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Income Tax - Case Laws

Showing 261 to 280 of 503 Records

• 2013 (1) TMI 573 - ALLAHABAD HIGH COURT
  

  Addition u/s 68 - rejecting the gift received by appellant - reopening of assessment - Held that:- As specific information was received that the loans/credit entries given by Ganga Ram Agarwal Group of Companies who were indulging in giving bogus entries and therefore, the assessment has rightly been reopened as it is based on relevant materials and information.

  So far as the factum of gift is concerned perusing the gift deed even though the donor and donee belonged to the same religion, but the relationship has not been mentioned. It is not clear as to whether the donor was related to the donee or not. Further, notice u/s 133(6) was sent and no reply was filed. It was the obligation and duty of the appellant to give the address or to produce the donor because the appellant was claiming that she had received the amount of Rs. 5 lakhs as gift, which is not liable to tax. She having failed to discharge the burden, the authorities have rightly treated it as income - against assessee.

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• 2013 (1) TMI 572 - ALLAHABAD HIGH COURT
  

  Addition u/s 68 - assessee could not discharge his onus of providing the genuineness of the share transaction - ITAT deleted the addition by assessing the income under the head LTCG as shown by the assessee - Held that:- The assessee was in possession of the shares in question and had sold the said shares in course of ordinary transaction of sale of shares at stock exchange and if the broker did not file any evidence since the same were seized by the Revenue Department, there is no fault lies with the assessee.

  From the aforesaid facts it is clear that the shares in question were allotted to the assessee in the public issue which were held in demat a/c of Stock Holding Corporation of India Ltd. The shares were transferred to Abhipra Capital Ltd. The sale consideration was received by demand draft. Therefore, the transaction in question cannot be said to be fake and is a genuine transaction. The Tribunal has not committed any error in upholding the order of CIT(Appeals) by deleting the addition - in favour of assessee.

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• 2013 (1) TMI 571 - ALLAHABAD HIGH COURT
  

  Deduction u/s 80-P (2) (a) (i) - interest received from non-members - revenue contested against Tribunal in allowing the deduction as clause 41 of the bye laws of the society clearly mentioned that loans and advances be given to women members only - Held that:- As decided in CIT, Muzaffarnagar Versus Muzaffarnagar District Co-Operative Bank Ltd. [2012 (12) TMI 493 - ALLAHABAD HIGH COURT] & Commissioner Of Income Tax, Ghaziabad Vs. M/s Ghaziabad Zila Sahkari Bank, Ghaziabad [2013 (1) TMI 553 - ALLAHABAD HIGH COURT] & [2013 (1) TMI 552 - ALLAHABAD HIGH COURT] that the income arising out of banking activities by Cooperative Bank is exempted under Section 80P (2) (a) (i) - in favour of assessee.

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• 2013 (1) TMI 570 - ALLAHABAD HIGH COURT
  

  Addition made u/s 68 - unexplained receipt - assessee could not prove the sale of jewellery - ITAT deleted the addition - Held that:- The assessee had submitted sufficient material and evidence to show that he was in possession of the requisite jewellery as the same was declared under the Voluntary Disclosure of Income Scheme, 1997, which was also accepted and tax was paid.

  Further, Sri Bishan Chand, partner of M/s. Bishan Chand Mukesh Kumar was examined on oath by AO who categorically stated that he had purchased the jewellery in question from the respondent assessee and had made the payment through bank draft. Assessment under the Delhi Sales Tax Act had also been made on the turnover and further, all the purchases and sales have been accepted by the Assessing Authority under the Income Tax Act while completing the assessment for the instant year under Section 143 (3) - order of the Tribunal does not suffer from any legal infirmity as no unaccounted receipt is confirmed - in favour of assessee.

