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Showing 101 to 120 of 1621 Records
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2016 (5) TMI 1528
Disallowance u/s 14A read with Rule 8D - Whether assessee has demonstrated that the investments were made from and out of the surplus funds? - HELD THAT:- Rule 8D(2) provides for computation of expenditure by all the three limbs provided therein on aggregate basis. Since the CIT(Appeals) has not considered the available funds with the assessee and source thereof, this Tribunal is of the considered opinion that the Assessing Officer shall reconsider the issue afresh and find out whether the assessee had any surplus funds as observed by the CIT(Appeals). If surplus funds were available, the Assessing Officer has to consider such surplus funds for making the investments.
Since the order of CIT(Appeals) is not clear regarding the availability of surplus funds and source thereof, this Tribunal is of the considered opinion that the matter needs to be reconsidered by the Assessing Officer. Accordingly, the orders of the lower authorities are set aside and the entire issue is remitted back to the file of the Assessing Officer. AO shall reconsider the issue afresh and find out the availability of surplus funds and source thereof and thereafter decide the issue in accordance with law, after giving reasonable opportunity to the assessee.
Disallowance of contribution made to ESI and Provident Fund. - Addition u/s 2(24)(x) and Section 36(1)(va) - HELD THAT:- It is not in dispute that the employees’ as well as the employer’s contribution to Provident Fund and ESI was deposited before the due date for filing of return of income. The Madras High Court in Industrial Security & Intelligence India Private Limited [2015 (7) TMI 1063 - MADRAS HIGH COURT] after considering the judgment of Apex Court in Alom Extrusions Limited [2009 (11) TMI 27 - SUPREME COURT] found that even though the employees’ contribution towards Provident Fund and ESI was deposited after the due date prescribed under the relevant Act but before the due date for filing of return of income under the Income-tax Act, no disallowance can be made under Section 43B of the Act. In view of this judgment of Madras High Court in Industrial Security & Intelligence India Private Limited (supra), this Tribunal do not find any reason to interfere with the order of the lower authority and accordingly the same is confirmed.
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2016 (5) TMI 1527
Recovery of cash credit/loan amount alongwith interest - time limitation - Section 18 of the Limitation Act, 1963 - acknowledgement of liability made before the expiration of the period of limitation for any suit - It was argued by the respondent/defendant that since the two letters were obtained/written after the period of limitation expired for preferring the suit, and therefore those letters could not have been treated as validating letters - HELD THAT:- From a bare reading of two letters (Ex.PW2/2 and Ex.PW2/3), it would appear that the respondents have clearly admitted their liability of the outstanding dues towards the Bank, only for the purposes of restituting the Bank. The contents of the aforesaid two letters are nothing short of an acknowledgment of the dues as also an implied promise to pay. The promise to pay as required under Section 25(3) of the Indian Contract Act need not be express and can be implied or inferred as well. Any acknowledgment of liability is necessarily an admission of the fact that the maker owes money to the creditor. The only corollary of such an acknowledgment is that the same is payable and that the person making the acknowledgement would pay such amount or else there would be no requirement of making any such acknowledgment.
No doubt, there is a distinction between an acknowledgement under Section 18 of the Limitation Act and a promise under Section 25 (3) of the Indian Contract Act inasmuch as though both have the effect of giving a fresh lease of life to the creditor to sue the debtor, but, for an acknowledgement under Section 18 of the Limitation Act to be applicable, the same must be made on or before the date of expiry of the period of limitation whereas such a condition is non-existent so far as the promise under Section 25 (3) of the Indian Contract Act is concerned - also, implied promise is not unknown under the Indian Contract Act.
The letters indicate the categorical endorsement of the liability to make the payments, and thus, it could be treated as an implied promise to pay. The circumstances under which such an acknowledgement was made, viz. after the reminders by the Bank for repayment of the loan amount, further lends support to the hypothesis that the aforesaid letters are in the nature of a promise to pay. Prior to the aforesaid acknowledgements, there was a confirmation of the balance amount by the respondent/defendant. Any written acknowledgment after the confirmation of the balance amount can safely be treated as a promise to pay and not mere acknowledgement - the First Appellate Court was not justified in dismissing the suit of the appellant on the ground of the same being time barred.
The letters are in the nature of a promise and therefore there was no requirement of the same having been obtained/written within a period of three years to be counted from 02.09.2002 - appeal allowed.
