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Showing 181 to 200 of 1327 Records
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2012 (11) TMI 1155
TDS u/s 194C - non deduction of tds on payment made to parent company - Held that:- Disallowance cannot be made as it has not been shown or established that aforementioned payments were made by the assessee to the aforementioned group concerns against any contract work carried out by them for the assessee. In the case of reimbursement of expenses, the expenditure incurred is related to the person who has not made the original payment. The payment of expenditure is made by "X" party on behalf of "Y" party and later on the same is reimbursed to "X" party by "Y" party, the expenditure is pertaining to "Y" party and not pertaining to "X" party. - Decided in favour of assessee.
Addition u/s 43B - miscellaneous expenses as provision for interest on VAT - Held that:- We restore this issue to the file of AO with a direction to give an opportunity to the assessee to submit all the vouchers. After verifying the same AO will re-adjudicate the issue regarding disallowance of impugned amount in accordance with law.
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2012 (11) TMI 1154
Issues Involved:
1. Deduction u/s 80IB(10) for "Maestros" and "Mistry Moor" projects.
2. Deduction u/s 80IB(10) for "Rose Parade" project.
3. Deduction u/s 80IB(10) for "Lapiz Lazuli" project.
4. Pro-rata deduction u/s 80IB(10) for "Lapiz Lazuli" project.
Summary of Judgment:
1. Deduction u/s 80IB(10) for "Maestros" and "Mistry Moor" Projects:
The Tribunal upheld the CIT(A)'s decision allowing the deduction u/s 80IB(10) for the "Maestros" and "Mistry Moor" projects. This decision was based on the Tribunal's earlier ruling in the assessee's favor for A.Y. 2001-02 to 2003-04, where similar issues were adjudicated.
2. Deduction u/s 80IB(10) for "Rose Parade" Project:
The CIT(A) allowed the deduction u/s 80IB(10) for the "Rose Parade" project after considering the DVO's report, which confirmed that the built-up area of none of the flats exceeded 1500 sq.ft. The Tribunal found no infirmity in this decision and dismissed the revenue's appeal on this ground.
3. Deduction u/s 80IB(10) for "Lapiz Lazuli" Project:
The CIT(A) denied the deduction u/s 80IB(10) for the "Lapiz Lazuli" project, as only 76 out of 214 flats had a built-up area of less than 1500 sq.ft. The Tribunal upheld this decision, noting that the combination of adjoining flats into larger units exceeded the prescribed limit.
4. Pro-rata Deduction u/s 80IB(10) for "Lapiz Lazuli" Project:
The Tribunal allowed the assessee's request for pro-rata deduction u/s 80IB(10) for the "Lapiz Lazuli" project, following the precedent set in the case of D.S. Kulkarni Developers Ltd. The Tribunal directed the AO to calculate the proportionate deduction for the flats with a built-up area of less than 1500 sq.ft. and allow the deduction accordingly.
Conclusion:
The appeal filed by the revenue was dismissed, and the appeal filed by the assessee was partly allowed, granting pro-rata deduction for the "Lapiz Lazuli" project.
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2012 (11) TMI 1153
Issues involved: Appeal against penalty u/s 272B of the Income Tax Act, 1961 for default in quoting PAN numbers of deductees in e-TDS quarterly statement.
Summary:
Issue 1: Levy of penalty u/s 272B for default in quoting PAN numbers
The appeal was filed against the penalty imposed u/s 272B of the Income Tax Act, 1961 for not quoting PAN numbers of six deductees in the e-TDS quarterly statement. The Assessing Officer held the assessee liable and imposed a penalty of &8377;60,000, which was upheld by the CIT (Appeals). The provisions of section 272B (1) state that failure to comply with Section 139A may result in a penalty of &8377;10,000. The first ground of appeal was dismissed, but the alternate plea in ground No. 2 was allowed.
Issue 2: Correct application of penalty amount
The appellant contended that the penalty amount imposed was &8377;60,000 instead of the prescribed &8377;10,000 u/s 272B. The appeal challenged this discrepancy, and the Tribunal partially allowed the appeal, recognizing the error in the penalty amount imposed.
In conclusion, the appeal was partly allowed, addressing the issues raised regarding the penalty u/s 272B for the default in quoting PAN numbers in the e-TDS quarterly statement. The Tribunal clarified the correct application of the penalty amount as per the provisions of the Income Tax Act, 1961.
Order pronounced in the open Court on 26th day of November, 2012.
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2012 (11) TMI 1151
Section u/s 145 - Held that:- Assessee has treated the amount in question as unearned income, whereas; per Revenue, section 145(2) is applicable and he amount in question has to be treated as income of the current year.
Expenditure incurred by the assessee in foreign currency towards bandwidth charges paid to a non-resident - Held that:- Payments in question made by the assessee cannot be subjected to the applicability of TDS provisions contained in the “Act”.
Depreciation @ 100% on addition made to furniture and fittings disallowed - Held that:- Assessing Officer did not consider the vital aspects of the issue i.e. nature of expenditure incurred on acquisition of assets. In appeal, same have been taken note by the CIT(A) and accordingly, necessary directions have been issued to the Assessing Officer.
