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Income Tax - Case Laws
Showing 1 to 20 of 594 Records
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2014 (5) TMI 1230
Revision u/s 264 - refund claim as exemption u/s 10(10C) and 89 denied but latter on allowed - issue of law as decided in favour of the assessee in another matter by this Court in the year 2008 and by the Apex Court in the year 2009 - assessee filed the application u/s 154 for rectification of the assessment order which was rejected and petitioner filed a revision u/s 264 to the Commissioner of Income Tax, for refund - whether the petitioner is entitled to enforce that remedy in the manner in which she has done? - HELD THAT:- In a similar matter, a Division Bench of this Court in the case of Devdas Rama Mangalore [2014 (2) TMI 132 - BOMBAY HIGH COURT] granted complete relief, including an order of refund.
The only difference between this case and that case is that, in that case, the petitioner had made an application for condonation of delay under Section 119 (2) (b) of the Income Tax Act, which was rejected, in view of the circular issued by the CBDT. In the case before us, the course adopted was under Section 264 of the Act.
The course adopted by the petitioner in the facts and circumstances of the present case was valid. We allow the petition by directing the respondent to allow refund due to the petitioner.
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2014 (5) TMI 1228
Addition u/s 14A r.w.r. 8D - claim of the assessee was that no expenditure had been incurred by it to earn the exempt income - HELD THAT:- Undoubtedly, the assessee had not accounted for any expense. AO applied the provisions of Section 14A r.w.r. 8D of the Rules. The issue is as to whether these provisions are applicable to an assessee, who has been admitted to be a dealer in shares, as has been done by the AO in the present case.
In ‘CCI Ltd.’ [2012 (4) TMI 282 - KARNATAKA HIGH COURT] has held that if the assessee is a dealer of the shares and securities, it cannot be said that the purchases of the shares and holding of shares made by it were for the purpose of earning of dividend income; and that hence, the expenditure incurred in acquiring these shares cannot be disallowed u/s 14A - like in the present case, it was the admitted position that the assessee was a dealer in shares and securities. ‘CCI Ltd.’ (supra) was followed by the Ahmedabad Bench of the Tribunal in ‘Hina Nitin Parikh’ [2013 (7) TMI 514 - ITAT AHMEDABAD] - Decided in favour of assessee.
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2014 (5) TMI 1225
Accrual of income - Derecognition of interest on accrual basis on Non-Performing Assets (NPAs) - HELD THAT:- As the question of law is covered against the Revenue by two decisions, i.e. CIT v. Vasisth Chay Vyapar Ltd. and Anr. [2010 (11) TMI 88 - DELHI HIGH COURT] and DIT v. Brahmaputra Capital Finance Ltd. [2011 (5) TMI 321 - DELHI HIGH COURT]
Provision for doubtful debts for NPAs - As far as the second aspect goes, we notice that the Revenue had succeeded before the ITAT in light of the judgment of the Supreme Court in Southern Technologies Ltd. [2010 (1) TMI 5 - SUPREME COURT] - The Revenue is not in appeal in respect of that question. Following the decision in Vasist Chay Vyapar Ltd. (supra) and Brahmaputra Capital Finance Ltd. (supra), the question of law urged by the Revenue is answered against it and in favour of the assessee.
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2014 (5) TMI 1224
Assessment framed u/s 158BC - Deposits made in the bank accounts against sale of shares - HELD THAT:- We have already upheld the addition of Rs. 38,099/- and also are in conformity with the order of CIT (Appeals) with regard to Rs. 30,000/-. The addition of Rs. 33,000/- in the hands of the assessee is also justified in the absence of any proof being filed by the assessee with regard to the availability of the cash in hand. In addition to the three additions upheld by the Commissioner of Income Tax (Appeals), we further uphold the addition relatable to the deposits made in the bank accounts against sale of shares totaling Rs. 141,667/-. In view thereof, we partly allow the ground of appeal No. 1 raised by the revenue.
Cash deposits in the bank account which was claimed to be out of tuition fee - HELD THAT:- By rejecting the plea of the assessee that it had made cash withdrawals on earlier dates and the said cash was available with the assessee. Consequently, ground Nos. 3, 4 and 5 raised by the assessee are dismissed.
Unexplained investment in the property - HELD THAT:- The assessee claimed that regarding its income for the year 1996-97 was more than its outgoing and in view of the assessee having spent Rs. 56,302/- against bills on various dates, no addition was made by the Commissioner of Income Tax (Appeals). We are in conformity with the order of the Commissioner of Income Tax (Appeals) in this regard specially after the verification exercise carried out by the Commissioner of Income Tax (Appeals) during the appellate proceedings. Upholding the order of Commissioner of Income Tax (Appeals) we dismiss ground No. 2 raised by the revenue.
