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Income Tax - Case Laws
Showing 41 to 60 of 10077 Records
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2019 (12) TMI 1600
Disallowance @10% of the dividend u/s 14A - case of the appellant is that all the scripts of investments are held by it as stock in trade, therefore, no disallowance u/s 14A can be made - DR submitted that provisions of section 14A will apply even if the assessee has shown the investment generating exempt income as stock in trade - HELD THAT:- As submitted that investments are held by assessee as stock in trade. In the present case the issue is squarely covered by the decision of Maxoop Investment Ltd [2018 (3) TMI 805 - SUPREME COURT] as held that when the share are held as stock in trade, it becomes the business activity of the assessee. Whether the dividend earned or not is immaterial. It would be “quirk of fate‟ if the dividend is received. The Hon‟ble Supreme Court thus held that in such cases there cannot be any disallowance u/s 14A of the Act. Thus, the fact is not denied that assessee is holding exempt income generating investment as stock in trade, the disallowance made by the ld Assessing Officer and confirmed by the ld CIT(A) is not sustainable. Accordingly, we direct the ld Assessing Officer to delete the disallowance u/s 14A of the Act.
Deduction u/s 36(1)(viii) -Addition of interest on housing loans - HELD THAT:- In the present case the methodology adopted by the assessee is consistently followed for last eight years. Same was accepted by the revenue without any objection. The only issue is with respect to how the profit of the business for the purpose of long term housing finance shall be worked out. The only issue is that assessee is computed with respect to the total income with respect to the interest income whereas the ld AO has applied the above ratio to the total receipt. When the method has been consistently accepted for the above year we do not find any reason to defer from that. In view of this we do not find any infirmity in allowing the assessee claim of deduction u/s 36(1)(viii) of the Act applying the ratio of 62.75%. In the result we do not find any merit in ground No. 1 of the appeal. Hence, it is dismissed.
Disallowance u/s 14A - CIT(A) deleted the disallowance as per Rule 8D but retained 10% of such disallowance - HELD THAT:- AO has not recorded any satisfaction with respect to the expenditure incurred in relation to exempt income. Therefore, on this account the disallowance cannot be made by the ld Assessing Officer under that section without recording satisfaction that assessee has incurred some expenditure in relation to exempt income. Further as held by us in appeal of the revenue for AY 2009-10 that assessee is holding these investments as stock in trade no disallowance can be made. For the reasons given by us in the appeal of the assessee wherein, we have directed to delete the disallowance, this ground of appeal of revenue is also deserves to be dismissed. Accordingly, ground No. 2 of the appeal is dismissed.
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2019 (12) TMI 1598
Assessment u/s 153A - HELD THAT:- High Court may be pleased to issue a writ, order or direction especially in the nature of writ of Mandamus calling for the relevant records from the Respondents, and (i) declaring the reason to believe purportedly recorded by 2nd and 3rd Respondents u/s. 132(l) of the Income Tax Act, 1961 as being arbitrary, illegal, without jurisdiction, mala fide and for collateral purpose and (ii) declare the warrants of authorization dated 03rd January, 2018 and 08th January, 2018 issued by the 2nd and 3rd Respondents respectively as arbitrary, without jurisdiction and illegal, and (iii) declare the consequent searches on the Petitioners premises as arbitrary, without jurisdiction and illegal and (iv) consequently, quash the notices dated 24th December, 2018 issued by the 4th Respondent u/s. 153A for the assessment years 2012-13 to 2017-18 and (v) without prejudice to above, no incriminating material seized during the course of search, quash the notices dated 24th December, 2018 issued by the 4th Respondent u/s. 153A of the Act for the Assessment Years 2012-13 to 2017-18 and (vi) without prejudice to above, the statement recorded from farmers/ growers do not constitute incriminating material, quash the notices dated 24th December, 2018 issued by the 4th Respondent u/s. 153A for the Assessment Years 2012-13 to 2017-18, and (vii) without prejudice to above, the assessment for the AY 2015-16 could not be subject to proceeding under section 153A of the Act, quash the notice dated 24th December, 2018 issued by the 4th Respondent u/s. 153A of the Act for the AY 2015-16 and (viii) restrain the Respondents from initiating any further action pursuant to the said searches.
Stay the notices issued by the 4th Respondent u/s. 153A for the assessment years 2012-13 to 2017-18 pursuant to search and seizure proceedings - The interim order granted earlier is extended upto 31.12.2019 Post the WP on 23.12.2019.
