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Showing 181 to 200 of 1266 Records
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2012 (10) TMI 1098
Issues involved:
The judgment involves the correctness of the Commissioner of Income Tax(Appeals)'s order u/s 143(3) r.w.s. 147 of the Income Tax Act, 1961 for the assessment year 2004-05.
Ground Nos. 1, 4 & 5:
These grounds are general and are dismissed without specific adjudication.
Ground Nos. 2 & 3:
The assessee contested the addition of amounts on account of difference between TDS deducted and credited in the profit and loss account, and estimation of expenses. The Assessing Officer added back amounts due to discrepancies in service charges and incomplete details of expenses incurred. The assessee explained that the difference in figures was due to the reimbursement of expenses, and a fire incident had hindered the preparation of detailed expense breakdown. The Tribunal acknowledged the possibility of TDS deduction from reimbursement payments and directed the matter back to the Assessing Officer for verification, while confirming the ad hoc disallowance of 2% on expenses.
Detailed Analysis:
The assessee, engaged in clearing and forwarding agency business, received service charges for services rendered. During reassessment, it was noted that the service charges in the profit and loss account differed from those in the TDS certificates. The Assessing Officer made additions based on these discrepancies, considering the difference as undisclosed service charges and making an ad hoc disallowance due to incomplete expense details. The Tribunal emphasized the need for the assessee to demonstrate the reimbursement component separately in bills to justify the difference. While agreeing with the assessee's position on the TDS deduction, the Tribunal upheld the ad hoc disallowance due to lack of complete expense details. The matter was remitted back to the Assessing Officer for factual verification.
Conclusion:
The appeal was partly allowed for statistical purposes, with the Tribunal directing the matter back to the Assessing Officer for verification while confirming the ad hoc disallowance on expenses.
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2012 (10) TMI 1097
Whether there was violation of Principles of Natural Justice and whether transfer of Writ Petition No. 111/2011 was in accordance with law ?
Whether both or any of the petitioners in Civil Writ Petition Nos. 111/2011 and 125/2011 are guilty of suppression of material facts, not approaching the Court with clean hands, and thereby abusing the process of the Court?
Held that:- Writ petition No. 111/2011 was based upon falsehood, was abuse of the process of court and was driven by malice and political vendetta. Thus, while dismissing this petition, we impose exemplary costs of Rs. 5 lacs upon the next friend, costs being payable to respondent no.6.
The next friend in Writ Petition No. 125/2011 had approached the court with unclean hands, without disclosing complete facts and misusing the judicial process. In fact, he filed the petition without any proper authority, in fact and in law. Thus, this petition is also dismissed with exemplary costs of Rs. 5 lakhs for abuse of the process of the court and/or for such other offences that they are found to have committed, which shall be payable to the three petitioners produced before the High Court, i.e. Ms. Kirti Singh, Dr. Balram Singh and Ms. Sushila @ Mohini Devi.
On the basis of the affidavit filed by the Director General of Police, U.P., statement of the three petitioners in the Writ Petition, CBI’s stand before the Court, its report and the contradictory stand taken by the next friend in Writ Petition No.111/2011, we, prima facie, are of the view that the allegations against the respondent no.6 in regard to the alleged incident of rape on 3rd December, 2006 and the alleged detention of the petitioners, are without substance and there is not even an iota of evidence before the Court to validly form an opinion to the contrary. In fact, as per the petitioners (allegedly detained persons), they were never detained by any person at any point of time.
The CBI shall continue the investigation in furtherance to the direction of the High Court against petitioner in Writ Petition No. 111/2011 and all other persons responsible for the abuse of the process of Court, making false statement in pleadings, filing false affidavits and committing such other offences as the Investigating Agency may find during investigation. The CBI shall submit its report to the court of competent jurisdiction as expeditiously as possible and not later than six months from the date of passing of this order.
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2012 (10) TMI 1095
Applicability of higher rate of tax is decided against the assessee.
Disallowance of expenditure on purchase of fixed assets is also decided against the assessee.
Disallowance of bonus expense is decided in favour of the assessee.
