|
Advanced Search Options
Income Tax - Case Laws
Showing 281 to 300 of 9151 Records
-
2015 (12) TMI 1406
Transfer pricing adjustment - DRP/AO/TPO benchmarking the foreign currency loan transaction using the fixed deposit rate of scheduled commercial banks and ignoring the internal CUP analysis performed by the assessee - Held that:- The comparable adopted by the assessee, in his transfer pricing analysis, is the rate at which the Exim Bank of India had extended similar foreign currency loan to the assessee, and the TPO has rejected the same on the basis that such a rate constitutes costs of funds to the assessee which is irrelevant, in the considered view of the TPO, for the purpose of benchmarking the loan to its AE. What, however, the TPO overlooks is the fact that the credit rating of the AE, which is a newly formed and one hundred percent subsidiary of the assessee, is, in the normal course, expected to be the same as that of the subsidiary and if a credit institution like Exim Bank is offering the foreign currency loan to the assessee at a particular price, it is reasonable to proceed on the basis that the foreign currency loan, on similar terms, to the AE could be an arm’s length transaction - Decided in favour of assessee.
Adjustment on account of interest on outstanding interest receivable from AE - Held that:- In the present case, however, ALP adjustment by way of charging interest is in respect to delay in payment of interest itself, and APL determination of interest is also before us. While dealing with the preceding ground of appeal, we have already held that the loan arrangement with Exim Bank is a valid internal CUP for this international transaction as well, and, therefore, even the question as to whether the delayed payment of interest will invite compounding of interest can be addressed in the light of the terms of the internal CUP. For this limited purpose, the matter is restored to the file of the Assessing Officer. Whatever be the rate of interest and terms applicable in a materially similar situation of delay in payment of interest to Exim Bank will apply mutatis mutandis in this fact situation as well.- Decided in favour of assessee for statistical purposes.
Determining the ALP of the Guarantee fee @ 2% of the Guarantee amount extended by the appellant on behalf of its AE - DRP/AO/TPO rejecting the internal Comparable Uncontrolled Price (‘CUP’) submitted by the Appellant and instead considering external data - Held that:- There is no scientific basis for coming to the conclusion that 2% guarantee commission is an arm’s length price of the corporate guarantee commission, but then there was no information furnished by the assessee to assist in ascertainment of the ALP. The assessee has not even given complete details about the guarantees issued by the assessee, nor has he offered any assistance whatsoever in ascertaining the arm’s length price of the corporate guarantee issued by the assessee. In view of these discussions, as also bearing in mind entirety of the case, we deem it fit and proper to remit the matter to the file of the TPO for the limited purposes of ascertaining the arm’s length price of the corporate guarantee issued by the assessee. The assessee is directed to fully cooperate by furnishing necessary information and inputs to the TPO and assist in expeditious disposal of the remanded matter. As the matter is being remitted to the file of the TPO for adjudication de novo, we consider it appropriate to give liberty to the assessee to raise such legal and factual arguments as the assessee may deem appropriate. With these directions, while the ALP adjustment is upheld in principle, the quantification of ALP adjustment is restored to the file of the TPO for adjudication de novo in accordance with the law, by way of a speaking order and after giving yet another opportunity of hearing to the assessee.- Decided in favour of assessee for statistical purposes.
Non granting exemption under section 10(1) of the Act in respect of agricultural income - Held that:- The issue is covered against the assessee, by Hon’ble Karnataka High Court’s judgment in assessee’s own case for the assessment year 2001-02, inasmuch as the matter has been thus remitted to the file of the Assessing Officer for fresh adjudication.
Disallowance under section 40(a)(ia) of the Act on account of non-deduction of tax at source on procurement and processing charges - Held that:- The payments did not attract tax deduction under section 194C and, as such, there is no occasion for invoking disallowance under section 40(a)(ia).- Decided in favour of assessee
Disallowance of deduction in respect of employees’ contribution to Provident Fund (PF)- amount paid beyond the due date but before the due date of filing the return of income - Held that:- Respectfully following the esteemed views of Hon’ble jurisdictional High Court in assessee’s own case, and in the light of undisputed factual position to the effect that the payments were made before the due date of filing of income tax return, we uphold the grievance of the assessee and direct the Assessing Officer to delete this disallowance - Decided in favour of assessee
Depreciation on goodwill - Held that:- A petition dated 16th April 2015 seeking admission of additional evidence in support of this grievance, and contended that “on becoming aware of the decision of Hon’ble Supreme Court in the case of CIT vs SMIF Securities Limited (2012 (8) TMI 713 - SUPREME COURT ), the assessee has raised a ground in respect of allowability of deduction for goodwill” and prayed that the same may be adjudicated on merits. A reference is also made to Hon’ble Supreme Court’s judgment in the case of NTPC Ltd Vs CIT (1996 (12) TMI 7 - SUPREME Court) in support of the contention that this issue can be raised even at this stage. We are of the considered view that the matter should be remitted to the file of the Assessing Officer for adjudication on merits on this issue.- Decided in favour of assessee for statistical purposes.
