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Income Tax - Case Laws
Showing 221 to 240 of 503 Records
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2013 (1) TMI 677 - ITAT MUMBAI
Penalty u/s 271(1)(c) - excess deduction u/s 10A on account of unrealized export proceeds - Held that:- Assessee along with the return of income has filed its Audit Report and Form No. 56, intimating the realized and unrealized portions of export proceeds. Also found from the papers appended by the assessee in its APB that before the finalization of assessment for the current year, the assessee had realized substantial export proceeds and, dutifully, it was submitted before the AO, as to how much unrealized export proceeds have been received by it and for which unit. In these circumstances, since the assessee had made adequate disclosure in its return with respect to the unrealized export proceeds at the time of filing its ROI, no fault on the conduct of the assessee found.
Thus respectfully following the decision in the case of DSL Software Ltd. (2012 (4) TMI 360 - ITAT DELHI) and the Circulars issued by the competent authority, i.e. RBI, with regard to receipt of export proceeds, and also the fact that the AO himself had dropped the penalty proceedings on same facts in the subsequent year penalty under section 271(1)(c) is not exigible in the instant case - in favour of assessee.
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2013 (1) TMI 676 - ITAT AGRA
Determination of annual value of properties - Addition made AO u/s 23(4) - calculation of notional rent - case of the assessee that according to section 23(1)(c) annul value of those properties are nil - Held that:- Neither the Revenue authorities nor the assessee has brought on record any material or evidence in support of the determination of annual value of properties, however, the assessee has furnished evidence in respect of annual value determined by municipal/local authority, Agra Nagar Nigam in support of annual value of concerned properties. Such material is relevant for determination of annual value is in accordance with section 23(1)(a) as there are various consideration which are relevant for determination of Annual value under section 23(1)(a) out of which, one of the consideration is annual value as taxed by Municipality or Local Authority for the purpose of municipal or local tax.
Therefore, the annual valuation taken by the local authority is one of the basis under the peculiar facts and circumstances of these cases for determining the annual value under section 23(1)(a). Since additional evidence is admitted by us first time, therefore, the A.O. is directed to verify the annual valuation determined by the local authority/Agra Nagar Nigam and determine the annual value for the purpose of section 23(1)(a) - it is relevant to state that the annual value determined by the municipal/local authority has been considered in the case under consideration is one of the basis of determination of annual value for the purpose of section 23(1)(a) but under the peculiar facts and circumstances of the case under consideration, as neither the assessee nor the Revenue has brought on record any other material based on which the annual value of these properties can be determined in accordance with section 23(1)(a) therefore, the ratio of this order is not applicable to other cases as annual value under section 23 is to be determined in accordance with facts of each case - in favour of assessee for statistical purposes.
Addition on account of house hold expenses - Held that:- The estimation made by the A.O. on account of house hold expenses are arbitrary also sustained by CIT(A). In A.Y. 2003-04 the assessee has shown house hold expenses of Rs. 3,71,500/-, whereas the CIT(A) has estimated at Rs. 4,80,000/-. The addition of Rs. 8,500/- has been sustained in A.Y. 2003-04. Similarly, in A.Y. 2008-09 the CIT(A) has estimated the house hold expenses at Rs.10,80,000/-against the house hold expenses shown by the assessee at Rs. 8,91,000/-. The addition of Rs. 1,89,000/- has been sustained by the CIT(A). The facts of the case regarding family status and other for A.Y. 2003-04 and 2008-09 are same whereas the addition sustained in A.Y. 2003-04 was Rs. 8,500/- and in A.Y. 2008-09 it was Rs. 1,89,000/- which clearly establishes that the estimation made by the Revenue authorities on account of house hold expenses are arbitrary without any basis particularly under the circumstances where during the course of search no such material was found in this regard. Further, confirming the additions in respect of bills related to house hold appliances which were found at the time of search in A.Y. 2002-03,2005-06 & 2007-08 while deciding separate grounds of those appeals in subsequent paras of this order. In the light of the facts, the arbitrary addition made on account of house hold expenses are not sustainable therefore deleted - in favour of assessee.
