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Income Tax - Case Laws
Showing 341 to 360 of 9151 Records
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2015 (12) TMI 1231
Levy of penalty u/s. 271(1)(c) - Assessee was not entitled to adjust the dividend income against the business loss - CIT(A) deleting addition - Held that:- CIT(A) while deleting the penalty has given a finding that Assessee had disclosed all the relevant facts regarding the computation of income, the income from business and the dividend earned on shares in the return of income and none of the particulars furnished by the Assessee were found to be false or inaccurate. He has further noted that the issue is debatable as the matter had traveled up to ITAT, again set aside to the file of A.O and that the question of law being admitted by Hon'ble Gujarat High Court shows that the issue is debatable. These findings of ld. CIT(A) have not been controverted by Revenue. We further find that on merits, on identical issue as to whether the dividend income can be set off against the speculation loss, the Hon'ble Gujarat High Court in the case of CIT vs. Sphere Stock Holding Pvt. Ltd. (2011 (8) TMI 1124 - GUJARAT HIGH COURT) has upheld the view of ld. CIT(A) as well as Tribunal that the irrespective of provisions contained in Section 56 of the Act and Explanation to 73, loss should be adjusted against such business income.
In view of the aforesaid facts and in the absence of any contrary binding decision brought to our notice by Revenue, we find no reason to interfere with the order of ld. CIT(A) and thus the ground of Revenue is dismissed. - Decided in favour of assessee.
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2015 (12) TMI 1230
Addition on account of excess depreciation - CIT(A) deleted the addition - Held that:- We find that the assessee is following a policy of deducting the sale proceeds of the office from the building block only. It has properly deducted in this year also as the commercial space is a lease hold property. So the apportionment made by AO between the building and plant & machinery is not justified. The facts in the previous year are identical to the facts as it provided in the assessee's case as decided by the ITAT. Respectfully following the order of the Tribunal in assessee's own case, we are inclined not to interfere with the order of Ld. CIT(A). - Decided against revenue
Addition made on account of payment of gratuity - CIT(A) deleted the addition - Held that:- Since the payment has actually been made by assessee during the relevant year at the time of the employee leaving the services of the assessee and the same has been recorded in its regular books of account, it can be inferred that the expenditure has actually been incurred by assessee. Hence, we confirm the order of Ld. CIT(A). - Decided against revenue
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2015 (12) TMI 1229
Addition made on account of excess depreciation claimed by assessee - AO has disallowed the depreciation of assessee by treating the transaction as sale of building and plant & machinery inbuilt therein - CIT(A) deleted the addition - Held that:- The assessee is following a policy of deducting the sale proceeds of the office from the building block only. It has properly deducted in this year also as the commercial space is a lease hold property. So the apportionment made by AO between the building and plant & machinery is not justified. The facts in the previous year are identical to the facts as it provided in the assessee’s case as decided by the ITAT to held DR could not produce any evidence in support of the contention that the space sold by the assessee was inclusive of plant and machinery. Respectfully following the order of the Tribunal in assessee’s own case, we are inclined not to interfere with the order of Ld. CIT(A) - Decided against revenue
Addition on account of payment of gratuity - CIT(A) deleted the addition - Held that:- Since the payment has actually been made by assessee during the relevant year at the time of the employee leaving the services of the assessee and the same has been recorded in its regular books of account, it can be inferred that the expenditure has actually been incurred by assessee. Hence, we confirm the order of Ld. CIT(A).- Decided against revenue
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2015 (12) TMI 1228
Revision u/s 263 - unverified purchases - Held that:- A.O., while completing the assessment under section 143(3), has not verified the details of purchases adopted by the assessee and to that extent, the Ld. CIT's order under section 263 holding assessment order to be erroneous and prejudicial to the interests of the Revenue also has been upheld by the ITAT. Further, in the final paragraph of its order, this Tribunal has held that the Ld. CIT was right in directing the A.O. to re-do the assessment as the A.O. in the original assessment had not made any enquiries as to the genuineness of the purchase figure or to the validity of the assessee's separate debit of transport expenditure under the Head "Direct Expenses" i.e., Schedule-11 to the P & L account and further that the A.O. has not applied his mind by verifying from the Sales Tax authorities and failed to ascertain correct figures and hence, the order of the assessment passed by the A.O. without making necessary enquiries on such important points connected with assessment would be erroneous and prejudicial to the interests of the Revenue.
