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Income Tax - Case Laws
Showing 201 to 220 of 678 Records
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2016 (2) TMI 1027 - ITAT MUMBAI
Bogus purchases - NP determination - Held that:- NP ratio of assessee has increased to 3.54 as against 2.58 in AY 2007-08. The NP ratio was not disputed by ld DR for the revenue. The Hon’ble Bombay High Court in CIT Vs Hariram Bhambhani [2015 (2) TMI 907 - BOMBAY HIGH COURT] held that revenue is entitled to bring the entire sales consideration to tax, but only the profit attributable on the total unrecorded sales consideration alone can be subject to income tax. Considering the above referred factual position and the decision of Co-ordinate Bench in assessee’s own case for AY 2010-11, we deem it appropriate to restrict the disallowance @ 10% of the impugned purchases. We order accordingly. - Decided partly in favour of assessee
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2016 (2) TMI 1024 - ITAT DELHI
Gross profit rate adopted in making treating addition adopting the gross profit rate of the preceding year - Held that:- CIT (A) has admitted that there is a possibility of discrepancies in party accounts and the same cannot be ruled out due to lack of proper reconciliation as well as the stock register was not maintained by the assessee but the CIT(A) also has given a finding that all the payments were made through banking channels and assessee has given ledger account and copies of letters of credit before the Assessing Officer. The assessee company also submitted confirmation of the parties as per the Assessing Officer ’s enquiry. The CIT(A) has rightly added ₹ 10 lacs and deleted the remaining disallowance. Hence, Ground No. 1 to 7 will not sustain.
Disallowance u/s 40(a)(ia) - non deduction of TDS by making the payment for the various expenses - Held that:- CIT(A) has given a finding that in all respective salary and wages there was no payment which was made above 50,000/- and, therefore, the same is not coming under the purview of Section 194C for TDS deduction. The record also speaks the same. The remand report also has not stated that there was a payment more than ₹ 50,000/- to any of the administrative staff or outsiders related to the expenses. Hence, these grounds are also not sustainable.
Salary expenses disallowed - Held that:- As relates to expenditure under the head salary the assessee filed the details before the Assessing Officer and the same was not controverted by the Assessing Officer in the remand proceedings. Thus, this ground also does not sustain.
Revenue appeal dismissed.
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2016 (2) TMI 1023 - ITAT MUMBAI
Exemption u/s 12AA(3) cancelled - registration was cancelled by the authorities on finding its activities in nature of trade, commerce and business etc and also on the reason of that the gross receipt of the assessee became in excess of ₹ 10 lacs - Held that:- Both the aspects with regard to the cancellation of registration have duly been examined by the DIT(E) and thereafter took the action in accordance with law. The only proviso of the section 12AA(3) is in connection with giving an opportunity of being heard to the assessee which has also been given by virtue of notice dated 02.02.2012. Anyhow, apparently in view of the P & L Account the total sales is to the tune of ₹ 2,30,32,426/- and the net income from cost of sales has shown to the tune of ₹ 1,21,73,529/- and miscellaneous income has also shown to the tune of ₹ 6,14,126/- and the case is squarely covered in view of the proviso u/s 2(15) of the Act. Moreover, charitable purposes should be on record to carry out the exemption granted by the DIT(E). As discussed above receipts on account of sale of liquor, catering receipts and soft drink etc cannot be treated for charitable purposes. The receipt has also became very high i.e. more 25 lakhs thereforer in view of the said circumstances we are of the view that the purpose of the assessee is not the charitable purpose and value of receipt has became more than 25 lakhs therefore the learned DIT(E) has rightly cancel the registration as per provision of 12AA(3) of the Act in accordance with law. - Decided against assessee
Order required to be implemented retrospectively - Held that:- Undoubtedly, the proviso to section 2(15) of the Act is effective from the assessment year of 2009-10 but in the instance case the matter was taken by the learned DIT(E) in pursuance of report / proposal received from ADIT(E)(II)(1), Mumbai. The order nowhere speaks that the report filed by the ADIT(E)(II)(1), Mumbai is in connection of any specific year, but it is quite clear that the authority examined the record of the assessee for the year of 2009-10. When the activities of the assessee was not charitable for the period w.e.f A.Y.2009-10 then no doubt the activities of the assessee is not required to be legalized on this fact that the order passed by the respondent on 01.03.2012. The record of the assessee speaks about this fact that the purpose of the assessee was not charitable for the period w.e.f 2009-10 then in the said circumstances we are of the view that the order is required to be implemented to the very assessment year 2009-10, not from the date of passing the order. Accordingly this issue is also decided against the assessee and in favour of Revenue.
