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Income Tax - Case Laws
Showing 1 to 20 of 905 Records
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2019 (2) TMI 2103
Validity of additions based on valuation report - Referring the matter to DVO u/s 142A without first rejecting the books of account - addition u/s 69 being unexplained investment in the factory building - HELD THAT:- AO in the instant case has not rejected the books of account before making a reference to the DVO.
We find in the case of Lucknow Public Educational Society (2011 (3) TMI 1326 - ALLAHABAD HIGH COURT] has held that u/s 142A(1) the assessing authority cannot refer the matter to the DVO without first rejecting the books of account.
We find also in the case of CIT vs Subhash Chandra Gupta [2013 (12) TMI 784 - ALLAHABAD HIGH COURT] has held that the Assessing Officer cannot refer the matter to the DVO without first rejecting the books of account.
Thus unless and until the books of account are first rejected by the Assessing Officer, the Assessing Officer is not justified in making reference to the DVO u/s 142A and if reference is held to be had in law, the DVO’s report is to be ignored and cannot be the basis to make the addition. Thus AO is not justified in referring the matter to the DVO u/s 142A(1) without first rejecting the books of account.
So far as the observation of the ld.CIT(A) that the assessee has not produced the books of account completely as per requirement of the Assessing Officer is concerned, the same is contrary to the facts. The finding of the CIT(A) shows that the assessee has maintained regular books of account. The reply of the assessee before the Assessing Officer as well as the observation given by the Assessing Officer in the body of the assessment shows that the assessee has produced the books of account. Decided in favour of assessee.
Addition u/s 68 - share application money received by the assessee from the three persons - Addition made as assessee failed to produce the above parties for his examination and the letters issued to the above three parties were not complied with since one letter was returned unserved and the other two parties did not respond - Assessee argued that proper opportunity was not granted to the assessee - HELD THAT:- Considering the totality of the facts of the case and in the interest of justice, we deem it proper to restore the issue to the file of the Assessing Officer with a direction to give one final opportunity to the assessee to substantiate with evidence to his satisfaction regarding the identity and credit worthiness of the share applicants and the genuineness of the transaction. The Assessing Officer shall decide the issue as per fact and law. Assessee's ground allowed for statistical purposes.
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2019 (2) TMI 2101
TP adjustment on account of outstanding receivables - DRP directed to give working capital adjustment and re-compute the interest chargeable on outstanding net receivables by applying LIBOR + 400 bps - HELD THAT:- We note that the Tribunal [2017 (10) TMI 111 - ITAT DELHI] for assessment year 2012-13 in case of the assessee, following the decision of Kusum Health Care Pvt. Ltd. [2017 (4) TMI 1254 - DELHI HIGH COURT] held that "no separate adjustment on account of interest receivable is required when working capital adjustment has already been made to the margins of the comparables while comparing the margin of the assessee under the TNMM.
We set aside the finding of the DRP complied by the Assessing Officer in the impugned order and delete the adjustment on account of the interest receivables. In the result, the grounds of the appeal of the assessee are allowed.
Disallowance towards "stock written off" - AO disallowed the claim in respect of obsolete inventory on the ground that the assessee did not furnish any report from any Engineer, production head or certificate from the third party that said inventory has become obsolete - DRP found that no such report from the Engineer or production head or third-party certificate was produced before the learner DRP, thus the Assessing Officer was directed to verify the submission of the assessee and bring out the facts properly and passed a speaking order on the issue - HELD THAT:- As the assessee failed to produce any certificate from the expert third-party, respectfully following the finding of the Tribunal [2018 (2) TMI 1525 - ITAT DELHI], we reject the contention of the assessee and dismiss the grounds of appeal raised by assessee in this regard.
Disallowance as excess depreciation claimed on fixed assets acquired by the assessee from NCR Corporation India Private Limited. - HELD THAT:- The issue in dispute being identical to the issue decided by the Tribunal (supra), respectfully following the same, the issue of excess depreciation claimed is restored to the file of the Ld. Assessing Officer for verification and decide in view of the direction of the Tribunal [2018 (2) TMI 1525 - ITAT DELHI]. The ground of the appeal is accordingly allowed for statistical purposes.
