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Income Tax - Case Laws
Showing 81 to 100 of 1116 Records
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2015 (10) TMI 2723
Disallowance u/s 43B in respect of contribution to PF - Held that:- For the AY 2002-2003 in the assessee‟s own case, wherein the Tribunal adjudicated the identical issue and allowed the assessee‟s claim u/s 43B of the Act. On perusal of the said decision of the Tribunal for the AY 2002-03 in the assessee‟s own case we direct the AO to examine and apply the ratio laid down in the said Tribunal‟s order.
Disallowance of prior period expenses - Held that:- As submitted that forfeiture of customs duty / lapse of duty drawback are allowable expenditure under section 37 of the Act. In support of this, he relied on various precedents. On hearing both the parties and on perusal of the relevant material placed before us, we find this matter should be remanded to the file of the AO with a direction to examine and adjudicate the issue afresh after affording a reasonable opportunity of being heard to the assessee. Accordingly, Ground no.2 is allowed for statistical purposes.
Disallowance of unreconciled sundry creditors - Held that:- AR submitted that even after repeated requests, the Revenue Authorities have not provided the relevant material filed by the creditors in response to the notice issued u/s 133(6) of the Act as well as the basis on which „the amount debited by the assessee‟ has been arrived to determined the shortfall. As well, the Revenue Authorities also have not provided sufficient opportunity to furnish the reconciliation which is against the principle of natural justice. Considering the above, Ld AR requested to remand the matter to the file of the AO for fresh consideration and decision in the matter.
Disallowance of travelling expenses for sales team - Held that:- AR relied on the Apex Court judgment in the case of Calcutta Co Ltd [1959 (5) TMI 3 - SUPREME COURT] wherein it has been held that any sum representing the estimated expenditure which had to be incurred by the assessee in discharging a liability. Alternatively, it is the submission of the assessee that since the expenses are actually incurred during the FY 2003-2004, the expenses should be allowed for AY 2004-05 corresponding to the FY 2003-2004 - this matter should also be remanded to the file of the AO to adjudicate the issue afresh
Disallowance of expenses under the head advertisement and sales promotion - Held that:- AR submitted that since, the assessee is method of accounting is mercantile system the treatment given by the assessee is correct and no disallowance is called for. After hearing Ld Representatives of both the parties, we find it relevant to remand the matter to the file of the AO to examine and adjudicate the issue after granting a reasonable opportunity of being heard to the assessee.
Disallowance of travelling and conveyance expenses - Held that:- In assessee's own case for the AY 2002-2003 wherein the identical issue was adjudicated by the Tribunal and restored the matter to the file of the AO with a direction to verify whether the plant and machinery were used for other than the manufacturing purpose, and directed to grant depreciation in case such plant and machinery were used. Therefore, it is prayed that considering the commonality of the issue, the matter may be decided in the same lines.
Transfer Pricing adjustment made in respect of the international transaction related to import of finished goods - Held that:- We remand this issue of most appropriate method to the file of the CIT (A) to decide the same after hearing the assessee and in the light of the order of the Tribunal for the AY 2002-2003. CIT (A) is also directed to pass a speaking order on the other aspects of benchmarking events i.e selection of comparables.
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2015 (10) TMI 2722
Depreciation claim u/s 32 - asset used by directors of the Assessee company - claim of foreign Assessee company in relation to certain vehicles registered under its name, but given to its employees for their use - Held that:- As relied upon the decision of Sayaji Iron and Engineering Company v. CIT [2001 (7) TMI 70 - GUJARAT HIGH COURT] where it was held that once the directors of the Assessee company are entitled to use the vehicles of the company for their personal use as per the terms and conditions of their appointment, it cannot be said that the same was a personal expenditure. In other words, it continues to be business expenditure and is not disallowable as such. The Court is not persuaded to hold a different view in the matter - decided in favour of assessee.
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2015 (10) TMI 2721
Reassessment - validity of notice issued u/s 148 - Assessment is in pursuance of an order on appeal u/s 150 - Held that:- an appellate or revisional authority cannot give a direction for assessment or reassessment which goes to the extent of conferring jurisdiction upon the AO if his jurisdiction had ceased due to the bar of limitation - if the issuing of a notice had become time-barred at the time of the order, which was the subject-matter of the appeal, then section 150 (1) cannot be invoked for making an assessment or reassessment - hence the proceedings initiated u/s 147 for the AY 2002-03 are impermissible and, therefore, the AO is not empowered to reopen the same u/s 150(1), considering the restriction placed by section 150 (2) - appeal by revenue is dismissed.
