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Income Tax - Case Laws
Showing 81 to 100 of 594 Records
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2014 (5) TMI 1073 - ITAT HYDERABAD
Estimation of profit at 10% on unaccounted turnover - Held that:- In the present case, when the assessee has admittedly not produced its books of accounts before the revenue authorities, there is no option left with them but to estimate the profit of the assessee. However, profit has to be estimated applying a reasonable rate. In the present case search has taken place on 12-9-2006 i.e., in financial year 2006-07 relevant to the asst. Year 2007-08. Therefore, taking it as a base we direct the Assessing Officer to estimate the profit on unaccounted turnover at double the rate of the average net profit declared by the assessee for the asst. Year 2007-08 and the preceding two assessment years i.e., asst. year 2005-06 and 2006-07. Further, the Assessing Officer must ensure that there cannot be inclusion of disclosed turnover while estimating profit from undisclosed turnover as per the seized material. In other words, turnover already disclosed should be excluded from the unaccounted turnover. Following the decision of co-ordinate bench in case of Sri Ravinder Kumar (2013 (6) TMI 739 - ITAT HYDERABAD), we direct the Assessing Officer to allow telescoping of the unaccounted income at the hands of the partners while considering investments made by them.- Decided in favour of assessee in part
Addition u/s 69C on account of unexplained purchases - Held that:- It is not disputed that the Assessing Officer himself has accepted the fact that the entries made in the loose papers represent unaccounted sales of the assessee. It is also a fact that the Assessing Officer has estimated profit on such unaccounted sales turnover. That being the case, it is not reasonable on the part of the Assessing Officer to make additions on account of unaccounted purchases on the basis of the same entries as found recorded in the seized documents. Therefore, the finding of the CIT (A) in this regard appears to be just and reasonable - Decided in favour of assessee
Addition of unaccounted interest income - Held that:- Assuming for the sake of argument that the amounts mentioned by the Assessing Officer is correct, then it actually represent the sale shown on credit basis (sundry debtors) as held by the CIT (A). That being the case, no addition can be made at the hands of the assessee on account of interest on such credit sales as the sales relate to the firm “Jai Balaji Sanitary Stores and not the assessee. In the aforesaid circumstances, in our view, the addition made by the Assessing Officer has no legs to stand. - Decided in favour of assessee
Addition as unexplained investment - Held that:- AR at the time of hearing before us as well in his written submission has submitted that assessee has neither purchased the land nor has paid the amount of ₹ 4,60,000/- to the persons concerned. In view of such submission, we are inclined to remit this issue to the file of the Assessing Officer to verify the claim of the assessee and decide the issue accordingly after affording a reasonable opportunity of being heard to the assessee. - Decided in favour of assessee for statistical purposes.
Entitlement to exemption u/s 54F - Held that:- It is worthwhile to note here the co-ordinate bench of this Tribunal in case of Sri M.V. Subramanyeswara Reddy and others (2014 (4) TMI 71 - ITAT HYDERABAD ) and Shyamlal Tandon vs. ITO (2014 (4) TMI 867 - ITAT HYDERABAD ) held that if the property is a residential property but used for commercial purpose the nature and character of the property would not change so as to invalidate the claim of exemption u/s 54F of the Act. Following the aforesaid view of the co-ordinate bench and considering the factual aspect of this issue, we allow the claim of the assessee u/s 54F of the Act. - Decided in favour of assessee
Addition as unaccounted income - Held that:- The amount received by the assessee on the dissolution of the firm was towards contribution made by him in the partnership business. Therefore, the amount received by him being a capital invested by him earlier in the partnership business cannot be treated as income of the assessee. We therefore direct the Assessing Officer to delete the same. - Decided in favour of assessee
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2014 (5) TMI 1072 - ITAT CHENNAI
Disallowance u/s.40(a)(i) - non deduction of tax at source on the commission payments made to the nonresident u/s.195(2) - CIT(A) deleted the disallowance - Held that:- The assessee has paid commission to foreign agent M/s.Met-Tech International Pte, Singapore for procuring export orders for the assessee from companies located in Japan, Indonesia and UK. The Commissioner of Income Tax (Appeals) has given categoric finding that the foreign agent had not extended any technical services but had only procured export orders. The commission was paid by the assessee on various dates through banking channels for the services rendered outside India. The Commission has been remitted in foreign currency outside India. The findings of the Commissioner of Income Tax (Appeals) on the issue remain unrebutted. The Hon’ble Supreme Court in the case of GE India Technology Vs. CIT reported as [2010 (9) TMI 7 - SUPREME COURT OF INDIA ] has held that, if the income chargeable to tax is not assessable in India, there is no question of deduction of tax at source. No error in the findings of the Commissioner of Income Tax (Appeals) on the issue. - Decided in favour of assessee.
