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Income Tax - Case Laws
Showing 21 to 40 of 594 Records
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2014 (5) TMI 1179 - ITAT JODHPUR
Penalty levied u/s 271AAA - conditions laid down in sub-section(2) of section 271AAA not been fulfilled by the assessee - surrender of income consequent to search - assessee could not explain the manner in which the undisclosed income had been derived by him - Held that:- The transactions which could not be verified from the regular books of account of assessee’s business were surrendered by him. It is a fact that the A.O. has admitted this surrender on the basis of assessee’s business activity being carried on by him. There is no specific finding or evidence with reference to the seized material or in the statement from which contrary view can be taken.
On similar facts, the Cuttack Bench of the ITAT while deciding the case of Pramod Kumar Jain reported in [2012 (12) TMI 629 - ITAT CUTTACK] as relied upon by the ld. CIT(A), has taken a view that there is no prescribed method to indicate the manner in which income was generated when the definition of ‘undisclosed income’ has been defined in the Act itself when no income of the specified previous year represented “either wholly or partly’ which onus lay upon the assessee stood discharged. Therefore, levy of penalty u/s 271AAA of the Act has been correctly deleted by the ld. CIT(A). - decided in favour of assessee.
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2014 (5) TMI 1178 - ITAT JODHPUR
Disallowance of depreciation to assessee-trust - depreciation cannot be allowed to the assessee being a trust as the full value of the assets had already been allowed as capital expenses during the earlier years and considered as application of income of the trust - Held that:- CIT(A) deleted the disallowance made by the AO in accordance with the judgmentof CIT Vs. Market Committee [2010 (7) TMI 374 - PUNJAB AND HARYANA HIGH COURT] and no contrary decision was brought to our notice. We, therefore, do not see any merit in these grounds of the departmental appeal.
Addition on account of interest from bank - as credited to earmarked fund account ignoring the fact that it is a revenue receipt and ought to have been credited to Income and Expenditure Account - Held that:- Issue to be decided in favour of the assessee by following the decision in the case of Sukhdeo Charity Estate Vs. Income Tax Officer [1991 (5) TMI 47 - RAJASTHAN HIGH COURT].
Donations received in kind were not income for the purpose of Section 12(1) - Held that:- In the present case, it is an admitted fact that the assessee received the donations in kind and the same could not be applied, accumulated or invested, therefore, it cannot be treated as income. Therefore, the CIT(A) was fully justified in reversing the observations of the Assessing Officer. We do not see any infirmity in the order of the CIT(A) on this issue.
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2014 (5) TMI 1177 - ITAT NEW DELHI
Disallowance of trade discount u/s 40A(2)(b)- Held that:- Issue is squarely covered in favour of the assessee by the decision of Hon'ble Jurisdictional High Court in the case of United Exports Vs. CIT [2009 (8) TMI 60 - DELHI HIGH COURT] wherein their Lordships held that Section 40A(2)(b) is not applicable in respect of trade discount. Section 40A(2)(b) is not applicable in respect of trade discount. - Decided against revenue
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2014 (5) TMI 1176 - ITAT MUMBAI
Disallowance of business expenditure - assessee company had not commenced during the year under consideration - Held that:- While deciding the appeal for, AY 2005-06 on 11.09.2013,Tribunal had held that assessee commenced its business activity in March 2004 i.e. in AY 2004-05. It was finally held that assessee had set up his business activities in earlier years. As the facts and circumstances for the year under appeal are identical to the earlier AY.s,so,respectfully following the same we decide ground no.1 & 2 against the AO. He is directed to allow the deductions to the assessee as per the provisions of law.
Allowance of interest expenditure under the head ‘Income from House Property’ - Held that:- Referring to orders for the earlier years as held that income of the assessee for the year under consideration has to be assessed under the head ‘Business Income’,therefore, in our opinion ground taken by the AO has to be dismissed.