Unexplained investment of FDR in the name of the wife of the assessee - HELD THAT:- Commissioner of Income Tax (Appeals) accepted the plea of the assessee in view of the said withdrawals which had been verified by the Assessing Officer and also in view of the approximate income of Rs. 75,000/- from different sources being available with the assessee. The ld. DR for the revenue has failed to controvert the findings of Commissioner of Income Tax (Appeals) and in view thereof, we find no merit in ground No. 3 raised by the revenue.
Unexplained investment in the purchase of household items - HELD THAT:- Addition was deleted by the Commissioner of Income Tax (Appeals) as approximately Rs. 70,000/- for the purchase of various items was paid through cheques and balance amount was held to be out of the known sources of income. We find no merit in ground No. 4 raised by the revenue in this regard in view of the abovesaid facts and circumstances and same is dismissed.
Investment in purchase of cars - HELD THAT:- In Remand proceedings, remand report was called for and the Assessing Officer accepted the payment of Rs. 107,109/- paid towards the purchase of Maruti car and the said investment was treated as explained. With regard to the second Maruti car, it was noted by the Commissioner of Income Tax (Appeals) that the new car was purchased on 11.09.1996 and the old car was sold on 08.12.1996 hence, the new car being purchased before the sale of the old car, does not justify the claim of the assessee and an addition of Rs. 77,153/- was upheld in this regard. In the totality of the facts and circumstances and in view of the remand report, we find no merit in the ground of appeal No. 5 raised by the revenue and the same is dismissed. We also find no merit in the issue raised by the assessee vide ground No. 6 where the old car was sold later than the date of purchase of the new car and consequently, the said sale proceeds of old car not being available with the assessee, the claim in this regard was not justified. We uphold the addition of Rs. 77,153/- and dismiss ground No. 6 raised by the assessee.
Investment in purchase of jewellery - HELD THAT:- The assessee had purchased an item of jewellery from the jewellery and the Assessing Officer had made the addition in the absence of any explanation of sources of investment. The Commissioner of Income Tax (Appeals) deleted the addition because of the salary drawn by the assessee. In the entirety of the abovesaid facts and circumstances, we find no merit in ground No. 6 raised by the revenue.
Unexplained investment in plot - HELD THAT:- In the absence of any details, the cost of acquisition of the plot was taken at 'nil' by the Assessing Officer and the entire sale consideration was treated as income from capital gains. The Commissioner of Income Tax (Appeals) noted that in the remand proceedings vis-à-vis the various bank deposits, the Assessing Officer has noted that Rs. 30,000/- had come from sale proceeds of the above land which was purchased in the year ending 31.3.1987. The loss on the sale of the plot was claimed at Rs. 5,000/- as the assessee had shown the cost at Rs. 35,000/-. In view thereof, the addition was deleted by the Commissioner of Income Tax (Appeals). We find no error in the order of the Commissioner of Income Tax (Appeals) and upholding the same, we dismiss ground No. 7.
Addition made in the hands of the assessee on account of a hand written document found during the course of search which reflected that the assessee had sold property - HELD THAT:- Where the document was found from the possession of the assessee, the presumption is that the said document belongs to the assessee and the onus is upon the assessee to explain the nature of the document. In the instant case, the hand written document found from the possession of the assessee was claimed to be a dumb document as no proof of the property or date of the transaction was mentioned in said property - no evidence was found by the Department to establish its case of transfer of remittance of Rs. 10 lacs to London.
In the absence of any corroborative evidence found to establish that the assessee as owner of any property, had sold the said property or his share in property for a sum no addition on the basis of such document, which clearly is a dumb document, could be made in the hands of the assessee. Upholding the order of Commissioner of Income Tax (Appeals), we dismiss the ground of appeal No. 8 raised by the revenue.
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2014 (5) TMI 1223
Default u/s 201(1) and 201(1A) - Alternate remedy - as argued 15% trade discount allowed by the petitioner to the advertising agencies was not payment of commission within the meaning of section 194H therefore, the authorities had no jurisdiction to initiate proceedings under sections 201(1)/201(1A) - HELD THAT:- We are not inclined to entertain this petition as the petitioner has a statutory alternative remedy of filing an appeal before the CIT and a further appeal to the Income Tax Appellate Tribunal, if required. In the judgment rendered in Jagran Prakashan [2012 (5) TMI 488 - ALLAHABAD HIGH COURT] the notice issued to the petitioner was in respect of section 194H alone. In the present case, as noticed above, apart from section 194H, the notice was issued under various other provisions of the Act. The impugned order elaborately deals with each of the provisions and has found that the assessee has failed to deduct TDS under each of these heads.
As various factual aspects relating to the imposition of duty under these sections have been raised in this petition, we do not consider it appropriate to entertain this petition as the petitioner has available the statutory alternative remedies.
Though it has been contended by petitioners that the principles of natural justice have been violated as adequate opportunity has not been given to the petitioner, but we find from the records that a notice had been issued to the petitioner to which he had submitted a reply. It cannot be urged that there has been a breach of the principles of natural justice.
