ and dismiss the ground raised by the assessee.
-
2018 (6) TMI 1720 - ITAT MUMBAI
Disallowance of expenses relating to exempt income made u/s 14A - disallowance made for computing book profit u/s 115JB - HELD THAT:- Special Bench in the case of Vireet Investment P. Ltd., [2017 (6) TMI 1124 - ITAT DELHI] the direction of the CIT(A) to adopt the disallowance made under Section 14A for the purpose of computing book profit u/s 115JB is liable to be set aside. The assessee also took us to the working made by it for ascertaining the expenses relating to exempt income for the purpose of computation of book profit u/s 115JB.
We noticed that the assessee has allocated expenses in the ratio of taxable income and exempt income and the said method was determined by the Department in A.Y. 2000-01. It is stated that the same method is being followed for A.Y. 2000-01 onwards by the assessee.
Since a consistent method is being followed by the assessee for more than 10 years and since the allocation of expenses is on the basis of exempt income and taxable income, we are of the view that the computation made by the assessee for determining expenses relating to exempt income for the requirement of provisions of Section 115JB does not require disturbance. Accordingly we set aside the order of the learned CIT(A) on this issue and direct the AO to accept the computation made by the assessee for the purpose of sec. 115JB - Appeal filed by the assessee is treated as allowed for statistical purposes.
-
2018 (6) TMI 1717 - ITAT MUMBAI
TP Adjustment - application of most appropriate transfer pricing method and the arm‟s length price - international transactions - HELD THAT:- Functions performed, assets employed and risk undertaken by the assessee and its associated enterprises was found to be reasonable. Accordingly, we allow assessee to withdraw these grounds for the A.Y.2008-09 and 2009-10 in so far as these grounds are covered by the APA, the principle laid down in the APA for benchmarking analysis in respect of the international transactions being guidance value since there is no change in the said assessment years in the nature of international transactions.
We also direct the Department to pass an order giving effect u/s.92 CD (5) of the Act in the A.Y. 2010-11 & 2011-12. Whereas for A.Y.2008-09 and A.Y.2009-10, we observe that the principles laid down in the APA for benchmarking/comparability analysis in respect of the international transactions shall have a guidance value since there is no change in the said Assessment Years in the nature of the international transactions, functional, Asset and Risk (“FAR‟) profile of the assessee and the AEs. We direct accordingly.
Transfer pricing adjustment in respect of transactions pertaining to taxability of reimbursement of expenses and taxability of reimbursement for purchase of fixed assets - taxability of reimbursement for purchase of fixed assets - HELD THAT:- As decided in own case [2018 (6) TMI 359 - ITAT MUMBAI] Reimbursements paid being backed by third party invoices without any element of markup, cannot be benchmarked at NIL as done by TPO. Accordingly, we delete the addition so made by the AO.
Short credit of taxes deducted at source - HELD THAT:- AO is directed to give effect for short TDS credit granted to the assessee, after due verification. We direct accordingly.
-
2018 (6) TMI 1716 - ITAT AMRITSAR
Validity of reopening of assessment u/s 147 - eligibility of reasons to believe - HELD THAT:- In the present case, we find that the first sentence of the so-called reasons recorded by AO speaks that "there is information in the possession of this office".
The first part is only information and the second paragraph of the so-called reasons is mere reason and third part is directions of the superior authority. From the so-called reasons, it is not at all discernible as to whether the Assessing Officer had applied his mind to the information and independently arrived at a belief that on the basis of the material which he had before him, income had escaped assessment.
Assessing Officer failed to make any exercise for reopening of the case independently and with corroborative material. Even the Assessing Officer has not made any exercise to gather any material evidence on record. The initiation of reassessment itself is based upon no evidence and/or un-corroborative material, therefore in any sense cannot survive, because initiation of the proceeding u/s 147 itself is a vague and based upon no substantive reasoning and/or material at all, hence in our considered opinion, the Ld. CIT(A) was absolutely unjustified in upholding the reopening of the assessment u/s 147 of the Act, without appreciating the facts of the case, explanation submitted and evidences places on record judiciously. - Decided in favour of assessee.
-
2018 (6) TMI 1715 - BOMBAY HIGH COURT
Rectification Application u/s 254(2) - provisions of Section 11(1) Explanation2 of the Act would warrant its appeal being allowed was not considered and its appeal was dismissed - HELD THAT:- We find that the issue is no longer res judicata as it stands concluded by the decision of this Court in Safari Mercantile [2016 (6) TMI 1313 - BOMBAY HIGH COURT] and Gyan Constructions [2015 (1) TMI 1427 - BOMBAY HIGH COURT] that while dealing with the application for rectification, the Tribunal where it finds there is an error apparent on record, then it should recall the original order and place the Appeal for consideration of the issue on merits before the Regular Court. It is not appropriate to dispose of the controversy on merits of the submission while disposing of the Rectification Application.
The impugned order dated 16th January, 2018 is quashed and set aside. The Rectification Application filed by the petitioner is restored to the Tribunal for fresh disposal.
