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Showing 141 to 160 of 871 Records
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2012 (5) TMI 736
Issues involved: Determination of annual letting value of property u/s 24 and attribution of interest expenses to earning dividend income u/s 36(1)(iii).
Issue 1 - Determination of annual letting value of property u/s 24:
The appeal concerns the addition made by the AO and sustained by the CIT(A) regarding the annual letting value of the assessee's property at 8.5% of the total investment. The AO added notional interest on interest-free security deposit received by the assessee to the actual rent declared, resulting in a higher income chargeable to tax under "Income from house property." The CIT(A) disagreed with the AO's approach, stating that standard rent under the Bombay Rent Control Act should be considered. The CIT(A) determined the standard rent at 8.5% of the total investment in the property, directing the AO to use this figure as the annual letting value. The Tribunal, following a previous decision in the assessee's case for another assessment year, held that the annual letting value could not exceed the municipal ratable value. Therefore, the municipal ratable value was taken as the annual letting value for tax computation purposes.
Issue 2 - Attribution of interest expenses to earning dividend income u/s 36(1)(iii):
The appeal also addressed the attribution of proportionate interest expenses to earning dividend income, with the AO allowing exemption only on the net dividend amount. The assessee claimed the interest as legitimate business expenses u/s 36(1)(iii). The Tribunal, citing a previous decision for another assessment year, upheld the AO's decision to allocate interest expenses on a prorate basis towards dividend income, allowing exemption only on the net dividend income. The Tribunal reasoned that interest expenditure on funds used for investment in shares for earning exempt dividend income could not be allowed as a business expenditure.
In conclusion, the Tribunal partly allowed the assessee's appeal, determining the annual letting value based on municipal ratable value and upholding the allocation of interest expenses towards dividend income.
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2012 (5) TMI 735
Issues involved:
The issues involved in the judgment are related to the withdrawal of appeals by the assessee companies under Article 27 of the Double Tax Avoidance Agreement between India and the United States.
Withdrawal of Appeals:
The assessee companies had filed separate letters under Article 27 of the Double Tax Avoidance Agreement between India and the United States regarding adjustments made in the assessment orders. Subsequently, the competent authorities of both countries resolved the cases, and closing letters were issued to the assessees by the United States competent authority. The learned counsel for the assessee informed the tribunal that the appeals are to be withdrawn as the assessee is no longer interested in prosecuting them. The tribunal considered the submissions and allowed the assessees to withdraw their appeals, noting that there were no genuine reasons presented by the Revenue to justify continuing the appeals. The tribunal emphasized that if the Department was aggrieved by the lower authorities' orders, they could have filed cross objections or appropriate petitions, but no such material was available on record. Therefore, the appeals were dismissed as withdrawn.
Competency to Withdraw Appeals:
The learned CIT-DR raised an objection stating that the Bench D.R. handling the appeals was not competent to assist in the withdrawal process. However, the tribunal opined that a person competent to file an appeal should also have the liberty to withdraw it, unless genuine reasons are provided by the Revenue to justify continuation. The tribunal highlighted that since neither the Department nor the assessee was aggrieved by the impugned orders, there was no reason to keep the appeals pending for formal approval. Consequently, the assessees were permitted to withdraw their appeals, and the appeals were dismissed accordingly.
Conclusion:
The Appellate Tribunal ITAT Mumbai allowed the withdrawal of appeals by the assessee companies under Article 27 of the Double Tax Avoidance Agreement between India and the United States. The tribunal emphasized the importance of genuine reasons for continuing appeals and permitted the withdrawal as neither the Department nor the assessee was aggrieved by the impugned orders. Consequently, the appeals were dismissed as withdrawn on 31st May 2012.
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2012 (5) TMI 734
Disallowances of expenses on wages, petrol hire charges etc. - non deduction of tds - Held that:- ‘Provisions of Section 40(a)(ia) of the Act are applicable only to the amount of expenditure which is payable as on 31st March of every year and cannot be invoked to disallow the expenditure which had been actually paid during the previous year without deduction of TDS.’’ In the present case also, there is no outstanding payment as on 31-03-2008 as the entire payment has already been paid during the year under consideration. Therefore, no disallowance can be made u/s 40(a)(ia) of the Act.
