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Income Tax - Case Laws
Showing 61 to 80 of 887 Records
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2019 (7) TMI 1890 - ITAT AGRA
Unexplained income on account of investment in margin money of share trading besides RD Interest - Addition of investment by the assessee after withdrawing from the bank account jointly held with his father - HELD THAT:- Agricultural land was owned by the assessee’s father.However, the assessee has not claimed such an agricultural income from his father either in the earlier assessment years or in the succeeding years. Over and above the assessee’s father is neither filing return of income nor any statement of account including income and expenditure statement of working of his agricultural income has been furnished by the assessee either before Authorities below or before us so as to ascertain the correct amount of agricultural income.
Assessee has failed to produce material documentary evidence to proof cultivation of agricultural produce by way of Khasra Khatauni, source of irrigation (tube well/canal), evidence on cold storage etc. to justify the cash deposits in the aforesaid joint bank account in which even the cash deposits do not correlate with the proceeds emanating from Mandi Parishad.Therefore, the agricultural income claimed from the sale of accumulated produce of two and a half years in between March 2010 to October 2010 towards cash deposit in the bank account in anticipation to corresponding withdrawals to the agricultural operations to be carried out for earning such volume of agricultural income is rightly disbelieved by the ld. CIT(A),to demonstrate availability of cash for investment in margin money of share trading business.
Addition in respect of the accumulated interest on RD A/c - it is noticed that the aforesaid interest amount was found credited in the RD bank amount in the year under consideration by the AO. Since, the assessee failed to demonstrate on the basis of documentary evidence that the said Interest income was related to earlier years either before the authorities below or before us and therefore, we are inclined to appreciate the finding of the CIT(A) on this issue as legal and justified and confirm the addition accordingly. This ground of appeal is also rejected. Assessee appeal dismissed.
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2019 (7) TMI 1889 - ITAT DELHI
Exemption u/s 11 - Charitable activity u/s 2(15) - proof of charitable activity undertaken by assessee trust - income from business As applied or accumulated for application for the charitable or religious purpose of the trust - HELD THAT:- We agree with the contentions of the Ld. AR that the assessee’s case is covered in its favour by the orders of the Coordinate Benches of the Tribunal in assessee’s own cases for three different assessment years. We would like to make a reference to the Tribunal’s order for assessment year 2009-10 wherein detailed findings have been recorded by the Tribunal. This order was upheld by the Hon’ble Uttarakhand High Court in[2019 (2) TMI 1616 - UTTARAKHAND HIGH COURT] - there is no bar in the charitable trust/institution carrying on business provided the conditions prescribed in section 11(4)/11(4A) of the Act are satisfied. The Hon'ble Supreme Court in the case of P. Krishna Warriers [1964 (4) TMI 13 - SUPREME COURT] has been pleased to hold with reference to income tax Act 1922 that if the trust carried on business and the business itself is held in trust and the income from such business is applied or accumulated for application for the charitable or religious purpose of the trust, the conditions prescribed in section 4(3)(i) and fulfilled and the income is exempt from taxation.
Authorities below have grossly erred in holding that the appellant's activities in relation to production and sale of ayurvedic preparations are not incidental to its main objective as the same are commercial in nature.
We thus hold that in the present case the authorities below have failed to appreciate that the business set up and held by the appellant under trust is to sub serve the predominant charitable objects of providing medical relief education and relief to poor. Furthermore, since separate books of accounts were maintained and the entire profits are for charitable objects, the conditions prescribed in section 11(4A) of the Act, too were fulfilled. - Decided against revenue.
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2019 (7) TMI 1888 - CALCUTTA HIGH COURT
Depreciation on hoardings - temporary v/s permanent structure - depreciation at the rate 100% by treating these hoardings to be temporary structures - HELD THAT:- On examination of the impugned order of the tribunal [2016 (8) TMI 1555 - ITAT KOLKATA] we find that its finding that the subject structure of the respondent was temporary and not permanent was substantially derived from the findings of the tribunal in respect of the same respondent for the earlier assessment years. This finding of fact has not been challenged by the revenue in appeal or it remains untouched by any superior Court.
Appellant, could not show us any case made out by his client in the subject assessment year that there was any technological advancement or modification in the temporary structure in such a manner so as to classify it as a permanent one.
