Home Case Index All Cases Income Tax Section Wise 2011 2011 (1) This

Law	-- All -- GST Income Tax Benami Property Customs Corporate Laws Securities / SEBI Insolvency & Bankruptcy FEMA Law of Competition PMLA Service Tax Central Excise CST, VAT & Sales Tax Wealth tax Indian Laws
Court	-- Any -- Supreme Court SC Orders / Highlights High Court Appellate Tribunal Tribunal Appellate authority for Advance Ruling Advance Ruling Authority National Financial Reporting Authority Competition Commission of India ANTI-PROFITEERING AUTHORITY Commission Central Government Board DISTRICT/ SESSIONS Court Commissioner / Appellate Authority Other
Citation	--Year-- 2025 2024 2023 2022 2021 2020 2019 2018 2017 2016 2015 2014 2013 2012 2011 2010 2009 2008 2007 2006 2005 2004 2003 2002 2001 2000 1999 1998 1997 1996 1995 1994 1993 1992 1991 1990 1989 1988 1987 1986 1985 1984 1983 1982 1981 1980 1979 1978 1977 1976 1975 1974 1973 1972 1971 1970 1969 1968 1967 1966 1965 1964 1963 1962 1961 1960 1959 1958 1957 1956 1955 1954 1953 1952 1951 1950 Upto 1949 - -Volume- 1 2 3 4 5 6 7 8 9 10 11 12 -
Landmark	Nil - N/A Referred in >= 2 Cases Referred in >= 4 Cases Referred in >= 5 Cases Referred in >= 10 Cases Referred in >= 15 Cases Referred in >= 25 Cases Referred in >= 50 Cases Referred in >= 100 Cases
Order by	TMI Citation Date of Decision

Advanced Search Options

Case Laws

Showing 161 to 180 of 1047 Records

• 2011 (1) TMI 1438
  
  Issues involved: Appeal against order of CIT(A) regarding deletion of addition towards capital introduced by partners and additions made towards advance u/s 68 of the IT Act for assessment year 2006-07.
  
  Deletion of addition towards capital introduced by partners:
  The appeal concerned the deletion of addition made towards capital introduced by a partner, which was initially treated as unexplained credit u/s 68 of the IT Act due to lack of evidence. The Managing Partner had introduced capital through bank transfers, but failed to provide evidence of fund availability. However, the CIT(A) deleted the addition based on bank statements and a copy of the bank account obtained from Union Bank of India without confronting the evidence to the assessing officer. The Tribunal found this improper, stating that the CIT(A) should have presented the documents to the assessing officer before making a decision. Consequently, the issue was set aside to the assessing officer for fresh consideration after reviewing the documents produced by the assessee before the CIT(A).
  
  Additions made towards advance u/s 68 of the IT Act:
  Another ground of appeal involved additions made towards an advance u/s 68 of the IT Act, where the assessee failed to provide names and addresses of the parties from whom the advance was received. The assessing officer treated it as unexplained credit, but the assessee contended that it was received towards sales advances and subsequently adjusted towards sales, thus not qualifying as unexplained credit. The CIT(A) agreed with the assessee and deleted the addition. However, the Tribunal noted that the evidence collected by the CIT(A) was not presented to the assessing officer for verification. In the interest of justice, the issue was set aside to the assessing officer for reconsideration in light of the evidence produced by the assessee before the CIT(A).
  
  In conclusion, the appeal of the Revenue was partly allowed for statistical purposes, and the order was pronounced in open court on 7.1.2011.

  ---

• 2011 (1) TMI 1437
  
  Issues involved: Appeal against the order passed by CIT(A) regarding estimation of income u/s 44AD for assessment year 2007-08.
  
  Revenue's Grounds:
  1. CIT(A) erred in law and facts.
  2. Discrepancy in estimation of gross receipts compared to similar cases.
  3. Application of sections 30 to 44D when books are rejected.
  
  Assessee's Cross Objection:
  Supports CIT(A)'s order.
  
  Facts:
  Assessee, a construction company, filed return for AY 2007-08 with total income of Rs. 55,64,210. AO rejected books, estimated income at 10% of contract receipt. CIT(A) directed income estimation at 6% on gross receipts and 3% on hire charges. Revenue appealed.
  
