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Income Tax - Case Laws
Showing 81 to 100 of 8823 Records
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2017 (12) TMI 1720 - ITAT CHANDIGARH
Cancelling registration granted u/s 12A - holding the activities of the assessee society as not being genuine and not being carried out in accordance with the objects of the trust - assessee is indulging in the activity of giving donations to other institutions - HELD THAT:- The assessee admittedly has given donations to various organizations as reproduced in earlier part of out order. When asked to show during proceedings before the Ld. Commissioner of Income Tax as to how they were actually utilized by the donee societies/institutions, nothing was shown by the assessee. The assessee has, therefore, neither established the user of the donations for charitable purposes, nor demonstrated that the said donee society was a charitable society registered u/s. 12A of the Act. Meaning thereby that the assessee society has not demonstrated the application of its funds for charitable purposes. The assessee, therefore, is not entitled to claim the donations as application of its income.
In view of the above, we agree with the Ld. Commissioner of Income Tax that the assessee is indulging in the activity of giving donations to other institutions which is not in consonance with the approved objects of the assessee society. We, therefore, uphold the action of the Ld. Commissioner of Income Tax in cancelling the registration granted u/s. 12A of the Act by invoking the provisions of section 12AA(3) of the Act. - Decided against assessee.
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2017 (12) TMI 1719 - ITAT BANGALORE
Reference u/s 92CA to TPO - Cognizance taken by the AO under section 92B(i) and reference made to TPO u/s 92CA - expenditures in respect of which payment has been made or is to be made to person referred to in clause (b) of sub section 2 of section 40A - Whether on account of omission of clause (i) from the statute, the proceedings already initiated or action taken under clause (i) becomes redundant or otiose ? - HELD THAT:- Once the clause is omitted by subsequent amendment, it would be deemed that clause (i) was never been on the statute. While omitting the clause (i) of section 928A, nothing was specified whether the proceeding initiated or action taken on this continue. Therefore, the proceeding initiated or action taken under that clause would not survive at all. In this legal position, the cognizance taken by the AO under section 92B(i) and reference made to TPO under section 92CA is invalid and bad in law. Therefore, the consequential order passed by the TPO and DRP is also not sustainable in the eyes of law.
Where this clause (i) is omitted from the statute since its inception, the AO ought have required to frame the assessment in normal course after making necessary enquiries of particular claim of expenditure in accordance with law. But this exercise could not have been done on account of provisions of section 92BA Clause (i) of the Act.
Now when this clause (i) has been omitted from the statute by virtue of the aforesaid amendments, the AO is required to adjudicate the issue of claim of expenditures in accordance with law after affording opportunity of being heard to the assessee. We therefore set aside the orders of the AO and the DRP and restore the matter to the AO with the direction to readjudicate the issue of claim of expenditure incurred in respect of which payment has been made or is to be made to person referred to in clause (b) of sub section 2 of section 40A of the Act. Accordingly, since we have restored the matter to the AO, we find no justification to deal with the other issues on merit. Accordingly, appeal of the assessee stand allowed for statistical purposes.
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2017 (12) TMI 1717 - PATNA HIGH COURT
Stay proceedings - Reopening of assessment - HELD THAT:- Issue notice. Learned counsel for the respondents takes notice. He may file counter affidavit within four weeks.
List after four weeks.
Further proceedings in furtherance of Sections 147 and 148 of the Income Tax Act shall remain stayed.
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2017 (12) TMI 1715 - ITAT KOLKATA
Penalty u/s. 271(1)(c) - defective notice issued u/s. 274 - HELD THAT:- We find that the notice dt. 05-12-2007 issued u/s. 274 r.w.s 271 does not specify the charge of offence committed by the assessee viz whether had concealed the particulars of income or had furnished inaccurate particulars of income. Hence the said notice is to be held as defective. - Decided in favour of assessee.