Unexplained investment in purchase of Washing Machine & Air Conditioner - Held that:- CIT(A) confirmed the addition as the bill was found at the time of search and the assessee did not furnish any explanation. The assessee has failed to explain the source of the said amount except general submission that it has been purchased out of household withdrawals. Since the addition on account of low house hold withdrawals which was made by the A.O. on adhoc are deleted and estimation basis without any basis and since this addition is supported by the bill which was found at the time of search, in the light of the fact, no infirmity in the order of CIT(A).
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2013 (1) TMI 675 - ITAT MUMBAI
Loss on sale of shares Capital loss or business loss - Assessee engaged in business of trading and investment - AO assessed the same as short term capital loss instead of business loss Held that:- the frequency & number of transactions are undisputedly too low, earning of dividend appears to be a dominant intention in acquisition of the two units of MFs, obviously the scrips are few, figures appear of high value, it does not appear that the assessee has the intention of holding on to the units as investment, the conduct of the assessee in dealing with the shares over the years is also relevant factor and adequate facts for determining the same are not brought on to the records etc. Therefore, assessee is required to file adequate data for establishing the claim. AO is directed to admit evidences or additional evidences that may help for substantiating the claims Remand back to AO
Loss on F&O contracts - Assessee has claimed loss on open position of F&O contract - did not offer the profit for taxing on similar open position of F&O contact on the last day of the previous year Held that:- The notional loss is allowable as long as there are no contingencies are attached and the notional gains should be allowed in the year of realization based on the principle of prudence. The question is what if there is difference between the anticipated profits quantified in an year and the actual profits realized thereafter. On finding that there is no dispute on the fact that the appreciated value of stocks is realized and afforded to tax in the next year In favour of assessee
Disallowance u/s 14A Rule 8D Expense in relation to exempt income - Earned dividend income and claimed exemption in view of the provisions of section 10(34) Reckoning of units of MF as stock in trade or as investment - Held that:- Following the decision in case of India Advantage Securities Ltd. (2012 (11) TMI 458 - ITAT, MUMBAI) that assessee had not retained the shares with the intention of earning dividend income which was incidental due to his sale of shares which remained unsold by the assessee therefore disallowance u/s 14A did not upheld. AO needs to collect additional facts for deciding the principle of res judicata and the rule of consistency. Till the time, the actual nature of the transaction is decided; the quantification issues u/s 14A has to wait for sake of harmony in adjudication. Remand back to AO
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2013 (1) TMI 674 - ITAT HYDERABAD
Assessee contended that The order appealed against, though made in pursuance to a section 263 order, is nevertheless an assessment under section 143(3) and, accordingly, the first appeal there-against would lie only before the first appellate authority Held that:- in no uncertain terms, that even though the assessment under reference is titled as an assessment under section 143(3) read with section 263 of the Act, the same is in essence and substance only an order giving effect to the revisionary order, inasmuch as the ld. CIT has given clear directions to the assessing authority for carrying out specific additions/disallowances, leaving no room for verification or adjudication by the assessing authority. - CIT(A) has no power to hear appeal against such orders.