-
2015 (12) TMI 1377
Revision u/s 263 - Held that:- In order to invoke the provision of section 263 of the Act, the order passed by the AO has to be erroneous and prejudicial to the interest of the revenue. Whereas in the present case the order is not erroneous nor prejudicial. The AO had called for details from the assessee in respect of Manglad Flash Flood claim and after considering the reply filed by the assessee allowed and accepted the treatment given to disputed claim in respect of Manglad Flash Flood which had been accepted for the assessment year 2007-08. The order is also not prejudicial to the interest of the revenue as the assessee itself offered the amount of claim of Manglad Flash Flood in the assessment year 2011-12, when the claim attained finality and thus, no prejudice was caused to the revenue.
In the case of CIT Vs. Greenworld Corporation [2009 (5) TMI 14 - SUPREME COURT OF INDIA] held that an order of Assessment passed by an ITO should not be interfered with only because another view is possible. Similarly in the case of CIT Vs. Max India Limited 2007 (11) TMI 12 - Supreme Court of India & Malbar Industries Co. Ltd. Vs. CIT (2000 (2) TMI 10 - SUPREME Court ) the Supreme Court has laid down the principle that when the Assessing Officer taken one of the two views permissible in law and which the Commissioner does not agree with and which results in a loss of revenue, it cannot be treated as erroneous order prejudicial to the interest of revenue, unless the view taken by the Assessing Officer is completely unsustainable in law. Considering the facts of the assessee and respectfully following the ratio laid down in various judgemenets (supra) we are of the considered view that the assessment order is neither erroneous nor prejudicial to the interest of the revenue and therefore, the order passed by the CIT u/s 263 is annulled/cancelled. - Decided in favour of assessee
-
2015 (12) TMI 1376
Exemption u/s 11 denied - Held that:- The assessee is wholly and solely engaged in business activity and the assesseeby itself is not engaged in any charitable activity except the donations made to HNF, which the assessee considers as a charitable organization. But it is seen that even the activities of HNF is not charitable as no free treatment or free medicines are distributed to the poor. The exemption u/s. 11 is available when the assessee is engaged in charitable activities, but in the present case it is an admitted fact that the assessee is engaged in business and is not directly involved in any charitable activity as provided u/s. 2(15). After considering all the facts and circumstances of the case, I am of the view that the assessee is not a charitable organization as provided u/s. 2(15) and as such assessee is eligible for exemption u/s. 11 and accordingly, the action of the AO in denying the exemption u/s.11 is confirmed - Decided against assessee.
-
2015 (12) TMI 1375
Rectification of error u/s 254 - Depreciation in respect of non-compete fee paid - Held that:- The depreciation cannot be allowed on an amount of non-compete fee, which was in fact paid to the Managing Director of the Company for not taking any employment. This cannot be considered under section 32(1) as an intangible asset.
Thus we reject the contentions of the assessee on this issue, and direct the Assessing Officer to disallow the claim of the assessee for depreciation on brought forward written down value in respect of non-compete fee paid in assessment year 2007-08 to Sudhir Vaid in relation to Concord Biotech Limited. - Decided against assessee
-
2015 (12) TMI 1374
Addition u/s 69 for unexplained investment - Held that:- In the case under appeal also there has been no finding by the Assessing Officer about the defects of books of accounts as well as detection of undisclosed investment which may have been made by the assessee from the undisclosed sales. In these circumstances it will not be justifiable to impose GP @ 16.78% on the undisclosed turnover when separate additions has already been made for peak credit, cash deficit and payments towards capital nature of expenditure and as such Net Profit rate shown by the assessee on the disclosed turnover should be applied on the undisclosed credits of ₹ 25,64,264/- and by application of Net Profit rate of 4.8% on ₹ 25,64,264/- the sustained addition of ₹ 4,30,283/- will scale down to ₹ 1,24,110/-. In other words, assessee will get relief of ₹ 3,03,173/- and the total sustained addition of ₹ 8,39,832/- referred in ground no.1 will be reduced to ₹ 5,33,659/-.
Addition on account of unexplained investment in FDI - Held that:- Assessee has accepted that the credits in the disclosed bank account were not shown in the books of account and did not put forth any proper explanation for these cash deposits in its account and further most of the withdrawals from this bank account have been made for payment to Kotak Securities Ltd. for share trading business. This means that flow of funds in this account was not at all related to the business of job of jari kasab done by the assessee and, therefore, the contention of the ld. AR for applying net profit rate on this amount of ₹ 2,25,977/- cannot be accepted and accordingly we are of the view that ld. CIT(A) has rightly confirmed this addition of unexplained investment in the hands of the assessee and as such this ground of the assessee is dismissed.