Disallowance u/s.14A - CIT(A) deleted the disallowance - Held that:- The provision of Rule 8D cannot be applied in the assessment year under appeal i.e. 2007-08. However, reasonable disallowance has to be made for earning tax free income. The assessee has made additional investment of F1.33 Crores during the relevant financial year. Even if the investment is made from own funds, the assessee must have been spending some amount in managing its investment portfolio which is to the tune of F2.62 Crores. In our considered view, 5% of the dividend income earned is just and reasonable for making disallowance u/s. 14A. - Decided partly in favour of revenue.
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2014 (5) TMI 1069 - ITAT DELHI
Disallowance u/s 40(a)(ia) - amount paid by the assessee to the consolidator for transfer of rights - Held that:- The issue in relation to disallowance u/s 40(a)(ia) is concerned, the same is squarely covered in favour of the assessee by the decisions relied upon. The relevant conclusion as drawn by ITAT in the case of Finian Estates Developers Pvt. Ltd. (2012 (6) TMI 705 - ITAT, Delhi) which state that the provisions of s.40(a)(ia) of the Act in any case do not apply,the assessee having not claimed any deduction for any expenses on account of payment of Vikram Electric Equipment (P) Ltd., either in its P and L a/c or in the computation of taxable income filed. It was only that the A.O. recoded a loss of ₹ 19,700. This obviously, did not include any addition of either ₹ 4.02 crores of ₹ 1.24 crore.
So far as the issue in relation to genuineness of the expenditure is concerned, it is found that the Department has not challenged the findings of Ld. CIT(A) in this regard. So, considering the entirety of facts, circumstances, material on record and by following the precedents, we direct to delete the impugned addition made by the A.O. and confirmed by Ld. CIT(A). - Decided in favour of assessee.
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2014 (5) TMI 1068 - ITAT PANAJI
Depreciation on the UPS @ 60% as are applicable to the computers - Held that:- After hearing the rival submissions we found that this issue is duly covered by the decision of the Hon'ble Delhi High Court in the case of CIT vs. BSES Yamuna Powers Ltd. (2010 (8) TMI 58 - DELHI HIGH COURT ). Respectfully following the decision of the Hon'ble Delhi High Court, we delete the disallowance sustained by the CIT(A). - Decided in favour of assessee.
Transfer pricing adjustment in the operating margin of CDR unit and sustaining part addition therein by the CIT(A) - selection of comparable - Held that:- Out of the 5 companies for which the assessee has asked for relief before us and requested to exclude these companies also from the comparables, we further exclude 3 companies out of the comparables and sustain the action of CIT(A) to treat R. Systems International Ltd. to be a comparable company. We noted that exclusion or non-exclusion of R. Systems International Ltd. will not have much impact on the cash PLI because in the case of this company, the cash PLI comes to 26.1 per cent as computed by the assessee and filed before us while the average cash PLI in the case of the assessee comes to 32.67 per cent. The assessee has given average cash PLI of all the comparables at 24.97 per cent which is much below the cash PLI worked out in the case of the assessee at 32.67 per cent. The cash PLI earned by the assessee is much more than the average of the cash PLI in the case of the other comparables. Therefore, in our opinion, no addition on this account can be sustained in the case of the assessee. We, accordingly, set aside the order of CIT(A) and delete the addition sustained by CIT(A). - Decided in favour of assessee.
