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Income Tax - Case Laws
Showing 41 to 60 of 6519 Records
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2013 (12) TMI 1684
Issues involved: Appeal against disallowance of interest rate difference u/s.40A(2)(b) for AY 2006-07.
Grounds of appeal:
1. Disallowance of interest rate difference confirmed by CIT(A).
2. CIT(A) not proving higher interest rate than market rate.
3. Sec.40A(2)(b) inapplicable to interest receipts.
4. Directors taxed at higher rates, no tax evasion.
5. Non-compliance with CBDT circular.
6. CIT(A) ignoring relevant facts.
7. CIT(A) disregarding appellant's reply and judicial precedent.
8. Request for amendment of grounds of appeal.
Judgment details:
The Assessee's appeal challenged the disallowance of Rs. 1,430,681 for interest rate difference in lending and borrowing loans u/s.40A(2)(b) for AY 2006-07. The AO added the amount based on the difference in interest rates, which the CIT(A) upheld. The Assessee argued that the interest recipients paid tax at the maximum rate, citing CBDT Circular No.6-P and a Bombay High Court decision. The Sr.DR supported the lower authorities' decisions, referencing a previous ITAT ruling against the Assessee for AY 2005-06.
The ITAT Ahmedabad noted that the Assessee failed to prove in AY 2005-06 that interest recipients paid tax at the maximum rate. However, for AY 2006-07, evidence showed recipients paid the maximum marginal rate, indicating no tax evasion. Transactions were between related parties u/s.40A(2)(b), with the Assessee paying 15% interest but receiving 10%. The AO's addition was based on the excessive payment of interest without commercial expediency. Following the Bombay High Court decision, the ITAT directed the AO to delete the addition, as no tax evasion was evident, and the payments were not unreasonable or excessive.
Therefore, the Assessee's appeal was allowed, and the addition was deleted.
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2013 (12) TMI 1680
Issues Involved:
1. Deletion of addition of Rs. 34,02,404/- in respect of undervaluation of closing stock.
2. Allowance of disallowances in respect of telephone expenses and vehicle expenses of Rs. 10,000/- and Rs. 3,000/- respectively.
Summary:
Issue 1: Deletion of Addition of Rs. 34,02,404/- in Respect of Undervaluation of Closing Stock
The A.O. observed that the assessee, engaged in the business of sale of gold ornaments, did not maintain a quantitative stock register and valued the closing stock at Rs. 50,01,037/-. The A.O. noted discrepancies in the valuation method, as the assessee used an average rate method instead of the cost or market price, whichever is lower, leading to an undervaluation of Rs. 34,02,404/-. The A.O. rejected the book results u/s 145(3) of the IT Act, relying on the Supreme Court decision in British Paints India Pvt. Ltd. and the Gujarat High Court decision in Kwality Steel Vs CIT.
The CIT(A) allowed the assessee's appeal, noting that the assessee consistently followed the weighted average method, a recognized method as per AS-2 issued by ICAI and the Government of India. The CIT(A) found the A.O.'s method of using a small sample of purchase bills for valuation inappropriate and observed that the A.O. did not disturb the opening balance, leading to an unrealistic G.P. rate of 288.67%. The CIT(A) directed the deletion of the addition.
The Tribunal directed the A.O. to verify if the assessee consistently followed the weighted average cost method and to ask for carat-wise details of opening and closing stock, purchase, and sale. The A.O. was instructed to take a decision as per law. This ground of appeal was allowed for statistical purposes.
Issue 2: Allowance of Disallowances in Respect of Telephone Expenses and Vehicle Expenses
The A.O. disallowed Rs. 10,000/- for telephone and vehicle expenses, citing personal use, and Rs. 3,000/- for shop expenses due to payments made in cash and self-made vouchers. The CIT(A) deleted these additions, stating they were made on an ad-hoc basis without plausible reasons.
The Tribunal reversed the CIT(A)'s order, noting that personal use elements are always present in such expenses. The Tribunal allowed the Revenue's appeal, emphasizing the need for evidence of non-business purposes and considering the assessee's low household withdrawals and income.