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2017 (12) TMI 1714 - ITAT CHENNAI
Non prosecution of appeal - HELD THAT:- The appeal of the assessee was posted for hearing on 05.12.2017 by service of notice [RPAD on record]. None appeared on behalf of the assessee nor any adjournment petition has been filed. Further, the assessee has not rectified the defects notified in the Defect Memo that “Appeal fees to be paid under sub-head “Others”. Hence, it is inferred that the assessee is not interested in prosecuting the appeal.
Therefore, having regard to Rule 19(2) of ITAT Rules and following the decision of the Delhi Bench of the Tribunal in the case of Multiplan (India) Ltd. [1991 (5) TMI 120 - ITAT DELHI-D] and case of late Tukojirao Holkar [1996 (3) TMI 92 - MADHYA PRADESH HIGH COURT] the appeal of the assessee is dismissed for want of prosecution.
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2017 (12) TMI 1713 - ITAT DELHI
Unaccounted Investment - AO has made the addition only on the basis of unsigned document found in search - non reference to the DVO report - HELD THAT:- As unsigned agreement to sell was found as a result of search but it is also a matter of fact, as submitted by the assessee and not denied by the DR, that no question was asked by the search team on this document during the course of search. The contention of the learned DR that the document seized is sufficient to make addition of unaccounted investment is contrary to the provisions of law as the document found during the course of search is not required to be proved or disproved by both, assessee as well as the department as only presumption can be made u/s 132(4A) of the Act with regard to a seized document.
This presumption is a rebuttable presumption. However, the first onus to disprove such document is on the assessee. In the present case we note that the AO in order to verify the veracity of the document, referred the valuation of the property in question to the DVO with specific remarks that a document showing consideration of ₹ 21.96 crore has been found during the course of search. The DVO after having the knowledge of the seized document showing value of ₹ 21.96 Crore valued the property at ₹ 7.11 Crore with supporting evidence. Strangely, the AO after carrying out this exercise of valuation during the assessment proceedings did not refer the same in assessment order while making the addition of ₹ 698 lakhs.
Also gone through the document like DVO report, sale deed of adjacent property, HSIIDC rate of allotment document and other documents and find that the land prices of the property, excluding construction were in the vicinity of the amount paid by the appellant to Bluebird Software Private Limited and its shareholders. It is also a matter of fact and record the sale price on the basis of signed documents is accepted by the department in the hands of sellers of the property or shareholders of Blue Bird Software Private Limited. Those assessment orders are also passed after search in their cases by the central circle.
The assessee has also placed on record the assessment order of Blue Bird Software Pvt Ltd who has purchased this property for 6.80 cr just few months before the date of unsigned document. This value is also accepted by the Income tax authorities.
The assessee has been able to produce enough evidence on record to rebut the presumption. In the case of M.M. Financers (P) Ltd vs DCIT [2006 (12) TMI 189 - ITAT MADRAS-B] it is held that the expression used in section 132(4A) is ‘may be presumed’ and it does not mean that other factors are not to be taken into consideration. The mandate does not mean that it has to be presumed irrespective of all other factors. The decision of Delhi High Court in the case of CIT vs Ved Prakash Choudhary [2008 (2) TMI 14 - DELHI HIGH COURT] also support the case of the assessee.
Thus addition made by the AO is contrary to the DVO report obtained by him and the CIT(A) has ignored the vital and material documents and evidences on record before upholding the order of the AO. Consequently, the addition upheld by the CIT(A) is deleted - decided in favour of assessee.
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2017 (12) TMI 1712 - ITAT CHENNAI
Penalty levied u/s. 271(1) (c) - omission to make a suo-motu disallowance u/s.43B(e) - AO put the assessee on notice as to how it could claim interest on loans taken from HDFC when such amount was not actually paid - HELD THAT:- Assessee had offered the sum as income in the subsequent assessment year considering it as a cessation of liability. Interest to the extent of ₹ 1,55,00,000/- debited in Profit and Loss found specific mention in the Audit Report and Annual Accounts also. Thus, the omission to make a suo-motu disallowance u/s 43B(e) was in our opinion inadvertent and not with an intention of understating the income. That apart, assessee having mentioned the amount in its Audit Report and Annual Accounts, we cannot say that the particulars furnished by it were inaccurate.