The issue as to whether the subject structure was temporary or permanent in the assessment year in question has become res judicata.
Hence, we find no infirmity in the impugned order of the tribunal holding that it was so and allowing the respondent assessee 100% depreciation. - Decided in favour of assessee.
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2019 (7) TMI 1883 - ITAT BANGALORE
TP adjustment - comparable selection - determination of Arm's length price (ALP) in respect of a transaction of rendering software development service by the Assessee to its Associated enterprise (AE) - excluding M/s. Flextronics Software Services Ltd., iGate Global Solution, M/s. Infosys Technologies Ltd., Satyam Computers Services Ltd., and L&T Infotech Ltd., on the ground that the turnover of these companies was above ₹ 200 crores and therefore the Assessee whose turnover is only ₹ 6.36 Crores cannot be compared with those companies - HELD THAT:- The admitted factual position is that these companies have turnover of over ₹ 200 crores in the relevant asst. year whereas the assessee's turnover is only 6.36 crores. It has been held by the Bangalore Bench of ITAT that turnover filter is a valid filter in the matter of exclusion of comparables that companies with turnover below 200 crores cannot be compared with the companies above 200 crores. In this regard, Bangalore Bench of the Tribunal in the case of Auto Desk India Pvt. Ltd. [2018 (12) TMI 1742 - ITAT BANGALORE] has taken the aforesaid view after considering several decisions on the issue. In view of the above, we find no grounds to interfere with the exclusion of the aforesaid 5 companies by the CIT(A).
Exclusion of M/s. Exensys Software Solutions Ltd., and Thirdware Solutions Ltd., as not comparable companies by the CIT(A) on the ground that these companies showed abnormal profits - On the issue of exclusion of companies on account of abnormal profits, the law is well settled that abnormal profits by itself is not a ground to exclude a company which is otherwise comparable, but if the abnormal profits are owing to some unusual circumstances, then those companies can be excluded. As far as exclusion of M/s. Exensys Software Solutions Ltd., is concerned, the same is due to amalgamation that happened between this company and some other company during the relevant previous year and therefore the CIT(A) was justified in excluding this company.
Thirdware Solutions Ltd company was a product company and not a SWD service provider such as the Assessee and this company was excluded. We are of the view that in view of the aforesaid order of the Tribunal, we sustain the order of CIT(A) on the basis that this company needs to be excluded as functionally not comparable
M/s. Quintegra Solutions Ltd., had a different accounting year than that of the Assessee and therefore this company ought to have been excluded by the CIT(A) and the learned counsel for the Assessee did not object to its exclusion from the list of comparable companies . Therefore ground No.5 raised by the revenue is allowed.
Exclusion of the following companies Bodhtree Consulting Ltd., Geometric Software Solutions Co. Ltd., and Tata Elxsi Ltd., from the list of comparable companies - The assessee is pure software SWD service provider, whereas these companies were software product companies. The exclusion of these companies in the case of pure software development service provider such as the assessee was considered by this Tribunal in the case of Kodiak Network India Pvt. Ltd[2015 (8) TMI 225 - ITAT BANGALORE] AND M/S. SHARP SOFTWARE DEVELOPMENT (INDIA) PVT. LTD. AND VICE-VERSA. [2017 (1) TMI 1734 - ITAT BANGALORE] - Both these cases relate to asst. year 2005-06 and in these cases it was held in that case that the aforesaid companies were software product companies and not software development service provider such as the Assessee and the segmental details of SWD services and SW Products were not available and therefore the profit margin in the SWD services segment of these companies were not available for comparison. In the light of the aforesaid decision of the Tribunal, we are of the view that the exclusion of the aforesaid companies by the CIT(A) was justified.
Inclusion of M/s. VJIL Consulting Ltd., as not comparable. It was agreed by the parties that this company can be treated as a comparable company and hence ground No.7 raised by the revenue is allowed.
Directing working capital adjustment to be allowed - Even the TPO in his order has allowed working capital adjustment. In transfer pricing analysis allowing working capital adjustment is necessary and it is settled law that such adjustment should be made for proper comparison of profit margin of Assessee and the comparable companies. We find no merit in this ground of appeal raised by the revenue.
