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Income Tax - Case Laws
Showing 41 to 60 of 541 Records
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2014 (6) TMI 1008
Best judgement assessment - Invoking provisions u/s 145(3) - application of profit rate of 3% on the estimated sale - AO has disbelieved the Account book submitted by the assessee mainly on the ground that sales are not supported by proper vouchers - Held that the sales are controlled and regulated by Excise Department and as there is no discrepancy in the stock register maintained and the Excise Department did not find any discrepancy - AO committed an error in disbelieving the Account book only on the ground that sales vouchers has not proper - there was no sufficient ground with the AO for invoking provisions u/s 145(3) - Decided in favor of assessee
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2014 (6) TMI 1007
Deduction u/s 10A computation - up-linking charges deducted for computing export turnover u/s.10A - Held that:- Substantial questions of law are answered in favour of the assessee as relyin on Commissioner of Income Tax and Another Vs. Tata Elxsi Ltd., & Others (2011 (8) TMI 782 - KARNATAKA HIGH COURT) wherein held charges both from the export turnover as well as from the total turnover for the purposes of computation of deduction u/s 10A of the Act.
Section 10A deduction allowable to the assessee in respect of profit making unit -Whether the tribunal was correct in failing to appreciate the substituted Section 10A of the Act by Finance Act, 2000 w.e.f. 1.4.2001 that the deduction is to be allowed u/s.10A of the Act on the total income of the assessee without setting out the loss from non-profit making units? - Held that:- As considered by this Court in the case of Commissioner of Income Tax and Another Vs. Yokogawa India Ltd., & Others reported in (2011 (8) TMI 845 - Karnataka High Court) and was answered in favour of the assessee and against the Revenue.
Deduction u/s.10A allowable in respect of income computed on the arms length price - Section 92(C)(4) applicability - Held that:- The error committed by the Assessing Officer was relying on Section 92(C)(4) to a case where Arm’s Length Price was determined by the assessee, whereas the said provision applies to a case where Arm’s Length Price was determined by the Assessing authority. That mistake has been corrected by the tribunal by setting aside the order passed by the Commissioner as well as the assessing authority. No error committed by the Tribunal in the impugned order. - Decided against revenue
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2014 (6) TMI 1006
Disallowance u/s 14A - reasonable disallowance u/s 14A - Held that:- As relying on case of Godrej Boyce Mfg. Co. Ltd vs. DCIT [2010 (8) TMI 77 - BOMBAY HIGH COURT] it is held that the provisions of Rule 8D shall apply w.e.f AY 2008-2009, prior to which the AO has to enforce the provisions of section 14A(1) by adopting the “reasonable basis on method consistent with all the relevant facts and circumstances after furnishing a reasonable opportunity to the assessee to place all germane material on the record.” In this backdrop, find that the disallowance u/s 14A in the appellant’s case being relatable to AY 2007-08 has to be worked out on a reasonable basis.
Section 145A applicability - addition on account of service tax - Held that:- As decided in M/s. Knight Frank (India) Pvt Ltd vs. Addl CIT [2013 (7) TMI 1033 - ITAT MUMBAI] the fact is that the assessee is a service provider company and patently, provisions of section 145A cannot be made applicable, because the provision was specifically introduced for the purposes of manufacture segment of business because section 145A(a)(ii) submitted before the CIT (A) mentions “.by the assessee being goods to be place of location & conditions as on the date of valuation are required to be included”.
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2014 (6) TMI 1004
Grant of registration u/s 12AA - charitable activity - scope of section 2(15) - Held that:- No doubt, applicability of the provisions of Sec. 13(1)(c) cannot be looked into at the time of registration but CIT is bound to look into whether the objects of the trust/institution are charitable/religious or not. We do not find any irregularity or infirmity so far as jurisdiction of CIT is concerned in ascertaining the purpose of the object for which the institution has been established. We have also examined the submission of the ld. AR that the Assessee is engaged in activity of education and rendering education in the game of cricket and therefore, the proviso to Sec. 2(15) will not be applicable in the case of the Assessee. In our opinion, this submission of the Assessee, keeping in view the objects of the Assessee, does not have any leg to stand in view of the decision of the Hon'ble Supreme Court in the case of Sole Trustee, Loka Sikhshana Trust‟s case [1975 (8) TMI 1 - SUPREME Court]
It is not the case of the Assessee that it is running a normal schooling for sports. Therefore, we hold that the Assessee‟s activities do not fall within the term “education”.
