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Income Tax - Case Laws
Showing 221 to 240 of 825 Records
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2015 (12) TMI 1520 - ITAT NAGPUR
Disallowance vls 40(a)(ia) - amount payable or paid by the end of the year - Held that:- Supreme Court in Vector Shipping Services (P) Ltd. [2015 (12) TMI 1131 - SUPREME COURT OF INDIA ] has approved the special bench judgment in the case of Merilyn Shipping and Transport Ltd.[2012 (4) TMI 290 - ITAT VISAKHAPATNAM ] in which it was held that disallowance u/s. 40(a)(ia) applies only to amounts 'payable' as of 31st March and not to amounts already 'paid' during the year. Since the said matter has now reached finality, it is held that the disallowance made by the AO u/s 40(a)(ia) would apply only to amounts which are "payable" as on 31st of March 2006.
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2015 (12) TMI 1519 - ITAT MUMBAI
TDS u/s 194C OR 194J - payments for production of programmes for broadcasting and telecasting and payments for uplinking charges - Held that:- As decided in assessee's own case and the decision of the Hon'ble Delhi High Court in the case of Prasar Bharati (2006 (11) TMI 159 - DELHI High Court ) holding that placement charges/ carriage fees is covered under the definition of work contracts and therefore tax was to be deducted at source on such payments under section 194C, we decide this issue in favour of the assessee
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2015 (12) TMI 1518 - ITAT MUMBAI
Penalty under section 271(1)(c) - Held that:- Respectfully following the decision of the Hon'ble Karnataka High Court in the case of Manjunatha Cotton & Ginning Factory reported in (2013 (7) TMI 620 - KARNATAKA HIGH COURT) we hold that the notice issued under section 274 r.w.s. 271 of the Act dated 30.12.2009 for A.Y. 2007-08 for initiating penalty proceedings under section 271(1)(c) of the Act in the case on hand is invalid and consequently, the penalty proceedings are also invalid. - Decided in favour of assessee
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2015 (12) TMI 1517 - ITAT PUNE
Disallowance of deduction u/s u/s.80IA(4) in the asst. framed u/s.153A - Held that:- Tribunal in assessee’s own case in the preceding assessment following the decision of Hon’ble Bombay High Court in the case of CIT Vs. ABG Heavy Industries Ltd. and other [2010 (2) TMI 108 - BOMBAY HIGH COURT] and various other decisions allowed the claim of deduction u/s.80IA(4) of the Act. However, as pointed out by the Ld. Counsel for the assessee we find no disallowance has been made u/s.80IA(4) in the assessment order passed u/s.153A of the Act. Therefore, the ground raised by the assessee becomes academic in nature.- Decided in favour of assessee
Addition made u/s.69B on account of difference in valuation in the asst. framed u/s.153A - Held that:- In the instant case, there is nothing on record to suggest that any material was unearthed during the search or in 153A proceeding which would show that non-addition u/s.69B was erroneous, therefore, we do not find any infirmity in the order of the CIT(A) deleting the addition made by the AO. In view of the above and in view of the detailed reasoning given by the CIT(A) deleting the addition made u/s.69B of the Act we find no infirmity in the same.- Decided in favour of assessee
Depreciation on windmill and MEDA charges - Held that:- The AO has accepted the rate of depreciation as claimed by the assessee and MEDA charges was allowed as business expenditure. No incriminating material whatsoever was found during the course of search or 153A proceedings. The Hon’ble jurisdictional High Court in the case of All Cargo Global Logistics Ltd./ Continental Warehousing Corporation (2015 (5) TMI 656 - BOMBAY HIGH COURT ) has held that completed assessments cannot be disturbed by making additions which is not based on any incriminating material found during the course of search or during 153A proceedings - Decided in favour of assessee
Addition on the basis of loose papers found during the course of search - Held that:- A perusal of the assessment order shows that the AO has not carried out any verification in support his contention that notings conclusively prove that the entries in the loose papers are infact speed money/bribe paid to various persons whose names are mentioned against each figure. On a pointed query raised by the Bench during the course of hearing the Ld. Departmental Representative also candidly admitted that no such exercise has been done either by the Investigation Wing after the search or by the AO during the course of assessment proceedings. Therefore, it is not correct to hold that the payments noted on the seized papers indicate speed money/bribe paid by the assessee company to various persons. However, considering the presumption laid down in section 132(4A) of the I.T. Act, since these papers are found with the assessee company, therefore, the AO is justified in holding that the assessee company has paid the amount noted on the seized papers and the CIT(A) is justified in upholding the addition - Decided against assessee