Computation of deduction u/s 10A - HELD THAT:- Taking into consideration the decision rendered by the Hon'ble High Court of Karnataka in the case of CIT v. Tata Elxsi Ltd [2011 (8) TMI 782 - KARNATAKA HIGH COURT], we are of the view that communication charges should be excluded both from export turnover and total turnover. We are of the view that as of today, law declared by the Hon'ble High Court of Karnataka which is the jurisdictional High Court is binding on us.
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2019 (7) TMI 1881 - ITAT AHMEDABAD
Penalty u/s 271(1 )(c) - addition u/s 68 on bogus LTCG - HELD THAT :- It is not in dispute that the assessee has furnished the supporting bills and details of payments in support of transactions reported to be long term capital gain. It was contended that entire addition is based on the statement of Mr. Mukesh Chokshi which was never provided to the assessee. It was also pointed out that it is quite possible that Mr. Mukesh Chokshi has not included the transactions with assessee in his statement at all.
Incidence of penalty under s. 271(1 )(c) of the Act is not automatic and should not be imposed merely because it is lawful to do. Considering the smallness of the amount involved, we consider it expedient to give benefit of doubt to the assessee owing to mitigating circumstances viz: the absence of copy of statement of Mr. Mukesh Chokshi or any other substantive material. The assessee has supported the face value of transactions with bills and payments. In the backdrop of ambiguity in circumstances, it is difficult to hold that the explanation offered by the assessee is blatantly false. We are thus inclined to exonerate the assessee from the incidence of penalty. - Decided in favour of assessee.
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2019 (7) TMI 1880 - ITAT RAIPUR
Addition u/s 69 - addition of undisclosed investment in land made by the AO on the basis of seized material - whether corroborative material found during search? - HELD THAT:- In the case of Sahitya Housing (P) Ltd.[2014 (2) TMI 811 - ITAT HYDERABAD] some entries were found in a pen drive which pertained to two persons, one of whom accepted the entries and offered for taxation while the other did not do so. It was held that it is not substantiated by any corroborative evidence that the second assessee was involved in the transaction so as to make addition in the hands of the second assessee. In absence of corroborative evidence, the addition was held to be not justified.
Addition made by the AO on account of purchase of 32.68 acres of land merely on the basis of the excel sheet contained in the seized pen drive and entries in loose papers in the seized documents, unsubstantiated with any corroborative evidence, is not justified, which has been rightly deleted by learned CIT(A) - Decided in favour of assessee.
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2019 (7) TMI 1877 - ITAT VISAKHAPATNAM
Addition u/s 2(24)(x) r.w.s. 36(1)(va) - delayed employees’ contribution to provident fund - Contribution received from the employees paid before due date of filing of the return - HELD THAT:- As decided in M/S. EASTERN POWER DISTRIBUTION COMPANY OF A.P. LTD. AND VICA-VERSA [2016 (9) TMI 1040 - ITAT VISAKHAPATNAM] we are of the view that there is no distinction between employees’ and employer contribution to PF, and if the total contribution is deposited on or before the due date of furnishing return of income u/s 139(1) of the Act, then no disallowance can be made towards employees’ contribution to provident fund. The CIT(A) after considering the relevant details rightly deleted the additions made by the A.O. We do not see any reasons to interfere with the order of the CIT(A). Hence, we inclined to uphold the CIT(A) order and dismiss the appeal filed by the revenue.
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2019 (7) TMI 1875 - ITAT KOLKATA
Reopening of assessment u/s 147 - period of limitation to issue notice u/s 143 - HELD THAT:- The proviso to sec. 143(2) states that no notice under this sub-section shall be served on the assessee after the expiry of six months from the end of the financial year in which the return is furnished. So, from a bare reading of the provisions, it is clear that the AO is barred from serving any notice u/s. 143(2) of the Act on the assessee after the expiry of six months from the end of the financial year in which the return is furnished.
