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Case Laws
Showing 121 to 140 of 1677 Records
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2016 (9) TMI 1563
Addition towards long term capital gains by withdrawing the exemption u/s 54 - Assessee had not fulfilled the conditions prescribed u/s 54 barring the deposit of the sale proceeds in the “capital gain scheme account” - HELD THAT:- Facts reveal that the assessee had deposited the entire sale proceeds in his savings bank account maintained with nationalized bank out of which he has constructed his house. The only small lacuna assessee had made is that the assessee though had placed the entire sale proceeds in the nationalized bank he has not transferred the same in the “Capital gain scheme account”.
For this small technical lapse of the assessee, the benefit of section 54 should not be denied. Section 54 of the Act is a beneficial provision and a beneficial interpretation has to be made as far as possible for giving benefit to the assessee. The assessee had proceeded to comply with the provisions of section 54 of the Act but has only made a small technical breach which we are of the considered view should not disentitle the assessee for the benefit of section 54 of the Act. Therefore, we hereby direct the AO to grant the benefit of section 54 of the Act to the assessee and accordingly delete the addition made by him which was further sustained by the learned Commissioner of Income Tax (Appeals). - Decided in favour of assessee.
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2016 (9) TMI 1562
Bogus purchases - disallowance sustained by the Ld.CIT(A) @17.5% - HELD THAT:- Findings recorded by the Ld.CIT(A), it is evident that total purchases were wrongly disallowed by the Assessing Officer. The Ld.CIT(A) took a reasonable view whereby the disallowance was sustained to the extent of estimated inflation in the amount of purchases made by the assessee. The disallowance sustained by the Ld.CIT(A) @17.5% of the purchases have been accepted by the assessee with a view to bury the litigation.
Nothing has been brought before us by the Ld.DR to contradict the findings recorded by the Ld.CIT(A). The assessee’s counsel has also placed reliance upon case of CIT vs Nikunj Eximp Enterprises Pvt Ltd [2013 (1) TMI 88 - BOMBAY HIGH COURT] wherein similar issue has been decided on identical lines by the Hon’ble Bombay High Court. In our view, no intervention is required in the findings of Ld.CIT(A) and, therefore, the same is confirmed. The grounds raised by the revenue are dismissed.
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2016 (9) TMI 1561
Assessment u/s 153A - new claim in the return of income filed u/s 153A - HELD THAT:- In the present case before us though the second proviso to sub-section (1) of section 153A would not apply in the first three years of this case, yet, as far as the second three year period is concerned (which are pending before us), the assessments were pending. The proceedings in relation thereto abate. Now the entire assessment in relation to the second phase of three years can be made. The pending assessment in that case may be undertaken u/s 153A of the Act. The abatement of pending assessment is for the purpose of avoiding two assessments for the same year i.e. one being regular assessment and the other being search assessment u/s 153A of the Act. In other words, these two assessments merge into one assessment. It means that completed assessments stand on different footing from the pending assessments.
Hence, in so far as pending assessments are concerned, the jurisdiction to make original assessment and assessment u/s 153A of the Act merge into one and in that case only one assessment for the remaining set of years, where assessment is pending, is to be made separately on the basis of search materials and the regular material existing or brought on record before the AO/Revenue.
Assessee can make any new claim in the return of income filed u/s 153A of the Act or even during the course of assessment proceedings undertaken u/s 153A of the Act. In our view, and in view of the second proviso to Section 153A (1) of the Act, once assessment get abated it is opened both way i.e. for the Revenue to make any additions apart from seized material even regular items declared in the return can be subject matter if there is doubt about the genuineness of those items and similarly the assessee also can lodge new claim, deduction or exemption or relief which remained to be claimed in regular return of income, because assessment was never made in the case of the assessee in such situation. Hence, we allow this issue of assessee‟s appeal.
Disallowance of capital receipt on account of gain on prepayment of VAT / Sales tax - remission or cessation of trading liability u/s. 41(1) - HELD THAT:- As decided in CIT Vs Suzler India Ltd [2014 (12) TMI 267 - BOMBAY HIGH COURT] has decided the issue in favour of the assessee by observing that where the assessee has made pre-mature payment of deferred sales tax on NPV basis of certain amount against the total liability and credited balance amount to its capital reserve account, the credited amount was capital receipt and it cannot be held to be a cessation or remission of a trading liability u/s 41(1) of the Act. Since, none of the authorities below have adjudicated this issue and facts are not available on records, we restore this issue back to the file of the AO - Appeals of the assessee are partly allowed for statistical purposes
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2016 (9) TMI 1560
TDS u/s 194I - Disallowance on account of Plant and Machinery hire charges u/s.40(a)(ia) - HELD THAT:- The machineries were actually used by the assessee and the lease rent paid by SIL was reimbursed by the assessee. It is clear from the order of CIT(A) elaborating the details of payment made by M/s. Sanghi Industries Ltd to Sanghi Infra Ltd towards lease rent and the similar amount recovered by the SIL from the assesse as reimbursement of expenditures. The SIL had made the payment on account of plant and machinery, hire charges after deduction of TDS under the provisions of section 194I of the Act and the reimbursement of these payments by the assessee to the SIL has no income element.
