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Income Tax - Case Laws
Showing 421 to 440 of 10077 Records
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2019 (12) TMI 683
Addition on account of unproved expenses - Lack of response from the creditors/purchase party - HELD THAT:- CIT(A) has considered all the aspects and dimensions of the issues including the detailed reconciliation and explanation by the assessee. CIT(A) has specifically noted that the addition can not be made for lack of response from the creditors/purchase party and more so when the assessee was called upon to explain the balance standing in the credit of a party at the last moment by providing details and books of suppliers on whom the assessee has no control. Under these facts and circumstances, we are in agreement with the conclusion of CIT(A) that disallowance is uncalled for. Accordingly, we uphold the order of CIT(A) by dismissing the ground raised by the Revenue.
Addition of income representing unaccounted production - assessee is engaged in the business of production of bread for Britannia Industry Ltd. on contractual basis. The entire raw material is supplied by the Britannia Industry Ltd which go into the manufacturing processes - HELD THAT:- In this case the addition was primarily based upon the excess consumption of fuel to the extent of 24638 litters. We observe that the assessee was contract manufacturer of Britannia Industry Ltd. and was operating under the direct control and supervision of Britannia Industry Ltd. and was not allowed to do or manufactured bread for any other outside party. We also note that the excess consumption of fuel was within the standard norms as has been observed by CIT(A) by comparing the actual and standard consumption in the preceding and succeeding year and came to the conclusion that the estimation of unaccounted sale on the basis of excess consumption of fuel is wrong and against the provisions of the Act. We are quite convinced with the conclusion drawn by the Ld. CIT(A) on this issue as the AO has made addition on hypothetical basis not appreciating the facts in correct perspective. Accordingly, we are uphold the order of ld CIT(A) by dismissing the ground raised by the revenue.
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2019 (12) TMI 682
Revision u/s 263 - assessment order passed u/s 153A r.w.s 143(3) - HELD THAT:- We note that the assessee filed its return of income u/s 139(1) on 30.09.2011. The time limit for issue of scrutiny notice u/s 143(2) expired on 30.09.2012. The search was initiated in the assessee’s case on 13.03.2014. Therefore, we note that at the time of search and seizure the assessment for A.Y.2011-12 was not pending. Therefore, in case of assessee, the assessment year 2011-12 is an unabated assessment. It is settled position of law that in case of unabated assessment, the addition cannot be made by AO without incrementing documents unearthed during search. In assessee`s case, during search operation, the search team did not find and incrementing material.
Assessment order u/s 153A /143(3) was passed on 31.03.2016 and the ld. PCIT has issued notice u/s 263 on 08.12.2017. Therefore, we note that assessment year 2011-12 under consideration, was not pending on the date of search, hence it is an unabated proceedings. Without incriminating material in case of unabated assessment, the addition could not be made therefore, order passed by the AO is not erroneous.
Since, the assessment which is not pending before the AO is an unabated proceeding and the Assessing Officer is empowered to make any addition only based on incriminating materials found/unearthed during search. This is a settled position of law and is no longer res integra. In this case, no any incriminating material unearthed by search team therefore Assessing Officer’s order is not erroneous. Therefore, we are of the view that the order passed by the AO is neither erroneous nor prejudicial to the interest of the revenue. Hence, we quash the order u/s 263 - Appeal of the assessee is allowed.
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2019 (12) TMI 681
Validity of revision order - whether the ld. Pr. CIT was justified in invoking revisionary jurisdiction u/s.263 of the Act in the facts and circumstances of the case?
HELD THAT:- The details of valuation of closing stock of each project has indeed been furnished by the assessee before the ld. AO during the course of assessment proceedings vide letter dated 27/06/2017, on which fact there is no dispute. We find that ld. AO had merely sought to bring to tax the notional rental income from the closing stock of un-sold flats in terms of Section 23 of the Act.
Revenue was not able to bring on record any evidences that the assessment for A.Y.2014-15 were subsequently subjected to any reopening u/s 147 of the Act or revision proceedings u/s.263 of the Act. Hence, it could be safely concluded that the ld. AO while framing the assessment for the A.Y.2015-16 had merely adopted the same valuation method accepted by his predecessor for A.Y.2014-15 in assessee’s own case. Hence, there cannot be any error on the part of the ld. AO in framing a possible view thereon. In any case, we would like to hold that the assessee had furnished the actual cost incurred in respect of this project which had been subsequently completed, before the ld. CIT during the revision proceedings wherein, the assessee was able to prove that the estimate made as on 31/03/2015 matched closer to the actual costs incurred in the project subsequently.
