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Income Tax - Case Laws
Showing 221 to 240 of 10077 Records
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2019 (12) TMI 1175
Reopening of assessment - jurisdiction and authority of the Assessing Officer who passed reassessment order under section 143(3) read with section 147 - whether the learned Joint Commissioner of Income-tax who passed the reassessment order dated March 20, 2015 is vested with jurisdiction and authority to pass such order in absence of proper order under section 120(4)(b)? - HELD THAT:- Revenue has failed to file any order passed by the Principal Chief Commissioner of Income-tax/Chief Commissioner of Income-tax/Principal Commissioner of Income-tax, under section 120(4)(b), authorising the Joint Commissioner of Income-tax to act as an Assessing Officer in the case of the assessee. We further noted that although the Revenue filed copy of the Board's general notification authorising Joint Commissioner of Income-tax/ Additional Commissioner of Income-tax to act as an Assessing Officer, but failed to file the order of the Principal Commissioner of Income-tax under section 120(4)(b) of the Act, empowering the Joint Commissioner of Income-tax to act as an Assessing Officer. We further noted that although, the Revenue has filed order of the Principal Commissioner of Income-tax-17, Mumbai passed under section 120(1) and (2) of the Act, but said order is not under section 120(4)(b) of the Act. Therefore, we are of the considered view that the reassessment order passed by the Joint Commissioner of Income-tax-Range17, Mumbai is void ab initio and liable to be quashed, because, the Assessing Officer who had passed reassessment order does not had valid jurisdiction and authority to pass such order, in absence of proper order in writing under section 120(4)(b) of the Income-tax Act, 1961.
Reassessment order passed by the Joint Commissioner of Income-tax, Range-17, Mumbai is void ab initio and liable to be quashed, because the Assessing Officer who had passed the assessment order does not possesses valid authority and jurisdiction to pass such order in absence of separate order under section 120(4)(b) of the Act. Case followed M/S. TATA COMMUNICATIONS LTD., (FORMERLY VIDESH SANCHAR NIGAM LTD.,) VERSUS ADDITIONAL COMMISSIONER OF INCOME TAX RANGE-1 (3) , MUMBAI AND VICE-VERSA [2019 (8) TMI 1446 - ITAT MUMBAI] - Decided in favour of assessee.
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2019 (12) TMI 1158
Unsecured loan received by the assessee - Addition u/s 68 - HELD THAT:- As pursuant to notice issued by AO u/s 142(1) assessee explained that it had received sum of ₹ 16,20,000/- from M/s Dhoot Infrastructure Projects Limited, towards sale of shares to them. Copies of purchase and sale invoices were also furnished by the assessee.
Copy of the invoice dated 15-03-2013 of ₹ 16,20,000/- against trade payable in the name of Dhoot Infrastructure Projects Ltd. against sale of equity shares along with copy of the ledger accounts for the period 01-04-2012 to 31-03-2013. We note that the nature of such Trade Payable was also explained to the AO. The assessee furnished the complete details including name, address, PAN, Bank statement highlighting the transaction before the AO.
We also note that the Ld. CIT(A) has called for the remand report twice, however, the AO did not raise any adverse view about the veracity of the documents filed by assessee, therefore, the addition of sum received by the assessee as 'advance’ as unexplained cash credit under section 68 of the Act was not warranted and therefore the Ld CIT(A) rightly deleted the addition. So, we are inclined to confirm the order of the Ld. CIT(A) and dismiss the ground of appeal raised by the revenue.
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2019 (12) TMI 1157
Addition on account of unsecured loan and interest paid thereon - AO concluded that loans obtained by the assessee were not genuine and made an addition u/s 68 - Search and seizure action u/s.132 - HELD THAT:- CIT(A) has incorporated various documents filed by assessee in respect of each party from whom loan is taken. CIT(A) has also incorporated from the balance sheet of these loan parties that they have the creditworthiness as their share capital and reserves are much more out of which loans are given to assessee company.
It is also clear from the record that all the loans taken during the year were repaid in next financial year. Therefore no addition can be made.- See M/S. SKYLARK BUILD. [2018 (10) TMI 1513 - BOMBAY HIGH COURT] - Decided in favour of assessee.
