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Income Tax - Case Laws
Showing 21 to 40 of 678 Records
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2016 (2) TMI 1339 - ITAT JAIPUR
TDS u/s 195 - Disallowance u/s 40(a)(ia) - services rendered and expenditure incurred is in the nature of commission - HELD THAT:- It is not in dispute that the assessee firm is engaged in the business of manufacturing and export of readymade garments and in connection with the exports, the assessee has incurred an amount. On perusal of the agreement with M/s Arjoo J. Ltd. the CIT(A) has given a clear finding that the services rendered and expenditure incurred is in the nature of commission. Given the fact that the commission has been paid in relation to export of garments outside India and the fact that the no services have been rendered in India we are unable to accede to the arguments of the ld. DR that the subject payments are taxable in India.
Similar is the position in respect of payment to M. Ishikawa who has been paid commission in relation to export of garments as apparent from the agreement as well as working of the commission payments. Accordingly, provisions of section 195 are not attracted in the instant case, hence the disallowance of expenditure u/s 40(a)(i) is hereby deleted. - Decided in favour of assessee.
Delayed employees contribution to PF and ESI - HELD THAT:- CIT(A) has given a categorical finding that the employees contribution to ESI and PF has been paid before filing of the return of income u/s 139(1) of the Act. In view of the consistent stand taken by this Bench and respectfully following the decision of the Hon’ble Rajasthan High Court in the case of State Bank of Bikaner & Jaipur.and others [2014 (5) TMI 222 - RAJASTHAN HIGH COURT] ground taken by the Revenue is dismissed .
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2016 (2) TMI 1335 - ITAT PUNE
Treatment to profits on sale / redemption of investments (including amortization of securities) as taxable - HELD THAT:- The year under appeal before us is assessment year 2008-09 i.e. the year in which the said provisions of Rule 5 of First Schedule were not on Statute. Similar claim was made by the assessee that the profit / loss arising on sale / redemption of securities, investment was not taxable and even the loss on account of amortization of securities was to be reduced from the taxable income of the year, arose before the Tribunal in assessee’s own case in assessment year 2003-04 [2009 (8) TMI 810 - ITAT PUNE-A]
Following the same parity of reasoning, we hold that while computing the income from insurance business under section 44 and First Schedule of the Act, there is no merit in holding the profit / loss on sale / redemption of securities / investments amounting to about ₹ 50 crores as taxable and the loss on amortization of securities is to be reduced from the taxable income of the assessee. The order of Tribunal in assessment year 2003-04 has been subsequently followed by the Tribunal in assessment year 2004-05 [2010 (12) TMI 1191 - ITAT PUNE] Appeal of assessee allowed.
Disallowance u/s 14A r.w.r. 8D - HELD THAT:- The issue arising before us is identical to the issue before the Tribunal for assessment year 2003-04 [2009 (8) TMI 810 - ITAT PUNE-A] and in the absence of any contrary material brought to our knowledge by the learned Departmental Representative for the Revenue, we find no merit in the orders of authorities below. The disallowance as made by the assessee under section 14A of the Act at ₹ 49,42,631/- as assessee itself had worked out the expenses disallowable under section 14A is upheld and the balance disallowance worked out by the Assessing Officer and DRP is thus, deleted. The ground of appeal No.2 raised by the assessee is thus, allowed.
TDS u/s 195 - Disallowance computed by invoking the provisions of section 40(a)(i) - payment made to Allianz Reinsurance Asia Pacific Branch Singapore (ARAP) on account of re-insurance premium and payment of survey fees was also paid to non-resident surveyors - HELD THAT:- Applying the said ratio laid down by the Hon’ble Supreme Court in GE India Technology Centre P. Ltd.[2010 (9) TMI 7 - SUPREME COURT] we hold that merely because remittance has been made to a foreign company, the same would not be liable to tax deduction at source, where the whole or part of the said payment is not liable to be taxed in India in the hands of recipient nonresident company. The provisions of section 195(1) of the Act postulates that the remittance should be chargeable under the provisions of the Act and where the same is not liable to tax in India, there is no requirement for tax deduction at source and the provisions of section 195(1) of the Act are not attracted and further the provisions of section 40(a)(i) of the Act are not to be applied.
Payment of re-insurance premium to ARAP is not to be allowed in the hands of assessee as the assessee had not made any application under section 195(2) - The reading of sub-section itself show that the provisions of the said sub-section are applicable where the person who is responsible for making the payment to a non-resident is sure that such sum was chargeable under the Act. The first step to be fulfilled is that the payment paid to non-resident company is chargeable under the Act. We have already in the paras hereinabove, have come to a finding that sum paid by the assessee is not chargeable in the hands of non-resident company, as income arising in India. In view thereof, where the amount is not chargeable in the hands of non-resident company, the provisions of subsection (2) to section 195 of the Act cannot be invoked and we find no merit in the order of Assessing Officer in this regard.
Determination of tax deductible by the assessee in respect of various payments made during the year under consideration - Before the DRP, the case of assessee was that in the proceedings under section 201(1) of the Act for the period up to 31.12.2008, all foreign remittances including re-insurance premium payments were subjected to assessment and after evaluating the transactions, the ADIT (International Transaction)-II, had passed consolidated order from assessment years 2005-06 to 2009-10, wherein it was concluded that the taxes were required to be withheld only on payment of certain survey fees paid to the non-residents. In view thereof, where the Revenue authorities have given a finding that no tax was required to be deducted out of reinsurance premium paid by the assessee to ARAP, we find no merit in the order of Assessing Officer in holding that the assessee should have made the application under section 195(2) of the Act.
In order to fulfil the conditions of having PE by an agent acting on behalf of an enterprise of other contracting state, it is provided that such an enterprise would deemed to have PE in the first mentioned state, if this person has habitually exercised an authority to conclude the contracts on behalf of the enterprise and / or maintains stock of goods on merchandise, which he regularly delivers on behalf of the enterprise, in the first mentioned state or habitually secures orders wholly or almost wholly for the enterprise itself or for other enterprises, etc. The assessee claims that it was not acting on behalf of the foreign company. Further, it was not dependent on the foreign company and had no authority to conclude any contract on behalf of the foreign company. Where in such circumstances, there was no merit in the order of DRP in applying the approach of ‘look through’.