Conclusion:
The Revenue's appeal was partly allowed, with the Tribunal directing further verification for the undervaluation of closing stock and reversing the CIT(A)'s deletion of disallowances for telephone and vehicle expenses. The order was pronounced in open court on 17.12.2013.
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2013 (12) TMI 1679
Issues Involved:
1. Addition of Rs. 10.17 crores as unexplained cash credit u/s 68.
2. Disallowance of business loss as speculation loss.
3. Charging of interest u/s 234B.
Summary:
1. Addition of Rs. 10.17 crores as unexplained cash credit u/s 68:
The assessee, engaged in trading shares and securities, filed a return declaring nil income. During assessment, the AO noted that the assessee repaid a loan of Rs. 10.17 crores to Madhavpura Mercantile Co-operative Bank Ltd. using funds from the allotment of preference shares. The AO investigated and found that directors of 28 companies, who subscribed to the shares, stated they received cash from the assessee in exchange for their investment. The AO, relying on similar findings in the case of M/s Chat Computers Pvt. Ltd., added the amount as unexplained cash credit u/s 68. The CIT(A) confirmed this addition.
The Tribunal observed that the AO did not conduct an independent inquiry and relied solely on the ADIT(Inv) report and un-cross-examined statements. The Tribunal noted that the assessee provided sufficient documentary evidence, including share applications and bank statements, proving the genuineness of the transactions. The Tribunal emphasized the violation of natural justice principles, as the assessee was not allowed to cross-examine the directors whose statements were used against it. Citing precedents, the Tribunal held that the addition could not be sustained without corroborative evidence and deleted the addition made by the AO and confirmed by the CIT(A).
2. Disallowance of business loss as speculation loss:
The assessee did not press this ground during the hearing. Consequently, the Tribunal dismissed this ground as not pressed.
3. Charging of interest u/s 234B:
Similarly, the assessee did not press this ground during the hearing. The Tribunal dismissed this ground as not pressed.
Conclusion:
The appeal of the assessee was partly allowed, with the deletion of the addition of Rs. 10.17 crores u/s 68, while the other grounds were dismissed as not pressed. The order was pronounced in the open court on 20/12/2013.
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2013 (12) TMI 1678
Issues involved:
The judgment deals with an Income Tax Appeal filed u/s 260-A of the Income Tax Act, concerning substantial questions of law related to the presumption u/s 132 (4A) of the Act, ownership presumption u/s 292C, and the assessment of agricultural income.
Presumption u/s 132 (4A) of Act:
The ITAT dismissed the appeal of the revenue, holding that the presumption u/s 132 (4A) is limited to documents/material seized during a search and not available for framing assessment. The ITAT's decision was based on the provisions of Sec.292C inserted by the Finance Act, 2007, allowing the use of material found in possession/control of any person in assessment proceedings. However, the ITAT found the presumption under Section 292C (1) to be rebuttable, and the assessee failed to rebut the ownership presumption against him.
Assessment of Agricultural Income:
The ITAT considered the agricultural income issue, noting that the assessee had provided the intikhab-Khatauni before the AO, indicating ownership of agricultural land and income from the sale of sugarcane. The ITAT accepted the income of Rs. 1 lac from agriculture based on the yield of sugarcane and sale consideration per quintal.
Analysis of Orders:
The CIT (A) and ITAT examined the diary seized during search operations, with the AO using it to determine undisclosed income. However, the CIT (A) did not agree with the AO's assessment, and the ITAT found the diary to be a general household record, not exclusively related to business transactions. The ITAT upheld the CIT (A)'s findings, stating that the explanations provided by the assessee were not adequately considered by the AO, leading to no undisclosed income being established.
Conclusion:
The High Court dismissed the Income Tax Appeal, affirming the findings of fact by the CIT (A) and ITAT regarding the diary entries and agricultural income. The Court held that these findings did not raise substantial questions of law as framed in the appeal memo, leading to the dismissal of the appeal.