  Judgment:
  Assessee's books not reliable, discrepancies found. AO rightly rejected books. Profit estimation varies based on factors like location, raw material availability. Tribunal considered 8% estimation reasonable based on similar cases. Directed AO to estimate income at 8% of gross contract receipt.
  
  Depreciation:
  Section 44AD restricts further deductions. Claim of depreciation on estimated income not justified.
  
  Partner's Salary:
  Proviso to section 44AD(2) allows deduction of partner's salary from income. Payment of salary to partner allowed subject to limitations under section 40(b).
  
  Precedent:
  Judgment of jurisdictional High Court not applicable due to changes in law. Salary paid to partner allowed separately from estimated income.
  
  Outcome:
  Revenue's appeal partly allowed, Assessee's Cross Objection dismissed. Salary to partner allowed as per limitations.

  ---

• 2011 (1) TMI 1436
  
  Issues involved: Challenge to the levy of penalty u/s.271[1][c] for A.Yrs. 1999-2000 and 2001-02 based on disallowed salary payments to Managing Director as per Shareholders Agreement.
  
  Summary:
  
  A.Y 1999-2000 Penalty Amount Discrepancy:
  - The appeal challenged the penalty amount of &8377; 6,20,064/- but clarified it as &8377; 4,84,167/- due to deletion of penalty for depreciation on vehicle by CIT(A).
  
  Disallowed Salary Payments to Managing Director:
  - The AO disallowed salary paid to Managing Director based on Shareholders Agreement terms.
  - CIT(A) confirmed the disallowance and imposed penalty u/s.271[1][c] @ 100%.
  - Assessee argued that the Shareholders Agreement mandated the foreign partner to pay Managing Director's salary.
  - Assessee appointed its representative as Managing Director due to foreign partner's resignation, with government approval for excess payment.
  - Tribunal noted genuine payment to Managing Director, approved by government, and no doubt on services rendered.
  - Tribunal emphasized that disallowance of legitimate claim does not warrant penalty, citing relevant case laws.
  - Tribunal held that failure to amend Shareholders Agreement due to business necessity does not constitute inaccurate particulars or concealed income.
  - Penalty was deleted as it was not a fit case for levy.
  
  Outcome:
  - Appeals of the assessee were allowed, and penalty was deleted.

  ---

• 2011 (1) TMI 1434
  
  Issues involved: Disallowance u/s. 10A of the Act for the assessment year 2005-06.
  
  Summary:
  The appeal was filed by the assessee against the order of the ld. CIT(Appeals) regarding the disallowance u/s. 10A of the Act for the assessment year 2005-06. The main issue revolved around the disallowance u/s. 10A by the ld. Dy.CIT, which was upheld by the ld. CIT(Appeals).
  
  The ld. AO disallowed the deduction u/s. 10A for the A.Y. 2005-06 citing various reasons including the absence of the STPL certificate and no change in the assessee's business activities. The ld. CIT(Appeals) upheld the disallowance stating that the approval certificate by the STP was mandatory for claiming the deduction u/s. 10A.
  
  On appeal, the assessee argued that all necessary details, including the STP approval letter, were submitted to the revenue during assessment proceedings. The AR contended that the non-production of the STP approval letter was not highlighted by the AO or the CIT(A). The ITAT in a previous case had annulled a similar order by the CIT for the A.Y. 2004-05, supporting the deductibility u/s. 10A.
  
  The ld. DR supported the CIT(A) and argued that the ITAT did not assess the deductibility u/s. 10A in a previous order. However, upon reviewing the materials on record, the Tribunal found that the only issue was the absence of the STPI approval certificate. In the interest of justice, the Tribunal provided the assessee with another opportunity to produce the required certificate before the ld. AO for a determination on the entitlement to deduction u/s. 10A. The appeal of the assessee was allowed for statistical purposes.
  
  This judgment highlights the importance of complying with the necessary documentation requirements for claiming deductions u/s. 10A of the Income Tax Act and the significance of providing opportunities for the assessee to rectify any deficiencies in the documentation process.

