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Income Tax - Case Laws
Showing 81 to 100 of 541 Records
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2014 (6) TMI 944
Assessment u/s 153C - Held that:- The person who has passed the order in the case of the searched person u/s. 153A of the Act is required to record the satisfaction note before completion of assessment u/s. 153A of the Act. The CIT(A) categorically held that/there was recording of satisfaction by the Assessing Officer of searched party and thereafter notice u/s. 153C was issued since the assessee was a party to a transaction as per the evidence seized in the course of search action u/s. 132 of the IT Act in the case of AV Prasad Group cases and the AR is not able to controvert these findings. Being so, it is to be held that invoking of provisions of section 153C in these cases is justified.
Capital gain - whether the property represents a capital asset and the gain on transfer of the land is taxable under the head 'short term capital gain' - main contention of the assessee's counsel is that sale of land was exempt u/s. 2(14) - Held that:- In a case where the purchase has been made solely and exclusively with the intention to resell at a profit and the purchaser has no intention of holding the property for himself or otherwise enjoying or using it, the presence of such an intention is a relevant factor and unless it is offset by the presence of other factors it would raise as strong presumption that the transaction is an adventure in the nature of trade. Even so, the presumption is not conclusive and it is conceivable that, on considering all the facts and circumstances in the case, the court may, despite the said initial intention, be inclined to hold that the transaction was not an adventure in the nature of trade. The presumption may be rebutted. In the present case, considering the facts and circumstances of the case it cannot be considered as an adventure in the nature of trade. The intention of the assessee from the inception was to carry on agricultural operations. Merely because of the fact that the land was sold in a short period of holding, it cannot be held that income arising from the sale of land was taxable as profit arising from the adventure in the nature of trade or capital gain. The period of holding should not suggest that the activity was an adventure in the nature of trade.
In view of our above discussion, in our opinion, the land is not situated within the Qutubullapur municipality, but, the same situated in the Dundigal village and the evidence brought on record suggest that the land is an agricultural land, hence, it is not liable for taxation. Accordingly, the addition made on this count is deleted in all the appeals under consideration - Decided in favour of assessee
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2014 (6) TMI 943
Appeal admitted on the following substantial questions of law:
a) Whether, the Income Tax Appellate Tribunal was right in holding that the provisions of Section 36(1)(viia) of the Income Tax Act, 1961 do not apply to bad debts report of two advances made by nonrural branches particularly after the insertion of Explanation 2, after the renumbered Explanation 1 to clause (viia) of subsection (1) of Section 36 by the Finance Act, 2013 with effect from 01st April, 2014?
(b) Whether, on the facts and circumstances of the case and in law, the Tribunal was justified in deleting the addition on account of reversal of unrealized interest?
(c) Whether, the reversal of interest was permitted in law in view of the specific provisions of Section 43D of the Income Tax Act, 1961 according to which such interest is taxable in the year of credit or receipt whichever is earlier?
(d) Whether, on the facts and circumstances of the case and in law, the Tribunal was justified in deleting the addition on account of provision for Rural Advances and provision against bad and doubtful debts?
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2014 (6) TMI 942
Deduction in respect of R&D expenses - revenue v/s capital expenditure - Held that:- It is admitted that AO in this case has not verified the allowability of the expenditure. He has specifically asked the Ld. CIT(A) that the same will be done if directed by him. It is not a case that the Ld. CIT(A) has himself examined the nature of these expenses and examined the allowability of these expenses as to whether the same were incurred wholly or exclusively for the purpose of business. As a matter of fact that Ld. CIT(A) has not even mentioned about the quantum of R&D expenses in his appellate order. There is no mention about the examination about nature of expenses. In these circumstances, in our considered opinion, interest of justice will be served if the matter is remitted to the file of the AO. The AO is directed to examine the issue of allowabilty of R&D expenses, after giving the assessee proper opportunity of being heard.
