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Showing 201 to 220 of 934 Records
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2013 (2) TMI 742
Whether Tribunal was right in holding that the brought forward unabsorbed depreciation and losses of the unit,the income of which is not eligible for deduction u/s/10B of the Act cannot be set off against the current profit of the eligible unit for computing the deduction u/s.10B of the Act? - Decided in favour of assessee as relying on (CIT v. Black and Veatch Consulting Pvt. Ltd.( 2012 (4) TMI 450 - BOMBAY HIGH COURT )
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2013 (2) TMI 741
Issues involved:
Challenging impugned order of Ld. CIT(A)-I, Nashik for assessment year 2004-05 u/s 148 of IT Act, 1961. Additional ground raised regarding absence of notice u/s 143(2) of Income Tax Act, 1961.
Issue 1: Validity of assessment order u/s 148:
Assessee challenged impugned assessment order as bad in law due to absence of conditions precedent for notice u/s 148. Contention that assessment is null, void ab initio, and without jurisdiction. Grounds raised regarding loan given to VISEA Trust Malad, Mumbai being "Income-chargeable to tax" under section 147. CIT(A) erred in holding loan as income of appellant under section 11(3)(a) despite evidences. Challenge to CIT(A) finding on interest u/s 234 B as mandatory when appellant income not taxable u/s 208.
Issue 2: Additional Ground - Notice u/s 143(2):
Assessee filed additional ground challenging assessment order u/s 143(3) r.w.s. 147 for absence of notice u/s 143(2). Legal ground raised for first time, citing decision in ACIT vs. Hotel Blue Moon. Tribunal admitted additional ground as purely legal, following precedent set by Supreme Court in National Thermal Power Company Ltd. case.
Judgment Summary:
The appeal was filed challenging the assessment order for the assessment year 2004-05 u/s 148 of the IT Act, 1961. The appellant raised multiple grounds questioning the validity of the assessment order, including the absence of conditions for notice u/s 148 and the treatment of a loan as income chargeable to tax. Additionally, an additional ground was raised regarding the absence of notice u/s 143(2) of the Income Tax Act, 1961. The Tribunal admitted the additional ground as a purely legal issue, following the precedent set by the Supreme Court. The Tribunal set aside the additional ground for further consideration by the CIT(A) and allowed the appeal for statistical purposes.
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2013 (2) TMI 740
Issues involved: Appeal by revenue for assessment year 2009-10 regarding deletion of unaccounted cash receipts u/s 71,67,000/- found during search action.
Summary:
The High Court of Bombay considered an appeal by the revenue regarding the assessment year 2009-10, focusing on the deletion of unaccounted cash receipts amounting to u/s 71,67,000/- found during a search action. The main question of law was whether the Tribunal was justified in accepting the explanation of the assessee that the cash receipts were booking advances collected from customers and part of the sale consideration declared by the assessee at the time of sale of flats post the search. The Tribunal upheld the finding that the cash receipt was indeed part of the sale consideration for flats sold by the assessee and should be taxed in the year of recording the sale. The revenue contended that the cash amount should be taxed in the year of receipt, not the year of flat sale. The Tribunal noted that the cash entries were related to the sale of flats and formed part of the consideration, with details of buyers and cash receipts found during the search. Based on these undisputed facts, the Tribunal dismissed the revenue's appeal.
The High Court, recognizing the Tribunal's decision as based on a concurrent finding of fact, declined to entertain the proposed question of law. Consequently, the appeal was dismissed with no order as to costs.
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2013 (2) TMI 739
Disallowance of expenses relating to exempted dividend income as per the method of computation shown by the ld. CIT(A) - Held that:- We see no reasons to disturb the fair and judicious stand of the CIT(Appeals). Once it is found that an expense is specifically relatable to a taxable income, as is the undisputed position in this case, no portion of such an expense can be disallowed u/s. 14A. The allocation of general expenses vis-à-vis tax exempt income and taxable income can only be made in respect of expenditure which cannot either be wholly allocated to taxable income, then or which can not be wholly allocated to tax exempt income; the allocation can be made, even on the basis of formula set out in Rule 6D(iii), in respect of such expenses which do not fall any of these categories. There is no infirmity in the stand of the CIT(Appeals). We approve the same.
