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Income Tax - Case Laws
Showing 261 to 280 of 421 Records
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2012 (4) TMI 336 - ITAT JODHPUR
Interest claim for deduction u/s. 24(b) in the computation of income from house property - Normal interest versus penal interest versus interest on interest - allowed at nil by the Revenue as the interest on unpaid capitalized interest is not envisaged for allowance u/s 24(b) – Held that:- the term 'interest' is defined comprehensively u/s. 2(28A) to include on any debt and, more importantly, the same is in respect of 'capital borrowed'. - The word 'capital' is wider in scope than the term 'money', and under appropriate circumstances, as the present one, include part of the debt that the seller, a financial institution, has agreed to extend, on charge of interest, to the assessee– purchaser.
The interest deductible is the actual interest payable by the assessee in respect of the capital borrowed, and not one which would have been payable under a different fact setting than the actual one. - the claim must be genuine and not a result of an artifice, arising as a device to inflate the interest expense with tax or other motivation.
There is no scope for bifurcating the interest into normal and penal components, as done by the Revenue. The agreement is clear. The capital is to be repaid as per a time schedule. If not paid thereat, additional interest would become chargeable for the period of default, i.e., till the payment of the installment. This would not be interest on interest, but a higher rate of interest on the capital borrowed and, thus, allowable u/s. 24(b) of the Act.
Interest at normal rate allowed - Interest at panel rate allowed - Interest on Interest is not allowed.
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2012 (4) TMI 335 - DELHI HIGH COURT
Block assessment - Search and seizure - The main contention of the petitioner is that the Assessing Officer has illegally assumed jurisdiction under Section 153C read with Section 153A of the Act, that there was no undisclosed income to be assessed in the petitioner’s hands and therefore a writ of certiorari should issue to quash the proceedings as null and void. - held that:- Once Section 153A is found to be applicable, there will be only one assessment in respect of each of the six assessment years immediately preceding the assessment year - It needs to be appreciated that the satisfaction that is required to be reached by the Assessing Officer having jurisdiction over the searched person is that the valuable article or books of account or documents seized during the search belong to a person other than the searched person - Even if they tend to act unreasonably or under misplaced enthusiasm, there are adequate safeguards which can be availed of by those persons - Writ petition dismissed
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2012 (4) TMI 334 - DELHI HIGH COURT
Whether the standing charges payable under the agreement dated 23rd June, 2004 qualify and are eligible for deduction under Section 80 IC of the Income Tax Act, 1961 - The expression “derived from” in taxation laws means something which has direct or immediate nexus with the specified activity, which in the present case means manufacture or production of article or thing - In the present case, in view of words “derived from”, we have to look at the immediate source which has generated or resulted in the said receipt/income - The final conversion charge shall be re-determined based on discussions related to financing cost of equipment, power costs, actual capital cost based on speed of the machine, import duties, etc - The Fixed Charges are the same as defined in Standing Charges in Clause 12 above but the Return of Equity will be considered as 100% instead of 50% - In the present case, the standing charges were payable because Hindustan Lever Limited did not place purchase orders for the normative production possible - The standing charges obviously do not form part of the supply made and are not treated as sale consideration or the price of the goods on which excise duty or the sales tax etc. would be or is payable - Decided against the assessee
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2012 (4) TMI 333 - DELHI HIGH COURT
Writ petition - The petitioner had entered into an agreement of purchase of the property dated 19th November, 1995 - The Appropriate Authority came to the conclusion that the land rate had to be computed on the basis of the FAR and adjustment of +35.71% was made on account of the said additional FAR - In the present case, after the order of acquisition dated 29th February, 1996 was passed, the Central Government paid an amount of Rs.42 lacs to the petitioner on 17th March, 1996 and Rs.2.37 crores to the respondent Nos. 3 and 4 on 22nd March, 1996 - It is well settled that a prerogative remedy is not a matter of course. In exercising extraordinary power, therefore, a writ court will indeed bear in mind the conduct of the party who is invoking such jurisdiction - The present writ petition was filed by the purchaser in end of May, 1996, more than two months after the cheques were received and encashed - The agreement to sell records that the conversion charges will be paid by the vendee, i.e., the petitioner. The petitioner had not incurred any such expenses after the agreement to sell dated 19th November, 1995. Form No. 37-I was filed on very next day, i.e., 20th November, 199 - Petition is dismissed
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2012 (4) TMI 332 - PUNJAB AND HARYANA HIGH COURT
Higher rate of depreciation on trucks – rectification of error - AO noticed in the return filed that the rate of depreciation claimed by the assessee on trucks at 40% was wrongly allowed as the assessee was not plying trucks owned by it on hire but was utilizing the trucks for its own purposes and hence rate of depreciation applicable was 25% - the Tribunal decided in favor of assessee - Held that:- the assessee was unable to demonstrate with reference to any material that the respondent-assessee was using the vehicles in a business of transportation of goods and the trucks owned by the assessee were being used for public carrier - the Tribunal was, thus, not justified in holding that the assessing officer had erroneously exercised jurisdiction under Section 154 of the Act substantial questions of law claimed above are, therefore, answered in favour of the revenue and against the assessee.
