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Income Tax - Case Laws
Showing 321 to 340 of 9151 Records
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2015 (12) TMI 1282
Addition on account of excess stock found during the course of survey - CIT(A) deleted the addition - Held that:- As agreeing with the view of the Learned CIT(Appeals) that once the surrender during survey was retracted immediately, then it was incumbent upon the Assessing Officer to provide to the assessee the inventory showing the alleged difference in stock and if no such inventory is provided to the assessee then it is not only a violation or principles of natural justice but also casts doubt on the veracity of stock taking itself. There cannot be an automatic addition either on t he basis of statement recorded during survey or on the basis of stock inventory whose copy was never provided to the assessee. In the remand report, the Assessing Officer has not countered the allegations of the assessee that copy of the inventory was not provided to him. Thus concur with the finding of the Learned CIT(Appeals) that additions have been made without following the due process of law and principles of natural justice. The Assessing Officer either in the assessment order or in the remand report, has not revealed the procedure adopted for physically verifying the stock. Keeping these material aspects of the case, Learned CIT(Appeals) has rightly deleted the addition - Decided in favour of assessee
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2015 (12) TMI 1281
Treatment to payment made to retiring partners as transfer of capital assets by way of distribution & brining the same to tax as short-term-capital gains in the hands of assessee firm - Held that:- We hold that there is no transfer of capital asset by way of distribution of capital asset at the time of making the payments to the retiring partners and therefore, no capital gain is chargeable to tax in hands of the assessee firm. Accordingly, order of the CIT(A) is set aside and addition made stands deleted. See COMMISSIONER OF INCOME-TAX AND ANOTHER Versus GURUNATH TALKIES [2009 (7) TMI 738 - KARNATAKA HIGH COURT ] - Decided in favour of assessee.
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2015 (12) TMI 1280
Reopening of assessment - Held that:- Assessing Officer, has no jurisdiction to issue notice u/s 148 of the Act to reopen the assessments in respect of those six assessment years immediately preceding the assessment year in which search is conducted or requisition is made. The period under consideration falls within the exclusive domain of section 153A. In the instant case, since the assessment is made consequent to search in another case, the Assessing Officer is bound to issue notice u/s 153C and thereafter proceed to assess or reassess total income under section 153A of the Act. The Assessing Officer, instead of complying with the provisions of section 153C, proceeded with the reassessment under section 147/148 which is not applicable to search cases. Therefore, the impugned assessment order passed u/s 143(3), r.w.s. 147 of the Income tax Act, 1961 is illegal, arbitrary and without any jurisdiction. Hence, the assessment order dated 31-12-2010 passed u/s 143(3) r.w.s. 147 is quashed.
Since, we have allowed the assessee ground on legality of reopening of assessment u/s 147 and quashed the assessment order, therefore, we do not consider it appropriate to discuss the other grounds raised by the assessee on merits of the case. - Decided in favour of assessee.
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2015 (12) TMI 1279
Nature of payments made by assessee franchise to BCCI towards right to operate IPL franchises of 'Deccan Chargers' (DC) for a period of ten years - Held that:- The character of the payment would depend on nature of rights acquired and the period for which such rights was acquired by the appellant. Any payment made for obtaining a commercial right would be a capital expenditure. But payment made periodically for exploiting such rights is revenue in nature. Therefore, in the instant case, payment made at the first instance for grant of right to be franchisee can be considered as capital payment. However, the subsequent annual payments made by the assessee are clearly for exploiting the rights as a franchisee, which are for a year and which can be terminated for non-payment of the franchise fees in the subsequent year. Therefore, the franchise fee paid is revenue in nature because by making such annual payment the appellant does not acquire any rights of permanent nature - Decided against revenue
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2015 (12) TMI 1278
Exemption under section 10(23C)(iiiad) - CIT(A) allowed the claim - Held that:- From the perusal of the said proviso, we see that the provisions of this proviso are applicable only to clauses (iv), (v) (vi) and (via) of section 10(23) of the Act. Since the assessee is claiming exemption under section 10(23C)(iiiad) of the Act, there is no need to file Audit Report in Form No.10BB. In view of the above, the assessee has complied with all the conditions of section 10(23C)(iiiad) of the Act. We do not find any infirmity in the order of the learned CIT (Appeals) and confirm the same. - Decided in favour of assessee.