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2014 (5) TMI 1067 - ITAT MUMBAI
Taxable income of Insurance Company u/s 44 - nature of the funds transferred from shareholders’ Accounts to the Policyholders’ Account to meet out the deficiencies - Held that:- under the provisions of IRDA Act, the assessee is under obligation to maintain separate accounts namely ‘policy holders account’ and the ‘shareholders account’. In case, there is income deficiency in policy holders’ account, the funds are transferred from the shareholders account otherwise, both these accounts are part of the business of the assessee and it is case of transfer of funds from one hand to the other of the same person. Such transfer of funds to policy holders’ accounts should not be treated as income as it is a case of transfer of funds from one hand to the other. It is a tax neutral transaction. This issue is now settled by the decisions of the Tribunal in the case of ICICI Prudential Insurance vs. ACIT [2012 (11) TMI 13 - ITAT MUMBAI] - Decided in favor of Assessee.
Applicability of provisions of Section 14A on insurance Companies - dis-allowance of expenditure related to exempted income - Held that:- in view of the special provisions applicable to the insurance companies, we are of the opinion that the provisions of section 14A r.w.r. 8D were held not applicable to the insurance companies i.e., ICICI Prudential Insurance, HDFC Standard Life Insurance Company. Therefore, the SBI Life Insurance Company Limited (assessee in the present case should not be any exception. Considering the settled nature of the issue vide the decisions of the Tribunal’s orders - Decided in favor of assessee.
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2014 (5) TMI 1066 - ITAT PUNE
Transfer pricing adjustment - CUP v/s TNMM method - Held that:- TPO has wrongly applied the CUP method for determining the ALP in respect of some mentioned transactions pertaining to export of finished goods. More so, when the TPO accepts that more than 90% of the exports to the AEs are at ALP, there is no reason to apply CUP method for part of the exports. Accordingly, the additions made on this account are not justified and they are directed to be deleted.
Adjustment towards imports - Held that:- On behalf of assessee that in respect of most of the products, the assessee has paid lower price to its AEs as compared to the prices paid to Third Parties. This fact has been clarified by the assessee to the TPO filed by the assessee. In this background, it was submitted that considering the fact that in respect of most of the instances, the assessee has paid lower prices to the AEs as compared to Third Parties, which indicates that the pricing of the products is influenced by economic circumstances and underlying transactional differences. In some of the products where the price paid by the assessee to its AEs is more than the price paid to Third Parties, such higher price paid amounts to ₹ 2,55,063/-. However, in most cases, where the prices paid by the assessee to its AEs is lower than the price paid to Third Parties, the lower price paid is to the tune of ₹ 18,08,201/- as detailed on page 217 of the Paper Book. This aspect has not been appreciated by the TPO.In view of above discussion, the TPO was not justified in adopting CUP method for determining ALP in respect of some of the international transactions pertaining to import of goods.
Adjustment towards Commission paid to AE - According to the TPO, CUP method is the most appropriate method for computing the ALP of the commission payment made by the assessee to its AEs and compared the rate of commission paid by the assessee to unrelated domestic agents against the rate of commission paid to the AEs located in Europe - Held that:- We find that considering the vast differences in the functions performed, the comparison of the rate of commission paid by the assessee to the AEs and third parties is not justified. It is further to be appreciated that the assessee has given the details of the parties to whom commission is paid in the domestic market. The rate of commission varies from 1 % to 7% which itself indicates that depending upon the services rendered, the commission is paid. Accordingly, the TPO has wrongly applied the CUP method for determining the ALP in respect of transactions of payment of commission by the assessee company to its AEs.
Similar issues i.e. determination of ALP for export, import & commission arose in other A.Ys. 2007-08 and 2008-09. Facts being similar, so following the same reasoning, we hold that the TPO was not justified in applying CUP method for determining ALP on account of some export, import transactions and commission payments as discussed above. - Decided in favour of assessee.
