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Income Tax - Case Laws
Showing 61 to 80 of 751 Records
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2018 (1) TMI 1626 - ITAT MUMBAI
Disallowance u/s 14A r.w,r. 8D - assessee could not establish one-on-one nexus between the own fund/ non-interest bearing fund with investments either during the assessment proceedings or at the appellate stage - CIT-A deleted the addition - HELD THAT:- After evaluating the orders passed by ld. CIT(A), we are in agreement with this proposition that when both borrowed and own funds are available and the own funds and interest free loan exceeds investment, the presumption can very well be made that investments have been made from interest free funds and not from borrowed funds
From the facts as well as documents placed on record, we noticed that the assessee had made huge investment as per profit and loss account and necessarily expenses must have been incurred towards undertaking these transaction / activities.
Thus , in order to maintain consistency and judicial discipline , end of justice will be met in the instant case if further disallowance of expenditure u/s 14A is kept at an additional amount of ₹ 5,00,000/- towards administrative/misc. expenses to be added to the income of the assessee . This is in view of the non recording of proper satisfaction by the authorities below as to the incorrectness of the claim of the assessee’s claim and also this disallowance u/s 14A so upheld by us is in consonance with the decision of Hon’ble Supreme Court in the case of Godrej and Boyce Manufacturing Company Ltd. v. DCIT [2017 (5) TMI 403 - SUPREME COURT]. We order accordingly.
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2018 (1) TMI 1625 - ITAT PUNE
Accrual of income - Interest accrued on NPAs - HELD THAT:- As decided in own [2016 (7) TMI 1605 - ITAT PUNE] no addition is warranted on account of interest accrued on NPAs. Accordingly, we uphold the order of CIT(A) in deleting the addition made on account of interest accrued on NPAs. The grounds of appeal raised by the Revenue are thus, dismissed.
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2018 (1) TMI 1623 - ITAT BANGALORE
Validity of the assessment proceedings u/s. 153A - HELD THAT:- As examined the orders of the lower authorities and we find that for AY 2012-13 return was filed on 27.09.2012 and for AY 2013-14 on 20.09.2013. Before concluding the assessment proceedings, the assessee was searched on 07.12.2012. As per provisions of section 153A of the Act, wherever assessment u/s. 153A is required to be framed consequent to the search, pending assessment shall abate and assessment is to be framed u/s 153A r.w.s. 143(3) of the Act. Under these circumstances, we find no infirmity in issuance of notice u/s. 153A of the Act. We therefore reject this ground of assessee raised in this regard.
Disallowance of business promotion expenses claimed u/s. 37 - expenditure was incurred on Doctors not allowable as deduction under the provisions of section 37(1) - AO has observed that the details of business promotion expenses incurred by the assessee on various Doctors is not available - AO further took a note of CBDT Circular No.5/12 dated 01.08.2012 wherein it was clarified that u/s. 37 of the Act such type of expenditure which are prohibited by law cannot be allowed - HELD THAT:- Assessee has furnished the details of persons to whom the stunts were sold and the AO has collected the evidences only from few persons. The contention of the assessee that sometime discounts were given in the invoice itself were also not properly appreciated or examined by the AO. When certain hospitals have categorically stated that there are two types of patients and one type of patient cashless treatment is to be given by the hospital in that case the hospital purchase the stunts from the assessee company and wherever the cashless treatment is not given, the patient is required to purchase the stunts.
The stunt would be directly sold to the patient and the corresponding entries with regard to sale of the stunt is not recorded in the books of accounts of the hospital and the hospital representatives collect the discount by the company agreed upon given by the company. These aspects need to be examined by the AO. In the light of these facts, we are of the considered view that the issue was not been properly examined by the lower authorities and they have disallowed the claim of the assessee by making superficial observation. Therefore, in the interest of justice, we set aside the order of the CIT(A) in this regard and direct the AO to readjudicate the issue after making necessary enquiry and verification. If the assessee succeeds in establishing that most of the time the discount was given in the invoice itself, the same may be allowed without making a further necessary enquiry.
Disallowance of bad debts written off - As observed that assessee has not established that amount has gone bad inspite of all efforts taken by him - HELD THAT:- Nothing has been established by the Revenue that condition stipulated under section 36(2) was not fulfilled with respect to any of the debts which were written off by the assessee during the previous year. Under these circumstances, we are of the view that disallowance made by the Revenue authorities is incorrect as the assessee is only required to write off the bad debts and is not required to establish that it has become really bad. Accordingly, we set aside the order of the CIT(A) and direct the AO to allow the claim of bad debt raised by the assessee.