In our opinion, CIT (Appeals) was justified in relying the case of Price Waterhouse Coopers [2012 (9) TMI 775 - SUPREME COURT] for deleting the penalty levied on the assessee. We do not find any reason to interfere with the order of the ld. Commissioner of Income Tax (Appeals). - Decided in favour of assessee.
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2017 (12) TMI 1708 - ITAT DELHI
Addition u/s 40(a)(ia) - TDS was not deposited with the statutory period, the expenditure so claimed was voluntarily added back in the computation of income as not allowable under section 40(a)(ia) - HELD THAT:- Where in respect of any sum, tax has been deducted in any subsequent year, such sum shall be allowed as deduction in computing the income of the previous year in which such tax has been paid. In such circumstances, the conclusion of CIT(A) to hold that since genuineness of expenditure stood examined in assessment year 2005-06 and tax was duly deducted in assessment year 2006-07, therefore, the disallowance made in the impugned order of assessment was on account of non-genuineness of expenditure was not tenable.
We also find that CIT DR has though extensively relied on enquiries conducted by learned AO but has failed to controvert the factual findings recorded by learned CIT (A), and the status of directions to the revenue authorities to take appropriate action as per law for AY 2005-06 and bring to tax the above expenditure as non genuine in AY 2005-06. As relying on SIR KIKABHAI PREMCHAND VERSUS COMMISSIONER OF INCOME-TAX (CENTRAL) , BOMBAY [1953 (10) TMI 5 - SUPREME COURT] we uphold the deletion of addition
Addition on account of discrepancy in the books of accounts of the assessee company - HELD THAT:- The fact of the matter remains that ₹ 2,00,00,000/- was explained by the assessee having been paid by debiting account of the group company and such payments have been made through banking channels. The revenue has not been able to place any material to rebut the aforesaid cogent explanation tendered in the appellate proceedings. No opportunity was granted in the assessment proceedings. We also notice that identical addition had been made in the order of assessment dated 31.12.2010 u/s 153A/143(3) of the Act in pursuance to search conducted on 5.11.2009 under section 132(1). The said addition stood deleted in an order passed by CIT(A) though the revenue has preferred an appeal but such deletion of addition has not been challenged before us which also supports the aforesaid claim of the assessee company. Having regard to the aforesaid factual position, we uphold the deletion of addition
Addition being an expenditure incurred on payments to SCLL as compensation by the assessee company - statement of Shri S.K Gupta, Director SCLL recorded in which Shri Gupta and reportedly stated that SCLL was involved in giving bogus entries, that the impugned transaction with Puri Construction Ltd. was not a genuine transaction - HELD THAT:- The addition so made solely on the basis of statement of Sh. S.K. Gupta’s statement and without rebutting the documentary evidences so relied on by the assessee company is hereby deleted - The material available on record that the statement of arbitrator, Sh. Om Prakash, retired Additional & Sessions Judge, who acted as an arbitrator between assessee company and M/s SCLL wherein, the learned judge had accepted regarding the award so granted between dispute pending between assessee and M/s SCLL and the said fact has not been rebutted by the learned counsel of Revenue and as such, this fact is also important to establish and substantiate the fact that the amount so paid to M/s SCLL is genuine and justified.
Addition on account of land development expense paid to M/s Manami Construction Pvt. Ltd. - HELD THAT:- Documentary evidences were arbitrarily brushed aside by both learned AO and CIT (A) and further, the reliance so placed on investigation carried out by learned AO was prior to the date of affidavit of director of M/s Manami Construction Co. Pvt. Ltd., wherein, current address of the said concern was furnished by the assessee company and further, all the details in the shape of nature of work done and payment made was also furnished before the learned AO, which all remained unrebutted and uncontested by lower authorities - Thus the disallowance made and sustained is deleted and the ground raised by the appellant is allowed.
