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Income Tax - Case Laws
Showing 81 to 100 of 571 Records
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2021 (1) TMI 1061 - ITAT MUMBAI
Denial of deduction u/s 35AC on the basis of statement of Trustee - Assessee argued that opportunity to cross examine the Trustee was not provided to the assessee - HELD THAT:- It is a well settled law that a statement cannot be used against the assessee unless an opportunity is granted to the assessee to cross examine the person who has made such statement. Apex Court in the case of ICDS Ltd. [2020 (2) TMI 1424 - SUPREME COURT] held that where opportunity to cross-examine witness relied upon by the Assessing Officer is not extended to the assessee, the entire issue has to be adjudicated fresh by giving fair opportunity to both the sides.
Nowhere it is emanating from perusal of assessment order that the statement recorded by the Department that was used to disallow assessee’s claim was provided to the assessee or the opportunity to cross- examine the person whose statement was used against the assessee was afforded to the assessee. AO ought to have provided material used against the assessee apart from providing an opportunity to cross examine deponent whose statement was used against the assessee. Besides the said statement there is no substantive material to disbelieve the claim of assessee.
The request of the assessee to cross-examine the person whose statement was used by the Revenue for making the addition was also declined by the CIT(A) - We restore the issue to the file of Assessing Officer for fresh adjudication after affording opportunity of cross examination to the assessee - Appeal of the assessee is allowed for statistical purposes.
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2021 (1) TMI 1049 - GUJARAT HIGH COURT
Disallowance of interest expenses u/s 14A read with Rule 8D(ii) - Tribunal deleted addition - HELD THAT:- Findings recorded is that, the interest income received during the year was more than interest paid by the assessee for all three assessment years. The Tribunal has concurred with the CIT(A) on the question of deletion of disallowance for interest under Rule 8(2)(ii) of the Rules.
This appeal stands dismissed so far as the first question of law as proposed by the Revenue is concerned.
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2021 (1) TMI 1047 - KARNATAKA HIGH COURT
Proportionate deduction u/s 80IB(10) - Deduction to the extent of profits attributable to the units where the built up area is below 1500 Sq. Ft. - Whether Tribunal erred in holding that the project completion method is a recognized method of accounting without properly examining as to whether the assessee is entitled to project completion method in the absence of assessee placing regular books of accounts ? - HELD THAT:- As decided in own case [2021 (1) TMI 789 - KARNATAKA HIGH COURT] on close scrutiny of the judgment rendered by this Court in BRIGADE ENTERPRISES LTD.[2020 (9) TMI 1137 - KARNATAKA HIGH COURT] it is evident that the first substantial question of law involved in this appeal is no longer res integra. Therefore, the first substantial question of law is answered against the revenue and in favour of the assessee.
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2021 (1) TMI 1046 - KARNATAKA HIGH COURT
Addition u/s 14A read with Rule 8D - Appellant has not made any claim that it has not incurred any expenditure for earning the exempt income - as argued assessing officer has not arrived at the mandatory satisfaction as required under section 14A and hence no disallowance is possible - HELD THAT:- AO has not determined the amounts of the expenditure and has not recorded any reasons with regard to correctness of the claim made by the assessee in respect of such expenditure, in relation to the income which does not form part of the total income of the assessee.
AO before embarking upon determination of the amount of expenditure incurred in the light of the exempted income, has to record a finding that he is not satisfied with the correctness of the claim of the assessee in respect of such expenditure. The aforesaid mandatory requirement has not been fulfilled by the Assessing Officer before disallowing the assessee under Section 14A - Decided in favour of assessee.
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2021 (1) TMI 1045 - KARNATAKA HIGH COURT
Capital gain - transfer of property u/s 2(47) - assessee had sold certain properties and had not paid capital gains - proceedings under Section 153C of the Act read with Section 143(3) were initiated - HELD THAT:- Perusal of relevant clauses of the Power of Attorney which was executed on the same day, it is evident that all rights in the property including the possession constructively infact has been handed over by the assessee to the purchaser. Therefore, we have no hesitation in holding that the aforesaid transaction is the same within the meaning of Section 2(47) of the Act and the Assessing Officer as well as the Commissioner of Income Tax (Appeals) has rightly treated the same to be a transaction of sale. However, the Tribunal, without taking into account the incriminating material on record, merely on the basis of the fact that the possession of the property under the agreement was not delivered, has held the same to be not sale. - Decided in favour of the assessee.