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2016 (5) TMI 1526
Penalty proceedings u/s 271(1)(c) - assessment order u/s 153A - additional income disclosed in the return filed in response to the notice u/s 153A was a voluntary disclosure of income with a view to buy peace, and therefore, the alleged voluntary disclosure of income does not form within the mischief of deemed - HELD THAT:- As far as the first fold of stand point is concerned, deemed concealment of income ought to be supported by availability of money, bullion, jewellery not by an inference of existence of money, bullion, jewellery or valuable articles or entry.
As far as second fold of submission raised by the ld.CIT(DR) in the written submissions is concerned, we find that the case of the assessee does not fall under the main provision. There is no addition to the income of the assessee. Returned income has been accepted as it is. Only by virtue of Explanation-5, this additional income declared by the assessee can be categorized under the deemed concealment. In the main provision, the case of the assessee cannot be brought. The assessee has placed on record copy of the statement recorded under section 132(4) of the Income Tax Act. We have perused the assessment order. AO has nowhere made a mention of any seized material. Thus, on facts there is no disparity. Therefore, all the appeals of the assessee are allowed and delete the impugned penalty for the respective assessment years.
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2016 (5) TMI 1525
Rectification of mistake - Revised order invoking the provisions of section 154 - input / CENVAT credit on capital goods claimed by the assessee as business expenditure - HELD THAT:- From the facts of the case it is apparent that the learned AO has invoked the provisions of section 154 of the Act after passing orders under section 143(3) r.w.s. 147 of the Act on an issue which is debatable and to be decided by a conscious thought process. Therefore we are of the considered view that, the learned Commissioner of Income Tax (Appeals) has rightly relied in the decision in the cases of Dimosaur Steels Ltd. and JCIT [2012 (9) TMI 839 - SUPREME COURT] and in the case of CIT Vs. Soora Subramanian [2009 (10) TMI 579 - MADRAS HIGH COURT] wherein it was held that section 154 of the Act can only be invoked for rectifying mistake which is apparent on the face of the record but not in respect of an issue which is debatable in nature. In these circumstances, we do not find it necessary to interfere with the order of the learned Commissioner of Income Tax (Appeals) on this issue. - Decided against revenue.
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2016 (5) TMI 1524
TP Adjustment - Tribunal had directed the AO to accept the pricing of thee international transaction of the assessee for the impugned year to be at arms length, if similar transactions with AEs were accepted by the TPO to be at arms length for previous years relevant to A. Ys. 2007-08 and 2008-09 - TPO had pursuant to the DRP directions passed an order not complying with the directions of the DRP and AO had therefore persisted with the same adjustment that he had done earlier - HELD THAT:- It is clear that the directions of the DRP is binding on the AO. No doubt as per Section 92CA(4) of the Act, an AO has to compute total income in conformity with the arms length price determined by the TPO. However, once there is an order of DRP, AO is bound by the directions of the DRP by virtue of sub-section (1) to Section 144C of the Act. AO is not required to refer the matter which has been decided by the DRP to the TPO again. We are therefore of the opinion that the addition made by the AO without considering the directions of the DRP reproduced by us above cannot stand in the face of the clear legal mandate. We delete such additions.
Disallowance of warranty provision - whether assessee had made the provisioning for warranty in a scientific manner - assessee doing the business of sale of laptops and desktops - HELD THAT:- Expenditure incurred against warranty given on sales made in any given year would be reflected in the succeeding year, when the provisioning is done on the basis of machine months. Assessee had done the provisioning based on machine months. If by application of the formula of multiplying machine months with repair action rate and cost per claim, an excessive warranty provisioning had resulted, then definitely in the succeeding year the expenditure incurred on warranty would be much less. The table above would show that expenditure on warranty was higher in almost all succeeding years except financial year 2009-09.
We cannot say that assessee had followed a method which was not scientific. We are of the opinion that the three conditions set out in the case of Rotork Controls India (Pvt) Ltd [2009 (5) TMI 16 - SUPREME COURT] have been satisfied by the assessee, viz., establishing that there is a present obligation on account of a past event, working out the probable estimate of the outflow of the resources required and substantiating the reliability of such estimate. Especially so since the assessee was mandatorily required to follow AS-I and principles of prudence stipulated in such AS-I required provisioning for all known liabilities even if it could not be determined with certainty, but was made based on available data. We therefore delete the addition made by the AO disallowing the provision for warranty. - Decided in favour of assessee.
