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Income Tax - Case Laws
Showing 81 to 100 of 641 Records
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2014 (12) TMI 1255 - ITAT MUMBAI
Rejection of claim for deduction u/s 54 of the Act in respect of second house property - Held that:- The flats were having door numbers 103 and 104 i.e they were contiguous to each other. Further they were combined into one unit having common kitchen. Under these set of facts, the Hon’ble High Court in the case of Devdas Naik [2014 (7) TMI 173 - BOMBAY HIGH COURT] has held that both the units should be considered as one unit and hence the assessee was entitled for deduction u/s 54 of the Act. The ratio of these decisions shows that the Hon’ble jurisdictional High Court has expressed the view that the deduction u/s 54 / 54F shall be available only in respect of one residential house only. If two different contiguous flats are combined together into a single unit, then the deduction u/s 54 and 54F shall be available in respect of the cost of both the flats combined together.
There is no doubt that the decision rendered by the Jurisdictional High Court is binding on all authorities and assessees falling under the purview of that High Court. In the instant case, the flats purchased by the assessee were located at two different places. It was not a case of combining of two contiguous flats. Hence, we are unable to follow the decisions rendered by the Hon’ble Karnataka High Court, which was relied upon by the assessee, since the said decisions are contrary to the decision rendered by the Hon’ble jurisdictional Bombay High Court in CIT Vs. Khoobchand M Makhija [2013 (12) TMI 1525 - KARNATAKA HIGH COURT] . Accordingly we uphold the order of the ld. CIT(A) on this issue, since it is in accordance with the decision rendered by the Hon’ble Bombay High Court. Accordingly, we hold that the assessee shall be entitled for deduction u/s 54 of the Act only in respect of one residential flat.
Assessment of value of two garages for the purpose of computation of capital gains - Held that:- We notice from the assessment order that the AO has computed the sale consideration relating to garages purely on surmises and conjuncture without bringing any material on record to show that the assessee had received any money separately for garages over and above the amount declared in the agreement. Hence, we are of the view that the ld. CIT(A) was not justified in confirming the assessment of value of the garages, which was assessed purely on presumptive basis. The alternative view taken by the AO that the cost pertaining to the garages has to excluded from the cost as on 1.4.1981 is also based on surmises and conjecture and hence we are of the view that the ld. CIT(A) was not justified in confirming the alternative view of the AO also. Accordingly, we set aside the order of ld. CIT(A) on this issue.
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2014 (12) TMI 1252 - GUJARAT HIGH COURT
Deduction u/s 80HHC - whether Appellate Tribunal is justified in holding that the “total turnover” for the purposes of reduction u/s.80HHC will not include Central Sales Tax, Gujarat Sales Tax and Excise Duty even after insertion of Section 145A - Held that:- This question of law raised for consideration in the present Tax Appeal is now not res integra in view of the decision of this Court in the case of Commissioner of Income-tax vs. Meghmani Organics Ltd [2014 (3) TMI 29 - GUJARAT HIGH COURT] wherein has held that excise duty is required to be excluded from the ‘total turnover’ for the purpose of computation of deduction u/s. 80HHC. Also see Pogagen and Nagarsheth [2014 (3) TMI 934 - GUJARAT HIGH COURT]
Allowance of expenditure claimed on repairs of building - Held that:- It is a settled position of law that the expenditure to preserve and maintain an already existing asset would constitute repairs. We are of the opinion that the Tribunal was justified in considering the replacement of flooring amounting to ₹ 1,30,500/- and replacement of wall amounting of ₹ 1,92,920/- as revenue expenditures. However, we find that the Tribunal has committed an error in not considering the expenses incurred for erection of new wall to the tune of ₹ 1,40,000/- and erection of wall to the tune of ₹ 1,68,000/- as capital expenditure. The CIT(A) has proceeded on the footing that the company had erected fencing wall long back with barbed wires with cement poles and was capitalized and that after a long period it was necessary to repair the same by re-erection using old major materials liked barbed wires etc. The CIT(A) observed that in the process the company spent on repairing without bringing out any new asset in existence. The Tribunal has confirmed the said finding. We, however, do not agree with the said findings. The expenditure incurred on erection of wall is required to be termed as capital expenditure.
