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Income Tax - Case Laws
Showing 221 to 240 of 6519 Records
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2013 (12) TMI 1203
Unexplained cash credit - Held that:- Following Dhakeswari Cotton Mills Ltd. vs. C.I.T. [1954 (10) TMI 12 - SUPREME Court] - The assessment was set aside on the ground that it is based on bare suspicion, conjectures and surmises and further held in the first case that finding of fact would be vitiated if it is based partly on conjectures or on material which is partly inadmissible or irrelevant even though there may be some other relevant admissible material to support the finding. But the order must be read as a whole to see whether the findings are vitiated - The reasons assigned to disbelieve the transaction of loan are not proper. Sri Ram Kumar was maintaining a bank account and payment was made through cheque to the assessee. In the absence of any relation with the partners of the assessee firm, it was not possible for the firm to deposit money in the account of partner in the firm and then get it from him as loan - Decided in favour of assessee.
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2013 (12) TMI 1202
Whether interest income earned on FDR is not taxable - unutilized interest was received, on the amount of grant received from the State Government, and kept in FDRs by the assessee - Held that - On the directions of the State Government, the assessee kept the unutilized grant in the bank. The interest accrued on such deposit did not form part of the profit and loss account of the Corporation, but will be treated as part of the grant-in-aid given by the State Government. The letter of the State Government dated 3.4.1980, was relied upon by the CIT (Appeals) in granting the relief - Decided against Revenue.
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2013 (12) TMI 1201
Unexplained cash credits - Held that:- Following CIT v. P.K. Noorjahan [1997 (1) TMI 6 - SUPREME Court] - The assessee did not have any source of income, and that money was not utilised by her - The protective assessment made against her and the substantive assessment against one Shri Deepak Gupta does not call for any interference by the High Court - The provisions contained in section 69 could not be invoked in respect of the investment - Decided against Revenue.
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2013 (12) TMI 1200
Genuineness of unsecured loans - Held that - The Tribunal found that both the creditors had appeared and confirmed the advances - The assessee had discharged the initial onus that lay upon it by bringing on record necessary confirmation, source of deposits and had produced the creditors, who had admitted making of advances - The nature and source of the credit was proved, and thus the assessee had discharged the burden - Decided against Revenue.
Valuation - Deduction of self supervision charges - Determination of cost of construction as the supervision charges as against 10% claimed by the assessee by its Directors - Held that:- The Tribunal found the allowance for self supervision at 10% to be justified on the basis of several decisions of the Tribunal.
On the architect's fees as added by DVO at 1% of the cost, the Tribunal did not find any error in the order of CIT (A) in directing the AO to substitute the estimated cost on account of architect fee with the actual cost incurred at about 2% - The Tribunal found that the findings of CIT (A) on the expenses or constructions such as supervision charges, bank commission, plans approval, expenditure, expenses for Form 32 for purchase of material, municipal taxes and fertiliser were justified - The CIT (A) had worked out the difference between the estimated cost in terms of DVO's report and modified the cost after allowing the supervision charges and adjusting architect fees - These, according to the Tribunal, were findings of fact - Decided against Revenue.
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2013 (12) TMI 1199
Fall in G.P. Rate – Held that:- AO simply mentioned that all the manufacturing expenses are not verifiable. Keeping in view this fact, we are of the view that it will meet the ends of justice if the addition of Rs.5,00,000/- is sustained instead of addition of Rs.12,61,810/- made by the AO – Partly allowed in favour of assessee.
Penal interest on late payment of interest to the bank – Held that:- As per the provisions of Explanation to Section 37(1) of the Act, any expenditure incurred by the assessee for any purpose which is an offence is not allowable - The late payment of interest to the bank is occurred during the normal course of business of the assessee - The expenditure in question is not incurred for any purpose which is an offence within the meaning of Explanation to Section 37(1) – Decided in favour of assessee.
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2013 (12) TMI 1198
Registration under section 12A – Held that:- The trust was created to provide opportunities for the students of the Department of Economics, Delhi School of Economics to seek employment - Assessee is charging money for registration and subscription from the enrolled students as well as it is also getting subscription from the companies who coming to the campus for providing employment to the enrolled students - The activities of trust are focused on the students of Delhi School of Economics getting education in the institute - Public at large is neither eligible to become a member nor is provided any benefit of the trust activities, as all its activities are for the members enrolled - The activities cannot be in any manner classified as being charitable in nature - Apart from administrative heads of expenditure, no other expenses were shown to have been incurred on any charitable activity – Decided against assessee.
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2013 (12) TMI 1197
Addition on adhoc basis u/s 145(3) – Held that:- The assessee has maintained proper books of accounts and there is no case for invoking section 145(3) – There was huge increase in expenses because cost has come down in respect of various expenses and increase is only in respect of claim and other services - The increase in rent and other services were on account of opening new stores - The entire claim of expenditure is supported from the audited accounts and the Assessing Officer has not found any mistakes or irregularity in respect of any part of the claim of the expenses - Proper stock record is maintained on ERP system - There was no case of any cash deficit and reconciliation statement was duly furnished to the Assessing Officer and Assessing Officer has not disputed the correctness of the same – Decided in favour of assessee.
