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Income Tax - Case Laws
Showing 461 to 480 of 9151 Records
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2015 (12) TMI 912
Apex Court dismissed the appeal of the assessee wherein HC has decided the issue against the assessee i.e Whether the secondment of employees by BSTL and DEML, the overseas entities, falls within Article 12 of the India-Canada and Article 13 of the India-UK DTAAs – High Court in this case [2014 (5) TMI 154 - DELHI HIGH COURT] had uphold the order of AAR and observed that, The nomenclature or lesser-than-expected amount charged for such services cannot change the nature of the services - once it is established that there was a provision of services, the payment made may indeed be payment for services - which may be deducted in accordance with law - or reimbursement for costs incurred – thus, the ruling of AAR is upheld – Decided against Assessee.
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2015 (12) TMI 911
Expenses of stamp duty for pledge agreement and processing fees charged by the bank - revenue or capital expenditure - ITAT deleted the addition - Held that:- While deleting the addition it was noted that the expenses incurred towards pledge agreement with the bank was for borrowing working capital availed from bank and by incurring he expenditure no capital asset has come into existence. Before us no material has been placed on record by the Revenue to controvert the findings of CIT (A) and ITAT treating the expenses as revenue. - Decided against revenue
Expenses on account of repairs, renovation, building road, Labour charges and maintenance expenses - revenue or capital expenditure - ITAT deleted the addition - Held that:- CIT (Appeals) and Tribunal concurrently came to the conclusion that looking to the nature of the expenditure, the same could not have been treated as capital expenditure. The Assessing Officer had also made an ad-hoc addition on the ground that corresponding labour charges and other expenses were not reflected. The Tribunal in particular confirmed the view of the CIT(A) that mere quantum of expenditure would not be sufficient to treat as capital expenditure, inter-alia, on such grounds - Decided against revenue
Machinery reconditioning charges of existing plant and machinery - expenses treated as capital expenditure - ITAT deleted the addition - Held that:- assessee contended that machinery had become old and without changing the core machinery, replacement of parts was carried out by way of reconditioning and the expenditure involved was for such purpose. Assessing Officer without rejecting the contention of the assessee that the core machinery remained unchanged, disallowed the expenditure and treated as capital expenditure. Here also, the Tribunal observed that merely because the cost of repair was close to written down value of the machinery, would not justify in treating as one of capital expenditure - Decided against revenue
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2015 (12) TMI 910
Failure to deposit TDS deducted from the salary received by the expatriate employee outside India - penalty u/s 271C - Held that:- In the present case, in light of the factual findings of the ITAT that there was nothing brought on record by the Department to show that the Respondent had been intimated by the expatriate employees about the remuneration received by them from ALF, it is held that the Respondent could not be held to be an Assessee in default and no penalty under Section 271C of the Act for the FYs in question could have been levied on it.
Accordingly, the question framed by the Court is answered in favour of the Assessee and against the Revenue.
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2015 (12) TMI 909
Brought forward unabsorbed loss/ depreciation of the assessee's 10B unit - set off against the current year's profit of the same 10B unit allowed or not ? - Held that:- The issue as raised stands concluded by the decision of this Court in Black & Veatch Consulting(P) Ltd.(2012 (4) TMI 450 - BOMBAY HIGH COURT ) and "Ganesh Polychem Ltd. Vs. ITO" [2012 (8) TMI 953 - ITAT MUMBAI ] against the Revenue. Tribunal was right in holding that the brought forward unabsorbed depreciation and losses of the unit, the income of which is not eligible for deduction u/s.10B of the Act cannot be set off against the current profit of the eligible unit for computing the deduction u/s.10B of the Act - Decided in favour of assesee
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2015 (12) TMI 908
Expenditure incurred for sales promotion and publicity and setting up of various stores - revenue v/s capital expenditure - CIT(A) deleted the addition confirmed by ITAT - Held that:- This Court in case of Core Healthcare Ltd.(2008 (10) TMI 74 - GUJARAT HIGH COURT ) held that advertisement expenses to create brand image is revenue in nature
The treatment accorded to a certain expenditure in the books of account of the assessee would not be conclusive of its true nature and on valid grounds, it would be open for the assessee before the Income Tax authority to claim a different treatment. This was perviously stated in case of Kedarnath Jute Manufacturing Co. Ltd.(1971 (8) TMI 10 - SUPREME Court) which was reiterated in case of Taparia Tools Ltd. (2015 (3) TMI 853 - SUPREME COURT ) as well. - Decided against revenue
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2015 (12) TMI 907
Quantum of deduction under section 80I - CIT(A) reduced the amount of deduction available to the assessee under Section 32AB - Tribunal reversed the decision taken by the CIT(A) holding that deduction under Section 80I of the Act was to be allowed after reducing the deduction allowable to the appellant under Section 32AB - Held that:- Learned counsel for the assessee was unable to demonstrate that the approach of the Tribunal was erroneous or perverse in any manner in allowing deduction under Section 80I of the Act after reducing the deduction allowable to the assessee under Section 32AB of the Act. We endorse the view of the Tribunal and consequently question noticed above is answered against the assessee.