From these observations of the Tribunal, it is evident that this Tribunal has held assessment order to be erroneous and prejudicial to the interests of the Revenue and has upheld the order of the Ld. CIT under section 263 in directing the A.O. to re-do the assessment. Though, there is a finding by the Ld. CIT in his order that the A.O. has not made proper enquiries on the issue of inflated purchases, in the penultimate para 4, he has directed the A.O. to re-do the assessment in accordance with his directions which is clearly in contradiction to his earlier finding. The Tribunal has not given any finding on this part of the order of the Ld. CIT. This, in our opinion, is a mistake apparent from record. In view of the same, we modify the order of this Tribunal by adding the following sentences to the end of paragraph-19.
"However, the direction of the Ld. CIT in paras 4 and 5 are set aside and the A.O. is directed to re-do the assessment after verification of the details relating to the issue and after affording reasonable opportunity of hearing to the assessee."
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2015 (12) TMI 1227
Profit earned on sale of share - long-term capital gains OR business income - Held that:- There has been some deviation to the contentions placed by learned authorised representative in relation to consistent treatment of transactions of purchase/sale of shares under the head "shares investment account". There is no dispute that the books of account are audited under section 44AB of the Act duly certified by the chartered accountant and showing the total stock of equity shares held by the assessee in trading and profit and loss account and has been treated as closing stock and no information is placed on record that whether such stock has been converted into capital account or vice versa. In these circumstances in order to verify the submissions/claim of the assessee of capital gains from shares held in shares investment account in the light of our working as well as questions raised, it will be just and proper to remit this issue back to the file of the Assessing Officer before whom the assessee will place all records. If the Assessing Officer is satisfied that the assessee has consistently treated the shares investment account as her investment for long-term purposes and has not shifted the stock in investment account to shares trading stock account or share derivatives account or vice versa then the Assessing Officer will accept the claim of the assessee of claiming deduction under section 10(38) of the Act for long-term capital gains from sale of equity shares and if contrary results are discovered by the Assessing Officer from the records made available by the assessee then such total income from the transaction of purchase/sale of shares in all the three sub-groups account shall be treated as business income - Decided in favour of assessee for statistical purposes.
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2015 (12) TMI 1226
Unexplained capital gain ans sale proceeds - Held that:- Once Smt. Shardaben R. Patel has recognised the sale consideration by computing capital gain on transfer of the two flats and the return was filed before the search, then it has been demonstrated that source of the funds in purchasing two fixed deposits is the transfer of the two flats by Smt. Shardaben R. Patel. The assessee has discharged the onus before us also, and therefore, no addition can be made in purchase of fixed deposits. We allow this ground of appeal. Addition of ₹ 9,80,000 which is 50 per cent. of the sale proceeds along with interest considered in the hands of the assessee is deleted.
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2015 (12) TMI 1225
Cognizance of section 153C - no satisfaction was recorded by the AO of the searched persons authorizing the AO of the assessee to issue notice under section 153C - Held that:- The satisfaction note in other cases as well as recorded in the case of assessee are verbatim same except the assessment years. A perusal of the satisfaction note would indicate that it is totally vague. It does not disclose what is the material found during the course of search, which belonged to the assessee. There is no reference to any such documentary evidence. - Decided in favour of assessee.
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2015 (12) TMI 1224
Addition under section 36(1)(iii) - interest paid on loan borrowed during the year under consideration - CIT(A) deleted the addition - Held that:- The proviso to sec.36(1)(iii) specifically deals with two situations first there should be acquisition of an asset and secondly such acquisition is for extension of existing business. In the instant case expenditure have been incurred for some repairs and replacement works which included replacement of flooring and lift and such replacements are for the smooth conduct of the existing business and not for the extension thereof and even otherwise that can not be construed as Extension of building because it is admitted fact that the Assessee has not constructed or added some new rooms or restaurants or some other new facility and even otherwise the Ld. A.O. has not disputed the nature of work undertaken or has made any case that any new facility has been constructed, there fore the work carried by the Assesses can not be treated as extension of existing business. Contention of Ld D.R that the work carried out by the Assessee was certainly in the nature of extension of business because the value of business and property would be increased and it amounts to capital expenditure having no essence and not tenable under the facts and circumstances as demonstrated and evident. There fore, taking all facts and circumstances into consideration, We are of the opinion that the work undertaken by the appellant does not include acquisition of an asset for the purpose of extension of its business therefore, proviso to sec.36 (1)(iii) is not applicable in this case and the addition is not justified. - Decided in favour of assessee.