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2014 (6) TMI 941
Transfer pricing adjustment - whether the assessee constitutes a Permanent Establishment in India in terms of Article 5 of the DTAA between India and the USA? - Held that:- We agree with the Ld. CIT(A) that the compensation which has been represented to a sale consideration for the equipment represent the payment for works contract where entire installation and customisation has been carried out in India. That the subsidiary has not only acted as a service provider for the assessee, but at the same time acted as a sale outlet cooperating with after sale service and also providing any assistance or service requested by the assessee. The assignment agreement between Indian subsidiary (assignor), the assessee company (assignee), the parent company Nortel Network Canada (the guarantor) and Reliance Infocom (the Purchaser) indicates that the contract initially signed by the Indian company gets assigned by the Indian subsidiary to the assessee and all the risk and responsibility in this regard are assumed by the parent company.In the background of the aforesaid discussion, we agree with the Ld. CIT(A) that activities of the assessee in India constitute PE of the Assessee in terms of Article 5 of the Indo US DTAA. The activities carried out by the PE are the core activities of the assessee resulting in generation of income to the assessee and they cannot be considered to be preparatory and auxiliary and therefore, the contention of the assessee that it do not have PE in India is rejected.
Profits arising to the assessee from supply of telecom hardware to Indian customers is attributable to the PE in India @50% as per CIT(A) - Held that:- We are in agreement with the AO that the accounts of the assessee furnished in the assessment proceedings have no sanctity. The same were not audited. The gross trading loss incurred from transaction within the group cannot be explained except for the reasons, that it has been designed as such to avoid taxation in India. Hence, we agree that for all purposes the accounts of the Nortel Group would give a true and correct picture of the profit of the assessee. Hence, AO’s reference to the global accounts of the Nortel and gross profit margin percentage as 42.6% is accepted. Now we come to the issue as to how much of the profit is attributable to the PE. The AO in this regard has only allowed 5% of the turnover as deduction pertaining to other selling general and marketing expenses.
We find that Ld. CIT(A) has held that AO was justified in resorting to Rule 10 as stated hereinabove. We have already concurred with the same. We find ourselves in agreement that the CIT(A)’s proposition that when profits are computed under Rule 10 after applying the profit rate, the expenses pertaining to the PE have to be allowed as deduction. Assessee has contended before the Ld. CIT(A) that in other cases attributed profits was determined @ 20% in the case of Nokia and 35% in the Rolls Royce. In this regard, Ld. CIT(A) has held that income of the PE has to be computed on the facts of each case. Ld. CIT(A) has held that he was of the view that an attribution of 50% of the profits to the activities of PE in India would be a reasonable attribution.
Thus we note from the gross profit computed by reference to the rate applicable to the global accounts of the assessee, further substantial deduction has been allowed for selling general and marketing expenses and also R&D expenses. Thereafter, 50% of the resultant figure has been attributed to PE. This in our opinion meets the ends of justice.
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2014 (6) TMI 938
Depreciation on goodwill - Held that:- Allowability of depreciation on goodwill i.e. intangible asset is covered in favour of the assessee with the decision of the Hon’ble Apex Court in CIT Vs. Smifs Securities Ltd. (2012 (8) TMI 713 - SUPREME COURT ), and accordingly, we hold that the assessee is entitled to depreciation on goodwill - Decided in favour of assessee
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2014 (6) TMI 937
Penalty u/s 271(1)(c) - bogus expenditure - CIT(A) deleted the addition - Held that:- A clear finding is given by CIT(A) that no positive material is brought by the Assessing Officer on record to indicate that the said expenditure claimed by the assessee was bogus and/or the assessee had concealed its income or had furnished inaccurate particular of the income. These findings of the CIT(A) could not be controverted by learned D.R. of the Revenue.
We also find that it is noted by the Assessing Officer in the penalty order that in the course of assessment proceedings, the assessee has filed details of various expenses but was unable to furnish complete vouchers in respect of expenses claimed. It is also noted by the Assessing Officer in the penalty order that the books of account of the assessee were rejected by the Assessing Officer u/s 145(3) of the Act and the Assessing Officer estimated the income by allowing expenses on estimate basis.