  ---

• 2011 (1) TMI 1433
  

  Power to summon persons to give evidence and produce documents - If learned ACMM considers some witnesses had been left out, instead of using its power of summoning additional witnesses under Section 311 Cr. P.C. during trial and to see that the culprit are punished, the learned ACMM seemed to have acted more like a Clerk than like a Judge and was happy in discharging everybody on the ground that there was no investigation on the point how the goods were allegedly exported, who were the officers posted at Customs Port at the relevant time and what goods were exported. - A Judge has power to summon additional evidence suo moto and has also power to question the witnesses and if he finds that investigation was mis-directed, the Judge can still ensure that necessary witnesses are summoned in the Court and examined - The parties are directed to appear before the Court of ACMM on 15th January, 2011

  ---

• 2011 (1) TMI 1432
  

  Investigation - 100% EOU - Bonded warehouse - Scrutiny - Demand - Apart from accepting that the import was made by M/s. ESSAR Oil Ltd. they have not been able to effectively rebut the findings of the Commissioner (Appeals) that the removal of the goods from the warehouse was authorised by the Supdt. of Customs without payment of any Customs duty - Failure on the part of the respondents to invite the attention of the officers to the fact of non-payment of Additional Duty by the importer i.e. M/s. ESSAR Oil Ltd. cannot be equated with any wilful and mala fide suppression of fact on the part of the appellants - Appeals are rejected accordingly

  ---

• 2011 (1) TMI 1431
  
  Issues Involved:
  1. Classification of income from owned properties.
  2. Classification of income from properties taken on rent.
  3. Inclusion of notional interest in computing income from property.
  
  Summary:
  
  Issue 1: Classification of income from owned properties
  The primary issue was whether the income from properties owned by the assessee should be classified as "Profits and gains of business" or "Income from house property." The assessee argued that the properties were converted into business centers and thus the income should be treated as business income. However, the Assessing Officer (AO) classified it as "Income from house property." The ITAT upheld the AO's decision, citing precedents such as East India Housing and Land Development Trust Ltd. vs. CIT and Shambhu Investment P. Ltd. vs. CIT, which established that income from letting out properties, even with additional services, should be classified as "Income from house property." The Tribunal concluded that the assessee was not providing sufficient business center services to classify the income as business income.
  
  Issue 2: Classification of income from properties taken on rent
  The second issue was whether the income from properties taken on rent and then let out should be classified as "Business income" or "Income from other sources." The AO treated this income as "Income from other sources," but the CIT(A) and the Tribunal upheld the assessee's claim that it should be classified as "Business income." The Tribunal noted that the assessee had been consistently treating such income as business income since the assessment year 1992-93 and that the activity constituted a continuous, organized, and systematic course of business.
  
  Issue 3: Inclusion of notional interest in computing income from property
  The third issue involved the inclusion of notional interest on security deposits in the computation of income from property. The AO included 10% of the security deposits as notional rent, but the CIT(A) deleted this addition. The Tribunal affirmed the CIT(A)'s decision, referencing the Mumbai Bench's order in DCIT vs. Reclamation Realty India Pvt. Ltd., which held that notional interest income on security deposits should not be included in the income from property for the purposes of section 23(1)(a) of the Income Tax Act.
  
  Conclusion:
  The Tribunal partly allowed the department's appeals, upholding the classification of income from owned properties as "Income from house property" and rejecting the inclusion of notional interest in computing property income. It also upheld the classification of income from properties taken on rent as "Business income."

  ---

• 2011 (1) TMI 1430
  
  Issues involved: Application for recall of order due to lack of COD approval for pursuing appeal before the Tribunal.
  
  The Revenue filed an appeal before the Tribunal which was dismissed on the ground that COD approval was required for perusing the matter. A Misc. application was filed by the Revenue requesting to recall the order as COD approval had been received. After hearing both parties and examining the COD approval, it was found that the Revenue was permitted to pursue the appeal in respect of depreciation on LAN/WAN, ATM, but not in respect of disallowance deleted by the CIT (A) under section 14-A and Rule 8-D, and also addition on account of interest. The order dated 17th June, 2009 was recalled to the extent of the approval granted by the COD, and the case was directed to be fixed in due course. The Misc. application filed by the Revenue was allowed based on the above terms. The order was pronounced in the open court on 07th January, 2011.