CIT has used material behind the back of the Assessee for rejecting the registration and has not given him proper opportunity, we, therefore, with our above observation set aside the order of CIT and restore this issue to the file of CIT with the direction that the CIT shall look into the matter of registration of the institution afresh after giving proper and sufficient opportunity to the Assessee to prove that the objects for which the Assessee institution is created are genuine and are for charitable purposes. We may clarify that while considering the application of the Assessee for registration, the CIT should not apply proviso to Sec. 2(15) retrospectively. If he so choses that in view of the proviso inserted w.e.f. 1.4.2009 the activities carried on by the Assessee no more remains charitable as per the amended definition of Sec. 2(15), he may pass an order u/s 154 rectifying his order withdrawing the registration of the Assessee in case he grants registration to the Assessee w.e.f. 1.4.2009 by passing a speaking order. Appeal of the Assessee is statistically allowed.
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2014 (6) TMI 1000
Tax on the interest received by the assessee on account of refund - Held that:- Section 244A provides, where refund of amount becomes due to the assessee under the Act, he shall, subject to the provisions of this section, be entitled to receive, in addition to the said amount, simple interest thereon calculated in the manner stipulated in the said Act. The said interest received by the assessee could be income in the hands of the assessee. Section 4 of the Act which is the charging section levies tax under the Act on such interest. The income received on 9.3.2004 is to be assessed for the years 1.4.2003 to 31.3.2004 which is previous year as the assessment year being 1.4.2004 to 31.3.2005. When once the assessee receives the income by way of interest, the liability to pay tax under the Act arises. As that income is received prior to 31.3.2004, it has to be declared for the year commencing from 1.4.2003 to 31.3.2004 and it has to be assessed during the period from 1 4.2004 to 31.3.2005. The date on which the order of the Tribunal is passed, though determined the rights of the parties, on that day, no income is received by the assessee. It is on receipt of the income, the liability to file return under the Act would arise.
The law provides for a reference to the civil court if the compensation awarded by the land acquisition officer, in the opinion of the land owner, is not sufficient and the reference court has jurisdiction to enhance the compensation and also to award interest on the said compensation. The said order is also subject to appeal and second appeal. In that context, it has been held that unless a competent court determines the liability to pay enhanced compensation and the compensation is paid in pursuance of such determination, the liability to pay tax on such compensation or the interest which is a component of interest would not arise. In the instant case, we are not dealing with any compensation. It is a simple case of payment of interest on the amount of refund which department found due to the assessee subject to the determination by the Appellate Authority. Therefore, no fault can be found in the order passed by the authorities. Decoded in favour of the revenue and against the assessee.
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2014 (6) TMI 999
Additions towards on money receipts - Held that:- The principles of natural justice require that no one should be punished on the basis of presumption. The addition has been made on presumption that if the assessee was suppressing the sale and expenses for subsequent year, he must have suppressed sales and expenses for earlier year also. Such addition could not be confirmed as the same was not supported by cogent material and evidence. The above decisions were referred to in respect of block assessment under Chapter XIV-B of the Act. The ratio laid down in these cases is applicable to the case of the assessee. In view of above facts and circumstances and also in view of the ratio as relied on by the assessee, the CIT(A) observed that the Assessing Officer was not justified in estimating on-money income in respect of all transactions of sale of plots, land and bungalows during F.Ys 2001-02 to 2007-08 relevant to A.Ys 2002-03 to 2008-09. Accordingly, the CIT(A) held that the addition made by the Assessing Officer on these accounts on estimate basis @ 50% of the recorded transactions was not unwarranted. This reasoned finding of CIT(A) needs no interference from our side. We uphold the same.
