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Income Tax - Case Laws
Showing 401 to 420 of 10077 Records
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2019 (12) TMI 741
Disallowance of expenses on brand reminders and expenses incurred on purchase of medical books and journals provided to HealthCare Professionals ('HCPs') - violation of Indian Medical Council (Professional Conduct, Etiquette and Ethics) - allowable expenditure under Section 37(1) in view of the IMC Regulations and CBDT Circular No. 05/2012 - HELD THAT:- In the present case, the Medical Practitioners are not under any binding obligation after receiving the brand reminder from the assessee company bearing logo of the assessee. This fact clearly reveals that the distribution of articles by the assessee is unconditional and does not go against the public policy. Mere distribution of the articles and other items having logo of the company without casting any burden upon the person receiving the items is merely an advertisement expenditure incurred by the company to promote the brand of the assessee.
AO has mentioned that free items might influence the decision of the Doctors. In this regard, we find that the articles are of nominal value and are not capable of influencing the decision of such highly skilled Medical Practitioners. There is no burden upon them. So this argument of the Assessing Officer has no substance. The expenditure incurred by the assessee is thus akin to advertisement and sales promotion expenditure incurred in any other businesses and cannot be disallowed for the reasons assigned by the Assessing Officer. AO misses the point that the advertisement expenditure, by its very nature, is not spent for a crystallized quid pro quo or against any services rendered to the payer. Once it is found that the expenditure is in the nature of advertisement expenditure, the question raised by the Assessing Officer loses significance.
Un-reconciled amounts as per Individual Transaction Statement (“ITS”) - whether the un-reconciled amount of ITS / AIR can be added to the total income of the assessee when the assessee denies having carried out any such transaction ? - HELD THAT:- We find that the details in the ITS statement are uploaded by the third party and assessee does not exercise any control on the same. There is no authenticity of such details nor are such details verified by any independent authorities as to its correctness and truthfulness.
In the present case, the assessee denied to have carried out the un-reconciled transactions of ITS. To prove its bona fide, the assessee also addressed letters to the concerned parties to get the details of the transactions which the other parties claim to have carried out by them with the assessee. However, none of the parties, except Bank of India, replied to the letters addressed by the assessee; the bank accepted the fact that there was human error and the PAN of the assessee was wrongly linked to other customer data and the transaction was not pertaining to the assessee.
Factual position clearly raises the doubt on the authenticity and correctness of the data reported in the ITS. The Assessing Officer has also not brought on record any concrete evidence to establish that the contents of the ITS were correct. In this scenario, we do not find any reason why the contents of the ITS report should be relied upon to the hilt. We, accordingly, set-aside the order of the CIT(A) and direct the Assessing Officer to delete the addition on account of un-reconciled amount. Accordingly, this Ground of appeal is allowed.
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2019 (12) TMI 702
LTCG - Transfer of a capital asset within the meaning of Section 2(47) - Power of Attorney (POA) for development of land - compromise deed - as per the deed, various amounts had to be paid by the Builder to the owner so that a complete extinguishment of the owner’s rights in the property would then take place - HELD THAT:- Section 53A of the T.P. Act be attracted, first and foremost, the transferee must, in part performance of the contract, have taken possession of the property or any part thereof. Secondly, the transferee must have performed or be willing to perform his part of the agreement. It is only if these two important conditions, among others, are satisfied that the provisions of Section 53A can be said to be attracted on the facts of a given case.
On a reading of the agreement to sell dated 15.05.1998, what is clear is that both the parties are entitled to specific performance. (See Clause 14).
Clause 16 is crucial, and the expression used in Clause 16 is that the party of the first part hereby gives ‘permission’ to the party of the second part to start construction on the land.
Clause 16 would, therefore, lead to the position that a license was given to another upon the land for the purpose of developing the land into flats and selling the same. Such license cannot be said to be ‘possession’ within the meaning of Section 53A, which is a legal concept, and which denotes control over the land and not actual physical occupation of the land. This being the case, Section 53A of the T.P. Act cannot possibly be attracted to the facts of this case for this reason alone.
We now turn to the argument of the learned senior counsel appearing on behalf of the assessee based on Section 2(47)(vi).
it is clear that the expression “enabling the enjoyment of” must take colour from the earlier expression “transferring”, so that it can be stated on the facts of a case, that a de facto transfer of immovable property has, in fact, taken place making it clear that the de facto owner’s rights stand extinguished. It is clear that as on the date of the agreement to sell, the owner’s rights were completely intact both as to ownership and to possession even de facto, so that this Section equally, cannot be said to be attracted.