Unaccounted cash during the course of search - assessee is before us with the submission that assessee has explained the source of availability of cash but it was not appreciated by the AO - Cash payment by patient’s made to hospital by some insurance companies - HELD THAT:- or the first type of patient who made cash payments whenever any stunt is deployed in the patient, the assessee company directly sells and places the stunts to patient and patient directly make the payment to the company. Company representatives comes every fortnight or monthly and collect the payment. This explanation was never examined or enquired by the AO. It was further contended that the reply given actually confirms that there were cash collections out of sales and in so far as PGIMER is concerned, it was contended that money was collected on 06.12.2012. Though the hospital has denied the payment made in November 1012 but the same payment was made to the assessee. Since the sufficient evidence was placed on record, AO should have examined and enquired into the genuineness of these statements before making any addition. In the light of specific stand taken by the assessee, we are of the view that explanation furnished by the assessee should have been examined by the lower authorities before making addition of the cash found during the course of search. Since addition was made without making necessary enquiry, we set aside the order of the CIT(A) and restore the matter to the AO to re-examine the availability of cash during the course of search after making a necessary enquiry in the light of the explanations furnished by the assessee
Cash deposit in the bank account - AO noted cash of ₹ 10 lakh was deposited in the bank account but no corresponding entry was found in the cash book - HELD THAT:- We find that assessee has contended before the AO that it was on account of inadvertent mistake, the corresponding entry of deposit of cash was not made on 02.08.2011 in the cash book but it was done on 29.08.2011 though there was no deposit of cash in the bank. But these explanations of the assessee was not examined by the AO nor by the CIT(A). In the light of these facts, we are of the view that since the issue was not properly examined by the lower authorities, matter should be sent back to the AO to readjudicate the issue in the light of assessee’s contentions. Accordingly, we set aside the order of the CIT(A) and restore the matter to his file to readjudicate the issue afresh after affording opportunity of being heard to the assessee in the light of assessee’s contentions.
Undisclosed cash sales - assessee is before us with the submission that assessee’s representatives have collected the cash from Hissar hospital and same was entered in books on 24.03.2011 and as regards the cash collected from PGIMER the same was recorded in books on 14.04.2011. It was recorded in the books as communicated by the representatives, however, the cash remained in his possession at Delhi and he sent mail to Bangalore Office of handing over the cash to Mukesh Yadav at Delhi - HELD THAT:- We find that this explanation of the assessee was not examined by the AO by making the necessary enquiry from the concerned parties. Therefore, we are of the view that the matter should be sent back to the AO for readjudication. Accordingly, we set aside the matter to the AO for readjudication of the issue in the light of assessee’s contentions after affording opportunity of being heard to the assessee.
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2018 (1) TMI 1622 - ITAT AHMEDABAD
Addition on account of motor accident claims - HELD THAT:- As decided in own case [2013 (1) TMI 758 - ITAT AHMEDABAD] issue is covered in favour of the assessee wherein the Tribunal has held that merely because the MACT awards are booked by the assessee at a later point of time than the date of the award cannot be reason enough to decline the claim for deduction in respect of these awards. It is sometimes possible, rather its inherent mechanism of the system as it exists, that sometimes there is considerable delay in communicating the awards granted by MACT. The awards are generally conveyed through the lawyers representing the assessee and it does take time in many cases.
It is not the case of the AO that the subsequent claims are duplication of claims in respect of the same liability, and the assessee does not stand to gain as a result of this delay in accounting. In any event, the quantification of claims is verified by the statutory auditors as also the CAG audit teams, and the same method of accounted is being followed by the assessee for last 50 years. As there is no change in method of accounting, as there is no duplication of claims, and, as assessee does not anyway gain anything from delaying accounting for these claims, we see no reasons to reject the claims merely because these claims are accounting for, in the books of accounts, at a point of time later than awards being granted i.e. when the assessee gets to know about the same. Grievance of the AO, regarding crystallization of liability, does not, therefore, survive any longer. In view of these discussions, as also bearing in mind entirety of the case, we approve the conclusions arrived at by the CIT(A) and decline to interfere in the matter - Decided in favour of assessee.
Income from license fees of canteen - business income OR income from house property - HELD THAT:- As decided in own case [2013 (1) TMI 758 - ITAT AHMEDABAD] Admittedly, the major part of the income for the licence fee of canteen is not from staff, but from outsiders and hence this judgment is not applicable to this receipt at all, and even for the receipt of rent on account of staff quarter, the judgment is not applicable because it could not be shown by the learned AR of the assessee that the facts are identical. Regarding the argument that this income was taxed under the head income from business in earlier years, we find that on the plea of consistency, it cannot be held that if a mistake is committed by the AO in earlier years, the same should be perpetuated. This is not case of the assessee that the rental income is not in respect of house property owned by the assessee, and hence in our considered opinion, this rental income is taxable under the head income from house property, as has been held by the authorities below, and hence, we do not find any reason to interfere with order of the learned CIT(A) on this issue, and this ground of the appeal of the assessee is dismissed. - Decided in favour of revenue.
