|
Advanced Search Options
Case Laws
Showing 121 to 140 of 1052 Records
-
2011 (4) TMI 1437
Issues involved: Determination of the justification for upholding the disallowance of cash subvention expenses u/s 143(3) of the Income Tax Act, 1961 for the assessment year 2006-07.
Summary:
Issue 1: Disallowance of Cash Subvention Expenses
The appeal was filed against the order passed by the CIT(A) regarding the disallowance of cash subvention expenses. The Assessing Officer rejected the claim of deduction for cash subvention expenses amounting to Rs. 92,04,873. The CIT(A) upheld this decision, stating that the expenditure claimed was abnormally high without sufficient evidence. However, upon further examination, the ITAT found that the subvention expenses were a legitimate business expense incurred by the assessee for marketing auto loans. The ITAT observed that the payments were made through banking channels, properly documented, and linked to specific customers and transactions. The ITAT concluded that there was no valid reason to disallow the cash subvention expenses and directed the Assessing Officer to delete the disallowance.
Issue 2: Consistency with Previous Decision
The ITAT noted that a similar issue was decided in favor of the assessee for the assessment year 2003-04. Based on the consistency of the facts and legal position, the ITAT upheld the grievance of the assessee and directed the Assessing Officer to delete the disallowance of Rs. 2,73,32,019.
In conclusion, the appeal was allowed, and the disallowances of both Rs. 92,04,873 and Rs. 2,73,32,019 were directed to be deleted by the ITAT.
-
2011 (4) TMI 1436
Issues Involved:
1. Whether the unpaid service tax liability amounting to Rs. 311,613/- can be treated as income.
2. Whether the unpaid service tax liability should be included as part of 'Current Liabilities' in accordance with the method of accounting.
3. Whether the unpaid service tax liability not paid before the due date of filing the return u/s 43B can be disallowed.
Summary:
Issue 1: Treatment of Unpaid Service Tax Liability as Income
The assessee challenged the addition of Rs. 311,613/- on the grounds that unpaid service tax liability cannot be treated as income. The Tribunal referred to the decision in ACIT vs. Real Image Media Technologies Pvt. Ltd. 114 ITD 573 (Chennai), which held that disallowance u/s 43B could not be applied to service tax billed but not received. It was observed that service tax billed but not received had not become payable to the credit of the Central Government by virtue of Section 68 of the Finance Act, 1994, read with Rule 6 of the Service Tax Rules 1994. Therefore, the addition of unpaid service tax as income was not justified.
Issue 2: Inclusion of Unpaid Service Tax Liability in Current Liabilities
The assessee argued that the unpaid service tax liability was disclosed as part of 'Current Liabilities' in accordance with the method of accounting for another Central Government Department. The Tribunal noted that the service provider acts merely as an agent of the Government and is not entitled to claim deduction on account of service tax. Hence, the unpaid service tax liability should be included in current liabilities and not treated as income.
Issue 3: Disallowance of Unpaid Service Tax Liability u/s 43B
The assessee contended that the unpaid service tax liability was not a statutory liability u/s 43B. The Tribunal referred to the decision of the Hon'ble Delhi High Court in CIT vs. Noble & Hewitt (India) (P) Ltd. 305 ITR 324 (Del), which observed that Section 43B was not to be applied in respect of service tax collected by the assessee which was not debited to the Profit & Loss Account as an expenditure. The Tribunal concluded that since the service tax was not payable by the assessee due to non-receipt of payments, the rigour of section 43B could not be applied. Therefore, the disallowance upheld by the CIT (A) was deleted.
Conclusion:
The Tribunal allowed the appeal filed by the assessee, deleting the disallowance of Rs. 311,613/- on account of unpaid service tax liability. The order was pronounced in the open court on 29.04.2011.
-
2011 (4) TMI 1435
Provisional order of attachment u/s 5(1) of the Prevention of money Laundering Act, 2002 (PMLA) - notice u/s 8 facts of the case - In connection with the petitioner's activities in forging documents and forging records in the name of non existing companies for the purpose of getting loan from the Bank, criminal cases were registered against the petitioner. The offence committed by the petitioner is covered by PMLA and investigation was undertaken by the second respondent Enforcement Directorate. It was thereafter, the provisional attachment order was made. The complaint u/s 5(5) of PMLA for Provisional Attachment was filed by the second respondent Deputy Director of Enforcement before the first respondent Adjudicating Authority. The first respondent on considering the complaint had issued a show cause notice u/s 8 of PMLA to the petitioner for his appearance before the first respondent calling him to show cause to his source of income, out of which or by means of which the provisionally attached movable properties were acquired. The petitioner instead of appearing before the first respondent has filed the present writ petition challenging the provisional attachment order as well as the case filed against him.
