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Showing 141 to 160 of 1903 Records
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2015 (11) TMI 1766
Interest accrued on the deferred installments towards the premium of the premises - Interest to NOIDA Authority towards the allotment of plot to the assessee and claimed the same as deduction - allowable business expenditure u/s 37 - Held that:- The facts are not disputed that the interest claimed by assessee was in respect of deferred instalments after the land including the superstructure was put to use on acquisition. Therefore, ld. CIT(A) rightly held that the interest pertaining to the period post acquisition and putting of such land including the superstructure in use, could not be capitalized along with the cost of land. We are in agreement with the view taken by ld. CIT(A), which is also fortified by the decision of Hon’ble Supreme Court in the case of Bombay Steam Navigation Co. (P) Ltd. (1964 (10) TMI 12 - SUPREME COURT).
Depreciation on computer accessories and peripherals such as, printer, scanners and server - Held that:- The said issue is covered by the decision of Hon’ble Delhi High Court in the case of CIT Vs. BSES Yamuna Powers Ltd. [2010 (8) TMI 58 - DELHI HIGH COURT] holding that the depreciation on computer accessories and peripherals such as, printer, scanners and server was to be allowed @ 60% the same being part of computer system.
TPA - Comparable selection - Held that:- Since the OP/OC of each comparable affected the average margin, on the basis of which addition is made, therefore, computation of correct OP/OC of each comparable is of paramount importance. We, therefore, restore this issue to the file of ld. TPO to examine the assessee’s contention. Ground is allowed for statistical purposes.
Misc. income as operating income in computing the operating margins of Mahindra Acres Consulting Engineers Ltd. and Rites Ltd. - Held that:- The assessee’s reliance is on the decision of the ITAT in the case of M/s bobst India Pvt. Ltd. Vs. ACIT [2014 (2) TMI 1347 - ITAT PUNE], in which it has been held that any item of income or expenditure, which is not linked to the international transactions under review has to be excluded from the computation of net operating profits and operating revenues. We find that this plea has not been taken before CIT(A) and, therefore, we refrain from making any comment on this aspect, particularly because if this principle is to be applied, then it is to be applied in respect of all the items of income and expenditure, which aspect has not been examined by lower revenue authorities. Since this issue does not arise out of the CIT(A)’s order, we refrain to adjudicate the same. Ground is dismissed.
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2015 (11) TMI 1765
TDS u/s 194I or 194C - Short deduction of tds - contract for carrier coming within the provisions OR ‘hire’ simplicteor coming within the provisions - Held that:- The contract entered between the assessee and the ship owners are not placed on record though there is a reference to some of the clauses of contract in the order passed u/s 201(1) and 201(1A). We find the issue has not properly deliberated by both the AO and the CIT(A) with regard to the contract entered between the assessee and the ship owners.
Therefore, for a proper appraisal of the issue and in the interest of justice and equity, we are of the view that the matter needs to be examined by the ACIT(TDS) afresh. ACIT(TDS) shall examine the contract entered between the assessee and the ship owners, which is the basis for making payment of charter hire charges. ACIT(TDS) on examination of the agreement/contract shall determine whether it is a case of contract of carrier coming within the ambit of sec. 194C or ‘hire’ simplictor and whether such hiring of ships come under the provisions of section 194-I of the Act. The ACIT(TDS) shall expeditiously dispose of the matter in accordance with law as indicated above after affording reasonable opportunity of being heard to the assessee
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2015 (11) TMI 1764
Deemed dividend addition u/s 2(22)(e) - granting of loan formed substantial part of its business - Held that:- As decided when once the business of the lender company covered by exception (ii) to section 2(22)(e) of the Income Tax Act, then the provisions of section 2(22)(e) will not be applicable. As per section 2(22)(iii), the loans granted did not fall within the definition of dividend and therefore, we find no infirmity in the orders of the ld. CIT(A) to be interfered with. Hence, we confirm the same - decided against revenue
Addition under section 68 -share application money treating the same as unexplained cash credits - Held that:- From the details and documents filed by the concerned share subscribers, it was held by the Assessing Officer that their identity and capacity as well as the genuineness of the relevant transactions were duly established and no addition under section 68 was called for. Keeping in view these submissions made by the ld. Counsel for the assessee, which have not been disputed or controverted by the ld. D.R., we find no justifiable reason to interfere with the impugned order of the ld. CIT(Appeals) deleting the addition - decided against revenue
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2015 (11) TMI 1763
The Supreme Court of India granted leave in the case. Stay granted on penalty imposed by assessing authority. Appellants to pay tax and interest within four weeks if not already paid.