Tax the Miscellaneous Income,Foreign Exchange Gain and Other Income under the head ‘Business Income’ - Held that:- We find that AO was of the opinion that assessee had not commenced its business activity and therefore, income received under the heads miscellaneous income etc. could not be assessed as business income. But, in the earlier years it has been held by the Tribunal that income from sub-leasing of premises of the I.T.Parks was the business of the assessee and same was set up/commenced in earlier years and we have followed the order of earlier years. In these circumstances, in our opinion, FAA had rightly held that incomes from foreign exchange gain, car parking, penalty etc. were incidental to the business, carried out by the assessee.
Addition on account of income from sub-lease of land and income under the head maintenance - Held that:- Following our order for the earlier year, we hold that income from the sub lease of land and income under the head maintenance has to be assessed under the head Business income and not under the head Income from Other Sources. As a result, we decide first ground of appeal against the AO.
Addition on account of interest paid on borrowings utilised for construction of house property under section 24 - Held that:- It is not in dispute that the assessee had taken loan for construction of buildings and it had also paid interest. FAA had held that out of the interest of ₹ 2.93 Crores ₹ 2.48 Crores should be allowed as interest expenditure under the head income from house property. From the balance sheet it is clear that the assessee has interest amounting to ₹ 2.48 Crores was capitalised. Therefore, FAA was justified in holding that it represented work in progress. For the balance interest payment of ₹ 45 lakhs he held that same was allowable under either of the heads. In our opinion,if interest has been paid by an assessee; for acquiring or constructing assets that are used for earning taxable income; then his claim for interest expenditure has to be allowed. Therefore, confirming the order of the FAA - decided against revenue
Treatment of maintenance income - assessed as income from other sources or business income - Held that:- To be held that the income received by the assessee as maintenance income has to be assessed as business income. - decided against revenue
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2014 (5) TMI 1173 - ITAT CHENNAI
Exemption u/s 11 - disallowance of depreciation - violation of provisions of sec. 13(1)(c) by making payment to the wife (Ms. Meenakshi Sundararajan) of founder of the trust - Held that:- In the present case, the assessee trust has been created on 1.2.1961. This is before the commencement of the Income-tax Act, 1961. As per Clauses 36 to 41 of the Memorandum of Association of the assessee trust, Ms. Meenakshi Sundararajan is entitled for honorarium in rendering services to the benefits of the assessee society. Therefore, as rightly argued by the learned counsel, the payment made to Ms. Meenakshi Sundararajan is covered by the said exemption. - Exemption allowed - Decided in favor of assessee.
Claim of depreciation - double benefit - Held that:- In fact, there is no question of double benefit. An assessee is getting the benefit of application of funds for charitable purposes from the income computed according to normal accounting practices. Accordingly, it is to be seen that there is no clash between providing depreciation allowance and recognizing the application of funds for charitable purposes.
Decided in favor of assessee.
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2014 (5) TMI 1172 - ITAT CHANDIGARH
Registration under section 12AA denied - non charitable activities - Held that:- As confirmed in JAMMU DEVELOPMENT AUTHORITY case [2013 (11) TMI 1578 - JAMMU AND KASHMIR HIGH COURT] wherein it has been held that the objects like sale and purchase of properties makes the Authority, a commercial organization and in absence of any restriction on application of asset for charitable purpose in the event of dissolution or winding up, the objects pursued by the assessee cannot be said to be a charitable in nature.
We find no merit in the claim of registration made by the assessee under section 12A of the Act and we uphold the order of Commissioner of Income Tax in refusing to grant registration under section 12AA of the Act. Appeal of the assessee is dismissed
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2014 (5) TMI 1171 - ITAT CHENNAI
Addition u/s 40A(3) - argument of the Revenue is that when old gold purchases are made from A and new ornaments sold to B, provisions of Rule 6DD will not be applicable - Held that:- The transaction considered in this case is of same person purchasing new gold ornaments from the assessee against old gold ornaments. In such a case, clause (d) of Rule 6DD clearly applies. The said clause reads that where the payment is made by way of adjustment against the amount of any liability incurred by the payee for any goods supplied or services rendered by the assessee to such payee is exempted from the operation of Section 40A(3). Therefore, in the present case, as rightly pointed out by the Commissioner of Income Tax (Appeals), the case of the assessee is protected by clause (d) of Rule 6DD.