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2014 (5) TMI 1065 - ITAT CHENNAI
Denial of benefits of Section 11 and Section 12 - whether CIT (A) had failed to recognize the assessee’s society which was registered under Tamilnadu Societies Registration Act and established for the promotion and control of the game of chess, to fall within the ambit of charity as prescribed U/s. 2(15) of the Income Tax Act, 1961? - Held that:- sports promotion is “human resources development’ and considering the policy declaration of Government of India, sports is construed at par with “education”. The Government of India does consider promoting and regulation of sports as constitutional obligation and discharges the same through recognized sports federations in India like that of the assessee. The Government also formulates sports management and provides training and technical assistance for development of sports in India. The National Sports Federations like that of the assessee honoring the national development board is the extended arm of Government providing training, coaching, development of skill among the sportspersons in India. In furtherance to the above discussions one can appreciate that in the present scenario, sports has also emerged as a profession the income derived from which is taxable, and such profession is associated with systematic and continues education in the sport one profess coupled with trained physical and mental fitness and therefore providing knowledge in any sport have to be treated at par with education.
Considering the scope of sports development in India, we are of the view that the recognized sports association in India, who impart knowledge in sports, promotion of sports by conducting various sports activities in all branches, to fall within the scope of “education as defined under the amended provisions of Section-2(15) of the Act”. Accordingly we hold that the objects of the assessee society will fall within the scope of the first limb of the amended provisions of section 2(15) of the Act viz., “education”. Further on analyzing the activities of the assessee society with regard to FIDE trainer coach fee, AICF chronicle, Prize money share, Rent on Monrai system, Title fees, Telecast charges–Doordarshan and FIDE remittances we find that all of them relate to the activities which are incidental to the main objects of the assessee’s society and therefore, proviso to section 2(15) of the Act will not be attracted. Based on our aforesaid decision the learned Assessing Officer is hereby directed to modify his order accordingly.
We hereby hold that the objects of the assessee trust falls within the scope of the first limb of Sec.2(15) of the Act viz. ‘Education’ and therefore, the proviso to Sec.2(15) of the Act will not be attracted and accordingly, the order of the Ld. CIT (A) stands confirmed in allowing exemption - Decided in favour of assessee.
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2014 (5) TMI 1064 - PUNJAB & HARYANA HIGH COURT
Reopening of assessment - unaccounted giving of accommodation/book entries - Held that:- During survey operation carried out on the premises of the assessee, it was discovered that the assessee was giving accommodation/book entries to various persons and this business was being carried out during the previous years relevant to assessment years 2002-03 and 2003-04. For reopening under section 147 of the Act, the appellant was found to be indulging in the business of arranging bogus long/short term gain/gifts/accommodation entries on commission basis. Evidence of cash deposits into various banks was also found. As no return had been filed for the assessment year 2002-03, the income generated from above business had escaped assessment within the meaning of Section 147 of the Act. The Tribunal held that the assessee had not furnished any returns of income for both the assessment years i.e. 2002-03 and 2003-04 and in the absence of the returns of income and because of availability of the information of escapement of income with the Assessing officer, the formation of belief under Section 147 of the Act and issue of notice under Section 148 of the Act was valid. In the light of the above, there is no justification in the submission made by learned counsel for the appellant that reopening was invalid.
After taking into consideration the totality of facts and circumstances where the assessee himself had admitted to have been carrying on the business of providing accommodation entries through several accounts belonging to him, his family members, brokers and also the admission of different stock brokers etc., the addition had been rightly made in his income.The narration of aforesaid factual matrix points out that the department had discharged the initial onus to prove the undisclosed income of the assessee and it was upon the assessee to have produced relevant material to rebut the same. No illegality or perversity could be shown in the aforesaid findings. In such circumstances, the findings recorded by the authorities below cannot be faulted. - Decided against assessee.
