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Income Tax - Case Laws
Showing 241 to 260 of 6519 Records
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2013 (12) TMI 1157
Whether benefit of exemption for investment in shares is violation of section 13(1)(d) - Held that:- It is well settled that the depiction in books of accounts is not a determinative test but the factual nature of the transaction which has to be considered for the purpose of taxation - The investment in shares of cooperative banks was a precondition for raising of loans and it was therefore not an investment as normally understood - The shares were subscribed to only for purposes of obtaining the loan and the amounts so obtained were used for furtherance of the objects of the trust - There is no reason to deny the benefit of exemption under Section 11 of the Act for Assessment Year 2008-09 - Decided against Revenue.
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2013 (12) TMI 1156
Whether amount received for commercial transaction be held as loan or dividend u/s 2(22)(e) - Held that:- The Tribunal being final Court of fact accepted the explanation that the amount was received as advance sale consideration for sale of cold storage of the assessee - The agreement could not materialise on which the MOU was executed cancelling the transaction - The payment of the amount in pursuance to the agreement for sale of cold storage would not by itself become loan or partake the character of loan after the agreement was cancelled and MOU signed for returning the amount – The MOU was produced by the assessee before CIT(A) - Decided against Revenue.
Interest free loan given to family members - Held that:- The Tribunal recorded the findings that the assessee in his individual account was having sufficient capital - If he had given the amount as interest free loan to his family members, that by itself could not be put to doubt and on which the interest was disallowed under Section 36 (1) (iii) of the Act – Decided against Revenue.
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2013 (12) TMI 1155
Penalty u/s 271(1)(c) – Held that:- The assessee could not produce supporting evidence/vouchers before the AO to substantiate the claim of expenses - The absence of any explanation or evidence/vouchers to support the claim of the assessee is nothing but false claim/bogus claim of the assessee - This amounts to furnishing wrong particulars of claim as assessee has claimed expenses which have not been substantiated by any document could not be established that claim was genuine - Assessee has concealed its income by claiming expenses which could not be found to be genuine – Decided against assessee.
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2013 (12) TMI 1154
Provision for Royalty – Held that:- The Copy right Board decided the rate of royalty payable by appellant to PPL at the average rate of Rs.660/- per needle hour - The appellant was allowable the expenditure for payment of royalty to the PPL @ Rs.660 per needle hour and not @ Rs. 1,500 per hour - the provision reflected at Rs.3,49,86,000/- included the opening balance of Rs.94,60,000/-, which was not required to be considered for the purpose of disallowance since the same was not provision made during the year – Decided against Revenue.
Advertisement and marketing cost – Held that:- As per Accounting Principle the provision for expenses are also allowable if the goods/services have been received - There is no material on record to show that in the instant case the goods/services have been received by the assessee during the year under consideration and there is no positive finding of the ld. CIT(A) in this regard - Even at this stage the ld. counsel for the assessee has placed no material on record to show that the goods/services have been received by the assessee during the year – The issue was restored for fresh decision.
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2013 (12) TMI 1153
Assessment u/s 143(3) r.w.s. 147 – Depreciation on windmill @ 80% or not - Held that:- Following K.K.S.K. Leather Processors P. Ltd. v. ITO [2009 (11) TMI 556 - ITAT MADRAS-D] - The claim made in the "return" of income filed within the due date of filing is sufficient for exercising the option as required under the second proviso of rule 5(1A) - Decided against Revenue.
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2013 (12) TMI 1152
Penalty u/s. 271(1)(c) – Disallowances in scrutiny assessment - Held that:- Following CIT v. Reliance Petroproducts Pvt. Ltd. [2010 (3) TMI 80 - SUPREME COURT] - The assessee respondent, in its return of income, had disclosed all details and material particulars - It is a different aspect that Assessing Officer made certain additions in the scrutiny assessment. However later on, CIT (Appeals) had treated it differently by allowing and deleting certain additions - This cannot give rise to the penalty proceedings - For levying penalty u/s.271(1)(c), non bona fide conduct of the assessee should be apparent from the facts and circumstances – Decided against Revenue.