Depreciation Claim of higher depreciation - Assets used to running them on hire - The assessee having claimed it at 40%, i.e., as against the normal 25% Held that:- The assessee admittedly letting out tractors, i.e., presuming so, only when the same are not required for its construction purposes, no case for charge of depreciation at the higher rate on own tractor/s, is, under the circumstances made out for us to interfere with the order In favour of revenue
Deduction in respect of Sales Tax Assessee paid Rs 40.53 lakhs as sales tax Paid excess of Rs. 5.91 lakhs adjusted against liabilities against earlier years - Held that:- Under the circumstances, and in the interest of justice, we, therefore, only consider it fit and proper to restore the matter back to the file of the A.O. to undertake the necessary examination and verification, and decide the issue on the basis of the facts determined by him in accordance with law - Remand back to AO
Addition on account of Retention money - Retention of a part of the value of a contract sub-contracted by the assessee to another - assessee had shown retention of the stipulated 8% - additional work done by the sub-contractor Held that:- TDS certificate/s is issued for the total value of the contract (Rs.194.75 lakhs), the assessee could recognize income in its accounts only for the value for which work is certified, and for which it can be claim to be paid. unable to say as to how and on what basis ld. CIT has found the impugned amount to be unaccounted for, directing for its addition. In our view, that survives the assessees explanation, however, is if the amount claimed by way of TDS is on the entire amount of Rs.194.75 lakhs, i.e., for which the TDS certificate stands issued to it, or is restricted to the amount proportionate to the amount accounted and claimed by it as its income for the year, i.e., Rs.179.31 lakhs. In favour of assessee
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2013 (1) TMI 673 - ITAT DELHI
Unaccounted stock Undisclosed income - Excess stock found at the time of Survey u/s 133A - Assessee engaged in selling sceneries/potteries received from various artists - whatever articles were sold she used to pay the artist after deducting her commission - unsold items she used to return back the items to the respective artists The additions were made by Assessing Officer on the basis that assessee did not provide the evidences during course of assessment proceedings - Held that:- The assessee had also submitted the confirmations from 13 artists who had confirmed of their being owner of the items found at the premises of assessee and they have confirmed that they have not sold these to the assessee. Therefore, excess stock found at the time of survey necessarily belonged to the various artists who had got their work of art displayed at the gallery of the assessee and these were meant to be sold by the assessee on commission basis. In favour of assessee
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2013 (1) TMI 672 - ITAT BANGALORE
Transfer Pricing Computation of Arm's Length Price - International transaction Arms Length Price - Assessee provided software research & development support services to its Associated Enterprise - Remunerated on a 'cost plus' basis - assessee adopted the Transactional Net Margin Method TNMM - Comparable - Comparability of the comparable relied upon by the TPO Turnover filter is an important criterion in choosing the comparables - Inappropriate computation of operating margins of comparables and that of the Assessee - Treating foreign exchange gain or loss and provision for bad debts as non-operating in nature and fringe benefit tax as part of operating cost
Abnormal margins - Held that:- Factors for abnormal profits have not been highlighted by the Assessee. In such circumstances it is not possible to accept the submission of the Assessee to exclude this company for the purpose of comparison. In favour of revenue
Segmental Margin Unusually high profit of comparables - Held that:- The growth rate of this company was double the industry average. Comparable company has made unusually high profit during the financial year 06-07. The operating revenues increased 63.03% which indicates that it was an extraordinary year for this company. The reasons given by the Assessee for excluding this company as comparable are found to be acceptable. In favour of assessee
TPO has observed that "market conditions" are different for on-site and offshore work Held that:- TPO fails to substantiated how market conditions differ. The fact is that in onsite development of computer software, the Assessee does not employ assets nor does the Assessee assume many risks which the offshore software developer assumes. Even the Assessee accepts that the per hour rate will be different in the case of offshore software development and onsite software development.
R & D expense Revenue or capital expenditure Expenditure on website development Assessee contended that these expenses were for exploring the possibility of domestic market through pilot projects Held that:- Unless the nature of the expenses is examined it is not possible to decide as to whether the same were revenue in nature and that it relates to existing business of an Assessee. The contention of the assessee that the claim should be examined u/s 35 also cannot be decided unless the correct description of the expense is considered. We therefore set aside the order of the AO Remand back to AO
Disallowance of provision Provision for building registration charges - AO has disallowed the same on the ground that it is a provision Held that:- The assessee submitted that the provision has been reversed and offered to tax during the AY 2009-10 and therefore same should not be taxed in the year under consideration. The limited plea of the Assessee before us is that if the sum is disallowed in this year the same should not be taxed in AY 09-10. We are of the view that it would be appropriate to direct the AO not to tax the same sum in AY 09-10 as the sum has already suffered tax by disallowance in the present AY In favour of assessee
Disallowance of Travel expense - Expenditure cannot be claimed on the basis of provision and that the liability in respect of the expenditure has not accrued to the Assessee during the previous year Held that:- Expenses which were claimed as a provision, the Assessee has the system of reversing expenses wherever the same was not incurred by the Assessee, in the succeeding Assessment years. AO examine as to whether the Assessee reverses excess provision when the actual expenses details are available and also see if the Assessee follows the method of accounting consistently Remand back to AO
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2013 (1) TMI 671 - CHHATTISGARH HIGH COURT
Determination of Gross Total Income - whether ITAT was justified in allowing deduction u/S 80HH and 80I by considering the gross income from the two units of the appellants, namely, flour mill unit, Itarsi and solvent extraction plant, Khandwa in violation of section 80AB - Held that:- As decided in Synco Industries Ltd. v. Assessing Officer (Income-tax) [2008 (3) TMI 13 - SUPREME COURT] Gross total income of the assessee has first got to be determined after adjusting losses etc., and if the gross total income of the assessee is 'Nil' the assessee would not be entitled to deductions under Chapter VI-A.