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2015 (11) TMI 1762
Allowability of provision for warranty - Held that:- As decided in favour of assessee [2012 (3) TMI 627 - ITAT BANGALORE] we are concerned with Product Warranties. To give an example of Product Warranties, a company dealing in computers gives warranty for a period of 36 months from the date of supply. The said company considers following options: (a) account for warranty expense in the year in which it is incurred; (b) it makes a provision for warranty only when the customer makes a claim; and (c) it provides for warranty at 2% of turnover of the company based on past experience (historical trend).
Under the circumstances, the third option is most appropriate because it fulfills accrual concept as well as the matching concept. For determining an appropriate historical trend, it is important that the company has a proper accounting system for capturing relationship between the nature of the sales, the warranty provisions made and the actual expenses incurred against it subsequently.
If warranty provisions are based on experience and historical trend(s) and if the working is robust then the question of reversal in the subsequent two years, in the above example, may not arise in a significant way. - decided against revenue
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2015 (11) TMI 1761
CENVAT Credit - input - Sheet Steam Jointings, machined and unmachined steel castings and Rough HRC Castings - Since these goods have been used for maintenance of capital goods installed in the factory, the same can be termed as use in or in relation to manufacture of the final product. As such, in terms of the broad definition of input, the disputed goods shall merit consideration as input for the purpose of taking Cenvat credit - credit allowed - appeal allowed - decided in favor of appellant.
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2015 (11) TMI 1760
Deduction claimed u/s 80IB(11A) denied - assessee has not fulfilled the conditions as prescribed in the Act - assessee’s claim that hiring Riksha will suffice the conditions of integrated business of transportation with handling and storage - Held that:- Deduction u/s 80IB(11A) is available to undertakings who are deriving profit from the integrated business of handling, storage and transportation of foodgrains. Thus, the facilities of transportation, handling and transportation must exist as an integrated business and the undertaking must derive profit from such business.
Transportation by hiring lorry or thela will not generate profit. The benefit must be from integrated business including transportation. The assessee’s claim that hiring Riksha will suffice the conditions of integrated business of transportation with handling and storage shall not be sufficient. Rather it will go against the very spirit of the Act. This deduction is available only on the profit derived from the integrated business of handling, storage and transportation of foodgrains. No merit in the pleading of the assessee and sustain the orders of the authorities below. - Decided against assessee.
Depreciation on the building and warehouse - assessee did not claim depreciation on the building - Held that:- The assessee claims that the audited balance sheet of the assessee shows the addition of warehousing building to its assets at ₹ 1,78,62,323/- and also shows rental income from FCI and Cargil India Private Limited and the tax has been deducted from the rent, therefore, in our view, the assessee is entitled to depreciation on warehousing - Appeal of the assessee stands partly allowed.
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2015 (11) TMI 1759
Revision u/s 263 - amount earned on cancellation of forward contracts entered in foreign exchange was not taxed by the AO - amount received on account of gain on cancellation of forwarding contracts was liable to be taxed as income of the assessee during the year under consideration - Held that:- The gain arose on forwarding contracts was on account of cancellation for forwarding contracts entered into in connection with the offshore equipment, byepass valve system etc. Since the commercial production had not begun during the year under consideration, the assessee company correctly capitalized all the expenses incurred in relation to setting up of plant and machinery and the gains reduced from the expenses to be capitalized resulting in lesser capitalization to that extent.
