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Income Tax - Case Laws
Showing 81 to 100 of 6519 Records
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2013 (12) TMI 1574
Disallowance of advances for purchase of capital goods written off - Held that:- There is no material has been placed on record that the supplier of goods have refused to refund the advances given to them. There is no material on record as to what efforts were made by the assessee for recovering the advances. Therefore, under these circumstances, the ld.CIT(A) was not justified in treating the same as business loss and allowable u/s.37(1) of the Act. Thus, this ground of the Revenue’s appeal is allowed.
Disallowance in respect of parts imported for SMS project - Held that:- We find that the assessee has not placed anything on record with regard to the contention that the assessee was unable to clear the parts due to inability to pay customs duties and other charges. The ld.CIT(A) has not given any finding that how much duty and other charges were payable by the assessee and how much has been paid by obtaining the parts even if it is assumed that non-clearance of parts by the assessee was resulted into business loss, then also the assessee is required to substantiate its claim by placing relevant material on record. So far the undisputed fact remains that the parts were to be utilized for commissioning of a new project, therefore, are in the nature of capital assets.The ld.CIT(A) has erred in not considering this aspect. After considering all aspects of the matter, we restore this issue back to the file of ld.CIT(A) to decide it afresh, after giving opportunity of hearing to the respective parties.
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2013 (12) TMI 1573
Puja expense incurred on occasion of Diwali and Mahurat are customary expenses and going by the turnover of the assessee-company and the nature of the business of the assessee, we feel that these are incurred for the harmony of the assessee-company’s employees and these are for the purpose of business. Similar are the reasons for incurring temple expense
Addition on account of cess on green leaf - Hld that:- This issue is covered by the decision of Hon’ble jurisdictional High Court in the case of AFT Industries Ltd. V. CIT (2004 (7) TMI 81 - CALCUTTA High Court ), wherein it has been decided by Hon’ble jurisdictional High Court that cess on green leaf is a normal business expenditure
TDS liability - disallowance u/s 40(a)(ia) - Held that:- The commission paid to foreign agents, who are not having permanent establishment business place in India and they are providing services outside India and even the payment is directly made outside India in foreign exchange. Assessee's income does not accrue or arise in India and once income does not accrue or arise in India, the assessee is not liable to deduct TDS on foreign payments
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2013 (12) TMI 1570
Disallowance of the claim u/s. 80IB(10) - Held that:- The assessee has not violated any of the conditions of Sec. 80IB(10) to gain eligibility for claiming the deduction and hence both the authorities below erred by denying the deduction to the assessee. We, accordingly, allow the assessee’s claim of deduction on the above reason and direct the Assessing Officer to allow the deduction u/s. 80IB(10). We also make it clear that as the amenity building is treated as an independent project, the assessee is not entitled to include the profit earned from the sale of any of the unit in the said building for claiming the deduction u/s. 80IB(10).
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2013 (12) TMI 1569
Short term capital gain - applicability of provisions of Section 2(47)(v) - Held that:- Commissioner of Income Tax (Appeals) as well as the learned Tribunal upon basis of the factual material placed before it and upon interpretation of the agreement entered between the assessee and the developer has found that the assessee was liable to pay capital gain in the year 2008-09, inasmuch as there was no possession handed over to the developer under Section 53A of the Transfer of Property Act in the assessment year 2003-04. It can thus be seen that finding recorded are upon appreciation of material led before the Commissioner of Income Tax (Appeals) and the Tribunal and upon consideration of the documents placed for its consideration. The said question therefore cannot be said to be a question of law, leave aside, the substantial question of law.
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2013 (12) TMI 1568
Issues Involved:
1. Treatment of income from letting out of poultry sheds as income from house property versus business income.
2. Treatment of sale of agricultural lands as long-term capital gains versus exempt agricultural income.
3. Disallowance of depreciation on poultry lands.
Detailed Analysis:
1. Treatment of Income from Letting Out of Poultry Sheds:
The assessee, a private limited company engaged in the business of poultry farms, leased out poultry sheds for eight months and reported the rental income as business income. The Assessing Officer (AO) treated this income as income from house property, disallowing the business expenditure claimed by the assessee. The CIT(A) upheld the AO's decision, referencing several judicial precedents, including Sultan Brothers Pvt. Ltd. vs. CIT and Shambhu Investments Pvt. Ltd. vs. CIT, which emphasized that for an activity to be assessed as a business, there must be an organized set of actions for earning income. The CIT(A) found no such organized activity in the assessee's case and confirmed the treatment of rental income as income from house property. The Tribunal upheld the CIT(A)'s decision, rejecting the assessee's grounds.