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2019 (12) TMI 1590
Order passed u/s 220(2A) - appealable order before the Income Tax Appellate Tribunal - HELD THAT:- As fairly agreed by the learned Authorized Representative that the appeal is not maintainable in so far as an order u/s.220(2A) is not an appealable order before the Income Tax Appellate Tribunal. Consequently, he has prayed for permission “to withdraw the appeal with a liberty to obtain an alternative remedy.” The learned Authorized Representative has also made an endorsement to that effect.
Consequently, the assessee is permitted to withdraw this appeal with liberty to obtain an alternative remedy. Accordingly, the appeal of the assessee is dismissed as withdrawn. Appeal of the assessee is dismissed.
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2019 (12) TMI 1588
Capital gain computation - Calculation of the sale consideration - development agreement for construction of the flats - property belongs to 2 owners - cost the construction determined by the AO which was collected from the developer - Deduction u/s 54 - HELD THAT:- Assessee has valid point that AO should have considered only the cost of construction, not the cost of the project, as per the submission made by the developer and the cash component will definitely be part of the project cost to the developer when the AO adopts the actual cost to the developer as the relevant cost for the fair value to the assessee. He should have restricted himself to calculate the sale consideration only to the portion of relevant cost of construction only relevant for the flats allotted to the assessee and he should have not considered the cash component which is already embedded in the cost of project. Accordingly, we direct the AO to remove the cash component from the sale consideration.
With regard to other cost of expenditure for which the developer has not provided the breakup of the cost of project/construction, we direct the AO to collect the breakup of the cost of the project/construction from the developer and calculate only the cost of construction and eliminate all those promotional expenditures and the expenditure which is not relating to the cost of construction. Therefore, we are inclined to remit this issue to the file of AO to re-calculate the cost of construction. Accordingly, this ground raised by the assessee is allowed for statistical purposes.
Deduction u/s 54 - Combining of flats - how combined portion of the area will be treated as one single unit? - We notice that assessee has modified the development agreement for construction of the flats from 40 flats to 36 flats and 2 penthouses and distributed between them as per terms of original agreement. Therefore, the modified agreement and its schedule, which is placed on record at page no. 43 of the paper book clearly indicates that the intention of the developer and the assessee to make 2 penthouses in 11th and 12th floor as penthouses and assessee was regularly pleading that these 2 penthouses were constructed by combining 4 flats at floors 11th and 12th.
AO has rejected the contention of the assessee with the observation that there is no record that this combing of flats were made during the impugned assessment year. We cannot accept the contention of the AO for the reason that the purpose of modification of the development agreement was to combine 4 flats and to make 2 penthouses. Therefore, we are in agreement with the submission of Ld. AR that there exist 2 penthouses at the site developed by the developer as per the terms of agreement in modified development agreement.
Development agreement was entered by the assessee along with his son with share of 73:27 between them and it is clear that there exist 2 penthouses and two individual assessee . Therefore, each assessee will get separate exemption u/s 54F of the Act. This benefit is legally available to both the assessee . There are catena of cases in which courts have held that when there exists two portion of flats with one ketchen then the whole combined portion of the area will be treated as one single unit for the purpose of granting exemption u/s 54 as well as 54F. Accordingly, we direct the AO to grant exemption u/s 54F of the Act to each assessee and as per their choice. On record, assessee prefers to get penthouse occupied by his daughter as exemption u/s 54F and by legally AO should allow this penthouse as exemption u/s 54F of the Act. Accordingly, this ground raised by the assessee is allowed.
Classification of transaction of sale into land and super structure - CIT-A distributing the sale proceeds into sale proceeds attributable to the land and super structure - flat purchaser has irrecoverably withdrawn his rights for any future FSI /TDR benefits awarded to the owners - assessee determined the capital gains in 2 portions as sale proceeds attributable to the land and determined the capital gain as long term capital gain and second portion as sale proceeds attributable to super structure and determined the capital gain as short term capital gains - HELD THAT:- We notice that in the case of CIT v Citibank [2003 (4) TMI 92 - BOMBAY HIGH COURT] it was held that as per the above ratio, the flat owners will get right of possession as well as right on portion of the undivided share in the land. We notice that as per the proportionate area of flats occupied by him in respect of the total area of the building i.e. undivided share, the owner of the flat will get an automatic membership in the cooperative society in proportion to the undivided share. Since cooperative society owns the total area of the land and being a member of the society, he gets the ownership of the undivided share. As per the sale deed, it is clear that assessee gets a membership on the cooperative societies, it does mean that flat owners not only owns a super structure and also ownership right on the undivided share, therefore we are inclined to accept the findings of Ld. CIT(A) in distributing the sale proceeds into sale proceeds attributable to the land and super structure. Accordingly, we reject the contentions of the revenue and dismiss the grounds of appeal raised by the revenue.