Accrual of income - assessee claimed 5% to 10% of the amount as performance security and submitted that the income to that extent had not accrued to it - Held that:- In Sony India (P) Limited's case, (2006 (4) TMI 457 - DELHI HIGH COURT), it was held that the liability arising out of a warranty was an allowable deduction even when the amount payable by the assessee was quantified and discharged in future. Learned counsel for the revenue was not able to rebut the aforesaid contention. Accordingly, this question is answered in favour of the assessee and it is held that the authorities below were not justified in rejecting the claim of the appellant assessee that 5% to 10% of the sale price in each year of supplies does not accrue as income for the year on the basis of terms and conditions attributed to warranty/guarantee/after sale service or on account of non completion of the contractual obligation and the assessee has to offer performance security under the contract. It shall, however, form part of the income to the extent the liability ceases to exist in the year in which the obligation of the assessee stands discharged. The said question is thus answered in favour of the assessee and against the revenue.
Deduction u/s 32AB - whether the deduction to be allowed under section 32AB is to be restricted to each profit making unit of the assessee or by taking the utilization of the plant and machinery purchased by the assessee as a whole? - Held that:- Tribunal following the decision of Phoneix Overseas Limited vs. CIT reported in [1995 (10) TMI 75 - ITAT DELHI-D ] directed the Assessing Officer to recompute the claim of the assessee under Section 32AB of the Act in respect of each unit taking the utilization of the plant and machinery purchased by the assessee as a whole and not relate it with each profit making unit of the assessee only. We find the approach of the Tribunal to be in consonance with the provisions of Section 32AB of the Act as there is nothing on the basis of which it could be deduced that deduction is to be allowed only out of the profit of a unit or undertaking where machinery is installed and not out of the profits of the assessee. Nothing was urged by learned counsel for the revenue to raise any challenge to the aforesaid finding of the Tribunal. In the absence of any issue raised by the revenue, no ground for interference by this Court is made out. - Decided in favour of assessee.
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2015 (12) TMI 906
Reopening of assessment - disclosure of the purchase of the property was not made in his return of income - contention of assessee is that the reopening of the assessment for the year in question was made merely for the purpose of further investigation - Held that:- In the present case, there is no allegation of the assessee not having made full and final disclosure in his return of income for the relevant assessment year. Much emphasis has been laid on the fact that disclosure of the purchase of the property was not made in his return of income for the relevant assessment year. On being asked, Sri E.I.Sanmathi, learned counsel for the respondent-Revenue, could not place before the Court any provision of law which required the assessee, in the assessment year 2004-05, to disclose about the fact of having made the actual investment in his return of income. In the absence of any legal obligation on the assessee to disclose about the purchase of property in his return of income, it cannot be said that the assessee had concealed any income, even though when there is no dispute about the fact that he had disclosed his agricultural as well as non-agricultural income during the assessment year in question, and there is no finding as to income from which other source had been concealed by the assessee. Learned counsel for the respondent-Revenue has also submitted, that since there was investigation required with regard to the investment made by the assessee for purchase of property for the assessment year in question, and time for issuance of notice under Section 143(2) of the Act had expired, issuance of notice under Section 148 of the Act was necessitated.
In our view, the same cannot be a ground for initiating proceedings under Section 148 of the Act. It was for the Assessing Officer to take proper steps earlier by issuing notice under Section 143(2), and if the law does not now permit issuance of any such notice, then invoking some other provision, which would not be applicable, is not the correct mode. - Decided in favour of assessee.