Addition u/s.41(1) - Held that:- CIT(A) is not justified in sustaining the addition made by the AO u/s.41(1) of the I.T. Act as the liabilities do not cease to exists merely by efflux of time. - Decided in favour of assessee
Depreciation claim - Held that:- No infirmity in the order of the CIT(A) allowing higher depreciation @80% on civil work foundation and related labour cost of windmill. - Decided in favour of assessee
Addition of expenses made by cheque - Held that:- We find the finding given by the Ld.CIT(A) that the seized documents reveal payment of ₹ 1.5 crores in cheque prior to 14-04-2007 by B.T. Patil and the share of the assessee in the said amount is ₹ 75 lakhs for which the assessee is entitled to a relief of ₹ 75 lakhs on account of payable of expenses made by the cheque is not based on any cogent evidence and proper appreciation of facts. On a pointed query by the Bench during the course of hearing, the Ld. Counsel for the assessee was also unable to clarify as to how this deduction/relief was justified on the basis of notings only on the loose paper. In view of the above, the order of the Ld.CIT(A) on this issue is set aside - Decided against assessee
Unaccounted expenditure incurred by the assessee on the basis of paper seized from the residence of Shri. D A Bhat - Held that:- Admittedly, the papers containing certain expenditure with dates mentioned therein are not considered by the assessee while working out the unaccounted income. During the hearing before us, the Ld. Counsel for the assessee was also not in a position to clarify the basis of deletion made by the CIT(A) and justify such deletion. In view of the above we reverse the order of the CIT(A) on this issue and the ground raised by the revenue is allowed. - Decided against assessee
Addition on account of undervaluation of WIP - Held that:- The assessment had not been completed for the A.Y. 2009-10 when the search took place and the same was pending. The Ld. Counsel for the assessee was unable to explain the non consideration of work-in-progress in the final accounts. In view of the above and in view of the detailed reasoning given by the Ld.CIT(A) while confirming the addition on account of undervaluation of work-in-progress we find no infirmity in the same.- Decided against assessee
Levy of interest u/s.234A - Held that:- A non-obstante clause has been inserted and with a defined intent. In our opinion, once the search takes place on a person and the due date for filing of the return u/s.139(1) has not expired he can file the return only after the issue of notice u/s.153A. He is not required to file the return u/s.139(1). Therefore, the authorities below are not justified in levying interest u/s.234A of the I.T. Act for a period from 31-10-2009 to 20-07-2010 - Decided in favour of assessee
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2015 (12) TMI 1515 - ITAT VISAKHAPATNAM
Revision u/s 263 - as per CIT(A) AO did not verified the issues with regard to claim of deduction u/s 80IB(10) of the Act at the time of completion the assessment - Held that:- Ee are of the opinion that the assessment order passed by the Assessing Officer is not erroneous insofar as it is not prejudicial to the interest of the Revenue. The CIT assumed his jurisdiction to revise the assessment order on the issues, which are considered by the A.O. in the assessment order. Therefore, the order passed by the CIT under sec. 263 of the Act is not maintainable; accordingly, we quashed the CIT’s order and restore the assessment order as CIT cannot assume the jurisdiction on the same issue, which is already considered by the Assessing Officer on the guise of revision by stating that the Assessing Officer has conducted inadequate enquiry or there is a lack of enquiry - Decided in favour of assessee
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2015 (12) TMI 1513 - DELHI HIGH COURT
Transfer pricing adjustment - ALP adjustment - appropriateness of adopting CUP method as against the TNMM for determination of the ALP - Held that:- As the present appeals are concerned, the Court finds the impugned order of the ITAT to be well reasoned and researched to hold that the assessee’s contention to the effect that the arm’s length price of services rendered to, or received from, the associated enterprises, which was computed on the basis of the same 50:50 model as is the industry norm and as has been employed by the assessee for computing similar services to the independent enterprises, was at arm’s length. Accordingly, the impugned arm’s length price adjustment stands deleted.