Therefore, in this case, since the assessee pursuant to the notice u/s. 147/148 of the Act dated 21.01.2013 had requested the AO to treat the original return of income filed u/s. 139 of the Act as the return in response to the notice u/s. 147/148 vide letter dated 19.02.2013 means the AO had to issue 143(2) notice before 31.08.2013. Admittedly, the 143(2) notice has been issued on 12.12.2013 and, therefore, the action of the AO is barred by the limitation prescribed by the 1st proviso to sec. 143(2) of the Act and the Hon’ble Supreme Court in the case of Hotel Blue Moon [2010 (2) TMI 1 - SUPREME COURT] has held that issuance of notice u/s 143(2) is mandatory for scrutiny assessment even in cases of assessments after search u/s 132 of the Act. Since issuance of notice u/s 143(2) is mandatory before scrutiny assessment even section 292BB of the Act cannot come to the rescue of the AO.
Further, we do not find any merit in the argument of the Ld. CIT, DR that return of income should have been filed and not the letter requesting the AO to treat the original return as the return of income pursuant to the 147/148 notice. Therefore, the notice issued by A.O u/s 143(2) dated 12.12.2013 is hit by the 1st Proviso to section 143(2) of the Act and therefore the A.O had no jurisdiction to issue notice u/s 143(2) after 31.08.2013 and therefore the issuance of notice u/s 143(2) dated 12.12.2013 and all subsequent action is null in the eyes of the law - Decided in favour of assessee.
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2019 (7) TMI 1873 - MADRAS HIGH COURT
Request for opportunity to cross examine - HELD THAT:- There is no material before this Court to demonstrate that communication dated 03.06.2019 was served on the writ petitioner. In any event, as the sole respondent has acceded to the request for cross examination, this Court is of the view that no prejudice would be caused, if the writ petitioner is given an opportunity to cross examine the aforesaid two individuals on a specified date.
Writ petitioner sought permission to cross examine three individuals, but permission was accorded to cross examine two individuals. On instructions, learned Revenue counsel submits that permission was accorded with regard to two individuals as the other individual namely Shri.K.Srinivasulu has turned hostile.
In the light of the narrative thus far, the following order is passed:
a) The impugned communication dated 28.06.2019 bearing reference 'C.No.ACLFS6523P/CC 2(4)/2019-20' is set aside. To be noted, impugned communication is set aside solely for facilitating the writ petitioner to get an opportunity to cross examine and it is not set aside on merits. In other words, this Court is not expressing any view or opinion on merits of the matter.
b) By consent of both sides, it is now agreed that the date, time and venue for cross examination of aforesaid two individuals namely Shri.S.Nagarathinam and Shri.S.Murugesan shall be 01.08.2019 (Thursday), at 12.00 Noon in the office of the Deputy Commissioner of Income Tax, Central Circle-2(4), Investigation Wing, Room No.111, 1st Floor, No.46, Mahatma Gandhi Road, Chennai – 34.
c) It is submitted on instructions that the writ petitioner's lawyer / Advocate shall cross examine the aforesaid two witnesses on the aforesaid date, time and venue.
d) After cross examination in the aforesaid manner, it is open to the respondent to reissue the impugned communication with regard to aspects other than cross examination aspect.
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2019 (7) TMI 1871 - ITAT MUMBAI
Corrigendum order by making correction in the Assessee’s company name and PAN number - HELD THAT:- As gone through the application and found that there is a typographical error on the page 1 and page 2 of the said order, dated 20/06/2018, passed by the Tribunal in the aforesaid two appeals. The correct assessee’s name is "Meridian Chem Bond Private Ltd. and PAN number is AAACM7299J.", however, it has wrongly been typed as "Meridian Chem Bond Purchase Ltd." and "PAN. AACR1789G" in the cause title of the aforesaid order. Therefore, we hereby issue this corrigendum and direct that the assessee’s company name is ‘Meridian Chem Bond Private Ltd. and PAN number is AAACM7299J instead of "Meridian Chem Bond Purchase Ltd." and "PAN. AACR1789G"
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2019 (7) TMI 1869 - MADRAS HIGH COURT
Order of Single Judge directing the appellant to file necessary objection to the show cause notice issued by the respondent - HELD THAT:- We permit the appellant to make suitable reply to the impugned show cause notice dated 21.03.2018 within a period of two weeks from the date of receipt of a copy of this order. On such receipt, the respondent shall pass appropriate orders within a period of two weeks thereafter.