Addition u/s 40A(3) - Held that:- If the profit of the assessee has been estimated by applying net profit rate than no separate disallowance can be made on account of any expenditure claimed under profit and loss account. In the present case, we have already held that the ld. CIT(A) was correct in applying the net profit rate. Therefore, no separate disallowance u/s 40A(3) can be made. In view of these facts and circumstances of the case, we hold that the ld. CIT(A) was justified in deleting this addition also.
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2012 (5) TMI 733
Issues involved: CENVAT credit availed by Unit-I for service tax paid on 'Consulting Engineers Service' used for setting up Unit-II, denial of credit by department, suppression of facts, time-barred recovery.
CENVAT credit availed by Unit-I: The appeal was filed by the department challenging the CENVAT credit taken by Unit-I for service tax paid on input service used for setting up Unit-II. The original authority and Commissioner (Appeals) had allowed the credit to Unit-I, but the department objected, arguing that the credit should have been claimed by Unit-II as it was an independent registered manufacturer. The Tribunal found that Unit-I should not have claimed the credit without being a registered input service distributor, and held that the credit was wrongly availed by Unit-I. The nexus between the input service and setting up Unit-II was acknowledged, leading to the conclusion that Unit-II could rightfully claim the CENVAT credit.
Suppression of facts and time-barred recovery: The department issued a show-cause notice in 2009 to recover the CENVAT credit taken by Unit-I in March and May 2007, alleging suppression of facts. The assessee denied the allegation and argued that the demand was time-barred. The original and appellate authorities did not consider the plea of limitation as they had allowed the credit on merits. However, the Tribunal, having ruled against the assessee on merits, directed the original authority to examine the limitation issue and make a decision in accordance with the law and principles of natural justice. The orders of the lower authorities were set aside, and the appeal was remanded for this purpose.
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2012 (5) TMI 732
Challenging the order of detention - Habeas Corpus petition - Arms Act - the appellant’s son is concerned, he had been arrested for the offence related to FIR u/s 302 IPC r/w Section 25(1-A) Arms Act. Subsequently, the detention order was passed by the District Magistrate under N.S. Act on various grounds, inter-alia, that the appellant’s son was involved in extorting of money and giving shelter to underground members of unlawful association, as his activities were pre-judicial to the security of the State and maintenance of public order. In support of the detention order, a large number of documents had been relied upon and supplied to the appellant’s son including the copy of FIR u/s 17/20 of the Unlawful Activities (Prevention) Act, 1967 (UA (P) Act).
HELD THAT:- In the instant case, admittedly, the said bail orders do not relate to the co-accused in the same case. The accused released in other cases on bail had no concern with the present case. Merely, because somebody else in similar cases had been granted bail, there could be no presumption that in the instant case had the detenu applied for bail could have been released on bail. Thus, as the detenu in the instant case has not moved the bail application and no other co-accused, if any, had been enlarged on bail, resorting to the provisions of Act was not permissible. Therefore, the impugned order of detention is based on mere ipse dixit statement in the grounds of detention and cannot be sustained in the eyes of law.
The appeal succeeds and is allowed. The impugned judgment and order is hereby set aside and detention order is quashed.
the conclusion that an order for detention can be validly passed against a person in custody and for that purpose it is necessary that the grounds of detention must show that (i) the detaining authority was aware of the fact that the detenu is already in detention; and (ii) there were compelling reasons justifying such detention despite the fact that the detenu is already in detention. The expression "compelling reasons" in the context of making an order for detention of a person already in custody implies that there must be cogent material before the detaining authority on the basis of which it may be satisfied that (a) the detenu is likely to be released from custody in the near future, and (b) taking into account the nature of the antecedent activities of the detenu, it is likely that after his release from custody he would indulge in prejudicial activities and it is necessary to detain him in order to prevent him from engaging in such activities."