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2019 (12) TMI 1156
Disallowance of liquidated damages claimed by assessee - AR submitted that assessee entered into joint development agreement with M/s.Century Golflinks who were landowners - DR submitted that liability to make the said sum was not on assessee as per the agreement, and therefore, the said sum cannot be said to be an expenditure incurred for purposes of assessee’s business - HELD THAT:- On perusal of agreement, it is observed that 45% of owners share were to be distributed between owner No.1 being S.Shivashankarappa and owner No. 2 being M/s Century Golflinks. In written submission placed at page 1-5 of paper book, assessee at page 2 of written submission gave details of expenditure incurred for power and water charges which in total amounted to ₹ 10,96,33,163/-. It has been submitted that proportionate cost from Mr. Shivashankarappa has been received whereas, M/s Century Golflinks refused to pay their share amounting to ₹ 1,08,11,537/-, which was claimed by assessee as liquidated damages in its P&L account.
“Liquidated damages” are compensation paid for breach of contract. We are therefore, unable to understand how the sum paid by assessee on behalf of M/s Century Golflinks being its proportionate share towards incurring of expenses would amount to liquidated damages. Assessee has also not brought on record to show that amount payable by M/s Century Golflinks is by way of compensation. Further, all decisions relied upon by Ld.AR in paper book filed before us emphasises circumstances and tests that has been laid down by various courts to consider any amount received, to be in the nature of compensation, and therefore an allowable deduction. On one breath assessee is arguing commercial expediency to spend such amount on behalf of M/s Century Golflinks, on the other hand, assessee is claiming it as liquidated damages. Assessee relied upon certain decisions wherein reasonableness of certain payments made has to be established by assessee. Also that assessee admitted for the said disallowance before Ld.AO during assessment proceedings, as per the order sheet entry dated 28/12/11 produced by Ld.Sr.DR before us. Ld.AR could not rebut aforestated noting, which is part of assessment records - Decided against assessee.
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2019 (12) TMI 1155
TP Adjustment - comparable selection - exclusion of comparables, EInfochip Ltd. and Thirdware Solutions Ltd. - HELD THAT:- Referring to international transactions of software development services the above two companies should be excluded from the list of comparables for the purpose of computing ALP
The assessee claims that, the TP ad ustment made in this regard would have to be deleted, if these two companies are excluded from the list of comparable companies. The TPO may verify this claim of the assessee and allow the claim if found correct. In the result, this ground of the assessee is allowed for statistical purposes.
Adjustment made on account of outstanding receivable in excess of 60 days, considering the outstanding receivable as a deemed loan to AE - HELD THAT:- As relying on KUSUM HEALTH CARE PVT. LTD. [2017 (4) TMI 1254 - DELHI HIGH COURT] we uphold the contention of the assessee that the working capital ad ustment in this case, subsumes the ad ustment that is required to be made on account of interest on outstanding receivables. Hence, this ad ustment made by the TPO is hereby deleted and this Ground of the assessee is allowed.
International transaction of guarantee fees paid to Associate Enterprises (AEs) - HELD THAT:- We find that the assessee has offered 1.5.% as corporate guarantee to its AEs, which is based on an internal CUP, which is the guarantee rate charged by the IDBI to the assessee company. Even under the Safe Harbor Rules, if the guarantee is provided to a subsidiary and the commission or fee declared is at the rate not less than one per cent per annum on the amount of guarantee.
In this case, 1.5% rate of commission is charged by the assessee. In our view, this should be considered as at arm’s length. The TPO has determined the ALP at three per cent, on an adhoc basis. After considering the facts and circumstances of the case, we direct the deletion of this adjustment as in our view. In the result, this ground of the assessee is allowed.
Disallowance of bad debt and write off of sundry balances/advances - HELD THAT:- Assessing Officer in the final assessment order restricted the disallowance to ₹ 12,647/- being amounts paid to employees, which cannot be recovered and amount of ₹ 3,48,645/- receivable from group entities and an amount of ₹ 15,60,871/- receivable from clients.