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2013 (12) TMI 1170
Unexplained investment under section 69C – Held that:- The assessee has not submitted any evidence before the CIT(A) - The CIT(A) is not justified in deleting the same – The issue was restored for fresh decision.
Re-opening of assessment u/s 147 – Held that:- Original assessment was framed u/s 144/147 on 8.12.2006 is a Regular Assessment as defined in sub-section (40) of Section 2 of the Act. While framing the original Assessment, Balance-Sheet as well as Audited Accounts were available on record before the AO - While framing this assessment the AO formed an opinion in respect of project advances shown by the assessee in the Balance Sheet as liability - A concluded assessment cannot be reopened beyond a period of four years from the end of the relevant Assessment Year unless there was failure on the part of the assessee to disclose fully and truly all material facts necessary for making assessment - In this case, the assessee has disclosed complete particulars regarding project advances in the Balance Sheet - The assessee has not suppressed any material facts and there is no documents on record from which an opinion can be formed that income of the assessee has escaped assessment - Following Parixit Industries (P) Ltd V/s ACIT [2012 (4) TMI 464 - GUJARAT HIGH COURT] – In the absence of existence of "any tangible material" to come to the conclusion that there was escapement of income from assessment, the Assessing Officer exceeded his authority to reopen the assessment merely on the basis of a "change of opinion" - Decided against Revenue.
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2013 (12) TMI 1169
Amount paid for production of television programme whether consitute fee for technical services - Held that:- As per Article 7 of the India-Singapore Tax Treaty - The profits of an enterprise of a Contacting State shall be taxable only in the State except if the profits of the enterprise are directly or indirectly attributable to the permanent establishment in the other state - The services of foreign company were utilized and payment for the services were also received outside India - There is no permanent establishment of that comany in India - Profits arising out of the transactions for services rendered by NAPL are not taxable in India - Decided in favour of assessee.
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2013 (12) TMI 1168
Substantive addition for the block period u/s 158(B) - Held that:- Addition of huge amount without any substantive basis and material available on record is unsustainable - Exercise of powers u/s 145 without disclosing cogent reason is unsustainable - Decided against Revenue.
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2013 (12) TMI 1167
Addition on account of unverified stock - Held that:- The CIT has observed the report of auditor - The Auditor has pointed out that the stores have not been physically verified in the constituent units and reconciled with the book value exhibited in the balance-sheet - There has been no adverse comments as regards the purchases from the consumption disclosed - The addition was deleted by CIT(A) as well as Tribunal.
Addition on account of value of scrap recorded in books - Held that:- The assessee has not maintained any details of scrap and its value - The availability of the scrap was not denied - The assessee has regularly been following the particular method of accounting, the addition made on the basis of the estimates and conjectures cannot be justified - Both the additions were made on estimate basis - Estimation is a question of fact - No question of law is emerging from both the proposed questions by the Department - Decided against Revenue.
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2013 (12) TMI 1166
Whether income from letting out of shops held as stock in trade is taxable as business income - Held that:- Letting out the premises or receiving the rent is not a business of the assessee. The business of the assessee is to construct and sale the properties - Following CIT vs. M/s. Goel Builders [2010 (5) TMI 487 - Allahabad High Court] - The units lying vacant due to shortage of demand were rented to earn income - The rental income was utilized to reduce the burden of repayment of interest - The assessee has rightly claimed rental income under the head "income from business" specially when the assessee was not engaged in the business of letting out for the construction of the business complex - The rental income was earned for a short period - The same was shown in the books of account - The unsold units in the stock-in-Trade were already treated as business assets - Decided in favour of assessee.
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2013 (12) TMI 1165
Whether the assessment passed u/s 144 is barred by limitation - special audit u/s 142(2A) was not completed within the stipulated period - Held that:- the A.O. has issued the first letter on 08.03.2006, which was received by the assessee on 13.03.2006 - The could complete the assessment within the time if the assessee had completed the special audit within 30 days time alloted for it - It is the assessee who has delayed the matter - It was the pious duty of the assessee to get its accounts audited under section 142 (2A) of the Act or file objection, instead of that the assessee reached upto Hon'ble the Supreme Court - If the accounts might have been audited as per direction of the A.O. especially when the assessee claimed that accounts were perfect and there was no requirement for getting accounts audited - The assessee never filed any objection against the letter dated 08.03.2006 - Due to non-cooperation of the assessee, the A.O. was forced to pass the ex parte assessment order under Section 144 of the Act and only after the assessment order, the assessee has filed the objections - Decided against assessee.
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2013 (12) TMI 1164
Whether wages paid to casual labour is not a business expense u/s 37 - Held that:- The books of accounts of the assessee company, bills and vouchers are audited under section 44 AB of the Companies Act but no audit account showing expenditure incurred for engaging casual labours or labours is produced - There is nothing on record to show payment of employees provident fund or the employees state Insurance Contribution with regard to these employees - This amount was not properly explained by documentary supporting evidence.