Unrecorded amount paid in respect of land at Gate No.150A, B, C - Held that:- The stand of the assessee has been that the registered purchase deed was not yet entered into. The Assessing Officer has not disputed/rebutted this contention of the assessee in the supplementary remand report dated 11.06.2010. In view of the above facts, the contention of the Assessing Officer that the assessee has not recorded cash payments of ₹ 42,20,574/- in the books of accounts was rightly rejected by the CIT(A). This reasoned finding of CIT(A) needs no interference from our side.
Addition on account of alleged unrecorded cash receipts - Held that:- It was not the case of the Assessing Officer that the amount received was over and above the consideration stated in the said agreement. Therefore even if for the sake of argument it is accepted that the amount was actually received by the assessee, the same could not be taxed in the hands of the assessee, as the same is in the nature of advance and the possession of the land is not given to the proposed purchaser and no sale deed was entered into in favour of the purchasers or any person nominated by the purchasers in this regard. In view of the above, the CIT(A) observed that the Assessing Officer was not justified in taxing the amount of ₹ 1,30,00,000/- in the hands of the assessee on account of alleged undisclosed receipt. This reasoned finding of CIT(A) needs no interference from our side because normal receipts were found with the person who made the payment G.K. Jadhav in his statement recorded on 08.02.2008 stated that an amount of ₹ 1.30 crores was not received and two persons were only mediators and this amount was made for betterment of the property in question. There is nothing as a result of which took after 51 days of alleged transactions claimed by the Assessing Officer. Moreover, no efforts have been made to take action u/s.153C of the Act against the two persons in respect of alleged unaccounted payment of 1.30 crores. There is nothing consideration of above deal as finally in favour of alleged purchaser. Accordingly, the order of CIT(A) on this point confirmed.
Addition on account of profit of extra work - Held that:- The actual work done in respect of 12 persons out of these 19 persons were included in the amount of actual work done of ₹ 38,26,284/- as per Page Nos. 30 to 40 of Annexure A-6. Further, it was pointed-out on behalf of assessee that other 7 persons including work of temple was only estimate for extra work which was not carried-out by the assessee. From the above facts, the CIT(A) concluded that the Assessing Officer incorrectly worked-out the amounts of extra work by considering amounts of estimates in respect of 12 persons and also amount of actual work done in respect of the said 12 persons. The Assessing Officer has also not considered that the 7 persons including the work for temple was not carried-out by the assessee and only estimate was worked out by the Engineer.
Difference between actual work done as noted in the seized diaries and receipts recorded in the books of accounts - Held that:- The stand of the assessee has been that the customers have actually paid ₹ 35,30,680/- in respect of the extra work. The stand of the assessee was found to be correct by the CIT(A) and he held that the actual amount received on account of extra work is in fact recorded in the books of accounts of the assessee company. In view of the above, the Assessing Officer was not justified in holding that the assessee has earned undisclosed profit of ₹ 6,70,819/- and ₹ 2,68,583/- in A.Ys. 2008-09 and 2007- 08 respectively. This reasoned finding of CIT(A) needs no interference from our side.
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2014 (6) TMI 998
Disallowance of interest expenditure - Held that:- Identical issue had come up for adjudication before the Tribunal in one of the group cases i. e. in the case of Eminent Holdings Pvt. Ltd [2014 (7) TMI 2 - ITAT MUMBAI] that matter was restored back to the file of the FAA. Departmental Representative(DR) left to the issue to the discretion of the Bench. After hearing the rival contentions, we are of the opinion that this matter should be remanded back to the file of the FAA.
Levy of interest u/s. 234 - Held that:- Provisions of section 234A, 234B and 234C were applicable to the notified person also. Therefore, upholding the order of the FAA to that extent, we hold that provisions of section 234 of the Act are applicable. As far as calculation part is concerned, we find merits in the submission made by the assessee. Therefore, we are restoring back the issue to the file of the AO for fresh adjudication who would decide the issue after considering the amount taxed deductible at source on the income assessed and after affording a reasonable opportunity of hearing to the assessee. Ground allowed in part in favour of the assessee.