Remand the case for deciding the factual and legal issue involved in this appeal afresh in the light of the law laid down by the Supreme Court referred to supra as undoubtedly, this decision was rendered after the impugned decision of the Tribunal was passed in this case and, therefore, the Tribunal did not. have an occasion and nor the benefit to examine the question involved in this appeal.
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2013 (1) TMI 655 - ITAT AHMEDABAD
Product Registration Expenses and reimbursement of Product Registration Support Services expenses - Trademark Registration Fees and Patent Registration Fees - capital v/s revenue - Held that:- Assessee has not acquired any new right of permanent character. The licenses or the registrations are required to be renewed and therefore part of the day to day running expenditure of the business. [ACIT v. Vodafone Essar Gujarat 2010 (1) TMI 941 - ITAT, AHMEDABAD]. If an expenditure can give a benefit which is said to be endured for one year or even annually year after year then it is unreasonable to hold that any enduring benefit taken place to the assessee. [Comsat Max Limited. 2009 (1) TMI 314 - ITAT DELHI-H]. An expenditure incurred in the existing line of business in order to run the business smoothly in the years to come but in the absence of creation of "any new asset we hereby held that such an enduring benefit may not tantamount to rendering of capital expenditure. [DCIT v. Core healthcare 2008 (10) TMI 74 - GUJARAT HIGH COURT]. Also as decided in CIT v. Finley Mills Ltd. [1951 (10) TMI 1 - SUPREME COURT] that an expenditure incurred in registering for the first time its trademark, then by registration the owner is merely absolved thereafter from obligation to prove his ownership of trademark. Thus the expenditure is neither for the creation of an asset nor an advantage for ever - in favour of assessee.
Weighted deduction for expenditure on Scientific Research u/s. 35(2AB) in respect of Clinical Trial and Bio-equivalence Study disallowed - Held that:- From the contents of the explanation of Section 25(2AB) it is found that not only the expenditure incurred on clinical drug trial but the expenditure incurred for obtaining approval from any regulatory authority under any Central, State or Provincial Act and also the expenditure incurred for filing an application for a patent under the Patent Act 1970 are stated to be covered within the definition of expenditure on scientific research. For a clinical drug trial, the first stage is to enroll volunteers and/or patient into small pilot studies and subsequently large scale studies are carried out on patients and such clinical drug trial may be in one country or in multiple countries. Carrying out drug trial is essential for approval of the drug in question to be sold in the public and hence, clinical drug trial cannot be carried out inside an in-house research facility i.e. usually the laboratory. Hence, this explanation to Section 35(2AB)(1) does not require that these expenses which are included in this explanation are essentially to be incurred inside an in-house research facility because in our considered opinion, it is not possible to incur these expenses inside in-house research facility - in favour of assessee.
Disallowance u/s. 14A - Held that:- Matter be restored back to the file of the A.O. for a fresh decision as was done by the tribunal in assessment year 2006-07 because as per this judgement of Godrej & Boyce Manufacturing Co. Ltd. v. DCIT [2010 (8) TMI 77 - BOMBAY HIGH COURT] as Rule 8D is applicable from assessment year 2008-09 - in favour of assessee for statistical purposes.
Unexplained investment u/s. 69 - purchase of Hummer H2 imported motor car - Held that:- As per the provisions of Section 69, addition can be made only if it is found that the assessee has made investments, which are not recorded in the books. Hence, it is essential that first it has to be established that some investments are made by the assessee which have not been recorded in the books of the assessee. Regarding the alleged difference in the price of imported car, it is the explanation of the assessee that whatever had been paid by the assessee is properly accounted for in the books and disclosed. Regarding the cost of US$20,800 in respect of conversion of this car from LHD to RHD, it is the submission of assessee that this payment is not actually made and is still outstanding. Once this explanation is furnished by the assessee, it was incumbent upon the A.O. to bring evidence on record to establish that payment was in fact made by the company. The A.O. has not done so. It could have been done by obtaining the confirmation from the concerned party as to whether the payment is received by that party or not and if received, in which year. Even this simple exercise was not even attempted to by the A.O. and hence, the addition is not justified in the absence of any evidence regarding actual payment by the assessee on this cost of conversion of the car - in favour of assessee.