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2019 (7) TMI 1868 - ITAT MUMBAI
Exemption u/s 11 - withdrawing registration granted u/s 12A - CIT-E cancelling registration granted u/s 12A by invoking his powers u/s 12AA(3) - sole reason given by the Ld. CIT(E) for cancellation of registration is that the assessee has collected ‘Building fund’ from parents/students, thereby, violated provisions of Prohibition of Capitation Fee Act (Government of Maharashtra), 1987 - HELD THAT:- As gone through provisions of the Maharashtra Educational Institution, Prohibition of Capitation Fee Act (Government of Maharashtra), 1987 and rules and regulation. As per section 5 of the Principle Act, any trust or institution is authorised to collect voluntary donations from any benevolent persons for the purpose of development of trust/institution, but such donations shall not be collected in pursuance of admission to a course in a college/schools run by the trust or institution.
In this case, on perusal of details available on record, it is abundantly clear that the donations collected from the parents/students in the form of building funds is voluntary and such funds have been applied for the purpose of development of buildings and other infrastructures. It is also not in dispute that the donations including fees collected from students is not in excess of prescribed fees fixed by the statement government - CIT(E) erred in cancelling registration granted under section 12A by invoking his powers under section 12AA(3) of the IT Act, 1961 only for the reason of receipt of donations from students/parents without appreciating the fact that such donations are voluntary and also within the limit prescribed limit fixed by the competent authority.
DIT(E) in his order except stating that the trust is collecting donations being 'Building Fund’ from students/parents has not made any observations with regard to activities of the trust, if any, as referred to in section 11 or 13 of the IT Act, 1961. Unless, the Ld. DIT(E) brings on record any evidences to prove that the objects of the trust are not charitable in nature and its activities are not carried out in accordance with objects, then merely for the reason of collection of donations from students, that too when such donations are within the limit at prescribed fees fixed by the competent authority, registration granted under section 12A cannot be cancelled by invoking his powers under section 12AA(3) - Decided in favour of assessee.
Exemption u/s 11 - Once registration granted under section 12A is available to the assessee from the date of registration including for the impugned assessment year, then the AO was incorrect in denying the exemption under section 11 of the Income Tax Act, 1961. Therefore, we direct the AO to allow the benefit of exemption claimed under section 11, in respect of income derived from property held under trust subject to other provisions of the IT Act, which is applicable to the assessee.
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2019 (7) TMI 1865 - ITAT LUCKNOW
Exemption u/s 11 - claim under the head ‘objects of general public utility’ OR under the head ‘preservation of environment’ - HELD THAT:- As following the judicial precedent in the case of the assessee itself [2019 (3) TMI 1920 - ITAT LUCKNOW] the activities being undertaken by the assessee are held to be charitable in nature. As regards the arguments of Learned D. R. that in earlier years the assessee had claimed exemption under the head ‘objects of general public utility’ whereas in the years under consideration the assessee had claimed exemption under the head ‘preservation of environment’ (including watersheds, forest and wildlife) we find that the specific clause would always prevail over the general clause. The amendment to section 2(15) was made with effect from 01/04/2009 whereby preservation of environment was included as a specific object u/s 2(15) of the Act and since the activities of the assessee fell in the specific category therefore, learned CIT(A) has rightly considered the same - Decided in favour of assessee.
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2019 (7) TMI 1864 - ITAT MUMBAI
Addition u/s 68 as unexplained cash credit - Bogus share application money received by the assessee - HELD THAT:- It is well settled that in order to discharge the onus u/s 68 of the, the assessee must prove the identity of the creditor, the capacity of the creditor to advance money; and the genuineness of transaction.
It is also well settled that after the assessee has adduced evidence to establish prima facie the aforesaid, the onus shifts to the department - assessee filed before the AO the relevant details and supporting documents with regard to issue of shares at a premium. A perusal of the assessment order clearly indicates that the AO without making any sort of inquiry has rejected the evidence filed by the assessee on the basis of conjectures and assumptions. Facts being so, we confirm the order of the Ld. CIT(A). Appeal filed by the revenue is dismissed.
Reopening of assessment u/s 147 - want of approval of satisfaction for re-opening the case from the competent authority as required u/s 151 - HELD THAT:- In the instant case, the return of income originally filed by the assessee on 30.09.2009 was processed u/s 143(1) of the Act -In the instant case, the AO has rightly issued notice u/s 148 for reopening the return of income processed u/s 143(1) of the Act. Accordingly we dismiss the cross-objection filed by the assessee.
