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Income Tax - Case Laws
Showing 41 to 60 of 819 Records
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2017 (9) TMI 1935 - ITAT MUMBAI
Estimation of income - bogus purchases - CIT(A) restricted the addition to 10% of the amount of bogus purchases - HELD THAT:- Hon’ble Bombay High Court In CIT Vs. Nikunj Eximp Enterprises Pvt. Ltd. [2013 (1) TMI 88 - BOMBAY HIGH COURT] has held that merely because the suppliers had not appeared before the Assessing Officer or the CIT (A) one could not conclude that the purchases were not made by the respondent/assessee. The Hon’ble Gujrat High Court in CIT vs. Simit P. Seth [2013 (10) TMI 1028 - GUJARAT HIGH COURT] upheld the decision of the Tribunal and sustained the addition 12.5% of the total bogus purchases holding that only profit element embedded in such purchases can be added to income of the assessee.
We uphold the decision of the Ld. CIT(A) and in the interest of justice, restrict the addition to 10% of the total amount of bogus purchases made by the assessee during the year relevant to the assessment year under consideration. We accordingly dismiss all the grounds of the appeal of the revenue and direct the AO to compute the addition in terms of this order.
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2017 (9) TMI 1933 - ITAT MUMBAI
Undisclosed cash receipts - Year of assessment - assessee is following accrual based accounting - CIT(A) deleted the addition as directed the AO to ensure that the unaccounted cash forms part of the assessed income of AY 2014-15 - HELD THAT:- Having gone through the return of income filed by ISAE for the AY 2008-09 to AY 2014-15, we find that it is following the project completion method. It filed its return of income for the AY 2014-15 on 04.04.2015 declaring total income. The above income has been accepted without any variation by ACIT-20(1), Mumbai in the assessment dated 28.12.2016 completed u/s 143(3) of the Act.
We have mentioned earlier that the return of income for A.Y. 2014-15 filed by the assessee declaring total income has been accepted by the ACIT-20(1), Mumbai u/s 143(3) of the Act. Therefore, we uphold the order of the Ld. CIT(A). - Decided against revenue.
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2017 (9) TMI 1932 - ITAT MUMBAI
Reopening of assessment u/s 147 - HELD THAT:- We find that in this case, the appeal has been filed against the order of ld.CIT(A) arising out of the order passed by the AO u/s 143(3) of the Act dated 24.12.2010 and thereafter the case has been reopened under section 147 r.w.s.148 of the Act. The reassessment was framed vide order dated 31.2.2015 in which various issues as have been raised by the revenue by way of present appeal were taken care of. As a result, the present appeal filed by the revenue has become infructuous and dismissed accordingly.
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2017 (9) TMI 1930 - ITAT DELHI
Addition of interest income earned on the deposits by the assessee during the construction period - whether total income of a person includes all the income earned (received) or deemed to be earned (received) by the person in the previous year? - CIT-A deleted the addition - HELD THAT:- It is noticed that an identical issue having similar facts was a subject matter of the departmental appeal for the assessment year 2010-11 in NTPC Tamil Nadu Energy Co. Ltd., New Delhi [2016 (3) TMI 49 - ITAT DELHI] wherein held interest incomes are also inextricably linked with the setting up of the power plant and such incomes have gone on to reduce the expenses for setting up of the plant and as there was no surplus funds available with the appellant company, therefore, such income is required to be capitalized to be set off against the pre operative expenses. As such the A.O. is not justified in adding the sum as income from other source u/s 56 - Decided in favour of assessee
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2017 (9) TMI 1929 - ITAT AHMEDABAD
Disallowance u/s 14A r.w.r. 8D - HELD THAT:- Assessee rightly points out, rule 8D has no application in the present year as it is held to be applicable with effect from the assessment year 2008-09 in the case of Godrej Boyce Mfg Co Ltd vs. DCIT [2010 (8) TMI 77 - BOMBAY HIGH COURT]. The only basis of impugned disallowance is Rule 8D but then, as noted above, it was not really applicable in the year before us. In this view of the matter, we uphold the plea of the assessee and delete the impugned disallowance .
