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Showing 441 to 460 of 934 Records
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2013 (2) TMI 501
Addition u/s 68 – Advance from customers – Assessee is a dealer of tractors and spare parts manufactured by Mahindra Tractors – There was unsecured loan in the books – It was received through demand draft - six parties had advanced against purchase of tractors to be billed in the subsequent year - AO taxed the same u/s.68 – Held that:- Assessee had discharged the onus which lay upon him and it was not the case for the AO to make pertinent note of the disclosure in the balance sheet that the trade creditors were to be separately indicated other than sundry creditors and unsecured loans – Assessee was not to be burdened under the provisions of Section 68 in respect of the six parties who have been adjusted from their advance in the subsequent sales – Further two persons who could not appear before the AO, had adequately established their identity, genuineness and creditworthiness as per the notings of the authorities below.
Further a customer of the assessee cannot be summoned to justify the amount paid by him for the purchase of tractor as after having purchased the goods he had no relation whatsoever with the assessee. The AO therefore was only to consider the identity, genuineness and creditworthiness of the purported loan creditors on the basis of confirmations and income tax documents filed before him which were self sufficient – No addition should be made u/s 68 – In fafour of assessee.
Discount to customers - Merely because the receipt vouchers were made by the assessee cannot be a ground to make ad hoc disallowance out of the claim of discount – such ad hoc disallowance cannot be sustained for legal scrutiny, without identifying a particular customer who could not be said to have availed such discount – In any case, the discount for disallowance has to be identified on specific finding which is lacking in the instant case – In favour of assessee.
Donations made to “pooja” committees – In this respect impugned orders of the authorities was upheld – Against the assessee.
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2013 (2) TMI 500
Principles of mutuality – Whether member will include guests and relatives of the members and members of the affiliated clubs - Held that:- Principles of mutuality are available to the assessee on the aspect of treating the income derived by the assessee as exempt from tax. For the purpose that the term “member” includes guests and relatives of the members and members of the affiliated clubs etc – As decided in Bhubaneswar Club Limited [2006 (8) TMI 237 - ITAT CUTTACK ] concept of “member” is spacious enough to include guests and relatives of the members and members of affiliated clubs and if it is so, then in the case of the assessee the income derived by letting out its premises or by allowing the guests and relatives of the members and members of affiliated clubs will not be subjected to tax – The services offered to the guests, relatives and affiliated clubs cannot be treated as trading activity and cannot be tainted with commerciality – Against the revenue.
Interest on deposits and investments - Whether interest on deposits and investments will form part of the taxable income - Held that:- Interest earned by the assessee out of the bank deposits and investments made by the assessee out of out of surplus contributions made by its members, is also covered under the principles of mutuality and as such - Mutuality offers a tax exemption as long as its mutual association is retained and its income is not tainted by commerciality - As held in Chelmsford Club vs. CIT [2000 (3) TMI 4 - SUPREME COURT] principles of mutuality applies to interest income derived by the assessee-co-operative society from the deposits made by it out of the contributions made by the members of society – Therefore, Once the income is found to be covered by principle of mutuality, the same cannot be brought to tax even under the provisions of s. 115JB – In favour of assessee.
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2013 (2) TMI 499
Addition u/s 68 – Assessee received share application money from M/s. Deevee Commercial Ltd – AO treated the amount received as unaccounted money – Search & seizure operation conducted at Gouri Business Centre u/s. 132 and in course of such operation, statements of the six persons were recorded u/s. 132(4) – From the statements of the above six persons, it was clear that Deevee Commercial Ltd. is nothing but a paper company/ jamakharchi company which is used to channelise unaccounted money by way of share application money – Held that:- Addition u/s. 68 of the Act can be made where an assessee fails to prove identity of the creditor; his creditworthiness and genuineness of the transaction – As decided in Nemichand Kothari vs. CIT [2003 (9) TMI 62 - GAUHATI HIGH COURT ] where an assessee receives any money by account payee cheque from another person, then u/s. 106 of the Evidence Act the assessee can be said to have established the genuineness and creditworthiness of the payer.
In CIT vs. Value Capital Services Pvt. Ltd. [2008 (4) TMI 263 - DELHI HIGH COURT] it was held that there was additional burden on the department to show that even if the share-applicants did not have means to make investments, the investments made by them actually emanated from the coffers of the assessee – In this case no such evidence was brought to prove that the assessee’s unaccounted money routed through M/s. Deevee Commercial Ltd. or any cash was deposited in the share applicant’s bank account prior to issuance of cheque for share application.