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• 2013 (1) TMI 569 - ITAT AHMEDABAD
  

  Disallowance of Commission - commission paid for high seas sales to a firm [(M/s Motilon Synthetics] in which the directors hold substantial interest - AO invoked the provisions of S. 40A(2b) - Held that:- No document has been furnished which would substantiate the rendering of service by the firm to the assessee or any evidence to show that firms were introduced by the firm or the sales were brought in by the firm. From the copy of the letter dated 1.4.2000 appointing Motilon Synthetics as sole selling agent cointain certain conditions to be complied but nothing has been brought on record to prove the compliance of the aforesaid conditions. - From the schedule of the profit and loss account it is seen that Motilon has earned the commission only from the assessee & not from any other party and therefore it could not be established that Motilon is in the business of commission agency and has also earned commission from other parties - no reason to interfere with the order of CIT(A) - CIT(A) following the decisions of Apex Court (1972 (9) TMI 4 - SUPREME COURT) and (1966 (9) TMI 30 - SUPREME COURT) - Decided against the assessee.

  Disallowance of Interest - loan from Motilon Synthetics (sister concern) - assessee has given interest free advance to Baba Synthetics (also its sister concern) - Held that:- Considering the undisputed fact that the assessee has paid interest on borrowed funds and had also lend interest free loan to its sister concern. CIT(A) while upholding the decision of AO has given a finding that assessee has not been in a position to prove the commercial expediency whereby it was required to give interest free loans to Baba Synthtics. As assessee could not controvert the findings of CIT(A) by bringing any material on record no reason to interfere with the order of CIT(A) - against assessee.

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• 2013 (1) TMI 568 - ITAT HYDERABAD
  

  Exemption u/s. 54F - disallowance of claim as the advances were paid for the purpose of construction only after 31.07.2008 i.e., after the due date of filing the return - Any portion of the sale consideration was not deposited in the capital gain scheme account as mandated by sec. 54 within the stipulated time - Held that:- Admittedly, in this case the assessee purchased a property measuring 17 acres 47 cents along with the building for a consideration of Rs. 2.25 crores and also incurred expenditure of Rs. 21,37,800 towards registration charges. The assessee also claimed expenditure of Rs. 27,03,100 towards settling the claims of two persons viz., Sri J. Subramanyam Naidu and B.C. Reddappa Reddy. The fact of purchasing the above property cannot be disputed. This property was purchased through the High Court order from Official Liquidator.

  As DR produced a letter that the vital documents filed by the assessee are not available in the assessment folder. To that extent there is a contradiction between the AO and the CIT(A)'s order. These facts are to be examined.

  As the expression "residential house" used in section 54F has not been defined in the Income-tax Act. The popular meaning of the word "house" is a place or a building used for habitation of persons. Since a house is called residential house with reference to the purpose of its users, it may not be necessary that somebody should live in it continuously. It is enough if it was a house for residence. A farmhouse is also a residential house. Thus if the evidence brought on record by the assessee to show that there was a dwelling unit in the present property and the investment has been made by the assessee for construction or remodelling of the existing building as stipulated herein below the claim of the assessee has to be allowed - claim of the assessee cannot be rejected on any superficial ground that the assessee had not made investment within the time stipulated and the building constructed by the assessee is not a residential house - remit the issue back to the file of the AO who will examine the issue afresh in the light of the evidence brought on record by the assessee - Also the amount incurred by the assessee towards settling certain claims at Rs. 27,03,100 cannot be considered for deduction u/s. 54F as the new property acquired by the assessee is through the High Court order from Official Liquidator and thud unable to see any reason to incur such an amount - in favour of assessee for statistical purposes.

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• 2013 (1) TMI 567 - ITAT COCHIN
  

  Non deduction of TDS u/s 194C - hiring of lorry for carrying the goods - Held that:- The legislature with effect from 01-04-1995 inserted Explanation 4(c) to Section 194C to include the term "work" - carriage of goods or passengers by any mode of transport other than by railways. Therefore, the contract shall be for carriage of goods or passengers other by railway.