Anonymous donations to be taxed under section 115BBC(1) - Held that:- We find that Assessing Officer had called for the details of donations received by the assessee, which the assessee failed to give. However, since the Assessing Officer denied the benefit of exemption under section 10(23C)(iiiad) of the Act to the assessee, he did not make any further addition under section 115BBC of the Act. The assessee has raised this issue before the learned CIT (Appeals) by taking a specific ground. However, from the perusal of the order of the learned CIT (Appeals), we see that the learned CIT (Appeals) has not adjudicated the said issue. In view of this, we restore this issue to the file of the learned CIT (Appeals) to adjudicate the same as per law.
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2015 (12) TMI 1277
Disallowance of interest computed @ 12% on advances given to sister concern - Held that:- As the details submitted shows that assessee is engaged in the business transactions with that company as these advances were given for the purpose of Printing and Dying Groups services for the assessee, it cannot be said that the advances are not for the purpose of the business of the assessee company. Further the assessee was having interest bearing fund of ₹ 36,21,707/- and non interest bearing funds of approximately ₹ 13.51 crores in the form of share capital and reserves and surpluses as at 31st March, 2009, therefore there is a considerable force in the arguments of AR that as it has more non-interest bearing funds available with it then the amount of alleged advances given to sister concern, the presumption of diverting the interest bearing funds used for giving this advances is not correct. Hon'ble Bombay High Court in case of CIT vs. Reliance utilities Ltd. [2009 (1) TMI 4 - HIGH COURT BOMBAY] has held that the principle for disallowance u/s 36(1)(iii) would be that if there are funds available both interest free and loans taken, then a presumption would arise that investment would be out of interest free fund generated or available with the company, if the interest free funds were sufficient to meet the investments . In the case of the assessee this presumption is established in view of huge interest free funds available with the assessee. Hence we delete the disallowance as interest @ 12% on advance outstanding to sister concern - Decided in favour of assessee.
Addition as unexplained loans and advances - Held that:- We are convinced that loans and advances are outstanding as per the balance sheet of the company in case of two parties as at 31-3-2009 amounting to ₹ 1,41,71,094/- and the maximum outstanding balance at any time during the year of these two parties in aggregate amounts to ₹ 1,50,41,688/-. Therefore the actual balance outstanding is only ₹ 1,41,71,094. The note no. 6 in schedule no. 19 of the balance sheet as well as the auditor's report clearly describes so. The ld. AO as well as the CIT(A) both erred in reading the audited accounts of the company and making and confirming the addition. According to us and as details furnished there is no difference in the balance sheet of the assessee and therefore we delete the addition - Decided in favour of assessee.
Addition on suspense account - Held that:- Suspense account is arisen out of various debits and credits which could not be identified by the assessee. Same were neither offered as income nor claimed as expenditure. Ultimately in financial year 2010-11 the assessee has written it back to the P & L Account and as it is not disputed that there is no difference between the tax rate of the current year as well as AY 2011-12, therefore we set aside this issue back to the file of AO for verifying the facts whether the suspense account written back has been offered to tax in Financial Year 2010-11i.e. AY 2011-12 and if so, delete the addition in the assessment year in the appeal. - Decided in favour of assessee for the statistical purposes.
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2015 (12) TMI 1276
Addition on account of development expenses - CIT(A) deleted the addition - Held that:- this issue is covered by the order of the ITAT for AY 2002- 03 and also by the orders passed by his predecessors for other assessment years. He observed that the AO had not pointed out any change in facts in the year under appeal as compared to the preceding assessment years and accordingly, ordered deletion of the disallowance made by the AO correctly as the impugned expenditure has been incurred by the assessee with the object of studying and identifying new areas of activities which would result in increased profits from business of manufacturing. The expenditure on feasibility study does not mean that it is incurred towards any new business- Decided in favour of assessee.
Addition made on account of sale of land - Addition u/s 68 - CIT(A) deleted the addition - Held that:- during the year under consideration i.e. AY 2007-08, there was no physical receipt of money in the books of the assessee and all that had happened was that a sum of ₹ 2.50 crores was transferred by the assessee to the account of Escorts Limited (Parent Company) by a book entry. We also take note that the Permanent Account Number (PAN) of Mr. Satish Lamba was furnished before the CIT (A) and complete details including address of Mr. Lamba was furnished to the Assessing Officer. Therefore, we find that the said sum of ₹ 2 crores has been advanced against the agreement to sale of land from Mr. Satish Lamba ; and since sale has not taken place due to procedural delay and clearance from Haryana Urban Development Authority, the sale has not been executed and the assessee has rightly shown the said amount of ₹ 2 crores as advance. Therefore, we do not find any infirmity in the order of CIT (A) deleting the said addition made by the AO and uphold the order of the CIT (A) on this issue - Decided in favour of assessee.
