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Showing 141 to 160 of 1861 Records
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2018 (6) TMI 1723
Disallowance of excess claim of depreciation - HELD THAT:- As decided in own case [2014 (5) TMI 926 - ITAT MUMBAI] direct the AO to allow the depreciation on the machinery that had been acquired from Bilag, and also include incidental expenses incurred on acquisition of assets.
Depreciation on goodwill - HELD THAT:- As decided in own case [2014 (5) TMI 926 - ITAT MUMBAI] relying on Smifs Securities Ltd. [2012 (8) TMI 713 - SUPREME COURT] - intangibles like goodwill are eligible for depreciation - non compete fee is in the nature of the payment and is now covered u/s 28(va) of the Act, it would be revenue in nature - AO is directed to allow the depreciation on goodwill as per law and consider the payment of non-compete fee, in terms of section 28(va) – Decided in favour of Assessee.
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2018 (6) TMI 1722
Service of petition - petition not served - HELD THAT:- The Petitioner is directed to complete the requisite Form because the name of the IRP is not proposed. There is no evidence of Section 8 notice. Also directed to serve the copy of Petition to the other side on or before next date of hearing.
The matter is adjourned to 08.08.2018.
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2018 (6) TMI 1721
Interest receipt - Income from other sources or Capital gain - whether assessee is not entitled to set off of business expenses against the income shown under the head ‘income from other sources’ as the business of the assessee has not commenced ? - HELD THAT:- The assessee has parked the loan amount in short term deposits with Banks and other financial institution and earned interest income, which has no direct nexus and the interest income is directly attributable to the deposits made out of funds generated by way of term loans. We are of the considered opinion that the interest earned by the assessee has to be treated as income on commercial principles.
Having regard to the judgment in the case of Tuticorin Alkali Chemicals and Fertilisers Ltd v CIT [1997 (7) TMI 4 - SUPREME COURT] AND in the case of CIT v. Autokast Ltd. [2000 (11) TMI 7 - SC ORDER] the Hon’ble Supreme Court has held that the interest income is assessable to tax in the hands of the assessee.
Hon’ble Supreme Court in the above decisions that the income tax is attracted at the point when the income is earned from the fixed deposits/short term deposits and taxability of income is not dependent upon its destination or the manner of its utilization and respectfully following the above decisions, we confirm the order of the ld. CIT(A) in holding that the Assessing Officer rightly brought the interest income under the head ‘income from other sources’ and dismiss the ground raised by the assessee.
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2018 (6) TMI 1720
Disallowance of expenses relating to exempt income made u/s 14A - disallowance made for computing book profit u/s 115JB - HELD THAT:- Special Bench in the case of Vireet Investment P. Ltd., [2017 (6) TMI 1124 - ITAT DELHI] the direction of the CIT(A) to adopt the disallowance made under Section 14A for the purpose of computing book profit u/s 115JB is liable to be set aside. The assessee also took us to the working made by it for ascertaining the expenses relating to exempt income for the purpose of computation of book profit u/s 115JB.
We noticed that the assessee has allocated expenses in the ratio of taxable income and exempt income and the said method was determined by the Department in A.Y. 2000-01. It is stated that the same method is being followed for A.Y. 2000-01 onwards by the assessee.
Since a consistent method is being followed by the assessee for more than 10 years and since the allocation of expenses is on the basis of exempt income and taxable income, we are of the view that the computation made by the assessee for determining expenses relating to exempt income for the requirement of provisions of Section 115JB does not require disturbance. Accordingly we set aside the order of the learned CIT(A) on this issue and direct the AO to accept the computation made by the assessee for the purpose of sec. 115JB - Appeal filed by the assessee is treated as allowed for statistical purposes.
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2018 (6) TMI 1719
Stay on invocation of Performance Bank Guarantee - HELD THAT:- The Corporate Debtor had completed the Work Order as assigned by 15.09.2016 to the satisfaction of GAIL India Limited who, in turn, had issued Completion Certificate and the "Defect Liability Period" has also MA 521 OF 2018 Rajeev Mannadiar, Resolution Professional Kohinoor Crane Services Vs. Petron Engineering Construction Limited elapsed on 15.09.2017, GAIL India Limited should not be allowed to demand State Bank of India for revocation of the Bank Guarantee.
