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Income Tax - Case Laws

Showing 301 to 320 of 6519 Records

• 2013 (12) TMI 999
  

  Technical Expenditure – Held that:- Following Sumitomo Mitsui Banking Corporation v. Deputy DIT [2012] 16 ITR (Trib) 116 - The principle of mutuality applies in respect of transactions between the permanent establishment and its head office - There can be no profit from transactions with self in as much as neither there can be any deduction in the hands of the permanent establishment nor there can be any income in the hands of the head office in respect of such mutual transactions - The learned CIT(A) was justified in holding that a sum of ₹ 4.23 crores can neither be allowed as deduction in the hands of Indian branch nor be considered as income in the hands of the head office.

  Following CIT v. P. V. A. L. Kulandagan Chettiar [2004] 267 ITR 654 (SC) - The provisions of sections 4 and 5 are subject to the contrary provision, if any, in the Double Taxation Avoidance Agreement - The provision of the Act or that of the Double Taxation Avoidance Agreement, whichever is more beneficial to the assessee, shall apply - The payment of ₹ 4.23 crores by the permanent establishment to the head office is a payment to self and hence cannot be allowed as deduction in the hands of permanent establishment - As a result thereof, the provisions of section 40(a)(i) were held to be not applicable. Since the assessee is a non-resident governed by the provisions of the Double Taxation Avoidance Agreement, it is entitled to the benefits of the Double Taxation Avoidance Agreement, if the quantum of income or the overall tax liability turns out to be less as per the Double Taxation Avoidance Agreement vis-a-vis the domestic law - It is not possible to determine as to whether or not the computation under the Double Taxation Avoidance Agreement is more beneficial to the assessee – The issue was restored for fresh adjudication.

  Fee for technical services – DTAA – Held that:- Though there is a discussion about article 13(4)(c) of the Indo-U.K. Double Taxation Avoidance Agreement but the decision has been rendered only under the domestic law - There is no finding of the learned Commissioner of Income-tax (Appeals) that the amount is chargeable to tax as per the Double Taxation Avoidance Agreement - The amount is not chargeable to tax in the hands of the head office under the domestic law – The issue was restored for fresh decision.

  Interest u/s 234B and 234C – Held that:- The assessee is a non-resident, naturally any amount payable to it which is chargeable to tax under the Act, is otherwise liable for deduction of tax at source – Following Director of Income-tax (International Taxation) v. NGC Network Asia LLC [2009 (1) TMI 174 - BOMBAY HIGH COURT] - When the duty is cast on the payer to deduct tax at source, on failure of the payer to do so, no interest can be charged from the payee-assessee under section 234B – Decided in favour of assessee.

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• 2013 (12) TMI 998
  

  Mistake apparent from record – Held that:- There was a seizure of ₹ 1.65 crores at the time of search and there was subsequent payment of ₹ 31 lakhs. These two amounts have been completely blacked out and interest was levied without giving any prior credit to the above amounts - This is a clear mistake apparent from the records liable for rectification – Following Pranoy Roy And Another v. CIT [2008 (9) TMI 150 - SUPREME COURT] - While computing interest both under sections 234A and 234B, prepaid amounts of ₹ 1.65 crores and ₹ 31 lakhs need to be given credit and the interest can be calculated only after giving credit to these amounts and reducing the same from the advance tax liability and tax liability respectively – Following CIT vs. K.K.Marketing [2005 (5) TMI 58 - DELHI High Court] - The advance tax payable should be adjusted from the amount lying with the department in the assessee’s own account when the assessee has given in writing to the department to meet the advance tax liability from such amount withheld by the department – Decided in favour of assessee.