The question of granting exemption from addition of this expenditure under section 37 will arise only if the expenditure is shown to have been incurred or proved on account of payment for casual labour etc - The expenditure is not proved to have been incurred and therefore, it is disallowed - Such position without proof of expenditure being established, the benefit of section 37 cannot be granted - Decided against assessee.
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2013 (12) TMI 1163
Enhancement of GP rate - Held that:- Following Commissioner of Income Tax (Central) Kanpur vs. M/s Carpet Palace, Rajpura, Bhadohi [2013 (9) TMI 447 - ALLAHABAD HIGH COURT] - The questions framed on the basis of rejection of books for low GP rate are not substantial questions of law - The material found during the search and seizure relating to AYs 2007-08, 2008-09 and 2009-10, (included in the block assessment period) was not considered by the AO - The AO satisfied himself in rejecting the books of account and thereafter raising the G.P. rate arbitrarily - The ITAT has given sufficient reasons to find that in comparable cases the G.P. rate in the relevant financial year was from 9% to 21%, whereas the assessee had disclosed a much higher gross profit rate at 28.4% - There was no justification to increase the G.P. rate beyond the highest gross profit rate in comparable cases, when the assessee had disclosed a higher rate of 22.40% for AY 2005-06 and 22.42% for AY 2006-07 - Decided against Revenue.
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2013 (12) TMI 1162
Whether the report of ADI (Investigation) may be the basis for initiating proceedings u/s 147 - Held that:- The condition that the A.O. must be in possession of a definite and relevant information or material which may led him to have reasons to believe that income chargeable to tax has escaped assessment must be fulfilled - The Tribunal is a final fact finding authority - The Tribunal observed that the mandatory conditions for initiation of the proceedings u/s. 147 were not fulfilled in the case of the assessee.
Also the tax effect in each appeal is less than prescribed limit - As per Board's Circular dated 24.10.2005 as well as limit prescribed under Section 268-A of the Income Tax Act, the Department is not expected to file the appeals - Decided against Revenue.
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2013 (12) TMI 1161
Disallowance of interest under Section 244A - Held that:- If refund is delayed for reasons attributable to the assessee wholly or in part, no interest is payable and the said period has to be excluded, but the said decision has to be taken by the Chief Commissioner or Commissioner - The Assessing Officer cannot pass an order under Section 244A(2) as per the findings recorded by the tribunal - In the case of the assessee, neither the Commissioner nor the Chief Commissioner had passed any order under Section 244A(2) - Once the tribunal came to the conclusion that the Assessing Officer could not have decided the issue, they should not have gone into the factual matrix whether the delay was attributable wholly or in part to the assessee - Partly allowed in favour of the assessee.
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2013 (12) TMI 1160
Product development Expenses - Capital or revenue expenditure - Held that:- Following ALEMBIC CHEMICAL WORKS CO. LTD. V. CIT [1989 (3) TMI 5 - SUPREME Court] - The upgradations were required constantly and perpetually - The Assessee had to keep pace with the rapidly changing requirements of the mobile phone users and with other software providers - The expenditure such as new features, upgrades, patches for removing glitches did not bring into existence a new asset but rectified and improved the product being sold - There has to be recurring expenditure which has to be incurred in the said business to ensure sale of the software,for removal of obstructions, restrictions or disabilities on the sale - These were normal day-to-day expenses for running the business in question and did not create enduring rights or advantage or benefit over a long period time - The determination should be based upon consideration of facts and circumstances and by applying principles of commercial trading and business expediency - Decided against Revenue.
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2013 (12) TMI 1159
Validity of order of CIT(A) - Held that:- A perusal of the order passed by the ITAT reveals that, though, arguments were addressed on the question of legality of order passed by the CIT(A) - The ITAT has not recorded any opinion thereon - The order passed by the ITAT, suffers from an error of jurisdiction and must necessarily be rectified.
The CIT(A) and the ITAT have apparently ignored Section 153(1)(a) as well as judgment of the Hon'ble Supreme Court of India in Assistant Commissioner of Income-tax v. J.K.Synthetics Ltd., [2001 (2) TMI 17 - SUPREME Court] - The matter was restored for fresh adjudication.
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2013 (12) TMI 1158
Whether conversion of deposit is income - Held that:- Following CIT v. Shri Bhogawati Sahakari Sakhar Karkhana Ltd. [2005 (8) TMI 66 - BOMBAY High Court] - Conversion of deposits is not income of the trust.
Whether interest paid on deposits is allowable - Held that:- Following CIT v. Shri Bhogawati Sahakari Sakhar Karkhana Ltd. [2005 (8) TMI 66 - BOMBAY High Court] - Interest payable on refundable and nonrefundable deposits is also an expenditure of the society and is liable to be deducted from income taking into consideration the Maharashtra Cooperative Societies Act, bylaws and the Government directives - Decided in favour of assessee.
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