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2015 (12) TMI 905
Disallowance u.s 14A - CIT(A) deleted the disallowance as confirmed by ITAT - Held that:- While rejecting the claim of the assessee with regard to expenditure or no expenditure, as the case may be, in relation to exempted income, the AO has to indicate cogent reasons for the same. From the facts of the present case, it is noticed that the AO has not considered the claim of the assessee and straight away embarked upon computing disallowance under Rule 8D of the Rules on presuming the average value of investment at ½% of the total value. In view of the above and respectfully following the coordinate bench decision in the case of J.K. Investors (Bombay) Ltd., [2013 (5) TMI 580 - ITAT MUMBAI] we uphold the order of CIT (A) and ITAT - Decided against revenue
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2015 (12) TMI 904
Income earned from customers outside India - whether is liable to tax in India under DTAA with USA? - assessee’s claim that the software provided to the representatives did not constitute PE - Held that:- There is no agency PE of the assessee in India. As in the absence of any PE in India the profits if any attributable to the Indian operations cannot be assessed as business profits under Article 7 of the Treaty. - Decided in favour of assessee.
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2015 (12) TMI 903
Transfer pricing adjustment - whether the filter of export sales to total sales of 25% applied by ld. TPO and accepted by ld. DRP is justified or not? - Held that:- Rule 10B(2)(d) is relevant only for CUP method cannot be accepted. All these factors have bearing on the net margin to be determined in all methods including TNM method. We are in agreement with the submission of ld. Sr. DR, reproduced earlier, that those geographical markets in which parties entering into transactions operate is an important factor which influence the price of the transaction and that has to be factored into for identification of uncontrolled transactions. Various case laws relied upon by ld. DR also fortify the view taken by us. For the sake of brevity, we are not referring to those decisions which have been elaborately considered in the submi1ssions of ld. DR, reproduced earlier. We, accordingly, reject this contention of ld. counsel for the assessee.
All the comparables had been excluded as they did not pass through export filter applied by ld. TPO. As we have already upheld the export filter applied by ld. TPO in earlier part of our order, we reject the assessee’s contention.
There is no denying of the fact that Infosys BPO operates on a large scale and caters to wide variety of customers operating in different industries. Ld. counsel has filed before us extracts from the annual reports and white paper issued by Infosys in regard to ‘Process Progression Model ( “PPM”), a holistic model to transform business processes’.In view of above discussion, we direct ld. TPO to exclude Infosys BPO.
eClerx Services Limited to be excluded from the list of comparables as this company is functionally different, which is evident from the business profile of eClerix, reproduced earlier from Annual Report.
TPO had denied the risk adjustment claimed by assessee on the ground that assessee failed to show that the comparables had actually undertaken suck risk and failed to demonstrate how the same material affected from margins. He pointed out that unless it was shown that how the risk adjustment to fetch the result of each comparable and how the same would improve the comparability and unless adequate reasons are given for such adjustment, no adjustment can be allowed to the tax payer. Before ld. DRP also the assessee failed to furnish any data for quantification of risk. Unless the difference can be ascertained accurately and their import on the margin can be assessed with reasonable accuracy, the adjustment cannot be allowed. Under such circumstances, the matter also cannot be restored back to the file of ld. TPO.
Denial of working capital adjustment - Held that:- The matter needs to be restored back to the ld. TPO to verify the assessee’s contention regarding all the invoices outstanding being for less than six months and, if, the same is found to be correct, then no addition is called for in view of the ITAT decision in the case of M/s Logix Micro Systems Ltd. (2010 (10) TMI 902 - ITAT BANGALORE). One of the plea of ld. counsel for the assessee was that the entire funds are received from parent company. However, this plea has been taken for the first time and was not taken before lower revenue authorities. Therefore, this aspect also needs to be considered by ld. TPO while deciding this issue de novo.