Addition as unaccounted fixed deposits as income u/s 69 - Held that:- As during assessment proceedings Assessing Officer found that assessee had made investments in cash certificates in various banks in the form of Fixed Deports and these Fixed Deposits were jointly held by the assessee with either his father or mother or his wife and the photo of the assessee was appearing on these Fixed Deposits and these Fixed deposits were not reflected in the balance sheet of any of the other joint holders and therefore, this amount was added as unexplained investments. Even before ld. CIT(A) no evidence has been furnished by the assessee to show that he was not the actual beneficiary of the Fixed Deposits and was unable to prove that Fixed Deposits related to any other year and therefore, ld. CIT(A) did not give any relief to the assessee. Even before us also nothing contrary has been produced to prove that these Fixed Deposits relate to any other year or Fixed Deposits are not related to the assessee. Therefore, it seems that assessee has nothing to say more to substantiate its ground and in these circumstances, we dismiss this ground of assessee.
-
2015 (12) TMI 1373
Reallocation of expenses while granting Deduction u/s.80IB & 801C - Held that:- It cannot be said that the benefit of R & D activity at Goa- PTD unit has benefited all the manufacturing units of the assessee during the year. Even as discussed above, the assessee has not allocated expenditure of Banglore R&D unit on the ground that the assessee’s formulation units were not deriving benefit from the activity carried in Bangalore unit, hence applying the same analogy, the issue in the light of observations made above is required to be relooked into by the AO. We further find that even the above explanation was not offered by the assessee before the AO. The explanation given vide letter dated 30.03.10 for the first time was offered to the Ld. CIT(A), who has also not discussed it in the impugned order. Thus the above submissions of the assessee that the benefit of R&D activities of the assessee has been enjoyed by the other units manufacturing formulations have not been examined by either of the lower authorities. Even by the above submissions made before us without any supporting evidence are not sufficient to decide the issue under consideration. The matter under the circumstances required to be examined afresh by the AO in the light of the observations made above and considering the evidences that may be submitted by the assessee to support its claim. Under the circumstances, we restore this issue to the file of the AO to examine the contentions raised by the assessee in this respect and to verify as to which manufacturing units of the assessee had got the benefit of R&D activity and to what extent from the Goa-PTD unit and thereafter to decide the issue a fresh and to accordingly allocate the expenditure of the Goa- PTD unit to such manufacturing units proportionately.
Disallowance under section 14A - disallowance restricted by the Ld. CIT(A) to the extent of 5% of the dividend income as against the suo-moto disallowance offered by the assessee @ 2% of the dividend income - Held that:- different coordinate benches of this Tribunal have observed that in such cases certain percentage of exempt income can constitute a reasonable estimate for making disallowance for the years earlier to assessment year 2008-09. The Hon'ble Bombay High Court in the case of CIT vs. 'Godrej Agrovet Ltd.' (2014 (8) TMI 457 - BOMBAY HIGH COURT ) has upheld the order of the Tribunal directing the AO to restrict the disallowance to the extent of 2% of the total exempt income earned by the assessee. Under the circumstances, the proposition of law which emerges from the order of the Hon’ble High Court in the case of ‘Godrej Agrovet’ (supra) is that certain percentage of exempt income can constitute a reasonable estimate for making disallowance for the years earlier to assessment year 2008-09 and not that in each every case, such percentage is to be restricted @2% only. The Ld. CIT(A), in the facts and circumstances of the case has restricted the disallowance @5% of the dividend income against ₹ 1,19,012/- which appears to be quite reasonable. We therefore do not find any infirmity in the order of the Ld. CIT(A) in this respect.
Addition on account of adjustments under section 145A in relation to excise duty and sales tax on closing inventory of raw material, packing material and stores & spares - Held that:- The assessee was following Exclusive method in respect of raw material, packing material and spare parts and therefore adjustment on account of tax/duty is required to be made in respect of such items in the purchase/ sales, opening stock and closing stock. The auditors had computed the adjustment under section 145A at Nil as per clause 12(b) of the auditors report which has not been accepted by the AO without giving any reasons. The AO has made his own adjustment which does not give details of adjustment made in relation to opening stock, sales and closing stock in relation to items mentioned by him. The matter in our view requires fresh verification and AO is required to give specific finding as to how adjustment prepared by auditors was not found acceptable. We, therefore, set aside the order of CIT(A) and restore the matter to the file of AO for passing a fresh order after necessary examination in the light of our observations made above and after allowing opportunity of hearing to the assessee
Ad-hoc disallowance @ 5% of repairs expenses incurred at Mumbai - Held that:- We find that the AO has allowed the repair expenses in respect of other units except a few expenses about which the assessee could not substantiate its claim as discussed in the assessment order. In respect of Mumbai Unit, the AO had called upon the invoices of ₹ 50,000/- and above. It is an admitted fact on the file that the assessee has no evidence to support the claim as the same has allegedly been destroyed in fire. The AO thus could not verify the said claim of expenditure. The AO, despite the above fact, considering the overall facts of the case, has allowed the claim but has retained only 5% adhoc disallowance for want of supporting evidences, which action seems to be quite justified. We do not find any infirmity in the order of the AO in this respect.