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2013 (2) TMI 738
Issues involved: Appeal challenging the judgment of Income Tax Appellate Tribunal regarding the addition of Rs. 25,97,902 under section 68 of the Income Tax Act, 1961.
Issue 1: The Tribunal's interpretation of section 68 to confirm the addition of Rs. 25,97,902.
The Assessing Officer noticed total deposits of Rs. 25,97,902 in the appellant's NRE account. The appellant claimed the amounts were loans from Shri Yakub Patel transferred from the U.K. under Habib Bank's instructions. However, the Assessing Officer did not accept this explanation, stating the appellant failed to justify the creditworthiness of the lender and the genuineness of the transaction. The CIT(A) and Tribunal upheld this view, emphasizing the lack of evidence regarding the source and creditworthiness of the deposits.
Issue 2: Disregarding relevant factors and confirming the addition under section 68.
The Tribunal found that the appellant did not furnish details of Shri Yakub Patel's bank account from which the amounts were transferred, nor establish Shri Yakub Patel's creditworthiness. The Tribunal cited the Supreme Court's decision in CIT v. P Mohankala, stating that when the explanation about the nature and source of credited sums is unsatisfactory, it can be treated as income. The appellant's claim of receiving the amounts as a loan from his brother was not substantiated.
Issue 3: Sustainability of the addition under section 68 based on evidence.
The revenue authorities and Tribunal concluded that the appellant failed to provide a satisfactory explanation for the sizable credits in his account, leading to the addition of Rs. 25,97,902 as unexplained cash credit. The Tribunal relied on the principle that when the assessee's explanation is unsatisfactory, there is prima facie evidence of receipt of money, shifting the burden to the assessee to rebut it. The appellant's assertion of receiving the amounts as a loan without further details was not deemed credible.
Issue 4: Burden of proof and dismissal of the tax appeal.
The Tribunal and revenue authorities emphasized the appellant's failure to prove the genuineness of the cash credits and the source of the deposited amount. Despite the appellant's claim of receiving the funds as a loan from his brother, the lack of supporting evidence led to the dismissal of the tax appeal. The decision highlighted the importance of providing credible explanations and evidence in such cases.
This judgment underscores the significance of substantiating claims with concrete evidence and satisfying the burden of proof in tax matters, particularly concerning unexplained cash credits under section 68 of the Income Tax Act, 1961.
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2013 (2) TMI 737
Issues involved: Disallowance of expenditure claimed by the assessee u/s 143(3) of the Income-tax Act, 1961.
Summary:
Issue 1: Disallowance of Expenditure
The assessee, an Apex Cooperative bank, claimed expenditure towards various funds created from surplus profits. The AO disallowed the expenditure, stating that the contributions to funds were not wholly and exclusively for the banking business, as per the bank's Bye-laws. The CIT(A) upheld the disallowance, considering the contributions as capital in nature. The assessee appealed, arguing that contributions were statutory obligations covered by relevant case law. The ITAT held that the contribution to the Co-operative Education Fund was justified, following the jurisdictional High Court's decision. For other contributions, the matter was remitted to the CIT(A) for further consideration, as the CIT(A) failed to address the assessee's contentions.
This judgment dealt with the disallowance of expenditure claimed by an Apex Cooperative bank for various funds created from surplus profits. The AO disallowed the expenditure, stating that the contributions were not wholly and exclusively for the banking business as per the bank's Bye-laws. The CIT(A) upheld the disallowance, considering the contributions as capital in nature. The ITAT allowed the appeal for the contribution to the Co-operative Education Fund based on relevant case law. However, for other contributions, the ITAT remitted the issue back to the CIT(A) for reconsideration, as the CIT(A) did not address the assessee's contentions adequately.
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2013 (2) TMI 736
Whether Preliminary objection to the maintainability of the Special leave petition be allowed - HELD THAT:- The law seems to be well settled that in the absence of a challenge to the main judgment, the special leave petition filed challenging only the subsequent order rejecting the review petition, would not be maintainable.In the present case, the preliminary objection has been raised at the threshold.Apex court accepted the preliminary objection raised.
The special leave petition is, accordingly, dismissed. Since the special leave petition has been dismissed, no orders are required to be passed on the application for impleadment as party respondent.
