|
Advanced Search Options
Income Tax - Case Laws
Showing 361 to 380 of 10077 Records
-
2019 (12) TMI 815
Transfer pricing regulations applicability to operations carried out through operating qualifying ships - assessee is a company registered under the Tonnage Tax Scheme ('TTS') - HELD THAT:- Assessee is correct in contending that the AO/DRP failed to appreciate that the transfer pricing regulations do not apply to the assessee, to the extent of operations carried out through operating qualifying ships, since the assessee is a company registered under the Tonnage Tax Scheme ('TTS') provided under the Act. The facts in the year under consideration are not different from those in assessment years 2007-08 and 2011-12, where the very same issue has been decided by the Tribunal in favour of the assessee.
(a) Section 115VA of the Income Tax Act, forming part of the TTS (for which, the assessee has made option) contained in Chapter XII-G of the Act, excludes the operation of sections 28 to 43C of the Act pertaining to the computation of total income under Chapter IV of the Act.
(b) For computing taxable income under Chapter XII-G of the Act, related party transactions have no relevance, weight and length of user of qualifying ships, rather than the nature of party for which the user is, or ALP, or income, or expenses, being the formula prescribed for computation of income under Chapter XII-G.
(c) Consideration of the TP provisions, enclosing within them, the arm’s length principle, under Chapter X (sections 92 to 92F) of the Act are, a fortiori, not applicable to the TTS and ALP does not affect the computation and taxability of the tonnage income of the assessee.
(d) Computation of income under the TTS is, thus, not impinged upon by the adjustment made by the TPO.
(e) Income computed under the TTS is, by virtue of section 115VF, deemed to be the profits taxable as profits & gains of business or profession.
(f) The amount which represents reimbursement of Head Office Expenses by the assessee to its holding company and AE, has wrongly been added, by altering the expenditure, under Chapter X, despite the inapplicability of the Chapter and inspite of the fact that Chapter X contains only machinery provisions and no charging provisions, sans which, it is trite, no tax can be levied.
(g) Non-applicability of Chapter X does not get altered by the factum of the assessee having either filed audit report in Form 3CEB, or undertaken the benchmarking process and concluding its international transactions to be at arm’s length.
(h) The issue stands decided by the Tribunal in favour of the assessee vide its orders in the assessee’s case for assessment years 2007-08 and 2011-12.
(i) The DRP has itself acceded to this legal claim of the assessee.
Dividend Distribution Tax (DDT) under section 115-O on the dividends declared and paid by the assessee, to its foreign shareholder who is a tax resident of the Netherlands - excess of the rate provided under Article 10 read with the Most Favoured Nation clause under Article IV of the Protocol to the Double Taxation Avoidance Agreement between India and the Netherlands - Admission of additional grounds - HELD THAT:- With respect to the submission of the ld. DR that the procedure for making a claim, as prescribed in Article 10(3) of the DTAA, is not on record and hence, it requires factual investigation, we are of the view that the same does not, in any manner, relate to the assessee, or VODMC BV, or the project office, and hence, it cannot be regarded as a fact that needs to be examined for the purposes of admission and/or adjudication of the assessee's claim. In any case, as dwelt upon hereinabove, the assessee was prevented from raising the additional ground before the lower authorities, due to a reason beyond the control of the assessee, as considered above. This fact, by itself, is, in our opinion, sufficient to allow it to be raised at this stage. So, even if, arguendo, the objections of the Department were to be acceded to, the assessee’s request for admission of the additional ground merits acceptance.
We set aside this issue to the file of the Assessing Officer to examine the same in the light of the judgments of the Hon’ble Supreme Court in the cases of ‘Union of India vs. Tata Tea Co. Ltd.’ [2017 (9) TMI 1300 - SUPREME COURT] and ‘Godrej & Boyce Manufacturing Company Ltd. vs. DCIT’ [2017 (5) TMI 403 - SUPREME COURT] , after providing due opportunity of hearing to the assessee. The assessee, no doubt, shall cooperate in the fresh proceedings before the Assessing Officer.