The Supreme Court in Commissioner of Income Tax & Ors. Vs. Chhabil Dass Agarwal [2013 (8) TMI 458 - SUPREME COURT] has held that as the Income Tax Act provides for a complete machinery against orders passed by the Revenue authorities, an assessee should not ordinarily be permitted to abandon that machinery and invoke jurisdiction of the High Court under Article 226.
In the instant case, the Act provides complete machinery for the assessment/re-assessment of tax, imposition of penalty and for obtaining relief in respect of any improper orders passed by the Revenue Authorities, and the assessee could not be permitted to abandon that machinery and to invoke the jurisdiction of the High Court under Article 226 of the Constitution when he had adequate remedy open to him by an appeal to the Commissioner of Income Tax (Appeals). The remedy under the statute, however, must be effective and not a mere formality with no substantial relief. In Ram and Shyam Co. vs. State of Haryana, [1985 (5) TMI 213 - SUPREME COURT] this Court has noticed that if an appeal is from "Caesar to Caesar's wife" the existence of alternative remedy would be a mirage and an exercise in futility.
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2014 (5) TMI 1222
Addition u/s 68 - Unsecured loan - onus to prove - addition on statement of one Sri Ramdinesh Ranjit Sharma. HELD THAT:- in the case of Amit Kumar S. Agarwal [2013 (1) TMI 1041 - ITAT AHMEDABAD] almost on identical situation the provisions of Section 68 were invoked and the AO had made the addition. In that case as well the proceedings were initiated on the basis of the statement of Sri Ramdinesh Ranjit Sharma. That statement was recorded consequences upon a survey conducted on Sri Lalit S. Sharma, as discussed by the AO in the appeal in hand. In short, we can conclude that on identical facts and circumstances when a view has been taken in assessee’s favour then there is no occasion to depart from that view but to follow the same. Moreover, we have noted that the assessee has duly discharged his primary onus of placing on record the confirmation letters, PAN details, cheque details, bank transactions through which the loans taken.
The assessee has informed that those parties were existing tax payers. Importantly, it has also been informed that the interest was paid to those parties by the assessee and the TDS was deducted. Further the loans were repaid in a subsequent years through City Bank transaction. Under the totality of the facts and circumstances of the case, we therefore uphold the view of learned CIT(A) and dismiss this ground of the Revenue.
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2014 (5) TMI 1220
Disallowance of deduction u/s 80P - As in ‘scrutiny’ AO formed an opinion that being a co-operative bank, the assessee is not a primary agricultural society or a primary co-operative and rural agricultural development bank entitled for section 80P deduction - HELD THAT:- It is made clear that no paper book or any other material has been filed before us to controvert the findings of the CIT(A) that the assessee is not engaged in any banking activity nor governed by the Banking Regulations Act. A perusal of relevant statutory provision i.e section 80P(4) reveals that this deduction is not available to any coI. operative bank other than a primary agricultural credit society or a primary co-operative agricultural and rural development bank.
There is no cogent evidence to observe that the assessee is a co-operative bank under the banking regulation law. The Revenue fails to prove the assessee to be covered by explanation (a) and (b) to section 80P(4). In absence of all this, only a factual issue remains. It has also come on record that the assessee had advanced credit to its associate members only. The Revenue has also failed to rebut the findings of fact under challenge. Thus, we do not see any reason to interfere in CIT(A)’s order and uphold the same. The Revenue’s corresponding grounds are rejected.
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2014 (5) TMI 1215
Claim not set out in the return of income - Disallowance of Additional claim for proportionate initial rent paid and other expenses incurred on aircraft acquired on finance lease - assessee company failed to make the said claim through a revised return as provided in the Act - ITAT allowed the claim - HELD THAT:- AO was in error in not allowing the assessee to raise the claim merely because it was not set out in the return of income or referred thereunder. This view taken by the Assessing Officer is not in consonance with the law laid down by this Court in the case of Commissioner of IncomeTax V/s. Pruthvi Brokers and Shareholders P. Ltd. [2012 (7) TMI 158 - BOMBAY HIGH COURT] - the refusal of the Assessing Officer to consider the claim is erroneous in law. Assessing Officer is now directed and in terms of the Division Bench order to allow the assessee to raise this claim. However, the claim shall be considered on its own merits and in accordance with law by the Assessing Officer. He shall to do so within a period of three months from the date of the receipt of the copy of this order. All contentions of both sides in relation to this claim are kept open.
Assessing Officer shall also follow the same exercise as is directed by our order in M/S. JET AIRWAYS (I) LTD. [2014 (5) TMI 707 - BOMBAY HIGH COURT] and in relation to the claim for depreciation on the aircrafts taken on hirepurchase by the assessee. He shall apply the same circular of 1943 as is referred by our order passed in the companion appeals to complete the exercise within the time stipulated therein.