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• 2013 (12) TMI 997
  

  Scientific research expenses – Held that:- The documents were submitted before the learned CIT(A) to show the objective, purpose and the results of the research and development activity carried on by the assessee - No such evidences were produced before the AO by the assessee - The ld. CIT(A) without referring the matter back to the AO to verify the claims of the assessee in this respect and without giving any opportunity to the AO to rebut the claim of the assessee deleted the additions made by the AO - He solely relied upon the submissions and evidences produced by the assessee before him. A proper course of action to refer the matter back to the AO so that the claim of the assessee could have been genuinely verified was not adopted by the learned CIT(A) – The issue was restored for fresh decision.

  Disallowance u/s. 14A – Held that:- The assessee company is a zero debt company - The interest expenditure is not at all related to any borrowing or investment in shares and mutual funds – Following Godrej & Boyce Mfg. Co. Ltd 328 ITR 81 - Rule 8D r.w.s. 14A(2) is not arbitrary or unreasonable but can be applied only if assessee’s method is not satisfactory - The disallowance u/s. 14A has to be made on a reasonable basis - There can be no disallowance of interest under section 14A - The AO has made a disallowance of Rs.1,66,334/- as per rule 8D in respect of administrative expenses which is on a higher side - Rule 8d is not applicable to the current year – Only Rs. 1 lakh should be disallowed under section 14A which is around 5% of the dividend income earned – Partly allowed in favour of Revenue.

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• 2013 (12) TMI 996
  

  Assessment u/s 147 r.w.s. 144C – Held that:- The Article 8 of DTAA deals with shipping and air-transport business – As per Article 8 profits from operation of ships or aircrafts in international traffic shall be taxable only in the Contracting State in which the place of effective management of the enterprise is situated - In view of specific clause in DTAA dealing with shipping business, we are of considered opinion that income of the assessee in the present case is not taxable in India – Following DIT (International Taxation) v. Venkatesh Karrier Ltd [2012 (4) TMI 76 - GUJARAT HIGH COURT] - The agreement between two countries has ousted the jurisdiction of the taxing officer in India to tax the profits derived by the enterprise once it is found that the ship belongs to a resident of the other contracting country - Circular No.333 states that the provisions made in DTAA would prevail over the general provisions of the Act and Circular no.732 clarifies that if ships are owned by an enterprise belonging to a country with which India has entered into an agreement of avoidance of double taxation and the agreement provides for taxation of shipping profits only in the country of which the enterprise is a resident, no tax is payable by such ships at the Indian ports - The income earned by the assessee is not taxable in India – Decided in favour of assessee.

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• 2013 (12) TMI 995
  

  Disallowance u/s 14A – Held that:- Following Godrej and Boyce Mfg. Co. Ltd. [2010 (8) TMI 77 - BOMBAY HIGH COURT] - The Assessing Officer has to examine the accounts of the assessee first - If he is not satisfied with the correctness of the claim, then only he can invoke rule 8D - No such examination was made or satisfaction was recorded by the Assessing Officer - The Assessing Officer has not considered the claim of the assessee at all and he has straightway embarked upon computing disallowance under rule 8D - The disallowance under section 14A required finding of incurring of expenditure.

  The assessee has offered most of the income under the tonnage tax scheme - the disallowance need not be made on entire expenditure made as the assessee's income from shipping related activity was assessed under section 115VA on presumptive basis – Following Varun Shipping Co. Ltd. v. Addl. CIT [2011 (11) TMI 370 - ITAT MUMBAI] - When the income of the assessee from the business of operating ships is computed as per the special provisions contained in Chapter XII-G, only the expenses incurred by the assessee for earning income of the said business are deemed to be allowed and nothing else - The income of the assessee from the business of operating ships having been computed in accordance with the provisions of Chapter XII-G, only the expenses incurred for the said business are deemed to have been allowed and no addition to such income can be made by way of disallowance under section 14A on account of any expenditure incurred in relation to earning of exempt dividend income – Decided in favour of assessee.

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• 2013 (12) TMI 994
  
  Issues:
  Interpretation of Double Taxation Avoidance Agreement (DTAA) between India and UAE regarding taxation of capital gains by non-resident Indian residing in UAE.
  