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2014 (6) TMI 997
TPA - selection of comparable - Held that:- The assessee is engaged in providing software development services only to its AE in USA on cost plus basis. Assessee is registered under the Software Technology Parks of India’s Scheme of Government of India as 100% export oriented unit, thus companies functionally dissimilar with that of assessee or any extraordinary event undertaken need to be deselected from final list of comparable.
Allowance of risk adjustment - Held that:- It is a fact that the assessee has raised the issue of risk adjustment before the TPO as well as the DRP. In our considered opinion, this issue may become academic if the assessee’s contention in respect of comparables selected/rejected by TPO is accepted. Therefore, we restore this issue to the file of the AO/TPO for considering afresh if need be, after working out the margin in terms with our directions issued in respect of comparables selected/rejected by the TPO. If, after excluding/including the comparables as per our directions, hereinabove, the assessee’s margin is found to be within Arm’s length, then, issue of risk adjustment may not arise. This ground of the assessee is considered to be allowed for statistical purposes.
Excluding communication expenses from the export turnover while computing deduction u/s 10A - Held that:- This issue is squarely covered by the decision of the Hon’ble Bombay High Court in case of CIT Vs. Gemplus Jewellery [2010 (6) TMI 65 - BOMBAY HIGH COURT] and ITO Vs Saksoft Ltd (2009 (3) TMI 243 - ITAT MADRAS-D). Following the ratio laid down in the aforesaid judgments, we direct the AO to exclude the communication expenses from export turnover as well as total turnover while computing deduction u/s 10A of the Act.
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2014 (6) TMI 996
Initiating of proceedings u/s 147 - international transaction as identified as sham - assessment beyond ordinary period - Held that:- In case of assessment in relation to the present assessment year 2003-2004, it should be by the end of financial year 2008, while for the year 2004-2005, it should be by the end of financial year 2009. Before us, copies of such notices have not been produced. However, the learned Tribunal on fact found that the notice was issued beyond four years, but there has been no factual basis as required under the aforesaid provision to reopen the assessment beyond four years and within six years, meaning thereby pre-conditions for issuance of notice after four years and within six years, namely, the allegation of escapement of assessment on account of failure on the part of the assessee to make a return under Section 139 or in response to notice issued under sub-section (1) of Section 147 or Section 148 or to disclose fully and truly all material facts necessary for its assessment for that assessment year have not been fulfilled. When pre-conditions are not found in the notices, initiation of proceedings is bad. We cannot re-appreciate this finding in the absence of the allegation of perversity. - Decided in favour of assessee.
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2014 (6) TMI 995
Proceedings initiated u/s 153A - non-availability of the books of accounts - Held that:- We notice that the Tribunal, on fact, found that assessment was done on the basis of the estimated income. It was found again that there is no incriminating material and in the course of search, no books of accounts and vouchers were found and it was admitted that the M.D. consequent to the completion of the assessments, the relevant books of accounts and vouchers were shifted to a godown and they were not able to locate the relevant books of accounts. We fail to understand when the assessment was made on the estimated income, how there can be relevancy of books of accounts and for that matter, non-availability of the books of accounts could be a factor to exercise the jurisdiction under Section 153-C of the Income Tax Act, 1961. The learned Tribunal, on appreciation of fact, correctly concluded that such exercise was not called for.
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2014 (6) TMI 992
Seniority list of Income-Tax Officers - contempt proceedings against the respondents - Held that:- Department stated that entire seniority will have to be considered by CBDT looking to the proposal and other requirements which will take some more time. It is expected that such seniority list may be finalized as far as possible by 15th October, 2014. Petition is disposed of accordingly.