Addition on account of royalty expenditure - CIT (A) deleted the disallowance - Held that:- This issue has already been decided in favour of the assessee by the Tribunal for assessment year 2004-05 and the same was followed by the CIT (A) in this relevant assessment year to conclude the expenditure is of a revenue nature - Decided in favour of assessee.
Disallowance u/s 35AB - Held that:- A perusal of the agreement reveals that there is nothing in it to suggest that the arrangement between the assessee and M/s Escorts Limited (100% holding company) is for providing a technical know-how and thus, we agree with the CIT (A) that there is no justification on the part of the AO to treat the expenditure as covered by Explanation to Sec 35AB of the Act. We further find that the genuineness of the expenditure is not in doubt since the AO himself has allowed 1/6th of the expenditure and the balance to be allowed in subsequent assessment years. The assumption of the AO that assessee had incurred expenditure for acquiring technical know-how is at best can be termed as guess-work and is not on the basis of any evidence to contradict the claim of the assessee or borne out of the agreement. We, therefore, hold that as the genuineness of the arrangement with the holding company is not in doubt and since no know-how has been acquired by the assessee, section 35AB is not attracted. - Decided in favour of assessee.
Disallowance of interest paid for the late deposit of TDS deducted - Held that:- The payment was made on account of interest on delayed payment of tax. In other words, the AO disallowed the interest paid for the late deposit of TDS deducted, on account of interest on FBT and interest on Service Tax, We take note of the fact that the payment was actually made by the assessee on account of late deposit of service tax etc. and this factual position has not been controverted by the assessee before the CIT (A) and before us. Therefore, we find that the AO has rightly made the disallowance - Decided against assessee.
Disallowance as unclaimed liability u/s 41 - Held that:- We find that the assessee has not furnished any documentary evidence to prove the identity/creditworthiness and genuineness of the sundry creditors before the AO or before the CIT (A). Therefore, we concede to the request of the Ld DR and remand this issue back to the file of the AO for adjudicating this issue de-nova and the assessee may produce necessary evidences before the AO to prove the identity/creditworthiness and genuine of the sundry creditors - Decided in favour of assessee for statistical purposes.
Disallowance of unpaid sales Tax due in the previous years - Held that:- This amount represents unpaid sales tax liability and the same was disclosed itself by the assessee as a contingent liability. We find that there is no impact in the Profit & Loss account since the assessee had not claimed any deduction on that score. Therefore, we find that AO could not have made any disallowance on this issue - Decided in favour of assessee.
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2015 (12) TMI 1275
Transfer pricing adjustment - selection of comparables - Held that:- We are inclined to accept the contention of the ld. CIT DR because there is no straitjacket formula given in either section 92A(2)(b) or in Rule 92A(2)(b) or in Rule 10B of the Rules for applying filter to the related party transactions, however, it is a well-settled proposition that if any company is functionally comparable with the taxpayer but at the same time it is more than a specific percentage of RTP, then the same should be ignored by treating it as a controlled transaction and hence, the view taken by the ITAT Delhi in the case of Nokia India Pvt. Ltd. (2014 (11) TMI 101 - ITAT DELHI ) is a balanced view supported by various orders of the Tribunal on the issue. Therefore, we are inclined to accept the contention of the ld. CIT DR that a company should be considered as non-comparable only if its RPT exceeds 25%.
It cannot be ignored that the NTPCES is also enjoying settlement of all employees from the holding company NTPCS at cost and the benefits received from the holding company and related party transactions (RPT) are not monetised in the annual report and in absence of specific data in this regard, NTPCES cannot be held as comparable with the assessee company. Therefore, AO/TPO was not justified in including NTPCES in the final set of comparables for benchmarking impugned international transaction of the assessee company and they are directed to delete the same.
The functional dissimilarity as well as distinction in the geographical market in the light of foreign exchange fluctuation risk of the assessee company coupled with below 25% RPT undertaken by the CIEL, we, therefore, decline to agree with the conclusion of the AO/DRP/TPO that the CIEL is a suitable comparable for the purpose of proposed TP adjustment made by the authorities below. Functional dissimilarity and other aspects cannot be ignored and these factors clearly demonstrate that CIEL should not have been included in the final set of comparables for making transfer pricing adjustment pertaining to the impugned international transactions of the assessee company and we order to exclude the same from the final set of comparables.