Our view is further supported by the decision of Hon’ble Supreme Court in the case of Challapally Sugar Ltd. (1974 (10) TMI 3 - SUPREME COURT). No infirmity in assessee’s claim for setting of gains on such forward contracts from the cost of plant and machinery during pre-commencement stage.
With regard to unrecognized gain in forwarding contracts, we find that gain arising on forward contract is an unrealized gain on account of restatement of the liability at the year end. The said forward contracts were entered into in connection with the purchase of Turbines. The nature of gain on account of forward contract is in connection with the acquisition of fixed assets and in view of our above discussion, the same is to be adjusted from the cost of the fixed assets. The Hon’ble Supreme Court in the case of Sutlej Cotton Mills Ltd. (1978 (9) TMI 1 - SUPREME COURT) held that profit or loss arises to an assessee on account of appreciation or depreciation in the value of foreign currency held as capital asset or as fixed assets is liable to be treated as capital in nature, therefore, profit or loss would be of capital nature.
No merit in the order of the ld. CIT passed u/s 263 of the Act and we set aside the same. - decided in favour of assessee
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2015 (11) TMI 1758
Assessment u/s 153A - addition in respect of share application money - proof of incriminating documents as found and seized during the course of search - abetted assessment - Held that:- It is a settled legal position that once a search and seizure action has taken place u/s 132 of the Act or a requisition has been made u/s 132A, the provisions of section 153A trigged and Assessing Officer is bound to issue notice u/s 153A of the Act. Once notices are issued u/s 153A of the Act then assessee is legally obliged to file return of income for six years. The assessment and reassessment for six years shall be finalised by the Assessing Officer.
It is also held by various Courts that once notice u/s 153A of the Act issued, then assessment for six years shall be at large both for Assessing Officer and assessee have no warrant of law. It has been also held that in the assessment years where assessments have been abated in terms of second proviso to section 153A then Assessing Officer acts under original jurisdiction and one assessment is made for total income including the addition made on the basis of seized material. But where there is no abatement of assessments and assessments were completed on the date of search then addition can be made only on the basis of incriminating documents or undisclosed assets, etc. In these cases there was no incriminating document found and seized. No assessment proceedings were abated in these assessees. Thus assessments for these assessment years were completed on the date of search. The assessments were completed u/s 143(3) of the Act read with section 153A/153C of the Act after the search. There was no abatement of any proceedings in these cases for these assessment years in terms of second proviso to section 153A of the Act. There is no seized material belonging to the assessee which was found and seized in relation to additions made.
We allow the appeals on the ground of sec. 153A of the I.T. Act wherein we have already held that in absence of any incriminating documents found and seized during the course of search, the Assessing Officer is not justified in making the addition in non-abated assessment order while passing the order u/s 153A r.w.s. 143(3) of the Act. - Decided in favour of assessee
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2015 (11) TMI 1757
Deduction u/s. 80IB on the amount of DEPB - Held that:- Hon’ble Supreme Court in the case of Baby Maine Exports, [2007 (3) TMI 206 - SUPREME COURT] relied by the assessee before us. In this decision, Hon’ble Apex Court has held that the premium paid by the export house or the trading house to a supporting manufacturer is an integral part of the turnover of the supporting manufacturer and was thus includible in the profits of the business eligible for deduction u/s. 80HHC.
The assessee was entitled for deduction u/s. 80IB in respect of sale of DEPB received as supporting manufacturer. In view of catena of decisions relied upon by the assessee, in our considered view, the conclusion of the CIT(A) denying deduction u/s. 80IB qua purported DEPB receipt, is not found to be correct. No material is adduced by the DR to take a contrary view. We, therefore, reversing the impugned order, hold that the assessee is entitled for deduction u/s. 80IB of the Act. This issue is decided in favour of the assessee as such. The ground No. 1 is accordingly allowed.