Assessment u/s 153A - original assessment proceedings under section 143(3) - HELD THAT:- We have noticed that AO in section 153A proceedings has merely repeated the additions so made in original assessment proceedings under section 143(3) of the Act and there was no new addition made by learned AO during section 153A proceedings. Thus, on the date of search i.e. on 05.01.2009, the assessee company’s assessment was finalized on 31.12.2008 and as such, the proceedings were not pending on the date of search and thus, additions could only have been made in proceedings under section 153A of the Act only when any incriminating material was found during the search.
The only material (if any) on which reliance is placed by AO is the statement of Sh. Mohinder Puri and construing it to be incriminating in nature is also unjustified, as the statement cannot be construed to be incriminating in nature and more specifically when the said statement has been retracted subsequently and has not been acted upon and as such, the additions so made in an order under section 153A/143(3) of the Act for impugned assessment year are in excess of scope of assessment.
Thus, it is held that the additions so made under section 153A of the Act are mere repetition of additions made in assessments already made under section 143(3) of the Act and as such, all the additions so made are beyond the scope of assessment of provisions of section 153A of the Act and thus, the said ground raised in Rule 27 of ITAT Rules by assessee – appellant is allowed.
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2017 (12) TMI 1707 - ITAT KOLKATA
Fringe Benefit Tax - power of CIT(A) to entertain the revised computation of the value of fringe benefits filed by the assessee before the AO - computing the value of chargeable expenditure for fringe benefits the assessee had considered the reimbursement of medical expenses as chargeable expenditure for calculation of fringe benefit tax - assessee claimed that the return of fringe benefit filed by it should be treated so as not to include reimbursement of medical expenses - HELD THAT:- Law is now well settled that the appellate authorities have the power to entertain a new claim by the assessee even in the absence of a revised return of income. CIT(A) erred in not examining the claim of the assessee for the reason that the claim made by the assessee to exclude certain items of the expenditure from value of fringe benefit was contrary to the return of fringe benefit filed by the assessee. The tax liability cannot be determined on the basis of admission and has to be in the light of the relevant statutory provision. We therefore hold that the CIT(A) was not justified in examining the claim of the assessee in this regard. We therefore proceeded to examine the correctness or otherwise of the claim by the assessee in this regard.
It is not disputed by the revenue that reimbursement of medical expenses was perquisite in the hands of the employees and tax is payable on the employee on such perquisite subject to basic deduction and exemption allowed under the Act. Under section 115WB(3) such expenditure cannot be part of fringe benefit provided by the employer to the employees. Therefore the claim of the assessee to exclude the reimbursement expenses from the chargeable expenditure for calculation of fringe benefit tax has to be accepted. The decision of DCIT vs Wipro Ltd [2014 (9) TMI 953 - ITAT BANGALORE] supports the plea of the assessee in this regard.
As far as the plea of the assessee for excluding the expenditure of providing uniforms to the chauffeurs is concerned it is clear from the policy of the company and the nature of its business that these are necessary for the purpose of carrying on its business and cannot be regarded as any benefit or welfare facility provided to the employee by the employer. CBDT Circular referred to by the ld. Counsel for the assessee clearly provides that similar items of expenses cannot be considered for the purpose of arriving at the value of fringe benefit. We therefore agree with the submissions of the assessee that the aforesaid item of expenditure cannot be include as expenditure in providing the fringe benefit.
The claims made by the assessee for exclusion of both the items of expenditure are accepted and the AO is directed to exclude the aforesaid expenditure from the chargeable expenditure for calculation of fringe benefit for levying of fringe benefit tax. - Decided in favour of assessee.
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2017 (12) TMI 1706 - ITAT JAIPUR
Addition u/s 69 - undisclosed investment - Search u/s 132 was conducted at business cum residential premises of assessee - addition on the basis of a ledger, seized from the possession of Shri Manish Tambi whose premises were covered under search operation u/s 132 - as alleged assessee has not provided the reasonable explanation offered to him, the evidences produced before him about the nature and source of investment - HELD THAT:- Issue in question is covered by the decision SHRI MANISH TAMBI VS. THE DCIT CENTRAL CIRCLE-1 JAIPUR AND VICE-VERSA. [2014 (3) TMI 1148 - ITAT JAIPUR] as held addition u/s 68 of the Act can be made only if any sum is found credited in the books of the assessee. A book means a collection of sheets of papers bound together with the intention that such binding shall be permanent and papers used are kept collectively in one volume. A book which contains successive entries of items maybe a good memorandum book but until those entries are totaled or balanced or both as the case may be, there is no reckoning and no accounts. A book which merely contains entries of items of which no account is made at any time, is not a ‘’book of account’ in a commercial sense. Thus the addition made u/s 68 is not justified.