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2013 (12) TMI 1675
Issues Involved:
1. Maintainability in law of the deletion of income assessed as dividend income u/s.2(22)(d) of the Income Tax Act, 1961.
2. Assessee's alternate contention that even if the income is held as dividend, it would be exempt u/s.10(34) r.w.s. 115-O of the Act.
Summary:
Issue 1: Maintainability in Law of the Deletion of Income Assessed as Dividend Income u/s.2(22)(d)
The Revenue's appeal questioned the deletion of Rs. 16,74,85,500/- assessed by the Assessing Officer (A.O.) as dividend income u/s.2(22)(d) of the Income Tax Act, 1961. The Revenue argued that the transfer of shares by the assessee did not represent a buy-back of shares in terms of section 77A of the Companies Act, 1956, as it was not on a proportionate basis to all shareholders. The assessee contended that the reduction of capital was pursuant to a scheme u/ss.391 to 394 of the Companies Act, approved by the jurisdictional High Court, and thus should be considered under sections 100 to 102 of the Companies Act. The Tribunal held that the receipt of Rs. 1674.85 lacs, to the extent attributable to the accumulated profits of the company, would be considered as dividend u/s.2(22)(d) r.w.s. 2(24)(ii) of the Act. The Tribunal found the Revenue's case unexceptional and concluded that only the sum received over and above that referable to the accumulated profits would bear the character of a capital receipt and be liable to tax u/s.45(1) of the Act.
Issue 2: Assessee's Alternate Contention for Exemption u/s.10(34) r.w.s. 115-O
The assessee's Cross Objection (CO) claimed that even if the income is held as dividend u/s.2(22)(d), it would be exempt u/s.10(34) r.w.s. 115-O of the Act. Section 10(34) exempts income by way of dividends referred to in section 115-O from tax. The Tribunal confirmed that the amount under reference falls u/s.2(22)(d) to the extent of the transferee company's accumulated profits and is thus considered as dividend within the contemplation of section 115-O. Consequently, the dividend is covered by the provision of section 10(34) of the Act, making the assessee's claim valid in law. The Tribunal concluded that the dividend is liable to additional income-tax u/s.115-O in the hands of the company paying the same, although this aspect was not directly under consideration in the present case.
Conclusion:
Both the Revenue's appeal and the assessee's CO were partly allowed. The Tribunal pronounced the order in the open court in December 2013.
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2013 (12) TMI 1674
Issues Involved:
1. Jurisdiction u/s 263 by CIT.
2. Conduct of CIT (DR) during proceedings.
3. Merits of the penalty order u/s 271(1)(c).
Summary:
1. Jurisdiction u/s 263 by CIT:
The assessee challenged the CIT's assumption of jurisdiction u/s 263, arguing that the penalty order dated 29-05-2009 was neither erroneous nor prejudicial to the interest of revenue. The CIT had set aside the penalty proceedings, which the assessee contended was unjustified. The ITAT noted that the assessee's claim of depreciation at 40% was based on a bona fide belief, supported by the ITAT's own order for A.Y. 2005-06, which had deleted the penalty on similar grounds. The ITAT held that the penalty order dropping proceedings u/s 271(1)(c) was not erroneous or prejudicial to the revenue, and thus, quashed the CIT's order u/s 263.
2. Conduct of CIT (DR) during proceedings:
The ITAT expressed strong disapproval of the conduct of CIT (DR) Shri D.K. Mishra, who was absent at the beginning of the hearing and unprepared when he arrived. His behavior was deemed contemptuous and obstructive to the judicial process. The ITAT imposed a cost of Rs. 1,000 on Shri Mishra, to be deducted from his salary, and directed the Registry to forward copies of the order to relevant authorities for appropriate action. The ITAT also noted that any case laws filed by Shri Mishra after the hearing would not be considered.