Disallowance of depreciation on Hummar H2 motorcar - Held that:- As decided in CIT Vs Varanasi Auto Sales Pvt. Ltd. [2010 (1) TMI 19 - ALLAHABAD HIGH COURT ] even if the trucks are in the name of the Director, depreciation is allowable to the assessee because the trucks were purchased in the name of the Director just for the convenience but the funds have been invested by the assessee company and hiring rent received from such tucks have been credited by the company in their account. As in the present case there is no finding by the authorities below on the aspect whether the car in question was used for the business purpose the assessee and disallowance was made merely on this basis that the car in question is in the name of the Director of the assessee company - restore this matter back to the file of the A.O. for a fresh decision & burden is on the assessee to establish the business use of this car and, thereafter, the A.O. should pass necessary order - in favour of assessee for statistical purpose.
Restricting the deduction u/s. 80IC & 80IB - Held that:- The stand of the A.O. cannot be approved because it is not a reasonable basis for computation of profit of an eligible unit. The profit has to be computed on the basis of selling price less cost of goods produced along with various overheads and only where there is some inter unit transfer of goods or service between various units of the same assessee, then it has to be ensured that recording of such transfer of goods or services should be at market value of such goods or services on the date of transfer and even if such recording of transfer is not as per market value, the A.O. can bring it to market value and he cannot proceed to estimate the profits and gains on a reasonable basis unless he establishes that there is any exceptional difficulty in adopting the market value and even then, the basis adopted by the A.O. to compute the profits and gains, should be reasonable basis. In the present case, we have seen that neither the pre requirement of sub-section (8) or its proviso to section 80-IA has been fulfilled by the A.O. nor the basis adopted by him is a reasonable basis and, therefore, we do not find any basis to confirm or approve the action of the A.O. - in favour of assessee.
Disallowing the mark to market exchange loss on foreign exchange derivatives - Held that:- Decided in favour of assessee relying on DCIT v. Bank of Bahrain & Kuwait [2010 (8) TMI 578 - ITAT, MUMBAI].
Addition as upward adjustment on international transactions - Transfer Pricing adjustment - Held that:- Since in the earlier year, similar issue was restored back to the file of the A.O. for a fresh decision, we restore this mater back to the file of the A.O. for a fresh decision for this year also with similar directions - in favour of assessee for statistical purposes.
Adjustment on account of 'Expenses disallowed u/s. 14A' for purposes of computation of book profit u/s. 115JB - Held that:- Decided in favour of assessee in the case of Goetz (India) Ltd. v. CIT [in the case of [2009 (5) TMI 615 - ITAT DELHI] & there is no contrary decision on this issue till date - in favour of assessee
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2013 (1) TMI 654 - ITAT AHMEDABAD
Reopening of assessment - assessee has claimed deprecation on non compete territory right - Held that:- As seen that not only query was raised by the A.O. in the course of original assessment proceeding but reply was also submitted by the assessee and, thereafter, in the assessment order also, it is noted by the A.O. that assessee has made claim of depreciation on these intangible assets @ 12.5% and he did not make any disallowance and under these facts, we are of the considered opinion that in the present case, the reopening done by the A.O. is on mere change of opinion and, therefore, the same is not valid as per this judgement rendered in the case of Gujarat power Corporation Ltd. (2012 (9) TMI 69 - GUJARAT HIGH COURT) and also CIT v. Kelvinator of India Limited (2010 (1) TMI 11 - SUPREME COURT OF INDIA) - in favour of assessee.