Addition made by the AO on account of capital expenditure as against the assessee’s claim that the same was revenue expenditure - CIT(A) deleted the addition - Held that:- This issue has been discussed by the Ld. CIT(A) after thoroughly examining the nature of expenses and relying upon the various case laws, has observed that these expenses were allowable as revenue expenditure because no new asset was acquired by the assessee and the expenditure was incurred to preserve the existing assets. He therefore held that the expenditure was allowable as revenue expenditure. However, the depreciation allowed on the asset in relation to the above amount of expenditure was liable to be withdrawn. After considering the submissions of the Ld. Representatives of the parties, we do not find any infirmity in the order of the Ld. CIT(A) in this respect. The appeal of the Revenue is therefore dismissed.
Repairs and maintenance expenses was incurred for the maintenance and preservation of the assets and no new capital has come into existence. He, relying upon various judicial decisions of the higher judicial authorities, has held that the nature of expenses is revenue in nature.
-
2015 (12) TMI 1372
Claim of exemption as charitable institution - exemption u/s 11 - CIT(A) allowed the claim - Held that:- The receipt in question is only incidental to the activity of the assessee. In fact, the registration granted to the assessee was cancelled on the ground that the assessee is collecting sale of tickets on book fair, rent on stalls and service tax. For the very same assessment year under consideration, this Tribunal found that the cancellation of registration is not justified. In view of the decision of co-ordinate Bench of this Tribunal, to which the Ld. Accountant Member is a party, this Tribunal is of the considered opinion that the collection of sale of tickets, rent on stalls and service tax are incidental to the main activity of the assessee. Therefore, it cannot be construed as trade or commerce. Hence, this Tribunal is of the considered opinion that the CIT(Appeals) has rightly allowed the claim of the assessee under Section 11 of the Act. - Decided in favour of assessee.
Claim of the assessee towards depreciation - Held that:- When the assessee claims the cost of the capital expenditure as exemption under Section 11 of the Act, then the cost of the capital asset becomes NIL. Admittedly, depreciation under Section 32 of the Act has to be allowed only on written down value of the asset. When the written down value of the asset becomes NIL since the entire cost was allowed as application of income under Section 11 of the Act, this Tribunal is of the considered opinion that there cannot be any further claim for deduction under Section 32 of the Act. In view of the above, this Tribunal is of the considered opinion that the assessee is not eligible for deduction under Section 32 of the Act towards depreciation. However, it is made clear that the assessee is eligible for exemption under Section 11 of the Act for all the assessment years under consideration.- Decided against assessee.
-
2015 (12) TMI 1371
Deemed dividend made under section 2(22)(e) - CIT(A) deleted the addition - Held that:- CIT(A) has appreciated the fact that the amount given by M/s ADJPL to M/s DJPL was in connection with a commercial transaction involving purchase of a property. It is further fortified by the fact that it is not shown by the AO that the assessee herein did receive any benefit out of it. The explanations of the assessee were duly supported by the documentary evidences. During the course of appellate proceedings, the Ld CIT(A) has also called for a remand report from the AO. But the assessing officer could not contradict these factual aspects in his remand report. Under these set of facts, we are of the view that the decision rendered by Ld CIT(A) does not call for any interference. - Decided against revenue
-
2015 (12) TMI 1370
Rectification of mistake - disallowance made out of labour charges - Held that:- Even if the claim made by the assessee in the applications filed under S.154 that the disallowance made out of labour charges in both the years under consideration is not sustainable separately was disallowed by the Assessing Officer in the orders passed under S.154 on merit, the same by itself will not enlarge the scope of proceedings under S.154, which is confined to rectification of only the mistakes apparent from record.
As held in the case of Mepco Industries Ltd. Vs. CIT (2009 (11) TMI 24 - SUPREME COURT ) relied upon by the learned CIT(A) in her impugned order, the decision rendered on a debatable issue cannot be treated as a mistake apparent from record, so as to rectify the same under S.154. As rightly held by the learned CIT(A) in this context, the rectification sought by the assessee vide applications filed under S.154 for both the years under consideration, was on a debatable issue, and even the learned counsel for the assessee has not been able to dispute this position. We, therefore, find no infirmity in the impugned order of the learned CIT(A), upholding the orders passed by the Assessing Officer under S.154 for both the years under consideration whereby he rejected the rectification sought by the assessee on a debatable issue. Accordingly, the impugned order of the learned CIT(A) is upheld - Decided against assessee.