Disallowance of expenses incurred in relation to exempt income u/s 14A - Held that:- In principle, we hold that the disallowance of interest is called for in the current year as well. As sufficient details in this regard are not available about the amount invested in tax free bonds and its co-relation with the borrowed funds, if any, we restore the matter to the file of A.O. for computing the disallowance u/s 14A on the interest component after verification of the necessary details after allowing a reasonable opportunity of being heard to the assessee. Also disallowance at 2% of exempt income for management / administrative expenses is in order
Deduction u/s 44C towards head office expenses attributable to Indian operations - Held that:- Article 7(3) does not talk of limiting the deduction of expenses incurred for the business of the permanent establishment subject to the limitations contained in the Act. While discussing this issue for assessment year 1999-2000 in the context of section 43B, we have held that the restriction contained in specific sections cannot apply in the light of the language of Article 7(3) of the DTA. In that view of the matter, the restriction contained in section 44C for allowing the head office expenditure can also not apply. Resultantly the direction given by the learned CIT(A) to modify the adjusted total income as per section 44C becomes infructuous as section 44C itself cannot apply. This ground is allowed.
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2012 (10) TMI 1094
Sale of Land - whether agricultural land or not - disallowance of pre-operative expenses - salary to staff, rent etc - Held that:- Assessee is engaged in the business of establishing holiday homes and resorts - Land purchased as a part of commercial business - no evidence on record to show that the assessee carried any agricultural activities - Cultivation of casuarina trees was only incidental - Land was not useful for carrying on any normal agricultural activities - Short-term capital gains tax has been levied - Decided against the assessee
Preoperative expenses - Held that:- Even though preoperative expenses cannot be technically considered as expenses incurred in connection with the transfer of the property - those expenses are in the nature of expenses incurred in developing and maintaining the property - thus increases the cost of land - decided in favor of assessee
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2012 (10) TMI 1093
Issues involved: Appeal against Income Tax Appellate Tribunal's judgment for assessment year 2004-05 regarding deduction under section 80IB(10), addition under sections 68 and 69C, and disallowance of deduction.
Deduction under section 80IB(10): The respondent-assessee, engaged in construction, claimed deduction under section 80IB(10) for a housing project. Dispute arose due to commercial construction in the project. Tribunal upheld the deduction, noting project approval and small utility shops for residents. Citing Bombay High Court precedent, Tribunal rejected revenue's appeal. Section 80IB(10) did not limit commercial construction then, and Tribunal rightly granted deduction excluding commercial area.
Addition under sections 68 and 69C: Assessing Officer made additions under sections 68 and 69C, later partially upheld by Commissioner (Appeals) and Tribunal. Both forums found no justification for full additions based on evidence. As issues are factual and both lower authorities concurred, no legal questions arise. Consequently, the tax appeal was dismissed.
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2012 (10) TMI 1092
Issues Involved:
1. Whether the assessment order passed u/s 143(3) of the Income Tax Act for A.Y. 2006-07 is erroneous and prejudicial to the interest of the Revenue.
2. Whether the Short Term Capital Gain (STCG) declared by the assessee should be assessed under the head 'profit and gains of business and profession' or 'capital gain'.
Summary:
Issue 1: Erroneous and Prejudicial Assessment Order
The assessee challenged the order passed u/s 263 by the Ld CIT(A)-II, Pune, which held that the assessment order u/s 143(3) for A.Y. 2006-07 was erroneous and prejudicial to the interest of the Revenue. The Ld CIT observed that the Assessing Officer (AO) did not conduct any enquiry regarding the proper head of income under which the profit from the sale of shares should be taxed, nor did he verify whether the shares were held as investments or stock-in-trade. The Ld CIT considered the AO's failure to investigate as a lack of enquiry, rendering the assessment order erroneous and prejudicial to the Revenue's interest.
Issue 2: Classification of Short Term Capital Gain
The core issue was whether the STCG of Rs. 65,33,174/- declared by the assessee should be assessed under 'profit and gains of business and profession' or 'capital gain'. The Ld CIT argued that the AO did not properly examine the nature of the transactions and the utilization of Portfolio Management Services (PMS), which indicated a systematic and organized business activity rather than an investment activity. The Ld CIT directed the AO to reassess the STCG under the appropriate head.