3. Merits of the penalty order u/s 271(1)(c):
The ITAT examined the merits of the penalty order, noting that the assessee had claimed depreciation at 40% based on a bona fide belief that the C.T. scan machine was eligible for such depreciation. The ITAT found that the assessee's belief was upheld in the preceding year by the ITAT, and thus, the same belief in the subsequent year could not be penalized. The ITAT concluded that the penalty proceedings were dropped after due consideration of the assessee's explanation and relevant case laws, including Dharamendra Textile Processors. The ITAT held that a cryptic order by the AO, in this context, did not render it erroneous or prejudicial to the revenue.
Conclusion:
The ITAT allowed the assessee's appeal, quashing the CIT's order u/s 263 and upholding the AO's decision to drop the penalty proceedings u/s 271(1)(c). The conduct of CIT (DR) Shri D.K. Mishra was condemned, and appropriate actions were directed against him.
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2013 (12) TMI 1672
Issues involved: The judgment involves issues related to addition of unaccounted investment in land, valuation of excess stock found, and addition made on account of various items.
Addition of unaccounted investment in land: The Assessing Officer made additions on account of unaccounted investment in land for multiple assessment years. The assessee contended that no evidence was brought forth to justify these additions and that there was no incriminating document found during the search. The Assessing Officer did not enforce the attendance of witnesses to verify the transactions. The Tribunal held that additions based on presumption cannot be sustained, especially when there is no documentary evidence of unaccounted transactions. Relief was granted to the assessee for most years, except for cases where the landowners confirmed receiving extra monies beyond documented prices. The Tribunal upheld the CIT(A)'s decision in this regard for all relevant assessment years.
Valuation of excess stock found: The judgment also addressed the valuation of excess stock found in various accounts, including items like soya seeds, crude and refined oil, stock on stores, stock in silos, and purchase of tin plates. The Tribunal examined each item individually based on the explanations provided by the assessee. In cases where the discrepancies were adequately explained, relief was granted. For instance, in the case of excess stock of crude and refined oil, the Tribunal found that the difference was explained by production and consumption during the day, leading to the deletion of the addition. Similarly, in other instances, where the assessee provided reasonable explanations supported by evidence, the Tribunal upheld the relief granted by the CIT(A).
Conclusion: The Tribunal dismissed all appeals of the revenue department, upholding the decisions made by the CIT(A) regarding the addition of unaccounted investment in land and the valuation of excess stock found. The judgment was pronounced on December 31, 2013, by the Appellate Tribunal ITAT Pune.
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2013 (12) TMI 1670
Issues involved: Appeals regarding disallowance u/s 14A of the Act and deletion of addition of compensation from customers.
Disallowance u/s 14A of the Act:
The appeals involved cross appeals by the assessee and the Revenue regarding the disallowance u/s 14A of the Act for the AY 2007-2008. The Tribunal considered both appeals together due to identical issues. The Counsel for the assessee argued for remanding the Revenue's appeal to the AO based on a previous Tribunal order. The Tribunal agreed and remanded the issue to the AO for fresh consideration. The disallowance under section 14A should be made only after considering the books of accounts and issues of reasonableness, without indirectly applying Rule-8D of IT Rules. The Tribunal referred to judgments of the Bombay High Court to support this stance. The AO was directed to restrict the disallowance to 2% of the total exempt income in line with the High Court's decisions. Both parties' grounds were allowed for statistical purposes.
Deletion of addition of compensation from customers:
The Revenue's appeal also raised the issue of deletion of an addition of Rs. 30,00,000 made on account of compensation from customers. The Tribunal remanded this issue to the AO with identical directions as a similar issue was remanded for a subsequent assessment year. The Tribunal allowed the Revenue's appeal on this ground for statistical purposes.
In conclusion, both the Revenue and the assessee's appeals were allowed for statistical purposes, with the Tribunal providing detailed reasoning and directions for the issues of disallowance u/s 14A of the Act and deletion of addition of compensation from customers.