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2018 (1) TMI 1621 - ITAT RAJKOT
Real v/s hypothetical income - Addition on account of accrued interest on NPA account - Mercantile system of accounting - HELD THAT:- In this case, appellant is a co-operative society is assessed to tax and engaged in the business of banking and governed by the banking Regulation Act, 1949. Return of income for assessment year under consideration was e-filed declaring total income at ₹ 2,59,94,100/-. The AO vide order u/s.143(3) of the Act dated 11.03.2015 assessed the total income of ₹ 3,13,72,830/-.
It is also held that in the case of banking companies, any interest accrued on advances classified as non-performing is taxed in the year in which the same is actually received. The theory of only real income is to be taxed is a settled law and therefore notwithstanding the appellant has been following mercantile system of accounting, the appellant could be taxed on the real income and not on the hypothetical income.
Disallowance u/s 14A - Assessee stated that the AO has not made any such observation to this effect that he was not satisfied with the correctness of the claim and just mechanically worked out the disallowance - HELD THAT:- Section 14A has not confirmed specific power to the AO to assume that a part of the expenditure must have necessarily been incurred to earn exempted income which he can estimate and disallow. The AO has no authority to estimate the expenditure which the appellant would have, in his opinion, incurred in relation to the exempted income - Since in the past similar additions were deleted by the CIT(A) and thereafter confirmed by the Hon’ble ITAT Bench. We are not inclined to interfere in the order passed by the ld. CIT(A). In our considered opinion, ld. CIT(A) has passed detailed and reasoned order which does not require any kind of interference at our end. - Decided against revenue.
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2018 (1) TMI 1618 - ITAT MUMBAI
Addition u/s 68 - Bogus share capital and share premium received by assessee from the 11 private Limited companies - genuineness of the transactions and creditworthiness of the subscribers to the shares not proved - HELD THAT:- Assessee has completely produced the evidences before the AO i.e. the identity of the shareholder by filing the registered address with ROC, PAN No. along with copy of returns of income furnished with particular Ward of the department of the investors. The assessee has also received money from shareholders through account payee cheque and issued documents such as share certificate, return of allotment filed with ROC forms which were filed before the AO. The assessee has also filed copies of bank statement of the subscribers showing that it had sufficient balance in its accounts to enabled the subscriber to subscribe the share capital. In view of these facts and circumstances, once the AO has not rebutted the evidences, the AO cannot disbelieve the same.
As relying on M/S. GAGANDEEP INFRASTRUCTURE PVT. LTD. [2017 (3) TMI 1263 - BOMBAY HIGH COURT] in view of the voluminous documentary evidence, only because those persons had not appeared before the AO would not negate the case of the Assessee.
We have also made enquiry from the learned Sr. Departmental Representative, whether the investors or this company is a Shell company or in the list prepared by Ministry of Corporate Affairs, Govt. of India. The learned Sr. DR, stated that this information is not available with the department. We made enquiry from the learned Counsel for the assessee whether this company has been strike off from the Registrar Of Companies or not, the learned Counsel stated that it is very much on the register of Registrar Of Companies. In view of these facts, we reach to a conclusion that this is existing company and even the investors are existing. - Decided against revenue.
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2018 (1) TMI 1617 - ITAT CHENNAI
Validity of Re-opening of assessment - assessee requesting for the reasons recorded for the purpose of re-opening denied - HELD THAT:- Revenue has not been able to produce any evidence to show that the reasons recorded had been provided to the assessee as prayed for in its letter. This being so, respectfully following the decision in the case of Videsh Sanchar Nigam Ltd. [2011 (7) TMI 715 - BOMBAY HIGH COURT] as also the principles laid down by the Hon’ble Jurisdictional High Court in the case of M/s.Jayanthi Natarajan [2017 (9) TMI 1042 - MADRAS HIGH COURT] we are of the view that the reasons recorded having not been given to the assessee before the completion of the assessment, the re-assessment is invalid and liable to be annulled and we do so. Appeal filed by the assessee is allowed.
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2018 (1) TMI 1616 - ITAT DELHI
Addition u/s 69A on account of unexplained cash - additional income disclosed under the head income from other sources/undisclosed income/undisclosed investment - Retraction of Additional Income disclosed - Addition based on the disclosure made by one person in case of a group companies - statement u/s 132(4) relied upon - HELD THAT:- In the present case the additions are involved based on statement u/s 132 (4) of the act as well as cash found during the course of search. The addition because of admissions is bald admission and which is partly retracted and corrected to the extent of ₹ 86 Crores. The statement was obtained by the revenue without collecting the evidences at the time of search.
Neither the ld AO, Nor investigation wing showed any evidence based on which the above disclosure of ₹ 150 crores was substantiated. Therfore there is no reason that matter can be set aside. No justification was alos showed before us in the above ground as to what inquiry ld Ao has failed to make which is now should be made by appellate forum. Furthermore the second addition on account of cash found was also substantiated by the assessee to show wealth tax returns of the family members as well as the cash position statement as on the date of search. AO has made the addition ignoring them. Now before us, it is not stated that what else inquiry or evidences should have been inquired about the above issue.