Mark to market losses on foreign exchange forward contracts disallowed - Held that:- Undisputedly, the facts and circumstances of the present case are more or less similar to the present AY 2009-10 and the assessee booked mart to market loss of ₹ 21.80 crore as on 31.3.09 being difference in the INR value of the USD as on 31.3.09 and the value of which the hedging contract was agreed to be settled. We further note that the assessee is following mercantile system of account for recognition of this loss in its financial statements. When we see the order of the DRP para 3.7.1, then it is amply clear that the ld. DRP has alleged that the forward contracts are not fully supported by the underlying support invoice both in terms of the amount as well as the tenure. DRP has drawn the table in this appeal and thereafter noted that out of 9 forward contracts, the assessee has only used 4 forward contract fully and the assessee has not used these forward contracts immediately but started using them against the sale invoice after the lapse of time of few months. Ld. DRP further noticed that contract no. 1461 was used for the first time on 31.10.08 for a nominal sum of USD 632 and thereafter in November for USD 144247 and balance in December 2008 for USD 2755121. Thus, it shows that there was no underlying asset for this contract from 6.8.2008 till 31.10.08. The entire forward contract could be utilised only by 31.12.08.
There is no observation of the ld. DRP in para 3.7.1 which support the contention of the assessee that all forward contracts were duly honoured by delivery of contracts under USD. In this situation, in principle, we agree that in view of the ratio laid down by Hon’ble Supreme Court in the case of Woodward Governer (2009 (4) TMI 4 - SUPREME COURT) while the assessee is following mercantile system of accounting, the loss suffered by the assessee by fluctuation in the foreign exchange as on the date of balance sheet is an item of expenditure u/s 37(1) of the Act. Under this proposition and dicta of Hon’ble apex court, and facts emerging from the DRP order, we find it appropriate that the issue requires detailed examination and verification and calculation on scientific basis at the end of the AO/DRP in the light of relevant proposition and provisions of the Act. Therefore, relying on the said propositions and following the judgement of Hon’ble apex court in the case of Woodward Governor (supra), we restore this issue to the file of AO/DRP for a fresh adjudication after factual analysis and examination of the impugned transactions after affording due opportunity of hearing for the assessee and without being prejudiced by the earlier orders.
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2015 (12) TMI 1243
TDS u/s 194H - Disallowance of sales promotion expenses - non-deduction of TDS by invoking the provisions of sec.40(a)(ia) - Held that:- The issue is to be decided by the Assessing Officer in the light of the Special Bench decision of the Tribunal in the case of Merilyn Shipping and Transports vs. Addl. CIT (2012 (4) TMI 290 - ITAT VISAKHAPATNAM ) wherein it was held that "provisions of section 40(a)(ia) are applicable only to the amounts of expenditure which are payable as on the date 31st March of every year and it cannot be invoked to disallow expenditure which has been actually paid during the previous year, without deduction of TDS. In view of the above, we remit this issue to the file of the AO for fresh consideration. At this stage, we refrain from deciding the issue of sec. 194-H of the Act, to these payments.
TDS u/s 194A - Disallowance u/s.40(a)(ia) - non-deduction of TDS on discount/factoring charges paid to M/s. Canbank Factors Ltd. - Held that:- Special Bench of the Tribunal in the case of Merilyn Shipping and Transports vs. ACIT (2012 (4) TMI 290 - ITAT VISAKHAPATNAM ) and judgment of CIT vs. M/s. Vector Shipping Services (P) Ltd [2013 (7) TMI 622 - ALLAHABAD HIGH COURT] held that sec 40(a)(ia) is not applicable when there is no outstanding balance at the end of the close of the year relevant to the assessment year in respect of these payment. However, the assessee has not brought on record, the details of outstanding expenses or schedule of sundry creditors showing whether the impugned amount is outstanding at the end of the close of the previous year relevant to the assessment year either in the name of the party or outstanding expenses. Hence, in the interest of justice, we are remitting the issue back to the file of the Assessing Officer with direction to verify the claim of the assessee and the assessee shall place necessary evidence in support of his claim.
Depreciation on aluminium cans and crates at 50% - Held that:- As per Index 1 to item (4), containers made of glass, plastic as refills entitled for depreciation at 50%, where the assessee claimed depreciation at 50% on aluminium cans. Being so, it is not fit under that category as mentioned in Index I to item No.4 of I.T.Rules. As such, the lower authorities are justified in restricting depreciation at 15% on w.d.v. Accordingly, this ground is dismissed.
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2015 (12) TMI 1242
Validity of reopening u/s.148 beyond 4 years - disallowance of royalty payment and recomputation u/s.80HHC - Held that:- Reopening is permitted only if the AO has the satisfaction that the income chargeable to tax has escaped assessment by reason of the failure on the part of the assessee to make a return u/s.139 or in response to a notice issued under sec.142(1) or sec.148 or to disclose fully and truly all material facts necessary for the purpose of assessment, as held by the Madras High Court in the case of CIT v. Eco Media (P) Ltd. (2012 (6) TMI 385 - MADRAS HIGH COURT ).