The Revenue has raised a contention in the grounds that the assessee may not raise separate bills for purchase of old gold and for sale of new gold ornaments. This view is not correct. There is levy of purchase tax by the State Government on purchase of old gold ornaments. For that matter, the assessee has to keep a separate account of old gold purchase supported by purchase invoices. Likewise, sale of new gold ornaments are again subject to sales tax for which the assessee has to maintain separate sales account supported by sales invoices. - Decided in favour of assessee
Disallowance being hedging loss treated by the assessing authority as speculative loss - Held that:- In the present case, the assessee has entered into a future contract to guard against the loss through future price fluctuations in gold. The assessee is in the business of manufacturing and merchanting of gold. Therefore, the future contract entered into by the assessee is straightaway covered by the first exception provided in clause (a) of Section 43(5). We find that the Commissioner of Income Tax (Appeals) is right in his decision.
Unexplained cash credits - Held that:- The assessee- company has passed journal entries with the concerned amounts, crediting the personal account of the Director and debiting the various expenditure to nominal accounts of the assessee-company. In fact, all the credits reflected in the personal account of the Director of the assessee-company are correspondingly very much reflected on the debit side of different expenditures and nominal accounts of the assessee-company. In that way, these cash credits are self-explaining in the books of accounts itself. There is no basis for the Assessing Officer to treat these credits as unexplained cash credits - Decided in favour of assessee.
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2014 (5) TMI 1170 - ITAT JODHPUR
Reopening of assessment - no opportunity to cross examine - Held that:- A.O. has been heavily carried away by the information of DDIT(Inv) and has ignored the fact that the share application money was received on 22.03.2006 through cheque No. 453639. M/s. Alliance Intermediatories and Network p. Ltd. is assessed to tax. Board’s resolution and confirmation of this company was filed before A.O. All these documents establish the identity of the share applicant and the genuinity of the transaction is also proved on record. The statement of Shri Mukesh Choksi was recorded at the back of the assessee and no opportunity to cross examine him was given to the assessee.
A.O. has not made his independent inquiries and verification to ascertain the correct facts. Therefore, we can safely hold that the assumption of jurisdiction by A.O. u/s 147 r.w.s. 148 is invalid and the assessment so made becomes authorities below initio void. However, we quash the order made u/s 147/143(3) of the Act in question and also hold that the addition of ₹ 5 lakhs in assessee’s hands is not warranted. Accordingly, we allow the appeal by the assessee.
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2014 (5) TMI 1169 - ITAT JODHPUR
Reopening of assessment proceedings u/s 147 - bogus share capital receipt - non independent application of mind by AO - borrowed knowledge - Held that:- The reason recorded by the Assessing Officer were merely on the basis of information received from DDIT (Inv.) Udaipur and Mumbai, therefore, from the so called reason, it was not at all discernable as to whether the Assessing Officer had applied his mind to the information and independently arrived at a belief that on the basis of the material which he had before him the income had escaped assessment, therefore, the reassessment u/s 147 of the Act was not valid and accordingly the same is quashed. - Decided in favour of assessee
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2014 (5) TMI 1168 - ITAT PUNE
Addition on account of write off of the principal portion of cash credit loan waived by Banks - Held that:- As decided in assessee's own case A.Y. 2008- 09 [2014 (1) TMI 1840 - ITAT PUNE] the answer would depend upon the purpose for which the said loan was taken. If the loan was taken for acquiring the capital asset, waiver thereof would not amount to any income exigible to tax. On the other hand, if this loan was for trading purpose and was treated as such from the very beginning in the books of account, as per T.V. Sundaram Iyengar and Sons Ltd. [1996 (9) TMI 1 - SUPREME Court] the waiver thereof may result in the income more so when it was transferred to the profit and loss account - CIT(A) has rightly confirmed the addition made by the AO to the extent of waiver to the cash credit loan - Decided against assessee.