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2012 (11) TMI 1150
Issues Involved:
1. Validity of initiation of reassessment proceedings u/s 147 read with section 148 of the Act.
2. Whether reassessment was based on a change of opinion.
3. Applicability of Government Resolution dated 21-5-1999 and the timing of income accrual.
4. Non-consideration of an alternative submission regarding the cessation of liability u/s 41(1) of the Act.
Summary:
1. Validity of initiation of reassessment proceedings u/s 147 read with section 148 of the Act:
The assessee contended that the reopening of the assessment u/s 148 was invalid as the notice was issued without providing reasons recorded for issuance until the completion of the assessment order. The Tribunal found that the reasons were communicated to the assessee via a show-cause notice dated 8-12-2009, thus meeting the requirement of affording an opportunity to the assessee to raise objections. The Tribunal upheld the CIT(A)'s view that the defect, if any, in not supplying the reasons initially was cured when the reasons were provided before the CIT(A).
2. Whether reassessment was based on a change of opinion:
The Tribunal rejected the assessee's contention that the reassessment was based on a mere change of opinion. It was noted that there was no assessment u/s 143(3) initially, and the return was processed u/s 143(1)(a), which cannot be termed as an assessment. The Tribunal relied on the decision of the Hon'ble Supreme Court in ACIT Vs. Rajesh Jhaveri Stock Brokers (P) Ltd., 291 ITR 500 (SC), concluding that the reassessment proceedings were valid.
3. Applicability of Government Resolution dated 21-5-1999 and the timing of income accrual:
The assessee argued that the income related to the waiver of arrears should be taxed in A.Y. 2000-01 based on the Government Resolution dated 21-5-1999. However, the Tribunal held that the income accrued on 23-5-2001, when the MSEB issued a letter specifying the benefit of waiver to the assessee. The Tribunal concurred with the CIT(A) that the remission of liability occurred in A.Y. 2002-03, as the specific act of waiver by MSEB was in May 2001.
4. Non-consideration of an alternative submission regarding the cessation of liability u/s 41(1) of the Act:
The assessee contended that the Tribunal failed to adjudicate an alternative submission that the loss on account of excess cost of electricity incurred in earlier years was not actually allowed, and therefore its waiver in A.Y. 2002-03 cannot be assessed as income u/s 41(1). The Tribunal acknowledged this omission and directed the Registry to re-post the appeal before a regular bench to consider and decide the alternative plea raised in Ground no. 4.
Conclusion:
The Tribunal partly allowed the Miscellaneous Application, directing a rehearing on the specific unadjudicated alternative plea while upholding the original decisions on other issues.
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2012 (11) TMI 1149
Appellant being an AOP/JV liability to deduct tax at source from the payments made to the constituent partners - Held that:- Disallowance u/s 40(a)(i) is only to the extent of the amount outstanding as on the last day of the previous year and amounts which have been paid during the previous year cannot be disallowed for non deduction of TDS.
Non- deduction of tax and consequent disallowance for the payments made to M/s. Sino Hydro Corporation, China - Held that:- It has to be verified whether the Chinese concern has offered this income for tax in India. If the Chinese concern has not filed income Tax return and offered this amount as part of their income in computing their taxable income, the same shall be assessed as income of the assessee, as the person responsible for making the payment to the Non Resident. If the Chinese constituent has not offered this amount as part of their taxable income in india, the AO may take suitable action for bringing the amount to tax in accordance with provisions of the Act.
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2012 (11) TMI 1148
Issues involved: Claim for expenditure incurred towards replacement of machinery disallowed by Assessing Officer and CIT(Appeals), appeal filed by assessee challenging the disallowance.
Summary:
In the appeal filed by the assessee, the grievance was that the claim for expenditure incurred towards replacement of machinery was not allowed by the Assessing Officer and confirmed by the CIT(Appeals). The assessee argued that each replaced machine only helped maintain existing production and quality levels without increasing production capacity.
The facts revealed that the claim for replacement of Simplex (Speed Frames), Draw Frames (auto leveler), and Cards amounting to `138.30 lakhs was initially disallowed by the assessing authority. The CIT(Appeals) allowed the claim, which was later confirmed by the Tribunal and the jurisdictional High Court. However, upon further appeal by the Revenue, the matter was remitted back to the Assessing Officer with specific directions regarding the treatment of the claim under Section 31(i) and Section 37 of the Act.
Upon reconsideration, the CIT(Appeals held that the claim could not be allowed based on precedents set by the Hon'ble Apex Court in relevant cases. The issue of whether the claim could be considered as current repairs or revenue outgo was decided against the assessee based on legal interpretations.
During the hearing, the assessee's representative argued that the replacement of machines over fifty years old did not result in an increase in capacity, thus the expenses should be allowed as revenue outgo. On the other hand, the Departmental Representative supported the orders of the lower authorities.
After reviewing the submissions and orders, it was observed that the replacements were not of parts but entire machinery components. The jurisdictional High Court's decision in a similar case clarified that expenditure on replacement of machinery could not be treated as revenue outgo post the concept of block of assets. Therefore, the CIT(Appeals) was justified in disallowing the expenditure claimed by the assessee.