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2019 (12) TMI 1572
Revision u/s 263 by CIT - Unexplained source of cash deposits not acknowledged by the AO - HELD THAT:- Details were submitted for verification of source of cash deposits such as Return of Income, Computation of Income, Unsecured Loan taken during the relevant year, details of source of cash deposits, Balance Sheet for F.Y. 2012-13, cash book of F.Y. 2013-14 and balance sheet of 2013-14 etc., of all the investors who were asked by the AO by notice dated 03.03.2016 and 07.11.2016 and also during the course of hearing. All the required details have already been submitted during the scrutiny assessment proceedings vide various submissions and same were also acknowledged by the AO.
Valuation of shares as per DCF Method - It is widely followed method for valuation of unquoted equity shares. This method involves projection of future cash flows. Techno, economic viability stata report was also obtained based on the said projection and conserving the profitability of the project. Thus, the projection was drawn as per the assessee after stating various aspects of the whole nature and other factors related to project. The actual figures may differ from the projections due to various factors and circumstances of the market in real time. On the entirety of the aspects, we rely upon the decision of Shree Salasar Overseas Pvt. Ltd., [2011 (11) TMI 686 - ITAT JAIPUR] it was held as “that details were filed before the Assessing Officer vide a letter in which, it was mentioned that such expenses were being allowed in earlier year. Hence, this was not a case where there was no enquiry.
AO had called for explanation on both the ground by issuance of notice and subsequently, the assessee had also submitted all the details in order to satisfy the queries raised during the investigations done by the AO which clearly shows that the AO had undertaken the exercise of examining of both the above issues. It appears that since the AO was satisfied with the assessee’s explanation, he accepted the same. Even the commissioner conceded the position that AO made the enquiries, but the grievances of the commissioner was that the AO should have made further enquiries rather accepting the assessee’s explanation, therefore it could not be said that it was a case of lack of enquiry.
Pr.CIT has not pointed out any specific deficiency in the enquiry that was not made, in the show cause notice as well as in the order u/s.263 of the Act - We hold that the order passed by ld.Pr.CIT u/s.263 of the Act for the above stated reasons is hereby set-aside and quashed - Decided in favour of assessee.
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2019 (12) TMI 1571
Taxability of freight charges from transportation of cargo through feeder vessels - freight income from transportation of cargo through feeder vessels is not eligible for benefit under Article 8 of India- Germany DTAA - income from feeder vessels would fall within the ambit of section 44B of the Act whereas the same shall not eligible for benefit under Article 8 of India-Germany DTAA - HELD THAT:- We finding no reason to take a different view as per AY 2007-08 [2012 (5) TMI 9 - ITAT MUMBAI] thus, are of the considered view that the benefits of Article 8 of the DTAA between India and Germany would also be available to the assessee in respect of the revenue earned from the feeder vessels obtained by the assessee by slot hire arrangements. The Grounds of appeal raised by the assessee before us are allowed.
Additional claim of IDS credit - claim was made by the assessee by moving a letter before the Assessing officer but the Assessing officer did not deal with the same - DRP also declined to interfere in the matter on the ground that the assessee had not made the claim before the Assessing Officer - HELD THAT:- We are of constant view that the matter should be examined by the Assessing Officer on merits. There cannot be any dispute that any legal issue can be raised before this Tribunal and the Tribunal can pass such orders “as it thinks fit” on the same. We direct the Assessing Officer to examine the claim of the assessee on merits.
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2019 (12) TMI 1569
Penalty u/s.271D - default u/s 269SS - Mandation of recording satisfaction for initiation of penalty proceedings - as per AO assessee had accepted deposits exceeding ₹ 20,000/- otherwise the account payee cheques or bank drafts in contravention of provision of section 269SS - HELD THAT:- Hon'ble Apex Court in the case of CIT vs. Jai Laxmi Rice Mills [2015 (11) TMI 1453 - SUPREME COURT] dealing with the levy of penalty under section 271D of the Act, has held that if there is no satisfaction recorded in the order of assessment regarding initiation of penalty proceedings under section 271D of the Act, then no penalty thereunder could be levied.
As in the case in hand no satisfaction for initiation of penalty proceedings under sections 271D and 271E of the Act has been recorded in the orders of assessment. In this factual matrix of the case and respectfully following the decision of the Hon'ble Apex Court in the case of Jai Laxmi Rice Mills (supra), we hold that since admittedly no satisfaction has been recorded for initiating penalty proceedings under sections 271D and 271E of the Act in the case on hand in the order of assessment for A.Y. 2000-01, therefore no penalty thereunder could be levied. In this view of the matter we cancel the penalty of 1,45,000/- each levied under sections 271D and 271E of the Act for A.Y. 2000-01. Consequently the assessee’s additional grounds are allowed in both the appeals.
