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Showing 101 to 120 of 1076 Records
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2014 (10) TMI 984
Addition u/s 40A(2)(b) - payments to persons specified - payments made to MIs. Kukreja Services Pvt. Ltd. towards Business Centre Facility and Administration Charges - Held that:- As gone through the order of the Tribunal in assessee’s case and found that on identical facts and circumstances, the similar addition made in earlier years were deleted by the Tribunal. We also found that payments made for business centre facility and administrative charges were not in excess of fair market value of similar services available in the market. No merit in the addition so made by the AO under Section 40A(2)(b) of the Act. Accordingly, we direct to delete the same.
Addition of interest paid on account of alleged interest-free loans given to the sister concerns - addition as interest bearing funds have been diverted for non-business purpose - Held that:- As before the AO assessee has furnished full details of interest free funds available with it amounting to ₹ 10.22 crores out of which advance given to the sister concern was ₹ 6.99 crores. There is no dispute to the well settled proposition that if the interest bearing funds have been diverted for non-business purpose, disallowance is required to be made with respect to the interest expenditure attributable to such advances. Where interest free funds have been utilized for advancing non-business purpose, no disallowance can be made. In the instant case, assessee has demonstrated the interest free funds available which was alleged to be advanced to sister concern without charging interest which requires due consideration by the AO. In the interest of justice, we restore this ground back to the file of the AO for deciding afresh after considering the interest free funds available with the assessee firm with reference to the interest free advances given to the sister concern
Addition of interest expenditure and directed for capitalization for the same towards project cost - as per AO same should be capitalized towards projects/plots/premises by observing that assessee is in the business of construction activity for which assessee was purchasing plot and making investment for construction of building - Held that:- We are not in agreement with the contention of the lower authorities as well as the contention of the learned DR insofar as interest expenditure was indirect expenditure which is required to be debited to the profit and loss account in the year of incurring of such expenses while computing the business income of the assessee. The issue is also covered by the decision of K. Raheja (P) Ltd. [2005 (5) TMI 552 - ITAT MUMBAI] wherein it was observed that where the assessee was following completed contract method for recognizing its income/loss, but claimed finance cost in nature of interest as a period cost, the same is deductible in the year in which it was incurred or accrued. It was further observed that the Accounting Standard 7 issued by the ICAI, also suggested that in case where expenditure cannot be attributed to a particular activity carried on by the assessee, same is to be allowed as period cost. It was further observed that various benches of the Tribunal have also taken a consistent view that claim made by the assessee for deduction of finance cost by way of interest is in conformity with said Accounting Standard.
No merit in the action of the lower authorities for not allowing the claim of interest expenditure paid to the bank on the funds borrowed and debited to profit and loss account of the year under consideration. even after disallowing the said interest expenditure, the declared loss of ₹ 2.08 crores was assessed by AO at a loss of ₹ 40.18 lakhs. Thus, there was no intention of assessee to reduce its taxable income by claiming interest paid to bank as expenditure of the year under consideration. - Appeal decided partly in favor of assessee.
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2014 (10) TMI 983
Maintainability of case for adjudication before Arbitral Tribunal - it was pleaded that the dispute between the parties is one of accounting and the appellant should not be permitted to wriggle out of the mode of resolution of disputes by arbitration - Held that:- A plaint is not to be read like a statute. The plaint has to be read as a whole. The allegation is really against their employee and in accounting dispute inter se the parties, and by impleading the third defendant, the appellant cannot be permitted to defeat the arbitration clause. At request of learned Senior Counsel for the appellant, we do clarify that naturally what has been observed by the learned Single Judge is for purposes of deciding the application under Section 8 of the said Act and would not, in any case, affect the merits of controversy before the Arbitral Tribunal.
Mere allegation of fraud against the third respondent, with some splatterings of allegations against the first two defendants / respondents, would not result in the case being made unfit for adjudication before the agreed mode of Arbitral Tribunal. In fact, even the appellant understood it in the same way, till suddenly the 'U' turn arose.
Appeal do not have any merit and is dismissed.
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2014 (10) TMI 982
Registration of the assessee u/s 12A with effect from 1. 4.2003 - Held that:- The Tribunal has taken pains to set out the facts of the case, the relevant provisions, the amendment, the object with which the trust is established, the judgments on which reliance is placed and later has rightly come to the conclusion that the delay is a bonafide one and therefore, it requires to be condoned. It has also taken note of the parliamentary legislation which was passed by the Government Major Ports. the nature of work the assessee is carrying on, the way in which they are protecting the interest of the country, the lengthy coast line in the west and in the east and held that therefore, it is entitled to registration under Section 12A of the Act. The order passed by the Tribunal is flawless. We do not see any justification to interfere with the said order.