Findings, the assessee has not committed any default under the provisions of sec. 40(a)(ia) of the Act, therefore, we uphold the order of the Ld. Commissioner of Income Tax(A) and ground of appeal of the Revenue is rejected.
Disallowance of operation & maintenance charge and Repairs & Maintenance - HELD THAT:- Assessee has made provisions for the expenses incurred during the year pertaining to operation & maintenance, repairs & maintenance but their bills were not received during the year. The assessee has made these provisions on the basis of actual estimation of liability because of this fact these provisions cannot be included in the category of contingent liability. CIT(A) has shown in his order the table reflecting the actual payment made by the assessee to the various parties in the subsequent year along with particulars of date of credit, name of party, PAN No, amount, TDS, date of payment of TDS. The assessee has been following the mercantile system of accounting and correctly made estimation of its liability. In view of above stated facts and findings, we justify the order of CIT(A) deleting the additions made by the Assessing Officer. We also agreed with the findings of CIT(A) that the provisions of section 40(a)(ia) are also not applicable to the case of the assessee as the assessee has only made the provisions in the account but not credited the same in the account of concerned parties.
Disallowance on account of legal and professional expenses u/s.40(a)(ia) - HELD THAT:- We noticed that the Ld. Commissioner of Income Tax(A) has shown the complete chart in his order with particulars of date, amount, nature of expenses etc. reflecting the nature of payment made and application of TDS provisions. We find that above stated facts and findings prove that the assessee has made reimbursement of the expenses to the SIL to which no income element involved. In view of above stated facts and findings, we justify the decision of Ld. Commissioner of Income Tax(A) to delete this addition.
Disallowance under the head “Operation and Maintenance charges - HELD THAT:- Assessee has not produced supporting documents and evidences of the other parties with detail of services availed by the assessee, or any material purchased by the assesssee for which these three parties have made payment on behalf of the assessee. Even in the paper book, the claim of the asssessee is not supported with proper evidences from these three parties that they have made payment on behalf of the assessee to the third parties. In view of above stated facts and circumstances, we justify the findings of the Ld. Commissioner of Income Tax(A) that the copies of the ledger provided do not clearly show that nature of payment and the fact that whether any profit element was there in the so-called reimbursement. We, therefore, dismiss this ground of cross objection filed by the assessee.
Addition under the head “Legal and Professional Expenses” - HELD THAT:- Commissioner of Income Tax(A) has disallowed the part payment made by Tapan Jha as the assessee failed to furnish the supporting evidences for its claim that this is reimbursement payment. We noticed that the pages referred in the paper book by the Ld. A.R. are pertained to the Sanghi Industries Ltd and the supporting documents/evidences as proof of reimbursement payment to Shri Tapan Jha was not furnished. In view of the above facts and findings, we uphold the order of the Ld. Commissioner of Income Tax(A) disallowing
Disallowance of interest u/s. 36(1)(iii) - HELD THAT:- Commissioner of Income Tax(A) has proved in his findings that assessee has not charged any interest on the advances made to the Sanghi Cement Ltd and Sanghi Energy Ltd. The assessee failed to prove with supporting evidences that these are not the advances made to these concerns. There was no surplus interest free funds available for that advances with the assessee. Since the advances were given for one day on the last day of the financial year so we uphold the decision of the Ld. Commissioner of Income Tax(A) to disallow the interest for one day only.
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2016 (9) TMI 1559
Waiver of interest chargeable u/s 234B and 234C - circumstances responsible for the delay in filing the return of income - HELD THAT:- Identical case was considered in the case of VINODCHANDRA C.PATEL v. CIT [1993 (10) TMI 10 - GUJARAT HIGH COURT] wherein pointed out that when circumstances resulting into late payment of taxes and when the same set of circumstances are considered to be unavoidable circumstances responsible for the delay in filing the return of income, ordinarily, such circumstances would also qualify to be considered to be unavoidable circumstances responsible for the delay in the late payment of taxes.