Under these facts, the judgment of Naresh Chand Agarwal vs. CIT [2013 (6) TMI 68 - ALLAHABAD HIGH COURT ] by Learned A.R. of the assessee is squarely applicable. In that case also, the income was assessed by the Assessing Officer by applying the net profit rate of 8% and it was held by Hon'ble High Court that when the addition is made on estimate basis, no penalty u/s 271(1)(c) can be imposed. In the present case also, the disallowance is made on estimate basis and respectfully following this judgment, we are of the considered opinion that there is no infirmity in the order of CIT(A) and therefore, we decline to interfere in the order of CIT(A). - Decided in favour of assessee
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2014 (6) TMI 934
Non-compete fee - whether capital in nature - whether assessee is entitled to depreciation on the same - Held that:- A right acquired by way of non- compete can be transferred to any other person in the sense that the acquirer gets the right to enforce the performance of the terms of agreement under which a person is restrained from competing. When a businessman pays money to another businessman for restraining the other businessman from competing with the assessee, he gets a vested right which can be enforced under law and without that, the other businessman can compete with the first businessman. When by payment of non-compete fee, the businessman gets his right what he is practically getting is kind of monopoly to run his business without bothering about the competition. Generally, non-compete fee is paid for a definite period. The idea is that by that time, the business would stand firmly on its own footing and can sustain later on. This clearly shows that the commercial right comes into existence whenever the assessee makes payment for non-compete fee. Therefore that right which the assessee acquires on payment of non-compete fee confers in him a commercial or a business right which is held to be similar in nature to know-how, patents, copyrights, trade marks, licences, franchises.
Therefore the commercial right thus acquired by the assessee unambiguously falls in the category of an 'intangible asset'. Their right to carry on business without competition has an economic interest and money value. The term 'or any other business or commercial rights of similar nature' has to be interpreted in such a way that it would have some similarities as other assets mentioned in Cl.(b) of Expln.3. Here the doctrine of ejusdem generis would come into operation and therefore the non-compete fee vests a right in the assessee to carry on business without competition which inturn confers a commercial right to carry on business smoothly. When once the expenditure incurred for acquiring the said right is held to be capital in nature, consequently the depreciation provided under Sec.32(1)(ii) is attracted and the assessee would be entitled to the deduction as provided in the said provision ie., precisely what the Tribunal has held. - Decided in favour of the assessee
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2014 (6) TMI 933
Sale of flat - short-term capital gains or long- term capital loss - Held that:- In order the calculate three years for the purpose of computing the capital gain, one has to take into account the date of allotment of the flat from the builder to the assessee, and it is pertinent to take note that from that date onwards the right to the said property is acquired by the assessee. In this case we find that the assessee had made the 1st payment for the flats (702 and 703) on 15.04.2006 and the said fact is corroborated by the letter written by the builder to the assessee dated 21.05.2006, which clearly refers to the progress in the construction of flat No. 702; and it is also reminder to the assessee to remit the rest of the part payment, which clearly goes on to substantiate the contention of the assessee that Flat No. 702, was in fact allotted to it and also to the fact that the construction of the said flat began soon after the first installment was paid by the assessee on 15.04.2006. Thus we find that the appellant had acquired the valuable right, title and interest in property on 15.04.2006 for flat No. 702. Therefore we direct the AO to allow the claim of long term capital loss on sale of right in Flat No. 702.
However in respect to Flat No. 703 the same may be verified by the AO. Having said so we set aside the order impugned and direct the AO to decide the date of allotment of flat No. 703 in the light of evidence placed on record and any other enquiries deemed fit by the AO in this matter. Needless to say that adequate opportunity be granted to the assessee before passing any order in this aspect.