TDS u/s 195 - disallowance u/s 40(a)(i) - failure to comply with the provisions of Chapter XVII-B from the commission paid to BG Energy Holding Ltd., a non-resident company - HELD THAT:- We find that the issue of taxability of commission in the hands of a non-resident came up for a detailed examination before this Tribunal, in the case of DCIT vs. Welspun Corp Ltd[2017 (1) TMI 1084 - ITAT AHMEDABAD] and the Tribunal decided the issue in favour of the assessee
In the present case, the commission payments have been made to an entity tax resident in United Kingdom. The benefit of Indo UK Double Taxation Avoidance Agreement is thus clearly admissible to the recipient. Coming to the treaty provisions, it is not even the case of the Assessing Officer that the UK based entity had a permanent establishment in India, and the commission paid to this entity, therefore, cannot be taxed as business profits. It is only elementary that, in the absence of a PE, Article 7 of the applicable DTAA does not allow taxation of business profits in the source country.
As for the taxability under the fees for technical services clause, it is important to bear in mind the fact that the Indo UK DTAA has a ‘make available’ clause in its article dealing with fees for technical services. As for the connotations of make available clause in the treaty, there are at least two non-jurisdictional High Court decisions, namely Honble Delhi High Court in the case of DIT v. Guy Carpenter & Co Ltd. [2012 (5) TMI 31 - DELHI HIGH COURT] and in the case of CIT v. De Beers India Minerals (P.) Ltd. [2012 (5) TMI 191 - KARNATAKA HIGH COURT] in favour of the assessee, and there is no contrary decision by Honble jurisdictional High Court or by Honble Supreme Court.
The rendition of services for earning commission cannot be of such a nature that there is a transfer of technology, in the sense it is required to fulfil the ‘make available’ clause in the Indo UK DTAA. It is also elementary that in a case in which the provisions of the DTAA are applicable, the provisions of the Income Tax Act apply only to the extent the same are beneficial to the assessee. In view of these discussions, quite clearly, even if the commission income in the hands of the recipient is taxable under the provisions of Section 9, the provisions of the Indo UK DTAA will come to the rescue of the assessee. Whichever way one looks at it, whether in the light of the provisions of the Act or the Indo UK DTAA, the conclusions of the CIT(A) do not call for any interference.
Disallowance u/s 14A r.w.r. 8D - HELD THAT:- In respect of Assessment Year 2008-09, it is important to bear in mind the fact that this is the year in which the Rule 8D had admittedly come into force and as per assessee’s claim that it had sufficient interest free funds. No disallowance is made by the Assessing Officer in respect of interest payments. The disallowance has been made on the basis of the formula set out in Rule 8D in respect of administrative expenses and we see no infirmity in the order of CIT(A) in confirming this disallowance. Ground No.2 is thus dismissed.
Purchase commission and guarantee commission for AY 2003-04 which was not claimed in AY 2003-04 and disclosed by way of a note in statement of total income filed along with return of income that the same will be claimed in the year of payment - HELD THAT:- So far as this grievance of the assessee is concerned, it is sufficient to take not of the fact that the assessee had incurred certain expenditure on account of purchase commission and guarantee commission in respect of assessment year 2003-04 which was not claimed in that particular year on the ground that tax was not deducted at source, with the caveat as set out in the note to the computation of income, that deduction will be claimed in the year in which the payment is made Learned Counsel submits that though the stand so taken by the assessee was erroneous inasmuch as no tax was deductible but the assessee cannot be put to the double disadvantage in the sense that neither the amount is deductible in the year in which expenditure is incurred nor the deduction is permitted in the year in which the tax is deducted, though wrongly, in respect of such payments. We are, therefore, urged to direct the Assessing Officer to allow the payment of purchase commission and guarantee commission for the year 2003-04 which was not claimed in that year on the ground that taxes were not deducted from the same and has been claimed in the present year on the basis that now taxes has been deducted and paid. Learned Departmental Representative very fairly does not oppose the contention so advanced by the assessee.