After noting the factual circumstances in the said case, it was pointed out that if the circumstances have been considered to be unavoidable circumstances for the purpose of waiver of interest under section 234A, in the facts of the case, the same would have to be considered as unavoidable circumstances for the purpose of reduction/waiver of interest under sections 234B and 234C as well. Accordingly, whatever waiver granted under section 234A, shall also be extended with regard to waiver of interest under sections 234B and 234C of the Act.
As noticed above, the respondent was satisfied with the fact that the petitioner has made out a case for waiver of interest under section 234A of the Act and the respondent recorded that it is a reasonable cause for delay in filing the return of income. Applying the reasons assigned by the Hon'ble Division Bench of the Gujarat High Court, this Court is of the view that the same reasoning should be adopted while considering the claim of waiver of interest under sections 234B and 234C of the Act.
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2016 (9) TMI 1558
Revision u/s 263 - claim of deduction u/s.80P - HELD THAT:- As decided in own case [2014 (4) TMI 355 - ITAT MUMBAI] identical issue has been decided in favour of the assessee in the assessee’s own case mentioned above. Following the consisting view taken on the identical issue, we are of the view that the assessee Cooperative Society does not fall within the restrictions placed u/s. 80P of the Act. In view of the said circumstances when the controversy is quite clear which has been decided in favour of the assessee, we are of the view that the order u/s.263 of the Act is not liable to be sustainable in the eyes of law because the order is not erroneous nor prejudicial to the interest of revenue. Accordingly we set aside the order in question dated 25.03.2014. The appeal of the assessee is hereby allowed.
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2016 (9) TMI 1557
Disallowance u/s 40(a)(ia) and 40A - Validity of jurisdiction - non admission of additional evidences filed during the course of appeal proceedings - HELD THAT:- Assessee instead of making any such complain to the higher authorities had appeared before the Addl.CIT at Pune who was holding charge of Satara Range. Now that huge additions have been made the assessee cannot say that he was harassed because of his appearance at Pune Income Tax Office instead of appearing at Satara Office. We fail to understand as to what type of other evidences the assessee could have produced at Sarata office before the same AO which he could not furnish at Pune office. This ground raised by the assessee at this juncture according to us is nothing but a frivolous ground having no force in it. We therefore dismiss the additional ground challenging the validity of jurisdiction.
Non supply of the various statements recorded at the back of the assessee which were not confronted to him - If the assessee does not appear before the AO he cannot expect the AO to confront the evidences which he had gathered during the course of assessment proceedings. No doubt it is the principle of natural justice that any evidence which has been collected at the back of the assessee and which is utilized against the assessee should be confronted to the assessee before making any such addition. However, in the instant case we find since the assessee did not appear before the AO despite repeated opportunities, there was no occasion on the part of the AO to confront these statements recorded or ledger extracts obtained from various parties. Therefore, the ground raised by the assessee on this issue is also dismissed.
Statements of several suppliers were recorded by the AO Shri J.Y. Chauhan, ITO, Ward-2 of Satara office which is impermissible in law - No merit in the above ground raised by the assessee in shape of an additional ground. An officer sitting at a place can always take the help of another officer by issuing necessary commission to record the statements of various persons who are assessed under his charge. Here, in the instant case, the Additional Commissioner sitting at Pune has taken the help of the AO Shri J.Y. Chauhan, ITO, Ward-2, Satara to record the statements of various persons of Satara only. This according to us cannot be held as impermissible in law. Ground raised by the assessee therefore being devoid of any merit is dismissed.
Non admission of additional evidences filed during the course of appeal proceedings - Admittedly, the accounts were audited by the auditors and the audit report was filed along with the return of income and such audit report was also duly signed by the assessee himself. Therefore, we fail to understand as to how and why the accounts could be re-audited by another Chartered Accountant or the same Auditor by recasting the accounts. We fail to understand as to how such a thing has happened since there is suppression of huge turnover as well as non recording of huge amount of expenses which have now been shown in the revised financial statements which is not only unbelievable but also unimaginable.
Disallowance u/s.40(a)(ia) - various Benches of the Tribunal following the insertion of the second proviso to section 40(a)(ia) by the Finance Act, 2013 w.e.f. 01-04-2013 are holding that disallowance u/s.40(a)(ia) of the Act need not be made if the assessee is not deemed to be an assessee in default under the first proviso to section 201(1) of the I.T. Act. Therefore, if the payees have disclosed the amount received from the assessee and paid the tax thereon, addition cannot be made in the hands of the assessee. However, this aspect has not been verified by the AO since this issue is being raised before us for the first time.
