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Showing 161 to 180 of 1266 Records
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2012 (10) TMI 1119
Issues Involved:
1. Addition of Rs. 24,90,000/- as unexplained unsecured loan u/s 68.
2. Whether the CIT (A) erred in deleting the addition made by the AO.
Summary:
Issue 1: Addition of Rs. 24,90,000/- as unexplained unsecured loan u/s 68
The assessee, engaged in civil construction, filed a return of income declaring Rs. 6,18,060/-. During scrutiny, the AO found Rs. 24,90,000/- credited in the assessee's books as cash credit from 8 creditors. The AO treated these cash credits as unexplained u/s 68, citing lack of credible evidence regarding the creditors' capacity and genuineness of transactions. For instance, Sonalben Vajubhai Kanani deposited Rs. 3,50,000/- in her bank account but failed to provide proof of such accumulation of cash or credible evidence of her business activities. Similar observations were made for other creditors, leading the AO to add the total amount to the assessee's income.
Issue 2: Whether the CIT (A) erred in deleting the addition made by the AO
The CIT (A) deleted the addition, reasoning that the creditors had sufficient land holdings and were income tax assessees, thus presumed to have the capacity to advance loans. The CIT (A) argued that the source of source need not be explained unless there is close association between the assessee and creditors. The CIT (A) found the identity, capacity, and genuineness of transactions to be proved by the assessee.
Tribunal's Findings:
The Tribunal disagreed with the CIT (A), emphasizing that the creditworthiness of creditors is not a matter of presumption but must be established with evidence. The Tribunal noted that significant cash deposits were made in the creditors' bank accounts just before issuing cheques to the assessee, indicating a well-calculated design to create a facade of genuine transactions. The Tribunal found the AO's findings, which showed the impugned cash credits were not genuine, to be sufficient and confirmed the AO's order.
Conclusion:
The Tribunal reversed the CIT (A)'s order and restored the AO's addition of Rs. 24,90,000/- u/s 68, allowing the Department's appeal.
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2012 (10) TMI 1118
Addition of amount debited on reversal of income by changing the method of accounting from accrual to cash basis and also that the amount was not written off in the books of account as irrecoverable - Held that:- Claim of reversal of income is allowed. See GE Capital Service India vs. DCIT [2012 (9) TMI 1070 - ITAT DELHI]
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2012 (10) TMI 1117
Issues involved: Application for stay pending before Tribunal, issuance of notice under Section 87 of the Finance Act, 1994, withdrawal of notice, recovery of excess amount.
Summary:
Application for Stay:
The applicant filed an application for a direction to the Revenue as their stay application was pending before the Tribunal. Despite the pending application, the Revenue issued a notice under Section 87 of the Finance Act, 1994 to the service-recipient to deduct a specific amount from the applicant. The applicant requested the Tribunal to direct the department to withdraw the notice under Section 87 and return the excess amount recovered.
Notice under Section 87:
The learned Additional Commissioner stated that the notice under Section 87 had been withdrawn as per a letter dated 10/10/2012. It was assured that the Tribunal's direction would be complied with within one month. Consequently, the concerned officer was directed to return the excess amount recovered over and above the service tax amount to the applicant within 30 days.
Compliance and Direction:
The Tribunal directed that compliance should be reported on 19th November 2012, ensuring that the excess amount recovered is returned to the applicant in accordance with the Tribunal's order.
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2012 (10) TMI 1116
Gain on sale of shares - capital gain or busniss income - Held that:- Commissioner as well as the Tribunal concurrently found as a matter of fact that looking to the relevant factors including the amount of shareholding of the assessee, the volume and the frequency of the purchase and sale of shares etc., it cannot be stated that the assessee was in the business of trading of shares. More significantly, we find that the assessee had sold shares only worth ₹ 83,712/- during the year under consideration inviting short term capital gain. As against that, bulk of the shares were held by the assessee for a long period of time inviting long term capital gain for a total sum of ₹ 53,84,239/-. Totality of the facts and circumstances of the case would lead to an inescapable conclusion that CIT (Appeals) as well as the Tribunal correctly applied the factual and legal position.