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2014 (5) TMI 1209
Fees for technical services - Receipts on account of transportation fee - taxable as ‘FTS’ u/s. 9(1)(vii) or not? - HELD THAT:- Fees earned by the assessee under the transportation agreement are not FTS and cannot be taxed u/s. 9(1)(vii) of the Act. Taking support from the decision of the Tribunal in assessee’s own case for A.Y. 2006-07 [2012 (2) TMI 365 - ITAT MUMBAI] the Ld. CIT(A) correctly held that the services rendered by the assessee are not managerial, technical or consultancy services and deleted the addition made by the AO. - Decided against revenue.
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2014 (5) TMI 1206
Deduction u/s. 80IA - AO restricted the deduction to the gross total income of the assessee, after set off all the brought forward unabsorbed deprecation - HELD THAT:- Similar issue raised by the revenue in this appeal was considered and decided by the Hon’ble Supreme Court in the case of Synco Industries [2008 (3) TMI 13 - SUPREME COURT] held that on the contention that the profits derived from one industrial undertaking cannot be set off against loss suffered from another undertaking in view of s. 80-I(6) and that the profit is required to be computed as if the profit making industrial undertaking is the only source of income, the Hon’ble Supreme Court held that the same has no merits and that the non obstante clause appearing in s. 80-I(6) is applicable only to the quantum of deduction, whereas the gross total income referred to in s. 80- I(1) is required to be computed in the manner provided under the Act which presupposes that the gross total income shall be arrived at after adjusting the losses of the other division against the profits derived from an industrial undertaking.
The Hon’ble Supreme Court also held that if the interpretation as suggested by the assessee is accepted then it would almost render the provisions of s. 80A(2) nugatory and, therefore, the same cannot be accepted. It was held that the non obstante clause in s. 80-I(6) cannot restrict the operation of ss. 80A(2) and 80B(5) which operate in different spheres. The Hon’ble Court therefore concluded that loss from the oil division of the assessee was required to be adjusted before determining the gross total income, and since the gross total income was ‘Nil’, assessee was not entitled to claim deduction under s. 80-I.
The above decision rendered in the context of Sec.80-I of the Act would in our view squarely apply to the provisions of Sec.80-IA and 80- IA(7) of the Act as the provisions are impari materia the same.
We are of the view that the order of the CIT(Appeals) allowing the claim of the assessee without setoff of losses of earlier years while arriving at the gross total income cannot be sustained.
Addition to the donation of assets and obsolesce of assets - AO did not allow the claim of the assessee for deduction of the aforesaid sum for the reason that the details of expenditure on account of obsolescence and donation of assets showed that they were capital losses and therefore cannot be allowed as revenue expenditure - HELD THAT:- Tribunal in assessee’s own case in A.Y. 2007-08 [2013 (10) TMI 1505 - ITAT BANGALORE]held that AO has not allowed the assessee's claim for deduction of the loss on obsolescence of assets under section 37(1) of the Act, holding it to be capital in nature. Before us, AR was unable to bring on record any cogent evidence to substantiate its claim and controvert the finding of the assessing authority. In this view of the matter, we dismiss assessee's ground.
Addition of prior period expenditure - HELD THAT:- Claim of stores reconciliation these sums were actually discrepancies in stock noticed during the previous year and had to be allowed as a deduction. The appraisal note by the audit committee,shows difference in quantities. However, it is seen that the aforesaid report has neither been considered by the CIT(Appeals) nor by the Assessing Officer in the remand report filed before the CIT(A). It appears to us that there has been no proper appreciation of the facts in the right perspective as to whether the appraisal note is in relation to reconciliation of stocks as per the books and as physically found relating to the previous year or to a prior period, which has neither been commented upon by the AO nor decided by the CIT(A).
Since the facts have not been properly appreciated either by the AO or the CIT(A), we are not in a position to comment on the allowability or otherwise of the claim of the assessee. In the given circumstances, we are of the view that it would be just and proper to set aside the order of the AO on this issue and remand the question of allowing the claim of the assessee for adjudication.
Prior period expenses disallowed with regard to price escalation we find that one SICAL who was transporting coal on behalf of the assessee to its various power stations had made a claim for escalation of costs to be paid for transportation of coal - the assessee has made a claim for deduction - aforesaid correspondence that the liability of the assessee to pay the aforesaid sum crystallised only during the previous year i.e., on 10.2.2006 and 25.3.2006 when the offer of the assessee and acceptance by SICAL took place. Though the liability may relate to an earlier period, since the liability had crystallised only during the previous year, the same had to be allowed as deduction. Accordingly, we direct that the aforesaid sum be allowed as deduction in computing the total income.
Difference in transport charges paid by the assessee for surface transport of coal the document on record show that the Board meeting of the assessee conducted on 2.1.2006 considered the revision of rates for surface transport of coal as recommended by the Technical Committee - The aforesaid sum was paid by the assessee to M/s. Aryan Energy Pvt. Ltd. It is thus clear from the document that the liability of the assessee to pay the differential surface transport charges crystallised only during the previous year. Though the amount in question was payable in respect of transportation done during an earlier period, the same is allowable in the present assessment year as the liability had crystallised only during the previous year. We therefore direct that the claim of the assessee be allowed.