Addition u/s 40A - Assessee has demonstrated that the provisions of section 40A(3) is not called for in case of Gatiman Earth Movers since no amount exceeding ₹ 20,000/- has been paid to that party. Similarly certain amounts have been received by crossed cheques with their confirmations -Also the submission of assessee that given an opportunity the assessee can properly reconcile the contract receipts and the sundry creditors. Considering the totality of the facts of the case, we are of the considered opinion that the matter requires a re-visit to the file of the AO for proper adjudication of the issue. We, therefore, restore the issue to the file of the AO with a direction to give one more opportunity to the assessee to substantiate his case.
Unaccounted income from land business - submission of the assessee that the lands in question are agricultural lands situated beyond 8 kms from the municipal limits and therefore these are rural agricultural lands and do not form part of the capital asset within the meaning of section 2(14)(iii)(b) - HELD THAT:- As perused the orders of the AO and CIT(A) and the paper book filed on behalf of the assessee. We find the AO in the assessment order has made addition to the total income of the assessee on account of unaccounted income from land business. He arrived at this figure by reducing the cost of land from the sale proceeds. We find the assessee before the Ld.CIT(A) in his recasted financial statements had shown the profit on sale of land at ₹ 96,78,970/- after making an adjustment of compensation expenses amounting to ₹ 23,81,325/-. Since the assessee has earned a profit of ₹ 96,78,970/- from such land dealings the Ld.CIT(A) enhanced the income to ₹ 96,78,970/- as against ₹ 11,13,750/- determined by the AO.
Nature of land aspect was not properly looked into by the AO or the CIT(A) as the necessary evidences which the assessee has enclosed with the paper book such as 7/12 extracts etc were not properly looked into. Further, the main issues have already been restored to the file of the AO for adjudication of the issues afresh. Considering the totality of the facts of the case, we deem it proper to restore this ground to the file of the AO with a direction to adjudicate the same in the light of our above observations and as per fact and law. Ground of appeal No.5 by the assessee is accordingly allowed for statistical purposes.
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2016 (9) TMI 1556
Settlement Commission order u/s 245D(6) (B) - Revenue does not seek to pursue Writ Petition BUT Mr. Chhotrary, learned Counsel appearing for the Petitioner in Writ Petition states that he has not received any written instructions and, therefore, he cannot withdraw the Petition - Difference amongst the different Officers of the department - HELD THAT:- We are at a loss to understand this attitude of Mr. Chhotrary. An Officer of the Income Tax in Court states that the department does not want to pursue Writ Petition No. 2860 of 2015, yet he still insists on not withdrawing the Petition. It appears that each Income Tax Officer considers himself as independent authority and not a part of one department. If each Officer of the Income Tax is allowed to separately canvass their view point and not the department's view, it would lead to chaos. It is to be noted that all authorities under the Act function under the overall supervision of Central Board of Direct Taxes in the execution of this Act. This filing of multiple Petitions on the same cause of action is normally not done. In fact, it is the first time, we are noticing multiple Petitions are being filed by the Income Tax Department through different Officers, challenging the same impugned order. This certainly leads to waste of public money as more than one Advocate is briefed to canvass/ agitate the same issue.
The grievances of the Revenue as a whole could be made a subject matter of single Petition.
We had on 27th July, 2016, adjourned the Petitions on the assurance given to us by Senior Counsel Mr.Setalwad, appearing for the Revenue that both the Petitions would be examined and remedial steps taken to ensure that multiple Petitions are not filed. In spite of the above, we find that there is dichotomy amongst the different Officers of the department instructing their Counsel.
It is not for us to decide the dispute between the Officers of the department. In the above facts, it is necessary that the Principal Chief Commissioner of Income Tax Department at Mumbai file an affidavit, explaining the circumstances which have led to the filing of the two Petitions on the same cause of action by two different Officers of the Revenue. Further, he should also put on record whether the department still insists on pursuing with both the Petitions and the reasons for the same. This without losing sight of the fact that the Income Tax Department as a whole was represented by one Commissioner before the Settlement Commission whose order is subject of challenge before us. Further, in case he is of the view that one of the Petitions is to be withdrawn, which one. We can only observe that the Officers of the Revenue must act in cooperation to protect its interest by putting up of joint show and not act at cross purposes. We have said so earlier, but it bears repetition, that the Commissioners of Income Tax must realize they are not independent entities but part of a team known as Income Tax Department administering the Direct Tax Laws.