  As in the present case, admittedly, the carriage of goods was not entrusted with the lorry/truck owners from whom the taxpayer has hired the lorries/trucks or with the taxpayer himself. Admittedly the responsibility of carriage of goods remains with M/s Logos Logistics Pvt Ltd. No work of carriage of goods was entrusted either with the taxpayer or with the lorry/truck owners from whom the taxpayer hired the lorries/trucks. Therefore, there is no contract for carriage of goods between the taxpayer and the lorry/truck owners from whom the trucks/lorries were hired. As such provisions of section 194C are not applicable to this transaction. See Mythri Transport Corpn. case (2009 (1) TMI 337 - ITAT VISAKHAPATNAM), Cochin Goods Transport Association (1998 (10) TMI 68 - KERALA HIGH COURT) & Associated Cement Co. Ltd. v. CIT [1993 (3) TMI 1 - SUPREME COURT]

  Moreover, the taxpayer has admittedly paid hire charges to lorry owners. Thus as decided in Merlyn Shipping & Transporters v. Asstt. CIT [2012 (4) TMI 290 - ITAT VISAKHAPATNAM ] in respect of amount paid on or before the last day of the financial year and it was held that the amount which was already paid cannot be a subject matter of deduction u/s 40a(ia) - in favour of assessee

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• 2013 (1) TMI 566 - ITAT AHMEDABAD
  

  Addition in respect of interest on borrowed capital - CIT(A)deleted the addition - Held that:- Considering the documentary evidences produced by the assessee that he had not availed any specific loan which has been used for addition to capital assets with no bank borrowing in order to acquire fixed assets & whatever banking loan was availed it was used for working capital as assessee had sufficient interest-free funds for procuring fixed assets revenue could not controvert the above findings of CIT(A) with any cogent evidence & on perusing the statement of Chartered Accountant's of the assessee company that “borrowing costs are recognized as expenses in the period in which they are incurred, except to the extent where borrowing costs that are directly attributable to the acquisition, construction, or production of an asset till put for its intended use is capitalized as part of the cost of that asset, it is apparent that the assessee has not charged any interest expense attributable to purchase of fixed asset to the profit and loss account of the assessee - against revenue.

  Disallowance of depreciation and other expenses - CIT(A)deleted the addition - Held that:- As decided in assessee's own case [2010 (11) TMI 841 - ITAT AHMEDABAD] in regard to ownership of the vehicle it is purchased by the assessee-company in the name of Director and it is not in dispute that fund for purchase of the vehicle was from the assessee-company as assessee filed complete funds flow statement which proves that the vehicle was purchased from the assessee-company’s funds. As decided in CIT v. Mohd. Bux Shokat Ali [2001 (2) TMI 26 - RAJASTHAN HIGH COURT] assessee company-firm was entitled to depreciation on vehicle purchased by it for its business purpose but registered in the name of one of the partners- car expenses cannot be disallowed in the hands of a company as there cannot be any personal expenses in case of a company as decided in Sayaji Iron & Engineering Co. case [2001 (7) TMI 70 - GUJARAT HIGH COURT] - against revenue.

  Disallowance by capitalizing Repairs and Maintenance expenses - CIT(A) deleted the addition - Held that:- The reasons pointed out by the assessee for treating the payments for purchase of various items as revenue expenditure has not been duly confronted by the AO and made a finding on the same as to why these payments are to be treated as capital expenditure. Since, the amount involved was meager compare to the overall transactions of the appellant company, CIT(A) judiciously allowed the appeal of the assessee in its favour. Thus as the amount involved is negligible and no resource needs to be unnecessarily wasted on this issue therefore confirm the order of CIT(A) - against Revenue.

  Addition u/s 40A (2) (b) - CIT(A)deleted the addition - Held that:- CIT(A) was right to hold that the price difference was due to the nature of trading i.e. wholesale and retail. Moreover, as observed by the CIT(A), AO has not brought out any material on record to establish that the appellant had sold the products to its sister concern below the prevailing market rate. Thus in total conformity with the order of the CIT(A) and, therefore, uphold the same - against revenue.

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• 2013 (1) TMI 565 - PUNJAB AND HARYANA HIGH COURT
  

  Territorial Jurisdiction – Jurisdiction of High Court - The doctrine of precedents - Rule of binding efficacy of law - The assessment order, u/s 143(3) was passed by the ITO, Ward-14(1), New Delhi - Partly allowed by the CIT(A), New Delhi – Appeal before Tribunal, Delhi Bench 'F', also partly allowed – In Lieu of u/s 127, whereby the assesse's case had been transferred from ITO, Ward-14(1), New Delhi to DCIT/ACIT, Central Circle-II, Chandigarh - Revenue file appeal with P&H High court instead of Delhi High court

  Held that:- The said order dated 21.12.2010 would not confer jurisdiction on this Court as the assessment order was passed in December, 2008 and the CIT(A), New Delhi, decided the appeal on 24.02.2010. Once the respondent-assessee was being assessed by the ITO, Ward-14(1), New Delhi who had territorial jurisdiction over the assessee respondent, this Court would have no jurisdiction to hear the present appeal filed u/s 260-A.

