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Showing 241 to 260 of 586 Records

2013 (9) TMI 749 - ALLAHABAD HIGH COURT

Search and seizure - basis of additions – Whether the Hon'ble ITAT was legally correct in deleting the addition made by the AO on the basis of seized documents found during the search and seizure operation and deciding the appeal by relying on the valuation of stock made by the Excise department though the same was done two days after the date of search. - Held that :- Even if an illegal search does not vitiate the discovery of incriminating document during search and the department may rely on such material, the findings of fact recorded by ITAT based on the inventory prepared by the Central Excise Department and the Court Commissioner satisfied the Tribunal with the stocks reported in the inventories. The satisfaction recorded by ITAT, on such reports does not raise any question of law to be considered by the Court.
2013 (9) TMI 748 - ALLAHABAD HIGH COURT

Addition on account of share application money – Undisclosed income to the company in case of money received from bogus shareholders – Held that:- Reliance is placed on the decision on Hon'ble Supreme Court of India reported in [2008 (1) TMI 575 - SUPREME COURT OF INDIA] in case of Commissioner of Income Tax Vs. Lovely Exports Pvt. ltd., in which Hon'ble Supreme Court has held that if the share application money is received by assessee company from alleged bogus share holders, whose names are given to the AO then the department is free to proceed to re-open there individual assessments in accordance with law but it can't regarded as undisclosed income of the assessee company – Decided against the Revenue.
2013 (9) TMI 747 - ALLAHABAD HIGH COURT

Addition on estimate basis by applying the net profit rate of 1% on total transport/service charges etc – Held that:- Estimation is a question of fact as per the ratio laid down in the case of Commissioner of Customs (Import) vs. Stoneman Marble Industries and Ors.,[2011 (1) TMI 15 - SUPREME COURT OF INDIA] – Decided against the Revenue.
2013 (9) TMI 746 - ALLAHABAD HIGH COURT

Disallowance of interest to sister concern – Held that:- Loan of Rs.17.19 lakhs advanced to the sister concern M/s Rampur International (P) Ltd advanced in the year 1985 was held to be advanced from the funds available with the assessee-company in the form of share capital, share application money, reserve and surplus other than borrowed money, affirmed the findings of the Income Tax Appellate Tribunal that the assessee company had sufficient funds other than borrowed money for giving to its sister concern and that the conditions of Section 36 (1) (iii) of the Act have been complied with. The assessee-company was entitled to full allowance of the amount of interest paid by it on borrowed capital.
Allowance of interest in distillery unit, fertilizer unit and biogas unit as income from other sources - Held that:- Assessee-company had received interest on the deposits/advances made by it to its debtors. The amount of interest was not relatable to any late payment of the invoices/bills or compensation/damages, and thus the amount of interest by any stretch of imagination could not be treated as income from business. It had to be treated under the head "income from other sources" – Decided against the Assessee.
2013 (9) TMI 745 - ALLAHABAD HIGH COURT

Rejection of books of accounts - G.P. rate increased on the ground of past G.P. rate – Held that:- Books of accounts were not rejected - The G. P. Rate was declining every year due to escalation in the fuel charges i.e. Petrol, Diesel etc. and also Mandi Fee - G.P. Rate is a question of fact and no substantial question of law arose as per the ratio laid down in the cases of Har Gopal Singh vs. CIT; [2004 (8) TMI 35 - PUNJAB AND HARYANA High Court] - The lower G.P. Rate never attracts the addition and it cannot be a ground for rejection of the books as per the ratio laid down in the cases of International Forest Company vs. CIT [1974 (12) TMI 33 - JAMMU AND KASHMIR High Court] – Decided against the Revenue.
2013 (9) TMI 744 - ALLAHABAD HIGH COURT