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2015 (12) TMI 902
Income from undisclosed sources by way of pay orders from Union Bank of Switzerland (UBS) – AG for US $ 4 million - Held that:- We find nothing on record to suggest any link between the assessee and the said company, which appears to be an Indian company and is only to be regarded as a distinct legal entity. And income due to or receivable by it could be regarded as the assessee's income only on the strength of evidence which leads to the inference of it being the assessee's money, being transferred to it, or the like. There is, in fact, no mention or even a whisper in this regard, or of any association or link between the two. Clearly, no case for including the amount received or receivable by the said company (US $ 2 million) in. The concept of income under the Act is vast, so that anything corresponding with the notion of income or gain qualifies to be 'income'. The exception would be where the amount is received on capital account, where, again, that received/receivable on transfer of a capital asset would stand to be assessed, to the extent of the gain embedded therein, as capital gains. There is nothing to suggest that the amount is on capital account, or in lieu of a capital asset. Why, any unexplained deposit or money, etc., is, by virtue of the provisions of the Act, and for the same reason, also deemed as income. That is, the onus to establish the nature (as well as the source) of the money, i.e., as being not in the nature of income, is on the assessee, and which he has clearly not.There is, under the circumstances, no case for or no basis to consider the impugned sum as not received (during the relevant year) and, two, of it being not in the nature of income. The assessment of the amount, sought to be paid to the assessee initially vide Pay Order (No. 004 06298 027 43 2895), as income, is, accordingly upheld. We decide accordingly, and the assessee gets part relief.
Addition on account of life style other expenditure - Held that:- Though the assessee subsequently, vide his statement u/s.131 dated 01.5.2007, does state that the said estimate by him was only for the current year f.y. 2006-07, and that the household expenditure earlier was much lower at ₹ 20,000/- p.m., there is nothing to indicate that his lifestyle of few years earlier was any different, or any less ostentatious. Why, the letter under reference by UBS AG is itself of April, 1999, suggesting links abroad even at that time. Rather, he shifted to Mumbai and Pune from Hyderabad, whereat he filed his returns up to A.Y. 1999-2000, so that his reference to an earlier living could, then, only be to that at Hyderabad. The said estimate, to be valid in law, has to be an informed one, taking into account the different variables or attributes on which it depends, viz. the number of family members, their living style, including expenditure on food, clothing, domestic helps, etc.; the expenditure on their education, medical bills; the number of residences being maintained; social or health clubs joined, etc. No such exercise has been attempted by the Revenue. Under the circumstances, it is only considered proper to determine the addition on account of lifestyle, including by way of maintenance, expenditure on the basis of the assessee's own estimate, and which we do at ₹ 7.50 lacs. The assessee shall be allowed credit for any sum reflected in his books of account toward the same. We decide accordingly, and the assessee gets part relief.
Income from undisclosed sources by way of unexplained capital - Held that:- The assessee's claim of having produced computerized books of account before the A.O., so that the latter's stating of him as not maintaining any books of account is incorrect, is neither here nor there. The 'opening capital' has nothing to do with the books of account for the current year. Rather, the books of account could only be of a business, while the bulk of the 'opening capital' is claimed to be in the form of assets carried over from generations, as part of the family heirloom. The books of account for the earlier years have admittedly been not produced. How and why have the same, having been acquired without incurring any cost, been valued? The income as returned for the nine years preceding the current year is meager, being not sufficient for the family even to meet two ends. Then, again, is the question of valuation. The claim of the opening capital, to the extent it relates to cash-in-hand of ₹ 5 lacs, is thus, again, without any explanation, none being even otherwise furnished. The addition is, accordingly, confirmed. - Decided against assessee
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2015 (12) TMI 901
Benefit of exemption u/s 11 denied - charitable purpose u/s 2(15) - profit motive - Association of leather merchants - AO was of the view that the assessee was allowing outsiders also to participate by keeping their stall in the trade fair organized by the assessee. The AO was therefore of the view that the assessee was having dealings or relations with the outside body and generating income. - Held that:- Keeping in mind the factual aspects and the objects of the Assessee and principle laid down in the decision of India Promotion Organization (2015 (1) TMI 928 - DELHI HIGH COURT ), in our view, will clearly show that the Assessee does not driven primarily by desire or motive to earn profits but to do charity through advancement of an object of general public utility. This is substantiated by the actual income received on operations of the Assessee and the expenditure incurred set out in the earlier paragraphs of this order.