Transaction was by account payee cheque. PAN details of the share applicant were provided ,therefore, the onus cast on the assessee u/s. 68 of the Act, was duly discharged – when all the ingredients contained in Sec. 68 of the Act are fulfilled, there is hardly any scope to invoke that section alleging introduction of unexplained fund by way of share application – As decided in CIT vs. M/s. Lovely Exports (P) Ltd[2008 (1) TMI 575 - SUPREME COURT OF INDIA] no addition on account of unexplained cash credit is warranted in the case of the assessee on the given facts and circumstances.
Further assessee filed a copy of Memorandum and Articles of Association of the assessee-company along with details of Demat Account - assessee purchased shares of M/s. Himadri Chemicals and M/s. Indo Tech Ltd. out of the share application money received from M/s. Deevee Commercial Ltd – In past the assessee has not been indulging in share trading business – AO was directed to treat the surplus as short-term capital gain instead of business income – Against the revenue.
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2013 (2) TMI 498
Addition u/s 68 – Assessee received share application money from M/s. Deevee Commercial Ltd – AO treated the amount received as unaccounted money – Search & seizure operation conducted at Gouri Business Centre u/s. 132 and in course of such operation, statements of the six persons were recorded u/s. 132(4) – From the statements of the above six persons, it was clear that Deevee Commercial Ltd. is nothing but a paper company/ jamakharchi company which is used to channelise unaccounted money by way of share application money – Held that:- Addition u/s. 68 of the Act can be made where an assessee fails to prove identity of the creditor; his creditworthiness and genuineness of the transaction – As decided in Nemichand Kothari vs. CIT [2003 (9) TMI 62 - GAUHATI HIGH COURT ] where an assessee receives any money by account payee cheque from another person, then u/s. 106 of the Evidence Act the assessee can be said to have established the genuineness and creditworthiness of the payer.
In CIT vs. Value Capital Services Pvt. Ltd. [2008 (4) TMI 263 - DELHI HIGH COURT] it was held that there was additional burden on the department to show that even if the share-applicants did not have means to make investments, the investments made by them actually emanated from the coffers of the assessee – In this case no such evidence was brought to prove that the assessee’s unaccounted money routed through M/s. Deevee Commercial Ltd. or any cash was deposited in the share applicant’s bank account prior to issuance of cheque for share application.
Transaction was by account payee cheque. PAN details of the share applicant were provided ,therefore, the onus cast on the assessee u/s. 68 of the Act, was duly discharged – when all the ingredients contained in Sec. 68 of the Act are fulfilled, there is hardly any scope to invoke that section alleging introduction of unexplained fund by way of share application – As decided in CIT vs. M/s. Lovely Exports (P) Ltd[2008 (1) TMI 575 - SUPREME COURT OF INDIA] no addition on account of unexplained cash credit is warranted in the case of the assessee on the given facts and circumstances.
Further assessee filed a copy of Memorandum and Articles of Association of the assessee-company along with details of Demat Account - assessee purchased shares of M/s. Himadri Chemicals and M/s. Indo Tech Ltd. out of the share application money received from M/s. Deevee Commercial Ltd – In past the assessee has not been indulging in share trading business – AO was directed to treat the surplus as short-term capital gain instead of business income – Against the revenue.
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2013 (2) TMI 497
Penalty u/s 271D and 271E – Whether receipt of share application money and repayment thereof will violate the provisions of section 269SS and 269T – Assessee has accepted monies on account of shares/ debentures of Rs.20,000/- or more and also repaid monies otherwise than by account payee cheques or account payee Bank Drafts – Held that:- As decided in the case of Rugmini Ram Ragav Spinners Pvt. Ltd.[ 2007 (7) TMI 237 - MADRAS HIGH COURT] provisions of section 269SS and 269T have application only in a limited way in respect of deposits or loans. When it is neither deposit nor loan the provisions of sections 269SS and 269T have no application at all. The Court further held that even if there is repayment by cash, it could not be said to attract the levy of penalty automatically under section 271E of the Act. The advances of share application money or repayments of such advances have not flowed from any undisclosed income of the assessee or the concerned persons.
In the present case also, the assessee was searched and these share application monies were never the subject matter of addition in the case of the assessee and accordingly the share application money and repayment of the same have not flowed from any undisclosed income of the assessee.