Therefore we reject the above grounds of the revenue. - Decided in favour of assessee.
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2018 (1) TMI 1615 - ITAT KOLKATA
Denial of natural justice - claim made by the assessee without filing a revised return - Sales tax subsidy as capital receipt OR revenue receipt - Revenue raising the issue of violation of Rule 46A of Income Tax Rules - as contended that when the fresh claim made by the assessee for exclusion of sales tax subsidy, otherwise than by filing a revised return, was not entertained by the AO CIT(Appeals) ought to have given opportunity the Assessing Officer to examine the said claim of the assessee as required by Rule 46A of the Income Tax Rules - HELD THAT:- We find merit in the contention raised by the assessee in this regard that there being no additional evidence filed by the assessee before the ld. CIT(Appeals) in support of its claim for exclusion of sales tax subsidy, Rule 46A has no application and the ld. CIT(Appeals) was not required to give any opportunity to the Assessing Officer to verify the claim of the assessee.
CIT (D.R.) has urged that such opportunity even otherwise deserves to be given to the Assessing Officer in the interest of substantial justice. CIT(Appeals), who is having co-terminus powers to that of the Assessing Officer, has already examined this issue in detail in the light of the material available on record including the scheme of the West Bengal Government under which the amount of sales tax subsidy in question was received by the assessee and after having satisfied himself on merit, he has allowed the claim of the assessee for exclusion of sales tax subsidy by treating the same as capital receipt not chargeable to tax.
As this issue is squarely covered in favour of the assessee by the decision of the Hon’ble Calcutta High Court in the case of Rasoi Limited [2011 (5) TMI 23 - CALCUTTA HIGH COURT]and since the ld. CIT(Appeals) has given relief to the assessee on this issue by relying on the said decision of the Hon’ble jurisdictional High Court, we are of the view that no cause of justice is going to be served by sending the matter back to the Assessing Officer for examination - uphold the impugned order of the ld. CIT(Appeals) allowing the claim of the assessee for exclusion of sales tax subsidy by treating the same as capital receipt not liable to tax and dismiss this appeal of the Revenue.
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2018 (1) TMI 1614 - ITAT KOLKATA
Disallowance of deduction under 80-lC for Ferro unit, since the assessee failed to make any substantial expansion - HELD THAT:- As decided in own case CIT(A) has rightly come to the conclusion that in respect of unit which claimed deduction earlier u/s 80IB of the Act such unit will continue to get the benefit of deduction of 80IC of the Act subject to the limitation of ten year period. The deduction for an undertaking making substantial expansion of the existing undertaking is not applicable in the case of the assessee. We are of the view that the conclusions drawn by CIT(A) on this issue are fully justified and does not call for any interference. Accordingly this appeal of the revenue is dismissed.
Disallowance of deduction under 80-lA for CFS (Sonai) Kolkata,( an infrastructural facility) - HELD THAT:- As decided in own case there remains no ambiguity with regard to the fact that assessee is engaged in CFS which is an infrastructure facilities as envisaged u/s 80IA of the Act. The deduction was denied by the AO on the ground that assessee is not engaged in the business of development of infrastructure facilities. However, after examining the above stated facts we find that the assessee has taken a land on lease for setting up the infrastructure facilities at KP and has incurred the cost for its development. Therefore, we hold that the assessee has set up the CFS facility and operating the same and accordingly eligible for claiming the deduction u/s. 80IA of the Act. In the light of above reasoning, we hold that the order of the Ld. CIT(A) is correct - Decided against revenue.
Disallowance of deduction under 80lA for CFS (JJP) Kolkata (infrastructural facility) - AO has denied the deduction on the ground that assessee is not engaged in business of infrastructure facilities - HELD THAT:- ssessee is engaged in CFS which is an infrastructure facilities as envisaged u/s 80IA of the Act. The deduction was denied by the AO on the ground that assessee is not engaged in the business of development of infrastructure facilities. However, after examining the above stated facts we find that the assessee has taken a land on lease for setting up the infrastructure facilities at KP and has incurred the cost for its development. Therefore, we hold that the assessee has set up the CFS facility and operating the same and accordingly eligible for claiming the deduction u/s. 80IA of the Act - Decided against revenue.
Disallowance of lease rent amortization - proportionate deduction was claimed by assessee u/s 37(1) of the Act after the commencement of its business - HELD THAT:- We find that the CBDT has issued a Circular 9/2014 dated 23.04.2014 wherein the impugned expenditure was allowed over the lease period after the commencement of business.
In the case where an assessee has claimed any deduction out of initial cost of development of infrastructure facility of roads/highways under BOT projects in earlier year, the total deduction so claimed for the Assessment Years prior to the Assessment Year under consideration maybe deducted from the initial cost of infrastructure facility of roads /highways and the cost ‘so reduced’ shall be amortized equally over the remaining period of toll concessionaire agreement. This Circular is applicable only to those infrastructure projects for development of road/highways on BOT basis where ownership is not vested with the assessee under the concessionaire agreement - Decided against revenue.