Applicability of Explanation 3 to section 43(1) to assessee's case - Held that:- As per this explanation 3 to section 43(1) the A.O. can determine the original cost of the assets for allowing depreciation to the assessee only if he is satisfied that the main purpose of transfer of such asset, directly or indirectly to the assessee, was the reduction of liability to income tax by claiming extra depreciation with reference to an enhanced cost. This is the first prerequisite that the A.O. has to establish that the main purpose of transfer of such asset was the reduction of liability to income tax by claiming extra depreciation on enhanced cost. In order to establish this, it has to be established that apart from claiming additional deprecation on enhanced cost, there is no other main purpose for acquiring the asset in question.
Valuation of intangible asset i.e. the trademark acquired - held that: - A.O. did not fulfill the pre requirement of invoking Exp.(3) to Section 43(1) & even after invoking this Exp.(3) to Section 43(1) rightly or wrongly, the A.O. has not worked out the value of the asset in question in the proper manner. - He has ignored the valuation report of various technical experts such as RSML & Co. C.A. and others and instead of obtaining the departmental valuation report or any other report of any other independent valuer, the A.O. has made his own exercise for valuation of the asset in question although it cannot be accepted that the A.O. is a technical expert for valuation of the asset in question. - the valuation done by the A.O. is not proper and therefore, the action of the A.O. is not justified - in favour of assessee.
Addition as interest on Deep Discount Bonds - Held that:- Assessee is entitled to proportionate claim of expenditure towards discount/interest of DDBs on actual basis in the year of appeal and the A.O. was directed to correctly work out the same and to allow deduction to the extent it relates to the year under appeal.
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2013 (1) TMI 653 - PUNJAB AND HARYANA HIGH COURT
Repair & maintenance expenses - Current Repairs - capital v/s revenue - Held that:- Repair and maintenance is in fact necessary not only for achieving the optimum utilization of machinery but also if possible to extend its economic life. Therefore, the fact that such installation has increased life beyond their original economic life cannot be a ground to conclude that the expenses incurred were not for repair and maintenance. Similarly, the ground of increase in the profitability of concern is again a totally alien to determine the nature of the repair and maintenance. Increase in profit would lead to increase in income, which would be separately taxable but could not be a ground for declining the expenses incurred by the assessee for repair and maintenance.
Though the findings returned is that new identifiable assets have been created but the Tribunal has returned a finding that though each of the item is useable independently but that such items have been used for repair and maintenance. With such finding, the expenditure was allowed. The findings recorded by the Tribunal are the findings of fact - no substantial question of law arises for consideration.
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2013 (1) TMI 652 - PUNJAB AND HARYANA HIGH COURT
Demand of tax dues and equivalent amount of penalty - communication directing the petitioner to pay Rs. 5,00,000/- by 10.1.2013 whereas the remaining demand was stayed up to 31.1.2013 - Held that:- Petitioner is duty bound to pay the duty amount of tax and the penalty as assessed by the AO. The petitioner was granted indulgence at one stage by deferring the payment of tax and penalty but subsequently, on a request made by the petitioner, a conditional order has been passed as mentioned above. Since, the payment of tax and penalty is a statutory duty, do not find that any case is made out for interference in the writ jurisdiction of this Court - against assessee.
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2013 (1) TMI 651 - PUNJAB & HARYANA HIGH COURT
Family arrangement - Capital gain on the compensation received - Whether the amount of compensation paid to the assessee to settle inequalities in partition represents immovable property and is not an income exigible to tax? - Held that:- As decided in R. Nagaraja Raos case (2012 (5) TMI 184 - KARNATAKA HIGH COURT) partition is not a transfer and adjustment of shares, crystallization of the respective rights in the family properties cannot be construed as a transfer in the eye of law. When there is no transfer of asset, there is no capital gain and consequently there is no liability to pay tax on capital gains.
In view of the above payment of Rs.24 crores to Group A is to equalize the inequalities in partition of the assets of M/s Hind Samachar Ltd. The amount so paid is immovable property. If such amount is to be treated as income liable to tax, the inequalities would set in as the share of the recipient will diminish to the extent of tax. Since the amount paid during the course of partition is to settle the inequalities in partition, therefore deemed to be immovable property. Such amount is not an income liable to tax. Thus, the amount of owelty i.e. compensation deposited by Group B is to equalize the partition represents immovable property and will not attract capital gain.
The argument that the assessee is liable to tax being interest on cash, suffice it to say, that such question or fact does not arise from the orders of the Tribunal - question of law is answered against the Revenue.