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2021 (1) TMI 1043 - GUJARAT HIGH COURT
Exemption u/s 11 - activities of the assessee in the nature of commerce / trade or not? - Tribunal justified considering the activity of the assessee as engaged in the development of urban area which is in the nature of advancement of general public utility not hit by the newly introduced first and second proviso to section 2(15) of the Act without considering the merit of the issue? - HELD THAT:- The questions of law, as proposed by the Revenue are no longer res-intigra in view of the decision of this Court in case of Ahmedabad Urban Development Authority Vs. ACIT [2017 (5) TMI 1468 - GUJARAT HIGH COURT] all the questions of law as proposed stand squarely covered by the decision of this Court in case of AUDA (supra).
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2021 (1) TMI 1041 - KARNATAKA HIGH COURT
Revision u/s 263 - Eligibility of benefit of deduction under Section 10A - HELD THAT:- In the instant case, the period of 10 consecutive years would start from Assessment Year l995-96 and would end with Assessment Year 2008-09 - period of 10 year commences from 1995-96 irrespective of the fact that whether or not the assessee has claimed benefit in between the Assessment Years and the period of 10 consecutive years therefore, in view of the plain language of the enactment cannot be extended.
AO without examining the aforesaid aspect of the matter granted the benefit of deduction Section 10A of the Act to the assessee. The view taken by the AO cannot but be said to be erroneous and prejudicial to the interest of the revenue. The view taken by the Assessing Officer cannot be said to be a plausible view.
No reasons have been assigned by the Assessing Officer for holding the assessee eligible for benefit of deduction under Section 10A - Since, the issue with regard to eligibility of the assessee for deduction under Section 10A of the Act for Assessment Year 2008-09 beyond a period of 10 consecutive years was not subject matter of order of assessment itself. Therefore, the same could not have been the subject matter of the appeal before the CIT (Appeals) and thus, in the fact situation of the case there was no bar in invoking the powers under Section 263 - The income of the assessee from staffing, which was not an income from export of computer software was also allowed by the Assessing Officer without any application of mind and without any enquiry. Therefore, the Commissioner of Income Tax has rightly invoked the powers under Section 263 - Decided against assessee.
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2021 (1) TMI 1040 - ITAT DLEHI
Disallowance u/s. 14A read with Rule 8D - HELD THAT:- We find that the Hon'ble Delhi High Court in the case Cheminvest Ltd. vs. CIT [2015 (9) TMI 238 - DELHI HIGH COURT] has held that if there is no exempt income, there can be no question of making any disallowance u/s 14A. Similar view has been taken by the Hon'ble Delhi High Court in CIT vs. Holcim India P. Ltd. [ 2014 (9) TMI 434 - DELHI HIGH COURT]. The net effect of these decisions is that the disallowance u/s 14A gets restricted to the extent of exempt income, even if the provisions of the section are attracted. - Decided against revenue.
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2021 (1) TMI 1038 - ITAT BANGALORE
Capital Gain (LTCG) or Business income - Exemption u/s 54F - AO took the view that the assessee was engaged in an adventure of the nature of trade and therefore the income declared under the head “capital gains” is to be taxed under the head Income from Business - HELD THAT:- Intention at the time of purchase was to construct a house for self occupation and that intention was given up due to the fact that the land was outside Mysore city and due to financial crunch. Therefore the tests laid down in the decisions support the plea of the Assessee that he did not do any adventure in the nature of trade when he sold the larger extent of property after dividing them into smaller sites. The dates of acquisition of the property and its conversion into sites and obtaining approval and the dates of sale by the Assessee all go to show his intention at the time of acquisition was not with a view to indulge in an adventure in the nature of trade. The case of B.Narasimha Reddy [1984 (7) TMI 72 - KARNATAKA HIGH COURT]
Thus gain on sale of land is to be regarded as income under the head “capital gain”. Consequently, the Assessee should be entitled to all the deductions permissible while computing income under the head “Capital Gain”.is a decision on facts of that case.- Decided in favour of assessee.
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2021 (1) TMI 1037 - ITAT DELHI
Disallowance u/s 14A r.w.r. 8D - HELD THAT:- As the entire investments have been made out of own funds and no borrowed funds have been used. However, we are of the considered view that for earning exempt income, some expenditure needs to be disallowed. Considering the facts of the case in totality, we are of the opinion that a disallowance of ₹ 2 lakhs should meet the ends of justice. We, accordingly, direct the Assessing Officer to restore the disallowance u/s 14A to ₹ 2 lakhs. Ground taken in Memorandum of appeal is partly allowed.