Coming to the third argument of the learned senior counsel on behalf of the appellant, what has to be seen is the compromise deed and as to which pigeonhole such deed can possibly be said to fall under Section 2(47).
A perusal of the compromise deed shows that the agreement to sell and the Power of Attorney are confirmed, and a sum of ₹ 50 lakhs is reduced from the total consideration of ₹ 6.10 crores. Clause 3 of the said compromise deed confirms that the party of the first part, this is the appellant, has received a sum of ₹ 4,68,25,644/- out of the agreed sale consideration. Clause 4 records that the balance ₹ 1.05 crores towards full and final settlement in respect of the Agreement entered into would then be paid by 7 post-dated cheques. Clause 5 then states that the last two cheques will be presented only upon due receipt of the discharge certificate from one M/s. Pioneer Homes.
In this context, it is important to advert to a finding of the ITAT, which was that all the cheques mentioned in the compromise deed have, in fact, been encashed.
This being the case, it is clear that the assessee’s rights in the said immovable property were extinguished on the receipt of the last cheque, as also that the compromise deed could be stated to be a transaction which had the effect of transferring the immovable property in question.
The pigeonhole, therefore, that would support the orders under appeal would be Section 2(47)(ii) and (vi) of the I.T. Act in the facts of the present case.
Appeal dismissed.
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2019 (12) TMI 701
Difficult for the persons residing in the Jammu and Kashmir to file income tax returns u/s 139(1) - HELD THAT:- There was no appearance for the petitioner, when the matter was listed on 8th November 2019 as well.
The matter was directed to be listed today. There is no appearance on behalf of the petitioner even today.
From the facts noted by us on 4th November 2019, it would appear that the grievance made by the petitioner stands redressed by the respondents. In view thereof, this writ petition is rendered infructuous and is disposed of as such.
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2019 (12) TMI 700
Exemption u/s 11 - charitable activity u/s 2(15) - ITAT directing the registration to be accorded instead of reverting it back for re-examination - HELD THAT:- Tribunal found that even if this anomaly was there in accounting yet this could be easily corrected and that the provision of Section 10(23C)(iiiad) and 12AA of the Act operate in different fields as held by this Court in the case of CIT vs. Appejay Education Society [2015 (4) TMI 303 - PUNJAB & HARYANA HIGH COURT] The Tribunal further held that the Commissioner had wrongly noticed that the no details of fee being charged have been supplied whereas all the details have been supplied.
Tribunal also faulted the Commission for coming to the conclusion that the salary structure which was put in place by the respondent was not as per the salary structure of CBSE and at such low salaries good education could not be given.
Tribunal correctly held that this was not the job of the Commissioner to comment on the quality of education and found that in the kind of area where the school was located, and the kind of fee it could generate, and the salaries which were paid, were proportionate. Apart from this anomaly in the accounting of the money, the Commissioner has not held that the respondent was either diverting any money or was generating any cash income (beyond that which has been prescribed in the prospectus) or any other thing which would impinge on its character as a charitable institution. No fault can be found with the findings of the Tribunal.
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2019 (12) TMI 699
Bogus purchases - AO disallowed the web advertisement expenses and the depreciation claimed by the respondent assessee in respect of software purchase - proof of actual use of software - reliance on the statement of accommodation entry provider - HELD THAT:- Addition was only made by the assessing officer on the statement of Shri SK Gupta, without affording any opportunity for cross examination. In the Present case, the assessing officer has made detailed enquiry. De hors the statement of Shri SK Gupta, assessee has failed to show that it has incurred expenditure for web advertisement and purchased the software. Further, we did not find the observation of the coordinate bench with respect to the non-availability of technology on which websites were developed, as well as the nonexistent websites of the advertisers and also the basic details called for by the AO with respect to software development lifecycle. In the present case, order of the assessing officer has clearly made further allegations and proved conclusively that the expenditure is bogus.
This Court in Alpasso Industries (P) Ltd. v. Income – Tax Officer [2018 (8) TMI 761 - DELHI HIGH COURT] rejected a similar submission of the appellant/ assessee and, while doing so, this Court reiterated the legal position as to when a finding of fact could be classified as perverse.
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2019 (12) TMI 698
Reopening of assessment - claim made u/s 10B - According to the petitioner, date of commencement of manufacture of the product was 01.04.1996 - HELD THAT:- It is to be noted at this juncture that though, the relevant provisions u/s 10B (3) prior to amendment made in the year 1999, granted the benefit of deduction for five consecutive assessment years falling within a period of eight years beginning with the Assessment Year relevant to the previous year in which the undertaking begins to manufacture, the AO has granted deduction to the petitioner for continuous nine years till the Assessment Year 2007-08.
