Advanced Search Options
Case Laws
Showing 61 to 80 of 914 Records
-
2020 (4) TMI 854
Characterization of income - One time membership entrance fees as one time membership fees for life time membership of club (15 years) - AO treated the said receipt as revenue receipt against the assessee’s treatment for treating it as a capital receipt - HELD THAT:- Considering the decision in the case of E.D. Sasoon, [1954 (5) TMI 2 - SUPREME COURT], Madras Industrial Corporation Ltd. [1997 (4) TMI 5 - SUPREME COURT], Calcutta Co. Ltd. [1959 (5) TMI 3 - SUPREME COURT] and in the case of Rotork Controls India Pvt. Ltd. [2009 (5) TMI 16 - SUPREME COURT] it was held that membership fee received for 33/25 years was liable to spread over the period of time for which such fee is received. Respectfully following the same, we direct the AO to tax following the earlier orders of ITAT i.e [2015 (11) TMI 1810 - ITAT MUMBAI]
Disallowance on account of amortization of additional premium paid on lease hold land - HELD THAT:- As in Associated Cement Co. Ltd. [1988 (5) TMI 2 - SUPREME COURT] held that it is material to consider is the nature of the advantage in a commercial sense and it is only where the advantage is in the capital field that the expenditure would be disallowable on an application of this test. If the advantage consists merely in facilitating the assessee's trading operations or enabling the management and conduct of the assessee's business to be carried on more effectively or more profitably while leaving the fixed capital untouched, the expenditure would be on revenue account, even though the advantage may endure for an indefinite future.
In the instant case, the advantage which was secured by the assessee by making the expenditure in question was the securing of absolution or immunity from liability to pay municipal rates and taxes under normal conditions for a period of 15 years. If the liability had to be paid, the payments would have been on revenue account and, hence, the advantage secured was in the field of revenue and not capital. And as a result of the expenditure incurred, there was no addition to the capital assets of the assessee and no change in its capital structure.
With utmost regard to the decision of Hon’ble Supreme Court, in our humble view, the ratio of the decisions are not helpful to the assessee. In the present case, there is no obligation under lease agreement to pay amortization of lease premium by assessee to the super lesser. There is no evidence on record that the land which was released by UDA was under the occupation of assessee or is part of business asset, in other word it was a part and partial of the plot of land leased to assessee. Thus, the ratio of the decision of Hon’ble Apex Court is not applicable on the present case. In the result, ground of appeal raised by assessee is dismissed.
Disallowance under section 14A r.w.r. 8D - HELD THAT:- On appeal before the ld. CIT(A), directed not to consider the investment made in Lift and Shift India Pvt. Ltd., being made in group companies. And rest of the disallowance under Rule 8D(2)(iii) was affirmed. Assessing Officer wrongly deducted ₹ 1739/- from disallowance of Rule 8D(2)(iii) which was directed to be rectified. Before us, the ld. AR of the assessee vehemently argued that only those investment which yielded the exempt income should be considered for considering the average value of investment for disallowance under Rule 8D(2)(iii).
Considering the decision of Special Bench of Delhi Tribunal in Vireet Investment Pvt. Ltd. [2017 (6) TMI 1124 - ITAT DELHI] we direct the AO to re-compute the disallowance under Rule 8D(2)(iii) by considering only those investment which yielded exempt income. Needless to direct that before computing the disallowance, the Assessing Officer shall grant opportunity to the assessee.
This ground of appeal is party allowed. However, we may make it clear that in case any other investment made in group concern and generated exempt income be also considered for taking average value of investment, if those investment yielded exempt income as per the decision of Special Bench of Vireet Investment (supra).
Professional Fees Payment - disallowance of professional fees paid to Bhagwan Madhav on the ground that no projects were undertaken by assessee during the Assessment Year under consideration - CIT(A) affirmed the action of Assessing Officer that professional charges paid for housing developed project in the past cannot be accepted for reasons that assessee failed to establish against which professional charges were incurred and that assessee failed to establish the nexus - HELD THAT:- Assessee is engaged in construction activities. The services of Civil Engineer are integral part of civil project construction activities. The Assessing Officer has not made any investigation about the genuineness of payment and services rendered by the Civil Engineer. The Assessing Officer simply disallowed the charges paid to Civil Engineer by taking view that project is yet to start. Similarly, the ld. CIT(A) the action of Assessing Officer holding that assessee failed to establish the nexus between the expenses and corresponding income without disputing the fact that services of Civil Engineer are integral part of civil construction activities. Considering the fact that professional charges paid to Civil Engineer are disallowed without bringing any adverse evidence on record and business of assessee is not in dispute, we direct the Assessing officer to delete the addition. In the result, this ground of appeal is allowed.
-
2020 (4) TMI 853
Estimation of income - Bogus purchases - disallowance u/s 69C - assessee categorically contended that the assessee has shown that they have declared gross profit at 10.37% and if the addition at 100% of the alleged bogus purchases is sustained, gross profit would raise to 24.44% and ultimate net profit would raise to 20.61% which is impossible - HELD THAT:- In case the transaction is not verifiable or the parties were failed to prove the entire transaction, only profit embedded in such transaction is liable to be taxed and not the entire transaction. Thus, considering the nature and activities of the assessee and the fact that the lower authorities have recorded that assessee failed to produce sufficient evidence to prove the genuineness, we are of the view that in order to check the possibility of revenue leakage, a reasonable disallowance of purchases / amount / disputed purchases would be sufficient to meet the ends of justice. Therefore, considering the nature of business, the disallowances are restricted to 12.5% of the amount / disputed purchases. The AO is directed accordingly.
-
2020 (4) TMI 852
LTCG for investment in REC Bonds - Computation of capital gain - fair market value (FMV) of the land and building as on 01/04/1981 was calculated on the basis of valuation report of two chartered engineers - HELD THAT:- In the hands of one of the co-owners, the assessment was completed u/s. 143(3) by accepting the computation of long term capital gains made by the co-owner (Shri Thinkal Govind Kumar). In the case of Shri Thinkal Govind Kumar, the assessment was taken up for scrutiny based on AIR information that he had sold an immoveable property at Chennai on 05/10/2005.