Since the position in the present case is identical as no satisfaction has been recorded by the ld.AO before initiating penalty u/s.271D of the I.T.Act, therefore while relying upon the judgments as mentioned above, we hold that since no satisfaction had been recorded for initiating penalty proceedings u/s.271D of the Act in the case in hand, therefore, no penalty could be levied. - Decide in favour of assessee.
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2019 (12) TMI 1567
Disallowance u/s.14A - disallowance as liable to be restricted to the exempt income - HELD THAT:- As it is noticed, the assessee has not filed an appeal against the confirmation of the disallowance u/s.14A and as the Revenue has not been able to point out any error in the order of the learned CIT(A) in restricting the disallowance u/s.14A being 0.5% of the average value of the investment, the order of the CIT(A) on the issue stands confirmed. Appeal of the Revenue is dismissed.
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2019 (12) TMI 1565
Reopening of assessment u/s 147 - Petitioner challenges the Notice u/s 148 - Main contention raised by the Petitioner is that AO has no jurisdiction to proceed to issue the notice as the jurisdictional requirements are not present - HELD THAT:- Respondents seeks time to take instructions and file reply, if necessary.
Considering the averments made in the Petition and that respondents are seeking time, there shall be ad-interim stay to the impugned notice.
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2019 (12) TMI 1564
Revision u/s 263 - reopening of assessment u/s 147 initiated pursuant to the revisional order of ld. Ld. Pr. CIT-3, Kolkata, passed u/s 263 - HELD THAT:- Assessee had preferred an appeal challenging the revisional order of ld. Pr. CIT-3 dated 30.03.2015 before this Tribunal; and the Tribunal was pleased to set aside the revisional order of the ld. Pr. CIT on 06.04.2016. Consequently the order of the AO passed giving effect to the ld. Pr. CIT’s order dated 30.03.2015 became ab-initio-void and resultantly non-est in the eyes of law.
The principle applicable is based on legal maxim “Sublato Fundamento Credit Opus” meaning, in case a foundation is removed, the superstructure falls.
In the case of Badrinath vs Government Of Tamil Nadu And Ors. [2000 (9) TMI 1044 - SUPREME COURT] held that once the basis of a proceeding is gone, all consequential orders and acts would fall on the ground automatically which is applicable to judicial/quasi-judicial proceedings.
In case in hand, the AO has passed the order dated 29.01.2016 by giving effect to the order of the ld. Pr. CIT dated 30.03.2015 and when that order of the ld. Pr. CIT has been set aside by the Tribunal by order dated 06.04.2016, the foundation of the AO’s order dated 29.01.2016 has been removed and therefore all consequential action falls and therefore the ld. CIT(A) rightly allowed the appeal of the assessee - Thus dismiss all the appeals of the Revenue.
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2019 (12) TMI 1563
Late fee u/s 234E - delay of 390 days in filing of TDS statements has been occurred - imposition of late fee for delay in filling of TDS statement(s) prior to amendment by way of finance Act, 2015 which came into effect from 1st June 2015 - whether the late can be imposed for the period prior to 1st June 2015 when the Amendment was made vide Finance Act 2015 and as to whether there was enabling provisions for levy of late fee prior to 1st June 2015? - HELD THAT:- Considering the facts of the instant case are identical to the facts of the orders passed by Hon’ble Karnataka High Court in the case of Fatheraj Singhvi & Ors.[2016 (9) TMI 964 - KARNATAKA HIGH COURT] and M/s. M.G.N. Khalsa High School, Jalandhar [2019 (8) TMI 99 - ITAT AMRITSAR] and in the case of SIBIA HEALTHCARE (P) Ltd.[2015 (6) TMI 437 - ITAT AMRITSAR]we are of the considered opinion that late fee for the delay in filing the TDS statements, cannot be levied for the period prior to 1st June, 2015, hence we are inclined to delete the late fee imposed by the AO and affirmed by the ld. CIT(A). Consequently the appeal is liable to be allowed.
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2019 (12) TMI 1562
Notional interest on Annuity advance to subsidiary - assessee claimed that the advance had been made to the four companies for protecting and holding strategic interest in those companies and in various business initiatives - HELD THAT:- As noticed that the issue of the notional interest on the annuity advance to subsidiaries is now squarely covered by the decision of the Co-ordinate Bench of this Tribunal in the assessee’s own case for various Assessment Years and as it is noticed that the learned CIT(A) has followed judicial discipline in following the decision of the Co-ordinate Bench of this Tribunal in the assessee’s own case for the earlier Assessment Years referred to supra, as also on the ground that the Revenue has not been able to dislodge the findings on the learned CIT(A), we find no reason to interfere in the order of the learned CIT(A) on this issue. Consequently, this issue is held in favour of the assessee and against the Revenue.