Addition on account of section 35(2AB) - approval is not in prescribed Form No. 3CM - Held that:- As decided in assessee's own case A.Y. 2008- 09 [2014 (1) TMI 1840 - ITAT PUNE] the finding of the Ld. CIT(A) are acceptable that if the approval is not in prescribed Form No. 3CM is not a serious discrepancy which should result in disallowance of the deduction to the assessee u/s. 35(2AB) of the Act. In this case, it is not disputed that the assessee has applied to the competent authority for getting the approval/recognition and only after the verification of all the details the Prescribed Authority have issued the approval letter. CIT(A) has rightly allowed the claim of the assessee - Decided in favour of assessee
Addition on account of principal amount of waiver of loan - Held that:- As decided in assessee's own case A.Y. 2008- 09 the nature of the loan which has been waived in one time settlement is not disputed. In our opinion, the assessee’s case is squarely covered by the decision in the case of M/s. Xylon Holdings Pvt. Ltd. (2012 (9) TMI 449 - BOMBAY HIGH COURT) as the amount waived pertains to the term loan which was taken by the assessee for acquition of the assets. CIT(A) rightly deleted the addition made by the Assessing Officer on account of principal amount of waiver of loan.- Decided in favour of assessee
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2014 (5) TMI 1167 - BOMBAY HIGH COURT
Reopening of assessment - legal expenses and charges allowability - expenditure incurred towards filing of patent applications should have been treated as capital expenditure - failure on the part of the petitioner to disclose fully and truly all material facts necessary for its assessment - Held that:- All material facts with reference to the deductions claimed by the Petitioner in respect of the legal expenses and charges, were disclosed by the Petitioner not only during the original assessment proceedings but also during the scrutiny assessment, which culminated in the assessment order dated 30th December 2008. We therefore find that in fact there had been no failure on the part of the Petitioner to disclose fully and truly all material facts as required under the first proviso to section 147 of the Act.
On a perusal of the reasons for initiating to assessment proceedings, we find that it is not even the case of Respondent No. 1 that any new tangible material was brought to his notice which led him to believe that income had escaped assessment. As stated earlier, all material facts were disclosed by the Petitioner in proceedings that were undertaken under sections 142(1) r/w 143(2), which finally culminated in the assessment order dated 30th December 2008 under section 143(3). It is therefore evident that Respondent No. 1 after passing the original assessment order dated 30th December 2008 has changed his opinion and issued the impugned notice under section 148.
The reasons for the impugned notice as well as the impugned order proceed on the basis that a patent is a capital asset and hence expenditure incurred towards filing of patent applications should have been treated as capital expenditure. Since it was treated as a revenue expenditure, there was computation of excessive loss which resulted in income escaping assessment. Therefore now, despite the fact that in the original assessment order this very expenditure was allowed as a revenue expenditure, Respondent No. 1 now seeks to treat the same as a capital expenditure. This to our mind is nothing but a "change of opinion", and hence Respondent No.1 had no jurisdiction to re-open the assessment proceedings. - Decided in favour of assessee.
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2014 (5) TMI 1166 - DELHI HIGH COURT
Penalty u/s 271(1)(c) - voluntary surrender of income - Held that:- In the present case, the assessee did produce all the relevant material in the form of books of account, bank statements, vouchers, sale bills etc. During the course of further enquiry in the assessment proceedings. The assessee voluntarily offered a sum of ₹ 75 lacs for assessment stating that even though all the material existed, yet in order to buy peace it was offering the amount to tax.
The facts of this case are clearly such that the decision in MAK Data (2013 (11) TMI 14 - SUPREME COURT), in the opinion of this Court, cannot be attracted. The assessee at no point seem to have accepted the revenue’s contentions that such claimed expenditure was bogus and that it was not allowable, he offered the amount only to buy peace. There is also no finding by the AO that the appellant had failed to offer an explanation in respect of the income returned or had failed to disclose material particulars. - Decided in favour of assessee.