G.P. rate of 0.5% of the turnover - Held that:- As decided in assess's own case wherein rate of 0.5% of the turnover has been upheld
Unexplained investment on account of profit of trading of shares of assessee - Held that:- Tribunal upheld the order of the CIT(A) in the absence of any evidence that the said shares being actually purchased either in the name of the assessee or in the names of his family members was the unaccounted investment of the assessee and the same was to be included in the hands of the assessee. As regards the amount for the purchase of shares paid out of the bank accounts of the assessee, his mother and his son, the Tribunal restored the issue back to the Assessing officer to verify the source of payments made by the assessee to Mr. R.K.Kohli & Co. vis a vis the details of shares acquired. It was observed that if it was found that the transactions in the relevant source bank account had been considered while estimating the income in the hands of the assessee for accommodation basis, necessary credit shall be allowed while computing unexplained investments. The Tribunal further observed that in the assessment years 2003-04 and 2004-05, the benefit of telescoping is to be allowed in respect of income assesseed in the earlier years. The revenue had challenged the observations of the Tribunal with regard to the telescoping whereby the assessee was entitled to allowance of investment in shares relating to this period.The issue has been remitted to the Assessing Officer requiring re- examination for determining the quantum of unaccounted income in the hands of the assessee. In view of the above, no interference is called for.
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2014 (5) TMI 1063 - HIMACHAL PRADESH HIGH COURT
Revision u/s 263 - MAT computation - Whether doubtful loans written off as bad debts and subsequently credited to the profit and loss account by way of contra-entry, could be deducted from the book profits under clause (i) of Explanation 1 to section 115JB , especially when such doubtful loans had not been included in the book profits of the relevant years for the purposes of section 115JA or 115 JB? - Held that:- It would be seen that it had not been disputed before the ITAT that the sum represents the provision for non-performing assets created earlier years, not out of reserve created before 1.4.1997. Therefore, the same had to be reduced for computation of book profit in accordance with section 115JB. The ITAT has come to categorical findings of fact that following provisions were available for credit to the profit and loss account, which had been made after 1.4.1997 and not prior to it.Therefore, in the given facts and circumstances, we have left with no option but to uphold the order passed by the ITAT.
from the exposition of law, it can be safely concluded that the power of the Commissioner Income Tax to exercise suo motu revisional power in terms of Section 263(1) is in the nature of supervisory jurisdiction and the same can be exercised only if the circumstances specified therein viz “(i) the order is erroneous”; (ii) “by virtue of the erroneous order prejudice has been caused to the interest of the Revenue, however, every loss of revenue as a consequence of an order of Assessing Officer cannot be treated to be prejudicial to the interest of revenue. Both the conditions precedent for exercising the jurisdiction under section 263 of the Act are conjunctive and not disjunctive. The order of assessment passed by an Income Tax Officer, therefore, should not be interfered with only because another view is possible.
The ITAT has correctly interpreted the provisions of section 115JB of the Act and thereafter applied the same to the facts of each case(s). - Decided in favour of assessee.
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2014 (5) TMI 1062 - ITAT MUMBAI
Reopening of assessment - Held that:- The reopening of assessment originally completed u/s 143(3) by the AO beyond the period of four years from the end of the relevant assessment year was bad in law as rightly held by the ld. CIT(A) as the same was based merely on “change of opinion” and there was no failure on the part of the assessee, specifically pointed by the AO in the reasons recorded, to disclose fully and truly all material facts necessary for his assessment. The assessment completed by the AO us/ 143(3) r.w.s. 147 in pursuance of such invalid initiation, therefore, was bad in law and the ld. CIT(A), in our opinion, was fully justified in cancelling the said assessment. We, therefore, uphold the impugned order of ld. CIT(A) cancelling the assessment made by AO u/s 143(3) r.w.s.147 of the Act - Decided in favour of assessee.