The expenditure incurred in replacement of flooring and replacement of wall will be considered as revenue expenditures whereas expenses incurred for erection of new wall and erection of wall to the tune shall be considered as capital expenditure. Moreover, excise duty is required to be excluded from the ‘total turnover’ for the purpose of computation of deduction u/s. 80HHC of the Act
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2014 (12) TMI 1250 - GUJARAT HIGH COURT
Short term capital loss on sale of mutual funds within one day after earning tax free dividend income thereon - Held that:- We hold that the Tribunal was right in allowing the short term capital loss on sale of mutual funds within one day after earning tax free dividend income thereon. See CIT., Mumbai Versus M/s. Walfort Share & Stock Brokers P. Ltd. [2010 (7) TMI 15 - SUPREME COURT ] - Decided in favour of assessee
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2014 (12) TMI 1249 - ITAT MUMBAI
Claim of set off of loss of earlier years incurred on derivative transactions to adjust against profit earned on derivative transactions of current year - Held that:- It is not in dispute that the assessee has earned profit from the same business in which losses were incurred in the earlier years. The loss brought forward during all these years and gain made during the year is having same nature. There is no change in the nature earning of income during the year. In all the preceding years he was incurring losses in futures and options transactions but in current year he made gain. Nothing was brought on record by AO to allege that profit earned during the year was not out of future and option transaction. Thus the assessee was entitled to set off the carried forward losses of earlier assessment years against profits of the same business in this assessment year.
The classification of business for the limited purpose of set off of past losses, into speculative and non-speculative is to be done on uniform basis and losses incurred in the same business in earlier assessment years are to be treated as eligible for set off against profit of the same business in the subsequent assessment years. For this reason also the assessee deserves to be allowed to set off of brought forward losses from business of dealing in derivatives, incurred in assessment years prior to assessment year 2006-2007 against profit of the same business in current assessment year 2006-2007. Thus speculative losses made on future option transactions in earlier years are eligible to be allowed to set off against the business income of future option transactions of current year. Based on the same in the present case the assessee is entitled to set off the carried forward losses of earlier year from the same business against profit of the business in this assessment year. - Decided in favour of assessee
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2014 (12) TMI 1246 - GUJARAT HIGH COURT
Addition made on account of difference in stock - difference in statement as furnished before the bank as compared to shown in books of account for availing higher credit facility - Held that:- As in the case of Riddhi Steel and Tubes (2013 (10) TMI 291 - GUJARAT HIGH COURT ) it is held by this Court that only on account of inflated statements furnished to the banking authorities for the purpose of availing of larger credit facilities, no addition can be made if there appears to be a difference between the stock shown in the books of account and the statement furnished to the banking authorities. Accordingly, the question is answered in the affirmative i.e. against the appellant – revenue and in favour of the assessee.
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2014 (12) TMI 1245 - ITAT CHENNAI
Eligibility to claim deduction under sec.80IA - Held that:- We find that the issue in appeal has already been considered and decided in favour of the assessee by the Hon’ble Jurisdictional High Court in the case of Velayudhaswamy Spinning Mills [2010 (3) TMI 860 - Madras High Court ].- Decided in favour of the assessee.
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2014 (12) TMI 1244 - ITAT MUMBAI
Revision u/s. 263 - taxability of the amount received by the assessee on retirement from the partnership firm - Assessing Officer accepted the contention that the amount received was not taxable - Held that:- Assessing Officer conducted an enquiry on the issue of taxability the amount received by the assessee on retirement from these two partnership firms and examined the deed of retirement and reconstitution as well as the submissions of the assessee. It is manifest from the notice issued u/s 142(1) along with questionnaire, reply furnished by the assessee along with the relevant documents on the point that the Assessing Officer has examined the issue and then accepted the claim of the assessee. Therefore, it is not a case of lack of enquiry. Even the CIT has also not alleged that the Assessing Officer has not conducted any enquiry. Once the case does not fall under the category of lack of enquiry then the revisionary powers u/s 263 can be invoked by the CIT only when the claim of assessee allowed by the Assessing Officer is impermissible under law. It is settled legal proposition of law that if two views are possible on an issue and Assessing Officer has taken one of the possible views then the Commissioner has no jurisdiction to revise the order of Assessing Officer on the ground that he did not agree with the view taken by the Assessing Officer.
As decided in Tribhuvandas G. Patel Versus Commissioner of Income-Tax [1996 (2) TMI 16 - SUPREME Court] even where a partner retires and some amount is paid to him towards his share in the assets, it should be treated as falling under clause (ii) of section 47.