In our view, the receivables from clients and intra group entities have definitely been routed through the profit and loss account. Otherwise they would not be trade receivables. The balances in employee accounts, who have left are also not receivables. As relying on TRF. LTD. [2010 (2) TMI 211 - SUPREME COURT] we delete the disallowance in question and allow this ground of the assessee.
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2019 (12) TMI 1154
TP Adjustment - 6% markup on cost / expenditure - Mutual agreement between the assessee and associated enterprises - assessee not in possession of any formal agreement - HELD THAT:- In the earlier years, the 6% markup on cost was the proposition considered by learned CIT(A) which was accepted by the ITAT. In the present assessment year there is no mention whatsoever about this claim of the assessee in the order of learned CIT(A). All the assessee’s arguments before learned CIT(A) were confined to selection of comparables and certain other adjustments.
We agree that this contention of the assessee deserves consideration provided the facts for the present assessment year are in conformity with the earlier assessment years. Furthermore as noted above this aspect has not at all been considered at the level of learned CIT(A). In the interest of justice, we deem it appropriate to remit this aspect of assessee’s contention to the file of learned CIT(A) to consider the same and give a finding thereupon. Needless to add the assessee should be granted opportunity of being heard. - Matter remanded back to CIT(A).
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2019 (12) TMI 1153
Transfer pricing (TP) adjustments - notional/book adjustment - correct interpretation or construction of section 092 / 92C/ 92CA - income chargeable to tax in India - whether the provisions of chapter X shall be invoked in a situation where the assessee is enjoying tax exemption under section 10A of the Act and/or where there is no motive to avoid tax? - HELD THAT:- the purpose behind the provision of transfer pricing is to determine true profits/income as if such international transaction has been entered with an unrelated party or non-AE, irrespective of the fact that the income of the assessee was eligible for exemption. - there is no express provision under the Act restricting the application of section 92C of the Act for determining the income at arm’s length where such income is eligible for deduction u/s 10A of the Act. On the contrary, there is a proviso to section 92C(4) of the Act which prohibits the deduction u/s 10A of the Act on the income to the extent enhanced as an effect of a determination of ALP.
If the purpose or object of Chapter X and/or Section 10A of the Act is being defeated, then it is up to the legislature, if they think so, to reconstruct the law as per the required object. - there is no need to look into the intention or purpose of the statute or application of reasonable construction. Accordingly, it is meaningless to apply the principles of purposive or object-based rules of interpretation
Indeed, in the instant case, albeit the adjustment in the ALP for the year under consideration may be of notional value, and the same may not actually result in an inflow of foreign exchange. But the said proviso to section 92C(4) of the Act shall deter the practice of manipulating the prices as suiting to the parties. - Consequently, the purpose of the provisions of section 10A of the Act will not be defeated.
We further note that assessee though claiming the exemption under section 10A of the Act can also manipulate the ALP with an objective to avoid corporate dividend tax by shifting its profits to AE.
In the instant case we find that the provisions of chapter X are not impeding with the manner of the computation of exemption under section 10A of the Act, but it is to work out the true ALP qua the sale price of the impugned international transaction. Therefore we disregard the contentions of the ld. AR for the assessee that no reference to the TPO can be made for determining the ALP.
AR also contended that it is a settled legal position that where two views are possible, the one in favor of the assessee should prevail and to support his contention, also placed reliance on a series of case laws. In this regard, we concur with the view of the ld. AR for the assessee. But in the case on hand there are contrary views on the impugned issue, accordingly, this special bench has been constituted to decide the question referred to it after considering the fact, rival submissions, and the legal position.
Interpretation of the provision of the Act, which gives rise to two different possible views. In the case on hand, the issue relates to the provisions of section 10-A viz-a-viz Chapter-X of the Act which operates in different domains and has different objects. As such, none of the provision has neither been made subject to each other nor superseded by each other. Therefore we are of the view that the question of two views about the interpretation to section 10-A viz a viz chapter-X in the given facts and circumstances does not arise. But these provisions co-exits and their concordance are facilitated by the proviso to section 92C(4) of the Act. As such, there is a direct provision under chapter X of the Act restricting the deduction/ exemption to the assessee in this particular case, which will prevail in the given facts & circumstances.