Disallowance u/s.14A r.w. Rule 8D(2)(iii) - CIT(A) had followed the decision of the Co-ordinate Bench of this Tribunal in the assessee’s own case and had directed the Assessing Officer to determine and restrict the disallowance u/s.14A to 0.5% on the average investment as provided under Clause-(iii) of Rule 8D(2) - HELD THAT:- As decided in own case [2016 (1) TMI 1028 - ITAT CHENNAI] a part of the expenditure incurred in the manpower and infrastructure facilities diverted for earning exempted income has to be disallowed. As rightly submitted by the learned DR, the Assessing Officer has computed 0.5% of the average investment as expenditure by applying third limb of Rule 8D. Rule 8D(2)(iii) provides for disallowance of an amount equal to 0.5% of the average value of investment, income from which does not form part of the total income, shall be disallowed. Accordingly, the orders of the lower authorities are modified and the Assessing Officer is directed to disallow 0.5% of the average value of investment, the income from which does not form part of the total income - Decided against revenue.
Depreciation of Franchise rights - claim disallowed by AO on the ground that, in the case of the assessee, the franchise has been suspended and the assessee had not been taking part in the tournament - HELD THAT:- As decided in own case [2016 (1) TMI 1028 - ITAT CHENNAI] assessee has claimed only 18.89 crores as depreciation and the Assessing Officer has given an enhanced depreciation of an additional amount of ₹ 12.92 lakhs resulting a depreciation of ₹ 31.81 crores. Similarly, for the assessment year 2015-16, the assessee had claimed 14.17 lakhs, whereas the Assessing Officer has granted ₹ 32.05 crores. Thus, the Assessing Officer has in fact granted the assessee higher depreciation than what has been claimed by the assessee. A perusal of the order of the learned CIT(A) shows that the learned CIT(A) has followed judicial discipline in following the decision of the Co-ordinate Bench it has been held that the Assessing Officer is directed to allow depreciation on the entire cost of ₹ 364 crores - as it is noticed that the issue is squarely covered by the decision of the Co-ordinate Bench of this Tribunal in the assessee’s own case issue is decided against the Revenue and in favour of the assessee.
Nature of receipts - Sales Tax subsidy as capital receipts - HELD THAT:- CIT(A) has categorically considered the fact that if the object of the subsidy is to enable the assessee to run a business more profitably, then the receipt is on revenue account. On the other hand, if the object of the assistance under the subsidy is to enable the assessee to set up a new unit or to expand its existing unit, then the receipt of the subsidy was on capital account - CIT(A) has also considered the principles laid down by the Hon’ble Supreme Court in the case of Commissioner of Income-Tax vs. Ponni Sugars and Chemicals Limited . [2008 (9) TMI 14 - SUPREME COURT] - CIT(A) has also recognized the fact that the subsidy was granted to the assessee as incentive to invest in backward areas and consequently the said subsidy granted by the Government in fact was capital receipt. It is also noticed that the learned CIT(A) has recognized with the fact that the Cement Manufacturing Plant at Parli, Beed District in the state of Maharashtra comes under the Industrial Promotion Policy of the Government of Maharashtra and the ‘Package Scheme of Incentives 2007’ invited by the Directorate of Industries, Government of Maharashtra and consequently the assessee has made a fixed capital investment of nearly 152 crores as on 31.03.2011. It is after recognizing this that the learned CIT(A) has granted the assessee the benefit of treating the said subsidy as a capital receipt.
Foreign currency monetary item transaction - HELD THAT:- The amortization has been done by applying the notification issued by the MCA Circular dated 29.11.2011 but in the Memorandum of total income the amortized sum was added back and the entire expenses claimed. Thus, it is not the issue as to the assessee having amortized the deferred revenue expenditure but this is in fact a forex loss incurred by the assessee on account of a loan taken for the general purpose. This is admittedly to be allowed on the revenue filed in line to the decision in the case of Commissioner of Income Tax vs. Woodward Governor India (P) Limited [2009 (4) TMI 4 - SUPREME COURT]. It must also be mentioned here that the Assessing Officer in the assessment order has not disturbed the claim of the assessee on the ground that the loss was capital. The Assessing Officer is disallowing the claim only on the ground that the MCA Circular are not binding on the department. As no error in the accounts of the assessee nor has any facts has been brought out to show that the forex loan taken by the assessee was for the capital asset.