The legal principles governing the determination of ALP in a TP adjustment exercise have been expounded lucidly by the ITAT in the impugned orders. - Decided against revenue
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2015 (12) TMI 1512 - GUJARAT HIGH COURT
Reopening of assessment - assessee sold his immovable property and had earned long term capital gain claiming deduction under section 54-EC on investment in Rural Electrification Corporation - Held that:- The reasons recorded by the assessing officer do not even suggest that the income chargeable to tax had escaped assessment due to failure on the part of the assessee to disclose truly and fully all material facts. The revenue has not, even if possible to do so, demonstrated any such failure on the part of the assessee. In fact, counsel for the petitioner rightly pointed out that not only that all such declarations were in the returns filed, during the assessment also this issue had come up for consideration. The petitioner in communication dated 03.09.2010 had pointed out to the assessing officer the investments made with the Rural Electrification Corporation and in purchase of immovable property.
Thus, quite apart from the reasons recorded by the assessing officer not indicating any failure on the part of the assessee to disclose truly and fully all material facts, even the record suggests to the contrary. Reopening quashed - Decided in favour of assessee.
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2015 (12) TMI 1511 - GUJARAT HIGH COURT
MAT computation - Working of tax liability on book profit u/s.115JB - receipt of dividend income - Reopening of assessment - Held that:- In the computation of income presented by the petitioner along with the return of income, the petitioner had shown book profit as per Section 115JB of the Act of ₹ 4,23,47,912/-. This figure is significant and would appear in our later observations as well. In the profit and loss account, the petitioner showed dividend income of ₹ 15,458/- as income from other sources and showed profit before tax of ₹ 4,23,47,912/-. For computation of book profit for the purpose of Section 115JB, the petitioner adopted such amount of ₹ 4,23,47,912/- as shown in the profit and loss account. There were no additions and deductions to be made as referred to in Section 115JB and therefore, the final figure of book profit for the said provision came to the said original amount of ₹ 4,23,47,912/-.
Thus for all purposes whether for the computation of income for normal tax provisions or as per the book profit under Section 115JB of the Act, the said amount of ₹ 15,458/- was duly reflected and was accounted for. The Assessing Officer formed wrong belief that for the purpose of computing book profit under Section 115JB of the Act, the said amount of ₹ 15,458/- disappeared from the consideration.Under the circumstances, notice of reopening being bad in law, is quashed. - Decided in favour of assessee
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2015 (12) TMI 1510 - GUJARAT HIGH COURT
Revision u/s 263 - Held that:- Merely because the assessing officer has made additions in a particular manner would not mean that the Commissioner would be confined to scrutiny of the methodology adopted by the assessing officer and to proceed either to confirm or to delete the additions, if such methodology is not found entirely satisfactory. Even without the aid of these wide powers, the appellate authority would have inherent power to uphold the additions on correct application of law and facts if sustainable even if on the reasoning of the assessing officer is not found correct. In other words, the appellate authority is not bound by the reasoning of the assessing officer and can through different route reach the same conclusion.
Under the circumstances, we do not think that the powers under section 263 of the Act can be exercised when, though addition has been made, on the footing of the premises which are not to the satisfaction of the Commissioner and, therefore, to make additions on better premises with better reasoning or on different application of legal principles.In the result, in our opinion, the Commissioner lacked jurisdiction to issue the impugned notice. When the question is the very foundation of the notice and jurisdiction of the Commissioner to exercise such powers, the question of relegating the petitioner to alternative remedy or to permit the Commissioner to complete the proceedings and thereafter to direct the petitioner to take appeal route does not arise. - Decided in favour of assessee.
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2015 (12) TMI 1509 - BOMBAY HIGH COURT
Maintainability of appeal under Section 260A - whether the Tribunal was right in rejecting the reference application filed by the department, though as per rule 45 of Appellate Tribunal Rule 1962, the tribunal may send the statement to the High Court without annexures? - Held that:- The impugned order has not been passed in appeal by the Tribunal but consequent to the order of this Court dated 2nd February, 1999 allowing the Revenue's application under Section 256(2) of the Act. Therefore, the impugned order has been passed consequent to the order dated 2nd February, 1999 of this Court in advisory jurisdiction. The impugned order of the Tribunal is not in exercise of its appellate jurisdiction for it to be an order amenable to appeal under Section 260A of the Act.
