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Income Tax - Case Laws
Showing 461 to 480 of 6519 Records
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2013 (12) TMI 608
Gold biscuits found during search - Held that:- The two gold biscuits recovered from the locker of the assessee were not owned by Shri Ashok Kumar Varshney at the time of recording his statement while making declaration/surrender of undisclosed income - So far as the slip A-4 is concerned, the Income tax authorities recorded findings that the assessee has tried to get the benefit of that addition in his hands without sufficient evidence - The details recorded in the slip A-4 were the investment and not the actual quantity of gold, which was recovered from the locker of the assessee - There is no substantial question of law - Decided against the assessee.
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2013 (12) TMI 607
Validity of order u/s 263 - Held that:- The Commissioner in her order under Section 263 has recorded specific findings as to why and for what reason she felt that the order passed by the Assessing Officer on two accounts was erroneous and prejudicial to the interest of Revenue - Computation of book profits u/s 115JA - Under proviso to clause (i) of the Explanation to Section 115JA reserve or provision made may relate to any period and not during the period between 1st April, 1997 and 31st March, 2001 - These two dates are relevant as Section 115JA is applicable during this period. Clause (i) operates when an amount is withdrawn from provision made or reserve created but as per the proviso adjustment can be made only when at the time of creation of reserve or the provision, the amount in question was duly accounted for by increasing the book profits by the said reserve or provision - Transfer from revaluation reserve either should have been credited to the profit and loss account or reduced from the depreciation provided in the books - The respondent-assessee had credited the same amount to the depreciation account and also the profit and loss account in the year in question.
Disallownace u/s 14A - Held that:- the Assessing Officer had failed to disallow expenditure in respect of exempt income as per the mandate of Section 14A of the Act - Section 14A was introduced by Finance Act, 2001, which was tabled in the Parliament on 28th February, 2001. The said provision was introduced with retrospective effect from 1st April, 1962 - The quantum of deduction should be made on reasonable basis - The the Commissioner had rightly invoked Section 263 of the Act as the order of the Assessing Officer was erroneous and prejudicial to the interest of the Revenue - adjustment of Rs.1.35 crores should not have been allowed under clause (i) to Explanation to Section 115JA and deduction should have been also made towards expenditure to earn dividend income, which did not form part of taxable income under Section 14A of the Act. - Decided in favour of Revenue.
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2013 (12) TMI 606
Interpretation of articles of DTAA - Held that:- A plain reading of provisions of DTAA between India and France makes it absolutely clear that Sub-Articles (1) & (2) will apply inter alia when the recipient of interest does not have a permanent establishment in the country, where he has received interest - The respondent assessee had a permanent place of business in India and, accordingly, submitted to the taxing jurisdiction of India and paid tax on its income except income from interest under Section 44BB of the Income Tax Act - The interest earned in India on the refund of income tax is not covered by Sub-Articles (1) & (2) of Article 12 of the said Treaty - Decided in favour of Revenue.
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2013 (12) TMI 605
Understatement of sale consideration - Held that:- The Tribunal has referred to the material produced by the assessee before the Assessing Officer, which included other contemporaneous sale deeds, copy of valuation certificate issued by the registered valuer etc - The said evidence was rejected by the Assessing Officer observing that “the value determined by the government authorities is more acceptable than the value determined by the registered valuer - The Assessing Officer has recorded the date of purchase and the value declared at the time of purchase, which was not disturbed - Decided against Revenue.
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2013 (12) TMI 604
Improper authorization u/s 158BG of ground of appeal - Held that:- Following Shirish Madhukar Dalvi Vs. Assistant Commissioner of Income Tax & others [2006 (7) TMI 145 - BOMBAY High Court] - The provisions of section 158BG are not procedural and and it need to be complied - These provisions are specially inserted into the Act with a specific purpose - Before a Block Assessment Order is passed, certain legal requirements are to be complied - The legislature provides for previous approval so that these harsh provisions are not abused by the Lower Authorities - The noncompliance of said provision cannot be construed as a mistake, defect or omission - If the said provision is not complied, the order passed by the Authority without the previous approval is no order in the eye of law - Decided against Revenue.