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2012 (5) TMI 731
Whether on a complaint made to the Copyright Board under Section 31 of the Copyright Act, 1957, the said Board under Clause (b) of Sub-Section (1) can pass an interim order in the pending complaint - Held that:- In the instant case, the power being sought to be attributed to the Copyright Board involves the grant of the final relief, which is the only relief contemplated under Section 31 of the Copyright Act. Even in matters under Order XXXIX Rules 1 and 2 and Section 151 of the Code of Civil Procedure, an interim relief granting the final relief should be given after exercise of great caution and in rare and exceptional cases. In the instant case, such a power is not even vested in the Copyright Board and hence the question of granting interim relief by grant of an interim compulsory licence cannot, in our view, arise. Mr. Salve’s submission that the substratum of the scheme of Section 31 is commercial in nature and only involves computation of the charges to be paid to the holder of the copyright who withholds the same from the public, is no answer to the proposition that under Section 31 only an ultimate relief by way of grant of a licence on payment of reasonable charges to the copyright owner to publish and/or broadcast the work could be given. To grant an interim compulsory licence during the stay of the proceedings would amount to granting the final relief at the interim stage, although the power to grant such relief has not been vested in the Board.
It is no doubt true, that Tribunals discharging quasi-judicial functions and having the trappings of a Court, are generally considered to be vested with incidental and ancillary powers to discharge their functions, but that cannot surely mean that in the absence of any provision to the contrary, such Tribunal would have the power to grant at the interim stage the final relief which it could grant.
Such incidental powers could at best be said to exist in order to preserve the status-quo, but not to alter the same, as will no doubt happen, if an interim compulsory licence is granted. If the legislature had intended that the Copyright Board should have powers to grant mandatory injunction at the interim stage, it would have vested the Board with such authority. The submission made that there is no bar to grant such interim relief in Section 31 has to be rejected since the presence of a power cannot be inferred from the absence thereof in the Statute itself. Appeal allowed.
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2012 (5) TMI 730
Penalty u/s 271(1)(b) - Held that:- Assessee attended the assessment proceedings from time to time and furnished the details as called for by the Assessing Officer by issuing notice under Section 142(1) of the Act and on the basis of those details, the income shown by him was accepted. In the light of this undisputed fact of the case, it cannot be said that the assessee did not comply with the notices served upon him by the Assessing Officer. We further find that the provisions of Section 271(1)(b) do not make it compulsory for the Assessing Officer to impose the penalty in such cases of technical lapse as the word used are “may direct” for imposition of penalty. Since, the Assessing Officer has discretion in the matter, we are of the considered opinion that the Assessing Officer should have exercised his jurisdiction and should not have imposed the penalty, as this is not a fit case for such imposition of penalty. - Decided in favour of assessee.
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2012 (5) TMI 729
Disallowance of depreciation in respect of certain assets given under ‘sale and lease back basis’ by treating the lease transactions as finance transactions - Held that:- In the case of finance lease depreciation is not admissible to the lessor who is simply a nominal and symbolic owner of the asset, whereas the real owner who bears all the risks and rewards incidental to the ownership is the lessee. It has thus been held that it is only the lessee who is the actual and real owner of the asset in case of a finance lease, who is eventually entitled to depreciation and not the lessor. In view of the foregoing reasons, we are of the considered opinion that the ld. CIT(A) was justified in denying depreciation to the assessee.
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2012 (5) TMI 728
Disallowance of interest and other operating expenses treating that the expenses were incurred for earning income exempt u/s. 10 - Held that:- We are of the opinion that matter should be restored to the file of the CIT(A) for adjudicating the issue of disallowance afresh. Assessee is directed to furnish the details like availability of interest free funds, reserves, self generated fund etc., during the hearing proceedings to be held by the CIT(A).
Applicability/non-applicability of Section 115JA - Held that:- MAT cannot be applied to electricity companies for mutually similar reason we uphold the plea of the assessee. We decided the issue in favour of the assessee. As we have held that provisions of Sec. 115JA are not applicable in the case under consideration.
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2012 (5) TMI 727
Issues involved: Appeal by Revenue against CIT(A) order regarding tax calculation u/s 115JB for A.Yr. 2007-08.