Therefore, do not think that the Revenue is justified in contending that the petitioner is entitled only for five consecutive assessment years as covered u/s 10B (3), as existed prior to 01.04.1999 and contend that the present claim made by the petitioner is based on any false information.
Even otherwise, this Court has to only see that as to whether these two relevant dates referred to at Serial Nos.7 and 8, are factually incorrect, so as to derive a conclusion that the petitioner has not truly and fully disclosed the material facts. As this Court finds that there is no dispute with regard to the date of commencement of manufacture of the product namely 01.04.1996, when the petitioner has chosen to claim direction from the second year onwards, the number of consecutive years for which deduction is claimed referred to at Serial No.8 is certainly the 10th year and therefore, such statement by the petitioner at Serial No.8, cannot be termed as false statement or claim.
When such being the position, find that the Assessing Officer is not justified in reopening the assessment in the absence of failure on the part of the assessee to truly and fully disclose the material fact.
Reopening is barred by limitation, as the AO has not satisfied that the assessee has failed to disclose the material facts truly and fully. Accordingly, this writ petition is allowed and the impugned order is set aside.
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2019 (12) TMI 697
Reopening of assessment - Capital gain - transfer u/s 2(47) - effective date of transfer - Year of assessment - HELD THAT:- There was no effective adjudication as to what would be the effective date of transfer while deciding the correctness of the reassessment for the year 1996-97 while making protective assessment for the year 2001-02. Therefore, we fully agree with the view taken by the CIT(A) that there was no discussion on merits on the effective date of transfer.
CIT(A), after elaborately considering the terms of agreement, was right in concluding that the transfer came to be actually completed during the financial year 1999-2000 and consequently, the CIT(A) was right in holding that the entire capital gains relating to 40% of the undivided share of land were subjected to tax for the assessment year 2000-01.
The Tribunal re-examined the factual position and pointed out that the assessees had never admitted the capital gains on sale of 40% of undivided portion of the land, against which, consideration was held to be 60% of the constructed area. After noting that the assessee had shown the capital gains on the basis of individual sale deeds executed in favour of the nominees of the developer, it was held that it cannot be stated that the assessment order stood merged with the appellate order because the said issue was never raised by the assessee in order to be decided by the appellate authority.
Assessees cannot plead a case that there has been a change of opinion and that the rules of consistency had been violated. The CIT (A) has elaborately dealt with this aspect and we concur with the view taken by the CIT(A), which was confirmed by the Tribunal. Thus, for all the above reasons, we find that the Assessing Officer has not traveled beyond the reasons, for which, the assessment was re-opened and there is no contra view of the Assessing Officer for two assessment years i.e., 1996-97 and 2000-01 as it is reiterated that at no point of time, there was discussion on the merits of the matter as to what is the actual date of transfer. Furthermore, we have also brought out the factual position to show that the assessee were inconsistent in their stand at different point of time. Thus, for the above reasons, we are of the view that the decisions relied on learned counsel for the appealant can be of no assistance to the case of the assessee . - Decided against the assessee
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2019 (12) TMI 696
Revision u/s 263 - HELD THAT:- CIT has not invoked Explanation 2 to S. 263 either in the show cause notice or in the order passed u/s. 263. Even otherwise, Explanation 2 is not applicable as assessing officer has made the inquiry and verification which ought to have been made. Further, it is submitted that the coordinate bench in the case of Narayan Tatu Rane [2016 (5) TMI 1162 - ITAT MUMBAI] held that Explanation cannot said to have overridden the law as interpreted by the various High Courts, where the High Courts have held that before reaching a conclusion that the order of the AO is erroneous and prejudicial to the interest of revenue, the Commissioner himself has to undertake some enquiry to establish that the assessment order is erroneous and prejudicial to the interest of Revenue.
And the Explanation 2 to section 263 was inserted from 01.06.2015 and it is not applicable retrospectively as held in the case of Santi Krupa Estate Pvt. Ltd. vs. ACIT [2016 (9) TMI 1341 - ITAT AHMEDABAD].
In the present case as well as the legal proposition laid down by the higher courts we are of the view that in the present case the AO had made enquiry and assessee has also placed on record all the documents as were required by the AO in respect of both the issues as now raised by the Pr.CIT. Thus, the order passed by the AO is neither erroneous nor prejudicial to the interest of the Revenue.