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2016 (2) TMI 1022 - ITAT MUMBAI
Entitled for claiming exemption u/s.11 - Held that:- Breach of section 13(1)(d) and 13(2)(h) would lead to forfeiture of exemption of income derived from such investment and not the entire income would be subjected to the maximum marginal rate of tax u/s 164(2). Thus the exemption u/s 11 is available to the assessee only on the income to the extent the same is derived in conformity of section 11 and applied during the year for such purpose of charitable trust.
Dividend income on shares and mutual funds and long term capital gain on sale of shares an exempt u/s 10(34),10(35) and 10(38) respectively and cannot be brought to tax by applying section 11 and 13 of the Act.
Education grant given to the Indian students in India for education/higher education abroad fulfills the conditions of application of money for such purpose in India - Decided in favour of assessee.
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2016 (2) TMI 1021 - ITAT MUMBAI
Unexplained expenditure u/s 69C - AO making the addition on the basis of statements given by the third parties before the Sales Tax Department, without conducting any other investigation - Held that:- Tribunal in the case of ITO Vs. Premanand (2006 (8) TMI 272 - ITAT JODHPUR) wherein it has been held that where the AO has made addition merely on the basis of observations made by the Sales tax dept and has not conducted any independent enquiries for making the addition especially in a case where the assessee has discharged its primary onus of showing books of account, payment by way of account payee cheque and producing vouchers for sale of goods, such an addition could not be sustained - Decided in favour of assessee
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2016 (2) TMI 1020 - ITAT DELHI
Conversion of protective addition into a substantive addition - violation of principles of natural justice - Held that:- In the case on hand, there was violation of principles of natural justice. No proper opportunity was given to the assessee. The AO extensively relied on a report called “appraisal report.” This finds mention on pages 24, 26, 49 and 56 of the assessment order. In case the AO relies on a report of any authority, natural justice demands that, a copy of that report be made available to the assessee, so as to enable him to place his contentions on the same. If the Revenue cannot furnish this report to the assessee on the ground of confidentiality, then, no addition whatsoever can be made in the hands of the assessee based on this report. A statement was recorded from one Shri Rajesh Aggarwal. A copy of the statement was also not furnished to the assessee, though the AO relied on this statement for making certain additions.
Evidence was gathered during the search of Jagat Group and these evidences were also not confronted to the assessee. We also find that the assessment order was framed in a hurry, possibly due to constraint of time. Though the notice u/s 153A was given on 1.5.2012, show cause notices were issued only on 5.2.2013, 8.2.2013 and 14.2.2013. The assessee gave a reply on 8.3.2013 and the assessments were framed on 28.3.2013. Though the AO had written a very detailed order, we find that the contention of the assessee that, material relied upon by the AO in his orders were not confronted to the assessee is correct.
The contents of the show cause notices does not conform to the reasoning in the assessment order. Similarly, the first appellate authority has converted the protective addition made by the AO into a substantive addition without specifically confronting the assessee with such a proposal. The commission income was also bifurcated on ad hoc basis by the ld.CIT(A) without giving any opportunity to the assessee. Though the assessee has pleaded violation of principles of natural justice, the ld.CIT(A) did not address the objection by providing adequate opportunity by furnishing the evidences and by calling for the remand report on these issues from the AO.
In view of the above as there is violation of principles of natural justice all these appeals should be set aside to the file of the AO for fresh adjudication in accordance with law.