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2013 (12) TMI 1668
Grant from government received - Interest earned on unutilised portion kept in FD - AO and CIT(A) claims interest income is revenue in nature and to be treated as income from ‘other sources’ and brought to tax - Whether grant in aid given by the Government is capital receipt of revenue receipt - HELD THAT- In the case [1996 (5) TMI 71 - GUJARAT HIGH COURT], it was held that interest received in respect of grant in aid cannot be treated as income of the assessee in view of the specific directive of the Government that interest earned will be treated as part of grant in aid. Thus the interest income received on grant in aid parked in FD pending utilization is not chargeable to tax. The opinion of Expert Advisory Committee of ICAI that the aforesaid amount should be capitalised and not treated as income will be applicable.
Decision in favor of assessee.
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2013 (12) TMI 1665
Issues involved: Two appeals filed by the Revenue against the order of CIT(A) quashing penalties imposed u/s 271D & 271E for the assessment year 2005-06.
Issue 1 - Penalty u/s 271D:
The AO imposed a penalty u/s 271D for accepting cash loans in contravention of IT Act provisions. The CIT(A) found the penalty order erroneous and perverse as it related to transactions from different assessment years. The AO's action was deemed invalid as penalties for specific assessment years must be initiated within the prescribed time limits. The Tribunal upheld the CIT(A)'s decision, stating that penalties must be imposed based on facts of the relevant assessment year.
Issue 2 - Penalty u/s 271E:
Similarly, a penalty u/s 271E was imposed for repaying cash loans in contravention of IT Act provisions. The CIT(A) dismissed the penalty considering the same facts and arguments as in the previous case. The Tribunal upheld the dismissal, reiterating that penalties must align with the facts of the assessment year in question.
The Tribunal dismissed both appeals by the Revenue, upholding the CIT(A)'s decisions to quash the penalties imposed u/s 271D & 271E for the assessment year 2005-06.
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2013 (12) TMI 1664
Issues involved: Non-deduction of tax on payment to a foreign company as agency commission.
Summary:
The appeal was filed by the revenue against the order of the Income Tax Appellate Tribunal regarding non-deduction of tax on payment to a foreign company as agency commission. The assessing officer disallowed the agency commission amount as it was not fully paid and not an allowable deduction. The Commissioner of Income Tax (Appeals) held that tax should have been deducted on such payments in the foreign country. However, the Tribunal found that since the payment was to be made in a foreign country in foreign currency, it cannot be considered as income accrued in India, following the Supreme Court judgment in GE Technology Centre (P.) Ltd. v. CIT [2010] 327 ITR 456 (SC).
The Tribunal referred to the responsibilities under the contract which stated that the work was to be done outside the country and payment to the agent was to be made in a foreign country. The Tribunal held that no part of the income of the foreign company is taxable in India. The Supreme Court's interpretation of Section 195(1) was also considered, emphasizing that the payer becomes an assessee in default only when failing to fulfill the statutory obligation. The Tribunal found that the assessee was not liable to deduct tax on the transaction with the foreign company.
The Delhi High Court in CIT v. EON Technology (P.) Ltd. [2012] 343 ITR 366 also supported a similar view. Since the payment in question related to the assessment year 2007-08, the amendments made by the Finance Act, 2012 were deemed inapplicable. The appeal was dismissed as no substantial question of law arose for consideration.
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2013 (12) TMI 1662
Disallowance of “Provision for leave encashment” u/s 43B(f) - Held that:- As decided in THE ASSISTANT COMMISSIONER OF INCOME-TAX, CIRCLE-1 (1) , THRISSUR. VERSUS M/S. KERALA FEEDS LTD., [2013 (9) TMI 1212 - ITAT COCHIN] Department is restrained from recovering penalty and interest which has accrued till date. It is made clear that as far as the outstanding interest demand as of date is concerned, it would be open to the Department to recover that amount in case Civil Appeal of the Department is allowed. We further make it clear that the assessee would, during the pendency of this Civil Appeal, pay tax as if Section 43B(f) is on the Statute Book but at the same time it would be entitled to make a claim in its returns.