Thus bearing in mind entirety of the case, we see merits in the stand of the assessee and direct the Assessing Officer to allow the claim, upon verification about the factual elements embedded in the submissions of the learned Counsel, in accordance with law. This issue is thus remitted to the file of the Assessing Officer for necessary factual verification. The additional ground is thus allowed for statistical purposes.
Addition made on account of refund of value added tax receivable by the applicant for AY 2007-08 - CIT(A) deleted the addition on the ground that “VAT has not been routed through profit and loss account and therefore , it has not been claimed as expenditure” - HELD THAT:- We see no merits in the stand of the Assessing Officer. Once it is not in dispute that the assessee has not claimed any deduction at the time of making payment of VAT, the refund of such VAT cannot be brought to tax in the hands of the assessee. The action of the CIT(A) does not indeed call for any interference. We, therefore, approve the order of the CIT(A) on this point and decline to interfere in the matter.
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2017 (9) TMI 1928 - DELHI HIGH COURT
Validity of order passed under Section 142(2A) - ITAT has declined to permit the Petitioner to raise additional ground - HELD THAT:- In the considered view of the Court, the ITAT ought to have permitted the Petitioner to raise the aforementioned additional ground and ought to have decided the said additional ground on its merits in accordance with law.
The writ petition is allowed and the impugned order passed by the ITAT is set aside. The petitioner is permitted to urge the additional ground no.22 before the ITAT, which would decide the Petitioner’s appeal including the above additional ground, in accordance with law, while passing the final order.
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2017 (9) TMI 1927 - ITAT DELHI
Penalty u/s 271(1)(c) - Defective notice - addition on account of bogus liabilities AND on account of unaccounted entries - CIT(A) deleted the penalty - assessee argued for non specification of charge in notice - HELD THAT:- As in case of Cit Vs. Manjunatha Cotton and Ginning Factory , [2013 (7) TMI 620 - KARNATAKA HIGH COURT] wherein it is held that as the notice issued by the ld Assessing Officer did not specify under which limb of section 271(1)(c) penalty proceedings had been initiated, i.e. whether for concealment of particulars of income or furnishing of inaccurate particulars of income, therefore, the order of levy of penalty is bad.
On the similar circumstances in the assessment order at page No.6 the ld Assessing Officer has mentioned both the limbs and in the penalty order Assessing Officer has levied penalty on both the limbs. Therefore, in view of the above judicial precedents, we do not find any infirmity in the order of the order of the ld CIT(A) in deleting the penalty u/s 271(1)(c) of Assessing Officer - Decided against revenue.
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2017 (9) TMI 1925 - ITAT CHENNAI
Search proceedings - cash available with the assessee and sale proceeds from jewellery - second round of litigation before this Tribunal - Second round of litigation before this Tribunal - in the first round of litigation, this Tribunal directed the Assessing Officer to examine the search documents and find out the cash available with the assessee and sale proceeds from jewellery and thereafter find out whether the sale proceeds have been used for acquisition of any other asset. If it is not found, then corresponding credit should be given towards unaccounted money lending business - On appeal by the assessee, the CIT(Appeals) deleted the addition made by the Assessing Officer - HELD THAT:- It is an admitted fact that no appeal was filed either by the Revenue or by the assessee against this order of the Tribunal. In other words, the order of this Tribunal dated 17.10.2008 has attained finality. Therefore, the Assessing Officer has to examine the search documents and find out whether cash was available with the assessee and sale proceeds of jewellery were used for acquisition of any other asset. If it is not utilised, then corresponding credit should be given to the unaccounted money lending business as directed by this Tribunal. In this case, the Assessing Officer specifically found that there was no evidence for acquisition of other assets by the assessee. Therefore, the CIT(Appeals) has rightly deleted the addition made by the Assessing Officer. Hence, this Tribunal do not find any reason to interfere with the order of the lower authority and accordingly the same is confirmed. Appeal filed by the Revenue stands dismissed.
