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Income Tax - Case Laws
Showing 441 to 460 of 9151 Records
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2015 (12) TMI 977
Undisclosed sources and the nature of credit entries mentioned in the UTI Bank Account - Held that:- Addition of ₹ 1.20 crores was made to the total income of the assessee for the period under consideration. The assessee filed revision petition before the CIT(C). It was inter alia recorded by the CIT(C) that the assessee was offered proper opportunity to give address of Pritam Singh and thereafter was also asked to produce Pritam Singh for recording his statement but the assessee failed to discharge his liability. He also did not disclose his bank account No.30210100009591. The money was received in the bank account of the assessee but was withdrawn in cash and thereafter there was no trace of the said amount. In case the transaction was so transparent, the money should have been returned by cheque in the same manner as it was received but this was not so. The petitioner was also asked to provide the original MOU and compromise deeds and other such documents. He had expressed his inability to produce the originals.
The assessee had failed to produce sufficient material either before the Assessing Officer or CIT(C) in revisional proceedings on the basis thereof a finding of fact could have been returned in favour of the petitioner. The factual matrix was required to be established by producing material evidence in that regard before the assessing authority or the revisional authority. The learned counsel for the petitioner was unable to give any one good or sufficient reason which prevented him to produce material evidence in support of his version either before the Assessing Officer or CIT(C). The petitioner cannot be allowed de novo trial under the garb of this submission. In such a situation, in the absence of any material on record which could substantiate the claim of the petitioner, we do not find justification to entertain this petition under Articles 226/227 of the Constitution of India as there is no jurisdictional error in the order of the assessing authority or the CIT(C). - Decided against assessee
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2015 (12) TMI 976
Invoking Section 80IA(10) while denying benefit of Section 80IC - ITAT reversing the order of the CIT(A) - Held that:- The same products are being sold from both the units and at the same price ranging between ₹ 5,25,000/- to ₹ 6,25,000/- in both cases. How the machines were costing less at Baddi was not explained. When the end product is same, the cost would also be the same. By installing a machine of ₹ 6 lakhs it cannot be said that the assessee is achieving economy of scale or some other technological development. It is a simple case of inflation of profits in the eligible unit and in such situation the Assessing Officer has clear powers in terms of Section 80IA(10) to compute the reasonable profit. The Ld. CIT(A) has misdirected himself by observing that Assessing Officer has not pointed out any discrepancy because the Assessing Officer has clearly pointed out wrong allocation of various expenses which was accepted by the assessee before the CIT(A). Further, the Assessing Officer has also given reasons showing that profits in exempt unit have been inflated. In Section 80IA(10), it is clearly provided that if Assessing Officer has reasons that the business has been so arranged to show inflated profits in eligible unit then Assessing Officer has power to recompute the profits of such eligible unit. As seen from the sale invoice there is definitely a reason to believe that assessee has inflated the profits in eligible unit because the same product is being sold from both the units for almost identical price. In this background, ITAT correctly set aside the order of CIT(A) and restore that of Assessing Officer - Decided against assessee
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2015 (12) TMI 975
Levy of penalty under section 271(1)(c) on estimated brokerage income and qua non discharge of burden under section 271(1)(c) - Held that:- A perusal of the findings recorded by the Tribunal show that the assessee had not furnished his return of income for the year under consideration within the time allowed under section 139 of the Act. Survey operations were carried out under Section 133A of the Act at the office premises of the appellant who was engaged in giving accommodation/book entries on account of long/short term capital gains/gifts/loans by charging commission. The modus operandi was that cash received from different beneficiaries was deposited in various bank accounts of the appellant, his family members and other share brokers from where cheques were issued in favour of clients for bogus capital gains/share profits/gifts etc. The appellant in his statement recorded during the course of survey operation on 15.6.2004 admitted to have issued cheques/drafts for bogus profits in return of the cash provided to him by his clients. The appellant also disclosed the names of various concerns under which he was carrying on his business and also the bank accounts from where cheques/drafts were issued. The appellant after the conclusion of the survey vide letter dated 1.3.2005 made surrender of ₹ 27 lacs i.e. ₹ 15 lacs relating to the assessment year 2004-05 and ₹ 12 lacs relating to the assessment year 2005-06. The income surrendered by the appellant was disclosed in the return of income furnished for the assessment years 2004-05 and 2005-06. The appellant had not furnished any return of income since after the assessment year 1996-97 till the date of survey on 25.6.2004. Information was collected during the survey operation that the business was being carried out in the earlier years also. In view of the information gathered during the survey, the Assessing Officer found that the appellant's income relevant to the assessment year 2002-03 had escaped assessment within the meaning of section 147 of the Act and hence proceedings under Section 148 of the Act were initiated. The investments made by the assessee were not declared and thus there was clear cut case of concealment. - Penalty confirmed - Decided against assessee