The proviso to Sec.2(15) of the Act is therefore not applicable to the case of the Assessee. We therefore hold that the Assessee is entitled to the benefits of Sec.11 of the Act. The AO has not disputed the conditions necessary for allowing exemption u/s.11 of the Act, except the applicability of proviso to Sec.2(15) of the Act. In view of our conclusions that the said proviso is not applicable to the case of the Assessee, we uphold the order of CIT(A) and hold that the Assessee's income is not includible in the total income. - Decided in favour of assessee
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2015 (12) TMI 900
Addition made on account of suppression of sales - CIT(A) deleted the addition - Held that:- CIT(A) has given a finding that it has not been shown by the AO that the assessee has wrongly recorded the sale price in the books. He further observed that this observation leads to suspicion and can be the starting point for investigation but this cannot be the basis for rejecting the books. The A.O. should have carried out inquiries with the buyers to confirm his suspicion before concluding that the books were defective. As no specific defect has been shown in the books, they could not be rejected. We find merit into this contention of the ld.CIT(A) that the AO has not made any enquiry from the buyers to verify the actual sale price. In the absence of the same, in our considered view, the AO was not justified in rejecting the books of account and making the addition. Therefore, we do not see any reason to interfere with the order of the ld.CIT(A), same is hereby upheld - Decided against revenue
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2015 (12) TMI 899
Disallowance of loss on revaluation of stock of equity shares - Held that:- The assessee has relied upon the entries passed in the books of account and also the fact that the shares were purchased out of borrowed funds in order to support its contentions that it intended to purchase the shares as stock in trade. However, as held by Ld CIT(A), these two factors alone cannot be taken as determinative factors and accordingly the intention of the assessee should be gathered from the conduct of the party and surrounding circumstances. We also notice that the assessee had originally disallowed part of interest expenditure relating to the purchase of shares of M/s Deepak Fertilizers & Petrochemicals Ltd treating the same as investment, but retracted from the same only during the course of assessment proceedings. Hence, in our view, the conduct of the assessee and the factors surrounding the issue shows that the assessee had intended to purchase the shares of the above said company only to hold them as investments. Hence we are of the view that the tax authorities are justified in rejecting the claim of the assessee that it was held as stock in trade. Consequently, the tax authorities are justified in rejecting the claim of revaluation loss arising on account of fall in the price of shares.
Disallowance made u/s 14A - Held that:- we notice that the assessee itself has admitted that the shares of Deepak Fertilizers & Petrochemicals Ltd were purchased out of loan of ₹ 20.75 crores taken from M/s Nova Synthetics Ltd and the assessee itself has computed the interest of ₹ 40.94 lakhs as pertaining to the investment made in the shares of Deepak Fertilizers. Hence the interest expenditure of ₹ 40.94 lakhs cannot be taken as expenditure relating to the business carried on by the assessee, but it is related to the investment made in the shares. Hence, the interest expenditure is otherwise not allowable under the normal provisions of the Act. Accordingly, we confirm the disallowance of ₹ 40.94 lakhs made by the AO.
Disallowance of interest expenditure u/s 24 - Since the assessee had not let out the house property, the AO held that the assessee cannot claim the same u/s 24 of the Act also - Held that:- The Ld D.R submitted that the assessee has changed the character of the property from business asset to house property. But the question here is whether the assessee is entitled to claim deduction of interest expenditure u/s 24 of the Act. The Ld CIT(A) has observed that the question of using of personal purposes shall not arise in the case of the assessee herein, since it is a legal person. Hence the restrictions placed in the Act in respect of property held for personal purposes shall not apply to the case on hand. The Ld D.R could not demonstrate as to how the decision rendered by Ld CIT(A) is contrary to the provisions of the Act. Hence, we do not find any reason to interfere with the view taken by Ld CIT(A) on this issue.
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2015 (12) TMI 898
Non-granting of exemption u/s.11 - DR submitted that activity of publishing of newspaper carried on by the assessee is a commercial one - Held that:- Giving a purposive interpretation to the statute, it may have to be read and understood that the second limb of exclusion under cl. (b) in relation to the service rendered by the assessee, the terms "any trade, commerce or business" refers to the trade, commerce or business pursued by the recipient to whom the service is rendered (as there may be a situation involving in publishing of newspaper. Thus, as observed earlier, publishing of newspaper is a commercial line which cannot be considered as charitable activity, so as to grant exemption u/s.11 of the Act. Accordingly, we are in agreement with the lower authorities and we deny the exemption u/s.11 of the Act.
Disallowance of depreciation - Held that:- We have to make it clear that the claim of depreciation to be granted on written down value of the assets. In other words, if the assessee has already claimed capital expenditure on acquisition of assets as application of income in earlier years and the value of the assets on which depreciation claimed has been fully allowed as expenditure or application in the earlier years that cannot be any claim of depreciation once again. The present claim of depreciation cannot be a double deduction over and above the fully value of the assets, if it was granted as application of income in earlier years. With these observations, this ground is allowed for statistical purposes.