-
2018 (6) TMI 1714 - KARNATAKA HIGH COURT
Penalty under Section 271(1)(C) - Deduction u/s 10B computation - HELD THAT:- Since the Tribunal has reiterated the findings of facts that both the additions made to the income of the Assessee having been set aside following the decision of the High Court in the case of Tata Elxsi Ltd [2011 (8) TMI 782 - KARNATAKA HIGH COURT] as far as issue of Section 10B is concerned and on the issue of excess stock being tax neutral, such cogent and reasonable findings of facts returned by the learned Tribunal and consequentially setting aside the penalty under Section 271[1][c] of the Act, does not give rise to any substantial question of law requiring the consideration by this Court under Section 260-A of the Act.
Appeal filed by the Revenue is thus found to be without merit and liable to be dismissed and the same is accordingly dismissed.
-
2018 (6) TMI 1713 - ITAT CHENNAI
Reopening of assessment u/s 147 - unexplained investments addition u/s 69 - CIT(A) held that the Assessing Officer validly completed the assessment under section 143(3) r.w.s. 147 - Assessee submitted during the course of hearing of this appeal, the addition made in the reassessment may be deleted and justice be rendered - HELD THAT:- We direct the CIT(A) to adjudicate the issue on merits with regard to the addition made under section 69 of the Act in accordance with law by allowing an opportunity of being heard to the assessee. Appeal filed by the assessee is allowed for statistical purposes.
-
2018 (6) TMI 1711 - ITAT MUMBAI
Disallowance of club membership of fee - AO disallowed partial amount of total club membership expenses on the ground that the assessee failed to furnish evidences - HELD THAT:- It is the contention of the assessee that it has filed details for balance amount of ₹ 2,30,623/- before the Ld. CIT(A) vide its submission dated 22.01.13. Such details have been furnished before us in the form of paper book. Therefore, we are of the considered view that the issue needs to be reexamined by the AO, in the light of evidences filed by the assessee. Hence, we set aside the issue to the file of AO and direct him to consider the issue afresh after affording a reasonable opportunity of hearing to the assessee.
Disallowance of expenses incurred in relation to exempt income under section 14A r.w.r. 8D - HELD THAT:- Once the assessee has proved the availability of own funds in excess of value of investments, then the question of disallowance of interest expenses under rule 8D(2)(ii) does not arise. In this case, the assessee has filed necessary details to prove availability of own funds. Hence, we are of the considered view that the AO was incorrect in disallowing interest expenses under rule 8D(2)(ii) of Income Tax Rules, 1962 and accordingly direct him to delete disallowance of interest expenses worked out under rule 8D(2)(ii).
Disallowance of direct expenses under rule 8D(2)(i) - suo moto disallowance by assessee - AO has not recorded his satisfaction before disallowing further expenses - HELD THAT:- We find no merits in the arguments of the assessee for the reason that the AO has arrived at a satisfaction by rejecting computation worked out by the assessee towards suo-moto disallowances which means that the AO has considered the nature of expenses incurred by the assessee and also disallowances quantified in the light of exempt income earned for the year and hence we are of the considered view that the AO was right in invoking rule 8D(2)(iii) to quantify disallowance in respect of expenses incurred in relation to exempt income. Hence, we are of the considered view that there is no error in the computation worked out by the AO under rule 8D(2)(iii).
Disallowance of gift expenses - assessee has failed to file any evidences to prove necessity of gifts given to employees, associates and government officials in relation to its business activity - HELD THAT:- Basically the expenses in the nature of gifts and rewards are in the nature of personal expenses and hence cannot be allowed as deductable under section 37(1). Mere payment of fringe benefit tax on such expenses would not discharge the assessee’s obligation to prove such expenses to say that these are incurred wholly and exclusively for the purpose of business. The Ld. CIT(A) after considering the relevant submissions has rightly confirmed additions made by the AO. We do not find any error or infirmity in the order of the Ld. CIT(A). Hence, we are inclined to uphold the findings of the Ld. CIT(A) and reject ground raised by the assessee.
Disallowance of compensation payment u/s 40(a)(ia) - non deduction of tds - HELD THAT:- Although the assessee claims that payment made to Mr. SS Mohla is in the nature of compensation for which the provisions of TDS has no application, on perusal of facts available on record, we find that such payment is in the nature of commission for securing orders, therefore, we are of the considered view that mere change in nomenclature of the expenses does not absolve the assessee from the responsibility of complying with applicable TDS provisions. In this case, the assessee itself has admitted that it has paid commission for securing orders. Once the payment is in the nature of commission obviously the assessee ought to have deducted TDS under section 194H - Since the assessee has failed to deduce TDS, the AO has rightly disallowed such expenditure under section 40(a)(ia) - CIT(A) after considering the relevant submissions has rightly confirmed additions made by the AO. In so far as case laws relied upon by the assessee, we find that all the case laws are rendered on different set of facts and has no application to the facts of the assessee’s case. Hence, we are inclined to uphold the finding of the Ld. CIT(A) and reject the ground raised by the assessee.