Best Judgment Assessment to reach different figure than figure given by the Assessee – Held that:- The books of account of the assessee were audited. Profit and loss account, balance sheet and audit report were filed. The A.O. rejected the books of account only on the ground that bills and vouchers were not produced before him. He did not care to find out as to why the audit report cannot be believed before making additions. The Tribunal has rightly relied upon the judgment of Rajasthan High Court in CIT v. Gotan Lime Khanij Udhyog, [2001 (7) TMI 19 - RAJASTHAN High Court], in which it was held that it is not necessary that on restoring to best judgment assessment the Assessing Authority must reach a different figure of income and profit. The assessee has adequately explained the Gross Profit rate and Net Profit rate by furnishing a comparative table.
2013 (9) TMI 743 - ALLAHABAD HIGH COURT

Whether on the facts and circumstances of the case and on a true and correct interpretation of section 37 of Act, the Tribunal was legally correct in upholding the disallowances of (a) Rs.1,00,000/- : under the head repairs & maintenance (to building); (b) Rs.1, 83,500/- : out of motor upkeep expenses; (c) Rs. 1,84,000/- : out of payments made to M/s A.K. Katare & Co., Chartered Accountants, as had been grouped under the broader head Miscellaneous Expenses.– Held that:- Questions raised by the appellant are not the questions of law much less substantial questions of law to be considered by the Court. Each of the question is based upon the assessment of evidence, which was placed before the Income tax authorities – All the expenses are disallowed by the Income Tax Authorities – All the findings was arrived on the basis of evidence – Decided against the Assessee.
2013 (9) TMI 742 - ALLAHABAD HIGH COURT

Binding of circular upon the Revenue officers – effective date of Circular No.7 of 2009 dated 22.10.2009 withdrawing earlier circulars - disallowance was made by A.O. under Section 40 (a) (i) for non-deduction of tax at source under Section 195. - Held that:- Where a circular issued earlier created a vested right in the tax-payer and such right is sought to be curtailed or withdrawn by a subsequent circular, then such subsequent circular will not have a retrospective effect - Circular No.7 of 2009 dated 22.10.2009 withdrawing earlier circulars became operative from 22.10.2009 - Circulars in the relevant year was binding upon the department and assessee can challenge the affect of the Circular but that the A.O. did not have any right to ignore the circulars and to disallow non-deduction of tax at source under Section 195 and under Section 40 (a) (i) of the Act – Decided against the Revenue.
2013 (9) TMI 737 - ALLAHABAD HIGH COURT

Whether the expense is a capital expenditure of revenue expense in nature – Held that:- Entire expenditure as disclosed in the annual report was on the construction of the works of capital nature i.e. hatcheries, which were under construction. The assessee could not produce the document to bifurcate expenses, which were expended on the construction of hatcheries and those which were expended in the regular business of the Corporation. The findings that the assessee could not explain the expenses, which were incurred on business of the Corporation is a finding of fact - Expenses claimed under the head of work in progress on the units under construction, were of enduring inseparable advantage from the projects to the assessee-corporation - Any administrative expense, which are made on the construction having enduring advantage to the assessee has to be treated as capital expense. It cannot be treated as revenue expenses of the organization – Decided against the Assessee.
2013 (9) TMI 736 - ALLAHABAD HIGH COURT

Whether incentive received by the assessee by way of additional quota for free sale sugar which is directly connected with the business activities of the assessee, was on capital account and hence not taxable as a revenue receipt – Held that:- Following the judgment in the case of CIT Vs. Ponni Sugars & Chemicals Ltd [2008 (9) TMI 14 - SUPREME COURT], in which it was held that main eligibility conditions for the scheme (Sampat Incentive Scheme) was that the incentive had to be utilized for repayment of loans taken by the assessee to set up new units or substantial expansion of an existing unit, and the subsidy received by assessee was not in the course of a trade but was a capital nature – In the present case, the incentive received is considered as Capital in nature – Decided against the Revenue.
Whether allowance made u/s 43B in respect of unpaid production incentive bonus covered under section 36 (i) (ii) of the I.T. Act –Held that:- The Company was claiming allowance of Rs.13,98,899/- on the unpaid productivity incentive bonus as on 31.3.1990 - Allowance is permissible on actual payment of production linked incentive bonus to the workmen of the Company, and not on the amount reserved for that purpose, which is kept as unpaid - Allowance under Section 37 of the Act in respective of productivity linked incentive bonus can be claimed as deduction, provided the assessee-company paid the amount in the previous year, relevant to the assessment year in question. The allowance cannot be claimed for unpaid part of production linked incentive bonus – Decided in favor of Revenue.
2013 (9) TMI 735 - PUNJAB &HARYANA HIGH COURT