The liabillity of long term capital gains cannot differ between the co-owners of a property. Even though there is no res judicata in tax proceedings, the principle of consistency has to be applied. The Hon’ble Supreme Court in the case of Union of India & Others vs. Kaumudini Narayan Dalal and Another [2000 (12) TMI 101 - SC ORDER] was considering an issue whether it is open to revenue to accept a judgment in the case of one assessee and appeal against identical judgment in the case of another assessee. In this context it was held by Hon’ble Apex Court that such a differential treatment on the same set of facts was not permissible in law. The same view was taken by the Hon’ble Supreme Court in the case of Berger India Ltd. [2004 (2) TMI 4 - SUPREME COURT]
In the instant case, the assessee has adopted the FMV as on 01/04/1981 based on the valuation reports of two chartered engineers and is not without any basis - in the hands of one of the co-owners (Shri Thinkal Govind Kumar) the computation of long term capital gains calculated by him which was identical to the LTCG computed by the assessee was accepted in scrutiny assessment. Long term capital gains computed by the assessee needs to be accepted. - Appeal of the assessee is allowed.
-
2020 (4) TMI 851
Deemed dividend u/s 2(22)(e) - Payment of advances to the assessee against purchase of land - assessee and his brother owned 85% of the stake in the company - Instead of payment rent to the promoters, company decided to purchase property from the promoters, as adviced by the banks - HELD THAT:- CIT(A) has examined the nature and scope of the transactions and found that the impugned transactions are towards business and commercial purpose and there is no benefit accruing to the assessee from such transaction. Thus assessee has clearly established that the impugned transactions are not following within the scope of section 2(22)(e).
Revenue is not able to dislodge such findings recorded by the Ld. CIT(A) by relevant material. Therefore, the case laws relied on by the Ld DR is not of any help to the revenue on the above facts and circumstances of this case. Hence, we do not find any reason to interfere with the order of the Ld. CIT(A). Therefore, we dismiss the Revenue’s corresponding grounds of appeal.
Addition under the head house property - assessee is owner of the land and building used by the company towards its business purposes - HELD THAT:- Annual value of property, i.e. the income arising from the house property, has to be assessed to tax u/s.s 22 to 27 of the Income Tax Act. The AO has based the rental income received by the assessee in the immediately succeeding year, as the sum for which the property might reasonably be expected to let from year to year and particularly for this assessment year. On which, the assessee has not placed any material to hold that the amount assessed by the AO is unreasonable. - Decided in favour of revenue
-
2020 (4) TMI 850
Unaccounted sale - excess stock of finished goods of iron ore (manganese ore) - Assessee not explained the entire shortfall (in physical stock), which he estimated at 35% of the alleged excess book-stock (36,400 MT) - HELD THAT:- There is no reason to, as the assessee does, club the two types of materials, or the iron ore component therein, in seeking to justify the difference/s as found. In doing so, it in fact removes the very basis of the Revenues’ case. That is, to begin with, there is a complete mis-appreciation of the Revenue’s case.
State of the assessee’s approach in the matter, since accepted, i.e., in principle, by the ld. CIT(A), to be completely misfounded. The complete disharmony between the figures makes a travesty of the assessee’s methodology in explaining the difference. While the total difference per the same, and which it therefore seeks to explain, is 36,400 MT, it justifies a difference for a much higher figure of 1,14,250 MT through the certificate of the consulting Geologist. That is, the same has no relation to the obtaining difference between the physical and book figures per its’ own calculation, which it seeks to justify. The said certificate is, in fact, again a misrepresentation by the assessee, and has rightly been not accepted by any authority.
Ascertainment of Difference in stock - Held that:- One could regard the price variation between the two product categories, i.e., lumps and fines, as on account of mineral recovery due to the products’ physical properties, primarily, the particle size. While the lumps could be easily crushed into fines, making the two equivalent, it may be difficult to, or at least involve cost and technology, to coalesce fines into lumps, resulting in a lower price for the latter. In fact, as explained during hearing, the transportation cost itself, where the technology is not available locally, exceeds the selling price.
A product may be saleable at ₹ 3000 (say), while the other lot may not fetch more than ₹ 1000 (say) or even ₹ 500 (say). Surely, the latter is subgrade relative to the former; the price differential across lumps and fines, inasmuch as there is no segregation between the two in the physical stock-taking, being more than 750% ((3050/400) x 100) (Table 4B). As afore-noted (para 4.4), there is no segregation of processed iron ore stock into lumps and fines (see Table 1A).
While the assessee consistently maintains of iron ore being saleable in the iron grade class 50%-55%, with that below 50% being sub-grade, per Gd. 5 of its’ Appeal it claims to be selling iron ore in the grade class 57%-60%, belying its’ stand of the limitation of the physical processes being carried out by it to improve the iron grade beyond 55%. It thus tacitly admits to projecting incorrect facts, as well as evading royalty, paid on its’ entire sales in the grade category ‘below 55%’. Mention here be also made to the statement of NS, reproduced at page 26 of the impugned order, stating iron ore being saleable in the grade category 54%-55%. If that is indeed so, which fact could be easily proved, or called upon to, the entire material below 54% would stand to be classified as subgrade.
Quantification of the income that has escaped assessment - Held that:- Differece between an excess physical stock and excess book-stock, representing opposite situations, even as, as explained hereinbefore, results in an inference of escapement of income from tax and, accordingly, liable to be brought to tax, albeit at different amounts, representing valuation/s thereof.
While a positive difference (excess physical stock) would translate into an addition irrespective of any addition made on that count (or for undisclosed assets), it may not necessarily be so in the case of a negative difference (excess bookstock), which indicates, among others, unaccounted disposal of the relevant stock (i.e., as of the date of the physical verification), so that income concomitant to that disposal had escaped assessment (as on that date).