There cannot be any prejudice that could be caused to the interests of the revenue also as it is merely a timing difference. Hence, it could be safely concluded that the ld. AO had duly applied his mind by accepting the valuation method adopted by the assessee in respect of Vrindavan Palms at ₹ 1500/- per sq.ft on an estimated basis as on 31/03/2015 on which there cannot be any interference and there cannot be any attribution of error on the part of the ld. AO. Hence, revision proceedings u/s.263 of the Act in respect of this project deserves to be quashed.
There is no error in the order passed by the ld. AO in accepting the valuation of the assessee in respect of projects as on 31/03/2015 - the ld. CIT had erred in exercising revision jurisdiction u/s.263 of the Act in the facts and circumstances of the instant case.
Appeal of the assessee allowed.
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2019 (12) TMI 680
Validity of reopening of assessment - HELD THAT:- For assumption of jurisdiction, in the reasons so recorded by the Assessing officer, he has stated that assessee has failed to fully and truly disclose all material facts necessary for the assessment. Apparently, the Assessing officer has drawn reference to the proviso to section 147 of the Act which in our mind is not applicable in the instant case as the original return so filed by the assessee was processed u/s 143(1) and not under section 143(3) and thus, the proviso to section 147 and the condition so specified therein cannot be invoked to invoke assumption of jurisdiction u/s 147 of the Act.
Basic requirement for assumption of jurisdiction u/s 147 is not satisfied in the instant case and consequent reassessment proceedings deserve to be set-aside - Appeal filed by the assessee is allowed.
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2019 (12) TMI 679
Exemption under Section 54F - whether the property acquired by the assessee by means of perpetual lease for unlimited period would amount to purchase ? - HELD THAT:- Assessee was in possession of residential house. Therefore, this Tribunal is of the considered opinion that in view of the definition found in Section 2(47)(vi) of the Act, the transaction of perpetual lease agreement by which the assessee took possession of property for unlimited period, has to be construed as purchase of property within the meaning of Section 54F of the Act.
Section 269UA(2)(iii)(f) defines transfer which includes lease for a term not less than twelve years. In this case, admittedly, the lease was not for less than twelve years. Hence, for all practical purposes, the acquisition of property by perpetual lease exceeding the period of twelve years, has to be construed as purchase within the meaning of Section 54F of the Act. In view of the scheme under the provisions of the Income-tax Act, as enunciated under Section 2(47)(vi) and Section 269UA(2)(iii)(f), this Tribunal is of the considered opinion that when the assessee acquired the residential house by means of perpetual lease exceeding twelve years, it has to be construed as acquisition of property / purchase of property within the meaning of Section 54F of the Act. Therefore, the assessee is entitled for exemption under Section 54F of the Act. Hence, this Tribunal is unable to uphold the order of the Principal Commissioner passed under Section 263 of the Act. Accordingly, the impugned order of the Principal Commissioner is quashed. - Decided in favour of assessee.
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2019 (12) TMI 678
TP Adjustment - AO found that the assessee has international transaction with its Associated Enterprises (AE) exceeding limit and hence, with prior approval of the Principal CIT, the matter was referred to the Deputy Commissioner of Income-tax(TP) - Comparable selection - HELD THAT:- Companies as different with software development services (SDS) as that of assessee need to be deselected from final list. The companies who have more than 25% RPT of sales were excluded.
AR submitted that the assessee has made a claim of TDS and out of total TDS the AO has not granted the total credit and prayed for direction for granting for credit of TDS. We found that the assessee has raised this ground of appeal and we direct the AO to grant TDS credit as per Form 26AS and further interest u/s 234B has to be levied as per law.
