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Income Tax - Case Laws
Showing 1 to 20 of 803 Records
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2016 (8) TMI 1594 - ITAT MUMBAI
Addition u/s 69C - peak cash credit in respect of alleged bogus purchases - HELD THAT:- AO issued notice u/s 133(6) of the Act to the said suppliers which were not replied and when the assessee was confronted with the said fact, it was submitted that they had shifted their business locations.
AO received information from the Sales Tax Department qua the above suppliers being suspicious dealers. We find merit in the arguments of the ld. AR that sources of purchases of material were not in dispute. The assessee has made purchases from these suppliers and duly made payments to the said suppliers and therefore the payments were duly reflected in the books of accounts of the assessee and therefore the provisions of section 69C of the Act cannot be invoked
A plain perusal of the provisions of section 69C reveals that where the assessee has incurred any expenditure and the sources whereof could not be explained before the AO or AO is not satisfied with the explanation of the assessee only then provisions of section 69C could be invoked and not otherwise. In our view the order of CIT(A) upholding the application of provision of section 69C of the Act was wrong as the source of payment was not doubted or disputed. Decided in favour of assessee.
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2016 (8) TMI 1593 - ITAT MUMBAI
Provision of warranty - deduction u/s 37 denied - assessee had failed to maintain systematic data in support of its claim for provision of warranty - Assessee’s contention that such warranty was necessary and was part of contract of sale - CIT(A) deleted the addition - HELD THAT:- As per accounting system regularly followed by assessee, such provision was made @ 2% of sales and would written back if in excess at the expiry of warranty period.
CIT(A) observed that assessee’s case is squarely covered by the decision of M/s. Rotork control India Pvt. Ltd. [2009 (5) TMI 16 - SUPREME COURT] wherein observed that the valve actuators manufactured by the assessee, were sophisticated goods and statistical data indicated that every year some of these were found defective; that valve actuators being a sophisticated items, no customer was prepared to buy a valve actuator without a warranty.
Therefore the warranty became an integral part of the sale price; in words the warranty was attached to the sale price of the product. In this case the warranty provision had to be recognized because the assessee had a present obligation as a result of past event resulting in outflow of resources and reliable estimate could be made of the amount of obligation.
As assessee had incurred a liability during the assessment year which was entitled to deduction u/s 37 - Facts being similar, so, following same reasoning, CIT(A) was justified in granting relief to assessee. This reasoned factual finding of CIT(A) needs no interference from our side - Decided against revenue.
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2016 (8) TMI 1592 - SC ORDER
Addition on account of capital gain on the basis of valuation of asset by DVO - FMV determination - resorting to section 50C - Commissioner (Appeals), who observed that if the stamp duty valuation is higher than the amount declared by the assessee the same has to be considered as a fair market value and if the valuation arrived at by the DVO was less than the value adopted by the stamp valuation authority, the fair market value is to be taken as the value by the DVO - as decided by HC [2016 (4) TMI 480 - GUJARAT HIGH COURT] the condition precedent for resorting to the provisions of sub-section (1) of section 50C is that the land or building should have been transferred for a lesser consideration than that adopted or assessed or assessable by the stamp valuation authority and in the present case, undisputedly the valuation made by the assessee exceeds the value adopted by the stamp valuation authority - condition precedent for invoking sub-section (1) of section 50C of the Act is, therefore, clearly not satisfied. Consequently, there was no question of referring the valuation of the plots in question to the Valuation Officer.
HELD THAT:- We do not see any reason to interfere with the impugned order. The special leave petition is dismissed.
Pending applications, if any, stand disposed of.
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2016 (8) TMI 1590 - ITAT INDORE
Ex-parte order passed by CIT(A) - on various dates of hearing the case was not attended by the counsel - assessee contended that no proper opportunity of hearing was afforded to the assessee - CIT(A) was not justified in rejecting the appeals of the assessee ex-parte. The documents relied by the AO were not made available to assessee - HELD THAT:- The principle of audi alteram partem is the basic concept of natural justice. The expression “audi alteram partem” implies that a person must be given opportunity to defend himself. This principle is sine qua non of every civilized society. The right to notice, right to present case and evidence, right to rebut adverse evidence, right to cross examination, right to legal representation, disclosure of evidence to party, report of enquiry to be shown to the other party and reasoned decisions or speaking orders.
We find that the right of hearing is decided by the Hon'ble Supreme Court in the case of Maneka Gandhi vs. Union of India, [1978 (1) TMI 161 - SUPREME COURT] as held that rule of fair hearing is necessary before passing any order. We find that it is pre-decision hearing standard of norm of rule of audi alteram partem.
We find that in this instant case, the assessee was not given proper hearing. Therefore, we are of the view that the assessee must be given one more opportunity of hearing and to represent his case. Therefore, we restore these appeals to the file of ld. CIT(A) for allowing proper opportunity of being heard in accordance with law. Appeals of the assessee are allowed for statistical purposes.
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2016 (8) TMI 1588 - DELHI HIGH COURT
Assessment of trust - Income earned from conducting casual and ‘non-recognized’ courses - educational institution within the meaning of Section 10(23)(c)(vi) - HELD THAT:- The issue stands covered against the Revenue and in favour of the Assessee by the decision of Delhi Music Society vs. DGIT [2011 (12) TMI 124 - DELHI HIGH COURT] - Consequently, no substantial question of law arises for determination.