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2014 (6) TMI 991
Issue of claim of deduction under section 10B - profits on sale of incentives received under the scheme Vishesh Krishi Upaj Yojna @ 5% of FOB value of exports, received from Ministry of Commerce, Govt. of India - Held that:- CBDT has issued the circular No. 8 of 2002 dated 27.08.2002 which clarifies that the restriction in deduction under section 10A and 10B to 90% of the profits and gains of the enterprises was for only one assessment year i.e. 2003-04. The assessee is in appeal before us relating to assessment years 2006-07 and 2009-10. Hence, the assessee is entitled to the claim of deduction @ 100% of the profits and gains of the enterprises. We find that a mistake has occurred in the order of the Tribunal. In view thereof, we modify the findings of the Tribunal in para 62 and hold that the assessee is entitled to deduction @ 100% of the profits of the EOU unit.
We allow the Miscellaneous Application moved by the assessee relating to assessment years 2006-07 and 2009-10 on the issue of claim of deduction under section 10B of the Act to be allowed at 100% of the profits of EOU unit. The remaining order passed by the Tribunal shall remain unchanged.
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2014 (6) TMI 988
Disallowing a sum towards exchange difference by resort to provisions of section 43A - Held that:- Case of the assessee before the Commissioner of Income Tax (Appeals) was that the provisions of sec43A were not applicable as the foreign exchange was not on account of borrowing for the purpose of imported machinery. The assessee has filed a Paper Book which is available on record. However, it is not clear from the documents available on record whether the assessee had utilized the said foreign exchange for the purpose of acquisition of machinery from any country outside India. In case the basic condition of acquisition of asset from outside India is not satisfied then the provisions of section 43A are not attracted. In order to cull out the facts, we deem it fit to restore this issue back to the file of Assessing Officer to determine the facts of the case.
Disallowance on account of processing fee against the ECB loan - Held that:- The matter has been remitted back to the file of Assessing Officer against ground No. 2(a) in order to determine the nature of the ECB loan taken by the assessee. In case the said loan has been taken during the course of carrying on of the business, the expenditure incurred on processing fee is to be allowed as expenditure in the hands of the assessee. However, in case the said loan is utilized for the acquisition of assets from a country outside India, then the processing fee is a capital expenditure and the same is to be capitalized to the cost of Plant & Machinery. This aspect also shall be verified by the Assessing Officer
Disallowance u/s 14A - Held that:- The assessee had earned dividend income of ₹ 279,170/- and also agricultural income of ₹ 45,000/-. The Assessing Officer in view of the investments made by the assessee invoked the provisions of section 14A of the Act and disallowed a sum of ₹ 1,00,000/- out of general and administrative expenses and financial expenses relatable to earning of exempt income. The said disallowance was restricted to ₹ 50,000/- by the Commissioner of Income Tax (Appeals) against which the assessee is in appeal. The year under appeal is assessment year 2006-07 and the provisions of section 8D are not applicable and in view thereof, we restrict the disallowance to ₹ 20,000/-. - Decided partly in favour of assessee.
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2014 (6) TMI 987
TDS disallowance - Whether the Ld. CIT(A) was justified in deleting the disallowance u/s 40(a)(ia) by holding that TDS disallowance applies only to amounts ‘payable’ as on 31st March and not to amounts already paid during the year? - Held that: - the issues relating to the applicability of section 194C of the Act, as contained in the Grounds raised in the Cross Objection, as also the fresh plea raised by the assessee before us based on the second proviso to section 40(a)(ia) of the Act inserted by the Finance Act, 2012 w.e.f. 01.04.2013, deserve to be examined afresh on their merits. The aforesaid new plea has not been examined by the lower authorities, because they did not have the benefit of the insertion of second proviso to section 40(a)(ia) of the Act by the Finance Act, 2012 w.e.f. 01.04.2013 before them - the matter is restored back to the file of the Assessing Officer with directions to examine contentions of the assessee and decide the same - appeal allowed by way of remand.