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2016 (5) TMI 1523
TP Adjustment - No opportunity of cross-examination was granted to the petitioner or not - HELD THAT:- Petitioner would have had no opportunity of rebutting the data unless the persons, who submitted the data, were subjected to cross-examination. This is all the more so because the data that was submitted was not part of the audited accounts. In these circumstances, we set aside the impugned order dated 29.03.2016 and remit the matter to the TPO for affording an opportunity to the petitioner to cross-examine the authorized personnel of the said companies, who submitted the segmental data, which has been utilized by the TPO. The TPO may thereafter pass a fresh order in accordance with law.
The learned counsel for the petitioner states that the petitioner shall not take up the plea of limitation.
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2016 (5) TMI 1522
Reopening of assessment - validity of reason to believe - disallowance towards repairs and maintains expenses incurred by the assessee - HELD THAT:- AO on going through the records noticed that assessee claimed certain expenditure towards repairs and maintenance and according to him this is not an admissible expenditure. Therefore he was of the opinion that there is escapement of income within the meaning of Sec. 147 of the Act by the assessee.
On going through the reasons recorded, we find that no tangible materials have come on record after completion of assessment so as to believe that the income of the assessee has escaped assessment. It is only from the records the Assessing Officer came to the conclusion that the expenses are not allowable and therefore there is escapement of income. This is only a mere change of opinion of the Assessing Officer to reopen the assessment based on the materials already available on record which it is not permissible under law. See RALLIS INDIA LTD. VERSUS ASSISTANT COMMISSIONER OF INCOME-TAX AND ANOTHER [2010 (3) TMI 164 - BOMBAY HIGH COURT] - Decided in favour of assessee.
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2016 (5) TMI 1521
Deduction u/s.80P - assessee was carrying on banking business - HELD THAT:- As decided in Kulswami Co-operative Society assessee [2014 (4) TMI 355 - ITAT MUMBAI] Co-operative Society does not fall within the restriction placed in sub-section (4) of section 80P of the Act, and decided the identical issue in favour of the assessee.
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2016 (5) TMI 1520
Assessment u/s 153A - Period of limitation - Six preceding years will have to be reckoned from the date of recording of satisfaction note u/s 153C and not from the date of search - HELD THAT:- Referring to CBDT Circular dated 31.3.2014 and cases SSP AVIATION LTD. [2012 (4) TMI 335 - DELHI HIGH COURT] and SHREE JASJIT SINGH [2015 (8) TMI 982 - DELHI HIGH COURT clinch the issue in favour of the assessee and, accordingly, we quash the assessment framed u/s 153A/143(3) for assessment year 2007-08 as being void ab initio as being barred by limitation. Ground of the assessee’s appeal is allowed.
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2016 (5) TMI 1519
Liability towards gratuity and payable to employees - represented an unascertained liability so as to enhance the book profit in terms of provisions of Clause (c ) of Explanation to Section 115JA(1) - HELD THAT:- The issue relating to provision for gratuity is restored back to the file of the AO to be adjudicated in the same manner as has been directed, for AY 2002-03. However, the provision for leave encashment is to be considered ascertained liability and, therefore, not required to be added back for computing book profits u/s 115JB.
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2016 (5) TMI 1518
Allowability of 60% depreciation on V-sat equipment - AO has restricted the claim of depreciation of 60% on V-sat equipments to 25% - HELD THAT:- An identical facts on similar issue, in the case of Anagram Capital Ltd. v. ACIT [2011 (2) TMI 1575 - ITAT AHMEDABAD] since the facts are identical as has been considered in the earlier year in which it was held that the VSAT equipments cannot be categorized as computer software, there is no material on record to dispute the findings of the authorities below. Nothing is brought to our notice on facts to distinguish the facts considered in earlier year as noted above. - Decided against assessee
Disallowance of ROC fees paid to Registrar of Companies for increasing the share capital - revenue expenditure or capital expenditure - HELD THAT:- As perused the order of the Hon’ble Supreme Court in the case of Punjab State Industrial Development Corporation Limited v. CIT [1996 (12) TMI 6 - SUPREME COURT] wherein, held that “the fee paid to the Registrar for expansion of the capital base of the company was directly related to capital expenditure incurred by the company and although incidentally that would certainly help in the business of the company and may also help in profit making, it still retains the character of capital expenditure since the expenditure was directly related to the expansion of capital base of the company and thus it was not an expense in the nature of revenue” - Decided in favour of revenue.