Further even the penalty under section 271D and 271E is not automatic there is bonafide belief to the effect that the receipt of advances against allotment of shares and repayment of share money would not be termed as loans or deposits, which would be sufficient to drop the penalty levied in the present case – In favour of assessee.
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2013 (2) TMI 496
Notification No.102/2007Cus – Transformation of the imported round logs into sawn timber by the importer before subsequent sale to domestic market – Whether it would vitiate the condition of subsequent sale prescribed in exemption notification No.102/2007Cus – Held that:- Importer were, under the law, obliged to reduce the length of the timber before its transport - Importer imported the goods after paying SCVD - At the time of its sale in the local market, they also paid local taxes - Before transportation of timber, they were required to reduce its size since the RTO rules did not permit transportation of logs longer that 40feet – Exemption would be available – Against the revenue.
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2013 (2) TMI 495
Modification of the scheme of amalgamation - scheme was sanctioned by this court under sections 391 and 394 of the Companies Act for amalgamation of ICCL into IMFA – After sanction of the scheme ICCL was dissolved without being wound up - petition under section 392 was filed to modify the scheme of arrangement and amalgamation - by confirming the reduction of share capital of IMFA, by cancellation of 3,49,466 equity shares of Rs. 10 each presently held by the erstwhile ICCL Shareholders Trust – Held that:- Modification is sought for cancellation of 3,49,466 equity shares of IMFA which have not been accepted by the small shareholders of erstwhile ICCL offered to them at a discount of 50 per cent. - This situation was not conceived at the time of framing the said scheme and, therefore, this situation has arisen during the working of the scheme.
No objection has been received from any person to the modification sought in this petition. The shareholders to whom the said shares were to be offered under the scheme have not accepted the same despite reminders as aforesaid. Further, since the consequent reduction of capital does not involve either the diminution of liability in respect of unpaid share capital or the payment to any shareholder of any paid-up share capital, the interest of creditors of IMFA are not affected. The modification sought in this petition is merely a small portion of the scheme and does not involve any substantial modification of the scheme – This does not affect the interest of any shareholder of either the erstwhile shareholder of ICCL or IMFA or creditor of IMFA adversely and there cannot be any possible objection to the same.
As decided in S. K. Gupta's case [1979(1)TMI 195 – SC], the company court has been conferred power of widest amplitude under section 392 not only to give direction but to make such modifications in the scheme as the court may consider necessary and the only limit on the power of the court being that such directions can be given and modifications can be made for the proper working of the scheme - petition is allowed and the scheme sanctioned modified to the extent that 3,45,466 equity shares -consequent reduction of share capital of IMFA to the above extent is confirmed – In favour of petitioner.
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2013 (2) TMI 494
Denial of Cenvat Credit - On dismantling of existing structure in the factory - Input service given under rule 2(l) of the CCR, 2004 - Held that:- Renovation involves dismantling of the existing structure on which a new structure can be erected - Cenvat Credit allowed in respect of dismantling of existing structure in factory - In favour of assessee
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2013 (2) TMI 493
Benefit of Notification No. 74/93-CE – Whether State Electricity Board is a Department of the State Government to avail benefit of exemption notification - Held that:- No, Following the decision in case of ASSTT. ENGINEER (CIVIL) (2008 (9) TMI 105 - CESTAT NEW DELHI) that notification lays down twin conditions, and unless both the conditions are satisfied exemption cannot be claimed. Admittedly, State Electricity Board is not a Department of the Government. Merely because 100% capital is owned by State Government does not make it a body at par with the State Government. Hence the PCC poles manufactured in the factories which admittedly belong to the Electricity Board does not qualify for exemption. That apart, the intended or actual user of the poles also being the Board itself, and not any Department of the State Government, the other condition are is not fulfilled. Therefore, the appellants are not entitled for the benefit of Notification No. 74/93-CE – In favour of revenue
Demand – Penalty u/s 11AC - Extended period of limitation – Suppression of facts – Intention to evade payment of duty – Held that:- Allegation of suppression with intent to evade payment of duty is not sustainable. Hence, demands invoking the extended period of limitation are not sustainable. The demands for the normal period of limitation as provided under Section 11A of the Central Excise Act are confirmed. Set aside the penalty – In favour of assessee
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2013 (2) TMI 492