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2014 (6) TMI 986
TDS u/s 194C and 194H - assessee purchased sugarcane from the farmers and has made payments to the harvesting and transport contractors without deduction of TDS - Held that:- Since in the instant case it has been categorically observed that the price fixed for sugarcane is negotiated on ex-factory gate basis and the responsibility to harvest and transport the sugarcane is on the cane growing farmers and since such transportation and harvesting charges and commission paid by the assessee have not been claimed as separate deduction by the assessee and the same have been deducted from the purchase price of cane paid to the farmer and the assessee only has made the payment on behalf of the farmer to the harvesting and transport contractors, therefore, the provisions of s. 194C and 194H, in our opinion, are not applicable to the facts of the present case.
We find from the assessment order for the asst. yr. 2005-06 passed under s. 143(3) on 15th Dec., 2008 that no such disallowance was made in the said scrutiny assessment order. Further, the submission of the learned counsel for the assessee that in the past years also there was no such disallowance under s. 40(a)(ia) could not be controvered by the learned Departmental Representative. The various decisions relied on by the learned Departmental Representative are distinguishable and not applicable to the facts of the present case. - Decided in favour of assessee
Disallowance of Bakshish under s. 40(a)(ia) - CIT(A) deleted the disallowance holding that the Bakshish paid to the harvesting and transport contractors directly by the assessee sugar factory is made on belief of sugarcane grower farmers - Held that:- It is the submission of the learned counsel for the assessee that such payment is made on completion of every harvesting season although the assessed is not contractually liable for such payment. However, same is paid to maintain good relationship with the labour force who come from outside Nashik and Marathawada Regions. It is also the submission of the learned counsel for the assessee that each individual payment is less than ₹ 20,000 and therefore tht provisions of s. 194C will not be applicable. The learned Departmental Representative could not controvert the above submission of the learned counsel for the assessee. Further, no such disallowance was made in the past yeas. The assessee has not claimed separately any such expenditure and the same has been debited to the purchase of sugarcane account. In view of our reasonings given in the preceding paras, we find no infirmity in the order of the CIT(A) deleting the disallowance - Decided in favour of assessee
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2014 (6) TMI 985
Addition on account of unaccounted receipt from National Dairy Development Board (NDDB) - Held that:- We find that the assessee is able to explain by filing details of packaging charges received to the sum of ₹ 1,20,27,912/- and why the difference kept in. The assessee has reconciled the figure of ₹ 7,22,171/- being the amount of packaging charges already booked in the Ay 1999-2000 and it has been verified by the AO as well as CIT(A). The second figure of ₹ 4,62,597/- being the amount received from NDDB was reflected under the head “other incomes” as is evident from the statement forming part of assessee’s paper book appearing at pages 27 to 31. From the above reconciliation it is clear that the assessee is able to explain why difference between the receipts as noted in TDS certificate and receipt declared by assessee arose. Accordingly, this amount of ₹ 12,32,996/- has rightly been deleted by CIT(A) and we confirm the same. This ground of appeal of revenue is dismissed.
Disallowance of interest on borrowed money - Held that:- We find that the assessee company contributed a sum of ₹ 2,10,48,250/- by way of its shares in the joint venture. The assessee company under the name of Metro Dairy Ltd. produces milk in joint venture with WBSCMPFL and NDDB. The joint venture is a business enterprise and investment by assessee in the same is wholly and exclusively for the purpose of business. The assessee company filed copy of joint venture agreement amongst assessee, WBSCMPFL and NDDB before the AO, before CIT(A) and even now before us. Once the investment is made in a joint venture and all the monies borrowed were used wholly and exclusively for the purpose of business, no interest can be disallowed. This issue is covered by the decision of Hon’ble Calcutta High Court in the case of CIT Vs. Rajib Lochan Kanoria (1994 (2) TMI 42 - CALCUTTA High Court ). Even this issue is covered by the decision of Hon’ble Bombay High Court in the case of CIT Vs. Reliance Utilities & Powers Ltd.(2009 (1) TMI 4 - BOMBAY HIGH COURT ) wherein it is held that if there is interest free funds available to assessee to meet its investments and at the same time the assessee has raised loans it can be presumed that investments were from interest free funds available. Even otherwise, for the purpose of consistency, the assessee has made this investment from AY 1994-95 to 1999-2000 no such interest was allowed by AO and accepted this fact. In term of the above, we are of the considered view that the CIT(A) has rightly deleted the disallowance and we confirm the same.