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2015 (12) TMI 974
Penalty u/s 271(1)(c) - disallowance under Section 80IC - Held that:- A glance at the provisions of Section 271(1)(c) of the Income Tax Act, 1961 suggests that in order to be covered by it, there has to be concealment of the particulars of the income of the assessee. Secondly, the assessee must have furnished inaccurate particulars in his income. The meaning of the word “particulars” used in section 271(1)(c) would embrace the details of the claim made. Where no information given in the return is found to be incorrect or inaccurate, the assessee cannot be held guilty of furnishing inaccurate particulars. In order to expose the assessee to penalty, unless the case is strictly covered by the provision, the penalty provision cannot be invoked. By no stretch of imagination can making an incorrect claim tantamount to furnishing inaccurate particulars. There can be no dispute that everything would depend upon the return filed by the assessee, because that is the only document where the assessee can furnish the particulars of his income. When such particulars are found to be inaccurate, the liability would arise. To attract penalty, the details supplied in the return must not be accurate, nor exact or correct, no according to the truth or erroneous - Decided in favour of assessee
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2015 (12) TMI 973
Excess wastage claimed - Tribunal had disallowed 50% of the wastage claimed by the assessee - Held that:- It is a question of fact adjudicated by the Tribunal which is a plausible view. In such circumstances, no interference is called for with the findings recorded by the Tribunal as held that we are in agreement with the stand of the CIT(A), still since the survey was made on 5.3.2004 and assessee made the claim of 22689.656 kg. as wastage the daily wastage, on average comes to 66.734 kgs. whereas during the impugned period (25 days) assessee showed the wastage of 8897.267 klgs. meaning thereby average daily wastage of 355.89 kgs. This increase is not supported by any commensurate increase in the production by the assessee. At the same time, the claim of the assessee also simply cannot be brushed aside, therefore, keeping in view the overall facts and circumstances, we reduce the addition to 50% of the total i.e. ₹ 10,06,000/- in place of ₹ 20,12,092/- made by the learned Assessing Officer, because firstly, upto 5.3.2004 no disallowance was made by the learned Assessing Officer himself, and secondly the steep increase in the wastage is not supported by any evidence like consequential increase in production etc. Lastly,if not the least, the Assessing Officer has not made blind addition and before 5.3.2004 it was allowed - Decided against assessee
Deduction under Section 80HHC - Held that:- Deduction under Section 80HHC of the Act is available only on showing fulfilment of conditions specified therein and there could be no presumption that surrender made on account of unexplained stocks represented export income. The assessee was unable to give any explanation. There could be no presumption that additional amount surrendered represented income from exports. Deduction under Section 80HHC of the Act can be claimed only on showing facts which made the assessee eligible for the deduction. The burden to prove these facts was on the assessee and not on the Revenue. - Decided against assesseee
Deduction on account of interest received on FDRs under Section 80HHC - Held that:- Tribunal while rejecting the aforesaid contention recorded as on the plea that in the impugned order on the ground that the learned CIT(A) erred in not allowing the deduction as claimed under section 80HHC of the Act. The claim of the assessee is that the deduction of ₹ 1,07,941/- under Section 80HHC has been wrongly worked out because the Assessing officer included 90% of the interest receipts and also reduced 90% of ₹ 20 lakhs being the sum surrendered at the time of survey from the profits of the business for computing the deduction. On appeal, the submission of the assessee is that the interest was received by the assessee on FDRs which was maintained for the purpose of taking limits from the bank. For the amounts surrendered by the assessee, it was claimed that it was also a part of business income. - Decided against assesseee
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2015 (12) TMI 972
Disallowance under section 14A - ITAT held no disallowance can be made under section 14A unless a clear cut nexus is established between the expenses disallowed and income earned ignoring the fact that both direct and indirect expenses are attributable to such investment - Held that:- The Tribunal after considering the matter held that no part of interest expenditure could be considered for the purpose of computing disallowance under Section 14A of the Act. Further, in the absence of any proximate nexus having been established by the lower authorities between the administrative and other expenses and the exempt income, no disallowance under section 14A of the Act could have been made for the assessment year under consideration. Learned counsel for the appellant-revenue has not been able to show any illegality or perversity in the approach of the Tribunal or that the findings recorded by it are erroneous.