Merely just because the view taken by the AO was not found acceptable does not mean that the AO has failed to make requisite enquiries. AO was plausible view, which cannot be disturbed by the Ld. Pr.CIT. Therefore, Pr.CIT was not correct in exercise the jurisdiction u/s 263 - We quash the assessment proceedings initiated by the Pr.CIT in the impugned order passed under section 263 and allow the appeal of the assessee. - Appeal of the assessee is allowed.
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2019 (12) TMI 695
Benefit of deduction u/s 54 - construction could not be started within the stipulated time and added the same amount in the income of the assessee on account of long term capital gain - HELD THAT:- We note that during the year under consideration the assessee has sold a residential house property having her 1/3rd share therein situated at East Patel Nagar New Delhi for ₹ 100 lacs and had a long term capital gain of ₹ 81,66,515/-.
The assessee claimed the deduction u/s 54 by investing the entire sale proceeds (aggregate investment of ₹ 1,14,51,375 and details thereof as shown at page no. 39, 42 & 41 of the Paper Book) before the due date of filing Income Tax Return u/s. 139 of the Act for the purchase of another residential property at Green Bay Gold Village, Yamuna Expressway, Distt. Gautam Budh Nagar, UP. Construction on the said land could not be completed within the stipulated period of three years for the reasons beyond the control of the assessee i.e. Farmers agitation against Yamuna Authority related to the area in which plot was located, as seen from page 21-31 of the Paper Book and change of developer as Silverglades Pvt. Ltd. sold the project to other developer – Orris Infrastructure. In such circumstances, we are of the view that benefit of deduction cannot be denied to the assessee.
We hold that assessee is entitled to the exemption claimed by her and, therefore, delete the disallowance in dispute by allowing the appeal of the assessee.
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2019 (12) TMI 694
Assessment order made in the name of amalgamated company - HELD THAT:- We do not find any fault with the CIT(A) in following the decision in the case of Saraswati Industrial Syndicate Ltd [1990 (9) TMI 1 - SUPREME COURT] wherein it was held that when two companies amalgamated merged into one, the transfer company loses its entity as it serious to have its business, and their respective rights are liable to be determined under the scheme of amalgamation, but the corporate entity of the transfer company ceases to exist with effect from the date of the amalgamation is made effective.
In this matter the amalgamation was effective from 1/4/2011 under the order dated 17/08/2012 passed by the Hon’ble Delhi High Court under section 391 (2) and 394 of the Companies Act, 1956.
In this case, however, the assessee specifically brought it to the notice of the learned Assessing Officer that there was a merger of the companies, and there was a direction of the Ld. PCIT to issue notice and hear they correct the existing legal entity. However, there is failure on the part of the learned Assessing Officer to comply with the said direction inasmuch as he issued notices to the non-existent company and completed the assessment on it. - Decided against revenue.
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2019 (12) TMI 693
Addition u/s 68 - unexplained cash credit - assessee was ultimate beneficiary and has taken loan from dubious company - HELD THAT:- Impugned addition clearly is a case of Double Taxation as it has been taxed in the hands of M/s Varrenyam Securities Private Limited as well as the assessee.
As stated by assessee that the addition has been finally made in the hands of M/s Verrenyam Securities Pvt. Ltd. by the AO; Ld. CIT(A) sustained the addition and ITAT has upheld the action of the Ld. CIT(A) by dismissing the appeal of the assessee and no further appeal has been filed against the order of the ITAT, therefore, it has become final. Keeping in view of the facts and circumstances of the present case, we are of the view that addition was rightly deleted by the Ld. CIT(A), which does not need any interference on our part, hence, we uphold the action of the Ld. CIT(A) and reject the grounds raised by the Revenue. The judicial decisions relied upon by the representatives of both the sides have been duly considered. In our considered view, we do not find any parity in the facts of the decisions relied upon with the peculiar facts of the case in hand. - Decided against revenue
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2019 (12) TMI 692
Disallowance of Aircraft Expenses - CIT(A) restricted the disallowance to 25% of the total aircraft expense and corresponding depreciation - HELD THAT:- We find this issue is squarely covered by the decision of the Pune Bench of the Tribunal in assessee‟s own case [2019 (12) TMI 627 - ITAT PUNE] wherein this disallowance has been restricted to 15%. Both the parties agreed that facts and circumstances for this relevant assessment year is absolutely similar to assessment year 2010-11 and therefore, maintaining principle of consistency, we follow our decision on this issue and for this year also, this disallowance on account of aircraft expenses and corresponding depreciation is restricted to 15%. The order of the Ld. CIT(Appeals) is therefore modified as indicated above. Thus, ground No.1 raised in appeal by the assessee is partly allowed.