Addition under the head ‘Scooby Doo Promotion expenses’ - Held that:- As explained by the assessee before the AO that it did not receive any bill from Parley Agro Pvt. Ltd. but remitted ₹ 19/- per tray of Frooti Mango drink containing 27 tetra packs of the said juice. The assessee submitted complete breakup of ₹ 49,44,199/- paid/payable to Parley Agro Pvt Ltd. It was claimed by the assessee that it was under compulsion to participate in the scheme as a prudent businessman and accordingly, paid its share of expenses. It was the objection of the revenue that no services in exchange of payment to Parley Agro Pvt. Ltd. was received by the assessee company but it seems that the objection of the revenue is unjustified in view of the fact that the advertisement in the form of Scoobi Doo animation film was shown in Television and All India display of such film was intended for increase of the sale of “Frooti”. This being a promotional scheme assessee received huge success in business and this being a business itself, assessee’s expenses are also business expenses. We are of the view that the CIT(A) has rightly deleted the disallowance and we confirm the same
Addition on account of increase in closing stock of stores & spares etc. - Held that:- We find from the reconciliation that the increase in the value of stock from ₹ 48,19,274/- to ₹ 48,37,047/- i.e. ₹ 17,772/- was properly accounted by the assessee and in view of this, CIT(A) has rightly deleted the addition and we confirm the same.
Addition on unaccounted receipts from Dhara Vegetable Oil & Food Co. Ltd - Held that:- We find that as per TDS certificate issued to assessee by Dhara Vegetable Oil & Food Co. Ltd. the total bill of packaging charges amounting to ₹ 87,11,115/- and not ₹ 87,21,394/- as noted by the AO in the assessment order. The assessee explained before us that the gross bill of ₹ 87,11,115/-, it reversed the packaging charges of the earlier years attributable to under despatch packing material and added the packaging charges relating to under despatch packing material and the current year and there was discrepancy. We find that the assessee has determined the income chargeable under the head Profit and Gains of business in accordance with the method of accounting regularly employed by the assessee and also reconcile the discrepancy in the packaging charges vis-à-vis closing stock. Once the assessee explained the same, the addition cannot be made. Accordingly, we confirm the order of CIT(A) deleting the addition
Addition of amount received by assessee from Metro Dairy Ltd on account of TDS credit - Held that:- AO failed to correctly appreciate the submissions made by assessee in regard to real nature of receipt of the assessee. It is a fact that assessee has received a sum of ₹ 4,62,911/- on account of reimbursement of expenses incurred by assessee on a joint venture project carried on with Metro Dairy Ltd. Since this amount represented reimbursement of expenses it was not in the nature of income in the hands of the assessee. CIT(A) has rightly deleted the same and we confirm the same.
Addition on account of obsolete stores - Held that:- From the details of closing stock as on 31.03.2003 has shown in the statement enclosed with the assessee’s letter it is noticed that the total of the various items of closing stock of stores and spares was at ₹ 51,32,752/- from which obsolence amounting to ₹ 2,5,705/- was deducted. From the statement it is clear that this amount shown by the assessee as provision for obsolence rather it is a deduction claimed on account of obsolete stores and spares written off. This being an usual practice in the manufacturing industry to write off obsolete stores annually and therefore, claim as deduction from the closing stock is fully justified.
Addition on account of remission of sales tax - Held that:- The sales tax remission given under West Bengal Incentive Scheme 1993 and 1999 was not for assisting the assessee in carrying out its business operation but incurred the promotion of industries in the State of West Bengal and consequently, following the decision of Hon’ble Supreme Court in the case of Sahaney Steel & Press Works Ltd. Vs. CIT [1997 (9) TMI 3 - SUPREME Court ] holding the sales tax remission as capital receipt.