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2015 (10) TMI 2720
Long term capital gains - selection of year for assessment - year of transfer of asset - Held that:- From a perusal of the order of the first appellate authority as well as of the Tribunal, we find that the registered sale agreement was executed on 27th January, 2005 and the sale consideration was paid on 10th January, 2005 and 31st March, 2005. Possession was also handed over to the buyer.
In view of the aforesaid, the "transfer" was complete as per the provision of Section 2(47)(6) of the Act. Explanation 2, which was added by Finance Act, 2012 with retrospective effect from 1st April, 1962 is clearly applicable in the instant case. The long term capital gains could only be computed in the year when the property was transferred, namely, in the financial year 2004-05 that is (3) assessment year 2005-06.
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2015 (10) TMI 2719
Disallowance being deposits written off - busniss loss or capital l0ss - Held that:- Hon’ble Supreme Court in the case of CIT Vs Mysore Sugar Co. Ltd [1962 (5) TMI 3 - SUPREME Court] for what was the money laid out? Was it to “ acquire an asset of an enduring nature for the benefit of the business, or was it an outgoing in the doing of the business? If money be lost in the first circumstance, it is a loss of capital, but if lost in the second circumstance, it is a revenue loss. In the first, it bears the character of an investment, but in the second, to use a commonly understood phrase, it bears the character of current expenses.”
Also in the case of I.B. M World Trade Corpn.(1988 (12) TMI 23 - BOMBAY High Court) that the moneys advanced by the assessee in pursuance of these agreements to the landlord for the purposes of and in connection with the acquisition of the premises on lease were for the purpose of business. Naturally, therefore, when such advances are lost to the assessee, the loss would be a business loss and not a capital loss - Decided against revenue
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2015 (10) TMI 2718
Disallowance of finance charges - utilization of loans taken - nexus of interest expenditure with the income earned - Held that:- The income of the assessee consisted of consultancy fee, royalty income, trade mark fee, share of profit& interest on capital from firm, dividend income etc. A.R also fairly admitted that the funds were taken from Vithal Kamat (HUF) over the years in many instalments and they have been utilized for all the purposes. Thus, the exact utilization of loans taken from Vithal Kamat (HUF) could not be proved at this stage. Hence, as submitted by Ld D.R, the nexus of interest expenditure with the income earned by the assessee could not be established by the assessee. Thus the Ld CIT(A) was justified in confirming the disallowance of interest expenditure. - Decided in favour of revenue
Disallowance u/s 14A - Held that:- The finance charges was disallowed u/s 36(1)(iii) and hence the same has already been excluded by the Ld CIT(A). The remaining expenses, in our view, could not be linked to the dividend income. Hence we agree with the contentions of Ld A.R that no disallowance of expenditure is called for in terms of Rule 8D(2)(iii) of the I.T Rules. Accordingly, we set aside the order of Ld CIT(A) on this issue and direct the AO to delete the disallowance of expenses confirmed by Ld CIT(A) u/s 14A - Decided in favour of assessee
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2015 (10) TMI 2716
Transfer pricing addition - comparable selection criteria - functional similarity - Held that:- The assessee is into software design and development services thus companies functionally dissimilar with that of assessee need to be deselected from final list.
Deduction u/s 10A - data link charges being excluded from the export turnover - Held that:- By virtue of definition of export turnover given Explanation-2(iv) to Sec.10A of the IT Act, 1961, interpretation sought by the assessee cannot be accepted. However, its alternative contention for exclusion of such amount from the total turnover also, while calculating deduction u/s 10A of the IT Act, 1961 is reasonable in view of case of CIT Vs M/s Tata Elxsi Ltd., (2011 (8) TMI 782 - KARNATAKA HIGH COURT)
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2015 (10) TMI 2715
Registration of trust u/s 12AA - whether the objects are not covered u/s 2(15) and that the activities and objects are not charitable? - Held that:- What needs to be examined is that where an object of general public utility is not merely a mask to hide the true purpose or rendering of any service in relation thereto, and where such services are being rendered as purely incidental to or as subservient to the main objective of "general public utility", whether the carrying on of bona fide activities in furtherance of such objectives of "general public utility" will also be hit by the proviso to section 2(15) of the Act.
In the instant case, the matter therefore, requires detailed examination in terms of main objects of Urban Improvement Trust, the relevant governing legislation / Notification under which Urban Improvement Trust was established as well as activities of the trust in order to decide whether trust is eligible for registration u/s 12AA of the Act. Thus, in the light of the above, the matter is set aside to the file of the ld. CIT to decide afresh in light of Board Circular No. 11 of 2008 dated 19-12-2008 by providing reasonable opportunity of being heard to the assessee. The assessee is also directed to cooperate in the proceedings. Thus, the appeal of the assessee is allowed for statistical purposes.