Disallowance of Expenses u/s.14A - HELD THAT:- AO while providing appeal effect deleted the interest disallowance based on the fact that investments were not made from borrowed funds and sufficient interest free funds were available. CIT passed the order u/s.263 of the Act against this deletion of interest. As per the instructions in the order u/s.263, the Assessing Officer passed fresh order u/s.143(3) r.w.s.263 and recomputed the disallowance u/s.14A r.w.r.8D and restricted the disallowance to ₹ 1,95,95,619/-. Therefore, the assessee filed fresh appeal against this order and the matter is still pending before the Ld. CIT(A). In view of the present scenario, this ground raised before the Tribunal becomes infructuous.
Depreciation on Printers, UPS & Other allied items - HELD THAT:- We observe that in assessment year 2009-10 the Co-ordinate Bench has upheld the findings of Commissioner of Income Tax (Appeals) in allowing depreciation @ 60% on UPS and other allied items. The Commissioner of Income Tax (Appeals) in assessment year under appeal has granted relief to the assessee by following its own order in assessment year 2009-10. We find no infirmity in the findings of Commissioner of Income Tax (Appeals) on this issue
Disallowance u/s.40A(2) in respect of commission paid to Directors - HELD THAT:- We find that this issue was considered by the Tribunal in appeal by Revenue in assessee’s case in assessment year 2009-10. The commission paid to the Directors was allowed by the Tribunal. Hence, we do not find any reason to interfere with the findings of Commissioner of Income Tax (Appeals) on this issue.
Addition to capital subsidy - assessee has claimed subsidy received under the aforesaid scheme as capital receipt, whereas, the Department has held the subsidy to be on revenue account - HELD THAT:- The Co-ordinate Bench of Tribunal in the case of Innovative Industries Limited Vs. DCIT [2017 (4) TMI 44 - ITAT PUNE] has considered the issue of subsidy received under Package Scheme of Incentive in detail. After considering catena of judgments the Tribunal held that the incentive received by the assessee under Package Scheme of Incentive, 2007 is in the form of refund of Sales Tax and is a capital receipt not liable to tax. The Commissioner of Income Tax (Appeals) has granted relief to the assessee by following the aforesaid decision of Tribunal.
Disallowance of provision for warranty - HELD THAT:- Commissioner of Income Tax (Appeals) granted relief to the assessee holding that the provision was created on scientific basis. Further, reliance was placed on the decision of Hon’ble Supreme Court of India in the case of Rotork Contrals India Pvt. Ltd. [2009 (5) TMI 16 - SUPREME COURT] and ACIT Vs. Dana India Pvt. Ltd. [2013 (10) TMI 1533 - ITAT PUNE] . The findings of Commissioner of Income Tax (Appeals) was accepted by the Department and were not agitated in appeal before the Tribunal - Decided against revenue
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2019 (12) TMI 691
Addition u/s 68 - Unexplained cash credit - HELD THAT:- We consider it fair and proper and in the interest of justice to give one more opportunity to the assessee-company to explain the relevant cash credit representing share capital and share premium amount in terms of section 68 by producing the concerned share subscribers along with the relevant documentary evidence for verification before the AO.
D.R. has not raised any objection for sending the matter back to the Assessing Officer for verification. The impugned order passed by the CIT(Appeals) on this issue is accordingly set aside and the matter is restored to the file of the AO for deciding the same afresh after giving proper and sufficient opportunity to the assessee to support and substantiate its case by producing the concerned share subscribers along with the relevant documentary evidence for verification.
Appeal of the assessee is treated as allowed for statistical purposes.
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2019 (12) TMI 690
“Undisclosed income” u/s.158BA - Search and seizure operations u/s. 132 - HELD THAT:- Based on the material unearthed by the Revenue during the search operations, it was found that certain expenses or deduction or allowances claimed by the assesssee was found to be false and a part of such expenses or deduction or allowances were also admitted to be sources for the expenditure unearthed from the same search operations in the cases of Mr. Mohan, Mrs Geethalakshmi, (w/o Mohan) and Sanjay Mohan (S/o Mohan). Therefore, these material fall within the scope of “undisclosed income” U/s.158BA viz “any income based on any entry in the books of account or other documents or transactions, where such thing, entry in the books of account or other document or transaction represents wholly or partly income or property which has not been or would not have been disclosed for the purposes of this Act or any expense, deduction or allowance claimed under this Act which is found to be false”.