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2014 (6) TMI 932
Allowable expenditure u/s.48(i) - brokerage/commission - that:- When the total capital gain earned by the assessee is ₹ 26.13 crores for the A.Y. 2006-07 to A.Y. 2008-09 and he has duly paid taxes thereon and the capital gain earned by the individual members of the group is ₹ 148.95 crores there was no justification on the part of the assessee to claim such a meagre commission for sale of the land which is hardly 0.5% to 1.5% as against the prevailing market rate of about 2% and above. In this view of the matter we find merit in the submission of the Ld.counsel for the assessee that the payment of brokerage at ₹ 25,96,400/- was an expenditure incurred wholly and exclusively in connection with the transfer of the land which is an allowable expenditure u/s.48(i) of the I.T. Act. We therefore set-aside the order of the CIT(A) and direct the AO to delete the disallowance made. - Decided in favour of assessee
Addition on account of unexplained jewellery found during the course of search action at the residential premises of the assessee - Held that:- Admittedly the AO has already given credit for explaining the jewellery belonging to the family members as per the instruction of the CBDT. The assessee could not bring on record anything more to prove that he has purchased the jewellery out of his withdrawals. In absence of the same, we do not find any infirmity in the order of the CIT(A) sustaining the addition - Decided against assessee
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2014 (6) TMI 931
reopening of assessment - permission from Commissioner of Income Tax instead of Joint Commissioner of Income - Tax Held that:- reopening of assessment after taking permission from Commissioner of Income Tax instead of Joint Commissioner of Income Tax is not valid. Accordingly, the same is quashed. Once the issue of notice under Section 148 is held to be invalid, consequentially, the assessment order passed in pursuance to such notice is also quashed. - Decided in favour of assessee
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2014 (6) TMI 930
Non entitlement to deduction of 10% of the aggregate average advances made by its rural branches u/s. 36(1)(viia) - Held that:- An identical issue was considered by the Hon’ble Jurisdictional High Court in the assessee’s own case [2014 (8) TMI 635 - KERALA HIGH COURT ] wherein noted that the assessees are not primary agricultural credit co-operative society or other kind of bank so as to go out of the definition of cooperative bank under sub-clause (a) to clause (viia) of section 36(1) - No doubt, Explanation (ia) to section 36(1)(viia) defines what is a rural branch - It is with reference to a place and certain number of population - It refers to branch of a scheduled bank or a non-scheduled bank - co-operative bank also falls under the category of non-scheduled bank for the purpose of this section - reading of the entire section 36(1)(viia)(a) along with the Explanation would mean two kinds of deductions referred to in the section will be allowed to all those banks only if they satisfy the terms and conditions referred to in the provision - the authorities below were justified in opining that the benefit of deduction of 10 per cent of the aggregate average advances is applicable to co-operative bank also provided their rural branches have advanced such amounts - - Decided against Assessee.
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2014 (6) TMI 929
Disallowance u/s 14A - Held that:- The assessing authority should take note of these develpoments in deciding whether any expenditure is incurred in earning the said income. The discussion by the assessing authority clearly demonstrates these aspects has not been taken note of and the notional expenditure is calculated pre modernization. When the assessee has not incurred any expenditure for realizing this income, the question of holding that 2% of the gross total income is an expenditure and that has to be added back to the income is unsustainable in law. - Decided in favour of assessee.
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2014 (6) TMI 928
Revision u/s 263 - whetehr Revenue proceeds in invoking section 263 of the Income Tax Act 1961 although the view taken by the Assessing Officer is a possible view of the matter? - Held that:- If the Tribunal's order is perused, the Tribunal merely emphasized on the Commissioner that he could not have invoked section 263 of the Income Tax Act in the given facts and circumstances but the Tribunal emphasized the fact that despite the authoritative pronouncement in the case of Malabar Industrial Co. Ltd. [2000 (2) TMI 10 - SUPREME Court ] the Commissioner has proceeded to exercise his powers under section 263 of the Income Tax Act to set aside a possible view of the matter. It is not that the Tribunal was emphasizing anything on the merits of the claim or that the view taken in Sulzer's case was the one applicable in its entirety on merits. What the Tribunal was emphasizing is when the Assessing Officer has taken a possible view, then section 263 of the Act could not have been invoked and that is how the Tribunal proceeded to set aside the order impugned in the Assessee's Appeal. No attempt was made to show that the Assessing Officer's view was not a possible one. Even otherwise, there was enough material in law to indicate that the legal position is otherwise. In such circumstances, we would not permit Mr Ahuja to argue before us that the present Appeal should be admitted on questions which were not subject matter of the Tribunal's order. We would not therefore make any observation with regard to the correctness of the view taken by the Tribunal in the Full Bench decision in M/s Sulzer India Ltd. [2010 (11) TMI 728 - ITAT, MUMBAI ]
We agree that the Tribunal could not have invoked section 263 of the Act and the remedy of the Revenue if any, in law lies elsewhere. The order passed by the Assessing Officer has to be restored only on this count. It is only to emphasize and repeatedly that section 263 of the Income Tax Act could not have been invoked, that the Tribunal held that the view taken by the Assessing Officer is a possible view
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2014 (6) TMI 927
Computation of Arm’s length price - Selection of comparables by TPO – Held that:- It the learned Tribunal has [2014 (3) TMI 626 - ITAT HYDERABAD] decided all the points which are sought to be agitated before us, relying on earlier decisions of Bangalore and Hyderabad Benches of the Tribunal and we do not find any reason to interfere with the impugned judgment. – Decided in favour of Assessee.
