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Income Tax - Case Laws
Showing 21 to 40 of 6519 Records
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2013 (12) TMI 1713
Issues Involved:
The judgment deals with the taxation of interest earned on deposits kept with banks by a cooperative society before the commencement of its business activities.
Issue 1:
The first issue pertains to the justification of the Commissioner of Income Tax (Appeals) in taxing the interest earned on bank deposits under Section 56 of the Income Tax Act, even when the business of the assessee was not set up.
The Appellate Tribunal upheld the decision of the CIT(A) based on the precedent set by the Hon'ble Supreme Court in Tuticorin Alkali Chemicals & Fertilizers Ltd. case, stating that interest earned on surplus funds deposited in banks is taxable as income from other sources.
Issue 2:
The second issue questions the correctness of taxing the interest income as income from other sources, despite the deposits having a direct link with the establishment of the business and no intention to earn income at that stage.
The Assessing Officer held that only interest received from cooperative banks is exempt under Section 80(p), while interest from nationalized banks is taxable. The Tribunal agreed with this interpretation and upheld the taxability of the interest earned on bank deposits.
Issue 3:
The third issue challenges the decision of the CIT(A) in following the judgment of the Hon'ble Supreme Court in Tuticorin Alkali Chemicals & Fertilizers Ltd. case, which was later practically overruled by the Supreme Court in subsequent cases.
The Tribunal found that the interest earned during the construction period on deposits kept with nationalized banks is assessable as income from other sources, as per the decisions of the Supreme Court in similar cases. Therefore, the appeal of the assessee was dismissed.
In conclusion, the Appellate Tribunal upheld the decision of the CIT(A) to tax the interest earned on bank deposits under Section 56 of the Income Tax Act, dismissing the appeal filed by the assessee.
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2013 (12) TMI 1712
The High Court of Uttarakhand dismissed the appeal without interference, following a similar judgment in Income Tax Appeal No. 39 of 2009.
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2013 (12) TMI 1711
The High Court of Uttarakhand upheld the judgment in Income Tax Appeal No. 39 of 2009 (Commissioner of Income Tax vs. M/s The Nainital Bank Limited, Nainital) without interference. The appeal was dismissed.
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2013 (12) TMI 1710
Additions to the assessee's income on account of unaccounted credits - Disallowance u/s 40A(3) on payments made in cash - HELD THAT - Alleged cash payments are appearing in bank statement of payee and not being cash payments. Also , books of the assessee were duly tallied with the books of the payee company and the payment of purchases were duly settled periodically. In [1995 (8) TMI 108 - ITAT PUNE] , it was held that since the genuineness of payment was proved and the accounts were tallying, it is an allowable expenditure.
Decision in favor of assessee.
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2013 (12) TMI 1709
Issues involved: Interpretation of whether the land sold by the assessee falls within the definition of "capital asset" u/s 2(14) of the Income Tax Act.
Summary:
1. The appellant sold certain plots of lands inherited from forefathers during F.Y. 2006-07. The appellant claimed the lands were agricultural and thus not a "capital asset" u/s 2(14) of the Act, hence no capital gains tax was disclosed. However, the AO assessed the profit under Section 45 as Long Term Capital Gain.
2. On appeal, the ld. CIT(A) referred to a Tribunal decision regarding agricultural land situated within a certain distance from Municipalities or Cantonment Boards, as notified by the Central Government. The Tribunal held that the appellant's land, located outside Rajarhat Municipality and 2.5 KM away from its limits, did not fall within the definition of "capital asset" u/s 2(14)(iii) of the Act. Therefore, no capital gains tax was chargeable on the sale transaction.
3. The ld. CIT(A) relied on the Tribunal's decision and held that the land transferred by the appellant was agricultural and did not constitute a "capital asset" u/s 2(14) of the Act. The AO was directed to delete the addition made on account of long term capital gains.