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2016 (8) TMI 1587 - ITAT BANGALORE
CIT-A dismissing the appeal on the ground of non-payment of admitted taxes - mandatory conditions to invoke the jurisdiction u/s 153C of the Act did not exist - HELD THAT:- While filing an appeal before the CIT(Appeals), the assessee is required to pay the tax on the admitted return of income. But in the instant case, on the admitted return of income, the assessee has already paid the taxes. The assessee has not paid the taxes on the revised return which was not treated to be valid by the AO and was non est in law. Since the revised return was treated to be non est in law, there was no question of making payment of tax on the income declared therein.
Therefore, we are of the view that the assessee has already paid the tax on the admitted income declared in the original return filed which was acted upon by the AO for framing the assessment u/s. 153C of the Act. In the light of these facts, we are of the view that the CIT(Appeals) was wrong in dismissing the appeal of the assessee. Therefore, we set aside his order and restore the matter to his file with a direction to readjudicate the appeal on merits by passing a reasoned order.
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2016 (8) TMI 1586 - ITAT PUNE
Deduction u/s. 80IB(10) - housing project ‘Kumar Puram’ developed by the assessee - HELD THAT:- Assessing Officer in the assessment year 2001-02 had raised similar objections in disallowing the claim of deduction u/s. 80IB(10) on the housing project ‘Kumar Puram’ developed by the assessee. In appeal filed by the assessee before the Tribunal, the Tribunal decided the issue in favour of the assessee. The Commissioner of Income Tax (Appeals) in the impugned order has followed the order of Tribunal i [2013 (2) TMI 925 - ITAT PUNE] and accepted the claim of the assessee in assessment years under appeal.
DR has not placed on record any material to controvert the findings of Tribunal. In the absence of any contrary material, we find no infirmity in the order of CIT (Appeals) on this issue. Accordingly, the findings of CIT (A) on this issue are affirmed and the ground raised by the Department against allowing claim of deduction u/s. 80IB(10) of the Act to the assessee is dismissed.
Disallowance u/s. 14A r.w. Rule 8D - HELD THAT:- Assessee has earned exempt income from share of profit from the partnership firm and dividend. The disallowance has been made by the AO u/s. 14A read with Rule 8D. The Hon'ble Jurisdictional High Court in the case of Godrej and Boyce Mfg. Co. Ltd [2010 (8) TMI 77 - BOMBAY HIGH COURT] has held that Rule 8D would apply from assessment year 2008-09.
Some reasonable disallowance has to be estimated u/s. 14A for earning income exempt from tax. The Commissioner of Income Tax (Appeals) has restricted the disallowance to 10% of the exempt income - The assessee has accepted the same. We do not find any infirmity in the order of CIT (Appeals). Accordingly, the issue raised by the Department against restricting the disallowance u/s. 14A to 10% of the exempt income is devoid of any merit. Accordingly, this ground of appeal of the Revenue is dismissed.
Depreciation on Motor Cars - AO disallowed the claim of depreciation on motor cars on the ground that twin conditions for claiming depreciation u/s. 32 assets should be used for the purpose of business and assets should be owned by the assessee, are not satisfied - HELD THAT:- Commissioner of Income Tax (Appeals) has allowed the claim of the assessee by placing reliance on the decision of the Co-ordinate Bench of the Tribunal in the case of Rohan Builders and Developers Pvt. Ltd. [2012 (6) TMI 319 - ITAT PUNE]. We do not find any infirmity in the order of CIT (Appeals) in accepting the claim of the assessee. Thus, in view of the facts of the case and the decision of Co-ordinate Bench, the ground of appeal raised by the Department against allowing of depreciation on motor vehicles registered in the name of Directors of the assessee company is dismissed.
Deduction u/s. 80IA(4)(iii) - assessee has complied with all the conditions laid down under the Industrial Park Scheme, 2008 and thus, the assessee is eligible to claim deduction u/s. 80IA(4)(iii) - HELD THAT:- In the present case the project of the assessee was initially approved under IPS 2002 on 15-02-2005. The assessee had claimed deduction u/s. 80IA(4)(iii) in assessment year 2006-07 which was allowed to the assessee. The assessee could not complete the project within the time frame specified in IPS 2002 i.e. 31-03-2006. The assessee applied for notification of the project under IPS 2008. The project was notified by CBDT on 09-07-2010. After notification of the project under IPS 2008, the eligibility of deduction has to be seen with respect to the new scheme.
Thus, in view of the facts of the case and the observations of the Co-ordinate Bench of the Tribunal we find no merit in the contentions of the ld. DR that the assessee is not eligible to claim deduction u/s. 80IA(4)(iii) in assessment years under appeal.
Second objection of the Revenue is that minimum 30 units were not established as per the scheme - The order of the Tribunal in the case of M/s. Kolte Patil Developers Ltd. Vs. Dy. Commissioner of Income Tax [2015 (3) TMI 363 - ITAT PUNE] further strengthens the case of assessee in allowing the deduction u/s. 80IA(4)(iii) of the Act. Accordingly, the ground of appeal raised by Department against allowing deduction u/s. 80IA(4)(iii) to the assessee is dismissed.
Disallowing the claim of assessee with respect to interest expenditure pertaining to interest free advances given to various parties - HELD THAT:- As in view of the absence of vital information, we are of the considered view that this issue needs a revisit to the file of Assessing Officer to ascertain the financial position of the assessee at the time of giving advances. In case own interest free funds of the assessee are sufficient to cover the advances at the time of making such advances, no disallowance should be made in view of the decision of Hon'ble Jurisdictional High Court in the case of Commissioner of Income Tax Vs. Reliance Power Utility Ltd [2009 (1) TMI 4 - BOMBAY HIGH COURT] Accordingly, ground No. 3 raised in the appeal of the assessee for assessment year 2007-08 is allowed for statistical purpose.