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2014 (5) TMI 1060 - ITAT JODHPUR
Revision u/s 263 - CIT directed the AO to re-examine whether share profits disclosed by the assessee as short-term capital gain fell under the head 'Business income'? - Held that:- In the present case as we have already pointed out that the assessee furnished the details relating to the shares transactions, disclosed the profit on the basis of books of account wherein all the transactions were entered. The assessee was maintaining the shares transactions with three brokers under two portfolios i.e. investment portfolio and trading portfolio. The assessee disclosed short-term capital gain of ₹ 27,42,135 on the sale of shares which were held as an 'investment' and also declared profit of ₹ 2,23,199 as 'business income' on the day trading of shares. The assessee also paid security transaction tax. The AO during the course of assessment proceedings, asked the assessee to furnish the details relating to the sale transactions and the assessee furnished the same before the AO as well as before the learned CIT. So, it cannot be said that the assessee had not furnished the details relating to the shares transactions or the AO had not examined those details while framing the assessment under s. 143(3) of the Act. We therefore, by considering the totality of the facts of the present case, are of the view that the learned CIT was not justified in treating the assessment order passed by the AO under s. 143(3) of the Act as erroneous and prejudicial to the interest of the Revenue. In that view of the matter, the impugned order is set aside and the assessment order passed by the AO is restored. - Decided in favour of assessee
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2014 (5) TMI 1059 - ITAT LUCKNOW
Validity of assessment u/s 153C - Held that:- undisputedly the assessee was subjected to search action under section 132(1) of the Act, therefore, the assessment can only be framed upon the assessee under section 153A of the Act. The assessment under section 153C of the Act can only be done in those cases where the Assessing Officer, during the course of assessment upon searched person, has found some incriminating material relating to some other person upon whom search was not conducted. Having recorded his satisfaction, the Assessing Officer of the searched person may refer the material along with satisfaction note to the Assessing Officer of the person upon whom action under section 153C of the Act is required to be taken. But in the instant case, the assessee himself has been subjected to search action, therefore, the assessment under section 153C of the Act is not possible. The right course would be to complete the assessment under section 153A of the Act. Therefore, we do not find any infirmity in the order of the ld. CIT(A), who has examined the issue in the light of the relevant provisions of law and finally annulled the assessment. We accordingly confirm the order of the ld. CIT(A) and dismiss the appeals of the Revenue. - Decided against revenue
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2014 (5) TMI 1058 - ITAT CHENNAI
Deduction u/s 80P - CIT(A)’s only ground while denying claim of deduction is that the assessee has advanced loans to even the nominal/associate or ’B’ class members which is hit by section 80P(2)(a)(i) - Held that:- The assessee has produced before us an order in case of M/s SL(SPL) 151, Karkudalpatty Primary Agricultural Co-operative Credit Society Ltd. vs ITO [2014 (5) TMI 556 - ITAT CHENNAI]. Therein, after taking into consideration section 2(16) of the Tamilnadu Co-operative Societies Act, 1983, treating associate or ‘B’ class members within section 2(16) of the State Co-operative Societies Act, we have held that no such distinction could be drawn for the purpose of deduction u/s 80P(2)(a)(i) of the Act. We have also held that being a deduction provision, there is no scope for further classification within members. On being pointed out, the Revenue has failed to draw any distinction on facts. - Decided in favour of assessee
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2014 (5) TMI 1052 - ITAT CHENNAI
penalty u/s 271D and 271E - ITO has found during the survey proceedings that the assessee had violated the provisions of both the sections 269SS and 269T of the Income Tax Act as the assessee had accepted the loans in cash exceeding ₹ 20,000/- and repaid the loan exceeding ₹ 20,000/- - Held that:- From the penalty order, the facts are very clear that the assessee had borrowed ₹ 15.00 lakhs in cash and repaid 15.00 lakhs in cash in the assessment year 2008-09. Again he borrowed 20 lakhs on two occasions and repaid ₹ 24 lakhs in cash in the assessment year 2009-10. In the assessment year 2010-11, again, the assessee borrowed ₹ 20 lakhs and repaid in cash. In the assessment year 2011-12, he borrowed ₹ 20 lakhs and repaid ₹ 23 lakhs. Further, in the assessment year 2012-13, the assessee had repaid ₹ 13 lakhs in cash. These facts are not disputed by the assessee. He has not given any explanation neither before the Assessing Officer nor before the ld. CIT(Appeals) or even before us. He is not in a position to explain what is the reasonable cause for accepting loans in cash and repaid the same in cash. It is very clear from the order of the Assessing Officer that he has given as many as number of opportunities to explain his case before him. However, the assessee has not utilized those opportunities and he was not in a position to explain as to what was the reason for accepting and repaying monies in cash, which is contrary to the provisions of sections 269SS and 269T of the Act. After carefully going through the orders of the Assessing Officer and ld. CIT(Appeals), we are of the opinion that the assessee is not in a position to give any explanation either before the Assessing Officer or before the ld. CIT(Appeals) and therefore, he has avoided to attend before the lower authorities. Now, the ld. Counsel for the assessee is requesting to remit the matter back to the ld. CIT(Appeals), which appears to be not fair, just and proper.