Adverting to the judgment relied upon by the learned counsel for the appellant-revenue, it may be noticed that in Walfort Share and Stock Brokers P. Limited's case (2010 (7) TMI 15 - SUPREME COURT ), it held that the assessee was entitled to set off loss from transactions against its other Income chargeable to tax. The said view was affirmed by the High Court. The question before the Apex Court was whether loss arising in the course of dividend stripping transaction taking place prior to 1.4.2002 was disallowable on the ground that such loss was artificial as the dividend stripping transaction was not a business transaction. After examining the legal and factual position therein, it was held that in cases arising before 1.4.2002, losses pertaining to exempted income could not be disallowed. Such is not the position in the present case. - Decided against the revenue
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2015 (12) TMI 971
Set off of tax credit under section 115J (correct provision is Section 115JAA) for the purpose of calculation of interest under section 234B - Held that:- The matter is no longer res integra. The Apex Court in Tulsyan Nec Limited's case (2010 (12) TMI 23 - Supreme Court of India) considering identical issue held that the Assessing Officer is required to give benefit of tax credit available under Section 115JAA of the Act and determine the interest payable under Section 234B of the Act thereafter.
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2015 (12) TMI 970
Unexplained expenditure under head "wages" - ITAT deleted the addition - conclusion of the authorities below was that the assessee had not booked the complete expenditure on wages in its books of account as the number of the workers found during the course of survey were more than the list of workers available in the books of account - Held that:- First of all the said survey was conducted at the premises of the assessee on 9.9.2004 when the said list was prepared. The conclusion of the said survey could not be applied while completing the assessment pursuant to search carried out at the premises of the assessee under section 132 of the Act. Secondly, there was no merit in the said addition being made in the hands of the assessee as the explanation of the assessee that the workers of the two concerns were totally considered in the list of workers prepared by the survey team for the assessee firm cannot be ignored. The said list of 59 workers was prepared on 9.9.2004 and the plea of the assessee was that the said 59 workers as on the date of survey belonged to the assessee and its sister concern. The requisite list of workers employed with either of the concerns were filed on record. Merely because the said statement was confronted to one of the partners who had signed the list does not establish that the workers belonged to the firm in which he was a partner i.e. the assessee firm before us. In the absence of any concrete evidence found, we find no merit in the orders of the authorities below and no addition is warranted in the hands of the assessee on the basis of said list prepared by the survey team where the assessee had clearly explained its case that the said total number of workers belonged to two concerns and not to the assessee itself. In any case, the additions in the hands of the assessee for the years under consideration have been made on pure estimation as no evidence of excess workers was found in the years under appeal. - Decided against revenue
Addition on account of income of Smt.Meena Garg, Prop. of M/s Punjab Timber Trading Company being treated as income of the assessee on substantive basis - ITAT deleted the addition - Held that:- The Tribunal in the case of Smt.Meena Garg relating to assessment years 2002-03 to 2007-08 have held that the income arising from M/s Punjab Timber Trading Company was the sole proprietary concern of Smt. Meena Garg, consequent to which the income arising from the said concern was to be assessed in the hands of Smt.Meena Garg. In view of the income arising to M/s Punjab Timber Trading Company being assessed on substantive basis in the hands of Smt.Meena Garg, after holding that the assessee is the sole proprietary of the business being run under the name and style of M/s Punjab Timber Trading Co, there is no merit in making any addition in the hands of the assessee in this regard. Accordingly, we direct the Assessing Officer to delete the addition - Decided against revenue