  A conjoint reading of the aforementioned provisions makes it evident that the DG or Chief CIT or CIT is empowered to transfer any case from one or more A.O. subordinate to him to any other A.O. It also deals with the procedure when the case is transferred from one A.O. subordinate to a DG or Chief CIT or Commissioner to an Assessing Officer who is not subordinate to the same Director General, Chief Commissioner or Commissioner. The aforementioned situation and the definition of expression 'case' in CIT to jurisdiction of an A.O. is quite understandable but it has got nothing to do with the territorial jurisdiction of the Tribunal or High Courts merely because Sec. 127 dealing with transfer has been incorporated in the same chapter

  The present appeal is dismissed by holding that this Court has no territorial jurisdiction to adjudicate upon the lis over an order passed by the Assessing Officer at New Delhi. Consequently, the appeal is returned to the Revenue for filing before the competent Court of jurisdiction in accordance with law. No Territorial Jurisdiction

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• 2013 (1) TMI 564 - PUNJAB AND HARYANA HIGH COURT
  

  Undisclosed investment - Construction of property - Escaped assessment - Whether reopening of assessment on the basis of report from District Valuation Officer u/s 147 as valid, whereas books of account produced by the assessee were never rejected - Unexplained cost of construction – Held that:- Following the decision in case of Sargam Cinema (2009 (10) TMI 569 - SUPREME COURT OF INDIA) that the assessing authority could not have referred the matter to the DVO when there was no rejection of books of account maintained by the assessee. In favour of assessee

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• 2013 (1) TMI 553 - ALLAHABAD HIGH COURT
  

  Deduction u/s 80P(2)(a)(i) - respondent - assessee is a Cooperative Bank - Held that:- Reserve Bank of India had permitted the assessee - opposite party to continue to operate its banking activities. Thus, for all practical purposes, the assessee is entitled to claim deduction under Section 80P(2)(a)(i).

  The banking activities carried out by the respondent - assessee cannot be termed to be illegal, contrary or in violation of any statutory provisions - in favour of assessee.

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• 2013 (1) TMI 552 - ALLAHABAD HIGH COURT
  

  Deduction u/s 80P(2)(a)(i) - respondent - assessee is a Cooperative Bank - Held that:- Reserve Bank of India had permitted the assessee - opposite party to continue to operate its banking activities. Thus, for all practical purposes, the assessee is entitled to claim deduction under Section 80P(2)(a)(i).

  The banking activities carried out by the respondent - assessee cannot be termed to be illegal, contrary or in violation of any statutory provisions - in favour of assessee.

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• 2013 (1) TMI 546 - DELHI HIGH COURT
  

  Relinquished of ownership rights in Plot sold - Memorandum of Understanding (MoU) with two developers for the purchase of 500 sq mtrs. of land or a residential flat not exceeding 300 sq mtrs paying a sum of Rs. 68,00,000 when MOU entered and the balance in two installments - supplementary MoU by which plot no. A-1 measuring 500 sq mtrs was allotted to the Petitioner - reopening of assessment - Long term capital gain v/s Short term capital gain - Held that:- It is clear from the record that by way of first agreement which was entered in the year 1990, the assessee had acquired right in the property and this right he has relinquished in favour of new vendee in 1995. Thus, in considered opinion that the assessee is liable to long-term capital gain and not to short term capital gain. Under these circumstances, no infirmity in the impugned order passed by the Tribunal and since it is a finding of fact given by the Tribunal that the assessee acquired right in the property at the time of execution of first agreement in the year 1990 and had relinquished his rights in favour of new vendee in 1995, no substantial question of law arises for our consideration.