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2016 (8) TMI 1585 - ITAT MUMBAI
Assessment u/s 153A - Rejection of books of accounts - estimation of turnover and profit thereon - Addition based on material on record - Assessing Officer did not accept the books of account, so, he estimated the turnover and profit thereon - AR submitted that these additions are not based on the seized materials at the time of search as discussed above, but only on the basis of cash flow statement prepared by assessee irrespective of correlation to search material - HELD THAT:- Addition in question has no nexus with search material, so, addition is not justified in view of decision of All Cargo Global Logistic Ltd. [2012 (7) TMI 222 - ITAT MUMBAI(SB)] So, in the proceedings after search in the assessment u/s.153A of the Act addition should have nexus with seized material found at the time of search.
Without prejudice to above, estimation of turnover and profit thereon in question is also not based on material on record. Agreeing to alternative contention of assessee, we find that assessee had been doing agency work on behalf of other parties. There is nothing on record to suggest that assessee was doing the said transaction at his own. Assessing Officer has not brought anything on record to suggest that above land transaction were done by assessee in his name. It could have been corroborated by AO with real instances of transaction which has not been done by him. In such situation, assessee cannot be taxed on the basis of on money transaction of its client. So, addition in hand of assessee is not justified. Same is directed to be deleted.
Unsecured loan as undisclosed cash credit u/s 68 - HELD THAT:- Agreeing to the contention of ld. Authorized Representative, we are of the view that Assessing Officer was not justified in making addition u/s.68 of the Act without making nexus of the same with the seized material found at the time of search. Moreover, non appearance of creditor before Assessing Officer is not sound basis of addition in question while they have confirmed the same and all details of parties were with Assessing Officer at relevant point of time including their PAN number. Assessing Officer has not exercise his option to summon parties to verify the fact which has not been done for the reasons known to him. So, addition in question is not justified. Same is directed to be deleted.
Addition u/s.68 on account of current liabilities as unexplained cash credit - Assessment of income of deceased assessee - Assessee failed to establish the identity and creditworthiness of aforesaid parties and genuineness of such transactions u/s.68, So, same was added to the income of deceased assessee - HELD THAT:- Since, deceased assessee had filed confirmation from both parties, addition was not warranted. Deceased assessee has categorically given the details of parties and transactions therewith. Once transaction was stated to be completed, so, it was no more liability. All details in this regard were filed before Revenue authorities. Assessee has tried to prove the identity by giving details of parties. Agreeing to alternate contention of assessee, we hold that addition in question having no nexus with seized material as discussed above, so in view of the ratio laid down in All Cargo Global Logistic Ltd. [2012 (7) TMI 222 - ITAT MUMBAI(SB)], addition u/s.68 of the Act is not justified. Under facts and circumstances, the addition in question is directed to be deleted.
Addition of household expenses - Estimating withdrawal as against shown in capital account - Assessing Officer estimated withdrawals at Rs.4,80,000/- as against Rs. 2,34,218/- on account of household expenses - HELD THAT:- The stand of deceased assessee has been that this addition is on the basis of purely on estimation and having no nexus with the seized material found at the time of search. Agreeing to the contention on behalf of assessee and in view of ratio laid down in All Cargo Global Logistic Ltd. (supra) as discussed above, addition in question is not justified. Same is directed to be deleted.
Unexplained expenditure u/s.69C - HELD THAT:- There is nothing on record to suggest that assessee was doing the said transaction at his own. Assessing Officer has not brought anything on record to suggest that above land transaction were done by him in his personal capacity. In such situation, assessee cannot be taxed on the basis of on investment transaction of its client. So, addition in hand of assessee is not justified. Same is directed to be deleted.
Addition made on account of current liabilities and unsecured loan as cash credit u/s.68 - Assessee has shown current liabilities against various parties’ narrations - Since, deceased assessee was not able to give satisfactory answer to the Assessing Officer, so, same was u/s.68 - HELD THAT:- As stated above, assessee was broker, transactions were doen on behalf of investor. Assessing Officer has brought nothing on record to suggest that as in fact dealing in land as parties. Same could be done by making nexus to land deal. But, on such effort has been made by revenue authorities. In view of above discussion, addition in question is not justified. Same is directed to be deleted.
Protective assessment of all deposits of an account - HELD THAT:- As the substantive addition on account of unexplained bank deposits made by Assessing Officer in the hands of deceased assessee was deleted. However, in order to safeguard the interest of the Revenue, it was held that protective addition towards unexplained deposits in aforesaid bank account will continue in the hands of assessee till the said amount is finally assessed in the hands of assessee’s HUF. Once CIT(A) held that the amount belongs to bank account deposit should be assessed in the hands of Late Sunil D. Gulati (HUF), so, protective addition in case of deceased assessee is not justified and same is directed to be deleted.
Addition on account of Deal Wise Excel Sheets for a sum as unexplained expenditure u/s.69C - HELD THAT:- A preliminary analysis of these two statements revealed that they had several defects/ shortcomings as outlined in paras 33 to 3.3.4 on page 3-4 of the impugned order for which no clarification was given at the time of assessment. It was concluded that these statements did not reflect the true and correct picture of the business and personal transactions of the appellant and as such could not be relied upon. During course of assessment proceedings, deceased assessee was asked to furnish complete details/explanation in respect of all such DWES along with supporting documents and evidences. Similar issue arose in A.Y. 2003-04 wherein vide para 3 of this order wherein we have deleted similar addition. Facts being similar, so following same reasoning, the addition in question is directed to be deleted.