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2014 (6) TMI 926
Non-appearance by the assessee on the appointed date of hearing - assessee has prayed for recalling of the ex-parte order - Held that:- As there was sufficient cause for the non-appearance by the assessee at the time of hearing, and therefore we deem it fit and proper to recall the ex-parte order dated 22.06.2012 (supra).
The captioned appeal is directed to be listed for hearing before the regular Bench on 10.09.2014 to be adjudicated on merits as per law.
Since the above date of hearing has been announced in the open Court in the presence of both the parties, the requirement of issuance of a formal notice of hearing is hereby dispensed with.
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2014 (6) TMI 925
Non deduction of tax at source on the payment of interest on the deposits to members and non-members - Held that:- Disallowance made on account of interest paid by the assessee society to its members on deposits in excess of ₹ 10,000 invoking the provisions of section 40(a)(ia) is to be deleted as relying on The Bagalkot District Central Co-op. Bank, Bagalkot case [2015 (1) TMI 1005 - ITAT BANGALORE ]
Addition on account of interest accrued on the loans & advances, which were classified as nonperforming assets - CIT(A) deleted the addition - Held that:- A similar issue involving identical facts thus has already been decided by the Tribunal in the case of ITO v. M/s. Shiva Sahakari Bank Niyamitha (2012 (12) TMI 1021 - ITAT BANGALORE) following the decision of the Hon’ble jurisdictional High Court in the case of Canfin Homes Ltd. (2011 (8) TMI 178 - KARNATAKA HIGH COURT) and respectfully following the same, we uphold the impugned order of the ld. CIT(Appeals) deleting the addition made by the AO on account of interest accrued on loans & advances classified as nonperforming assets.
Disallowance of provision for bad and doubtful debts in respect of rural advances - Held that:- At this issue is squarely covered in favour of the revenue and against the assessee by the decision of the Tribunal rendered in the case of Syndicate Bank v. DCIT [2015 (4) TMI 727 - ITAT BANGALORE ]confirming the disallowance made by the AO on account of assessee’s claim for deduction u/s. 36(1)(viia) on account of provision for bad and doubtful debts in respect of rural advances. - Decided against assessee
Disallowance on account of amortization of premium on Govt. securities - Held that:- Squarely covered in principle in favour of the assessee by the decision of the Tribunal rendered in the case of ING Vysya Bank Ltd [2015 (2) TMI 892 - ITAT BANGALORE ] . The matter is restored to the file of the Assessing Officer for the limited purpose of verifying as to whether the relevant securities in the present case are “held to maturity” by the assessee and accordingly to allow relief to the assessee on such verification, keeping in view the decision of the Tribunal in the case of ING Vysya Bank Ltd. (supra).