Addition on account of difference in valuation of building - basis of report of the valuation officer - ITAT deleted the addition - Held that:- The ratio laid down by the Hon'ble Apex Court in Sargam Cinema (2009 (10) TMI 569 - Supreme Court of India ) is squarely applicable to the facts of the present case where the books of account were not rejected by the Assessing Officer. On the other hand, the Assessing Officer had referred valuation of the building to the Valuation Officer who had reported the value of the building at ₹ 78,15.026/- as against the cost of the building shown by the assessee at ₹ 70,33,524/-. In view of the ratio laid down by the Hon'ble Supreme Court, no addition on this account can be made in the hands of the assessee where the books of account had not been rejected. - Decided against revenue
Addition on account of estimated profit on short stock found - ITAT deleted the addition - Held that:- During the year under consideration, the assessee had shown fall in GP rate and the explanation of the assessee was that due to huge increase in the turnover there was marginal fall in GP rate, which undoubtedly has been accepted by the Assessing Officer in toto. In view of the totality of the facts and circumstances where we have already upheld the addition on account of sale depicted in the seized documents being outside the books of account and on account of the explanation given by the assessee that the discrepancy stands reconciled on account of the GP rate to be applied and other discrepancies explained by the assessee, there is no merit in any further addition. Another aspect to be kept in mind is that the information gathered by the Income tax Department during the search proceedings were forwarded to the excise department who in turn visited the premises of the assessee and found no discrepancy in the stock. Thus no merit in the addition made on account of estimated profit of short stock found on the date of search.- Decided against revenue
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2015 (12) TMI 969
Entitlement to interest under section 244A paid by them under section 140A - Held that:- The entitlement of a person to interest on the refund arises out of substantive part of sub-section (1) of section 244A. Clauses (a) and (b) relate only to the method of computation. The method of computation dealt with by clause (a) relates to specific cases of refund under certain provisions. Therefore, the starting point for calculation of the interest is fixed as 1st April in clause (a). Clause (b) is a residuary clause, as could be seen from the usage of the expression "in any other case". Therefore, the starting point for the computation of interest under clause (b) is the date of payment. The provisions under section 244A do not distinguish the cases where payment is made on assessment under section 140A. The explanation to section 244A does not really talk about the entitlement or disentitlement. The explanation, which we have extracted above, would show that the expression "date of payment of tax or penalty" means the date on and from which the amount of taxes or penalty specified in the notice of demand issued under section 156 is paid in excess.
The above explanation does not give room for an interpretation that if a person has paid money otherwise than by way of demand under section 156, he is not entitled to interest on refund under section 244A. The explanation cannot, really, curtail the method of computation prescribed in clause (b) or the substantive part of section 244A. Therefore, the question of law is answered in favour of the assessee. The Tax Case Appeal is allowed. No costs. The connected miscellaneous petitions are closed.
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2015 (12) TMI 968
Disallowance under Section 40 (a) (i) - ITAT deleted the addition - whether the services rendered by the agents to the Assessee were in the nature of fee for technical services - Held that:- ITAT has analysed the agreements in question entered into by the Assessee with the foreign entities (agents) and concluded that the services rendered by the ‘agents’ were purely in the nature of advancement of the business of the Assessee which could not be categorized as managerial/technical or consultancy services. Consequently, it was held that the consideration paid by the Assessee to such agents could not be classified as fee for technical services.
The Court finds that the view taken by the ITAT on the interpretation of clauses of the agreements in question was a plausible one. It is also consistent with the decision of this Court in DIT v. Pan Alfa Auto Elektrik Ltd. [2014 (9) TMI 706 - DELHI HIGH COURT] and the decision of CIT v. M/s. Grup ISM (2015 (6) TMI 10 - DELHI HIGH COURT). Consequently, this Court finds no substantial question arises for determination on this issue.- Decided in favour of assessee.
Whether the payments could have been made by the Assessee to the foreign entities towards tour expenses without deduction of TDS? - Held that:- The CIT (A) has held against the Revenue on this issue. Where the recipient of the payment is not liable to tax in India, the question of deducting tax at source on payments made to such entity does not arise. - Decided in favour of assessee.