Differential sales tax reimbursement of lease rentals - HELD THAT:- Though the assessee’s liability to differential sales tax was in relation to an earlier period, the liability had crystallised only during the previous year and therefore had to be allowed as a deduction in computing the total income of the previous year. We therefore direct the AO to allow the aforesaid claim of the assessee for deduction.
Disallowance of expenses claimed by the assessee’s employees and other agencies - HELD THAT:- We are of the view that considering the explanation offered, it would be reasonable to allow the claim of the assessee. Consequently the claim of the assessee is directed to be accepted.
MAT computation applicability u/s 115JB - additional grounds raised by the assessee seek to challenge the applicability of provisions of section 115JB to an electricity supply company such as the assessee - HELD THAT:- Following the decision of the Tribunal in the assessee’s own case [2013 (10) TMI 1505 - ITAT BANGALORE] we allow the additional grounds raised by the assessee and hold that the provisions of section 115JB are not applicable to the assessee.
Expenditure claimed under the head expenditure on maintenance expenses - HELD THAT:- From a perusal of the order of the AO as well as CIT(Appeals), it is clear that the revenue authorities have not denied the fact that the expenditure crystallised during the previous year, though they related to a period earlier to the previous year. In our view, under the mercantile system of accounting it is the crystallization of liability that will decide as to allowability of an expenditure. Since, admittedly, crystallization of expenses in question had happened during the previous year, the expenditure claimed by the assessee has to be allowed. Accordingly, the AO is directed to allow the claim of the assessee for deduction.
Expenditure claimed under the head expenditure on establishment and general expenses - HELD THAT:- CIT(A) in enhancing the disallowance made by the AO has overlooked the fact that the liability of the assessee to pay DA had crystallised only during the previous year. Accordingly, the addition made by way of enhancement by the CIT(A) is directed to be deleted.
For balance amount assessee submitted before us that the necessary evidence to prove crystallization of liability during the previous year can be produced by the assessee and for this purpose, pleaded for a fresh opportunity before the AO. We are of the view that the request made is reasonable and accordingly we set aside the order of the CIT(A) insofar as the addition and direct the assessee to file necessary evidence before the Assessing Officer. In this regard we are also of the view that the Assessee being a corporation established by the State of Karnataka should be afforded an opportunity as no motives for any tax evasion can be attributed.
Expenditure claimed by the appellant under the head power charges and electricity tax on colony consumption - HELD THAT:- It is not in dispute before us that that the liability of the assessee to pay the aforesaid sum arose only during the previous year. It is also not in dispute before us that the total demand insofar as the power charges are concerned is much more than the sum of ₹ 6,53,49,424. The assessee has no doubt challenged the order of KERC, but insofar as the sum of ₹ 6,53,49,424 is concerned, the assessee had made the actual payment of the aforesaid sum, notwithstanding the fact that the challenge by the assessee includes this sum also. Strictly speaking, the liability to this extent cannot be said to have been crystallized during the previous year. However, as and when the dispute is settled, the assessee will be entitled to claim this expenditure in the assessment year in which the dispute is ultimately settled. Consequently, this ground of appeal by the assessee is dismissed.
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2014 (5) TMI 1202
Deduction on account of interest paid to the third parties from the estimated income determined by applying the NP rate - HELD THAT:- As in the instant cases, the Tribunal while allowing the appeal has directed the Assessing Authority to re-compute the total income as estimated by him and allow relief on account of payment of interest and claim of depreciation. The finding recorded by the Tribunal is purely a finding of fact, based on proper appreciation of material on record and the evidence produced by the assessee. As no question of law arises out of the order passed by the Tribunal, we find no fault with the order of the Tribunal declining to refer the question for our opinion.
Deduction on account of interest paid to the third parties is to be allowed to the assessee and modify the earlier order passed by the ITAT to this extent.
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2014 (5) TMI 1197
Claim of interest expenses u/s 57(iii) in the light of the assessee’s claim of exemption u/s 54EC - assessee has sought to derive double benefit by claiming exemption u/s 54EC in respect of capital gains income and by simultaneously claiming deduction u/s 57(iii) in respect of the interest paid on loan which was taken to invest in 54EC bonds - HELD THAT:- We find that there is neither any dispute about the consideration for transfer of shares nor there is any dispute in respect to the fact that 15% amount of the sale consideration was held back by the purchaser and was disbursed only in subsequent years along with interest; and the assessee had offered it to tax too. Since capital gain is to be taxed on the accrual basis, in order, to meet the short fall (15% of balance sale consideration) the assessee had borrowed the loan and in the loan agreement with the bank it is specifically stated that loan taken was to be invested. We find that the loan was taken wholly and exclusively for the purchasing the Bonds.