Tribunal's Findings:
The Tribunal found that the AO had indeed made enquiries regarding the STCG during the assessment proceedings, as evidenced by the order sheet entries and the assessee's responses. The Tribunal noted that the AO had considered the explanations provided by the assessee and concluded that the gains should be assessed under 'capital gain'. The Tribunal emphasized the distinction between 'lack of enquiry' and 'inadequate enquiry', stating that the AO's enquiries, though possibly inadequate, did not constitute a lack of enquiry. Therefore, the Ld CIT's invocation of u/s 263 was not justified.
Conclusion:
The Tribunal held that the assessment order was neither erroneous nor prejudicial to the interest of the Revenue, as the AO had made necessary enquiries and applied his mind to the issue. Consequently, the Tribunal cancelled the order passed u/s 263 by the Ld CIT and allowed the assessee's appeal.
Result:
The assessee's appeal was allowed, and the order u/s 263 was cancelled. The judgment was pronounced in the open Court on 19th October 2012.
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2012 (10) TMI 1091
Issues involved:
The judgment involves appeals filed by the Revenue for assessment years 2006-07 & 2005-06, and a Cross Objection filed by the assessee for AY 2005-06 against orders of the Commissioner of Income Tax (Appeals)-XV, Ahmedabad.
Appeal for AY 2005-06:
The Revenue appealed against the deletion of disallowance amounting to Rs. 1,37,48,745 made by the Assessing Officer under section 80IB(10) of the Income-tax Act. The assessee, an organizer-cum-project consultant, had claimed this deduction, which was disallowed by the AO in the scrutiny assessment. The CIT(A) allowed the appeal, leading to the Revenue's appeal before the ITAT. The ITAT noted the objections raised by the AO regarding the completion of construction work and the status of the assessee as a project consultant. The ITAT found that these objections were not adequately addressed by the CIT(A) and decided to restore the matter back to the CIT(A) for fresh consideration in light of relevant judgments.
Appeal for AY 2006-07:
In a consistent view with the appeal for AY 2005-06, the ITAT allowed the Revenue's appeal for statistical purposes, indicating that the grounds raised by the Revenue were valid. The appeal for AY 2006-07 was also allowed for statistical purposes.
Cross Objection for AY 2005-06:
The assessee raised a Cross Objection seeking a higher deduction under section 80-I(10). However, during the proceedings, the assessee's counsel decided not to press the Cross Objection, leading to its dismissal as not pressed.
In conclusion, the ITAT allowed both appeals of the Revenue for statistical purposes and dismissed the assessee's Cross Objection as not pressed.
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2012 (10) TMI 1090
Assessment u/s 153A - Deduction u/s 80IA and 80IB - Held that:- Instead of complying with the requirements of section 153A of the Act, the A.O. proceeded with the pending assessment proceeding for the A.Y.and passed the impugned assessment order during the pendency of the assessment u/s 153A of the Act which is a nullity and as such the assessment order dtd. 27-12-2006 passed u/s 143(3) of the Act is illegal, arbitrary, wholly without jurisdiction and, hence, the same is quashed.
As regards the plea of the ld. D.R. that in the assessment order passed u/s 153A of the Act, the A.O. has made the additions/disallowances on the basis of the impugned assessment order passed u/s 143(3) of the Act, therefore, on equitable ground, the said additions may remain to be considered as made in the assessment order passed u/s 153A of the Act, we find that it is a settled law that where there is no ambiguity and the intention of the legislature is clearly conveyed, there is no scope for the court to undertake any exercise to read something into the provisions which the legislature in its wisdom concisely omitted. Such an exercise is undertaken by the court may amount to amending or altering statutory provisions. The courts have to decide what the law is and not what it should be.
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2012 (10) TMI 1089
Irrigation project - whether qualifies for deduction under Section 80IA - Held that:- the infrastructure is developed and handed over to the Government - it cannot be considered as a mere works contract but considered as a development of infrastructure facility - assessee is a developer and not a works contractor - the contracts involves development, operating, maintenance, financial involvement, and defect correction and liability period - the assessee satisfied two conditions - investment in eligible projects and execution of project by itself - and hence eligible for deduction u/s 80IA - Decided in favor of assessee
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2012 (10) TMI 1087
Issues Involved:
1. Disallowance of brokerage/commission expenses.
2. Issuance of summons to involved parties.
3. Relationship between appellant company and involved parties.
4. Disallowance of air ticket expenditure.
5. Direction to AO to pass an order in accordance with ITAT's previous order.
6. Timeliness of assessment completion.
7. Jurisdiction of CIT(A) and AO.
Detailed Analysis:
1. Disallowance of Brokerage/Commission Expenses:
The primary issue was whether the CIT(A) was justified in confirming the AO's action of disallowing brokerage/commission expenses amounting to Rs. 35,86,519 paid to M/s. Spectrum Synthetics Pvt. Ltd. The AO disallowed the expenses on the grounds that the payments were made to a sister concern and were not genuine or reasonable. The assessee failed to provide evidence of the services rendered by Spectrum Synthetics Pvt. Ltd. and could not furnish confirmation from the said party. Despite being given opportunities, the assessee did not establish the business necessity of the payments under Section 37(1) of the Income Tax Act. The Tribunal upheld the CIT(A)'s decision, noting that the assessee did not produce any documents to support the claim of brokerage and commission payments.
2. Issuance of Summons to Involved Parties:
The assessee argued that the CIT(A) erred by not directing the AO to issue summons to M/s. Radhika Synthetics and M/s. Spectrum Synthetics Pvt. Ltd. for confirmation of transactions and services rendered. However, this ground was not pressed during the hearing, and thus, it was rejected.
3. Relationship Between Appellant Company and Involved Parties:
The assessee contended that there was no special relationship between the appellant company and M/s. Radhika Synthetics Pvt. Ltd., and thus, the commission payments were genuine. The Tribunal noted that the assessee failed to prove the lack of relationship and did not provide sufficient evidence to support the genuineness of the transactions.
4. Disallowance of Air Ticket Expenditure:
The CIT(A) was criticized for not directing the AO to disallow only the amount incurred on the air ticket of the executive's wife. This ground was not pressed during the hearing and was rejected.
5. Direction to AO to Pass an Order in Accordance with ITAT's Previous Order:
The assessee argued that the CIT(A) should have directed the AO to pass an appropriate order giving effect to the ITAT's previous order dated 25.4.2006. This ground was also not pressed and was rejected.
6. Timeliness of Assessment Completion:
The assessee claimed that the assessment was time-barred as per Section 153(2A) of the Income Tax Act. This ground was not pressed during the hearing and was rejected.
7. Jurisdiction of CIT(A) and AO:
The assessee argued that the CIT(A) and AO erred in assuming jurisdiction in a time-barred assessment matter. This ground was not pressed and was rejected.
Conclusion:
The Tribunal found that the assessee did not provide necessary evidence to support the claim of brokerage and commission payments. The CIT(A)'s decision to confirm the AO's disallowance of Rs. 35,86,519 was upheld. The appeal filed by the assessee was dismissed.
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2012 (10) TMI 1086
Issues involved: Cross appeals by assessee and Revenue against Commissioner of Income-tax(Appeals) order for assessment year 2008-09 u/s 143(3) of the Income-tax Act, 1961.
Assessee's Appeal:
1. Addition of Membership Fees: Assessee challenges addition of Rs. 158,43,81,853 being 40% of deferred membership fees. Tribunal finds addition unjustified based on earlier orders and rules in favor of assessee.
2. Disallowance of Foreign Exchange Loss: Disallowance of Rs. 1,83,10,529 upheld by Commissioner as capital in nature due to revaluation loss on foreign exchange fluctuation. Tribunal agrees with lower authorities, confirming disallowance.
3. Disallowance of Unabsorbed Depreciation: Disallowance of Rs. 96,75,008 upheld as assessee not eligible under section 72A. Tribunal rejects argument, deciding against assessee.
4. Taxability of Excess Assets: Rs. 80,76,889 treated as short-term capital gains by lower authorities. Tribunal finds excess notional and arising from amalgamation, thus deletes the addition in favor of assessee.
5. Capital Nature of Expenditure: Disallowance of expenditure on building extension upheld as capital in nature by Commissioner. Tribunal finds no reason to interfere, dismissing the ground.
6. Verification of Expenditure: Direction to verify Rs. 2,07,14,756 expenditure dismissed based on previous decision for assessment year 2006-07.
7. Disallowance of Software Purchase: Disallowance under section 40(a)(ia) deleted as provisions of section 194J not applicable, following Special Bench decision.