4. The Revenue appealed against the CIT(A)'s order, arguing that the issue was covered in favor of the assessee based on the Tribunal's previous decision regarding a co-owner of the property. The Tribunal upheld the CIT(A)'s decision, stating that the land in question was agricultural and did not fall within the definition of "capital asset" u/s 2(14) of the Act.
5. The Tribunal confirmed the CIT(A)'s order, dismissing the Revenue's appeal.
Judges: Shri Mahavir Singh (Judicial Member) and Shri Shamim Yahya (Accountant Member)
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2013 (12) TMI 1708
Issues Involved:
1. Deduction u/s 80IA of the Income Tax Act, 1961.
2. Sales tax incentive and its qualification for deduction u/s 80IA.
3. Initial assessment year for the purpose of section 80IA(4)(iv).
4. Nature of sales tax incentive as capital subsidy.
5. Disallowance of indirect expenditure from windmill business profits.
6. Disallowance u/s 14A of the Income Tax Act, 1961.
7. Disallowance of foreign travel expenditure.
Summary:
1. Deduction u/s 80IA of the Income Tax Act, 1961:
The primary dispute was the interpretation and application of section 80IA(5) of the Act regarding the computation of profits from the windmill business. The Tribunal upheld the assessee's stand, following its own decision in the assessee's case for AY 2006-07 and the judgment of the Hon'ble Madras High Court in Velayudhaswamy Spinning Mills (P) Ltd. vs. ACIT. The CIT(A)'s approach was deemed incorrect for not following judicial discipline. The Tribunal directed the AO to re-compute the deduction following its earlier decision.
2. Sales tax incentive and its qualification for deduction u/s 80IA:
The AO and CIT(A) concluded that the sales tax incentive received by the assessee did not qualify for deduction u/s 80IA. The CIT(A) noted that the assessee had accepted the AO's finding based on the Supreme Court decision in Liberty India vs. CIT. The Tribunal found no reason to interfere with this conclusion, and the ground was dismissed.
3. Initial assessment year for the purpose of section 80IA(4)(iv):
The Tribunal did not separately address this issue in detail but upheld the assessee's interpretation of section 80IA(5) as discussed in the first issue.
4. Nature of sales tax incentive as capital subsidy:
The Tribunal followed its earlier decision in the assessee's case for AY 2006-07, which was based on the precedent set in Rasiklal M. Dhariwal (HUF) vs. DCIT, and dismissed the ground, holding that the sales tax incentive was not a capital subsidy exempt from income tax.
5. Disallowance of indirect expenditure from windmill business profits:
The AO allocated indirect expenses to the windmill business based on turnover, which the CIT(A) upheld. The Tribunal affirmed the CIT(A)'s direction to re-calculate the disallowance based on the assessee's working, finding no error in the approach of the lower authorities.
6. Disallowance u/s 14A of the Income Tax Act, 1961:
The AO made a disallowance of Rs. 9,91,140/- invoking section 14A r.w. rule 8D. The Tribunal remanded the matter back to the AO to determine afresh whether the interest expenditure was related to funds used for acquiring shares/mutual funds yielding exempt income. The AO was directed to allow a reasonable opportunity to the assessee before passing an order.
7. Disallowance of foreign travel expenditure:
The Tribunal followed its decision in the assessee's case for AY 2006-07, directing the AO to restrict the disallowance to 50% of the expenditure claimed.
Conclusion:
The appeals for AY 2008-09 were partly allowed, and the decisions applied mutatis mutandis to AY 2004-05 and 2005-06. The order was pronounced in the open Court on 30th December, 2013.
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2013 (12) TMI 1706
Issues involved: Assessment of tax liability on a foreign company for income received under a contract involving activities both inside and outside India, interpretation of tax identity and permanent establishment as per the Agreement for avoidance of double taxation.