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2013 (1) TMI 650 - PUNJAB AND HARYANA HIGH COURT
Addition on estimate basis by arbitrarily rejecting the books being duly audited - assessee is using old machinery and oil cakes have has to contain appreciable amount of oil for sale in market towards animal feed - Held that:- The sales of oil and oil cakes have been shown in the manufacturing account in consolidated form although there is wide variation in the market price in these products best known to him. Also there was wide variation in the percentage of yield of oil, sale rates of oil and oil cakes in the market, but keeping in view the yield disclosed by the appellant in the consolidated form not only the books of account were rejected but also the yield was assessed in a particular manner. The order passed by the Tribunal is based upon pure findings of fact. No substantial question of law arise for consideration.
Addition on account of interest on business loan - Held that:- Since the assessee has advanced loan from his cash credit account on which the interest was paid by the appellant, therefore, such interest has been rightly disallowed as expenditure. The plea of the assessee the amount being advance interest free loan has rightly been not accepted - appeal against assessee.
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2013 (1) TMI 649 - PUNJAB & HARYANA HIGH COURT
Research & Development expenses - capital or revenue expenditure - product already being marketed - Held that:- Development of new project through Research is a continuous process because technology is changing very fast . Thus, even if assessee has developed 14 Pin Double Decker Relay Socket and 48x96 panel meter but still the prototype may require further improvement. Mere selling of units will not show that the assessee already has the technology of the same product
Even if a specific product has been sold at one stage, but still the developments in the product can be carried out. It is finding of fact recorded by the Tribunal that the assessee has incurred expenditure for research and development activities, thus no substantial question of law arises for consideration.
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2013 (1) TMI 648 - MADRAS HIGH COURT
Challenge to the letter regarding payment of arrears of tax and interest accrued. - Expenditure on replacement of machinery in the spinning mills - AO passed orders treating the expenditure incurred as capital expenditure and allowed depreciation thereon - notice of demand for the balance tax payable including interest u/s 234-B, 234-C - Held that:- Plea of the petitioner that the demand of interest u/s 234-B and 234-C is not sustainable in law,as the assessment order does not include the demand of interest u/s 234-B and 234-C, it is an issue which has to be raised by the petitioner in the appeals said to have been filed challenging the orders of assessment. At this stage, this Court is not inclined to go into the veracity of the legal plea taken, since what has been challenged before this Court is not the fine assessment orders, but only a letter demanding the payment of arrears of tax and interest accrued. Therefore, the Court is not inclined to go into the merits of the contentions raised, as the substantial issue challenging the assessment orders is admittedly pending before the appellate forum. Thus when appeal on substantial plea is pending, the writ petition raising certain legal pleas based on a letter is totally untenable and misconceived.
What the petitioner failed to achieve directly is trying to achieve indirectly. The petitioner's attempt before this Court lacks bona fide and the writ petition is filed raising irrelevant legal plea only to delay the payment of tax and interest. The writ petition, therefore, lacks bona fide and amounts to abuse of process of Court. No case is made out to approach this Court under Article 226 of the Constitution - writ petition filed with mala fide intention with an object of delaying recovery of tax is condemned - against assessee.
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2013 (1) TMI 647 - ITAT HYDERABAD
Rectification of mistakes - Exclusion of US Branch sales from the total turnover as well as from the export turnover while computing the deduction u/s 10B - Held that:- The power to rectify a mistake u/s 254(2) cannot be used for recalling the entire order. No power of review has been given to the Tribunal under the IT Act.
The assessee has not fulfilled the conditions laid down in section 10B as it speaks only of exports out of India, irrespective of the purchases & the facts remain that the goods have not been physically exported out of India and therefore the important and necessary condition precedent for claiming deduction u/s 10B has not been satisfied. As such, the assessee wants to review the order of the Tribunal in the instant case u/s 254(2) which is not permissible under ITAT Rules - against assessee.