Further, the admitted factual position is that "Moratorium" has already been commenced vide an Order (supra), therefore, alienation of any asset or recovery from any property of the Corporate Debtor is prohibited, hence action of revocation of the Bank Guarantee is against the provisions of the Insolvency Code - The State Bank is hereby estopped from revocation of Bank Guarantee or discharge in favour of any party including GAIL so that the rights of the stakeholders of the Corporate Debtor should not be prejudiced.
Application allowed.
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2018 (6) TMI 1718
Validity of action of the respondents in not fixing the rate of admission for the petitioner-theater as per their application dated 20.06.2017 - HELD THAT:- The issue decided in the case of RAMAKRISHNA GLITTERATI VERSUS STATE OF TELANGANA [2016 (10) TMI 1314 - TELANGANA HIGH COURT] where it was held that all services used in relation to the business of manufacturing the final product are covered under the definition of `input service' and in the present case, the outdoor catering services being integrally connected with the business of the manufacture of cement, credit of service tax paid out on catering services has been rightly allowed by the Tribunal.
Petition disposed off.
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2018 (6) TMI 1717
TP Adjustment - application of most appropriate transfer pricing method and the arm‟s length price - international transactions - HELD THAT:- Functions performed, assets employed and risk undertaken by the assessee and its associated enterprises was found to be reasonable. Accordingly, we allow assessee to withdraw these grounds for the A.Y.2008-09 and 2009-10 in so far as these grounds are covered by the APA, the principle laid down in the APA for benchmarking analysis in respect of the international transactions being guidance value since there is no change in the said assessment years in the nature of international transactions.
We also direct the Department to pass an order giving effect u/s.92 CD (5) of the Act in the A.Y. 2010-11 & 2011-12. Whereas for A.Y.2008-09 and A.Y.2009-10, we observe that the principles laid down in the APA for benchmarking/comparability analysis in respect of the international transactions shall have a guidance value since there is no change in the said Assessment Years in the nature of the international transactions, functional, Asset and Risk (“FAR‟) profile of the assessee and the AEs. We direct accordingly.
Transfer pricing adjustment in respect of transactions pertaining to taxability of reimbursement of expenses and taxability of reimbursement for purchase of fixed assets - taxability of reimbursement for purchase of fixed assets - HELD THAT:- As decided in own case [2018 (6) TMI 359 - ITAT MUMBAI] Reimbursements paid being backed by third party invoices without any element of markup, cannot be benchmarked at NIL as done by TPO. Accordingly, we delete the addition so made by the AO.
Short credit of taxes deducted at source - HELD THAT:- AO is directed to give effect for short TDS credit granted to the assessee, after due verification. We direct accordingly.
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2018 (6) TMI 1716
Validity of reopening of assessment u/s 147 - eligibility of reasons to believe - HELD THAT:- In the present case, we find that the first sentence of the so-called reasons recorded by AO speaks that "there is information in the possession of this office".
The first part is only information and the second paragraph of the so-called reasons is mere reason and third part is directions of the superior authority. From the so-called reasons, it is not at all discernible as to whether the Assessing Officer had applied his mind to the information and independently arrived at a belief that on the basis of the material which he had before him, income had escaped assessment.
Assessing Officer failed to make any exercise for reopening of the case independently and with corroborative material. Even the Assessing Officer has not made any exercise to gather any material evidence on record. The initiation of reassessment itself is based upon no evidence and/or un-corroborative material, therefore in any sense cannot survive, because initiation of the proceeding u/s 147 itself is a vague and based upon no substantive reasoning and/or material at all, hence in our considered opinion, the Ld. CIT(A) was absolutely unjustified in upholding the reopening of the assessment u/s 147 of the Act, without appreciating the facts of the case, explanation submitted and evidences places on record judiciously. - Decided in favour of assessee.
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2018 (6) TMI 1715
Rectification Application u/s 254(2) - provisions of Section 11(1) Explanation2 of the Act would warrant its appeal being allowed was not considered and its appeal was dismissed - HELD THAT:- We find that the issue is no longer res judicata as it stands concluded by the decision of this Court in Safari Mercantile [2016 (6) TMI 1313 - BOMBAY HIGH COURT] and Gyan Constructions [2015 (1) TMI 1427 - BOMBAY HIGH COURT] that while dealing with the application for rectification, the Tribunal where it finds there is an error apparent on record, then it should recall the original order and place the Appeal for consideration of the issue on merits before the Regular Court. It is not appropriate to dispose of the controversy on merits of the submission while disposing of the Rectification Application.