Addition on account of other cash / unaccounted transaction by treating it as unexplained expenditure u/s.69C - HELD THAT:- Revenue authorities have to bring concurrent evidence with regard to the said explanation vis-à-vis plot. Deceased assessee was not an investor. He was doing investment on behalf of other parties. He might have done something wrong for increasing brokerage business. After search, Revenue authorities had option to unearth transaction correspondence to the expenditure in question which has not been done, meaning thereby, Revenue authorities have not found this document in course of search. So, such transactions done for the sake of business cannot be made sound basis for addition in question. In view of above discussion, addition is not justified. Same is directed to be deleted.
Cash/unaccounted transaction by treating same as unexplained expenditure - HELD THAT:- As deceased assessee’s consistent stand has been accepted by us that he was only a Real Estate agent or broker or deal maker and hence he used to block the plots by giving some advances to the plot owners-cum-farmers on behalf of investors only. Revenue authorities had not brought anything on record to suggest that assessee himself purchased property in question from the farmers. In such a situation, assessee was entitled for brokerage only. In view of above, addition in question is not justified. Same is directed to be deleted.
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2016 (8) TMI 1582 - ITAT MUMBAI
TP Adjustment - Comparable selection - international transaction pertaining to provision of software development services undertaken by the assessee with its AE - HELD THAT:- Companies functionally dissimilar with that of assessee need to be deselected.
Depreciation on UPS - treating it as ‘Plant and Machinery’ eligible for 15% rate of deprecation as against the claim of 60% made by the assessee on the ground that, the same has to be treated as part of the computer - HELD THAT:- Before us, nothing has been brought on record to the on the fate of such a finding given by the DRP in the AY 2009-10. Once in the earlier year, depreciation has been allowed @ 15% not 60%, then no different stand can be taken in this year, because depreciation has to be allowed on WDV. Accordingly, ground as taken by the assessee is treated as dismissed.
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2016 (8) TMI 1580 - ITAT AHMEDABAD
Principle of mutuality - Allowance of depreciation - assessee was settled / incorporated as per the order of Hon'ble jurisdictional High Court to treat the effluent of hazardous / created in and around of Vapi - HELD THAT:- As decided in assessee own case []2012 (4) TMI 813 - ITAT AHMEDABAD] basic object of the company is to give treatment of effluent in the form of liquid and solid to prevent the pollution in Vapi Industrial area on the suggestion of the Hon’ble Gujarat High Court. The company is limited by guarantee. There is no share capital of the members. Only subscription is made on the basis of wastage delivered by their plants. No dividend has been distributed by the company so far. The object mentioned in the main and ancillary object are as per the line of the company act but it is not for profit earning. The Board of Director has to pass resolution to allow the outsider to get the services of the company. No director is outside from the members of Vapi Industrial Association.
On the basis of decision of Hon’ble Gujarat High Court in the case of Sports Club of Gujarat [1987 (10) TMI 21 - GUJARAT HIGH COURT] the assessee also has declared the interest income in return as taxable on fixed deposit with bank however, it was admitted that no outsider had provided the services of the company but the AO is directed to verify the claim of the assessee whether any outsider is getting services or not from non-members, has to be taxed accordingly after giving full opportunity to the assessee. The assessee is also directed to cooperate with the A.O. and give all the evidences as required by the A.O. for his satisfaction. The revenue appeal on allowance of depreciation by the CIT(A) has no bearing as the principle of mutuality has been accepted by this Court.
We affirm CIT(A)’s findings under challenge in these facts and circumstances. Revenue’s other substantive ground are rendered academic in view of our adjudication on mutuality principle in assessee’s favour.
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2016 (8) TMI 1579 - ITAT MUMBAI
Allowable business expenses u/s 37(1) - expenses incurred for the running of the business of the assessee OR Income from house property - disallowing the claim of expenses from the business income on the alleged plea that the said expenses was claimed by the appellant against the Income from Houses Property - as per DR All the expenses have to be included for disallowance as business is composite - HELD THAT:- Respectfully following the afore-stated decision of the co-ordinate bench of this Tribunal in assessee’s own case in the immediately preceding assessment year [2016 (4) TMI 1435 - ITAT MUMBAI] for assessment year 2010-11 as facts are identical in the instant appeal, we are also inclined to set aside the matter to the file of the A.O. for verification of the various expenses like business promotion expenses , advertisement expenses and any other expenses debited to Profit and Loss which are directly attributable to earning of lease rental income having regards to the account of the assessee , will be disallowed by the A.O.
It is also noted that in the preceding assessment year , the assessee suo motu voluntarily disallowed electricity expenses incurred in relation to R-Mall but the same are not disallowed in the instant assessment year under appeal which aspect shall also be looked into by the AO. This disposes of Ground No. 1, 2 & 3 raised by the assessee in the memo of appeal filed with the Tribunal as set out above. We order accordingly.
Disallowance u/s 14A - as contended no expenses have been incurred for earning the exempt income as the assessee was having sufficient own funds for the investments made in the shares - HELD THAT:- We find that on identical facts in the immediately preceding year, the co-ordinate Bench of this Tribunal in assessee’s own case [2016 (4) TMI 1435 - ITAT MUMBAI] for assessment year 2010-11 has set aside the matter back to the file of the A.O. to decide the matter in accordance with the ratio of case of Cheminvest Ltd. [2011 (11) TMI 267 - DELHI HIGH COURT] and also work out disallowance of interest expenses after considering the availability of assessee’s own funds vis-à-vis investments made which yields exempt income - thus we set aside and restore the matter back to the file of the A.O. with the same directions as were given in the Tribunal afore-stated order for the immediately preceding assessment year.