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2012 (10) TMI 1115
Gain on sale of shares - capital gain or busniss income - Held that:- Commissioner as well as the Tribunal concurrently found as a matter of fact that looking to the relevant factors including the amount of shareholding of the assessee, the volume and the frequency of the purchase and sale of shares etc., it cannot be stated that the assessee was in the business of trading of shares. More significantly, we find that the assessee had sold shares only worth ₹ 83,712/- during the year under consideration inviting short term capital gain. As against that, bulk of the shares were held by the assessee for a long period of time inviting long term capital gain for a total sum of ₹ 53,84,239/-. Totality of the facts and circumstances of the case would lead to an inescapable conclusion that CIT (Appeals) as well as the Tribunal correctly applied the factual and legal position.
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2012 (10) TMI 1114
Cancellation of bail - The appellant lodged a complaint in respect of murder of the deceased against respondent 2 herein and five others. which was registered under Sections 147, 148, 149, 364 and 302 of the Indian Penal Code (for short, “the IPC”). By the impugned order, the Rajasthan High Court released the accused on bail. The appellant has challenged the said order. From the complaint and the statements recorded under Section 164 of the Code, it prima facie appears that there was illicit relationship between the accused and Deceased. It appears to be the case of the investigating agency that the accused eliminated the deceased with the help of his companions.
HELD THAT:- The impugned order granting bail to accused is quashed. The police are directed to take accused in custody. The trial court is directed to frame charges within a period of one month from the date of receipt of this order. The trial court is further directed to proceed with the case and conclude it at the earliest independently and in accordance with law without being influenced by any observations made by us which may touch merits of the case as they are merely prima facie observations.
The appeal is disposed.
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2012 (10) TMI 1113
Issues Involved:
1. Disallowance u/s 43B for various statutory duties.
2. Disallowance of software expenses as capital expenditure.
3. Classification of interest income and rent as business income or income from other sources.
4. Deduction u/s 80HHC.
5. Levy of interest u/s 234B.
6. Deduction for VRS payments.
7. Sales-tax subsidy as capital receipt.
8. Custom Duty on goods for export purposes.
9. Excise Duty on inputs.
10. Custom Duty on closing inventory with vendors.
11. Custom Duty on closing stock.
12. Custom Duty paid in advance on goods in transit.
13. Excise Duty paid under protest.
14. Central and Local Sales Tax paid under protest.
15. Excess claim of consumption of stock.
16. MODVAT on input differences.
17. Loss on account of foreign exchange fluctuation.
18. Depreciation on enhanced liability.
19. Disallowance u/s 14A.
20. Disallowance u/s 40(a)(i).
21. Loss on sale of shares.
22. Depreciation on Foreign Exchange Fluctuation.
23. Membership fee.
Summary:
1. Disallowance u/s 43B for various statutory duties:
The assessee claimed deductions for various statutory duties paid during the year u/s 43B. The Tribunal upheld the disallowance of excise duty on inputs based on the Special Bench decision in Glaxo Smithkline Consumer Health Care Ltd. but allowed the deduction for the opening balance of RG23A. Sales tax paid on components and sales tax recoverable were disallowed as per earlier ITAT decisions. Excise duty on spare parts was allowed following the decision in Modipon Ltd.
2. Disallowance of software expenses as capital expenditure:
The Tribunal allowed the software expenses as revenue expenditure, citing the decision in CIT v. Asahi India Safety Glass Ltd., which held that expenditure on application software is allowable as a revenue deduction.
3. Classification of interest income and rent:
The Tribunal upheld the classification of interest income and rent from land as income from other sources, based on the decision of the Delhi High Court in the assessee's own case for AY 1985-86.
4. Deduction u/s 80HHC:
The Tribunal dismissed the ground for reclassifying interest income and rent from land as business income for computing deduction u/s 80HHC, following the decision of the Delhi High Court in the assessee's own case.
5. Levy of interest u/s 234B:
The Tribunal held that the levy of interest u/s 234B is mandatory and consequential.
6. Deduction for VRS payments:
The Tribunal dismissed the additional ground for the entire VRS payment as revenue expenditure, as the assessee was entitled to 1/5th of the total claim as per section 35DDA.
7. Sales-tax subsidy as capital receipt:
The Tribunal restored the issue of sales-tax subsidy to the Assessing Officer for deciding as per law, considering the additional evidences and the decision in CIT vs. Ponni Sugars and Chemicals Ltd.
8. Custom Duty on goods for export purposes:
The Tribunal upheld the CIT (A)'s decision allowing the deduction for custom duty paid on goods imported for export purposes, following earlier ITAT decisions.
9. Excise Duty on inputs:
The Tribunal upheld the disallowance of excise duty on inputs, following the decision in Glaxo Smithkline Consumer Health Care Ltd.