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2016 (9) TMI 1555
Exemption u/s 11 - declining registration under section 12AA - registration was declined was that the assessee institution was not for the benefit of public at large but for the mutual benefit of the association members - HELD THAT:-This is a case in which the applicant institution was set up to set up an effluent plant and take care of industrial pollution. The objectives of the applicant trust clearly and unambiguously show that main objectives of the trust being set up is to take anti pollution measures for minimise the harmful impact of pollutants and to abide by guidelines of Gujarat Pollution Control Authority and Central Pollution Control Authority.
The main objectives numbers 1 to 11 are specific objects in this regard. Pollution Control is certainly an object of public concern and utility. Under these circumstances, the pedantic approach of the learned CIT was clearly incorrect, and it cannot meet any judicial approval. As for the coordinate bench decision relied upon by the assessee, it was a materially different situation inasmuch there was nothing to show that a public cause was served by the applicant in that case. Revenue does not, therefore, get any advantage from the same. In the light of these discussions, as also bearing in mind the entirety of the case, we uphold the grievance of the assessee. The CIT, accordingly, is directed to grant the registration under section 12AA. - Appeal allowed.
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2016 (9) TMI 1554
MAT Applicability u/s 115JB - HELD THAT:- Admit following question of law arises for consideration - “Did the Tribunal fall into error in holding that the provision of Section 115 JB of the Income Tax Act did not apply to the assessee in this case?”
Appropriate rate of depreciation of electronic/energy meters - HELD THAT:- We notice that the ITAT went by a plain reading of the rule of concerned provision i.e. Part A, under Appendix 1, Clause III (8) (ix) (B) (e) of the Income-tax Rules, 1962. The revenue had urged that the appropriate rate of depreciation would be 25% as against which the assessee had claimed 80% depreciation in view of the rule.
Having regard to the fact that ITAT went by the text of the rule itself, in the absence of any other indication within the statute with respect to its inapplicability, the impugned ruling cannot be faulted. No question of law arises on this aspect.
Treatment of the service line deposit over the years being capital or revenue - AO refused to recognise the amounts as capital receipts - HELD THAT:- Assessee offered 1/3rd of the amount to the profit and loss account and later explained that these were capital receipts and are not revenue in nature. This volte face of the assessee seems to have triggered the AO’s decision that the receipts were not capital but revenue and therefore entirely liable to be taxed. The issue is covered against the revenue in Hoshiarpur Electric Supply Co. vs. CIT [1960 (12) TMI 6 - SUPREME COURT]
Method of valuation - ITAT permitted the assessee to adopt the moving average methodology - ITAT noted that the previous method adopted by the assessee was First In First Out (FIFO) in terms of AS2. However, they changed that method from 2005-2006 onwards - HELD THAT:- ITAT concurred with the CIT (A)’s decision that the assessee had the autonomy to decide appropriate method as along as the authority did not find anything fundamentally wrong in it. In our opinion no question of law arises on this score as well.
Treatment as deemed dividend - assessee was not a shareholder in Rajdhani Power Limited the provisions of Section 2 (22) (e) was not attracted - finding is affirmed by the ITAT - HELD THAT:- The court is of the opinion that there is no infirmity with the finding as one of the essential pre-requisite for application of Section 2 (22) is that the assessee should be related to the other concern which advances the money or from which amount flows back to it as a shareholder. This position has now been affirmed by this court in CIT vs. Ankitech (P) Ltd. [2011 (5) TMI 325 - DELHI HIGH COURT] .
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2016 (9) TMI 1553
Interest on refund - Sections 27 and 27(A) of the Customs Act, 1962 - applications are now pending consideration before the second respondent - HELD THAT:- Considering the fact that the request is still pending before the second respondent it would be appropriate for the second respondent to pass a speaking order on merits and in accordance with law.
These writ petitions stand disposed of by directing the second respondent to consider the petitioner's application for payment of interest and pass orders on merits and in accordance with law.
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2016 (9) TMI 1552
Disallowance u/s 14A - Assessee suo motto added expenditure relating to exempt income in the computation - HELD THAT:- The decision reported in COMMISSIONER OF INCOME TAX vs. HDFC BANK LTD (2014 (8) TMI 119 - BOMBAY HIGH COURT) applies on all fours. In that decision it was held that when assessee's capital, profit reserves, surplus and current account deposits were higher than the investment in tax-free securities, it would have to be presumed that investment made by the Assessee would be out of the interest-free funds available with Assessee, and the additions made by the AO under Rule 8D(2)(ii) by disallowing the expenditure, have to be deleted.