Penalty u/s 271(1)(c) of the Income Tax Act – Held that:- Reliance has been placed upon the judgment in the case of Reliance Petro Products' case [2010 (3) TMI 80 - SUPREME COURT], wherein the Hon’ble Supreme Court has held that mere raising of a claim, even if not sustainable in law, is not by itself, sufficient to hold that it denotes furnishing of inaccurate particulars with an intent as would invite a penalty – In the present case, deductions were claimed in a bona fide exercise of the right of an assessee to claim deduction. The fact that this claim was rejected, does not raise inference of a mala fide attempt to evade tax. A penalty is imposed only if the claim is mala fide or raised with intent to evade tax – Decided against the Revenue.
2013 (9) TMI 734 - PUNJAB & HARYANA HIGH COURT

Service of Notice u/s 143(2) within the time limit – Held that:- The onus to rebut the presumption of service of notice sent by post, lies upon the petitioner. The petitioner has failed to discharge this onus. The bald denial by the petitioner that notice was never received, in our considered opinion, is insufficient, to record a finding in favour of the petitioner - No reason to accept the petitioner's averments and submissions that notice dated 22.5.1992 was not served upon the petitioner, within the period of 12 months prescribed by the proviso to Section 143 (2) of the Act – Petition dismissed – Decided against the Assessee.
2013 (9) TMI 733 - DELHI HIGH COURT

Benefit under Section 43(5) clause (d) – speculative loss - derivative transactions - the said insertion was made by Finance Act, 2005. Rule 6 DDA and Rule DDB were subsequently enacted to prescribe conditions and procedure for notification of a recognized stock exchange. National Stock Exchange and Bombay Stock Exchange were notified vide notification dated 25th January, 2006. - Held that:- Respondent is entitled to benefit, even in respect of transactions carried out with effect from 1st April, 2006. Tribunal observed that Parliament had enacted the provision with effect from the said date, and delay, if any, in the issue of Rules and notification, cannot nullify the legislative mandate of the enactment. Delay was attributable to the Central Board of Direct Taxes, who had failed to issue necessary notification within time – Decided against the Revenue.
However, during the course of hearing before us, learned counsel for the parties have accepted that the tribunal has not decided the other question i.e. applicability of Explanation to Section 73 of the Act. - matter remanded back to tribunal on this issue.
2013 (9) TMI 691 - ITAT AHMEDABAD

Penalty u/s 271(1)(c) of the Income Tax Act - Revised return of income was filed by the assessee on November 24, 2008 in which additional income was declared by the assessee – Assessee in a statement confessed regarding this investment out of additional income as declared by the assessee in the revised return of income filed on November 24, 2008 – Held that:- Notice issued by the Deputy Director of Income-tax (Investigation) under section 131 of the Income-tax Act, 1961 on November 20, 2008, there is no indication regarding any adverse material having brought out on record by the Department regarding any concealment of income by the assessee - Assessee's explanation is this that this investment was made out of past savings but on receipt of this notice under section 131 of the Income-tax Act, 1961, the assessee consulted a chartered accountant who advised the assessee to file revised return of income and include additional income in the same to cover this investment since he was not in a position to substantiate his explanation that the investment was made out of past savings.
Reliance has been placed upon the Hon’ble Tribunal decision in the case of Deputy CIT v. Dr. Satish B. Gupta[2010 (8) TMI 641 - ITAT, AHMEDABAD], wherein it has been held that question of considering whether the assessee is liable for action under section 271(1)(c) would arise only when return of income is scrutinised by the Assessing Officer and he finds some more items of income or additional income over and above what is declared in the return. Also, assessee would be liable for action under section 271(1)(c) in respect of such items only which are discovered by the Assessing Officer on the scrutiny of return of income or after carrying out investigation and discovering some more items of income not found declared or mentioned in the return of income – Following the above judgment and various other judgments cited by assessee, penalty is deleted – Decided in favor of Assessee.
2013 (9) TMI 690 - ITAT MUMBAI