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2014 (5) TMI 1165 - ITAT PUNE
Disallowance u/s 14A r.w.r. 8D - Held that:- The payment of interest amounting to ₹ 2,90,95,369/- to Bank of India on account of loan taken of ₹ 30 crores by the assessee during earlier years, which was evident from the sanctioned letter of Bank of India dated 18.05.2006 addressed to the assessee of the credit facilities and terms & conditions mentioned therein in the annexure attached to the same. Thus, the aforesaid amount of loan of ₹ 30 crores had exclusively been assigned with respect to purchase of wind mill from M/s. Enercon was found undisputed. The assessee has also credited an amount of ₹ 7,56,61,095/- on account of sale of power and has also shown profit of ₹ 4,77,10,734/- in Profit & Loss Account from wind mill business. As observed that the aforesaid interest could not be held to be in any way to be related to the earning of exempt income either directly or indirectly. Disallowance made by the Assessing Officer u/s.14A r.w. Rule 8D(2)(ii) of ₹ 77,78,214/- was allowed out of 1,30,30,180/-. This reasoned finding of CIT(A) needs no interference from our side.
Disallowance of expenditure on helicopter - CIT(A) following the decision of ITAT in assessee’s own case for A.Y. 2005-06, has restricted the disallowance on helicopter expenditure to 1/7th - Held that:- It is true that the onus is on the assessee to substantiate the claim of the assesses. Considering the peculiar circumstances better known to the assessee, there is surrender of claim to the extent of 1/7th of the total claims ₹ 93,96,771/- (i.e. ₹ 66,04,980/- on account of depreciation of vehicles and ₹ 27,91,791/- on account of aviation expenses). At this point of time, in our opinion, the Onus has shifted to the revenue to demonstrate that the said surrender is incorrect and estimations made by the AO are fair within the meaning of section 38(2) of the Act. Fairness is an important factor in matters of quantification of the disallowances, when section 38(2) invoked. The revenue has not done any probe independently to demonstrate that assessee’s offer is unfair and his estimations are fair. The estimations made by the AO, which are confirmed in case of the Cessna Aircraft and altered in case of Bell Helicopter are hereby set aside. Thus e are not inclined to interfere with the finding of CIT(A), who has restricted the disallowance on helicopter expenditure to 1/7th. - Decided against revenue.
Estimation of annual value of let out property at Mumbai - Held that:- The assessee has let out space to the sister concern, which is undisputed fact and is receiving ₹ 10,000/- per month from each sister concern. Therefore, the assessee's property is covered by provisions of clause (b) of section 23(1). This is a fact that assessee's actually rent received or receivable in respect of the said property is not in excess of the ALV computed under clause (a) of section 23(1). AO's decision to invoke a comparable case to the property covered under clause (b) is not in tune with the above referred legal position. It is not also the case of the AO that assessee is covered by the exemptions provided in the Maharashtra Rent Control Act and, therefore, ALV of the property shall be determined on the basis of the comparable cases. In any case, the standard rent is upper limit for determination the ALV as held in the case of Makrupa Chemicals Pvt Ltd (2006 (9) TMI 207 - ITAT BOMBAY-F ) - Decided against revenue
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2014 (5) TMI 1151 - GUJARAT HIGH COURT
Unexplained loans and cash credits - absence of any evidence or material from the side of the assessee - Held that:- The books of accounts were neither produced before the assessing officer nor before CIT(Appeals). The Tribunal also noted that no steps were taken in bringing evidence on record, even before the Tribunal and for the purpose of additional evidence, there was absence of any application. Such non-cooperative attitude of the appellant led the Tribunal not to accede to the request of the appellant. Considering these glaring facts coupled with the fact that these findings are completely based on the factual matrix and no perversity could be noticed in such findings which would have given rise to substantial question of law. - Decided against assessee
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2014 (5) TMI 1150 - ITAT MUMBAI