When the assessee himself disallowed some amounts in respect of the expenses attributable to the exempt income, the learned AO assumes jurisdiction to invoke section 14A read with Rule 8D of the Rules only when he reaches a conclusion that the claim of expenditure made by the assessee is not correct.
We conclude that own funds of the assessee are sufficiently in excess of investments and the legal requirement of the AO to record the reasons for resorting to Section 14A read with Rule 8D of the Rules in this matter are conspicuously absent. Viewing from any angle, we are convinced that there is no justification for the authorities below to sustain disallowing a sum of ₹ 8,87,670/- over and above which was added by the Assessee under section 14A of the Act read with Rule 8D of the Rules.
We hold that the authorities below are not justified in disallowing a sum of ₹ 8,87,670/- over and above which was added by the Assessee under section 14A of the Act read with Rule 8D of the Rules, and any addition on such score has to be deleted. We order accordingly.
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2016 (9) TMI 1551
Disallowance u/s 14A - Computation of deduction - HELD THAT:- Decision for making investment of such a high magnitude would definitely require involvement of high officials. The assessee has not furnished the basis for allocating 1% of Authorised Signatory’s (CEO) salary expenses and 0.1% of his deputation expenses. It is also not known as to whether CEO alone took the decision for making investments in mutual funds. Normally such decisions are taken by consulting finance department and investment experts. However, such details are not available on record.
It is difficult to accept the workings given by the assessee and we are of the view that the disallowance of ₹ 3,94,711/- made by the assessee appears to be on the lower side. However, since the number of transactions is limited, we are of the view that this issue may be settled by making an estimate on a reasonable basis. Accordingly, we are of the view that, considering the facts and circumstances of the case, the disallowance u/s 14A of the Act may be made at ₹ 10.00 lakhs in order to cover up the expenses relating to utilisation of human/other resources not considered by the assessee. In our considered view, the same would meet the ends of justice and we order accordingly. Accordingly the order passed by Ld CIT(A) stands modified accordingly and the AO is directed to disallow the above said amount of ₹ 10.00 lakhs u/s 14A of the Act. - Decided partly in favour of assessee.
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2016 (9) TMI 1550
Commission from the business of accommodation entries - HELD THAT:- As perused the respective orders of the authorities below and find that similar issue had come up before the Tribunal in the cases of Goldstar Finvest Pvt. Ltd. [2015 (11) TMI 1693 - ITAT MUMBAI],Alliance Intermediateries and Network Pvt. Ltd. [2016 (2) TMI 1113 - ITAT MUMBAI] and Mr. Mukesh Choksi [2016 (5) TMI 1408 - ITAT, MUMBAI] which have been relied upon by the assessee before us. On perusal of the aforesaid decisions we find that the Tribunal had directed that the income by way of commission from the business of accommodation entries being carried out by Mukesh Choksi group was liable to be assessed at 0.15% instead of 2% applied by the Assessing Officer.
Since it was a common point between the parties that the appellant company before us is also a part of the entities controlled by Mr. Mukesh Choksi, in our view, the aforesaid decisions are relevant to assess the income of the assessee. In this view of the matter, we, therefore, set-aside the order of the CIT(A) and direct the Assessing Officer to recompute the commission income from the business of providing accommodation entry in conformity with the aforesaid precedents.
We, therefore, set-aside the order of the CIT(A) and restore the matter back to the file of Assessing Officer to redetermine the total income as per aforesaid directions. Needless to mention, the Assessing Officer shall allow the assessee a reasonable opportunity of being heard before recomputing the income as per law.
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2016 (9) TMI 1549
Reopening of assessment u/s 147 - issuance of the notice in the name of a deceased person - HELD THAT:- No decision to the contrary has been cited before us. Therefore, respectfully following the decision in the case of ‘ITO Vs Sikandar Lal Jain’ [2010 (12) TMI 623 - ITAT, AGRA] And ‘ITO Vs Somnath Malhotra’, [2015 (7) TMI 1257 - ITAT DELHI BENCH ‘G’, NEW DELHI] the assessment framed in the present case is also quashed, as having been initiated and framed on a dead person. Decided in favour of assessee.
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2016 (9) TMI 1548
Issues:
Challenge to order granting approval for reassessment under Section 29(7) of U.P. Value Added Tax Act, 2008 for Assessment Year 2008-09.
