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Income Tax - Case Laws
Showing 61 to 80 of 594 Records
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2014 (5) TMI 1106 - BOMBAY HIGH COURT
Transfer pricing adjustment - Held that:- Appeal admitted on the following substantial question of law:-
Whether on the facts and in the circumstance of the case and in law, the Tribunal was justified in confirming the order of CIT (Appeals) in deleting the addition of ₹ 61,84,483/- made under Section 92CA(3) by the Assessing Officer?”
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2014 (5) TMI 1104 - ITAT MUMBAI
Adhoc addition being 25% of the total interest claimed by the assessee as deduction - Held that:- It is not in dispute that the assessee has obtained loan for business purpose and utilised the same for the purpose of business. Interest paid by the assessee on such loan was allowed as deduction from year to year. Therefore there is no dispute with regard to the fact that the expenditure is wholly and exclusively incurred for the purpose of business. The assessee is at liberty to arrange its affairs in such a way which would strengthen business relations and the Assessing Officer cannot put himself in the shoes of the businessman to decide as to what would be the course of action that needs to be taken in a given situation. In the instant case the assessee explained the reasons for permitting group concerns long term credits. Merely because the Assessing Officer views its otherwise, expenditure incurred for the purpose of business cannot be disallowed, particularly in the light of the decision of Hon'ble Apex Court in the case S.A. Builders Ltd. (2006 (12) TMI 82 - SUPREME COURT ).
The tax authorities have not made out any case for disallowance of 25% of the total claim. The Assessing Officer is directed to allow the claim in its entirety - Decided in favour of assessee
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2014 (5) TMI 1102 - ITAT AHMEDABAD
Disallowance out of purchases - difference found between the credit entry in the bank account and sale proceeds - Held that:- It is true that without purchase no sale can be executed. The appellant had not produced the books of accounts before the AO, however made available copy of bank account to the AO on which addition had been made. The appellant had shown net profit on sale of ₹ 32.01 lac @ 4.08%. The AO made addition without comparing any case in the similar line of business @ 25% and disallowed the expenses on estimated basis. He made addition on account of difference found between the credit entry in the bank account and sale proceeds shown by the assessee at ₹ 17,31,629/-. The AO has not brought any material on record that the assessee had made purchases outside the books of accounts. The sales included the cost of purchase plus expenses and net profit.
Therefore, the whole sale proceeds cannot be added as income of the assessee. As suggested by the ld.counsel for the assessee that 5% on net profit of total credit entries, i.e. ₹ 49,32,992/- be taken as income of the assessee which comes to ₹ 2,46,649/-. The appellant had already disclosed income at ₹ 1,30,757/- and returned income at ₹ 95,114/-. After reducing the amount of returned income, the net addition is worked out at ₹ 1,15,892/-; whereas as per the peak theory of investment, the maximum balance was at ₹ 2,05,643/-. The appellant had not established that all the cash deposited in the bank account came from the sale proceeds of the assessee. In the absence of complete books of accounts, we estimate the assessee’s income for the year under consideration at ₹ 2.05 lacs on the basis of ‘peak’ plus ‘income’ disclosed by the assessee in the return. When assessee’s income has been estimated on the basis of facts, no other addition remained to be justified as held by the various courts on this issue. - Decided partly in favour of assessee
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2014 (5) TMI 1101 - ITAT AHMEDABAD
Addition on account of assessee’s saving bank account - peak amount of entries - Held that:- We find that the fact that SB account of the assessee with “SNCB” was not disclosed in the account book of the assessee nor it was disclosed to the department, could not be controverted on behalf of the assessee. However, the action of the Department in adding the entire aggregate of the credit entries in the said bank account is not in accordance with the settled position of law. In such a case, only the peak amount of entries could be added as income in the hands of the assessee. Since the account of the assessee was undisclosed to the department and the peak amount is addable as income in the hands of the assessee, the plea of the Revenue that the assessee should prove the co-relation between the credit and debit entries in the said bank account, is not sustainable. In the facts and circumstances of the case, and in accordance with the settled law, we direct the AO to determine the peak amount in the said SB Account No.1001926 with “SNCB” and restrict the addition to the peak amount only, and this part of the ground of the appeal of the assessee is partly allowed.