Demand proceeding - Matter under litigation - Premature demand - Compounded levy scheme - Annual Capacity of Production - Held that:- Where original order fixing the duty liability itself is challenged and remanded by the Hon'ble CESTAT for reconsideration, it is evident that as of today there is no valid legal order fixing the duty liability during the material period. When there is no such valid legal order, the demands raised based on the impugned order issued by the Commissioner cannot sustain. The demands are premature. Therefore, keeping in view of the Hon'ble CESTAT's order, the demands raised in the above three show cause notices are not sustainable and are to be dropped. In favour of assessee
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2013 (2) TMI 491
Duty paying document - Stay of recovery - Denial of CENVAT credit in absence of documentary evidence - Of 'business support service' received from Input Service Distributor - Disallowance has been made in the absence of documentary evidence - Rule 9(g) of CCE 2004 - read with Rule 4A(2) of STR, 1994 - Rule 14 of Cenvat Credit Rules, 2004 - read with proviso to Section 11A of the Central Excise Act, 1944 - Held that:- Assessee have produced copies of these documents with a miscellaneous application. These documents include the ST-3 returns of the ISD, relevant challans and other documents related to distribution of services to the assessee by the ISD. Taking into all the said documents on record and, for the ends of justice, direct the adjudicating authority to reconsider the appellant's claim for CENVAT credit. Remand back to Commissioner
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2013 (2) TMI 490
Waiver of pre-deposit - Assessee is engaged in the manufacture of sugar and molasses - Bagasse, which is a residue, is cleared without payment of duty - Demand of duty in respect of the clearance of bagasse - Avail credit on common inputs and input service - Used in the manufacture of dutiable and exempted goods - Held that:- Following the decision in case of INDIAN POTASH LTD.(2012 (12) TMI 347 - CESTAT, NEW DELHI)that bagasse emerges in course of crushing of sugarcane. It may be noted that crushing of sugarcane is necessary to extract cane sugar juice which in turn is processed for production of sugar and molasses. Bagasse is the waste product left after the crushing of sugarcane. Therefore, by no stretch of imagination it can be held that the assessee possibly could have maintained separate account for the inputs for production of sugar and molasses (excisable item) and bagasse.
Moreover, neither the show cause notice nor the impugned order in appeal mentions as to which common Cenvat credit availed inputs have been used in manufacture of sugar and molasses (dutiable final products) and bagasse (exempted final product). Since bagasse emerges at sugarcane crushing stage, there is no possibility of any input-chemicals etc. having been used at that stage. In favour of assessee
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2013 (2) TMI 489
Waiver of pre-deposit - Assessee is engaged in the manufacture of sugar and molasses - Bagasse, which is a residue, is cleared without payment of duty - Demand of duty in respect of the clearance of bagasse - Avail credit on common inputs and input service - Used in the manufacture of dutiable and exempted goods - Held that:- Following the decision in case of INDIAN POTASH LTD. (2012 (12) TMI 347 - CESTAT, NEW DELHI) that bagasse emerges in course of crushing of sugarcane. It may be noted that crushing of sugarcane is necessary to extract cane sugar juice which in turn is processed for production of sugar and molasses. Bagasse is the waste product left after the crushing of sugarcane. Therefore, by no stretch of imagination it can be held that the assessee possibly could have maintained separate account for the inputs for production of sugar and molasses (excisable item) and bagasse.
Moreover, neither the show cause notice nor the impugned order in appeal mentions as to which common Cenvat credit availed inputs have been used in manufacture of sugar and molasses (dutiable final products) and bagasse (exempted final product). Since bagasse emerges at sugarcane crushing stage, there is no possibility of any input-chemicals etc. having been used at that stage. In favour of assessee
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2013 (2) TMI 488
Section 3(1) of the Tamil Nadu Tax on Entry of Motor Vehicles into Local Area Act, 1990 invoked to ask for further details including family details to verify whether the vehicle was used for the period of fifteen months as specified under the Act - Held that:- All that is required under the Act is proof of the registration of the vehicle and its use. Since the registration certificate itself gives the address proof, it is not clear as to why the authority asked for further documents which are not required under any provision of law. It is not the case of the respondent that the address shown in the registration certificate is bogus or that it is a fraudulent address. Thus it is totally irrelevant and there is no scope under section 3(1) of the Tamil Nadu Tax on Entry of Motor Vehicles into Local Area Act, 1990 to make such an enquiry on the family status of the petitioner
In such view of the matter the respective petitioner can be directed to submit the original registration certificate of the vehicles and establish their case before the authority.