Addition u/s 69B - Also peak determined by the A.O. is not correct, otherwise also, when once peak amount has been added then no separate addition is required. It seems that the A.O. has not properly prepared the list of debtors and creditors based on any logic. CIT(A) has confirmed the addition under the Provisions of Section 69B. This section relates to investment made by the assessee in the acquisition of bullion/jewellery or other valuable articles but it does not speak about any investment in debtors. Moreover, Section 69B also stipulates the position where the investment exceeds the amount shown in the books of account. Since the assessee does not maintain any books of account wherein the debtors and creditors are reflected , therefore, this addition has also been wrongly made and upheld u/s 69B - Decided in favour of assessee.
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2017 (12) TMI 1705 - ITAT JAIPUR
Addition u/s 69B - unexplained investments and interest thereon - HELD THAT:- Peak determined by the A.O. is not correct, otherwise also, when once peak amount has been added then no separate addition is required. It seems that the A.O. has not properly prepared the list of debtors and creditors based on any logic.
CIT(A) has confirmed the addition under the Provisions of Section 69B. This section relates to investment made by the assessee in the acquisition of bullion/jewellery or other valuable articles but it does not speak about any investment in debtors.
Section 69B also stipulates the position where the investment exceeds the amount shown in the books of account. Since the assessee does not maintain any books of account wherein the debtors and creditors are reflected , therefore, this addition has also been wrongly made and upheld u/s 69B of the Act. Hence, in our considered opinion, only commission income has to be determined in this case and nothing more. Accordingly, we reverse the findings of the ld CIT(A) and order to delete the entire addition so made. - Decided in favour of assessee.
Addition u/s 68 - unexplained cash addition as assessee could not prove the source of advances received - HELD THAT:- Revenue’s claim that during the course of survey concerns giving advances were found to be non-existent. However, the assessee claims that the above concerns were having PAN and the new address could have been ascertained from Registrar of Companies. It is also noted that the ACB, Govt. of Rajasthan, Jaipur has conducted the similar enquiries against the concerns at Mumbai and found the concerns were not existing on the given registered office addresses. The ld.AR of the assessee submitted that lower authorities have referred and relied on the enquiries conducted by the ACB, Govt. of Rajasthan, however, no such report of ACB was made available to the assessee at any stage. Assessee was not provided opportunity to controvert the report if any. There is violation of natural justice. Law does not allow such act. Thus it will be in the interest of equity and justice to restore the issue to the file of the AO to decide it afresh - Decided in favour of assessee for Statistical purposes.
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2017 (12) TMI 1704 - ITAT DELHI
Valuation of closing stock - assessee following weighted average method - AO rejected the valuation made by assessee and instead applied FIFO method - books of accounts have been rejected by AO to the extent of the valuation of stocks - HELD THAT:- Statutory provisions for computation and disclosure of income chargeable under the head profit and gains of business or profession, we find that undisputedly assessee has been following weighted average method in valuing the closing stock in the previous years which has not been disturbed by revenue authorities.
Weighted average method is also considered to be one of the method which reflects the fairest possible approximation of cost incurred, by the Institute of Chartered Accountants in their Accounting Standards. Therefore we do not find any justification in rejecting this method of valuation by AO. Moreover AO has also not furnished any reasonable explanation for rejecting the method consistently adopted by assessee. We are therefore inclined to allow this ground raised by assessee. As we have upheld the weighted average method for valuation of closing stock, we allow ground raised by the assessee wherein the books of accounts have been rejected by Ld. AO to the extent of the valuation of stocks.