-
2019 (12) TMI 814
Assessment u/s 153A - no approval in the eye of law, having been granted without application of mind - Faulty approach of the Additional CIT - HELD THAT:- Additional CIT, without any consideration on merit in respect of issues on which addition was made granted the Approval on the undertaking of the AO, in view of stated paucity of time with him for granting Approval.This approach of the Additional CIT, Central has rendered the Approval to be an eyewash and idle formality and such a mechanically granted Approval is no approval in the eyes of law.
As rightly pointed out by the Ld. AR that in the facts of case of “AAP Paper Marketing Limited” [2017 (4) TMI 1371 - ITAT LUCKNOW] there may be some justification for the qualified approval in view of the fact that the limitation in that case was getting expired on the day when the draft assessment orders were put up before the Additional CIT, Central Circle, Kanpur for his approval. However, to the disadvantage of the revenue in the case on hands there can be no little justification for qualified approval as the proposal for approval was put up before the Additional CIT on 26.03.2015 and at the same time it was granted, without any application of mind on the pretext that limitation is going to get expired on 31.03.2015. Thus, in the case at hand despite availability of time the Additional CIT taking excuse of limitation has chosen to grant approval without application of his own mind but on the undertaking of the AO that “while completing the assessment as per the draft assessment order, all the observations made in the appraisal report relating to examination/investigation as also the issues identified in the course of examination of seized material have carefully considered.” In our view such a practice is required to be deprecated and we deprecate the same. - Decided in favour of assessee.
-
2019 (12) TMI 813
Disallowance u/s 10(10A)(ii) - assessee had revised his return of income and thereby offered less income than that was shown in the original return - nature of compensation received by the assessee from his employer - HELD THAT:- Employer introduced new policy for payment of pension / commuted pension to the employees. As per the said policy, the employer of the assessee had drawn annuity policy for its employees from Life Insurance Corporation of India. Out of the total fund value payable to the assessee, an amount was paid to the assessee on account of Commuted Pension and the balance funds was to be utilized for paying monthly pension after getting relieved from service. Though, the assessee was not immediately retired from the service and continued with the employment with his employer, yet, the basic intent and purpose of the aforesaid payment to the assessee was that of payment towards commuted pension to the employees. Though, generally the retrial benefits are paid on retirement from service, however, under certain circumstances, employment may be continued subject to payment of retrial benefits.
The aforesaid payment to the assessee was nothing but the payment of retiral benefits towards Commuted Pension. We, therefore, are of the view that the lower authorities were not justified in disallowing the claim of the assessee u/s 10(10A)(ii). The action of the lower authorities on this account is set aside and the Assessing Officer is directed to allow the claim of the assessee made u/s 10(10A)(ii) of the Act.
-
2019 (12) TMI 812
Regional existence of place of PE - supervisory PE under Art. 5(2)(i) r.w. Art.5(1) of the DTAA - Income accrued in India - force of attraction rule - treaty between India and Germany DTAA - HELD THAT:- The location where the activities would be performed by the assessee in respect of the specific projects was dictated by the client’s project site or as agreed with the clients and was undertaken outside India. Further, restriction on the activities which may be undertaken by project office is stipulated in the approval issued by the Government. Therefore, it cannot be said that the PE constituted in India by the assessee under Phase-II of the contracts with JKSPDC was involved in any way in the earning of income from technical services rendered by the assessee and other contracts in India. We find force in the contention of the assessee, that the PE constitute in India by the assessee under Phase-II of the contract with JKSPDC did not play any role or contributed in any manner to the execution of the other contracts or earning of FTS under other contracts and cannot thus be said to be involved with any other projects in India. Accordingly, FTS received by the assessee from rendering of technical services and other contracts cannot be said to be involved directly or indirectly in any manner to the PE constituted in India under the contract with JKSPDC- Phase-II and are formed for the purpose of deliberate avoidance of tax. We find merit in the argument of the Ld. AR that such income by way of FTS is to be subjected to tax @ 10% under article 12 of the treaty and cannot be subject to tax @ 20% as contemplated by the Assessing Officer.