Disallowance u/s 14A read with Rule 8D - Non recording of satisfaction - assessee has earned dividend income which is exempted from tax though the assessee has made a disallowance - HELD THAT:- No defect of whatsoever was pointed out by the AO at the time of assessment proceedings. Rather the AO had resorted to the provision of Rule 8D of the Rule for the purpose of disallowance. However, the provision of law requires the AO before resorting to the disallowance has to record the satisfaction after referring the books of account of the assessee. But in the instant case, the AO has failed to do so. Therefore, we hold that the AO has passed his order against the provision of law.
We draw support from judgment of Hon'ble Delhi High Court [2015 (3) TMI 155 - DELHI HIGH COURT] wherein it was held that without recording satisfaction there could be no question of disallowance u/s 14A read with Rule 8D.
Besides the above, we find that there was sufficient fund available with the assessee. Therefore any inference can be drawn that the impugned investment was made out own fund of assessee - Decided in favour of assessee.
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2018 (1) TMI 1613 - ITAT AHMEDABAD
TP Adjustment - assessee claims that Internal TNMM should have been considered as the most appropriate method - Comparable selection - HELD THAT:- Rejection of internal TNMM analysis undertaken by the appellant during the course of transfer pricing assessment should not have been rejected. Appellant company has provided identical services to AE as well as non AEs and functions performed, assets used and risks assumed in AE as well as non AE business were similar. Therefore, even internal TNMM can be considered as most appropriate method. We find that the operating margin of the appellant from the AE segment was derived at 30.90% and the operating margins in the non AE segment was derived at ₹ 74.92%.
TPO rejected the internal TNMM analysis on the basis that as the appellant has made operating loss in non AE business, the transactions with non AEs are not at independent rates and they have been undertaken only to increase capacity utilization. The total turnover of Non AE segment of ₹ 5.67 lacs as against the turnover of ₹ 1909.60 lacs in the case of international transactions with AE.
CIT(A) confirmed the rejection by holding that the turnover of the third party segment is very much less compared to that with AE. CIT(A) further held that the appellant has not proved the allocation of the common cost between AE and non AEs and whether they are scientific and at arm’s length. We find that the TPO has nowhere disputed the common cost allocation made by the appellant. We also find that the ld. CIT(A) has also never raised any doubt on the allocation.
The Comparable CG-Vak Sofware &Exports Limited was rejected as the turnover of the company is less than 1 crore and hence does not qualify turnover filter. The turnover of the relevant segment of the company is 86.10 lacs but just because this company does not pass the turnover filter of 1 crore should not have been rejected as the business is exactly similar to that of the appellant company.
If the aforementioned two companies are accepted as comparable, as exhibited elsewhere, the average of the 5 comparables comes to 15.17% whereas that of the appellant company comes to 30.90%.
We further find that the appellant company has earned foreign exchange gain on revaluation of its outstanding revenue receivables which were not considered as part of operating profit by the TPO as well as CIT(A). We find that the foreign exchange gain earned by the appellant pertained towards revaluation of its debtors as on the balance sheet date which means that exchange fluctuation was towards revenue item. Further, Safe Harbour Rules are only applicable to those assessee who have opted for Safe Harbour Rules and the same is made effective from A.Y. 2013-14 onwards.
Foreign exchange fluctuation should be considered as operating in nature for the purposes of computing the operating profit of the appellant as well as comparable companies.Upward Adjustment is uncalled for and we direct the same to be deleted.
Accentia Technologies Ltd., Acropetal Technologies Ltd. Coral Hub Limited - First Appellate Authority has held that these companies are incomparable to the business of the appellant and therefore the ld. CIT(A) has ruled in favour of the appellant.
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2018 (1) TMI 1611 - SUPREME COURT
Reopening of assessment - reasons to believe - Income accrued in India - Permanent establishment - attribution of profits - HELD THAT:- In view of the fact that the Dispute Resolution Panel has found that there is no permanent establishment in India, the judgment of the High Court is set-aside and the appeals are allowed accordingly
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2018 (1) TMI 1610 - SUPREME COURT
Reopening of assessment - reasons to believe - Income accrued in India - Permanent establishment - attribution of profits - HELD THAT:- In view of the fact that the Dispute Resolution Panel has found that there is no permanent establishment in India, the judgment of the High Court is set-aside and the appeals are allowed accordingly
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2018 (1) TMI 1609 - ITAT CHENNAI
Maintainability of appeal - low tax effect - tax effect on account of the said alleged audit objection - Reopening of assessment on audit objection disallowing of total income as admitted before adjustment of loss as well as disallowance of depreciation claim on MS Rolls - HELD THAT:- Revenue has filed the present petition to recall the order of the Tribunal [2016 (7) TMI 1590 - ITAT CHENNAI] and adjudicate the issue on merits on the ground that there was audit objection and such audit objection was accepted by the Department, but, the Revenue has not filed any documentary evidence along with the petition or during the course of hearing of the petition.