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2013 (12) TMI 1151
Conversion charges and parking charges – Revenue or capital in nature - Held that:- Following Bikaner Gypsums Ltd. vs CIT [1990 (10) TMI 2 - SUPREME Court] - If some expenditure incurred resulted into advantage of enduring benefit, the expenditure may not amount to acquisition of an asset - The assessee had paid amounts for one time conversion charges and for parking charges at the two outlets, the benefits of which might accrue to the assessee for indefinite period of time - These were incurred to enable the profit making structures to work more efficiently leaving the source or the profit making structure untouched - The expenditure were in the nature of levies/taxes paid by an assessee to a government authority for making available the required infrastructure to run the business efficiently and effectively – The expenses are revenue in nature - Decided against Revenue.
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2013 (12) TMI 1118
Admission of application for advance ruling - Determination of status of assessee - Independent company or AOP - On Shore Services Contract - offshore supply of all goods - Held that:- mere filing of return does not attract bar on the admission of the application as provided in section 245R(2) of the Act. We are of the view that only when the issues are shown in the return and notice under section 143(2) is issued, the question raised in the application will be considered as pending for adjudication before the Income-tax Authorities. In the present case the application was filed on 4.4.2012. Return of income was filed on 30.11.2011 i.e. before filing the application. However, notice under section 143(2) was issued on 8.8.2012 i.e. after the date of the application. Following which ruling in Hyosung Corporation (2013 (8) TMI 487 - AUTHORITY FOR ADVANCE RULINGS) we hold that the question raised by the applicant in the present case is not already pending before the Income-tax Authorities and therefore, the application is admitted.
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2013 (12) TMI 1117
Taxability of payments made towards line production services - shooting outside India for the show 'Wipe Out' - Nature of payment - Fee for Fees for Technical services ('FTS') or Royalty - withholding tax u/s 195 - non-fiction format show Bigg Boss (Big Brother) and has also other reality shows in India such as Fear Factor - Khatron Ke Khiladi etc. - Held that:- The payments made by the applicant towards line production services provided by Endemol ARG in accordance with the agreement entered into by the applicant with Endemol ARG is not 'fees for technical services' as the services falls under 'work contract' as defined in Explanation to Section 194C of the IT Act. - The payments made by the applicant to Endemol ARG for availing the line production services under the agreement is not chargeable to tax as per the provision of section 9(1)(i) of the IT Act. - No TDS liability u/s 195 - Decided in favor of assessee.
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2013 (12) TMI 1116
Whether proceedings u/s 153A are invalid since no panchnamas were drawn/issued after search u/s 132 - Held that:- The aforesaid contention of the 22 petitioners has to fail in the present cases for several reasons. The said contention was not raised against the first order under Section 153A passed by the Assessing Officer which was made subject matter of challenge in a revision before the Commissioner under Section 264 of the Act. The Commissioner has set aside the first assessment orders under Section 153A of the Act and has passed an order of remand for fresh adjudication vide order dated 16th March, 2012. The petitioners have not questioned and challenged the orders dated 16th March, 2012 and have accepted the same.
There is certainly lapse and failure to comply with the requirements of search and seizure manual as the panchnama did not contain names of the 22 petitioners and does not record any suspension of search. Even the obstruction and presence of third persons were not mentioned in the panchnamas. But this would not affect the validity of the search.
Assessment orders under Section 153A cannot and should not be permitted to become a matter of writ proceedings as the first appellate forum. The first appellate statutory authority can deal with the questions and issues raised before us, whose jurisdiction indeed has been invoked with appeals being preferred by the petitioners. We do not think that the contentions and issues raised, merit or justify their examination and decision in writ petitions in exercise of extra ordinary jurisdiction.
Writ petition dismissed - Decided against the assessee.
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2013 (12) TMI 1115
Whether variable licence fee paid by the assessees was properly deductible as revenue expenditure or or capital expenditure which is required to be amortized under Section 35ABB of the Income Tax Act, 1961 - The licence was issued under a statutory mandate and was required and acquired, before the commencement of operations or business, to establish and also to maintain and operate cellular telephone services. - Held that:- payment of licence fee was capital in part and revenue in part and it would not correct to hold that the whole fee was capital or revenue in entirety. The licencees i.e. the assessees in question required a licence in order to start or commence business as celluar telephone operator. The requirement to procure a licence or pay licence fee was a precondition before the assssee could commence or set up the business in question. The fee was certainly paid to the Government for permitting and allowing an assessee to set up/start cellular telephone service which otherwise was not permitted or prohibited under the Telegraph Act. In a way, it was a privilege granted to the assessee subject to payment and compliance with the terms and conditions.
The expenditure incurred for establishing or for setting up/construction of any factory/business would be capital, but the amount paid on yearly basis for running or operation of the factory/business would be normally revenue in nature. - Decided partly in favor of revenue.