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2015 (10) TMI 2714
Penalty u/s 271(1)(c) - tax was levied under the provisions of MAT under section 115JB on assessee - Held that:- As decided in the case of CIT Vs. M/s Vardhman Acrylics Limited [2014 (8) TMI 1144 - PUNJAB & HARYANA HIGH COURT] the assessment having been made under the provisions of MAT under section 115JB of the Act, penalty under section 271(1)(c) of the Act cannot be levied on additions and disallowances made in regular income.
Since there were brought forward losses and depreciation, the return was filed declaring the income under the MAT and even after appeal effect, the income assessed under section 115JB of the Act, we find that the assessee being assessed under section 115JB of the Act, the penalty under section 271(1)(c) of the Act cannot be levied. - Decided in favour of assessee
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2015 (10) TMI 2712
Interest income from banks - busniss income or income from other sources - Held that:- None of the judgments cited by the learned AR of the assessee is rendering any help to the assessee. Hence, respectfully following the judgment of Hon’ble Jurisdictional High Court rendered in the case of CIT vs. Indo Gulf Fertilizer & Chemical Corporation Ltd. (2005 (8) TMI 45 - ALLAHABAD High Court) we hold that interest income from bank is taxable as income from other sources except interest income of ₹ 17,70,413/- earned in course of public issue of shares as per Ground No. 5.1 raised by the assessee. In our considered opinion, this income should be set off against public issue expenses because interest earned was inextricably linked with raising of share capital and was thus adjustable towards the expenditures involved for the share issue.
We direct the A.O. that to the extent of expenses incurred for public issue of shares, the amount of interest income of ₹ 17,70,413/- earned in course of public issue of shares should be set off against such expenses but if the amount of interest income on share application money is more than the expenses incurred for public issue of shares, then such excess interest income should be taxed as income from other sources. Decided in favour of assessee for statistical purposes.
Disallowance of depreciation - Held that:- Since business was not in existence, depreciation is not allowable because as per section 32, depreciation is allowable on assets used for business. He has also relied on the judgment of Hon’ble apex court rendered in the case of Bokaro Steel Ltd (1998 (12) TMI 4 - SUPREME Court) and held that if the asset is used in construction of project, depreciation has to be capitalized and not allowable as revenue expenditure. As it is noted by CIT (A) that no submission was made on this issue. We find no infirmity in the assessment order on this issue and therefore, this ground is rejected.
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2015 (10) TMI 2711
Grant of registration under Section 12AA - Held that:- Application dated 1.4.2003 moved by petitioners for grant of registration under Section 12AA of Income Tax Act, 1961 shall be decided by competent authorities within period of three moths from today.
The issue pertaining to conduct of assessee in treating itself as deemed registered is kept open and can be considered thereafter. Said conduct or its impact on other appeals can also be examined after such adjudication. Parties are given the liberty accordingly to raise all relevant challenges after such adjudication.
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2015 (10) TMI 2709
Disallowance u/s. 14A r.w. Rule 8D - computation of deduction - allowance of interest on net or gross amount - Held that:- FAA had rightly held that while making disallowance u/s.14A of the Act,the AO should have considered only net interest. See Maxopp Investment Ltd. [2011 (11) TMI 267 - Delhi High Court ]. Effective ground of appeal is decided against revenue
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2015 (10) TMI 2708
Penalty under section 271(1)(c) - addition on account of service tax liability - Held that:- Addition on the basis of which penalty was imposed under section 271(1)(c) of the Act, has been deleted by the Tribunal while deciding assessee’s quantum appeal [2014 (6) TMI 1006 - ITAT MUMBAI], the very basis for imposition of penalty no more survives. Therefore, we have no hesitation in deleting the penalty imposed under section 271(1)(c) of the Act. - Decided in favour of assessee.
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2015 (10) TMI 2705
Allowing exemption u/s 54EC - Capital gain not to be charged on investment in certain bonds - assessee did not made any investment within six months from the date of transfer and further did not fulfill the conditions prescribed in the agreement, therefore, exemption was wrongly allowed to the assessee - Held that:- The intent and purpose of section 54EC is the date, when the assessee actually collects/receives the sale consideration and thereafter makes investment within six months and that is the date of transfer, thus, the spirit of the legislation is very much clear. If the date of the agreement is taken and the assessee does not receive any consideration, then, where is the question of investment? The investment can only be made when any amount is actually received by the assessee. In fact, date of receipt by the assessee/investor and date of deposit for obtaining the prescribed bonds are important dates.