Regarding the Non-discrimination clause in the DTAA between India and UK, we find that the learned counsel’s arguments proceed on the fallacious assumptions that while examining the applicability of the non-discrimination provisions, the transactions with a resident assessee can be compared with transactions of non-resident. Even if at the most the company was to transact business with its non-resident related party, the same course was to follow. There is thus no discrimination viz a viz the assessee and the domestic enterprises.
We are of the view that even if an assessee is eligible for tax exemption at the rate of hundred percent under section 10A/10B of the Act, then also the arm’s length price on international transactions deserve to be determined under section 92C. Hence, question posed before the Special Bench is answered in negative against the assessee and in favour of the Revenue.
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2019 (12) TMI 1152
Penalty u/s 271(1)(c) - disallowance of additional depreciation by the assessee on account of reclassification of certain assets resulting in change of rate of depreciation disclosed in the return of income filed u/s 153A of the Act vis-à-vis the return filed u/s 139(1) - HELD THAT:- the assessee while filing the return of income u/s 153A of the Act for AY 2004-05 to AY 2009-10 had regrouped/reclassified its assets to the rate of depreciation which had resulted in the excess depreciation claim of ₹ 1,23,51,251/- for AYs 2004-05 to 2006-07. In the instant case, we are concerned with AYs 2004-05 and 2005-06. The application filed by the assessee has since been rejected by the ITSC u/s 245D(2C) of the Act, treating it as invalid.
During the course of assessment proceedings, the AO asked the assessee to file full details in respect of the above excess claim of depreciation. But the assessee failed to furnish the relevant documents on the above. In a situation like the present one, the assessee had to file the relevant documents/evidence from which the AO could have drawn correct inference. The assessee failed to do so. As a logical corollary, the burden cannot be shifted to the Department. The burden of proof rests with the assessee.
We are of the considered view that the Ld. CIT(A) has overlooked the above facts while passing the order dated 02.03.2017. A fortiori, he has not considered the fact that consequent to withdrawal of appeal before ITAT for AYs 2004-05 and AY 2005-06, the assessee re-worked its claim of depreciation for AY 2007-08 to AY 2014-15 before the Settlement Commission and as a result, the revised claim of depreciation on the basis of re-grouping of assets stood withdrawn.
Therefore, we set aside the order of the Ld. CIT(A) and restore the matter to the file of the AO to make a de novo order after giving reasonable opportunity of being heard to the assessee. We direct the assessee to file the relevant documents/evidence regarding the claim of additional depreciation of ₹ 75,80,338.16/- on account of reclassification of certain assets during the year under consideration.
As the matter has been restored to the file of the AO, we are not adverting to the case laws relied on by both sides. Appeals are allowed for statistical purposes.
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2019 (12) TMI 1151
Unexplained expenses u/s 69C - Addition on basis of the information obtained from the website of the sales tax department about the cancellation of registration certificate of the parties - claimed to be allowed as "business loss" u/s 28 or 37 - HELD THAT:- assessee has already declared the GP in its books of accounts by recording the sales and the corresponding purchases. But to prevent the possible leakage of the Revenue, as the purchases from the local/grey market is normally cheaper, we are inclined to make the ad hoc addition at the rate of 10% of such purchases in order to meet the end of justice and to stop the ongoing dispute.
Claim of Bad Debts - assessee failed to furnish the details of the parties viz a viz details of the sales made to them - Held that:- It is the settled law that the losses incurred by the assessee in the course of the business activities are allowable deduction either under section 37(1) or 28 of the Act - assessee is eligible for the deduction of the impugned loss as incurred in the course of the business but not as bad debts under the provisions of section 36(1)(vii) of the Act.
Addition made for ₹ 4,899/- on account of the Act VAT credit written off. - Held that:- there was an allegation from the authorities below that the assessee has purchased the goods from the parties whose VAT/ CST registrations were cancelled. In the absence of the assistance from the side of the assessee, we can draw an adverse inference by holding that such amount of VAT credit relates to such parties i.e. the registrations were cancelled. If that be so, then it is clear that the claim was made by the assessee on account of such VAT credit for the purchases from the parties not having valid registration number. Therefore, it is inferred that such claim of the assessee was not bona fide in the absence of contrary documentary evidence. Thus we not find any reason to interfere in the order of the Ld. CIT(A). Hence, the ground of appeal of the assessee is dismissed.