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2017 (12) TMI 1703 - ITAT BANGALORE
Deduction u/s 10AA - denial of deduction as the assessee-company had not provided any services and the assessee-company had not complied with the condition stipulated under sub-section (4) of section 10AA - CIT-A deleted addition - HELD THAT:- Any undertaking established in a SEZ is entitled to claim a relief from its profits, provided it is engaged in the manufacture or production of articles or things or provision of any service. From the above, BRL being in unit has correctly claimed relief under section 10AA of the Act on income derived from export of research services. The appellant is entitled to Section 10AA relief.
It is undisputed fact that the M/s. Biocon Ltd., also enjoys the SEZ status. Therefore, by selling platform technology to the assessee-company, the motive of tax evasion cannot be attributed to M/s. Biocon Ltd., Furthermore, M/s. Mylan Ltd., also said to be unrelated party. Therefore, it cannot be even imagined that without any value addition by the assessee-company, M/s. Mylan would have paid so much of consideration. This factor, should clinch the issue in favour of the assessee-company. Thus viewed from any angle, the assessee-company cannot be denied the benefit of deduction u/s. 10AA though the reasoning adopted by the CIT(A) is cryptic. No reason to interfere with the order of the CIT(A) this issue. - Decided against revenue
TDS liability on reimbursement of actual cost incurred - addition u/s 40(a)(ia) - HELD THAT:- There was no dispute with regard to the contention of the assessee-company that subject payments are merely reimbursement of the cost incurred and no profit element was present. Further there was no dispute that the payees had shown receipts as income in their respective hands and discharged the tax liability. In the light of these facts, we hold that the assessee-company is not under obligation to deduct tax at source on the payments which are not liable to tax in the hands of the payee. Further we find no reason to differ with the reasoning of the CIT(A) that when the second proviso to section 40(a)(ia) is applicable to the facts of the present case there is no obligation to deduct tax at source and consequent disallowance u/s. 40(a)(ia). See M/S. TE CONNECTIVITY INDIA PVT. LTD. VERSUS INCOME-TAX OFFICER (LTU) (TDS) , BANGALORE [2016 (5) TMI 1222 - ITAT BANGALORE] . Thus, we do not find any reason to interfere with the order of the CIT(A). - Decided against revenue
TDS u/s 195 - services rendered by non-resident parties - HELD THAT:- The assessee-company is only entitled to use the annual report given by those parties which does not mean that technology is made available to it. The co-ordinate bench of Tribunal (Delhi) in the case of ITO vs. Nokia India Pvt. Ltd. [2015 (7) TMI 476 - ITAT DELHI]) has considered an identical issue The assessee-company is not under obligation to deduct tax at source on the payments made to non-resident parties and therefore, the question of consequent disallowance u/s. 40(a)(ia) does not arise. Thus, the grounds of appeal are allowed.
disallowance u/s. 14A - HELD THAT:- In the present case, there is no dispute that surplus fund far exceeds investments made. Therefore, it should be presumed that investments are made out of surplus funds of the assessee and the question of disallowance on account of interest does not arise.
As regards disallowance of indirect expenditure, in the absence of recording satisfaction as to how claim of the assessee is incorrect, no disallowance can be made. The assessee-company placed reliance on the decision of the co-ordinate bench cited supra and the ratio of the decision is squarely applicable to the facts of the present case. Thus, this ground of appeal is allowed.
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2017 (12) TMI 1702 - CALCUTTA HIGH COURT
Review petition - Payment made without deducting any tax at source - alternative point urged, of the payee being exempted from payment of income tax - HELD THAT:- We have by our order in CIT vs Central Roller Flour Mills Ltd. [2017 (1) TMI 1672 - CALCUTTA HIGH COURT] held that review is possible in exercise of jurisdiction under section 260A of the Income Tax Act, 1961. We are satisfied that the assessee has made out good ground for review.
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2017 (12) TMI 1698 - RAJASTHAN HIGH COURT
Amortization of cost paid towards the acquisition of wasting asset i.e. mining land/leasehold land u/s 37 - Whether ITAT has not legally erred in not allowing the claim? - HELD THAT:- We are in complete agreement with the view taken by the tribunal, therefore, first issue is required to be answered in favour of the department and against the assessee.