Capital gains or Income from other sources - transfer of sub tenancy rights, deemed tenancy rights - Held that:- the assessee has been referred to as licensor. From the agreement deed it is clear that the assessee had incidental right of the premises through which the looms were to be used. The said right of the assessee has been recognised from the date of agreement till surrender of the said right. Even the original tenant and the original owner did not dispute such right of the assessee over the property. Now, the case of the Revenue is that the agreement dated June 13, 1972 did not provide any right to the assessee of sub-tenancy of the premises but it was only with respect to looms and machinery and user of the premises was only incidental. But the fact remains that incidental right to use the premises was provided by the agreement itself. The fact also remains that assessee has been referred to as licensee in the said agreement.
The provisions of section 5(11)(bb) and 15A of the Rent Control Act have already been reproduced above. By virtue of amendment in 1973, i.e., subsequent to the date of agreement of the assessee that the licensees who are deemed to be tenant under section 15A were to be considered as tenant. Therefore, in any case, the assessee had acquired the status of tenant of the landlord. As per the provisions of section 55(2) tenancy right has been considered to be capital asset. Moreover, the definition of capital asset as per section 2(14) of the Act is wide enough to cover "property of any kind" and the type of right acquired by the assessee in the property used by it cannot in any manner be said to be less than "any kind of property" held by the assessee - assessee, in fact, was enjoying possession of the impugned property and for peaceful vacation thereof it had received the impugned amount which was described by both parties as amount paid for surrender of tenancy rights. The assessee had acquired the said right long back and the licensor to the assessee also had recognised the said right of the assessee.
The right of the assessee was undisputed and the nature thereof was "property of any kind" which was held by the assessee and was to be termed as a capital asset within the meaning of section 2(14) of the Act. Tenancy rights have also been recognized as capital asset within the meaning of section 55(2)(a) of the Act - Decided in favour of assessee.
2013 (9) TMI 689 - ITAT MUMBAI

Transfer pricing adjustments - PE - Assesee contended that AO had not passed the order as per the directions given by the DRP, that there was violation of provisions of section 144C(13) of the Act. – Held that:- Open defiance of the directions of the DRP by an adamant AO, non disposal of application of the assessee filed u/s. 154 of the Act and request of the assessee to direct the AO to follow the orders of the DRP unmistakably prove one thing that assessee has been compelled to approach the Tribunal because of the disobedience and inaction of the AO. Helplessness of the assessee is evident from the fact that it is ready not to press other grounds of appeal, if the AO is directed to act as per law. If even for its rightful claim an assessee has to approach a judicial forum, then it has to be held that AO had miserably failed in performing his duties. As a representative of the State, he is duty bound to collect only 'due' taxes and not only taxes. On two counts behavior of the AO can be held to be perverse-first he did not obey the instructions of the panel and second he did not take any action with regard to the rectification application filed by the assessee – Decided in favor of Assessee.
2013 (9) TMI 688 - ITAT MUMBAI