This being so, as also on the fact that the revenue has not been able to dislodge the findings of the facts as arrived by the learned CIT(A) in his order, we find no reason to interfere in the order of the learned CIT(A) and the same stands upheld. In the result, the issue is held in favour of the assessee.
Depreciation of UPS restricted to 60% - HELD THAT:- The issue as to whether the UPS is liable to be considered as part of the computer system and therefore entitled for rate of 60% being the rate eligible for computers admittedly is squarely covered by the decision of the Co-ordinate Bench of this Tribunal in the case of Indian Overseas Bank Limited [2014 (2) TMI 930 - ITAT CHENNAI] AND Case of Datacraft India Limited, Mumbai [2010 (7) TMI 642 - ITAT, MUMBAI] - UPS forms part of the computer system and therefore was entitled for depreciation at 60% being the rate of depreciation for computers.
Deduction u/s.80IA - adjustment of the rate in respect of the electricity consumed under the captive consumption - HELD THAT:- As deduction u/s.80IA is the deduction from the total income of the assessee the profits and gains of an eligible undertakings.
The Hon’ble Gujarat High Court in GUJARAT ALKALIES AND CHEMICALSLTD [2016 (10) TMI 1111 - GUJARAT HIGH COURT] has categorically admitted that the deduction u/s.80IA is permissible for captive consumption and even the rate at which the deduction is to be computed. Consequently, the issue is held in favour of the assessee and against the Revenue.
Disallowance u/s.14A r.w.rule 8D while comuting book profit u/s.115JB - HELD THAT:- CIT-A followed the principles laid down by the Co-ordinate Bench of this Tribunal in the assessee’s own case and restricted the disallowance to 0.5% of the average investment to be considered for disallowance under both the regular provisions and also in computing the book profits u/s.115JB of the Income Tax Act, 1961. As it is noticed that the learned CIT(A) has followed the principles laid down in the case of Assistant Commissioner of Income Tax Vs. Vireet Investment Private Limited [2017 (6) TMI 1124 - ITAT DELHI], we find no error in the order of the learned CIT(A) which calls for any interference. In the result, the issue is held in favour of the assessee and against the Revenue.
Disallowance u/s.37 as business expenditure for the payment made to National Council for Cement & Building Materials - As submitted assessee had to contribute to the National Council for Cement and Building Materials [NCCBM] which was a Government of India organization - HELD THAT:- As it is noticed the payments have been made by the assessee to NCCBM which is an Apex body functioning under the Government of India and doing significant study and research in cement related field, obviously, the results from the said study would be in the interest of the assessee’s business.
This being so, in view of the decision of the Hon’ble Supreme Court in the case of Venkata Satyanarayana Rice Mill Contractors [1996 (10) TMI 2 - SUPREME COURT] as also complying the principles laid down in the case of Chemicals and Plastics India Limited [2007 (2) TMI 194 - MADRAS HIGH COURT] we are of the view that the expenditure is a business expenditure and allowable u/s.37 of the Income Tax Act, 1961.
This being so and also on account of the fact that the Revenue has not been able to dislodge the findings as arrived by the learned CIT(A) on this issue, we find no reason to interfere in the order of the CIT(A) on this issue. Consequently, the said issue is held in favour of the assessee
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2019 (12) TMI 1561
Deemed dividend addition u/s 2(22)(e) - loan received by assessee - HELD THAT:- It is an admitted fact that M/s Punjab Metallic Pvt. Ltd. is not a share holder of the assessee company from whom the loan was received by the assessee. Therefore the amount of loan cannot be treated as a deemed dividend under section 2(22)(e) of the Act, in the hands of the assessee company as per the ratio laid down by the Hon'ble Jurisdictional High Court in the case of CIT Vs. Sharman Woolen Mills Ltd.[2011 (9) TMI 752 - PUNJAB AND HARYANA HIGH COURT] - Thus impugned addition made by the A.O. and sustained by the Ld. CIT(A) is deleted. - Decided in favour of assessee.
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2019 (12) TMI 1557
TP Adjustment - Compabale selection - HELD THAT:- Genesys International Corpn.Ltd., Infosys Ltd., Larsen and Toubro Infotech Ltd., and Persistent Systems Ltd. excluded from the final list of comparable companies for the purpose of arriving at the arithmetic mean of comparable companies for the purpose of comparison with the profit margins.