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2019 (7) TMI 1863 - DELHI HIGH COURT
Correct Assessment year - HELD THAT:- As Revenue has placed before the Court an order [2013 (11) TMI 1785 - DELHI HIGH COURT] by this Court admitting the Revenue‟s appeal which is for the Assessment Year (AY) 2004-2005.
Issue notice to the Respondent. List on 26th September, 2019.
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2019 (7) TMI 1861 - AUTHORITY FOR ADVANCE RULINGS — MUMBAI BENCH (INCOME-TAX)
Income taxable in India - transfer of shares of the Indian subsidiary - capital gains on transfer of equity shares of wholly owned subsidiary IEE Pvt.Ltd. will be taxable in the hands of the applicant at the rate of 10 per cent. in accordance with section 112(1)(c)(iii) of the Income-tax Act, 1961 - applicant is an Australian company and has sold the entire shareholding in its wholly owned Indian subsidiary to an entity of APXL group - applicant was controlling the affairs of the Indian subsidiary through its key managerial personnel (KMP) - applicant contends that it is a tax resident of Australia and as per article 13(5) of the India-Australia Tax Treaty on "Alienation of property", the sale of equity shares of IEE Pvt. Ltd. may be taxed in India
HELD THAT:- Applicant is operating in India through wholly owned subsidiary (IEE Pvt. Ltd.) and on account of the world wide operations of applicant group, it has established supply agreements and the developed warehouse management, inventory control software and accounting system and the same practices were employed in running operations in India. It is also noticed that as part of business strategy the applicant group entered into strategic alliance with APXL group in 2006 (much before the impugned sale in 2012), sharing part of its supply chain and other practices. Along with the application what was submitted was share purchase agreement and clause 5.4 of the said agreement mentions that all strategic arrangements would cease with effect from the closing date of share purchase agreement. The Department's contention that the transaction is more than share transfer is thus not correct
Slump sale - Argument of the Revenue that it is a case of slump sale is not borne out by facts. All the assets and liabilities IEE Pvt. Ltd. remain with IEE Pvt. Ltd. after the transfer and what has changed is the shareholding pattern. Further a perusal of the share purchase agreement, clause 5.4 reveals that all strategic agreement will automatically stand terminated with effect from closing of the share purchase agreement.
Value of share of IEE Pvt. Ltd. is not ascertainable thus the fair market value of the capital assets on the date of transfer shall be deemed to be full value of the consideration received as per section 50D and also to ascertain the fair market value reference to valuation officer under section 55A is called for - The plea of the Department is not tenable as during the course of hearing the applicant has provided the valuation report prepared by BSR & Co. and the same was shared with the Department and their letter dated May 16, 2019 comments were also offered on the said valuation. The valuation report lists out various projections and assumptions and after employing the discounted cash flow method, the value of share was arrived at 5.34 AUD per share (₹ 372 per share). The actual share transfer has happened at ₹ 182 per share owing to hard bargaining by the buyer. Thus, the value of share was ascertained and pleas of the Department are rejected.
Difference between ascertained price and the actual sale price is income of buyer as per section 56(2)(viia) - The said argument is really not pertinent to the case of the applicant as it is the seller of the shares. The referred section affects the buyer and the Department is at liberty to proceed against the buyer on the differential between fair market value and actual sale price.
Substantial question raised in the application is answered in the affirmative, i. e., the capital gains on transfer of equity shares of IEE Pvt. Ltd. will be taxable in the hands of the applicant at the rate of 10 per cent. in accordance with section 112(1)(c)(iii) of the Income-tax Act, 1961.
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2019 (7) TMI 1860 - ITAT BANGALORE
Expenses claimed u/s 57 - various expenses incurred by the assessee viz., PMS charges, professional fees salary is integral to the investment activity undertaken by him and to earn the income returned in the return of income for the previous year - admission of additional evidence of assessee accepted - HELD THAT:- PMS charges - There is no mention about any investment in foreign securities in this PMS agreement. This is also seen that as per the balance sheet, the investment in Indian companies is only about securities and not any bank deposit, income of which is taxable. Hence on the entire investment of the assessee through PMS, the only income which can be earned is dividend income or capital gain and none of these two incomes is taxable under the head ‘Income from other sources’ and therefore, such expenses is not allowable u/s. 57(iii) of the IT Act. Hence, the additional evidence filed by the assessee is not rendering any help to assessee in the present case.