Summary:
1. The appellant, a foreign company, filed its income tax return for the Assessment Year 2007-08 showing nil income due to claimed losses from a contract with O.N.G.C. Assessing Officer disallowed deductions and imposed tax on 25% of revenue allegedly for outside India activities. Appellate Tribunal upheld the decision, leading to the present appeal.
2. The appeal focused on taxing 25% of revenue under the contract for allegedly outside India activities within the Indian tax network, separate from the disallowed deductions issue.
3. The Agreement with the Republic of Korea does not specify the mechanism to apportion tax liability for entities with tax identities in multiple countries.
4. Article 7 of the Agreement recognizes tax identities of enterprises in different Contracting States and attributes profits to permanent establishments in each State.
5. Paragraph 2 of Article 7 outlines the attribution of profits to a permanent establishment as if it were a separate enterprise.
6. The Agreement lacks guidance on attributing income to specific tax identities unless profits are generated between different tax entities.
7. The appellant claimed revenue from within and outside India activities without generating revenue between its Indian and Korean tax identities.
8. The appellant, a resident of Korea, acknowledged tax identity in India by filing returns, raising questions on the tax obligations under the Agreement.
9. The Tribunal's decision to tax 25% of revenue without evidence of attribution to the Indian permanent establishment was deemed arbitrary. The appeal was allowed, setting aside the tax liability imposition.
Separate Judgment: The judgment was delivered by Barin Ghosh and U.C. Dhyani, JJ.
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2013 (12) TMI 1705
Issues involved:
1. Deletion of addition under section 2(22)(e) as 'debt' not 'loan/advance'
2. Deletion of addition of unexplained unsecured loans u/s 2(22)(e)
Deletion of addition under section 2(22)(e) as 'debt' not 'loan/advance':
The Revenue appealed against the CIT(A)'s order deleting the addition of Rs. 18,00,000 under section 2(22)(e) treating it as a 'debt' not a 'loan/advance'. The Revenue argued that the assessee had availed loans from a company in which he had substantial interest. However, the CIT(A) allowed the benefit to the assessee based on the nature of the transactions. The Tribunal found that the transactions were in the nature of ordinary business short-term finance entries, not supported by a loan agreement. The Tribunal agreed with the CIT(A) that the entries could be considered as a 'debt' but not a 'loan/advance' as per section 2(22)(e). The Tribunal upheld the CIT(A)'s decision based on the evidence presented.
Deletion of addition of unexplained unsecured loans u/s 2(22)(e):
During assessment, it was found that the assessee had taken loans from various parties, including Rs. 4 lakhs from Shree Ganesh Ispat Industries. The Assessing Officer added this amount to the income as confirmation and PAN details were not provided. The CIT(A) accepted the explanation that the loan was temporary and deleted the addition. The Tribunal upheld the CIT(A)'s decision as the financing entry was supported by bank records and the account details of the lending party. The confirmation and PAN details were later submitted, leading to the acceptance of the loan as genuine. The Tribunal dismissed the Revenue's appeal based on the evidence presented and the CIT(A)'s decision.
*Order pronounced on 23.12.2013.*
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2013 (12) TMI 1704
Issues involved: Appeal against order of CIT(A)-XIX, Kolkata regarding computation of Long Term Capital Gains (LTCG) u/s. 143(3) of the Income-tax Act, 1961 for Assessment Year 2006-07.
Summary:
The appeal was filed by the assessee against the order of CIT(A)-XIX, Kolkata regarding the computation of Long Term Capital Gains (LTCG) u/s. 143(3) of the Income-tax Act, 1961 for Assessment Year 2006-07. The assessee sold one third share of a house property and declared LTCG. The AO computed LTCG based on the market value of the property and the cost of acquisition. The assessee contested the adoption of the cost of acquisition as on 01.04.1981. The Tribunal, after considering the valuation report submitted by the assessee, set aside the issue to the file of AO for recomputation of LTCG based on the fair market value of the property as on 01.04.1981. The appeal of the assessee was allowed for statistical purposes.