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2019 (12) TMI 677
Validity of scrutiny assessment order passed u/s 143(3) - No valid notice u/s 143(2) within the time prescribed under the provisions of law - rectification u/s 292BB - HELD THAT:- In the case on hand, the notice, as alleged by the Revenue on the basis of acknowledgement of speed post, has been issued through the speed post. The copy of the acknowledgement is placed on page 103 of the paper book. On perusal of the same, we find certain infirmities as submitted by the assessee before the learned CIT (A) which are discussed somewhere in the preceding paragraph. First of all the acknowledgement does not bear any date suggesting the issuance of the notice. Secondly, it does not contain any tracking number which is normally issued by the postal authorities.
DR has not brought any corroborative evidences in support of the contention that the notice was issued within the prescribed time. In our considered view, the Revenue has failed to discharged the onus by producing sufficient documentary evidence for establishing the fact that the statutory notice under section 143(2) of the Act was issued within the prescribed time. Thus in absence of contrary evidences, we are not convinced with the finding of the authorities below. Indeed, it (acknowledgment issued by the postal department) is a vague and inchoate document. Hence, no reliance can be placed on the same.
Accordingly, we hold that the assessment framed under section 143(3) of the Act without the issuance/serving of notice under section 143(2) of the Act within the time is not sustainable. Hence the ground of appeal of the assessee is allowed.
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2019 (12) TMI 676
Disallowance u/s 14A - HELD THAT:- No disallowance of interest expense claimed by the assessee can be made on account of investments as discussed above. Hence, we reverse the order of the authorities below. The AO is directed to delete the addition made by him. Hence the ground of appeal of the assessee is allowed.
Disallowance on account of interest expenses under the provisions of section 14A read with rule 8D - HELD THAT:- Regarding the interest expenses, we note that in the identical facts and circumstances the impugned issue has been decided in favour of the assessee in his own case vide paragraph number 7 to 7.3 of this order. For the detailed discussion please refer to the relevant paragraph. Respectfully following the same we hold that there cannot be any disallowance on account of interest expenses.
Regarding the disallowance of administrative expenses, we note that the AO has invoked the provisions of section 14A read with rule 8D mechanically without referring to the books of accounts of the assessee. As such the assessee has not claimed any expenditure against such exempted income. Therefore in our view there cannot be any disallowance of the expenses on account of exempted income. See RAKESH K. PATEL (HUF) VERSUS DCIT, CIRCLE-1 (2) , BARODA [2019 (7) TMI 1545 - ITAT AHMEDABAD]
We hold that there cannot be any disallowance on account of interest and administrative expenses under the provisions of section 14A read with rule 8D - Decided in favour of assessee
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2019 (12) TMI 675
Addition u/s 68 - Unexplained cash credit - HELD THAT:- We find that the assessee had placed on record sufficient documentary evidences to discharge the primary onus casted upon him and it was obligatory on the part of the revenue to controvert the same. However, no such material has been placed by revenue which would lead to a conclusion that assessee’s unaccounted money was routed in the accounts by way of Share Application Money.
The summons issued by AO u/s 131 were duly responded to by the investor entities and ledger confirmations were also filed in support of the transactions. There are no allegations of immediate cash deposits in the bank accounts of investor entities and nothing on record would suggest any cash got exchanged between the assessee and the investor entities.
Therefore, on the basis of stated factual matrix, it could safely be concluded that the assessee was successful in proving the identity of the investors, creditworthiness of the entities and genuineness of the transactions. Hence the conclusions drawn by learned first appellate authority could not be faulted with and we find no reason to interfere with the same.
Characterization of income - interest income - income has been held to be business income as against Income from other sources - HELD THAT:- We would concur with the submissions of Ld. AO that the same was assessable as Income from other Sources since undisputedly, the said investments were out of surplus funds and the assessee was not engaged in the business of finance and investment.Therefore, we hold that the said income was rightly brought to tax by Ld. AO as Income from other sources.
Allowable business expenditure - since they were stated to be incurred for maintaining the corporate status and for the purpose of statutory compliances. The revenue has not agitated the same before us and therefore, the said conclusion would require no adjudication from our side. The Ld. AO is directed to recompute the income of the assessee in terms of this order.
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2019 (12) TMI 674
Re-opening of assessment - Addition u/s 68 - HELD THAT:- There is no report or evidence of any authority conducting spot verification, dates etc. The share applicant companies are all registered companies under the Companies Act and are having bank accounts as well as PAN nos. The assessee has raised share capital of ₹ 90 lakhs during the year and this was disclosed in the annual accounts attached with the income tax return. It is a recorded and disclosed fact.