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2019 (2) TMI 2095
Addition on account of depreciation - assessee has claimed depreciation @ 30% on machinery claimed as commercial vehicle - AO noticed assessee is not doing business of motor buses, motor lorries, motor taxies used in a business of running them on hire, thus assessee is entitled to depreciation @ 15% which is applicable to plant & machinery - assessee submitted that the ld.CIT(A) has passed an ex parte order for which the appeal is pending before the Tribunal against such ex parte order and various decisions relied on by the assessee at the time of hearing before the Assessing Officer were not considered like decision of M/s Sayeed Iqbal [2014 (1) TMI 744 - ITAT JODHPUR] wherein it has been held that depreciation on tippers, road rollers and JCB will be allowable @ 40% as against 25% allowed by the AO treating these machinery as plant and machinery and not under the category of motor vehicles - HELD THAT:- We deem it proper to restore the issue to the file of the Assessing Officer with a direction to decide the issue afresh in the light of various decisions cited above. Needless to say, the Assessing Officer shall give due opportunity of being heard to the assessee and decide the issue as per fact and law. We hold and direct accordingly. The first issue raised by the assessee in the grounds of appeal is accordingly allowed for statistical purposes.
Addition u/s 68 - partner introduced the money in the firm - assessee has not furnished any cash flow statement to establish the withdrawal and the deposit of cash during the course of appeal proceedings - Addition n the hands of the partnership firm stating that there is no exigency for introduction of such loan in the shape of cash - HELD THAT:- Although the assessee has not explained such business exigency, however, it is a fact that there are withdrawals from the bank account of the partner apart from his declaration of income u/s 44AD of the IT Act. The Revenue has not proved that the Partner after withdrawal of the money from the bank has utilized the money otherwise than for investing in the partnership firm. There is nothing on record to show that the partner has utilized the money for acquisition of any capital asset or spent the money towards some marriage in the family or on other such occasions where huge cash is required to be invested or expended.
It has been held in various decisions that when a partner introduces the money in the firm either in the shape of capital or loan to the partnership firm, addition, if any, can be made only in the hands of the partner and not in the hands of the partnership firm as long as the partner confirms to have invested towards capital or as loan to the firm. Since the partner in the instant case has admitted to have invested in the firm in the shape of unsecured loan and the withdrawals from the bank account has not been disputed by the Revenue, therefore, we are of the considered opinion that addition, if any, could have been made in the hands of the partner, namely, Shri P.K. Wadhwa but, certainly not in the hands of the partnership firm. As long as the partner has sufficient means to explain the source of such loan, the Revenue cannot treat the same as unexplained cash credit u/s 68 in the hands of the partnership firm merely stating that there is no exigency for introduction of such loan in the shape of cash - Decided in favour of assessee.
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2019 (2) TMI 2093
Accrual of income - interest on FDRs held for and on behalf of Central and State Government - assessee company is a State Government Company and whose entire share capital is being held through Governor of Rajasthan and is working as Nodal Agency for implementation of various Central/State Government Schemes for which funds are provided by Central/State Government - HELD THAT:- Assessee has received interest on the FDRs which were made to park various amounts with the bank. There is no dispute that the amount which was put into the fixed deposit was received by the assessee from the Government for the purpose of disbursement of the same in the various schemes/projects sponsored by the Government.
Interest earned by the assessee on the fixed deposit of the amount which is received from the Government for disbursement to the various schemes/projects for which the assessee is a Nodal Agency to implement such projects/schemes such interest will not be the income of the assessee. Accordingly, following the decisions of Karnataka Urban Infrastructure Development & Finance Corporation [2009 (1) TMI 243 - KARNATAKA HIGH COURT] as well as Rajasthan Avas Vikas & Infrastructure Ltd [2016 (4) TMI 1099 - ITAT JAIPUR] we hold that the interest received by the assessee is not assessable to tax but it was received on behalf of the Government and will be forming part of the funds to be disbursed for implementation of various schemes and projects for public welfare. Hence, the addition made by the assessee is deleted. This issue is common for both the years, therefore, it stands adjudicated for assessment years 2013-14 & 2014-15.