HELD THAT:- In the present case, by attachment of property made by the second respondent, the petitioner is not bound to lose anything and he cannot be said to be prejudiced. On the other hand, by virtue of Section 5(3), every order of attachment made u/s 5(1) of the PMLA will lose its efficacy either after 150 days or after an order passed u/s 8(2) of the PMLA. Therefore, it is only the petitioner instead of approaching the first respondent Adjudicating Authority who had initiated proceedings u/s 8(1), had rushed to this court. Even if the attachment is made final, u/s 26, an appeal lies to the Appellate Tribunal. Therefore, the petitioner must submit his explanation to the Adjudicating Authority and convince it that the amount sought to be attached was not obtained due to any money laundering and that it was the legally earned income. Even if he fails before the first respondent, there is time enough for challenging the same before the judicial appellate Tribunal constituted u/s 26 of the PMLA. When the Act itself provides for an inbuilt remedy, it is not open to the petitioner to rush to this Court at the stage of provisional attachment, which is yet to be confirmed by the Adjudicating Authority.
Therefore, the writ petition filed by the petitioner must necessarily fail.
-
2011 (4) TMI 1434
Issues involved:
The issues involved in this case are the treatment of peak balance of a bank account as the assessee's income, addition of unexplained bank deposit, and the proper application of sections 68/69/69A/69B of the Income-tax Act, 1961.
Treatment of Peak Balance as Assessee's Income:
The appeal by the Revenue was against the order of the Commissioner of Income-tax (Appeals)-III, Surat, directing the Assessing Officer to treat the peak balance of the bank account as the assessee's income instead of adding a specific amount for the assessment year 2006-07. The Assessing Officer had made an addition of a substantial amount on account of unexplained bank deposit, as the assessee failed to provide necessary information about the bank account. The Revenue contended that the entire deposits in the bank account should be considered as unexplained cash credit due to lack of cooperation from the assessee. However, the Ld. CIT(A) directed the AO to tax only the peak balance of the account as the assessee's income, considering the substantial rotation of money and withdrawals matching the deposits. The Tribunal upheld the decision of the Ld. CIT(A) based on the reasoning that the peak balance represented the assessee's undisclosed income, and declined to interfere with the order.
Proper Application of Sections 68/69/69A/69B:
The Ld. CIT(A) highlighted that the Assessing Officer should have been clear about the specific section under which the addition was being made, instead of citing multiple sections. It was noted that there was substantial rotation of money in the bank account, with deposits being withdrawn on the same day. The AO had added the total of all deposits as the assessee's undisclosed income, whereas the peak theory should have been applied to determine the income emerging from such transactions. The Ld. CIT(A) directed the AO to consider only the peak balance of the account as the assessee's income, which was calculated to be a specific amount on a particular date. The Tribunal agreed with the reasoning provided by the Ld. CIT(A) and dismissed the appeal of the Revenue.
-
2011 (4) TMI 1433
Issues Involved:
1. Deletion of addition of Rs. 53,00,000/- made by the Assessing Officer (AO) on account of cash credit u/s 68 of the Income Tax Act.
2. Whether the order of the CIT(A) should be upheld or the AO's order restored.
Summary:
Issue 1: Deletion of Addition u/s 68 of the Income Tax Act
The Revenue challenged the deletion of Rs. 53,00,000/- added by the AO u/s 68 of the Income Tax Act. The AO had issued a commission u/s 131(1)(d) to the Additional Director of Income Tax (Inv.), Kolkata, who reported that certain shareholders were not genuine. The AO, relying on various judicial decisions, added the amount as unexplained cash credit.
On appeal, the CIT(A) deleted the addition, noting that the companies were registered under the Companies Act and regularly assessed to tax. The CIT(A) found that the AO's notices were duly served, and detailed replies were furnished by the applicant companies. The CIT(A) also noted that one of the companies, M/s. Hanuman Coke Plant Pvt. Ltd., was a Non-Banking Financial Company (NBFC) registered with the RBI, and thus could not be considered non-existent. The CIT(A) concluded that the genuineness, creditworthiness, and identity of the shareholders were established, and no addition u/s 68 was warranted.