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2015 (12) TMI 967
Maintainability of appeal - monetary limit - Held that:- We need to take note of a very pragmatic initiative, taken by the Central Board of Direct Taxes last week, for reducing litigation in direct taxes. Vide circular no. 21/ 2015 dated 10th December 2015, the Central Board of Direct Taxes has, inter alia, announced that, subject to certain exceptions- which are not relevant in the present context, henceforth, no departmental appeals will be filed against relief given by the CIT(A), before this Tribunal, unless the tax effect, excluding interest, exceeds ₹ 10,00,000. What is even more important is that not only that such a taxpayer friendly measure will be implemented in all future tax litigation, even the pending appeals, wherever the tax involved in the appeals does not exceed ₹ 10,00,000, shall not be pressed or withdrawn. In effect thus, irrespective of the year to which the departmental appeal before the Tribunal pertains, as long as such an appeal is pending before the Tribunal, this will be a legal nullity.
While we have checked and rechecked each case individually and we are satisfied that in none of these cases tax effect involved is not more than ₹ 10,00,000, we accept that human errors are possible and no such error should be allowed to prejudice legitimate interests of the revenue. The liberty is, therefore, specifically granted to the Assessing Officers to approach this Tribunal in case there are any cases, inadvertently included in this bunch of appeals, wherein the tax effect, in terms of the CBDT circular (supra), exceeds ₹ 10,00,000, so that the related appeals can be recalled for adjudication on merits. Thus we deem it fit and proper to dismiss all these appeals as non maintainable.
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2015 (12) TMI 966
Transfer pricing adjustment - Held that:- Motilal Oswal Investment Advisors Pvt. Ltd. be excluded from the list of comparables in the case of investment advisory services as this company is engaged in the business of Merchant Banking and, therefore, is not a good comparable of a company providing investment advisory services to the AE.
Brescon Advisors Limited be excluded from the list of comparables as this company has earned its revenue from debt resolution/debt syndication and financial restructuring advisory services. As per the profits and loss account, income is earned from debt resolution and debt syndication. It is further observed that this company also makes significant investments in companies using its own funds.
Sundram Finance Distribution Ltd be excluded A this company is primarily engaged in the business of agency and retail distribution, operational income and income from brokerage service charges and incentives forms 96% of the total income. We also find from the Annual Report that the income is recognized from insurance agency commission and brokerage.
Integrated Capital Services Ltd. be excluded as be excluded as this company is rendering advisory and consultancy services in the area or merger acquisition and reconstruction of business.
Khandwala Securities Limited be rejected as this company as comparable on the ground that its income is very akin as security and stock brokers.
Axis Private Equity Ltd., the related party transactions are more than 90%. Moreover, the principle product/services of the company as per balance sheet abstract show that it is into the asset management services. Thus, it can be safely concluded that this company has functionally different from the assessee. Therefore, it would be better to exclude this company from the final list of comparables.
Computation of deduction u/s. 10A - assessee was asked to explain why 50% of the telecommunication expenses should not be excluded from export turnover for inclusion of deduction u/s. 10A - Held that:- Respectfully following the ratio laid down in the case of CIT Vs Gem Plus Jewellery [2010 (6) TMI 65 - BOMBAY HIGH COURT ] we direct the AO to exclude the telecommunication expenses from total turnover also. - Decided in favour of assessee
Grievance related to ESOP cost - Held that:- Respectfully following the decision of the Special Bench of Biocon Ltd (2013 (8) TMI 629 - ITAT BANGALORE), we hold that discount on issue of employees stock options is allowable as deduction in computing the income under the head profits and gains of business of profession. - Decided in favour of assessee
Disallowance of charges paid to National Securities Clearing Corporation Ltd, Bombay Stock Exchange and National Stock Exchange - Held that:- Respectfully following the ratio laid down in case of Angel Capital & Debitt Market Ltd. [2014 (5) TMI 584 - BOMBAY HIGH COURT] , we direct the AO to delete the impugned additions as the amount paid as penalty was on account of irregularities committed by the assessee’s clients. Such payments were not on account of any infraction of law and hence allowable as business expenditure. In such a case the explanation to Sec. 37 would not apply - Decided in favour of assessee