Revenue's Appeal:
1. Deduction of Furniture Cost: Commissioner directed deduction of furniture cost, which Tribunal allows based on earlier decision for assessment year 2006-07.
2. Disallowance of ESOP Compensation: Disallowance deleted by Commissioner following Tribunal's order in similar case, binding on Commissioner. Revenue's ground fails.
3. Disallowance of Consultancy Charges: Disallowance under section 40(a)(i) deleted by Commissioner as taxes withheld on income chargeable to tax in India. Revenue's ground dismissed.
In conclusion, both assessee and Revenue appeals partly allowed. Orders pronounced on 17th October 2012 at Chennai.
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2012 (10) TMI 1085
Issues involved: Appeal against assessment order u/s 144C(13) r.w.s. 143(3) for AY 2007-08 regarding inclusion of service tax in revenue for profit computation u/s 44B of IT Act, 1961.
Issue 1: Inclusion of service tax in revenue for profit computation u/s 44B
The appellant contested the addition of service tax amounting to Rs. 3,40,76,521 in total revenue for profit calculation u/s 44B. Assessee argued that service tax should not be considered as revenue for this purpose. The appellant relied on various Tribunal decisions supporting their stance. The respondent, however, cited a contrary decision by Delhi ITAT. The Tribunal analyzed the arguments and previous rulings. Referring to the case of Islamic Republic of Iran Shipping Lines, it concluded that service tax, being a statutory liability without profit element, should not be included in total receipts for determining presumptive income under section 44BB. Consequently, the order of DRP was set aside, directing the Assessing Officer not to include service tax amount in total receipts for income calculation under section 44BB. The Tribunal upheld the appellant's appeal based on the aforementioned decision and the subsequent acknowledgment by Delhi ITAT regarding the nature of service tax as a statutory liability devoid of profit element.
Decision: The Tribunal allowed the appeal, pronouncing the judgment on 31st October, 2012.
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2012 (10) TMI 1084
Issues involved:
The review petition seeks to recall an order dismissing an Income Tax appeal u/s 260-A on the ground of limitation. The petitioner argues for condonation of delay based on a subsequent amendment u/s 260-A (2A) inserted by the Finance Act, 2010. The main issue revolves around whether the court can now condone the delay beyond the statutory period due to the amendment.
Judgment Details:
Issue 1: Condonation of Delay
The petitioner requested the recall of the order dismissing the appeal solely on the ground of limitation. The High Court considered the amendment u/s 260-A (2A) introduced by the Finance Act, 2010, which allows for condonation of delay beyond the statutory period if sufficient cause is shown. However, the court relied on the Full Bench decision in CIT v. Farooqui & others, stating that the provisions of sections 4 to 24 of the Limitation Act, 1963, are not applicable to appeals under Section 260-A of the Income Tax Act. The court emphasized that the amendment does not apply retrospectively to cases already settled before its introduction, citing the principle of prospective over-ruling to avoid reopening settled issues. Therefore, the court held that the appeal was rightly dismissed as per the law in force at the time, and the subsequent amendment does not apply to concluded cases.
Conclusion:
The High Court dismissed the review petition, finding no merit in the petitioner's argument for condonation of delay based on the subsequent amendment u/s 260-A (2A). The court upheld the original order dismissing the appeal on the ground of limitation, emphasizing that the amendment does not apply retrospectively to cases that have already attained finality.
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2012 (10) TMI 1083
Issues involved: Appeal against deletion of penalty u/s 271(1)(c) of the Income Tax Act, 1961 by the Ld CIT(A) for A.Y. 2006-07.
Issue 1: Deletion of penalty u/s 271(1)(c) - Claim of deduction u/s 80IB(10):
The Revenue challenged the deletion of penalty by the Ld CIT(A) regarding the disallowance of the claim of Rs. 28,06,265 under Sec. 80 IB (10). The assessee, a builder and developer, claimed deduction u/s 80 IB (10) for the project 'Rohan Heights'. The AO disallowed the claim as the completion certificate was not produced to show completion before 31st March 2008. The AO also disallowed Rs. 90,263 for non-deduction of TDS. The penalty proceedings were initiated by the AO based on these disallowances. The assessee contended that the claim was withdrawn upon realizing non-fulfillment of conditions and argued no concealment of income or inaccurate particulars. The Ld CIT(A) deleted the penalty, citing the Supreme Court's decision in CIT v. Reliance Petro Products Pvt. Ltd., emphasizing that a mere unsustainable claim does not warrant penalty u/s 271(1)(c).