Regional existence of place of PE and the article 5(1) in the form of JKSPDC-BCS as well as there is existence of supervisory PE under article 5(2)(i) in the form of JKSPDC-BCS was not established by the Revenue from any documentary evidence on record. Similarly, the nature of business of the assessee remains unchanged and the assessee is engaged in the business of providing consultancy services to various projects in India. The assessee is an engineering consultancy services that offers wide range of planning, designing and consultancy services etc. in relation to complex infrastructure projects in India. The assessee rendered engineering consultancy services mainly in relation to power projects.
PE in respect of JKSPDC-Baglihar Phase – II Project has rightly been offered to tax at 20% by the assessee as it is the only project which has PE. The Force of Attraction rule will not be applicable in other projects as the same do not constitute either PE or does not come under the purview of the DTAA. The contradictions pointed out by the Revenue do not demonstrate that the other projects constitute PE. In fact, for applying force of attraction, there should be some common link to each of the contracts/projects such as the common expats, the common nature of the contract/projects, the commonality of the location, the common contracting parties etc. which are absent in the present case. Therefore, the applicability of rule of force of attraction does not apply in the present assessee’s case. Thus, the treatment given by the assessee for offering tax @20% in one project and 10% in rest of the projects was rightly done.
Taxability of reimbursement of expenses - HELD THAT:- these expenses were actually incurred by the assessee and there is no element of income involved in these expenses. This has been demonstrated by the assessee during the Assessment Proceedings as well as before the CIT(A). But both the Revenue authorities have not taken cognizance of the same. Besides that, revenue could not point out that there is any element of income involved in the said expenses as well as could not demonstrate that there was any mark up to these expenses. Therefore, Ground No. 2 of the assessee’s appeal allowed
Interest u/s 234B and 234C is not chargeable where tax is deductible at source. The reliance placed on GE Packaged Power Inc. [2015 (1) TMI 1168 - DELHI HIGH COURT] is apt.
-
2019 (12) TMI 811
Bogus LTCG/losses derived from transfer of shares - Unexplained cash credits u/s 68 - Diversified views - HELD THAT:- Addition on involving an assessee’s profits derived from sale of shares can be declined only in absence of the supportive evidence on record whereas hon’ble Bombay high court has gone by circumstantial evidence.
Rely on the evidence produced by the assessee in support of its claim and base our decision on such evidence and not on suspicion or preponderance of probabilities. No material was brought on record by the AO to controvert the evidence furnished by the assessee. Under these circumstances, we accept the evidence filed by the assessee and allow the claim that the income in question is Long Term Capital Gain from sale of shares and hence exempt from income tax.
Hon’ble high court’s have adopted varying opinions qua correctness of identical long term capital gains. In other words, hon’ble Calcutta high court is of the view that such an addition on involving an assessee’s profits derived from sale of shares can be declined only in absence of the supportive evidence on record whereas hon’ble Bombay high court has gone by circumstantial evidence.
We quote hon’ble apex court’s judgment in CIT vs. Vegetable Products [1973 (1) TMI 1 - SUPREME COURT] in these peculiar facts and adopt the view of hon’ble Calcutta high court in taxpayer’s favour. We further make it clear that hon’ble jurisdictional high court has not decided the issue till date. The impugned additions are deleted therefore. - Decided in favour of assessee.
-
2019 (12) TMI 776
Dismissal of appeal for non prosecution - HELD THAT:- Matter was listed on 08.11.2019. This Court passed the following order:
“Two weeks’ time is granted to Ld. counsel for the appellant to file the affidavit of valuation and deficit court fee.”
The office report indicates that the appellant has not filed the affidavit of valuation and deficit court fee so far.
Further four weeks’ time is granted to the appellant to file affidavit of valuation and deficit court fee.
Failing to file the same, the Appeal shall stand dismissed for non-prosecution.