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2014 (6) TMI 982
Appeal admitted on following substantial question of law :-
Whether Tribunal was justified in law in holding that income received by the assessee during the assessment year in question from services/erection charges of plants and accessories was not a part and parcel of the income which it derived from their manufacturing activities from eligible undertakings/enterprises and, hence, they were not entitled to claim deduction available to them under Section 80-IC of the Income Tax Act, 1961 ?
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2014 (6) TMI 981
Eligibility for deduction under section 80IB - DEPB and duty drawback not considering - Held that:- We are not in agreement that the ITAT has erred in not considering both the aspects viz. the duty drawback as also the claim which was made towards DEPB. If DEPB was covered by Liberty India's judgment [2009 (8) TMI 63 - SUPREME COURT] then failure to consider duty drawback claim is unsustainable, is the plea. We are unable to agree with the same.
Supreme Court has considered both the claims and held as above. Therefore, ratio of that judgment is clearly applicable to the facts and circumstances of the present case. The Tribunal did not commit any error in holding that if the claim was of Daman Unit of the Assessee, then the matter was squarely covered against the Assessee and in favour of the Revenue by Liberty India' judgment.
From the copy of the order passed by the Delhi High Court in the case of Dharampal Premchand Ltd., [2010 (9) TMI 155 - DELHI HIGH COURT] it is apparent that Assessee filed return declaring certain income which included amount refunded as excise duty. The Assessing Officer held that the refund of excise duty was not income derived and therefore, the Assessee was not entitled to include the same in its income. It is in that event the Assessing Officer held that the deduction under section 80-IB in respect of that unit could not be granted. The Assessing Officer's order was reversed by the Commissioner of Income Tax (Appeals). The Tribunal reversed the order of the Commissioner of Income Tax (Appeals).
As a result of the above discussion and finding that the Tribunal's order is not vitiated by any perversity, we proceed to dismiss this Appeal
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2014 (6) TMI 980
Violation u/s.11(5) and 13(1)(d) - whether the exemption is to be withdrawn for the entire income or the portion of the income? - Held that:- This issue is covered by the judgment of the Bombay High Court in the case reported in Director Of Income-Tax (Exemptions) Versus Sheth Mafatlal Gagalbhai Foundation Trust(2000 (10) TMI 26 - BOMBAY High Court ).
Following the aforesaid judgment, this court in the case of Commissioner of Income Tax, Mangalore Vs. Fr. Mullers Charitable Institutions, Kankanady, Mangalore [2014 (2) TMI 1033 - KARNATAKA HIGH COURT ] has held the entire income of the assessee cannot be assessed for the tax, for violating under Section 11(5) read with Sec.31(1)(d) of the Act and what would become the subject matter of assessment is only that income which is the subject matter of violation. - Decided in favour of the assessee
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2014 (6) TMI 979
Disallowance of Commission paid to Managing Director of assessee company - Held that:- We find this issue to be covered in favour of the assessee by the decision of ITAT in assessee’s own case for AY 2005-06 [2012 (5) TMI 217 - ITAT DELHI] wherein the ITAT decided this issue in favour of the assessee. Since the issue is settled by the decision of ITAT in assessee’s own case in earlier years, we do not find any infirmity in the order of learned CIT(A) in deleting the disallowance
Disallowance u/s 14A applying the provisions of Rule 8D - Held that:- We find this issue also to be covered in favour of the assessee by the decision of ITAT in assessee’s own case for AY 2007-08 wherein the ITAT set aside the matter to the file of the Assessing Officer wherein held in case, the AO is satisfied with the claim of the assessee with regard to the expenditure or no expenditure, as the case may be, the AO is to accept the claim of the assessee insofar as the quantum of disallowance under s. 14A is concerned. In such eventuality, the AO cannot embark upon a determination of the amount of expenditure for the purposes of s. 14A(1). In case, the AO is not, on the basis of objective criteria and after giving the assessee a reasonable opportunity, satisfied with the correctness of the claim of the assessee, he shall have to reject the claim and state the reasons for doing so. Having done so, the AO will have to determine the amount of expenditure incurred in relation to income which does not form part of the total income under the said Act. He is required to do so on the basis of a reasonable and acceptable method of apportionment
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