Status of the assessee is a Government company - As we have already discussed the facts and memorandum of association wherein the objects of the assessee has been set out. From the objects and purpose of creating the assessee it is clear that the state Government is helping more than 98% shares of the assessee, therefore, this issue though is only academic in nature, however, once the Government is holding more than 98% shares then the assessee company is a Government company.
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2019 (2) TMI 2092
Expedite the hearing on stay application - petitioner has prayed at the moment that his appeal which is pending before the Commissioner of Income Tax, Gomit Nagar may be expedited - HELD THAT:- Facts of the case are that according to C.B.D.T. Circular dated 31.07.2017 the amount of 20% of the demand has to be deposited. Then stay application can be heard on merits. Admittedly the petitioner has not deposited the amount of Rs.20% under the C.B.D.T. Circular.
In view of the admitted position that 20% of the amount deposited has neither been deposited nor any request to grant time to deposit the same is being made. We cannot expedite the hearing on stay application.
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2019 (2) TMI 2090
Deduction u/s. 80P(2)(d) - interest earned out of surplus funds from investment made in any bank - HELD THAT:- Assessee society is engaged in the business of accepting deposits from members and granting them credit facilities which is in the nature of banking business and deposits in question were made in the course of the said business of the assessee society.
Therefore, we find that the present case of the assessee is squarely covered by the decision of NIPHAD NAGARI SAHAKARI PATSANSTHA LTD. [2015 (1) TMI 1004 - ITAT PUNE] - Therefore, we observe that whenever, the credit society is carrying on business of accepting deposits from members and providing them credit facilities, it is allowable for deduction u/s. 80P(2)(ai) - Hence, we do not find any infirmity in the order of the Ld. CIT(Appeals) and relief provided to the assessee is thereby sustained.
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2019 (2) TMI 2089
Addition u/s. 14A r.w. Rule 8D - as contended that assessee company was having sufficient interest free fund for making investment and CIT(A) has erred in sustaining the impugned addition - HELD THAT:- As demonstrated from the material on record that the assessee was having sufficient interest free fund in the form of share capital and free reserves as against the investment made from which exempt income was earned.
After considering the decision of Reliance Utilities Power Ltd, [2009 (1) TMI 4 - BOMBAY HIGH COURT] we consider that there was no merit in disallowing the interest expenses . However, we sustain the addition in respect of administrative expenditure as computed by the assessing officer under para 6 of the assessment order as investment cannot be made without incurring administrative and other expenses. Accordingly, this appeal of the assessee is partly allowed.
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2019 (2) TMI 2086
Addition of fair rental income - Income from house property - rate of rent to be charged from the related parties - assessee is the owner of a building consisting of some floors for which declared the gross rent only under the head house property - Revenue alleges that the actual rent received/receivable is less than the reasonable expected rent - HELD THAT:- As rent should be decided on the basis of the sum which can be reasonably expected from the letting out the property during the year or the actual rent received/receivable, whichever is higher.
CIT (A) has determined the fair rent of the property at Rs. 248/- per Square feet on the basis of the rent received by the assessee from the bank of Baroda in the assessment year 2011-12 as increased by 5% p.a. As no dispute that the bank vacated the property on 30th June 2010. Assessee claimed that the fair rent for the property under consideration is of the same amount received by it from its associated enterprises.
Thus once the assessee has disputed the fair rent, then the lower authorities are under the obligation to reject the contention of the assessee with cogent reasons. As such the authorities below were under the obligation to determine the fair rent of the property in the manner as discussed. But the authorities below have not determined the fair rent without considering the procedures prescribed under the law.