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2017 (9) TMI 1924 - GUJARAT HIGH COURT
Unaccounted investment - bogus LTCG on shares transactions - whether shares transactions to be genuine since the same were carried out through banking channel though the same were not executed on the floor of NSE/ISE? - CIT(Appeals) and the Tribunal deleted the additions - HELD THAT:- CIT(Appeals) in his elaborate order considered the nature of transactions and while deleting the addition observed that the assessee had shown the identity of the person from whom the sale consideration was received. He had also proved the genuineness of the transaction by submitting demat statement of the seller, sale invoices of the broker and copy of the bank statement through which the transactions were routed. Interalia, on such grounds the CIT(Appeals) allowed the appeal. The Tribunal additionally relied on similar issues which were decided by the Bombay Tribunal to dismiss the revenue's appeal.
The issue is primarily based on appreciation of facts and materials on record and is purely factual in nature. No question of law arises.
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2017 (9) TMI 1923 - ITAT DELHI
Penalty u/s 271(1)(b) - Delay in furnishing required details - as submitted that the assessment was completed u/s 143(3) of the Act which was proof enough that the assessee had duly cooperated during the course of assessment proceedings - HELD THAT:- We find that the instant appeal is squarely covered by the decision of Akhil Bhartiya Prathmik Shikshak Sangh Bhawan trust [2007 (8) TMI 386 - ITAT DELHI-G] - we hold that the imposition of penalty u/s 271(1)(b) of the Act was patently wrong, especially in view of the fact that the impugned assessment order has been passed u/s 143(3). While setting aside the impugned order, we direct the Assessing Officer to delete the penalty. Appeal of the assessee is allowed.
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2017 (9) TMI 1922 - ITAT DELHI
Levy of penalty u/s 271(1)(b) - non-compliance of certain notices issued to the assessee by the Assessing Officer from time to time - assessment has been completed u/s 143(3), wherein the revised return filed by the assessee declaring loss has been accepted by the Assessing Officer after calling for various records from the assessee - HELD THAT:- Though there may have been non-compliance on certain dates/notices, but ultimately all the due compliance and replies have been filed by the assessee and had participated in the proceedings through its authorised representatives before the AO. Before the ld. CIT (A), assessee had contended that the time allowed for compliance of notice dated 30/9/2014 was not sufficient and questionnaire also were not specific, therefore, assessee could not make proper compliance. However, later on assessee had filed all the details, which have been duly examined and accepted by the AO.
Penalty under section 271(1)(b) for non-compliance of particular notice is merely technical and venial in nature, and therefore, we do not find that it fit to be case for levy of penalty u/s 271(1)(b). Accordingly, penalty levied by the Assessing Officer and as confirmed by the ld. CIT (A) is deleted. - Appeal of the assessee is allowed.
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2017 (9) TMI 1920 - ITAT BANGALORE
Capital gain computation - JDA agreement - HELD THAT:- There is no dispute that as per JDA entered into between the assessee company and Shri Ramesh, Ramesh was required to bear the expenditure incurred to make the schedule land usable for development and even if such expenses is paid by the other party, the same is to be debited to his account.
In view of this clear understanding as per JDA, it cannot be accepted that this expenditure of ₹ 65 lakhs is because of business exigency because whatever may be the dispute between Shri Ramesh and his sister, it was to be settled by Shri Ramesh at his own cost and such expenses is not required to be borne by the assessee company.
We are of the considered opinion that the order of CIT(A) is not sustainable because these paras of JDA were not considered by CIT(A) at all. Regarding various judgments cited by ld. AR of assessee, we would like to observe that in view of this fact that the assessee had not been able to establish that the payment in question was on account of business exigency and it was required to be borne by the assessee company and not by Shri Ramesh, none of the judgments cited by ld. AR of assessee is relevant in the present case of the assessee. We therefore reverse the order of CIT(A) and restore that of AO - Appeal filed by the revenue is allowed.
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2017 (9) TMI 1919 - ITAT MUMBAI
Estimation of income - bogus purchases - CIT-A estimating 12.5% as profit element on the alleged bogus purchase - HELD THAT:- It is the averments of the Revenue that the assessee has purchased material from grey market in cash while bills are organized from these bogus hawala dealers. No such details of grey material suppliers are brought on record from whom the assessee has allegedly purchased material in cash and also no trail of money to evidence flow of cash is brought on record by authorities below and these are all in the realm of suspicion which is not permissible.