10. Custom Duty on closing inventory with vendors:
The Tribunal upheld the CIT (A)'s decision allowing the deduction for custom duty paid on closing inventory with vendors, following earlier ITAT decisions.
11. Custom Duty on closing stock:
The Tribunal upheld the CIT (A)'s decision allowing the deduction for custom duty paid on closing stock, following earlier ITAT decisions.
12. Custom Duty paid in advance on goods in transit:
The Tribunal upheld the CIT (A)'s decision allowing the deduction for custom duty paid in advance on goods in transit, following earlier ITAT decisions.
13. Excise Duty paid under protest:
The Tribunal upheld the CIT (A)'s decision allowing the deduction for excise duty paid under protest, following earlier ITAT decisions.
14. Central and Local Sales Tax paid under protest:
The Tribunal upheld the CIT (A)'s decision allowing the deduction for Central and Local Sales Tax paid under protest, following earlier ITAT decisions.
15. Excess claim of consumption of stock:
The Tribunal upheld the CIT (A)'s decision deleting the addition for excess claim of consumption of stock, following earlier ITAT decisions.
16. MODVAT on input differences:
The Tribunal upheld the CIT (A)'s decision allowing the deduction for MODVAT on input differences, following earlier ITAT decisions.
17. Loss on account of foreign exchange fluctuation:
The Tribunal upheld the CIT (A)'s decision allowing the deduction for loss on account of foreign exchange fluctuation, following earlier ITAT decisions and the Supreme Court decision in CIT v Woodward Governor India P. Ltd.
18. Depreciation on enhanced liability:
The Tribunal upheld the CIT (A)'s decision allowing the depreciation on enhanced liability due to custom duty paid and capitalized on plant and machinery, following earlier ITAT decisions.
19. Disallowance u/s 14A:
The Tribunal remanded the issue of disallowance u/s 14A to the Assessing Officer to be decided in view of the recent decision of the Delhi High Court in Maxopp Investment Ltd.
20. Disallowance u/s 40(a)(i):
The Tribunal upheld the CIT (A)'s decision deleting the disallowance u/s 40(a)(i) for payments made outside India, following earlier ITAT decisions and the Supreme Court decision in G E India Technology Cen. P. Ltd. v. CIT.
21. Loss on sale of shares:
The Tribunal upheld the CIT (A)'s decision treating the loss on sale of shares as long-term capital loss, not speculative loss, following earlier ITAT decisions.
22. Depreciation on Foreign Exchange Fluctuation:
The Tribunal upheld the CIT (A)'s decision allowing the depreciation on foreign exchange fluctuation, following earlier ITAT decisions and the Supreme Court decision in CIT v Woodward Governor India P. Ltd.
23. Membership fee:
The Tribunal upheld the CIT (A)'s decision allowing the deduction for membership fee, following earlier ITAT decisions and the decisions in Otis Elevators Co. (India) Ltd v CIT and American Express International Banking Corporation v CIT.
Conclusion:
Both the appeal of the assessee and the appeal of the revenue were partly allowed.
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2012 (10) TMI 1112
Issues involved: Notice u/s 25(1)(ii) of U.P. Value Added Tax Act, 2008 for provisional assessment of commercial tax; Challenge to sub-section (5) of Section 59 of the Act making Commissioner's decision binding on authorities.
Issue 1: Notice under Section 25(1)(ii) of U.P. Value Added Tax Act, 2008:
The petitioner is aggrieved by a notice dated 20.8.2012 for provisional assessment of commercial tax. The notice is based on the Commissioner's decision regarding the rate of tax on 'Finayal and Flour Cleaners' under Section 59, where it was opined that these goods are not insecticide/pesticide attracting tax at 4% but rather fall under Schedule-V attracting tax at 12.5%. The petitioner challenges this notice and seeks to contest the applicability of the tax rate on the goods manufactured and sold by them.
Issue 2: Challenge to sub-section (5) of Section 59 of the Act:
The counsel for the petitioner seeks to challenge sub-section (5) of Section 59, which makes the Commissioner's decision in the matters of any dealer binding on Assessing Authorities and Appellate Authorities. The petitioner's counsel highlights a previous case where the Court intervened and protected the interests of other dealers. The petitioner aims to file an amendment application challenging this provision and requests time for the same.