-
2019 (12) TMI 775
Benefit of exemption u/s 194A(3)(iii)(a) on interest by the CO-OPERATIVE BANK to the Primary Agricultural Credit Societies - HELD THAT:- Requirement of deduction of tax at source does not prejudice the writ petitioner assessee, since the tax amounts deducted at source from the payments effected to the petitioner societies would be credited to their account with the Income Tax Department, and adjusted towards any tax liability determined against them in their assessment for the respective years. In the event the petitioner societies succeed in establishing before the Income Tax authorities that they do not have any income liable to tax under the Act, then they would be entitled to a refund of the tax amounts so deducted pursuant to a finalization of their assessments under the Income Tax Act. Alternatively, the petitioners societies also have the option of approaching the Income Tax Department for a certificate u/s 197. Stating that, in view of their non-liability to tax under the Act, there need be no deduction of tax effected at the time of making payments to them. This aspect has been made clear in the circular of the Treasury department impugned in these writ petitions.
In the result, these writ petitions are disposed by declaring that, in the case of deposits made by the petitioner societies with the Co-operative Banks, they would be entitled to the benefit of exemption under Section 194A(3)(iii)(v) and, in respect of the deposits made by the petitioner societies with the Treasury, they will not be entitled to the benefit of exemption under Section 194A(3)(iii)(a)
-
2019 (12) TMI 774
Depreciation on wind mills which was not actually put to use - HELD THAT:- ITAT held that prior to introduction of new concept of ‘block of assets’ with effect from 01.04.1988, the depreciation used to be claimed separately on each asset. The legislature found that this was a cumbersome procedure leading to various difficulties and therefore, the concept of ‘block of assets’ was introduced. It is further been held that the concept of ‘block of assets’ as reflected in the Central Board of Direct Taxes dated 23.09.1986 that once the various assets are clubbed together, they become block assets within the meaning of Section 2(11) of the Act and it becomes one asset and every time new asset is acquired, it is thrown into common hotchpotch i.e., block of asset on meeting the requirement of depreciation being allowable at the same rate. It is further been held that the individual asset meet their identity and become a new separate part of block of asset, insofar as calculation of depreciation is concerned.
Income Tax Appellate Tribunal has held that the assessee is entitled to claim depreciation on the value of wind mills. We are in agreement with the view taken by the Income Tax Appellate Tribunal for the reasons which we have mentioned supra. Accordingly, the first substantial question of law is answered in the affirmative and in favour of the assessee and against the revenue.
-
2019 (12) TMI 773
Penalty u/s 271(1)(c) - HELD THAT:- Disallowance made under Section 14-A of the Act and re-computation of deduction under Sections 10-A and 10-AA of the Act by recalling the original order and the same is pending adjudication before the Tribunal. The petitioner has filed an appeal against the order of penalty impugned herein and the said appeal is also pending consideration before the Appellate Authority. It is well settled law that the penalty is not automatic.
In such circumstances, it was obligatory on the part of the Assessing Officer to consider the application of the petitioner staying the demand of penalty subject to the decision of the Tribunal/Appellate Authority. The same having been rejected, this Court deems it appropriate to direct the respondents not to enforce the demand relating to the penalty amount under the demand notice dated 23.4.2019 issued by the respondent No.1 under Section 156 relating to the assessment year in question until disposal of the proceedings pending before the Tribunal or the Appellate Authority challenging the order passed under Section 271(1)(c) of the Act, whichever is earlier and is ordered accordingly.
-
2019 (12) TMI 772
Disallowance of interest expenditure u/s 14A - HELD THAT:- Reserve and surplus available with the assessee as on 31.03.2010 at ₹ 1000.63 Crores was much more than this tax-exempt investments of the assessee company. In the light of these facts, now we examine the applicability of the judgment of Hon’ble Karnataka High Court rendered in the case of CIT Vs. Microlabs [2016 (4) TMI 219 - KARNATAKA HIGH COURT] on which reliance has been placed by assessee. In this case, Hon’ble Karnataka High Court has followed the judgment rendered in the case of CIT Vs. HDFC Bank [2014 (8) TMI 119 - BOMBAY HIGH COURT] wherein it was held that when investments are made out of common pool of funds and non interest bearing funds were more than the investments in tax free securities, no disallowance of interest expenditure u/s 14A can be made.