Disallowance u/s 40(a)(ia) being the alleged difference between amount mentioned in the tax audit report and the return of income - assessee is in second appeal before the Tribunal - HELD THAT:- As observed that the assessee has failed to deduct tax at source on the work-in-progress - Since the work-in-progress is part of the P&L account , the assessee was required to disallow the same on the grounds of non-deduction of tax as per provisions of Section 40(a)(ia) of the Act and the same cannot be claimed as expenses while computing income from business as the tax has not been deducted at source.
Assessee has submitted that it has disallowed voluntarily the said amount of its own in WIP while filing return of income which needed verification by the authorities below and hence we are inclined to set aside and restore this issue to the file of the AO for de-novo determination of the issue on merits after considering the relevant evidences of the assessee. Needless to say proper and adequate opportunity of being heard shall be provided by the AO to the assessee in accordance with principles of natural justice in accordance with law.
Disallowance u/s 80G - Difference as per the tax audit report the deduction calculated and assessee had claimed deduction u/s 80G - HELD THAT:- The assessee submitted that if an opportunity is provided to the assessee, the necessary documents in support of the claim of the assessee can be submitted which can be verified by the AO and deduction can then be allowed on merits as per provisions of Section 80G of the Act. The ld. D.R. submitted that he has no objection in granting an opportunity to the assessee to submit the relevant documents and matter may be restored to the file of AO for verification. In our considered view and in the interest of justice, we set aside and restore this issue to the file of the A.O. for verification of the claim of the assessee with respect to allowability of deduction on account of donation paid by the assessee as per provisions of Section 80G.
Assessee’s appeal partly allowed for statistical purposes.
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2016 (8) TMI 1578 - ITAT NAGPUR
Nature of receipt - amount received under the sales-tax incentive scheme - revenue or capital receipt - HELD THAT:- As relying on [2015 (11) TMI 1882 - ITAT NAGPUR] assessee company was justified in claiming the sales tax incentives as exempt and not to be taken into account in computing the taxable income. The view taken by the learned CIT(A) is accordingly confirmed. The ground of appeal raised by the Revenue is dismissed.
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2016 (8) TMI 1576 - JHARKHAND HIGH COURT
Contribution of the employees to the provident fund or other welfare fund - Addition u/s 36(1) (va) or/and u/s 43B - Whether the second proviso of section 43B of Income Tax Act applies only in respect of employers' contributions to provident fund and does not apply in respect of employees' contribution to provident fund? - HELD THAT:- This issue has been decided in the case of CIT versus Alom Extrusions Ltd., [2009 (11) TMI 27 - SUPREME COURT] wherein Hon'ble Supreme Court, after considering the said explanation to Section 36(1) (va) of the Income Tax Act, has held that Section 43B of the Act would apply to the employees' contribution also.
In the present case, on 31st October, 2005 i.e. before filing of the returns, the contribution was already made to the provident fund of the employees' as well as employees' state insurance fund by this appellant and hence, the amount, in question, is covered under Section 43B of the Income Tax Act.
Thus the amount deposited by this appellant for employees' contribution to the provident fund as well as employees' state insurance fund is covered under Section 43B of the Income Tax Act. Thus the aforesaid question of law is answered accordingly.
Addition being fresh capital introduced by partners - HELD THAT:- It appears that before the assessing officer balance sheet of the assessee showing partners capital amount but no such balance sheet of the partners nor their bank statement or capital account of the partners have been presented before the assessing officer despite the adequate opportunities were given, whereas, looking to the order passed by CIT (Appeals), it has been mentioned before the Commissioner of Income Tax (Appeals) vide order dated 15th January, 2009 which is at Annexure-4 to the memo of this appeal wherein it has been mentioned that this appellant- assessee had produced the requisite evidence before AO. But AO has overlooked this evidence and document. Hence, no error has been committed by the Income Tax Appellate Tribunal in remanding the matter to AO to consider the evidence on record.
So far as partners capital account of Rs. 14,26,139.82 paise is concerned, we see no reason to take any other view what has taken by the AO as well as by the CIT (Appeals). Thus the issue raised as stated here-in-above is required to be decided on the basis of the evidence on record and hence, fresh decision will be taken by the AO on the basis of the evidence on record. So far as addition is concerned, if the said decision has not yet been taken by the assessing officer.
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2016 (8) TMI 1575 - ITAT KOLKATA
Rectification u/s 154 - credit for TDS - whether the credit for TDS was available for AY 2004-05 or 2005-06 was a debatable issue? - HELD THAT:- As submitted that even though the TDS amount in question was pertaining to the commission income accrued to the assessee in financial year 2003-04 relevant to assessment year 2004-05 as mentioned in the relevant TDS certificate, the said commission income was actually offered by the assessee in the year under consideration, i.e. AY 2005-06 on receipt basis and the assessee, therefore, was entitled to claim credit for the same in AY 2005-06.
In support of this contention, he has relied, inter alia, on the Third Member decision of Chandigarh Bench of this ITAT in the case of Shri Pardeep Kumar Dhir [2007 (4) TMI 294 - ITAT CHANDIGARH-B] - In the said case, the issue referred to Third member under section 255(4) was whether the credit for the tax deducted at source in the previous year is to be allowed in the assessment year relevant to the year in which deduction has been made or in the year in which the income is assessable to tax. It is thus clear that the similar issue as involved in the present case was referred to Third Member in the case of Shri Pardeep Kumar Dhir (supra) as there was a difference of opinion between the two Members of the Division Bench of the Tribunal on this issue and the fact that there was such a difference of opinion between the two Members of the Tribunal is sufficient to show that this issue was highly debatable on which two opinions were possible.