Disallowance on account of payment by the assessee towards unapproved gratuity fund - Held that:- Respectfully following the decision of the co-ordinate Bench of the Tribunal in the case of Bilagi Pattana Sahakari Bank Niyamit (2013 (5) TMI 860 - ITAT BANGALORE), we delete the disallowance made by the AO and confirmed by the ld. CIT(Appeals) on account of payment made by the assessee to unapproved gratuity fund
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2014 (6) TMI 924
Transfer pricing adjustment - selection of comparable - Held that:- Avani Cincom Technologies Ltd.,Celestial Biolabs Ltd., KALS Information Systems Ltd., Infosys Technologies Ltd., Wipro Ltd.,Tata Elxsi Ltd., E-Zest Solutions Ltd., Thirdware Solutions Ltd., Lucid Software Ltd., Persistent Systems Ltd., Quintegra Solutions Ltd. and Softsol India Ltd. be excluded from the list of comparable as not functionally comparable to the assessee as assessee offers software development services to its AEs as relying on case of 3DPLM Software Solutions Ltd. v. Dy. CIT [2014 (12) TMI 612 - ITAT BANGALORE]
Risk Adjustment - Held that:- As regards risk adjustment, the TPO has not allowed any adjustment by observing that this has been considered and discussed in detail in the order for earlier years. We find that on similar facts, different co-ordinate benches of this Tribunal in the case of Intellinet Technologies India (P.) Ltd. (2012 (6) TMI 237 - ITAT BANGALORE) and Bearing Point Business Consulting (P.) Ltd. (2014 (4) TMI 997 - ITAT BANGALORE ) have held that the TPO ought to have given risk adjustment to the margins of the comparables for bringing them on par with the assessee and remanded the issue back to the file of the TPO. Following the decisions in the aforementioned cases of the co-ordinate benches of this Tribunal (supra), we remand the issue of market risk adjustment to the file of the Assessing Officer/TPO for examining the issue in the light of the decisions cited.
Reimbursement of Expenses not to be marked up - Held that:- On examination, the receipts are mere recovery of expenses without any service element, then the same should not be added back to the cost base for the purpose of mark-up. Having so decided, we are of the view that it would be in the fitness of things to remit the issue to the file of the Assessing Officer / TPO for detailed examination and verification of the said expenses, as to whether it was incurred on behalf of the AE, as was done in the earlier year.
Provision for outstanding forward exchange contracts - Held that:- Admittedly, this issue has not been examined earlier by the TPO or the DRP. Since the DRP, in the subsequent year, has rendered a finding that the foreign exchange loss due to forward contracts is a non-operating expenditure while dealing with the order of the Assessing Officer, we are of the view that it would be in the interest of equity and justice that this additional ground be admitted for adjudication and the issue be remitted back to the file of the Assessing Officer /T.P.O. for consideration in the light of the decision of the DRP in Assessment Year 2009-10 in this regard, after affording the assessee adequate opportunity of being heard and make submissions required.
Provision for loss on Mark to Market ('MTM') Valuation of foreign exchange forward contracts - Held that:- DRP, in the assessee's own case in the subsequent year, has allowed the expenses, we are of the opinion that it will be in the fitness of things to remit this issue back to the DRP to examine the issue afresh by considering its findings in the subsequent year.
Capital Expenditure-Disallowance of Software Expenses - Held that:- In the proceedings before us, the assessee has not brought on record any material to show that the expenses related to the current year are any different from that of the earlier year, which claim of the assessee, has been disallowed by the aforesaid order of the co-ordinate bench of this Tribunal in the assessee's own case for Assessment Year 2007-08 (supra). Therefore we uphold the decision of the Assessing Officer in disallowing the expenses on purchase of "software additions", and in allowing depreciation thereon at the rates applicable.
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2014 (6) TMI 923
Addition for purchase of computer software - revenue v/s capital expenditure - CIT(A) deleted the addition and confirmed by ITAT - Held that:- Considering the aforesaid finding recorded by the Commissioner of Income Tax (Appeals) as well as the tribunal, it cannot be said that the tribunal and the Commissioner of Income Tax (Appeals) have committed any error in deleting the aforesaid disallowance. We are in complete agreement with the view taken by the tribunal as well as the Commissioner of Income Tax (Appeals) while deleting the aforesaid disallowance. Under the circumstances, the proposed question nos. (b) and (c) are held against the revenue and so far as the proposed question no. (a) is concerned, as the amount involved is only ₹ 2,50,000/-, on the smallness of the amount involved, we decline to entertain the said question. - Decided against revenue
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2014 (6) TMI 922
Deduction u/s. 80IA(4)(iv)(a) - Held that:- Deduction u/s.80-IA of the Act is first claimed and thereafter for a period of 10 years from the initial assessment year. The initial assessment year is not the year in which the Assessee begins to make profits in the eligible business but the year in which deduction is claimed from eligible business. In respect of period prior to such claim loss/depreciation if they remain absorbed cannot fictionally be reduced from the profits on which deduction is to be allowed. In the light of the aforesaid judgment of the Hon’ble High Court of Karnataka in the case of CIT v. Anil H. Ltd. (2011 (1) TMI 1047 - ITAT, Bangalore ), we are of the view that there is no merit in this appeal by the revenue and consequently the same is dismissed. - Decided in favour of assessee.