  ---

• 2011 (1) TMI 1429
  

  Smuggling - Gold Bars - the conviction has been based only on the statement of the petitioner recorded under Section 108 - Held that: - The possession of gold has been proved and the fact that it is of foreign origin has been proved by the statement of the petitioner recorded under Section 108 of the Customs Act - Under Section 123 of the Customs Act, the burden of the prosecution is not to prove beyond reasonable doubt that the goods recovered were smuggled goods.

  The statement of the petitioner recorded under Section 108 of the Customs Act proves that there is a reasonable belief that the gold found in possession of the petitioner is smuggled. Though this statement is sought to be retracted after two days in the bail application which is not signed by the petitioner but by his counsel wherein it has only been written that the confession was coerced from him and the same stands withdrawn. This is not a proper retraction but a defence sought to be laid. This so called retraction does not cast a doubt on the voluntariness of the confessional statement.

  It is a settled legal principle that under Section 30 of the Evidence Act, confession of co-accused can be used only to lend assurance.

  Petition dismissed - decided against petitioner.

  ---

• 2011 (1) TMI 1428
  
  The Delhi High Court upheld the decision of the Income Tax Appellate Tribunal to allow payment of bonus and commission to employee-Directors under Section 36(1)(ii) of the Income Tax Act. The Tribunal considered past payments and dismissed the appeal, stating that no question of law arose.

  ---

• 2011 (1) TMI 1427
  
  Issues Involved:
  The judgment deals with the issue of tax withholding obligations under section 194H of the Income Tax Act, 1961 in relation to sub brokerage paid on the sale of mutual fund units.
  
  Comprehensive Details:
  
  1. Issue of Tax Withholding Obligations:
  The primary issue in this appeal was whether the CIT(A) was justified in upholding the disallowance of &8377; 2,87,409 for sub brokerage paid on the sale of mutual fund units due to the failure of the assessee to fulfill tax withholding obligations under section 194H. The Assessing Officer invoked section 40(a)(ia) to disallow the payments made by the assessee for brokerage. The CIT(A) rejected the plea that brokerage on the sale of securities is not covered by tax withholding requirements under section 194H, stating that the definition of 'securities' under the Securities Contracts (Regulations) Act does not include 'mutual fund units'. The assessee appealed this decision.
  
  2. Legal Analysis and Decision:
  The Tribunal examined the provisions of section 194H of the Income Tax Act, which require tax deduction at source for commission or brokerage payments. The Tribunal noted that the definition of 'securities' under the Securities Contracts (Regulations) Act includes mutual fund units. The Tribunal rejected the CIT(A)'s reasoning and held that the payment for the sale of mutual fund units falls within the scope of 'securities' as per the definition. The Tribunal emphasized that the definition of commission or brokerage under section 194H includes payments for services rendered in the course of buying and selling goods, which encompasses the sale of mutual fund units. Therefore, the Tribunal concluded that there were no tax withholding obligations for the payments made for commission on the sale of mutual fund units.
  
  3. Outcome:
  Based on the above analysis, the Tribunal found that there was no requirement for tax withholding from payments related to brokerage on the sale of mutual fund units. Consequently, the disallowance under section 40(a)(ia) was deemed invalid as there was no failure to comply with tax withholding obligations. The Tribunal allowed the appeal and directed the Assessing Officer to delete the disallowance.
  
  4. Conclusion:
  The Tribunal's decision clarified the scope of tax withholding obligations under section 194H concerning payments for brokerage on the sale of mutual fund units, emphasizing the importance of interpreting legal provisions in their entirety to determine the applicability of tax deductions accurately.

  ---

• 2011 (1) TMI 1426
  
  Issues Involved:
  1. Validity of the revision order under Section 263 of the Income Tax Act, 1961.
  2. Admissibility of depreciation on goodwill under Section 32 of the Income Tax Act, 1961.
  