Issue 2: Whether the Order of CIT(A) Should be Upheld
The Revenue argued for restoring the AO's order, while the assessee relied on the CIT(A)'s findings and judicial precedents, including CIT vs. Lovely Export Pvt. Ltd. The ITAT noted that in a similar case involving a sister concern, the ITAT had rejected a similar report from the Addl. DIT (Inv.), Kolkata, and concluded that once the identity of shareholders is established, no addition can be made u/s 68. The ITAT upheld the CIT(A)'s findings, emphasizing that the existence of shareholders was not doubted, and the share application money could not be regarded as undisclosed income of the company.
Conclusion:
The ITAT dismissed the Revenue's appeal, affirming the CIT(A)'s decision to delete the addition of Rs. 53,00,000/- u/s 68 of the Income Tax Act. The ITAT reiterated that the identity, genuineness, and creditworthiness of the shareholders were established, and the share application money could not be treated as undisclosed income of the assessee company.
-
2011 (4) TMI 1432
Issues:
1. Applicability of principles of unjust enrichment in a refund claim.
2. Consideration of cross-objections by the Commissioner (Appeals).
Analysis:
1. The case involved a dispute regarding the applicability of the principle of unjust enrichment in a refund claim made by the appellants, who were manufacturers of grey cement. The dispute arose from a scheme announced by the Central Government to incentivize cement manufacturers for increasing manufacturing capacity. The Supreme Court had previously ruled that the principle of unjust enrichment cannot be disputed in such cases, emphasizing the need to determine whether the duty burden had been passed on to customers. The Assistant Commissioner initially ruled in favor of the appellants on one point but against them on the other. However, the Commissioner (Appeals) set aside the ruling, stating that the issue of unjust enrichment was beyond the scope of adjudication due to the Supreme Court's remand order. The appellate tribunal found that the lower authorities erred in not considering the applicability of unjust enrichment as directed by the Supreme Court, leading to the decision being set aside.
2. The second issue involved the Commissioner (Appeals) refusing to consider the cross-objections filed by the appellants regarding the duty burden passed on to customers. The tribunal deemed this refusal improper, stating that the cross-objections should have been considered, especially since the department had filed an appeal against the lower authority's order. The tribunal concluded that the Commissioner (Appeals) should have addressed the cross-objections within the same appeal and remanded the matter to reconsider this aspect. Consequently, the tribunal partially allowed the appeal, upholding the decision on unjust enrichment but directing a review of the consideration of cross-objections related to the duty burden passed on to customers.
In summary, the appellate tribunal's judgment clarified the scope of adjudication regarding unjust enrichment in a refund claim and emphasized the importance of considering cross-objections filed by appellants. The tribunal set aside the ruling of the Commissioner (Appeals) for not adhering to the Supreme Court's directions and remanded the matter for further consideration on the duty burden passed on to customers.
-
2011 (4) TMI 1431
Supreme Court dismissed the Civil Appeal after condoning the delay. (Citation: 2011 (4) TMI 1431 - SC Order)
-
2011 (4) TMI 1430
Issues:
The judgment involves two main Issues:
a) Whether the deletion of disallowance made u/s 40(a)(ia) of the Act by the learned CIT (A) is justified.
b) Whether the deletion of the addition of Rs. 6,21,486/- relating to the excess claim of expenditure by the learned CIT (A) is justified.
Issue a - Disallowance u/s 40(a)(ia):
The assessee, an individual operating as a Transport Contractor, had discrepancies in expenditure claims and TDS deductions. The Assessing Officer disallowed excess expenses and TDS not deducted on hire charges. The Assessing Officer invoked Sec.40(a)(ia) due to failure to deduct TDS. The assessee appealed to the CIT (A) and relief was granted. The revenue appealed the decision. The Departmental Representative argued that Sec. 194C applies to hire charges, supporting the disallowance. The Authorised Representative cited precedents in favor of the assessee. The Tribunal noted that Sec. 194C(1) wasn't applicable for the assessment year in question. Considering previous decisions and the CIT (A)'s decision, the Tribunal upheld the relief granted by the CIT (A) on this issue.