The view taken by the Assessing Officer on this question of taxability of the amount received by the assessee on retirement from the partnership firm is certainly not an impermissible or impossible view rather the view taken by the Assessing Officer is a proper and more logical view as it is fortified by the series of decisions of Hon'ble Supreme Court, Hon'ble High Court as well as of this Tribunal. There is no quarrel on the point that if the Assessing Officer has failed to apply his mind and taken a view which is not permissible under the law then the order will be considered as erroneous so far as prejudicial to the interest of revenue. However, when the Assessing Officer has conducted an enquiry and taken a possible and rather a proper view then the Commissioner is not permitted to exercise the revisionary powers u/s 263 merely on the ground that he does not agree with the view taken by the Assessing Officer or even on the ground that there are divergent view on the issue. - Decided in favour of assessee.
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2014 (12) TMI 1242 - ITAT MUMBAI
Reopening of assessment - addition based on information received regarding the collation and dissemination of information from Foreign Tax Authorities(U.S. tax authorities) towards transaction carried out with Bridgewater, New Jersey, USA - Held that:- Since the AO’s reopening was based on tangible material received by AO from US tax authorities, it cannot be said that there was mere change of opinion. The CIT(A) upheld the reopening of assessment. We also found that after receipt of information from US tax authorities, the AO compared the information which he had in the record and informed some receipts from US authorities, which were not matching with regard to the names and account of transaction. Thus, it cannot also be said that there was true and correct disclosure by the assessee in the return of income. Accordingly, we do not find any infirmity in the reopening of the assessment u/s.147.
We found that aggregate transaction value of design services provided to the group company were USD 221,223, account copies of break up of the Revenue received from various countries in India and also from other countries were furnished before the AO. While making addition, the AO could not prove that this transaction is not part of the transactions which is shown by the assessee as Revenue which was built to Aker Kvaerner Pharmaceuticals which was on the same address i.e. Bridgewater, New Jersey, USA. We also found that the aggregate transaction value of USD 221,223 with its group company Aker Kvaerner Pharmaceuticals for the year reflected in contract revenue and offered to tax was much higher than the amount of USD 43,592 indicated in the notice. Thus, the aggregate contract revenue reflected by the assessee in its books and already offered to tax is more than the transaction value provided. Accordingly, the addition of USD 43,592 made by the AO is tantamount to double taxation of the very same income. The detailed finding recorded by the CIT(A) at para 4.3 has not been controverted. Accordingly, we do not find any reason to interfere in the order of CIT(A) for deleting the addition of USD 43,592.
Disallowance u/s 14A - Held that:- We found that the CIT(A) while dealing with the issue has observed that assessee invested an amount of ₹ 23,19,77,841/- for earning the exempt income and invested ₹ 22,33,76,732/- in growth funds of mutual funds. Grow funds of the mutual funds are taxable under the Act. The assessee receives the income in the short term or long term capital gains based on the time the assessee keeps its investments. Hence, investment under growth scheme cannot be considered as investment in income which does not form part of the total income, as this income is taxable, the expenditure incurred for it cannot be disallowed as this will not come under purview of sec.14A. Therefore, the CIT(A) directed the AO to exclude the investment from the growth fund while applying the Rule 8D and restricted the disallowance to ₹ 1,47,887/-. From the observation of the CIT(A), we found that the investments in mutual fund with growth scheme have not generated any tax-free dividend income, therefore, the CIT(A) has rightly excluded the same from the total value of investments. Accordingly, we do not find any reason to interfere in the order of the CIT(A)
Accrual of income - Addition on reversal of Income and the expenses of earlier years - CIT(A) deleted the addition - Held that:- We do not find any infirmity in the order of CIT(A) insofar as he has brought to tax income of the prior year and at the very same time directed the AO to allow expenditure of prior period. The detailed finding recorded by CIT(A) has not been controverted. Accordingly, we do not find any reason to interfere in the order of CIT(A)
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2014 (12) TMI 1238 - PUNJAB AND HARYANA HIGH COURT
Rate of depreciation - 80% or 15% - Renewable energy device - nature of power evacuation infrastructure attached to a wind mill - Held that:- See order of even date passed in Commissioner of Income Tax -I, Ludhiana Vs. M/s Eastman Impex.[ 2015 (1) TMI 436 - PUNJAB & HARYANA HIGH COURT]
A wind mill, which is admittedly a source of renewable energy, cannot possibly function without power evacuation infrastructure and, therefore, to hold that it is not integral to a wind mill would be travestying of facts and justice. It would be necessary to clarify that we are not dealing with an ordinary device, where transmission lines and electricity generation devices are involved but a wind mill, which obviously cannot supply electricity without power evacuation infrastructure as integral to its very functioning and user. ITAT was justified in law, in upholding the order of the Ld. CIT(A) wherein disallowance of higher depreciation @ 80% on account of expenditure on installation of electrical line for power transmission and metering treated as not part of wind mill by the A.O., was deleted by the CIT(A)- Decided against Revenue
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2014 (12) TMI 1237 - ITAT MUMBAI
Sale of shares - Short term capital gain or business income - Held that:- It is an admitted fact that around 90% of the total gains is from sale of the shares of FCS Softwares Solutions Ltd.