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2013 (12) TMI 603
Whether confirmation form party are sufficient to hold that such services were actually rendered by the parties - Held that:- Evidence is produced to show brokerage was paid and the brokerage was duly acknowledged and the recipient has accounted for it in its books of accounts and has offered it for tax - The Tribunal has given cogent reasons why it has not granted benefit to the assessee - The material on record shows the persons to whom the brokerage was paid, who are interested are closely connected to the Directors of the assesee Company - Though book entrites were there and the Revenue offered it for tax, on appreciation of the entire material on record, they have recorded a categorical finding that no such brokerage fee was paid - When the evidence on record discloses that the amounts paid were not brokerage, merely because the amounts were confirmed that by itself would not enable the assessee to claim the exemption - Decided against assessee.
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2013 (12) TMI 602
Whether the ground of appeal not raised before FAA be raised before the Tribunal through miscellaneous petition - Held that:- Where the Miscellaneous petition is dismissed the proper course of action is to file appeal against the original order - The appeal cannot be raised against the rejection of miscellaneous petition - The assessee has deducted the tax at source while paying commission - No substantial question of law arises - Decided against Revenue.
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2013 (12) TMI 601
Rejection of books of account - Held that:- From sub-section (3) of Section 145 of the Act it can be concluded that it is the absolute subjective satisfaction of the Assessing Officer about the correctness or completeness of the accounts of the assessee - The method of accounting is not under consideration - If there is an increase in the cost/purchase price, there will be a corresponding rise in the price of sale - The assessee could not justify its claim that there is increase in the cost of inputs with there being no corresponding rise in the price of sale - There is no significant increase in the expenses viz. personnel cost, administrative & selling expenses, interest & finance charges, etc. considering the increase in turnover reported from year to year - The increase in output costs is almost insignificant compared to the increase in input costs - The steep decline in the rate of net profit, the assessee cannot, therefore, attribute to the increase in input costs - The estimation of profit by the AO is reasonable - The order of rejection is not required to be expressed - Decided against assessee.
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2013 (12) TMI 600
Validity of proceedings u/s 147/148 - Held that:- Dispensation of justice should not suffer on account of a fault which is not attributable to an assessee-subject - The bonafides of the averment made by the appellant petitioner are not assailed before the Court - The Tribunal committed an error in dismissing the wrong plea made on behalf of the assessee - Decided in favour of assessee.
Estimation of income - Held that:- the books of account were not reliable and therefore the income was required to be estimated. Further, the estimation as made by the CIT(A) was affirmed by the Tribunal - Plea does appear in the Ground of Appeal raised by the assessee and the non-consideration of the same, constitutes a mistake apparent from record within the meaning of section 254(2) of the Act - Following CIT vs. K. M. Sugar Mills (P.) Ltd. [2004 (8) TMI 59 - ALLAHABAD High Court] - An omission to consider the Ground, which appears in the Memorandum of Appeal filed by the assessee, is a mistake apparent from record within the meaning of section 254(2) of the Act - It is justified to recall the order of the Tribunal - Decided in favour of assessee.
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2013 (12) TMI 599
Penalty u/s 271(1)(c) due to disallowance of depreciation on account of capitalized value of steel purchased - Held that:- there cannot be a straight jacket formula to apply that the assessee has furnished any inaccurate particulars of income but it depends on the facts of each case. - there were purchases and recorded in the books of accounts of the assessee and correctness of the books of accounts of the assessee have not been rejected by department on the ground that the assessee has made bogus purchases. - levy of penalty u/s 271(1)(c) of the Act on the claim of depreciation made by assessee in the assessment years under consideration is not justified. - Decided in favor of assessee.
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2013 (12) TMI 598
Whether expenses on abandoned film are allowable as deduction or not - Held that:- Following Alembic Chemical Works Co. Ltd. vs. CIT [1989 (3) TMI 5 - SUPREME Court] - A feature film is only a stock-in-trade of his business for a film producer - Where not released for exhibition, i.e., 'sold' directly or indirectly, the same is to be necessarily carried over as such - Where the film for some reason cannot be completed and the project is shelved it cannot be reharded as a capital asset - The value of the film declines considerably within a short period of its release - The only condition to which this would be subject is of the said suspension of work being not temporary, so that there is in fact no loss of value, of which though there is no indication in the present case - The loss ensuing thus would only be the loss for the year of its incurrence, i.e., the year in which the film project is abandoned - Decided against Revenue.