To record in the reasons that this was discovered during survey is not factually correct. A disclosed fact already on record cannot be discovered. Similarly the recording that information was received from the investigation wing is vague. No particulars are given. The director has sought for time to provide details. It is not a case of failure to prove the identity etc. Identity, creditworthiness and genuineness of a transaction cannot be proved in spot enquiry during survey. Hence as in the case of reasons recorded for re-opening for AY 2009-10 the re-opening of assessment for AY 2010-11 is also bad in law.
There is no independent application of mind by the AO to the information received from the investigation wing. Suspicion cannot take place of proof or evidence. Though it is true that conclusive evidences need not be brought on record at the time of recording of reasons, there should be some verification which should lead to the formation of belief that income subject to tax has escaped assessment. Vague statement, wrong recording of facts in the reasons recorded for re-opening, render the re-assessment is bad in law.
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2019 (12) TMI 673
TDS u/s 194J - Disallowance u/s 40(a)(ia) - bank guarantee charges - HELD THAT:- There is nothing on record to show that the assessee actually sought any technical services from Bank or that the Bank actually provided any technical services to the assessee or that the aforesaid payment was made by the assessee to the Bank as fees for technical services. Thus, we are of the view that the finding of the Ld. CIT(A) that the payment was made by the assessee to the Bank on account of technical services; is without any basis and without any supporting materials.
Therefore, the conclusion of Ld. CIT(A), arrived at without any basis and without any supporting materials, cannot be upheld. In view of the foregoing, and respectfully following the precedents and order of Hon’ble Supreme Court in the case of CIT vs. Kotak Securities Ltd. [2016 (3) TMI 1026 - SUPREME COURT] we decide the disputed issue in the present appeal before us in favour of the assessee
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2019 (12) TMI 672
Disallowance of claim u/s. 36(1)(viii) - amount transferred to special reserves - AO had disallowed the same holding that activity of the assessee of extending long term finance to the dairy cooperative could not be termed as long term financé for agricultural and industrial development - HELD THAT:- Issue decided in favour of the revenue as in its own case [2017 (6) TMI 1146 - ITAT AHMEDABAD] as held that other conditions of section 36(1)(viii) are not complied with by the assessee. The milk produced by the assessee is not amounting to manufacture and therefore the assessee was not engaged in providing long term finance for industrial and agricultural development or development of industrial facility and again it had no capital which is necessary to compute the aggregate of the amount to be carried to special reserve account as twice the amount of the paid up share capital and of the General reserve. The assessee failed to comply with these other conditions and therefore it would not be entitled the deduction.
Disallowance being grant given to Cooperative Union Federation and other Organization u/s. 36(1)(xii) alternatively allowable u/s. 28/37 - HELD THAT:- As in assessee's own case [2017 (6) TMI 1146 - ITAT AHMEDABAD] Tribunal had recalled the earlier order, and it was held that the grant is allowable as an expenditure under section 36(l)(xii) of the Act, and the matter was sent back to the AO for verification (j) whether the alleged non-refundable grants are given from grants received or not, and (ii) non-refundable grants sanctioned, are claimed as only when fund are already utilised/ fund utilisation report are received. He also submitted that under similar facts, in A.Y.2004-05, 2005-2006 and 2006-2007, the Tribunal has restored back the matter to the file of the AO for readjudication.
Disallowance u/s. 14A - HELD THAT:- We restrict the adhoc disallowance to ₹ 10 lacs being administrative expenditure incurred towards earning exempt income. Accordingly, the appeal of the assessee is partly allowed on this issue.
Interest income of NKPDF project - HELD THAT:- In the preceding assessment years the same issue was travelled upto ITAT and the ITAT in assessment year 2003-04 and subsequent years till assessment year 2008-09 has adjudicated the issue against the assessee. We have gone through the decision of ITAT for assessment year 2008-09 [2017 (6) TMI 1146 - ITAT AHMEDABAD] and noticed that ITAT has held that consistently following the decision of Co-ordinate Bench for assessment year 2004-05 and subsequent years the interest income of North Kerala Dairy Project is to be considered as taxable income.