Disallowance of lease rentals - main argument of the AR is that the lease rental was crystallized during the assessment year 2005-06 and 2006-07 and the same was claimed in these years - ssessee is following mercantile system of accounting - HELD THAT:- The expenditure relating one assessment year cannot be claimed in another assessment year since each assessment year is an independent assessable unit. The assessee was following mercantile system of accounting and the expenses not recorded in relevant assessment year, the same cannot be allowed as deduction because remedy does not lie on the next assessment year. Considering the facts and circumstances of the case, we are of the opinion that it would be appropriate to remit the issue back to the Assessing Officer with regard to lease rentals paid to NELCO to allow rental accrued in the relevant assessment year only. AO shall exclude prior period of lease rentals while considering the same. With these observations, we set aside the order of the ld. CIT(A) and remit the matter back to the Assessing Officer to work out the allowable deduction in accordance with law. Thus, the ground raised by the Revenue is allowed for statistical purposes.
Lease transactions with HCL Comnet Ltd. - CIT(A) has observed that the advance payments were down payments towards lease rentals for both the assessment years - HELD THAT:- It is a fact that a mere down payment does not make the transaction a sale nor the amount can be treated as refundable deposit without any basis. Therefore, these expenditures should be considered as revenue expenditure. Further, the Assessing Officer has not given any finding to disallow the band width charges for 256 KBPS and lease rental charges paid to various franchisees as well as v-sat shifting charges. Though both the items are not provided in the books of accounts, but the assessee has made the claim in the computation of income statements, which is found to be in order in view of the judgement of CIT v. Pruthvi Brokers and Shareholders P. Ltd. [2012 (7) TMI 158 - BOMBAY HIGH COURT] . Therefore, the ld. CIT(A) has rightly held that both the charges would be treated as revenue items and eligible for deduction. Thus, we find no infirmity in the order passed by the ld. CIT(A) on this issue and accordingly, the ground raised by the Revenue is dismissed.
Allowability of depreciation on office equipments - at 15% or10% - HELD THAT:- CIT(A) was of the opinion that the claim of the assessee seems to be in order. He also observed that as per Appendix-I to Rule 5 of Income Tax Rules, 1962, Block III(i), the depreciation rate is 15% for office equipments. Depreciation rate of 10% is applicable for Furniture and Fittings falling in Block II to the above Appendix-I. Office equipments obviously and apparently falling under Block III are entitled to 15% depreciation rate. Accordingly, he directed the Assessing Officer to allow the depreciation @ 15% on Office Equipments. In view of the above findings of the ld. CIT(A), we find no reason to interfere with the order passed by the ld. CIT(A) on this issue. Thus, the ground raised by the Revenue is dismissed.
Allowability of depreciation on printers and scanners - assessee has claimed depreciation at 60% on printers and scanners under the head ‘Computers’ - AO has restricted the depreciation to 15% and the excess depreciation was added back to the total income of the assessee - HELD THAT:- We find that the Hon’ble Delhi High Court in the case of BSES Yamuna Powers Ltd. [2010 (8) TMI 58 - DELHI HIGH COURT] has held that computer accessories and peripherals such as printers, scanners and server etc. formed an internal part of the computer system and, in fact, the computer accessories and peripherals cannot be used without the computer. The Hon'ble High Court thus held that they are the part of the computer system and are entitled to depreciation at the higher rate of 60%. In view of the above, we find no infirmity in the order passed by the ld. CIT(A) and thus, the ground raised by the Revenue is dismissed.
Disallowance u/s 14A r.w.r. 8D - HELD THAT:- In the argument advanced by the assessee. However, we are of the opinion that the investments would definitely involve certain administrative and establishment cost since the decision to make investments, track investments, sale of such investments and follow-up of the receipt of income, sale proceeds etc have to be undertaken which entails definite costs. It is for this purposes that Rule 8D(2)(iii) provides that one half percent of the average value of the investments will be deemed to be expenditure incurred for the same. When the Act has specified a definite formula for working out the expenditure to be disallowed, the Assessing Officer should have disallowed ½ % of average value of the investments as per Rule 8D(2)(iii) as expenditure incurred for earning of exempt income. Accordingly, we set aside the order of the ld. CIT(A) on this issue and direct the Assessing Officer to disallow under Rule 8D(2)(iii) alone. Thus, the ground raised by the assessee is allowed for statistical purposes.