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2016 (2) TMI 1010 - ITAT MUMBAI
Depreciation on assets of assessee trust - Held that:- Claim has since been correctly allowed by the CIT(Appeals) following the ratio of the judgment of the Hon’ble Bombay High Court in the case of CIT vs. Institute of Banking Personnel [2003 (7) TMI 52 - BOMBAY High Court]
Allow carry forward of the current’s assessed deficit for set-off in the subsequent years - Held that:- The said direction of the CIT(Appeals) is very much in line with the decision of the Hon’ble Bombay High Court in the case of Institute of Banking Personnel Selection (supra) and on this aspect also no error can be found with the decision of the CIT(Appeals), which I hereby affirm.
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2016 (2) TMI 1005 - ITAT DELHI
Addition for trade outstanding u/s 68 - Verification of the sundry creditors - Held that:- Assessing Officer is of the view that the assessee has tried to cover up unexplainable credits by splitting them under 38 names under the imprest account. However, the Ld. AR has submitted that all the entries appearing therein can be explained and correlated by the assessee, if given a chance to do so. Therefore, in the interest of justice, we restore the matter to the file of the Assessing Officer for fresh adjudication.
Disallowance u/s 40(a)(ia) - retrospective amendment - Held that:- We find that the Agra Bench of the ITAT in the case of Rajiv Kumar Agrawal (2014 (6) TMI 79 - ITAT AGRA) wherein held a curative amendment to avoid unintended consequences is to be treated as retrospective in nature even though it may not state so specifically, the insertion of second proviso must be given retrospective effect from the point of time when the related legal provision was introduced - it cannot subscribe to the view that it could have been an "intended consequence" to punish the assessees for non-deduction of tax at source by declining the deduction in respect of related payments, even when the corresponding income is duly brought to tax - That will be going much beyond the obvious intention of the section - the insertion of second proviso to Section 40(a)(ia) is declaratory and curative in nature and it has retrospective effect from 1st April, 2005, being the date from which sub clause (ia) of section 40(a) was inserted by the Finance (No. 2) Act, 2004 – thus, the matter is remitted back to the AO for fresh adjudication
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2016 (2) TMI 1004 - ITAT MUMBAI
Income from sale of shares - capital gain or business income - Held that:- In view of the above discussion and keeping in view the decision of Tribunal in case of Gopal Purohit [2009 (2) TMI 233 - ITAT BOMBAY-G] which was confirmed by Hon’ble Bombay High Court [2010 (1) TMI 7 - BOMBAY HIGH COURT] as well as decision in the case of SMK Shares & Stock Broking, [2010 (11) TMI 714 - ITAT, MUMBAI] and in the case of Vinod K. Nevatia (2010 (12) TMI 73 - ITAT, MUMBAI), which have already been discussed by the lower authorities in their respective orders, we do not find any merit for deviating from the conclusions drawn by the department in earlier year while framing the assessment u/s.143(3) without change in facts and circumstances during the year under consideration. It is pertinent to mention here that assessee was investing in shares and continuously showing not only short term but huge long term capital gains as well as dividend income which has been accepted by the department in their scrutiny assessment. - Decided against revenue
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2016 (2) TMI 1000 - ITAT KOLKATA
Penalty u/s 271(1)(c) - defective notice - Held that:- The show cause notice u/s. 274 of the Act is defective as it does not spell out the grounds on which the penalty is sought to be imposed. Following the decision of CIT & Anr. v. Manjunatha Cotton and Ginning Factory [2013 (7) TMI 620 - KARNATAKA HIGH COURT ] we hold that the orders imposing penalty in all the assessment years have to be held as invalid and consequently penalty imposed is cancelled.
We may also add that the provision of section 292B of the Act cannot cure the basic defect in assumption of jurisdiction and only cure the mistake, defect or omission in return of income, assessment, notice or the proceeding is in substance and effect in conformity with or according to intent and purpose of the Act. As we have already seen that the Hon’ble Karnataka High Court in the decision referred to earlier view the show cause notice and the reasons mentioned in the show cause notice are part of the process of the natural justice and the defect in such notice cannot be overlooked. In view of the aforesaid decision we do not find any infirmity in the arguments advanced by the learned AR before us.