Depreciation on license to use the land for mining - whether not covered by the definition of intangible asset u/s 2(11) ? - HELD THAT:- On a close scrutiny of Sub section 32 (ii) of the Income Tax Act in respect of depreciation of- (ii) know-how, patents, copyrights, trade marks, licences, franchises or any other business or commercial rights of similar nature, being intangible assets acquired on or after the 1st day of April, 1998,
In our considered opinion, the rights which are given to the assessee are of commercial rights which are akin to license for mining.
Expenditure incurred on computerization of Mines Department of the Government of Rajasthan - whether not qualify to be an expenditure expended “wholly and exclusively for the purpose of business” allowable u/s 37 ? - HELD THAT:- Taking into consideration the expenses which are done in view of decision in SA Builder’s case [2006 (12) TMI 82 - SUPREME COURT] and other judgments relied on the assessee, the issue is answered in favour of the assessee.
Benefit of deduction u/s 80IA - sum received on account of minimum guarantee covenant under the agreement by holding the same to be not ”derived” from the business of power generation undertaking - HELD THAT:- regarding liquidated damages which are given are business losses which the undertaking ought to have done, if the machines which were delivered to the assessee would have performed very well, therefore, damages which were given for loss of business which was guaranteed by the supplier, ALPINE SOLVEX LTD. [2004 (11) TMI 58 - MADHYA PRADESH HIGH COURT] will not apply in the present case. This is not damages for compensation for business loss. In that view of the matter, this issue is also answered in favour of the assessee and against the department.
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2017 (12) TMI 1697 - ITAT CHANDIGARH
Penalty u/s 271(1)(c) - Quantum additions deleted - HELD THAT:- CIT(A) has quashed the penalty orders is evident from the ground raised by the Department itself. A perusal of the impugned order shows that the reason for quashing the penalty orders has been the fact that the issue has been decided in favour of the assessee which has affirmed the order of the ITAT [2015 (12) TMI 1805 - ITAT CHANDIGARH] . Accordingly, once the additions stand deleted, the Revenue’s appeal in the peculiar facts and circumstances has no merit. - Decided against revenue
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2017 (12) TMI 1696 - ITAT CHANDIGARH
Disallowance of Bank Charges - as per AO assessee company had paid the bank charges for processing of working capital loan which in his opinion was a capital expenditure and hence not allowable under section 37(1) - HELD THAT:- DR had not brought to our notice any distinguishing facts in the present case as compared to the facts in the preceding years wherein identical expenditure had been held to be revenue in nature and allowed in appeal both by the CIT(Appeals) and the I.T.A.T. For the aforesaid reason, since the issue stands decided in favor of the assessee in preceding years and in the absence of any distinguishing facts having been brought to our notice, we uphold the order the of the Ld. CIT(Appeals) deleting the disallowance of bank charges
Addition u/s 14A r.w.r. 8D - A.O. made the impugned disallowance on account of the fact that the assessee company had made investments in shares/mutual funds, the income from which was exempt from tax - CIT(Appeals), restricted part addition as disallowance made on account of interest as per rule 8D(2(ii) of the Income Tax Rules,1962, for the reason that the assessee had sufficient interest free funds of its own for making the investments. The disallowance on account of administrative expenses as per rule 8D(2)(iii) was however upheld - HELD THAT:- No infirmity in the order of the Ld. CIT(Appeals) deleting the disallowance. The assessee had repeatedly contented both before the A.O. and the CIT(Appeals), that it had utilized its own interest free funds for the purpose of making the impugned investments which were made in earlier years. As submitted by the assessee that the said investments were made in financial years 2005-06 & 2006-07 when the cash accruals from the business of the company were to the tune of ₹ 37.08 Crores and ₹ 51.71 Crores which were sufficient for making the impugned investments of ₹ 34.65 Crores. Copies of financial statements of the said years were also filed. Based on the above facts the CIT(Appeals), we find, deleted the disallowance made following the decision of the jurisdictional High Court in the case of Hero Cycles Ltd. [2009 (11) TMI 33 - PUNJAB AND HARYANA HIGH COURT]
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2017 (12) TMI 1694 - ITAT DELHI
Revision u/s 263 by CIT - As per CIT no enquiries were conducted by AO in respect of sundry creditors - Whether no enquiry was undertaken by the Pr. CIT to come to the conclusion that the original assessment order was erroneous and prejudicial to the interest of revenue? - HELD THAT:- On perusal of the order of the ld CIT, it is noticed that it has not stated how the order of the AO is erroneous as complete income including the job work income was shown. It was also not stated that how the survey of the premises of the father of the assessee has made the order erroneous.