Computation of deduction u/s. 80HHC and 80IB ignoring the provisions of section 80IB(13) r/w sec. 80IA(9) - Held that:- Referring to the varied decisions in the matter laying our hands on the decision favourable to the assessee rendered in the case of Associated Capsules (P) Ltd. [2011 (1) TMI 787 - BOMBAY HIGH COURT] relied by assessee, we reverse the order of the CIT(A) holding that deduction u/s. 80IB would not go to reduce the total income for the purpose of calculating deduction u/s. 80HHC. Accordingly, this issue is decided in favour of the assessee.
Disallowance on account of foreign traveling - Held that:- For want of any bills/vouchers or supporting evidence to substantiate foreign traveling expenses to the extent of ₹ 1,47,827/-, the ld. Authorities below have rightly disallowed the same. Therefore, this ground of appeal raised by assessee has no force and is liable to be dismissed.
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2015 (11) TMI 1756
Estimation of income of the assessee @ 5% on the cost of goods sold - Non maintenance of books of accounts - Held that:- We find that the assessee has not maintained any books of account and therefore, the estimation of income is justified. It is only the rate at which the income is to be estimated is before us. A.O. has estimated the income at 5% of the cost of goods sold, while the assessee is seeking the estimation at 3% of the cost of goods sold.
In the case before us, the assessee is agreeable to the estimation of income at 3% of the cost of goods sold. As the facts before us are similar to the facts before the Tribunal in the case of Venkateswara Wines, Nizamabad (2015 (9) TMI 1616 - ITAT HYDERABAD) and the uniform rate of profit cannot be adopted in the case of every assessee in similar business, we allow ground No.2 of the assessee.
Remuneration paid to the partners to be allowed to be deducted from the estimated income - Held that:- We find that the same is not allowable as the income of the assessee itself has been estimated on the cost of the goods sold and not on the turnover or receipts of the assessee.
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2015 (11) TMI 1755
Deduction u/s 10A denied - alternate Claim - no such claim was made by the assessee in the return of income filed and this was not raised as an additional ground/claim but as an alternative claim before the appellate authority, where a claim for deduction u/s 108 was already made in the return of income - Held that:- When the claim of deduction u/s 10B was denied, the AO ought to have examined whether the assessee is eligible for deduction u/s 10A of the Act. The 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.
See Judgment of the Hon’ble Delhi High Court in the case of CIT vs Technovate E Solution P Ltd reported [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 - 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 of the Act. It is ordered accordingly. - decided against revenue
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2015 (11) TMI 1754
SSI exemption - clubbing of clearances - dummy units - Held that:- All the units are located at different places and the mere fact that the units are owned and controlled by one person does not allow clubbing of the clearances. Merely because the proprietor of the present concern has interest in other six units does not entitle the Department to club all the shares of the assessee in other units - appeal dismissed - decided against Revenue.
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2015 (11) TMI 1753
Issues:
Challenge to order under section 260A of the Income Tax Act, 1961 regarding TDS under section 40(a)(ia) and retrospective application of provisions.
Analysis:
The appellant Revenue challenged the order of the Income Tax Appellate Tribunal related to the applicability of TDS under section 40(a)(ia) of the Income Tax Act, 1961. The appellant raised questions regarding the Tribunal's justification in not appreciating the fact that the provisions of section 40(a)(ia) as amended by the Finance Act, 2010 were clarificatory and retrospective in nature. The Tribunal was also questioned for not considering the Memorandum explaining the provisions in the Finance Bill, 2010, which clearly stated the retrospective application from 1st April, 2010 for the assessment year 2010-11 and subsequent years.