Suppose, the required bonds are not available with a particular bank/institution and are issued at a later stage, the date of deposit of the amount in the bank or the institution, as the case may be, are the relevant dates for getting the benefit of exemption u/s 54EC. For the purpose of section 54EC, the date of investment is to be regarded as the dates of investment/ the payment received by the authorized bank, thus, we find no infirmity in the conclusion drawn by the Commissioner of Income Tax (Appeals) - Decided against revenue.
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2015 (10) TMI 2703
Eligibility to deduction u/s 80IB - CIT-A allowed the claim considering assessee unit to be Small Scale Industrial Unit by simply relying on the submissions of the assessee and by not giving any independent findings - no consistency in the findings of CIT(A) - Held that:- It is well settled law that provisions of section 250(6) are mandatory and it is obligatory for Commissioner (Appeals) to pass a speaking order stating points raised in appeal, his decision thereon and reasons for such decisions.
Hon'ble Bombay High Court Maneklal D. Shah Vs. P.K. Gupta and Others [2002 (2) TMI 15 - BOMBAY High Court] has categorically held that appellate authority is enjoined and it is incumbent upon it to appreciate the evidence consider the reasoning of the primary authority and assign its own reasons as to why it disagrees with the reasons and findings of the primary authority. Unless adequate reasons are given, merely because it is an appellate authority, it cannot brush aside the reasoning or findings recorded by the primary authority. In the instant case, the Ld. CIT(A) has not provided reasons in the impugned order, we left with no other alternative but to set aside the impugned order and remand the matter to CIT(A) with a direction to decide the issue afresh in accordance with law after affording due and reasonable opportunity of being heard to the assessee.
in the assessment year 2007-08, on similar set of facts, the CIT(A) has confirmed the disallowance under section 80IB amounting to ₹ 26,41,716/- in respect of Noida unit. In the assessment year 2007-08, while deciding a similar issue the CIT(A) has not made any reference to the order passed by his predecessor in assessee’s case for assessment year 2006-07. Thus remand the matter back to the CIT(A) for fresh a decision
Disallowance u/s 36(l)(iii) on alleged interest free advances to various party - Held that:- This issue needs to be verified and decided at the level of the Assessing officer. The assessee is free to produce the recent decision of the Hon'ble Punjab & Haryana High Court on this issue. Considering the entire facts and circumstances of the present case, we set aside the order of CIT(A) on this issue and remand the matter to the CIT(A) for a fresh decision in accordance with law. For statistical purposes, this ground of the Cross objection is allowed.
Disallowance of prior period expenses - Held that:- As decided in Saurashtra Cement and Chemical Industries Ltd. [1994 (10) TMI 30 - GUJARAT High Court] merely because an expense relates to a transaction of an earlier year it does not become a liability payable in the earlier year unless it can be said that the liability was determined and crystallized in the year in question on the basis of maintaining accounts on the mercantile basis. In the instant case, bills were received in this year and, therefore, it can be said that the liability was determined and crystallized in the year in question on the basis of maintaining account on mercantile basis. - Decided in favour of assessee.
Disallowance u/s 40(a)(ia) - retrospectivity - Held that:- As in the case of CIT-I Vs. Ansal Land Mark Township (P) Ltd [2015 (9) TMI 79 - DELHI HIGH COURT] wherein held that the second proviso to Section 40 (a) (ia) of the Act is declaratory and curative in nature and should be given retrospective effect from 1st April 2005. Considering the entire facts and circumstances of the present case, we set aside the order of CIT(A) and remand the issue to CIT(A) with a direction to decide the issue afresh keeping in view the above decisions.
Disallowance of advisory charges paid - Held that:- Mere claim of the assessee that these expenses were on account of legal expenses for the purpose of business transfer would not justify the claim. As regards the payments made to M/s PKP Consultants and M/s AZB & Partners is concerned, the CIT(A) has categorically observed that the Assessing officer had verified from the above parties. The Ld. CIT(A) has categorically stated that the expenses claimed by the assessee have nothing to do with the transfer of the business of the assessee to his successor company. There is not material on record to controvert the findings of the lower authorities. At this stage also, no material was brought on record to show that these expenses were incurred in connection with transfer of the business of the assessee to the successor company. - Decided against assessee.