Thus we hold that levy of penalty in the present case cannot be sustained. - Decided in favour of assessee.
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2016 (2) TMI 997 - ITAT DELHI
Validity of reopening of assessment - Held that:- A plain reading of the reasons recorded demonstrate that the A.O. has not applied his mind to the material/information received from the Director (Investigations). Without such independent application of mind, it is not possible for the A.O. to come to a conclusion that he has reason to believe that income assessable to tax has escaped assessment. Thus, respectfully following the propositions of law laid down by the Hon’ble Delhi High Court in the case of Pr.CIT vs. G & G Pharma India Ltd. ( 2015 (10) TMI 754 - DELHI HIGH COURT ) we hold that the reopening is bad in law. - Decided in favour of assessee.
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2016 (2) TMI 996 - ITAT CHENNAI
Addition u/s 14A r.w.r.8D - Held that:- When the Assessing Officer is not satisfied about the correctness of the claim of expenditure or the assessee’s claim that no expenditure was incurred, then the Assessing Officer shall recompute the expenditure by applying the procedure laid down in Rule 8D(2). As per sub-Rule (2) of Rule 8D, the aggregate of the three limbs provided therein has to be taken into consideration for the purpose of computing the expenditure.
In the case before us, the assessee admittedly utilized the reserve available to the extent of ₹ 54,54,90,000/-. Therefore, no direct expenditure was incurred for earning the income which does not form part of total income. The assessee also has not incurred any expenditure by way of interest. Therefore, the second limb of the Rule 8D(2) is not applicable. Now coming to the third limb, the amount equal to 0.5% of the average value of the investment, income from which does not or shall not form part of total income as appearing in the balance sheet of the assessee on the first day and the last day of the previous year, has to be taken into consideration. This Tribunal is of the considered opinion that the third limb of Rule 8D(2) has to be applied. Therefore, the computation made by the Assessing Officer by adopting second limb of Rule 8D(2) may not be correct.
Accordingly, the orders of the lower authorities are modified and the Assessing Officer is directed to take 0.5% of the average value of the investment, income from which does not or shall not form part of total income as appearing in the balance sheet of the assessee on the first day and the last day of the previous year, as expenditure for earning income.
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2016 (2) TMI 995 - ITAT DELHI
Addition on account of transfer pricing adjustment - Held that:- Unable to accept argument that the comparables should be selected on the basis of similarity even under TNMM. The Hon’ble High Court has laid down that selection of comparables does not differ with the method adopted. Ex consequenti, it is no more open to argue that the functional dissimilarity of the companies under the overall broader category can be ignored under the TNMM. In view of the foregoing discussion, we find the functional similarity of Apitco Limited lacking on entity level with the assessee company. As such, we order for its exclusion from the final set of comparables.
Global Procurement Consultants Ltd. can be considered as comparable to the assessee company. We, therefore, order for the elimination of this company from the final list of comparables.
NTPC Electric Supply Ltd.'s activities carried out by the assessee in facilitating purchase and sale of goods for its AEs, can by no standard, be compared with the nature of activity carried out by NTPC Electric Supply Ltd. We, therefore, order for the exclusion of this company from the list of comparables.
Askme Info Hubds Ltd. hardly bears any similarity with the assessee company. We, therefore, reject the assessee’s contention for including this company in the list of comparables.
Crisil Research & Information Services Ltd only reason given for its exclusion is the nonavailability of data for the relevant financial year. The ld. AR fairly admitted that it is not possible to deduce operating profit margin of this company for the financial year ending 31.3.2007 on the basis of information as is available in public domain. As such, we hold that the authorities were justified in excluding this company from the list of comparables on this score alone.
Addition towards the expenditure incurred on account of leasehold improvements by treating the same as capital in nature - Held that:- It is evident from the description of the items on which the above referred expenditure has been incurred that it is a case of renovation of premises immediately after taking it on lease. As such, there can be no question of replacement. We cannot help if the Revenue has accepted the part deletion of disallowance by the ld. CIT(A). Be that as it may we are concerned only with the items of disallowance raked up in the appeal before us and hold that the ld. CIT(A) has taken unimpeachable view in treating the instant amount as capital expenditure.