It is also an undisputed fact that the assessee had applied in the shares of the IPO of the said company from borrowed capital. Merely because the shares were applied through borrowed capital cannot be a ground for treating the capital gains as business income. The IPO funding availed by the assessee was to get more allotment but the fact of the matter is that the assessee was an investor and the sole intention of applying in the shares through IPO was to get higher allotment of shares. We also find that there are no repetitive purchase and sale of the same script which means that there is no churning of shares. The total number of days utilized by the assessee for investment in shares is 32 days. Considering all these facts in totality, we do not find any reason to treat the assessee as a trader. We, therefore set aside the findings of the Ld. CIT(A) and direct the AO to treat the Short Term Capital Gain on sale of shares as declared by the assessee. - Decided in favour of assessee.
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2014 (12) TMI 1236 - ITAT PUNE
Expenditure pertaining to employee stock purchase scheme disallowed - Held that:- There is no dispute to the fact that the assessee in the impugned assessment year has issued 7590 equity shares to its employees at concessional price of R.100/- each under ESPS against the prevalent market price of ₹ 850/- per share. The difference amount of ₹ 53.92 lakhs has been debited by the assessee company as business expenditure. We find the Bangalore Special Bench of the Tribunal in the case of Biocon Ltd., (2013 (8) TMI 629 - ITAT BANGALORE) while deciding an identical issue has held that discount on issue of Employee Stock Option Plan (ESOP) is allowable as deduction in computing the income under the head “profits and gains of business or profession”.
It is on account of an ascertained liability and it cannot be treated as a short capital receipt. While doing so, the Special Bench of the Tribunal has also considered the decision of the Delhi Bench of the Tribunal in the case of Ranbaxy Laboratories Ltd. (2009 (7) TMI 1273 - ITAT DELHI) which has been relied on by the CIT(A) while rejecting the claim of the assessee.Respectfully following the decision of the Bangalore Special Bench of the Tribunal and in absence of any distinguishable features brought to our notice by the Ld. DR, we set-aside the order of the CIT(A) on this issue and direct the AO to allow the claim of expenditure - Decided in favour of assessee
Disallowance of Warranty Provision in normal tax computation - Held that:- The Hon’ble Supreme Court in the case of Rotork Controls Pvt. Ltd. (2009 (5) TMI 16 - SUPREME COURT OF INDIA ) has held that when large number of sophisticated goods are manufactured and sold with warranty and the past records show that defects existed in some of the items, the provision made by the assessee for warranty claims on the basis of past experience is an allowable deduction u/s.37. The various decisions relied on by the Ld. Counsel for the assessee also support the case of the assessee. Since the assessee in subsequent years has incurred expenditure against such warranty provision, therefore, we do not find any justification in the order of the CIT(A) restricting the disallowance to ₹ 44,94,000/- which was the amount outstanding as on 31-03-2003,i.e. after a period of 12 months from the end of the accounting year. We accordingly set-aside the order of the CIT(A) on this issue and direct the Assessing Officer to delete the entire disallowance - Decided in favour of assessee
Disallowance of Warranty Provision in computation of tax as per the provisions of section 115 JB - MAT - Held that:- CIT(A) while deciding the appeal found that assessee has subsequently incurred an amount of ₹ 65,84,078/- towards stamp duty on adjudication of court order and another ₹ 4,95,610/- towards professional fees. Therefore, he held that an amount of ₹ 70,84,078/- cannot be considered as unascertained contingent liability for which he allowed 1/5th of such expenditure as deduction u/s.35DD. The Ld. Departmental Representative could not controvert the above factual findings given by the Ld.CIT(A). Accordingly, the order of the CIT(A) is upheld on this issue and the ground raised by the Revenue is dismissed. - Decided in favour of assessee
Treatment to software expenditure - revenue or capital expenditure - Held that:- The issue stands squarely decided in favour of the assessee by the decision of the Hon’ble Bombay High Court in the case of CIT Vs. Lubrizol India Ltd.(2015 (8) TMI 134 - BOMBAY HIGH COURT) where it has been held that expenses incurred to obtain the application software which has to be upgraded from time to time due to change in technology has to be allowed as revenue expenditure. - Decided in favour of assessee