  This Court is in agreement with the above reasoning as in the present case, the Petitioner had acquired right to a specific plot, furthermore, the interest was in the nature of an actionable claim, which could be asserted in a legal proceeding. The tax authorities had issued a no objection certificate in respect of the transaction. In these circumstances, the reporting of the amount received as capital gains was correct. Moreover, Calcutta Discount Ltd. vs. ITO, (1960 (11) TMI 8 - SUPREME COURT) is an authority for the proposition that as long as the assessee makes a full and true disclosure of the income, the fact that it might claim that as falling under one head which is ultimately not accepted, would not make it a wrong disclosure, or suppression. The question as to the proper assessability of any amount, to income tax falls within the domain of the tax adjudicator - writ petition is entitled to succeed & the reassessment proceedings are hereby quashed - in favour of assessee.

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• 2013 (1) TMI 545 - KERALA HIGH COURT
  

  Entitlement to exemption u/s 54B - Appellant had 1/4th share in 1.10 acres of land in Ayyanthole Village sold for Rs.44 lakhs on 14.11.2004 - Whether the subsequent purchase of land (at Koothattukulam) in which a farm house is situated satisfied the requirements of Section 54F and/or Section 54B and thus there was no liability to pay any long term capital gains tax on the sale of land at Ayyanthole, in the AY 2005-06 ? - Held that:- Section 54F is intended to encourage construction of or acquisition of residential house with the aid of the proceeds from the transfer of any long term capital asset, which is not a residencial house. The provision contemplates computing the cost of the residential building, but the value of the plot on which the farm house stands and the land appurtenant could also be considered.

  The tribunal has categorically found that the appellant has not produced material to show that the entire area of 1.92 acres should be considered as land appurtenant to it. It is in such circumstances, the tribunal made an estimation and directed that the value of the plot on which the farm house is located and the land appurtenant be fixed as Rs. 2 lakhs. Thus unable to accept the contention of the appellant that the value of the entire land must be considered in arriving at the value of the residential building. No illegality committed by the tribunal. It is not open to the appellant to invoke Section 54B of the Act in regard to the rest of the land at Koothattukulam.

  This is for the reason that the appellant has not been able to satisfy the requirements of Section 54B with regard to the land at Ayyanthole as the appellant's late father had applied for sanction for construction of a compound wall before the Thrissur Urban Development Authority. The appellant had claimed in the return, exemption on the basis of Section 54F of the Act. But, during the assessment proceedings, the appellant relied on Section 54B of the Act. In other words, initially the appellant even did not have a case that the land at Ayyanthole was used for agricultural purposes. Therefore, at any rate, there can be no basis for invoking Section 54B for deducting the value of the land purchased at Koothattukulam - against assessee.

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• 2013 (1) TMI 544 - DELHI HIGH COURT
  

  Reopening of Assessment - about 90 companies were floated for the purpose of providing accommodation entries - all the companies are "bogus" - Held that:- Persuading a letter circulated by the ACIT (Respondent No.2) to all the assessing officers of Range-14, which includes the assessing officer of the present petitioner dated 24.08.2009 a list of beneficiaries mentioned for the AY 2007-08 was found with the serial No.19 shows the petitioner as a beneficiary - the petitioner furnished a reply to the earlier questionnaire which had been issued on 18.02.2009 giving details of share capital raised by the petitioner. Those details included the sums received from the aforesaid alleged accommodation entry providers. Alongwith the said reply dated 09.11.2009, confirmations from the said parties were also furnished.A similar reply was again furnished on 27.11.2009.

  Despite the furnishing of these details, AO further issued notices under section 133(6) to the said companies directly, on 27-30.11.2009 which the said five parties responded, thus in the backdrop of these facts, it is difficult to believe the plea taken that the said information was “neither available with the department nor did the assessee disclose the same at the time of assessment proceedings”. There is nothing to show that the assessing officer did not receive the said information as it is apparently because he was mindful of the said information that he issued notices under section 133(6) directly to the parties to confirm the factum of application of shares and the source of funds of such shares - in favour of assessee.