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2021 (1) TMI 1036 - ITAT DELHI
Disallowance of interest - HELD THAT:- We agree with the contention of the Ld. Counsel for assessee that there was no case for disallowance of the amount on account of interest expenses. We direct the AO to delete this amount. Accordingly, first ground of appeal is allowed.
Disallowance of rent paid - HELD THAT:- The assessee has also made a reference to Section 38 of I.T. Act for apportionment of expenses U/s 38 of I.T. Act. Under Section 38 of I.T. Act, a portion of the expenses is allowable to the assessee as deduction, having regard to use of the premises / building for the purposes of assessee’s business. We find that the lower authorities – the AO as well as the Ld. CIT(A) - have not considered the applicability of Section 38 of I.T. Act; and further, that the relevant facts are not available on the records on the basis of which fair apportionment can be made. Moreover, neither the assessee has furnished details for such apportionment; nor the lower authorities - the AO as well as the Ld. CIT(A)-have considered apportionment of expenses U/s 38(1) - We are of the view that the relevant facts for deciding this ground of appeal are not available on records of the Tribunal; and that these relevant facts are needed to be brought on record. Therefore, we set aside this issue to the file of the AO with the direction to pass a fresh order as per law for deciding the issue regarding allowability of rent paid after providing the assessee a reasonable opportunity.
Disallowance towards director remuneration - HELD THAT:- Whether the assessee has deducted tax at source under Section 192 of I.T. Act in respect of the disputed amount of enhanced remuneration paid to the Director, is also not available on our record. We find that the lower authorities, AO as well as Ld. CIT(A), have also not examined these aspects; and have not brought relevant facts on record. We find that for the purposes of Section 40A(2) relevant facts pertaining to enhanced remuneration paid to the Director, such as free market value, legitimate needs of assessee’s business and benefit derived by / accruing to the assessee are not available on the records. For deciding this ground of appeal are not available on records of the Tribunal; and that these relevant facts are needed to be brought on record. Therefore, we set aside this issue to the file of the AO with the direction to pass a fresh order as per law on the dispute under second ground of appeal.
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2021 (1) TMI 1034 - ITAT MUMBAI
Penalty u/s 271(1)(c) - bogus purchases disallowed - HELD THAT:- Assessee is unable to produce the actual delivery/physical delivery of goods but it is a fact that the AO has not doubted the sales made by assessee or even the payments were made by account payee cheques. Once this is a fact that once sales are not doubted, the entire purchases cannot be considered as bogus and that is also a presumption. Mere on presumption, penalty cannot be levied. Hence, we confirmed the order of CIT(A) deleting the penalty and dismissed this appeal of revenue.
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2021 (1) TMI 1033 - ITAT MUMBAI
Levying the penalty u/s 271(1)(c) - Bogus purchases - HELD THAT:- AO has initiated the penalty proceedings in both the charges that means he is not sure about which charges, the assessee has committed the default. Hence, this issue is squarely covered by the decision in case of CIT vs. Samson Perinchery [2017 (1) TMI 1292 - BOMBAY HIGH COURT]. Hence, on this count, we deleted the penalty.
As regards to merits of the case, we noted that the assessee has filed complete ledger account, purchase bills, delivery challans in respect of purchase transactions made with Nimesh Steel Pvt. Ltd for purchase value of ₹ 5,75,536/- and also payment made by account payee cheque. The assessee could not produce only the purchase party for examination of the Assessing Officer and the Assessing Officer levied penalty only on this count. We noted that this cannot be the reason for levy of penalty under section 271(1)(c) because the Assessing Officer is unable to prove the concealment of income in this case. Hence, we delete the penalty and allowed the appeal of assessee.
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2021 (1) TMI 1032 - ITAT DELHI
Nature of expenditure - expenditure as license fee payment to M/s. Remfry and Sagar Consultants Pvt. Ltd. (RSCPL) for use of goodwill of ‘Remfry & Sagar’ and to practice in this name - revenue or capital expenditure - HELD THAT:- We are of the considered view that amount of deduction claimed by the assessee on the amount of licence fee paid to RSCPL is allowable as expenditure u/s 37 of the Income-tax Act, 1961. So, ground no.1 is determined against the Revenue.