Interest income to be adjusted towards the cost of the project - Assessee has utilised the borrowed funds for earning the income to that extent, the interest has to be given set off to the interest paid on the borrowed funds - It was the contentions of the assessee that there is a direct nexus and these funds are not surplus funds so as to consider as income from other sources – Held that:- Direct nexus aspect requires examination by the AO and in case there is direct nexus with the earning of interest income with that of the borrowals, then only net interest can be brought to tax or adjusted in the construction account – Restored the issue to the file of the AO to examine the nexus aspect of the earning of interest income on borrowed funds, specifically borrowed for the purpose of project which is under construction and decide accordingly.
Disallowance of leave encashment – Amount involved is ₹ 1,03,25,488/- - Assessee made a provision of leave encashment on actuarial basis which was disallowed by the AO as a provision – Held that:- Restored the matter to the file of the AO for fresh adjudication as and when the decision of the Hon'ble Supreme Court is rendered on this issue in the case of Exide Industries Ltd., which has been decided by Kolkata High court referred in [2007 (6) TMI 175 - CALCUTTA High Court ] and which is still pending before the Hon’ble Apex court.
Disallowance of Bad Debts – A.O. disallowed the amount on the reason that no details were furnished – Held that:- The claim of amount satisfy the conditions of section 36(2) as these are taken into the books of account - These advances/ receivables are part of the business activity of the assessee and there is no dispute with reference to the amounts being receivable - Except the amount of TDS, which is claimed as bad debt, other amounts, in our view, are allowable as bad debt and in the alternative also as business loss - For the purpose of verification including the claim written off as TDS, the issues are restored to the file of the AO to examine the facts first and then decide according to law – Matter restored to the file of A.O. – Decided in favor of Assessee for statistical purpose.
2013 (9) TMI 687 - ALLAHABAD HIGH COURT

Tribunal is final fact finding authority - Reference to the DVO for valuation of building – Held that:- A.O. has not specifically rejected the books of account and never pointed out any defects. The assessee submitted the books of account, vouchers, bills of building accounts which were duly examined by the A.O. with due application of mind and the same were never rejected - The reference to the DVO without rejecting the books of account is not desirable – However, the Tribunal is a final fact finding authority as per the ratio laid down in the case of Kamla Ganpati vs. Cntroller of Estate Duty, [2001 (2) TMI 132 - SUPREME Court] – Decided against the Revenue.
2013 (9) TMI 686 - ALLAHABAD HIGH COURT

Interest u/s 244A for delay in refund – Held that:- Reliance has been placed upon the judgment in the case of Commissioner of Income-tax vs. Larsen & Toubro Ltd., [2010 (6) TMI 414 - Bombay High Court], wherein it has been held that Section 244A(2) provides that in the event the proceeding resulting in refund has been delayed for reasons attributable to the assessee, the period of delay so attributable shall be excluded from the period for which the interest is payable - The proceeding resulting in the refund was not delayed for reasons attributable to the assessee. Though the TDS certificates were not submitted with the return and were filed during the course of the assessment proceedings, the Tribunal has noted that the tax was in fact deducted at source at the right time - Since the benefit of TDS has been allowed to the assessee, interest under Section 244A could not be denied only on the ground that the TDS certificates were not furnished with the return of income. Tax was deducted and deposited in the exchequer in time. Section 244A(2) is not attracted – In the light of the above judgment in the case, the issue is decided in favor of Assessee – Decided against the Revenue.
2013 (9) TMI 685 - ALLAHABAD HIGH COURT

Year of chargeability of capital gains tax - Assessee is a widow and 81 years old lady. The assessee is the owner of the premises know as "Dady Villa", situated at R.F. Bahadurji Marg (Meera Bai Marg), Lucknow - Assessee entered into an agreement with the builder Shivalik Real Estate Promoters Pvt. Ltd. As per agreement, an area of 18603 sq. ft. was to be developed into a multi story apartment. The builder developed the land and constructed a complex known as "Khushnuma Complex". The built up area was 1,670.3147 sq. mtrs. The builder was to give 35% of the built up area to the assessee or its sale value if the assessee wanted it to be sold through the builder. The builder was to get 65% of the built up area along with undivided 65% interest on the land – Contended that since assessee had handed over the possession of the plot to the builder in pursuance of an agreement for transfer i.e. in part performance of a contract referred to in Section 53A of the Transfer of Property Act, the transfer took place during the previous year itself in view of the provisions of Section 2(47) of the Act – Held that:- capital gain can be charged only on receipt of the sale consideration and not otherwise. How can a person pay the capital gain if he has not received any amount - In the instant case, the assessee has honestly disclosed the capital gain for the assessment year 1998-99 to 2000-01, when the flats/areas were sold and consideration was received. During the year under consideration, only an agreement was signed - No money was received. So, there is no question to pay the capital gain – Decided against the Revenue.