Therefore, find myself in agreement with the CIT(Appeals) that the rectification on such debatable issue as sought by the assessee by way of application for rectification was beyond the scope of section 154. The impugned order of the id. CIT(Appeals) on this issue is, therefore, upheld dismissing the appeal of the assessee.
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2016 (8) TMI 1574 - ITAT MUMBAI
Sale of carbon credits - whether sale of carbon credits is not derived from eligible business of generation of power? - whether carbon credits has direct nexus between activity of assessee and income generated for it? - HELD THAT:- As in case of DCIT vs. Kalpataru Power Transmission Ltd. [2016 (4) TMI 916 - ITAT AHMEDABAD] wherein assessee was engaged in business of power generation through biomass power generation unit. It received Carbon Emission Reduction Certificates (CERs) popularly known as ‘Carbon Credits’ for activity of using agricultural waste as fuel. Assessee received certain amount from transfer of carbon credit which was shown as capital receipt. Assessing Officer treated said receipt as business income and brought it to tax.
CIT(A) following the decision in case of My Home Power Ltd. [2012 (11) TMI 288 - ITAT HYDERABAD] held that the receipt on sale of carbon credits was a capital receipt and deleted the addition. On appeal, Tribunal observed that assessee was engaged in the business of power generation through biomass power generation unit. It received Carbon Emission Reduction Certificates (CERs) popularly known as ‘Carbon Credits’ for activity of using agricultural waste as fuel. Assessee received certain amount from transfer of carbon credit which was shown as capital receipt.
AO treated said receipt as business income and brought it to tax. Whether since carbon credit was not an offshoot of business but an offshoot of environmental concerns, amount received on transfer of carbon credit had no element of profit or gain and, thus, it could not be brought to tax. Ld. Authorized Representative fairly agree to restore the matter to be decided in its facts and circumstances. So, issue is restored to Assessing Officer with a direction to decide the same as per fact and law after providing due opportunity of being heard to assessee.
Additional depreciation for wind mills u/s. 32(1)(iia) - HELD THAT:- As in case of CIT vs. VTM Ltd. [2009 (9) TMI 35 - MADRAS HIGH COURT] examined the same issue and dismissed the revenue appeal seeking to disallow additional depreciation u/s.32(1)(iia) of the Act with respect of setting up a windmill by a manufacturer of textile goods. Thus, following the ratio of VMT Ltd.(supra) issue has been decided in favour of assessee with regard to addition depreciation u/s.32(1)(iia) of the Act. Hon’ble Supreme Court in case of CST vs. M.P. Electricity Board (1968 (11) TMI 85 - SUPREME COURT] held that the electricity generated by an assessee is an article or goods. The explanation to amendments (memorandum) as inserted by Finance Act, 2012 as relied upon by CIT(A) cannot be said to overrule and earlier decision of Hon’ble High Court.
An amendment that has prospective application cannot be said to retrospectively take away the rights of an assessee qua it’s explanatory notes. Where there is no ambiguity in the Section, there is no warrant for resort to external aids of interpretation namely the notes on clauses and the memorandum explaining its provisions. In the light of decision of VTM Ltd.(supra) with regard to claim of additional depreciation u/s.32(1)(iia) for setting up a windmill, wherein material being sole decision by Hon’ble High Court on the matter, we hold that additional depreciation should be allowed.
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2016 (8) TMI 1573 - ITAT DELHI
Addition on account of commission paid to directors by the assessee company - HELD THAT:- We have perused the records placed before us and orders referred and relied upon by the Ld. AR in assessee’s own case for assessment year 2005-06 and 2006-07. It is observed that the similar payment has been made to the same employee directors during those preceding years. The facts and circumstances being similar and identical to the year under consideration we respectfully following the decision of the coordinate bench of this tribunal in assessee’s own case for the previous assessment years hold that the payment of commission was justified and is allowable under section 36 (1) (iii) .
Addition made u/s 14 A read with Rule 8D on account of expenditure incurred for incurring dividend, being exempt income - HELD THAT:- It is undisputed facts that Rule 8D is not retrospective and therefore is applicable from assessment year 2008-09. We accordingly set aside this issue to the Ld. AO for calculating the disallowance under section 14 A of the act by applying the ratio laid down by the Hon’ble jurisdictional High Court in the case of M/s Maxopp Investment Ltd [2011 (11) TMI 267 - DELHI HIGH COURT]
Depreciation at the rate of 60% on addition of computer peripherals, printers, UPS etc - AO and CIT (A) allowed the depreciation @ 15% on the basis that the UPS is not an integral part of the computer as the computer can function without these peripherals - HELD THAT:- As decided in own case [2014 (7) TMI 1314 - ITAT DELHI] since the expenditure is with regard to the computer peripherals, printers, UPS which cannot be used stand alone, therefore, in view of the decision relied upon by the appellant, I agree that in the facts and circumstances of the appellant's case, he is entitled for depreciation @ 60%.
Allowability of foreign travel and conveyance expenses - AR submits that the details of the foreign travel expenses have been provided in the paper book which include the provision for dividend - HELD THAT:- We agree with the contentions of the Ld. AR that the provision for dividend has been added back in the computation. Therefore we are inclined to modify the directions issued by the Ld. CIT (A) that the Ld. AO may allow the same as an expenses.