Non-allowance of deduction on the ground that bonus expense not actually paid - Held that:- The assessee drew our attention to exhibit 275 which is Appendix-IV to the Audit Report for the year ended 31.3.2008. It was pointed out by the Ld. Counsel that the bonus amount of ₹ 36,46,21,050/- was not paid on or before the due date for furnishing the return of income out of which the assessee paid an amount of ₹ 35,34,72,734/- during the year under consideration. It is the say of the Ld. Counsel that the AO has not properly appreciated the facts of the case. The AO is directed to consider the facts of the case properly and decide the issue afresh after giving reasonable and sufficient opportunity of being heard to the assessee - Decided in favour of assessee by way of remand
Addition on account of the difference between the actual payments made by the assessee to American Express Banking Corporation (AEBC) and the confirmation provided by AEBC - Held that:- We find force in the contention of the Ld. Counsel. A perusal of DRP’s order also show that the corrected amount was provided to the DRP but the same was not accepted as it was not uploaded by AEBC on AIR. In our considered opinion, if the payee does not amend its AIR information, the payer cannot be penalized for the same. Once AEBC has confirmed of having received an amount of ₹ 11,55,45,253/- alongwith relevant bank statements evidencing the payment, we do not find any reason/logic in making the additions. The AO is directed to delete the same - Decided in favour of assessee
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2015 (12) TMI 965
Unexplained investment assessed u/s 69 - Held that:- As contended that assessee belongs to muslim community and according to shariat law applicable to her, she is not supposed to earn interest from any person including bank and she had kept her earnings in the form of cash which was duly deposited at the time of purchase of property. Be that as it may, assessee was not prevented from opening a current account with a bank on which assessee would not have earned any interest, but that was not done. Moreover, sudden deposits of ₹ 2,20,000/- by assessee within a period of 11 days starting from 14/09/2004 and ending with 24/09/2004 definitely proves the unexplained nature of cash deposits which was not related to any business but from some unexplained source. Moreover, these deposits were made immediately before the issue of cheques for either payment to builder or for meeting expenses/payment towards electricity, telephone, insurance payments, etc. and clearly shows that as and when assessee needed to make payments towards the cost of flat and/or towards other expenses, she decided to deposit cash in her accounts. Thus, all these submissions made by the assessee's CA are irrelevant and dismissed.
Cash deposits made in the bank account of assessee's daughter Asma A. Sarang and entries in P&L Account, Capital Account and Balance Sheet for financial year relevant to A.Y. 2005-06 are held to be the property of assessee's daughter and therefore, these have been excluded while deciding assessee's appeal. It is a separate case by itself and these cash deposits require to be examined afresh by the Assessing Officer in assessee's daughter's case.
Therefore, assessee has failed to provide explanation for the sources of unexplained expenditure/investments/deposits in bank account totalling ₹ 2,03,269/-(92,369+1,10,900) u/s 69, 69B and 69C of IT Act, 1961 of IT. Act, 1961 - Decided against assessee
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2015 (12) TMI 964
Assessment under section 158BC(c) - non issue of notice - whether issuance of notice happens to be within the statutory limitation of one year? - Held that:- A perusal of section 143(2) proviso as it existed being substituted w.e.f. 1.4.2008 makes it clear that no notice under clause (ii) of Section 143(2) shall be served after the expiry of twelve month from the end of the month in which the return is furnished. The expression “served” in our view happens to be much distinct than the expression “issued”. We make it clear that the present is a tax statute wherein such expressions used have to be literally interpreted. We are of the opinion that the word “shall” used in the provision also highlights the expression to be of mandatory character. A co-ordinate bench of the tribunal in the case of ITO Vs. Shri Dinesh B. Gandhi [2015 (12) TMI 756 - ITAT AHMEDABAD] has rejected a similar argument of the Revenue wherein the very dates of return followed by issuance and service of section 143(2) notices were involved. The Revenue’s fails to point out any distinction on facts or law. We accordingly reject its first contention.- Decided in favour of assessee.
Whether Section 158BC in chapter XIV-B is a complete code in itself wherein section 143(2) does not apply in toto? - Held that:- Section 158BC(b) clearly stipulates the procedure to be followed by an Assessing Officer in determining undisclosed income of the relevant block period in the manner laid down in section 158BB and the provisions of 142 and 143(2) and (3) etc. We accordingly reject this second argument as well. The Revenue’s sole substantive ground fails. The CIT(A) order quashing the impugned assessment on the ground of validity of section 143(2) notice stands upheld. - Decided in favour of assessee.