On perusal of the approval granted by the Principal Commissioner of Income Tax-6, Chennai under Rule 15 of Appellate Tribunal Rules, 1963, it appears that the appeal was filed by the Revenue in the regular course and not on the basis of audit objection. Therefore, it is obvious that para 8 of Circular No.21 of 2015 issued by CBDT is not applicable.
We find that against dismissal of the Miscellaneous Petition filed by the Revenue in the case of DCIT v. Paragon Steels Pvt. Ltd. [2017 (3) TMI 1825 - ITAT CHENNAI] the Revenue preferred further appeal before the Hon’ble Madras High Court [2017 (12) TMI 1604 - MADRAS HIGH COURT]. While dismissing the appeal filed by the Revenue held Tribunal ultimately concluded that paragraph 8 of Circular No.21/2015 issued by the Central Board of Direct Taxes is not applicable and accordingly, the said miscellaneous petition filed by the Revenue was rejected. MP filed by the Revenue stands dismissed.
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2018 (1) TMI 1608 - ITAT JAIPUR
Rejection of books of accounts - estimation of net profit @ 8% - addition on the contract receipts - HELD THAT:- Considering the various aspects recorded by the authorities below, the Bench are of the view that the rejection of books of account is justified. However, with regard to claim of estimation of net profit of business other than the grit business, the Bench find that the ld. CIT(A) has relied on the findings of the ITAT in the case of A.Y. 2010-11. However, in the decision for the A.Y. 2011-12, the ITAT has found that the declared profit of the assessee was more than 8% of the gross receipts subject to deduction on account of depreciation and interest, therefore, the addition was deleted.
G.P. rate for the year under consideration was better than the earlier two immediate preceding years. Net profit @ 8% of gross receipts subject to further deduction on account of depreciation and interest are held to be reasonable. Such view has been held by the Hon’ble Rajasthan High Court in the case of CIT Vs Jain Construction Co & ors.[1999 (9) TMI 26 - RAJASTHAN HIGH COURT] . In assessee’s case, the net profit rate subject to deduction of depreciation and interest comes @8.09% of the gross receipts, which is more than 8%.
Wherever even books of account are rejected by the Assessing Officer then also no trading addition is required to be made as held in the case of CIT Vs Gotan Lime Khanij Udhyog [2001 (7) TMI 19 - RAJASTHAN HIGH COURT] .
CIT(A) was not justified in sustaining the part addition in both business of the assessee. Hence, appeal of the assessee stands allowed.
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2018 (1) TMI 1607 - ITAT CHENNAI
Short term capital gain - transfer of equity shares and such transactions as charged to Securities Transaction Tax - assessee had applied the rate of 10% based on Section 111A - HELD THAT:- None of the lower authorities had addressed the issue whether the transactions of shares claimed by the assessee satisfied the conditions set out in Sec. 111A of the Act. Though the ld. AO has stated in the assessment order that assessee could not prove the actual delivery of shares to it, how he came to such a conclusion is not clear. We are therefore of the opinion that the issue requires a fresh look by the ld. Assessing Officer. We set aside the orders of the authorities below on this issue and remit it back to the ld. Assessing Officer to consider the claim afresh, in the light of the conditions specified Sec.111A
Exemption u/s 10(38) - income earned by it from transactions relating to units in M/s. ICICI emerging sector fund - long term capital gains - HELD THAT:- Income of a Venture Capital Fund is exempt provided it satisfied the conditions set out in clause (b) of Explanation 1. By virtue of the deeming provisions (1) of Sec. 115U of the Act income accruing to a person out of investments made in a Venture Capital Fund also gets the exemption u/s.10(23FB) of the Act. Though the grounds of the Revenue say that compliance with Securities and Exchange Board of India (Venture Capital Funds) Regulations, 1996 has not been established, what we find is that form No.64 specified in Rule 12C which is to be furnished by the Venture Capital Fund was filed by the assessee. Said Form 64 by necessary implication means that at the Venture Capital Fund had complied with the conditions set out in Explanation (1) to Section 10(23FB). Assessing Officer did not find anything wrong in the said form No.64 which is the Form set out by the Rules under sub-section 2 of Section 115U of the Act. We cannot also say that the income which is exempt u/s.10(23FB) of the Act had to be considered on receipt basis and not on accrual basis since Section 115U of the act takes within its ambit accrued income also. Ld. Commissioner of Income Tax (Appeals) in our opinion was justified in allowing the claim of the assessee u/s.10(23FB) of the Act read alongwith Section 115U of the Act. Appeal of the assessee is partly allowed for statistical purposes
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2018 (1) TMI 1605 - ITAT DELHI
Disallowance u/s 14A - CIT(A) restricted the disallowance u/s 14A to the extent of 10% of the income - HELD THAT:- AO made the disallowance by invoking the provisions of Rule 8D of the Income Tax Rules, 1962, which is applicable for the assessment year 2008-09 and not for the year under consideration i.e. assessment year 2007-08. We, therefore, do not see any merit in this ground of the departmental appeal.