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2012 (4) TMI 331 - DELHI HIGH COURT
An application filed with the Ministry of Commerce and Industries for registration of the industrial park under the Industrial Park Scheme, 2002 to avail of benefits/exemption under Section 80IA - petitioner was informed that the date of commencement of park was after 31st March, 2006, their application was not covered under the 2002, Scheme - the 2002 Scheme ended on 31st March, 2006 and the 2008, Scheme was notified on 8th January, 2008 and parks set up on or after 1st April, 2006 but not later than 31st March, 2009 were covered by the said scheme - the petitioner did not fulfil the requirements of 2008, Scheme on the minimum requirement of constructed area required and required minimum number of units - Held that:- when an application was filed on 23rd September, 2006, there was no scheme in place/operation, which had been framed and notified by the Central Government -The 2002, Scheme had lapsed as it was effective, notified and applicable upto 31st March, 2006 - with effect from 1st April, 2006 there was no scheme which had been framed and was gazetted. Therefore, no undertaking could take advantage or benefit of Section 80 IA(4)(iii) of the Act
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2012 (4) TMI 330 - KARNATAKA HIGH COURT
Appellate Authorities held that the MODVAT credit should not be added to the income as well as the value of the closing stock for the current assessment year as held by the Assessing Officer – CIT(A) assessing officer should not have rejected the method of accounting employed by the assessee, as it was a standard method of accounting and even as approved by the institute of Chartered Accountants in India and therefore this amount was directed to be deleted – Held that:- follow the view taken by the Income-tax Appellate Tribunal, Mumbai in the case of S.H. Kelkar & Co. Ltd. v. Dy. CIT (1992 - TMI - 58028 - ITAT BOMBAY-A ) and also in the case of Berger Paints India Ltd. v. Dy. CIT (1992 - TMI - 60611 - ITAT CALCUTTA-E ) the assessing officer was not justified in adding the amount on account of MODVAT etc., and therefore upheld the view of the appellate Commissioner and dismissed the appeal of the revenue - deem it proper to remand this matter to the assessing officer on this question, so that the assessee can make good its claim in terms of actual payment etc.
disallowance on the ground of obsolescence - the Appellate Authorities held that custom duty paid on goods claimed as irrecoverable and therefore the entire amount of Rs. 9,84,349/- should be allowed as an expenditure despite the assessee not establishing that this amount had become obsolete – Held that:- the understanding and the manner of working out of the extent of obsolescence by the appellate Commissioner was fully justified, having regard to the nature of the business the assessee carried on and the kind of product with which it is dealing with etc – against revenue.
Whether the Appellate Authorities were correct in holding that custom duty paid on software and expenses incurred on MRB items should be allowed in full and not at 50% as held by the Assessing Officer and since computer software would become obsolete despite the assessee not producing any proof to claim such obsolescence - Held that:- having regard to the fact that the products got obsolete fairly fast in comparison to the other products in other industry and more so even in the computer industry a software having comparatively lessor shelf life we do not propose to disturb the view taken by the appellate authorities - in favour of the assessee.