The Tribunal noted that the assessee had sold one third share of a house property and declared LTCG. The AO computed LTCG based on the market value of the property and the cost of acquisition. The assessee contested the adoption of the cost of acquisition as on 01.04.1981, claiming a different fair market value. The Tribunal considered the valuation report submitted by the assessee valuing the property as on 01.04.1981 at a different amount. As the assessee had produced a valuation report from a registered valuer, the Tribunal directed the AO to compute the LTCG based on the fair market value of the property as on 01.04.1981, considering the valuation report provided by the assessee.
The Tribunal found that the AO should have considered the fair market value of the property as on 01.04.1981, as submitted by the assessee through a valuation report. The Tribunal set aside the issue to the file of AO for recomputation of LTCG based on the fair market value of the property as on 01.04.1981. The appeal of the assessee was allowed for statistical purposes.
In conclusion, the Tribunal allowed the appeal of the assessee for statistical purposes and directed the AO to recomputed the LTCG based on the fair market value of the property as on 01.04.1981, as provided in the valuation report submitted by the assessee. The order was pronounced in the open court on 19th Dec., 2013.
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2013 (12) TMI 1702
Issues Involved:
1. Taxability of interest received from surplus funds.
2. Computation of deduction u/s 10A and 10B of the Income Tax Act.
3. Allowance of management expenses attributable to interest income.
Summary:
Issue 1: Taxability of Interest Received from Surplus Funds
The revenue challenged the Tribunal's order that interest payable on fixed deposits constitutes profits of the business of the undertaking, thus entitling the assessee to benefits u/s 10A and 10B of the Income Tax Act, 1961. The assessee earned interest from deposits in the EEFC account and inter-corporate loans. The Tribunal held that interest income from these sources should be assessed under the head "Income from Business" and extended the benefit under Section 10B for the assessment year 1998-99. However, for the assessment year 2001-02, the Tribunal noted the change in law and applied the formula in sub-section 4 of Section 10B, concluding that the term "profits of the business" is broader than "profits and gains derived by the assessee from a 100% export-oriented undertaking."
Issue 2: Computation of Deduction u/s 10A and 10B
The revenue contended that only profits and gains derived from the export of articles or computer software should be considered, not the profits of the business of the undertaking. They argued that interest from fixed deposits, loans to sister concerns, or EEFC accounts cannot be construed as profits and gains from export. The Tribunal, however, held that the entire profits deriving from the business of the undertaking should be considered while computing the eligible deduction u/s 10B/10A by applying the mandatory formula. The Court agreed with the Tribunal, noting that the amended Section 10B(4) includes all incidental incomes derived from the business of the undertaking.
Issue 3: Allowance of Management Expenses Attributable to Interest Income
The Tribunal allowed management expenses attributable to interest income at the rate of 5%, while the Assessing Officer had computed it at 4%. The Court did not find any cogent reasons provided by the Assessing Officer for applying the lower rate and upheld the Tribunal's decision.
Conclusion:
The Court upheld the Tribunal's decision that interest income from surplus funds should be treated as part of the total income for computing deductions u/s 10A and 10B. The first substantial question of law in ITA No.428/2007 was answered in favor of the revenue, and the first substantial question of law in ITA No.447/2007 was answered in favor of the assessee. The second substantial question of law in both appeals did not arise for consideration. The parties were ordered to bear their own costs.
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2013 (12) TMI 1701
Issues Involved:
1. Whether the registration u/s 12A/12AA of the Income Tax Act, 1961, could be cancelled or withdrawn u/s 12AA(3) in view of the amendment in law by way of substitution of section 2(15) by Finance Act, 2008 w.e.f. 01.04.2009.
2. Whether the assessee's activities, in view of interest and rent receipt, are to be regarded as arising in the course of and in furtherance of the objects for which it is established, or is it by way of a commercial exploitation of its resources.