With regard to the other addition of ₹ 40,000/- on account of inflation in opening stock, no argument was addressed on behalf of the assessee before us, and accordingly, the ground of the appeal of the assessee, with regard to the issue of this addition of ₹ 40,000/- on account of inflation in opening stock figure is dismissed. - Decided partly in favour of assessee.
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2014 (5) TMI 1100 - ITAT PUNE
Eligibility for deduction u/s.80P(2)(a)(i) - to whether the addition if any sustained u/s. 40(a)(ia) is eligible for deduction u/s.80P(2)(a)(i)? - Held that:- Addition made u/s.40(a)(ia) has to be allowed as deduction u/s.80P(2)(a)(i) of the I.T. Act. See Pharande Developers Versus ITO [2013 (6) TMI 690 - ITAT PUNE ]. In this view of the matter, the ground raised by the Revenue is accordingly dismissed.- Decided in favour of assessee
Addition on gross amount of MSEB commission - Held that:- We find merit in the submission of the Ld. Counsel for the assessee that pro-rata expenditure should be allowed to the assessee for earning the commission since the assessee has to incur various expenditure and such pro-rate expenditure comes to 91.40%. If the said rate is applied then the net income from MSEB commission after considering the expenditure works out to ₹ 19,531/- which is below ₹ 50,000/- and is eligible for deduction u/s.80P(2)(c). - Decided in favour of assessee
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2014 (5) TMI 1099 - ITAT PUNE
Eligibility for deduction u/s 80P(2)(a)(i) - Held that:- The income earned by co-operative society, engaged in the business of providing credit facility to its members is exempt. The assessee has earned income from facilities provided to its members. The fact that the income earned from members from loans advanced, which were partially secured out of borrowing from NDCC Bank, does not make any difference. Nowhere, it has been provided in the above section that in order to earn income from providing credit facilities to its members, amount used for giving credit facilities to its members should not be from borrowing from cooperative banks. In view of above, the CIT(A) was justified in observing that the assessee is eligible for deduction u/s 80P(2)(a)(i) - Decided in favour of assessee
Addition on account of income from cash collection counter - Held that:- the business activity of credit co-operative society and co-operative banks are similar in respect of accepting deposits, providing credit facilities and also carrying on activity of electricity bills, telephone bills collection centre. The Hon’ble Bombay High Court in the case of CIT Vs. Ahmednagar District Central Co-operative Bank Ltd. (2003 (7) TMI 50 - BOMBAY High Court ) has laid down that the activity of collecting bills, dues and charges for and on behalf of government, local authority, MTNL, BEST, MSEB, etc. is akin to banking activity and is eligible for deduction u/s. 80P(2)(a)(i). In view of above, the CIT(A) was justified in directing the Assessing Officer to allow the deduction u/s. 80P(2)(a)(i) in respect of the said income - Decided in favour of assessee
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2014 (5) TMI 1098 - ITAT MUMBAI
Additions made u/s 153C - Held that:- Additions are not sustainable when there is no indication of incriminating material having been found in the course of search to be used against the assessee.
Regarding the addition of ₹ 3.60 lakhs, being income from Bombay Rayon Fashions Ltd, it is submitted that the Assessing Officer made estimated additions based on the statement recorded during the assessment proceedings u/s 131 of Act. It is the case where AO estimated the income for personal use at the rate of ₹ 30,000/- per month and the same is not supported by any incriminating material. As stated above, such additions are not sustainable in law. Therefore, we are of the opinion that the additional ground raised by the assessee is allowed in his favour.