Similar issue of providing re-insurance in India and whether in the absence of any PE in India, the entire business income was not taxable in India, arose before Mumbai Bench of Tribunal in Swiss re-insurance Co. Ltd. [2015 (4) TMI 905 - ITAT MUMBAI] considered the aspect of PE of the said company within purview of Article 5 of Swiss Treaty and held that the conditions laid down in Article 5 were not fulfilled to treat the Indian entity as PE. Further, reference was made to the OECD guidelines. It was observed that in the absence of any business connection and in the absence of any agency, it was held that the said foreign entity had no PE in India. - Appeal of assessee allowed.
Disallowance on account of risk inspection charges - AO had treated the claim of the assessee as bogus - HELD THAT:- As we are aware that as against the insurance charges paid by the respective insurer in case of the damages being compensated by the insurance company, the volumes are very high. In such circumstances, it was the responsibility of the assessee to take the requisite steps to protect itself from future losses, if any, in this regard. The risk inspection was the necessary tool in the hands of the assessee. However, in view of the evidence collected by the Revenue Department and in the totality of the facts and circumstances, we hold that the entire expenditure is not allowable in the hands of the assessee. It is not correct to make estimated disallowance of expenses. However, in view of the evidence filed against the assessee and in the absence of complete details available before us and to prevent leakage of revenue, we are constrained to disallow 25% of the said expenditure in the hands of assessee.
The disallowance would be worked out by taking net expenditure of ₹ 11.91 crores i.e. total expenditure of ₹ 14.62 crores minus ₹ 2.17 crores allowed by the Assessing Officer. Further, the assessee himself had withdrawn the claim of expenditure of ₹ 32,67,497/- and has further furnished evidence of ₹ 68,07,042/-. The Assessing Officer shall verify the additional evidence filed by the assessee and if the same is found to be in order, the said expenditure would be allowed in the hands of the assessee. Then out of balance remaining, the Assessing Officer shall disallow 25% of the expenditure. The ground of appeal No.4 raised by the assessee is thus, partly allowed.
Addition on account of income from software consultancy charges - international transactions undertaken by the assessee - assessee had during the year shown international transactions with its associated enterprises on account of provision of software consultancy charges. The TPO while benchmarking the international transactions of the assessee found it not to be at arm’s length in view of the arithmetic mean of the comparable companies taken at 42.30% and proposed an addition - HELD THAT:- Admittedly, in case the said receipts are taxed in the hands of assessee for the year under consideration, there is enhancement of income, for which the requirement of law is that enhancement notice should be issued to the assessee before such an addition is made in the hands of the assessee. Further, in the case of the assessee, no such enhancement notice was issued to the assessee either by DRP or by Assessing Officer. Further, the plea of the assessee of recognition of revenue was in respect of determination of arm's length price of international transactions and the same was recognized for working out the margins of the assessee as compared to the margins of comparables. DRP has directed the Assessing Officer not to consider the said revenue of as receipts of assessment year 2009-10 for the purpose of TP adjustment, if any, to be made in assessment year 2009-10. The said amount does not result in addition as income in the hands of assessee for the captioned assessment year. Accordingly, we find no merit in the order of Assessing Officer in this regard and the addition of ₹ 3.01 crores is deleted. Before parting with the issue, we may also mention that the said receipts have been shown as part of the income of assessee in assessment year 2009-10. The ground of appeal No.5 raised by the assessee is thus, allowed.
Deduction in respect of amount collected towards environmental relief fund which was disallowed under section 43B of the Act - HELD THAT:- We find an identical issue arose before the Tribunal in assessee’s own case in assessment year 2006-07 the matter was set-aside to the file of Assessing Officer with a direction to decide the issue afresh and in accordance with law. The issue arising before us is identical to the issue before the Tribunal and in view thereof, we remit this issue back to the file of Assessing Officer to decide the same in line with the directions of the Tribunal in earlier year after affording reasonable opportunity of the hearing to the assessee. The ground of appeal No.6 raised by the assessee is thus, allowed for statistical purposes.
Non-granting of credit for self assessment tax paid by the assessee and non-credit of TDS allowed - assessee pointed out that the assessee has made an application for rectification under section 154 of the Act, which till date has not been disposed of - HELD THAT:- Accordingly, we direct the Assessing Officer to allow the claim of the assessee in accordance with law after verifying the claim of the assessee while computing income and tax payable thereon, pursuant to the order of Tribunal. The grounds of appeal raised by the assessee are thus, allowed.
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2016 (2) TMI 1329 - ITAT CHENNAI
Reopening of assessment u/s 147 - Nature of expenditure - Disallowance of expenditure on construction of compound wall in place of replacement of Barbed wire fencing as capital expenditure - HELD THAT:- As disputed disallowance on the issue of allowability of expenditure of replacement of compound wall was not discussed as referred at page no.3 of assessment order. Since there is no opinion was formed at the time of regular assessment u/s.143(3) of the Act completed on 30.11.2010 and the assessee has filed objections to reopening of the Act and ld. Assessing Officer considered the objection of the assessee on the reopening of assessment and disposed off by separate order dated 22.01.2014. Considering all we dismiss the appeal on the ground of re-assessment.
Nature of expenditure - On Comparison with the provisions of Sec.37(1) and the nature of expenditure and the treatment of expenditure in the books of Accounts also factual circumstances and Apex Court decisions relied by the assessee the expenditure takes the characteristic of Revenue in nature though ld. Assessing Officer in his order has mentioned that this decision is not applicable for the issue in dispute as it pertaining to assessment year 1995-96 and 1997-98 and due to amendment in Sec.30 of the Act. Considering the factual circumstances the claim of the assessee fall under residual sec. of 37(1) were the expenditure has been incurred wholly and exclusively for the purpose of business and expenditure being a replacement cost to the existing asset which satisfy the functional test of revenue expenditure and also follow the jurisdictional High Court decision CIT vs. Southern Roadways Ltd [2007 (6) TMI 193 - MADRAS HIGH COURT]
we set aside the order of the Commissioner of Income Tax (Appeals) on this ground and Direct the Assessing Officer to allow the deduction of replacement of barbed wire fencing with compound wall as revenue expenditure - Decided in favour of assessee.
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2016 (2) TMI 1328 - ITAT RAJKOT
Assessment u/s 153A - Proof of incriminating material found in search - HELD THAT:- The assessee’s arguments are in tune with those made in the lower appellate proceedings that his regular assessment stood completed well before search and the AO ought not to have invoked section 153A in absence of any incriminating evidence. We find that he has also placed on record relevant panchnama drawn on 09-09-2011. The Revenue fails to rebut this factual position.
Thus initiation of section 153A proceedings in absence of any incriminating evidence is not sustainable. The same is accordingly quashed - Decided in favour of assessee.