Taxability of interest income, it is to be taxed under the head "income from other sources" and it is not an exempted income and there is no reason to exempt the same from taxation as the assessee is not entitled exemption u/s.11 of the Act, in view of the judgment of the Supreme Court in the case of Bangalore Club v. CIT (2013 (1) TMI 343 - SUPREME COURT ).
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2015 (12) TMI 897
Unaccounted cash transactions shown in seized material - CIT(A) conformed the addition - Held that:- The reply furnished by the assessee is not satisfactory inasmuch as it lacks evidence and tries to disown the facts of the impugned document. This categorical finding of CIT(A) could not be controverted by Learned A. R. of the assessee before us and therefore, we do not find any reason to interfere in the order of CIT(A) on this issue. When the assessee could not bring evidence to establish that the cash transactions shown in seized material is duly recorded in books of the assessee, it has to be accepted that unaccounted cash was channelized in books by showing bank draft receipts. Hence, there is no infirmity in the order of CIT (A) on this issue. - Decided against assessee.
Disallowance made on ad hoc basis to the extent of 1% of total expenses - CIT(A) deleted the addition - Held that:- On the basis of general observations, without pointing out even a single specific defect in the vouchers or books of accounts, ad hoc disallowance made by Assessing Officer is not justifiable and the same was rightly deleted by CIT(A). Hence, on this issue, we decline to interfere in the order of learned CIT(A) - Decided in favour of assessee.
Deduction claimed by the assessee u/s 80IA(4) disallowed - deduction u/s 80IA(4) is not allowable in case of a contractor and the assessee is a contractor and therefore, this deduction claimed by the assessee is not allowable to the assessee - Held that:- In the present case, categorical finding has been given by CIT (A) that the assessee was engaged in development of road and is not a mere contractor as he had deployed his own capital, used his own management and expertise in maintenance and had to bear the risk and defect correction. These findings of CIT (A) could not be controverted by learned DR of the revenue and therefore, this tribunal order rendered in the case of Koya & Co. (2012 (5) TMI 158 - ITAT HYDERABAD ) is squarely applicable because the facts are similar. In the order of CIT (A), he has followed this tribunal order and various other judicial pronouncements as noted by him in his order, as reproduced above. Considering this factual and legal position, we find no infirmity that the order of CIT (A) on this aspect that in the facts of the present case, it cannot be said that the assessee company was mere a contractor and not a developer.
Non allowability of claim of the assessee u/s 80IA(4) because this claim is made by the assessee for the first time in the return filed by the assessee u/s 153A - Held that:- In both these years i.e. assessment year 2009-10 and 2010-11, the original return of income was filed by the assessee without claiming deduction u/s 80IA but within the time available u/s 139(1) because in assessment year 2009-10, the original return of income was filed by the assessee on 25/09/2009 whereas time available for filing the return was 31/10/2009 and in assessment year 2010-11, time available for revising the return was up to 31/03/2012 and the return u/s 133A was filed on 31/03/2012 i.e. within the time available for filing the revised return of income and till the date of search, due date of filing the return has not expired. Considering these facts that in these two years i.e. A.Y. 2007 – 08 & 08 – 09, where the time available for filing the revised return has expired before the date of search, CIT(A) has held that the claim made for deduction u/s 80IA(4) in the return filed by the assessee u/s 153A is not acceptable but in the later two years i.e. assessment year 2009-10 and 2010-11, since the time was available for filing the revised return/return of income u/s 139 (5)/ 139 (1) and the assessee could not file the revised return of income within the available time because of search, the return furnished in response to notice issued by the Assessing Officer u/s 153A should be considered as a return filed u/s 139(1) of the Act and therefore, on this issue also, we find no infirmity in the order of CIT(A) and therefore, this issue is decided in favour of the assessee in two assessment years i.e. assessment year 2009-10 and 2010-11 whereas in the earlier two years in which this issue has been raised by the assessee in its C.O. in assessment year 2007-08 and 2008-09, this issue is being decided against the assessee.