Claim of depreciation - Held that:- In order to bring any amount within the ambit of Explanation 1 to section 32, it is paramount that the expenditure incurred by the assessee on the premises in the capacity of non-owner should firstly be in the nature of capital expenditure and then it should fall within any or both the clauses as discussed above. If these conditions get satisfied, as is the case under consideration, then the amount incurred for such works falls for consideration under Explanation 1 to section 32. In other words, the amount so incurred would be capitalized entitling the assessee to depreciation as per the eligible rate. In view of the foregoing discussion, we uphold the impugned order on this issue subject to grant of depreciation.
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2016 (2) TMI 990 - DELHI HIGH COURT
SIC company - Grant of a concession or relief in terms of the Scheme presented before the BIFR - relief relating to capital gains tax under Section 45 on sale of assets disallowed on the basis of projected figures and not on the basis of actual figures - whether the difference between the actuals and the projected figures should be absorbed by the Petitioner?
Held that:- Referring to the order passed by AAIFR it requires the Income Tax Department to accept or reject the plea for grant of a concession or relief in terms of the Scheme presented before the BIFR. The AAIFR observed that “the Department should have only considered the proposed concession and taken its own decision.” That order does not by any means suggest that when there are actual figures available at the time of the decision to be taken by the Department, reliance can be placed on the projections of the Petitioner which were submitted at the time of submission of the scheme before the BIFR. In any event, it does not support the plea of the Revenue that the difference between the actuals and the projected figures should be absorbed by the Petitioner.
Consequently, while setting aside the order dated 29th November 2012 passed by the DIT Recovery, the Court requires the DIT (Recovery) to once again consider the proposed scheme and the question of entitlement of the Petitioner to concession as sought for by the Petitioner. A fresh decision based on the actual figures submitted by the Petitioner will be taken.
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2016 (2) TMI 987 - ITAT PUNE
Interpretation of provision of section 80IA(5) - "initial assessment year" - Held that:- As Poonawalla Stud and Agro Farm Pvt. Ltd. Vs. ACIT [2010 (9) TMI 1080 - ITAT PUNE] the initial 'A. Y' for the purpose of claiming deduction u/s. 80IA was the first year in which the assessee claimed the deduction u/s. 80IA (1) after exercising his option as per the provisions of 80IA (2) of the Act. It was held that the Ld. CIT(A) has erred in holding that the initial A. Y for the purposes of Section 80IA(2) r.w.s. 80IA (5) was the year in which the assessee started generating electricity from the wind mill activity. Also see Hon’ble Madras High Court in the case of Velayudhaswamy Spinning Mills (P) Ltd. vs. ACIT [2010 (3) TMI 860 - Madras High Court]
When the assessee exercising the option, only the losses of the year beginning from the initial A. Y. are to be brought forward and not the losses of earlier year which have been already set off against the other income of the assessee. The revenue cannot notionally bring forward any loss of earlier years which has already been set off against any other income of the assessee and set off the same against the current income of the eligible business. We thus set aside the orders of the authorities below and direct the A. O to allow the claimed deduction u/s. 80IA without bringing the notionally brought forward any loss or depreciation of earlier years which has already been set off against other income of the assessee.
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2016 (2) TMI 985 - ITAT DELHI
Receipt of accommodation entries - Held that:- In the case in hand it was not mere transfer of money by these share applicants to the assessee but the assessee has produced on record the board's resolution, share applicants form, copy of share transfer deeds and information from the Registrar of Companies in respect of the share applicants. It established the existence of real transaction of transfer of shares and, therefore, it rebuts the case of the Revenue of alleged accommodation entries.