The impugned order dated 16th January, 2018 is quashed and set aside. The Rectification Application filed by the petitioner is restored to the Tribunal for fresh disposal.
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2018 (6) TMI 1714
Penalty under Section 271(1)(C) - Deduction u/s 10B computation - HELD THAT:- Since the Tribunal has reiterated the findings of facts that both the additions made to the income of the Assessee having been set aside following the decision of the High Court in the case of Tata Elxsi Ltd[2011 (8) TMI 782 - KARNATAKA HIGH COURT] as far as issue of Section 10B is concerned and on the issue of excess stock being tax neutral, such cogent and reasonable findings of facts returned by the learned Tribunal and consequentially setting aside the penalty under Section 271[1][c] of the Act, does not give rise to any substantial question of law requiring the consideration by this Court under Section 260-A of the Act.
Appeal filed by the Revenue is thus found to be without merit and liable to be dismissed and the same is accordingly dismissed.
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2018 (6) TMI 1713
Reopening of assessment u/s 147 - unexplained investments addition u/s 69 - CIT(A) held that the Assessing Officer validly completed the assessment under section 143(3) r.w.s. 147 - Assessee submitted during the course of hearing of this appeal, the addition made in the reassessment may be deleted and justice be rendered - HELD THAT:- We direct the CIT(A) to adjudicate the issue on merits with regard to the addition made under section 69 of the Act in accordance with law by allowing an opportunity of being heard to the assessee. Appeal filed by the assessee is allowed for statistical purposes.
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2018 (6) TMI 1712
Maintainability of petition - availability of alternative remedy of appeal - section 39(1) of the Karnataka Value Added tax Act, 2003 - HELD THAT:- The writ petition is not entertained and it is dismissed as not maintainable, reserving liberty to the petitioner herein to avail alternative appellate remedy, if so advised.
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2018 (6) TMI 1711
Disallowance of club membership of fee - AO disallowed partial amount of total club membership expenses on the ground that the assessee failed to furnish evidences - HELD THAT:- It is the contention of the assessee that it has filed details for balance amount of ₹ 2,30,623/- before the Ld. CIT(A) vide its submission dated 22.01.13. Such details have been furnished before us in the form of paper book. Therefore, we are of the considered view that the issue needs to be reexamined by the AO, in the light of evidences filed by the assessee. Hence, we set aside the issue to the file of AO and direct him to consider the issue afresh after affording a reasonable opportunity of hearing to the assessee.
Disallowance of expenses incurred in relation to exempt income under section 14A r.w.r. 8D - HELD THAT:- Once the assessee has proved the availability of own funds in excess of value of investments, then the question of disallowance of interest expenses under rule 8D(2)(ii) does not arise. In this case, the assessee has filed necessary details to prove availability of own funds. Hence, we are of the considered view that the AO was incorrect in disallowing interest expenses under rule 8D(2)(ii) of Income Tax Rules, 1962 and accordingly direct him to delete disallowance of interest expenses worked out under rule 8D(2)(ii).
Disallowance of direct expenses under rule 8D(2)(i) - suo moto disallowance by assessee - AO has not recorded his satisfaction before disallowing further expenses - HELD THAT:- We find no merits in the arguments of the assessee for the reason that the AO has arrived at a satisfaction by rejecting computation worked out by the assessee towards suo-moto disallowances which means that the AO has considered the nature of expenses incurred by the assessee and also disallowances quantified in the light of exempt income earned for the year and hence we are of the considered view that the AO was right in invoking rule 8D(2)(iii) to quantify disallowance in respect of expenses incurred in relation to exempt income. Hence, we are of the considered view that there is no error in the computation worked out by the AO under rule 8D(2)(iii).