The assessee had sought cross examination of these hawala parties who have given incriminating statements before Maharashtra VAT authorities but the cross examination was not granted to the assessee by the A.O./CIT(A). The assessee has discharged its primary burden by bringing on record all details w.r.t. purchase and utilization/consumption of material covered under these purchases and there is no adverse comments of the authorities below as to the same and the assessee is sought to be prejudiced by Revenue solely based on statement of third parties i.e. selling dealers which incriminating statement was recorded by Maharashtra VAT authorities at the back of the assessee , while no statement has been recorded by the Revenue nor any enquiry whatsoever u/s 133(6)/131 was conducted by Revenue itself, under these factual matrix of the case , the right of cross examination of the assessee has become absolute and no prejudice can be done to the assessee in these circumstances till the said parties are offered by Revenue for cross examination before the assessee, which despite specifically being asked by the assessee, the Revenue did not allow assessee to cross examine these hawala parties. Under these circumstances keeping in view entire factual matrix of the case, in our considered view, the additions as were upheld by learned CIT(A) cannot be sustained in the eyes of law and is hereby ordered to be deleted - Decided in favour of assessee.
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2017 (9) TMI 1917 - ITAT MUMBAI
Deemed notional rental income from properties owned - Income from house property - HELD THAT:- As found from record that Flat No.16 and 18 at Kalpana, Marine drive were duplex flats used by the assessee. Also found that flat no.16 and flat no.18 on 5th and 6th floor respectively having common staircase attached to both the floors inside the said premises and hence, it can be considered as one house which is adjacent to each other. Accordingly, direct the AO to delete addition made in respect of Flat No.18 for the A.Y.2006-07 to 2009 - From A.Y.2010-11, the assessee has taken Flat No. 8 & 9 at Kalpana, Marine drive as SOP, therefore, there is no reason to disturb the notional value taken by the AO for Flat No. 16 & 18 at Kalpana, while making addition u/s.22 of the IT Act.
Flat No.1, Joothica Co-operative Housing Society Ltd., 22, Naushir Bharucha Road, Mumbai – 400 007 was claimed to be not in a habitable state and therefore it did not have a ready marketable value. In the interest of justice, I restore this issue to the file of AO for verifying factual position and to decide the same afresh as per law.
In respect of Flat No.402, West Wind, Plot No.170/1, Gandhi Gram Road, Juhu, Mumbai – 400 049, we do not find any infirmity in the order of lower authorities, accordingly, we confirm the addition made by AO u/s.22.
Appeals of the assessee are allowed in part in terms indicated
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2017 (9) TMI 1916 - ITAT MUMBAI
Estimation of income - bogus purchases - CIT(A) reduced it to 25% - HELD THAT:- In this case the sales have not been doubted it is settled law that when sales are not doubted, 100% disallowance for bogus purchase cannot be done. This proposition is supported from Hon’ble jurisdictional High Court decision in the case of Nikunj Eximp Enterprises [2013 (1) TMI 88 - BOMBAY HIGH COURT] - However, the facts of the present case indicate that assessee has made purchase from the grey market. Making purchases through the grey market gives the assessee selling on account of non-payment of tax and others at the expense of the exchequer. In such situation in considered opinion on the facts and circumstances of the case the 12.5% disallowance out of the bogus purchases meets the end of justice.
This is following the decision of Hon’ble Gujarat High Court in the case of Simit P Seth [2013 (10) TMI 1028 - GUJARAT HIGH COURT] followed by the ITAT Mumbai Benches in a number of cases. We order of learned CIT(A) and direct that the disallowance be limited to 12.5% of the bogus purchase. Appeal filed by the assessee is partly allowed.