Addition invoking the provisions of Section 69C - CIT(A) has deleted the above addition - HELD THAT:- Reply of the parties from whom the enquiries were conducted by the AO and in fact they confirmed that the transaction of the sale of the properties is at the purchase price shown by the appellant. Provision of section 50C for that relevant year applied in the hands of the seller and not the buyer. In the present case the assessee is a buyer. Hence, he stated that income cannot be added in the hands of the assessee by invoking provision of section 50C - As examined that provision of section 56(1)(vii)(b) of the Act is not applicable as it applies w.e.f. 01.04.2014. DR also could not point out any infirmity in the order of the ld CIT(A). We are also of the considered view that there is no provision of difference between stamp duty value as well as the transacted value can be added in the hands of the buyer - Appeal of the department is dismissed.
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2018 (1) TMI 1604 - ITAT HYDERABAD
TP Adjustment - rate of interest on CCDs - whether it is to be calculated under PLR as claimed by the assessee or at LIBOR+ as computed by the TPO/DRP - HELD THAT:- As decided in Adama India Pvt. Ltd [2017 (1) TMI 893 - ITAT HYDERABAD] we agree with the assessee's contentions that the CCDs cannot be categorised as a loan and LIBOR plus two hundred basis points benchmark cannot be accepted on the facts of the case.
Coming to the issue of adopting the benchmark rate in Indian context, assessee has justified the ALP not only on the basis of SBI PLR, which was at 12.26% for the year under consideration, but also from the data from NSDL website in which average coupon rate ranged from 0.50% to 16.50% with an arithmetic mean of 12.50%. These rates were already before the TPO. Therefore, we are of the opinion that there is no need to restore the matter to the file of the AO for reexamination, when assessee has justified the issuance of CCDs at 12%. We are of the opinion that the rate at which the CCDs were given are within the range, therefore, no further addition can be considered under the TP provisions. In view of that, the addition so made is deleted and grounds of the assessee.
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2018 (1) TMI 1600 - ITAT MUMBAI
Deferred Payment Guarantee Commission - Accrual of income - HELD THAT:- As in assessee’s own case for AY 1984-85 to 19989-90 & 1996-97 [2016 (4) TMI 1392 - ITAT MUMBAI] this ground of appeal is allowed in favour of assessee.
Disallowance of Depreciation on Matured Investments - HELD THAT:- As in assessee’s own case for AY 1984-85 to 19989-90 & 1996-97, [2016 (4) TMI 1392 - ITAT MUMBAI]this ground of appeal is decided against the assessee.
Disallowance in respect of payments for Scientific Research - HELD THAT:- AR agreed that assessee had not challenged the order for the year 1996-97[2016 (4) TMI 1392 - ITAT MUMBAI] before the Tribunal. As the assessee had accepted the order of the FAA for the earlier year, we are of the opinion that there is no need to disturb the order of the CIT(A) for the current year as facts for both the years are identical- except that the amounts involved are different. Confirming the order of the FAA Ground is decided against assessee.
Disallowance of expenses for earning exempt income u/s. 10(15)(iv)(c) & (f), 10(15)(iv)(h), 10(23G) and 10(33) by applying the provisions of section 14A r.w.r. 8D - HELD THAT:- Various propositions which have been raised by the assessee in the context of the disallowance under section 14A of the Act which require specific determination by the AO. Therefore, following the earlier precedent, the matter relating to section 14A is remanded back to the file of AO, with the directions to allow the assessee an opportunity to make submissions, and the AO shall pass a speaking order giving determination on each of the propositions as per law. Thus, with these directions, the matter is restored back to the file of AO to adjudicate afresh as per law. Hence, this ground of appeal is allowed for statistical purpose.
Disallowance of depreciation on leased assets - HELD THAT:- In assessee’s own case for AY 1996-97 wherein similar ground of appeal was decided against the assessee.
Unearned interest on doubtful advances as per section 43D not allowed as a deduction - HELD THAT:- This ground of appeal is restored to the file of AO with similar direction as per order .[2016 (4) TMI 1392 - ITAT MUMBAI]
TDS u/s 195 - disallowance of expenses incurred in connection with issue of Resurgent India Bonds u/s. 40(a)(i) on account of non-deduction of tax at source - HELD THAT:- expenditure has been paid towards the services in connection with the issue of RIBs and are in the nature of advertisements, collecting bank commission etc. Broadly speaking the payments are in the nature of commission paid to non-residents for services of mobilizing deposits, etc. showing that the services have been rendered abroad. It is also not the case of the AO that any of the non-residents in question have any business operation in India. Therefore, in the said background, the ratio of the judgment of Hon’ble Supreme Court in case of CIT vs. Toshoku Ltd. [1980 (8) TMI 2 - SUPREME COURT] is clearly attracted which lays down that commission earned by non-resident for services rendered abroad could not be construed as incomes accrued or arisen in India. Thus, on this point itself, we are inclined to uphold the stand of the assessee and accordingly the disallowance made by lower authorities by invoking section 40(a)(i) of the Act is hereby set-aside. On this ground assessee succeeds. Hence, this ground of appeal is allowed.