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2014 (10) TMI 981
Rebate u/s. 88E - Exclude short term capital gains for the purpose of calculating "average rage of tax" for determining rebate u/s. 88E - tax rate of business income - Held that:- The average rate of income tax is to be applied on the income which is computed under the head profits and gains of business or profession. Such income has to be referred only in the context of meaning given in sub–section (1). If the business income of the assessee company is taxed at maximum marginal rate, then rebate is to be allowed for the security transaction tax paid on such income only under section 88E.
The short term capital gain is taxed at lower rate under section 111A, but at the same time, no security transaction tax credit is allowed against the same. The tax rate of business income is governed by altogether different provisions of the Act which could not be imported or read into section 88E. The phrase “amount calculated by applying the average rate of income tax” as used in sub– section (2) has to be reckoned as average rate of income tax on business income only. No merit in the ground raised by the Department as the directions given by the learned Commissioner (Appeals) is in accordance with the provisions of the law. - Decided against revenue
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2014 (10) TMI 980
Sale of pledged articles taken as a security - Dealer or not? - levy of tax on sale - imposition of penalty for non-payment of tax - Is the appellant is a dealer as defined under Section 2(xv) of the Kerala Value Added Tax Act? - Held that:- Reading of Rule 2(xv)(f) show that a bank or a financial institution selling pledged articles taken as a security whether in the course of business or not, is a dealer - In so far as this case is concerned, it is the admitted case of the bank that the properties of the company were mortgaged to it, for securing the loan availed and those properties were sold in public auction by the Bank. It was in the capacity of the mortgager that the bank became a party to the proceedings before the BIFR - the appellant bank satisfied the requirements of Section 2(xv)(f) of the Kerala Value Added Tax Act and is a dealer in so far as the sale conducted by it on 5.4.2007.
The respondents were fully justified in levying tax and also penalty - revision dismissed.
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2014 (10) TMI 979
Rectification of mistakes - Exemption u/s 10(10) - Voluntary Retirement Scheme (VRS) - Error apparent on record - Held that:- We find no reason to entertain these Special Leave Petitions, which are, accordingly, dismissed.
However, question of law is kept open.
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2014 (10) TMI 978
Treatment to rental income received by the assessee on letting out the unsold stock - “Income from house property” or “Business income” - allowing of deduction under section 24 - Held that:- On identical set of facts, it has been held consistently by the Tribunal that the rental income received by the assessee has to be assessed under the head “Income from house property”. Therefore, following the orders of the Tribunal in the preceding assessment years on the same issue, we confirm the order of the ld. CIT(A) on this issue and thus the appeal of the Revenue is hereby dismissed accordingly.
Income from the sale of the premises in question as sale of the stock in trade - busniss income - assessee submitted that property in question was converted from stock in trade to investment in the year 2005 - Held that:- Mere changing the head in the balance sheet is not sufficient to hold that the intention of the assessee to hold the property was as investment. From the record, we observe that since the assessee could not sell its property at appropriate time and therefore had exploited it for rental purposes. To get the benefit of indexation, the assessee made the accounting entry treating the same as investment, whereas, the real business intention and treatment of the property remained the same i.e. to sell it for the purpose of business of the assessee. The AO has discussed in detail, the nature, character and business of the assessee, the clauses of the partnership deed as well as the terms and conditions of the agreement entered into by the assessee while selling the property in question as promoter of the property.
The order of the AO as well as of the ld. CIT(A) is well reasoned and we do not find any infirmity in the same. Lower authorities have rightly treated the income from the sale of the premises in question as sale of the stock in trade and as such the income from the same has rightly been taxed under the head “Business income.”
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2014 (10) TMI 977
Capital gain computation - Value of tenancy right determination - deduction of cost of improvement of the residential premises inherited by the assessee against the long term capital gain - FMV determination - Claim towards the cost of new residential property purchased against long term capital gain arising on sale of an old house property - deduction u/s 54 denied - as per assessee he inherited tenancy rights from his father and hence the provisions of section 55(2)(b)(ii) shall apply - as per DR cost of tenancy right should be taken as NIL - Held that:- Since the assessee has transferred only his tenancy right, in our view, the assessee cannot consider the cost incurred on construction of the structures as the cost of acquisition of tenancy rights. In our view, the value of tenancy right has to be determined in accordance with the practice adopted in real estate market.