  Analysis:
  The appeal before the Appellate Tribunal ITAT Mumbai concerned the interpretation of the DTAA between India and UAE regarding the taxation of capital gains by a non-resident Indian residing in Dubai, UAE for the assessment year 2008-2009. The main issue revolved around whether the assessee was entitled to the benefits of the DTAA, thereby exempting the capital gains from taxation in India.
  
  The Assessing Officer had initially held that since individuals are not taxable in UAE, the assessee could not be considered a "resident of the contracting state" as per Article 4 of the Indo-UAE DTAA. Consequently, the income from capital gains was taxed in India. However, the learned CIT(A) ruled in favor of the assessee, allowing the benefit of the DTAA.
  
  During the proceedings, the assessee's counsel presented a previous order by the Tribunal in the assessee's favor for the preceding assessment year, where a similar appeal by the Revenue was dismissed on the same grounds. The Departmental Representative also acknowledged the similarity of facts between the current appeal and the previous case.
  
  After considering the arguments and reviewing the relevant material, the Tribunal referred to its earlier decision where it had granted the assessee exemption from capital gains tax under the DTAA. Given the similarity of facts between the two cases, the Tribunal upheld the order of the CIT(A) and dismissed the appeal by the Revenue, affirming the assessee's entitlement to the benefits of the DTAA.
  
  In conclusion, the Appellate Tribunal ITAT Mumbai upheld the decision of the CIT(A) and dismissed the appeal by the Revenue, confirming that the assessee was entitled to the benefits of the DTAA, and therefore, the capital gains were not taxable in India for the assessment year in question.

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• 2013 (12) TMI 993
  

  Liability to deduct tax at source – Indirect transfer of shares - Held that:- The learned CIT(A) entertained additional evidence and deleted the liability of deducting tax at source by relying on such additional evidence without confronting it to the Assessing Officer – The issue was restored for fresh decision.

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• 2013 (12) TMI 992
  

  Exemption u/s. 11 – whether Trust itself is not lawful Trust - Held that:- Following CIT vs. Gujarat Maritime Board [2007 (12) TMI 7 - SUPREME COURT OF INDIA] – Any institution created for public utility by the State Government has been held to be entitled for registration and grant of exemption under section 11 – The assessee’s function also does not involve any profit motive - As per MID Act the assessee was required to carry out Government functions which are of public interest - It cannot be said that assessee is a Corporate Body and is not entitled to exemption under section 11 to 13 - By virtue of section 19 of the MID Act to provide services of public utility and legal obligation on the part of Corporation to hold and apply all its property income and assets for the purpose of the Act i.e. object of general public utility – Following Radhasoami Satsang vs. CIT [1991 (11) TMI 2 - SUPREME Court] - There is no material change justifying the revenue to take a different view of the matter - The denial of exemption under section 11 is contrary to the doctrine of consistency - Decided against Revenue.

  Carry forward of deficit – Held that:- Following CIT vs. Institute of Banking Personnel Selection [2003 (7) TMI 52 - BOMBAY High Court] - In case of charitable trust whose income is exempt under section 11 excess expenditure in the earlier years can be adjusted against income of subsequent years and such adjustment would be application of income for subsequent years – Decided against Revenue.

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• 2013 (12) TMI 991
  

  Principles of mutuality – Held that:- Following Bangalore Club Vs. CIT & Others [2013 (1) TMI 343 - SUPREME COURT] - Doctrine of mutuality was applicable upon surplus amount received from members but the amount of interest earned by the assessee from the banks would not fall within the ambit of mutuality principles and would, therefore, be exigible to tax in the hands of the assessee club - Bringing the interest income earned by the assessee during the year to tax, does not result in any enhancement of income – Decided partly in favor of revenue.