Disallowance of gift expenses - assessee has failed to file any evidences to prove necessity of gifts given to employees, associates and government officials in relation to its business activity - HELD THAT:- Basically the expenses in the nature of gifts and rewards are in the nature of personal expenses and hence cannot be allowed as deductable under section 37(1). Mere payment of fringe benefit tax on such expenses would not discharge the assessee’s obligation to prove such expenses to say that these are incurred wholly and exclusively for the purpose of business. The Ld. CIT(A) after considering the relevant submissions has rightly confirmed additions made by the AO. We do not find any error or infirmity in the order of the Ld. CIT(A). Hence, we are inclined to uphold the findings of the Ld. CIT(A) and reject ground raised by the assessee.
Disallowance of compensation payment u/s 40(a)(ia) - non deduction of tds - HELD THAT:- Although the assessee claims that payment made to Mr. SS Mohla is in the nature of compensation for which the provisions of TDS has no application, on perusal of facts available on record, we find that such payment is in the nature of commission for securing orders, therefore, we are of the considered view that mere change in nomenclature of the expenses does not absolve the assessee from the responsibility of complying with applicable TDS provisions. In this case, the assessee itself has admitted that it has paid commission for securing orders. Once the payment is in the nature of commission obviously the assessee ought to have deducted TDS under section 194H - Since the assessee has failed to deduce TDS, the AO has rightly disallowed such expenditure under section 40(a)(ia) - CIT(A) after considering the relevant submissions has rightly confirmed additions made by the AO. In so far as case laws relied upon by the assessee, we find that all the case laws are rendered on different set of facts and has no application to the facts of the assessee’s case. Hence, we are inclined to uphold the finding of the Ld. CIT(A) and reject the ground raised by the assessee.
Disallowance of write off of doubtful deposits - assessee had claimed deduction of write off of deposits which were long outstanding and had become irrecoverable - HELD THAT:- Deposits written off by the assessee are balance sheet items and not part of trading receipts. If the assessee has given deposits out of its tax suffered income, then obviously such deposits are coming within the ambit of bad debts written off under section 36(1)(vii) of the Act. If the assessee has given such deposit out of its borrowings then obviously it does not fulfill the conditions prescribed under section 36(2) of the Act. Hence, the Ld. CIT(A) has rightly set aside the issue to the file of AO to verify whether such advances are trade advances or not. Therefore, we are of the considered view that the Ld. CIT(A) was right in setting aside the issue to the file of the AO to verify the nature of advances. There is no grievance is caused to the assessee. The assessee can file necessary evidences before the AO to prove whether such advances are in the nature of trade advances or not. Hence, we are inclined to uphold the findings of the Ld. CIT(A) and reject the ground raised by the assessee.
Disallowance of irrecoverable advances - debit balance outstanding in DEPB provision account and amount receivable for duty drawback for recovery from Vietnam exports as the same were irrecoverable - AO disallowed written off of irrecoverable advances on the ground that such advances were not bad debts of customers and hence could not be allowed under section 36(1)(vii) - HELD THAT:- When export incentive is offered to tax in the earlier period by showing the amount as receivable, then write off of such advance as irrecoverable is in the nature of bad debt which can be claimed as deduction under section 36(1)(vii) - there is a contradiction in the claim made by the assessee in its books of accounts and the submissions made before the authorities. The assessee has claimed an amount of ₹ 51,45,651/- as irrecoverable advances, however, as per the submissions the amount written off was at ₹ 39,39,160/-. Therefore, we are of the view that the issue needs to be reexamined by the AO in the light of submissions of the assessee. Hence, we set aside the issue to the file of AO and direct him to examine the claim with necessary evidences before allowing the claim. If the assessee is able to file evidences to the extent of ₹ 51,45,651/-, then the AO is directed to allow write off irrecoverable advances.
Adhoc disallowance of 50% of payment made to subsidiary company for supply of support services and supply of manpower - AO has disallowed amount paid to associate concern on the ground that the payments were excessive and unreasonable - HELD THAT:- We find force in the arguments of the assessee for the reason that the assessee has furnished necessary details of payment made to its subsidiary company for rendering services. The AO has made adhoc disallowance of 50% without any reference to comparable cases to come to the conclusion that payments made by the assessee are excessive and unreasonable. Hence, we direct the AO to delete additions made towards disallowance of payments made under section 40(2)(b) .