Analysis:
The High Court, comprising Sudhir Agarwal and Dr. Kaushal Jayendra Thaker, JJ., heard arguments from both sides represented by respective counsels. The writ petition contested the order dated 30.12.2015 by the Additional Commissioner, Grade-II, Commercial Tax, Ghaziabad Zone-II, Ghaziabad, which approved reassessment under Section 29(7) of the U.P. Value Added Tax Act, 2008 against the petitioner. The petitioner had previously accepted the Compounding Scheme under the VAT Act, 2008, as evidenced by the filed copy. The petitioner argued that since they had accepted the Compounding Scheme and paid the tax accordingly, the reassessment under Section 29(7) was unwarranted and beyond jurisdiction. Specifically, the petitioner highlighted that under the Compounding Scheme, the tax payable was dependent on the percentage of import, with a clear distinction between tax rates for import up to 5% and above 5%. The respondents were accused of misinterpreting the Compounding Scheme by considering the total payment received by the contractor, leading to an erroneous reassessment. The Standing Counsel for respondents, Sri C.B. Tripathi, conceded that when an assessee accepts the Compounding Scheme and fulfills the tax obligations, Section 29 does not apply.
The Court, based on the respondents' acknowledgment that Section 29 does not apply when an assessee has availed the Compounding Scheme and paid the due tax, concluded that the reassessment conducted in this case lacked jurisdiction and was untenable. Consequently, the writ petition was allowed, and the impugned order dated 30.12.2015 was set aside.
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2016 (9) TMI 1547
Addition of unbilled revenue and non-grant of deduction u/s. 10B - Erroneous addition of unbilled revenue to the taxable income - HELD THAT:- We are not in agreement with the contentions raised by the assessee. The assessee has failed to furnish any evidence during the assessment stage and at the appellate stage to substantiate the fact that the unbilled revenue has been included in the revenue earned during the year under consideration. The source of the said revenue, too, is unexplained in as much as there are no bills, vouchers from the persons to whom the services pertaining to the unbilled revenue were rendered by the assessee company. The assessee has failed to substantiate as to why the said amount was not included in the receivable account or in the sundry debtors account. In view thereof, the Ground No. 1 raised by the assessee is dismissed.
Deduction claimed by the assessee u/s. 10B - Competent authority to grant approval - assessee has obtained approval as a 100% export oriented unit from the director, Software Technology Parks of India (STPI) and had been claiming deduction u/s. 10B from the year 2001 - AO disallow the entire claim of deduction made by the assessee by holding that for claiming such deduction, the approval ought to have been taken from the Central government through the appropriate authority constituted u/s. 14 of the Industries (Development and Regulations) Act, 1951 as against the Director, STPI - HELD THAT:- As decided in Regency Creations Ltd [2012 (9) TMI 627 - DELHI HIGH COURT] there is no notification or official document suggesting that either the Inter Ministerial Committee, or any other officer or agency was nominated to perform the duties of the Board (constituted u/s. 14 of the IDR Act), for purpose of approvals u/s. 10-B. Though the considerations which apply for granting approval u/s. 10-A and 10-B may to an extent, overlap, yet the deliberate segregation of these two benefits by the statute reflects Parliamentary intention that to qualify for benefit under either, the specific procedure enacted for that purpose has to be followed. There is nothing in any of the Circulars or instructions relied on by the Tribunal in all the orders, implying that approval for purposes of an STP also entitled the unit to a benefit u/s. 10-B. The orders of the Tribunal are consequently erroneous, and its reasoning, unsupportable. - Decided in favour of assessee.
Deduction of bonus paid to employees u/s. 43B - HELD THAT:- In the present case, the assessee has filed a revised return of income alongwith Form 56F before the Ld. CIT(A). In an identical case before us in ACIT vs. M/s. Q Burst Technologies P Ltd. [2015 (11) TMI 1755 - ITAT COCHIN] we had dismissed the appeal of the revenue on this issue.