Conclusion:
The different quantities/figure are not liable to be reconciled and, accordingly, no case for any reconciliation of different figures, or for any addition on the basis of the said categorizations, is accordingly made out, either toward excess physical or book stock. The ‘excess’ stock is, under the circumstances, only being so/notional.
While a positive difference (excess physical stock) would translate into an addition irrespective of any addition made on that count (or for undisclosed assets), it may not necessarily be so in the case of a negative difference (excess bookstock), which indicates, among others, unaccounted disposal of the relevant stock (i.e., as of the date of the physical verification), so that income concomitant to that disposal had escaped assessment (as on that date).
It is, accordingly, open to the assessee to make out a case that the past unaccounted income, since admitted and returned, arose on account of such undisclosed disposal. That is, the said escaped income, being sought to be brought to tax for the current year, had already suffered tax in an earlier year. Again, a further clarification may be in order. That is, in a case as the present one, where the escapement of income is on account of unaccounted disposal, the assessee realizes it’s value (₹ 100, say), which gets disclosed/returned on the corresponding asset/money being discovered (by the Revenue). The income on this sale, however, would only be after deducting its cost, incurred and reflected in accounts (₹ 40, say), i.e., ₹ 60. This is as the balance ₹ 40, though realized through sale, continues to be reflected in accounts, albeit does not represent an actual capital (of the reporting entity). This needs to be borne in mind, and once again emphasizes the need for bringing the accounts to actuals. The orders of the Revenue authorities are accordingly set aside, and additions deleted. - Decided in favour of assessee.
-
2020 (4) TMI 849
Condonation of delay filling Rectification application u/s 154 - disallowance u/s 14A - as held by ld. CIT(A) that the assessee has not explained the delay even after dismissal of rectification application - HELD THAT:- Before us neither the assessee has explained the delay nor filed any documentary evidence or copy of application filed before the ld. CIT(A) in seeking condonation of delay. Thus, we do not find any justifiable reason in seeking the condonation of delay before the ld. CIT(A).
The ratio in the case law relied by assessee in Collector of Land Acquisition vs. Mst Katiji [1987 (2) TMI 61 - SUPREME COURT] and in Gera Developments (P.) Ltd. [2016 (8) TMI 1009 - ITAT PUNE] is not helpful to the assessee as the facts in both the case law are different. The assessee in this case was aware about the disallowance under section 14A, which was not hesitated by him by filing appeal before first appellate authority. No merit in the grounds of appeal raised by assessee.
-
2020 (4) TMI 848
Deduction u/s 80IB - Manufacturing activity - claim denied as assessee company is only providing services to mineral oil concerns and generation of logs does not amount to manufacture or production of article or thing - HELD THAT:- Following the decision rendered by the Hon’ble High Court in assessee’s own case [2011 (5) TMI 322 - DELHI HIGH COURT] we are of the considered view that assessee company is an industrial undertaking engaged in the business of manufacturing or production of an article or thing for the purpose of section 32A and section 80IB. So, AO as well as CIT (A) have erred in AYs 2004-05, 2007-08 & 2008-09 in denying the deduction claimed by the assessee company u/s 80IB of the Act on the ground that the assessee company is not a manufacturing concern.
Depreciation on plant & machinery owned and used below the ground in field operation in mineral oil concern - @ 25% as against 80% claimed by the assessee - HELD THAT:- As held in assessee’s own case [2011 (5) TMI 322 - DELHI HIGH COURT] assessee’s wireline logging and perforation equipments are eligible for a higher depreciation @ 100% under cl. (ii) of s. 32(1) of the Act, r/w item III(3)(ix)(b) of the schedule of rates of depreciation in Appendix I to the Income Tax Rules, 1962.
Disallowance u/s 14A - addition @ 15% of the exempted income earned by the assessee company during the year under assessment being the reasonable expenditure incurred to earn dividend income by the assessee company - HELD THAT:- As assessee has stated to have already disallowed expenditure directly related to earning exempt dividend income - when investment is made by the assessee company time and manpower need to be utilized to steer the investment in right places so we reasonably restrict the disallowance made by the AO and CIT (A) from 15% to 5% of the gross exempt dividend income earned by the assessee during the year under assessment.
Service-tax payable - AO held the service-tax payable as a trading receipt on the ground that the assessee has raised sales bills and charged service-tax on the same and service-tax is in the nature of revenue receipt - HELD THAT:- When undisputedly aforesaid amount as service-tax payable has not been passed through P&L account duly reported in tax audit report nor the assessee has claimed deduction of service-tax payable to the Government, there is no question of disallowance of the deductions not claimed by the assessee.
As decided in NOBLE AND HEWITT (I) P. LTD. [2007 (9) TMI 238 - DELHI HIGH COURT] since the assessee did not debit the amount to the profit and loss account as an expenditure nor claim any deduction in respect of the amount and considering that the assessee was following that mercantile system of accounting, the question of disallowing the deduction not claimed would not arise - CIT (A) has rightly deleted the addition
Revision u/s 263 - Claim of additional depreciation - HELD THAT:- When the assessee company has been held to be engaged in the manufacture or production of an article or thing by the order passed by the Hon’ble Delhi High Court affirmed by Hon’ble Supreme Court, the assessee is entitled for additional depreciation u/s 32(1)(iia) of the Act and as such, the AO has rightly allowed the additional depreciation to the assessee, hence assessment orders passed by the AO are not erroneous sufficient to exercise revisionary jurisdiction u/s 263 of the Act.
Revenue supported the order passed by the ld. CIT on the only ground that the assessee is not engaged in the manufacture of any article or thing, but this issue is no longer res integra as assessee in its own case held to be engaged in manufacture or production of an article or thing. Moreover, since the ld. CIT only modified the assessment directing the AO to withdraw the deduction for additional depreciation allowed u/s 32(1)(iia) but has not set aside the assessment to be framed afresh, Explanation 2 to section 263 of the Act relied upon by the ld. DR for the Revenue is not attracted. So, we are of the considered view that arguments addressed by the ld. DR and his reliance on umpteen number of judgments is not applicable to the facts and circumstances of the case. Consequently, impugned orders passed by the ld. CIT u/s 263 not sustainable in the eyes of law, hence ordered to be quashed. - Decided in favour of assessee.