Issue 1: Interpretation of tax calculation u/s 115JB
The Revenue contended that tax should be calculated u/s 115JB, while CIT(A) held for normal computation of total income. The Tribunal referred to a previous decision and explained that if the tax payable under normal provisions exceeds 10% of book profit, MAT provision u/s 115JB does not apply. The Tribunal clarified that tax payable u/s 115JB is gross tax before rebate under other provisions. The appeal of the Revenue was dismissed based on this interpretation.
Issue 2: Comparison of tax payable with book profit
The Revenue argued that tax payable on total income should be compared with 10% of book profit u/s 115JB before giving credit for rebate u/s 88. The Tribunal reiterated that if tax under normal provisions exceeds 10% of book profit, MAT provision does not apply. The Tribunal upheld CIT(A)'s decision, stating that the tax payable on income computed under normal provisions was greater than 10% of book profit. Consequently, the appeal of the Revenue was dismissed.
Conclusion: The Tribunal dismissed the Revenue's appeal, confirming CIT(A)'s order regarding the interpretation and application of tax calculation u/s 115JB for the relevant assessment year.
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2012 (5) TMI 726
Issues involved: Assessment of netting of interest income u/s 2004-2005.
Summary:
The appeal was filed by the assessee against the order of the Commissioner of Income Tax (Appeals)-I, Baroda for the assessment year 2004-2005. The Tribunal had earlier partly allowed the appeal. However, the assessee filed a Misc. Application contending for netting of interest income earned from M/s. Krishna Barrels Pvt. Ltd. The Tribunal recalled its earlier order to decide on the alternate plea of netting of interest to the extent of &8377; 35,203 out of the disallowed amount of &8377; 5,41,838. The assessee argued that the interest income of &8377; 35,203 was earned from loans and advances given to "KBPL" and should be allowed for netting. The Tribunal found that the assessee was entitled to netting the income from loans and advances given to "KBPL" of &8377; 35,203 out of the disallowed interest amount of &8377; 5,41,838, as there was no dispute on the basic facts. The Tribunal directed accordingly, granting relief of &8377; 35,203 to the assessee. The appeal was partly allowed as a result.
In conclusion, the assessee's appeal was partly allowed by the Tribunal, granting relief in the form of netting of interest income earned from loans and advances given to "KBPL" to the extent of &8377; 35,203 out of the disallowed interest amount of &8377; 5,41,838 for the assessment year 2004-2005.
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2012 (5) TMI 725
Issues:
1. Allowance of interest income under the head "business income" for set off of brought forward business loss.
Analysis:
The appeal by the Revenue challenged the order of the ld. CIT(A) allowing the appeal of the assessee company regarding the treatment of interest income on FDR under the head "business income" for set off of brought forward business loss. The Assessing Officer observed that the assessee earned interest income from bank deposits and claimed set off of brought forward business loss against it. The AO disagreed with the assessee's claim, stating that the interest income was not earned from loans and advances, which were the main business activities of the company. The AO assessed the interest income under the head "Income from other sources" and denied the set off of brought forward business loss. The ld. CIT(A) allowed the claim of the assessee based on his decision in the preceding assessment year. The Tribunal noted that the issue was similar to the previous year's decision where the interest income on bank deposits was considered as income from business. Since the Revenue did not provide any new evidence to challenge the ld. CIT(A)'s findings, the Tribunal upheld the decision, dismissing the appeal by the Revenue.
The Tribunal found that the ld. CIT(A) had correctly followed his earlier decision in the preceding assessment year and allowed the claim of the assessee regarding the treatment of interest income on bank deposits under the head "business income." The Tribunal referenced a previous decision in the assessee's case for the AY 2007-08, where a co-ordinate bench had dismissed the Revenue's appeal against the ld. CIT(A)'s decision. As the facts and circumstances in the current year were similar to the previous year, and no new evidence was presented by the Revenue to challenge the findings, the Tribunal declined to interfere with the ld. CIT(A)'s decision. The Tribunal dismissed the appeal by the Revenue, as no additional grounds were raised, and no new arguments were presented during the proceedings. Therefore, the Tribunal upheld the decision of the ld. CIT(A) to treat the interest income on bank deposits as business income, allowing the set off of brought forward business loss against it.