-
2015 (12) TMI 1369
Registration under section 12AA - CIT had rejected to grant registration U/s.12AA because the assessee was yet to commence its charitable activities and therefore, genuineness of the activities could not be established -BHeld that:- no justification in the action of the Ld. CIT for refusing to grant registration U/s.12AA of the Act on this flimsy ground. The assessee trust is in the incubation stage, and has not carried out its objects at the time of application seeking registration U/s.12A of the Act. Only after getting recognition of the Act, the assessee Trust will be able to seriously pursue its objects. Further on perusing the objects of the trust, we find that they are both religious and charitable in nature because the objects of the Trust provides so.
Trust deserves to be granted registration U/s.12AA of the Act. Unless the registration is granted to the assessee trust, it would be difficult for the assessee trust to pursue its objects. Therefore, it is the primary duty of the Ld. CIT to grants registration U/s.12AA of the Act after examining the objects and genuineness of the trust. In this case before us there is nothing adverse to suggest the genuiness of the Trust or its objects. Considering the facts and circumstance of the case, we are of the considered view that the Ld. CIT ought to have granted registration when the assessee has categorically explained the cause of delay in conducting the activities of the trust. Therefore we hereby direct the Ld.CIT to grant registration U/s.12AA of the Act to the assessee Trust, needless to mention that at the time of assessment the Ld.A.O shall be at liberty to withdraw the benefits if the Trust has violated any of the provisions of the Act. - Decided in favour of assessee.
-
2015 (12) TMI 1368
Transaction of shares - business income or Short Term Capital Gains eligible to concessional tax treatment u/s.111A - Held that:- The assessee has indulged in violation of SEBI Regulation while making investment in IPOs. However, whatever amounts the assessee had illegally earned, which could have been assessed as their income, has been taken away by SEBI from them. Once the actual amounts of income earned through the violation of SEBI Regulation have been disgorged by SEBI, ultimately no income has resulted to the assessee. Thus, applying the theory of real income and also relying upon the above decision of Shri Monal Y. Thakkar and Smt. Reetaben R. Thakkar [2015 (7) TMI 913 - ITAT AHMEDABAD ] we are of the opinion that the sum of ₹ 2,20,76,842/- is to be excluded from the assessee’s income. We order accordingly and hold that only the sum of ₹ 34,12,218/- is to be assessed in the hands of the assessee in the year under consideration.
We express no opinion about the finding of the CIT(A) that the sum of ₹ 2,20,76,842/- is to be assessed as business income because since we have held that on account of disgorgement the sum of ₹ 2,20,76,842/- is not to be assessed in the hands of the assessee. Once the amount is not to be taxed because it has already been recovered by the SEBI and there is no real income in the hands of the assessee, the question of the head under which it is to be assessed could not arise. Now, we revert back to the question with regard to the head under which the sum of ₹ 34,12,218/- is to be assessed.
The entire gain had arisen from the purchase and sales of one share, i.e., FCS share which was purchased once and was also sold once. Thus, there was a purchase and sale of single script at one time during the year under consideration – that too with assessee’s own fund. This statement of the ld. Counsel has not been controverted. In view of above, we do not find any justification to interfere with the finding of the CIT(A) in this regard upholding assessment of ₹ 2,20,76, 842 (out of Short Term Capital Gains of ₹ 2, 54, 93,060 shown in the appellant's return) as business income instead of as Short Term Capital Gains eligible to concessional tax treatment u/s.111A.
-
2015 (12) TMI 1367
Additions of Bank deposits made u/s 68 - applicability of provisions of sec. 44AF - Held that:- In view of the fact that the deposits were found to have been made into the bank account from various cities, the theory of unexplained cash credit may not be applicable in view of the explanations furnished by the assessee. Hence, inclined to accept the claim of the assessee that the same represents business receipts. Accordingly, in my view, the provisions of sec. 68 do not have application to the facts of the present case.
Once it is held that the impugned deposits may represent sales collection, then the question of estimation of profit would arise. The assessee’s claim is that the provisions of sec. 44AF should be applied. However, in my view, the said provisions can be applied only if the assessee maintains some record to show that the business was actually carried on and further he satisfies about the quantum of sales. In the instant case, the assessee has failed to show any record and hence, in my view, the provisions of sec. 44AF shall not have application in the facts and circumstances of the case.