  Issue-wise Detailed Analysis:
  
  1. Validity of the Revision Order under Section 263 of the Income Tax Act, 1961:
  The assessee appellant challenged the correctness of the Commissioner's order dated 26th March 2009, which invoked revision powers under Section 263 of the Income Tax Act, 1961, concerning the assessment under Section 143(3) for the assessment year 2004-05. The appellant contended that the conditions for invoking such extraordinary jurisdiction were not satisfied and that the Assessing Officer (AO) had considered every aspect of the case, making proper inquiries before framing the assessment. The Commissioner, however, observed that the AO had not raised any specific query regarding the admissibility of depreciation on goodwill for the assessment year 2004-05 and thus set aside the assessment order, directing the AO to reframe the assessment.
  
  2. Admissibility of Depreciation on Goodwill under Section 32 of the Income Tax Act, 1961:
  The core issue was whether depreciation on goodwill is allowable under the head "Intangible Assets" as per Section 32. The Commissioner noted that the assessee was granted depreciation of Rs. 127.54 lakhs on goodwill, which was not covered under the items specified for the allowance of depreciation. The assessee argued that the goodwill was acquired through the purchase of a running business and was included in the block of intangible assets allowable for depreciation. The assessee referred to several judicial precedents, including the Hon'ble Supreme Court's judgments in CIT v. Max India Ltd. and Malbar Industries Co., asserting that the Commissioner cannot revise the assessment order simply because he disagrees with the AO's decision.
  
  The Tribunal found that the issue was covered by the Hon'ble Delhi High Court's judgment in CIT Vs Hindustan Coca Cola Beverages Pvt Ltd, which concluded that the scheme of Section 263 does not permit the substitution of the AO's view by another possible view of the Commissioner. The High Court had held that goodwill, being a valuable commercial asset similar to other intangibles specified in the definition of block assets, is eligible for depreciation. The Tribunal noted that the AO had accepted the assessee's claim for depreciation on goodwill in earlier years and that the goodwill in question was merely an opening balance with no additions in the current year. Therefore, the AO's conduct could not be faulted, and the revision order was set aside.
  
  Conclusion:
  The Tribunal upheld the plea of the assessee, setting aside the revision order under Section 263. The appeal was allowed, and it was pronounced in the open court on 28th January 2011.

  ---

• 2011 (1) TMI 1425
  
  Issues involved: Appeal against order relating to deduction of bad debt and disallowance of employees' contribution to PF & ESI.
  
  Deduction of Bad Debt:
  The assessee claimed deduction of Rs. 2,08,223/- written off as bad debt, but the AO disallowed it for lack of evidence of recovery efforts. The CIT(A) upheld the disallowance, citing the need to establish badness in the debt. However, the ITAT referred to the TRF Limited case, stating that after April 1, 1989, it is not necessary to prove irrecoverability, only that the debt is written off in the accounts. Relying on this, the ITAT allowed the deduction under sec. 36(1)(vii) r.w.s. 36(2) of the Act.
  
  Employees' Contribution to PF & ESI:
  The AO disallowed Rs. 11,393/- for delayed payment of employees' contribution to PF & ESI. The CIT(A) upheld this disallowance, citing conflicting decisions on the matter. The ITAT, however, referred to various judgments, including the Alom Extrusions Ltd case, to establish that contributions made before the due date for filing the return of income are allowable under sec. 36(1)(va) read with sec. 2(24)(x) and sec. 43B of the Act. The ITAT vacated the disallowance and directed the AO to allow the claim.

  ---

• 2011 (1) TMI 1423
  
  Issues involved: Appeals filed by the assessee and the Revenue against the order of ld. CIT(A) for the assessment years 2004-05, 2005-06, and 2006-07.
  
  Issue 1 - Disallowance of claim for depreciation:
  - The AO disallowed the assessee's claim for depreciation on fixed assets u/s 143(3).
  - The ld. CIT(A) deleted the disallowance following the Tribunal's decision in the case of M.P. Madhyam & Others.
  - The Revenue appealed against the deletion of disallowance.
  - The Tribunal referred to the decision of the Jurisdictional High Court in the case of CIT vs. Raipur Pallotine Society regarding depreciation for charitable trusts.
  - The Tribunal held that a charitable trust is entitled to depreciation for its assets to preserve the trust's corpus.
  - The Tribunal upheld the deletion of disallowance of depreciation based on the High Court's decision and the Tribunal's precedent.
  