The order passed by the Tribunal consequent to the order passed under Section 256(2) of the Act is not an order passed in Appeal by the Appellate Tribunal. An application under Section 256(2) of the Act and the order passed by this Court thereunder are in the exercise of its advisory jurisdiction. Therefore, any grievance of the parties in respect of the Tribunal, not complying with the order of this Court for whatever reason could not be remedied by an Appeal under Section 260A of the Act. Thus Appeal as filed from the impugned order is not maintainable under Section 260A of the Act.
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2015 (12) TMI 1508 - KARNATAKA HIGH COURT
Admission made in the statement recorded under Section 132(4) - disclosure of income to be examined in the course of the proceedings under Section 245D(4) - procedure adopted by the Settlement Commission - Held that:- The point of maintainability of the application could be raised as a contention by the Department before the Settlement Commission and the Settlement Commission would be entitled to examine that question at the final hearing.
On the other hand, if this court were to issue rule and to admit the case to file and take it up for final hearing several years down the line, it would cause prejudice to the Department. Therefore, since the Settlement Commission would be in a position to decide the application along with the point as regards the maintainability in the first instance, there is no prejudice caused to the Department. Since it is also an admitted fact that the respondent has paid the entire tax on a sum exceeding ₹ 300 crore, there is absolutely no prejudice caused to the Department. The petitions are misconceived.
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2015 (12) TMI 1507 - BOMBAY HIGH COURT
Tribunal power under the Act to extend the stay of demand in the appeals pending before it beyond the period of 365 days - Held that:- This Court has consistently taken a view that the Tribunal has power to extend the stay even after the substituted third proviso to subsection 2A to Section 254 of the Act was introduced. This is evident from all the orders referred to in para 3 hereinabove. The Revenue has not filed appeal against the above orders of this Court in the context of the substituted third proviso to Section 254(2A) of the Act. Nothing has been shown to us as to why when the Revenue has accepted the above orders, a different stand is taken in this appeal.
Apex Court in CCE vs. Kumar Cotton Mills (P) Ltd., (2005 (1) TMI 114 - SUPREME COURT OF INDIA) held that notwithstanding the presubstituted third proviso to Section 254(2A) of the Act the Tribunal continues to have powers to grant interim relief.
In the above view, therefore, the ratio of the decision in “Narang Overseas (P) Ltd.” (2007 (7) TMI 5 - HIGH COURT, BOMBAY ) would apply even in case of substituted third proviso to Section 254(2A) of the Act.
The only substantial difference in the presubstituted third proviso and substituted third proviso to Section 254(2A) of the Act is the addition of the words “even if delay in disposing of the appeal is not attributable to the assessee” These additional words added in the substituted third proviso to Section 254(2A) of the Act has been struck down by the Delhi High Court in Pepsi Foods (P) Ltd. Vs. Asstt. Commissioner of Income Tax, (2015 (5) TMI 655 - DELHI HIGH COURT). - Decided against revenue
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2015 (12) TMI 1506 - ITAT DELHI
Penalty u/s 271(1)(c) - addition u/s 68 - Held that:- In the present case there was a change of opinion and no concealment of income or furnishing of inaccurate particulars on the part of the Assessee. Therefore, we find force in the contention of the assessor's counsel that the issue involved in the present case is squarely covered by the decision of the Hon'ble High Court of Delhi in the case of CIT vs. Aggarwal Pipe Co [1999 (7) TMI 57 - DELHI High Court] wherein that the Tribunal had found that the assessee had furnished confirmations from the cash creditors and it was only when the Assessing Officer wanted him to produce these creditors, including Y in whose case summons sent under section 131 of the Income Tax Act, 1961, were received back unserved, that the assessee found it expedient to surrender the amounts, but merely because the assessee had surrendered the amounts it did not follow that the amount agreed to the added represented its concealed income. The surrender so made also stood accepted and the Revenue had brought no material on record, besides the factum of the assessee. The Tribunal was justified in cancelling the penalty
Assessee has not furnished inaccurate particulars of income, however, it is a case of change of opinion. Under these circumstances, in our view the penalty in dispute is totally unwarranted and deserve to be deleted. Accordingly, we delete the penalty in dispute made u/s. 271(1)(c) of the I.T. Act and cancel the orders of the authorities below on the issue in dispute. - Decided in favour of assessee.