Court's Decision:
The Court allows the petitioner's counsel two weeks to file an amendment application challenging sub-section (5) of Section 59. Additionally, the Standing Counsel is granted three weeks to file a counter affidavit, with the petitioner given one week thereafter to file a rejoinder affidavit. The case is connected with a previous matter and listed for further hearing on 26.11.2012.
As an interim measure, the Court directs that the Commissioner's decision dated 5.12.2008 under Section 59 will not be binding on the petitioner's assessment cases regarding the tax rate of the goods they manufacture and sell. The Assessing Authority is instructed to decide the tax rate question independently, without being influenced by the decision in the case of M/s India Distributors. The petitioner is required to participate in the assessment proceedings and cooperate accordingly.
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2012 (10) TMI 1111
Issues involved: Appeal against the order of CIT(A)-V, Baroda regarding the addition of interest and direction to recalculate the disallowance of interest.
Issue 1: Addition of interest
Summary: The assessee, a firm providing educational and hostel facilities, had given an interest-free advance to a related party. The Assessing Officer (AO) added a proportionate interest of Rs. 4,12,600, presuming that the interest-free loans were given out of interest-bearing funds. The first appellate authority upheld the addition, stating that the interest-free advances did not serve the proximate business purpose of the appellant. However, the Tribunal reversed the decision, considering the availability of interest-free funds and the absence of a finding regarding deduction in earlier years.
Issue 2: Recalculation of disallowance of interest
Summary: The first appellate authority directed the Assessing Officer to recalculate the disallowance of interest based on the outstanding advances. The appellant argued that the authority had no power to set aside the issue back to the assessment stage due to an amendment in the relevant section. The Tribunal agreed with the appellant's arguments, reversed the findings of the authority, and directed to delete the addition of interest. The appeal of the Assessee was allowed.
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2012 (10) TMI 1110
Issues involved: Appeal against CIT(A) order for assessment year 2006-07 on grounds of disallowance of deduction u/s 80IB, disallowance of expenditures u/s 40(a)(ia), and charging of interest u/s 234A, 234B & 234C.
Disallowance of deduction u/s 80IB:
The assessee appealed against the disallowance of deduction claimed u/s 80IB, arguing that the profits were attributable to excise duty refund and not derived from manufacturing activity. The counsel cited a decision of the Jurisdictional High Court in favor of the assessee. The Tribunal, following the High Court's judgment, ruled that the Excise Duty refund is a 'capital receipt' and not taxable, allowing the appeal on this ground.
Disallowance of expenditures u/s 40(a)(ia):
Regarding the disallowance of expenditures on freight, labor contract, and interest added to the business income u/s 40(a)(ia), the counsel contended that a previous decision by the ITAT, Amritsar Bench, favored the assessee. The Tribunal agreed, stating that the issue had already been decided in favor of the assessee, and allowed the appeal, permitting deduction u/s 80IB on the enhanced income due to the disallowance.
Charging of interest u/s 234A, 234B & 234C:
The counsel mentioned that the issue of charging interest under these sections was consequential. The Tribunal directed the AO to allow any consequential relief at the time of implementing the order, disposing of this ground accordingly.
Telescoping in computing profits for deduction u/s 80IB:
The issue of telescoping in computing business profits and deduction u/s 80IB was dismissed as it did not arise from the AO's order, and the counsel agreed with this decision.
Conclusion:
The appeal by the assessee was partly allowed, with the Tribunal ruling in favor of the assessee on the grounds of disallowance of deduction u/s 80IB and disallowance of expenditures u/s 40(a)(ia), while providing directions on the charging of interest under specified sections.
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2012 (10) TMI 1109
The Appellate Tribunal ITAT Hyderabad dismissed the Revenue's appeal against the order of the Commissioner of Income-tax (Appeals) Guntur for the assessment year 2009-10. The tax effect in the appeal was less than Rs. 3 lakhs, making the appeal not maintainable as per CBDT Instruction No.3 of 2011. The appeal was dismissed in limine on 17.10.2012.
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2012 (10) TMI 1108
Issues involved: Disallowance u/s 40A(3) of the Income-tax Act for cash payments exceeding Rs. 20,000 and treatment of expenditure on computer software as capital expenditure without allowing depreciation.