Once the assessee has established the existence of the transaction of transfer of shares against the received of share application money then the burden is shifted on the Assessing Officer to conduct the necessary enquiry and investigation to disapprove the evidence produced on record by the assessee. The Assessing Officer did not choose to conduct any enquiry or investigation during the assessment proceeding but relied upon the statement of Shi Mahesh Garg and the report of the Investigation Wing, therefore, the addition made by the Assessing Officer merely on the basis of a statement recorded by the Investigation Wing without any corroborative evidence and examination and cross-examination of the assessee is not sustainable. Therefore, no error or illegality in the order of the learned Commissioner of Income-tax (Appeals) in deleting the addition in question. - Decided in favour of assessee
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2016 (2) TMI 980 - ITAT DELHI
Validity of assessment order passed under section 143(3)/158BC - period of limitation - Held that:- Undisputedly, in the present case of the assessee, the search was conducted on March 19, 2002, and notice under section 158BC of the Act was issued to the assessee on May 9, 2002. Thus, both the dates falls well before June 1, 2002, when the new Explanation 1 to this section was in existence. Prior to the insertion of the new Explanation 1 with effect from June 1, 2002, Explanation 1, as inserted by the Finance (No. 2) Act, 1996, with retrospective from July 1, 1995, and amended by the Finance (No. 2) Act, 1998, with retrospective effect from July 1, 1995, in computing the period of limitation for the purposes of this section, the period during which the assessment proceedings is stayed by an order or injunction of any court was to be excluded.
The order under section 158BC was to be passed within two years from the end of the month in which the last of the authorisation for search under section 132 or for requisition under section 132A, as the case may be, was executed in cases where a search is initiated or books of account or other documents or any assets are requisitioned on or after the January 1, 1997. Keeping all these material facts in totality in its mind, the learned Commissioner of Income-tax (Appeals) has rightly held that the new Explanation 1 inserted to section 158BE of the Act with effect from June 1, 2002 was not retrospective and thus the assessment order in question passed on July 14, 2011, was barred by limitation as the prescribed limitation for passing the order was up to May 30, 2011, after exclusion of the stay period. The first appellate order in this regard is thus upheld.
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2016 (2) TMI 971 - DELHI HIGH COURT
Reopening of assessment - reasons to believe - addition to income - Held that:- The issue urged by the Revenue stands covered in favour of the assessee by the decision of this court in Ranbaxy Laboratories Ltd. v. CIT [2011 (6) TMI 4 - DELHI HIGH COURT ] which has been followed in CIT v. Software Consultants [2012 (2) TMI 18 - DELHI HIGH COURT ]. In sum, if no addition is made on the basis of the reasons to believe recorded by the Assessing Officer for reopening the assessment under section 148 of the Act, resort cannot be had to Explanation 3 to section 147 of the Act to make an addition on any other issue not included in the reasons to believe for reopening the assessment. - Decided in favour of assessee
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2016 (2) TMI 970 - BOMBAY HIGH COURT
Deemed dividend under section 2(22)(e) - Held that:- The issue raised in the present case is no longer res integra as this court in the case of CIT v. Impact Containers P. Ltd. reported in [2014 (9) TMI 88 - BOMBAY HIGH COURT ] and in the case of CIT v. Universal Medicare P. Ltd. [2010 (3) TMI 323 - BOMBAY HIGH COURT ] has held that a person liable to pay tax on deemed dividend is the person who is the shareholder of the company advancing the loan.
Admittedly, the respondent-assessee was not a shareholder of M/s. Arco Electro Technologies Pvt. Ltd. at the relevant time.
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2016 (2) TMI 967 - PUNJAB AND HARYANA HIGH COURT
Penalty under section 271C r.w.s. 274 - failure to deduct tax at source out of interest paid/credited to four deductees as required under section 194A - ITAT confirms CIT(A) order in deleting penalty - Held that:- As decided in CIT (TDS) v. State Bank of Patiala Sectt. Shimla ( 2015 (1) TMI 473 - HIMACHAL PRADESH HIGH COURT ) that no tax at source is required to be deducted in view of section 194A(3)(iii)(f) of the Act in respect of payments made to any societies which are wholly financed by the Government and the Central Government had issued notification exempting those societies. Learned counsel for the Revenue was not able to demonstrate that the approach of the Commissioner of Income-tax (Appeals) and the Tribunal was erroneous or perverse or that the findings of fact recorded were based on misreading or misappreciation of evidence on record warranting interference by this court. - Decided against revenue
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