Summary:
1. Legal Issue: Cancellation of Registration u/s 12A/12AA:
The legal issue revolves around whether the registration granted u/s 12A/12AA can be cancelled or withdrawn u/s 12AA(3) due to the amendment in section 2(15) by Finance Act, 2008. The assessee contends that registration once granted can only be reviewed under the terms provided by law, specifically section 12AA(3), which requires a satisfaction that the activities of the trust are not genuine or not carried out in accordance with its objects. The Revenue argues that if the objects of the registered entity are no longer regarded as charitable due to the first proviso to section 2(15), the registration cannot subsist as it becomes inconsistent with the law. The Tribunal noted that the moot point is whether an object that is no longer regarded as charitable under the amended law would still entitle an entity to continue its registration under the Act.
2. Factual Issue: Nature of Assessee's Activities:
The factual controversy is whether the assessee's activities, particularly the interest and rent receipts, are in furtherance of its objects or constitute commercial exploitation. The assessee, an Authority established under the Mumbai Metropolitan Region Development Act, 1974, argues that its activities, including earning interest and rent, are in furtherance of its objects. The Revenue contends that these activities amount to systematic, commercial exploitation of its assets, thus justifying the withdrawal of registration. The Tribunal found that the assessee has not provided sufficient details to establish that the interest and rent receipts are integral to its functioning and in accordance with its objects.
Findings and Conclusion:
The Tribunal concluded that the issue of applicability of section 12AA(3) is factually indeterminate and restored the matter back to the Director of Income Tax (Exemptions) for a fresh examination. The DIT(E) is to allow the assessee a reasonable opportunity to present its case and decide the matter per a speaking order and in accordance with law. The DIT(E) should focus on the factual aspect of whether the conditions of section 12AA(3) are satisfied without being influenced by the first proviso to section 2(15). The Tribunal emphasized that the assessee's case would require examination by the tribunal only if it survives the factual test under section 12AA(3).
Result:
The assessee's appeal is allowed for statistical purposes, and its stay petition is dismissed. The order was pronounced in the open court on December 31, 2013.
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2013 (12) TMI 1699
Issues involved:
The judgment involves the following substantial questions of law:
(A) Disallowance of depreciation on multimodal project
(B) Disallowance of bonus and royalty expenses
(C) Disallowance of obsolete stock/stores
Disallowed Bonus and Royalty Expenses:
The Tribunal confirmed the deletion of disallowance of bonus and royalty expenses as they were paid before the due date of filing the income tax return, making the assessee eligible for deduction under section 43(B) of the Income Tax Act. The CIT(A) also supported this decision based on the crystallization of liabilities during the relevant accounting period, as per the decision in Kedarnath Jute Manufacturing Co. Ltd. Vs. CIT. The Court found no error in this decision and dismissed the appeal regarding this issue.
Obsolete Stock/Stores Disallowance:
The Assessing Officer disallowed a portion of the claim for obsolete stock/stores. The assessee had written off the stock as per Schedule XI of the P and L account, supported by reports of technical committees/personnel indicating zero value. The CIT(A) allowed the write-off but considered 25% of the total amount as scrap value, confirming a 75% disallowance. The ITAT upheld the 25% disallowance, leading to the deletion of 75% disallowance. The Court dismissed the appeal against the deletion of 75% disallowance, as both the CIT(A) and ITAT had confirmed the disallowance to the extent of 25%.
Conclusion:
The Court dismissed the appeal regarding the disallowance of bonus and royalty expenses and the deletion of 75% disallowance for obsolete stock/stores. The judgment focused on the application of relevant provisions of the Income Tax Act and the decisions of lower authorities in determining the allowability of expenses and write-offs.
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2013 (12) TMI 1698
Issues involved: Appeal against order of Commissioner of Income Tax setting aside assessing officer's order to compute income u/s 115JB of the Income Tax Act, 1961 for a Banking Company.