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2014 (5) TMI 1087 - ITAT CHANDIGARH
Sales Tax Subsidy received from Government of Gujarat - revenue receipt OR capital receipt - Held that:- The issue raised before us is identical to the issue before the Tribunal in assessee's own case and following the same parity of reasoning, we hold that the sales tax subsidy received by the assessee is assessable in the hands of the assessee as revenue receipt. - Decided against assessee
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2014 (5) TMI 1086 - ITAT AMRITSAR
Penalty under section 221(1) - non deposit tax under section 140A - Held that:- As per Explanation 221(1), the assessee shall not cease to be liable to any penalty merely by reason of the fact that before the levy of penalty he has paid to the tax. In fact, in the present case, the penalty u/s 221(1) of the Act was levied on 30.12.2009 on which date, the assessee was enjoying the money by investing the same in his sister concern in which he is stated to have incurred losses and by placing balance sheet of such company cannot help the assessee to prove good and sufficient cause and such action of investing money in the said concern M/s. Nijjar Agro Foods appears to be quite intentional for avoiding preferred liability of Income-tax. Therefore, there cannot be any good and sufficient cause established before any of the authorities below or even before us for not levying penalty. No infirmity in the order of the ld. CIT(A) who has actually confirmed the levy of penalty under section 221(1)of the Act - Decided against assessee
Rectification of mistake - reversal of returned income claiming exempt LTC gain which has been erroneously shown - Held that:- We concur with the views of the ld. CIT(A) that the AO is quite justified in rejecting the assessee’s rectification application because the mistake sought to be amended is not a prima facie mistake. Secondly, the assessee is submitting corroborating evidence with the rectification application which requires investigations and verification and as such the same is outside the purview of provisions of section 154 of the Act. However, the correct course would have been by seeking remedy by moving revision application u/s 264 before the CIT_II, Amritsar soliciting for revision of order passed u/s 143(1) of the Act or by filing revised return.- Decided against assessee
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2014 (5) TMI 1085 - ITAT PUNE
Reference to DVO - Held that:- Assessing Officer has no power to make the reference to the DVO for the A.Y. 2007-08 by invoking u/s. 55A of the Income-tax Act for determining fair market value as on 01-04-1981 on the opinion that FMV must be less than as declared by the assessee. - Decided against revenue
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2014 (5) TMI 1084 - ITAT CHENNAI
Entitlement to benefit to the assessee- societies available u/s. 80P(2)(a)(i) - Held that:- This issue has been considered in M/s. SL(SPL) 151, Karkudalpatty Primary Agricultural Co-operative Credit Society Ltd. Versus The Income Tax Officer [2014 (5) TMI 556 - ITAT CHENNAI ] as afer perusing the relevant provisions of State Co-operative Societies Act, 1983, governing similar assessees, the Tribunal found that definition of ‘members’ includes ‘associate members’, as well. The Tribunal found that such nominal members also enjoy statutory recognition as per the State Cooperative Societies Act. The Tribunal further observed that the objections of the Revenue that ‘members’ defined in sub-clause (i) of section 80P(2) should only include voting members, would amount to a classification within classification which is beyond the purview of taxing statute; unless provided specifically by the legislature.
Therefore, we find that the issue raised in these appeals stands adjudicated by the Tribunal in favour of the assessees. Accordingly, we set aside the orders of the lower authorities on this point and direct the assessing authority to grant the benefit to the assessee- societies available u/s. 80P(2)(a)(i). - Decided in favour of assessee
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2014 (5) TMI 1083 - ITAT HYDERABAD
Interest accrued to the assessee - @18% p.a. as claimed by the assessees in the suits filed for recovery of advances - Held that:- As assessees have stated before the CIT(A) that the amounts advanced are from out of the share application monies and temporary advances. It is so stated on the basis of entries in the Balance Sheet and the Profit & Loss Accounts of the respective assessees filed along with their returns of income. In the absence of any contract between the assessee companies and M/s. SCSL for charging of interest on the advances, the assessees are not entitled to receive any interest income on such advances. Therefore, merely because the assessee is following mercantile is system of accounting, it cannot be said that the interest has accrued to the assessees .Further, merely because the assessees have claimed interest at the rate of18% per annum in the suits filed for recovery of advances, it cannot be said that the said rate of interest is applicable as M/s.SCSL has not admitted the liability of even the amounts of advance. As such, we find that there is no certainty with regard to the said rate of interest. Therefore, it cannot be presumed that the interest accrued to the assessee at the rate of 18% p.a. as claimed by the assessees in the suits filed for recovery of advances.