2. Treatment of Sale of Agricultural Lands:
The Revenue contested the CIT(A)'s decision to delete the addition of long-term capital gains on the sale of agricultural lands, which the assessee claimed as exempt agricultural income. The AO argued that the lands were used for poultry farming and were within 8 kilometers of Bibinagar, thus not qualifying as agricultural lands. However, the assessee provided additional evidence, including certificates from local authorities, proving that the sold lands were different from those used for poultry farming and were situated approximately 17 kilometers from the nearest municipality. The CIT(A) accepted the assessee's contention and deleted the addition. The Tribunal upheld the CIT(A)'s order, confirming that the lands sold were indeed agricultural and exempt from capital gains tax.
3. Disallowance of Depreciation on Poultry Lands:
For the assessment year 2006-2007, the Revenue challenged the CIT(A)'s direction to the AO to reconsider the disallowance of depreciation on poultry lands. The assessee argued that the depreciation claimed was on a distinct property, not the poultry sheds yielding rental income. The CIT(A) remitted the issue to the AO for examination. The Tribunal upheld the CIT(A)'s order, noting that the CIT(A) had not directed the allowance of the claim but merely asked for a re-examination.
Conclusion:
The Tribunal dismissed the cross-appeals for both assessment years, upholding the CIT(A)'s decisions on all issues. The treatment of rental income as income from house property was confirmed, the deletion of long-term capital gains on the sale of agricultural lands was upheld, and the remand for reconsideration of depreciation on poultry lands was validated.
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2013 (12) TMI 1567
Addition U/s 14A - Held that:- The burden is on the assessee to submit the details of volume of transactions in relation to activity regarding dividend income and other activities from which the assessee has earned taxable income and then the Assessing Officer should work out the amount of disallowance in the ratio of such transactions undertaken by the assessee for earning dividend income and other transactions resulting into taxable income. The Assessing Officer should pass necessary order as per law as per above discussion after providing reasonable opportunity of being heard to the assessee. Ground No. 1 of Revenue’s appeal stands partly allowed for statistical purposes.
Addition on purchased/received the vehicle - Held that:- If the assessee establishes this fact that the assessee received the delivery of the vehicle on 31/03/2007 and got it registered in his name on the first day of the next year then the assessee is eligible for depreciation even if the same was registered in the next year but since this fact is not verifiable from the record and no finding is available, we set aside the order of learned CIT(A) on this issue and restore the matter to the Assessing Officer for fresh decision. We would like to make it clear that the burden is on the assessee to furnish the proof of delivery of vehicle on 31/03/2007 and thereafter, the Assessing Officer should pass necessary order as per law. This ground of appeal is allowed for statistical purposes.
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2013 (12) TMI 1566
Proceedings under s.153C - Held that:- Assessing officer having issued a notice u/s 153A of the Act, could not have completed proceedings which are supposed to be done u/s 153C of the Act if there is any incriminating material and accordingly, the proceedings itself become bad in law.
Computation of income - Held that:- Estimation of income at 9.5% by the CIT(A) is on higher side. Considering the past record of the assessee, we are of the opinion that it is reasonable to estimate 5% income net of depreciation on sub-contract payments and 8% net of depreciation on the balance of the contract receipts, out of the total turnover shown by the assessee. This should meet the end of justice on the facts of the case. However, other incomes offered by the assessee, with reference to undisclosed income being added in A.Y. 2009-10 and other incomes not connected with the contract receipts should be accepted as such. This estimation of 8% on assessee’s contract works and 5% on sub-contract works is only limited to the contract receipts. With these directions, the assessing officer is directed to modify the computation of income accordingly. Assessee’s grounds are considered allowed accordingly.