Respectfully following the decision of ITAT for assessment year 2008- 09 and other preceding assessment years as cited above, we are of the view that interest income of North Kerala Dairy Project is to be considered as taxable income. Therefore, this ground of appeal of the assessee is dismissed.
Disallowance being contribution made to Employees Recreation Trust by invoking provisions of section 40A(9) - HELD THAT:- It is noticed that in assessment year 2007-08 [2013 (8) TMI 360 - ITAT AHMEDABAD] the ITAT has adjudicated this issue against the assessee after following the decision of ITAT in the case of the assessee itself for assessment year 2003-04.
Addition being provision written back - HELD THAT:- Addition made by the AO is not sustainahle for two reasons. The first reason is that when provision was made, the assessee was not liable to tax, hence, if the provision is reversed in the year of making the provision, it is not resulting into any tax liability, because the assessee was not taxable in that year, and therefore, reversal of such a liability cannot give rise to tax in the year of reversal, when it is not giving any benefit to the assessee, in the year of making the provision. The second reason is that even, if it is held that income has to be assessed in the year of making the provision, then this deduction on account of provision under section 36(l)(vii) is not allowable deduction in that year, because under this section, actual write allowable and not the provision. This is a pre-requirement of section 41(1) that where the allowance or deduction has been made in the assessment for any year, in respect of loss, expenditure or trade liability incurred by the assessee, and the same is subsequently ceased or has been remitted, then there is income under section 41(1) of the Act. Since in the present case, no deduction has been allowed to the assessee, in the year of making the provision, and it cannot be allowed because provision is not allowable under section 36(1)(vii), write back of such provision cannot give rise to an income under section 41(1)
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2019 (12) TMI 671
Assessment u/s 153A - addition in respect of the loan advanced to Smt. Naragoni Radha - HELD THAT:- AO has made the addition on the ground that pro-notes as well as receipts of the amount found in the premises of the assessee by rejecting the submission of the assessee that he has not advanced any amount to Smt. Naragoni Radha. As per section 292C of the IT Act, any document is found in the possession of the assessee, he has to explain that it is not belonging to him. In this case, the assessee denied that he has not advanced the amount, but the documentary evidence by way of promissory notes and receipts from the borrower shows that the assessee has advanced the amount. That part, nobody signs a promissory note without receiving the money. In view of these observations, we are of the opinion that assessee has failed to discharge burden cast upon him to establish that he has not advanced amount to Smt. Naragoni Radha.
No infirmity in the order of the CIT(A) in confirming the addition made by the AO and accordingly, upholding the order of CIT(A), we dismiss the ground raised by the assessee on this issue.
Unexplained investment - HELD THAT:- We find that the assessee himself has admitted by filing an affidavit that he has advanced an amount of ₹ 5 lakhs to Shri K. Naganatham, but, we do not know what is the reason for denial of the same. Before the AO, CIT(A) and even before us, the assessee failed to explain the source for advancing the amount of ₹ 5 lakhs, hence, the assessee failed to discharge the burden cast upon him to prove that he has not advanced the amount.
We find no infirmity in the order of the CIT(A) in confirming the addition made by the AO, therefore, upholding the order of CIT(A) we dismiss the ground raised by the assessee on this issue.
Unexplained investment in jewellery - We are of the view that CIT(A) has reasonably held that 500 grams of gold by the wife of the assessee is reasonable and hence, we confirm the decision of the CIT(A) and dismiss the grounds raised by the assessee on this issue.
Unexplained investment in construction of house based on the valuation report of the DVO - AO to ascertain the investment in the house property, referred the case to the Valuation Cell and the Valuation cell had estimated the cost of construction at ₹ 75.53 lakhs which was contested by the assessee who worked out the estimated construction at ₹ 66.10 lakhs - HELD THAT:- CIT(A) directed the AO to verify the rate adopted by the Valuation Cell whether the same is based on CPWS rate and if so, the AO should give a deduction of 15% thereon to bring at par on the state PWD rate. Further, he directed that in terms of the judicial pronouncements as above including that of the jurisdiction Tribunal, a 10% should be allowed for self supervision charges to arrive at the cost of construction instead of 7.5% allowed by the Valuation Cell. In other words, the AO should work out the cost of construction afresh keeping in view the direction as above.