Disallowance of unrealized foreign exchange loss - AO disallowed such loss on the ground that it pertains to capital assets which ought to have been added to the concerned asset - HELD THAT:- CIT(A) has already set aside the issue to the AO to consider it afresh in the light of decision in the case of CIT V/s. Woodward Governor India Pvt. Ltd. [2009 (4) TMI 4 - SUPREME COURT]. Therefore, we are of the considered view that there is no grievance caused to the assessee. The assessee can file necessary details before the AO to prove the loss whether it pertains to revenue or capital in nature. We further observe that the assessee itself has admitted while giving effect to the order of the Ld. CIT(A) the AO has allowed unrealized foreign exchange loss. Therefore, we are of the considered view that there is no merits in the ground taken by the assessee and accordingly we reject ground taken by the assessee.
Non adjudication of additional ground by Ld. CIT(A) - ground filed by the assessee relating to the allowance of claim which was wrongly disallowed by the assessee while filing the return of income u/s 40(a) - HELD THAT:- we find that the assessee is within its right to raise the additional ground qua the deduction not claimed before the AO during the year. The assessee has raised the issue before the first appellate authority who has not adjudicated the same. In our opinion, the issue needs to be restored to the file of the Ld. CIT(A) so that the same could be decided on merits. The case of the assessee is squarely covered by the ratio laid down in the case of CIT vs. “CIT vs. Pruthvi Brokers and Shareholders Pvt. Ltd.” [2012 (7) TMI 158 - BOMBAY HIGH COURT]as held that the assessee can raise before the appellate authorities any additional ground qua the deduction which was not claimed in the return of income.
Disallowance of product trial expenses - HELD THAT:- Assessee is eligible for deduction towards product trial expenses under section 37
In so far as assessee’s claim of weighted deductions under section 35, we find that the assessee has failed to file any kind of evidences to prove that such R&D expenditure has been approved by the competent authority to be eligible for weighted deduction, therefore we are of the considered view that there is no merit in the arguments of the assessee that the assessee is eligible for weighted deduction under section 35 of the Income Tax Act, 1961. The Ld. CIT(A) after considering the relevant submissions has rightly allowed the claim. We do not find any infirmity in the order of the Ld. CIT(A). - Decided against revenue.
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2018 (6) TMI 1710
Advances made to rural branches u/s 36(1)(viia) - Deduction of provision for bad debts in terms of Section 36(1)(viia) - definition of “Rural branch” for the purpose of arriving at deduction u/s. 36(1)(viia) - HELD THAT:- The definition of non-scheduled bank as noticed from the Banking Regulation Act was “any bank which is not included in the second schedule to the Act”. Though there was a separate definition of co-operative banks in the Banking Regulation Act, the Division Bench held that the co-operative banks for the purpose of section 36(1)(viia) would be treated as included and entitled to such benefit.
A reading of clause (a) under section 36 (1)(viia) would dispel any doubts regarding such inclusion. The deduction in respect of any provision for bad and doubtful debts to the extent of 7½% of the total income is applicable to scheduled banks not being one incorporated outside India, a non scheduled bank or a co-operative bank other than those specified. Under the second limb the deduction is to the extent of 10% of the aggregate average advances by the rural branches of such bank. The rural branches of the category of banks referred to in the first limb would be entitled under the second limb. We agree with the decision and there is no reason for us to take a different view in the present case especially in an appeal instituted by another assessee.
The question raised is also as to the sustainability of the dictum in Kannur District Co-operative Bank [2014 (8) TMI 635 - KERALA HIGH COURT]that while identifying the 'rural branches', the co-operative banks are also to be brought under the rigour of the definition of a "Rural Branch".
The Division Bench found that the view was covered by the earlier judgment in Lord Krishna Bank Ltd.[2010 (10) TMI 860 - KERALA HIGH COURT]. - Also see MALAPPURAM DISTRICT CO-OP. BANK LTD VERSUS INCOME TAX OFFICER, WARD-2, TIRUR. [2014 (10) TMI 1023 - KERALA HIGH COURT] - Decided against assessee.