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2015 (12) TMI 963
Penalty u/s 271(1)(c) - claim of revenue expenditure u/s 35(2AB) disallowed - Held that:- The claim of the assessee was not accepted by the Assessing Officer for the sole reason that the assessee could not get the approval from DSIR till completion of scrutiny assessment proceedings and therefore, in the facts of the present case, this judgment of Hon'ble Apex Court in CIT vs. Reliance Petroproducts [2010 (3) TMI 80 - SUPREME COURT ] wherein it was held that merely because of the assessee's claim, deduction of the interest of expenses which has not been accepted by revenue, penalty u/s 271(1)(c) not attracted, for merely making of the claim, which is not sustainable in law by itself will not amount furnishing inaccurate particulars of income. - Decided in favour of assessee
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2015 (12) TMI 962
Nature of interest received - revenue receipt or capital receipt - compensation for breach of contract relating to capital assets - CIT (A) treated the interest received and tax deducted at source from the same u/s 194A as capital in nature - Held that:- We find merit in the submissions of the learned Counsel for the assessee. Merely because the tax has been deducted by the builder and recorded it in his books of account as revenue expenditure, the same cannot be treated as revenue receipt. The compensation received for breach of contract which relates to capital assets and, therefore, the learned CIT(A) has rightly held it to be capital in nature. Thus, we do not find any cogent reason to disturb the reasoned order passed by the learned CIT(A) and decline to interfere in the matter as such. - Decided against revenue
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2015 (12) TMI 961
Transfer pricing adjustment - adoption of Most Appropriate Method (MAM) - Held that:- We direct the TPO to adopt RSPM as the MAM in this case.
Transfer pricing adjustment of AMP expenses - Held that:- As agreed by both the parties this issue is set aside to the file of the AO/TPO for fresh adjudication in line with the propositions laid down by the Special Bench of the Tribunal in the case of L.G.Electronics India [2013 (6) TMI 217 - ITAT DELHI]
Treating foreign exchange loss as an item of non operating expenditure - Held that:- The Ld.Counsel for the assessee agreed with the contention of the Ld.D.R. that safe harbour rules should not be the basis of decision making. In view of the above contentions, we modify the directions of the DRP to the extent that safe harbour rules should not be applied while considering foreign exchange fluctuation loss while arriving at net operating margins. Decided in favour of revenue
Addition on prior period expenses - Held that:- None of the expenditure identified by the AO has been claimed in AY 2009-10, as the relevant provisions were made in AY 2008-09 and the said provision expenditure ahs been allowed by the AO in AY 2008-09. Thus, the addition proposed by the AO does not survive - Decided in favour of assessee.
Relief granted by the DRP on account of provision for warranty - Held that:- On the ground that the assessee has made provisions of warranty on a consistent and rational basis, the dRP directed the AO to grant deduction. We find no infirmity in this finding. Hence this ground of the Revenue is dismissed. - Decided in favour of assessee.
Disallowance made u/s 40(a)(ia) with respect to advertisement expenditure - DRP delted the addition - Held that:- The DRP recorded that the assessee had complied with the statutory requirement of deducting tax at source and hence the disallowance u/s 40(a)(ia) is not warranted. There is no infirmity in this finding and hence this ground of Revenue is dismissed.- Decided in favour of assessee.
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2015 (12) TMI 960
Penalty levied u/s 271(1) (c) - cessation of liability u/s 41(1) in respect of two trade creditors and in respect of one trade debtor - Held that:- It clearly emerges that the amounts in question were carried over trade credits from earlier year, corresponding purchases were included in trading a/c thus legally speaking if trade credits are added as cessation of liability, the relevant entries exist in books and if they are held as bogus then they belong to earlier years. Besides relevant information is furnished along with return of income.
Though surrendered in assessment the assessee can take fresh pleas in the penalty proceedings which by settled law are distinct and separate. Assessee can make fresh submissions and lead fresh evidence. AO can take fresh investigations on the basis of new pleas and material. Thus when surrendered is technically rejected and assessee gives reasonable explanation, penalty can be imposed not on the sole basis of alleged refused surrender. AO has a duty to consider the material and submission of the assessee and decide whether income on the basis of these pleas was assessable in the year in question.