Disallowance of the net Aircraft expenditure - HELD THAT:- A categorical finding has been given by the CIT(A) in his order that the assessee satisfies both the conditions and on this basis, it was held by him that the assessee is eligible for depreciation on the Aircraft. He has further noted that the Aircraft was acquired to run it on hire and air craft charges are in fact received and, on this basis, he decided that depreciation on Aircraft of ₹ 2100,08,528/- is allowed. We find that there is no dispute that an amount of ₹ 269,80,969/- was earned by the assessee towards aircraft hire charges and the expenses claimed by the assessee of ₹ 1983.43 lakhs is after reducing the charges received by the assessee of ₹ 269.81 lakhs. Under these facts, we find no infirmity in the order of the CIT(A) as per which it was held by him that the expenses on aircraft including depreciation is allowable.
Section u/s 14A disallowance - HELD THAT:- This is the main claim of the assessee before CIT(A) that the assessee is a registered NBFC and the main business of the assessee is to lend money and to invest in equity shares of various companies. It is also claimed before the CIT(A) that the assessee has earned interest income of about ₹ 41 Crores and the assessee has a share capital & reserve of ₹ 1001 Crores. Out of this capital and reserve of ₹ 1000.63 Crores, if we reduce investment in shares considered for 14A disallowance of ₹ 313.11 Crores as on 31.03.2010, then also, surplus amount of approx. ₹ 688 Crores remains to take care of share application money given by the assessee of ₹ 65.22 Crores. By following the same judgment of rendered in the case of CIT Vs. Microlabs [2016 (4) TMI 219 - KARNATAKA HIGH COURT] we hold that no disallowance is called for in respect of investment by way of share application money
-
2019 (12) TMI 771
Revision u/s 263 - G.P. shown at 4.68% on sales made in individual capacity should have been considered for G.P. in the case of the partnership firm (assessee under consideration) - HELD THAT:- It is a settled position in law that provisions of section 263 do not permit substituting one opinion by another opinion. The order of the PCIT cannot be sustained on the principle of 'erroneous' nature of the order of the A.O. as it is not erroneous. Further, in the instant case, to reiterate, there was no allegation by the AO that the evidences produced were fictitious or invented, thus accepted the authenticity of the same.
Such an order cannot be called erroneous and prejudicial to the interests of revenue. Hence, we are of the view that revisionary jurisdiction exercised by the PCIT u/s. 263 was not in tune with the facts and evidences on record duly explained to the A.O. and verified by him in detail, that being so the order passed u/s. 263 on such erroneous stand is liable to be quashed.
We accordingly quash the order u/s 263 of the Act and allow the appeal of the assessee.
Second point in the impugned notice u/s.263 was to the direction that addition of peak credit on the basis of the bank account has not been considered in the impugned reassessment order. As stated above, the said peak credit was assumed on the basis of deposits in April,2007 in Axis Bank maintained by the assessee-firm.
It is pertinent to note that the said peak credit was originally added in the individual assessment of Sri Jabibur Rahaman for the impugned assessment year solely on the ground that the Bank account with Axis Bank had not been disclosed in his ROI. The Hon’ble Tribunal on the basis of the finding that the same was not related to the individual but belonged to the partnership firm, in which the said individual is a partner, deleted the addition and the same was directed to be considered in the case of the assessment of the partnership firm.
Evident that the addition of peak credit in the guise of undisclosed income was made for not disclosing the Axis Bank Account in the ROI, but when the said Bank Account admittedly stood declared in the ROI of the partnership firm for the impugned assessment year and accounted for in the audited books of account, the addition on the basis of earlier stand of undisclosed income does not survive on facts and in law. Since, in para No.12 of our order, we have quashed the order of PCIT, and the second point in the impugned notice u/s.263 is consequential in nature, therefore does not require adjudication. - Appeal of the assessee is allowed.