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2016 (2) TMI 1327 - ITAT DELHI
Addition u/s 69B - Addition on basis of valuation report of the DVO - Onus to prove - HELD THAT:- Burden of proof lies upon the person who alleges that the apparent is not real. In the facts of the present case, the ld. Assessing Officer, therefore, must prove that the falsity of the entries/transactions in the books of accounts as maintained by the assessee, on the basis of material/evidences on record.
In the facts of the present case, as it is apparent from the assessment order that the ld. AO has not brought any evidence/material on record to show that the assessee has received more than what has been declared by him. AO has merely made an addition on the basis of the report obtained from the DVO without bringing any evidence on record. He has also not established that the details/evidences filed by the assessee are wrong. Under such circumstances, we do not find any infirmity in the findings of the ld. CIT(A) and the ld. CIT(A) has rightly deleted the addition made by the ld. Assessing Officer. We, therefore, dismiss the ground of appeal filed by the revenue.
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2016 (2) TMI 1326 - ITAT MUMBAI
Rectification of mistake u/s 154 - amount received against TDR/FSI as a capital receipt which is not chargeable to capital tax - HELD THAT:- Shri Bharat R. Patel who had claimed the sale of development right as a LTCG which was denied to him by the AO and treated the same as income from other sources, however, the same was allowed by CIT(A) in its order dated 30.03.2010. The assessee claimed the amount received against TDR/FSI as a capital receipt which is not chargeable to capital tax. However, the AO treated the same as income from other sources by concluding that it is not a transfer falling within the provision of section 45 of I.T. Act.
Though the assessee and his brother received the amount from builder but since beginning both the brother set up their different claim in respect of amount received under TDR agreement for the purpose of assessment. The case of assessee was considered by CIT(A) on which conceivably two opinion are available. Since Ld. CIT(A) has taken one of the possible views, his order cannot said to suffer from mistake apparent from record.
CIT(A) while exercising the power u/s. 154 of the Act are ignored the principle and basic scope of rectification of order as discussed in paras 5 to 8 supra. Hence, the order dated 20.07.2010 passed by CIT(A) is not sustainable under the scrutiny of law and the same is set-aside.
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2016 (2) TMI 1325 - ITAT CHENNAI
Condonation of delay - sufficient cause of delay - HELD THAT:- A casual or a negligent litigant who has acted with utter irresponsible attitude, cannot claim the condonation of delay in law when the right has accrued to the other side. The expression "sufficient cause" will always have relevancy to reasonableness. The actions which can be condoned by the Court should fall within the realm of normal human conduct or normal conduct of a litigant. It is neither expected nor can it be a normal conduct of a public servant or a litigant that they would keep the files unmoved, unprocessed for months together on their tables. How the power of condonation of delay is to be exercised, has been explained by the Apex Court in the case of Collector, Land Acquisition v Mst. Katiji And Others. [1987 (2) TMI 61 - SUPREME COURT]
We considering the factual aspects of the case, the delay in filing the appeal was not a wonton act as sworn in the affidavit by the director of the assessee company that they were under bonafide belief that Sec.154 petition was filed and the assessee is praying remedy u/sec154 with a hope that the matter will be solved but the ld.Assessing Officer rejected petition for various reasons observed in his order
We as a quasi judicial body draw support from the decision of Supreme Court in the case of Mela Ram & Sons [1956 (2) TMI 5 - SUPREME COURT] and we found there is sufficient cause considering the factual circumstances in the interest of justice, we direct the Commissioner of Income Tax (Appeals) to condone the delay and admit the appeal and adjudicate the grounds on merits after giving adequate opportunity of hearing to the assessee. Appeal of the assessee is partly allowed for statistical purpose.
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2016 (2) TMI 1322 - ITAT KOLKATA
Penalty levied u/s. 271(1) (c) - Defective notice - non specification of charge - addition made by the ld.AO towards cash deposits in the bank account u/s. 68 and interest income from deposits - HELD THAT:- We find lot of force in the arguments of the assessee that the ld.AO had not mentioned any specific charge on which the said penalty proceedings have been initiated by him either in the assessment order or in the show-cause notice issued u/s. 271(1) ( c) r.w.s 274 of the Act. We hold that mentioning specific charge is pre-requisite for initiating the penalty proceedings on the assessee.
Show cause notice u/s. 274 of the Act is defective as it does not spell out the grounds on which the penalty is sought to be imposed. Following the decision of MANJUNATHA COTTON AND GINNING FACTORY, MANJUNATH GINNING AND PRESSING, VEERABHADRAPPA SANGAPPA AND CO., V.S. LAD AND SONS, G.M. EXPORT [2013 (7) TMI 620 - KARNATAKA HIGH COURT] we hold that the orders imposing penalty in all the assessment years have to be held as invalid and consequently penalty imposed is cancelled - Decided in favour of assessee.
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2016 (2) TMI 1320 - ITAT INDORE
Assessment u/s 153A - incriminating documents found in search or not? - HELD THAT:- We hold that the incriminating documents pertaining to the various assessment years even for years where the assessments are not abated, were found and seized. The assessee himself had admitted before the Assessing Officer that several loose papers seized as Annexure LPS 1 to LPS 5 and BS-1 to BS-5 are having entries relating to personal unaccounted business of the assessee. The assessee himself had prepared a cash flow statement of these unaccounted cash transactions incorporating debit and credit cash transactions. The unrecorded sales and unaccounted assets were also discovered in the search operation. The assessee has also admitted undisclosed income on the basis of these documents and assets. Therefore, the ratio laid down in case laws relied on by the learned counsel for the assessee is not applicable to the facts of the assessee’s case. Considering all these factual aspects, we dismiss all these grounds for all the assessment years raised before us.
Unexplained investment in the share - Proof of unaccounted transaction - HELD THAT:- The revenue’s claim that no promoter would divest with such a huge holding at a very nominal profit is without any basis and only a guess work. The assessee’s contention that the promoters were intended to go for public issue is well established by the fact that expenditure incurred in this regard has been debited in the books of accounts of Adroit Industries Ltd., therefore, the revenue’s contention that the promoters were not intended to go for public issue is not correct - all such allegations are wild and without any basis. The revenue has even failed to bring anything on record to establish that any unaccounted transaction in any form was done by any of the persons of this group and associates. There is no evidence against the assessee with regard to transfer and reacquisition of shares of Adroit Industries Ltd. during the relevant period to the assessment years 2007-08, 2008-09 and 2010-11 respectively. The revenue’s allegations are general and not supported by any evidence - no addition could be sustained only on the basis of guess work or in the absence of any positive evidence. In view of this factual matrix, we find no merit in the addition made - Decided in favour of assessee.