  Issue 2 - Denial to carry forward deficit in the application of funds:
  - The grievance of the assessee related to the AO's denial of carrying forward deficit in the application of funds.
  - The assessee relied on the decision of the I.T.A.T. in the case of Sarvajanik Jankalyan Parmarthik Nyas vs. ACIT and the Hon'ble Rajasthan High Court's decision in the case of Maharaja of Mewar Charitable Foundation.
  - The Tribunal held that excess expenditure for charitable purposes in one year can be adjusted against income of the succeeding year.
  - It was established that if a charitable trust's expenditure exceeds its income in a year, adjusting the excess expenditure against the following year's income qualifies as application of income for charitable purposes.
  - The Tribunal allowed the appeal of the assessee and dismissed the appeals of the Revenue regarding the denial of carrying forward deficit in the application of funds.
  
  This judgment was pronounced on 31st January, 2011, by the Appellate Tribunal ITAT Indore, with Shri Joginder Singh, Judicial Member, and Shri R.C. Sharma, Accountant Member presiding.

  ---

• 2011 (1) TMI 1422
  
  Issues Involved: Appeal against deletion of addition u/s 68 of the Income-tax Act, 1961 for assessment year 2006-07.
  
  Summary:
  1. The revenue appealed against the deletion of an addition of Rs. 12 lacs made by the Assessing Officer u/s 68 of the Income-tax Act, 1961.
  
  2. The assessee, a real estate development company, received fresh share capital of Rs. 24 lacs, with doubts raised by the Assessing Officer regarding the genuineness and creditworthiness of the share applicants, M/s. Athnic Creation (P) Ltd. and M/s. MV Marketing (P) Ltd., due to alleged discrepancies in their operations and transactions.
  
  3. The assessee contended before the Learned CIT(Appeals) that the share application money was genuine, providing evidence such as PAN, registration with ROC, affidavits, and bank statements. The CIT(A) relied on precedents like CIT Vs. Lovely Exports and decisions of the Hon'ble Delhi High Court to support the assessee's case.
  
  4. The Hon'ble Delhi High Court's decisions in Victor Electrodes Ltd. and Dwarkadish Financial Services emphasized that the burden of proof shifts to the Revenue once the assessee establishes the identity and genuineness of transactions. The court criticized the Assessing Officer for not summoning the directors of the applicant companies for verification.
  
  5. The ITAT upheld the CIT(A)'s decision, stating that the Assessing Officer failed to collect concrete evidence and relied on circumstantial defects, dismissing the revenue's appeal.
  
  6. The appeal of the revenue was dismissed, affirming the decision of the CIT(A) in favor of the assessee.

  ---

• 2011 (1) TMI 1421
  
  Issues involved: Determination of liability for payment of duty u/s Central Excise Act, 1985, based on manufacturing processes undertaken by the appellants; Clubbing of clearances made by different units without issuing show-cause notice.
  
  Manufacturing Process Liability: The Revenue alleged that the appellants manufactured excisable goods beyond exemption limits without payment of duty, resulting in confirmed demands. The appellants argued that their processes of cutting, sizing, and welding iron and steel materials did not amount to manufacture, citing previous Tribunal decisions. They contended that the demand was time-barred and suppression of duty intent was not sustainable, referencing relevant legal precedents. The Tribunal found merit in the appellants' argument, noting that the processes undertaken did not amount to manufacture during the disputed period.
  
  Extended Period of Limitation: The Revenue invoked extended limitation period due to alleged suppression of facts to evade duty payment. The appellants argued that the demand was time-barred and not sustainable based on the nature of the processes undertaken. Citing Supreme Court judgments, the Tribunal concluded that there was no willful suppression with intent to evade payment of duty during the disputed period, supporting the appellants' contention.
  