Further, there was no finding by the AO to record anywhere his satisfaction to believe that income chargeable to tax had escaped assessment on account of failure on the part of the assessee to disclose truly and fully all material facts necessary for assessment. Notice u/s.148 of the Act was issued beyond the period of 4 yeqrs from the end of the relevant assessment year is wholly unsustainable as held by the Jurisdictional High Court in the case of CIT v. Schwing Stetter India P. Ltd. (2015 (6) TMI 497 - MADRAS HIGH COURT ). The same view was fortified by the judgment of the Supreme Court in the case of CIT v. Kelvinator of India Ltd. (2010 (1) TMI 11 - SUPREME COURT OF INDIA ). Being so, when the AO framed the original assessment u/s.143(3) of the Act after considering the materials on record and when there is no failure on the part of the assessee to disclose fully and truly all material facts necessary for assessment in all the issues raised by the AO for the purpose of reopening of assessment, notice u/s.148 of the Act along with consequential proceedings are to be quashed. - Decided in favour of assessee.
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2015 (12) TMI 1241
Revision u/s 263 - Addition u/s 68 - whether insertion of proviso to section 68 is retrospective - Held that:- When the AO chose not to make any addition by exercising his discretion as per the mandate of section 68, then the ld. CIT in the instant cases was not obliged to hold against the assessees. - But in the present case, AO did not make befitting inquiry in the given circumstances and the CIT has held the assessment order to be erroneous and prejudicial to the interest of the revenue
We are concerned with a case in which the AO did not discharge the burden cast on him as regards the framing of assessment. In such circumstances, the ld. CIT stepped in to check his action. All the aspects of the assessment are required to be examined by the AO alone and no other authority. But if such an examination has not been done which has rendered the assessment order erroneous and prejudicial to the interest of the Revenue, then it is not only the right but the duty of the CIT to revise such an erroneous assessment, which is prejudicial to the interest of the revenue. This is what has exactly happened in this case. If the contention of the ld. AR is accepted and taken to a logical conclusion, it will amount to rendering the provisions of section 263 otiose. We, therefore, refuse to accept this contention.
After making an elaborate analysis of the nature of amendment, memorandum explaining the provisions of the Finance Bill, 2012, and legal position as emanating from various judgments from the Hon'ble Summit Court governing the retrospective or prospective effect of an amendment, it has been held that insertion of proviso to section 68 is retrospective. As such, this argument, being devoid of any merit, deserves to meet the fate of dismissal
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2015 (12) TMI 1240
Penalty u/s. 271(1)(c) - Held that:- As considered by the Hon'ble Supreme Court in the case of Mak Data (P) Ltd., Vs. CIT [2013 (11) TMI 14 - SUPREME COURT], there cannot be any surrender of income with a view to avoid litigation by peace and to channelise energy and resources towards productive working and to make amicable settlement with the Income Tax Department. Statute does not recognize those types of defenses in Explanation-I, Section 271(1)(c) of the Act. It is trite law that voluntary disclosure does not release assessee from mischief of penal proceedings. Law does not provide that when assessee returns a voluntary disclosure of his concealed income, he has to be absolved from penalty. As already stated, the penalty is levied with reference to original return of income and not with reference to the assessment made consequent to the disclosure by assessee. In view of this, uphold the order of penalty for the above reasons. - Decided against assessee.
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2015 (12) TMI 1239
Addition made on account of suppressed production and sale - Held that:- The addition in the hands of assessee was made on the basis of erratic consumption of electricity vis-à-vis production on the basis of Article written by Dr. N.K. Batra, Professor, IIT, Kanpur. No evidence was found against the assessee of having clandestinely removed the goods without payment of Excise duty in the instant assessment year, though in assessment years 2006-07 to 2008-09, the Commissioner of Central Excise and Customs, Aurangabad had passed an order on evasion of Excise duty by the steel manufacturers in Jalna District, in turn found by the DGCEI for the said year. However, the said addition was deleted by the Third Member of CESTAT. Further, in assessment year 2009-10, the Commissioner of Central Excise and Customs has passed an order on the basis of consumption of electricity, which in turn, was deleted by the Division Bench of CESTAT. The Tribunal in assessee’s own case had heard similar issue in cross appeals relating to assessment years 2006- 07 to 2008-09 had deleted the addition, in the absence of any evidence found by the Income–tax Department against the assessee for the alleged suppressed production and sales and held that there was no merit in the aforesaid addition worked out on the basis of monthly variation in consumption of electricity.