Issue b - Excess Claim of Expenditure:
Regarding the excess claim of Rs. 6,21,486/-, the Departmental Representative argued that fresh evidence was considered without the Assessing Officer's knowledge. The Authorised Representative didn't object to setting aside this issue for re-examination. The Tribunal found that the matter of excess claim needed further examination based on the fresh evidence presented. The Tribunal set aside the CIT (A)'s decision on this issue and directed the Assessing Officer to reevaluate the matter in accordance with the law.
In conclusion, the appeal of the revenue was partly allowed for statistical purposes, with the Tribunal upholding the relief granted by the CIT (A) on the disallowance u/s 40(a)(ia) issue and directing a reexamination of the excess claim of expenditure issue.
-
2011 (4) TMI 1429
Issues involved: Service tax liability on transmission and distribution of electricity for the period from July 2003 to March 2007.
Summary:
The Appellate Tribunal CESTAT Bangalore heard two appeals filed by the assessee and the Revenue against Order-in-Original No. 06/2008-ST (Commr) dated 25.2.2008, regarding service tax liability on transmission and distribution of electricity. The adjudicating authority confirmed the demand of service tax and imposed penalties under Sections 76 and 78 of the Finance Act, 1994. The assessee appealed against the order, while the Revenue was aggrieved by the non-imposition of penalty for the period prior to 18.4.2006 under Section 76 of the Act.
The learned Counsel for the assessee relied on Notification No. 45/2010-ST dated 20.7.2010, issued by the Government of India, which exempted all taxable services related to transmission of electricity till 26-2-2010 and distribution of electricity till 21-6-2010. The notification clarified that services of transmission and distribution of electricity were not intended to be taxed under the Finance Act, 1994. Consequently, the Tribunal set aside the impugned order, allowing the assessee's appeal with consequential relief and rejecting the Revenue's appeal.
This judgment highlights the exemption provided by the government for services of transmission and distribution of electricity, leading to the setting aside of the service tax liability imposed on the assessee for the specified period.
-
2011 (4) TMI 1428
Issues Involved:
1. Date of approval of the housing project for deduction u/s 80IB(10).
2. Ownership of the land for claiming deduction u/s 80IB(10).
3. Proportionate deduction u/s 80IB(10) for merged flats exceeding the area limit.
Summary:
Issue 1: Date of Approval of the Housing Project
The primary dispute was regarding the date of approval of the housing project "Prakruti Park" for the purpose of availing deduction u/s 80IB(10). The Assessing Officer (AO) contended that the project was first approved on 27.02.2004, which required completion by 31.03.2008. Since the project was completed on 19.06.2008, the AO held that the assessee failed to comply with the provisions of section 80IB(10). The CIT(A) held that the project was finalized only when the commencement certificate was issued on 21.09.2004, making the completion date within the prescribed limit. The Tribunal confirmed the CIT(A)'s order, stating that the building plan was first approved on 21.09.2004, and thus, the project was completed within the required timeframe.
Issue 2: Ownership of the Land
The revenue argued that the assessee was not the owner of the land on which the project was constructed, as the commencement and occupation certificates were in the names of the original holders of development rights. However, this issue did not emanate from the CIT(A)'s order, nor was it recorded by the AO in the assessment order. Therefore, the Tribunal dismissed this ground of appeal in limine.
Issue 3: Proportionate Deduction for Merged Flats
The AO found that some flats were merged, resulting in units exceeding the area limit of 1000 sq. ft., thus breaching the conditions u/s 80IB(10). The CIT(A) allowed proportionate deduction by excluding the merged flats, following the decision of the Calcutta Bench in the case of Bengal Ambuja Housing Development Ltd. The Tribunal upheld the CIT(A)'s order, noting that the proportionate deduction is allowable when the other conditions regarding the area of the plot are fulfilled. The Tribunal found no error in the CIT(A)'s order and rejected both the revenue's appeal and the assessee's cross-objection on this issue.
Conclusion:
The Tribunal dismissed the revenue's appeal and the assessee's cross-objection, confirming the CIT(A)'s order on all issues. The order was pronounced in the open court on 29.04.2011.
-
2011 (4) TMI 1427
The petitioner sought release of his trucks loaded with coal, claiming illegal detention and detention charges of Rs. 2,000 per day. Trucks were released as per court order. Court did not find petitioner's claim for damages proven, declining to use Article 226 jurisdiction. Petitioner advised to pursue relief through appropriate legal avenues. Petition disposed, petitioner's personal bond released.