-
2020 (4) TMI 847
Validity of reopening of assessment - no proof for service of notice u/s. 148 - HELD THAT:- Referring to narration given by the AO as to issuance of service of notice u/s 148 shows that it does not contain facts if the notice were ever served upon the assessee, it just contains the fact that notices u/s 148 were issued on 05.06.2009.
Further examine assessment record viz. order sheet prepared by the AO and dispatch register, no doubt copy of notices dated 05.06.2009 for AYs 2006-07 & 2007-08 is reportedly issued on 05.06.2009 vide dispatch register but the record is altogether silent if the said notices were served upon the assessee or received back served/unserved nor copy of acknowledgement from the postal authority acknowledging the receipt of notice is there on the file. It is settled principle of law that when the assessee has specifically challenged service of notice u/s 148 as well as u/s 142 (1) since the stage of assessment it is the duty of the Revenue to prove the service of notice.
When we examine the order sheet entries for AYs 2006-07 & 2007-08 prepared in due course of official duty by the AO, except for the fact that notices were issued on 05.06.2009, there is not a whisper even if the said notices were served upon the assessee.
Merely producing the carbon copy of notice and dispatch register entry does not prove service of notice on the assessee.
Service of notice u/s 148 dated 05.06.2009 for AYs 2006- 07 & 2007-08 and service of notice dated 24.09.2009 u/s 142 (1) in AY 2008-09 is not proved to have been effected upon the assessee in accordance with provisions contained under section 282 (1) of the Act read with order under Rule XII and Order III Rule 6 of CPC, 1908 which is a jurisdictional pre-condition to finalize the reassessment and as such, Revenue has failed to prove the proper service of notice u/s 148 - Decided against revenue.
-
2020 (4) TMI 846
Penalty u/s 271(1) (c) - Disallowance of deduction u/s 80IB(10) in respect of project 'Damodar Residency' - HELD THAT:- CIT(Appeals) while deleting the penalty has noted that the Tribunal vide order in BHUJBAL BROTHERS CONSTRUCTION COMPANY [2015 (11) TMI 582 - ITAT PUNE] had directed the AO to allow the claim of deduction u/s.80IB(10) - Since deduction on which penalty has been levied has itself been deleted, there remains no basis for sustaining the penalty. DR could not bring any material to demonstrate that the order of Tribunal allowing the claim of deduction u/s.80IB(10) has been set aside/overturned by higher judicial forum meaning thereby that the order granting deduction to assessee u/s.80IB(10) has attained finality. - Decided against revenue.
-
2020 (4) TMI 845
Revision u/s 263 - return was selected under scrutiny through CASS and the main reason was to examine the share premium - HELD THAT:- Being a limited scrutiny case, we fail to persuade ourselves to believe that the Assessing Officer did not make any enquiry on the issue on the basis of which return was selected for scrutiny assessment. It is a settled proposition of law that in a return selected for limited scrutiny, the Assessing Officer cannot go beyond the issue and from the notice u/s 142(1) of the Act exhibited elsewhere, it can be seen that the Assessing Officer made specific query in relation to details of share premium.
The share application money has been received from very same persons from whom share application and share premium amount has been received in earlier years. No adverse inference has been drawn in earlier years in respect of money received from the very same persons. During the year also, in the course of assessment proceedings, the assessee has furnished copy of bank statements in respect of all allottees alongwith their tax returns details.
During the course of scrutiny assessment proceedings, the assessee has furnished a certificate from the CA justifying the valuation of shares and the certificate. This clearly shows that the Assessing Officer has examined the share premium received during the year which is supported by the fact that the return was selected for scrutiny assessment only for this limited purpose.
No hesitation in holding that the assessment framed u/s 143(3) was after detailed enquiries and verification and merely because the assessment order is silent, the same cannot be considered as erroneous and prejudicial to the interest of the revenue, as held by the Hon'ble High Court of Bombay in the case of Gabriel India Ltd [1993 (4) TMI 55 - BOMBAY HIGH COURT]
Assessing Officer, after considering the various submissions made by the assessee, has taken a possible view. Therefore, merely because the PCIT does not agree with the opinion of the Assessing Officer, he cannot invoke the provisions of section 263 of the Act to substitute his own opinion. - Decided in favour of assessee.
-
2020 (4) TMI 844
Estimation of income - on-money received by the assessee on booking of flats and shops in “Vesu Project” - income offered by the assessee at 8% of the alleged gross receipts - source of payment of cash for purchase of the land - HELD THAT:- On an analysis of the record, it would reveal that during the course of search not only details of on-money received by the assessee on booking of flats and shops in “Vesu Project” was found, but details of certain expenditure, which are not recorded in the books were also found. This included cash payment for purchase of land.
CIT(A) has rightly observed that the gross on-money noticed on the seized paper cannot be considered as income of the assessee. There are certain expenditures which were not recorded in the books. Those expenditure must have been made from this on-money.
After going through the well reasoned order of the ld.CIT(A), and in the light of judgment of Hon’ble jurisdictional High Court in the case of Panna Corporation [2014 (11) TMI 797 - GUJARAT HIGH COURT] as well as Koshor Mohanlal Telwala [1998 (9) TMI 106 - ITAT AHMEDABAD-A] we are of the view that only element of income embedded in the on-money received by the assessee for booking of flats/shops in “Vesu Project” is required to be assessed in its hand in all these years.
Element of income involved in this on-money - assessee is showing income at 8%, AND CIT(A) is estimating it at 20% - HELD THAT:- CIT(A) has also not mentioned any attending circumstances for harbouring a belief that 20% could have been earned from this activity. Thus after taking guidance from the judgment of Kishor Mohanlal Telwala [1998 (9) TMI 106 - ITAT AHMEDABAD-A] we deem it proper that the assessee has rightly disclosed the profit element embedded in the gross profit at 8%. Accordingly, we allow the ground of appeal raised by the assessee, and hold that profit which has been directed to be adopted by the ld.CIT(A) at 20% of the alleged turnover should be taken at 8%. The income of the assessee is to be computed thereafter.