The rent charged by the assessee from the bank of Baroda cannot be the basis for determining the fair rent of the properties as property was rented out by the assessee to the bank of Baroda in the year 1998, and in every rental agreement, there is an escalation clause for enhancing the amount of rent. Rent charged by the assessee from the bank was based on the agreement which was made in the year 1998. Rent charged by the assessee from the bank in the year, 2010 was not based on the fair market rent.
There is a time gap of 1 year & 9 months when the assessee received the last rent from the bank of Baroda and the year of consideration. As such there can be certain factors which can affect the fair market rate in any manner which have not been considered while determining the fair market rent.
The issue on hand needs to be examined in the manner as discussed above - restore this issue to the file of AO as stipulated above. Thus, the ground of appeal of the assessee is allowed for statistical purposes.
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2019 (2) TMI 2085
TP Adjustment - comparable selection - Assessee as Providing ITES services - HELD THAT:- Accentia Technologies Ltd., and Acropetal Technologies Ltd., should be excluded from the list of comparable companies as functionally dissimilar.
ICRA Online Ltd. is concerned, the RPT in the case ICRA Online Ltd., needs to be verified by the TPO and if the RPT is more than 15% of the total revenue of this company then the same should be excluded.
Jeevan Scientific Technology is concerned, the TPO is directed to examine the comparability of this company as was directed by the Tribunal in the case of Swiss Re Shared Services India Pvt. Ltd [2016 (7) TMI 1359 - ITAT BANGALORE].
TPO is directed to compute the ALP as per the directions given above after affording opportunity of being heard to the assessee.
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2019 (2) TMI 2083
Deduction u/s 80IA - deductions to the assessee who is an undertaking which develops and operates or maintains and operates an Industrial Park - HELD THAT:- In the present case, the assessee had already developed the Industrial Park and as many as 21 units were already operational as admitted by the revenue. These units were sold during the assessment year in question. The profit arising out of such sale was accounted for in the said year and offered to tax.
As therefore, that the assessee was entitled to deduction in respect of such profit. The assessee was following Percentage Completion Method and not Project Completion Method and was therefore obliged to account for the revenue generated from the sale of the units during the year in question itself. Any other view would amount to the assessee offering the income arising out of the sale of the units to tax during the current year on which no deduction u/s 80IA of the Act would be available under the Act.
ITAT has not erred allowing claim of deduction u/s 80IA(4) in favour of the assessee for the impugned assessment year. Decided in favour of assessee.
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2019 (2) TMI 2080
Income deemed to accrue or arise in India - royalty receipts - consideration for providing domain registration services - HELD THAT:- The following question of law arises in this appeals:
“Whether, in the facts of the case and in law, the Tribunal erred in holding that the income received by the Appellant as a consideration for providing domain registration services amounted to 'royalty' under section 9(1)(vi) of the Income Tax Act, 1961”?
List on 29.07.2019.
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2019 (2) TMI 2078
Disallowance of deduction u/s 14A - disallowance for interest on funds used for making the investment for earning the tax free income - HELD THAT:- As expounded that if the assessee has sufficient interest free funds to make the investment in tax free instrument, disallowance u/s. 14A cannot be done. Respectfully following the Hon'ble Jurisdictional High Court decision in the case of Reliance Utilities and Power Ltd. [2009 (1) TMI 4 - BOMBAY HIGH COURT] and CIT vs. HDFC Bank Ltd [2014 (8) TMI 119 - BOMBAY HIGH COURT] we remit the issue to the file of the A.O. to decide as per the Hon'ble Jurisdictional High Court’s decision as referred above.