Expenditure on account of interest on loans has been incurred for acquiring the interest yielding bonds, which clearly establishes the nexus between the income earned and the expenditure incurred. It has been rightly noted by the CIT(A) that the interest income earned/ accrued on such bonds has been offered for tax as income from other sources and the expenditure incurred for earning such income is allowable u/s 57(iii) and therefore there is clear link and nexus between interest earned and interest paid and therefore the assessee will be eligible for the deduction of interest out of the interest earned on such investment. Therefore we find no infirmity in the order of the CIT(A), therefore we confirm the order passed by the CIT(A) and the appeal preferred by the revenue is dismissed.
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2014 (5) TMI 1194
Charitable activities u/s 2(15) - exemption u/s 10(23C) - Whether receipt of royalty in lieu of IPR is charitable activity or not - Requirement of separate books of accounts - Registration of charitable institution u/s 10(23C) of the Income Tax Act - HELD THAT:- Delay condoned. Leave granted.
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2014 (5) TMI 1193
Recognition u/s 80G(5) - relevance of object of a trust - stage of registration and for exemption under Section 80G - charitable activity u/s 2(15) - HELD THAT:- Stated object of the trust is required to be examined. Whether the funds are properly applied or not, can be examined by the Assessing Officer at the time of framing the assessment.”
Hon’ble Punjab & Haryana High Court in the case of CIT v. O.P. Jindal Global University [2013 (5) TMI 364 - PUNJAB & HARYANA HIGH COURT] held that at the time of granting approval for exemption u/s 80G, object of the trust is required to be examined and application of funds can be examined by Assessing Officer at the time of framing assessment. - Decided in favour of assessee
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2014 (5) TMI 1191
Exemption u/s 2(14) in respect of agriculture property transferred - any proof of conversion of agricultural land to non agricultural land - HELD THAT:- This property is the garden land and cultivable area and when it is cultivable area it is an agricultural land therefore, we are of the view that CIT(A) is justified in holding that the disputed property is agricultural land and it is liable to be exemption under section 2(14) of the Income tax Act on capital gain. We find that the assessee has sold agricultural land and this agricultural land is situated in village Panchayat and the same was not coming within 8 kms from notified Municipality. The form No. I & XIV shows that the land in question is agricultural land. The agricultural operation were carried in the property till the date it was sold and the several fruits bearing trees were existed in the said agricultural land for a number of years, thus, it is a garden land. Therefore, we are of the view that it is not liable to be a capital gain.
We find that the CIT has relied upon the decision of Bombay High Court in the case of CIT vs. Debbie Alemao [2010 (9) TMI 560 - BOMBAY HIGH COURT] wherein as held that when land is shown by the Govt. as agricultural land and that land is never used as non agricultural land till it was sold. The assessee is not liable for capital gain. The Hon’ble High Court has further held that the land has to be treated as agricultural land even though no such agricultural income is shown by the assessee as the assessee stated that the agricultural income received on sale of coconuts grown on the land was just enough to maintain the land and there was no surplus
CIT(A) is justified in his action and our interference is not required. We also find from the decision of Karnataka High Court in the case of CIT & Anr. vs. Smt. K. Leelavathy [2012 (3) TMI 151 - KARNATAKA HIGH COURT] wherein High Court has held that the land sold by the assessee retained its agricultural character till the date of the order permitting non agricultural use and could be treated as capital asset only thereafter. In the instant case there is no evidence on the record that this property in use is converted from agricultural land to non agricultural land moreover the Assessing Officer has not brought out any evidence before us. We find that the assessee was holding this land almost 20 years and the assessee was holding as owner of the property as agricultural land. Therefore, in our opinion, the CIT is justified and our interference is not required. Therefore, we are in complete agreement with the finding of the CIT(A). In the result, department’s appeal is dismissed on this ground.
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2014 (5) TMI 1190
Special provision for computing profits and gains of shipping business in the case of non-residents - section 44B applicability - TDS u/s 195 - Default u/s 201(1) - non deduction of tds on hire/time charter charges paid by the assessee to the non-resident entities being in the nature of royalty (equipment royalty taking ship as an equipment) - provisions of section 44B applicability - HELD THAT:- CIT(A) was not justified in holding that the provisions of section 44B of the Act are applicable to the payments in question made by the assessee.