Peak credit amount taken as income of the assessee - Held that:- As in the instant case, the assessee has not come out with details of actual sales and hence it cannot be said that the amount of ₹ 11,51,953/- represents the actual sales. The possibility of higher sales cannot be altogether ruled out. The assessee has also not furnished any details about the profit range earned by him. Further, these business transactions have not been disclosed to the revenue also in the income tax return filed by the assessee. Hence, taking into consideration all possible lapses, in my view, the present issue would meet the ends of justice, if the net profit from the alleged business activities is estimated at 25% of the aggregate amount of deposits of ₹ 11,51,953/-. Accordingly, the order passed by the Ld CIT(A) is set aside and the assessing officer is directed to sustain the addition to the extent stated above.In the result, the appeal filed by the assessee is partly allowed.
-
2015 (12) TMI 1366
Disallowance of purchases made - bogus purchases - CIT(A) restricted the disallowance to 7% as against 25% made by AO - Held that:- The assessee being in an export promotion zone, the movement of its goods is controlled and customs approved; that the purchases being approved purchases, there was no question of their being bogus purchases. The assessee enclosed the custom approved invoices in respect of purchases from Zalak Impex. These invoices have been produced before us also, in the paper book filed by the assessee. As per these invoices, the goods purchased had been verified and approved by the Customs Authority. This clearly shows that the goods had actually been purchased and received by the assessee. As such, these purchases could not have, by any stretch of imagination, been treated as bogus purchases. It is also noteworthy that the payments made by the assessee to Zalak Impex were through account payee cheques only. Neither of the Taxing Authorities, however, took these invoices into consideration and wrongly held the assessee’s purchases from Zalak Impex to be bogus purchases. Nothing has been brought on record to show that these invoices were self made or fabricated. Moreover, the comparative chart of purchases made during the year and the selling price (page 141-144), as filed before the ld. CIT(A) has not been refuted and this also goes to prove the theory of bogus bills and accommodation entries to be wrong. Therefore, the order under appeal is a result of complete misreading and non-reading of cogent documentary evidence brought on record by the assessee. For this reason also, along with the reason that the sales made by the assessee were never questioned, the addition is deleted in toto. - Decided in favour of assessee
-
2015 (12) TMI 1365
Depreciation on the asset put into use - assessee is a registered charitable trust - Held that:- As decided in CIT, Karnataka I Versus Society Of The Sisters Of St. Anne [1983 (8) TMI 44 - KARNATAKA High Court ] it is not in dispute that if the mercantile system is followed, the depreciation allowance in respect of the trust property should be allowed - Decided in favour of assessee
Carry forward of deficit - Held that:- There is no dispute that an identical issue was considered and decided by this Tribunal in favour of the assessee in the case of Dr. T.M.A Pai Foundation, Manipal [2010 (2) TMI 1156 - ITAT BANGALORE] the object of the religious and charitable trust can only be achieved by incurring expenditure and in order to incur that expend iture, the trust should have an income. So long as the expenditure incurred is on religious or charitable purposes, it is the expenditure properly incurred by the trust, and the income from out of which that expenditure is incurred, would not be liable to tax. The expenditure, if incurred in an earlier year is adjusted against the income of a later year, it has to be held that the trust had incurred expenditure on religious and charitable purposes from the income of the subsequent year, even though the actual expenditure was in the earlier years, if in the books of account of the trust such earlier expenditure had been set off against the income of the subsequent year. The expenditure that can be so adjusted can only be expenditure on religious and charitable purposes and no other. - Decided against revenue
Revaluation of investments treated as income of the assessee - Held that:- Mere revaluation of asset would not increase income or receipt of the assessee, until and unless the said gain of revaluation is realised. Therefore, the gain on revaluation of the asset/investments without actual realisation cannot be treated as income of the assessee - Decided against revenue
-
2015 (12) TMI 1364
Disallowance of bad debt - Assessing Officer after holding held that the same is related to Debentures held by the Appellant and cannot be deductible either as a bad-debt u/s 36 or as business loss - Held that:- acquisition of debentures, on the facts of the case before us, was in the course of the business carried on by the assessee and, therefore, it cannot be seen on standalone basis divorced from the peculiar facts under which the assessee company came to own these debentures and incur the loss on non-redemption of these debentures. The form of transaction is not important. What is important is that the de facto transaction was of finance and the amount advanced during the course of the financing business had become bad. It is a matter of record, as noted by the CIT(A), that the assessee pursued the matter before Hon’ble Calcutta High Court in winding up petition against IFB Finance Limited, and all this was essentially, and undisputedly, integral part of the financing business carried on by the assessee. As for the question whether the amount has actually become bad and whether loss can be claimed as a deduction for bad debts in the current year, suffice to note that the assessee has written off the amount in this year and, following the law laid down by Hon’ble Supreme Court in the case of TRF Limited Vs CIT [2010 (2) TMI 211 - SUPREME COURT ], the deduction is to be allowed in the year of write off. - Decided in favour of assessee.