The Civil Courts would consider and decide the liability of M/s. SCSL to repay the amounts of advances and would also consider the liability of M/s. SCSL to payinterest thereon and the rate of interest at which the advances should be repaid. Therefore, unless and until the liability to pay the advances and the rate of interest at which the temporary advances are to be repaid is determined by the Civil Court, it cannot be said that the same has accrued or arisen to the assessees. However, if the assessees had advanced interest bearing funds as interest free advances, the interest paid by the assessees towards such borrowed funds would have to be disallowed and treated as the income of the respective assessees. We find that neither the Assessing Officer nor the CIT(A) has examined the issue from this angle. Therefore, the orders of the CIT(A) and the Assessing Officer share set aside and the issue is remitted to the file of the Assessing Officer of the respective assessees for de no consideration in the light of our observations above. Further, we hold that if the amounts advanced to M/s. SCSL by the respective assessees are from their own funds, then the interest expenditure cannot be disallowed and brought to tax
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2014 (5) TMI 1082 - ITAT CHANDIGARH
MAT - Computation of book profits under section 115JB - addition on account of disallowance worked out under section 14A - plea of the assessee in this regard was that the assessee itself had disallowed sum on account of disallowance under section 14A under regular provisions and under section 115JB provision in its return of income on proportionate basis - Held that:- Similar issue of computation of book profits under section 115JB of the Act in view of readjustment on account of disallowance under section 14A of the Act arose before the Tribunal in assessee’s own case relating to assessment year 2008-09 wherein as directed Assessing Officer to adopt the book profits as per the Profit & Loss Account and do not make addition on account of disallowance worked out under section 14A of the Act, as such disallowance is computed under the normal provision of the Act, which are not applicable for determining book profits under section 115JB of the Act. - Decided in favour of assessee
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2014 (5) TMI 1081 - ITAT PUNE
Enhancement of income on account of incremental disallowance u/s 14A - Held that:- The stand of the assessee that no expenditure was allocable towards the earning of exempt income is a bald assertion; and, therefore the CIT(A) made no mistake in rejecting it and considering a portion of operating expenses as having been incurred towards earning of exempt income. The quantification of such expenditure done by the assessee is ₹ 3,76,53,360/-, which is the amount disallowed by the CIT(A) u/s 14A of the Act. We find no reason to discard the working which the assessee itself furnished and accordingly in so far as the disallowance of ₹ 3,76,53,360/- u/s 14A of the Act made by the CIT(A) is concerned, the same is hereby affirmed - Decided partl in favour of assessee
Claim of exemption u/s 10(23G) of the Act with respect to the interest income earned by the assessee from infrastructure advances - Held that:- Since the aforesaid issue was not before the lower authorities, we deem it fit and proper to restore it to the file of the Assessing Officer, who shall consider the assessee’s claim of exemption u/s 10(23G) of the Act on its merits, having regard to the facts and circumstances of the case. Need1l1ess to say, the Assessing Officer shall allow the assessee a reasonable opportunity to put-forth its claim, and only thereafter, he shall adjudicate the claim of the assessee as per law - Decided in favour of assessee for statistical purposes.
Deduction u/s 36(1)(vii) in respect of debts written-off by non-rural branches - Held that:- The claim of the assessee is that the said Additional Ground is entirely in tune with the judgement of the Hon’ble Supreme Court in the case of Catholic Syrian Bank Ltd. (2012 (2) TMI 262 - SUPREME COURT OF INDIA ). On this aspect also, we deem it fit and proper to restore the matter back to the file of the Assessing Officer who shall consider the claim of the assessee in the light of the judgement of the Hon’ble Supreme Court in the case of Catholic Syrian Bank Ltd. (supra). Herein also the Assessing Officer shall allow the assessee a reasonable opportunity to put-forth its claim and only thereafter, he shall adjudicate the claim of the assessee as per law.