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2017 (9) TMI 1915 - ITAT JAIPUR
Addition u/s 68 - cash deposits in bank account as undisclosed income - CIT- A confirmed addition - submission of assessee that the said amount represented sale consideration received by assessee for sale of land - assessee has submitted that the ld. CIT (A) has decided the appeal of the assessee ex parte without affording proper opportunity of hearing to the assessee - HELD THAT:- In the interest of natural justice, we set aside the order of the ld. CIT (A). The matter is restored back to ld. CIT (A) for deciding the same on merits, after affording opportunity of hearing to the assessee. Appeal of the assessee is allowed for statistical purposes
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2017 (9) TMI 1914 - ITAT PUNE
Unexplained cash credit u/s 68 - treatment to migrants from Pakistan - assessee had made cash deposit in eight bank accounts, of which five were current accounts - assessee explained that she had migrated from Pakistan on 30.07.2009 with a view to permanently settle in India and while coming to India, she had brought ₹ 2.71 crores in cash and 1387.50 grm. of gold ornaments and jewellery - CIT- A deleted the addition - revenue argued that assessee had filed declaration with ITO, Mumbai regarding cash brought into India and deposited in various bank accounts in Aurangabad, knowing fully the fact that the jurisdiction of the case over the assessee was not in Mumbai, but was in Aurangabad - Revenue aggrieved by the observations of CIT(A) in treating it as mere venial breach as against the jurisdictional issue in law
HELD THAT:- Assessee had opened bank accounts in Aurangabad. It may be clarified herein itself that the said ITO had accepted the declaration in line with the Circular and had issued certificate to the assessee both for cash and the jewellery declared.
Whether the declaration so made before the ITO, Mumbai affects his jurisdiction and such declaration cannot be accepted? - As coming to the Circular issued in 1969, wherein it is clearly provided that Indians migrating from Pakistan were not required to produce documentary evidence in support of their claim for transfer of money and personal jewellery but had to prove the resources in Pakistan to which such money or jewellery could be reasonably attributed.
We find merit in the order of CIT(A) in this regard in holding that the Income Tax Officer at Mumbai is a functionary of the Income Tax Department. We hold that he is competent to receive the said declaration and to issue certificate in this regard. Even if there is default in filing the said declaration before the ITO in Mumbai but the default is of venial breach in nature and does not affect the declaration so made by the assessee and the subsequent order passed by the ITO, Mumbai - vide said certificate after having considered all the facts of the case and on going through the documents produced, stated that the declaration made by the above person is accepted. In the said certificate, the Assessing Officer referred to the CBDT Circular dated 03.02.1969 and also noted that the lady was Hindu of Indian origin and was residing in Pakistan. Further, she came to settle permanently in India and she brought in sum of ₹ 2.71 crores in cash and gold ornaments & jewellery weighing 1387.50 grms. In support thereof, she produced the passport, Visa and RP number.
AO not accepting the declaration made by the assessee on the ground that the assessee did not prove that it had transferred the assets which it claims to have sold by her and her husband - CIT(A) has not only considered the said evidence filed by the assessee but had forwarded the same to the Assessing Officer, who has not offered any comments in this regard. The CIT(A) vide paras 13, 14 and 15 had elaborately discussed the transactions entered into by the assessee vis-à-vis sale of her gas stations and gas stations sold by her husband, wherein both the assessee and her husband had 40% share each. The assessee had claimed that it had received ₹ 2 crores being her share in the said gas station and her husband had received ₹ 1.50 crores being 40% share in sale of said gas station. Vide para 15, the CIT(A) has further relied on the documentation of sale of property for ₹ 1.10 crores by the husband of assessee. In respect of all these transactions, the CIT(A) had also taken note of mutations in the name of purchasers as per registered sale deeds.
As supporting evidence available with the assessee, the assessee having established its case of availability of cash in its hands, which in turn, was withdrawn by way of cash withdrawal, it cannot be said that the assessee did not have resources of cash, which she had brought into India. In view thereof, we find no merit in the findings of Assessing Officer in this regard and hold that where the assessee has successfully established the resources in her hand, then the plea of assessee of having brought into India of ₹ 2.70 crores cannot be brushed aside.