Disallowance u/s 40A(3) of the Income-tax Act:
The appellant, a partnership firm engaged in manufacturing and exporting silk fabrics, filed an appeal against the disallowance of Rs. 8,65,844 made by the Commissioner of Income-tax - (Appeals) I at Bangalore under section 143(3) of the Income-tax Act, 1961. The disallowance was related to cash payments exceeding Rs. 20,000 to job workers. The CIT(A) reduced the disallowance to Rs. 8,65,844 from the initial disallowance of Rs. 3,14,89,660 by considering the commercial exigencies and genuineness of the transactions. The appellant argued that the recipients were identified, TDS was deducted, and the recipients had offered income in their returns, thus justifying the cash payments. The ITAT Bangalore, after considering both parties' contentions, concluded that the disallowance u/s 40A(3) was not warranted as the appellant had demonstrated the commercial necessity for making cash payments exceeding Rs. 20,000.
Treatment of expenditure on computer software:
The appellant also contested the treatment of expenditure on computer software as capital expenditure without allowing depreciation. The ITAT observed that although the CIT(A) did not address this issue in the order, the appellant had raised it in the grounds of appeal. The ITAT directed the Assessing Officer to allow depreciation on the capital expenditure for the computer software at the applicable rates. The appeal filed by the appellant was allowed on both grounds.
Conclusion:
The ITAT Bangalore allowed the appeal filed by the appellant, setting aside the disallowance u/s 40A(3) for cash payments exceeding Rs. 20,000 and directing the Assessing Officer to allow depreciation on the capital expenditure for computer software.
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2012 (10) TMI 1107
Issues involved: Appeal against rejection of application u/s 154/155 by the assessee for adjusting seized amount against advance tax liability, interpretation of section 132B(1) of the Income-tax Act, liability for interest u/s 234B and 234C, and amendment of grounds of appeal.
Appeal against rejection of application u/s 154/155:
The Revenue appealed against the rejection of the application filed by the assessee u/s 154 for adjusting the seized amount against advance tax liability. The assessee had surrendered an amount during a search under section 132, and subsequently, a notice was received for a demand. The assessee's application u/s 154 was rejected by the Assessing Officer, leading to the appeal. The CIT(A) accepted the explanation of the assessee and directed the deletion of interest charged under section 234A & 234B, finding the AO's rejection erroneous.
Interpretation of section 132B(1) of the Income-tax Act:
The AO contended that section 132B(1) refers to existing liability under the Income-tax Act, excluding advance tax liability. However, the counsel for the assessee argued that advance tax demand should be considered an existing liability, citing relevant court decisions. The CIT(A) upheld the assessee's explanation, emphasizing that advance tax demand created by the department constituted an existing liability, leading to the deletion of interest charges.
Liability for interest u/s 234B and 234C:
The issue of interest liability u/s 234B and 234C arose due to the adjustment of seized amount against advance tax demand. The CIT(A) directed the deletion of interest charges based on the interpretation of existing liability and the application of relevant court decisions favoring the assessee's position.
Amendment of grounds of appeal:
The Revenue sought leave to amend or add grounds of appeal during the proceedings. However, the appeal was dismissed by the Appellate Tribunal, upholding the CIT(A)'s decision to delete the interest charges under section 234A and 234B. The Tribunal found no infirmity in the CIT(A)'s order and dismissed the appeal filed by the Revenue.
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2012 (10) TMI 1106
Surplus arising out of the sale of share held for period of less then 30 days - business profit OR short-term capital gain - Held that:- While going through the computation of income for subsequent assessment year we find that though assessee suffered loss on sale of shares, the same has been shown as short-term capital loss and the same was carried forward to the next year instead of treating the same as business loss and taking advantage of this by way of reducing the income of that year.
The intention of the assessee is clear that he has treated investment in shares as “investment” and not for the purpose of trade. The Revenue has not brought any material to show that assessee has invested in shares for “trade”. We further find that Revenue has not filed any appeal against the order of CIT(A) treating the investment of assessee in shares for more than 30 days and less than 12 months as investment in short-term asset. There is no provision under the Act to indicate that the holding period of 30 days is relevant to decide whether any transaction is made for investment or for trading. Therefore, we have no hesitation in holding that ld. CIT(A) was not justified in treating the surplus arising out of sale of shares held for the period of less than 30 days as business income instead of short-term capital gain shown by the assessee. - Decided in favour of assessee.
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2012 (10) TMI 1104
Issues involved: Challenge to jurisdiction of Assessing Officer in framing assessment u/s 153C read with Section 153A of the Income Tax Act.