We are of the view that the directions given by the CIT(A) to AO are proper and no interference is called for in the directions of the CIT(A) and accordingly, the ground raised by the assessee is dismissed.
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2019 (12) TMI 670
Addition on account of closing stock - HELD THAT:- Material on record including the tax audit report, original return as well as revised return, we observe that the assessee has inadvertently mentioned the wrong figures of stock in the original return which has lead to corresponding increase in the net profit of the assessee resulting into high and unrealistic net profit, which was rectified by filing revised return on 29/03/2013.
After examining the original as well as revised return along with tax audit return and audited financial accounts, we are of the view that there is an inadvertent mistake on the part of the assessee while preparing the original return which was correctly rectified by way of revised return on 29/03/2013. Moreover, the AO, in the remand report dated 24/03/2017 which was called for during the course of appellate proceedings before the CIT(A), submitted that after considering the details and evidences filed during the course of remand proceedings, the revised return of income ₹ 17,81,124/- appears to be correct. We are inclined to set aside the order of the CIT(A) and direct the AO to delete the said addition made on account of closing stock. Thus, this ground of appeal raised by the assessee is allowed.
Allowable business expenses - HELD THAT:- We have examined the orders of the lower authorities and also the remand report and observe that the disallowance was made purely on ad hoc basis without assigning any specific reason or giving any finding that the expenses were not incurred in connection with the business of the assessee wholly and exclusively. Disallowance made by the ld.CIT(A) needs to be restricted to 10% of the miscellaneous expenses and 5% of the labour expenses and gift to the parties and 5% of the travelling expenses. Consequently, the assessee gets relief of ₹ 71,625/- under the head ‘miscellaneous expenses’ and under the head ‘labour expenses’, ‘gift to the parties’ and ‘travelling expenses’. Accordingly, this ground of appeal raised by the assessee is partly allowed.
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2019 (12) TMI 669
Reopening of assessment u/s 147 - Validity of reasons to believe - HELD THAT:- Reasons in support of the impugned notice accept the fact that as a matter of regular business practice, a broker in the stock exchange makes modifications in the client code on sale and /or purchase of any securities, after the trading is over so as to rectify any error which may have occurred while punching the orders. The reasons do not indicate the basis for the AO to come to reasonable belief that there has been any escapement of income on the ground that the modifications done in the client code was not on account of a genuine error, originally occurred while punching the trade.
The material available is that there is a client code modification done by the Assessee's broker but there is no link from there to conclude that it was done to escape assessment of a part of its income. Prima facie, this appears to be a case of reason to suspect and not reason to believe that income chargeable to tax has escaped assessment.
We are of the view that the impugned notice is without jurisdiction as it lacks reason to believe that income chargeable to tax has escaped assessment. - Decided in favour of assessee.
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2019 (12) TMI 668
Addition of value of closing stock being diminution in the value of closing stock and claiming depreciation therein - HELD THAT:- The assessee computed his income according to cash or mercantile system of accounting in term of section 145 and accounting standards notified by the Government of India from time to time. The assessee values its closing stock at lower than the cost or net reliable value and to arrive at the valuation of closing stock from the perspective of accounting standards. The assessee reduced the value of certain items from closing stock to appropriate reflect its net reasonable value which is lower than the cost. The said reduction from the cost represents the wear and tear of the stocks of the items which are lying in the inventory/showrooms.
We noted that there is no factual difference in this year and any adjustment in the closing stock for the year no. 1 would consequently result in the adjustment to the opening stock of year No. 2. Further, we noted that the assessee has filed complete details of valuation of closing stock in its paper book along with statements showing details of subsequent sales with regard to the items of closing stock which were revalued to net reliable value along with sample copies of invoices with respect of subsequent sales. From those details it is clear that net reasonable value adoptable by the assessee for the purpose of value of closing stock in certain cases is as per the prevailing accounting practices as accounting standards 2. Hence, we find that no infirmity in the order of CIT(A) and respectfully following the Tribunals decision for AY 2012-13, we confirm the order of CIT(A) and deleting the addition.