Travelling expenses and entertainment expenses - ad hoc disallowance of 5% - HELD THAT:- We are of the considered view that none of the expenditure can be disallowed merely on the basis of surmises. Perusal of the impugned order passed by the ld. CIT (A) shows that he has followed the earlier year’s order passed by the ld. CIT (A) allowing the identical expenditure.
When undisputedly entries in the books of account qua the claimed expenditure have not been questioned in any manner whatsoever ad hoc disallowance made by the AO to the extent of 5% of the expenditure of travelling expenses and entertainment expenses is not sustainable in the eyes of law. So, we find no scope to interfere into the findings returned by the ld. CIT (A), hence ground no.2 is determined against the Revenue.
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2021 (1) TMI 1030 - ITAT CHENNAI
Nature of expenditure - expenditure incurred for development of a new product including knowhow - assessee manufacturing auto electrical parts incurred expenditure for setting up separate cell for developing import substitute parts - revenue or capital expenditure - HELD THAT:- In this case, the facts are identical to the facts considered in the case of CIT Vs Denso India Ltd [2009 (7) TMI 144 - DELHI HIGH COURT] where the assessee is engaged in the business of manufacturing LED lights, was purchasing certain raw materials till assessment year 2010-11, but from the assessment year 2013-14, it started manufacturing substitute of purchases for which certain expenditure have been incurred for development of the product which are purely revenue in nature.
Although, the assessee has considered said expenditure as deferred revenue expenditure, pending amortization in the financial statement, but because of nature of expenditure the same has been claimed as deduction u/s.37(1) in the statement of total income.
Thus expenditure incurred by the assessee being technical consultancy charges, purchase of raw materials, advertisement charges and electricity charges are in the nature of revenue expenditure, which does not give any enduring benefit to the assessee and hence, same cannot be treated as capital expenditure. Hence we, direct the Assessing Officer to allow deduction towards expenditure as claimed by the assessee in the statement of total income. - Decided in favour of assessee.
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2021 (1) TMI 1029 - ITAT CHENNAI
Exemption u/s 11 - AO rejected accumulation of income u/s.12AA on the ground that the assessee has accumulated its income not for specific purpose, but merely to defer taxation of surplus of amount which has not been applied towards its objects in the corresponding accounting period - HELD THAT:- Once assessee has accumulated income with a specific purpose and such purpose is specified in the main objects of the trust, then the Assessing Officer cannot deny such accumulation of income merely for the reason that purpose specified in Form No.10 is vague and general in nature. As long as objects of the trust provide for such purpose, then the assessee can accumulates funds for the purpose which is specified in trust deed.
This view is fortified by the decision of Hon’ble Gujarat High Court in the case of CIT (Exemption) vs. Bochasanwasi Shri Akshar Purshottam Public Charitable Trust reported in [2018 (10) TMI 995 - GUJARAT HIGH COURT where it was held that lack of declaration in Form No.10 regarding specific purpose for which funds were being accumulated by the assessee trust would not be fatal to the exemption claimed u/s.11(2) of the Act. The Hon’ble Supreme Court [2019 (3) TMI 1405 - SC ORDER] has dismissed SLP filed by the Department in the above case and has upheld the findings of the Hon’ble Gujarat High Court.
In this case, on perusal of facts available on record, clause 4k of trust deed provides for extending help and relief to distressed and destitute, homeless and underprivileged and funds accumulated u/s.11(2) is covered under main objects of the trust.
AO as well as learned CIT(A) has erred in denying benefit of accumulation of income u/s.11(2) of the Act. Hence, we direct the Assessing Officer to delete the additions made towards denial of accumulation of income u/s.11 (2) of the Act and direct him to allow benefit of accumulation as claimed by the assessee. - Decided in favour of assessee.
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2021 (1) TMI 1022 - ITAT CHENNAI
Stay of demand - exemption u/s.11 denied - assessee has violated provisions of section 13(3) r.w.s. 13(2)(a) for the reason that return required to be filed u/s.139(1) was not filed within the due date for filing return of income, accordingly, entire income has been brought to tax - HELD THAT: - We find that assessee has not paid any amount towards outstanding demand created by Assessing Officer . As per the amended provisions of section 254 (2A) of the Act, before granting any stay, assessee is required to deposit at least 20% of disputed tax. When this provision is apprised to learned AR for the assessee , he pleaded that assessee’s financial condition is very weak and it cannot service disputed demand. We, therefore, considering fact that assessee is not willing to pay any amount towards disputed demand, reject the stay application filed by assessee. However, in order to give early hearing to assessee, appeal filed by assessee is posted for out of turn hearing on 09.02.2021.