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2012 (5) TMI 724
Issues involved:
Assessment order under section 143 [3] read with section 147 challenged by the assessee.
Summary:
Issue 1: Validity of reopening assessment under section 147:
The assessee filed its return of income showing a loss, which was processed under section 143 [1]. The Assessing Officer (AO) reopened the case under section 147 due to the set off of short-term capital loss against business income, which was deemed impermissible under section 71 of the Act. Additionally, an amount was disallowed under section 14A r.w. Rule 8D(1) for not offering any disallowance u/s 14 A related to exempt income. The AO completed the assessment, leading the assessee to appeal before the CIT[A]. The assessee contended that the reopening under section 147 was invalid as the return was already accepted under section 143 [1]. Despite detailed submissions, the CIT[A] upheld the assessment. The ITAT Mumbai quashed the assessment proceedings, citing that the AO's action to issue notice under section 147 without concluding proceedings under section 154 was legally flawed.
Decision:
The ITAT Mumbai allowed the appeal, emphasizing that the assessment proceedings were incomplete due to pending section 154 proceedings, rendering the notice under section 147 invalid. As a result, the assessment was quashed, and other issues from the assessment order were left undecided.
Conclusion:
The ITAT Mumbai ruled in favor of the assessee, highlighting the procedural error in reopening the assessment under section 147 without resolving the section 154 proceedings, ultimately leading to the quashing of the assessment.
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2012 (5) TMI 723
Issues involved:
Appeal against deletion of addition u/s 68 of the Income Tax Act, 1961 on account of unexplained credit.
Issue 1: Addition of Rs. 1,35,00,000/- u/s 68 of the Income Tax Act, 1961
- The Assessing Officer added Rs. 1,35,00,000/- as unexplained credit from Kuber Group entities during re-assessment proceedings.
- Assessee failed to provide confirmations/agreements, leading to the addition.
- Ld CIT(A) confirmed the addition, but Tribunal set aside the case for further examination.
- Legal objections raised against burden of proof on assessee.
- Factual submissions included identification of parties and reliance on case laws.
- Ld CIT(A) upheld the legality of reopening but favored the assessee on the addition.
- Explanation-3 of section 147 allowed Assessing Officer to inquire into genuineness of loans.
- Assessing Officer failed to prove income escape before shifting burden to assessee.
- Evidences submitted by assessee proved identity and creditworthiness of lenders.
- Assessing Officer's conclusion of non-genuineness deemed illogical.
- Addition of Rs. 1.35 crore u/s 68 deleted by Ld CIT(A).
Issue 2: Appeal before the Tribunal
- Department appealed against Ld CIT(A)'s decision.
- Arguments presented by both parties regarding the burden of proof.
- Citing judgments emphasizing assessee's limited burden under section 68.
- Assessee provided details but could not furnish confirmations.
- Assessing Officer made additions without adverse findings other than lack of confirmations.
- Tribunal dismissed the appeal, finding Assessing Officer's additions unjustified and against the facts of the case.
In conclusion, the Tribunal upheld the decision of Ld CIT(A) to delete the addition of Rs. 1.35 crore u/s 68, emphasizing the importance of establishing a nexus between the creditor's deposits and the assessee's income from undisclosed sources. The burden of proof was deemed fulfilled by the assessee through submitted evidence, leading to the dismissal of the revenue's appeal.
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2012 (5) TMI 722
Issues: Appeal against the order of confiscation of seized goods and imposition of penalty u/s Customs Act.
Summary:
1. The High Court reviewed the order of the Customs, Excise and Service Tax Appellate Tribunal, which allowed the appeal of the respondent, setting aside the order for confiscation of seized goods and imposition of penalty.
2. The Tribunal detailed the recovery of mobiles and earphones of foreign origin, highlighting the lack of valid acquisition documents, and noted that the burden was on the Revenue to prove the goods were smuggled, as they were not notified goods under the Customs Act.