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2013 (2) TMI 487
Direction to pre-deposit a sum of Rs. 1.50 crore out of confirmed demand of Rs. 7.48 crore for the purposes of hearing the appellant's appeal on merits - disallowance of entitlement to the benefit of Notification No. 1/2006-S.T. & also invoked the extended period of limitation by alleging suppression - Held that:- Tribunal in the impugned order has proceeded on the basis that no evidence with regard to sale of goods and materials used in providing services was led by the appellant. This ignores the evidence led before the Commissioner in adjudication proceedings.
As that the evidence of the value of goods supplied was on record and the Tribunal has not taken even a prima facie view on the same. The works contract/job work may not separately provide for sale of the goods but may be a composite amount for doing the work. Therefore, the supply value of goods has to be understood in the context of the work contract/job work contract to determine whether it included in it also the sale of goods. Besides, it is the contention of the appellant that the demands are barred by limitation as well as the duty amount has been wrongly computed in the show-cause notice and if the correct rate for Works Contract Services under the composition scheme at 4% is applied the appellant would be entitled to refund of service tax - set aside the impugned order and remand the matter to the Tribunal to consider afresh the stay application filed by the appellant after hearing the parties.
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2013 (2) TMI 486
Cargo Handling Services & Airport Services - short payment of Service tax for the period 16.08.2002 to 9.9.2004 and from 10.09.2004 and onwards respectively - CA for the appellant submits that they had submitted a reconciliation statement reconciling the difference in the figures reflected in the Service Tax-3 returns and in the Balance sheet as the Balance sheet is prepared on “accrual basis” whereas the liability to pay Service Tax is on “cash basis” therefore, they are bound to be difference between these two figures - Held that:- The adjudicating authority has not rebutted the claims of the appellant after examining the figures furnished by them and the reconciliation statement submitted by them. Thus, the ground for rejection of the claim made by the appellant is flimsy. Nothing prevented the adjudicating authority to call for relevant records of the appellant and satisfy himself as to the correctness and accuracy of the figures submitted by the appellant, in case he had any reason to doubt the veracity of the appellant's claim. Therefore the matter has to go back to the adjudicating authority for consideration afresh by keeping in mind the fact that while the balance-sheet figures are on accrual basis, the liability to discharge Service Tax is on cash basis.
The reconciliation statement provided by the appellant shall be examined carefully in detail and if need be by calling for the relevant records from which the figures have been taken - in favour of assessee by way of remand.
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2013 (2) TMI 485
Container movement charges and Local transport charges – Whether Service tax on container movement charges and local transport charges is leviable under CHA service and freight charges is under GTA service –Appellant is a registered service provider of “Custom House Agent” service - not paid Service tax on Container movement charges and Local Transport charges for the period from 18-4-2006 to 31-3-2008 – Held that:- There is no allegation in the show cause notice seeking to demand Service tax under “Custom House Agent” service or “Goods transport Agency” service. However the demand had been confirmed under those heads without invoking them in the SCN.
Appellant also arranges transportation of goods belong to the exporter/importer by engaging GTA - Consignment note issued by GTA clearly shows the importer or exporter as the consignor – Consignment note also mentions that the Service tax is to be paid by the consignor or the consignee. Even though the appellant pays freight charges to the GTA, separate invoice is raised on the clients for the transportation – In this invoice, it is clearly mentioned that the Service tax on the transportation is payable by the importer or exporter and the appellant is not liable to pay Service tax thereon – Consignor or consignee has discharged appropriate Service tax – Appellant is not liable to pay Service tax on freight charges paid by him and reimbursed by their clients under GTA services as it would result in double taxation.
Further As decided in Lee & Muir Head Pvt. Ltd. v. Commissioner of S.T.[ 2008 (10) TMI 131 - CESTAT, BANGALORE ] All activities of CHA other than Custom House Agency cannot be taxed under CHA service, applicant are not liable to pay Service tax on container movement charges and transportation charges under CHA services and on freight charges under GTA services. When the services of container movement charges which is nothing but transportation of containers from the CFS to the port is not includible in the value of Custom House Agent Services – Order set aside – Appeal allowed – In favour of assessee.