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2013 (12) TMI 597
Whether Tribunal can review its own order u/s 254 - Held that:- In all the points raised by the assessee in its miscellaneous application is basically a review of the detail finding and conclusion given by the Tribunal and there is no ‘mistake apparent from record’ which can be rectified within the scope of Section 254(2) - Decided against assessee.
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2013 (12) TMI 596
Advance taken from other company - Deemed dividend - Held that:- The factual submissions made by the assessing officer reveal that the transactions are of commercial in nature - Following CIT v. Raj Kumar [2009 (5) TMI 17 - DELHI HIGH COURT] - Section 2(22)(e) did not bring within its ambit advances received against the future supply of goods - The word 'advance' which appears in the company of the word 'loan' could only mean such advance which carries with it an obligation of repayment - Trade advance which are in the nature of money transacted to give effect to a commercial transactions would not, fall within the ambit of the provisions of section 2(22)(e) of the Act - Decided against Revenue.
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2013 (12) TMI 595
Interest on investment - Held that:- Following assessee's own case for A.Y. 2003-04 - Business relationship can be said to exist even with the persons from whom funds are borrowed - The principle of commercial exigency cannot be blindly applied in the case of persons with whom the assessee has some business relationship - The assessee had borrowed money for its own purpose but has been investing it in shares. Prima facie it appears to be diversion of funds for acquisition of share - If there was no condition in the very first year or in subsequent years, the amounts invested in various years in shares of Lakhani India Ltd. cannot be treated as assessee's compulsion to make investment in shares within the meaning of Commercial expediency - The issue has not been examined either by the Assessing officer or the learned CIT(A) - The issue was set aside for fresh adjudication.
Expenses on exempt income - Held that:- Following assessee's own case in A.Y. 2003-04 and 2004-05 - The group concern namely Lakhani Marketing Incorporation in A.Y 2000-2001 are exactly identical to the facts of the assessee in A.Y. 2006-07 - The applicability of the facts pertaining to commercial expediency as considered in the facts of group concern needs to be seen and brought on record - No such exercise has been done by the A.O. - The issue was set aside for fresh adjudication.
Tax not deducted on interest - Held that:- Following Merilyn Shipping & Transports vs. Addl. CIT [2012 (4) TMI 290 - ITAT VISAKHAPATNAM] - what can be disallowed u/s 40(a)(ia) is only the outstanding balance as on 31st March of the year and cannot be invoked against payment made prior to 31st March of every year - The issue in question has become debatable in view of Special Bench judgment and contrary judgments of High Courts - The issue was set aside for fresh adjudication to verify whether the TDS has been deducted in the subsequent year and to decide the same in accordance with law keeping in view the latest legal position.
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2013 (12) TMI 594
Transfer pricing adjustment – Comparable data – Arm’s length price - Held that:- Mere difference in turnover is not sufficient for treating two entities or two transactions as not comparable or warrant any adjustment - Following Symantec Software Solutions P. Ltd. [2011 (5) TMI 107 - ITAT MUMBAI] - Low turnover does not necessarily mean high margin in competitive market condition - Unless and until it is brought to record that the turnover of such comparables has undue influence on the margins, it is not the general rule to exclude the same that too when the comparables are selected by the assessee itself – Following Distributors (Baroda) P. Ltd. v. Union of India [1985 (7) TMI 1 - SUPREME Court] - Commission percentage in associated enterprises segment should be compared with commission percentage in non-associated enterprises segment - Following Bayer Material Science P. Ltd. [2011 (12) TMI 393 - ITAT MUMBAI] - When the indent/commission transaction with the associated enterprises is to be benchmarked, the same should be done with indent/ commission transaction with non-associated enterprises - Decided against the assessee.
Legal and professional charges – Held that:- The assessee-company employs foreign nationals for the purpose of its business, as they have requisite expert knowledge of the markets outside India - The assessee-company has many of the foreign nationals, on its rolls, working at various managerial positions - As per the general policy of the assessee-company and the market wide practice, the company at the time of the departure of such foreign assignees, after completion of their assignments, bears the cost of their return journey to their respective home countries - The expenditures were incurred by the assessee on its employees who were returning to their home countries, after completion of the assignments. The expenditures were charges in connection with passenger baggage clearing – Decided in favour of assessee.