Disallowance of write off of doubtful deposits - assessee had claimed deduction of write off of deposits which were long outstanding and had become irrecoverable - HELD THAT:- Deposits written off by the assessee are balance sheet items and not part of trading receipts. If the assessee has given deposits out of its tax suffered income, then obviously such deposits are coming within the ambit of bad debts written off under section 36(1)(vii) of the Act. If the assessee has given such deposit out of its borrowings then obviously it does not fulfill the conditions prescribed under section 36(2) of the Act. Hence, the Ld. CIT(A) has rightly set aside the issue to the file of AO to verify whether such advances are trade advances or not. Therefore, we are of the considered view that the Ld. CIT(A) was right in setting aside the issue to the file of the AO to verify the nature of advances. There is no grievance is caused to the assessee. The assessee can file necessary evidences before the AO to prove whether such advances are in the nature of trade advances or not. Hence, we are inclined to uphold the findings of the Ld. CIT(A) and reject the ground raised by the assessee.
Disallowance of irrecoverable advances - debit balance outstanding in DEPB provision account and amount receivable for duty drawback for recovery from Vietnam exports as the same were irrecoverable - AO disallowed written off of irrecoverable advances on the ground that such advances were not bad debts of customers and hence could not be allowed under section 36(1)(vii) - HELD THAT:- When export incentive is offered to tax in the earlier period by showing the amount as receivable, then write off of such advance as irrecoverable is in the nature of bad debt which can be claimed as deduction under section 36(1)(vii) - there is a contradiction in the claim made by the assessee in its books of accounts and the submissions made before the authorities. The assessee has claimed an amount of ₹ 51,45,651/- as irrecoverable advances, however, as per the submissions the amount written off was at ₹ 39,39,160/-. Therefore, we are of the view that the issue needs to be reexamined by the AO in the light of submissions of the assessee. Hence, we set aside the issue to the file of AO and direct him to examine the claim with necessary evidences before allowing the claim. If the assessee is able to file evidences to the extent of ₹ 51,45,651/-, then the AO is directed to allow write off irrecoverable advances.
Adhoc disallowance of 50% of payment made to subsidiary company for supply of support services and supply of manpower - AO has disallowed amount paid to associate concern on the ground that the payments were excessive and unreasonable - HELD THAT:- We find force in the arguments of the assessee for the reason that the assessee has furnished necessary details of payment made to its subsidiary company for rendering services. The AO has made adhoc disallowance of 50% without any reference to comparable cases to come to the conclusion that payments made by the assessee are excessive and unreasonable. Hence, we direct the AO to delete additions made towards disallowance of payments made under section 40(2)(b) .
Disallowance of unrealized foreign exchange loss - AO disallowed such loss on the ground that it pertains to capital assets which ought to have been added to the concerned asset - HELD THAT:- CIT(A) has already set aside the issue to the AO to consider it afresh in the light of decision in the case of CIT V/s. Woodward Governor India Pvt. Ltd. [2009 (4) TMI 4 - SUPREME COURT]. Therefore, we are of the considered view that there is no grievance caused to the assessee. The assessee can file necessary details before the AO to prove the loss whether it pertains to revenue or capital in nature. We further observe that the assessee itself has admitted while giving effect to the order of the Ld. CIT(A) the AO has allowed unrealized foreign exchange loss. Therefore, we are of the considered view that there is no merits in the ground taken by the assessee and accordingly we reject ground taken by the assessee.
Non adjudication of additional ground by Ld. CIT(A) - ground filed by the assessee relating to the allowance of claim which was wrongly disallowed by the assessee while filing the return of income u/s 40(a) - HELD THAT:- we find that the assessee is within its right to raise the additional ground qua the deduction not claimed before the AO during the year. The assessee has raised the issue before the first appellate authority who has not adjudicated the same. In our opinion, the issue needs to be restored to the file of the Ld. CIT(A) so that the same could be decided on merits. The case of the assessee is squarely covered by the ratio laid down in the case of CIT vs. “CIT vs. Pruthvi Brokers and Shareholders Pvt. Ltd.” [2012 (7) TMI 158 - BOMBAY HIGH COURT]as held that the assessee can raise before the appellate authorities any additional ground qua the deduction which was not claimed in the return of income.
Disallowance of product trial expenses - HELD THAT:- Assessee is eligible for deduction towards product trial expenses under section 37
In so far as assessee’s claim of weighted deductions under section 35, we find that the assessee has failed to file any kind of evidences to prove that such R&D expenditure has been approved by the competent authority to be eligible for weighted deduction, therefore we are of the considered view that there is no merit in the arguments of the assessee that the assessee is eligible for weighted deduction under section 35 of the Income Tax Act, 1961. The Ld. CIT(A) after considering the relevant submissions has rightly allowed the claim. We do not find any infirmity in the order of the Ld. CIT(A). - Decided against revenue.
........
|