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2013 (12) TMI 1564
Reopening of assessment - Held that:- There was true disclosure of all material and primary facts at the time of original assessment and assessment was reopened in respect of the matter already covered by the disclosure made by the assessee during original assessment proceedings and initiation of reassessment proceedings on the same material would obviously amount to change of opinion. Consequently, we hold that the initiation of reassessment, in absence of any new tangible material was change of opinion which is not permissible as per statutory provisions of the Act. Accordingly, the act of the Assessing Officer in initiation of reassessment proceedings and notice issued u/s 148 of the Act is quashed.
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2013 (12) TMI 1562
Deduction under Section 80IB of the Act is allowable for the income from sale of scrap - The receipts from sale of scrap being part and parcel of the activity and being proximate thereto would also be within the ambit of gains derived from the industrial undertaking for the purpose of computing deduction under Section 80IB.
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2013 (12) TMI 1559
Delay in deposit of Employees contributions of Provident Fund - Held that:- EPF was paid before the due date of filing the return. Thus we direct the A.O. to allow the payment of EPF contributions since the same has been paid before the due date of filing the return.
Claim of deduction u/s 80IB - Held that:- As the assessee has supplied DG sets to the customers which includes installation, testing and commissioning, which is intricate and inseparable part of manufacturing activity and therefore, any surplus arising therefrom shall be termed as derived from an industrial undertaking and eligible for deduction u/s 80IB of the Act Accordingly, the order of the Ld. CIT(A) is reversed and the AO is directed to allow deduction u/s 80IB
Violation of provisions of section 40A(3) - Held that:- There is no dispute to the fact that the rent has been paid in cash in violation of provisions of section 40A(3) and the Ld. CIT(A) has rightly confirmed the action of the AO in disallowing the same. It is also fact that the disallowance of sum claimed enhances the income of the assessee and the income so enhanced is available u/s 80IB of the Act. Therefore, in the facts and circumstances of the case, the ld. CIT(A) is not justified in not allowing deduction u/s 80IB of the Act.
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2013 (12) TMI 1557
Issues Involved:
1. Validity of the invocation of Section 263 of the Income-tax Act, 1961 by the Commissioner.
2. Whether the Assessing Officer (AO) conducted proper inquiries regarding the deduction under Section 80IAB.
3. Whether the sale of bare shell buildings qualifies as an authorized operation under the SEZ Act and is eligible for deduction under Section 80IAB.
Detailed Analysis:
1. Validity of the Invocation of Section 263:
The primary grievance of the assessee revolves around the invocation of Section 263 by the Commissioner, who deemed the assessment order as erroneous and prejudicial to the interest of the revenue. The Commissioner issued a show-cause notice stating that the AO allowed a deduction under Section 80IAB without proper inquiry, particularly concerning the sale of bare shell buildings, which he argued did not qualify as an authorized operation under the SEZ Act.
2. Inquiry Conducted by the AO:
The AO had issued a detailed questionnaire under Section 142(1) and received responses from the assessee, including various documents like the approval letter for SEZ development, the MOU with the co-developer, and the definitive co-developer agreement. The AO discussed the deduction under Section 80IAB in the assessment order, revising the deduction amount after considering the details provided. The ITAT observed that the AO had indeed conducted inquiries and applied his mind before allowing the deduction, thus fulfilling his role as both investigator and adjudicator.
3. Sale of Bare Shell Buildings as Authorized Operation:
The assessee argued that the sale of bare shell buildings to the co-developer was an authorized operation under the SEZ Act, supported by approvals and clarifications from the Ministry of Commerce & Industries. The SEZ Act allows co-developers to be treated at par with developers, and the transfer of bare shell buildings was recognized as an authorized activity by the Board of Approval (BOA). The ITAT noted that the BOA's approval and subsequent clarifications confirmed that such transfers were authorized operations, making the income derived from these transactions eligible for deduction under Section 80IAB.
Conclusion:
The ITAT concluded that the AO had conducted adequate inquiries and that the assessment order was not erroneous. The Commissioner's invocation of Section 263 was based on a misinterpretation of the SEZ Act and the nature of the transactions. The ITAT quashed the Commissioner's order, allowing the assessee's appeal and upholding the deduction under Section 80IAB. The decision emphasized that the AO had taken one of the possible views, and merely because the Commissioner had a different interpretation did not render the assessment order erroneous or prejudicial to the revenue.