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2016 (5) TMI 1517
Capital gain on sale of agricultural land - date of transfer u/s 2(47)(v) - AO has alleged the transfer of the subject land took place only after conversion of the land use u/s 90-B of Land Revenue Act and therefore, the same is taxable as capital asset - HELD THAT:- An application is required to be made to the relevant authorities for land conversion where the appellant holding land for agricultural purposes intend to develop such land for housing, commercial, institutional, semi-commercial, industrial, cinema or petrol pump purposes or for the purposes of multiplex units, infrastructure projects or tourism projects or for such other community facilities or public utilities purposes as may be notified. Therefore, what need to be seen is whether the appellant has moved an application for land conversion as specified under section 90-B(3) of the land Revenue Act for the above specified purposes or not.
As per JDA order no. 52/2007 dated 29.5.2007 placed on record, it is stated that the appellant has moved an application under section 90-B(3) in respect of land bearing khasra Nos. 370 situated in village Vimalpura Tehsil Sanganer District Jaipur for converting the said land into farm houses. On perusal of the JDA’s order, it is stated therein that in the village area, constructing farm houses is permissible and there is no need for land conversion and accordingly, the appellant’s application for surrender of agricultural land was accepted by JDA u/s 90-B(6) whereby the land shall vest with JDA with effect from date of passing of such order. Similarly, there is another order of JDA bearing order no. 21/2007 dated 26.04.2007 in respect of land bearing khasra Nos. 371 situated in village Vimalpura Tehsil Sanganer District Jaipur for converting the said land into farm houses. The ld AR has submitted during the course of hearing that JDA has issued similar orders in respect of other parcels of lands whereby the appellant has applied for conversion of agricultural land into farm houses and it was ordered by JDA that there is no need for land conversion for farm houses. The Revenue has not brought any evidence to controvert the above orders of JDA.
Appellant has moved an application for land conversion under section 90-B of land Revenue Act for conversion of agricultural land into farm houses and as per the orders of the JDA, constructing farm houses is permissible on agriculture land and there is no need for land conversion. Given that there is no conversion of agriculture land as confirmed by JDA, being the appropriate authority under land Revenue Act, what has been transferred by the appellant continues to be the agriculture land.
Undisputedly, the said agricultural land in question is lying in an area beyond 8 Kms. of the municipal limits. Once it is held that the agriculture land has been transferred which is lying in an area beyond 8 Kms. of the municipal limits, it is of no consequence from tax point of view whether the date of transfer should be the date of agreement to sell i.e, 02.04.2007 or the registration of the sale deeds of various parcels of land done on 28.04.2007 and on subsequent dates falling within the same financial year, as the agriculture land will fall outside the definition of capital asset under Sec. 2(14)(iii) of the Act and we are not inclined to examine the same and other related grounds raised by the Revenue as the same have become infructious.
Impugned agricultural land, not being a capital asset under Sec. 2(14)(iii) of the Act, provisions of section 45 of the Act are not attracted in the instant case and hence, the sale consideration on transfer of agriculture land cannot be brought to tax. - Decided against revenue
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2016 (5) TMI 1516
Addition on account of TPO adjustments - Comparable selection - additional evidence filed by assessee - HELD THAT:- After going through the decision in the case of Hughes Systique [2013 (8) TMI 812 - ITAT DELHI] we are of the opinion that it would be in the interest of justice to admit the additional evidence filed by assessee in the form of affidavit because this affidavit has come in possession of assessee after the proceedings were over for both the assessment years in question. We, therefore, set aside the order of ld. CIT(A) for AY 2005-06 and restore the matter to the file of ld. AO/TPO to decide the ALP of the commission paid by assessee after taking into consideration the affidavit of Ernst Huber, Director of Taratec SA. Accordingly, department’s appeal for AY 2005-06 stands allowed for statistical purposes.
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2016 (5) TMI 1515
Addition u/s 40A(3) - assessee had made payments in cash - HELD THAT:- AO has presumed that only sold quantity of land was purchased during the year under consideration. There is nothing on record with the Authorities Below to arrive at this conclusion. In view of the above facts and circumstances we do not find that action of learned CIT(A) in confirming the disallowance made by AO u/s 40A(3) of the Act, can be upheld as there is no evidence of purchase of land by assessee and also there is no evidence that assessee had made payments to the owners of land as has already been established by the fact that owners had received payments form actual buyers only and therefore, there can not be any question of disallowance u/s 40A(3). Therefore, we hold that on merits and facts of the case no disallowance was warranted u/s 40A(3).