We set aside the order of Ld CIT(A) on this issue and restore the same to the file of the assessing officer with the direction to examine this issue afresh in accordance with the decision rendered by Hon’ble Supreme Court in the case of M/s Exide Industries Ltd COMMR. OF INCOME TAX & ORS Versus M/s EXIDE INDUSTRIES LTD. & ANR. - [2009 (5) TMI 894 - SUPREME COURT] - Appeal filed by the assessee is treated as allowed for statistical purposes.
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2013 (12) TMI 1661
Issues Involved:
1. Transfer pricing adjustment
2. Comparability analysis
3. Aggregation of international transactions
4. Inclusion of services income
5. Adjustment for high import duty
6. Working capital adjustment
7. Computation of transfer pricing adjustment
8. Use of multiple year data
9. Use of contemporaneous data
10. Benefit of +/-5% range
11. Levy of interest u/s 234B
12. Levy of interest u/s 234C
13. Short grant of credit for TDS
14. Initiation of penalty proceedings u/s 271(1)(c)
Summary:
General Grounds:
The grounds of appeal No. 1, 2, 3, 8, 9, and 10 were dismissed as not pressed by the assessee.
Inclusion of Services Income (Ground No. 4):
The Tribunal restored the issue to the file of the AO with directions to decide the issue afresh in light of the Tribunal's previous directions in the assessee's own case for the preceding assessment year, ensuring due opportunity for the assessee to be heard.
Adjustment for High Import Duty (Ground No. 5):
The Tribunal, following its earlier decision in the assessee's own case, restored the matter to the AO to adjudicate the issue afresh, allowing the assessee a reasonable opportunity to present material and submissions.
Working Capital Adjustment (Ground No. 6):
The Tribunal directed the AO to remove Elecon Engineering Co. from the list of comparables and re-compute the PLI, following the decision of the Mumbai Bench in DHL Express Ltd. v. Asstt. CIT.
Computation of Transfer Pricing Adjustment (Ground No. 7):
The Tribunal upheld the assessee's plea, stating that the adjustment should be confined to international transactions with AEs alone, not non-AE transactions. The ground was allowed, following the Tribunal's decision in the assessee's own case for the preceding assessment year.
Levy of Interest u/s 234B and 234C (Ground Nos. 11 & 12):
The Tribunal dismissed these grounds, stating that charging interest under these provisions is mandatory and consequential.
Short Grant of Credit for TDS (Ground No. 13):
The Tribunal restored this ground to the AO, directing verification of records and necessary credit for TDS as per law.
Initiation of Penalty Proceedings u/s 271(1)(c) (Ground No. 14):
The Tribunal dismissed this ground as premature.
Conclusion:
The appeal filed by the assessee was partly allowed for statistical purposes.
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2013 (12) TMI 1660
Issues involved: Appeal against CIT(A) order, rejection of books of account, estimate of profit, disallowance u/s 40(a)(ia) of the Income Tax Act, 1961.
Rejection of Books of Account: The appellant appealed against the CIT(A)'s decision upholding the assessing officer's rejection of the books of account. Grounds 2 and 3 were withdrawn during the appellate proceedings.
Disallowance u/s 40(a)(ia) of the Act: The main issue in this appeal was the disallowance of &8377; 40,37,746 u/s 40(a)(ia) of the Act. The assessing officer disallowed this amount as finance charges due to non-payment of TDS by the assessee. The CIT(A) upheld this disallowance, citing the decision of ITAT Hyderabad Bench in a similar case.
Judicial Precedents: The appellant argued that the issue was covered by a later decision of the jurisdictional High Court, which favored the assessee. The Departmental Representative relied on a different decision by a coordinate bench. The ITAT considered the legal position and referred to a previous case involving the jurisdictional High Court, where it was held that no further disallowance could be made based on rejected books of accounts.
Decision: The ITAT, following the precedent set by the jurisdictional High Court, deleted the addition made by the assessing officer and confirmed by the CIT(A). The coordinate bench decision cited by the Departmental Representative was disapproved in light of the later judgment of the High Court. Consequently, the appeal of the assessee was allowed, and the addition was deleted.