Further, in assessment year 2009-10, the Tribunal had also deleted the addition, in view of the physical verification having been carried out by the Excise authorities, wherein it was found that there was in fact higher consumption of electricity than the report of Dr. Batra. In the instant assessment year i.e. 2010-11, there is no order of Commissioner of Central Excise and Customs and there is no evidence of any clandestine removal of goods without payment of Excise duty, found against the assessee. In the entirety of the above said facts and circumstances, there is no merit in any addition in the hands of assessee, in view of the finding of Tribunal in assessee’s own case - Decided in favour of assessee.
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2015 (12) TMI 1238
Penalty u/s. 271(1)(c) - AO was of the firm belief that the stock of shares was nothing but investment and the investment was made out of borrowed funds, thus disallowed the entire claim of expenditure and the income from business was assessed at Rs. Nil. - CIT(A) deleted the penalty - Held that:- Applying the ratio of the Hon'ble Supreme Court in the case of Reliance Petro Products [2010 (3) TMI 80 - SUPREME COURT ] on the facts of the present case as mentioned elsewhere on the date of the filing of the return of income, the assessee had assessment order for A.Y. 2008-09 wherein business of trading in shares and securities was accepted by the Revenue authorities even if that order was made u/s. 143(1) of the Act. Till date neither the assessment of A.Y. 2008-09 has been reopened nor any revisionary action u/s. 263 of the Act have been taken by the Commissioner. Considering all these facts in totality, we do not find any reason to interfere with the findings of the Ld. CIT(A). Appeal filed by the Revenue is accordingly dismissed. - Decided in favour of assessee.
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2015 (12) TMI 1237
Treatment of income under the head income from house property - Held that:- This issue has been decided against the assessee and in favour of the Revenue by the Tribunal for assessment years 1999-2000, 2000-2001 and 2001-2002.
Disallowance made u/s 14A of the Act read with rule 8D - Held that:- This issue is no more res integra as the applicability of Rule 8D has been held to be prospective from assessment year 2008-2009 by the decision of the Hon'ble High Court of Bombay in the case of Godrej & Boyce Ltd. Mfg. Co. v. DCIT [2010 (8) TMI 77 - BOMBAY HIGH COURT]. We, therefore, restore this issue to the file of the A.O. to be decided afresh without applying Rule 8D after giving a reasonable opportunity of being heard to the assessee. - Decided in favour of assessee for statistical purposes.
Treatment of premature repayment of sales tax loan at net present value as revenue receipt chargeable for tax - Held that:- Hon'ble High Court of Karnataka in the case of CIT v. McDowell & Co. Ltd. [2014 (11) TMI 272 - KARNATAKA HIGH COURT] has laid down the ratio that where the assessee, due to certain scheme, made premature payment of deferred sales-tax and on such payment entire liability to pay tax stood discharged, section 41(1) was not applicable. A similar view was taken by the Special Bench of the Tribunal in the case of Sulzer India Ltd. (2012 (8) TMI 203 - ITAT MUMBAI). - Decided in favour of assessee.
Denial of deduction claimed u/s 35D - Held that:- The impugned assessment year, i.e., assessment year 2005-2006 is the last assessment year, i.e., the tenth year of claim of deduction, which has been denied since the Steel Unit has been sold by the assessee. On a perusal of section 35D shows that the Act is silent in the case when a unit is sold. Section 35D(5) of the Act refers to the transfer before the expiry of the period of 10 years to another Indian company in a scheme of amalgamation and section 35D(5A) refers to the transfer before the expiry of the period in a scheme of demerger. There is no clause in the section which debars the assessee from claiming the expenses as a write off on sale of the undertaking. We, therefore, do not find any reason for declining the claim of the assessee. - Decided in favour of assessee.
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2015 (12) TMI 1236
Validity of assessment order u/s. 158BD r.w.s. 158BC r.w.s. 143(3) - as per CIT(A) satisfaction note is belated which would not confer jurisdiction of the assessing officer to initiate the proceedings u/s. 158BD - Held that:- The Hon'ble Supreme Court in the case of CIT Vs Calcutta Knitwears [2014 (4) TMI 33 - SUPREME COURT] has made a strong observation that the Revenue has to be vigilant in issuing notice to the third party u/s. 158BD immediately after the completion of assessment of the searched person. The facts of the case discussed hereinabove defy the observations of the Hon'ble Supreme Court mentioned hereinabove.