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2018 (6) TMI 1709
Grant of Regular Bail - Blackmail and Extortion - threat to publicize morphed photographs - HELD THAT:- While an exhaustive study of the authorities on the point may disclose some degree of oscillation in the precedential pendulum, the unalterable median is, and always is, that bail is the rule, and jail is the exception; the corollary would be that, if one is to abandon the rule, and embrace the exception, there must necessarily be overwhelming reason, and justification, to do so - To arrive at any opinion, it would be necessary to examine the cases of the individual applicants, individually. While doing so, this Court is required to be alive to the fact that investigations, in the present case, are as yet incomplete, as several of the alleged extortionists/blackmailers, named by the complainant or by the witnesses, are yet to be traced and apprehended.
Bail Application 752/2018, of Harish Tiwari, and Bail Application 1332/2018, of Subhash Sharma, are rejected. Bail Application 401/2018, of Ashok Sagar, is allowed, and he is directed to be released on bail, subject to his furnishing security to the tune of ₹ 1 lakh, along with two solvent sureties of like amount, to the satisfaction of the learned Trial Court - the release shall be subject to various conditions imposed.
Bail application disposed off.
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2018 (6) TMI 1708
Exemption u/s 11 - specific services to member as well as non-members by charging fees - HELD THAT:- Rendering specific services to member as well as non-members by charging fees and applicability of exemption u/s 11 of the Act has already been decided by the Hon’ble Delhi High Court [2012 (11) TMI 429 - DELHI HIGH COURT] by holding that the assessee society is entitled to get benefit u/s 11.
DR also raised an issue that post amendment to the proviso to Section 2(15) of the Act , the situation has become altogether different from the AY 2009-10 onwards and the activities of the Assessee are liable to be treated as business activities, however, we realized that co-ordinate bench of ITAT at Delhi in the assessee’s own case for the AYs 2008-09 & 2009-10 duly considered and adjudicated the said issue and nothing is brought on record by Ld. DR, contrary to the said judgments and/or filing of any appeal against the same. - Decided against revenue.
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2018 (6) TMI 1707
TP Adjustment - comparable selection - HELD THAT:- Assessee was providing e-learning solutions i.e. IT enabled services like content technology services, desktop technology services, e-learning and conversion services to its associated enterprises.
Accentia Technologies Ltd to be excluded as being not functionally comparable to the activities carried on by the assessee
Not considering foreign exchange gain as operating income while calculating the PLI of assessee - The foreign exchange fluctuation is in respect of revenue earned from the associated enterprises vis-à-vis provision of ITES services and hence, the same forms part of the operating income / cost. The Assessing Officer / TPO is thus, directed to verify the claim of assessee in this regard and re- compute the PLI of assessee and the comparables. It may also be pointed out that the assessee had chosen filter of export sales exceeding 75% for comparables. Thus, the foreign exchange fluctuations arising with regard to exports cannot be treated as non-operating in nature even in the case of comparables. See B.C. MANAGEMENT SERVICES PVT. LTD. [2017 (12) TMI 255 - DELHI HIGH COURT]
Risk adjustment - As relying on STARENT NETWORKS (INDIA) PVT. LTD.[2018 (4) TMI 32 - ITAT PUNE] we direct the Assessing Officer to verify the above said claim of assessee and re-compute the margins of assessee and also the mean margins of comparables in line with our directions and determine transfer pricing adjustment, if any, is to be made. The grounds of appeal raised by the assessee are thus, partly allowed.
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2018 (6) TMI 1706
Unexplained cash credit - addition made towards unsecured loans / gifts - tribunal confirmed addition - HELD THAT:- Assessee failed to prove the capacity of the concerned persons who alleged to have given the unsecured loan and/or gift, it cannot be said that the learned Tribunal has committed any error in confirming the additions made by the AO and confirmed by the CIT (Appeals) as unsecured cash credit.
So far as submission on behalf of the assessee that all the concerned persons gave their confirmation, the aforesaid confirmations are neither here or there. These confirmations are required to be decided and/or considered along with the capacity / financial capacity of the concerned persons. Mere confirmation alone is not sufficient. In a given case, it may happen that a labourer may give a confirmation of ₹ 1 Crore, but ultimately the same is to be decided or considered, considering his paying capacity.