3. The Tribunal emphasized the need for evidence to substantiate the allegation of smuggling, referencing a previous case to support its conclusion that the seized goods were freely traded in the market without restrictions in India.
4. The appellant Department argued that the burden shifts to the possessor to prove payment of lawful duty if the goods are liable to customs duty and have not suffered duty, citing a judgment of the Karnataka High Court and the scheme of the Customs Act.
5. The Court discussed the proof required to establish goods as smuggled, mentioning circumstantial evidence such as the condition of goods at seizure, packaging, labeling, and transportation.
6. It was highlighted that confiscation should not be justified solely on the absence of knowledge or documents regarding duty payment, especially when there is no evidence to prove the goods were smuggled.
7. Ultimately, the Court found no substantial question of law necessitating determination and dismissed the appeal.
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2012 (5) TMI 721
Issues involved: Appeal by revenue against deletion of deduction u/s 80IB, Cross objection by assessee for restriction of deduction u/s 80-IB.
Summary:
1. The appeal was filed by the revenue against the order of CIT(A) deleting the addition of Rs. 25,13,417 made on account of disallowance of claim of deduction u/s 80IB of the IT Act. The grounds raised by the revenue were related to the error in law and facts by the CIT(A) in deleting the said addition.
2. In the cross objection filed by the assessee, it was contended that the CIT(A) erred in not allowing the entire deduction of Rs. 29,85,313 claimed by the assessee u/s 80-IB and restricting it to Rs. 25,36,658.
3. The Assessing Officer observed discrepancies in the expenses allocation between Unit-III and Unit-IV, leading to the disallowance of deduction u/s 80IB. The CIT(A) allowed deduction to the extent of Rs. 25,35,658 based on revised working submitted by the assessee.
4. The CIT(A) considered the revised working submitted by the assessee, which reallocated expenses between units, resulting in an increased profit for Unit III and decreased profit for Unit IV. The CIT(A) held that the profit of Unit IV is eligible for deduction u/s 80-IB, amounting to Rs. 25,35,658, based on the revised working submitted by the assessee.
5. The Tribunal upheld the order of the CIT(A), stating that the allocation of expenses by the assessee was reasonable and that the Assessing Officer's method of computing profits for both units based on turnover ratio was not justified. The appeal of the revenue and cross objection by the assessee were dismissed.
Judges: A. K. Garodia, Accountant Member and Kul Bharat, Judicial Member.
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2012 (5) TMI 720
Issues Involved:
1. Validity of Re-opening of assessment after four years.
2. Assessment of DEPB benefits.
3. Addition on account of under pricing in the sale of kernels made to sister concerns.
4. Validity of charging of interest u/s 234D of the Act.
5. Exclusion of 90% of items credited to the Profit and Loss account as "Expenses allocated"¯ and "Cess refund"¯ under explanation (baa) of sec. 80HHC of the Act.
6. Aggregation of export turnover of two independent units for the purpose of computation of deduction u/s 80HHC of the Act.
7. Disallowance of claim of deduction u/s 80IB in respect of new unit for want of separate books of account.
8. Exclusion of 90% of "Allocated expenses"¯ and "Prior year adjustments"¯ under explanation (baa) to sec. 80HHC.
Summary:
1. Validity of Re-opening of assessment after four years:
The assessee contested the validity of re-opening the assessment for the year 1999-2000 after four years. The return was initially processed u/s 143(1) and not u/s 143(3). The Tribunal upheld the validity of re-opening, stating that the restriction imposed under the proviso to sec. 147 does not apply as there was no regular assessment. The AO had recorded proper reasons for re-opening, and the provisions of sec. 147 authorize the AO to assess escaped income that comes to his notice during the reassessment proceedings.
2. Assessment of DEPB benefits:
The issue of taxability of DEPB receipts was set aside to the file of AO for fresh consideration in accordance with the decision of the Hon'ble Supreme Court in the case of Topman Exports Vs. CIT.
3. Addition on account of under pricing in the sale of kernels made to sister concerns:
The AO added Rs. 23,41,202/- to the total income of the assessee due to under pricing of sales to sister concerns. The Tribunal upheld this addition, noting that the assessee failed to provide convincing explanations for the under pricing, leading to the presumption of a colorable device to shift profits to sister concerns.