Once the assessee obtained loans in cash exceeding ₹ 20,000/- and repaid it in cash, if this factual position is correct, the only option for the assessee is to explain the reasons under what circumstances the assessee has obtained the loans and repaid the loans in cash as prescribed under sections 269SS and 269T. Other materials and arguments of the assessee are irrelevant and immaterial in the context of the present case. In this case, the assessee has not explained under what circumstances he has borrowed loans in cash and repaid in cash either before the Assessing Officer or before the ld. CIT(Appeals). Even before us, no explanation was given. Under these facts and circumstances, we are of the opinion that this is a fit case to impose penalty - Decided against assessee.
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2014 (5) TMI 1051 - GUJARAT HIGH COURT
Condonation of delay - Inordinate delay of 415 days - Held that:- Though delay is substantial, it is explained by mentioning that the assessee is a partnership firm and Shri Nandkishore Sakarlal, who looks after the partnership’s financial and tax matters has not been keeping good health since last couple of years, during which he had been admitted for eight months in the hospital - Shri Nandkishore Sakarlal is aged about ninety years. Under the circumstances, delay is condoned. - Delay condoned.
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2014 (5) TMI 1042 - ITAT CHENNAI
Nature of payment made to M/s. Pyramid Saimira Entertainment Ltd. - goodwill v/s goodwill gesture - Revenue v/s capital - Held that:- The assessee has not been able to show as to who authorised M/s. Pyramid Saimira Entertainment Ltd., to receive payment from the assessee to be disbursed to the exhibitors who have actually suffered the loss. There is nothing on record to show whether the payments have been actually received by the persons who have suffered losses. Therefore, from the records, we find that M/s. Pyramid Saimira Entertainment Ltd., has no locus standi.
The assessee made the said payments to protect its goodwill in the market. The assessee has to operate and do business in the market in future as well, the assessee had to maintain its goodwill. The assessee has not been able to show from the agreements dated February 16, 2008 or supplementary agreement dated July 28, 2008 that the said payment is made in accordance with the covenants of agreement. A perusal of records, as well as the assessee's own admission make it absolutely clear that the payment was not made to discharge any legal liability. The payment was made either voluntarily or out of pressure from the market forces but it was certainly not out of business obligation. The assessee made the payment in the form of compensation to stay afloat in the business
The assessee has not been able to show that the payments were actually received by the persons who suffered losses. This casts a shadow over the genuineness of the payment. Even if the payment is believed to be genuine, the same is held to be capital in nature and thus cannot be allowed under section 37 of the Act. - Decided against assessee.
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2014 (5) TMI 1041 - ITAT COCHIN
Non deduction of tds - demand raised under section 201(1) and interest under section 201(1A) - "assessees-in-default" for non-deduction of tax at source on the interest paid to the depositors - Held that:- A plain reading of section 197A(1A) shows that the said provision overrides the provisions of section 194A if the modalities prescribed in section 197A(1A) are complied with. The section further states that the person responsible for paying any income of the nature referred to in section 194 or section 194A or section 194K shall not deduct tax under any of the abovesaid sections in the case of a person, if such person furnishes a declaration in writing in duplicate in the prescribed form and verified in the prescribed manner. Hence, it was contended by the learned authorised representative that the assessee cannot deduct tax at source, if the recipient of the interest amount furnishes declaration in the prescribed form.
We have already noticed that the duplicate copies of declarations furnished by the depositors in Form 15H/15G are required to be filed with the Chief Commissioner or Commissioner. Under these circumstances, it is not clear as to how the Income-tax Officer (TDS) can reject those declarations furnished by the depositors. We notice that the tax authorities have not addressed these contentions also.
Thus the Income- tax Officer (TDS) has passed the impugned orders without properly addressing the various contentions of the assessee. Accordingly, this matter requires fresh examination at the end of the Assessing Officer. Restore all the matters to the file of the Income-tax Officer (TDS) with the direction to examine all the issues afresh by duly considering various contentions urged by the assessee and take appropriate decision in accordance with the law. - Decided in favour of assessee for statistical purposes.