Addition towards Transportation Charges - unserved notices as parties were not available on the addresses given by the assessee - genuine expenditure - Held that:- It is not disputed that the assessee had furnished proof of actual performance of transportation work, lifting of waste, payments of TDS, full addresses of the parties, confirmation of account with PAN and mode of payment. By giving such details, in our opinion, assessee had discharged its initial burden of proof. If AO had doubt about the genuineness of transaction or payment, he should have made further inquiries and should have confronted the assessee with the result of such inquiries. Assessee was awarded contract by MCGM for lifting solid waste and was paid for it by the corporation. It had hired sub-contractors to carry out job assigned by the Municipal Corporation. As per the terms of contract assessee had to get the vehicles used for lifting wastage with RTO. Inquiry with RTO/ MCGM would have brought truth in light. It is true that letter issued by the AO remained unserved, but that factor alone should not result in addition of Rupees more than two crores. Non service of notices issued by the AO was the starting point to investigate the matter further. But, the AO chose to stop there and ignored the documentary evidences produced by the assessee. In these circumstan -ces, we are of the opinion that the order of the FAA does not suffer from any legal infirmity - Decided in favour of assessee
Addition u/s. 68 - unexplained unsecured loans - establish the capacity, genuineness and proper identity of creditors - Held that:- Two of the creditors not only had appeared before the AO, but had also admitted of giving loan to the assessee. AO has not pointed out any abnormality in their statements. In these circumstances, there was no reason to make addition for the sums appearing in their names. From the order of the FAA it is clear that Shantiben Shah and Charmi A Mehta had capacity of advancing loans to the assessee and they were regular tax payees. Thus, FAA has conclusively proved that identity of the creditors, genuineness of the transaction and capacity to advancing loan cannot be doubted. - Decided in favour of assessee
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2014 (5) TMI 1145 - ITAT MUMBAI
Addition made u/s 94(7) - profit earned by the assessee from the sale of shares held for a period of less than six months - short term capital gain or business income - treated by the AO as the business income - Held that:- It is observed that the profit earned by the assessee from the sale of shares held for a period of less than six months has been treated by the ld. CIT(A) as short term capital gain in the hands of the assessee and as submitted by the ld. counsel for the assessee, the department has not filed an appeal before the Tribunal against the order of ld. CIT(A) on this issue. It therefore, follows that the entire profit/loss arising to the assessee on sale of shares has been finally taxed in the hands of the assessee under the head “ capital gains” and consequently in addition/disallowance u/s 94(7) of the Act is liable to be made under the head “capital gains” as rightly claimed by the assessee and not under the head “profit and gains of the business or profession” as held by the AO and ld. CIT(A).
We, therefore, set aside the impugned of the ld. CIT(A) and direct the AO to make addition/disallowance u/s 94(7) of the Act under the head “capital gains”. - Decided in favour of assessee.
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2014 (5) TMI 1142 - ITAT PUNE
Reference to the DVO u/s. 55A - valuation of the registered valuer of the assessee should be accepted and not the valuation given by the DVO - Held that:- Assessing Officer has no power to make the reference to the DVO for the A.Y. 2008-09 by invoking u/s. 55A of the Income-tax Act for determining fair market value as on 01-04-1981. Moreover, the issue has been decided in favour of the assessee by the jurisdictional High Court in the case of CIT Vs. Puja Prints [2014 (1) TMI 764 - BOMBAY HIGH COURT]. We, therefore, find no reason to interfere with the order of the Ld. CIT(A). Accordingly, the same is confirm and grounds taken by the Revenue are dismissed.
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2014 (5) TMI 1141 - GUJARAT HIGH COURT
Validity of assessment u/s 153C - alternate remedy - availability of statutory remedies - Held that:- We are of the opinion that at this stage no interference is called for. Section 153C as is well known, pertains to assessment of income of persons other than one who is subjected to search. Subsection (1) of section 153C provides that where any Assessing Officer is satisfied that any money, bullion, jewellery or other valuable article or thing or books of account or documents seized or requisitioned belongs or belonged to a person other than the person referred to in section 153A, then the books of account or documents or assets seized or requisitioned shall be handed over to the Assessing Officer having jurisdiction over such other person and that Assessing Officer shall proceed against each such other person and issue such other person notice and assess or reassess income of such other person in accordance with the provisions of section 153A of the Act.
Section 158BD of the Act makes similar provisions for block assessment of undisclosed income of persons other than the searched person. Under the circumstances, the petitioner’s contention that notice under section 153C of the Act could not have been issued after search operations were over cannot be accepted.
We are not inclined to entertain the writ petition in view of the availability of statutory remedies. Since we relegate the petitioners to remedies under the statute, at this stage, we express no opinion on the validity of the reference.