The assessment year in question was 2005-06, with the relevant accounting period being the previous year 2004-05. The Court noted that a previous decision in Tax Appeal No.493 of 2003 had already established that the amendment introduced by the Finance Act, 2010 had retrospective effect from 1st April, 2010. Given this precedent, the Court found that there was no need to delve into the detailed facts and contentions of the case. Referring to the judgment in Tax Appeal No.413 of 2013, the Court concluded that the impugned order by the Tribunal did not give rise to any substantial question of law warranting interference. Consequently, the appeal made by the appellant Revenue was dismissed.
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2015 (11) TMI 1752
Deduction of interest expenditure u/s 36(1)(iii) - AO observed that the interest to the extent of interest on investment in land was not for business purpose - Further disallowance of Interest amount pertaining to investment in capital work-in-progress - Disallowance u/s 14A - expenditure related to exempt income - Held that:- Following the decision for the earlier years, CIT(A) was right in deleting the additions - Decided in favor of assessee.
Disallowance u/s 14A - Held that:- the expenditure which is directly relatable to earning the taxable income has to be excluded. The wording of Rule 8D (ii) of the Income Tax Rules is quite clear as it has been postulated in this provision that the interest relatable to investment in tax free funds is to be computed.
Under sub-section (2) of section 14A of the Act, the Assessing Officer is required to examine the accounts of the assessee and only when he is not satisfied with the correctness of the claim of the assessee in respect of expenditure in relation to exempt income, he can determine the amount of expenditure which should be disallowed in accordance with the method prescribed, i.e. Rule 8D of the Income Tax Rules.
Higher rate of Depreciation on power evacuation facility (PEF) and transmission lines used with wind turbine generator - Held that:- power evacuation infrastructure facility is part and parcel of the windmill though partly owned by the assessee on which the assessee is entitled to the claim of depreciation at the same rate on which depreciation was allowed on the windmill. - Decided in favor of assessee.
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2015 (11) TMI 1751
Liability of Interest on the amounts awarded by the Arbitrator to the respondent/contractor - Clause 16(2) of the General Conditions of Contract (GCC) - scope of word 'immoral' - it is argued that even if the petitioner/UOI is found liable to pay any amount to the contractor, whether in a civil suit or any arbitration proceedings by an award, petitioner because of Clause 16(2) of the GCC cannot be called upon to pay interest for the pre-reference/present period or the post reference period including pendente lite period and till passing of the Award/decree.
Held that:- The entire concept of rule of law and existence of relevant legislations in any country in this age (or in any age for that matter) is to prevent dishonesty. This principle that dishonesty is not promoted is as absolute and inviolable as the rising of the sun in the east. It can never ever be argued that a legislation or a contract can be so interpreted by courts, or that they be so applied by courts, which will result in promoting of dishonesty. Dishonesty is an anathema to the rule of law. Illegal holding on to the principal amounts by one person clearly leads to dishonesty on his part as such person wrongly benefits from the moneys illegally/wrongfully retained by him - In today's date and age to say that moneys can be retained for years and years and decades is clearly immoral and has to be held against public policy otherwise there will be gross injustice to the existence of the commercial world which cannot survive without payment of moneys in time.
The four Sub-clauses of sub-Section (2) of Section 4 of the Interest Act do not restrict immorality to instances of sexual immorality as the only immorality, and hence in today's age and date the expression 'immoral' will have to be interpreted to include immorality arising in commercial transactions especially because a whiff of the same surely exists in the first Sub-clause (a) of sub-Section (2) of Section 4 of the Interest Act, 1978 which deals with payment of interest on a deposit, and deposit of moneys is generally and ordinarily a commercial transaction - Once Section 5 of the Interest Act, again with a non obstante clause, allows overriding effect and power of Section 34 CPC for grant of pendente lite interest, clearly, the post reference interest till the passing of the award is clearly payable to a person and it cannot be argued that pendente lite period would stand exempted because of the language of a clause such as the Clause 16(2) of the GCC in the present case.
