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Income Tax - Case Laws
Showing 201 to 220 of 6519 Records
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2013 (12) TMI 1255
Unexplained commission paid – Held that:- The Assessing officer has accepted the payment of commission by Santosh Kumar Agarwal - When the amount has already been assessed in his hands, then the same amount cannot be added in the hands of the assessee to avoid double taxation – There is no justification for making the addition of Rs.16,40,000/- in the hands of the assessee.
Unexplained payment - Held that:- The ITAT found that M/s. Mohan Lal Jain & Sons was having transaction with Sri Santosh Kumar Agrawal only. He was not having any transaction with the assessee firm. M/s. Mohan Lal Jain & Sons have repeatedly asked Sri Santosh Kumar Agarwal, whose wife was a partner in the assessee firm, for making the payment, and Sri Santosh Kumar Agrawal has also confirmed it.
Net Profit rate - Held that:- Profit @ 8 % was justified and accordingly an addition of Rs. Rs.9,649/- was confirmed, and relief of Rs.1,11,149/- was granted - Decided against Revenue.
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2013 (12) TMI 1254
Reference to valuation officer for valuation of land - Held that:- The assessee had purchased the plot in question from the UPSIDC - The UPSIDC had informed the Revenue authority through its letter dated 7.1.1997 that the cost of plot as on 1st April, 1981 was Rs.9.75 per square yard, which has not been disputed by the assessee then in such a situation it was not necessary for the assessing authority to refer the matter to the valuation officer - Once from the documentary evidence and material on record, it is established that the cost of land is Rs. 9.75 per square yard then there appears to be no reason to invoke the provisions of Section 55A of the Income Tax Act - The power conferred in Section 55A deals the controversy to refer to valuation officer, in case there is dispute or doubt or inability to find out the fair market value of capital assets - Decided against assessee.
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2013 (12) TMI 1253
Penalty for concealment of income - Undervaluation of closing stock - Held that:- The assessment was not based on estimation - The assessee had concealed the income by reducing the value of the closing stocks at absurdly lower rate, which was much less than the purchase price without any evidence or material to show that the stock of foodgrains had deteriorated to such an extent, that the valuation would be lesser than the purchase price - The AO applied the lowest of the purchase rates for each of the commodities constituting the assessee's closing stock as obtaining in the month of its purchase - The AO did not estimate such value - In the absence of any other material produced by the assessee he accepted the lowest of purchase price as the value of the closing stock - Decided against assessee.
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2013 (12) TMI 1252
Whether reopening of assessment u/s 147 based on DVO's report constitute reason to believe - Held that:- The Tribunal found that the DVO's report is based on his opinion, and not on any material, which could form the basis of reopening of the cases, and thus it can at best be treated as an information, which will not be sufficient material for recording 'reason to believe' to proceed in the matter - The opinion of the DVO, as to what would be reasonable percentage of architects fees and the supervision charges by the Directors, would not constitute tangible material for exercising powers of reopening the assessment - Following Assistant Commissioner of Income-Tax v. Dhariya Construction Co. [2010 (2) TMI 612 - Supreme Court of India] - The DVO's report per se is not an information for the purposes of reopening assessment under Section 147 of the Act - The Assessing Officer has to apply his mind on the information, if any, collected and must form a belief thereon on reopening the assessment - There has to be something more than the report of DVO for the belief of the Assessing Officer - Decided against Revenue.
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2013 (12) TMI 1251
Whether interest income earned on surplus amount of funds involved in FDRs be treated as business income - Held that:- Following Totgar's Co-operative Sale Society Ltd v. Income-Tax Officer [2010 (2) TMI 3 - SUPREME COURT] - The interest on the FDRs cannot be treated as income from profits and gains of business - The word 'income' has been defined in Section 2 (24) (i) of the Act to include 'profits and gains'. Sub-section is an inclusive. The business profits have been specifically included in the word 'income' - The assessee-company had invested the surplus funds, which were not immediately required by it, in FDRs, which were later on encashed and used for expansion of business - The deposits made by the company were not in the regular course of business, nor it was the business of the company to make deposits and earn interest - The interest income cannot be said to be attributable to the activities of the company. The interest had accrued on the funds, which were not immediately required by the assessee-company for its business purposes and which were invested in FDRs - The assessee company is engaged in the business of manufacture of oxygen and nitrogen gas; re-rolling of steel; and fabrication of railway wagons. The surplus profits retained by the company were kept in FDRs - The interest earned on such income was not earned out of business regularly carried out by the assessee company - Decided in favour of Revenue.