Addition on the basis of valuation report of D.V.O - Held that:- In the present case reference was made without rejection of books of accounts and therefore, the same is not valid. On merit also, he has given a finding that the Assessing Officer has not considered this aspect that this property was directly purchased by the assessee and then renovated and photograph of the building before renovation and after renovation was submitted before the Assessing Officer and the said investment was duly disclosed by the assessee in its income tax returns but the DVO report does not say that there is an extra investment over and above the declared amount. His report is only an estimate of the fair market value and not an estimate of investment. He has given a finding that the DVO’s valuation report is based on fair market value and this fair market value is relevant for Wealth Tax purposes but under section 69, the term used is unexplained investment in the property. He has given example that if investment is made of ₹ 1,00,000 in April, 2003 and the fair market value of the same building in December, 2003 becomes then no addition can be made of ₹ 45,000/- being difference between investment in April, 2003 and fair market value in December, 2003. Learned D. R. of the Revenue could not point out any defect in this finding of CIT (A) on merit also and considering the totality of facts, we find no infirmity in the order of CIT (A) on this issue also. - Decided in favour of the assessee.
Disallowance u/s 14A - Held that:- Allowability of expenses u/s 57(iii) that actual earning of dividend income is not necessary for the purpose of allowing interest expenditure incurred for borrowing for making investment in shares. We have held that on the same analogy, for the purpose of making disallowance u/s 14A also, actual earning of dividend income is not necessary and if it is seen that the expenditure was incurred for earning dividend income, disallowance has to be made u/s 14A of the Act. Accordingly, on this issue, we reverse the order of CIT (A) and restore that of the Assessing Officer. This issue is decided against the assessee.
Addition on account of vehicle running expenses - Held that:- section 69C is not mentioned by the Assessing Officer, this comes out from the language of Para 7 of the assessment order that the assessee could not explain as to how this payment found recorded in the seized paper was recorded in the books of accounts. If the assessee fails to establish by bringing evidence that the entry of expenses found in seized material was recorded in books of accounts or that the same was paid out of known sources of fund, addition has to be made u/s 69C and deduction for corresponding expenditure is not allowable. Since the assessee could not establish by bringing evidence on record before us or before lower authorities that the expenditure noted in the seized material was in fact recorded in the books of accounts or was paid out of known sources of fund, the addition made by the Assessing Officer is to be considered as addition u/s 69C and since before CIT(A) or before us also, the assessee could not establish that the entry was made in the books of accounts or that the same was paid out of known sources of fund, deletion of addition by CIT(A) is not proper. Therefore, we reverse the order of CIT (A) on this issue and restore that of the Assessing Officer - Decided against assessee.
Addition on account of cash payment exceeding - Held that:- Assessing Officer invoked the provisions of section 40A(3) of the I.T. Act and the total amount of ₹ 69,83,015/- alleged as paid in cash exceeding ₹ 20,000/- was disallowed. When the assessee carried the matter in appeal before the CIT(A), he deleted the disallowance. It is noted by CIT(A) on page No. 31 of his order that part of expenses are related to assessment year 2008-09 and in that year, when the A. O. asked the assessee to explain, it was submitted by the assessee before the Assessing Officer that cash payments were not made to one single person on one single day and there was no bar under the provisions of IT Act for multiple payments being made to different persons which were less than ₹ 20,000/- for each person. The CIT(A) has noted down some instances also that amount of ₹ 85,894/- has been stated to have been made in cash consisting of payments of ₹ 19,894 + ₹ 20,000 + ₹ 18,000 + ₹ 15,000 + ₹ 15,000. Regarding one more payment of ₹ 1.05 lac, it was noted by CIT(A) that this is not a single payment to one party but is being paid to various parties and in support, copies of accounts are enclosed. Similarly payment of ₹ 1,10,000/- and ₹ 10,01,420/- was made but it was stated the same is duly recorded in the books of accounts being paid to various persons as per books of accounts produced. Considering these facts that the cash payment in excess of ₹ 20,000/- was not made to a single person on single date, we decline to interfere in the order of learned CIT(A) on this issue. - Decided in favour of the assessee.
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2015 (12) TMI 896
Assessment u/s.153A - Held that:- In absence of any incriminating material, no addition can be made in the assessment u/s.153A
Disallowance of additional depreciation - Held that:- Generation of electricity is a manufacturing activity and the assessee is eligible for additional depreciation u/s.32(1)(iia).
Depreciation on electrical fittings used for mindmill - Held that:- CIT(A) correctly following the decision of the Tribunal in the cases of Poonawala Finvest Agro Pvt. Ltd. Vs. ACIT [2008 (6) TMI 586 - ITAT PUNE] held that on power evacuation, infrastructure, transformer, erection and commissioning of the structures, line work, electrical items will qualify for depreciation @80% whereas MEDA charges, site development expenses, cost of construction of controlled beam, civil work, internal road, development application charges, professional fees and bank charges will not qualify for higher rate of depreciation. She accordingly directed the AO to verify these expenses and allow depreciation on above items accordingly.