CBDT Circular No. 14 (XL-35) dated 11.4.1955 has clarified that the revenue shall not take advantage of ignorance of the assessee as to his rights and the officers are duty bound to grant deduction legally available to the assessee. The CIT(A) also relied the judgment in the case of CIT vs. Technovate E Solution P. Ltd. [2013 (3) TMI 372 - DELHI HIGH COURT] wherein it was held that registration with Software Technology Parks of India is sufficient to allow deduction u/s. 10A of the Act. The copies of the certificate of registration issued by STPI and the certificate of the Chartered Accountant in Form 56F are also enclosed in the paper book filed by the assessee for the respective assessment years. On examination of the certificates of registration under STPI and the certificate of the Chartered Accountant in form 56F, we are of the view that the CIT(A) is justified in allowing the alternative claim of deduction u/s. 10A
Deduction of bonus payment u/s. 43B - HELD THAT:- We are in agreement with the Ld. CIT(A) on this issue. The said addition cannot be sustained as the provision for bonus is already debited in the profit and loss account of the assessee company and the sme was first added to the total income of the assessee and then reduced to the bonus actually paid during the year. We find no infirmity with the order passed by the Ld. CIT(A) Thus Ground No. 4 raised by the Department is dismissed.
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2016 (9) TMI 1546
Disallowance u/s 14A - HELD THAT:- We find that the Hon’ble High Court of Delhi in case of Chem Investment Ltd., Vs CIT [2015 (9) TMI 238 - DELHI HIGH COURT] has held that section 14A will not apply if no exempt income is received or receivable during the relevant previous year. - Decided against revenue
Allowance of a depreciation adjustment - HELD THAT:- Following the ratio of the above said decision in the case of Market Tools Research Pvt. Ltd. [2013 (12) TMI 414 - ITAT HYDERABAD] we hold that DRP erred in directing to exclude depreciation from the cost of the Tax Payer as well as comparables. Hence, we direct the AO to rework depreciation.
TP Adjustment - comparable selection - HELD THAT:- Companies functionally dissimilar with that of assessee need to be deselected from final list. Since the Assessee’s margin of 26.12% is higher than the arithmetical mean of the margins of the comparables, that is 14.01%, the international transaction of provision of software development services by the Assessee to its AE in FY 2009-10 can be concluded as being at arm’s length.
Section 40(a)(ia) application to depreciation allowance under Section 32 - assessee had capitalized software expenses and appropriate income tax depreciation was claimed u/s 32 - HELD THAT:- We are of the opinion that the issue is squarely covered by the decision in the case of Kawasaki Microelectronics Inc. Vs DICT (International Taxation) [2015 (9) TMI 9 - ITAT BANGALORE] where it has been held that once the assessee has capitalized payment in question though the assessee has not deducted tax at source on such payment, section 40 (a) (1) cannot be invoked for disallowance of depreciation.
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2016 (9) TMI 1545
Validity of assessment order - separate order of penalty - whether the impugned order could have been passed by the Assessing Officer imposing penalty by way of a separate order? - HELD THAT:- The issue involved in this writ petition is squarely covered in favour of the dealer, by a decision of this Court reported in RAINBOW FOUNDATIONS LTD. VERSUS ASSISTANT COMMISSIONER (CT) (FAC) , T. NAGAR (SOUTH) ASSESSMENT CIRCLE, CHENNAI [2009 (10) TMI 875 - MADRAS HIGH COURT] where it was held that under section 16[2] of the Act, the assessing authority had not jurisdiction to impose penalty by a separate and independent order. Even if a statute has brought in a new section by way of section 12C, given the fact that section 16[2] of the Act remained as it was, the view of the officer that by introduction of section 12C, section 16[2] would lost its validity, rendering the decision irrelevant, could not be accepted by any standard of reasoning.
The impugned order is not sustainable - petition allowed.
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2016 (9) TMI 1544
Valuation of closing stock - Survey u/s 133A - Difference between the value of stock arrived at by survey team and that of value calculated by assessee on the basis of Trading Account as on the date of survey by applying G.P. rate of previous year - HELD THAT:- Assessee is in the business of Cloth and Garments and its qualities are numerous and it is also a fact that the prices mentioned on the Slips attached on such cloths does not necessarily realize the same value as during bargaining the business man has to give some discount, therefore, the valuation by survey team at highest prices was not justified. AO has not made out a case that assessee had not been valuing its stock at sale prices as normally the stocks are valued at cost prices or market prices whichever is less. Therefore, valuation of inventory at the time of survey at sale prices is not at all justified.
The assessee had submitted that the gross profit ratio earned by it for the last five years and has also filed the gross profit earned by assessee in the same trade by its competitors and had requested the AO to consider the gross profits of these firms also but AO did not consider the submissions and neither rebutted any of the submissions made by assessee - addition made by AO and further upheld by CIT(A) is not justified specifically in view of the fact that they did not find any discrepancy in the books of account nor the books of account were rejected. In view of the above, the grievance of the assessee is justified and we delete the addition. - Decided in favour of assessee
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