TDS u/s 195 - No deduction of TDS on payment of external services and recruitment expenses - HELD THAT:- In the instant case the assessing officer has not discussed any factual aspect in respect of the payment made by the assessee to the non-resident. The Ld. AR has submitted before us the MOU dated 10/07/2006 entered into by the assessee with the non-resident. We accordingly remand the issue to the Ld. AO for verifying the details as submitted by the assessee before the Ld. CIT (A) and to examine the issue in the light of the decision by Hon’ble High Court in the case of CIT versus EON Technology Private Limited [2011 (11) TMI 20 - DELHI HIGH COURT] Accordingly this issue raised by the assessee stands allowed for statistical purposes.
Bad debt and advances reimbursed - bad debts being outstanding for more than a year and a recovery was remote - assessee claimed the said amount as bad debt under section 36 (1) (vii) - AO rejected assessee’s contentions as the companies were well-known group and there was no reason for the bad debts to become bad - HELD THAT:- During assessment proceedings the Ld. AO was well possessed with these details, to prove that the debts were written off. A similar issue arose before Hon’ble Supreme Court in the case of M/s Vijaya Bank versus CIT and Anr. [2010 (4) TMI 46 - SUPREME COURT] wherein the Hon’ble court has held that an assessee debits the amount of bad debts to the profit and loss account and credits the said account it would constitute a write-off of actual bad. In the light of the ratio laid down by Hon’ble Supreme Court in the case of M/s Vijaya bank Vs.CIT (supra) the claim of bad debts stands allowed.
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2016 (8) TMI 1572 - ITAT CHENNAI
TP Adjustment - whether the CUP method to be followed or TNMM to be followed to determine the ALP of assessee’s case? - HELD THAT:- As relying on Knorr Bremsc India Pvt Ltd. [2012 (11) TMI 165 - ITAT DELHI] in view of our findings on the questions of law in the assessee's appeal, it would be necessary for the authorities to consider this matter afresh in the light of those observations as well. It would be necessary upon remand for the authorities under the Act to consider whether the transactions ought to be separately benchmarked or whether the transactional net margin method ought to be adopted in respect of the same as well.
In the result, the appeals of the Revenue are allowed for statistical purposes.
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2016 (8) TMI 1571 - ITAT MUMBAI
Deduction u/s.10(38) for gains/loss on sale of investment - assessee company is engaged in the insurance business and that Computation of its Income from insurance business is to be governed as per special section 44 of the Income Tax Act r.w.Rule 5 contained in the First Schedule - HELD THAT:- It is pointed out that in Assessment Year 2004-05 the Tribunal [2013 (10) TMI 1130 - ITAT MUMBAI] followed its earlier decision [2012 (11) TMI 587 - ITAT MUMBAI] and allowed the claim of the assessee. Similarly, in Assessment Years 2005-06 and 2006- 07, the Tribunal has upheld its earlier decisions vide order. It has also been pointed out that in Assessment Year 2007-08 also, the Tribunal [2015 (2) TMI 1372 - ITAT MUMBAI] has decided the issue in favour of the assessee. Apart therefrom, the learned representative for the assessee pointed out that the view of the Tribunal is also in consonance with the clarification issued by CBDT vide Circular dated 21.02.2006, which has indeed been referred by the CIT(A) in the impugned order. - Decided in favour of assessee.
Exemption u/s 10(15) and 10(34/35) - CIT(A) allowed the plea of assessee by referring to the clarification issued by CBDT dated 21.02.2006 whereby it is clarified that exemption available to any other assessee under any of the clauses of Sec. 10 of the Act shall also be made available to a person carrying on non-life insurance business - HELD THAT:- As decision of Tribunal in the case of assessee for Assessment Year 2007-08 [2015 (2) TMI 1372 - ITAT MUMBAI] wherein similar issue has been decided in favour of the assessee following precedents in the case of ICICI Prudential Insurance Co. Ltd. [2012 (11) TMI 13 - ITAT MUMBAI] and New India Assurance Co. Ltd. [1967 (10) TMI 16 - BOMBAY HIGH COURT]
Disallowance of expenses incurred on performance linked incentive for employees, operating expenses like advertisement, legal and professional fees, courier charges, repairs and maintenance, etc. - According to the Assessing Officer, assessee was following mercantile system of accounting and since the impugned claim was merely a provision for expenses, the same was not allowable - AO also noticed that out of the aforesaid total expenditure, tax has not been deducted at source with respect to expenditure and, therefore, the said amount was also hit by Sec. 40(a)(ia) - HELD THAT:- We find that before the CIT(A), assessee pointed out that expenses representing items of communication expenses, employees remuneration & welfare benefits, interest and bank charges, printing & stationery and travel & conveyance expenses are not liable for deduction of tax at source except employee’s remuneration & welfare benefits, which have been duly subjected to deduction of tax at source. Additionally, it was pointed out that on the balance of expenditure assessee had deducted tax at source and paid by the due date, i.e., 31.5.2008. In this manner, assessee sought to point out that there was no justification for invoking Sec. 40(a)(ia) of the Act with respect to the entirety of expenditure of ₹ 39,71,60,000/-. In this context, we find that the CIT(A) has confirmed the disallowance with respect to Miscellaneous expenses and Rent, Rates & Taxes amounting to ₹ 6,27,01,000/-. We find that the said finding of CIT(A) is quite contrary to the plea of assessee that the requisite tax has been deducted and paid by 31.5.2008. At the time of hearing, the learned representative pointed out that the expenses which were required to be subjected to tax at source, the aforesaid plea of the assessee holds good and that even if the dates of deposit of TDS are required to be verified by the Assessing Officer, it may be so directed.