Disallowance of depreciation in respect of sale and lease-back transactions of assets - Held that:- We are in respectful agreement with the views so expressed by the coordinate bench. In this view of the matter, we deem it fit and proper to remit the matter to the file of the Assessing Officer for adjudication de novo in the light of the above legal position and the allow the relief, as admissible. As long as assessee is the legal owner of the asset and has used the asset in the course of his business, he is to be allowed depreciation in respect of that asset. The use in leasing business is also a use of the asset. The matter needs to be re-examined in this light. While doing so, the Assessing Officer will give a reasonable opportunity of hearing to the assessee, decide the matter by way of a speaking order and in accordance with the law. Order, accordingly.
Disallowance of EMI residual account - CIT(A) deleted the addition - Held that:- In the case before us, whatever be certainty of the assessee realizing the profits in future as a result of this arrangement, these profits can only be brought to tax when these actually accrue and arise and that stage comes only when the recoveries are made from the individual borrowers. It is also not in dispute, in the light of the categorical finding given by the CIT(A), that the related incomes are brought to tax in subsequent period when these income accrue and arise. As for the reference to Hon’ble Supreme Court’s judgment in the case of CIT Vs Shiv Prakash Janak Raj & Co Pvt Ltd [1996 (9) TMI 5 - SUPREME Court], that was a case in which accrual had admittedly taken place. That is not the situation before us. In these circumstances, we see no infirmity in the well reasoned conclusion arrived at by the CIT(A) and decline to interfere in the matter. - Decided against revenue.
-
2015 (12) TMI 1363
Penalty order u/s 271D - Bar of limitation for imposing penalties - Held that:- The original assessment order had been passed on 30.11.2010 on which date the AO proposed to initiate penalty proceedings u/s 271D had been initiated. The notice u/s 271(D) was also issued on the said date. The penalty order u/s 271D has been passed on 08.06.2011. The relevant financial year during which the assessment order was completed ends on 31.03.2011. The period of six months from the end of the month in which the action for initiation of penalty proceedings expires on 30.05. 2011. The Hon’ble Rajasthan High Court in the case of ‘CIT vs. Jitendra Singh rathore [2013 (3) TMI 222 - RAJASTHAN HIGH COURT ] has held that the six month period for the purpose of clause (c) of section 275(1) of the Act is to be computed from the date of issue of first show cause notice by the AO and not from the date of issue of first show cause notice issued by the Joint Commissioner. In the light of the above decision, the order dated 08.06.2011 is hit by the bar of limitation as prescribed in clause(c) of section 275(1) of the Act and the same is accordingly set aside. - Decided in favour of assessee
Penalty u/s 271D - ₹ 40,000/- i.e. the amount equal to the amount of cash loan accepted by the assessee - Held that:- The assessee has explained that the assessee lady has been engaged in the profession of tailoring. She had no intention to contravene the provisions of the Act. In fact, after receipt of loan from her daughter in law, a very close relative, she had deposited the amount in bank. Both the ladies were unaware of the provisions of law in this respect. Considering the status of the assessee being a small time tailor, her gross total Income mainly from tailoring and interest income for A.Y. 2008-09 only ₹ 158282/- , the total income in relation to which was returned and assessed at ₹ 150280/- and there being no intention to breach the provisions of law while accepting loan of ₹ 40,000/- from her daughter in law, we do not find it a fit case for levy of penalty u/s 271D of the Act. The same is accordingly ordered to be deleted.- Decided in favour of assessee
-
2015 (12) TMI 1362
Disallowance of contractor expenses - whether payment made to sub-contractors are bogus - Held that:- Assessing Officer cannot substitute his own standard of reasonableness of expenditure for that of the assessee, as the assessing authority has not brought anything to show that the assessee adopted colourable or illusory or fraudulent means to reduce the profits to show the expenditure. In our opinion, in the present case the assessee proved the genuineness of the payment by producing cogent evidence including identity of the parties alongwith payment details and the burden cast upon the assessee was discharged as there is no evidence to suggest the bogus nature of the expenditure and the conclusion of the Assessing Officer is based on the presumption to reach the conclusion that the payment are not genuine it cannot be upheld. Further, the assessee is able to show the commercial expediency to incur the expenditure for the purpose of business and incurring of expenditure also confirmed by the respective sub-contractors and they have received payments through banking channel in subsequent assessment years. Hence, we have no hesitation in confirming the order of the Commissioner of Income Tax (Appeals) - Decided against revenue
-
2015 (12) TMI 1334
Reopening of assessment - Commissioner quashed the notice under section 148 also upheld by ITAT and HC [2015 (5) TMI 217 - MADHYA PRADESH HIGH COURT] as action for sanction by JCIT was without application of mind and as this was done in a mechanical manner - Apex court dismissed the revenue appeal after condonation of delay
-
2015 (12) TMI 1333
TPA - AMP expenses - Does the decision in Sony Ericsson apply? - Held that:- As noticed in MSIL (2015 (12) TMI 634 - DELHI HIGH COURT ) the facts of the cases of the Assessees in Sony Ericsson (2015 (3) TMI 580 - DELHI HIGH COURT ) did not give rise to a dispute that there is no international transaction involving the Assessee therein and its AEs. In fact each of the Assessees were receiving subsidies/subventions from their respective AEs. The second factor taken note of by the Court is that as BLT was invalidated as a means of determining the existence of an international transaction, the onus was on the Revenue to show the existence of an international transaction. In the present case, the existence of such a transaction was ascertained only by applying the BLT. For the above reasons, the Court is satisfied that the case of the present Appellant would not stand covered by the decision in Sony Ericsson (supra). Question (i) is accordingly answered in favour of the Assessee and against the Revenue.