Summary:
1. The appellant, a Banking Company, appealed against the order of the Commissioner of Income Tax directing computation of income u/s 115JB of the Income Tax Act, 1961.
2. The appellant argued that provisions of section 115JB are not applicable to Banking Companies, citing decisions of ITAT Bangalore Bench and Mumbai Bench. The ld. DR did not dispute this contention.
3. The Tribunal, after considering earlier orders and the decision in the case of Dena Bank, held that section 115JB is not applicable to Banking Companies. The order passed by the Commissioner of Income Tax u/s 263 of the Act was vacated based on this finding.
4. As the order of the Commissioner of Income Tax was vacated, the Tribunal did not adjudicate on other grounds raised by the appellant.
5. Consequently, the appeal of the assessee was allowed.
Note: Separate judgment was not delivered by the judges.
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2013 (12) TMI 1697
Issues Involved:
1. Addition of Rs. 1,34,24,319/- on account of income accrual shown as loan written back.
2. Addition of Rs. 1,73,783/- on account of stock discrepancy.
3. Addition of Rs. 32,290/- on account of finished goods supplied as free samples.
4. Allowing relief of Rs. 2,70,262/- on account of deduction u/s 80IB of the Income-tax Act, 1961.
5. Allowing relief of Rs. 6,31,073/- on account of deduction u/s 80HHC of the Income-tax Act, 1961.
Summary:
1. Addition of Rs. 1,34,24,319/- on account of income accrual shown as loan written back:
The assessee claimed that the waiver of a loan taken for acquiring capital assets should be treated as a capital receipt and not taxable. The CIT (A) agreed, stating that the transaction was of a capital nature. The Revenue argued that the assessee benefited from depreciation and thus the amount should be taxable. The Tribunal upheld the CIT (A)'s decision, referencing the case of Mahindra and Mahindra Ltd. Vs. CIT, where a similar waiver was deemed non-taxable as it was a capital receipt.
2. Addition of Rs. 1,73,783/- on account of stock discrepancy:
The AO added the amount due to minor discrepancies in raw material and finished goods. The CIT (A) deleted the addition, accepting the assessee's explanation of wastage and testing. The Tribunal found the shortage negligible and upheld the CIT (A)'s decision.
3. Addition of Rs. 32,290/- on account of finished goods supplied as free samples:
The AO added the amount as the reduction in closing stock was not clear. The CIT (A) deleted the addition, accepting that samples were given for product promotion. The Tribunal upheld the CIT (A)'s decision, finding the practice customary in the industry.
4. Allowing relief of Rs. 2,70,262/- on account of deduction u/s 80IB:
The AO excluded certain incomes from the deduction calculation. The CIT (A) directed the inclusion of some items but excluded others. The Tribunal upheld the inclusion of interest from customers as per Nirma Industries Ltd. Vs. DCIT but excluded insurance claims and other unspecified claims, remanding the issue of written-back provisions to the AO for fresh examination.
5. Allowing relief of Rs. 6,31,073/- on account of deduction u/s 80HHC:
The AO recalculated the deduction by excluding the amount under sub-section (9) of Section 80IA. The CIT (A) disagreed, but the Tribunal sided with the AO, referencing the Special Bench decision in A.C.I.T. Vs. Hindustan Mint & Agro Products (P) Ltd. and the Punjab & Haryana High Court decision in M/S Broadway Overseas Limited, ruling that deductions u/s 80HHC must be computed after reducing the deduction u/s 80IB.
Conclusion:
The appeal of the revenue was partly allowed, with some decisions of the CIT (A) being upheld and others being overturned or remanded for further examination. The order was pronounced in the open court on 23.12.2013.
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2013 (12) TMI 1695
Issues involved:
The judgment involves the following issues:
1. Whether disallowance u/s 14M of the I.T. Act can be made when dividend income is earned on shares held as stock in trade.