-
2011 (4) TMI 1426
Issues involved: The judgment deals with the revision order u/s. 263 of the Income-tax Act, 1961 passed by the Commissioner of Income-tax, Trivandrum for two consecutive years (A.Y. 2005-06 & A.Y. 2006-07) regarding the status of the assessee as a `local authority' and its eligibility for tax exemption u/s. 10(20).
Status of the assessee as a `local authority': The assessee, charged with town planning responsibilities, claimed to be a `local authority' under a state legislation. The ld. AR argued that the AO's assessment was permissible and the CIT erred in substituting his view. The ld. DR contended that the state Notification did not confer `local authority' status as per the Act's definition. The Tribunal held that the term `local authority' is exhaustively defined u/s. 10(20) of the Act, and the grant of this status is crucial for tax exemption under the same section. The Tribunal found merit in the CIT's order deeming the assessment erroneous and prejudicial to Revenue's interests due to misapplication of law.
Eligibility for tax exemption u/s. 10(20): The Tribunal noted that the grant of `local authority' status is a prerequisite for claiming relief u/s. 10(20). Even though the assessee was denied exemption under this section, the grant of `local authority' status was considered prejudicial to Revenue's interests. The Tribunal emphasized that the denial of `local authority' status would have negated the assessee's claim for exemption u/s. 10(20) from the outset. The Tribunal referred to the scope of the term `prejudicial to the interests of the Revenue' as clarified by the apex court and concluded that there was a patent misapplication of law in this case.
Direction for reassessment: The Tribunal directed the AO to conduct proper inquiries and redo the assessments in accordance with the law, considering the higher courts' interpretations and the specific definition of `local authority' u/s. 10(20). The Tribunal highlighted the need for thorough examination of the state legislation, the COI provisions, and the Kerala Municipalities Act to determine the assessee's eligibility as a `local authority'. The Tribunal refrained from expressing an opinion on the matter but underscored the importance of due diligence in reassessment.
Conclusion: The Tribunal upheld the CIT's order deeming the assessments erroneous and prejudicial to Revenue's interests, leading to the dismissal of the assessee's appeals. The judgment emphasized the significance of the `local authority' status under the Act and the necessity for proper assessment in line with legal provisions and judicial interpretations.
-
2011 (4) TMI 1425
Issues involved:
The judgment involves the assessment of income for relinquishment of tenancy rights under the Income Tax Act 1961 for the assessment year 1989-1990.
Summary:
Issue 1: Assessment of income for relinquishment of tenancy rights
The petitioner, a partnership firm engaged in the business of manufacturing tiles and other products, had relinquished its tenancy rights in a premises in Patna. The income received for this relinquishment was initially accepted in the assessment order but was later challenged through a notice under section 148 of the Income Tax Act. The petitioner argued that the income was a capital receipt and not liable for income tax, citing relevant judgments. The High Court, after considering the agreements and judgments, concluded that the income derived from relinquishment of tenancy rights is a capital receipt and not subject to income tax. Consequently, the impugned order of assessment was set aside.
Issue 2: Validity of notice under section 148 of the Act
The petitioner also challenged the validity of the notice under section 148 calling for re-opening of assessment proceedings. The High Court, having set aside the assessment order, deemed the notice as infructuous and quashed it. The Court allowed the writ petitions challenging the validity of the notice under section 148.
Separate Judgment:
In a separate judgment, the High Court allowed another writ petition challenging the validity of a notice under section 148 related to the same issue of relinquishment of tenancy rights. The Court set aside the impugned notice in this case as well.
In conclusion, the High Court allowed all the writ petitions, answered the substantial questions of law in favor of the petitioners, and against the Revenue. No costs were awarded in the case.