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2013 (2) TMI 735
The Bombay High Court admitted the case for consideration on the substantial question of law regarding the deductibility of State taxes paid by the assessee in jurisdictions other than India as a business expenditure.
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2013 (2) TMI 734
Penalty levied under s. 271AAA - Held that:- Assessee had filed a revised return before completing the assessment. When that is the case, the first return filed by the assessee is non est. The only valid return is the revised return filed by the assessee. In that return, the amount admitted by the assessee at the time of search was offered for taxation. The assessee has paid the tax; he has paid the interest. He has not preferred any quantum appeal. He has also explained about the business and stated that the jewellery was acquired over a period of time. When all the pieces are put together, we find that the CIT(A) is justified in holding that there is no ground to levy penalty in the present case under s. 271AAA. Accordingly, the order passed by the CIT(A) is upheld.
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2013 (2) TMI 733
Denial of deduction under Section 10A as the assessee claimed deduction under Section 10B instead of under Section 10A - Held that:- The provisions of Sections 10A and 10B are similar. The formats of Form No.56F & 56G are same, therefore, this was a technical defect, if any and only on account of technicality and venial defect, the benefit allowable to the assessee should not have disallowed by the AO.
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2013 (2) TMI 732
Issues Involved:
1. Distinction between illegal and irregular appointments for purposes of regularisation.
2. Validity of termination of petitioners' appointments.
3. Requirement of procedural compliance and natural justice in termination.
4. Applicability of precedents and interpretation of relevant judgments.
Summary:
1. Distinction between Illegal and Irregular Appointments:
The seminal reference was whether (2010) 9 SCC 247 (State of Karnataka v. M. L. Kesari) departs from the distinction between illegal and irregular appointments as held in (2006) 4 SCC 1 (State of Karnataka v. Uma Devi) for purposes of regularisation. The court concluded that there was no conflict between Uma Devi and M.L. Kesari. The former's distinction between illegal and irregular appointments was reaffirmed in the latter. The court emphasized that an appointment made without following the regular procedure in consonance with Article 14 of the Constitution is illegal and cannot be regularised.
2. Validity of Termination of Petitioners' Appointments:
The petitioners were appointed on class IV posts by the Civil Surgeon cum Chief Medical Officer and terminated on the grounds of illegal appointments. The court found that their initial appointments were not preceded by any advertisement or competitive merit selection, and there was no evidence that the appointments were made against sanctioned posts. The court held that the appointments were backdoor entries and thus illegal.
3. Requirement of Procedural Compliance and Natural Justice in Termination:
The petitioners contended that their termination after 11 years of service was unjustified and that they were not given a fair opportunity to defend themselves. The court found that show cause notices were issued to the petitioners, which they did not reply to, and thus there was no violation of natural justice. The court emphasized that natural justice is not an abstract principle and its applicability depends on the facts of each case.
4. Applicability of Precedents and Interpretation of Relevant Judgments:
The court referred to various precedents, including (Uma Devi), (M.L. Kesari), and others, to conclude that illegal appointments cannot be regularised. The court noted that the observations in paragraph 53 of Uma Devi must be read in the context of the entire judgment and cannot be interpreted to allow regularisation of appointments made in violation of Article 14. The court also highlighted the duty of litigants to present correct facts and the consequences of distorting or misrepresenting facts.
Conclusion:
The court dismissed the writ petitions, holding that the petitioners' appointments were illegal and void ab-initio, made contrary to Article 14 without competitive selection, and thus could not be regularised. The court directed the State Government to take appropriate action against the officials involved in the illegal appointments and submit a report within eight weeks.
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2013 (2) TMI 731
Addition on interest on NPA Account in as much as such interest has not accrued - Held that:- The appellant is making the provision of interest as per the guidelines issued by the R.B.I. However, same has not been credited in the p&l account as it was notional had not received actually by it. Section 43 is also not applicable as assessee has not credited in the p&l account but shown in the assets and liability side in the balance sheet directly and also not received actually. Thus, we have considered view that the CIT(A) was not justifying in confirming the addition. Accordingly, the assessee’s appeal is allowed.