Bringing huge cash to India in the absence of any banking channels where the assessee has failed to produce any evidence - It may also be pointed out that the bank statement of the bank account held by the assessee in Pakistan clearly shows a credit in her name of ₹ 4.38 crores, which is the evidence of resources held by the assessee and the same cannot be brushed aside. The manner in which the money was transferred and brought into India cannot be looked into by the Assessing Officer, in view of clear-cut guidelines issued by the CBDT and once the assessee is holding requisite amount of cash balance in her bank account, out of which the assessee claims that she had brought the money into India in cash, then the availability of such cash stands explained and does not warrant any addition under section 68
Whether the said amount has been brought into by hawala transaction or hawala means or not? - Admittedly, the transactions through hawala are not to be accepted as such but in the absence of any direct banking facilities between India and Pakistan, modes other than the banking channels are used for the transfer of funds by the migrants from Pakistan to India. The assessee had sought her migration to India because of compelling circumstances, where she has migrated along with her five children. The learned Authorized Representative for the assessee clarified that the husband of assessee is still in Pakistan but on her migration for her settlement, she brought the said cash through unauthorized channels; but in the absence of banking channels between Pakistan and India, the assessee was forced to do so. The Circular issued by CBDT in this regard and the Reserve Bank of India in its letter to the Asst. Director (FERA) had insisted upon a lenient and liberal view in such circumstances in respect of such monies brought into India.
The Hon’ble High Court of Madras in S.R. Lakshmanan Vs. CIT [1990 (2) TMI 21 - MADRAS HIGH COURT]had held that if resources were established to have been available in Sri Lanka, then the manner in which those resources were repatriated to India, though not recognized as one, would not be questioned, but would be accepted
As assessee placed on record certain material from the web in respect of lack of direct banking facilities between India and Pakistan. In another report dated 20.09.2016, wherein it is mentioned that trade between India and Pakistan had increased but there was lack of direct banking channels, limited connectivity and hence, the same was affecting the trade. Accordingly, we uphold the order of CIT(A) in deleting the addition made under section 68 of the Act.
Revenue pointed out that in case the assets were sold in Pakistan and whether the assessee had paid taxes on the said income as she was resident in India. The learned Authorized Representative for the assessee has fairly pointed out that the assessee is resident in India but in the year under consideration is not ordinary resident and as per proviso to section 5 of the Act, only income arising in India is taxable in the hands of such non-ordinary resident persons. We find merit in the plea of assessee.
Theory of probability - AO has accepted the declaration of jewellery and has not made any addition in this regard. The said jewellery was also brought by the assessee on her migration from Pakistan to India and was declared in the same declaration before the same ITO, Mumbai. No adverse comments have been raised in respect of said jewellery declaration nor the same has been added as income of the assessee, consequently, the declaration of cash made by the assessee in the same declaration merits to be accepted. We find no merit in the plea of learned Departmental Representative for the Revenue that no extra corroborative evidence has been brought on record. The assessee has very clearly establishes its case of having transferred the properties in the name of persons to whom it claims to have sold the same and it cannot be the case of Revenue that the said transfers in the name of purchasers was made without taking consideration due for the said transfers. We find no merit in the plea of learned Departmental Representative for the Revenue in this regard and dismiss the same. We uphold the order of CIT(A) in deleting the aforesaid addition under section 68 - Decided in favour of assessee.
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2017 (9) TMI 1913 - ITAT DELHI
Transfer pricing addition - international transaction of ‘Provision of IT enabled services’ with transacted value - Comparable selection - application of the TNMM as the most appropriate method or the assessee’s own computation of PLI - HELD THAT:- It can be seen from the Annual Report of this company, a copy of which has been placed in the paper book, that it paid Outsourcing charges to the tune of ₹ 8 crore and odd in addition to payment of Salary and wages etc. to its staff, including director’s remuneration, to the tune of ₹ 24.54 crore. This divulges that roughly 26% of the activity carried out by this company has been outsourced.
As against this, the assessee is doing the entire business at its own without there being any expenditure on outsourcing. This reveals a significant difference in the business model adopted by the assessee and e-Clerx Services Ltd.
In Rampgreen Solutions Pvt. Ltd. vs. CIT [2015 (8) TMI 931 - DELHI HIGH COURT] excluded Vishal Information Technology Ltd. from the list of comparables on accounts of its different business model, namely, more of outsourcing than in-house services. When we advert to the facts of the instant case, we find that e-Clerx Services Ltd. has also spent more than 26% of the total cost of the employees and job work charges simply on outsourcing. Since the business model of e-Clerx Services Pvt. Ltd. is significantly different from that of the assessee, which is not outsourcing any of its work, the same, in our considered opinion, renders it non-comparable. We, therefore, direct to exclude this company from the final set of comparables.