The assessee is entitled to adopt fair market value of the tenancy rights as on 1-4-1981 as the cost of acquisition of tenancy rights. However, from the records we notice that neither the assessee nor the A.O. has attempted to ascertain the fair market value of the tenancy rights as on 1-4-1981. Accordingly, we are of the view that the issue relating to the determination of fair market value of the tenancy rights as on 1-4-1981 should be decided afresh at the end of the A.O. Accordingly, we set aside the order of the ld. CIT(A) on this issue and restore the matter to the file of A.O. with a direction to determine the fair market value as on 1-4-1981
Deduction towards the expenditure incurred on construction of any authorized or any unauthorized structure - Held that:- From the computation of capital gain made by the assessee, we notice that the assessee has claimed to have spent ₹ 31 lacs for construction of certain structures on 15-12-1988 and claimed indexed cost thereof as deduction against capital gain. In this regard, we inclined to agree with the view taken by the ld. CIT(A) that the assessee has received compensation for surrendering the tenancy rights and not towards surrender or sale of any unauthorized or authorized structure - assessee is not entitled to claim any deduction towards the expenditure incurred on construction of any authorized or any unauthorized structure
Disallowance of part of expenditure incurred in connection with the acquisition of new asset - Held that:- The assessee is entitled to include the expenditure incurred on the new flat in the cost of the new flat, provided they were incurred within in the prescribed time. However, in the instant case, the details of expenditure relating to ₹ 2,23,830/- are not available on record. Hence, in our view, the claim made by the assessee with respect to the sum of ₹ 2,23,830/- needs to be examined afresh in the light of the decision rendered by the co-ordinate Bench of this Tribunal in the case of Saleem Fazelbhoy [2006 (6) TMI 139 - ITAT BOMBAY-G]
Disallowance of development charges, proportionate share of tax and other charges - Held that:- all these expenses have been incurred by the assessee for peaceful enjoyment of the property and not for acquisition of the property -Accordingly, we find merit in the decision taken by the ld. CIT(A) in confirming the decision taken by the A.O. Accordingly we hold that the assessee is not entitled to include this amount in the cost of acquisition of new flat.
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2014 (10) TMI 976
Oppression and mismanagement - Criminal proceedings in exercise of power Under Section 482 Code of Criminal Procedure - Embezzlement of crore of Rupees by affecting suitable change in the shareholding pattern - Held that:- Judicial process should not be an instrument of oppression or needless harassment. The court should be circumspect and judicious in exercising discretion and should take all the relevant facts and circumstances into consideration before issuing process lest it would be an instrument in the hands of private complainant as vendetta to harass the persons needlessly
Summoning of an accused in a criminal case is a serious matter and the order taking cognizance by the Magistrate summoning the accused must reflect that he has applied his mind to the facts of the case and the law applicable thereto. Section 482 of the Code of Criminal Procedure empowers the High Court to exercise its inherent powers to prevent abuse of the process of court and to quash the proceeding instituted on complaint but such power could be exercised only in cases where the complaint does not disclose any offence or is vexatious or oppressive. If the allegations set out in the complaint do not constitute the offence of which cognizance is taken by the Magistrate it is open to the High Court to quash the same in exercise of power Under Section 482.
The power of quashing a criminal proceeding should be exercised very sparingly and with circumspection and that too in the rarest of rare cases; that the court will not be justified in embarking upon an enquiry as to the reliability or genuineness or otherwise of the allegations made in the FIR or the complaint and that the extraordinary or inherent powers do not confer an arbitrary jurisdiction on the court to act according to its whim or caprice.
The letter dated 14.12.2006 which is the basis of taking cognizance was allegedly sent from the office of Respondent No. 4 Company under the signature of one colleague of the Appellant without the knowledge or prior permission of the Appellant and the said letter was never signed by the present Appellant. In our view, if that is so, it is open to the Appellant to take a defense and prove their contention during trial. Needless to say that the trial court shall consider the said contention during trial and record its findings.
The High Court rightly refused to quash the criminal proceedings in exercise of power Under Section 482 Code of Criminal Procedure - appeal dismissed.