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2014 (5) TMI 1037 - ITAT CHENNAI
Penalty u/s 271(1)(c) - loss on account of currency fluctuation debited - Held that:- It is also true that the assessee has to evaluate the current position of such foreign exchange loan as on the last day of the previous year. If a liability is cast on the assessee on account of fluctuation in foreign exchange rate, the assessee has to provide for the same in its books of account. This is a mandatory provision for companies. The assessee has provided for such liability arising out of the currency fluctuation. In respect of such liability arising out of the currency fluctuation, treatment has to be given in two ways ; first, in respect of revenue items and second, in respect of capital items. In the present case, loss of RS.1,93,13,616 related to capital items and therefore, the said loss should have been added to the cost of assets acquired by the assessee utilising the foreign exchange loan as provided under section 43A. On the other hand, in its return, the assessee claimed this amount also as loss instead of claiming higher amount of depreciation. This is not a case of concealment of income or furnishing of inaccurate particulars. This is a case of a mistake or an oversight or at the best, a case of wrong claim. There is no scope to invoke section 271(1)(c) in the present case. - Decided in favour of assesse.
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2014 (5) TMI 1032 - ITAT CHANDIGARH
Deduction u/s 54B - new land purchased by the assessee was in the name of Nirmal Singh that is the son of the assessee - Held that:- assessee is basically an agriculturalist and is aged about 75 years. Further the land which was sold by the assessee was in the joint name of the assessee along with his son, which means the son was also part owner of the land - Even if we consider the decision of Jai Narayan v. ITO [2007 (8) TMI 295 - PUNJAB AND HARYANA HIGH COURT] the court has simply stated that the word "assessee" occurred in section 54B must be interpreted in same manner as occurring with the context and subject of its usage. Even from that angle since the son of the assessee was also joint owner of the land, which was sold (because name of the son was there in the land which the assessee was holding though beneficial owner is only the assessee). Therefore in our opinion, if the land was purchased in the name of the son of the assessee because of old age and other technical reasons, the assessee would still be entitled to deduction under section 54B of the Act. Accordingly we set aside the order of the learned Commissioner of Income-tax (Appeals) and direct the Assessing Officer to allow deduction under section 54B of the Act. - Decided in favour of assessee.
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2014 (5) TMI 1031 - ITAT CHENNAI
Capital receipt or Revenue receipt - Corpus fund - Held that:- The capital fund of a charitable society is built-up mainly by the life membership fee. This is more true in respect of associations like assessee. The assessee is a society of practising anaesthesiologists. Therefore, among other items, the life membership fee contributed by the members is also capital fund of the society. There should not be any doubt that the life membership fee always remains as contribution to the corpus fund of the society. The amount received by the society towards award fund is a specific fund. The contribution received to that specific fund is accumulated as capital fund in the accounts of the assessee-society and interest income arising out of that fund is used by the society for giving awards. Therefore, it is to be seen that contribution made towards award fund is not a voluntary donation conceived under section 12, but, corpus donation explained in section 12(1) of the Income-tax Act, 1961. - The said award fund stands separate and even though technically not termed as corpus fund, it is in the nature of capital fund and by virtue of that nature, it always stands in pari passu with capital fund of the assessee-society.
This is the same case with the amounts received towards IJA fund and WSJA fund. Those funds are specifically created for procuring journals, books and other professional materials for the development of practising anaesthesiologists. - all the four items objected to by the Assessing Officer are essentially part of the capital fund and therefore, have to be considered as corpus of the assessee-society. These are all specific funds for fulfilling specific objectives. Further, all those funds always remain as capital funds and those funds are used only for the purpose of fulfilling the objectives for which those separate funds are constituted. - lower authorities have grossly erred in treating the above stated four funds as voluntary contributions in the nature of income as provided under section 12 of the Income-tax Act, 1961. We set aside the findings of the lower authorities. We direct the Assessing Officer to treat the four funds as capital funds and exclude them from the computation of income for the impugned assessment year. - Decided in favour of assessee.
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