Addition on account of undisclosed income admitted by the assessee in his statement recorded u/s.132(4) - Whether addition was not represented by corresponding unexplained assets, unexplained investment or unexplained transactions in the seized material etc? - HELD THAT:- The judgments relied upon by the first appellate authority while making addition on the basis of assessee’s statement are not applicable to the facts of the assessee’s case in as much as in all the cases either the assessee claimed the statements having been given under threat or intimidation whereas it was a voluntary statement or retraction was filed after many years or no reasons were assigned for retraction or retraction was made despite existence of incriminating material. The facts of the assessee’s case are totally different.
While offering undisclosed income for taxation, the assessee categorically stated that the declaration was on the basis of provisional verification of seized material. While filing return of income pursuant to notice u/s.153A, the assessee scientifically analysed the entire seized material as well as undisclosed investment and assets, worked out peak credit by datewise chronologically arranging unaccounted cash receipts and cash payments and offered the same for taxation as undisclosed income. No income was offered for taxation for assessment year 2012-13 because the undisclosed income determined in earlier assessment years and recovery of cash advanced in earlier period was sufficient for explaining cash payments and undisclosed investments during the year. In view of the facts and legal position discussed above, the assessee humbly request deletion of the addition sustained by the C.I.T.(A) and determine undisclosed income offered by the assessee on the basis of peak credits for various assessment years on the basis of cash book prepared by him and placed before the Tribunal as well as the lower authorities.
CIT(A) has made the addition of difference between the income offered in the statement recorded u/s 132(4) and confirmed in the letter submitted to the Investigation Wing for the assessment year 2012-13 - The peak credit in view of various issues decided in these appeals including appeal in Signet Industries Limited needs to be reworked out. The income worked out of poly product sold out of books and under-invoiced for assessment years 2006-07, 2007-08 and 2008-09 have been held to be taxed in the hands of Signet Industries instead of the assessee. Part of this income was offered by the assessee in his return of income for these years which shall be reduced in view of these facts. Further, various other issues are also restored to the file of the Assessing Officer. Assessing Officer is also directed to rework out the peak amount.
Unaccounted sales and underinvoicing which formed part of income from unaccounted sales and underinvoicing assessed in the case of Signet Industries Ltd.- HELD THAT:- As have already decided this issue in the case of Signet Industries Limited wherein we have upheld the addition in the hands of Signet Industries Limited. The addition upheld in the hands of Signet Industries Ltd. on the basis that these unaccounted sales of poly product and under-invoicing of poly product were product of Logic Poly Products which is a unit of Signet Industries Ltd. Further Signet Industries Limited has filed settlement petition before the Customs & Central Excise Commission and admitted it as unaccounted transaction in its own hands. We have sustained the addition totaling to ₹ 8,13,29,014/- for three assessment years 200607, 2007-08 and 2008-09 in the hands of Signet Industries Limited. We have also directed that this amount may be reduced in case of Mukesh Sangla(assessee) , therefore, on this account we allow this grounds of assessee’s appeal.
Addition on the basis of entries of cash payments and cash receipts recorded in the material found and seized during search - assessee claimed that he has prepared cash receipt and cash payments account on the basis of these documentsand the excess amount has been offered for taxation while the revenue’s claim is that the assessee has not given full details regarding the incoming and outgoing of the cash amounts, therefore, the addition of both cash receipt and cash payment is justified - HELD THAT:- In the case of Signet Industries Limited we have upheld the addition made on the basis of loose papers found and seized by the Central Excise & Customs Department, part of which was offered as income in the hands of the assessee after filing the revised return. We have sustained the addition in the case of Signet Industries Limited with regard to poly product sold out of books and sold by under-invoicing. Therefore, the same amount shall not be available with the assessee to explain various entries for the assessment years 2006-07, 2007-08 and 2008-09 in the assessee’s hands.
We do agree with the pleadings of assessee that once the inflow and outflow of the cash payments is scientifically prepared datewise on the basis of the documents seized during the search operation then the addition can be sustained only of the peak so arrived at. The revenue is not allowed to selectively overlook the entries recorded in the seized material resulting in multiple additions. After considering the complexity of this issue and considering the impact of the issue decided in the case of Signet Industries Limited, we find it appropriate that the issues raised in the various grounds of these appeals of the assessee deserve to the restored to the file of the Assessing Officer with the direction to prepare a scientific datewise receipt and payment account of cash and work out the peak for these years and then make the addition accordingly.
Unaccounted polymer trading - HELD THAT:- We find that on the issue of initial investment we find it appropriate to restore the issue to the file of the Assessing Officer for the reason that we have directed to sustain the addition of peak amount in earlier years. If such amount is available for telescoping the initial investment, this addition shall be deleted. On the issue of the quantum of addition, we hold that it is on higher side as the addition is almost 50% of the unaccounted trading - we direct to reduce the addition if finally sustained to the tune of 10% of the total unaccounted sales of polymer trading. On the issue of estimating the net profit we hold that we have already held 4% of sales as reasonable profit on such sales, therefore, the addition for determining the NP shall be worked out @ 4% of such sales. Since the addition has been made on estimated basis, therefore, no addition is called for by invoking the provisions of section 40A(3)
Bogus purchases of polymer - We uphold the addition up to the NP rate of 4% after considering various pleadings and aspects of the case.
Unexplained investment in jewellery - HELD THAT:- CIT(A) has rightly sustained the addition up to ₹ 74,72,863/- on the diamond ornaments. Similarly, the addition sustained on the silver wares was also justified as the assessee was having no explanation for the same. The assessee himself has offered the silver wares of ₹ 49,49,402/- in his return of income. Moreover, the assessee has disclosed the unaccounted income for the assessment year 2012-13 at ₹ 12,61,00,000/- in the statement recorded u/s 132(4) and the learned CIT(A) has made further addition of ₹ 9,43,55,415/- on the basis of difference between the undisclosed income declared by the assessee in the statements recorded u/s 132(4) and the addition sustained of ₹ 3,17,44,585/- for the assessment year 2012-13. Therefore, we find no merit in these grounds of the assessee’s appeal.