4. Validity of charging of interest u/s 234D of the Act:
The issue was restored to the file of AO with the direction to follow the principles laid down by the Jurisdictional High Court in the case of CIT Vs. Kerala Chemicals and Proteins Ltd.
5. Exclusion of 90% of items credited to the Profit and Loss account as "Expenses allocated"¯ and "Cess refund"¯ under explanation (baa) of sec. 80HHC of the Act:
The Tribunal set aside the order of Ld CIT(A) and restored the issue to the file of AO for fresh examination. If the assessee had booked the expenses and cess payment in the profit and loss account and recovered a part of such expenses/cess, they cannot be treated as independent sources of income.
6. Aggregation of export turnover of two independent units for the purpose of computation of deduction u/s 80HHC of the Act:
The Tribunal upheld the view of Ld CIT(A) that both turnovers of cashew kernels and CNSL have to be aggregated for the purposes of sec. 80HHC, as the definitions of "Export Turnover"¯ and "Total Turnover"¯ refer to the "assessee"¯ and not "undertaking."¯
7. Disallowance of claim of deduction u/s 80IB in respect of new unit for want of separate books of account:
The issue was restored to the file of AO with the direction to examine it in light of the principles given in the case of T.C. Usha Vs. ACIT.
8. Exclusion of 90% of "Allocated expenses"¯ and "Prior year adjustments"¯ under explanation (baa) to sec. 80HHC:
The Tribunal set aside the order of Ld CIT(A) regarding "Allocated expenses"¯ and restored it to the file of AO for fresh examination. However, it upheld the exclusion of "Prior year adjustments"¯ under explanation (baa) to sec. 80HHC, as they relate to income from an earlier year.
Conclusion:
All the appeals of the assessee were treated as partly allowed for statistical purposes.
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2012 (5) TMI 719
Issues Involved:
The judgment deals with a Miscellaneous Application filed by the applicant-Revenue against the order of the Tribunal dated 26.08.2011 in ITA No.1023/Chd/2010 concerning the Assessment Year 2007-08.
The applicant-Revenue raised a grievance regarding an error in ground No.(ii) before the Tribunal, where the addition of Rs. 80,000/- on account of revaluation of closing stock of gold was mistakenly mentioned instead of the deletion of addition of Rs. 3,80,000/-. Due to this error, the appeal of the Revenue was dismissed for having low tax effect. Upon review, it was found that if the correct figure of Rs. 3,80,000/- is considered in ground No.(ii), the tax involved would exceed the limits for filing an appeal before the Revenue. Consequently, the Tribunal recalled its order dated 26.8.2011 and directed the Revenue to file an amended ground of appeal No.(ii).
The Tribunal scheduled the appeal for hearing on 4.6.2012, and formal notice was waived with the consent of the parties. The Miscellaneous Application filed by the Revenue was allowed, and the order was pronounced in the Open Court on the 9th day of May, 2012.
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2012 (5) TMI 718
Issues Involved:
1. Condonation of delay in filing the appeal.
2. Deletion of disallowance of expenses by adding value of Fringe Benefit on the basis of 40% of the expenses incurred under specified heads.
3. Direction to consider expenses of Rs. 43,26,760/- under clause 115WB(2)(Q) of the Act.
Summary:
Condonation of Delay:
The appeal by the revenue was time-barred by 125 days. The revenue filed a condonation petition, which was conceded by the counsel for the assessee. The delay was condoned, and the appeal was admitted for hearing.
Fringe Benefit Tax (FBT) on 40% of Expenses:
The first issue was regarding the deletion of disallowance of expenses by adding the value of Fringe Benefit on the basis of 40% of the expenses incurred under specified heads. The CIT(A) had allowed the claim of the assessee by relying on his own order for the assessment year 2006-07, where it was held that for assessing the value of fringe benefit u/s 115WE(3), only 40% of the expenses incurred under specified heads can be taken into account. The Tribunal, however, reversed the order of the CIT(A) by following its earlier decision in the assessee's own case for the assessment year 2006-07, where it was held that FBT is not linked with the income of an employer but with the expenditure incurred by the employer on the benefits provided to its employees. Therefore, the Tribunal upheld the action of the Assessing Officer, allowing the revenue's appeal on this issue.