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2013 (2) TMI 730
Revision of orders prejudicial to revenue u/s 263 - rejection the books of account - whether GP rate as determined by AO is correct or not - Held that:- The assessee firm has not maintained stock register - assessee has not disclosed any value of material at the site and work-in-progress at the end of the year - considering these defects the AO rejected the books and decided to apply GP rate of 9.5 per cent subject to deduction of the interest to the third party, depreciation, interest on capital of the partners and partner's salary - CIT also suggested that the books of account were not reliable - It is well settled that once the books of account are rejected the only alternative to determine the income is application of profit rate - Decided in favor of Revenue
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2013 (2) TMI 729
Issues involved: Service tax demand on renting of immovable property and supply of tangible goods for use, entitlement to Cenvat credit, payment of VAT liability on tangible goods supplied.
Service tax demand on renting of immovable property: The appellant, a hospitality company, was providing renting services and supplying tangible goods to another company. The department issued a show cause notice for service tax demands totaling &8377; 65,97,432/- for renting services and &8377; 25,66,027/- for tangible goods supply. The appellant contested the notice, claiming payment made in cash and through Cenvat credit account. The adjudicating authority confirmed the demands due to lack of valid documents for Cenvat credit and VAT payment on tangible goods.
Entitlement to Cenvat credit: The appellant argued that they were entitled to Cenvat credit on service tax paid for rented premises as they had leased the premises from parties who charged service tax. They also claimed to have discharged VAT liability on tangible goods supplied. However, no relevant documents were produced before the adjudicating authority. The matter was to be reconsidered based on submitted evidence.
Payment of VAT liability on tangible goods supplied: The appellant contended that they had paid VAT on tangible goods supplied, thus not liable for service tax. Lack of evidence before the adjudicating authority led to the matter being remanded for fresh consideration. The appellant was directed to submit all relevant evidences within 30 days for the adjudicating authority's review, failure to do so would result in a decision based on available records.
Conclusion: The appeal was allowed by way of remand for further review and decision based on submitted evidences regarding entitlement to Cenvat credit and payment of service tax on tangible goods supplied.
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2013 (2) TMI 728
Disallowance of interest payment in respect of loans utilized for acquiring shares - Held that:- held that the investments made on the ground of commercial expediency has to be treated as a business investment irrespective of the fact that the income arising out of such investment will be exempted from taxation - Hon’ble Supreme Court in the case of SA Builders Ltd. vs. CIT - Decided in favor of assessee
Disallowance of ₹ 22,98,746/- being 2% of the dividend income earned by the assessee - as expenditure attributable to dividend income - Held that:- top management of the company are required to decide about the investments - some management expenditure has to be attributed towards earning of tax-free dividend income - Here the investments were so old - the scope of expenditure also would be little lessor - A lumpsum amount of ₹ 10 lakhs is disallowed - Partly in favor of assessee
Disallowance being interest paid on borrowings as relating to interest free advances - Held that:- Funds are utilized for the assessee’s own business - These are reflected in the books of account of the assessee - Decided in favor of assessee
Applicability os Sec 14A - Payment of intrest - Held that:- When the shares are sold, the assessee will be liable for capital gains taxation and, therefore, the expenditure incurred in respect of borrowings cannot be classified purely in relation to income which does not form part of the total income - expenditure was incurred essentially for the purpose of the business - Decided in favor of assessee
Disallowance of interest payment on loans utilized for acquiring shares of the assesse’s subsidiary - Held that:- As discussed above disallowance is not justified - Decided in favor of assessee
Disallowance of general and administrative expenses pertaining to dividend income - Held that:-As per the reasons stated in order in ITA No.638/Mds/2012 the disallowance and is confirmed
Addition in the computation of income under sec.115JB Held that:- The disallowance cannot change the frame of profit and loss account prepared by the assessee under the provisions of the Companies Act, 1956 - addition made by the AO for the purpose of book profit under sec.115JB is deleted.
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2013 (2) TMI 727
Issues Involved:
1. Disallowance of discount expenses.
2. Disallowance of car depreciation.
Summary:
1. Disallowance of Discount Expenses:
The assessee, a private limited company engaged in trading vehicle spares, claimed a discount expense of Rs. 5,28,920/-. The AO disallowed 50% of this amount (Rs. 2,64,460/-) citing lack of confirmation and excess discount over TELCO circulars, a decision upheld by CIT(A). The Tribunal noted that similar issues in previous years were restored to the AO for verification. Following the precedent, the Tribunal restored the issue to the AO for necessary verification and adjudication, allowing the ground for statistical purposes.