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2013 (12) TMI 1555
Nature of receipts - Held that:- Nature of receipt in this case if ₹ 5.75 crore has clearly been established as being the capital receipt. The provision of Income Tax Act does not provide for taxation of such capital receipt, even if it is forfeiture of amount. Accordingly, in the background of the aforesaid discussions and precedents, we do not find any infirmity in the order of the Ld. CIT(A). Accordingly, we uphold the same.
Depreciation @ 60% on the printers and UPS & computer peripherals to the assessee.
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2013 (12) TMI 1554
Value adopted by the Assessee for part of the stock in accordance with the order of the Hon'ble Bombay High Court - Held that:- Even the stock of iron ore at that time was also divided. The liability arising due to the order of the Hon'ble Bombay High Court, in our opinion, cannot be a business liability as the price realized by the Assessee can also not be the market price but the price put by the Hon'ble Bombay High Court is for the purpose of settling the dispute mutually among the family members and distribute the various assets and liabilities by putting certain value to them. It cannot be regarded to be sale at the open market. If any loss is incurred by the Assessee, that cannot be regarded to have been incurred during the course of the business.
Commissioner (Appeals) was not correct in directing the Income-tax Officer to revalue the opening stock also consistently along with the closing stock when the assessee wanted to adopt the “works cost” method for the relevant assessment year.
Direction to be given to the assessing officer to take the opening stock of ROM and screened fines for the assessment year 2007-08 in consequence of making an adjustment to the closing stock as on 31.3.2006 - Held that:- Value of the closing stock of the impugned assessment year will become the value of the opening stock of the succeeding assessment year. Since the appeal before us relate to the assessment year 2006-07 our jurisdiction are limited to give the finding in respect of the ground of appeal relating to the impugned assessment year we cannot decide the grievance of the assessee relating to the assessment year 2007-08. This issue can be taken by the assessee during the assessment year 2007-08 in accordance with the law before the appropriate authorities.
As we have already confirmed the addition in the valuation of the closing stock for the A.Y 2006-07, we direct the assessing officer to take the same value of the opening stock as on 1.4.2006 for determining the profits and gains of the business of the assessee for computing the taxable income.
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2013 (12) TMI 1553
Issues Involved:
1. Legality of the CIT(A)'s order.
2. Addressing of arguments by CIT(A).
3. Justification of penalty imposition under Section 271(1)(c) of the Income Tax Act, 1961.
4. Right to amend grounds of appeal.
Issue-wise Detailed Analysis:
1. Legality of the CIT(A)'s Order:
The assessee challenged the legality of the CIT(A)'s order dated 23.11.2012. The primary contention was that the order was "bad in law." The tribunal examined the procedural and substantive aspects of the order to determine its legality but found no substantial procedural irregularity that would render the order invalid.
2. Addressing of Arguments by CIT(A):
The assessee argued that the CIT(A) failed to address all arguments raised during the appeal. The tribunal reviewed whether the CIT(A) had considered all material arguments and evidence presented by the assessee. It was noted that the CIT(A) had indeed reviewed the explanations and documents provided by the assessee, including the letter dated 21.2.2011, which contained detailed explanations of the impounded documents.
3. Justification of Penalty Imposition Under Section 271(1)(c):
The core issue was the justification for upholding the penalty of Rs. 9,14,750/- levied under Section 271(1)(c) of the Income Tax Act, 1961. The tribunal scrutinized whether the conditions for imposing such a penalty were met. It was highlighted that the penalty proceedings are distinct from assessment proceedings and require fresh inquiry to prove concealment or furnishing of inaccurate particulars of income.
The assessee had surrendered Rs. 25 lakhs during a survey operation with the condition that no penalty or prosecution would be initiated. However, this amount was not included in the return of income. The Assessing Officer added the amount, and the CIT(A) upheld this addition. The tribunal examined whether the surrender was voluntary and whether the penalty was justifiable based on the quantum addition.