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2021 (1) TMI 1020 - ITAT MUMBAI
Reopening of assessment u/s 147 - Addition u/s 68 - treating the share premium money received by the assessee as unexplained cash credit - HELD THAT:- We find that assessee has filed the necessary evidences in support of its claim before the AO as well as before the Ld. CIT(A). The evidences filed comprised of copies of ITR, annual accounts, bank statements, PAN numbers, application from share applicants, copies of board resolutions etc and even in response to summons issued under section 131, these investors filed their audited statements, ITRs and bank statement before the AO.
AO has also proceeded on the basis of the statement of Shri Pravin Kumar Jain and others recorded during the course of search to doubt these transactions and has not brought on record any substantive material to prove these investments as non genuine whereas the assessee has filed all the evidences.
The director Shri Dipak Singhvi has presented himself before the AO in order to examine Shri Pravin Kumar Jain and others, however, the same did not attend before the AO and cross examination could not be performed. Besides, the amendment to section 56(2)(vii)(b) of the Act is applicable from A.Y. 2013-14 and not to the year under consideration and therefore the question of issuing shares at a premium can not be examined in this year and also addition can not be made.
We find that on the date of issue of shares, the intrinsic value of the share as on 31.03.2007 was 411.80 and therefore the observation of the AO that shares were issued at a very high price is wrong and against the facts of the case. We have also perused the decisions referred to and relied by the ld. AR of the assessee in support of his arguments and found them to be squarely applicable to the assessee's case.
In this case, the assessee has discharged the onus cast upon it by filing the necessary documents before the AO as well as CIT(A). Moreover in absence of cross examination of the persons whose statements were relied by the AO, the addition can not be made in view of the fact that specific prayers to the AO to this effect were made before the AO. In view of the above discussion and facts of the case, we are inclined to set aside the order of Ld. CIT(A) and direct the AO to delete the addition. - Decided in favour of assessee.
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2021 (1) TMI 1019 - ITAT MUMBAI
Disallowance of proportionate interest on capital advances provided by the assessee - contentions of the Ld. AR are that, the advances does not pertains to sister concerns but the balance with government authorities - HELD THAT:- We find, out of total amount of ₹ 50,64,880/- disclosed under short term loans and advances in the note to financial accounts, the amount of ₹ 47,11,874/- pertains to VAT, service tax, TDS and income tax refund receivables. Whereas the A.O. is of the opinion that these are the advances provided to sister concerns.
Thus the advances disclosed in the financial statements are with the statutory authorities and the action of the A.O. to disallow proportionate interest considering such advances is not acceptable. Accordingly, we set aside the order of the CIT(A) and direct the Assessing officer to delete the addition and allow the grounds of appeal in favour of the assessee.
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2021 (1) TMI 1018 - ITAT MUMBAI
Reopening of assessment u/s 147 - assessment of the assessee was reopened after the expiry of 4 years - HELD THAT:- In the instant case all the material fact has already been disclosed by assessee. Moreover, after the issuance of notice dated 30.12.2012, the assessee has furnished the reply also and after the satisfaction the matter of controversy has been decided.
Since the assessee was not failure to for the disclosure of all the material facts necessary for assessment, therefore, the reopening is also bad in view of the decision in the case of (i) Phool Chand Bajrang Lal Vs. ITO [1993 (7) TMI 1 - SUPREME COURT](ii) ALA Firm Vs. CIT [1991 (2) TMI 1 - SUPREME COURT](iii) Indian and Eastern Newspaper Society Vs. CIT [1979 (8) TMI 1 - SUPREME COURT] & ITO Vs. Lakhmani Mewal Das[1976 (3) TMI 1 - SUPREME COURT] . On appraisal of the above said finding, it is apparent that the assessment could only be reopened on account of disclosure of new matter of knowledge of fresh facts which were not present at the time of original assessment. It may constitute reason to believe that the income of escaped assessment within the meaning of Section 147
We are of the view that the notice u/s. 147/148 of the Act is wrong against law and facts, hence, is hereby ordered to be set aside. Accordingly, we decide these issues in favour of the assessee
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