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2014 (5) TMI 1140 - ITAT PUNE
Disallowance of claim on account of additional cost of land - poof of obligation as per the development agreement to make any such payment - Held that:- We find the Assessing Officer has not doubted the payment to the land owners but disallowed the amount of ₹ 18 lakhs on the ground that assessee was under no obligation as per the development agreement to make any such payment. The existence of a Civil Suit on the impugned land because of which the development work on the land could not be carried out for a long time was within the knowledge of the Assessing Officer. There is no dispute to the fact that the payment of ₹ 18 lakhs has been made on 17-07-2007 although the development agreement was dated 17-05-2005 and the payment have been made by crossed account payee cheque to the land owners. In view of the above and in view of the detailed reasoning given by the Ld.CIT(A) we find no infirmity in his order.
Addition u/s 40(a)(ia) - retrospectivity - Held that:- The assessee has made a new legal argument that the Finance Act, 2010 has amended the first proviso to section 40(a)(ia) w.e.f. 01-04-2010 and it has been held by various judicial authorities that such amendment is retrospective in nature. It is the submission of the Ld. Counsel for the assessee that the second proviso to section 40(a)(ia) was inserted by the Finance Act, 2012 w.e.f. 01-04-2013 wherein it is stated that disallowance u/s.40(a)(ia) of the Act need not be made if the assessee is not deemed to be an assessee in default under the first proviso to section 201(1) of the I.T. Act., therefore, this should also be held as retrospective since it has been introduced to eliminate unintended consequences which may cause undue hardship to the tax payers.
We find some force in the above argument of the Ld. Counsel for the assessee. We find the Cochin Bench of the Tribunal in the case of Antony D. Mundackal (2013 (12) TMI 67 - ITAT COCHIN ) relied on by Ld. Counsel for the assessee, had an occasion to decide an issue in the light of the above argument and has restored the issue to the file of the Assessing Officer with certain directions. Thus we restore this issue to the file of the Assessing Officer with a direction to examine the above contention of the assessee and decide the issue afresh and in accordance with law.
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2014 (5) TMI 1138 - ITAT CHENNAI
MAT - deduction of provision for diminution in the value of investment while computing the book profit under Section 115JB - Held that:- In a case where the assessee is reducing the diminution in the value from the current asset’s value of the company, then also credit entries are passed in the account of the current assets to reduce the value and there also the corresponding debit is made to the Profit & Loss account thereby reducing the profit or increase the loss of the company. Whether it is shown as a separate provision or it is reduced from the current asset’s value, the corresponding and consequential effect is to reduce the profit of the assessee or increase the loss of the assessee by debiting to Profit & Loss account. As far as the credit entry is concerned, it can either be shown as a separate provision on the liability side of the balance sheet or reduce from the current asset’s value shown in the asset side of the balance sheet. This is only an accounting format. It does not change the character of the amount sought to be deducted by the assessee. It does not affect the accounting/financial result. It always affects the income or loss aspect of the assessee.
Therefore, only for the reason that the assessee has not created a separate provision, but only reduced the diminution in the value of investment from the current asset’s value, does not make any difference and the adjustment made by the assessee is equally covered by the retrospective amendment brought in by the Finance Act, 2009. Commissioner of Income Tax (Appeals) is justified in confirming the order of the Assessing Officer for adding back the diminution in the value of investment to the book profit of the assessee for the purpose of Section 115JB.
Levy of interest under Sections 234B and 234C - Held that:- Hon’ble Madras High Court in the case of CIT v. Revathi Equipment Ltd. (2007 (6) TMI 154 - MADRAS HIGH COURT) has held that when an assessee could not have foreseen liability caused on account of a subsequent legislative amendment, the assessee cannot be liable for interest on the differential amount of tax in the reason that the assessee could not have paid the differential amount of tax for the relevant previous year. Here also, the income escaping assessment was passed because of the retrospective amendment brought in by Finance Act, 2009. The additional liability has been generated only in the assessment. It was not possible for the assessee to foresee the retrospective amendment. So, it was not possible for the assessee to pay advance tax for the relevant previous year against the differential demand of tax that would arise in future. Therefore, we delete the liability of interest made under Section 234B and 234C of the Income-tax Act, 1961.
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