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2019 (12) TMI 1128
Exemption u/s 11 - Disallowance of depreciation on the assets purchased by the assessee by application of funds - HELD THAT:- In assessee’s own case also, Hon’ble jurisdictional High Court in DIT vs Indraprastha Cancer Society [2014 (11) TMI 733 - DELHI HIGH COURT] considered the question whether after claiming deduction in respect of the cost of the assets u/s 35(1) of the Act, assessee again claimed deduction on account of depreciation in respect of the same asset. Hon’ble jurisdictional High Court held the issue in favour of the assessee. In view of the binding precedent of the jurisdictional High Court in assessee’s own case, we do not find any unreasonableness in the order of the Id. CIT(A). We, therefore, confirm the order of the Id. CIT(A) and dismiss Ground Nos. 1 & 2.
Disallowing the loss on sale of assets - Plea of the assessee is that the assets were sold at a price lesser than the WDV of the assets and when the depreciation is allowed following the commercial principle, there is no bar to consider the loss and the learned AO committed error in taking the sale proceeds as income and ignoring the loss - HELD THAT:- CIT(A) considered the plea of the assessee and satisfied that the assessee could demonstrate that the income u/s 11 had to be determined on commercial principles. We are also of the considered opinion that the income u/s 11 has to be determined on commercial principles and to determine the same, the losses arising on sale of assets of the society shall be considered. Therefore, the capital loss has to be considered while calculating the income of the assessee. With this view of the matter, we uphold the finding of the Id. CIT(A) on this ground and dismiss Ground No.3.
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2019 (12) TMI 1115
Exemption u/s 11 - Entitled to the registration u/s 12AA - claim of assessee that it was an alumni association of a school and was set up for charitable purposes and was therefore entitled to the exemption under Section 12AA - assessee placed on record an order under Section 12 A(a) in respect of the main school which had been granted about 15 years ago - HELD THAT:- Arguments of both counsel are too extreme. It cannot be said that the certification in favour of the school is entirely irrelevant nor can it be said that merely because the school got a certificate under Section 12A(a) the alumni association would also be entitled to exemption as of right.
In the circumstances, what the Tribunal has done cannot be said to be illegal. The Tribunal has not reversed any finding of the Commissioner but has merely asked the Commissioner to consider another document, the relevancy and importance of which would be determined by the Commissioner himself. Moreover, it is also not disputed that when the original application was filed by the respondent it was a fledgling organization. Today another 2-3 years have passed and therefore, the Commissioner would have the benefit of seeing the records of the respondent to verify whether it does indeed meet the test of Section 12AA or not. In sum and substance, therefore, we do not deem it appropriate to interfere with the order.
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2019 (12) TMI 1114
Order of assessment u/s 158BC(c) - Procedure for block assessment - validity of search - undisclosed income determined - Authorisation and assessment in case of search or requisition - HELD THAT:- From perusal of Section 158BC it is evident that the computation of undisclosed income should be based on such evidence which is seized during the search which is not accounted in the regular books of account.
In the present case the warrant of authorization has not been produced before this Court despite order dated 13.10.2019. Therefore, it is open for this Court to draw an adverse inference. However, in the peculiar fact situation of the case, we deem it appropriate to grant liberty to the revenue to proceed afresh in accordance with law. However, on account of non-production of the warrant of authorization, the adverse inference has to be drawn. Therefore, the first substantial question of law is answered in favour of the appellant and against the revenue, however, with the liberty to the revenue to proceed against the appellant in accordance with law.
Validity of search - Admittedly, the authorities were under an obligation to examine the validity of the search and thereafter only to proceed to initiate the block assessment proceeding, which has not been done in the instant case. Therefore, the second substantial question of law framed is also answered in favour of the assessee and against the revenue.