Depreciation @ 25% in respect of electronic equipments and Safe Deposit Vaults, etc. grouping the same under the head ‘Plant & Machinery’ - Held that:- Having regard to the parity of reasoning laid down by the Hon’ble Bombay High Court in the case of Central Bank of India (1975 (6) TMI 12 - BOMBAY High Court ) as well as Punjab & Sind Bank Ltd. (2000 (5) TMI 31 - DELHI High Court). In both the judgements, it clearly emerges that in the case of a banking company, for allowing depreciation in respect of lockers, counters, steel equipment, electrical fittings, etc., their functional utility has to be evaluated. Assessing Officer is required to go into the aspect of the depreciation allowable in relation to the impugned assets afresh.
Exclusion of a sum out of the total income on account of write back of Provision for non-performing investments - Held that:- In our view, the aforesaid claim could not have been foreseen by the assessee at the time of filing of the return of income as it has emerged out of the past assessments, wherein certain additions/disallowances were made by the income-tax authorities. Therefore, instead of shutting out such a claim merely because of its absence in the return of income, the income-tax authorities ought to have examined the same on its merits. As a result, we therefore deem it fit and proper to set-aside the order of the CIT(A) on this aspect and direct the Assessing Officer to consider the factual position and thereafter allow the claim of the assessee in accordance with law. Needless to mention here, the Assessing Officer shall allow the assessee a reasonable opportunity to put-forth its claim and the Assessing Officer shall thereafter adjudicate the claim of the assessee as per law. - Decided in favour of assessee for statistical purposes.
Disallowance of depreciation on value of securities transferred from ‘Available for sale’ to ‘Held to Maturity’ - Held that:- Assessing Officer is directed to verify the claim of the appellant that depreciation is reduction in value of the securities held under the category 'Held to Maturity' because of reduction in market value of these securities as on 31st March 2004 which is the last day of the previous year relevant to the assessment year under consideration. If it is found that the reduction by way of depreciation is because of reduction in market value of securities as on the last day of the relevant financial year, the claim of the appellant shall be allowed as allowable deduction for the purpose of computing taxable profit during the assessment year under appeal.
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2014 (5) TMI 1080 - ITAT LUCKNOW
Disallowance u/s 40A(2)(b) - Held that:- In the present case, it is not the case of the Assessing Officer that any part of the remuneration paid by the assessee company to the directors was on account of extra commercial consideration and hence, the judgment of Punjab State Industrial Development Corporation Ltd. Vs Commissioner of Income-tax as reported in [1996 (12) TMI 6 - SUPREME Court ] by learned D.R. of the Revenue is not applicable in the facts of the present case. We also find that it is noted by CIT(A) that his predecessor has also adjudicated upon the same issue in favour of the assessee in assessee’s own case in the immediately preceding year and nothing has been brought on record before us by learned D.R. of the Revenue that the order of CIT(A) in the earlier year was reversed or modified by the Tribunal. We also find that although the Assessing Officer has invoked the provisions of section 40A(2)(b) of the Act but he has not established that the increase in remuneration to the directors is excessive or unreasonable. Under these facts, we do not find any infirmity in the order of learned CIT(A) on this issue. Accordingly, this ground of Revenue is rejected.- Decided against revenue.
Disallowance of depreciation on the vehicle - whether the assessee did not own the assets and it did not furnish the certificate of transfer of vehicle on which it had claimed depreciation at any point of time during the relevant part of the year - Held that:- In the facts of the present case, the entire purchase price paid by the assessee was received back because the car had some technical defects. For allowing depreciation on an asset, the assessee has to fulfill two preconditions that the asset should be owned by the assessee and it should be used by the assessee for business purposes. So far the user is concerned, it was submitted by the assessee that the assessee was using the car till it was returned to the seller but for the other condition i.e. the assessee was owning the car, we find that although the car in question was in possession of the assessee and the assessee used it also but no effort was made to get the car transferred in the name of the assessee company. It may have been different case if an effort was made to get the car transferred but the same could not be transferred for some technical defects. In the present case, no document has been brought on record to show that any effort was made by the assessee to get the vehicle transferred in its name. In fact, in the same year, the assessee intimated to the seller to take back the vehicle and refund the entire amount and the entire amount was refunded also although in a subsequent year. The assessee was retaining the car only because the seller did not return the money. As and when he returned the money, the assessee returned the car. Since the seller was using the money, the assessee was using the car. It does not make the assessee an owner of the car. The assessee was not even a beneficial owner and he is a bailor only because the assessee was to receive the full amount paid by it. Under these facts, in our considered opinion, it cannot be said that the assessee was owner of the car and therefore, depreciation is not allowable to the assessee. - Decided against assessee.