Deduction u/s 32AB of interest earned on FDRs - Held that:- The AO had rightly disallowed the deductions under Section 32AB out of the interest income treating the same as income from other sources - Decided in favour of Revenue.
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2013 (12) TMI 1250
Whether reopening of assessment u/s 147 is permissible on the basis of audit report - Held that:- The audit report was not the only information, which persuaded the assessing authority, to issue notice under Section 142 (1) of the Act - The audit report was submitted on 17.11.2008, and was available on record - The Assessing Officer after examining the judgments of the Supreme Court in Liberty India [2009 (8) TMI 63 - SUPREME COURT] - The AO formed an opinion to issue notice under Section 142 (1) of the Act, fixing 15.06.2012 to submit the specified documents mentioned in the questionnaire attached with the notice dated 31.5.2012. The Assessing Officer did not commit any jurisdictional error in issuing the notices - Decided against petitioner.
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2013 (12) TMI 1249
Unreasoned order of Tribunal - Valid or not - Held that:- Though tribunal has extended the benefit of its earlier judgement while deciding the controversy as raised, but not indicated as to what and in which manner the case is identical to the earlier judgment - It was incumbent upon the tribunal to discuss the similarity between two controversy, one which was decided earlier and the other i.e. the case in hand - If the tribunal would have compare the similarity between two disputes the one of which was decided earlier and thereafter parity have been extended then finding should have been recorded with regard to similarity of dispute – Following Assistant Commissioner, Commercial, Tax Department, Works Contract and Leasing, Quota Vs. Shukla and Brothers [2010 (4) TMI 139 - SUPREME COURT OF INDIA] - It shall be obligatory on the part of the judicial or quasi judicial authority to pass a reasoned order while exercising statutory jurisdiction - Reason is the very life of law. When the reason of a law once ceases, the law itself generally ceases - The tribunal has been failed to discharge his obligation by not discussing the evidence and material available on record extending parity to the respondent - The order is unreasoned and decided without discussing the similarity between the case in hand and the earlier judgement of tribunal – The issue was restored for fresh adjudication.
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2013 (12) TMI 1248
Application for renewal of exemption u/s 80G - Held that:- The petitioner neither misutilised the grant nor utilised it for any business - The observations of CIT that the interest was utilised for business is not based on any material and the discussion of the manner in which the interest was utilised - He also did not record any finding that the respondent assessee did not comply with the terms and conditions of the utilisation of the grant - Section 80G(5)(i)(b) provides the condition for exemption or rejection of the application for renewal, if the donation made to the institution or funds are not used by it directly or indirectly for the purpose of such business - The Commissioner did not record any such finding that the funds, which was earmarked and was kept in separate account in fixed deposit was not used by the respondent assessee directly or indirectly - There was no occasion to misuse the funds as the hospital had not yet started and thus the plant and machinery could not be purchased from the grant, which was kept in fixed deposit - Decided against Revenue.
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2013 (12) TMI 1216
Petition for recalling of noting in the order sheet - adverse remarks made by the tribunal against the Chartered Accountant (CA) in the order - Held that:- it appears that originally, the dispute was between Accountant and Judicial Members of the Tribunal and it was not functioning. So, adjournment was sought by the petitioner, but the same was refused. However, on 06.03.2013, the case of the petitioner was decided in favour of the assessee in his presence. - During the course of arguments, the petitioner has tendered his unconditional apology orally as well as in writing. When the petitioner has tendered his unconditional apology, no further adjudication is required -
The order of the Tribunal modified to expunge the reference made by the Tribunal to the Institute of Chartered Accountant of India, and cancelled the cost of Rs.5,000/-, imposed by the Tribunal too. Adverse remark against the petitioner, if any, is also expunged.- Decided in favour of petitioner.
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2013 (12) TMI 1215
Payments made for acquiring television rights amount to royalty - Held that:- As per clause (v) to Explanation (2) to Section 9(1) of the Act - "Royalty" to mean consideration for the transfer of all or any rights (including the granting of a licence) in respect of any copy right, literary, artistic or scientific work including films or video tapes for use in connection with television or tapes for use in connection with radio broadcasting, but not including consideration for the sale, distribution or exhibition of cinematographic films - The transfer deed clearly states that the transfer in favour of the assessee is for a perpetual period of 99 years - The assessee was also entitled to assign the said rights, which was transferred in their favour - Further the agreement was irrevocable and shall remain in force for a period of 99 years - The nature of transaction, being a perpetual transfer for a period of 99 years, would undoubtedly fall within the scope of sale - The findings of the First Appellate Authority was perfectly justified in holding that the transfer in favour of the assessee as sale and therefore, excluded from the definition of "Royalty" as defined under clause (v) to Explanation (2) of Section 9(1) of the Act - Decided in favour of assessee.