2. Permissibility of tribunal to base its decision on decisions by co-ordinate benches without confronting parties.
3. Applicability of judgments by high courts in relation to the issue under appeal.
4. Consistency of tribunal's view on the matter.
5. Principles of apportionment under section 14A in relation to dividend income from shares held as stock-in-trade.
6. Whether any expenditure can be said to be incurred in relation to dividend income when shares are held as stock-in-trade.
Revenue's Appeal (ITA No. 5163/MuW2011):
The Revenue's appeal did not have a difference of opinion between the members, and thus, no confirmatory order was needed. The appeal was decided as per the order proposed by the Accountant Member and concurred with by the Judicial Member.
Assessee's Appeal (ITA No. 5724/MuW2011):
In the assessee's appeal, no submissions were made by the Revenue, and the assessee was unrepresented during the final posting. The points of difference referred to u/s 255(4) by the Members separately included questions regarding disallowance u/s 14M of the I.T. Act when earning dividend income on shares held as stock in trade, permissibility of relying on decisions by co-ordinate benches, applicability of high court judgments, consistency of tribunal's view, principles of apportionment under section 14A, and whether any expenditure can be said to be incurred in relation to dividend income from shares held as stock-in-trade. The Third Member concurred with the view expressed by the Accountant Member, and the appeal was decided as per the majority view.
In conclusion, the Revenue's appeal was dismissed, and the assessee's appeal was partly allowed. The order was pronounced in the open court on December 06, 2013.
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2013 (12) TMI 1694
Issues involved: Appeal by Revenue against CIT(A) order for assessment years 2000-01, 2001-02, and 2003-04 based on search and seizure operation u/s 132 of the I.T. Act, 1961.
Assessment Years 2000-01, 2001-02, and 2003-04:
The Assessing Officer (A.O.) observed unexplained investments in M/s. Sujana Metal Products Limited and interest income on lease deposits. Assessee's explanation challenged the basis of additions, citing lack of incriminating evidence and reliance on a seized "dumb material." CIT(A) held the seized document as inconclusive and lacking corroboration, directing deletion of additions for all years. Legal precedents supported disregarding uncorroborated seized documents for determining undisclosed income. The CIT(A) decision was upheld, emphasizing the need for substantial evidence to support additions.
Fixed Deposits Interest:
CIT(A) upheld additions for fixed deposits interest despite assessee's explanation. Revenue appealed CIT(A) decision, arguing the existence of unaccounted investments. However, the Tribunal emphasized the necessity of direct evidence to substantiate income additions, dismissing the revenue's appeals due to lack of conclusive evidence and reliance on a "dumb document."
Conclusion:
The Tribunal dismissed Revenue's appeals, emphasizing the importance of corroborative evidence and direct proof for income additions. The decision highlighted the inadequacy of relying solely on seized documents without substantial verification, leading to the deletion of additions based on insufficient evidence. The Tribunal's stance underscored the necessity of concrete evidence to support income assessments, ultimately upholding the CIT(A) order to delete the additions.
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2013 (12) TMI 1693
Issues involved: Appeal against rejection of application for approval u/s 80G(5) of the Income-tax Act, 1961 by Commissioner of Income-tax, Rajkot.
Summary:
The appeal was filed by the assessee-trust against the order of the Commissioner of Income-tax, Rajkot-I rejecting the application for approval u/s 80G(5) of the Income-tax Act. The assessee-trust, engaged in charitable activities in the educational field, had applied for approval on 21.05.2012. However, the Commissioner rejected the application citing insufficient evidence of charitable activities and expenditure details. The assessee-trust did not provide the required information despite being asked by the Commissioner. The Commissioner concluded that the trust did not carry out substantial activities and failed to comply with the necessary requirements for approval u/s 80G(5) as per the Act and Rule 11AA. The assessee-trust appealed the decision on various grounds, arguing that they deserved approval u/s 80G(5).