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• 2013 (12) TMI 959
  

  Payment excedding Rs.20,000 made through crossed cheque - Violation of Section 40A(3) - Held that:- As per the Circular issued by the CBDT refers to the instructions issued by the Reserve bank of India to the banks in which the difference between a crossed cheque and account payee cheque has been brought out - Payments made by a crossed cheque cannot be considered as payment by account payee cheque. Law requires payments to be made by an account payee cheque and not by a crossed cheque - Section 40A(3) is neither subject to any reasonable cause nor to any exception. Once payment exceeding Rs. 20,000/- is shown to have been made otherwise than by account payee cheque drawn on a bank or account payee bank draft, the expenditure in respect of which such payment has been made cannot be allowed as deduction - All the conditions for the applicability of section 40A(3) are fully satisfied - Decided against assessee.

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• 2013 (12) TMI 958
  

  Long term capital gain on sale of shares – Assessee contended that in the case of the assessee since all the MOU were cancelled and the sale consideration kept in the Escrow account had been appropriated by DRDL, therefore no transfer can be said to have taken place. - Held that:- The transfer of shares is complete in all respects from the assessee to the DRDL as there is extinguishment of rights of the assessee over the concerned shares - The conduct of the parties in executing the transfer forms by the sellers in favour of the buyer recording of transfers in the share certificates and books of accounts of the respective companies and the annual return filed before ROC clearly demonstrate that the intention of the assessee was to transfer the shares to the buyer DRDL for a consideration and the transaction is complete on delivery of share certificates and executing the instrument of transfer - In pursuance to the transfer of shares, control and management of all 13 companies were handed over to the buyer DRDL - Not only there are entries in the books of accounts of the transferor companies and transferee company but all other formalities under the provisions of the companies Act, 1956 like execution of instrument of transfer, recording of transfer in share certificates handing over the share certificates, books of accounts, all other records and documents as well as control and management of the companies have been carried out which proves that there is transfer of shares to the buyer DRDL - There was an extinguishment of assessee's rights over the shares – Decided against assessee.

  Advance from several persons – Held that:- The assessee failed to explain the deposits by furnishing the names and addresses, amounts received etc., and even confirmation letters were also not produced by the assessee - Before the CIT (A), the assessee submitted that the sum was refund of advance previously made and has been duly disclosed in the books of accounts – The assessee failed to substantiate his claim – The issue was restored for fresh adjudication.

  Unsecured loan taken – Held that:- The assessee has failed to furnish any evidence to prove the source of creditor's past savings – The assessee has not submitted PAN and Bank statement of the creditor before the lower authorities - The assessee has submitted the PAN and bank statement of loan creditor before the CIT (A) - The CIT (A) has confirmed the addition without considering the evidences submitted by the assessee – The issue was remitted back to the file of the Assessing Officer for fresh adjudication after taking into account the evidences produced by the assessee.

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• 2013 (12) TMI 957
  

  Sale of ‘Prosopis Juliflora' - Agricultural income or not - AO observed that the assessee could not specify the actual mode of cultivation, as initially it claimed that it had used the plants supplied by the Forest Department free of cost, and subsequently, on being required to furnish evidence from the forest depart. - as per AO the assessee was itself in doubt about the very basis of the cultivation contentedly carried out in 140 acres..

  Held that:- The facts brought on record show that the assessee has sold the crop to various persons after growing the said crop - The assessee filed details pertaining to the said crop viz., sales receipts etc. to the department - The department when recording his statement, the department not only to furnish the statement of the proprietor to the assessee but also an opportunity of cross-examination shall be given to the assessee and opportunity of such cross examination is one of the corner-stones of natural justice - The authorities cannot draw adverse inference on the basis of the statement of the Proprietor of M/s Raghavendra Seeds & Pesticides and the claim of the assessee has to be accepted on the basis of evidences on record brought by the assessee - Decided in favour of assessee.

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• 2013 (12) TMI 956
  

  Validity of assessment u/s 263 - Held that:- As per section 263 - CIT must have some material(s) which would enable him to form a prima facie opinion that the order passed by the Assessing Officer is erroneous in so far as it is prejudicial to the interest of the Revenue - The AO cannot revise an order on grounds regarding which the assessee was not show cause otherwise also the assessment order was made u/s 147/148 r.w.s. 143(3) of the Act and the AO has computed assessee's income after making reasonable and due inquiries - The assessee is not found to have been indulging in the purchase and sales of any immovable property - The twin condition of Section 263 are not fulfilled and, thus, the order cannot be revised - Decided in favour of assessee.