Even otherwise, if it is assumed that assessee must have first purchased the land and had made payments in cash even then the disallowance u/s 40A(3) cannot be made in view of the judgment in the case of Sh. Gurdas Garg [2015 (8) TMI 569 - PUNJAB & HARYANA HIGH COURT]
Where the identity of the persons who has received payment in cash is established and genuineness of transactions is established, no disallowance can be made under the provisions of section 40A(3). In the present case even if it is assumed that assessee had first purchased the land and had made the payments to sellers of land the identity of sellers of land is established as is evident from the copy of agreement to sell impounded during survey and also the identity of assessee is established who is deemed to have purchased the land and therefore, also the facts and circumstances of the present case read with judgment of Hon’ble Punjab & Haryana High Court in the case of Sh. Gurdas Garg suggest that no disallowance could have been made in the present case. In view of the above we allow ground Nos.3 to 6 of the appeal of the assessee.
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2016 (5) TMI 1514
Loss on account of fall in value of the investment held as stock in trade - ITAT deleted the addition - HELD THAT:- The Court is not persuaded to concur with the view expressed in ING VYSYA Bank Ltd. [2013 (6) TMI 43 - KARNATAKA HIGH COURT] which appears to have been decided in the peculiar facts of that case. The Court prefers to adopt the reasoning in the decision in Karnataka Bank Ltd. [2013 (7) TMI 656 - KARNATAKA HIGH COURT] and HDFC Bank Ltd. [2014 (7) TMI 724 - BOMBAY HIGH COURT] . The Court accordingly declines to frame a question on this issue.
Deduction claimed under Section 36(1)(vii) - ITAT allowed the Assessee to raise an additional ground AND remanded the said issue to the AO for a fresh determination - HELD THAT:- Having perused the impugned order, the Court finds that the ITAT accepted the plea of the Assessee that all the relevant facts in this regard were already on record. Only a pure legal ground was being urged on that basis. In the circumstances, the Court declines to frame a question on this issue as well.
Addition on account of excess claim of depreciation on the LAN/WAN equipments - Assessee claimed depreciation @ 60% by treating them as computer peripherals whereas the AO granted depreciation @ 15% by treating them as plant and machinery - HELD THAT:- As urged that the said equipments were not essential for the working of computers in the Assessee's organization and, therefore, could not be treated as computer peripherals. The Court is unable to agree with the above submission. Where the Assessee uses a network of computers for its business purposes, the LAN/WAN equipment is an essential art of the computer system. The ITAT's view to the above effect cannot be said to be perverse. In the circumstances, the Court declines to frame a question on this issue as well.
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2016 (5) TMI 1513
Deemed dividend u/s 2(22)(e) - HELD THAT: It is important that unless advances it is not gratuitous to its shareholder but it is to protect the business interest of the company, it falls out of the purview of taxation u/s 2(22) (e) of the act. It is not a current account but advances in the nature of loan which assessee enjoys, simply on account to being a share holder exceeding specific percentage, then only, the provisions the section 2(2)(e) of the act comes into play.
The above view further gets support from the decision of CIT Vs. Creative Dying and Printing Pvt. Ltd [2009 (9) TMI 43 - DELHI HIGH COURT] . No other contrary decisions were brought to our notice by the ld DR. In view of the above finding we reverse the finding of the ld CIT(A) in confirming the addition as deemed dividend u/s 2(22)(e)
We also clarify that in the present appeal the accumulated profit are to the tune of only ₹ 1123551/- and the total alleged advances given to the appellant is ₹ 2377000/- and ₹ 15,00,0008/- are on account of security deposit and therefore ₹ 877000/- are the entries of mutual current account transactions, which are also not deemed dividend in view of above judicial precedents and hence, total addition confirmed of ₹ 11,23,551/- by the ld CIT(A) is deleted - Appeal of the assessee is allowed.