The second major head of expenses is Salary and bonus - the narrations given in the ledger account, the name of the employees is given and, there is no such detail as to what work is entrusted to these employees and whether the work entrusted to these employees is regarding earning of income taxable under the head ‘Income from other sources’. Hence, this expenditure on Salaries and bonus is not correlated by assessee with earning of income taxable under the head ‘Income from other sources’ and therefore, this expenditure of Salaries and bonus is also not allowable u/s. 57(iii) of the IT Act.
Professional charges - only detail available is this as to whom it was paid and for which period. There is no such detail available as to whether such professional charges is in respect of earning of income taxable under the head ‘Income from other sources’ and therefore, even after considering the additional evidence, these expenses of Professional charges also cannot be held to be allowable u/s. 57(iii).
Hence, it is held that these three expenses i.e. PMS charges, Salaries and bonus and Professional charges are not allowable u/s. 57(iii) of the IT Act and the remaining expenses is very small and less than the amount of expenses already allowed by the AO.- Decided against assessee.
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2019 (7) TMI 1859 - ITAT AHMEDABAD
Disallowance u/s 14A read with Rule 8D - assessee has debited interest expenses in the Profit & Loss Account and also made large investment on which he earned tax free income which is not forming a part of the total income - HELD THAT:- Since interest receipts are excess than the expenditure on interest there should not be any disallowance in Rule 14A of the Act in view of several judicial pronouncements including Safal Realty Pvt. Ltd.[2013 (11) TMI 1588 - ITAT AHMEDABAD] - It is also settled principal that disallowance cannot exceed the total expenditure claimed by the assessee. The appellant had incurred and claimed total expenditure of ₹ 32,235/- (₹ 2235 + 30,000). In that view of the ratio laid down by the judicial pronouncements as discussed above, the CIT(A) correctly restricted disallowance of ₹ 32,235/- being the total expenditure claimed by the assessee deleting the remaining addition of ₹ 8,60,278/-. - Decided against revenue.
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2019 (7) TMI 1858 - ITAT CHENNAI
Bogus LTCG - Exemption u/s 10(38) - assessee is involved in promoting the penny stock company - HELD THAT:- As not brought on record how the assessee is involved in promoting the penny stock company and how the assessee involved in inflating the shares of the company. Moreover, the copy of the investigation report said to be received from the Investigation Wing of the Department at Kolkata was not furnished to the assessee.
This Tribunal is of the considered opinion that the matter needs to be re-examined by the AO. Accordingly, orders of both the authorities below are set aside and the issue raised by the assessee with regard to deduction under Section 10(38) of the Act is remitted back to the file of the AO. AO shall examine the matter as directed by this Tribunal in the case of Kanhaiyalal & Sons [2019 (2) TMI 1640 - ITAT CHENNAI] and thereafter decide the issue afresh in accordance with law, after giving a reasonable opportunity to the assessee - Appeal filed by the assessee is allowed for statistical purposes
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2019 (7) TMI 1857 - ITAT MUMBAI
Adjustment from the actuarial valuation - assessment of life insurance business - HELD THAT:- We noted that this issue is squarely covered by the decision of ITAT in assessee’s own case [2017 (8) TMI 1644 - ITAT MUMBAI] - We have noted that the Tribunal is taking a consistent view in all the cases of life insurance business and allowing adjustment from surplus arrived at as per actuarial valuation while interpreting section 44 of the Act r.w. Rule -2 of the First Schedule along with the provisions of Insurance Act 1938, Insurance Regulatory and Development Authority Act 1999 and regulations there under. As the issue is squarely covered in favour of the assessee consistently, the Ld. CIT DR could not point out any distinguishing facts in the present case. Hence, we affirm the order of the CIT(A) and dismiss this issue of Revenue’s appeal.