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• 2013 (12) TMI 955
  

  Whether consultancy charges and travelling expenses are capital in nature - Held that:- The assessee has paid consulatncy fee for rendering services of fleet management service and providing security products and networking solution - The payment made under consultancy agreement has to be allowed as revenue expenditure when the genuineness of the payment has not been doubted - The assessee has started a new line of business in the service industries - Such an expenditure has to be allowed as revenue and cannot be held as capital expenditure or can be capitalized in the books of account - Following Empire Jute Co. Ltd. v. CIT [1980 (5) TMI 1 - SUPREME Court] - If there is continuity of business with common management and fund, then even if the assessee has started a new line of business in this year, the payment made for carrying out such running of new business, is nothing but a business expenditure which has to be allowed in the year in which it has been incurred - There is no augmentation of asset to the assessee but has helped the assessee to develop a proper guidance for running the new line of service industries - Decided in favour of assessee.

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• 2013 (12) TMI 954
  

  Validity of assessment u/s 147 - Held that:- It is apparent from the materials on record as well as the remand report submitted by the Assessing Officer, no notice either u/s 143(2) of the Act or section 142(1) of the Act was issued to the assessee before completing assessment - If the Assessing Officer treats the return filed belatedly to be a non est return then certainly the Assessing Officer could not have proceeded for making assessment u/s 143(3) of the Act - Following Hotel Blue Moon [2010 (2) TMI 1 - SUPREME COURT OF INDIA] - The requirement of issuing notice u/s 143(2) of the Act is a mandatory requirement and not a curable procedural irregularity - When the statute requires an act to be done in a particular manner, then it has to be done in that manner only - The Assessing Officer has completed the assessment u/s 143(3) read with section 147 of the Act without issuing any notice u/s 143(2) as per the statutory mandate, the assessment order passed is legally unsustainable - Decided against Revenue.

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• 2013 (12) TMI 953
  

  Depreciation on fixed assets - Held that:- The major portion of the depreciation has been disallowed because the assessee did not present adequate proof regarding the additions to the fixed assets - Enough time was not given to the assessee to produce sufficient evidence and the same has been mentioned in the written submissions also - The issue was restored for fresh adjudication.

  Depreciation on UPS - Held that:- UPS is an essential component of a computer system and ensures data integrity through uninterrupted supply of power - This is a dedicated system for computers only. Therefore, the depreciation rate to be allowed is 60% - Decided against assessee.

  Depreciation on library books - Held that:- The cost of the books is less than Rs. 5,000 - 100% depreciation claimed by the assessee is to be allowed - Decided in favour of assessee.

  Exemption u/s 10A - Held that:- Following Gemplus Jewellery India Ltd. [2010 (6) TMI 65 - BOMBAY HIGH COURT] - Even if the disallowance is sustained, it will only go to increase the business profits of the assessee which is exempt u/s 10A - Assessing Officer is directed to recompute the deduction after taking into account disallowances made - Decided in favour of assessee.

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• 2013 (12) TMI 952
  

  Unexplained sources of deposits - Held that:- The sources of deposits in one account has been explained to be out of sale of sugarcane - Sufficient cash was available with the assessee for deposit in the joint account - The Assessing Officer has nowhere denied that assessee was owning 275 acres of land in which agricultural operations were conducted - Assessing Officer cannot deny the sources simply by saying that there is a gap of more than one month in the withdrawal of cash from one bank and deposit in another is not sufficient to doubt the sources - There can be various reasons for such a gap and the gap of 1 ½ month is not a large gap so as to raise suspicion – Decided in favour of assessee.