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2012 (4) TMI 329 - ITAT CHENNAI
Addition to the regular income as performance incentive received from employer claiming tax deducted at source - reason for the demand is non availability for TDS credit claim - same performance incentive was admitted both in the assessment year 2007-08 and 2008-09, whereas TDS credit is available only for the assessment year 2008-09 – appeal on ground that amount of performance incentive has been taxed twice by the Income Tax Department – assessee submitted that he had aggregated with salary amount, performance incentive of Rs. 4,28,750/- which was given by the said company to him in financial year 2007-08 relevant to the assessment year 2008-09, by mistake as shown in Form 16 issued by the said company – Held that:- If the Income-tax Act authorizes a designated authority to collect tax for State, the same Act always permits the said authority to rectify any proceedings, which has resulted in double taxation - the assessment of Rs. 4,28,750/- to income-tax for the assessment year 2007-08 is against law - direction to the assessing authority to delete the said amount from the assessment relating to the - the appeal of the assessee is to be allowed
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2012 (4) TMI 324 - ITAT JAIPUR
Validity of the order passed u/s 153A r.w.s 143(2) - Search and seizure - held that:- the warrant is issued in the name of the assessee and the address of the premises searched is also the official address of the assessee viz. E-127, Industrial Area, Bhiwadi. The panchnama is prepared for the search operation conducted at this premises and the name of the assessee very much appears in the panchnama. In view of these facts, it is clear that a valid search and seizure operation has been conducted u/s 132 and the order u/s 153A passed by the A.O is as per law. - it is not disputed by the assessee company that search warrant was not issued against the assessee company. A single search warrant can be issued in the name of number of concerns. Once search warrant has been issued then the AO is required to pass the assessment order u/s 153A read with Section 143(3) of the Act.
Tax evasion - Fluctuation of share price - Indo-Mauritius DTAA - held that:- The shareholders having the shares as on 17-07-2006 have offered the gain arising from sale of shares by treating the sale consideration at Rs. 318/- per share. Hence, it is not the case that there is a tax evasion. The entities which purchased the shares before 17-07-2006 and has offered the profit. It is not the case of the revenue that such entities have given back profit to the persons from whom such shares were purchased before 17-07-2006. Hence, it is not the case of tax evasion.
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2012 (4) TMI 323 - ITAT AHMEDABAD
Penalty u/s.271 (1)(c) - assessee, Gujarat State Road Transport Corporation engaged in the business of Mass Transport facilities and allied services - CIT (A) deleted the penalty in respect of loss of Rs. 33,55,15,227/- on the ground of bonafideness of the assessee, however, the CIT (A) confirmed the penalty u/s. 271(1)(c) of Rs. 2 crore as the assessee disclosed this amount of loss only in response to notice u/s. 148 and the assessee has failed to discharge the onus cast upon it within the meaning of Explanation-1 to section 271(1) (c) - In the assessment proceedings the AO while ascertaining the total income chargeable to tax would be in a position to detect the specific or definite particulars of income concealed or of which false particulars are furnished - The deemed concealment is provided in explanations often a question arose whether in cases where additions or disallowances made by the AO the penal provisions of section 271(1)(c) would attract - The essence of part B of the explanation is that the person must provide an explanation which is bona fide and he should substantiate that explanation by some evidence with him - Held that: when the assessee is able to offer reasonable explanation based on some evidence, the AO cannot invoke Part B of the explanation unless he has given finding based on some contradictory evidence to disapprove that explanation offered by the assessee - There is no finding of the AO based on some contradictory evidence to disapprove that explanation offered by the assessee was false or the assessee was not able to substantiate the explanation furnished or fails to prove that such explanation is not bona fide and that all the facts relating to the same and material to the computation of his total income has not been disclosed by him - Decided in favor of the assessee
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2012 (4) TMI 322 - ALLAHABAD HIGH COURT
Deduction claim under section 80 IB - penalty order was issued under section 271(1)(c) - claim allowed by Tribunal - department appeal - Held that:- The Apex Court in the case of CIT vs. Reliance Petroleum Products (P) Ltd (2010 (3) TMI 80 - SUPREME COURT) has laid down that a mere making of a claim which is not sustainable in law, but itself, will not amount to furnishing of inaccurate particulars regarding the income of the assessee - there is no finding that any details supplied by the assessee in its return were found to be incorrect or erroneous or false - no question of inviting the penalty under section 271(1)(c) of the Act - no error in the order of the Tribunal dismissing the appeal of the Department.
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2012 (4) TMI 321 - ALLAHABAD HIGH COURT
Addition made in the income as an unexplained investment - AO noticing the valuation report from DVO made an addition – Held that:- the seller of the property was not called by the AO nor there was any material to come to a conclusion that the amount which has been added in the income was actually paid by the assessee - DVO's reported value as 17 lacs does not leads to the conclusion that unexplained consideration of Rs. 5 lacs was actually paid by the assessee -the burden is on the Department to show that the fair market value of the assets as on the date of purchase was more than the value declared by the assessee and that the amount paid has been understated and the assessee has actually paid more than what has been declared – in favour of assessee.