-
2011 (4) TMI 1424
Issues Involved:
1. Addition made u/s 14A on proportionate basis.
2. Deletion of interest u/s 234D.
3. Deletion of addition on account of valuation of closing stock.
4. Computation of deduction u/s 80HHC after considering the sale proceeds of DEPB license.
5. Disallowance of depreciation on building.
6. Disallowance of payments made to PF.
Summary:
1. Addition made u/s 14A on proportionate basis:
The Assessing Officer (AO) disallowed Rs. 28,16,011/- out of interest paid and Rs. 80,18,703/- out of administrative expenses, invoking Section 14A, as the assessee failed to establish that no expenditure was incurred for earning exempt income. The CIT(A) found that the interest was paid only to two banks for packing credit and investments were made out of surplus funds, thus no disallowance could be made out of interest paid. However, CIT(A) upheld a partial addition of Rs. 10 lacs for administrative expenses. The Tribunal set aside the matter to the AO to re-examine the claim in light of the Bombay High Court decision in Godrej & Boyce Manufacturing Co. Ltd. Vs DCIT.
2. Deletion of interest u/s 234D:
The AO charged interest u/s 234D amounting to Rs. 9,18,915/-. CIT(A) deleted the addition, stating that Section 234D was applicable w.e.f. 01.06.2003. The Tribunal upheld CIT(A)'s decision, referencing the Delhi High Court's ruling in DIT Vs M/s. Jacob Civil Incorporated, which held that Section 234D would not apply prior to Assessment Year 2004-05.
3. Deletion of addition on account of valuation of closing stock:
The AO valued the closing stock on the basis of cost price, resulting in an addition of Rs. 17,20,980/-. CIT(A) deleted the addition, relying on ITAT's decision for Assessment Year 1993-94. The Tribunal upheld CIT(A)'s decision, noting that the assessee consistently valued closing stock at cost price or market price, whichever was lower, a method accepted in earlier years.
4. Computation of deduction u/s 80HHC after considering the sale proceeds of DEPB license:
The AO disallowed the claim of deduction u/s 80HHC in respect of DEPB receipts. CIT(A) allowed the claim. The Tribunal set aside the issue to the AO to decide in light of the Bombay High Court's decision in CIT Vs Kalpataru Colour & Chemicals, which held that the entire amount of DEPB received must be excluded under clause (baa) of Explanation to Section 80-HHC.
5. Disallowance of depreciation on building:
The AO disallowed depreciation on the building, as the conveyance deed was not executed in favor of the assessee. CIT(A) allowed the claim, relying on the Supreme Court's decision in Mysore Minerals, which held that ownership for Section 32(1) purposes includes possession and dominion over the property. The Tribunal upheld CIT(A)'s decision, distinguishing it from the Tamil Nadu Civil Supply Corporation Ltd. case.
6. Disallowance of payments made to PF:
The AO disallowed payments made to PF, which CIT(A) upheld. The Tribunal deleted the disallowance, referencing ITAT's decision in the assessee's own case for Assessment Year 2003-04, which was upheld by the Delhi High Court. The Tribunal directed the AO to delete the addition.
Conclusion:
The appeals for Assessment Year 2002-03 are partly allowed for statistical purposes, and the Revenue's appeal for Assessment Year 2004-05 is dismissed.
-
2011 (4) TMI 1423
Issues involved: Appeal against deletion of addition of profit on sale of shares as business profit, disallowance of interest payment to creditors, disallowance of interest paid to the bank, and disallowance of telephone and vehicle expenses.
Deletion of addition of profit on sale of shares as business profit:
The Revenue appealed against the CIT(A)'s order deleting the addition of profit on sale of shares as business profit. The Revenue's appeal was dismissed as the tax effect was less than the threshold set by C.B.D.T. Instruction No.5 of 2008. The Tribunal found the appeal not maintainable due to contravention of the said Instruction, resulting in dismissal of the Revenue's appeal.
Disallowance of interest payment to creditors:
The Assessing Officer disallowed &8377; 1,07,375/- under section 40(a)(ia) as the assessee did not deduct tax at source on interest paid to creditors. The CIT(A) upheld the disallowance, citing relevant provisions of section 40(a)(ia) and section 194. The Tribunal affirmed the CIT(A)'s decision, stating that the charges were in the nature of interest and the assessee failed to deduct tax at source, hence dismissing this ground.
Disallowance of interest paid to the bank:
The Assessing Officer disallowed &8377; 10,900/- as proportionate interest on a bank loan, considering only a portion was used for business purposes. The CIT(A) upheld the disallowance after verifying the balance sheet details. The Tribunal confirmed the CIT(A)'s order, finding no contrary evidence to warrant a different view, and dismissed this ground of cross objection.