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2015 (12) TMI 1188
Transfer pricing adjustment - Was there an international transaction between WOIL and its AE involving the AMP expenses within the meaning of Section 92B of the Act read with Section 92F(v) of the Act? - Held that:- As far as the present appeals are concerned, the Revenue has been unable to demonstrate by some tangible material that there is an international transaction involving AMP expenses between WOIL and Whirlpool USA. In the absence of that first step, the question of determining the ALP of such a transaction does not arise. In any event, in the absence of a machinery provision it would be hazardous for any TPO to proceed to determine the ALP of such a transaction since BLT has been negatived by this Court as a valid method of determining the existence of an international transaction and thereafter its ALP.
Question put as there an international transaction between WOIL and its AE involving the AMP expenses within the meaning of Section 92B of the Act read with Section 92F(v) of the Act is answered in the negative, i.e., in favour of the Assessee and against the Revenue. Consequently Question (ii) in the Assessee's appeal is not required to be answered. Further, the only question framed in the Revenue’s Appeal viz., "Whether the ITAT erred in deleting the addition of ₹ 180,73,10,769 made by the AO/TPO on account of AMP expenses under Section 37 of the Act?" is answered in the negative, i.e. in favour of the Assessee and against the Revenue.
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2015 (12) TMI 1187
Compensation on termination of joint-venture agreement - whether taxable as income under the Head ‘Capital Gains’ - Held that:- In the present case what stood extinguished as a result of the termination of the JVA was a bundle of rights of the Assessee. This included the right to manufacture computers using HP knowhow and HP labels, trademarks and patents. At the same time it was not as if the Assessee's right to manufacture its own computers was also taken away by the termination. That stood revived. In any event, there has been no attempt at unbundling the compensation amount, as it were, to determine how much of it pertained to the above constituent rights in the bundle of rights of the Assessee that were extinguished. The AO proceeded on the basis that the entire sum received by the Assessee was for it giving up the right to manufacture HP computers. This overlooked the factual position concerning the extinguishment, as a result of the termination of the JVA, of the entire bundle of rights not limited to the right to manufacture HP computers. The right of HCL HP to revive manufacturing its computers cannot be construed as a 'transfer' of a right. At the same time HP HCL lost its status as an exclusive distributor of HP products. The transfer, if any, of the intangible assets of the kind described under the JVA could not, at the relevant time, be held to fall within the ambit of the kinds of capital assets that were contemplated in Section 55 (2) (a) as it then stood. Therefore, their cost of acquisition could not have been deemed to be 'nil' in terms of Section 55 (2) (a) (ii) of the Act as it stood at the relevant time.
The Court, therefore, holds that the receipt of ₹ 6080.95 lakhs by the Assessee as a result of the termination of the JVA during AY 1998-99 was a capital receipt but in light of Section 55 (2) (a) of the Act as it stood at the relevant time, the said amount cannot be brought to capital gains tax. At the relevant time, there was no provision in regard to determining the cost of acquisition of the above intangible assets for the purposes of computing capital gains tax. - Decided in favour of the Assessee.