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2013 (12) TMI 1658
Issues involved: Appeal against penalty u/s 271(1)(c) of the Income Tax Act, 1961 for non-reckoning of loss on sale of fixed assets in income computation.
Summary:
1. The appellant contested a penalty of Rs. 48,043/- imposed u/s 271(1)(c) of the Income Tax Act, 1961, confirmed by the Commissioner of Income Tax (Appeals), Kolkata, due to non-inclusion of a loss on sale of fixed assets in the income computation.
2. The Assessing Officer added the omitted amount to the assessment, initiating penalty proceedings. The appellant claimed it was a technical error, not intentional concealment. Despite explanations, the penalty was levied, upheld by the CIT(Appeals) citing ignorance of law as no excuse.
3. The appellant argued before the ITAT that the mistake was unintentional and not tantamount to concealment. The ITAT noted the Assessing Officer's acknowledgment of the error being inadvertent, especially in the first year of e-filing. Citing a precedent, the ITAT ruled the penalty unjustified as no inaccurate particulars were furnished.
4. The ITAT concluded that the penalty u/s 271(1)(c) was unwarranted, quashing the penalty and allowing the appellant's appeal.
Judgment: The ITAT Kolkata allowed the appeal, quashing the penalty imposed u/s 271(1)(c) of the Income Tax Act, 1961, due to the inadvertent error in income computation.
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2013 (12) TMI 1657
Deduction u/s. 80IB - Appellant did not file audit report under section 80IB along with the return of income - Such audit report was filed during the course of assessment proceeding - Appellant fulfils all other conditions required for claim under section 80IB. - HELD THAT:- It is fact that the assessee did not furnish audit report along with return but produced before the A.O. at the time of assessment as Hon’ble Gujarat High Court has held that it is a sufficient compliance of the Section if the assessee furnished the audit report before the A.O. at the time of assessment. Thus, claim of 80IB cannot be denied. Decision in favor of assessee.
Business of running a multiplex theatre - Depreciation on electrical fittings allowed at higher rate - The A.O. observed that depreciation on electric fittings is admissible @ 15% but assessee has claimed depreciation @ 25%. Appellant claimed that these are in the nature of plant which is essential for carrying on the business activity. - HELD THAT - It is undisputed that electrical items are fitted with projector and other film exhibition systems. Without electrical items, the projector as well as exhibition systems cannot be run. Thus, the assessee is entitled to higher rate @ 25%. - Decided in favor of assessee.
Addition u/s. 40(a)(ia) on account of late payment of TDS- The assessee capitalized the various expenses but claimed depreciation at ₹ 2,86,448/- in the P&L account. TDS on capitalised item paid on 30.05.2005 as against due date of 07.12.2004 - Appellant submitted that the entire TDS was paid on May 30, 2005 which is much before the due date of filing return. As per retrospective amendment by finance act 2008 the expense is allowable if TDS for the month of March is paid before due date of filing return. TDS in this case is prior to March 2005 and therefore amended provisions will not apply to the appellant - HELD THAT:-. Depreciation cannot be disallowed under section 40 (a) (ia) of IT act since it talks of expenditure by way of interest, commission, brokerages, fees for professional services. The assessee did not claim any expenditure under these heads. Therefore, provision of Section 40(a)(ia) is not applicable. Decided in favor of assessee.
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2013 (12) TMI 1655
TDS u/s 194C or u/s 194J - During the course of survey, it was found that assessee was engaged in the business of media channel under the name of “Sristi Television” and paid carriage fees to various parties. The assessee deducted TDS @ 2% under Section 194C on payment made to those parties. Assessing Officer was of the opinion that TDS on payment of carriage fees was to be deducted @ 10% under the provisions of section 194J of the Income Tax Act, 1961.