As mentioned elsewhere, the block assessment in the case of searched person i.e. M/s. Tips Industries Ltd., was completed on 28.9.2001. The Hon'ble Supreme Court says that the notice u/s. 158BD should be immediately issued after the completion of the assessment of the searched person, but in this case the notice was issued and served on 5.9.2005, almost 4 years after the date of the completion of the assessment of the searched parties.
In our considered opinion, this service of notice cannot be considered to be immediately after the completion of the assessment of the searched person and is contrary to the observations of the Hon'ble Supreme Court (supra). Also see BHARAT BHUSHAN JAIN AND OTHERS case [2015 (1) TMI 705 - DELHI HIGH COURT] wherein a delay ranging between 10 months to 1½ years was not accepted. Thus we decline to interfere with the findings of the Ld. CIT(A). The Ld. CIT(A) has rightly annulled the impugned assessment order. As the impugned assessment order has been annulled, we do not find it necessary to dwell into the merits of the case. - Decided against revenue
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2015 (12) TMI 1235
Disallowance of salary payment - Held that:- The assessee was asked to furnish details of employees on 07/12/2010, which was submitted with name, address and salary paid, to the Assessing Officer. He also explained the work done and duties assigned to them. It is undisputed fact that the payment of salary was made in cash. The business of the assessee as such that local people are required to make available the details of land available for sale, owners of the land, market rate of that area, other factual/title information to make agreement with support of the advocate etc. The assessee had disclosed more than Rs. one crore returned income on which he had claimed salary expenditure of Rs. More than 19 lacs, which is very nominal. The Assessing Officer up to 27/12/2010 had recoded the statement of six persons and no adverse inference had been drawn by him. The other four persons were not made available by the assessee as claimed by him that they left the job and are not traceable. The time given by the Assessing Officer is very short. The ld CIT(A) had not asked the assessee to produce the remaining employees for verification at the time of appellate proceedings. Therefore, we do not find any reason to confirm the addition to this head - Decided in favour of assessee.
Disallowance of commission expenses on estimate basis - Held that:- The assessee furnished the details of brokerage vide letter dated 17/12/2010 before the Assessing Officer. However, he asked the assessee to produce the four brokers on 27/12/2010 for verification. It is a fact that time given by the ld Assessing Officer was not sufficient. However, the assessee produced two brokers for verification. The details of brokerage have been submitted alongwith letter dated 07/12/2010. The details furnished before the Assessing Officer showed that they are villagers of nearby area who provided the services to make available the land in that area. It is undisputed fact that payments were made in cash on self made vouchers, the ld Assessing Officer had not brought on record any adverse evidence that brokerage payment is not genuine. He simply disallowed the expenses on estimate basis. Therefore, we do not find any reason to confirm the disallowance out of brokerage expenses.- Decided in favour of assessee.
Disallowance of various expenses on estimate basis - Held that:- The assessee’s business is as such that no pakka vouchers can be collected from the recipients of payments. The ld Assessing Officer also had not verified the details given by the assessee and also he sought the information on 27/12/2010 and completed the assessment on 31/12/2010 hurriedly. It is difficult to provide the full particulars of expenses. It is also a fact that non business purposes, the expenditure can be ruled out in absence of third party evidence. The addition confirmed by the ld CIT(A) appears to be higher side. Therefore, in the interest of justice, we consider reasonable disallowance out of travelling expenses, staff welfare expenses, telephone expenses, festival expenses, general expenses and guest house expenses @ 10% out of total expenses claimed. We do not require to be disallowed any expenses out of legal fees for registry, advertisement expenses, printing and stationary expenses, land maping and preparing expenses. Thus we confirm the addition of ₹ 14,000/- out of total disallowances made by the ld CIT(A) at ₹ 5,62,900/- - Decided partly in favour of assessee.
Addition on sale of agricultural land as income from business as against agricultural income claimed by the assessee - Held that:- The intention of the assessee was to get capital appreciation on purchase and sale of agricultural land. The assessee had shown separately brokerage income earned on trading of land as business income. All the purchases and sales of the agricultural land beyond 8 km from the municipal area had been shown in the fixed assets as investment not in stock in trade. The assessee’s case has scrutinized continuously and in past also these additions were made by the Assessing Officer but the Coordinate Bench has set aside the issue to the Assessing Officer. It appears that the Coordinate Bench also not accepted the revenue’s plea. Further in A.Y. 2007-08, the assessee had shown exempted capital given of ₹ 83,11,740/-, which has been accepted by the Assessing Officer himself as the assessee has drawn attention on page No. 31 to 33 of paper book wherein copy of assessment order for A.Y. 2007-08 enclosed which shows that there is no addition made by the Assessing Officer under this head but during the year under consideration, the ld Assessing Officer held the same exempted income as business income. The rule of res judicata is not applicable in the case of income tax proceedings but the Hon'ble Supreme Court in the case of Radhaswami Satsang Vs. CIT [1991 (11) TMI 2 - SUPREME Court] has held that rule of consistency is to be followed to settle the repeated issue. The facts and circumstances of the case are identical to A.Y. 2007-08, therefore, we do not find any reason to hold exempted agricultural capital gain as adventure in nature of trade i.e. business income. The book entries are to be examined for deciding the nature of transaction. The assessee had shown these lands under the head fixed assets, therefore, the case law referred by the assessee are squarely applicable in the case of assessee. Accordingly, we reverse the order of the ld CIT(A) on this ground. - Decided in favour of assessee.