When the assessee itself admitted an undisclosed income based on part of the seized material , which had attained finality, then , it can not plead that the addition made based on the other part of the seized material, which were unearthed in the same search and seizure operations, would not fall as an “undisclosed income” within the scope of Section 158 BA.
With regard to the genuineness of the transaction with M/s. J S Agency, as pleaded by the ld. Sr. Standing counsel, supra, the AO after due consideration of the seized material, the statements recorded at the time of search, the statement recorded from the parties subsequently and on due analysis of the additional evidence produced by the assessee has clearly recorded the reason as to why such claim cannot be accepted and how the assessee has failed to prove that the impugned payment was made to Mr.Selvam and Mr. Inbaraj.
It is clear from the order of the CIT(A) that the assessee has not laid any material assailing the findings recorded by the AO and hence, the ld CIT(A) confirmed the impugned additions. Before us also, the assessee has not filed any material assailing the findings recorded by the lower authorities. Therefore, we do not find any reason to interfere with the orders of the lower authorities on the quantum. Therefore, the assessee’s contention that the disallowance of expenses made by the AO cannot be treated as an assessment of an “undisclosed income” within the scope of Section 158 BA, is held as untenable. Thus, all the grounds of the assessee fail and therefore the assessee’s appeal is dismissed.
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2019 (12) TMI 689
Deduction u/s 80P(2) - CIT(A) passed order u/s 154 wherein the claim of deduction u/s 80P was denied - HELD THAT:- In the case of Chirakkal Service Co-operative Co-operative Bank Ltd. v. CIT [2016 (4) TMI 826 - KERALA HIGH COURT] had held that when a certificate has been issued to an assessee by the Registrar of Co-operative Societies characterizing it as primary agricultural credit society, necessarily, the deduction u/s 80P(2) has to be granted to the assessee.
Full Bench of the Hon’ble jurisdictional High Court in the case of The Mavilayi Service Co-operative Bank Ltd. V. CIT [2016 (4) TMI 826 - 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 Assessing Officer. 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.
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, the Assessing Officer shall follow the law laid down 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.
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2019 (12) TMI 688
Levy of penalty u/s 271AAB(1)(a)(ii) - During the course of search, the Investigation team found incriminating material in the form of a note in I-pod with regard to rate quoted by the assessee for sale of plots @₹ 4,600/- per square yard which was seized in the office and also in the residential premises of the partners / directors of the assessee firm - HELD THAT:- Though the incriminating material was found indicating sale of plots at ₹ 4,600/- per sq.yd. the assessee admitted the income @3,700/- for Sunray Village and ₹ 2,700/- for Sunray Beach Front after deducting the expenditure which was paid outside the books of accounts and the AO had accepted the admission made by the assessee and completed the assessment. From the assessment order and the penalty order, we find that the assessee had explained the manner in which the additional income was admitted stating that the plots were sold @2,700/- and ₹ 3,700/- per sq.yd and the sale consideration was recorded at the rate lesser than the sale consideration accounted in the books of accounts.
No evidence was brought on record by the revenue to show that the contention of the assessee was incorrect. In fact the revenue has accepted the submissions made by the assessee and completed the assessment on the disclosure made by the assessee. Therefore, we hold that the assessee has satisfied the conditions laid down u/s 271AAB for levying penalty @10% which the Ld.CIT(A) has upheld. Therefore, we do not find any reason to interfere with the order of the Ld.CIT(A) and the same is upheld. - Decided against revenue
Penalty u/s 271AAB and 271F - assessee admitted the additional income of ₹ 2.00 crores for the assessment year which was accepted by the department and completed the assessment estimating the income @18% on gross contract receipts before depreciation - AR argued that the AO should have initiated penalty u/s 271(1)(c) - A.Y.2014-15 - HELD THAT:- Though in the earlier years, the assessee had admitted the additional income on the net consideration received, in the year under consideration the admission was only towards estimated profits for future period i.e. from 01.04.2013 to 31.04.2014. The AO also completed the assessment estimating the income @18% rejecting the books of accounts of the assessee company before depreciation. No material was also brought on record to support the estimation of income @18% on gross receipts. Though the AO completed the assessment on estimation of income, penalty was initiated u/s 271AAB instead of 271(1)(c). From the material gathered, submissions made by the assessee and from the records, we are of the considered view that no material was available with the department to hold that there was undisclosed income for the previous year ending 31.03.2014 till the date of search. Thus, there is no case for levying the penalty u/s 271AAB and we do not find any reason to interfere with the order of the Ld.CIT(A). Accordingly, the appeals of the revenue as well as the cross objections filed by the assessee are dismissed.