Disallowance of contribution to SBI Retired Employees Medical Benefit Fund - Addition u/s 40A - HELD THAT:- provisions of section 40A(9) should not make any harm to the expenditure incurred bonafide, that the contribution by the assessee bank was not disputed by the AO, stating that the same was not bonafide, that the funds were not controlled by the assessee banks, that the bonafide contribution made by the assessee as an employer was not hit by section 9 of section 40A of the Act. In the case under consideration, there is no doubt about genuineness of payment nor it is the case of the AO or FAA that Trust was not bonafide or the expenditure was not incurred wholly and exclusively for the employees. Considering these facts of the case and following the judgment of State Bank of Travancore [1986 (1) TMI 1 - SUPREME COURT] - Ground decided in favour of the assessee.
Provision for bad and doubtful debts to be allowed u/s. 36(1)(viia) - HELD THAT:- There is no dispute regarding the claim allowed by the AO is proper as per the provisions of section 36(1)(viia). When the allowable claim has been accepted by the AO under the provision of section 36(1)(viia) then merely the provision made on the basis of RBI guidelines does not become allowable for deduction in contravention of the provision of section 36(1)(viia). It is pertinent to note that when the claim of deduction specifically provided u/s 36(1)(viia) then the same cannot be allowed by applying any other provision. Accordingly, we do not find any merit or substance in the claim of the assessee. Hence dismissed.
Disallowance of provision in respect of foreign offices - HELD THAT:- Considering the decision of Tribunal in assessee’s own case for AY 1998-99, wherein similar ground of appeal has been restored to the file of AO, hence, this ground of appeal is also restored to file of AO to decide it afresh in accordance with law.
Staff Welfare expenses on account of payments made to educational institution for reservation of seat to the children of employees - Allowable revenue expenditure - HELD THAT:- We find that both the revenue sources have treated this expenditure as opposed to the public policy, however, in our view the same cannot be a valid reason for disallowing the expenditure because this aspect does not come within the provision of IT Act 1961. We are further of the opinion that it is a matter of corporate policy where policies of this type are framed after due consultation with employees/officers Association, hence, it cannot be treated as arbitrary. Further, the officers of the bank to not get any bonus whereas the employees get bonus which can also be treated as arbitrary in the similar manner, if the contention of the revenue are accepted. As far as incurrence of this expenditure for business purpose is concerned, that is not doubted. In this background, we hold that the expenditure incurred by the assessee is allowable as revenue expenditure. Thus, this ground of the assessee stands accepted.
Exchange Gain on repatriation GDR issue proceeds - AO disallowed exchange Gain on repatriation GDR holding that gain of the amount arise from the money raised against the equity capital, had been realized in the normal course of business and was utilized as circulating capital in banking - HELD THAT:- The exchange gain has arisen on account of holding of GDR proceed and their subsequent repatriation to India. Accordingly, the exchange gain is capital in nature and not liable to tax. Moreover, the assessing officer has not disputed those facts that the money raised by way of GDR was raised against capital equity. Thus, we find that the ld CIT (A) allowed the ground of appeal after considering the fact that GDR proceeds are part of capital receipt. Hence, do not find any illegality or infirmity in the order passed by CIT (A). In the result this ground of appeal is dismissed.
Disallowance of interest on securities - HELD THAT:- Section 145 of the Act could not override the provisions of Section 5 and, therefore, no person could be assessed unless the income accrued to him and in the cases of Securities, interest accrued to the assessee on specified dates and not on day today basis as the assessee has no right to receive the income before fixed date, hence, interest was taxable on the due basis only. In this view of the matter, we accept this ground of the assessee.
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2018 (1) TMI 1599 - ITAT HYDERABAD
Rectification of mistake - Reopening of assessment - addition made u/s 69 and u/s 69A of the Act towards unexplained investment in jewellery and cash deposits - as per CIT-A even if the above addition is deleted, it is still liable to be taxed u/s 2(22)(e) - assessee has raised the alternative grounds in both the appeals that it cannot be treated as a deemed divided u/s 2(22)(e) - Revenue filed the M.A. contending that the alternative ground raised by the assessee on similar lines as in A.Y 2010-11 has not been adjudicated by the Tribunal resulting in an apparent mistake which needs rectification - HELD THAT:- We find that the appeals before the Tribunal were filed by the assessee and the alternative grounds raised by the assessee are not adjudicated by the Tribunal. However, we find that non-adjudication of the said grounds by the Tribunal do not cause any prejudice to the interests of the Revenue and therefore, we see no mistake in the order of the Tribunal which needs rectification at the instance of the Revenue.
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