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2015 (12) TMI 1505 - ITAT DELHI
Deduction u/s 35ABB (2) - Held that:- In view of prohibition to transfer the original license, we reject the claim of the assessee for deduction of the whole sum paid under Phase-I of the license u/s 35ABB (2) of the Act and confirm the order of CIT(A) on this count.
Deduction u/s 35ABB (1) - Held that:- Assessee has exercised option to migrate to Phase-II and not to continue under phase-I policy. As per chart submitted by the assessee showing difference between the Phase-I and Phase II, there are change in the payments terms which has become from fixed payment regime to revenue sharing regime, in the conditions pertaining to shareholding, conditions for appointment of directors, hiring of broadcasting equipment's etc. As we have already held that migration of license of assessee from phase-I to phase-II is just modification of terms and conditions of the license and these modification cannot be said that old license granted to assessee in phase-I has ceased or not in force. Therefore we are unable to persuade ourselves that the terms of licence granted in Phase-I has come to an end. In our view terms and conditions of license has been modified in above manner and tenure of the same is also extended and license granted in Phase-II is not independent of license granted to assessee in Phase-I. Therefore the claim of the assessee for deduction of above sum u/s 35ABB (1) is also not correct.
Whether the amount of unallowed capital expenses paid by the assessee under phase-I policy is a capital loss or whether such a sum is allowable to the assessee? - Held that:- The reason given by CIT(A) for allowing the deduction of fees paid by assessee under PHASE-I over the remaining life of the license granted under PHASE-II of the regime. We do not find any infirmity in the finding as well as reasoning given by CIT(A) as in substances the reason canvassed by CIT(A) are similar to what we have propounded in our order. In view of this we confirm the order of CIT(A) in granting deduction of ? 1,26,58,244/- being 1/10th of ? 12,65,82,440/- being fees paid by assessee in Phase-I as deductible expenditure u/s 35ABB(1) during the year under consideration i.e. A.Y. 2006-07 - Decided against assessee.
Depreciation u/s 32(i) (ii) on the amount of license fees - Held that:- We are of the view that provision of section 35ABB(8) which provides that Where a deduction for any previous year under sub-section (1) is claimed and allowed in respect of any expenditure referred to in that sub-section, no deduction shall be allowed under sub-section (1) of section 32 for the same previous year or any subsequent previous year. Further as held by is in deciding the issue of allowability of claim of the assessee u/s 35ABB (1) wherein we have allowed the claim of the assessee on proportionate basis from remaining years of license, the claim of the assessee cannot be accepted - Decided against assessee.
Interest income - assessed as business income OR income from other sources - Held that:- Before CIT(A) the details of such interest income was not furnished by AR of the assessee and same was no such details have been furnished before us. In the assessment order also, AO has not mentioned the reason for changing the head of bank interest income from "Business Income "offered by assessee to 'income from other sources'. Therefore in the interest of justice we set aside this ground of appeal of the assessee back to the file of AO to decide the same on merit after affording reasonable opportunity of hearing to assessee. - Decided in favour of assessee for statistical purposes.