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2013 (1) TMI 646 - ITAT MUMBAI
Disallowance of depreciation on intangible asset – Depreciation on Goodwill - Assessee is a share broker and the main source of income is generated through brokerage – Assessee has purchased entire clientele business of M/s. AFC Pvt. Ltd. by assigning all clients to the assessee for a consideration of ₹ 2.50 crores. - Booked these expenses as purchase of goodwill and has claimed 25% of depreciation - Held that:- It cannot be denied that by getting a right over 3709 clients of M/s. AFC, such right is used as a tool to carry on the business by the assessee. Merely because the assessee showed the payment to be on account of goodwill in the books of account, no adverse inference could be drawn against the assessee. Following the decision in case of Smifs Securities Ltd. (2012 (8) TMI 713 - SUPREME COURT) that goodwill is an asset eligible for depreciation. It can also be seen from the angle of purchase of entire marketing network by the assessee from M/s. AFC even if considered from this angle the assessee is eligible for depreciation – In favour of assessee
TDS on Subscription for e-magazine/journal – Disallowance u/s 40(a)(ia) – Held that:- Assessee made the payment for terminal charges for on line information and data base access and retrieval services and therefore, no TDS was required to be deducted as the payment was for a subscription of financial e-magazine – In favour of assessee
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2013 (1) TMI 645 - ITAT DELHI
Addition on account of income as per TDS certificate - Difference in books of accounts and TDS - TDS certificate issued by Mysore Breweries Limited, the total reimbursement made to the assessee Due to clerical mistake debit note in excess of amount resultant shown higher reimbursement to assessee - Held that:- Following the decision in case of SUDHIR SEKHRI (2010 (4) TMI 50 - DELHI HIGH COURT) that addition wholly unwarranted. The assessee had explained that a credit note of Rs. 80,88,000/- issued by it in favour of Mysore Breweries Limited was not accounted for by them and, therefore, by this amount they had shown higher reimbursement to assessee In favour of assessee
Tax Credit - Where the income component was neither being admitted, nor was being offered to tax TDS certificate issued by deductor - Held that:- Following the decision in case of Lear Automotive India Ltd. (2010 (2) TMI 963 - DELHI HIGH COURT) that credit is to be allowed to the deductee in respect of TDS made on higher amount of reimbursement than was actually offered to tax. Once the TDS certificate has been issued by deductor he cannot claim refund of the amount deducted because the tax deducted primarily constitutes income of deductee and he can only claim the refund of the amount In favour of assessee
Contravention of Rule 46A of the Income Tax Rules, 1962 - AO had required the assessee to submit the invoices/vouchers - the relevant documents were not available since the same got mutilated/ destroyed while shifting of office Held that:- In regard to personnel expenses are concerned, no interference is called for with the said findings because the impugned amount was part of the overall salary payments debited to P&L A/c. And provision for audit fees is concerned, assessee had submitted a bill vide ADB-101/04 dated 12/06/2003 issued by Price Waterhouse mentioning that the same is claimed towards statutory audit fee. To examine genuineness of evidence - Remand back to AO
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2013 (1) TMI 630 - PUNJAB AND HARYANA HIGH COURT
Penalty u/s 271(1) (C)(iii) - appellant has transferred majority of his shares to a firm closely connected at a lower rate - the loss emanating from such deliberately chosen transaction of sale of shares is a false loss - Held that:- As decided in CIT Vs. Sangrur Vanspati Mills Limited [2008 (2) TMI 285 - PUNJAB AND HARYANA HIGH COURT] that for levy of penalty, there should be conclusive evidence that the assessee has concealed the particulars of income.
Thus the tests specified therein are wholly satisfied in the present case. It is proved that the appellant has concealed the particulars of his income by giving inflated losses. Such finding of fact does not give rise to any substantial question of law - penalty confirmed - against assessee.
Dismissed.
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2013 (1) TMI 629 - DELHI HIGH COURT
Additions u/s 69 - search conducted u/s 132 - notice u/s 153C - valuation of properties referred to District Valuation Officer (DVO) - ITAT deleted the addition - Held that:- No reason to differ from the view taken by the Tribunal as no material was found in the search and seizure operations, which would justify the AOs action in referring the matter to the DVO for his opinion on valuation of the said properties. If that be the case, then the valuation arrived at by the DVO would be of no consequence. In any event, the Tribunal has also, on facts, held that the DVOs valuation was based on incomparable sales, which is not permissible in law - in favour of assessee.
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