It was emphasized that for penalty imposition, there must be conclusive evidence of concealment or furnishing of inaccurate particulars. The tribunal found that the Assessing Officer's reasoning was based on inferences rather than concrete evidence, such as cross-verification from third parties. The surrender was conditional, and the assessee had provided explanations for the impounded documents, which were not factually disproven by the Assessing Officer.
4. Right to Amend Grounds of Appeal:
The tribunal acknowledged the appellant's right to add, alter, amend, or modify any grounds of appeal during the proceedings. This procedural right ensures that the appellant can address any additional issues or arguments that may arise during the hearing.
Conclusion:
The tribunal concluded that the penalty under Section 271(1)(c) was not justified. The explanations provided by the assessee were not conclusively disproven, and the surrender was made with the condition of no penalty imposition. The tribunal allowed the appeal, deleting the penalty imposed by the Assessing Officer and upheld by the CIT(A). The order was pronounced in the open court on 31st December 2013.
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2013 (12) TMI 1552
Addition to capital gain declared by disallowing expenses for transfer - Disallowance of the expenditure related to the land sold - Held that:- The payments were made by bank cheques and the fact that the said deeds and confirmation letters were filed the contention of the assessee stands proved even in the absence of affidavits of the payees filed at the appellate stage. In view of the above, the Assessing Officer was not justified in making addition
Assessee was entitled to claim deduction u/s.54B
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2013 (12) TMI 1550
Rectification of mistake - Income considered to be liable for tax - Held that:- Income was considered to be liable for tax at the rate of 15% by the assessee itself in its return of income. No material has been brought on record to show that applicability of rate of 15% was examined by the AO during the course of original assessment proceedings. Even during the course of rectification proceedings, the assessee did not submit any reply to the AO. It is also not the case of the assessee that AO did not give opportunity to explain that as to why 15% rate of tax was justified. In these circumstances, we are of the opinion that there was no “change of opinion” as has been argued by Ld. AR. The levy rate of tax has to be in accordance with the statutory provisions. If there is less levy, then it is liable for rectification.
Accordingly, we hold that AO was not wrong in exercising his right u/s. 154 of the Act.
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2013 (12) TMI 1549
Land in question was liable to be excluded from the definition of ‘capital assets’ on account of section 2(14)(iii) of the Act. Accordingly, the surplus on the sale of such asset has been rightly held to be outside the purview of capital gains tax.
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2013 (12) TMI 1548
No merit in the conclusion drawn by the lower authorities for treating the gains arising out of sale of shares as business income rather than capital gain.
Addition u/s 2(22)(e) on account of deemed dividend - Held that:- We found that Shri Anoop Karwa has more than 10 % voting rights in the share capital of Krishi Dham Seeds Limited, therefore, the provisions of Section 2(22)(e) is clearly applicable for loans and advances so taken by the assessee. Accordingly, the addition made by the Assessing Officer u/s 2(22)(e) was perfectly justified.
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2013 (12) TMI 1547
Registration u/s.12AA denied - Held that:- The assessee did not furnish the trust-deed/memorandum of article/memorandum of association, whereby the objects and notifications can be ascertained. On the contrary, the contention of the ld.counsel for the assessee is that the trust is registered under Gujarat Private University Act and as per the Gujarat Government Gazette dated 11/04/2012, it is mentioned the trust registration No.5539 dated 01/08/1996. After hearing the rival submissions and the documents filed by the assessee during the course of hearing, it would be appropriate if the matter is restored back to the file of ld.DIT(E) for fresh decision. The order of ld.DIT(E) is hereby set aside and the appeal is restored back to the file of DIT(E) for fresh decision. The DIT(E) is directed to consider the documents as filed by the assessee, i.e. deed of trust and decide this issue in the light of various case-laws relied upon by the ld.counsel for the assessee. The assessee shall furnish all the required details in support of its contention before the ld.DIT(E). Thus, grounds of assessee’s appeal are allowed for statistical purposes only.
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2013 (12) TMI 1546
Estimation of accrued interest on NPAs - Held that:- Assessee was justified in contending for amortization of premium paid in excess of face value of securities held to maturity (HTM) category or period remaining till maturity was found reasonable by the CIT(A). Accordingly addition made by the Assessing Officer by disallowing amount towards amortization of Government Securities (HMT) was deleted.
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