CIT has stated that why the tax has not been deducted at source on payments to ABC Enterprise. However, in the same order the CIT himself has stated that assessee was the proprietor of ABC Enterprise and M/s. Shiva International. As the payment is made from one proprietary concern to another proprietary concern of the same assessee, DR could not show any provision of tax deduction at source applicable. Furthermore, the ld CIT has not carried out any enquiry to show that order passed by the ld Assessing Officer is erroneous.
In view of this Hon'ble Delhi High Court in Pr.CIT Vs. Delhi Airport Metro Pvt. Ltd [2017 (9) TMI 529 - DELHI HIGH COURT] has held that when no enquiry was undertaken by the Pr. CIT to come to the conclusion that the original assessment order was erroneous and prejudicial to the interest of revenue, it cannot be sustained. When the ld CIT has sent the entire matter back to the file of Assessing Officer for fresh assessment can also be done only after he undertakes an enquiry. Apparently, same is missing in this case. - Decided in favour of assessee.
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2017 (12) TMI 1692 - ITAT DELHI
Rejection of books of accounts - Addition invocation of provisions of section 145(3) - HELD THAT:- Looking at the accounting standard for inventory valuation we do not find any infirmity in the method of techniques of measurement of cost as well as cost formula used by the assessee. The assessee in fact has followed the accounting standard only.
We find that provision of section 145(3) are incorrectly invoked by the AO and confirmed by the ld CIT(A) because the valuation method is correct and therefore, it does not impact the correctness or completeness of the account of the assessee. In fact it makes the accounts of the assessee complete and correct.
AO has applied the past year’s gross profit ratio in that year also the valuation of the inventory was on similar basis therefore, if opinion of the AO is accepted then it cannot be said that accounts of previous year were correct and complete. The method of valuation of inventory followed by the assessee is year to year same. The assessee has maintained complete quantitative details also. No defects have been pointed out by the AO in the books of account other than what is stated by the Auditor.
To invoke provisions of section 145(3) of the Act it is necessary that accounts of the assessee suffers from latent, patent and glaring errors.
In the present case, we do not find any such finding by the AO. Further, the assessee has given detailed reason for the down fall in the gross profit also. Further, the details of valuation of closing stock of the manufactured goods as per retail method were also filed before the lower authorities and no infirmity was found in the same. In view of this, we do not find any reason to sustain the orders passed by the lower authorities with respect to the invocation of provisions of section 145(3) of the Act and consequently, making the addition to the total income of assessee - Decided in favour of assessee.
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2017 (12) TMI 1691 - ITAT MUMBAI
Addition u/s 14A read with rule 8D - HELD THAT:- As in assessee’s case for the assessment year 2008-09 where in an identical issue on identical facts has been decided as observed that the disallowance should be worked out on proportionate method under rule 8D(2)(iii) and determined disallowance at ₹ 35,120/- applying the proportionate method on the total income and dividend income earned and total expenses in the current year. The only difference in the facts are with regard to the quantum of amount of dividend income earned and the quantum of expenses.
Considering the decision of the Co-ordinate Bench of the Tribunal and the overall expenses as well as the income and total income of the assessee, we are of the view that it would be fair and reasonable if a sum of ₹ 10 lakhs is disallowed under rule 8D(2)(iii). Accordingly, we direct the AO to disallow a sum of ₹ 10 lakhs under rule 8D(2)(iii). Resultantly, the appeal of the assessee is partly allowed.
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