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2014 (10) TMI 975
Addition u/s 69A - Cash in hand - peak credit for cash deposit - Held that:- No alternative except to accept the opening balance of the cash in hand of ₹ 24,49,500/- as on 1.4.2005. If the opening balance of ₹ 24,49,500/- stands accepted as no appeal has been filed by the Revenue for A.Y 2005-06, in our opinion, no interference is required in the order of CIT(A) as this amount will be sufficient to off set the cash deposit of ₹ 16,90,000/- as mentioned by the AO. We accordingly sustain the order of CIT(A) allowing relief to the Assessee to the extent of ₹ 16,51,112/-. Thus, ground taken by the Revenue stands dismissed. The AO is free, if he so desires, to take the action under the Wealth Tax Act as the closing balance of cash in hand as per the cash flow statement as on 30.3.2006 comes to ₹ 27,94,699/-. - Decided against revenue
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2014 (10) TMI 974
Exemption to section 10B - connection with activity of export - the interest earned in respect of bank deposits kept for opening letters of credit - Held that:- Obtaining of letters of credit is an essential activity for undertaking exports and the deposit of amounts for that purpose is a condition precedent. If the deposits so made have yielded interest, it certainly is attributable to or can be said to be derived from the activity of export
Unless the amount is referable to the activity of the concerned industry and it has close nexus with such activity, it cannot be brought under the purview of section 80HH of the Act
Thus setting aside the order of the Tribunal, in so far as it relates to items (b) and (c) claimed by the respondent, viz. :
"(b) Interest given by the banks in respect of the moneys received by the said banks on behalf of the assessee-company against the pub lic issue of shares ; and
(c) Interest earned in respect of the temporary intercorporate deposits kept by the assessee-company with other companies, out of the proceeds of the public issue of shares."
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2014 (10) TMI 973
Disallowance of deduction u/s 80IB(10) on income from leave & license fees and Miscellaneous Income - Held that:- Considering the fact that the unsold flats, being stock-in-trade of the housing project, being the immediate source of the impugned rental income, we find direct nexus of the said income to the housing project on hand. Therefore, the said income is derived from the housing project, making the income eligible for deduction u/s 80IB(10) of the Act. Therefore, the conclusions drawn by the CIT (A) are not sustainable in law. - Decided in favour of assessee
Regarding the miscellaneous income as held by the Revenue Authorities as ineligible income for the purpose of deduction u/s 80IB(10) we find, the Income Tax Authorities has not gone into the facts relating to this income. As per the Ld Counsel, the same constitutes reimbursements of maintenance charges by the flat owners. This is the reimbursement of expenses incurred by the assessee to the housing society of the housing project. Such reimbursement does not constitute income of the assessee. The Revenue Authorities have wrongly held it as income and treated the same as ineligible for claim of deduction - this matter should visit the file of the AO for fresh adjudication after analyzing the relevant facts. - Decided in favour of assessee for statistical purposes.
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2014 (10) TMI 972
TDS u/s 194A - whether accident claim cases and the compensation awarded under the Motor Vehicles Act cannot be said to be taxable income? - Held that:- he Circular, dated 14.10.2011, issued by the Income Tax Authorities, whereby deduction of income tax has been ordered on the award amount and interest accrued on the deposits made under the orders of the Court in Motor Accident Claims cases, is quashed and in case any such deduction has been made by respondents, they are directed to refund the same, with interest at the rate of 12% from the date of deduction till payment, within six weeks from today.
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2014 (10) TMI 971
Liability of service tax - Notional interest accrued on security deposits for renting of immovable property - Held that: - this issue has been extensively considered by this Tribunal in the case of Magarpatta Township Developers & Construction Co. [2014 (9) TMI 461 - CESTAT MUMBAI], wherein this Tribunal held that notional interest on security deposit cannot be added to rent agreed upon between the parties for the purpose of levy of service tax for renting of immovable property - appellant is not required to pay service tax on notional interest on security deposit under the category of renting of immovable property service - appeal allowed - decided in favor of appellant.
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2014 (10) TMI 970
Deduction claimed u/s 80IB (10) - partial completion certificate received - Held that:- It is an admitted fact that the facts and circumstances of the present case are identical to the facts and circumstances in the earlier years i.e. assessment years 2008-09 and 2009-10 and following the same parity of reasoning, we hold that the assessee is entitled to claim of deduction under section 80IB (10) of the Act in relation to the profits derived from the housing project Harsh Paradise.
Second residential unit allotted in the same project to two members of the said family - Applicability of the amended provisions of sub section (f) to section 80IB (10) of the Act - Held that:- The amended provisions having been introduced on a later date cannot be applied to the transactions completed before the said provisions were introduced were amended as the assessee cannot be expected to do deeds which are impossible.
Applying the ratio laid down by the Hon'ble Supreme Court in the case of Krishnaswamy S. Pd. v. Union of India (2006 (2) TMI 75 - SUPREME Court) and in the case of CIT Vs. Revathi Equipment Ltd. (2007 (6) TMI 154 - MADRAS HIGH COURT), we hold that the assessee is entitled to claim of deduction under section 80IB (10) of the Act in respect of the flat allotted to Mrs. Nalini Andar i.e. second residential unit allotted in the same project to two members of the said family.