Company ICRA Techno Analytics Ltd. - The said company was excluded by the DRP on the ground of functional comparability. Besides the above, the related party transaction in the case of the aforesaid company was more than 25% as is evident from page 1129 & 1130 of Assessee’s paper book containing the financial statement of this company from capitaline database, which details are extracted at page 863 of Assessee’s paper book which is objections filed by the Assessee before the DRP. In the circumstances, this company has to be excluded from the list of comparable companies.
Request of the Assessee to compute the PLI of the Assessee by considering provision for service tax written back as part of the operating profit of the Assessee - HELD THAT:- As in the decision rendered in the case of Sony India (P) Ltd. Vs. DCIT [2008 (9) TMI 420 - ITAT DELHI-H] this aspect has been considered and it was held that provisions written back in the P&L a/c should be regarded as forming part of the operating profit of the taxpayer. Thus we hold that provision written back should be regarded as part of the revenue of the Assessee while determining PLI.
TPO is directed to compute the ALP of the international transaction of rendering of SWD services in the light of the directions contained in this order, after affording the Assessee opportunity of being heard. No other grounds relating to Transfer Pricing adjustment, were pressed for adjudication.
Grant of appropriate MAT credit - HELD THAT:- The issue has been dealt with by the DRP by directing the AO to allow MAT credit, if available, according to the provisions of Sec.115JAA of the Act. We are of the view that the said directions are proper and we direct the AO to allow MAT credit as per the directions of the DRP.
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2019 (12) TMI 1555
Income accrued in India - Income taxable in India - subscription charges received - As per AO subscription charges received under Chemical Abstract Services (CAS) division and publications (PUBS) division would be chargeable to tax in India under India US DTAA being received for use of copyright of artistic, literary or scientific work and /or for use of information concerning industrial, commercial or scientific experience and/ or for use of industrial, commercial or scientific equipment - HELD THAT:- We notice that in the assessment year 2014-15, the assessee filed its return of income declaring nil income on the plea that it was a tax resident of USA and entitled to be taxed in accordance with the provisions of India USA Double Taxation Avoidance Agreement (DTAA) to the extent they are more beneficial. The
AO however, taxed the income earned by the assessee from Indian customers with respect to the subscription fees for Chemical Abstracts Services (CAS) division and (PUBS) Division as royalty in terms of section 9(1) (vi) of the Act as well as Article 12(3) of the India USA DTAA. The contention of the assessee was that these incomes constitute business profits which are not taxable in the absence of any permanent establishment (PE) in India and since the services were being provided from outside India. The coordinate Bench decided both the issues in favour of the assessee. The coordinate Bench has decided the identical issues in favour of the assessee in assessee’s appeal 2019 (4) TMI 1818 - ITAT MUMBAI] - Decided in favour of assessee.
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2019 (12) TMI 1552
Revision u/s 263 by CIT - Profit on Sale of Ancestral Property as taxable under Capital gain - assessee has sold the ancestral property - deemed full value consideration u/s 50C of the Act cannot be applied in the case of the assessee where the sale consideration shown in the sale deed and declared by the assessee is equivalent to the stamp duty valuation - HELD THAT:- The fair market value of the asset shall be taken as the valuation adopted by the stamp duty authority as provided u/s 50C of the Act being full value consideration and therefore, for the purpose of computing the capital gains the said amount would be deemed to be full value consideration which is the actual sale consideration - There will be no change in the capital gains computed and declared by the assessee even after applying the provisions of section 45(2) of the Act. Resultantly, the business income, if any, from the said transfer under the provisions of Section 45(2) of the Act would be Nil being the cost of acquisition of stock in trade and the sale consideration of the said property is the same.
Even after invoking the provisions of Section 45(2) of the Act, there would be no change in the tax liability of the assessee and hence the order passed by the AO cannot be said prejudicial to the interest of the Revenue. It is undisputed proposition of law that for exercising the power u/s 263 of the Act, the Commissioner has to satisfy itself that the order passed by the AO is erroneous as well as prejudicial to the interest of the Revenue. Without satisfaction of the twin conditions that the order passed by the AO is erroneous as well as prejudicial to the interest of the Revenue, the provisions of Section 263 cant be invoked.
Therefore, in the case in hand, when there will be no Revenue loss even if provisions of section 45(2) is applied then in such a situation the Commissioner is not allowed to exercise its power u/s 263 of the Act merely because the AO has accepted the capital gains declared by the assessee. Hence, in the facts and circumstances of the case, the impugned ex-parte order passed by the ld.PR. CIT without proper opportunity of hearing to the assessee and without establishing the order of the AO is prejudicial to the interest of the Revenue is not sustainable in law and consequently the same is quashed and set aside.- Decided in favour of assessee.