Issue 2: Deletion of penalty u/s 271(1)(c) - Non-deduction of TDS:
Regarding the disallowance under Sec. 40(a)(ia) for non-deduction of TDS, the Ld CIT(A) found no concealment or furnishing of inaccurate particulars. The AO noted the TDS omission from details submitted by the assessee. The Ld CIT(A) reasoned that the TDS breach had separate provisions for interest and penalty, not falling under penalty u/s 271(1)(c). The Ld CIT(A) highlighted that incorrect application of law does not attract penalty under section 271(1)(c), as seen in the case of Kanbay. The inability to obtain a completion certificate by the due date was not sufficient grounds for penalty, as the assessee filed the return before knowing this fact.
Conclusion:
The ITAT Pune upheld the Ld CIT(A)'s decision to delete the penalty, emphasizing the assessee's withdrawal of the claim upon discovering non-compliance with conditions. The Tribunal found the case aligned with the Supreme Court's ruling on bonafide claims not warranting penalties u/s 271(1)(c). The appeal by the Revenue was dismissed, affirming the deletion of the penalty by the Ld CIT(A) on 19th October 2012.
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2012 (10) TMI 1082
Issues involved: Addition of income from house property u/s 22 and 23, Disallowance u/s 14A.
Income from house property: The appellant, a manufacturing company, owned a premises leased to IDBI. The AO added income from the property for the whole year, disputing the claim of vacancy. The CIT(A) upheld the AO's decision. The appellant argued that the property was vacant after the lease ended, citing a court decision. The Tribunal found merit in the appellant's argument, directing the AO to verify the vacancy claim and allow benefit u/s 23(1)(c) if found correct.
Disallowance u/s 14A: The appellant claimed exemption for dividend income without making a disallowance for related expenses u/s 14A. The AO disallowed expenses proportionately, which was modified by the CIT(A) applying Rule 8D retrospectively. The Tribunal, following a High Court decision, set aside the CIT(A)'s order and directed the AO to recompute the disallowance on a reasonable basis.
In conclusion, the appeal was allowed for statistical purposes, with the Tribunal providing detailed reasoning and directions for each issue raised in the appeal.
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2012 (10) TMI 1081
Issues Involved:
1. Status of the Assessee
2. Taxability of Income in the Status of AOP
3. Preparation of Profit & Loss Account and Balance Sheet
4. Re-allocation of Contracts and Sub-contracting
5. Applicability of TDS Provisions u/s 194C
6. Control and Responsibility of the Contract
7. Landmark Judgement of Ch. Achaiah
8. Judgement of Authority for Advance Rulings in Geoconsultant ZT GMBH
9. TDS Apportionment Certificates
10. Sub-contracting and Legal Entity Status
Summary:
1. Status of the Assessee:
The Tribunal noted that the status of the assessee was consistently shown as an AOP in the returns filed manually until A.Y. 2006-07. The error in status appearing as 'firm' in electronic filings from A.Y. 2007-08 was attributed to a computer error. The CIT(A) found that the status was correctly shown as AOP and deemed it not relevant for the applicability of section 194C.
2. Taxability of Income in the Status of AOP:
The Tribunal observed that the joint venture did not execute any contract work but was formed for obtaining contract work and receiving payments, which were immediately distributed among members. The CIT(A) held that there was no income attributable to the AOP, and thus, no taxability arose in its hands.
3. Preparation of Profit & Loss Account and Balance Sheet:
The Tribunal noted that the joint venture did not prepare a Profit & Loss account as there was no profit or loss to the assessee per se. The contract account and Balance Sheet only reflected the apportionment of contract receipts, assets, and liabilities between the members.
4. Re-allocation of Contracts and Sub-contracting:
The Tribunal found that there was no relationship of contractor and sub-contractor between the joint venture and its members. The entire gross revenue along with TDS was passed to the members, negating the applicability of TDS provisions u/s 194C.