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• 2013 (1) TMI 543 - PUNJAB AND HARYANA HIGH COURT
  

  Entitlement to benefit of section 158BB (1) (b) - assessee having filed the return under Section 139 sufficiently after action u/s 132A was invoked - Held that:- As evident from the perusal of sub clause (b) of Sub-section (1) of Section 158BB, that the AO is required to reduce the income disclosed in the return filed by the assessee under Section 139 or Section 147 but the assessments had not been finalised till the date of search or the requisition while computing the income for the block period.

  In the present case, the cash was seized by the police on 15.9.1998 and action u/s 132A was initiated on 5.10.1998. The warrant of requisition was executed on 9.8.2001 when the money was paid by the police to the Income Tax department and notice u/s 158BC was issued to the assessee on 7.4.2003 in respect of block assessment for the period 1.4.1988 to 5.10.1998. The assessee filed return in Form 2B on 5.8.2003 and the block assessment was framed on 29.8.2003. It may, however, be noticed that prior thereto for the assessment year 1999- 2000, the assessee had filed return on 10.3.2000 in which the cash of Rs. 7 lacs was not disclosed but the same was disclosed by the assessee while filing the revised return on 5.6.2000. This return was processed u/s 143(1) on 31.3.2001. In the present facts and circumstances, the CIT(A) and the Tribunal held that the benefit of the amount of Rs. 7 lacs which was disclosed in the return filed by the assessee under Section 139 was admissible to the assessee while computing his undisclosed income & the revenue was unable to demonstrate that the aforesaid view was not in accordance with law - in favour of the assessee.

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• 2013 (1) TMI 542 - PUNJAB AND HARYANA HIGH COURT
  

  Entitlement for exemption u/s 11(2) - ITAT denied the claim - appellant is a charitable institution registered under Section 12A - Held that:- Following the decision of Nagpur Hotel Owners's Association's case [2000 (12) TMI 99 - SUPREME COURT] it is mandatory under the provisions of the Act and the Rules to give intimation to the assessing authority in Form 10 as required under Rule 17 of the Rules to claim benefit of Section 11. This information in Form 10 is required to be furnished at any time before the finalisation of the assessment proceedings.

  Thus the assessee having failed to furnish Form No.10 before the completion of the assessment, the benefit under the provisions of Section 11 for accumulation of profits had been rightly denied by the authorities below - against the assessee.

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• 2013 (1) TMI 541 - UTTARAKHAND HIGH COURT
  

  Delay in filing advance tax - interest u/s 234B or section 234C - assessee claimed to be exempt as per circular dated 23.5.1996 - Held that:- Ground taken by the assessee for payment of advance tax belatedly is that he suffered financial losses in his publication business. However, such a ground does not exist in the circular dated 23.5.1996 in order to grant exemption to the petitioner for payment of interest of late advance tax.

  Therefore, the revenue authority has rightly come to the conclusion that such waiver cannot be granted to the petitioner. Since this is a fiscal matter and has to be construed strictly, this Court after perusing the circular dated 23.5.1996 comes to a conclusion that the findings of the revenue authority on this aspect are indeed correct. Since the petitioner does not fall under the exemption category such exemption cannot be given to the petitioner - against assessee.

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• 2013 (1) TMI 540 - ITAT AHMEDABAD
  

  Deduction u/s.10B - disallowed the claim for the Chennai Unit as section 10B requires that the industrial unit should not be formed by the transfer of previously used machinery - Held that:- The start point of the limitation for claiming the benefit flowing from section 10B would commence from the year of manufacture or production of the undertaking. If the conditions prescribed in the section are not satisfied in the year of commencement of production, it would not be able to claim such deduction in the subsequent years, unless the said initial test on the date of the starting point has been satisfied. Section 10B therefore do not give any indication that in each year of claim it’s eligibility should be newly established, because the relevance of the phrase “newly established undertaking” is only to identify initial year of period for which assessee is eligible for claim of exemption u/s.10B.