Power to Court to bifurcate and divide the licence fee into capital and revenue and what percentage or ratio should be attributed to revenue and capital account. - Held that:- The difficulty in apportionment cannot be a ground for rejecting the claim either of the Revenue or of the assessee. Such an apportionment was sanctioned by courts in Wales v. Tilley, Carter v. Wadman (H.M. and T. Sadasivam v. Commissioner of Income-tax, Madras. In the present case apportionment of the compensation has to be made on a reasonable basis between the loss of the agency in the usual course of business and the restrictive covenant.
Basis of apportionment - Held that:- It would appropriate and proper to divide the licence fee into two periods i.e. before and after 31st July, 1999. The licence fee paid or payable for the period upto 31st July, 1999 i.e. the date set out in the 1999 policy should be treated as capital and the balance amount payable on or after the said date should be treated as revenue.
Capital expenditure will qualify for deduction as per Section 35ABB of the Act. - Decided partly in favor of revenue.
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2013 (12) TMI 1114
Disallowance u/s 40A(3) – Cash payment for purchase of land - Held that:- The assessee has made payment to various villagers for purchase of agricultural land - Normally farmers would insist on cash payments, specially when such payments involve huge amounts for the simple reason that they would like to avoid the risk of receiving cash at the town where the sale deed is to be registered before sub-registrar and which may be far way from the sellers' village – Perusal of the second proviso to s. 40A(3) shows that the object of the legislature is not to make disallowance of genuine cash payments which have to be compulsorily made by the assessee in view of absence of banking facilities at the place of payment - The assessee made cash payment to the agricultural land seller villagers which are covered under second proviso to section 40A(3) of Rule 6DD(h) of the Rules – Decided in favour of assessee.
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2013 (12) TMI 1113
Gain on sale of shares – capital gain or business income – Held that:- Following Associated Industrial Development Co. (P.) Ltd [1971 (9) TMI 3 - SUPREME Court] - If any body proves that the share purchased kept under the investment portfolio and the same are kept under the stock-in-trade, then the same treatment is to be given - The assessee has shown all the purchases under the head investment portfolio - This fact has been admitted by the departmental authority in previous two years, where the short term capital gain shown by the assessee has been accepted - Following V.A.Trivedi [1987 (1) TMI 12 - BOMBAY High Court] - The period of the holding and number of transactions cannot be the only basis to determine whether the assessee has carried out the business in shares transactions - It may be one of the relevant consideration but cannot be the main consideration for deciding whether the assessee in this case is engaged in a business or not – All the surrounding circumstances should also be looked into – Decided in favour of assessee.
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2013 (12) TMI 1112
Validity of assessment u/s 147– Held that:- As per AO, certain income has escaped assessment by reason of incorrect allowing of deduction under section 54F of the Act for the reason that the assessee had not acquired the dominion over the new residential property within the stipulated two years - The said issue was a subject matter of consideration in the block assessment framed under section 158BC read with section 158BD - The same point cannot be taken up by the Assessing Officer to hold that any income has escaped assessment within the meaning of section 147/148 when the block assessment u/s 158BC was not uphold by CIT(A) - Following Smt. Mira Ananta Naik v. Dy. CIT [2008 (8) TMI 800 - BOMBAY HIGH COURT] - There is much substance in the contentions of Shri Nadkarni that the search having resulted in block assessment - In these proceedings the income tax assessed and taxed after it was brought to the notice of the Assessing Officer. Merely because the block assessment was not upheld by the authorities under the Income-tax Act, it cannot be reason enough in this case to invoke section 147 of the same - The reasons recorded by the Assessing Officer, reproduced in the earlier part of this order do not show any reasonable basis for the Assessing Officer to conclude that there was any escapement of income - The initiation of proceedings by issuance of notice under section 147/ 148 in the present case is flawed and void ab initio – Decided in favour of assessee.
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2013 (12) TMI 1111
Applicability of section 161(1A) - taxability of income in the hands of beneficiary – Revision u/s 263 by CIT - Whether the assessee is a Trustee (or representative- assessee) u/s. 161(1) - Held that:- While the A.O. considers it to be a AOP, the assessee claims that of an individual, with the ld. CIT states of being not a valid trust, holds the asset in its own right (refer paras 2.2(i) and 2.3( c) of this order). In our view, this aspect would stand to be considered only after a clear understanding of the transaction. Further, the MF being itself, as we understand, a Trust, could it possibly be a beneficiary of a Trust (inasmuch as it is only the beneficiary which in law is the assessee, being represented by a trustee), for which its terms as well as the permissible avenues, including the mode and manner of making investments by it, would also be relevant.