Disallowance of telephone and vehicle expenses:
A 10% disallowance was made by the Assessing Officer on telephone and vehicle expenses due to personal use elements. The CIT(A) restricted the disallowance to 10% based on past assessments and personal use considerations. The Tribunal found no evidence to refute personal use and upheld the CIT(A)'s decision, dismissing this ground of cross objection.
In conclusion, both the Revenue's appeal and the assessee's cross objection were dismissed by the Tribunal based on the respective issues raised and the findings of the CIT(A) in each case.
-
2011 (4) TMI 1422
Issues Involved:
The judgment involves the denial of deduction u/s 36(1)(viii) for various incomes, the application of netting principle for interest income, the challenge to the charging of interest u/s 234B, and the withdrawal of interest u/s 244A(3).
Denial of Deduction u/s 36(1)(viii):
The appellant contested the denial of deduction u/s 36(1)(viii) for income received from cooperatives, interest from banks, and interest on advances/deposits on loans to employees. The appellant argued that as the corporation's objective is to provide long-term loans/advances to cooperatives and State Governments, the income in question should be eligible for the deduction u/s 36(1)(viii) of the Income-tax Act, 1961.
Application of Netting Principle for Interest Income:
The appellant contended that the entire interest income should be adjusted against interest expenditure, as the corporation relies on long-term borrowings and other sources for funds. The appellant emphasized that only the net profit should be considered for the purpose of disallowance u/s 36(1)(viii), and provided a working of disallowance for consideration.
Challenge to Charging of Interest u/s 234B:
The appellant argued that the charging of interest u/s 234B was incorrect and not legally permissible, asserting that the interest should not be levied at all.
Withdrawal of Interest u/s 244A(3):
The appellant challenged the withdrawal of interest u/s 244A(3) as being erroneous and contrary to law.
Decision Summary:
The Tribunal noted that the issues raised were similar to a previous decision and directed the AO to work out the net profit for disallowance u/s 36(1)(viii) after considering the appellant's contentions. The Tribunal emphasized the need for a direct nexus between income earned and expenditure incurred, and allowed specific deductions for interest from bank deposits, dividend income, and miscellaneous receipts/interest on advances. The appeal was treated as partly allowed for statistical purposes, with consequential revisions to the interest calculations under u/s 234B and u/s 244A(3).
-
2011 (4) TMI 1421
Issues Involved:
1. Validity of initiation of reassessment u/s 147 of the Income Tax Act, 1961.
2. Merits of the deduction u/s 80 HHC of the Act.
3. Genuineness of purchases from Salbha Garments.
Summary:
1. Validity of initiation of reassessment u/s 147 of the Income Tax Act, 1961:
The assessee challenged the validity of the reassessment proceedings initiated by the AO under section 147 of the Act. The first reassessment notice was issued on 10/1/2005, based on the AO's observation that the assessee had incurred losses in the business of export, thus wrongly claiming deduction u/s 80 HHC. The CIT(A) held the initiation of reassessment proceedings as invalid, and the ITAT and Hon'ble High Court upheld this decision. Subsequently, a second reassessment notice was issued on 29/3/2006, citing different reasons, including the inter-laced business activities of the Koramangala unit and the genuineness of purchases from Salbha Garments. The Tribunal held that successive reassessments on the same deduction issue amounted to a mere change of opinion, which is not permissible. However, the second reassessment was upheld concerning the genuineness of purchases from Salbha Garments, as it was based on subsequent developments in another assessment year.
2. Merits of the deduction u/s 80 HHC of the Act:
The AO and CIT(A) did not express any opinion on the total turnover and the inclusion of the Koramangala unit's turnover in the total turnover of the manufacturing export unit. The Tribunal remanded the issues to the AO for fresh consideration, directing the AO to determine whether the turnover of the Koramangala unit of Rs. 2,79,81,165/- should be included in the total turnover for the calculation of deduction u/s 80 HHC and whether the assessee is entitled to add 90% of the loss of the Koramangala unit of Rs. 12,69,654/- from the calculation of the profits of the business under clause (baa) of explanation after 80 HHC (4C).
3. Genuineness of purchases from Salbha Garments:
The Tribunal noted that the disallowance of purchases from Salbha Garments in AY 2002-03 was deleted by the Tribunal. Since the assessment in the current year was based on the AO's decision in AY 2002-03, which was already deleted, the Tribunal directed that the addition for the current year could not be sustained and should be deleted.