HELD THAT:- No technical services were involved in payment of carriage charges made by the assessee for broadcasting of the programmes produced by the assessee. The admitted fact was that the assessee produced various types of programmes/serials and news. These were telecast/broadcasted through Multi System Operators for which payments were made to them for which nomenclature used was ‘carriage charges ’. For this payment tax was deductible u/s 194C explanation iv(b) which is clear from the section itself as cited by the assessee and quoted earlier.
Decision in favor of assessee.
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2013 (12) TMI 1649
Re-opening of assessment u/s 147 - Assessee contended that reasons are vague and based upon no material and simply on the basis of some presumption of the Investigation Wing. - The learned DR stated that the Assessing Officer received definite information from the Director of Income Tax (Investigation), New Delhi and the assessment has been reopened on the basis of such specific and definite information. - HELD THAT- On what basis the inference is drawn that the above amount received is accommodation entry received by the assessee has neither been mentioned in the assessment order nor the letter of DIT. In view of the above, we hold that the information on the basis of which the Assessing Officer had initiated proceedings under Section 147 was vague and uncertain. Respectfully following the same, we quash the notice issued under Section 147 of the Act and consequently, the assessment order passed in pursuance thereto is also quashed.
Decision in favor of assessee.
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2013 (12) TMI 1645
Issues involved: Appeal by Revenue and Cross Objection by assessee against CIT (A)'s order for assessment year 2008-2009 regarding tax effect below Rs. 3 lakhs.
Revenue's Appeal:
The Revenue filed an appeal against CIT (A)'s order, but the assessee argued that the tax effect was below Rs. 3 lakhs as per Board's Circular. The Revenue contended that the tax effect calculation by the assessee did not include education cess, making the tax effect exceed Rs. 3 lakhs. The assessee referred to a judgment of the Hon'ble Delhi High Court regarding the inclusion of cess in tax for section 43B of the Act. The Tribunal noted the Board's Instruction stating that the Revenue should not file appeals if the tax effect is below Rs. 3 lakhs. Considering the Delhi High Court's judgment, the Tribunal held that tax effect should be calculated without including cess. Consequently, the Revenue's appeal was deemed not maintainable and dismissed.
Cross Objection by Assessee:
The Cross Objection filed by the assessee was in support of the CIT (A)'s order. Since the Revenue's appeal was dismissed due to low tax effect, the Cross Objection by the assessee was also dismissed. Ultimately, both the Revenue's appeal and the Cross Objection of the assessee were dismissed by the Tribunal.
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2013 (12) TMI 1641
Issues involved: Interpretation of provisions u/s 194J and 201(1A) of the Income Tax Act, 1961 regarding tax deduction on payments made to Himachal Pradesh Road Transport Co. Ltd. (HRTC) by the assessee authority.
Summary:
The appeals were filed against the order of the CIT(A), Shimla, where the assessee challenged the application of section 194J and the interest u/s 201(1A) of the Income Tax Act. The main contention was that payments made to HRTC were reimbursement of expenses and not subject to TDS. An additional ground was raised, citing legal precedents to support the argument. The ITAT Chandigarh admitted the additional ground, considering it a legal issue with relevant facts on record.
The case involved a survey revealing payments made by the assessee to HRTC without tax deduction. The Assessing Officer deemed these payments as service charges, requiring tax deduction u/s 194J. The CIT(A) upheld this decision, leading to the appeal.
During the hearing, the assessee's counsel argued that the payments were reimbursement for services provided by HRTC, not subject to TDS. They also contended that HRTC had already paid taxes on these receipts, relieving the assessee from tax liability. The revenue's representative supported the Assessing Officer's order.
After reviewing the submissions, the ITAT found that the assessee authority reimbursed HRTC for services provided due to a lack of infrastructure. The payments were based on predetermined rates for staff and facilities, not lump sum service charges. Citing various tribunal decisions, the ITAT concluded that no tax deduction was required u/s 194J. The order of the CIT(A) was set aside, and it was held that no tax was deductible by the assessee authority.
In conclusion, the appeal of the assessee was allowed, and the order was pronounced on 31/12/2013.
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