Disallowance of deduction of deposits written off – Held that:- The assessee has debited an amount to the profit and loss account under head "Deposits written off - The AO misread the profit and loss account and amount claimed in the assessment year 2006-07 was understood by him as the amount claimed in the assessment year 2007-08 - The such write off was claimed in the assessment year 2006-07 – The issue was restored for fresh decision.
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2013 (12) TMI 593
Addition on account of fall in GP rate – Held that:- Following assessee's own case from A.Y. 2003-04 to 2006-07 - In view of the past records of the gross profit rate of the assessee – The small variation in GP rate is considered while accepting books of accounts - Factually there was no fall in GP rate for the year under consideration – During previous year the percentage of GP ratio was taken by including the "other income" in the total turnover; while the turnover of the assessment year compared with was after excluding the "other income".
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2013 (12) TMI 592
Exemption u/s 54 – The assessee had invested sum of Rs. 23,61,550/- out of withdrawals from its bank account jointly held and utilized the same for acquisition of the residential house in Sector 11, Panchkula - The balance sum of Rs. 20 lakhs was out of the housing loan raised by the assessee from LIC Housing Finance - Held that:- The assessee having parked its funds in FDRs with banks, of sale proceeds of the old assets and utilized housing loan for the purchase of new asset, does not disentitle the assessee from the benefit of exemption u/s 54 - Decided in favour of assessee.
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2013 (12) TMI 591
Whether income from lease rent taxable under the head “Income from businesss” or “Income from other sources” – Held that:- The assessee has not brought on record any material to show that it has intention to revive its business activities - The question whether the assessee is having an intention to revive its business activity is a question of fact and the same is required to be considered every year - Though the Government licences are still continuing in the assessee's own name, it has not proved the claim of the assessee that it had an intention to revive its business activity – Decided against Revenue.
Expenses u/s 57 and 58 - Held that:- The assessee did not get opportunity to contend about the deduction of eligible expenses as per the provisions of sec. 57 - The issue remitted back for fresh examination at the end of the AO for the limited purpose of deduction of expenses.
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2013 (12) TMI 590
Restriction of rate of depreciation claimed on lorries to 25% - Held that:- Following CIT vs. Gupta Global Exim P. Ltd. [2008 (5) TMI 7 - SUPREME COURT] - Mere inclusion of certain amount in the total business income is not the determinative factor for deciding whether trucks were used by the assessee during the relevant year in a business of running them on hire - The returns filed by the assessee as well as the constitution of the assessee-company were not available - No evidence was produced to show that the assessee was in the business of hiring out motor lorries for running them to earn business income - The entire inference is drawn by the Commissioner of Income-tax(Appeals) only on the footing that the Assessing Officer had treated Rs. 12,59,639/- as part of total business income which is not determinative of the above test, viz., whether the trucks were used in the transportation business as claimed by the assessee – The issue was restored to AO for fresh examination.
Disallowance of purchase of iron and steel of Rs. 6,59,164 – The assessee could produce only photocopy and carbon copies of the relevant purchase bills and not the original bills - Held that:- The assessee failed to produce the photocopies of the relevant bills before the Tribunal - The Assessing Officer also did not record a finding that the bills have been authenticated by the concerned sellers - The claim of the assessee have not been verified by anybody – The issue was restored to AO for verification of the photocopies of the bills.
Disallowance of a part of purchases of broken stones Rs. 1,08,876 – The purchases of broken stones are supported by either type written papers or hand written papers and not proper printed bills - Held that:- The AO examined some of the suppliers of the broken stones he could not obtain proper bills as expected by him - The trade practice prevailing in that trade is to supply the broken stones on the basis of type written slips or hand written slips only – The details were required from various suppliers of broken stones and most of them confirmed the transactions entered by them with the assessee - The assessee has effected payments by way of cheques in most of the cases – Based on the facts and circumstance of the assessee’s business and prevailing trade practice – Decided in favour of assessee.
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2013 (12) TMI 555
Whether the incentive received is capital or revenue - Held that:- Following CIT Vs. Ponni Sugars & Chemicals Ltd [2008 (9) TMI 14 - SUPREME COURT] - The incentive had to be utilized for repayment of loan taken by the assessee to set up new units or for substantial expansion of the existing unit. The subsidy received by the assessee was not in the course of a trade but was of capital nature - Decided against Revenue.
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