-
2019 (12) TMI 770
Disallowance of written off depreciated investments - HELD THAT:- Because of the restrictions contained in section 44 read with Rule 5 of the First Schedule, there could not be any disallowance of the amount written off out of investments and, accordingly, the disallowance is deleted
Disallowance of Amortisation of Premium paid on Purchase of Investments - HELD THAT:- As relying on assessee's own case [2019 (6) TMI 84 - ITAT KOLKATA] CIT(A) has not erred on the facts of the case and in law in holding that a sum being amortization of premium paid on purchase of investments is an allowable deduction while computing the income."
Addition towards Reserve created for Unexpired risk u/s 115JB - HELD THAT:- As relying on assessee's own case [2019 (6) TMI 84 - ITAT KOLKATA] Reserve created for unexpired risk need not be added back for the purpose of computation of book profits u/s 115JB
Disallowance u/s 14A while computing the book profit of the assessee company u/s 115JB - HELD THAT:- Rule 8D could be invoked only for making a disallowance u/s 14A while computing the income of the assessee under the normal provisions of the Act and not for computation of book profit u/s 115JB of the Act. It was further held that unless an item is debited in the profit and loss account, the same could not be the subject matter of addition to book profits under clause (f) of Explanation to section 115JB of the Act and it is only the actual expenditure incurred by the assessee in relation to the exempt income, which is debited to the profit and loss account, can be added. In the present case, the assessee company had already disallowed expenses incurred in relation to the exempt income suo moto and keeping in view the same, we do not find any infirmity in the impugned order of the Ld. CIT(A) deleting the further disallowance made by the A.O. u/s 14A by applying Rule 8D while computing the book profit of the assessee company u/s 115JB of the Act. Ground of the Revenue’s appeal is accordingly dismissed.
-
2019 (12) TMI 769
Service PE in India - Royalty - attribution of profit - AO has erred in holding that Appellant has a service Permanent Establishment (“PE”) in India within the meaning of Article 5 of India UK Double Taxation Avoidance Agreement (“DTAA”) - Whether Appellant has a service PE in India under Article 5(2)(k) of the DTAA? - HELD THAT:- Following the decision in own case [2018 (9) TMI 961 - ITAT DELHI], decided in favor of assessee.
-
2019 (12) TMI 768
Addition of the fixed conveyance allowance - disallowance on account of non-availability of the supporting evidences - HELD THAT:- As there was no representation from the side of the learned AR for the assessee qua the disallowances made by the authorities below against the fixed conveyance allowance received by the assessee from LIC, we do not find any infirmity in the order of the authorities below. Indeed, the onus lies on the assessee to furnish the details of the expenses incurred by him against the fixed conveyance allowance received from LIC. Hence, in the absence of the documentary evidence, the ground of appeal of the assessee is dismissed.
Unexplained household expenses - HELD THAT:- We note that the AO has made the addition on the basis of the guesswork. In fact, the AO has not brought anything on record about the actual expenses incurred by the assessee with respect to the telephone, mobile, electricity, education of his daughter etc. it is the settled law that there cannot be any addition based on guess work despite how strong the guesswork is.
In the case on hand, the reasoning given by the AO for making the impugned addition appears to be strong and reasonable but the same is not supported on the basis of documentary evidence. Therefore we are of the view that no such addition is warranted in the given facts and circumstances. Hence, the ground of appeal of the assessee is allowed.
Profit with respect to share trading activities - HELD THAT:- AR at the time of hearing has not made any representation in the written submission filed before us. As there was no representation from the side of the learned AR for the assessee qua the addition made by the authorities below against the share trading transactions, we do not find any infirmity in the order of the authorities below. Indeed, the onus lies on the assessee to furnish the details of the profit earned by him against the share trading transactions. Hence, in the absence of the documentary evidence, the ground of appeal of the assessee is dismissed.