Adjustment made while computing book profit under section 115JB to the closing stock - HELD THAT:- We find that this issue is answered in the first issue and the same finding will apply here also. Hence, we confirm the order of CIT(A) deleting the addition.
Disallowance of provision for leave encashment under section 43B - HELD THAT:- Calcutta High court in the case of Exide Industries Limited And Anr. vs Union Of India (UOI) [2007 (6) TMI 175 - CALCUTTA HIGH COURT] whereby the provision of section 43B(J) of the Act struck down as arbitrary but stayed and is pending before Hon’ble Supreme court . Hence, it was requested that the matter can be kept pending till the decision of Hon’ble supreme court. On this, we require the learned DR, to explain the situation. He only requested that this matter can be referred back to the file of the Assessing Officer who will decide in term of the Hon’ble Supreme Court decision. After hearing both the sides and going through the records, we restore the matter back to the file of the Assessing Officer to decide the claim of assessee in term of the decision of Hon’ble Supreme Court in the case of Excide Industries [2007 (6) TMI 175 - CALCUTTA HIGH COURT] . This issue of the assessee’s CO is set aside to the file of the Assessing Officer.
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2019 (12) TMI 667
TP Adjustment - selection of comparables - HELD THAT:- Assessee was engaged in the business of distribution and sale of digital switching equipment, cellular exchange equipment, and other telecommunication equipment and provision of related services. It also provided intragroup marketing, technical support and contract software development services. The assessee had entered into various international transactions with its Associated Enterprises thus companies functionally with that of assessee need to be deselected from final list.
Deduction on account of liquidated damages - HELD THAT:- As assessee pointed out that it was a contractual obligation, which was not complied with but the Assessing Officer/DRP called it penalty; in fact it was a contractual liability on delay and supply of equipment. It was further pointed out by the Ld.AR that similar issue arose before the Tribunal in the preceding year and the issue has been remitted back to the Tribunal vide para 5 at pages 28 & 29. We find that similar issue has arisen in the preceding years and the matter has been remanded back to the file of Assessing Officer for deciding the issue afresh. Following the same parity of reasoning, we remit this issue back to the file of Assessing Officer to follow the directions of the Tribunal in the preceding year.
Claim of expenditure on account of TDS paid during the year - HELD THAT:- In view of the provision of section 40(a)(ia) where the assessee does not deposit the TDS, then such expenditure is not to be allowed as deduction in the hands of the assessee. However, in case the TDS is deposited in the succeeding year, then that expense needs to be allowed as deduction in the year when TDS is deposited. The said facts need to be examined by the AO. Hence, we remit this matter back to the file of Assessing Officer to allow the claim of the assessee after due verification and after allowing reasonable opportunity of hearing to the assessee. Thus, ground raised by the assessee are allowed for statistical purposes.
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2019 (12) TMI 666
Deduction u/s 80-IB(10) - HELD THAT:- Considering the facts in the present case are identical to earlier years and follow the precedence and direct the AO to grant deduction u/s 80IB(10)
Disallowance u/s 40(a)(ia) - non- deduction of TDS on provision for expenses - contentions of the ld. AR that no bills/invoices were raised by the parties. Hence, there is no liability to pay the amount. But as an Accounting Policy, the assessee has made provision in the books of accounts - HELD THAT:- we found this disputed issue was dealt by the co-ordinate bench in TE CONNECTIVITY INDIA PVT. LTD. [2016 (5) TMI 1222 - ITAT BANGALORE] and SANGHI INFRASTRUCTURE LTD. [2018 (7) TMI 2072 - GUJARAT HIGH COURT] where provision was made by assessee for expenses for which bills were not received during year under consideration, no section 40(a)(ia) disallowance could be made for nondeduction of TDS.” In the present case, no bills and invoices were raised by the creditors and no liability of payment arose. Hence we, followed the judicial decisions and are of the opinion that the assessee is under no obligation to make payment and no TDS is deducted and accordingly we direct the AO to delete the addition and allow the grounds of appeal of the assessee.
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2019 (12) TMI 665
Addition u/s 68 - unexplained cash credit - HELD THAT:- In nut-shell it is made out that injustice is done to assessee and bone of contentions made out by assessee were not appreciated by authorities below in right perspective despite all material placed by it before authorities below. It is also made out that appeal of the assessee was kept pending by CIT(A) for a period of almost 10 years and effective opportunity was not accorded by learned CIT(A) while disposing the appeal by CIT(A). Our attention was drawn to para 3 of learned CIT(A) order.