Non making a claim u/s.80IA(4) in the original return of income filed u/s.139(1) - Held that:- CIT(A) was not justified in rejecting the claim made u/s.80IA(4) of the I.T Act merely because the assessee had not made the claim in the original return.
Methodology of computation of deduction u/s.80IA(4) - Held that:- Each phase of windmill has to be considered as separate undertaking eligible for deduction u/s.80IA and therefore deduction u/s.80IA(4) should have been computed independently for each phase and not on consolidated basis.
Applicability of provisions of section 80IA(5) - selection of initial assessment year - whether initial assessment year u/s.80IA(5) means year of installation of windmill or year in which the claim of deduction u/s.80IA is first made? - Held that:- The provisions of section 80IA(5) are applicable only from the initial assessment year, i.e. the assessment year in which deduction u/s.80IA was first claimed by the assessee after exercising his option as per the provisions of section 80IA(2) of the Act. - Decided in favour of assessee.
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2015 (12) TMI 895
Computation of cost of construction - Held that:- CIT(A) has determined the cost of construction of the flats at ₹ 700/- per sq.ft. as against ₹ 511/- estimated by the Assessing Officer, without giving any valid reason for the relief allowed to the assessee. The CIT(A) has allowed the relief on the ground that selling price of the flats for succeeding year has been taken at ₹ 735/- per sq.ft. We are unable to appreciate that how the selling price in the succeeding year could determine the cost of construction of the property for the preceding year. In these facts of the case, we hold that the assessee could not adduce any evidence in support of its estimate of cost of construction and no valid reason could be assigned by the CIT(A) while giving substantial relief to the assessee and there was some basis for arriving at the cost of construction at ₹ 511/- per sq.ft. by the Assessing Officer on the basis of the assessee’s own valuer report - Decided in favour of revenue
Estimating the net profit rate of 15% of gross contract receipts - Held that:- he addition was made by estimating the net profit rate of 15% of gross contract receipts minus 8% of contract receipts by the Assessing Officer. We find that there was no basis for estimating the profit by applying the net profit rate of 15% and, accordingly, we hold that there is no mistake in the order of learned CIT(A) in holding that the Assessing Officer has adopted 15% rate without any concrete reason. Accordingly, the order of learned CIT(A) on this issue is confirmed - Decided against revenue
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2015 (12) TMI 894
Disallowance u/s 14A r.w.r 8D - Held that:- The assessee is a stock trader and not holding any investment in shares and securities then so far as interest expenditure is concerned, the same cannot be attributable or allocable for earning the dividend income which is only an incidental income and not intended income of the activity of the assessee being trading in shares and securities. We find that in a series of decisions, this Tribunal has decided this issue by holding that no disallowance u/s 14A can be made on account of the expenditure incurred for trading in shares & securities merely because the assessee earned the incidental dividend income.
The interest expenditure is exclusively incurred for trading activity and, therefore, cannot be said to be an expenditure incurred for composite activity yielding taxable and non taxable income and accordingly, the same cannot be attributed /allocated in respect of dividend income in the hands of the assessee. As regards the other expenses, we find that the Assessing Officer has not pointed out any expenditure debited to the P&L Account which has any proximate nexus with the dividend income. The entire expenditure debited to the P&L account has a direct nexus with the trading activity of the assessee, therefore, the disallowance made by the assessee on its own is proper and just and no further disallowance on account of administrative expenses is justified. In view of the above discussion, we delete the addition made by Assessing Officer u/s 14A. - Decided in favour of assessee.
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2015 (12) TMI 893
Deduction under section 54EC denied - assessee submitted that the period of six months should have been counted from the end of the month and if the same is counted from the end of the month, then investment made by the assessee was within a period of six months and assessee is entitled to get the impugned exemption - CIT(A) has accepted such contention of the assessee and granted the relief to the assessee - Held that:- In the decision of Special Bench in the case of Alkaben B. Patel vs. ITO [2014 (3) TMI 842 - ITAT AHMEDABAD ] “6 months” have been interpreted and it is held that the same would mean 6 calendar months and not 180 days. Thus we find no infirmity in the relief granted by Ld. CIT(A). - Decided against revenue
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