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2015 (12) TMI 1186
Deduction under Section 80IC - fabrication of steel Held that:- the fabrication of steel as undertaken by the Assessee, which involves several of the processes does fall within the definition of ‘manufacture’ for the purposes of Section 80 IC of the Act
Assessee furnished the requisite documents to demonstrate that it carried on the manufacturing activity at its Agartala unit. The Assessee produced during the assessment proceedings as well the appellate proceedings copies of the excise returns filed by it before the Central Excise authority at Agartala, the bills of machinery and of raw material purchased, details of freight and cartage for purchase of raw material, and details of job work paid. Documents to show that the Assessee paid ₹ 1.66 crores for the fabrication work carried out with the help of contract labour were produced. Further, the documents of registration with the VAT, CST, Service Tax, and Central Excise Authorities were furnished. The Assessee also produced details of the rent paid to the Tripura Industrial Development Corporation Ltd., the bills of construction of the factory sheds and the details of payment of electricity charged to Tripura State Electricity Corporation Ltd. The appellant has produced the bills purchase of the machinery installed at the premises, comprising drilling machines, welding machines, motors, gas cutting machines.: air compressor, etc. It produced details and bills of purchase of raw material comprising nuts, bolts, rods M.S. angles, channels, HR sheets metal etc. As rightly pointed out by the Assessee there was no requirement under Section 80 IC that the Assessee had to employ 10 or more workers directly. In the circumstances there appears to have been no justification for the AO to disallow the deduction under Section 80IC of the Act for the AYs in question. - Decided in favour of assessee
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2015 (12) TMI 1185
Addition under Section 68 - ITAT deleted the addition - Held that:- ITAT was fully justified in coming to the conclusion that there exists no evidence to establish that there was any re-routing of the money collected by the Respondent-Companies. None of the shareholders denied having contributed to their share capital. The Revenue has not been able to show why the decision of the Supreme Court in CIT v. Lovely Exports (P) Ltd. (2008 (1) TMI 575 - SUPREME COURT OF INDIA ) does not apply to the facts and circumstances of the case.
The Court accordingly concludes that in the present appeals the Revenue has not been able to show that the impugned decision of the ITAT in its analysis of the facts or application of the law governing Section 68 of the Act suffers from any legal infirmity. - Decided in favour of assessee.
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2015 (12) TMI 1184
Deduction u/s 10A - Tribunal holding that Section 10A is a deduction provision and not an exemption provision - Held that:- Decided in favour of the Assessee and against the Revenue by holding that the ITAT was in error in considering Section 10A of the Act to be a deduction provision.
Whether brought forward losses should first be deducted from the total income of the current year and thereafter the deduction u/s 10A of the Act should be allowed? - Held that:- Brought forward losses are to be set off only after giving effect to Section 10A of the Act. The Assessee earns both exempt income as well as income which is ineligible for exemption under Section 10A of the Act. The ineligible business income will be available for adjustment of brought forward losses of the earlier years - Decided in favour of the Assessee
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2015 (12) TMI 1183
Amortization of premium on HTM securities - treating the same as revenue expenditure could not be said to be erroneous within the meaning of section 263 - Held that:- We are of the view that no fault can be found with the impugned order holding that in such a case no occasion to exercise powers of Revision under Section 263 of the Act can arise as held by the Supreme Court in MALABAR INDUSTRIAL CO.LTD (2000 (2) TMI 10 - SUPREME Court).
In view of the above settled position of law in regard to jurisdiction under Section 263 of the Act the impugned order of the Tribunal does not give rise to a substantial question of law.
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2015 (12) TMI 1182
Addition of 25% undisclosed sales - Held that:- Revenue, has produced a chart to show the difference between the figures of sales as per the AISR and the figures of sales given in the return of income. The difference is 15 to 20%. The Court is unable to accept the rough and ready method of determination of the percentage of the difference in the two sales figures. The exercise must be done at the micro level. Individual invoices have to be examined to see what the actual discounts allowed for the transactions were. This appears to be the exercise undertaken by the ITAT before it came to the conclusion that there was no difference between the figures reported in the AISR and the sales as per the return of income. It was based on the thorough examination of the books of accounts and is purely factual. Consequently, the Court finds no reason to differ with the conclusion of the ITAT on this aspect. The addition made by the AO of 25% of the sales was rightly deleted. - Decided in favour of the Assessee and against the Revenue.
Commodities speculation - ITAT deleted the addition - Held that:- It is not understood why the AO undertook this exercise to arrive at a notional figure. On the other hand, in the impugned order of the ITAT, it has been noted that the Assessee announced several schemes, one of which was distribution of gold chains on the birthday of Mr. Dharam Pal Gulati, to the dealers who achieved certain targets. The Assessee purchased the gold and alloy and got them converted into chains from M/s Vijay Kumar Jewellers with whom the Assessee had a regular account. The ITAT found that “the assessee is not engaged in purchase and sale of gold on the basis of which it could be presumed that the assessee was engaged in speculative business.” It was further pointed out that if the Revenue wanted to rely on the surrender of certain amount made by the Directors after the search, the necessary evidence should have been brought on record since the statements made had been retracted. As rightly pointed out by the ITAT, the conclusion of the AO that the Assessee was engaged in the speculative business in agricultural commodities and gold was based on surmises and not on the basis of any credible evidence. The Court therefore holds that the deletion by the ITAT of the addition on the ground of speculative trading was for cogent and valid reasons. - Decided in favour of the Assessee and against the Revenue.