Adhoc additions on account of car expenses, communication expenses, and workman & staff welfare costs - Held that:- We find the issue stands decided in favour of the assessee by the decision of Sayaji Iron and Engineering Company Vs. CIT reported [2001 (7) TMI 70 - GUJARAT High Court ] where it has been held that partial disallowance of expenditure for maintenance of vehicles in case of a private limited company cannot be made. Addition, if any can be made in the hands of the concerned directors as perquisites but cannot be disallowed in the hands of a limited company. - Decided in favour of assessee
Unutilized CENVAT credit not be treated as income of the assessee - CIT(A) deleted the disallowance - Held that:- CIT(A) while allowing the claim of the assessee has also followed the decision of Chandigarh Special Bench of the Tribunal in the case of DCIT Vs. Glaxo Smithkline Consumer Health care Ltd. reported in [2007 (7) TMI 334 - ITAT CHANDIGARH ]. Further, the Pune Bench of the Tribunal in assessee’s own case has allowed the issue of unutilized Modvat credit in favour of the assessee for A.Y. 1993-94. The Ld. Departmental Representative could not bring any distinguishable features so as to take a different view than the view taken by the Ld.CIT(A). - Decided in favour of assessee
Addition on account of provision for discount on sale - Held that:- Since the Ld. Departmental Representative could not controvert the finding given by the Ld.CIT(A) that as against provision of ₹ 1.09 crores, the assessee has made payment to the tune of ₹ 1.11 crores towards the provision for discount on sales, therefore, under the facts and circumstances of the case, we find no infirmity in the order of the CIT(A) deleting the disallowance made by the AO. - Decided in favour of assessee
Addition on account of loss in Foreign Exchange Rate Fluctuation - Held that:- Hon’ble Supreme Court in the case of CIT Vs. Woodward Governor India Pvt. Ltd., reported in [2009 (4) TMI 4 - SUPREME COURT ] has held that losses suffered by the assessee on account of fluctuation in the rate of foreign exchange as on the date of the balance sheet is an item of expenditure u/s.37(1) of the I.T.Act. Considering the fact that loss amounting to ₹ 72,10,000/- was incurred by the assessee on account of foreign exchange rate fluctuation in respect of import and export transactions made during the year we find no infirmity in the order of the CIT(A) allowing the claim of loss of ₹ 72,10,000/- on account of foreign exchange rate fluctuation as a revenue expenditure. - Decided in favour of assessee
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2014 (12) TMI 1232 - BOMBAY HIGH COURT
Allowability of premium paid on premature redemption of debentures - Held that:- The premium was paid on premature redemption of debentures. The expenditure was incurred in the previous year and was termed to be a allowable deduction. The Tribunal held that in the case of Madras Industrial Investment Corporation Ltd. vs. Commissioner of Income Tax (1997 (4) TMI 5 - SUPREME Court ), which was the other Judgment relied upon by the Revenue, the facts were that the Assessee issued debentures at a discount and was bound to repay them at face value value, after a period of 12 years.
The question that arose for consideration was as to whether the entire discount had to be paid in the year of redemption or whether the same had to be spread over, namely, the period for which the debentures were issued. The findings and conclusions of the Hon'ble Supreme Court were distinguished by the Tribunal and in our opinion, rightly. That was done to deal with the two contentions of the Revenue, namely that the expenditure was capital in nature and alternatively even if it is considered to be revenue expenditure, it should have been spread over the duration or the entire period of the debentures. Meaning thereby, the date on which the debentures could become redeemable as per its terms. The Tribunal held that if the debentures were redeemed by the Assessee prior to the period for which they were issued and there was a mutual arrangement for premature redemption thereof, then, the amount of premature redemption or premature redemption premium cannot be said to be a capital expenditure and need not be spread over. - Decide against revenue
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2014 (12) TMI 1229 - ITAT CHENNAI
Registration under section 12A - whether the depreciation is allowable on the fixed assets, when the entire cost of assets have already been claimed as application of income towards objects of the trust? - Held that:- Such claims of depreciation, do not result in double deduction i.e., depreciation and capital expenditure on fixed assets. - Decided in favour of assessee.