Direction by CIT(A) to verify the record and allow carry forward of unabsorbed depreciation/ business loss as per law - Held that:- Assessee submitted before CIT(A) that it has only carried forward of unabsorbed depreciation of previous years of ? 9796408/- and ? 12521695/- of unabsorbed Business loss as per assessment order for AY 2004-05. Against this CIT(A) has granted a direction to AO verify the record and allow carry forward of unabsorbed business loss and depreciation in accordance with the law. We do not find any infirmity in the order of CIT (A) - Decided against revenue
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2015 (12) TMI 1504 - ITAT DELHI
Undisclosed receipts through post office - source of information - CIT(a) deleted the addition - Held that:- CIT (A) rightly observed that third party information is important for the purposes of assessment but it should be corroborated by relevant documentary evidences otherwise it cannot be acted upon to saddle the assessee with additions. Though the source of the information is a government organization, like in this case is a post office, the correctness of that information is countered by the assessee with by another piece of evidence emanating from the very same source, then the Post Master is duty bound to establish that the information supplied by him is correct by production of documents from where he has supplied the information to AO at the first place. In this regard, the ld. CIT (A) has noted that the information supplied by the post office to the AO was on monthly basis whereas it was supplied to the assessee on dayto- day basis. Thus, the contention of the assessee that there can be posting or compilation or totaling error cannot be ruled out unless the AO had called for the records from the post office and verified the same. Without doing the said exercise, the AO ought not to have made the addition simply by relying on the information given by the post office, when the assessee also has documentary evidence certified by the Post Master to support its claim. We further take note of the fact that the Post Master issued the certificates duly signed and stamped on day-to-day basis in the regular course of its business and which was the basis of audited books of accounts maintained by the assessee. We find force in the contention of the ld. AR that without rejecting the books of accounts maintained by the assessee company, the addition made simply on the basis of information from the post office without being corroborated or verified cannot be accepted. We further find that from a perusal of the statement of facts filed by the AO along with the appeal, vide letter dated 17.02.2005, the post office has brought to the notice of the AO that the documents for a period from 1999 to March 2002 has been weeded out. It was clearly mentioned that documents pertaining to period from April 2003 to July 2004 comprising of 1353 pages has been taken away by the Investigation Officer, C.O. Dalanwala, Dehradun on 04.09.2004. So, from the said letter, we can safely infer that records pertaining to the relevant assessment year i.e. 2003-04 (financial year 2002-03) was available with the concerned post office. We find that the AO has not taken any pains to call for the records before he passed the assessment order dated 31.03.2006 which he could have easily done.
Further, we find that pursuant to the ld. CIT (A)'s seeking remand report, the AO simply stated vide letter dated 24.11.2008 that records of FY 2002-03 are not available. When insisted by the ld. CIT (A) vide letter dated 27.02.2009 a copy of statement on oath of Shri Lalit Mohan Joshi, the Post Master was recorded on 25.02.2009 which has been incorporated verbatim at page 3 of the ld. CIT (A)'s order wherein he simply states that the information given by them must have been based on the basis of cash book and money order payment book and could not be based on wrong facts and the documents have been weeded out. So, we find that the AO, during the original assessment, could have summoned the documents and could have verified the veracity of the statement of the assessee qua the information supplied by the post office. Without doing so, the AO could not have made the addition. We find that though the documents for the next assessment year were taken away by the Investigation Officer, C.O., Dalanwala, Dehradun for the period April 2003 to July 2004 comprising of 1353 pages, we find that the AO in the next assessment year i.e. 2004-05 has not made any addition and has accepted the return filed by the assessee - Decided against revenue
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2015 (12) TMI 1503 - ITAT JAIPUR
Disallowance of excess depreciation claimed on Wind Mill plant - CIT(A) deleted the addition - Held that:- foundation of platform, erection, installation of plant and machinery, preparation of crane platform for wind mill and other civil work carried out for installation are internal part of wind mill, which have not independent use. Thus, we are of the considered view that the assessee is entitled for 80% of depreciation on composite wind mill project including other expenditure for put to use for wind mill.
TDS u/s 194H - Disallowance U/s 40(a)(ia) - assessee has not deducted TDS on payment of credit card service charges - Held that:- This issue has been considered by the Coordinate Bench in Gem Paradise Vs. ACIT [2012 (2) TMI 521 - ITAT JAIPUR] in which it has been held that the assessee sold its goods through credit card and on presentation of bill issued against credit card, the bank makes payment to the assessee after deducting agreed fees as per terms and conditions in case of credit card. This is not a commission payment but a fees deducted by the bank. There is no such relation between the bank and the shop keeper, which establishes the relationship of a principal and commission agent. Therefore, TDS is not liable to be deducted on payment made on the basis of credit card. The other case laws referred by the assessee is also squarely applicable. - Decided in favour of assessee.