Assessing the agricultural income as income from other sources - Held that:- The assessee regularly had declared the agricultural income not only in the preceding year but subsequent year, which has been accepted by the Assessing Officer. The assessee has filed the reply during the course of assessment proceedings vide letter dated 30/12/2010 and copy khasra girdawari vide letter dated 23/12/2010 to prove that the assessee had carried out agricultural activity on that land. The ld Assessing Officer in assessment year 2006-07, 2007-08 and 2009-10 has been accepted the assessee’s agricultural income. The ld Assessing Officer also had not brought out any evidence to substantiate the finding made by him that the assessee had not carried out any agricultural activity on it. Therefore, we allow the assessee’s ground of appeal and the Assessing Officer is directed to treat the agricultural income as such.- Decided in favour of assessee.
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2015 (12) TMI 1234
Unaccounted purchase - CIT (A) directed the AO to adopt 6% as the profit arising out of the transactions reflected in the loose sheets, found at the time of survey of assessee’s premises, thereby deleting the balance addition made by the AO - Held that:- If we take a presumption that the items in the loose sheets reflected purchases made by the assessee which were not recorded in its books, then definitely on the date of survey there should have been a stock variation. Items which were purchased by the assessee or which were alleged to have been purchased by the assessee were the same items which the assessee was manufacturing and trading. Hence in the nature of the trade, we cannot presume that assessee held all the purchased stock with it without effecting any sales. Since there was no discrepancy in stock, obvious conclusion is that whatever was purchased was sold by the assessee. As to the argument of the Ld. DR that stock might have been kept elsewhere, there is nothing on record to suggest any place of business for the assessee other than the one which was surveyed. Thus to consider the whole of the purchases as unexplained investment was incorrect. Assessee was continuously purchasing and selling and therefore the preponderance of probability is that successive purchases would have been financed by the sales of the earlier purchases. In such situation at the most what we can consider as unexplained investment is the first purchase. All the purchases were in the month of October, 2006 and the first purchase was on 03.10.2006. Assessee would have sold these and used such funds for the next purchase. In such a situation, in our opinion, what the assessee could have earned is only the profits from such purchases.
Even if we consider the first purchase to have been made out of unaccounted income, the estimated profits from the unaccounted sales would be more than sufficient to justify the source. Against the gross profit rate of 2 to 3% suggested by the assessee, based on a decision of Third Member bench of Ahmedabad Tribunal in the case of ITO v. Gurubachansingh J. Juneja [1995 (8) TMI 83 - ITAT AHMEDABAD-C ], CIT (A) had taken a higher rate of 6%. We find that in the circumstances of the case, directions of the CIT (A) were fair. We do not find any reason to interfere. - Decided against revenue
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2015 (12) TMI 1233
Disallowance of commission payment under section 40(a)(i) to non-resident - whether there was no agreement to suggest the payment of sales commission? - Held that:- The assessee has not discharged the burden cast upon it to show the nature of services rendered by non-resident agent. If there are services rendered by non-residents, who have no permanent establishment in India or have any business connection in India, by virtue of which the payment of commission accrued or arose in India then, it is exempted, if the assessee is able to prove that the services were rendered by those non-residents abroad. In the present case, the assessee has not established the facts on record that the non- resident has rendered services abroad and there is no business connection in India by producing relevant records, viz., either agreement entered into by the assessee with them or the correspondence took place between the parties. Without examining these details, we are not in a position to decide the nature of services rendered by the non-resident agent. Therefore, it is appropriate to remit the entire issue back to the file of the Assessing Officer with direction to the assessee to prove that it was sales commission towards procurement of orders from abroad.
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2015 (12) TMI 1232
Disallowance of commission - Held that:- In the absence of proof in support of the services rendered by the commission agent, no commission can be allowed as a deduction. Therefore, we dismiss the appeal filed by the assessee and allow the appeals filed by the Revenue. - Decided against assessee.
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