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2014 (5) TMI 1078 - ITAT CHANDIGARH
Capital subsidy - whether subsidy received was of a Revenue nature as per CIT(A)? - Held that:- In case before us, the subsidy was given in the category of small scale industry and under further sub head export oriented units. The subsidy is directly related to plant & Machinery. Therefore in our opinion, in this background the subsidy is clearly of capital nature and accordingly we set aside the order of the Ld. CIT(A) and hold that subsidy received by the assessee from Government of Punjab is in nature of capital receipt.
Disallowance on account of salary and wages on account of inflation of expenses - Held that:- The assessee has successfully explained the existence of extra attendance cards in respect of the number of the cards found during the survey but however, at the same time if we consider the case of 26 persons who had left the job in the month of August and Sept 2008 full explanation is not available. Therefore inflation of salary and wages cannot be ruled out totally. Considering overall explanation of the assessee and circumstances of the case, we are of the opinion that ends of justice would meet if a disallowance of ₹ 8 lakhs is made in respect of inflation of salary and wages in this case. This proposal was accepted by the Ld. Counsel for the assessee as well as the Managing Director of the company who was present in the Court, therefore we set aside the order of the Ld. CIT(A) and confirm the disallowance of ₹ 8 lakhs on account of salary and wages on account of inflation of expenses - Decided partly in favour of assessee
Addition on shortage of stock - Held that:- Assessing officer has not given any adverse comments and simply brushed aside the objection of the assessee by stating that item dealt by the assessee are numerous and are of different sizes. This is totally high handed approach by the Revenue. Whatever evidence is being filed, is not examined and simply brushed aside. Even before us, the Revenue could not point out any error in the valuation and the differences given by the assessee at page 323 to 329 of the paper book which were filed before the Assessing officer during assessment proceedings.Therefore in our opinion, these differences amounting to ₹ 12736887/- should have been accepted by the Ld. CIT(A). If these were supported by the copies of bills which have been filed in the paper book then same cannot be rejected.
Undisclosed sales - Held that:- Some stock was lying in Madhya Pradesh for which proper evidence has been filed. One more aspect was considered for determining of undisclosed sales and it was that assessee had employed more workers then actually shown in the books of accounts and for which addition of ₹ 86,57,239/- was made on that account which was reduced to ₹ 43,69,886/- by the Ld. CIT(A) because he accepted the contention regarding duplication of workers and contractor workers. However, we have already adjudicated this ground in above noted paras and addition has been reduced to only ₹ 8 Lakhs which was made only on estimated basis by us. Therefore this factor is also not available for the conclusion that the assessee had undisclosed sales. We also find force in the submission that during survey proceedings or otherwise the Revenue has not brought any material on record in form of any sales bill or diary notings that some sales have been conducted outside the books of accounts. Therefore in our opinion, this addition is totally uncalled for and accordingly we delete the same. Therefore this ground of assessee is allowed
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2014 (5) TMI 1077 - ITAT MADRAS
Method of depreciation - Held that:- The issue for the year under consideration is squarely covered by the decision of the Chennai Bench of ITAT in the case of K.K.S.K. Leather Processors Private Limited v. ITO [2009 (11) TMI 556 - ITAT MADRAS-D] directing to to allow the depreciation on WDV method
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2014 (5) TMI 1076 - ITAT MUMBAI
Claim exemption under section 54F denied - Held that:- In the case in hand, the residential property was not purchased by the assessee at the time of filing of the return. The claim was specifically made by the assessee before the appellate authority. But the first appellate authority failed to exercise its jurisdiction to consider the claim of the assessee.