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2019 (12) TMI 1550
Addition u/s 68 - addition in Share Capital only by making the reference of RBI Inspection report - whether CIT (A) not giving the proper opportunity to plead the case before it and by passing ex-parte order, the order is not tenable as it is not based on natural ground realities and justice - HELD THAT:- None was present from the assessee’s side. In the absence of any representation from assessee’s side, at the time of hearing before us, we heard the Ld. Sr. DR.
Appellant is a cooperative bank and AO after obtaining statutory inspection of appellant from RBI examinee the share capital introduced in the appellant bank and after detailed enquiry and having confronted appellant made an addition as appellant failed to discharge requisite onus u/s 68 of the IT Act. Similarly an addition was made on account to failure to substantiate genuineness, identity and creditworthiness of eight investors of share capital. Appellant failed to discharge the primary onus u/s 68. An addition appellant's claim regarding addition to share capital and incurrence of business, expenses u/s 37 at assessment stage as well as during appellate stage. Thus, the additions made by AO are upheld and accordingly appellant’s grounds of appeal are dismissed
We find that the Ld. CIT(A) has given detailed reasons for his decision on merits in the aforesaid impugned appellate order of Ld. CIT(A). During appellate proceedings in Income Tax Appellate Tribunalno material has been brought for our consideration to persuade us to take a view different from the view taken by the Ld. CIT(A) in the impugned ord er on merit. After hearing the Ld. Sr. DR and after perusal of materials on record, and further, in view of the foregoing discussion, we decline to interfere with the aforesaid impugned appellate order of Ld. CIT(A); and dismiss this appeal of assessee.
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2019 (12) TMI 1544
Penalty levied u/s. 271(1)(c) - Defective Notice u/s 274 - Non specification of charge - assessee has argued that the penalty notice nowhere speaks about specific limb to levy the penalty because the particular charge was not tick off in the notice - HELD THAT:- Since the notice was nowhere tick off by the AO to specify the limb to levy the penalty, therefore, the penalty is not liable to be sustainable in the eyes of law, therefore, we set aside the finding of the CIT(A) on these issues and delete the penalty. - Decided in favour of assessee.
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2019 (12) TMI 1543
Deduction u/s 54F - claim denied on reinvestment in multiple properties located in different addresses - scope of amendment - HELD THAT:- As decided in the recent decision in the case of Tilokchand & Sons v ITO [2019 (4) TMI 713 - MADRAS HIGH COURT] has held that profit on sale of property used for purchasing more than one residential houses within stipulated time limit, the assessee would be entitled to the benefit of exemption under section 54 of the Act
If the word 'a' as employed under Section 54 prior to its amendment and substitution by the words 'one' with effect from 01.04.2015 could not include plural units of residential houses, there was no need to amend the said provisions by Finance Act No.2 of 2014 with effect from 01.04.2015 which the Legislature specifically made it clear to operate only prospectively from A.Y.2015- 2016. Once we can hold that the word 'a' employed can include plural residential houses also in Section 54 prior to its amendment such interpretations will not change merely because the purchase of new assets in the form of residential houses is at different addresses which would depend upon the facts and circumstances of each case.
So long as the same Assessee (HUF) purchased one or more residential houses out of the sale consideration for which the capital gain tax liability is in question in its own name, the same Assessee should be held entitled to the benefit of deduction under Section 54 of the Act, subject to the purchase or construction being within the stipulated time limit in respect of the plural number of residential houses also. The said provision also envisages an investment in the prescribed securities which to some extent the present Assessee also made and even that was held entitled to deduction from Capital Gains tax liability by the authorities below. If that be so, the Assessee-HUF in the present case, in our opinion, complied with the conditions of Section 54 of the Act in its true letter and spirit - Decided in favour of assessee.
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2019 (12) TMI 1542
Reopening of assessment u/s 147 - rejecting the objections filed by the petitioners against the reasons recorded as well as the assessment orders passed under subsection (3) of section 143 read with section 147 - Petitioner invited the attention of the court to the reasons recorded to point out that though the assessment has already been made in the hands of the association of persons, the Assessing Officer sought to reopen the assessment to make protective addition in the hands of the petitioners - as submitted impugned orders are passed in violation of the principles of natural justice and that the proceedings under section 148 of the Act were wholly without jurisdiction, therefore, these petitions under Article 226 of the Constitution of India against the assessment orders are maintainable - HELD THAT:- Having regard to the submissions advanced by the learned advocate for the petitioners, issue Notice, returnable on 13.01.2020.
By way of adinterim relief, the operation of the assessment orders passed under section 143(3) read with section 147 as well as the impugned notices of demand issued under section 156 of the Act is hereby stayed.
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