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• 2013 (12) TMI 951
  

  Tax not deducted at source on transponder fees paid to non-resident - Held that:- Ld. CIT(A) simply relying upon the decision of Hon'ble Delhi High Court in Asia Satellite Telecommunication Co. Ltd. [2011 (1) TMI 47 - DELHI HIGH COURT] has granted relief to the assessee without discussing the provisions of applicable treaty - In the decision of Mumbai ITAT in Channel Guide India Ltd. v. Asstt. ACIT [2012 (9) TMI 95 - ITAT MUMBAI] which has been relied upon by the assessee - There is a discussion in detail regarding applicable treaty which in the present case is stated to be DTAA of India with Malaysia - The issue was restored for fresh adjudication.

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• 2013 (12) TMI 950
  

  Rectification of mistake - Order resulted in additional burden on the assessee - Held that:- When an appeal is preferred before the Tribunal by any of the parties, the Tribunal is supposed to pass appropriate order as it may deem fit in the appeal preferred by any of the parties - It is immaterial whether such order will benefit one or the other of the parties in the process it might be in favour of a party, who had not preferred the appeal, particularly, when the principle of law is laid down and on such legal principle the appellant may not entitled to any relief - There is nothing to prevent the Tribunal from passing appropriate order in such an appeal preferred by one of the parties even though it might amount to granting of relief to a party, who did not prefer any appeal - The Tribunal is not supposed to pass an anomalous order - Neither can it create a confusing state and permit confusion to continue, nor can it pass an incongruous order. It has to decide the case irrespective of the fact as to whether it would amount to granting relief to the other party who did not prefer the appeal - Following CIT v. Assam Travels Shipping Service [1992 (9) TMI 2 - SUPREME Court] - Tribunal is having no such power to make a review. There was no mistake in the order of the Tribunal much less any mistake apparent on record - Decided against assessee.

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• 2013 (12) TMI 949
  

  Treatment of share premium - additions u/s 68 - Issue of shares sham transaction – Held that – No doubt a non-est company or a zero balance company asking for a share premium of ₹ 490/- per share defies all commercial prudence but at the same time we cannot ignore the fact that it is a prerogative of the Board of Directors of a company to decide the premium amount and it is the wisdom of the share holders whether they want to subscribe to such a heavy premium. The Revenue authorities cannot question the charging of such of huge premium without any bar from any legislated law of the land.

  The subscribers to the share capital are all companies - The confirmations of the transactions have been received by the AO by issuing notice u/s. 133(6) - Identity of shareholders has been established beyond all reasonable doubts - The Revenue authorities have not questioned the identity of the share holders - The genuineness of the transaction can also be safely concluded since the entire transaction has been done through the banking channels duly recorded in the books of accounts of the assessee duly reflected in the financial statement of the assessee - Not even a single evidence could be found which could lead to the entire transaction as sham - The share holding pattern also cannot be said to generate any transaction which could be said to be sham - The share holders in all the related transaction under issue are directly or indirectly related to the Government of India - The Revenue authorities have erred in treating the share premium as income of the assessee u/s. 56(1) – The application of funds would be in the subsidiary companies – Decided in favour of assessee.

  Commencement of business – Held that:- The assessee company received certificate of commencement of business on 29.04.2008 – The main objects of the company shows that one of the main object of the company is that of financing, investing, sourcing, operating, green or clean technology products and services that optimize the use of natural resource or reduce the negative environmental impact - the assessee company has in fact set up three subsidiary private limited companies - One of this subsidiary private limited company has stated generating electricity as per the certificates given by the Tamilnadu State Electricity Board - All the legitimate expenses including depreciation are allowable – Decided in favour of assessee.

  Interest on fixed deposit – Held that:- The frequency and holding period of purchase of fixed deposits by the assessee shows that the intention of assessee is to earn interest income – Following CIT v. Indo Swiss Jewels Ltd. [2005 (9) TMI 47 - BOMBAY High Court] - The interest income is to be taxed under the head business income - Decided in favour of assessee.

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