Addition on inflated purchases - ITAT deleted the addition - Held that:- The Court is unable to find any error in the approach of the ITAT in the matter. Indeed if the amount has already been taxed at the hands of Mr. Sushil Kumar Trehan it is not understood how it could be brought to tax again in the hands of the Assessee by disallowance of the expenditure. Moreover the papers on the basis of which addition was made were found in the office of Mr. Sushil Kumar Trehan, who himself was engaged in the procurement of haldi and chillies. Further Mr. Rakesh Gupta, learned counsel for the Assessee informs that Mr. Trehan has paid the tax along with the interest in terms of the order of assessment of his return which has attained finality. - Decided in favour of the Assessee and against the Revenue.
Disallowance of advertisement expenditure - ITAT deleted the additionHeld that:- MDH deals primarily in household products. The contention of MDH that Mr. Dharam Pal Gulati is a pioneer of packaged spices in India and has built the business by his vision and hard work for over six decades has been unable to be contradicted by the Revenue. It is entirely up to the Assessee as to how it promotes its products. The Court finds no basis for the AO to have concluded that the expenses on advertisement was not for business purposes and for disallowing 20% of it. The ITAT rightly upheld the order of the CIT (A) deleting the said disallowance - Decided in favour of the Assessee and against the Revenue.
Addition under the head “Income Expenditure Investments” - Held that:- The revenue frankly states that he has been unable to ascertain how the said question arises in the concerned AYs. It may also be noticed that certain amounts attributed to the Assessee have in fact been brought to tax in the hands of Mr. Trehan and therefore, their addition in the hands of the Assessee was not justified.- Decided in favour of the Assessee and against the Revenue.
Whether the expenses incurred by the Assessee in construction of school building at Byadagi, Karnataka require to be added as income - Held that:- during the course of search Mr. Rajiv Gulati had surrendered a sum of ₹ 10 crores towards difference in stock and ₹ 1 crore on account of discrepancy in stock. The contention was that he was misled on account of pressure during the search operation into surrendering the said sum . This explained his retraction of the said surrender on 28th November 2006 itself. The ITAT also referred to the CBDT Instruction dated 10th March 2003 in this regarding making it mandatory that in the absence of discrepancy in the search inventory of the stock, no addition can be made. In the circumstances, the Court holds that the ITAT was justified in holding that the AO should have brought material in the form of inventory on record, if he wanted to make an addition of ₹ 11 crores. The ITAT, therefore, rightly deleted the said addition. - Decided in favour of the Assessee and against the Revenue.
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2015 (12) TMI 1181
Penalty u/s 271(1)(c) - Held that:- The issue stands covered by the judgments delivered in Commissioner of Income-Tax, Central-I, Kolkata vs. Amardeep Singh Dhanjal [2013 (2) TMI 291 - CALCUTTA HIGH COURT] and Commissioner of Income Tax, Central-III, Kolkata vs. Brijendra Gupta [2015 (7) TMI 451 - CALCUTTA HIGH COURT] the manner in which the income was derived has also been disclosed and the assessee has thereafter paid the tax and the applicable interest, thus all the requirements of the clause were met by the assessee and, therefore, the correct view of the matter is taken in allowing the immunity and upholding the view of the CIT appeals and setting aside the order of penalty passed by AO - in favour of assessee.