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2016 (5) TMI 1512
Taxability of profits arising on sale of investment - HELD THAT:- Tribunal considered the amendments brought in Rule 5 by Finance Act, 1988 w.e.f. 1.4.1989 and also subsequent amendment brought w.e.f. 1.4.2011 by Finance Act 2009. The Tribunal noticed that the Finance Act 1988 omitted the provision relating to exemption of the profits earned on sale of investments by general insurance companies and the same was brought to tax again w.e.f. 1.4.2011. Accordingly the Tribunal held that the gain on sale of investments cannot be assessed to tax in AY 2004-05. Since the facts prevailing in the year under consideration are identical, by following the order passed by the Tribunal for AY 2004-05, we hold that the profit on sale of investment cannot be taxed. Accordingly we set aside the order passed by Ld CIT(A) on this issue and direct the AO to delete the addition.
Disallowance computed u/s 14A - income of the assessee is computed as per the provisions of sec. 44 of the Act read with Rule 5 of First schedule of the Income tax Act - HELD THAT:- No disallowance u/s 14A can be made in the hands of the assessee, since it is covered by the special provision of computation of income u/s 44 of the Act. Consistent with the view taken in the above said years, we also hold that no disallowance u/s 14A can be made in this year also.
Amortisation of premium paid on purchase of investments - HELD THAT:- As in the assessee’s own case relating to AY 2004- 05 and 2006-0 decided the same in favour of the assessee by following the decision rendered by the co-ordinate bench of Tribunal in the case of Tata AIG General Insurance Company Ltd [2010 (10) TMI 764 - ITAT, MUMBAI].
Addition made u/s 69B - AO noticed that the actual value of shares held by the Custodian of the Assessee has exceeded the book value - HELD THAT:- The explanation of the assessee was that it had sold the shares, but the buyer has failed to take delivery of the same and hence the difference between the book quantity and the physical quantity has arisen. The same was not acceptable to both the tax authorities. The Tribunal has considered an identical issue in AY 2006-07 and held that the provisions of sec. 69B shall not apply to such kind of situations. Following the same, we set aside the order of Ld CIT(A) passed on this issue and direct the AO to delete this addition.
Rejection of claim for deduction u/s 35DDA - Year of assessment - as in the books of account, the said provision was reversed on the first day of next year and a fresh provision was made again on the last date of the year - HELD THAT:- Since the assessee has failed to furnish the details of computation of income pertaining to AY 2004-05 and 2005-06, we are unable to decide this issue. However, we have noticed that the assessee itself has disallowed the provision amount of ₹ 5.94 crores in AY 2003-04, meaning thereby, the assessee has intended to omit the entries passed in this regard. The assessee must have excluded the amount of ₹ 5.94 crores credited to Profit and Loss account and also disallowed the provision of ₹ 5.67 crores made on 31.3.2004, while computing the income for AY 2004-05. If the assessee has so disallowed the provision of ₹ 5.67 crores made on 31.3.2004, then the reversal of the above said amount made on 1.4.2004 should not be taxed in AY 2005-06. However, this fact requires verification. Upon verification, if it is found that the provision of ₹ 5.67 crores reversed on 1.4.2004 was not excluded while computing the income for AY 2005-06, then we direct the AO to exclude the same. Since all these facts require verification, we set the order passed by Ld CIT(A) on this issue and restore the same to the file of the AO with the direction to examine this issue
Computation of Book profit u/s 115JB - HELD THAT:- As decided in assessee's own case relating to AY 2004-05 and 2006-07 the provisions of sec. 115JB shall not be applicable to the assessee.
Non-granting of credit for foreign taxes paid - HELD THAT:- A careful perusal of the provisions of sec. 91 would show that the said section does not provide that the tax should have been paid in the foreign country only in the year the credit was claimed. Further, the income tax is computed on the total income and hence there is merit in the contentions of the assessee that the credit should be given in the year in which the concerned income is offered to tax in India. Accordingly, we set aside the order of Ld CIT(A) on this issue and direct the AO to match the tax paid in the foreign country with the income offered by the assessee and accordingly give credit of the same in accordance with the provisions of the Act.
Addition of interest charged u/s 234C - HELD THAT:- A.R fairly admitted that this issue is decided against the assessee in the earlier years. Accordingly we confirm the order passed by Ld CIT(A) on this issue.
Reversal of Provision for impairment loss on investments - HELD THAT:- Since the gain on sale of investments has been held to be not taxable, the corrolary is that the loss or the provision made for loss shall also not be deductible
Disallowance of exgratia payment - assessee took the plea that the provisions of sec. 43B shall govern this claim - HELD THAT:- We have noticed that this issue has already been restored to the file of the AO by Ld CIT(A) to examine the claim for deduction u/s 43B of the Act, i.e., the original reasons for making this disallowance appears to have been accepted by the assessee, since it has not raised any ground thereon. Hence, we do not find any infirmity in his order.