We find no reason to interfere with the decision of CIT(A) so far as it involves the deletion of the addition to the extent of ₹ 33,45,59,000/-. Insofar as the sustenance of disallowance of ₹ 6,27,01,000/- is concerned, we deem it fit and proper to direct the Assessing Officer to verify the plea of assessee that the corresponding tax deductible on such expenses have been deducted and paid by 31.5.2008, as contended by the assessee. For the limited purpose of verifying the aforesaid aspect, the matter is being remanded back to the file of Assessing Officer. The Assessing Officer shall examine the details put forth by assessee in this regard and thereafter re-determine the disallowance u/s 40(a)(ia) of the Act, if any, in the context of claim of expenses of ₹ 6,27,01,000/- as per law.
Disallowance u/s 14A - As per assessee, the disallowance envisaged u/s 14A of the Act is not applicable in the case of an assessee carrying on insurance business - HELD THAT:- It is also brought on record that the decision of Tribunal of Assessment Year 2004-05 [2013 (10) TMI 1130 - ITAT MUMBAI] has been further followed by the Tribunal in the case of assessee for Assessment Years 2005-06 and 2006-07 vide order dated .Subsequently, in Assessment Year 2007-08 also [2015 (2) TMI 1372 - ITAT MUMBAI] similar view has been affirmed by the Tribunal. Following the aforesaid precedents, we approve stand of the assessee that provisions of Sec. 14A of the Act are not applicable to an assessment made in terms of Sec. 44 of the Act read with First Schedule of the Act in relation to income of non-life insurance business. Thus, on this aspect, assessee succeeds.
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2016 (8) TMI 1570 - MADRAS HIGH COURT
Payment of tax with interest - petitioner has admittedly paid the tax amount, and the balance amount is relating to interest only - Since the petitioner has shown taxable income and paid tax thereon, he is entitled to get the benefit of waiver - Application before the first respondent/Chief Commissioner of Income Tax, Tiruchirapalli till date has not yet been considered - HELD THAT:- Considering the fact that original assessment order was passed on 30.01.2015 and in compliance of the same, the petitioner has already paid the tax and moved an application on 06.04.2015, this Court, in the interest of justice of both parties, directs the Officer, who is given full charge of the Chief Commissioner to Income Tax, to consider the application filed by the petitioner, on 06.04.2015, on merits and in accordance with law, within a period of four months from the date of receipt of a copy of this order. Till then, the impugned order shall be kept in abeyance.
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2016 (8) TMI 1569 - ITAT CHENNAI
Exemption u/s 14A r.w.r. 8D - interest paid by the assessee on the borrowed funds - HELD THAT:- If there is any direct nexus with the borrowed funds then the interest paid by the assessee on the borrowed funds has to be disallowed in view of Rule 8D(2)(i) of the Act. If the expenditure/interest is not relatable to the income which was exempted from taxation, then disallowance has to be computed under sub-clause(2)(ii) of Rule 8D. It is also necessary to examine the details of the investment made from the first day of the financial year and the last day of the financial year as found in the Balance Sheet for the purpose of computing the aggregate expenditure under third limb of Rule 8D(2). These exercises were not done either by the Assessing Officer or the CIT(A).
The investment made in Shriram Transport Finance Company Ltd and Shriram City Union Finance Ltd. was claimed to be investment in the subsidiary companies. It is not known how Shriram Transport Finance Company Ltd and Shriram City Union Finance Ltd. are sister concerns of the assessee-company. Merely because some of the Directors are common in both the companies, that cannot be a reason to hold that the companies in which the assessee invested are subsidiary/holding companies.
Tribunal is of the considered opinion that the shareholding pattern of the assessee-company and the companies in which investments were made has to be examined to decide whether the investment was made by the assessee in the subsidiary/holding companies. These facts were not apparently examined by the lower authorities. Moreover, the availability of liquid funds with the assessee on the date of the investment also needs to be examined. Since these factual aspects are not examined by any of the lower authorities, this Tribunal is of the considered opinion that the matter needs to be reexamined. Accordingly, the orders of the lower authorities are set aside and the entire disallowance made by the Assessing Officer u/s 14A r.w. Rule 8D is remitted back to the file of the Assessing Officer.
TDS u/s 194C - Addition u/s 40(a)(ia) - Proof of recipient/deductee disclosing the receipt in the return of income and paid taxes thereon - HELD THAT:- Under the scheme of the Income-tax Act, 1961, the assessee has to deduct tax only at the time of payment or giving credit, therefore, the amount which was already paid or given credit and remains ‘payable’ is also subjected to disallowance u/s 40(a)(ia) of the Act. Therefore, we are unable to uphold the order of the CIT(A) on this issue. Accordingly, the order of the CIT(A) is set aside and that of the Assessing Officer is restored.
Now the ld. Counsel submits that the recipient/deductee admitted the income and paid the taxes. This fact is not verified by any of the lower authorities. This Tribunal is of the considered opinion that if the recipient/deductee disclosed the receipt in the return of income and paid taxes, there is no need for further disallowance. However, the matter needs to be verified by the Assessing Officer. Accordingly, the orders of the lower authorities are set aside and the issue of disallowance u/s 40(a)(ia) of the Act is remitted back to the file of the Assessing Officer. The Assessing Officer shall verify whether the deductee/recipient of the amounts disclosed the same in their return of income and paid the taxes. The Assessing Officer thereafter decide the same in accordance with law after giving a reasonable opportunity to the assessee.
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