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2012 (4) TMI 319 - DELHI HIGH COURT
Slump Sale - The contention of the petitioner is that the ‘transfer’ under the Scheme of Arrangement is not a sale under Section 50B of the Act. The Scheme of Arrangement was sanctioned by the High Court of Calcutta under Section 391 to 394 of the Companies Act, 1956 and is statutory in nature and character. It is pleaded that Section 50B of the Act has no applicability as the ‘transaction’ was under the Scheme of Arrangement and the same is not a ‘slump sale’ as contemplated under Section 2(42C) of the Act. - Held that:– The term ‘transfer’ is used in Section 2(42C) is with reference to the transaction in the nature of ‘slump sale’. Thus any type of “transfer” which is in nature of slump sale i.e. when lump sum consideration is paid without values being assigned to individual assets and liabilities are covered by the definition clause 2(42C) and then by Section 50B of the Act - decision of the Supreme Court in Vania Silk Mills (P) Ltd. Vs. CIT (1991 (8) TMI 2 - SUPREME Court) gave definition of “transfer” in Section 2(47) of the Act is inclusive, and therefore, extends to events and transactions which may not otherwise be “transfer” according to its ordinary, popular and natural sense.
The Act i.e. Income Tax Act, 1961 was enacted to tax the income or gains made by an assessee. The Companies Act, 1956, on the other hand serves, and is intended to serve a different purpose and, therefore, when a scheme under Sections 391-394 of the Companies Act, 1956 is sanctioned by the Court, it is treated as a binding statutory scheme because the scheme has to be implemented and enforced. This cannot, or is not, a ground to escape tax on ‘transfer’ of a capital asset under and as per provisions of the Act.
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2012 (4) TMI 318 - ITAT, PUNE
Search and seizure action at the business and residential premises - Notice u/s.153C and assessment u/s. 153C r.w.s. 144 framed for all the 4 A.Ys - assessee challenged the validity of assessment order in absence of approval of the Joint Commissioner of Income Tax as provided u/s.153D of the Act and the validity of addition of the amount made by A.O. u/s. 69C - revenue submitted that Sec 153 D talks of only approval of the Joint Commissioner of Income Tax for assessment order passed u/s. 153A of the Act - Held that:- that requirement u/s. 153 D for obtaining approval of JCIT is not procedural only but a mandatory requirement - conjoint reading of Sec. 153 A, Sec. 153 B and Sec. 153 D makes it clear that the approval as prescribed u/s. 153 D is also required to be obtained in cases where notice u/s. 153 C had been served -reliance on the decision of Hon’ble Bombay High Court in the case of CIT Vs. Mrs. Ratnabai N.K. Dubhash (1997 - TMI - 17266 - BOMBAY High Court)mentioning cases falling under section 144B of the Act, the quasi-judicial function of the Income-tax Officer as an assessing authority comes to an end the moment the assessee files objections to the draft order and the power to determine the income of the assessee thereafter gets vested in the Inspecting Assistant Commissioner to whom the Income-tax Officer is required to forward the draft order together with objections – in favour of assessee.
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2012 (4) TMI 317 - ITAT BANGALORE
Tax deducted at source - Grossing up of TDS - AO disallowed the assessee’s claim of TDS without actually deducting the same from the payments and added it back – held that:- From the literal reading of the above provision, it is clear that the provision for grossing up of the tax can be made only if the same forms part of the income concerned, where there is an agreement or arrangement to pay the income-tax by the prayer itself. In the case before us, the assessee has not stated anywhere that the labour charges to be paid are agreed to be paid tax free or that the assessee has to bear the taxes.
Deposit of TDS before due date of filing of return - Held that:- Assessee has made the provision for such payment of tax at the end of the year, it is to be presumed that there is an arrangement for paying tax free income to the labourers – tax deducted at source at the end of the year can be deposited before the due date of filing of the return of income as decided in co-ordinate Bench of the Tribunal at Mumbai in the case of Bapu Saheb Nanasaheb Dhumal v. ACIT (2010 - TMI - 204337 - ITAT MUMBAI ) given a finding that Sec.40(a)(ia) cannot be invoked if the assessee remitted the TDS within the due date of filing of the return prescribed u/s 139(1) of the IT Act - appeal of the revenue dismissed.