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2016 (5) TMI 1511
Pre-arrest bail - offences punishable under Sections 120(B) and 420 of the Indian Penal Code and under Sections 3, 5 and 6 of Prize Chits and Money Circulation Schemes (Banning) Act, 1978 and Section 3 of Maharashtra Protection of Interest of Depositors (In Financial Establishments Act) - HELD THAT:- On considering parameters of section 438 of the Code of Criminal Procedure, I am not inclined to protect the accused. It won't be out of place to mention that such circulation is required to be stopped. It is necessary for the prosecution to take injunctive steps against this business activity which is prima facie, illegal. Though by stopping this business, a large group of people may get financially affected, however, it will save larger groups of people from becoming prey of this activity.
The Anticipatory Bail Applications are rejected.
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2016 (5) TMI 1510
Exemption u/s 80G - assessee is a Public Charitable Trust registered under the Bombay public Trust Act, 1950 and the Societies Registration Act, 1860 - assessee trust has incurred expenditure on its objects which is less than 85% of the total receipts and that the trust is charging fees for workshops and for laboratory activities - HELD THAT:- As perused the order the Ld. CIT denying grant of exemption u/s. 80G and the paper book filed on behalf of the assessee. We have also considered the various decisions cited before us. We find the assessee trust is granted registration u/s.12A vide Certificate No. 12AA(1)/2014-15-503 dated 20-05-2014 by the CIT-I, Nashik. We find the Ld.CIT vide his order dated 22-05-2014 rejected the claim of exemption u/s.80G of the Act on the ground that the assessee trust has incurred expenditure on its objects which is less than 85% of the total receipts and that the trust is charging fees for workshops and for laboratory activities.
From the various decisions filed by the the assessee we find exemption u/s.80G cannot be denied merely on the ground that the assessee trust has incurred expenditure on its objects which is less than 85% of the total gross receipts.
We find the in the case of N.N. Desai Charitable Trust Vs. CIT [1999 (5) TMI 11 - GUJARAT HIGH COURT] has held that while granting exemption u/s.80G the authority granting approval cannot act as assessing authority. The enquiry should be confined to finding out if institution satisfies prescribed conditions or not. Actual assessment of institution would not affect claim for special deduction u/s.80G.
CIT in our opinion is not justified in denying exemption u/s.80G on the ground that the assessee trust has incurred expenditure on its objects which is less than 85% of the total gross receipts and that the assessee Trust is charging fees for workshop and laboratory activities. We hold that the CIT is not justified in denying exemption u/s.80G. We accordingly set aside his order and direct him to grant exemption u/s.80G to the assessee Trust. - Decided in favour of assessee.
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2016 (5) TMI 1509
Possession of disputed property - right of class IInd heir in the property - HELD THAT:- In the instant case, as per concurrent findings of all the courts, Defendant No. 3 has failed to prove the factum of her adoption by deceased Yashoda in the year 1959. There was no corresponding document of adoption and other documentary evidence showing that Defendant No. 3 had ever been adopted by the deceased Yashoda. True it is that in some of the revenue entries the name of Defendant No. 3 has been shown as person in possession, but not in the capacity of adopted daughter. Yashoda was admittedly the owner of the property. The Plaintiff has based his case to recover possession on the strength of the sale deed executed by Buchamma in his favour.
It is settled law that denial for want of knowledge is no denial at all. The execution of the sale deed was not specifically denied in the written statement. Once the execution of the sale deed was not disputed it was not necessary to examine Buchamma to prove it. The provisions contained in Order 8 Rule 5 require pleadings to be answered specifically in written statement.
It is also settled law that passing of consideration under a sale deed cannot be questioned by third party. Defendant No. 3 has not been able to establish her case that she is an adopted daughter of the deceased Yashoda and thus, she being the third party, could not have questioned the execution of the sale deed by Buchamma on the ground of passing of consideration.
The property on the death of Yashoda had been passed on to Buchamma being class IInd heir, as such she had the right to sell the property to Plaintiff. Even if Buchamma had not placed Plaintiff in possession of property on strength of his title conferred by way of sale deed in question he had right to recover possession. The first appellate Court was thus right in decreeing the suit. The High Court has erred in allowing appeal - appeal allowed.
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