We set aside the impugned order on the issue of addition towards transfer pricing adjustment in the international transaction of ‘Provision of IT enabled services’ and remit the matter to the file of AO/TPO for fresh determination of its ALP. Appeal is allowed for statistical purposes.
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2017 (9) TMI 1912 - SUPREME COURT
Allowability of depreciation on toll road - ownership - When a person like the Assessee who is in the business of infrastructure development in execution of such agreement constructs a road and on Build, Operate and Transfer (BOT) basis on the land owned by the Government, can it claim depreciation on the toll road - HC held Merely, because the road is laid out does not mean that the Assessee is the owner thereof. He has laid it out for the purpose of the union and for its ultimate vesting in the public - HELD THAT:- In all the matters numbered above, service is complete. Ld. Counsel for the parties have failed to file the statement of case within the statutory period. Filing of Statement of Case is not mandatory as per amended Supreme Court Rules, 2013. Viewed thus, the matters shall be processed for listing before the Hon'ble Court under the rules.
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2017 (9) TMI 1910 - ITAT CHENNAI
Entitlement to deduction u/s. 80P(2)(a)(i) on jewel loans extended to members - claim for deduction on interest income on jewel loans - HELD THAT:- The assessee, in the garb of claiming deduction u/s. 80P(2)(a)(i), is seeking deduction qua other, non-eligible income, since already assessed and brought to tax. True, the AO has, while giving appeal affect, apportioned the general expenses on only interest income under reference, i.e., on jewel and other loans falling u/s. 80P(2)(a)(i). That, however, would make no difference to the net assessable (or total) income under the Act as interest income on the other (marketing) division has already been allowed deduction u/s. 80P(2)(a)(iii) on gross income basis. In fact, this is itself debatable as the said interest (for marketing the products) would equally be deductible u/s. 80P(2)(a)(i) – which he allows for the first time, as the provision makes no distinction with reference to the purpose for which the loan/credit is extended by a cooperative society to its member. We observe no infirmity, both in principle and in effect, in the AO’s working for the two years under reference.
AO, in the first instance, had rejected the assessee’s claim for deduction u/s. 80P(2)(a)(i) at the threshold, i.e., on the ground of it being ineligible. That is, regarded it as not qualifying for deduction. The question of the quantum of deduction or its determination did not arise for consideration. The claim being held valid, he has allowed the same on the basis of the underlying facts and figures. It is only at this stage that he was called upon to, and has, accordingly, allowed deduction, which is to be at the correct amount.
We have examined the algorithm of the assessee’s working to find it to be in accordance with the fundamental principle of only the net income being assessable and, further, of only the relevant income as included in the GTI being eligible for deduction. Merely because the same works to a figure lower than that claimed by the assessee, is, by itself, no ground for regarding the same as erroneous.
The assessee’s working, after all, cannot be considered as sacrosanct. Deduction could only be of the income included in the GTI, so that the assessee’s claim, made on the basis of gross interest income, is without basis in law as well as on facts. This has led to its claim u/s. 80P(1) exceeding the GTI. Further, no infirmity or fallacy in the AO’s working has either been found by us or pointed out by the assessee at any stage. The AO has not exceeded his jurisdiction.
Why, the Apex Court in The Citizen Co-operative Society Ltd. [2017 (8) TMI 536 - SUPREME COURT] also made light of the inclusion of associate members, which aspect/s though cannot be considered in appeal giving effect proceedings or the appellate proceedings arising there-from.
AO’s working is accordingly confirmed. The assessee, as it transpires, by not taking the proportionate expenses into account, is seeking to claim deduction u/s. 80P on other, assessable income. As regards the assessee’s COs, the same were not pressed and, besides, there is no estoppel against law (also refer: C.K.Gangadharan & Anr. v. CIT [2008 (7) TMI 10 - SUPREME COURT]. We, accordingly, have no hesitation in, setting aside the impugned order, restoring that of the AO.
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