Thus it cannot be said that the Tribunal has committed any error. No substantial question of law
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2018 (6) TMI 1705
Additional income declared by the appellant in the course of survey u/s.133A - deemed income u/s.69A - claim of set off of brought forward losses against the additional income - disallowance of provision for warranty - HELD THAT:- Income offered on the basis of the impounded documents collected during the survey action conducted on 24-01-2007 on the assessee. These documents clearly reflect the unexplained expenditure and unexplained receipts relates to sale of flats to the parties. Assessee is a Builder and his business is to construct the flats and sell the same to the customers. All these details clearly indicate the business nexus of the receipts/expenditure to the core business activities of the assessee. It is not the case that there was any cash impounded or seized in this case to deny such claim of set off as the source of the same becomes very vague issue. The entries available on the impounded material suggest the business nexus of the additional income.
The income in question is derived from the business activities of the assessee although they are outside the books of account of the assessee. Having held so, the taxability of the same under the head ‘business’ or ‘income from other sources’ is the next issue for adjudication. Considering the existence of business nexus, we are of the opinion that there is no reason why such income is taxed as ‘income from other sources when the source for the same from the business activity, is already demonstrated by the assessee during the proceedings before the assessment/appellate authorities. Unaccounted receipts/expenditure constitutes business receipts/expenditure. As such, the judgment of jurisdictional High Court in the case of CIT Vs. Sheth Developers Pvt. Ltd. [2012 (8) TMI 159 - BOMBAY HIGH COURT] affirms that the income from business is required to be taxed as ‘business income’.
We have also examined the allowability of statutory deductions out of such additional income disclosed during search and seizure/survey actions. There are binding decisions to support the claim of deduction qua the deductions u/s.80IB, 40B of the Act etc. Therefore, in principle, granting statutory deductions out of such additional income arising out of business activities is sustainable.
Linking the additional income to the business activities OR income from other sources - HELD THAT:- Items of income that are chargeable to tax under the head ‘income from other sources’ as per the provisions of section 56 of the Act, are specified therein. The deemed income like the present case is certainly not specified in the said section. Further, it is not the case of the AO that the said unaccounted income of ₹ 53 lakhs and ₹ 78 lakhs cannot be classified to any other head of income. In fact, section 56(1) of the Act provides for bringing such items of income under the scope of section 56 of the Act. Therefore, the decision of the AO in treating the same as chargeable to tax under the head ‘income from other sources’ is not valid as the source for such additional income is clearly determinable as chargeable u/s.28 of the Act. Further, there is no law to automatically tax each and every ‘unaccounted income’ disclosed during search/survey actions as ‘income from other sources’.
In our view, such income needs to be treated as the ‘business income’ of the assessee and consequently, the benefit of set off/carry forward should be granted to the assessee against such additional business income of the assessee in both assessment years. Accordingly, the decision of CIT(A) stands reversed on this issue. - Decided in favour of assessee.
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2018 (6) TMI 1704
Grant of Special Rebate - Section 12 of the Kerala Value Added Tax Act, 2003 - prohibition applicable to presumptive regime - whether the tax payable by the assessee on the suppressed purchase value under Section 6(2) of of the Act of 2003 is liable to special rebate under Section 12 of the said Act? - HELD THAT:- There are no analogy that can be drawn from Venus Marketing. Venus Marketing was with respect to the input tax credit claimed by a presumptive dealer. With respect to presumptive dealers, there is a specific prohibition, in claiming input tax credit under Section 11 of the Act of 2003. In the case of persons, who switch over from the presumptive regime to regular tax payment, there is an enabling provision under Rule 12 of the Kerala Value Added Tax Rules, 2005. An assessee, who is under the presumptive regime is to make an application pointing out his intention to changeover and from that time onward the assessee is entitled to input tax credit. Even when such changeover is allowed in the course of an year, the presumptive tax paid before the changeover is not entitled to input tax credit.
The procedural mandate distinguishes input tax credit allowable under Section 11 from special rebate deductible under Section 12. The claim under Section 11 has to be supported by invoices; which in the instance of best judgment were suppressed and later detected. While input tax is a claim to be made by the assessee, special rebate is a deduction permissible in the return itself. Hence the assessing authority when determining the turnover and levying tax is obliged to grant the deduction to tax payable under sub-section (2) of Section 6 as special rebate.
The assessee is entitled to special rebate on the purchases added to the turnover returned, on best judgment assessment - the questions of law is answered in favour of the assessee and against the revenue - Revision dismissed.
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9911796707