Deduction u/s. 35D - AO has disallowed the claim on the ground that the assessee has sold its Steel Division - HELD THAT:- We find that the ITAT on this issue vide order [2015 (12) TMI 1237 - ITAT MUMBAI] held that as perusal of section 35D shows that the Act is silent in the case when a unit is sold. There is no clause in the section which debars the assessee from claiming the expenses as a write off on sale of the undertaking. We, therefore, do not find any reason for declining the claim of the assessee - claim can be denied in the case of amalgamation and demerger but since the Act is silent in the case of sale of undertaking, in our understanding of the law, the Revenue authorities have erred in denying the claim. Decided in favour of assessee.
Addition on account of annual value of the property - As per revenue determining the annual value @ 12% of the cost of land and building shall mean that the same annual value shall remain for eternity as the cost of the land and building will never change - HELD THAT:- As assessee’s contented that the direction should be given in accordance with the earlier year ITAT order that the annual value of the property should be 12% of the cost and the land and building, we note that it is the plea of the Revenue that making an annual value as a percentage of the cost of the land and building forever will lead to annual value fixed for eternity which can never be permitted. We find that the ITAT earlier had confirmed the same direction. The matter is already before the Hon'ble Jurisdictional High Court. We do not find any cogent reason to depart from the earlier order of the Tribunal in the assessee’s own case.
Loss on compulsory conversion of u/s 64 - assessee submitted that the ITAT in the case of Schrader Duncan Ltd. [2012 (4) TMI 394 - ITAT MUMBAI] has dismissed the assessee’s appeal on similar issue and the Hon'ble Bombay High Court has admitted the said appeal - HELD THAT:- As we find that on the same issue, the ITAT has decided the case against the assessee and it is not the case that the Hon'ble Jurisdictional High Court has reversed the said decision. Respectfully following the same, we uphold the order of the ld. CIT(A).
Deduction u/s. 80HHC - assessee has claimed deduction on DEPB - HELD THAT:- Assessee stated that this issue is covered in favour of the assessee by ITAT order for A.Y. 2003-04 and Topman Exports vs. CIT [2012 (2) TMI 100 - SUPREME COURT] - Decided in favour of assessee.
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2019 (2) TMI 2076
Penalty u/s 271(1)(c) - Defective notice u/s 274 - whether the asseessee is guilty of having “furnished inaccurate particulars of income” or of having “concealed particulars of such income”? - HELD THAT:- Decision of the Coordinate Bench of this Tribunal rendered in the case of Suvaprasanna Bhattacharya [2015 (12) TMI 43 - ITAT KOLKATA] by relying on the decision in the case of CIT & Another –vs.- Manjunatha Cotton & Ginning Factory [2013 (7) TMI 620 - KARNATAKA HIGH COURT] is squarely applicable in the present case and respectfully following the same, we hold that the show-cause notices issued by the AO under section 274 for both the years under consideration not being in accordance with law, the penalty orders passed by the AO in pursuance thereof are liable to be cancelled being invalid. We accordingly uphold the impugned orders of the ld. CIT(Appeals) canceling the penalties imposed by the AO under section 271(1)(c) for both the years under consideration and dismiss both the appeals of the Revenue.
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2019 (2) TMI 2074
Late filing levy u/s 234E - intimations u/s 200A - As per assessee prior to 01/06/2015 such inclusion of late fee u/s 234E in the intimation u/s 200A is not permissible under the law - HELD THAT:- We find that similar issue came up for consideration in the case of M/s Terra Infra Development Ltd. [2018 (10) TMI 285 - ITAT HYDERABAD] as held levy of fees u/s 234E while processing returns, TDS u/s 200A prior to 01.06.2015 was without any authority of law.
Thus we hold that the late fee is not leviable in the period prior to 1.6.2015 and therefore, the issue is covered in favour of the assessee.