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2013 (2) TMI 484
Maintenance of software – Applicability before 1.6.2007 - Notification No. 20/2003 and Notification No. 7/2004 – Whether the appellant is liable to pay Service tax on maintenance of software during 9-7-2004 to 30-8-2005 under the category of “Maintenance and Repair Service” – Appellant realized consideration towards maintenance of Software from their customers for the period 9-7-2004 to 30-8-2005 – Held that:- Underlying principle in Kasturi & Sons Ltd. v. UOI[2011 (2) TMI 76 - HIGH COURT OF MADRAS] is that Service tax cannot be levied by issuing circular. Circular cannot override the provision of Finance Act, 1994. As per the decision in this case, Service tax is not liable to be taxed by way of Circulars without enabling provisions under Finance Act, 1994. Accordingly appellant is not liable to pay Service tax prior to the period of 1-6-2007 – In favour of assessee.
Cenvat credit on the Service tax paid towards telephone and medical insurance of employees – In Ultratech Cement Ltd [2010 (10) TMI 13 - BOMBAY HIGH COURT ] it has been held that the assessee is entitled for input service credit of the services, which are availed in course of their business and manufacturing activity. Since appellant had utilized both the disputed services in relation to their business activity and in the course of their business activity - Appellant is entitled to the credit of input service availed by them on the Service tax paid towards telephone and medical insurance of the employees – In favour of assessee.
Further appellants genuinely believed that software maintenance did not attract Service tax during the period from 9-7-2004 to 30-8-2005. - started paying Service tax w.e.f. 1-9-2005 even when the maintenance of software was not taxable - Therefore no suppression of facts with an intention to evade payment of Service tax - Entire demand for the maintenance of software and for wrong availment of ineligible credit is not sustainable as the ingredients to invoke the extended period under Section 73(1) of the Finance Act are absent in the instant case – set aside the order – Appeal allowed.
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2013 (2) TMI 483
Claim of deduction u/s 10B rejected - CIT(A) held that the assessee is not a manufacturer - assessee submitts that it manufactures eatables from raw material and that it is separate and distinct product known in the market and is covered by definition of Section 2(29BA) - Assessee is a 100% EOU engaged in the business of manufacturing and export of various food products like Paratha, Samosa, Dholka, Idli, vada etc. - Held that:- As decided in Cit Versus Pankaj Jain Prop. Aagam Food Industries [2005 (12) TMI 525 - HIGH COURT OF JAMMU AND KASHMIR] the activity of production of the foodstuff is a manufacturing activity (except for the items outsourced from other parties).
Manufacturing of chappati, parath, samosa, dhokla constitutes manufacturing activity as but as in the case of "mathia" and "chorafali" the assessee does repackaging. Further from the details of sales submitted by the assessee it is find that the sales includes sale of "coriander leaves", "chorafali", "custard apple pulp", "magaj ladu", "IQF shredded coconut" and "misc. items" from which it appears that the aforesaid items are sourced ready made and not manufactured in the factory of assessee. The total sales of such items as per the summary is Rs. 85,68,942/-. Thus the aforesaid items which have been outsourced and not manufactured in the premises of the assessee but have only been repackaged with some other connected activities at the assessee's premises cannot be considered to be a manufacturing activity by the assessee.
The profit for the year includes the profit on sale on outsourced items & rom the profits, the break-up of profit earned from outsourced items is not available therefore the assessee shall not be entitled to deduction under Section 10B on profit earned on sale on outsourced items - Matter of quantification of the quantum of profits earned on out-sourced and self manufactured items needs verification, therefore the matter be sent back to the file of the AO for the limited purpose to determine the profits of self manufactured items and that of outsourced items. The AO shall compute the profits eligible for deduction u/s.10B and allow the deduction under Section 10B in proportion of the turnover of self-manufactured and outsourced items - partly in favour of assessee.
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2013 (2) TMI 482
Registration u/s.12AA(3) cancelled - activities of the Trust are neither genuine nor are being carried out in accordance with the objects of the Trust - Non filing of return of income u/s 139 - survey action u/s.133A - assessee is engaged in the business of running of educational institutions - as per AO assessee is required to be assessed like any other assessee and is not entitled to the benefit of section 11 and 12 because it is hit by section 13 - Relief given by the CIT(A) by holding that 50% of the Advertisement expenses as expenditure towards objects of the Trust - Held that:- Considering the fact that similar expenses were allowed in the past, no part of the advertisement expenses should have been disallowed especially when there is no dispute about the genuineness of such expenditure. Therefore, there is no violation of provisions of section 13(1)(c) of the I.T. Act - in favour of assessee.