5. Applicability of TDS Provisions u/s 194C:
The Tribunal upheld the CIT(A)'s finding that the provisions of section 194C were not applicable as there was no contract or sub-contract work by the joint venture to its member companies. The revenue sharing was on a principal-to-principal basis, not a principal-agent basis.
6. Control and Responsibility of the Contract:
The Tribunal noted that the joint venture acted merely as a conduit for distributing receipts among its members and did not retain any share of the revenue. The CIT(A) found that the joint venture was not in full control of the contract, and thus, the provisions of section 40(a)(ia) were not applicable.
7. Landmark Judgement of Ch. Achaiah:
The Tribunal considered the Supreme Court's decision in Ch. Achaiah, which held that if the share of profit is determined in the joint venture agreement, it cannot be anything but an AOP. However, the Tribunal found that this case did not apply as there was no profit or loss in the hands of the AOP.
8. Judgement of Authority for Advance Rulings in Geoconsultant ZT GMBH:
The Tribunal referred to the AAR's decision in Geoconsultant ZT GMBH, which followed the Supreme Court's decision in Ch. Achaiah. The Tribunal found that the facts of the present case were similar, and thus, the CIT(A)'s decision was upheld.
9. TDS Apportionment Certificates:
The Tribunal noted that the Assessing Officer had issued TDS apportionment certificates every year, enabling the members to claim TDS credits in their respective cases. This indicated that the Assessing Officer had accepted the revenue-sharing arrangement.
10. Sub-contracting and Legal Entity Status:
The Tribunal upheld the CIT(A)'s finding that the joint venture was a separate legal entity and that there was no sub-contracting involved. The revenue was taxed in the hands of the members, and there was no disallowance u/s 40(a)(ia).
Conclusion:
The Tribunal dismissed the appeals filed by the Revenue, upholding the CIT(A)'s decision that there was no question of disallowance made u/s 40(a)(ia) of the Act in all these cases. The appeals filed by the Revenue were dismissed.
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2012 (10) TMI 1080
Issues Involved:
1. Whether the CIT(A) erred in not gathering particulars through the Assessing Officer or otherwise before adjudicating on share transactions.
2. Whether the CIT(A) should have upheld the Assessing Officer's order considering the high volume of transactions.
3. Whether the CIT(A) erred in holding that the transactions in shares are in the nature of adventure or trade.
4. Whether the CIT(A) should have applied the judgement of the Special Bench ITAT, Mumbai in the case of M/s. Daga Capital Management (P) Ltd., Vs. ITO in relation to transaction in shares and applied section 14A disallowing the expenditure towards exempted dividend income.
Summary:
Issue 1: Gathering Particulars Before Adjudicating on Share Transactions
The CIT(A) accepted the assessee's claim of long term capital gain at Rs. 4,09,074/- and short term capital gain at Rs. 82,89,260/-, following the decision of Nagpur Bench of the ITAT in the case of Dineshbhai C. Patel (HUF) and the Mumbai bench of the ITAT in the case of Gopal Purohit Vs. JCIT. The CIT(A) observed that the AO built his case on a wrong premise, i.e., the period of holding, and concluded that shares held for a short period would not qualify as short term capital gain.
Issue 2: High Volume of Transactions
The Ld. D.R. contended that the number of transactions and continuous purchase and sale of shares indicate that the assessee was involved in trading in the share market. However, the Ld. A.R. argued that the shares were held as investments, shown in the balance sheet, and the income was derived mainly from salary. The Tribunal noted that the period of holding and number of transactions cannot be the only basis to determine whether the assessee has carried out the business in share transactions.
Issue 3: Nature of Transactions in Shares
The Tribunal referred to the decisions of the Hon'ble Supreme Court in CIT (Central), Calcutta vs Associated Industrial Development Company (P) Ltd. and CIT, Bombay vs H Holck Larsen, emphasizing that whether shares are held as investments or stock-in-trade depends on the intention and evidence provided by the assessee. The Tribunal concluded that the shares were held as investments, not as stock-in-trade, and the onus was on the revenue to prove otherwise.
Issue 4: Application of Special Bench ITAT, Mumbai Judgment
The Tribunal noted that the CIT(A) relied on the decision of the ITAT Nagpur bench in the case of Dineshbhai C. Patel (HUF), which was confirmed by the High Court. The Tribunal also referred to the decision in Gopal Purohit Vs. JCIT, where it was held that the period of holding cannot be the sole criterion to determine whether the share transaction is a business income or capital gain. The Tribunal confirmed the order of the CIT(A), stating that the decision of the coordinate bench, approved by the jurisdictional High Court, is binding.