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2019 (2) TMI 2073
Revision u/s 263 - assessee's status converted from a private Limited Company to LLP - notice to [dissolved company] - whether there is violation of the principles of natural justice qua the LLP which is the Successor-in-Interest of the M/s. Brolly Dealcom Pvt. Ltd. before the Ld. Pr. CIT passed the order u/s. 263 of the Act - whether service was made in the manner as provided under the Code of Civil Procedure, 1908 - whether the LLP was served with a notice of sec. 263 proceedings or made aware of the said proceedings or is it feigning ignorance of the said proceedings before the Pr. CIT. This is what we have to find out as directed by the Hon'ble High Court - HELD THAT:- The scribbling on the Photostat with the incomplete address, wherein the Room No. 24, 3rd floor was not mentioned in the address of Princep Street and the fact that there was no tear off acknowledgment slip for the delivery if any of the notice at Princep address cumulatively goes on to show that no notice was delivered to the proper address at prince street; And we note that the first tear off acknowledgement is blank except seal and dated 20.03.2013 with no name or signature or address and second tear off is only at the most evidences collection of the impugned order after passing of the said order and not before that; and likewise Power of Attorney to Chartered Accountants were after the passing of the impugned order and thus and both the tear off acknowledgement slips and Power of Attorney to Chartered Accountants shown to us from the file of Pr. CIT in no way advance the case of the revenue to show that notice of the proceedings u/s. 263 of the Act is conveyed to the successor-in- interest the LLP at the proper address of the dissolved company/LLP at prince street.
Thus no notice of the sec. 263 proceeding has been brought to the knowledge of the assessee [dissolved company] at its last proper address of the dissolved company at prince street thereby it could have been said that successor-in-interest LLP had knowledge about the proceedings going on before the ld Pr CIT u/s 263 of the Act or before the impugned order was passed by the Ld. Pr. CIT u/s. 263.
Despite department knowing the last proper address of dissolved company at Princep street no notice was issued to its proper address or successor-in-interest LLP and, therefore, no opportunity of hearing was given to the assessee before passing the order u/s. 263 - So since there was denial of reasonable opportunity of hearing to assessee there is a violation of natural justice and, therefore, the impugned order of the Ld. CIT u/s. 263 of the Act is held to be fragile for violation of natural justice as held in CIT vs Amitabh Bachan [2016 (5) TMI 493 - SUPREME COURT] - Appeal of assessee is allowed.
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2019 (2) TMI 2072
Addition u/s 68 - share capital received at a premium unexplained - addition was made by the AO as there was no compliance from the assessee - identity, genuineness and the creditworthiness of the share applicant companies have not been established and the reasons for investment in this company that has no track record and that too with huge premium is not clarified - CIT-A deleted the addition assessee has responded to the notice of the Assessing Officer and filed documents giving full details of each of the 16 share applicant companies who had subscribed to the share capital as well as share premium money raised by the assessee -
HELD THAT:- A perusal of the statement of profit and loss account and balance sheet of the assessee company demonstrates that the revenues from operation was Rs.33,40,000/- for the impugned Assessment Year and other income was Rs.8,92,279/-. The assessee incurred substantial expenditure towards employee’s benefits, depreciation etc. It has fixed assets worth Rs.62,36,839/-. It is in the business of transport. Hence the test to be applied for such companies, in our considered opinion is not the same as that which is to be applied in case of a jamakharchi company or a company on paper which has net worth and no transactions or real asset base.
The creditworthiness of these share applicant companies is not in doubt. As far as the identity of these share applicant companies are concerned, the assessee has furnished the following details before the Assessing Officer in case of each of these companies as Share applications, ITR Acknowledgements, Audited Financial Statements, Relevant bank details and Allotment advices
It is well settled that merely because the directors of the share applicant companies did not appear before the Assessing Officer, the addition could not be made - We find that the revenue has not brought out any evidence to controvert the findings of the ld. CIT(A). We find no infirmity in the order of the ld. CIT(A) and uphold the same. - Decided against revenue.
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2019 (2) TMI 2071
Deduction u/s 10A - determination of gross total income or computing the net total income i.e. chapter IV or VI - introduction of the word ‘deduction’ - amendment made by Finance Act, 2003 with retrospective effect from 1.4.2001 - HELD THAT:- The Special Leave Petition is disposed of in terms of the judgment in Commissioner of Income Tax & Anr. vs. Yokogawa India Ltd., [2016 (12) TMI 881 - SUPREME COURT]
Pending applications, if any, shall also stand disposed of.