Disallowance of expenditure on Mercedez car and depreciation there on by holding the same to be in violation of section 13(1)(c) - Held that:- When the AO has allowed the expenditure on account of various other cars owned by the trust, therefore, merely because the assessee has purchased the Mercedez car to be used by the VVIP guests the AO should not have disallowed the expenditure and depreciation on such motor car especially when the AO in the past has not disallowed any expenditure on the Mercedez car owned by the trust. Therefore, in view of rule of consistency and in absence of any adverse material before the AO to take a contrary view no justification on the part of the AO and CIT(A) to hold that there is violation of provisions of section 13(1)(c) - in favour of assessee.
Advancing interest free loan by the assessee trust to D.Y. Patil Education Society, a related concern - whether will attract provisions of section 13(1)(d) - Held that:- As decided in the case of Alarippu [2000 (5) TMI 30 - DELHI HIGH COURT] that a loan given by one charitable trust to another with similar object cannot be treated as an investment but an application of income. The words "investment", "deposit", and "loan" have different meanings. Also see Sarladevi Sarabhai Trust [1988 (3) TMI 53 - GUJARAT HIGH COURT] wherein held that if the trust makes an investment in the course of attaining its objectives, that investment is an application of income and it cannot be considered to be violative of section 13(1)(d) r.w.s.11(5) - in favour of assessee.
Disallowance of remuneration paid to relatives of the trustees - CIT(A) deleted the addition - Held that:- Nowhere in the assessment order the AO has brought on record how much should have been the reasonable remuneration to the trustees and their relatives and what is the amount paid by similarly placed organisations to their employees. The submission of assessee that in the past also such type of payments were made and it was accepted by the department in scrutiny assessments for A.Y. 2000-01 to 2002-03 and no disallowance has been made could not be controverted by the DR. Under these circumstances order passed by the CIT(A) giving reasons for such deletion and in absence of any contrary material brought to our notice against the findings given by the CIT(A), no infirmity in the order found deleting the disallowance made by the AO u/s.40(A)(2)(b) of the I.T. Act - no violation of provisions of section 13(1)(c) proved - in favour of assessee.
Disallowance of Telephone and Mobile expenses - CIT(A) deleted the addition - Held that:- No such disallowance was made in the scrutiny assessments for A.Ys. 2000-01 to 2002-03 and in absence of any contrary material brought no infirmity in the order of the CIT(A) deleting the disallowance on account of Telephone and Mobile expenses - in favour of assessee.
Disallowance of maintenance expenses of flats at Gulmohar Society exclusively used by the founder of the trust violating the provisions of section 13(1)(c) - Held that:- AO did not give any notice to the appellant of his intention to disallow guest house expenses, substantively, on the basis of the statement of the caretaker, during the course of assessment proceedings, and, therefore, the appellant did not have any occasion or opportunity to file any evidence in support of its claim of guest house expenses. In fact, the appellant was not in the possession of the statement on the basis of which the AO was to make this addition. Under the circumstances, the appellant was prevented by sufficient cause from producing these evidences before the A0 during the course of assessment proceeding and therefore, admit them. These affidavits were sent to the AO for his comments on their impact on the assessment of the appellant. The AO has not given any specific comment on these affidavits. He has simply stated that these affidavits represent afterthought. It is an undisputed fact that disallowance of guest house expenses was made because of the fact that AO came to the conclusion that one particular portion of the guest house (flat Nos.G1 and G2) was used by trustee, exclusively. This conclusion was arrived at, substantively, on the basis of the statement of the caretaker of the guest house but as discussed above disallowance of guest house expenses cannot be made on the basis of statement of the caretaker on which reliance was placed by the AO - this disallowance of guest house expenses was not justified and is, therefore, directed to be deleted - in favour of assessee.
Employee’s Contribution - whether not deposited within due date under the Act or deposited before the due date of filing of the return is an allowable expenditure - Held that:- CIT(A) relying on various decisions directed the AO to delete the disallowance wherein the payments are made prior to the due date of filing of the return taking the consistent view that Employee’s Contribution to P.F. & ESIC, if paid before the due date of filing of the return, is an allowable deduction - in favour of assessee.
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9911796707