Conclusion:
The appeal was partly allowed, with the Tribunal upholding the validity of the second reassessment proceedings concerning the genuineness of purchases and remanding the issues related to the deduction u/s 80 HHC to the AO for fresh consideration. The Tribunal directed the deletion of the addition related to purchases from Salbha Garments. The other grounds of appeal were deemed consequential, and the AO was directed to provide consequential relief.
-
2011 (4) TMI 1420
Issues involved: Appeal against common order passed by CIT(Appeals)-38, Mumbai for assessment years 2001-02 to 2003-04 and 2005-06 u/s 143(3) read with section 153A.
Facts in brief: Search and seizure action u/s 132(1) conducted in the case of M/s Rohan Group revealed low withdrawals for household expenses by the assessee's family. Assessee voluntarily offered amounts for taxation due to insufficient withdrawals. AO added a sum to the income considering family size and social status. Assessee challenged the addition as arbitrary.
Assessment years 2001-02, 2002-03, 2003-04: Assessee voluntarily offered amounts for taxation. AO adjudicated the sufficiency of disclosures. Tribunal sustained additions for these years due to significant variation in withdrawals for 2005-06 compared to other years.
Assessment year 2005-06: Substantial withdrawals of approximately &8377; 40.92 lakhs justified no further addition. Grounds of appeal allowed for this year.
Assessment year 2003-04: Addition of &8377; 1,00,000 on account of bogus loan was confirmed by CIT(Appeals). Tribunal found no merit in the revenue authorities' conclusions, allowing the appeal for this year.
Conclusion: Appeals for assessment years 2001-02 and 2002-03 dismissed, appeal for 2003-04 allowed in part, and appeal for 2005-06 allowed.
-
2011 (4) TMI 1419
Issues involved: Jurisdiction u/s 147 of the Income Tax Act for Assessment Year 2004-05.
Summary:
The appeal by the assessee challenged the assessment made in response to a notice u/s 148 read with Section 147, contending that no addition was made based on which the assessment was reopened. The assessee filed amended grounds of appeal, arguing that the Assessing Officer assessed income not subject to the notice. The AR for the assessee requested admission of this ground before the Ld. CIT(A), which was conceded. After hearing both parties, the amended grounds were admitted. The Tribunal set aside the issue to the Ld. CIT(A) to examine whether the assumption of jurisdiction u/s 147 was justified, given that no addition was made for the income escaping assessment for which the assessment was reopened. The Ld. CIT(A) was directed to pass a speaking order on this issue. Consequently, the addition made on merit was also set aside for fresh consideration by the CIT(A). The appeal by the assessee was allowed for statistical purposes.
The order was pronounced in the open court on 07th April 2011.
-
2011 (4) TMI 1418
Issues involved:
The issues involved in this case are the taxation of notional income from a vacant property under the head "Income from House Property," determination of annual value of a property, and the authority of the Assessing Officer (AO) to entertain claims made by the assessee.
Taxation of Notional Income:
The assessee, a company dealing in shares and securities, acquired a property and let out a portion of it while the remaining portion remained vacant. The assessee declared a notional rental income for the vacant portion in the return of income. The Assessing Officer (AO) did not accept this declaration and treated the income under the head "Income from other sources."
Determination of Annual Value:
The assessee contended that the annual value of the property should be determined based on municipal rateable value or actual rent received, whichever is higher, as per section 23 of the Income Tax Act, 1961. The Commissioner of Income Tax (Appeals) (CIT(A)) held that the AO should compute the income as per the law irrespective of the assessee's declaration. The CIT(A) considered various factors for determining the annual letting value of the vacant portion and concluded that the AO was correct in accepting the declaration made by the assessee.
Authority of the AO to Entertain Claims:
The Tribunal disagreed with the approach of the CIT(A) and held that the property should be considered as one unit for determining the annual value. The Tribunal directed the AO to accept the actual rent received as the criteria for determining the annual value, as it was higher than the municipal valuation. The Tribunal also stated that the AO can consider claims made by the assessee even without a revised return, citing relevant case law.
Conclusion:
The Tribunal allowed the appeal of the assessee, directing the AO to accept the plea of the assessee regarding the determination of annual value based on actual rent received. The Tribunal emphasized that tax liability must be determined in accordance with the law, and technicalities raised by the CIT(A) do not restrict the powers of the Tribunal in considering claims made by the assessee.
............
|
9911796707