Challenge the action of the AO to assess u/s 158BC when the condition precedent are not existing as much as for computation of income u/s 158BC - From perusal of the material on record, it is evident that there was no seizure with regard to the assessment year 1988-89 and 1989-90 during the course of the search and seizure operations. However, the Assessing Officer while computing the undisclosed income has taken into account the income in respect of the aforesaid case also and thus the order passed by the Assessing Officer is in violation of Section 158BC(c) of the Act and therefore, the Tribunal was not justified in holding that there is no merit to challenge the action of Assessing Officer to assess under Section 158BC(c) of the Act. Accordingly, the third substantial question of law is also answered in favour of the assessee and against the revenue.
In view of preceding analysis, the impugned order dated 09.09.2011 insofar as it contains the findings against the appellant passed by the Income Tax Appellate Tribunal is hereby quashed and set aside. The order of assessment dated 28.11.2000 as well as the order of Commissioner of Income Tax (Appeals) dated 23.08.2002 are also hereby quashed and set aside. However, liberty is granted to the revenue to proceed against the appellant, if so advised in accordance with Section 158BC of the Act.
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2019 (12) TMI 1113
Unexplained cash credit u/s 68 - sale of agricultural crops - HELD THAT:- ITO found the nature of Business of assessee as 'Trading of green tea leaf and production of green tea leaf and other agricultural products." Total sale receipt from the agriculture crops was ₹ 25,50,349/-, out of which payment amounting ₹ 11,21,439/- received through bank, a copy of ledger account attached in page 47 of PB. The ld DR however, reiterated the stand taken by the AO. The assessee has submitted these all significant evidences during the appellate proceedings.
Neither the AO nor the CIT(A) disputed the fact that the assessee is not owner of land. Considering this factual position, we delete the addition of ₹ 14,28,910/-.
Bogus sundry creditors - During the course of scrutiny proceedings, the A/R gave the name and address of eleven sundry creditors. The sundry creditors are linked with purchases done by assessee. We note that assessee`s purchases were not doubted by the assessing officer. Assessee`s books of accounts are audited by a chartered accountant. Books of accounts of the assessee has not been rejected by assessing officer. Once the transaction gets completed, it may happen that the creditor may not cooperate in income tax proceedings and does not respond to notice under section 133(6) of the Act issued by AO during scrutiny assessment. The assessee submitted before the bench that brought forward balance of ₹ 41,84,399/- relates to assessment year 2012-13 and AO had already examined them in the assessment proceedings for A.Y.2012-13, therefore, these should not be treated bogus sundry creditors. In assessee`s case some of the creditors also replied the notice under section 133(6) of the Act. The ld DR for the Revenue did not doubt the factual position narrated above.
Considering the entirety of the facts and circumstances of the case, we delete the addition - Decided in favour of assessee.
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2019 (12) TMI 1112
Estimation of turnover - CIT(A) resorting to the weighted average method - appellant has shown gross receipts from retail trading on the basis of turnover - counsel submitted that the assessee has shown income as per provisions of section 44AF - HELD THAT:- Undisputedly, for the relevant assessment year, the appellant has disclosed total gross receipts of ₹ 28,98,562/- and shown net profit @ 10% to arrive at business income of ₹ 2,89,856/-, which is higher than the rate of 5% prescribed by the legislature for computing the profits and gains of retail business, who have turnover less than ₹ 40 lakhs during the relevant financial period. Therefore, as noted that the assessee herself has shown higher percentage of net profit of the turnover.
Since there is no dispute regarding estimation of net profit, therefore, no further addition is required on this point. From the assessment as well first appellate order, unable to see any valid reason or show cause to the assessee by the authorities below before making any addition on account of closing stock found during the survey. It is well established principle of business of accounting that if the assessee’s income of the assessee has been shown or estimated u/s.44AF then the assessee is not required to maintain any books of account and no further addition or disallowance is called for regarding his trading expenditure or any other account. Therefore, the addition made on the basis of closing stock found during the survey cannot be held as sustainable. I may point out that even if the authorities below want to tinker the point of closing stock found during the survey, then they are also required to consider the opening stock of the assessee at the beginning of the financial year i.e. on 1.4.2009 otherwise, addition on account of closing stock cannot be made in the hands of the assessee especially when the assessee herself is showing higher percentage of net profit on the turnover undertaken during the relevant financial period. Accordingly, Ground No.B is allowed.