Disallowance of Misc. supply expenses - CIT(A) deleted the addition - Held that:- The assessee is a Five Star hotel managed professionally. There is an agreement with multinational company in sharing receipts. The ld Assessing Officer made addition by making general observation. He is not deducted any specific bill vouchers that the assessee has made cash payments for expenses or made self made vouchers. The ld DR had not controverted the findings given by the ld CIT(A), therefore, we uphold the order of the ld CIT(A).- Decided in favour of assessee.
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2015 (12) TMI 1502 - ITAT MUMBAI
Validity of reopening of the case u/s 147 - AO treating the amount received on sale of shares which was claimed as Long-term-capital-gain, as income from other sources along with the commission paid for obtaining the alleged fictitious LTCG @ 0.15% - Held that:- From the analysis of the reasons recorded, it is evident that there is no specific information that the shares of N.E. Electronics Company purchased through M/s Goldstar Finvest Pvt Ltd. In April 2001 and sold through M/s Mahasagar Securities Pvt Ltd in June 2003 was a bogus transaction or was an accommodation entry. If the AO has received certain information from investigation wing then, it was incumbent upon him to apply his mind and peruse the assessee’s assessment record to see, whether the transactions undertaken by the assessee is also sham transaction or was only a accommodation entry taken from these companies of Mukesh Chokshi and there is any failure on the part of the assessee to disclose all material facts relating to such transaction.. More so, in this case the assessment sought to be reopened was beyond the period of 4 years. The ‘reason to believe’ entertained by the AO in such cases should be such that, whether there is any failure on the part of the assessee to disclose truly or full all material facts because that is a point of jurisdiction which AO has to acquire to reopen the competed assessment u/s 143(3). The information received from the Investigation wing was that assessee had also transacted with the said companies, i.e., it was also one of the beneficiary appearing in the list forwarded by the DDI(IT). There is no specific mention that, whether the particular transaction undertaken by the assessee of N.E. Electronics Pvt Ltd was a bogus transaction. From the perusal of the statement recorded of Shri Mukesh Chokshi it is evident that there is no mention or whisper about the assessee has taken accommodation entry to the assessee. The other most important fact here is that, the AO has not uttered a word about failure on the part of the assessee for disclosing the true and correct material facts. Such ascribing of failure of the assessee in the “reasons recorded” itself is mandatory, because from the reasons alone, it can be gathered whether there was any failure on the part of the assessee or not so as to acquire jurisdiction for reopening the case beyond the period of 4 years. There is not an iota of allegation of failure on the part of the assessee to disclose material facts.
Thus, without there being any failure on the part of the assessee, the reopening of the assessment u/s 147 beyond a period of 4 years is not permissible in the present case, as the assessee had completely disclosed all these material facts which has also been subjected to the scrutiny. - Decided in favour of assessee.
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2015 (12) TMI 1501 - ITAT PUNE
Computation of deduction under section 10B - enhanced profits by way of disallowance of an expenditure, in view of non-deduction of tax at source under section 40(a)(ia) - CIT(A) allowed the claim of the assessee - Held that:- As referred by the CIT(A), there is a provision by way of proviso under section 92C(4) of the Act that in case any addition is made on account of transfer pricing adjustment, no deduction under section 10A/10AA/10B of the Act or under Chapter VIA shall be allowed in respect of such amount of income by which the total income of the assessee is enhanced. However, there is no similar provision in respect of the disallowance made under section 40(a)(ia) of the Act. In the absence of specific provision of the Act, the income enhanced after the statutory disallowance under section 40(a)(ia) of the Act is to be considered as the eligible profits of the undertaking while computing deduction under section 10B of the Act. Upholding the order of CIT(A), we dismiss the grounds of appeal raised by the Revenue.