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2013 (12) TMI 1214
Scope of term 'Direction' in the Assessment Order to initiate penalty proceedings - Whether penalty proceedings can be initiated when there is no loss to revenue - Held that:- Following Commissioner Of Income Tax Vs. Manjunatha Cotton & Ginning Factory [2013 (7) TMI 620 - KARNATAKA HIGH COURT] - The assessment order should contain a direction for initiation of penalty proceedings - The meaning of the word direction is of importance - Merely saying that penalty proceedings are being initiated will not satisfy the requirement. The direction to initiate proceedings should be clear and not be ambiguous - It is well settled law that fiscal statutes are to be construed strictly and more so the deeming provisions by way of legal fiction are to be construed more strictly - As the words used in the legal fiction or the deeming provisions of Section 271(1B) is Direction, it is imperative that the assessment order contains a direction - Use of the phrases like (a) penalty proceedings are being initiated separately and (b) penalty proceedings under Section 271(1)(c) are initiated separately, do not comply with the meaning of the word direction as contemplated even in the amended provisions of law - The word 'direction' has been interpreted by the Apex Court - In any event whatever else it may amount to, on its very terms the observation that the ITO is free to take action, to assess the excess in the hand of the co-owners cannot be described as a direction - A direction by a statutory authority is in the nature of an order requiring positive compliance - When it is left to the option and discretion of the ITO whether or not take action, it cannot be described as a direction.
In the case of assessee - Assessing Authority was not satisfied that there is any concealment of the intent - There was no direction for initiation of penalty proceedings - In the absence of such a direction, the deeming provision is not attracted - The conditions prescribed under Section 271(1)(c) of the Act, is not attracted – Decided in favour of assessee.
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2013 (12) TMI 1213
Penalty u/s 271AAA on undisclosed income accepted during search operation - Held that:- Initially the amount of Rs.12.5 crores was declared and disclosed by the AOP but subsequently the AOP had filed a revised return declaring “nil” income - The Assessing Officer had decided that Rs.12.5 crores should be equally divided and taxed in the hands of Virendara Kumar Gupta, Sarad Jain and Sudhir Jain - The three respondent-assessees had filed appeal before the Commissioner (Appeals) questioning the said order/position - The AOP filed an application under Section 264 in pursuance of which the individual assessees withdrew the appeals - Taxes and applicable interest were paid on the undisclosed income - Details of nature of undisclosed income and manner of earning was recorded in the statement of Virendara Kumar Gupta - It was stated that such an income was undisclosed income - Decided against Revenue.
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2013 (12) TMI 1212
Disallowance out of preliminary expenses - Held that:- Following assessee's own casew for A.Y. 1994-95 - Total preliminary expenses incurred by the assessee had to be apportioned in the ten successive previous years, for preliminary expenses in accordance with Section 35D of the Income Tax Act, determining the previous year in which the business was commenced or in which the existence of the industrial undertaking was completed or in which the new industrial units commenced operation - Decided against Revenue.
Disallowance of deferred revenue expenditure - Held that:- The AO had not disputed the genuineness of the expenditure. His only objection was that the claim of expenses was on deferred basis. The advances were not doubted and the expenses were incurred during the year - The assessee had claimed less than the allowable expenditure, there was no justification for the disallowance under consideration - Decided against Revenue.
Disallowance of debenture transfer fee, upfront fee and processing fee - Held that:- There was no controversy as to whether the expenditure was capital expenditure or revenue expenditure - The borrowed funds were utilized for working capital, and since these funds were utilized for the business purpose, no disallowance was made out of the interest paid on such borrowed funds - The Tribunal further found that the AO has accepted that the interest bearing funds were entirely utilized by the assessee for its business purposes - Tribunal is final fact finding authority - Decided against Revenue.
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2013 (12) TMI 1211
Whether purchase and sale of shares are speculative transaction - Held that:- The assessee was engaged in the business of trading of crafts paper, installation, job work, consultancy and commission - The transaction whereby it purchased the shares and incurred loss on account of the fall in the value of the share was a solitary one - The Tribunal has recorded its finding that the transaction did not constitute the business carried on by the company, cannot be termed as perverse or unreasonable - No substantial question of law arises - Decided against Revenue.