Rejection of claim of the assessee for depreciation on the value of lease rent paid by including it as part of the plant (windmill) - Held that:- There is no evidence on record to show that there is a technical requirement of erecting the windmills at high altitudes. We will, however, proceed on the assumption that such a technical requirement exists. Even then, in our view, the lease rent paid for acquiring leasehold rights over the land can never be treated as cost of the plant (windmill). The functional test cannot be extended to a case of lease rent for acquiring leasehold rights over the land, whatever be the technical requirement of erecting a plant. The law is well settled that no depreciation is to be allowed on land. By placing reliance on the functional test, it is not possible to allow depreciation on land indirectly. If such a claim were to be allowed, then it could be extended to a case of a land over which a shopping mall is constructed. A shopping mall requires a good area/location, main road for good business. Can it be said that the rent paid for the land over which the shopping mall is constructed is part of the building on which depreciation is to be allowed? In our view, by applying the functional test, it is possible to contend in all the cases that the land is a tool of trade and has to be regarded as plant or building. We therefore decline to accept the proposition canvassed on behalf of the assessee.
With regard to the alternative claim made by the assessee, the claim cannot fall within the parameters of section 30 of the Act, because that section covers only rent paid on building. The claim has therefore to be considered u/s. 37(1) of the act. On this aspect, we find that the Hon’ble High Court of Karnataka in the case of HMT Ltd. (1992 (11) TMI 37 - KARNATAKA High Court ), has considered the premium for acquiring leasehold rights as nothing but rent paid in advance. The rent paid in advance was for acquiring leasehold rights over the land. Such payment had been considered by the Hon’ble Court as revenue expenditure. In view of the aforesaid decision of the Hon’ble High Court which is in pari materia with the facts of the present case, we are of the view that the lump sum rent paid for the entire period of 30 years has to be considered as revenue expenditure. The CIT(A) wrongly distinguished this decision as a case of lease of factory building. We therefore accept the alternative prayer of the assessee. Thus, the relevant grounds of appeal in all the three assessment years are treated as allowed on the alternative ground. - Decided in part in favour of assessee
Disallowance of depreciation on Windmill installed at Kolahalu Village on the ground that the Windmill was not actually put to use - Held that:- Admittedly the value of the windmills on which depreciation was claimed by the Assessee entered the block of assets on which depreciation was claimed. The windmills had been installed and acquired by the Assessee. In such circumstances, we are of the view that the decision of the Hon’ble Delhi High Court in the case of Bharat Aluminium Co. Ltd. (2009 (10) TMI 505 - DELHI HIGH COURT) will squarely apply. - Decided in favour of assessee
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2014 (6) TMI 921
Denial of claim of benefits available under section 80P(2)(a)(i) - Held that:- This issue has been considered in Karkudalpatty Primary Agricultural Co-operative Credit Society Ltd [2014 (5) TMI 556 - ITAT CHENNAI] 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 Co-operative 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. - Decided in favour of assessee
Claim of deduction under section 80P(2)(d) - assessee has submitted that the income by way of interest and dividend earned by the assessee society are from investments made in Salem District Central Cooperative Bank, which is also admittedly, a co-operative society - Held that:- In the present case, the assessee is an Agricultural Producers Co-operative Marketing Society Ltd., registered under Tamilnadu Co-operative Societies Act and established for the benefit of the agricultural producers and the interest or dividend earned by the assessee will be beneficial to the members alone. Therefore, keeping in view of the decision in the case of CIT v. Kangra Cooperative Bank Ltd. (2008 (8) TMI 193 - HIMACHAL PRADESH HIGH COURT ), we hold that the assessee is eligible for benefit under section 80P(2)(d) of the Act and also this being a beneficial section to the co-operative societies.- Decided in favour of assessee
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