Telescoping of unaccounted income - Addition of peak credit as per cash flow statement prepared from entries recorded in loose paper found and seized during search - HELD THAT:- On perusal of available cash balances for the entire block period as per the cash flow statement, it is quite manifest that Shri Mukesh Sangla had sufficient funds with him to set off addition on account of share application money, share capital, silver wares, Gold and diamond jewellery, unsecured loans, cash transaction with Shri Deepak Kalani and Shri Pankaj Kalani, initial investment for undisclosed polymer trading business etc. Therefore, the addition of peak credit as per cash flow statement prepared from entries recorded in loose paper found and seized during search in Shri Mukesh Sangla’s case as well as addition on account of share application money, share capital, silver wares, Gold and diamond jewellery, unsecured loans, cash transaction with Shri Deepak Kalani and Shri Pankaj Kalani, initial investment for undisclosed polymer trading business etc. in the case of Shri Mukesh Sangla and other group entities would amount to double addition.
From the seized documents, it is clear that the source of undisclosed income in the case of Shri Mukesh Sangla was unaccounted polymer business and other sources. The undisclosed income so generated was available with him to set off against addition on account of share application money, share capital, unsecured loans, cash transactions with Shri Pankaj Kalani and Shri Deepak Kalani etc. Therefore, it is humbly submitted that the addition on account of share application money, share capital, unsecured loans, cash transactions with Shri Pankaj Kalani and Shri Deepak Kalani etc. should be set off against undisclosed income determined on the basis of seized material in the case of Shri Mukesh Sangla.
In all these grounds the assessee has raised the issue of telescoping. After hearing both the sides, we are of the view that wherever it is possible to telescope the unaccounted income with the unxplained investment in any other asset including the jewellery, unexplained cash credits, unexplained investment or unexplained bank transactions, etc. relating to the assessee then such telescoping shall be justified.
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2016 (2) TMI 1319 - ITAT MUMBAI
Loss from Jeevan Suraksha Fund - Whether loss from Jeevan Suraksha fund can be set off against taxable income of the assessee corporation despite the fact that Jeevan Suraksha Fund is covered u/s 10(23AAB) whereby the income including the loss is not includible in the total income? - HELD THAT:- As noticed that while computing the taxable surplus, the negative reserves were ignored. On being show caused as to why the negative reserves should not be treated as income of the assessee, it was pointed out that the computation was in terms of the actuarial valuation carried out in accordance with Sec. 13, 15, 49 & 64V of the Insurance Act, 1938 and in terms of the IRDA regulations. It was also asserted that the prescribed methodology for valuation of the assets and determination of the liabilities was followed, on the basis of which, the actuarial valuation of surplus was arrived at for the purpose of taxation. The contentions of the assessee were not accepted by the Assessing Officer and accordingly he disallowed the adjustment of negative reserves amounting.
As a common point between the parties that the decision of the Tribunal dt. 3.4.2013 [2013 (6) TMI 377 - ITAT MUMBAI] pertaining to Assessment Year 2009-10 on an identical issue continues to hold the field as it has not been altered by any higher authority. As a consequence, we find no error on the part of the CIT(A) in deleting the impugned addition. Ground of appeal no. 1.2 raised by the Revenue is also dismissed.
Determination of Dividend Distribution Tax in terms of Sec. 115O - AO Noted that the assessee had distributed/paid to the Government of India on which Dividend Distribution Tax in terms of Sec. 115O of the Act was not levied - HELD THAT:- CIT(A) upheld the plea of the assessee following the decision of the Tribunal in the assessee‟s own case for Assessment Year 2006-07 - As a consequence, the stand of the assessee was allowed and the Assessing Officer was directed to delete the tax liability imposed u/s. 115O - As a consequence, the order of the CIT(A) is hereby affirmed and the Revenue fails on this aspect also.
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2016 (2) TMI 1317 - ITAT JAIPUR
Revision u/s 263 - CIT has objected that the increase in consumption by 5.41% this year as compared to the last year was not examined by the AO - HELD THAT:- As the issue of consumption of colour and chemicals has been examined by the survey team and based on that, the assessee has surrendered certain amount and reported in his return of income which has been accepted by the AO - AO has carried out the examination of assessee’s books of accounts which includes the manufacturing and trading account and based on better GP results which includes the consumption of colour and chemicals shown by the assessee, the same have been accepted - AO in his order has stated clearly that he has examined the manufacturing and trading account and felt satisfied. Accordingly, on this account, it cannot be said that AO has not the examined the matter or there is no application of mind which warrant an intervention by ld CIT under section 263 of the Act.
Addition or invoking section 41(1) - As submitted that these are the same creditors from whom the purchases of color and chemicals have been made and therefore, both the allegation are part of the one single issue and cannot be seen separately. CIT also therefore rightly did not alleged making any separate addition or invoking section 41(1) - We agree with the contention of the ld AR that where the balances of sundry creditors having been examined during the course of assessment proceedings, the fact that these creditors relates to consumption of colour and chemicals and CIT not invoking section 41(1) the issue has to be seen in the context of consumption of colour and chemicals which we have already discussed above. Accordingly, on this account, it cannot be said that AO’s order under section 143(3) call for intervention of ld CIT under section 263.
Excess stock of gray cloth - AO has not examined the value taken for the purposes of valuation of gray cloth in the stock inventory as on 31st March 2011 and selling price of gray cloth processed which has been sold - From the perusal of the computation of income (PB 143), it is noted that in addition to profit as per profit and loss account, the assessee has offered an amount which is the amount surrendered during the course of survey. The said amount includes an amount towards stock of gray cloth. Given this undisputed facts where the assessee has offered the whole of the purchase stock to tax and which has been accepted by the AO, we are unable to understand the prejudice which has been caused to the Revenue in this regard. In any case, the purchase and resultant sale of gray stock and profit arising therefrom has been factored in the Gross profit which has been examined by the AO. Accordingly, on this account, it cannot be said that AO’s order under section 143(3) call for intervention of ld CIT under section 263.
Cash payment and related disallowances u/s 40A(3) - As submitted by AR that admittedly, the assessee made payments below ₹ 20,000/- to the small persons engaged in the work of washing etc. which does not require much investment and they are financially weak and therefore, they always insist for cash payment. They even do not have their bank a/c and therefore, cash payment has to be made. It was further submitted that the AO has verified the cashbook produced before him alongwith the Tax Audit Report in which the Tax Auditor has not reported any contravention of sec. 40A(3). On pursual of the assessment order, it is noted that the cash book was produced during the course of hearing on 15.01.2013 and it is also stated that the AO has done the verification of the cash deposits. It therefore cannot be said that the AO has not verified the cash book and it is likely that on examination of such cash book, he has found the same to be in order including compliance with section 40A(3). Accordingly, on this account, it cannot be said that AO’s order under section 143(3) call for intervention of ld CIT under section 263 of the Act.