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2013 (12) TMI 1210
Whether polishing of rough granites amount to manufacture u/s 10B - Held that:- The definition of 'manufacture' was omitted from Section 10B of the Income Tax Act with effect from 01.04.2001 - Following M/s.Gem Granites vs. CIT [2004 (11) TMI 13 - SUPREME Court] - The polished granite is different from rough granites and that rough granites under the process as amounting to manufacture. Thus, when the resultant article no longer retained its original character, but has a different name and character - The plea of the Revenue cannot be accepted solely by the reason of the absence of definition of 'manufacture' under Section 10B of the Income Tax Act, during the relevant assessment years - Decided against Revenue.
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2013 (12) TMI 1209
Condonation of delay - Held that:- Whenever an explanation is given to condone the delay in filing the appeal, the Tribunal must exercise its discretion with a conscious application of mind on such explanation - The discretion of the Tribunal in such case must be exercised on such explanation and its sufficiency keeping in mind that the rejection of the application denies to the appellant an opportunity of hearing in appeal on merits - Unless the explanation is not bonafide, the right of hearing on merits may not be denied to the assessee - The fact that the Tribunal did not consider the reason, and observed that it was not a case to condone the delay has deprived the appellant the remedy of Second Appeal, which is the final authority on recording findings of fact - The Tribunal did not apply its mind to the explanation offered for condonation of delay in filing the appeal - Decided in favour of assessee.
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2013 (12) TMI 1208
Perquisites to director - Held that:- Following Commissioner of Income Tax v. HICO Products Pvt. Ltd. [1992 (11) TMI 58 - BOMBAY High Court] - In the case of employee director and such other persons, who are covered by the proviso to Clause (a) the aggregate ceiling of Rs.72000/- was fixed not only in respect of expenditure referred to in sub-clause (i) and sub-clause (ii) but also those referred to in sub-clause (i) and (ii) of clause (c) of Section 40 (5) of the Act - The legislative intention was to treat the employee directors and other persons mentioned in the proviso differently from other employees in the matter of allowability of expenditure incurred on them - The expenditure incurred by the director were within the ceiling.
Whether proposed dividend is an ascertained liability - Held that:- Following CIT v. Enfield India Ltd [1996 (10) TMI 14 - MADRAS High Court] - The dividend was only proposed and was not yet approved by the General Body of the shareholders at the annual general meeting - It could not be said to be liability on the first day of the computation period under sub-section (1) of Section 80J - Decided in favour of assessee.
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2013 (12) TMI 1207
Whether loss of unit entitled to deduction under Section 10-B be set off against business profits earned by the assessee - Held that:- Following Goetze (India) Ltd. v. CIT [2006 (3) TMI 75 - SUPREME Court] - The Tribunal has held that on the date relevant to the present controversy, the Act did not prescribe any impediment prohibiting the assessee from setting off the loss in the manner allowed by the Tribunal - The revenue is unable to refer to any statutory provision or precedent, relevant to the assessment year, that would enable us to hold to the contrary - The order passed by the Income Tax Appellate Tribunal granting relief to the assessee is in accordance with law - Decided against Revenue.
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2013 (12) TMI 1205
Petition for payment of demand in instalments - Held that:- The petitioner's claim to grant credit for TDS of the Assessment Years 2012-13 and 2013-14 cannot be accepted - The petitioner is facing serious financial hardship - It would be appropriate to permit the petitioner to clear the entire outstanding amounts in three monthly instalments - Decided in favour of petitioner.
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2013 (12) TMI 1204
Whether additional liability on actual cost of asset in respect of fluctuations in foreign exchange rate be deductible u/s 43A - Held that:- Following Commissioner of Income Tax. vs. Woodward Governor India (P) Limited [2009 (4) TMI 4 - SUPREME COURT] - Amendment to Section 43A by Finance Act, 2002 w.e.f 1.4.2003 was amendatory and not clarificatory - It shall be prospectively effective from 1.4.2003 and the cases relating to earlier assessment years would be governed by unamended Section 43A of the Act - The present appeal which relates to the assessment year 1993-94, the same would be governed by the unamended provisions of Section 43A of the Act - The assessee was entitled to exchange rate fluctuation in respect of foreign currency in the assessment year in question as it was following mercantile system of accountancy - Decided against Revenue.
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