Non-payment of interest can under no circumstances be justified in today's world and it is clear that illegal retention of moneys for a long period of time will clearly amount to immorality and violation of the public policy. Therefore there is not even an iota of doubt that illegal retention of principal amounts of moneys which are to be paid by a person to another person at an appropriate point of time, on account of a contractual clause, such as Clause 16(2) of the GCC, results in an immoral action which is violative of public policy and hence such a clause having the language of Clause 16(2) of the GCC in the present case, is liable to be and is accordingly struck down in view of Section 23 of the Indian Contract Act.
There is no merit in the objection petition that interest has been wrongly granted by the Arbitrator because of the bar of Clause 16(2) of the General Conditions of Contract in question, as this Clause 16(2) is invalid and void as the same is hit by Section 23 of the Indian Contract Act, 1872 - petition dismissed.
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2015 (11) TMI 1750
Unexplained expenditure in respect of undisclosed/suppressed sales - profit estimation - CIT-A proceeded to estimate the assessee’s profit @18% of the turnover after recording that entities in the same line of business - Held that:- Merely because the expenditure incurred by the assessee in respect of this turnover has not been proved does not mean that there was no expenditure incurred at all and such a plea cannot be accepted. In such circumstances, an estimate of the probable profit has to be made having regard to the surrounding circumstances, ground realities, corroborative evidence in the form of profits shown in comparative cases and other factors that are relevant to determine the real income of the assessee. CIT(A) has followed the correct and reasonable approach in estimating the profit on the suppressed turnover worked out by the AO which has not been questioned by the assessee. Revenue except for raising the ground has not been able to contravene the finding of the learned CIT(A) and we are,therefore, no interference is called for in the finding of the learned CIT(A) in the impugned order on this issue. - Decided against revenue
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2015 (11) TMI 1749
TPA - comparable selection - Held that:- Assessee is engaged in the business of providing customer relationship management services and related Business Process Outsourcing (‘BPO’) service thus exclusion of companies functionally dissimilar with that of assessee.
Deduction u/s.10A - Held that:- The issue raised in the present appeal with regard to the deduction of expenditure incurred for ‘Export Turn Over’ is also required to be deducted from ‘Total Turn Over’ for the purpose of computing the deduction u/s.10A of the Act, the controversy is no longer res integra and is covered by the decision of the Division Bench of this Court in the case of M/s.Tata Elxsi Ltd., vs. Asst.Commissioner of Income Tax [2015 (10) TMI 634 - KARNATAKA HIGH COURT]
Interest under Section 234B - Held that:- The charging of interest is consequential and mandatory and the Assessing Officer has no discretion in the matter. This proposition has been upheld by the Hon'ble Apex Court in the case of Anjum H Ghaswala (2001 (10) TMI 4 - SUPREME COURT) and we, therefore, uphold the action of the Assessing Officer in charging the said interest. The Assessing Officer is, however, directed to recompute the interest chargeable u/s. 234B of the Act, if any, while giving effect to this order.
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2015 (11) TMI 1748
SSI Exemption - clubbing of clearances - Why the turnover will not include the turnover of six units as six different units were established for the purpose of SSI exemption and that all the six units were owned and controlled by one person, namely, Sri B.M.Garg? - Held that:- All the units are located at different places and the mere fact that the units are owned and controlled by one person does not allow clubbing of the clearances - Merely because the proprietor of the present concern has interest in other six units does not entitle the Department to club all the shares of the assessee in other units - appeal dismissed - decided against Revenue.
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2015 (11) TMI 1747
Valuation of goods - Non adherence to provisions of Central Excise Law as regards valuation of goods manufactured and cleared by them - Demand of differential duty - the decision in the case of SHRI SACHIN GANDHI, M/S MAGNA LABORATORIES GUJ PVT LTD ANDSHRI RAMACHANDRAM NAIR VERSUS CCE & ST, VAPI [2014 (2) TMI 106 - CESTAT AHMEDABAD] contested.
Issue notice - List the matter after pleadings are complete.
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