We accordingly set aside the impugned order of the ld. CIT(A) and remand the matter back to the file of the ld. CIT(A) with a direction to consider the claim of the assessee regarding deduction under section 54F of the Act on merits after giving property opportunity to the assessee to represent his case. - Decided in favour of assessee for statistical purposes.
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2014 (5) TMI 1075 - ITAT PUNE
Valuation on account of impurities - Held that:- No interference is required in the order of the CIT(A) because he has allowed relief considering the trade practices, whereby the value of Gold in the ornaments manufactured, has been adjusted on account of impurities, alloy mixing, soldering joints, etc., whereas the Assessing Officer had adopted the rate of pure Gold. Nothing has been brought on record by the Revenue to establish any error in the approach of the CIT(A) in reducing the valuation on account of impurities, etc.. Accordingly, the action of the CIT(A) is hereby affirmed and the Revenue fails in its Ground of Appeal No.1.
Addition on account of interest expenditure by invoking section 40A(2)(b) - Held that:- Though the Assessing Officer was justified in examining the interest paid to M/s Gajara Finance within the prescription of section 40A(2) of the Act, so however, factually it is evident that the Assessing Officer failed to demonstrate as to how the payment of interest to M/s Gajara Finance @ 15% was excessive or unreasonable having regard to the market rate of interest, which was a condition precedent for making a disallowance in terms of section 40A(2)(a) of the Act. In this case, assessee pointed out before the CIT(A) that the loans raised from M/s Thane Janta Sahakari Bank Ltd. and ICICI Bank were on account of a cash credit facility and fo7r acquisition of car respectively. Both the loans were secured against assets and on the contrary, borrowing from M/s Gajara Finance was unsecured and this aspect clearly showed that the terms and conditions of the two borrowings were not similar. In-fact, this aspect also justifies the interest paid to M/s Gajara Finance at a rate higher than that paid to the banks. This aspect of the matter has not been controverted by the learned Departmental Representative before us, and continues to hold the field. Therefore, considering the aforesaid aspects and in view of the discussion of the CIT(A) which we have extracted above, Revenue has to fail on this Ground.
Disallowance out of interest expenditure by invoking section 40A(2)(b) - Held that:- The recipient organization to whom assessee has made the impugned payments. In order the CIT(A) has brought out the intended benefits, which the assessee was looking for, in return for incurring the expenditure. In our considered opinion, the decision of the CIT(A) does not require any interference inasmuch as he has factually brought out that considering the larger context of business expediency, the said expenditure has been incurred wholly and exclusively for the purposes of business. The order of the CIT(A) is hereby affirmed in the absence of any cogent material and reasoning with the Revenue to controvert the same. Thus, on this Ground also Revenue fails.
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2014 (5) TMI 1074 - ITAT HYDERABAD
Disallowance made u/s. 40(a)(ia) - non deduction of tds - Held that:- In this case as seen from the Profit and Loss A/c., the assessee had debited an expenditure of ₹ 23,38,41,519 out of total expenditure of ₹ 1212,47,48,985 and carried an amount of ₹ 1189,09,04,466 as work-in- progress in Balance Sheet. In other words, the assessee has not claimed this amount of ₹ 16,05,80,987 as an expenditure in the Profit and Loss A/c. In our humble opinion, unless and until the assessee claimed this as an expenditure while computing the income, the provisions of section 40(a)(ia) of the Act cannot be invoked.
The judgement relied on the learned DR is on the applicability of provisions of section 40A(3) of the Act in respect of payment made to a person in a day otherwise than by a account payee cheque drawn on a bank or account payee bank draft exceeding ₹ 20,000, no deduction can be made in respect of such expenditure. On the other hand, section 40(a)(ia) is with regard to disallowance in respect of payments where the assessee failed to deduct TDS. These two sections are not para materia.- Decided in favour of assessee
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