Default u/s 201(1)/201(1A) - as respectfully following the decision of the Special Bench of ITAT in the case of Mahindra & Mahindra [2009 (4) TMI 207 - ITAT BOMBAY-H] we hold that the orders passed by the A.O. u/s 201(1)/201(1A) of the Act in the present case for all the three years under consideration treating SCIL as the assessee in default cannot be sustained as there are no assessments which have been made in the hands of the payees in respect of the amounts paid by the assessee and even the time period for issuing notices u/s 148 for making such assessments have already come to an end. We accordingly uphold the impugned orders of the ld. CIT(A) giving relief to the assessee
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2014 (5) TMI 1185
Permanent Establishment(PE) in India under the provisions of Article 5(2) (k) - scope of expressions “rendering” and “furnishing” - case of the assessee that it did not have any Permanent Establishment(PE) in India under the provisions of Article 5(2) (k) as it was “rendering” services in India, where as per Article 5(2)(k) of DTAA, it was necessary to “Furnish” services in India - HELD THAT:- Expressions “rendering” and “furnishing” are somewhat inter changeable in the normal course of business and it will be too pedantic hyper technical approach to narrow down the meaning of expression “furnishing” to exclude rendering of professional services and if the answer of this question is in yes then it was to be held that assessee did not have a P.E in India in terms of Article 5(2)(k) of India UK DTAA, and, accordingly, profits attributable to P.E were taxable under Article – 7 of India UK DTAA and this question was answered in favour of Revenue and against assessee.
As decided in own case [2010 (7) TMI 535 - ITAT, MUMBAI] the assessee did have a PE in India under article 5(2)(k) of the India-UK tax treaty, and, accordingly, profits attributable to the PE are taxable under article 7 of the India-UK tax treaty. - Decided against the assessee.
Profits attributable to P.E in India - computation provided by the appellant in the Income and Expenditure Account as being the income attributable to the permanent establishment - whether value of services rendered by the PE is to be taken at market value of such services in India and not the price at which permanent establishment should be taken? - gross income at £ 1,56,813, deduction for direct expenditure at £ 52.445, deduction for overheads £ 2,623 and net profit at £ 1,01,745 - HELD THAT:- The very plea of the assessee proceeds on fallacy that arm’s length price adjustment can be made in respect of the transactions with the clients of the assessee. The revenues earned by the assessee are to be taken at actual figures and no adjustments are permissible in the same. We reject this plea of the assessee as well. The action of the authorities below is confirmed on this count as well - Decided against the assessee.
Disallowance of disbursements to the extent of 25% of the disbursement claim proportionate to the fee relating to services rendered in India as compared to the total fees - permanent establishment in India under Article 5(2)(k) of the Tax Treaty between India and the U.K - HELD THAT:- The Commissioner (Appeals) ought to have directed the Assessing Officer to allow deduction for the entire amount of the disbursements. AR was able to demonstrate that similar evidence which was furnished in respect of A.Y 1995-96 was also placed before AO during the course of assessment proceedings and on the basis of that evidence CIT(A) has given part relief to the assessee on account of reimbursement of expenses. The decision relied upon by DR also does not support the case of the Revenue for restoration of the issue to the file of AO as in the present case reimbursement has been compensated directly and not through third party. In this view of the situation, we are of the opinion that the issue raised by the assessee in ground No.6 of this appeal and raised by the Revenue in Ground No.2 of its appeal are covered in favour of the assessee.
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2014 (5) TMI 1184
TP adjustment - transactions with the parent company - adjustment made by rejecting M/s KPIT Cummins as a comparable - also after excluding foreign exchange as a relevant factor for the purpose of determining arm's length price - M/s KPIT Cummins has not been accepted to be a comparable since the assessee had taken into consideration its 'rest of the world revenue' - HELD THAT:- Neither at the first nor at the second chance, the TPO ever gave a comprehensive show cause to the assessee before rejecting the comparable. The assessee's argument that in succeeding assessment years, the very entity as a comparable stands accepted; has also not been specifically denied by the Revenue. In addition to this, no distinction on facts of the impugned and succeeding assessment year is pointed out. It emanates that the TPO's and Assessing Officer's orders dated 28.10.2011 26.9.2012 respectively, are prior in point of time than the TPO's order dated 31.10.2012 and assessment order dated 26.3.2013 for succeeding assessment year. In these circumstances, the aforesaid documents are admitted as a part of record. In addition to this, the fact also remains that from proceedings of assessment year 2009-10, acceptance of M/s KPIT Cummins as a comparable is not forthcoming - interest of justice would be met in case the issue is remitted back to the TPO for afresh proceedings
Inclusion of foreign exchange as a relevant factor in computation of ALP in transfer pricing proceedings - TPO as well as the DRP in the present case are of the view that such a factor has to be excluded - HELD THAT:- As decided in M/S. FOUR SOFT LTD. HYDERABAD VERSUS THE DY. COMMISSIONER OF INCOME-TAX, CIRCLE 1(3), HYDERABAD. [2011 (9) TMI 634 - ITAT HYDERABAD] there is no justification for any adjustment to the price declared by the assessee, since the assessee's margin would fall within the arms length range. We therefore, hold that no adjustment is required to be made on the margin declared by the assessee for the international transaction of the AEs in relation to software development services - we direct the TPO to take into consideration foreign exchange factor in computing assessee's ALP. The question is accordingly decided against the Revenue.