2. Disallowance of Car Depreciation:
The AO disallowed depreciation of Rs. 1,15,652/- on a car registered in the director's name, arguing it was not owned by the assessee and lacked evidence of business use. CIT(A) upheld this disallowance, referencing relevant case laws. The Tribunal, however, noted that the car was purchased with company funds and used for business, aligning with the decision in *Studio-3 Architect Pvt Ltd*. It held that non-registration under the Motor Vehicles Act does not preclude depreciation claims if the vehicle is owned and used by the company. Thus, the Tribunal directed the deletion of the disallowance, allowing this ground of the appeal.
Conclusion:
The appeal was partly allowed, with the issue of discount expenses remanded for further verification and the disallowance of car depreciation overturned.
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2013 (2) TMI 726
Transfer Pricing Adjustments - Computation of risk adjustment under Rule 10B(4) - Selection of comparables - Determination of Operating Margin - Assessee is working on cost plus basis as a captive service provider to its AE, therefore, it is a risk-free entity. As per the him, the basic economic formula is, take more risk, more profit would be there. Thus, an adjustment on assuming risk should be given. - HELD THAT:- the main section uses the expression "shall" which make it mandatory to first use the current year data. If certain other circumstances reveals an influence on the determination of transfer pricing in relation to the transaction being compared than other datas for period not more than two years prior to such financial year may be used.
The assessee has already assumed critical risk and it is a not a risk free entity. He failed to disclose nature of risks which are to be adjusted. Also, the quantification of the risk adjustment has not been made. Thus, no risk adjustment is to be given to the assessee. - we do not find any error in the appreciation of the facts and circumstances made by the learned DRP on the inclusion of ICRA Online in the comparable list.
Exchange fluctuation gain - Capital Receipt or Revenue Receipt? - Assessee had raised external borrowings i.e. ECB loan. On account of fluctuation gain, it received a some amount. The assessee contended that it is a capital receipt, whereas according to the learned AO it is a revenue receipt. - HELD THAT:- Loan was utilized not for the purpose of purchasing capital assets but for other purposes also. If a loss suffered on account of foreign exchange fluctuation is allowable as a revenue expenditure, as per the decision of the Hon'ble Supreme Court in the case of CIT VERSUS M/S WOODWARD GOVERNOR INDIA P. LTD. & M/S HONDA SIEL POWER PRODUCTS LTD. [2009 (4) TMI 4 - SUPREME COURT], then the gain on such fluctuation would also be revenue receipt. Thus treated as revenue receipt.
Decision against assesee.
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2013 (2) TMI 725
The High Court of Bombay dismissed the Revenue's appeal for assessment year 1998-1999, as the issue was already decided in a previous case. The appeal was dismissed with no order as to costs.
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2013 (2) TMI 724
CENVAT credit - M.S. Rod, Sheets, M.S. Channel, M.S. Plate, Flats etc. - denial on the ground that the items are not covered under the definition of “capital goods” in the CCR, 2004 - Held that: - there is no factual finding as to the nature of use of MS steel rods, MS channel and steel plates and the matter has to be reconsidered by the Tribunal in the Light of decision or the Honourable Supreme Court in Commissioner of Central Excise, Jaipur v. Rajasthan Spinning and Weaving Mill. Ltd. [2010 (7) TMI 12 - SUPREME COURT OF INDIA] - the Tribunal has to give finding with regard to the materials used by the appellant and whether the appellant is eligible to avail Cenvat credit - appeal allowed by way of remand.
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2013 (2) TMI 723
Cessation of liability of sundry creditors, invoking provisions of section 41(1) - Held that:- It is only after the completion of the arguments that the assessee has come with a new fact that he has been regularly repaying the loan amount to the creditors as detailed in the list. This type of explanation given by the assessee at this stage seems to be suspicious. However, the interest of justice demands that this explanation, though suspicious, is required to be verified. If the assessee has really repaid the amount to the creditors then it will be injustice to him, if the amount is added to his income. Under such circumstances, we remand this case back to the file of the Assessing Officer for fresh assessment in accordance with law and with direction to scrutinize, verify and make necessary investigations regarding the genuineness of the assessee’s claim of repayment to the sundry creditors
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