Unexplained investment - appellant could not produce any evidence before the CIT(A) to justified the source of such income - assessee is legal heir of parents and got all the movable and immovable property after their demise - HELD THAT:- AO has made addition by invoking the provisions of section 69 of the Act without any specific provisions of the Act and the assessee has substantially established that she had sufficient source of funds in the form of her accumulated saving for the last 15 years, against sale of property and jewellery and other valuables received from her parents on their death.
Therefore, unable to agree with the contention of the lower authorities for making the addition and confirming the same. - Decided in favour of assessee.
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2019 (12) TMI 1111
Claim of interest on capital and remuneration to partners from the assessed income - Scope of the partnership Deed - CIT(A) was of the opinion that since profit has been estimated on gross receipts after survey u/s 133A of the Act, the assessee is not entitled for any further deduction. - HELD THAT:- We find that partnership deed dated 01.05.2008 at clause 8 contains provision for interest on capital @ 12% per annum and clause 17 provides for remuneration to whole time working partners and method of computation of remuneration is also provided.
Vide supplementary deed dated 01.04.2010, manner of paying remuneration to whole time working partners have been revised. We find that in Assessment Years 2009-10 to 2011-12, the assessee has been claiming interest on capital and remuneration to partners, which are verifiable from the computation of income placed in the paper book.
As relying on VIJAY CONSTRUCTIONS [2006 (8) TMI 607 - ALLAHABAD HIGH COURT] we direct the Assessing Officer to allow remuneration to the partners and interest on capital as per provisions of law.
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2019 (12) TMI 1110
Assessment u/s 153A - proof of incriminating material found in search - HELD THAT:- Since the date of search and seizure operation is 20.11.2009, it can be safely concluded that since no notice was issued and served upon the assessee u/s 143(2) of the Act, assessment is complete.
In our considered opinion, the profit and loss account and balance sheet of the assessee company, by any stretch of imagination, cannot be considered as incriminating material. It is also not the case of the Revenue that the bank accounts were unearthed during the search operation. On these facts, the ratio laid down by the Hon'ble High Court of Delhi in the case of Kabul Chawla [2015 (9) TMI 80 - DELHI HIGH COURT] squarely apply - Decided in favour of assessee.
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2019 (12) TMI 1109
Addition u/s 68 - Assessee has accepted the amount received from the account of ARRS Developers Ltd., to his bank account as deemed dividend u/s.2(22)(e) - HELD THAT:- AO was not right in making addition in the hands of the assessee u/s.68 of the Act and ld CIT(A) was not correct in upholding the same. It is pertinent to note that the assessee has conceded ₹ 50,00,000/- as received as deemed dividend u/s.2(22)(e) of the Act only before the Tribunal and the authorities below had no occasion to deal with the issue while considering this fact. Therefore, in the changing scenario, we confirm ₹ 50 lakhs in the hands of the assessee u/s.2(22)(e) of the Act and consequently, other additions made by the AO and confirmed by ld CIT(A) only on the basis of ledger/book entry in the respective accounts and balance sheet of the assessee and his wife cannot be held as sustainable.
Addition u/s 68 - sum payable to the daughter of the appellant Smt. Silpa Agarwal against sale of shares of M/s ARSS Infrastructure Projects Ltd. - HELD THAT:- We find no error in the findings of the ld CIT(A) that no materials were produced before the authorities below. Before us, no valid explanation was submitted by ld counsel for the assessee to prove that Silpa Agarwal has paid the amount of ₹ 1,25,000/- to the assessee. - Decided against assessee.
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2019 (12) TMI 1108
Disallowance of discount given to dealers - HELD THAT:- As decided in own case [2017 (12) TMI 1395 - ITAT PUNE] the assessee as businessman had taken business decision to make a policy for the distribution of its goods and to pay discount to different dealers in this regard. Such business decision cannot be negated by the Assessing Officer on the surmise that as per the Assessing Officer, the discount paid by the assessee was higher. The assessee is best judge of its business arrangement and in the absence of any evidence found that the expenditure has not been incurred, merely on the ground that the rate of discount paid is higher, the expenditure cannot be disallowed in the hands of assessee.