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2015 (10) TMI 2701
Revision u/s 263 - whether the interest earned from fixed deposit was to be assessed under the head “Income from other sources “ or as “Business Income” - Held that:- CIT in his order dated 19th March 2013 passed u/s 263 of the Act has held that the issue is not free from doubt that the income earned by the assessee company from fixed deposits kept with the banks could be assessed as ‘Income from other sources’ and the AO to re-decide the issue as to whether the interest income earned from fixed deposit with bank is to be assessed under the head ‘Income from other sources’ or as ‘Business income’ clearly reveals that the CIT instead of giving final finding on this issue observed that the income earned by the assessee company from the fixed deposit with bank could be assessed as ‘Income from other sources’ as matter is not free from doubt itself shows that there is no finding or adjudication by the CIT and his observations are based on mere suspicion and are uncertain .
Yet a direction was issued to the AO to carry out fresh inquiries to do the exercise once again and decipher whether income earned from fixed deposit with bank by the assessee company could be assessed under the head ‘Income from other sources’ , thus CIT was unsure whether the treatment meted out by the assessee company in treating the said income from interest on FDR with bank as ‘Income from Business’ is right or wrong which does not show that the finding as arrived at by the AO is erroneous and hence the order of CIT does not meet the requirement of Section 263 of the Act. Our view is fortified by the judgment of Hon’ble Delhi High Court of Globus Infocom Ltd. v. CIT (2014 (9) TMI 18 - DELHI HIGH COURT) and also CIT v. Gabriel India Limited (1993 (4) TMI 55 - BOMBAY High Court)
Thus set aside to the file of the AO to re-decide the issue as to whether the interest income earned from fixed deposit with bank is to be assessed under the head ‘Income from other sources’ or as ‘Business income’ is unsustainable in law and is set aside and the assessment order of the AO dated 08th October 2010 passed u/s 143(3) of the Act is restored . We order accordingly.
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2015 (10) TMI 2700
Deduction u/s 80HHC on DEPB benefits - Condonation of delay - Held that:- The totality of facts, clearly indicates that the assessee took a conscious decision firstly, not to file the appeal against the order of the ld. First Appellate Authority and thereafter took a decision to file the appeal. It is not the case of delay which was beyond the control of the assessee. So far as, the affidavit is concerned, it is a self serving document and the assessee has not explained satisfactorily the reason of delay in filing the appeal. The assessee was wilfully negligent or irresponsible in taking a decision, thus, the huge delay cannot be condoned.
We are conscious of the fact that technicalities should not come in the way of substantial cause of justice but in cases, where the delay was beyond the control of the assessee or some genuine difficulties hindered his smooth way. As discussed earlier, it is clear cut case of conscious decision, thus, we find no merit in the self made story of the assessee, therefore, on this issue, we are not agreeing with the admission of this appeal, thus, the delay is not condoned, therefore, the appeal is dismissed.
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2015 (10) TMI 2699
Miscellaneous application - Held that:- Miscellaneous application filed by the applicant before the Tribunal is pending adjudication before the Tribunal since 2009. According to the learned counsel for the applicant, the outcome of the miscellaneous application would have a direct bearing on the present appeal. Moreover, in any case pendency of the present appeal is no reason for the Tribunal not to proceed further with the application. The court is, therefore, of the view that there is substance in the grievance voiced in the application and that the Tribunal is not justified in not proceeding with the application.
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2015 (10) TMI 2698
Corrigendum is being issued to correct the inadvertent typographical error in mentioning the assessment year. In para 1 at page 2, the assessment year has been wrongly mentioned as ‘assessment year 2008-09’, the same may be read as ‘assessment year 2009-10’.
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2015 (10) TMI 2697
Taxability of capital gains – STCG OR LTCG – booking rights to the apartment accrued to the assessee on the date of application for allotment/confirmation of allotment or on the date of execution of the agreement to sell i.e. the buyer’s agreement – Held that:- No legal and valid ground for interference. The Special Leave Petition is dismissed. HC order confirmed [2014 (3) TMI 474 - DELHI HIGH COURT]
HC has held that the date of acquisition of the capital asset must be considered the date of signing of said agreement i.e. 4.11.2004 – thus, the capital asset in the form of these rights was held for a period of 35 months and 28 days, i.e. a short-term capital asset thus rendering the profits from the transfer of this capital asset taxable as short-term capital gains.
It is incorrect to say that the assessee had no right or interest in the property until the completion of payment of all instalments under the agreement as the assessee was a beneficial owner from the date of signing the agreement, having been put in possession of the property as of that date - Section 2(42A) of the Act only uses the term “held” and not “owned”, thus indicating that a capital asset need not only refer to full title over any property – Decided against Assessee.
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