The question of application of sections 61 and 63 also does not arise. It is only where through the artifice of an arrangement the income is shifted to other than the beneficial owner that the said provisions would come into play.
Following Malabar Industrial Co. Ltd [2000 (2) TMI 10 - SUPREME Court] - Non application of mind is a matter of fact, and inferential one, which has to be inferred on the basis of the material on record, including the order considered as passed without application of mind, and the facts and circumstances of the case - Following Sunbeam Auto Ltd [2009 (9) TMI 633 - Delhi High Court] - There has been no application of mind in the matter by the A.O.
The income is taxable in the hands of assessee and not in the hands of beneficiary - Revision u/s 263 upheld – Decided in favor of Revenue.
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2013 (12) TMI 1110
Rectification of mistake – Held that:- If the concerned person/assessee makes an application during the course of assessment proceedings to adjust the remaining amount towards his future liability, the Assessing Officer after passing of 120 days from the last date of execution of search and seizure operation is liable, either to return the remaining amount to the assessee/concerned person and or to adjust the same towards his future liability if a specific request has been made by the assessee in this respect - If the amount remains with the Assessing Officer/tax authority after 120 days then the Central Government is liable to pay interest @ one half percent per month on the remaining amount - No automatic duty or liability has been prescribed under section 132B to adjust cash seized towards future liability of the assessee – Appeal is partly allowed in favour of assessee for reworking of interest liability.
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2013 (12) TMI 1109
Levy of interest u/s 201(1A) – Held that:- Following Solar Automobiles India (P) Ltd v. Deputy Commissioner of Income-tax [2011 (9) TMI 637 - KARNATAKA HIGH COURT] - The interest is payable for the period it is not paid after deduction - The principal liability of paying tax is that of the creditor and a statutory duty is cast on the debtor to deduct tax on the income of interest payable and remit the same to the company irrespective of liability of the principal debtor - The AO has to find out whether the creditors (hospitals) have filed their returns and paid the taxes. If they have filed the returns and paid the taxes, the liability of the asessee ceases from the day they have paid the taxes - This exercise has not been done by the AO - He had adopted the due date of filing of return of income for the purpose of calculation of interest u/s 201(1A) – The issue was restored for fresh decision.
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2013 (12) TMI 1108
Penalty u/s.271B – failure to get its accounts audited and furnished before prescribed date u/s 44AB - Waiver of penalty u/s 273B - Held that:- The audit report signed by the auditors in the instant case is dated 01-08-2008 - The assessee is required to get its accounts audited before the specified date i.e. 31st of October 2006 - The assessee has not given any details regarding the name of the previous auditor, the date of resolution appointing the new auditor and copy of any correspondence between the assessee company and the old auditor or the assessee company with the new auditor or correspondence between the new auditor and the old auditor - Delay in obtaining the auditor report was due to change of the auditor and delay in getting NOC from the previous auditor remains unsubstantiated - The assessee was tied up in court litigation the order of which was announced on 14-12-2007 - The assessee failed to substantiate the reason for delay between December 2007 till 01-08-2008 - The assessee could not explain any reasonable cause for not getting the accounts audited before the specified date and furnish the same by that date – Decided against assessee.
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2013 (12) TMI 1107
Penalty u/s 271(1)(c) – Unaccounted production - Held that:- Normally the penalty cannot be levied on estimated income alone – The assessee has not credited the additions of Rs.2,09,94,965/- and Rs.23,53,160/- in case of Shree Om Rolling Mills Pvt. Ltd., and SRJ Peety Steels Pvt. Ltd., respectively in their respective books of accounts - Sale of two days having been found as result of search – Assessee has paid tax to that extent – The assessee have to pay penalty on these two days sale – However on income estimated for the whole year penalty cannot be levied – Partly allowed in favour of Revenue.
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2013 (12) TMI 1106
Income from inland haulage charges – Held that:- The income from operation of ships in international traffic is exempt under Article 8 of DTAA between India and Belgium - Article 8(2)(b)(ii) also exempts any activity directly connected with shipping – Following assessee's own case in 2001-02 - Inland haulage charges are not only incidental but also closely connected with direct operations of ships – Decided against Revenue.
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