Unexplained expenditure - HELD THAT:- No dispute that during the course of search certain material/loose papers were found exhibiting the fact that the assessee has received cash, over and above, the amounts stated in the booking register. This cash was not accounted for in the books. It has been treated as on-money for sale of flats/shops. Simultaneously certain loose papers were found disclosing the fact that the expenditure were incurred in cash and accounted in the books. CIT(A) made an analysis of this, and then held that the moment assessees’ income is being assessed at 8% of the gross on-money, then the remaining amount 92% could take care of unexplained expenditure. It can be explained by a simple, viz. an assessee has received ₹ 100/- in cash for sale of flat.
Out of that, element of income embedded in this ₹ 100/-has been determined by us at ₹ 8/-. Remaining ₹ 92/- must have been incurred by the assessee for developing that flat. Thus, in other words, the expenditure whose details were found being incurred in cash could be construed as coming out of these ₹ 92/-. Thus, there cannot be any separate addition of unexplained expenditure. CIT(A) has rightly deleted the addition.
Addition u/s 68 - unexplained cash credit - HELD THAT:- These are not loans rather these are booking amount and the assessee has produced necessary details viz. PAN, addresses etc. CIT(A) correctly after going through the details deleted the addition by recording the following finding in the Asstt.Year 2014-15. The facts in the Asstt.Year 2015-16 are identical. - Decided against revenue
-
2020 (4) TMI 843
Deduction for loss arising from foreign exchange fluctuation - hedging contract to cover foreign exchange credit provided by ICICI Bank for payment for the purpose of imported raw material upon accounting of the outstanding hedging contract on market to marked basis at the end of the year - outstanding liability in foreign currency towards import either to the suppliers or to the bank - buyer’s credit liability was due in May, 2008 and it was an option contract and in order to hedge against the foreign currency liability the assessee entered a foreign option contract with ICICI Bank - sudden and unexpected fall in the value of USD Vs. Swiss currency in the math of March 2008, the assessee has incurred foreign exchange loss - HELD THAT:- The assessee was engaged in the business of manufacturing of vanaspati and refining of edible oil and the forward contract has been entered in the ordinary course of its business in respect of under lying import/export business. The transactions were carried out for the sole purpose of hedging against losses that may arise on account of adverse fluctuation in the foreign exchange rates.
As decided in Hon’ble High Court of Bombay in the case of CIT vs. De Chetan & Co. [2016 (10) TMI 629 - BOMBAY HIGH COURT] wherein it is held that forward contract for purpose of hedging in course of normal business activities of import and export done to cover up losses on account of differences in foreign exchange valuation would not be speculative activity but business activity - Decided against revenue.
LTCG - Addition after invoking section 50C on transaction of sale of immovable property in the form of land - HELD THAT:- It is noticed that the assessing officer has made addition of ₹ 15 lacs on the assumption that @ 20 lacs per acre the total market value works out to ₹ 1,22,50,000/- as against the consideration of ₹ 1,07,50,000/- shown by the assessee. It will be appropriate to restore this issue to the file of the assessing officer for deciding afresh after referring the issue to the departmental valuation officer for determining the fair market value of the land sold. Accordingly, the issue is restored to the file of assessing officer for deciding afresh as directed above, therefore, this ground of Cross Objection of the assessee is allowed for statistical purposes.
Addition for expenditure incurred on the acquisition of computer software - entitled to depreciation @ 60% - HELD THAT:- It is noticed that Hon’ble Gujarat High Court in the case of NJ India Invest Ltd. [2013 (7) TMI 738 - GUJARAT HIGH COURT] has held that software development and upgradation would include data administration services, information and technology support services, software asset management services, etc., which was in nature of maintenance, back up and support service to existing hardware and software and did not give any fresh or new benefit. Further we have seen that Hon’ble Gujarat High Court in the case of Oriental Bank of Commerce [2018 (4) TMI 1534 - DELHI HIGH COURT] has allowed the deduction on software expenses u/s. 37(1) of the act holding that use of software did not confer any enduring right of assessee. Moreover the assessee’s objective was not to augment software business rather it used computer software as a tool to maximize its purpose and streamline its efficiency.
Disallowance u/s. 40A(2) - HELD THAT:- Total income of the payee KTB Food Pvt. Ltd. for the assessment year 2010-11 was to the amount of ₹ 849,80,730/- on which tax was paid at higher marginal rate @ 30%. We have also gone through the decision of Hon’ble High Court in the case of Pr. CIT Vs. Gujarat Gas Financer Services Ltd. [2015 (7) TMI 743 - GUJARAT HIGH COURT] wherein it is held that where assessee company as well as assessee’s parent company both were assessed to tax at maximum marginal rate, it could not be said that service charge was paid by the assessee company to parent company at unreasonable rate to evade tax. Since revenue could not point out that assessee evaded payment of tax therefore, invocation of section 40A(2) was not valid.
Disallowance u/s. 14A - HELD THAT:- No exempt income was earned by the assessee therefore following the decision of Hon’ble Jurisdictional High Court of Gujarat in the case of Corrtech Energy Pvt. Ltd. [2014 (3) TMI 856 - GUJARAT HIGH COURT] no disallowance is to be made.
Disallowance as bad debts written off - amount in question had been taken into income under the head capital gains in earlier assessment years - CIT(A) justification in restricting the addition on the ground that loss was of the nature of capital loss - HELD THAT:- As relying on SAGAR DRUGS & PHARMACEUTICALS PVT LTD VERSUS JOINT COMMISSIONER OF INCOME TAX, RANGE-8, AHMEDABAD [2019 (1) TMI 1762 - ITAT AHMEDABAD] we restore this issue contested in the cross objection of the assessee to the file of assessing officer for examination of the alternate claim of the assessee to allow impugned loss as capital loss.