Transfer between share holders account and policy holders account is tax neutral and not taxable u/s. 44 of the Act r.w. Rule-2 of the First Schedule - HELD THAT:- As decided in own case [2017 (8) TMI 1644 - ITAT MUMBAI] Tribunal has already concluded that transfer between share holders account and policy holders account is tax neutral and not taxable u/s. 44 of the Act r.w. Rule-2 of the First Schedule. It was the contention of the Revenue that the Revenue has not accepted the decision of the ITAT and further appeals have been filed before the Hon'ble High Court. We noted that it is an admitted position that this issue is squarely covered in favour of the assessee in assessee own case vide orders of the Tribunal, hence, are not interfering in the finding of CIT(A) allowing the claim of the assessee. Even before us, now also the Ld. DR could not distinguish the facts of the present case vis-à-vis the orders of the Tribunal in earlier years.
100% depreciation in respect of assets costing less than ₹ 20,000/- - HELD THAT:- As there is no dispute on facts, the claim of assessee is that it has been consistently following the policy of providing depreciation @ 100% on the value of assets costing less than ₹ 20,000/-. The contention of the assessee is that since computation of profits and gains of the business of assessee, being in the business of life insurance, is in accordance with the provisions of section 44 of the Act, which over rides section 28 to 43B of the Act are not applicable to the assessee for determining the income from life insurance business. We noted that this issue is now settled and Revenue could not point out any distinguishing facts from earlier years [2017 (8) TMI 1644 - ITAT MUMBAI] and [2018 (1) TMI 1585 - ITAT MUMBAI]. Hence, we confirm the order of the CIT(A) and dismiss this Ground of Revenue’s appeal.
Exemption u/s 10(34) in respect to dividend income - dividend income is considered as part of income of Insurance Business and is included as an 'income' by the actuary - HELD THAT:- We note that this issue has been consistently decided in favour of the assessee by allowing the claim of exemption on account of dividend u/s. 10(34) of the Act by the Tribunal in earlier years and hence, taking a consistent view, we confirm the order of CIT(A) and this issue of Revenue’s appeal is dismissed.
Addition u/s 14A r.w.r. 8D - disallowance of expenses relatable to exempt income - CIT(A) held that no disallowance is attracted u/s. 14A of the Act in assessee’s own case even if it is held that the assessee is entitled to claim u/s.10(34) of the Act in respect of dividend income -HELD THAT:- As noted that the Tribunal is consistently taking a view that no disallowance u/s.14A of the Act r.w. Rule 8D of the Rules can be made while computing a total income of the person engaged in the business of insurance whose profits and gains from insurance business is computed in terms of the provision of section 44 of the Act r.w. First Schedule of the Act. As the Tribunal is consistently taking a view on this issue, we confirm the order of CIT(A) and this common issue is allowed in favour of the assessee. Accordingly, this issue in the appeal of the Revenue is dismissed and that of assessee’s appeal is allowed.
Carry forward of losses as assessed under the head ‘income from other sources’ - HELD THAT:- This issue is covered in favour of the assessee by Co-ordinate Bench decision in assessee’s own case for assessment year 2008-09 [2018 (1) TMI 1585 - ITAT MUMBAI] wherein the Tribunal has allowed the carry forward of losses u/s. 72.
Assessment of income - surplus available in share holders account is to be assessed as income from other sources or an income from insurance business - rates specified u/s.115B - HELD THAT:- As decided in own case [2017 (8) TMI 1644 - ITAT MUMBAI] these grounds are held in favour of the appellant and the AO is directed to apply the tax rate of 12.5% as per the provisions of section 115B in respect of the surplus in SHA by treating the same as part of the profits and gains of Life Insurance business and in respect of the income assessed as Profits and gains of life insurance business.
Claim of deduction on account of decrease in negative reserve - HELD THAT:- As in case HDFC STANDARD LIFE INSURANCE COMPANY LTD. AND OTHER VERSUS DCIT (OSD) -1 (1) MUMBAI AND OTHERS [2013 (10) TMI 1072 - ITAT MUMBAI] allowed the claim of the assessee - CIT(A) only on this basis allowed the claim of assessee of negative reserve. Since the issue is covered in favour of the assessee in regard to actuarial valuation, we uphold the order of CIT(A). The issued raised by the assessee in regard to negative reserve has become academic and, hence, infructuous.
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