We find support from the ratio laid down by the Hon'ble Supreme Court in CIT Vs. Walchand & Co. Pvt. Ltd. [1967 (3) TMI 2 - SUPREME COURT] . Accordingly, we find no merit in the order of Assessing Officer in this regard.
Disallowance of late delivery charges - HELD THAT:- As in assessee’s own case for A.Ys. 2010-11 and 2011-12 we find no error in the order of CIT(A) in holding that the late delivery charges paid by the assessee were in the nature of expenditure carried out during the course of carrying on the business. The said late delivery charges were levied by the OEM customers, who were given specific orders to the assessee for delivery within time frame, but because of the delay in the project, clause for L.D. charges was applied and the amount was recovered from the assessee. In the totality of the above said facts and circumstances, we are of the view that the said expenditure is duly allowable in the hands of assessee. Accordingly, we hold so
Disallowance of depreciation on windmill at 80% as it was commissioned on 09.08.2007 - AO noticed that high rate of depreciation was also claimed on civil work and installation of electrical lines - HELD THAT:- As decided in own case apellant was entitled to higher depreciation on the electrical line for transmission of the power generated. The Assessing Officer is directed to call for the breakup of each of these items of expenditure and allow accelerated depreciation on the items mentioned
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2019 (12) TMI 1107
Registration application u/s 12A Rejected - charitable activity u/s 2(15) - as per CIT-E activities of the assesse-society are not charitable in nature - A R submitted that the assessee society has taken premises on nominal rent from M/s Brahampuri Refugee Co-operative Society and the said premises are provided to needy persons to perform social obligation and other activities at affordable rate on no profit and no loss basis and a copy of the rent deed/IKarnama - HELD THAT:- Arrangement of taking premises on hire and giving it to needy persons as so claimed by the assessee society need to be examined afresh by the ld CIT(E). Further, the ld. AR has submitted that the predominant activity of the assessee-society is not hiring of the premises rather predominant activities of the assessee-society are holding of eye camps, yoga classes, celebration of festivals like Dushshera, Holi, Chetichand etc. and the receipts arising out of the hiring of premises are incidental receipts and the same are used for advancement of its main objectives.
The predominant activities where so carried out by the assessee society as so claimed will not necessarily result in any receipts, rather the assessee society has to incur expenses towards carrying out such activities and in order to fund such activities, where the premises and other places are given on rent and receipt arising therefrom will only be reflected in the financial statements and are used for carrying out the main activities, the latter activities will qualify as ancillary and in fulfillment of main activities and not the main and predominant activities.
However, we find that the said facts regarding carrying out main activities as so claimed by the assessee society are not emerging from the order of the ld. CIT(E) and thus not borne out of the records before us, though the assessee society has submitted some photographs which would again need verification. Therefore, in the interest of justice and fair play, we deem it appropriate that the matter is set-aside to the file of the ld CIT(E) to decide the matter afresh after providing reasonable opportunity to the assessee-society. Matter is set aside to the file of the ld. CIT(E) and the appeal filed by the assessee is allowed for statistical purpose.
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2019 (12) TMI 1106
Penalty u/s 271C - Non deduction of TDS on payment of External Development Charges (EDC) - HELD THAT:- Firstly, the assessee was not required to deduct TDS as the payment of EDC was not made out of any statutory and contractual liability to HUDA with whom the assessee has no privity of contract; secondly, the assessee has reasonable cause for non-deduction of tax at source by the assessee company; thirdly it is not the case of the Revenue authorities that the assessee has intentionally avoided the deduction of TDS by bringing on record contumacious conduct of the assessee; and fourthly, with continuous clarifications by the CBDT and DTCP discussed in the preceding paras, the issue became debatable if the TDS is to be deducted or not on the EDC providing reasonable cause to the assessee not to deduct the TDS. Consequently, penalty levied by the AO and confirmed by the ld. CIT (A) is not sustainable in the eyes of law, hence ordered to be deleted. So, the appeal filed by the assessee is allowed.
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