-
2020 (4) TMI 842
Addition u/s 36(1)(iii) - interest pertaining to stock in trade of the assessee - HELD THAT:- In the proceedings before the settlement commission the assessee claimed interest expenses and as per the order dated 28.07.2014 of the settlement commission and during verification proceedings u/s. 245D(3) assessee informed the AO that interest as claimed in the computation of income on ground of interest expenses retained in inventory is deductible under provisions of section 36(1)(iii) - the said amount of interest paid was in respect of capital borrowed for the purpose of business or profession. As further submitted that the construction and development having commenced, the business is in operation, therefore, interest is allowable u/s. 36(1)(iii)
As brought to the notice of the AO that in the case of CIT v. Lokandwala constructions Industries Ltd., [2003 (1) TMI 93 - BOMBAY HIGH COURT] the assessee’s claim for deduction of interest, although the revenue was recognized only on project completion basis in subsequent year, was allowed in the year in which the claim of interest was made - as contended that the interest expenditure incurred during the year is claimed and allowable as expenses even though the same has been inventorised in the Books of Accounts, these contentions were accepted by the revenue and no objection has been raised by the Assessing Officer and the settlement commission has accepted these contentions of the assessee. This fact was also taken note by the CIT(A) in allowing the claim of the assessee. Therefore, since the revenue could not controvert the findings of the CIT(A) that the project constructed by the assessee for which the loans have been taken is not a stock in trade and also the other findings of the Ld.CIT(A), we do not find any valid reason to interfere with the findings of the Ld.CIT(A) and accordingly we sustain the order of the CIT(A) on this issue. Grounds raised by the revenue are rejected.
Disallowance u/s. 14A r.w.r. 8D to the exempt income earned by the assessee - HELD THAT:- We find that Ld.CIT(A) restricted the disallowance u/s. 14A of the Act to the exempt income earned by the assessee following the decision of the Hon'ble Madras High Court in the case of Shiva Industries Holdings Ltd v. ACIT [2011 (5) TMI 451 - ITAT, CHENNAI]and the decision of Daga Global Chemical Pvt. Ltd., v. ACIT [2015 (1) TMI 1204 - ITAT MUMBAI]. This bench is consistently holding that, the disallowance u/s. 14A of the Act shall not be more than the exempt income and shall be restricted to the exempt income earned by the assessee. Thus, the decision of the Ld.CIT(A) is in tune with the consistent view of this Tribunal. Hence we do not find any infirmity in the order passed by the Ld.CIT(A). This ground of the revenue is dismissed.
Non-cognizance of the revised return of Income filed by the appellant on 31st March 2015 - filing of original return was delayed by few minutes - non considering the revised return on the ground that the original return filed by the assessee is a nonest and is a belated return - HELD THAT:- Delay is only of two minutes which was caused due to technical glitch and last hour of rush in the website, we direct the Assessing Officer to treat the original return filed by the assessee for the A.Y. 2014-15 as filed in time and consequently to consider the revised return of income filed by the assessee for the purpose of computing the income of the assessee.
Disallowance of deduction claimed u/s. 80IB - HELD THAT:- AO restricted the claim for deduction allowable u/s. 80IB(10) by reducing the excess claim which is due to inadvertence of the assessee as admitted and also the cancellation Charges from the total claim made - HELD THAT:- Since, we have directed the Assessing Officer to consider the original return filed with a delay of two minutes due to technical glitch as the return filed in time, we direct the Assessing Officer to allow the deduction as quantified by him in the Assessment Order at ₹.6,93,86,043/. Thus, Ground No.2(a) is allowed.
Deduction u/s. 80IB on the cancellation charges - HELD THAT:- Assessee is a builder and developer and the apartments constructed by the assessee are its stock in trade. When the buyer advances monies to the assessee for booking the flats, it is nothing but part of sale consideration and when subsequently if cancellation happens such amounts were forfeited and not refunded. These amounts cannot become a miscellaneous income for the assessee and this income will form part of income from eligible business. Sale of the apartments vis-à-vis the advances received for purchase of flats from the buyers are in extricable linked with eligible business of the assessee and therefore the amounts retained on cancellation of the apartments is nothing but business income and is eligible for deduction u/s. 80IB - when the assessee sells the apartments subsequently in later years which were cancelled by the buyers in earlier years the amounts forfeited/retained by the assessee on account of cancellations shall have to be reduced from the sale price and only on the balance sale consideration/income, the assessee is entitled for deduction u/s.80IB - we allow the claim of the assessee for deduction u/s.80IB(10) of the Act on the amounts received on cancellation of flats.
Disallowance of business promotion expenses - expenses towards gold coin and bullion purchases by the assessee - HELD THAT:- The increase in volume of turnover from the previous year to the current year is at ₹.209 Crores. The expenses incurred by the assessee on its scheme for distribution of gold coins when compared to the volume of business is very negligible. Therefore, since floating of scheme by the assessee is not in doubt at all, purchases of gold coins and bullion by the assessee from the parties is proved, incurring of expenses on the distribution of gold coins for the purpose of boosting the business of sale of flats by the assessee cannot be doubted - We are of the view that the expenses incurred by the assessee towards distribution of gold coins/certificates etc., for promoting its business through a promotional scheme is nothing but expenses incurred wholly and exclusively for the purpose of business. - Decided in favour of assessee.
-
2020 (4) TMI 841
Deemed dividend addition u/s 2(22)(e) - as contended on behalf of the assessee that this amount was received by the assessee in the course of regular course of business - HELD THAT:- As per Section 2(22)(e) the addition on account of deemed dividend is to be restricted to accumulated profits. As both sides agree to this, we direct the Assessing Officer to compute accumulated profits (possessed by M/s. Mittal Construction & Real Estate Pvt. Ltd.) as per law, and restrict the addition u/s 2(22)(e) on account of deemed dividend to the extent of aforesaid accumulated profits. For the limited purpose of computation of aforesaid accumulated profits as per law, this issue is remanded to the file of the Assessing Officer, for fresh order as per law in accordance with aforesaid direction.