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2015 (12) TMI 1180
Addition on account of labour charges - ITAT deleted the addition - Held that:- The assessee claimed deduction in respect of labour charges paid to about 50 labourers. The Assessing Officer reduced this amount having come to the conclusion that only a few labourers were traceable at the given addresses and some of the addresses were not even confirmed. The Tribunal kept in mind the ground realities in such cases. There were comparable results in expenses of labour charges in earlier years. The deductions were allowed to the assessee. The quantum of expenditure can be compared to the production done by the labour. The labour was engaged on piece rate bases. It was found that there was a co-relation between the production as well as the number of labour engaged. The issue really is a question of fact and appreciation of facts. We are unable to say that this analysis and the findings of the CIT(A) and of the Tribunal are perverse or absurd. - Decided against revenue
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2015 (12) TMI 1179
Entitlement to benefit to the assessee under section 54F - ITAT allowed claim - Whether the Tribunal was correct in holding that the order passed by the Commissioner under Section 263 of the Act with a direction to pass the fresh assessment by considering the housing loan raised by the assessee before getting benefit under Section 54F of the Act is not erroneous and prejudicial to the interest of the revenue? - Held that:- It is not in dispute that the assessee sold the agricultural land and the consideration received is in the nature of a long term capital gain. Even before the sale of the property, he had borrowed housing loan and started construction on the site belonging to him. After the sale, the amount spent towards construction of the house is more than the consideration received by the sale of agricultural land and therefore, he is entitled to the benefit of Section 54F of the Act.
Therefore, we do not see any infirmity in the order passed by the Tribunal which calls for interference. However, argument of the learned counsel for the revenue that without fully investing the money which he received as a consideration from the sale, he has completed the construction and he is claiming benefit of deduction of tax paid towards housing loan which would amount to double benefit. That is the question which is to be considered, if they arise and not at the time of granting benefit under Section 54F is available or not. - Decided against the revenue.
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2015 (12) TMI 1178
Addition on deemed dividend - Held that:- The section clearly states that the shareholder may be a member of the concern or a partner, which implies that the interest of the shareholder in the concern is to be determined with reference to the percentage of shareholding of the directors/ partners in the said concern. It is not necessary that in every case the detailed mechanism should be provided for computing the income and, if, by reasonable construction of the section, the income can be deduced then merely on the ground that specific provision has not been provided, it cannot be held that the computation provisions fails. It is well settled law that the construction which advances the object of legislation should be made and not the one which defeats the same. The percentage of shareholding in the concern to which loan is given, is the determining factor of the deemed dividend in case of shareholder. In the present case, since in M/s Aesthete International Ltd., Mr. Puneet Bhagat had 53.85 shareholding. Therefore, ₹ 5,38,500/- should have been assessed as dividend in the hands of Shri Puneet Bhagat and ₹ 4,61,100/- should have been taxed as deemed dividend in the hands of Mrs. Suneeta Bhagat. Since in case of Mr. Puneet Bhagat, this will lead to enhancement of income, uphold the addition of ₹ 5 lakhs only in his case. - Decided against assessee
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2015 (12) TMI 1177
Addition made under the head ‘bogus purchase’ - CIT(A) deleted the addition - whether where sale is genuine, purchase cannot be bogus, whereas no stock register and quantity wise details of purchase and sale is not available? - Held that:- It is clear from the order of the CIT(A) and the evidence on record that there was no valid basis to treat the entire purchases as bogus as was done by the AO. If purchases are being disallowed to the extent of ₹ 10,14,942/- what will happen to the corresponding sales being shown. The CIT(A) therefore was right in concluding that the A.O. was not justified in considering the entire purchases as bogus from these nine parties. The fact that the other parties avoided notices u/s. 133(6) of the Act could be because they were not disclosing sales made to the Assessee in their books of accounts. The AO at best could have rejected the books and estimated income of the assessee but he has not done so. Treating the entire purchases as bogus and making addition would result in absurd results in that the entire sale proceeds would get taxed as income. In the given facts and circumstances of the case, the addition made was rightly deleted by the CIT(A). We find no ground to interfere with the order of the CIT(A). - Decided against revenue
Addition u/s.41(1) as cessation of liability - CIT(A) deleted the addition - Held that:- There was no evidence to show cessation of liability. Assessee still shows the liability in its books of accounts which itself is primafacie evidence that the liability exists.The transaction of purchase, if regarded as bogus then there is no liability in law and hence the question of applying section 41(1) will not arise for consideration.The sums in question has been repaid in the subsequent assessment years, thereby rendering the theory of cessation of liability not sustainable. - Decided against revenue
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