Prayers aremade to set aside the issues in its appeal to the file of the AO for fresh adjudication on merits in accordance with law. We find merit in the contentions of assessee and we are of the considered view that issues in this appeal need to be restored to file of AO for framing denovo assessment on merits in accordance with law. We make it clear that these amounts stood credited in books of accounts of the assessee and primary onus is on assessee to prove identity of the creditors, creditworthiness of the creditors and genuineness of the transactions through cogent and credible evidences. In case the assessee did not cooperate in set-aside proceedings, the AO shall be at liberty to adjudicate the issue on merits in accordance with law based on material on record.
AO is directed to admit evidences/explanations filed by the assessee in its defense during set aside proceedings. Needless to say that AO shall give proper and adequate opportunity of being heard to the assessee in accordance with principles of natural justice in accordance with law in denovo assessment proceedings
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2019 (12) TMI 664
Disallowance in respect of business promotion expenses debited to Profit and Loss Account - AO has disallowed the said expenditure during year solely based on a letter from Taj Palace Hotel in which pre-wedding function is noted, whereas the fact on record suggest that there was no wedding ceremony took place in the family of the assessee during the year and it was happened only in the years 2004 and 2014 - HELD THAT:- Function was organized for lunch only and the expenditure incurred does not suggest any expenditure on account of DJ, Flower decoration, stage etc., suggesting that there was any marriage function organized in the family. Further, the invoice of Taj Palace Hotel issued and banquette challans does not mention any pre-wedding functions. Further, if there had been wedding in family, the other expenses on various transactions could have reflected in capital account of the assessee.
Therefore, these circumstantial evidences lead to infer that the expenditure was in the nature of business promotion only, hence, such disallowance made by the AO is without corroborating evidences and without cross examining the parties, hence same are deleted.
With regards to 1/5th of the disallowance of remaining expenses, we find that the AO has pointed out that some of the expenditure were incurred for personal travelling and are in the nature of personal, therefore, the nature of expenditure is such in which personal element cannot be ruled out. Therefore, we are of the considered opinion that AO was justified in making disallowance of the remaining expenses @1/5th, accordingly the disallowance of ₹ 2,02,993/- confirmed. This ground of appeal is partly allowed.
Disallowance of Travelling Expenses being 1/4th of the total travelling expenses on account of personal element - HELD THAT:- We are of the view that the AO has cited some instances of Air Tickets which are definitely personal in nature. It is, further seen that the various family members have travelled in India which are not for the purpose of business, therefore considering the totality of the facts, we are of the considered opinion that disallowances restricted to 1/5th of the total expenses by the ld.CIT(A) are appears to be reasonable, hence this ground of appeal of the assessee is dismissed.
Disallowance of vehicle expenses - HELD THAT:- AO disallowed 1/5th of the said amount and worked out the disallowance of ₹ 2,41,061/-. The ld.CIT(A) has also restricted the disallowances to 1/5th of the vehicle expenses. However, before us, that the ld.Counsel has argued that the disallowance on account of personal element in respect of car depreciation is not justified and against the Law. We find this argument of the ld.Counsel is valid, therefore 1/5the of the disallowances attributable to car depreciation of ₹ 8,33,187/- are deleted. The AO is directed to recalculate the disallowance, accordingly, out of vehicle expense. Remaining disallowances @1/5th restricted by ld.CIT(A) are upheld, accordingly, this ground of appeal is therefore partly allowed.
Rate difference on cancellation of contract of purchase of goods - HELD THAT:- Transaction could be effected by orgal agreement, which not prohibited by law. Since, the Om Exim, is a unit of M/s.Ram Kishore Chemical Co., therefore, non-appearing the name of Om Exim is of no consequence. The evidences filed by the assessee in the form of debit notes, confirmation, bank accounts and payments has not been refuted by the AO. In view of these facts, we are of the considered opinion that the assessee has incurred a business loss, hence same is allowable as business expenditure, accordingly the disallowance / additions made by the AO are therefore deleted.
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