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2014 (12) TMI 1227 - ITAT DELHI
Eligibility for deduction u/s 80P - Held that:- We find that total income earned by the assessee included income on fixed deposits placed with Bombay Mercantile Bank, interest income from a scheduled bank and dividend income from Delhi Cooperative Bank. From the certificate as placed we find that Bombay Mercantile Cooperative Bank is a cooperative society registered under Maharashtra Cooperative Societies Act and we further find that the said society has been assessed u/s 143(3) as a cooperative society and its income was allowed to be exempt u/s 80P(2)(i) as held for Assessment Year 1990-91 and 1991-92 and for Assessment Year 1997-98/
Therefore it is held that fixed deposits placed with Bombay Mercantile Bank falls within the exemption granted by Section 80P(2)(d) of the Act. The assessee was also eligible under the provisions of Section 80P(2)a(i) as the funds placed by assessee in the form of fixed deposits can be said to be kept for the purpose of business of the assessee as the assessee had availed credit facilities also against such fixed deposits which were again used for the purpose of business of assessee - Decided against revenue
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2014 (12) TMI 1226 - ITAT MUMBAI
Loss on account of Mark-to-Market loss - allowance of claim on valuation of forward exchange contracts on the closing date of the accounting year by CIT(A) - Held that:- The learned CIT(A) followed the decision of DCIT vs. Bank of Bahrain and Kuwait (2010 (8) TMI 578 - ITAT, MUMBAI) and also the decision of CIT vs. Woodward Governor India Pvt. Ltd. [2009 (4) TMI 4 - SUPREME COURT ] to hold that the liabilities for foreign exchange was incurred during the normal course of assessee’s business and in fact the gain earned on such revaluation having been accepted and brought to tax in the respective years, there is no reason to arrive at a different conclusion in this year merely because there is a loss. He accordingly correctly directed the AO to allow the impugned claim of the assessee. - Decided against revenue
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2014 (12) TMI 1224 - GUJARAT HIGH COURT
TDS u/s 19C - TDS on payments made by the farmer’s Samiti in respect of various expenses including labour charges, transport charges, insurance charges etc. on behalf of farmers - Held that:- The supply of sugarcanes at the gates of factories of the respective assesses was a part of sale transaction, and therefore, we are of the opinion that the assesses are not liable to deduct TDS. See COMMISSIONER OF INCOME TAX (TDS) Versus KRISHAK BHARATI COOPERATIVE LIMITED [2012 (10) TMI 655 - GUJARAT HIGH COURT] - Decided in favour of assessee
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2014 (12) TMI 1217 - ITAT PUNE
Disallowance of amortization expenditure on purchase of ' Govt. Securities and paid as premium - Held that:- The assessee is entitled to the claim of deduction on account of amortization of premium paid on Government securities held in HTM category. See Commissioner of Income Tax-2, Mumbai Versus HDFC Bank Ltd. [2014 (8) TMI 119 - BOMBAY HIGH COURT ] - Decided in favour of assessee
Disallowance being donation and subscription - Held that:- We find no merit in the claim of the assessee, where only a provision for donation and subscription to the extent of ₹ 5,00,000/- had been made in the books of account and no actual expenditure has been incurred by the assessee. Merely because the Board of the a- Bank had passed a resolution for incurring the said expenditure, does not entitle the assessee to the said claim in the absence of having incurred any expenditure on donation and subscription - Decided against assessee
Disallowance on account of staff voluntary payment - Held that:- Where the assessee in recognition of the services provided to its retiring employees make certain ex-gratia payments in recognition of their services, which are not based on any scheme or instruction formulated by the employer assessee, then the same partakes the nature of profit in lieu of salary. The relationship between the assessee and retiring employees was admittedly as of employer and employee and the remuneration paid to such employees is part of the salary due to the said employee. Even the ex-gratia payment made by the assessee over and above the remuneration due to the employees partakes the character of profits in lieu of salary to such employee and is duly allowable as an expenditure in the hands of the assessee under section 37(1) of the Act. We find no merit in the stand of the CIT(A) that such expenditure is capital in nature. Reversing the order of the CIT(A), we direct the Assessing Officer to allow the expenditure - Decided in favour of assessee
Disallowance invoking the provisions of section 40(a)(ia) - Non TDS on expenditure on study tour programme of directors - Held that:- First step to be taken into consideration is whether the expenditure incurred by the assessee is relatable to the business carried on by the assessee and after verifying the nature of the expenditure, the second step is whether the said expenditure is subject to deduction of tax at source. Merely because the assessee on its own motion had deducted tax at source, though in succeeding year, does not warrant the disallowance of said expenditure in the captioned assessment year. After going through the details furnished by the assessee, we are of the view that the plea of the assessee in this regard needs to be looked into i.e., the Assessing Officer should first examine the nature of the expenditure and its allowability i.e., being incurred for the purpose of carrying of the business and thereafter adjudicate whether the same should be subject to tax deduction at source. In view thereof, we set aside this issue back to the file of the Assessing Officer to re-adjudicate the same - Decided in favour of assessee for statistical purposes.