Summary:
The appeal was filed against the order of the ld. CIT(A)-1, Ahmedabad dated 12.11.2009, challenging the jurisdiction of the Assessing Officer in framing the assessment u/s 153C read with Section 153A of the Act. The appellant contended that previous ITAT decisions supported quashing such assessments. However, the ld. CIT(A) dismissed the appeal, stating that the assessment was framed u/s 143(3) of the Act, a normal scrutiny assessment order.
The appellant argued that the assessment for the year of search should be under u/s 153C or 153A, citing a previous ITAT decision. After considering both parties' arguments and noting the search date, the Tribunal applied the precedent set by the ITAT in a similar case. The Tribunal held that the Assessing Officer's order was u/s 153C r.w.s. 153A, and following the previous ITAT decision, the order was quashed.
As a result of the decision to quash the assessment order, other grounds raised by both the assessee and the Revenue were deemed unnecessary for adjudication. The assessee's appeal was allowed, and that of the Revenue was dismissed.
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2012 (10) TMI 1103
Issues Involved:
1. Confirmation of addition of Rs. 55,952/- made by the Assessing Officer on account of alleged unexplained investment in factory building.
2. Confirmation of addition of Rs. 4.15 lacs made by the Assessing Officer u/s 68 of the Act.
Summary:
Issue 1: Confirmation of addition of Rs. 55,952/- for unexplained investment in factory building
The assessee made phased construction at its factory building from Financial Year 1994-95 to 2006-07, declaring a cost of Rs. 25,56,339/- in books for FY 2006-07. The Assessing Officer referred the property to the DVO, who estimated the cost at Rs. 48.60 lacs, resulting in a difference of Rs. 1,00,931/- for the year under consideration. The Assessing Officer treated this amount as undisclosed investment and made an addition.
The assessee argued before the CIT(A) that for any addition u/s 69B, the Assessing Officer must establish that the amount expended was more than recorded in the books. The assessee maintained complete books and provided all bills/vouchers, which were not found defective by the Assessing Officer or DVO. The CIT(A) adjusted the valuation using Rajasthan PWD rates and a higher deduction for self-supervision, reducing the difference to Rs. 55,952/- for the year under consideration.
The Tribunal, referencing the Supreme Court's decision in Sargam Cinema vs CIT (2010) 328 ITR 513, held that the Assessing Officer could not refer the matter to the DVO without rejecting the books of accounts. Since the books were never rejected, the reliance on the DVO's report was misconceived. The addition sustained by the CIT(A) was deleted.
Issue 2: Confirmation of addition of Rs. 4.15 lacs u/s 68 of the Act
The Assessing Officer noticed that the assessee received Rs. 90,000/- from Shri Tara Chand and Rs. 3.25 lacs from Shri Khiya Ram, both employees, through account payee cheques. The Assessing Officer treated these credits as unexplained due to immediate cash deposits in the creditors' bank accounts before issuing cheques to the assessee.
The assessee contended before the CIT(A) that both creditors admitted to giving loans and explained their sources, including salary, stitching income, and agricultural income. The CIT(A) observed that no evidence of past savings or agricultural income was furnished and confirmed the addition, suspecting the bank accounts were used to route unexplained income.
The Tribunal found that the creditors had explained their sources and the transactions were through banking channels. The Assessing Officer did not substantiate that the creditors were incapable of providing the loans. The Tribunal held that the assessee proved the identity, creditworthiness, and genuineness of the transactions. The addition confirmed by the CIT(A) was deleted.
Conclusion:
The appeal filed by the assessee was allowed, and the additions made by the Assessing Officer and sustained by the CIT(A) were deleted.
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2012 (10) TMI 1102
Issues involved: Appeal against assessment u/s 143(3) of the Income-tax Act, 1961 for AY 2008-09 dismissed on grounds of non-payment of admitted tax.
Summary:
Issue 1: Maintainability of the appeal
The appeal was filed by the Assessee against the Order by the Commissioner of Income-tax (Appeals)-III, Hyderabad, contesting its assessment u/s 143(3) of the Income-tax Act, 1961 for AY 2008-09. The primary question was the maintainability of the appeal, as the first appellate authority dismissed it solely on the ground of non-payment of admitted tax, citing sec. 249(4) of the Act.
The Assessee filed its return of income for the relevant year, but there was a shortfall in the payment of self-assessment tax by &8377; 1.41 crores. Despite citing financial constraints as the reason for non-payment and requesting further time for payment, the appeal was dismissed by the CIT(A) as not maintainable u/s 249(4). The Assessee failed to show any infirmity in the impugned order, and non-payment of admitted tax was held to exclude the jurisdiction of the first appellate authority in admitting the appeal.