AO has held that the surrender is not acceptable and chose to add it u/s 41(1) of the Act. Thus technically even the surrender is not accepted and unilateral cessation of liable is assumed ignoring the plea that in subsequent years trading liability amounts were paid.
The details about trading liabilities and transactions were reflected in the accounting statements which were part of the return of income. Hon’ble Supreme Court in Reliance Petro Products case (2010 (3) TMI 80 - SUPREME COURT ) has held that if the relevant information is filed with the return of income in that case any variation in the claims of the assesse will not entail penalty. This judgment also supports the case of the assesse, in view thereof also the penalty in this case can not be imposed by merely referring to the alleged surrender and without considering the explanation. Thus, in consideration of entirety of facts, circumstances and case laws as relied on by assesse, we delete the penalty. - Decided in favour of assessee.
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2015 (12) TMI 959
Transfer pricing adjustment - Held that:- When assessee is not able to bring on record anything to show any services to have been rendered by AE to it and there are no documentations to show any services to have been received from AE, in our opinion it will be fair conclusion that no services were in fact rendered by AEs to the assessee. There is no dispute that both the AEs were subsidiaries of the assessee. Therefore, the agreements between such subsidiaries, which have been brought before us as well as lower authorities for justifying the payments could be best considered only as self-effectuating documents. There was considerable onus on the assessee to show that actual services were rendered by its subsidiaries. It is a well settled principle of law that a court has to go into substance and not be satisfied with the and form has to get behind the smoke screen to find the true state of affairs. In our opinion, the assessee was unable to show any services to have been received from sister concerns. When no services were received then lower authorities in our opinion were justified in considering the ALP to be zero. The assessee has not been able to show any services having been rendered by the AE to it. As to the claim of the assessee that natural justice was denied to it, we find that a number of opportunities were given by not only the DRP but also the TPO. Even during the remand proceedings before the TPO the assessee was unable to show any TP documentation with regard to the TP services rendered by AE - Decided against assessee
Disallowance u/s.10A - Held that:- The reason why assessee was denied the deduction claimed u/s.10A of the Act on the export benefits received from this unit was that it was formed by splitting up or reconstruction of a business already in existence. By virtue of the agreement mentioned supra, we cannot say that there was a split up or reconstruction of a business already in existence. There is neither any split up or reconstruction of business of the assessee nor SSAPL. Thus we hold that deduction u/s.10A could not have been denied - Decided in favour of assessee
Disallowance u/s.14A - Held that:- Interest ordinarily cannot be considered as having nexus with the business of the assessee. Such interest would normally fall under the head ' income from other sources'. No doubt, in assessee's case the Assessing Officer has not considered the interest receipt separately under the head 'income from other sources'. But this will not, in our opinion, change the nature of the transaction or character of the receipts. Rule 8D(2) prescribes application of the formula set out therein on the expenditure incurred by way of interest which is not directly attributable to any particular income or receipt. There is no case for the assessee that the interest expenditure of ₹ 335,169,433/- incurred by it were attributable to any particular income or receipt. There is nothing in the said rule which would allow for netting of interest. Rule 8D(2)(ii) states expenditure by way of interest. If we allow netting of interest income on such expenditure, it would be equivalent to adding something which is not there in the Rule book. Especially so, since interest received was not from any business activity but from FDs. We are, therefore, of the opinion that application of Rule 8D does not allow for netting of any interest income with interest expenditure. - Decided against assessee
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2015 (12) TMI 958
Search and seizure action u/s.132 - addition u/s 69 - Held that:- Presumption u/s. 132(4A) is available only against the person from whose possession the document is found and not against the third person. In the absence of clinching evidence against the third person as stated above, no action could be taken against him. In such a situation, the Assessing Officer was not justified to make addition in question in assessee’s case. In view of above, we are of the view that the addition made by the Assessing Officer is not justified and the same is directed to be deleted. It is pertinent to mention here that this case is being decided in its facts and circumstances; it cannot be applied to other cases as such. - Decided in favour of assessee
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