Disallowance for the expenditures incurred against the incentive bonus - HELD THAT:- AR at the time of hearing has not made any submission in the written submission filed before us. As there was no representation from the side of the learned AR for the assessee qua the disallowances made by the authorities below against the incentive bonus received by the assessee from LIC, we do not find any infirmity in the order of the authorities below. We also note that there is no provision under the Act authorizing the assessee to claim the deduction against the incentive bonus which is part of the salary as provided under section 17 of the Act.
Deduction u/s 80 G for the amount of donation paid to Shri Lalpur Gau Rakshak Mandal for ₹3000.00 only - same was disallowed by the AO in the absence of any documentary evidence - HELD THAT:- The assessee has not preferred an appeal to the learned CIT (A) against the non-disallowance of deduction for the donation paid under section 80G of the Act. However, the assessee in the ground of appeal has raised the issue before us 1st time. This is also pertinent to note that the assessee or his authorized representative has not made any representation against the ground of appeal raised by the assessee as discussed above. Thus, in the absence of any representation the ground of appeal of the assessee is dismissed.
-
2019 (12) TMI 767
Eligibility of deduction u/s 80P - HELD THAT:- Full Bench of the Hon’ble jurisdictional High Court in the case of The Mavilayi Service Co-operative Bank Ltd. V. CIT [2019 (3) TMI 1580 - KERALA HIGH COURT] had held that the A.O. has to conduct an inquiry into the factual situation as to the activities of the assessee society to determine the eligibility of deduction u/s 80P. In view of the dictum laid down by the Full Bench of the Hon’ble jurisdictional High Court (supra), we restore the issue of deduction u/s 80P(2) to the files of the AO. AO shall examine the activities of the assessee and determine whether the activities are in compliance with the activities of a co-operative society functioning under the Kerala Co-operative Societies Act, 1969 and accordingly grant deduction u/s 80P(2) of the I.T.Act.
As regards the interest on the investments with Cooperative Banks and other Banks, the co-ordinate Bench order of the Tribunal in the case of Kizhathadiyoor Service Cooperative Bank Limited [2016 (7) TMI 1405 - ITAT COCHIN], had held that interest income earned from investments with treasuries and banks is part of banking activity of the assessee, and therefore, the said interest income was eligible to be assessed as `income from business’ instead of `income from other sources’. However, as regards the grant of deduction u/s 80P on such interest income, AO shall follow the law laid down by the Larger Bench of the Hon’ble jurisdictional High Court in the case of The Mavilayi Service Co-operative Bank Ltd. V. CIT (supra) and examine the activities of the assessee-society before granting deduction u/s 80P of the I.T.Act on such interest income. It is ordered accordingly.
-
2019 (12) TMI 766
Reopening of the assessment by issuance of notice u/s 148 - Bogus purchases - HELD THAT:- In terms of quantity, the purchases and sales have not been disputed. Only thing disputed by the Revenue is part purchases from the alleged total sales were treated as bogus. It can be examined with a simple example. That the assessee has purchased material from party “A”; obtain bills from party “B”. Since he has not able to prove the purchases from “B”, therefore, the purchases have been treated as bogus. In fact, the material was received by the assessee.
If that thing has not been happened, then sales would not have been achieved. Therefore, in these circumstances, only extra element of profit involved in this modus operandi of purchases of goods from party “A” and obtaining bills from “B” is to be worked for treating the income of the assessee. The assessee has already shown gross profit at 7.25% and 7.14%. If extra profit at the rate of 6% is being estimated qua the alleged purchases of ₹ 59,09,015/- and ₹ 26,15,013/- in the AY 2009-10 and 2010-11, then ends of justice would meet. This 6% we have worked out on the basis of our past experience in dealing with such cases, wherein Hon’ble Gujarat High Court has also upheld estimation of profit ranging between 5% to 20% depending on the nature of business and considering undue profit earned by an assessee.
-
2019 (12) TMI 765
Addition u/s.68 - CIT(A) has changed the addition to section 69 - HELD THAT: In the case of Andaman Timber Industries v. CCE [2015 (10) TMI 442 - SUPREME COURT] wherein it was held that not allowing the assessee to cross-examination witnesses by taxing authority, though subsequent of those statements were made basis of the impugned order amounts to a serious flaw which makes impugned order nullity in as much as it amounted to violation of principles of natural justice. Though the CIT(A) by not allowing opportunity to the assessee cross-examination as violated the principles of natural justice.