The amended clause (f) to section 80IB (10) of the Act are to be applied w.e.f. 19-08-2009 and cannot be used to deny the deduction under section 80IB (10)in respect of the residential unit allotted 14 prior to the coming into operation of amended provisions i.e. clause (f) inserted to section 80IB (10) of the Act. - Decided against revenue
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2014 (10) TMI 969
Having regard to the seriousness of the allegations made against the appellant which were found to be correct by the authorities, the Tribunal was justified in passing the impugned order - There is nothing like res judicata or parity in the matter of granting interim orders in particular regarding pre-deposit - appeal dismissed.
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2014 (10) TMI 968
Profit on sale of investments not liable to be taxed in the hands of the assessee - Rule-5 applicability - assessee carries on insurance business - Held that:- A co-joint reading of Secton-44 to the First Schedule, it is clear that the profit and gains of the present assessee are to be computed in accordance with Rule-5 as applicable to the relevant year. A plain reading of this rule signifies that the profit as disclosed in the annual accounts, prepared in accordance with relevant Schedule of insurance Act, is to be taken as total income, subject to the adjustment, specifically provided in clauses (a) and (c). Clause (b) was omitted by the Finance Act 1988, w.e.f. 1.4.1989. The only effect of section 44 is that the operation of provisions referred to therein are excluded in the case of an assessee who carries on insurance business and in whose case the provisions of Rule-2 of the First Schedule are attracted.
Section 44 is a special provision enshrined in the Act for ascertaining the profit and gains of an assessee carrying on the business of insurance. Thus it can be said that special provision overrides the general provision. In view of this legal position the amount of profit, as disclosed by the P&L Account are to be drawn as per the insurance Act.
The Hon'ble Apex Court in Britannia industries Ltd.(2005 (10) TMI 30 - SUPREME Court) reiterated the same principle holding that expenditure towards rent, repairs, maintenance of guest house, used in connection with the business, is to be disallowed u/s. 37(4) of the Act because this is a specific provision overriding the general provision. This rule has been expressly incorporated in section 44 of the Act by specifically providing interalia that nothing contained in the provisions of section 28 to 43B shall apply to the profits and gains of business of insurance which shall be computed in accordance with rules contained in the First Schedule. We find no infirmity, on the issue, in the conclusion drawn by the ld. CIT(A). - Decided against revenue
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2014 (10) TMI 967
Disallowing depreciation on fixed assets to assessee trust - Held that:- We find that the assessee has given sufficient reasons for claiming the same, in support, certificates were filed which were also before the lower authorities. The assessee is running a hospital. The assets which have outlived their lives cannot be sold as scrap as per the rules governing the hospital, the assessee was left with no choice but to claim the same as additional depreciation. The Hon’ble High Court of Bombay in the case of Institute of Banking Personnel Selection (2003 (7) TMI 52 - BOMBAY High Court) has laid down the ratio that the income of the Trust is required to be computed u/s. 11 on commercial principles.
Claim of carry forward of deficit to be set off against the income of the subsequent years - Held that:- As the income has to be computed on commercial principles like business loss which is allowed to be carried forward and set off with the profit of subsequent years. Similarly, the deficit in the case of a trust is allowed to be carried forward to be set off in subsequent years. That being so, findings of the Ld. CIT(A) need no interference. - Decided against revenue
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2014 (10) TMI 966
Principles of Natural Justice - the appellants were not supplied the relied upon documents, the cross examination was not conducted and most of the written submissions were even not referred in the impugned order - penalty u/s 112(a) and 114A of CA, 1962 - Held that: - the relied upon documents were not supplied to the appellants except to Shri Kejal Mehta. The demand was confirmed against M/s. Samudri International, M/s Mayur enterprises and M/s Madhu Enterprises on the basis of statements of Shri Bhumish Shah and Shri kejal Mehta. Shri Alpesh Shah is the proprietor of M/s Samudri International and Bhupendra Ravani is the proprietor of M/s Mayur Enterprises and M/s Madhu Enterprises. It is very surprising that the statements of persons against whom the custom duty demand was confirmed were never recorded, even the said importers were not made confronted with the statements of Shri Bhumish Shah and Shri Kejal Mehta. In such a situation it becomes necessary that the cross examination must be granted.
There is gross violation of principle of natural justice in passing the adjudicating order, therefore such order deserves to be set aside and remanded - appeal allowed by way of remand.
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2014 (10) TMI 965
Condonation of delay - time limitation - Held that: - there is no explanation at to whether inspite of period of one month and five days, no COD application stand filed by the appellant. Inasmuch as the appeal is admittedly beyond the normal period of limitation, we find no reason to keep the same on record - appeal is dismissed as barred by limitation.
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