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2012 (4) TMI 316 - ITAT MUMBAI
Procedure of Appellate Tribunal – whether order proposed by AM while giving effect to the opinion of the majority consequent to the opinion expressed by the Third Member, can be said to be a valid or lawful order passed in accordance with the provisions of Section 255 – difference of opinion in respect of additions made u/s 68 and allowability of expenses - Held that:- Third Member was called upon to answer two questions on which there was difference of opinion among the two members who framed the questions and the Third Member in a well considered order, answered the reference by giving sound and valid reasons agreeing with the views of the Judicial Member. Thus, the majority view was in favour of the assessee. We further hold that the proposed order dated 18.2.2010 of the Accountant Member who is in the minority and had become functus officio wherein he has expressed his inability to give effect to the opinion of the majority and proceeded to frame three new questions to be referred to the President, ITAT again for resolving the controversy cannot be said to be a valid or lawful order passed in accordance with the provisions of section 255(4) and, hence, the said order proposed by the AM is not sustainable in law.
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2012 (4) TMI 315 - GUJARAT HIGH COURT
Unexplained cash credit - assessee filled appeal stating that the Tribunal without setting-aside the positive findings of the CIT(Appeals) has chosen to deal with the issue - Held that:- It will be difficult to uphold the contention of the appellant that Tribunal has decided this issue disregarding the orders of the lower authorities. In our opinion not only the Tribunal, has taken note of decisions of both, the Assessing Officer and that of CIT(Appeals), it also categorically made mention of the observations of CIT(Appeals) of absence of any positive material made available by the Revenue to disprove the claim of the assessee which was prima facie proved by furnishing the necessary confirmation. From the overall facts and circumstances, Tribunal noted that there was no sufficient material adduced by the appellant-assessee towards the proof of all the deposits and the depositors. There was absence of PAN numbers in certain cases and addresses of many depositors were lacking. This nowhere indicates that there was any prejudicial approach on the part of Tribunal nor did it conclude either in favour or against the appellant or Revenue. - Decided against the assessee.
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2012 (4) TMI 314 - KERALA HIGH COURT
Scope of deduction under Section 10B(4) - the sale proceeds received in convertible foreign exchange i.e. export turnover, the AO reduced there from the canvassing commission paid by the assessee to foreign agents and took only the net export turnover realized for the computation of export profit for deduction - Revenue stated since the assessee has DTA sales, the eligible export profit for deduction has to be worked out in terms of Section 10B(4) of the Act, which provides for working out proportionate profit on export turnover from the total profit - Held that:- There is nothing to indicate in the records or in any of the orders including the assessment order that the agent, who rendered service and to whom payment is made by the assessee, has rendered any technical or professional service answering the definition of "technical service" - no deduction is called for in terms of Explanation 2(iii) of sub Section (9A) of Section 10B for the purpose of computation of deduction under sub Section (4) of Section 10B
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2012 (4) TMI 308 - ITAT DELHI
Educational Institution – exemption denied u/s 10(23C)(iiiad) on ground that institution is not active in field of education, and it is in process of establishing - AY 2003-04 & 2004-05 Held that:- It is undisputed that Institution has been granted registration u/s 12A though on 29th September 2009 which infers aims and objects of the society was to run an educational institution and they are not for the purpose of profit. Apex court in case of ACIT v. Surat Art Silk Cloth Manufacturer Association(1979 - TMI - 5217 - Supreme Court - Income Tax) held that the test of pre-dominant object of the activity is to be seen whether it exists solely for education and not to earn profit. In the present case, society is in existence but actual educational activity has not taken place. Therefore in view of decisions of Calcutta High Court, Kerala High Court, wherein it has been observed that from construction period it is to be stated that educational institution is existing, we direct the A.O. to grant benefit of section 10(23C)(iiiad) – Decided in favor of assessee.
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2012 (4) TMI 307 - ITAT JAIPUR
Withdrawal of exemption u/s. 80G(5) – Charitable Trust - CIT(A) withdrew approval u/s 80G(5) on finding that Trust has spend about 78% of its total receipt for organizing 'Bhagwat Katha' i.e. activities of religious nature, which is in violation of Section 80G(5B) in FY 07-08 – AY 08-08, 09-10 - Held that:- Expenditure of religious nature exceeds the qualifying limit of 5%, in AY 2008-09. The withdrawal of the approval once for all on the basis of an activity restricted to a particular year would be unjust, amount as it would to castigating a person acting bona fide, particularly considering that its objects are purely charitable in nature. The charge of un-genuineness in our view would imply that the institution is not undertaking any charitable work or engaged in impermissible activity/s in the guise of charitable objects, which would be, a very un-charitable and unwarranted view to take. Therefore, withdrawal of approval u/s. 80G would be sustainable in law only in respect of the first year, i.e., AY 2008-09, while the matter would require a review for the subsequent years. In other words, the section would continue to apply, and the approval valid, for the years for which the said limit is not exceeded – Decided partly in favor of assessee for statistical purposes.
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