Disallowance u/s 40(a)(ia) - Why the third parties making the payment to the assessee have not made TDS and also the present AO has not intimated to the concerned AO of the such persons making payment to make disallowance u/s 40(a)(ia). In our view, the same cannot form the basis for assuming jurisdiction under section 263 in the case of the assessee.
Payment of job work charges - CIT believes that the Assessing officer ought to have examined whether TDS are made or not and whether the provisions of section 40a(ia) is applicable in the assessee’s case. In this regard, it is noted that the assessee vide its letter dated 11.01.2013 has submitted copy of TDS returns as well as copy of account of job work/process charges where it is shown that the assessee has done TDS on such payments. In our view, the same cannot form the basis for assuming jurisdiction under section 263 in the case of the assessee.
We are of the view that the order passed by AO under section 143(3) cannot be held to be an erroneous order which is prejudicial to the interest of Revenue. The AO has made sufficient enquiries, considered the survey records and the surrender made by the assessee and after considering the submissions of the assessee and due application of mind completed the assessment proceedings under section 143(3) of the Act. Hence, the impugned order issued by ld CIT under section 263 lacks the inherent jurisdiction. - Decided against revenue.
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2016 (2) TMI 1316 - ITAT CHENNAI
Computation of deduction u/s 10B - exclusion of expenses incurred in foreign exchange and telecommunication expenditure incurred in Indian currency from export turnover - HELD THAT:- Following the decision of Special Bench of Chennai Tribunal in the case of ITO Vs. Sak Soft Ltd [2009 (3) TMI 243 - ITAT MADRAS-D] CIT(A) directed the AO to reduce such expenses from both the export turnover and total turnover.
Disallowance of expenditure attributable for earning exempt income u/s.14A - CIT(A) directed the AO to disallow 5% of exempt income as the expenses attributable for earning exempt income in so far - HELD THAT:- CIT(A) estimated the expenditure at 5% of gross exempt income as the expenditure attributable to earning exempt income for assessment year 2005-06 and we find that this is quite reasonable - in the order of the Ld. CIT(A) in confirming he disallowance made u/s.14A r.w Rule 8D(2)(iii) of Income Tax Rules.
Expenditure incurred in foreign exchange which has been specifically excluded from export turnover would also not form part of total turnover for the purpose of sec.10B.
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2016 (2) TMI 1315 - ITAT CHENNAI
Contribution made by the assessee to the superannuation fund - allowable revenue expenses u/s 37(1) - HELD THAT:- Admittedly, the assessee was established by the State Government. By a Government Order, the State Government gave option to the employees of the erstwhile Port Department to work under the assessee-board. The Government categorically clarified that the employees who opted to work under the assessee-board would have the same tenure, remuneration, rights and privileges as to pension and gratuity. The Government employees who were transferred to the assessee-board will have the same rights and privileges in respect of superannuation and pension.
The contribution made by the assessee to the superannuation fund has to be allowed atleast u/s 37 of the Act as found by the Madras High Court in Kattabomman Transport Corporation Ltd [1998 (9) TMI 2 - MADRAS HIGH COURT] - Absorption of the Government employees by the assessee-board will not make any distinction in respect of payment for superannuation fund. Therefore, this Tribunal do not find any error in the order dated 21.8.2015 much less a prima facie error. There is no merit at all in the miscellaneous petition filed by the Revenue. Accordingly, the same is dismissed.
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2016 (2) TMI 1309 - ITAT CHENNAI
Disallowance of deduction claimed u/s 80IA in respect of interest income from deposits - assessee submitted that interest was received from deposits - HELD THAT:- This Tribunal in the assessee’s own case for assessment year 2008-09 [2013 (9) TMI 1256 - ITAT CHENNAI] found that the interest income is not eligible for deduction u/s 80IA of the Act. In view of the above, this Tribunal do not find any reason to interfere with the order of the lower authority. Moreover, the interest income is not from business of the assessee. The source of income is from deposits made by the assessee, therefore, it is not eligible for deduction u/s 80IA of the Act. Accordingly, the order of the CIT(A) is confirmed.
Deduction in respect of other income - HELD THAT:- Since in assessee’s own case for assessment year 2008-09, a co-ordinate Bench of this Tribunal found that other income is not eligible for deduction u/s 80IA of the Act and the CIT(A) has followed the order of this Tribunal, we do not find any reason to interfere with the order of the CIT(A). Accordingly, the same is confirmed.
Exclusion of expenditure in respect of income which does not form part of the eligible profit for deduction u/s 80IA - HELD THAT:- What was not excluded in the eligible profit for computation of deduction u/s 80IA is interest received by the assessee from fixed deposits and other income. For earning interest from fixed deposits, the assessee need not spend any money or incur any expenditure. The details of other income are not available on record and no material is available on record to indicate that the assessee has incurred any expenditure for earning the other income. In those circumstances, this Tribunal is of the considered opinion that exclusion of the so called expenditure does not arise for consideration.
Disallowance of gratuity amount paid to LIC - HELD THAT:- Creation of the trust is a mandatory pre-condition for payment of contribution by the assessee. In the case before us, for the year ended 31.3.2005, the trust was not created. The trust was created on 2.5.2015. Therefore, it cannot be said that the fund was paid for the irrevocable trust created exclusively for the benefit of the employees. In the absence of any material to indicate that the assessee has created an irrevocable trust, this Tribunal is of the considered opinion that the judgment of M/S TEXTOOL CO. LTD. [2009 (9) TMI 66 - SUPREME COURT] may not be applicable to the facts of the case. In view of the above, this Tribunal do not find any reason to interfere with the order of the lower authority. Accordingly, the same is confirmed.
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2016 (2) TMI 1308 - ITAT CHENNAI
Disallowance of deduction u/s 80IA in respect of interest income - assessee has received interest on fixed deposits made with banks - deposits were made from the advance received from the tenants for occupying the commercial space - HELD THAT:- Deduction u/s 80IA is to be allowed on the profit derived by an undertaking from the business of developing or operating and maintaining infrastructure facilities. In this case, admittedly, the interest income was not derived from the industrial undertaking but from the deposits made by the assessee from the banks. Therefore, the interest income has to be necessarily classified as income from other sources and hence, it cannot be construed as derived from industrial undertaking. Therefore, the assessee is not eligible to claim deduction u/s 80IA in respect of interest income.