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2014 (5) TMI 1183
Assessment u/s 153A - additions over and above declared income u/s. 132(4) based on materials gathered during assessment and other seized materials - HELD THAT:- With regard to justification of retraction, the stand of the assessee has been manifold. AR has submitted that a mistake in the declaration during search was due to incorrect bank credit summation which is matter of record. According to the learned Authorized Representative in general, books prepared by the assessee have not been rejected by cogent reasoning.
The main emphasis of the assessee has been that agricultural activity and related income was bonafide one as a source of initial funds. The source of agricultural income ought to have considered the overall quantification of income. The addition has been made on the basis of search statement alone, which is not justified. According to AO, the disclosure promise during search u/s.132(4) has not been fulfilled. While, according to the CIT(A), self serving books are not admitted. The Assessing Officer’s verification of books, his findings, etc. are contrary to his finding of facts on the issue. In this background, the stand of the assessee has been that the Assessing Officer’s observation as regards the books of accounts, mistake of quantification of credits, summations, etc., are facts.
These observations ought to have not been brushed aside by the CIT(A). According to us, this approach is not justified. The authorities below should give finding on each and every point while reaching to its conclusion.
Return filed based on books of account and income declared was reflected based on cogent reasoning - The main objection of the Assessing Officer has been that there is long gap of 28 months for retracting by way of return while there was no threat or coercion during search - HELD THAT:- For A.Y. 2004-05, source of funds for Ghanawat land deal were claimed from agricultural income and gift from relatives. The Assessing Officer has observed that the agricultural income was not sufficient considering Ghanawat land deal, hence, the said argument was not accepted. While in appeal, the CIT(A) in para 13, page 22 observed that considering the lavish life style of assessee, the agricultural income of ₹ 1.95 lakhs was not sufficient to explain the source of land payment. In this background, the stand of the assessee has been that the amount payments recorded in books of accounts, agricultural income was bonafide and gifts have not been doubted, so the addition in question was not justified. Thus, the authorities below have taken contradictory stand while rejecting the stand of assessee. In fact, it should be analysed as per fact put forward by the assessee on the point and authorities below should have appreciated the fact before reaching any adverse opinion that too mainly based on admission of assessee.
For A.Y. 2005-06, the stand of the assessee has been that the books are made on the basis of bank statement primarily. The very same statement was used as basis for declaration during search. This mistake crept in assessment and appellate stage, which could not be cured. According to us, the facts on record should not have been ignored to justify addition mainly based on admission.
Regarding A.Y. 2007-08 CIT(A) was not justified in rejecting contentions of assessee while upholding the addition made by the Assessing Officer. This aspect needs deep probe into the matter on the issue.
With regard to the other addition i.e. ₹ 32.50 lakhs received from Mr. Sonigra CIT(A) confirmed the order of Assessing Officer on the point. The stand of the assessee has been that the assessee has not received any cash from Ravet land deal from Sonigra. However, the assessee was in receipt of ₹ 33 lakhs for another land deal at Shinde Wasti which ultimately did not materialize. The said fact clearly emerged from the statement of Sonigra. These arguments of assessee have not been met out by authorities below. According to us, it is not justified. To reach a proper conclusion, it needs deep probe into the matter. It is pertinent to mention here that the person from agricultural background is not able to understand and meet out economic complications with income tax angle in fast urbanization.
According to us, the books of accounts should be rejected only after rejecting the claim of assessee by cogent reasoning because the assessee’s contention revolves around bank statement found during the course of search. According to us, this whole issue should be looked into in the light of above discussion. So, we set aside the order of CIT(A) and restore the whole issue to the file of the Assessing Officer with a direction to decide the same as per fact and law and after providing due opportunity of being heard to the assessee.
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2014 (5) TMI 1182
Addition u/s 14A - HELD THAT:- Estimation of disallowance of 2% of gross dividend income as the expenditure, as being incidental to the earning of dividend income u/s. 14A of the Act as the assessee had not furnished the details of expenditure incidental to earning of dividend income, estimation was made of the expenditure attributable to dividend income at 2% of the gross dividend income. We estimate the expenditure incurred towards earning of exempt dividend income of ₹ 11,61,400/- at 2% of the gross dividend income which works out to ₹ 23, 228/-. We, therefore, set aside the orders of the lower authorities and direct the Assessing Officer to restrict the disallowance u/s. 14A of the Act.
Addition u/s. 36(1)(viia) - provisions for bad and doubtful debts - HELD THAT:- It is clear that the provisions for bad and doubtful debts should be allowed u/s. 36(1)(viia), to the extent of provision made and available in the books of account, whether made in the current previous year or in the preceding previous years as we find that none of the lower authorities i.e. either AO or the CIT (Appeals) has examined the issue under consideration from this angle and as the entire facts are not available for us to adjudicate the issue, we, in the interest of substantial justice, set aside the orders of the lower authorities and remand the matter back to the file of the Assessing Officer for adjudication of the issue afresh as per law in the light of the discussions made hereinabove. Needless to mention that the AO shall allow reasonable and proper opportunity of hearing to the assessee before adjudicating the issue afresh.
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