Existence of an international transaction - whether the Revenue has been able to discharge the initial onus of showing that there was an international transaction concerning the Assessee and its foreign AEs - Held that:- During the financial year 2007-2008 relevant to the AY in question, of the total turnover of ₹ 251.06 crore only ₹ 9.57 crore, constituting 3.81 per cent, is towards distribution activity whereas the balance revenue of ₹ 241.48 crore was from the manufacturing activity. Further it is pointed out that the contention of the Revenue that market development in India is the function of the AE is factually incorrect. It is pointed out that para 4.30 of the TP documentation has stated that the Assessee plans and executes its own marketing strategy as it considers necessary and appropriate. Further as an independent manufacturer the Assessee bears all the risks associated with its business of manufacturing and sale of products in India and abroad. The condition in the license agreement that the technology will be used for sale of goods in designated jurisdictions or specified territories is not an unusual arrangement. The question of re-characterising the Assessee as a ‘contract manufacturer’ was unwarranted. The Court finds that the Revenue has not been able to controvert any of the above submissions.
In that view of the matter, the question of a benchmarking analysis by evaluating the AMP expenses incurred by the Assessee in relation to its total sales vis-à-vis its comparables is not called for. There is nothing to indicate that the AMP expenses incurred by the Assessee is at the instance of foreign AE and that the Assessee has to be compensated by the foreign AE in that behalf. Question is answered in favour of the Assessee and against the Revenue by holding that the Revenue has not been able to demonstrate that there exists an international transaction involving the Assessee and a foreign AE on the question of AMP expenses. - Decided against the Revenue
-
2015 (12) TMI 1332
TPA - AMP expenses - existence of an international transaction - whether advertising, marketing and promotion expenses (‘AMP’) incurred by the Assessee can be said to be incurred not only for the benefit of the Assessee but also by way of rendering the services of promoting the brand of the foreign associated enterprise (‘AE’) namely B&L, USA? - Held that:- It was not disputed that the said international transaction of incurring of AMP expenses could be made subject matter of a transfer pricing adjustment in terms of Section 92 of the Act. The Assessee here has throughout been contesting the very existence of any international transaction involving AMP expenditure between the Assessee and its AE, i. e., B&L, USA. Further the Revenue has not been able to contest the submissions of Assessee that as far as the Assessee is concerned that it received no subsidy/subvention from its AE, which, however, was not the case of the Assessees in Sony Ericsson (2015 (3) TMI 580 - DELHI HIGH COURT ).Therefore, it is not correct to contend that the decision in Sony Ericsson (supra), to the extent it has remanded the cases to the ITAT for a fresh consideration, would apply to the present appeals and that the same directions would have to issue in these appeals.Accordingly Question is answered in the negative, i.e., in favour of the Assessee and against the Revenue.
Existence of an international transaction - Held that:- In the present case, the mere fact that B&L, USA through B&L, South Asia, Inc holds 99.9% of the share of the Assessee will not ipso facto lead to the conclusion that the mere increasing of AMP expenditure by the Assessee involves an international transaction in that regard, with B&L, USA. A similar contention by the Revenue, namely, that even if there is no explicit arrangement, the fact that the benefit of such AMP expenses would also enure to the AE is itself sufficient to infer the existence of an international transaction has been negatived by the Court in Maruti Suzuki India Ltd. [2015 (12) TMI 634 - DELHI HIGH COURT]
On the issue of the intra group services, the Assessee is justified in contending that the re-characterization of its transaction involving its AE for the two years which have been fully disclosed in the TP Study on the basis of it not being for commercial expediency of the Assessee is clearly beyond the powers of the TPO and contrary to the legal position explained in EKL Appliances (2012 (4) TMI 346 - DELHI HIGH COURT ). For the aforementioned reasons the Court is satisfied that the Revenue has not been able to show the existence of an international transaction involving AMP expenses between the Assessee and its AE, B&L, USA. Question is accordingly answered in favour of the Assessee and against the Revenue.
............
|
9911796707