Deduction u/s 80IA in respect of other income other than interest income - HELD THAT:- For earning interest income from bank, the assessee is not expected to incur any expenditure. Therefore, the assessee cannot claim any expenditure for earning interest income from fixed deposits. In respect of other income other than the interest income from fixed deposits, this Tribunal is of the considered opinion that the assessee is eligible for exemption u/s 80IA, therefore, the alternative claim made by the assessee does not survive in respect of the income from other sources other than the interest income. Therefore, the alternative ground raised by the assessee is dismissed.
Disallowance u/s 43B being provision of 80% of cenvat credit amount relating to service tax - Raising a specific ground as Ground No.29 before the CIT(A) - HELD THAT:- It is an admitted fact that the assessee has contested disallowance u/s 43B of the Act being provision of 80% of cenvat credit amount relating to service tax. Admittedly, this ground raised by the assessee as Ground No.29 was not disposed of by the CIT(A). Therefore, this Tribunal is of the considered opinion that the CIT(A) has to dispose of this specific ground raised by the assessee as Ground No.29. Accordingly, this ground raised by the assessee with regard to disallowance u/s 43B is remitted back to the file of the CIT(A). The CIT(A) shall consider and decide the issue in accordance with law after giving a reasonable opportunity to the assessee.
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2016 (2) TMI 1307 - ITAT CHENNAI
Assessment of trust - Depreciation claim of assessee trust - HELD THAT:- We are constrained to hold that the assessee would not be entitled to claim the benefit of depreciation for the purpose of section 11 - it is pertinent to mention that section 11 is a section with a legal fiction, wherein, when registration is granted to a charitable institution under section 12A of the Act, income from the trust is not brought into the ambit of tax on fulfilling certain conditions.
Similarly, section 32 of the Act is also a provision with a legal fiction wherein notional amount is determined on the cost/WDV of the asset by applying the rate of depreciation specified in the Income Tax Rules and that is allowed as deduction while arriving at the business or profession income of the assessee.
A provision with fiction cannot be superimposed on another provision with fiction for arriving at the income of the assessee. For the aforesaid reasons, we are of the considered view that the assessee will not be entitled to claim depreciation under section 32 of the Act for arriving at the income of the assessee under section 11. Accordingly, we hereby confirm the order passed by the learned Assessing Officer and set aside the order passed by the learned Commissioner of Income Tax (Appeals).
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2016 (2) TMI 1306 - ITAT DELHI
Addition on account of transfer pricing adjustment on the international transaction of ‘Payment of Corporate expenses.’ - assessee has submitted an application under Rule 29 of the Income-tax Appellate Tribunal Rules, 1963, filing additional evidence - AR contended that these documents could not be filed before the authorities below because of their non-availability from its AEs at the material point - HELD THAT:- As observed that similar position prevailed in the assessment of the immediately preceding assessment year, namely, 2008-09. The assessee filed additional evidence before the Tribunal in support of its claim on the disallowance of payment of ‘Corporate expenses.’ The Tribunal vide its [2014 (9) TMI 517 - ITAT DELHI] order dated 29.8.2014 in ITA No.5765/Del/2012, has admitted the additional evidence and remitted the matter to the file of AO/TPO for a fresh determination of the ALP of this international transaction in the light of such additional evidence. A copy of such order has been placed on record. In the absence of any distinguishing feature in the facts of the instant year vis-à-vis the preceding year and respectfully following the precedent, we also admit the additional evidence and send the matter back to the file of AO/TPO for fresh determination of the ALP of this international transaction, after allowing a reasonable opportunity of being heard in the light of the additional evidence filed before us.
Transfer pricing adjustment on the international transaction of ‘Payment of Royalty’ - payment akin to the payment of fees for the use of technical know-how - HELD THAT:- TPO proposed the transfer pricing adjustment with Nil ALP of the international transaction of `Payment of royalty’ on the ground that no such payment was warranted and further no cost benefit analysis on this count was brought to his notice and as such the payment of royalty was not required.
AO in his final assessment order dated 26.12.2013 has taken the ALP at Nil on the basis of recommendation of the TPO without carrying out any independent investigation in terms of the deductibility or otherwise of such payment in terms of section 37(1) of the Act. As per the ratio decidendi of Cushman & Wakefield India (P.) Ltd. [2014 (5) TMI 897 - DELHI HIGH COURT the TPO was required to simply determine the ALP of this transaction unconcerned with the fact, if any benefit accrued to the assessee and thereafter, it was for the AO to decide the deductibility of this amount u/s 37(1) of the Act.
Since the authorities below have acted in contradiction to the ratio laid down in Cushman & Wakefield (supra), we set aside the impugned order on this score and remit the matter to the file of AO/TPO for deciding it in conformity with the law laid down by the Hon'ble jurisdictional High Court in the case of Cushman & Wakefield (India) (P.) Ltd. (supra).
Disallowance u/s 14A as per Rule 8D - AO made disallowance @ 0.5% of the average investments, which resulted into addition - HELD THAT:- Having regard to the facts of the instant case and the submissions advanced on behalf of the assessee about the confirmation of similar disallowance u/s 14A by the tribunal for the immediately preceding year @ 0.5% of the average value of investments in terms of Rule 8D(2)(iii), we approve the action of the AO in making the disallowance to this extent alone. This ground fails.
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2016 (2) TMI 1305 - ITAT DELHI
Disallowance u/s 14A r.w.r.8D - whether disallowance u/s 14A can exceed exempt income or not? - HELD THAT:- Hon’ble Delhi High Court in the case of Joint Investment Pvt. Ltd [2015 (3) TMI 155 - DELHI HIGH COURT] has held that disallowance u/s 14A rwr Rule 8D cannot exceed the entire tax exempt income. Respectfully following the decision of Hon’ble Delhi High Court the disallowance is required to be restricted to ₹ 1,65,492/- only. However, as the assessee on its own has made disallowance in the return of income, we restrict the disallowance as made by the assessee own its own. In view of this ground No.1 of the appeal is allowed reversing the order of the learned Commissioner of Income-tax (Appeals) and disallowance of ₹ 16,24,198/- is directed to be deleted. The appeal of the assessee is partly allowed.
Disallowance of Provident Fund - assessee has deposited employer’s contribution to the Provident Fund towards where the PF trust has made investments which are not permitted. AO did not considered this trust as recognized Provident Funds under Income Tax Act - HELD THAT:- This issue is taken up by the assessee before the learned Commissioner of Income-tax (Appeals) who in turn deleted the addition stating that since the trust is already registered and learned Commissioner of Income-tax has not revoked the registration of the trust , AO is not empowered to treat it as unrecognized fund. Further CIT (A) has also recorded finding that the matter is already decided in favour of the appellant by the orders of coordinate bench for Assessment Year 2003-04 to 2007-08 dealing identical issue in favour of the assessee and the appeal of the revenue is also dismissed by Hon’ble Delhi High Court. In para 5.4 of the order of ld CIT(A) he has dealt this disallowance. Ld. DR could not point out any infirmity in the same and therefore we confirm the order of CIT (A) in deleting the disallowance on account of employers’ fund contribution made by the assessee to the recognized fund. ground No.1 of the appeal of the revenue is dismissed.