Claim of brought forward capital loss - disallow assessee’s claim of set off of brought forward capital loss on the ground that the assessee has not filed Return of Income - HELD THAT:- Perusal of records shows that the assessee had filed ROI for assessment year 2009-10 in the office of ITO, Ward 19(2), New Delhi; wherein claim for long term capital loss to be carry forward has been made. Therefore, the basis on which the assessee’s claim for brought forward capital loss had been rejected by the Assessing Officer is incorrect. Further, if the date of filing of ROI is not clearly visible in the stamp; it is not the fault of the assessee.
The assessee does not bring its own acknowledgement stamp to be fixed on ROI; and the assessee does not himself fix the stamp. It is a stamp of Income Tax Department, and the stamp is fixed by officials of Income Tax Department. If the date of acknowledgement is not clearly visible in the ROI; it is the mistake of Revenue officials. Even when the date of receipt of ROI in Income Tax Department is not clearly visible in the acknowledgement; it is easy for Revenue officials to ascertain date of receipt from reference to records of Income Tax Department. We record our displeasure that no effort was made during appellate proceedings before Ld. CIT(A) to ascertain this date. -direct AO to allow the assessee’s claim for long term capital loss unless there is evidence in records of Income Tax Department to show that the return for assessment year 2009-10 was not filed by the assessee within prescribed time limit u/s 139(1) - For this limited purpose, this issue is remanded to the file of the Assessing Officer for fresh order
Addition under the head “Income from House Property” - properties at shop no. 4 and 5 at Kamla Nagar although not occupied by the assessee, was to be deemed to be let out - CIT(A) said assessee was to be treated as owner of the properties u/s 269 UA of Income Tax Act as the assessee had entered into the lease agreement with Sh. N.M. Mittal for a period of 30 years in respect of these properties.HELD THAT:- On perusal of materials before us, we find that the lease deed between Sh. Naresh Mohan Mittal and the assessee, dated 7th January, 1993 was for a period of 4 years only, and not for 30 years as alleged by the Ld. CIT(A). Therefore, Section 269UA(2)(f) has no application to the facts of the case. Moreover, this is not a case of purchase of the properties by central government under chapter XX-C of I.T.Act; and therefore, in any case, S. 269 UA has no application to facts of this case. Thus, the Ld. CIT(A) was in error, both on facts as well as in law, in confirming the aforesaid additions of ₹ 49,000/-. In view of the foregoing, the aforesaid addition has no legs to stand, and we accordingly direct the Assessing Officer to delete this addition.
Addition u/s 69 - cash deposit made in the bank accounts of minor children of the assessee - HELD THAT:-Having regard to the fact that the amounts are very small and insignificant in nature; and further, that it is customary and common practice in society to make gifts to the children on ceremonial occasions such as birthdays; we direct the Assessing Officer to reconsider the matter; and to treat a reasonable amount as explained through gifts received by the minor children on ceremonial occasions such as birthdays. For this limited purpose, this issue is remanded to the file of the Assessing Officer for fresh order in accordance with our aforesaid direction.
Addition u/s 50C - addition was made in respect of immovable property sold by the Assessee - it is the case of the assessee that the difference between value determined by the DVO and sale consideration as per sale deed, is less than 5% thus the assessee is entitled to benefit under 3rd proviso to Section 50C(1) - HELD THAT:- In the case before us the value as per Stamp Valuation Authority is more than 105 percent of the sale consideration as per sale deed . For the purposes of third proviso to S. 50C(1) of I.T.Act; the valuation of the property by DVO has no relevance; and what is material is the valuation by Stamp Valuation Authority. When the value as per Stamp Valuation Authority is more than 105 percent of sale consideration as per sale deed; the assessee is not eligible for benefit under third proviso to S. 50C(1) of I.T.Act, even when valuation by DVO is less than 105 percent of sale consideration as per sale deed - we decline to interfere with impugned order of the Ld. CIT(A) on this issue.
-
2020 (4) TMI 840
Refund of sugar cess paid on raw sugar imported - rejection on the ground that N/N. S.O. 102 (E) dt. 07.02.2009 exempting levy of CESS on sugar is not applicable to the refund claim of the appellant and also that since the respondents have not challenged the assessment they are not eligible for refund - Whether decision in the case of PRIYA BLUE INDUSTRIES LTD. VERSUS COMMISSIONER OF CUSTOMS (PREVENTIVE) [2004 (9) TMI 105 - SUPREME COURT] and ITC LIMITED VERSUS COMMISSIONER OF CENTRAL EXCISE, KOLKATA -IV [2019 (9) TMI 802 - SUPREME COURT] would apply to the facts of this case? - HELD THAT:- It is not disputed that the respondents have paid the cess at the time of filing the Bill of Entry under protest. The marking of protest itself gives information to the department that there is requirement for re-assessment. Assessment under Section 17 of Customs Act, 1962 cannot be said to be finalized when respondent has marked the protest while paying duty. In case, respondents had paid the entire duty without any mark of protest, in order to claim refund they have to request for reassessment of Bill of Entry. The mark of protest is an information to the department that the respondent is not making payment of cess voluntarily and then department has to initiate proceedings to vacate protest and pass speaking order for reassessment. If the department fails to do so the respondents cannot be put to any disadvantage of rejecting the refund claim - refund cannot be denied on this ground.
Whether cess paid by the respondent is eligible for refund? - HELD THAT:- The Board has clarified in a letter dt.10.08.2004 that cess is not a duty of excise. Though there may be decisions in which it is held that sugar cess is also duty of excise, the circular issued by the Board is binding on the department - Therefore the decision placed before us by the Ld.A.R contending that sugar cess is also duty of excise and therefore payable by the respondent does not find favour.
There are no grounds to interfere with the reasoned order passed by the Commissioner (Appeals) - appeal dismissed - decided against Revenue.