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2019 (12) TMI 687
Long term capital gains - Valuation determined by the DVO - adoption of SRO value for the purpose of capital gains - show cause notice to the assessee proposing to adopt the SRO value instead of Fair Market Value determined by the DVO for the purpose of capital gains and the assessee objected for adoption of the SRO Value due to the disadvantages in selling the property - AO rejected the objections raised by the assessee, since, the assessee did not dispute the guideline value before Stamps and Registration Authorities or in any Court of Law - HELD THAT:- Since the property in question was referred to valuation officer and the value assessed by the valuation officer is binding on the department, there is no reason to enhance the value assessed by the Valuation Officer when the Act does not permit the AO or the CIT(A) to do so.
In case the CIT(A) is not convinced with the value determined by the DVO, as an extension of assessing authority, the CIT(A) ought to have referred the issue to the DVO again for reconsideration of the value. The valuation officer being expert, the CIT(A) is not allowed to tinker with the expert opinion without further reference to the DVO and in the process, the CIT(A) also has to give opportunity to the assessee to cross examine and to present his case before Departmental Valuation Officer along with the observations of the CIT(A). The entire process of examination, reexamination, reference was not conducted in the instant case. Therefore, there is no reason to not to accept the value determined by the valuation officer. Thus we are unable to sustain the order of the CIT(A) and hold that the assessing authority has no option except to accept the FMV determined by the DVO after making reference and proceed to compute capital gains by following provisions of sub section 50C(3) of the I.T.Act.
Except the general remarks neither the CIT(A) nor the AO has found the specific defaults in the valuation report. Accordingly, we direct the AO to compute the capital gains adopting the value determined by the DVO in place of guideline value of Stamps and Registration Authority.
The next contention raised by the assessee is to accept the sum of ₹ 4,79,00,000/- as full value of consideration. DVO has considered all the issues raised by the assessee with regard to various disadvantages and determined the fair market value as on 30.07.2009. No other evidence or material brought on record by the assessee to disturb the fair market value assessed by the DVO. Therefore, we do not find any reason to interfere with the valuation determined by the DVO and the contention of the assessee is rejected. Accordingly, appeals of the revenue are dismissed and the appeals of the assessee are partly allowed.
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2019 (12) TMI 686
Addition in respect of receipt of on-money - HELD THAT:- It is undisputed fact that the assessee has received on money to the extent of ₹ 76,20,000/-. It is not clear neither from the order of the Assessing Officer nor from order of the ld.CIT(A) that this amount is received by the assessee over and above the sale consideration and in which mode. Therefore, we are of the opinion that the Assessing Officer cannot make the entire addition, only profit has to be estimated. Accordingly, we set aside the order of the ld. CIT(A) and remit the matter back to the Assessing Officer to consider the details filed by the assessee and decide the case in accordance with law. Thus, this ground of appeal raised by the assessee is allowed for statistical purpose.
Estimation of profit - AO estimated the profit at 20%, which the ld. CIT(A) reduced to 16% - HELD THAT:- Assessee has submitted that the assessee is a small assessee and section 44AD applies to him and therefore estimation may be made at 8%. We find that this case is covered by section 44AD, hence, estimation of profit at 8% is sufficient to meet the ends of justice. Accordingly, the estimation is scaled down to 8%. Thus, this ground of appeal raised by the assessee is partly allowed.
Unexplained investment in purchase of property - HELD THAT:- assessee has pointed out from the paper book at page No. 17 wherein the advance site at BS Layout 305 sq.yds. for an amount of ₹ 56.70 lakhs clearly mentioned in the balance sheet. Keeping in view of the disclosure made by the partner Sri Kotagri Suryanarayana Murthy, in our opinion the addition cannot be survived. Accordingly, the addition made by the Assessing Officer and confirmed by the ld. CIT(A) is deleted. Thus, this ground of appeal raised by the assessee is allowed.
Addition u/sec. 40A(3) as the payment or aggregate payments were made to a person in a single day in cash - HELD THAT:- The case of the assessee is that once income of the assessee is estimated, no separate addition can be made on account of expenditure incurred by the assessee. It is further submitted that the alleged cash payments were made towards various works like brick centering, mason, concrete and transportation charges against representing the persons who have received the payment on behalf of the entire team of the workers. Thus, the assessee contended that payments cannot be treated as paid to a single person. We find that the assessee has not given any proper explanation in respect of source of expenditure to the tune of ₹ 34.73 lakhs before the Assessing Officer and even before the ld. CIT(A) also. Before us also no proper explanation is given. We find that Assessing Officer is justified in making the addition.