Reduction of carried forward losses while computing the profits of the eligible undertaking under section 10B - Held that:- The facts arising in the present case are similar to the facts before the Tribunal in Vishay Components India Pvt. Ltd. Vs. Addl.CIT & Anr. (2015 (11) TMI 118 - ITAT PUNE ) and following the same parity of reasoning, we hold that the deduction under section 10B of the Act would be allowed to the assessee in the first instance before allowing the adjustment on account of brought forward depreciation losses, the deduction under section 10B of the Act is to be first allowed against the eligible profits and in case there are any leftover profits, then the same are to be adjusted against brought forward unabsorbed depreciation / loss as claimed by the assessee in its return of income. Accordingly, we direct the Assessing Officer to re-compute the deduction under section 10B of the Act in the hands of the assessee. - Decided in favour of assessee
Addition made on account of outward freight while computing the book profits under section 115JB - Held that:- We find merit in the claim of assessee with special reference to the calculation of book profits by applying provisions of section 115JB of the Act. The assessee has also filed a revised computation of eligible book profits under section 115JB of the Act, which is also placed on record. In case, the amount of unascertained liabilities of ₹ 2.65 crores is added back to the net profit shown in the Profit & Loss Account and the balance expenditure and income relatable to the deduction claimed under section 10B of the Act is added / reduced, then it cannot be held that the assessee had not added back the provision of ₹ 2.65 crores. However, in fairness, we are of the view that the matter needs to be looked at by the Assessing Officer in this regard. Accordingly, we direct the assessee to furnish the requisite calculation before the Assessing Officer, who in turn shall verify the same and compute the book profits under section 115JB of the Act in this regard, after affording reasonable opportunity of hearing to the assessee - Decided in favour of assessee for statistical purposes
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2015 (12) TMI 1500 - ITAT JAIPUR
Trading addition - CIT(A) deleted the addition - Held that:- Firstly, it is not under dispute that the assessee is in a line of business of petroleum trading wherein both purchase of petroleum products as well as subsequent sale thereof are governed by Oil Marketing Companies, in the instant case which is Indian Oil Corporation (IOC). Accordingly, the margin which is earned by the assessee is effectively governed by the IOC. It is also not under dispute that assessee has declared turnover of ₹ 33.11 cr and it is not the case of the revenue that there is a suppression of sales by the assessee during the year under consideration. Further, the assessee has demonstrated through the chart (reproduced above) that with the change in sale price of the petroleum products, the margin in the hands of the assessee remains the same. Further, we agree with the contention of the ld. A/R that since the revenue has not challenged the finding of the ld. CIT (A) wherein he has held that books of account cannot be rejected, revenue cannot be allowed to take the ground that ld. CIT (A) has erred in deleting the trading addition. In the light of above, we do not find any infirmity in the order of ld. CIT (A) - Decided against revenue.
Disallowance of salary expenses made by AO u/s 40A(2)(b) - CIT(A) deleted the addition - Held that:- We believe that ld. CIT (A) has rightly stated that the salary which is derived by a person not only depends on experience but also depends on his qualification. In the instant case it is not under dispute that Shri Naresh Pareek was holding Post Graduate diploma in Management from Balaji Institute of Modern Management, Pune. Secondly, the appellant, considering the educational qualification, has contractually agreed to pay ₹ 15,000/- per month to Shri Naresh Pareek. It is a settled principle that it is the businessman who is the best judge to determine the services which are required for the purpose of his business and what should be reasonable compensation to avail the services. In the instant case the appellant in his wisdom has decided to appoint Shri Naresh Pareek to run its business more efficiently and have agreed to pay a salary of ₹ 15,000/- per month to him. We see no infirmity in the order of ld. CIT (A). - Decided against revenue.
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2015 (12) TMI 1499 - ITAT HYDERABAD
Disallowance of the accumulation of income - rejection of Form 10 - Held that:- The assessee is a charitable trust and has been registered under section 12AA of the Act. During the relevant financial year, the assessee has excess of income over expenditure and has sought to set apart the said excess for the purposes of objects of the trust. Though in Form 10, the assessee has not mentioned specific purpose for which the accumulation is being done, we find that during the course of the assessment proceedings, the assessee has stated the specific purpose for which the accumulation is being done. The reason for the Assessing Officer's refusal to accept the subsequent letter of the assessee giving specific purpose of accumulation is that the assessee has not filed the resolution of the society for the specific purpose mentioned in the letter.
Thus particularly taking into consideration the assessee's contention that the funds set apart have been utilised for the purpose mentioned by the assessee in its letter filed before the Assessing Officer during the assessment proceedings, I am of the opinion that the assessee is eligible for accumulating the excess of income over the expenditure for the relevant assessment year. - Decided in favour of assessee
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