Consideration of Expenses under Clause 115WB(2)(Q):
The second issue was against the order of CIT(A) directing the Assessing Officer to consider the expenses of Rs. 43,26,760/- under clause 115WB(2)(Q) of the Act. The CIT(A) had allowed the claim of the assessee by adopting a "purposive approach" for classification of expenses, considering all expenses incurred in connection with foreign tours and travel as part of "tour & travel expenses" under clause 115WB(2)(Q). However, the Tribunal noted that the nature of these expenses was not explained by the assessee before the Assessing Officer, CIT(A), or even before the Tribunal. Therefore, the Tribunal set aside this issue to the file of the Assessing Officer, directing the assessee to explain the nature of these expenses, and the Assessing Officer to decide accordingly. This ground of appeal was allowed for statistical purposes.
Conclusion:
The appeal of the revenue was partly allowed for statistical purposes, with the Tribunal reversing the CIT(A)'s order on the first issue and remanding the second issue back to the Assessing Officer for further examination.
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2012 (5) TMI 717
Issues Involved:
1. Eligibility for benefits u/s 11 & 12 of the Income-tax Act, 1961.
2. Applicability of Section 13(2)(a) and Section 13(2)(h).
3. Deletion of addition on account of disallowance of donation.
4. Deduction claimed as an application of income u/s 11 and 12 for acquisition of fixed assets.
5. Deletion of addition on account of telephone and travelling expenses.
6. Eligibility for deduction u/s 11(1)(a).
Summary:
1. Eligibility for benefits u/s 11 & 12 of the Income-tax Act, 1961:
The CIT(A) held that the assessee is eligible for the benefits u/s 11 & 12 and that the provisions of Section 13 are not applicable. This decision was based on a previous Tribunal decision in the assessee's own case, which found that the provisions of Section 13(2)(h) read with Section 13(2)(a) and Section 13(1)(b)(1) are not applicable.
2. Applicability of Section 13(2)(a) and Section 13(2)(h):
The A.O. inferred a violation of clause (h) of Section 13(2) due to an interest-free loan to a related concern. However, the CIT(A) and the Tribunal found that none of the persons of the assessee society had substantial interest in the related concern, thus Section 13 provisions were not applicable.
3. Deletion of addition on account of disallowance of donation:
The A.O. disallowed a donation of Rs. 5,05,00,000 to Devi Shakuntala Thakral Charitable Foundation, citing a violation of Section 13(1)(c)(ii). The CIT(A) directed the A.O. to allow the exemption u/s 11, stating that the donation was made out of the current year's income and that the provisions of Section 13 were not attracted.
4. Deduction claimed as an application of income u/s 11 and 12 for acquisition of fixed assets:
The A.O. denied the deduction on the grounds that the benefits of Section 11 & 12 were not allowed. The CIT(A) allowed the deduction, stating that the assets were acquired for the purpose of advancing the society's objects, and thus should be treated as an application of income in terms of Section 11.
5. Deletion of addition on account of telephone and travelling expenses:
The A.O. disallowed Rs. 1,27,144/- for telephone expenses and Rs. 1,39,644/- for travelling expenses, citing personal use by society members. The CIT(A) deleted these disallowances, noting that the expenses were reasonable and incurred for the society's purposes, not for personal benefit.
6. Eligibility for deduction u/s 11(1)(a):
The A.O. denied a deduction of Rs. 1,65,22,945/- due to an alleged violation of Section 13. The CIT(A) held that the assessee was eligible for the deduction u/s 11(1)(a), as there was no violation of Section 13.
Conclusion:
The Tribunal upheld the CIT(A)'s decisions on all grounds, confirming that the assessee was entitled to the benefits and deductions claimed u/s 11 & 12 of the Income-tax Act, 1961, and that the provisions of Section 13 were not applicable. The appeal of the Revenue was dismissed.
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