During the hearing, the Authorized Representative for the assessee-trust contended that only the object of the trust needed to be examined at the time of granting approval for exemption u/s 80G, and the application of funds could be reviewed during assessment. He referred to a judgment of the Punjab & Haryana High Court and an ITAT decision supporting this view. On the other hand, the Revenue representative supported the Commissioner's decision, emphasizing the lack of evidence provided by the assessee-trust regarding their expenditure towards charitable activities.
After considering the arguments, the Tribunal referred to the Punjab & Haryana High Court's decision, which stated that the object of the trust should be examined during approval, and fund application could be reviewed during assessment. Following this precedent, the Tribunal set aside the Commissioner's order and directed the grant of approval u/s 80G(5) to the assessee-trust. Consequently, the appeal of the assessee-trust was allowed.
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2013 (12) TMI 1690
Issues Involved:
1. Validity of reopening of assessment u/s 147 of the Income-tax Act, 1961.
2. Treatment of unaccounted receipt of the assessee while computing book profit u/s 115JB of the Income-tax Act, 1961.
Reopening of Assessment u/s 147:
The assessment was reopened based on the assessee's deposit from the buyer of office space, claimed as refundable after 270 years, not being shown as part of the sale consideration. The AO proceeded with reassessment, making additions on issues not mentioned in the recorded reasons. The CIT(A) held that for reassessment u/s 147, the AO can only assess income related to the issue that escaped assessment based on recorded reasons. If the AO cannot justify the reopening with the recorded reasons, expanding reassessment scope is not permissible. The AO's actions were deemed without jurisdiction and void ab initio, leading to the cancellation of the order.
Treatment of Unaccounted Receipt:
The AO, after agreeing with the assessee that certain deposits were not chargeable as income, made an addition on a different issue of unaccounted receipt. The Tribunal cited precedents emphasizing that reassessment must first address the income that led to the reopening, before considering other items. As the AO's actions lacked jurisdiction, the assessment was deemed void ab initio. Consequently, the appeal by the Revenue was dismissed.
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2013 (12) TMI 1687
Issues involved: Interpretation of Section 44BB of the Income Tax Act, 1961 regarding amount paid or payable.
Summary:
The High Court of Uttarakhand addressed the issue of whether Section 44BB of the Income Tax Act, 1961 allows for the reduction of the amount paid or payable on account of any liability to be incurred by the payee. The Court referred to a previous judgment in Special Appeal No. 204 of 2007, which held that certain payments, including custom duty, would not fall under Section 44BB. However, the Court did not agree with this interpretation and decided to refer the matter to the Honorable Chief Justice for the constitution of a larger Bench for further consideration.
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2013 (12) TMI 1685
Issues involved: Appeal against order of CIT(A) u/s 50C(2), jurisdiction in re-opening assessment u/s 147, valuation as per provisions of Sec 50(2.
Appeal against order of CIT(A) u/s 50C(2): The assessee objected to value adopted by stamp valuing authority, requested not to invoke provisions of section 50C. AO treated market value at higher amount, computed capital gains. CIT(A) dismissed appeal as assessee did not furnish comparable cases. Assessee argued AO should refer matter for valuation by DVO as "may" in section 50C(2) should be read as "shall." Coordinate benches held referring to DVO is mandatory when objection raised. Tribunal agreed, set aside AO and CIT(A) orders, directed valuation by DVO for fair market value.
Jurisdiction in re-opening assessment u/s 147: Assessee withdrew objection regarding jurisdiction in re-opening assessment u/s 147 during arguments, ground treated as withdrawn.
Valuation as per provisions of Sec 50(2): Assessee argued for valuation by DVO as "may" in section 50C(2) should be read as "shall." Tribunal agreed, directed AO to refer issue to DVO for fair market value consideration. Coordinate benches consistently held referring to DVO is mandatory when objection raised by assessee.
Conclusion: Tribunal allowed appeal for statistical purposes, directed valuation by DVO for fair market value consideration.
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