Disallowance of directors and staff for training programme - Held that:- Where the expenditure has not been identified then the provision made for directors and staff training programme, even in cases where the assessee was following mercantile system of accounting, the same being unascertained liability, is not allowable under section 37(1). - Decided against assessee
Addition made on account of unpaid amount out of provisions - CIT(A) delted the addition - Held that:- D.R. has failed to controvert the finding of the CIT(A) except for stating that the provision made cannot be allowed as deduction. We find no merit in the plea of the Revenue in this regard and uphold the order of the CIT(A) - Decided against revenue
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2014 (12) TMI 1214 - BOMBAY HIGH COURT
Interpretation of section 80-IB(10)(d) - Effect of amendment w.e.f. 01.04.2005 - Held that:- The controversy or issue in the above Appeals is covered either by a Division Bench judgment to which one of us (S.C.Dharmadhikari,J.) was a party rendered in M/s. Happy Home (2014 (9) TMI 707 - BOMBAY HIGH COURT ) or another Division Bench judgment of in Commissioner of Income Tax V/s. M/s. Vandana Properties [2012 (4) TMI 54 - BOMBAY HIGH COURT ] held that section 80-IB(10)(d) is prospective in nature and can have no application to a housing project that is approved before 31st March, 2005 - clause (d) of section 80-IB(10) is inextricably linked to the date of the approval of the housing project and the subsequent development/construction of the same, and has nothing to do with the profits derived therefrom - Decided against revenue
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2014 (12) TMI 1212 - ITAT MUMBAI
Transfer pricing adjustment - choice of comparable - Held that:- M/s. Artefact Projects Ltd. company is having a very high percentage of related party transaction, it cannot be considered as a comparable. We accept the contention of the Ld. Counsel and direct for the exclusion of this company from the final list of comparables.
M/s.NTPC Electric Supply Ltd is a Government of India enterprise and is involved in enhancing and bringing sectoral reforms process and has been participating in various projects of distribution, infrastructural development programmes under consultancy assignments. Considering all these facts, this company is not functionally comparable. It is therefore directed to exclude this company from the final list of comparables.
RITES Limited be excluded from the final list of comparables as it is in providing engineering services and to end to end solutions and therefore not functionally comparables with marketing support services.
Water & Power Consultancy Services (India) Ltd. (Seg) be excluded from the final list of comparables as main fields of specialization of this company covered irrigation of drainage, flood control and Land Reclamation, River management dams, Reservoir Engineering and Barrages, Integrated Agriculture development, Watershed management, Hydropower and Thermal Power Generation, Power Transmission and Distribution , Rural Electrification, Ground Water Exploration, Minor irrigation etc
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2014 (12) TMI 1211 - PUNJAB & HARYANA HIGH COURT
Genuity of gifts - whether ITAT was right in law in directing the A.O. to reconsider the genuineness of the gifts when the addition made by treating the gift as not genuine is justified? - Held that:- Counsel for the parties are ad-idem that as the Tribunal has based its opinion on an earlier order which has been set-aside, it would be necessary for the Tribunal to adjudicate the appeal filed by the assessee afresh and in accordance with law.
In view of the consensus between counsel for the parties, the appeals are allowed. The order passed by the ITAT is set-aside and the Tribunal is directed to decide the appeals afresh and in accordance with law within six months from the date of receipt of a certified copy of this order.
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