Disallowance as prior period expenses - assessee while computed the income under normal computation mechanism has added this, However it was not added while calculating the book profit tax u/s 115JB - HELD THAT:- Commissioner of Income-tax (Appeals) has dealt with this issue vide para No.5.6 of his order and he followed decision of Hon’ble Delhi High Court in the case of Khaitan Chemical and Fertilizers [2008 (9) TMI 89 - DELHI HIGH COURT] where in the addition is deleted holding that there is no such adjustment required to be done according to the provision of section 115JB on account of prior period expenditure. We do not find any infirmity in the order of ld CIT(A), none has been pointed out by the ld DR. In view of this we confirm the order of LD CIT (A) in deleting the addition of prior period expenditure while computing book profit tax u/s 115JB of the Act.
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2016 (2) TMI 1300 - ITAT MUMBAI
TDS u/s 194H - Disallowance u/s.40(a)(ia) - not deducting the TDS on Credit Card commission charged by bank on credit card transaction - HELD THAT:- As decided in own case [2015 (8) TMI 1476 - ITAT MUMBAI] payment of commission to banks with regard to the processing of credit card transactions was not liable to be considered as a ‘commission’ within the meaning of section 194H.
The bank does not act as an agent of the assessee while processing the credit card payments and a charge collected by the bank for such service does not amount to ‘commission’ within the meaning of section 194H.
In view of the aforesaid Judgment of Hon’ble Delhi High Court in the case of JDS Apparels P. Ltd.[2014 (11) TMI 732 - DELHI HIGH COURT] we hereby affirm the conclusion of the CIT(A) to the effect that the impugned disallowance made by the AO by invoking section 40(a)(ia) is unsustainable. - Decided in favour of assessee.
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2016 (2) TMI 1299 - ITAT DELHI
Addition on account of notional income under the head "Income from House Property" - HELD THAT:- It is admitted before us that fact and circumstances of the issue involved is identical to earlier years. A perusal of order passed by the jurisdictional high court revels that the notional addition has been deleted by their Lordships [2010 (11) TMI 798 - DELHI HIGH COURT] - Respectfully following the decision of jurisdictional high court above ground No.1 of the Revenue appeal is dismissed.
Disallowance of interest expenditure claimed by the assessee - as claimed by the assessee that during the year under consideration no interest cost was debited as expenditure in the Profit & Loss Account and hence there was no such claim made in the return of income. - HELD THAT:- CIT-A correctly find that during the FY relevant to the AY under consideration, the appellant company has not paid any interest to the banks as stated by the ld. AO. The finance charges debited to the profit & loss a/c pertains to various services extended by the bankers to the appellant company. In such circumstances, no disallowance on account of advances made was liable to be made - After careful consideration of the issue we do not find any infirmity in the view adopted by CIT(A) in deleting the addition - Decided in favour of assessee.
Addition on account of extra depreciation claimed on computer peripherals - Case records show that during the year under consideration assessee has claimed depreciation on computer peripherals at the rate of 60%, however, this was restricted by the Ld. AO to the rate of 15% - HELD THAT:- CIT(A) has deleted the disallowance by following the decision of Hon'ble Delhi High Court in the case of BSES Yamuna Power Ltd.[2010 (8) TMI 58 - DELHI HIGH COURT]. After careful consideration of the case records we find no reason not to uphold the view taken by CIT(A) by following decision of jurisdictional high court noted above. As such ground No.3 of Revenue Appeal is also dismissed.
Disallowance u/s 14A read with Rule 8D - HELD THAT:- We principally agree with the said contention of the assessee. The AO should have first examined the books of accounts of the assessee and only thereafter if he was not satisfied with the claimed by the assessee that it had not incurred any expenditure for the purpose of any exempt income that he could have invoked provisions of Rule 8D. In the instant case Ld. AO has failed to adopt this mandatory procedure. It is also seen that even the assessee has not been able to substantiate its claim before the lower authority. In our considered opinion this issue requires fresh examination at the end of the AO. Accordingly we set aside the order of Ld. CIT(A) on this issue and direct the AO to examine this issue afresh in light of discussions made.
Disallowance on account of license fees paid by the assessee to New Delhi Municipal Corporation (NDMC) - HELD THAT:- As exonerates the claim made by the assessee. As per interim order dated 06th February 2002 assessee has been making payments to NDMC from FY 2001-02 onwards. For all these years i.e FYs 2001-02 FY 2013-14 even after payment of ₹ 75 lakhs per month initially and ₹ 1 crore per month thereafter the final liability determined in year 2015 was much more. Contingency if at all during FYs 2001-02 to 2013-14 was vis a vis ₹ 150.09 cr which finally became determinable in year 2015. However for the year under consideration the payment of ₹ 12 cr was a confirmed liability, which NDMC accepts as not being subject to further litigation before Delhi High Court. Considering the peculiar facts of the present case we therefore hold that the appellant was entitled to claim deduction of ₹ 12 crores paid by it to NDMC as License Fees under License Deed dated 14th July 1984. Decisions relied upon by the Ld AO in his order of assessment are also not relevant since these are decisions wherein certain provisions made in books of accounts were sought to be claimed as a deduction, per contrary this is a case where liability actually being discharged is being claimed as deduction. We accordingly hold that appellant merits succeeding in its claim.
Reopening of assessment u/s 147 - HELD THAT:- Facts relied upon by the Ld AO in support of his reasons to belief i.e note no. 2(iii) was duly considered by him during the course of original assessment. No fresh facts have also come to the knowledge of Ld AO justifying a fresh initiation of action u/s 147 of the Act. It is trite law that when a specific query raised by the AO is replied to by the assessee during the course of original assessment then it cannot be said that there is any failure or omission attributable to the assessee. As relying on HARYANA ACRYLIC MANUFACTURING COMPANY VERSUS COMMISSIONER OF INCOME-TAX IV AND ANOTHER [2008 (11) TMI 2 - DELHI HIGH COURT] we concur with the submission made by the appellant that the assumption of jurisdiction u/s 147 of the Act in this instant case by issuance of notice u/s 148 dated 26th February 2010 is bad in law
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