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2019 (2) TMI 2070
Penalty levied u/s 272(A)(1)(C) - no compliance by the assessee to file the said details in response to summons u/s 131 issued by the AO - assessee failed to file the specific details like ‘Consent Waiver Form’ before the AO as well as the Ld. CIT(A) - HELD THAT:- It is found that similar issue arose in the case of JAY KETAN PARIKH, RAJ HITEN PARIKH, SAUNAK JITENDRA PARIKH [2018 (10) TMI 1989 - ITAT MUMBAI] as held a bare reading of the summons show that a proforma of Consent Waiver Form was enclosed requiring the assessee to sign it, notarise it and thereafter submit it back. Therefore, it cannot be said that there was any default on the part of the assessee to submit a document which was already in his possession, as is the wont of the provision contained in clause (c) of Sec. 131(1) of the Act. What the Assessing Officer seeks to do in the present case is to compel the assessee to execute a document, as rightly put by the learned representative for the assessee before us, and not a case where a document already in possession of the assessee is being asked to be produced. Therefore, without going into any other aspect of the controversy, we find that the instant default is not of the type understood by a conjoint reading of clause (c) of Sec. 131(1) of the Act with clause (c) of Sec. 272A(1) of the Act. Therefore, on this count itself, we find no merit in the levy of penalty u/s 272A(1)(c) of the Act, which is hereby ordered to be deleted. - Decided in favour of assessee.
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2019 (2) TMI 2069
Denying exemption u/s 10(10AA)(i) - leave encashment received at the time of retirement - 263 days of leave as on the date of absorption - assessee had been in service under the Department of Telecommunication, Govt. of India and his stamps of appointment and pay-scale were governed by the Central Govt. Rules and assessee was absorbed in MTNL, a Govt. of India Undertaking, w.e.f 01.10.2000 vide order dated 19.01.2004 - HELD THAT:- As per the provisions of section 10(10AA)(i) of the Act, the assessee is entitled for exemption on the amount of leave encashment of leave earned during the period before absorption in MTNL as per section 10(10AA)(i) of the Act as applicable to Central Govt. because before that date he was employee of Govt. of India that the Central Government. The amount of leave encashment in respect of leave accrued after absorption in MTNL will be governed by the exemption as per section 10(10AA)(ii) of the Act.
Facts are clearly in favour of assessee and for 263 days of leave as on the date of absorption was available to the assessee, which was earned and unutilized from Government service i.e. Central Government and will be governed by 10(10AA)(i) - The balance 37 days of leave earned is from MTNL and will be governed as per the provisions of section 10(10AA)(ii) of the Act. Accordingly,allow the appeal of the assessee and direct the AO to recompute the exemption proportionately as directed above - Appeal of assessee is allowed.
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2019 (2) TMI 2068
Accrual of income - interest earned on fixed deposit - Real income theory - The said income was not the business receipt of the assessee company but was income from Other sources - AO rejected the contention of the assessee to hold that the interest accrued to the appellant was its income - HELD THAT:- CIT(A) deleted the addition stating that Income-tax is a tax on the real income, i.e., the profits arrived at on commercial principles subject to the provisions of the Income-tax Act. The real profit can be ascertained only by making the permissible deductions. There is a clear-cut distinction between deductions made for ascertaining the profits and distributions made out of profits. In a given case whether the outgoings fall in one or the other of the heads is a question of fact to be found on the relevant circumstances, having regard to business principles. Another distinction that shall be borne in mind is that between the real and the statutory profits, i.e., between the commercial profits and statutory profits. The latter are statutorily fixed for a specified purpose.
Facts of the case clearly show that the appellant never became the 'owner' of the money. It had to return the excess funds to the government. The addition made by the Ld. Assessing Officer cannot be sustained in appeal. Ground of appeal is allowed in favour of assessee.
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