Conclusion:
The Tribunal dismissed the appeals filed by the revenue, confirming the order of the CIT(A) that the gains from share transactions were to be treated as capital gains and not business income. The Tribunal emphasized that the period of holding and number of transactions alone cannot determine the nature of income, and the onus is on the revenue to prove that the shares were held as stock-in-trade.
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2012 (10) TMI 1079
Whether TDS to be deducted u/s 194C @1% or u/s 194J @10% - Nature of contract - services availed are on contract basis or technical services - contract for collection of data, locating and marketing of certain buildings, office etc. - Held that:- all technical work was performed by assessee himself and the parties from whom work was out-sourced has performed, non-skilled work either by supplying non-skilled labours at the site for helping assessee to monitor the work or by specialized machines - 194J suggest that professional service would constitute, all services which are rendered by a person in the course of carrying on legal, medical, engineering or architectural profession etc - The jobs availed by the assessee from the persons did not fall within the ambit of this explanation, rather they are ancillary jobs connected with main performed by the assessee, under clause F & I of Explanation-1 to section 194C - Decided against the revenue.
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2012 (10) TMI 1078
Issues Involved:
1. Entitlement to exemption u/s 11(4A) of the Income Tax Act, 1961.
2. Entitlement to exemption u/s 11(1) of the Income Tax Act, 1961.
3. Allowability of depreciation when 100% cost has been claimed as deduction towards application of funds.
Summary:
Issue 1: Entitlement to exemption u/s 11(4A) of the Income Tax Act, 1961
The Revenue challenged the CIT(A)'s decision allowing the assessee exemption u/s 11(4A). The AO had denied this exemption, arguing that the assessee's activities, including Management Development Programs (MDP) and consultancy services, constituted business activities and that separate books of accounts were not maintained. The CIT(A) found that the assessee maintained separate ledger accounts for MDP and that the activities lacked a profit motive, thus qualifying for exemption u/s 11(4A). The Tribunal upheld the CIT(A)'s decision, noting that the assessee maintained separate books of accounts for each institute and that the surplus was applied towards the educational objectives of the trust.
Issue 2: Entitlement to exemption u/s 11(1) of the Income Tax Act, 1961
The AO had treated income from hiring premises and advertisement rights as business income. The CIT(A) held that the income from hiring premises and advertisement rights, which were used for educational purposes, was eligible for exemption u/s 11(1). The Tribunal agreed with the CIT(A), referencing the Supreme Court decision in CIT vs. Andhra Chamber of Commerce, which held that rental income from property held for charitable purposes is exempt.
Issue 3: Allowability of depreciation when 100% cost has been claimed as deduction towards application of funds
The AO disallowed depreciation, citing the Supreme Court decision in Escorts Ltd. vs. Union of India, which prohibits double deductions. The CIT(A) distinguished this case and allowed depreciation based on the Bombay High Court decision in CIT vs. Institute of Banking. The Tribunal upheld the CIT(A)'s decision, noting that the assessee was not claiming double deduction but merely reducing depreciation from income to determine the percentage of funds applied for the trust's purposes. The Tribunal referenced the Punjab & Haryana High Court decision in CIT vs. Market Committee, Pipli, which supported this view.
Conclusion:
The Tribunal dismissed the Revenue's appeal, upholding the CIT(A)'s decisions on all grounds, thereby granting the assessee exemptions u/s 11(4A) and 11(1) and allowing the depreciation claim.
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2012 (10) TMI 1077
Rebate u/s 88E not allowable to the assessee while computation u/s 115JB - MAT - Held that:- Hon’ble Karnataka High Court in the case of M/s Horizon Capital Limited [2011 (10) TMI 489 - KARNATAKA HIGH COURT] has held that while computing the total income under Section 115JB of the Act, the assessee is entitled to claim deduction of the amount equal to the STT paid by him in respect of the taxable securities transactions entered into in the course of business during the previous year. Since this issue is squarely covered in favour of the assessee by the decision supra , we do not find any infirmity in the order of the learned Cit(A).
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