-
2020 (4) TMI 839
Principles of Natural Justice - DFIA scheme - order for assessment of Bill of Entry - benefit of N/N. 98/09-Cus. dated 11.09.2009 denied - case of appellant is that the relied upon documents along with show cause notice were not given to them and hence the impugned order was passed in violation of the principles of natural justice - HELD THAT:- The order has been passed in violation of principles of natural justice as the relied upon documents in the show cause notice were not given to the appellants. Hence the orders of the lower authorities cannot be sustained and the matter needs to be remanded back.
Appeal allowed by way of remand.
-
2020 (4) TMI 838
Inaction of the official respondent in not registering an FIR on the basis of the complaint made by the petitioner - complaint discloses a cognizable offence of forgery being committed for filing a case into the court against the petitioner - whether the High Court in exercise of jurisdiction under Article 226 of the Constitution of India can direct the official respondents to register an FIR on the basis of the complaint made by the petitioner?
HELD THAT:- If an act of forgery is resorted to and using such forged document a proceeding is laid in any court, the provisions of Section 195 (1)(b)(ii) of Cr. P.C., does not prohibit the victim from filing a complaint either with the police or before the magistrate under Section 156(3) of Cr.P.C. - Though in the facts of the present case, the petitioner has approached the respondent police authorities by lodging a complaint by e-mail on 03.09.2019 and thereafter on 29.10.2019, the respondent authorities did not register FIR on the basis of the complaint and on the other hand, directed the petitioner to approach NCLT since the matter was pending before such tribunal. Though in the notice issued to the petitioner with regard to the action taken on the complaint, the respondent authorities did not specifically refer to the provisions of Section 195 of the Cr.P.C., the purport of the said communication can clearly be inferred, whereby the respondent authorities wanted a complaint to be made by the concerned court under Section 340 of Cr.P.C., since, the document is already filed into the court.
The restriction placed under Section 195 of the code is applicable only when a court is required to take notice judicially of the act of offence complained and the investigation thereinto by the police authorities. Thus, this court is of the view that the respondent police authorities ought to have registered an FIR on the basis of the complaint made by the petitioner and take up investigation in the matter as specified under Section 156 of the Code, instead of issuing notice claiming that a civil dispute is pending before NCLT and directing the petitioner to approach NCLT for redressal.
Though this court having come to the conclusion that the respondent police authorities ought to have registered an FIR on the basis of the complaint made by the petitioner, this court cannot in a writ petition direct the respondent police authorities to register an FIR and investigate into the matter being complained of - the main relief sought for in the present writ petition of “directing the respondent official to register an FIR on the basis of the complaint” cannot be granted and since a notice has been issued to the petitioner informing the action taken on the basis of the complaint lodged, it is left open for the petitioner to approach the concerned Magistrate court having jurisdiction to avail remedies in accordance with law.
Petition disposed off.
-
2020 (4) TMI 837
Commitment of scheduled offences - Uttar Pradesh State Industrial Development Corporation (UPSIDC), Varanasi - It is the contention of the present appellant that it is a State Authority and has been erroneously shown to have committed the scheduled offences - HELD THAT:- On perusal of the impugned order & PAO, it is seen that nowhere there is any allegations made by the ED that the present appellant has committed the scheduled offences or has generated proceeds of crime or laundered any proceeds of crime. In fact, it is admitted in the written reply to the appeal filed by ED that this appellant has been made as a party as it was the lessor of the property over which the defendants no(s) 1 to 3 has rights as lessee and the ED has got no objection if the order of the Adjudicating Authority is modified in relation to the contention of the appellant.
On perusal of the materials available on record, it is seen that the Impugned Order has not disclosed as to how the present appellant is a party to the alleged commission of crime or has the possession of proceeds of crime or generated the proceeds of crime and laundered them even remotely. The implication of the present appellant along with other defendants by the Adjudicating Authority is neither proper nor legal.
Appeal disposed off.
-
2020 (4) TMI 836
Classification of Services - Port Services or CHA services - transport of export goods to the custom station or import goods from custom station to the importers’ premises in their own trucks - charges collected as stevedoring charges - It is the case of the Revenue that the transportation activities undertaken by them is an ancillary service which is part of the composite service of “CHA Service” - HELD THAT:- The stevedoring activity is loading and unloading of cargo. He explained that this activity is rendered by the appellant on his own behalf. He is actually directly dealing with the party. The appellant is only licensed by the port to undertake the stevedoring activity and these activities had not been done on behalf of the port neither they had been authorized by the port to do any port services.
CHA Services - HELD THAT:- This transportation charges are clearly reimbursable from their customers and they have to be necessarily excluded from the amount received from their customers. In these circumstances, the demand of Service tax by including the transportation charges collected by the appellant is not in order. Therefore, this is also liable to be set aside.
Summing up the demand on account of stevedoring services and by inclusion of transportation charges under the category of CHA services is not sustainable - Since the demands are not sustainable, there is no justification for imposition of any of the penalty - Appeal dismissed - decided against Revenue.
-
2020 (4) TMI 835
Refund of Swachh Bharat Cess - the cess paid on the input services used for providing export service - rejection of refund on the ground that there is no provision for refund of Swachh Bharat Cess paid on the input services used for providing export service - HELD THAT:- The issue involved in this appeal is no more res integra in view of the decision of this Tribunal in M/S. STATE STREET SYNTEL SERVICES PVT. LTD. VERSUS COMMISSIONER OF CGST, NAVI MUMBAI [2019 (6) TMI 859 - CESTAT MUMBAI] in which this Tribunal while discussing Section 119 of the Finance Act, 2015 and various case laws, by a detailed order allowed the Appeal filed by the Appellants therein and held that the Swachh Bharat Cess paid on input services has to be available as Cenvat Credit and the same can be discharged by utilizing Cenvat Credit and the appellant therein are entitle for refund of it.
The Appellants are entitled for refund of Swatch Bharat Cess used for Export of Services - Appeal allowed - decided in favor of appellant.
........
|