  Thus on examination of the facts recorded by the AO, it was noticed that the Chennai Unit was established/ acquired in the year 2000-01. Due to this reason, reliance can be placed on Saurashtra Cement & Chemical Industries(1979 (2) TMI 21 - GUJARAT HIGH COURT) and thus to hold that in the absence of any disturbance in respect of relief granted in initial year, there was no legal justification to disturb the continuous deduction of section 10B in any of the subsequent assessment year. Although it is possible, as in the present case, that in any of the subsequent years the assessee had acquired new plant & machinery, may be of substantial value, as also may be increase the turnover or efficiency, nonetheless the act subscribes that the undertaking must not be formed by the splitting up or the reconstruction of a business already in existence. Therefore, the initial year is the year to establish the eligibility of the claim - it was not evident from the records that the transaction relating to the machinery constituted outright sale thus hereby hold that the AO has wrongly presumed that the transaction in question was a purchase of machinery by Chennai Unit - rejection of deduction u/s.10B was bad in law - in favour of assessee.

  Deduction u/s.10B - CIT(A) allowed claim observing the activities carried on by the assessee were manufacturing - revenue contested against as it was engaged in polishing the valves - Held that:- The petitioner has shown various manufacturing steps which the raw castings have to undergo [viz.Turning, boring, milling, radial drillings and boring, deburning, etc.]. He purchased raw valves and thereafter put them under the aforesaid process. Therefore, after processing that raw valves, that becomes altogether a new product, which is distinct from raw casting and is commercially marketable, and that comes under the manufacturing activity. See CIT v/s. Perfect Liners [1979 (1) TMI 4 - MADRAS HIGH COURT] - As decided in CIT v. M.R. Gopal [1965 (7) TMI 40 - Madras High Court] the word “manufacture” has to be understood in a wide sense - in favour of assessee.

  Computation of deduction u/s.80HHC - addition of interest on deposit with banks - Held that:- interest only constitutes income and it can never be part or equivalent to turnover. Further it is assessable under the head income from other sources and in no case it will form part of computation mechanism as provided under section 80HHC unless it is held as business income and if it is so then 90% thereof would be required to be excluded. See CIT vs. Delhi Brass & Metal Works [2008 (11) TMI 42 - HIGH COURT DELHI] - in favour of assessee.

  Addition of Bogus payment - disalloance of Commission payment - Held that:- As the payments were made to independent unrelated parties made to procure the business as supported by details of the commission agents and the details of the TDS payments no bogus payment is to be concluded - AO had not examined the commission agents as certain basic information about the payment of commission was very much part of the record as also had been enquired by the Auditor, hence very much part of the assessment record. Without any investigation AO has wrongly disallowed claim - in favour of assessee.

  Ad-hoc disallowance - Held that:- Since most of these expenses are incurred on cash basis and incurred for snacks, food and hotel expenses etc. Various gift items were also purchased for different persons including guest. Since the business purpose of these expenses cannot be fully verifiable part disallowance is justified. However looking to the quantum of expense 10% disallowance is on higher side. I restrict the same to ₹ 1 lac. The balance disallowance of ₹ 5,70,800/- is deleted - partly in favour of assessee.

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• 2013 (1) TMI 539 - ITAT HYDERABAD
  

  Non deduction of TDS on Ground Rent - Whether the payments towards rent of the ground along with other facilities requiring deduction of tax at source u/s 194I or the payments are for works contract as per section 194C? - Held that:- Before coming to a definite conclusion on this issue, it is very much necessary to ascertain the exact nature of payment and the services rendered or facilities provided for which such payment was made. As find from the order of the AO that he has not made any endeavour to ascertain the correct fact by taking necessary enquiry either with the BCCI or HCA for finding out the true character of the payment made. At the same time, the CIT (A) was also not justified in presuming the payments to be in the nature of work contract falling u/s 194C when she herself has observed that the claim of the assessee cannot be accepted since the payment could not have been just on the basis of debit note and there might have been an agreement either oral or written for providing the particular services.

  Thus the CIT (A) was not justified in directing the AO to consider the payment u/s 194C and accordingly calculate tax and interest u/s 201(1)& 201(1A). The order of the CIT (A) is modified to this extent only. However, it is proper to remit the matter to the file of the AO for determining the issue afresh after conducting necessary enquiry affording a reasonable opportunity of being heard to the assessee - in favour of assessee for statistical purposes.

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