The Tribunal upheld the impugned order, stating that non-payment of admitted tax leads to a jurisdictional infirmity in the appeal. The Assessee conceded to a shortfall in the payment of admitted tax, and as the law in the matter was clear with undisputed facts, the appeal was dismissed.
In conclusion, the appeal by the Assessee against the assessment u/s 143(3) of the Income-tax Act, 1961 for AY 2008-09 was dismissed due to non-payment of admitted tax, rendering it not maintainable under sec. 249(4) of the Act.
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2012 (10) TMI 1101
Difference between the payment of net present value against the future liability of credited by the assessee under the capital reserve account in its books of account - capital receipt or revenue receipt - Payment of net present value of the future liability - Whether can be classified as remission or cessation of the liability so as to attract the provision of section 41(1)(a) of the Income Tax Act, 1961 or not ? - Held that:- No addition can be made. See Sulzer India Ltd case [2012 (9) TMI 1120 - ITAT MUMBAI]
Whether provision of warranty claim without its quantification and its absence of statistical data related to actual warranty expense is an allowable expenditure u/s.37(1)? - Held that:- We find the finding given by the CIT(A) that assessee has sold the products manufactured by it with warranty has not been disputed by the revenue. The further finding of the learned CIT(A) that the assessee has in the past paid warranty claim to its customers and claimed the same as expenditure on actual basis also remains uncontroverted. The observation of the learned CIT(A) that because of the introduction of AS29 the assessee changed its method of recognising expenditure on warranty claim from actual basis to accrual basis and accordingly made provision of warranty claims on the basis of past experience/records also could not be controverted by the learned DR. Accordingly the order of the CIT(A) allowing the provision for warranty claim is upheld
Interest on share application money disallowed by the AO u/s.37(1) - Held that:- Interest on share application money is allowable on the principles of commercial expediency.
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2012 (10) TMI 1100
Issues Involved:
1. Deletion of penalty u/s 271(1)(c) of the Act.
2. Addition u/s 41(1) of the Act.
Summary:
Issue 1: Deletion of penalty u/s 271(1)(c) of the Act
The Revenue appealed against the CIT (A)'s decision to delete the penalty of Rs. 12,58,371/- levied u/s 271(1)(c) of the Act on an addition of Rs. 37,38,477/- made u/s 41(1) of the Act. The assessee, a partnership firm, had written back a disputed amount payable to M/s. Hindustan Lever Limited (HLL) in three installments over three years and offered the same for taxation. The AO disputed this, adding the entire balance amount u/s 41(1) of the Act and initiated penal proceedings u/s 271(1)(c) for furnishing inaccurate particulars of income. The CIT (A) canceled the penalty, reasoning that the assessee's explanation was bona fide and that two views were possible regarding the write-back period. The Tribunal upheld the CIT (A)'s decision, stating that the provisions of s. 41(1) were not applicable as there was no cessation or remission of liability by the creditor.
Issue 2: Addition u/s 41(1) of the Act
The AO added the balance amount of Rs. 37,38,477/- u/s 41(1) of the Act, arguing that the entire sum should be added as deemed profit in the first year of write-back. The assessee contended that the amount was in dispute and HLL had not confirmed the waiver, thus the provisions of s. 41(1) were not applicable. The Tribunal referenced previous judgments, including CIT v. Bharat Iron & Steel Industries and CIT v. Silver Cotton Mills Co. Ltd, concluding that unless there is a cessation or remission of liability, the amounts written back cannot be added to the income u/s 41(1). The Tribunal found that the addition was made on a misconception and upheld the CIT (A)'s decision to delete the penalty.
Conclusion:
The Tribunal dismissed the Revenue's appeal, affirming that the CIT (A) was justified in deleting the penalty imposed u/s 271(1)(c) of the Act. The order was pronounced in the open Court on 26-10-2012.
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2012 (10) TMI 1099
Additions towards unexplained cash in hand - The cash book produced to explain cash balance also shows negative balance on certain dates which itself make it unreliable - The so-called withdrawals made in odd amounts through the current account and capital account on the same date also do not inspire confidence in the submissions of the assessee - assessee has failed to prove the source of cash deposit - additions confirmed - Decided against the assessee.
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