We further observe that the addition is not sustainable u/s.69. We further observed that the assessee has repaid all the loans to the lenders in the subsequent year through cheque which has been appeared in their bank account also therefore when the assessee has repaid the loans by cheques which has in cash to the respective parties, and the assessee has furnished complete details and address, and thus the assessee has discharged the onus u/s.68 of the Act, hence addition is not sustainable in law.
The addition sustained by the CIT(A), by u/s.69 is not found sustainable in the law. Accordingly, the same is directed to be deleted. Accordingly, these grounds of appeals are allowed.
-
2019 (12) TMI 764
Unexplained cash credit u/s 68 - Penalty under section 271(1)(c) - HELD THAT:- The non–cooperation of the lenders in the enquiry conducted may be for various reasons. While confirming the addition in the quantum proceedings, one has to look at whether the ingredients of section 68 of the Act are established or not. Once the Appellate Authority on the basis of facts on record concludes that either the identity of the creditor or the genuineness of the loan transaction or the creditworthiness of the creditors are not established, addition can be made under section 68.
The aforesaid finding has to be on the basis of facts/evidences brought on record during assessment proceeding. However, imposition of penalty under section 271(1)(c) is an independent proceeding wherein assessee’s explanation qua the charge brought against him has to be evaluated afresh in the context of materials on record. In the facts of the present case, the assessee did furnish necessary information with some supporting evidence in respect of loan received from 22 creditors aggregating to ₹ 39,38,000. Therefore assessee cannot be accused of furnishing inaccurate particulars of income or concealing income to that extent. Therefore, imposition of penalty on the addition and the corresponding interest thereon deserves to be deleted.
-
2019 (12) TMI 763
Addition on account of alleged on–money received on sale of flats - HELD THAT:- Addition made by the Assessing Officer on account of on–money is purely on ad–hoc/estimate basis without having any nexus with any incriminating material brought on record. Merely relying upon the statements recorded under section 132(4) which were subsequently retracted, no addition can be made purely on presumption and surmises without any corroborative evidence to follow up the statements recorded under section 132(4).
As rightly observed by Commissioner (Appeals), undisclosed income declared at the time of search has already been offered by the assessee in the return of income filed for the assessment year 2011–12. Therefore, if the AO wanted to make any addition on account of on–money in the impugned assessment year, he should have brought evidence on record to back his conclusion.
The incriminating material referred to by him for making the addition in no way is connected with the assessee. Therefore, it cannot form the basis for making the addition. Therefore, on consideration of overall facts and circumstances of the case and keeping in view the decision of the Tribunal referred to above, we do not find any infirmity in the order of learned Commissioner (Appeals). - Revenue’s appeal is dismissed.
-
2019 (12) TMI 762
Disallowance of deduction claimed u/s 54/54F - since the flat transferred by the assessee was a residential property, claim of deduction under section 54F is not allowable - HELD THAT:- Merely because the assessee has claimed deduction under section 54F of the Act, by treating the flat as a commercial property, assessee’s claim of deduction under section 54 of the Act cannot be disallowed if the assessee fulfills the conditions of section 54.
In the facts of the present case, the Departmental Authorities have no doubt that the flat transferred by the assessee is a residential flat and on re–development the assessee has also received a residential flat. That being the case, the assessee is certainly entitled for deduction under section 54 of the Act. Merely because the assessee claimed a deduction under the wrong provision, his claim cannot be disallowed if it is allowable under a different provision.
While admitting the additional ground raised by the assessee being purely a legal ground which can be decided without requiring investigation into fresh facts, we direct the AO to allow assessee’s claim of deduction under section 54 of the Act in respect of the second flat. Additional grounds are allowed. Consequently, the ground raised by the assessee claiming deduction under section 54F of the Act having become redundant is dismissed.
............
|
9911796707