  Clubbing of Clearances: The appellants contested the clubbing of clearances made by other units without issuing show-cause notices to those units. They argued that such clubbing without proper notice was not sustainable. The Tribunal agreed, finding that demand by clubbing clearances without issuing show-cause notices to other units was not valid. Consequently, the demand was deemed time-barred, and penalties were set aside, leading to the allowance of the appeals.

  ---

• 2011 (1) TMI 1420
  
  The High Court of Bombay dismissed the appeal regarding the computation of interest liability under Section 234B of the Income Tax Act, 1961. The Tribunal held that the tax credit for taxes paid abroad should be considered, as per the amended law, which applies retrospectively to remove hardship for assessees. The appeal was dismissed with no costs.

  ---

• 2011 (1) TMI 1419
  
  Issues involved: The correctness of CIT(A)'s order deleting the addition of deemed dividend u/s.2(22)(e) of the Income tax Act, 1961 for the assessment year 2004-05.
  
  Summary:
  
  Issue 1: Addition of Deemed Dividend u/s.2(22)(e)
  - The Assessing Officer questioned the correctness of CIT(A)'s order deleting the addition of deemed dividend u/s.2(22)(e) of the Income tax Act, 1961.
  - The assessee company had transactions with its subsidiary company, M/s. Gujarat Insecticides Ltd, and the AO considered these transactions not as normal business.
  - The AO applied the provisions u/s.2(22)(e) and brought the outstanding amount as deemed dividend.
  - The CIT(A) deleted the addition, stating that no loans or advances were given to the assessee by its subsidiary.
  - The Tribunal upheld the CIT(A)'s decision based on previous rulings and principles established by the jurisdictional High Court.
  - The Tribunal found no merit in the objection raised by the Departmental Representative, as the issue was covered by the Tribunal's decision for the assessment year 2002-03.
  
  Decision:
  - The Tribunal dismissed the appeal filed by the revenue, affirming the CIT(A)'s decision to delete the addition of deemed dividend u/s.2(22)(e) for the assessment year 2004-05.
  
  This summary highlights the issues involved in the legal judgment and provides a detailed overview of the decision and reasoning presented in the case.

  ---

• 2011 (1) TMI 1418
  
  Issues Involved:
  1. Disallowance under section 40(a)(ia) of the Income Tax Act.
  2. Disallowance of carting charges under section 40(a)(ia) of the Income Tax Act.
  
  Issue 1: Disallowance under Section 40(a)(ia) of the Income Tax Act

  The primary issue revolves around the disallowance of Rs. 85.47 lakhs under section 40(a)(ia) of the Income Tax Act. The assessee, a transport contractor, claimed transportation charges of Rs. 1,34,49,861/-. The Assessing Officer (AO) noted that payments aggregating more than Rs. 50,000/- were made to various lorry drivers without deducting TDS, leading to a disallowance of Rs. 83,62,994/- under section 40(a)(ia).

  The assessee contended that no TDS was required as there were no contracts with the lorry owners, and payments were made directly to drivers. The AO, however, argued that the payments were made to sub-contractors and TDS should have been deducted under section 194C(2).

  The CIT (A) upheld the AO's decision, stating that there was an oral agreement between the assessee and the truck operators, which required TDS deduction under section 194C(2). The CIT (A) also noted that the assessee deducted TDS in subsequent years under similar circumstances.

  Upon appeal, the Tribunal observed that the AO did not provide concrete evidence of any contract between the assessee and the lorry drivers. The Tribunal highlighted that the AO's assertion that the names and addresses of the drivers were not genuine lacked substantial proof. The Tribunal noted that the AO failed to thoroughly examine whether the payments were for hiring vehicles or for assigning transportation work.

  The Tribunal referenced several judicial pronouncements, including the cases of CIT v. United Rice Land Ltd., R.R. Carrying Corporation v. ACIT, and K. Srinivas Naidu v. ACIT, which emphasized that in the absence of a contract, the provisions of section 194C did not apply. The Tribunal concluded that the issue required comprehensive re-examination and remitted the case back to the AO to determine if the payments were made under a contract for transportation work or merely for hiring vehicles. The AO was directed to examine the ownership and control of the vehicles and ascertain whether the provisions of section 194C were applicable.