Undisclosed contract receipts - HELD THAT:- assessee filed return of income on 15/04/2017 disclosing gross receipts of ₹ 4,63,50,000/- whereas information gathered u/sec. 133(6) of the Act, it was found that assessee has executed total contract of ₹ 4,66,93,000/-, thereby there is undisclosed income of ₹ 3,43,000/- (₹ 4,66,93,000 – ₹ 4,63,50,000). The same discrepancy was apprised to the assessee vide this office show cause dated 02/11/2017, but failed to submit any explanation, therefore the Assessing Officer has made the addition of ₹ 3,43,000/- in the hands of the assessee. Even before the ld.CIT(A) no explanation is given. Even before us no satisfactory explanation is offered, therefore we find no reason to interfere with the order passed by the ld.CIT(A). Thus, this ground of appeal raised by the assessee is dismissed.
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2019 (12) TMI 685
Levy penalty u/s 271(1)(c) - claim of deprecation on fall in value of investment and claim of depreciation on software - HELD THAT:- In the instant case, the assessee has maintained the accounts in terms of the RBI Regulations and he has shown it as investment. But consistently for more than two decades it has been shown as stock-in-trade and depreciation is claimed and allowed.
Therefore, notwithstanding that in the balance-sheet , it is shown as investment, for the purpose of Income Tax Act, it is shown as stock-in-trade. Therefore, the value of the stocks being closely connected with the stock market, at the end of the financial year, while valuing the assets, necessarily the bank has to take into consideration the market value of the shares. If the market value is less than the cost price, in law, they are entitled to deductions and it cannot be denied by the authorities under the pretext that it is shown as investment in the balance-sheet." (emphasis supplied) . We therefore find that the issue raised in this Appeal is also squarely covered by the judgment of the Karnataka High Court in the case of Karnataka Bank Ltd. [2013 (7) TMI 656 - KARNATAKA HIGH COURT]
AMC charges AND License fee for oracle database, antivirus software etc.- HELD THAT:- It is nobody's case that assessee is dealing with computer softwares or is in the business of any related services. Rather it uses specific customized software, which is specific to its banking activities. But for the use of such software, the nature of expenditure otherwise incurred for streamlining its functions i.e. towards fee payable to the consultants for systems and employment of special professionals to carry on the tasks that the software in fact performs, would have fallen undoubtedly in the revenue stream. Taking these into account and the further circumstance that the software itself would have run its course or life span as it were, given that the earlier assessment year in question is 2008-09, we are of the opinion that the question of law framed is to be answered in favour of the assessee and against the revenue.
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2019 (12) TMI 684
Mismatch between income as per Form 26AS maintained in data base of Revenue and income offered to tax by assessee in return of income filed with the Revenue as is reflected in books of accounts - Addition made purely based on entries in Form 26A - return of income was originally processed by Revenue u/s 143(1) but later case of the assessee was selected by Revenue for framing scrutiny assessment u/s 143(3) read with Section 143(2) - HELD THAT:- There could be several reasons for mismatch between income as is reflected in Form 26AS and income offered to tax in return of income filed with Revenue which could be due to recognition of income in the preceding year or in the subsequent year by the taxpayer vis-a-vis the other party owing to stage of completion of the work, different method of accounting followed by taxpayer and other party , deficiency in rendering of services /supplies which could lead to rejection of material/services rendered , credit notes /debit notes issued by one party while the same is not accounted by other party etc.
The assessee on its part has tried to reconcile its income as offered in the books of accounts with Form 26AS but the said evidences which are critical evidences going to the root of the matter has been discarded by the CIT(A) at the threshold as the same were not admitted by CIT(A). No doubt, Rule 46A of the 1962 Rules give powers to Ld.CIT(A) to refuse admit additional evidences in certain circumstances as stipulated under Rule 46A but whence substantial justice is pitted against technicalities , the Courts will lean towards substantial justice.
We admit the additional evidences filed by assessee before Ld.CIT(A) and restore the matter back to the file of the AO for framing fresh assessment denovo after considering entire evidences furnished by the assessee in its defense on merits in accordance with law.
AO shall admit all the evidences/explanation filed by assessee in its defense and then decide the issue in denovo assessment on merits in accordance with law. Needless to say that the AO shall give proper and adequate opportunity of being heard to the assessee in the interest of principles of natural justice in accordance with law.
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