  Issue 2: Disallowance of Carting Charges under Section 40(a)(ia) of the Income Tax Act

  The second issue involved the disallowance of carting charges amounting to Rs. 1,84,424/-. The AO disallowed this amount as the assessee failed to deduct TDS on the payment made to one Chinnappa. The assessee did not raise this issue before the CIT (A) and provided no justification or details during the hearing before the Tribunal.

  The Tribunal upheld the AO's disallowance of Rs. 1,84,424/- under section 40(a)(ia), noting the absence of any details or justification from the assessee's side.

  Conclusion:

  In conclusion, the Tribunal partly allowed the assessee's appeal for statistical purposes. The case was remitted back to the AO for a comprehensive examination of the disallowance under section 40(a)(ia) related to transportation charges. The disallowance of carting charges was sustained due to the lack of details and justification from the assessee.

  Pronounced in the open court on this 21st day of January, 2011.

  ---

• 2011 (1) TMI 1417
  
  Issues Involved:
  1. Classification of remuneration as salary vs. business income.
  2. Addition of unexplained cash credits under Section 68 of the Income Tax Act.
  
  Detailed Analysis:
  
  Issue 1: Classification of Remuneration as Salary vs. Business Income
  
  Assessment Year 2004-05:
  
  The assessee, a director of M/s. Ganesh Laxmi Processors Pvt. Ltd., received remuneration of Rs. 7,25,400, which he claimed as business income. The Assessing Officer (AO) treated this remuneration as salary, citing the lack of an agreement or contract indicating the nature of the remuneration. The AO relied on precedents, including Ram Prasad Vs CIT and B. Nagi Reddy Vs CIT, to conclude that the assessee was a servant of the company, subject to the control and supervision of the Board of Directors, and thus, the remuneration should be treated as salary. The CIT(A) upheld the AO's decision, emphasizing the employer-employee relationship established by the Articles of Association and the Board's resolution.
  
  The Tribunal, however, disagreed, noting that the Articles of Association and the Board's resolution did not impose any supervisory control over the assessee. The Tribunal cited multiple precedents, including Ram Prasad Vs CIT, Sardar Harpeet Singh Vs CIT, and Dwijendra Chandra Chowdhury Vs CIT, to support its conclusion that the assessee was not a servant of the company. The Tribunal directed the AO to treat the remuneration as business income, thereby allowing the appeal.
  
  Assessment Year 2005-06:
  
  The issue was similar, with the assessee receiving Rs. 11,25,000 as remuneration. The CIT(A) followed its earlier decision for AY 2004-05, treating the remuneration as salary. However, the Tribunal, consistent with its decision for AY 2004-05, set aside the orders of the authorities below and treated the remuneration as business income, allowing the appeal.
  
  Issue 2: Addition of Unexplained Cash Credits under Section 68
  
  Assessment Year 2004-05:
  
  The AO added Rs. 5,36,065 as unexplained cash credits, which the assessee claimed as long-term capital gains from the sale of shares. The AO's inquiries with stock exchanges and brokers revealed that the transactions were not conducted through recognized stock exchanges, leading the AO to treat the transactions as bogus and the amount as income from undisclosed sources.
  
  The assessee argued that the transactions were off-market and supported by contract notes, bills, and demat account statements. The CIT(A) upheld the AO's decision, noting the lack of evidence to substantiate the genuineness of the transactions and the non-compliance with SEBI's reporting requirements for off-market transactions.
  
  The Tribunal, however, found the transactions to be genuine, supported by documentary evidence, including demat account statements and confirmations from brokers. The Tribunal noted that the same CIT(A) had previously accepted similar transactions in another case, which was upheld by the Tribunal. Citing the decision in CIT Vs Anupam Kapoor, the Tribunal concluded that the transactions were genuine and directed the deletion of the addition, allowing the appeal.
  
  Conclusion:
  
  Both appeals for the assessment years 2004-05 and 2005-06 were allowed. The Tribunal directed the AO to treat the remuneration as business income and deleted the addition of unexplained cash credits under Section 68, finding the transactions to be genuine.

  ---

1 ....5678910111213........ 53