In conclusion, the appeal filed by the assessee was dismissed, and the order was pronounced in the Court on Monday, the 5th of November, 2012, at Chennai.
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2012 (11) TMI 1147
Issues involved: Appeal against order confirming interest charged u/s 234B for tax payable due to retrospective amendment.
Summary:
The appeal was filed against the order confirming the charging of interest u/s 234B by the Assessing Officer for tax payable due to a retrospective amendment. The assessee contended that there was no tax payable initially as per the estimated income for A.Y. 2005-06, and the retrospective amendment to section 115JB of the Act was not in force when the advance tax was due. The AO levied interest under section 234B, assuming the provision was in existence when the return was filed. The CIT(A) upheld the AO's decision, leading to the appeal.
The main argument of the assessee was that a retrospective legislation cannot impose an obligation that was impossible to fulfill initially. The assessee relied on the legal maxim "Lex Non Cogit Ad Impossibilia" and cited a decision of the Hon'ble Calcutta High Court where it was held that interest cannot be levied under sections 234B and 234C solely based on a retrospective tax liability. The assessee emphasized that there was no contradictory decision from any other court, making the Calcutta High Court's decision applicable in this case.
After considering the submissions and the record, the Tribunal noted that the Calcutta High Court had ruled that amended provisions cannot be used to penalize an assessee for non-payment of advance tax due to retrospective changes in the law. The Tribunal held that the law applicable at the time of advance tax payment should determine the default, not retrospective amendments. As there was no conflicting decision, the Tribunal followed the Calcutta High Court's decision and allowed the appeal.
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2012 (11) TMI 1146
Issues involved: Interpretation of sec. 10(26AAB) of the Act, deduction of amount accumulated u/s 11(2) of the Act.
Interpretation of sec. 10(26AAB) of the Act:
The Tribunal initially held that sec. 10(26AAB) applied retrospectively to the assessees. However, the High Court later ruled that it had prospective operation from 01.04.2009. The assessees sought recall of the orders to address grounds raised on merits. The appeals were then heard.
Deduction of amount accumulated u/s 11(2) of the Act:
The assessees filed Form No.10 for accumulation of income under sec. 11(2) during assessment proceedings, but the Assessing Officer rejected it for not being filed with the return of income. The AR argued that Form No.10 could be filed even at the appellate stage as sec. 11(2) compliance is procedural. The CIT(A) did not decide in favor of the assessees.
The Assessing Officer did not consider Form No.10 due to: (a) lack of specific purpose for accumulation, (b) not filing within the time prescribed, and (c) not investing in specified forms. The AO relied on legal precedents to support his decision, which the CIT(A) upheld.
The Tribunal found that the purpose of accumulation should be precise and specific, allowing for a plurality of purposes. The time limit for filing Form No.10 was clarified by judicial decisions to be before assessment completion. The issue of accumulation of funds u/s 11(5) also needs fresh examination.
The Tribunal set aside the CIT(A) orders on the accumulation issue, directing the Assessing Officer to reexamine it and make a decision in accordance with the law. The appeals were treated as partly allowed for statistical purposes.
Separate Judgment: None.
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2012 (11) TMI 1145
Issues involved: Appeals against deletion of penalties u/s 271AAA and 271(1)(d) of the Income Tax Act.
Penalty u/s 271AAA:
The taxpayer disclosed additional income during a search operation, but the assessing officer levied a penalty u/s 271AAA for not substantiating the manner in which the income was offered. The taxpayer contended that the income was from business and offered as per books of account. The Tribunal held that since the taxpayer substantiated the undisclosed income and had no other unaccounted source, the penalty was rightly deleted by the Commissioner of Income-tax(A).
Penalty u/s 271(1)(d):
The penalty was levied for allegedly concealing fringe benefit particulars. The taxpayer claimed exemption for certain expenses, which was rejected by the assessing officer. The Tribunal noted that the taxpayer had furnished all details and claimed non-taxability, which was not accepted. Citing the case of Commissioner of Income-tax vs Reliance Petroproducts, the Tribunal found that a mere claim of non-taxability does not amount to furnishing inaccurate particulars. Consequently, the penalty was rightly deleted by the Commissioner of Income-tax(A).
In conclusion, both appeals of the revenue were dismissed, affirming the decisions of the Commissioner of Income-tax(A) in deleting the penalties.
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2012 (11) TMI 1144
Issues involved:
Three appeals filed by the revenue against the order of Ld CIT(A) dated 25.3.2011, 17.2.2010 & 17.2.2010 respectively regarding exemption u/s 11 r/w sec. 12 of the Income Tax Act, 1961.
Assessment Year 2007-08:
1. The Ld CIT(A) erred in allowing exemption u/s 11 r/w sec. 12 of the Income Tax Act, 1961.
2. The Ld CIT(A) erred in holding that the ratio laid down by Hon'ble ITAT, New Delhi in a previous case is not applicable to the assessee society.
3. The Ld CIT(A) erred in relying upon a previous ITAT order for different assessment years.
4. The Ld CIT(A) erred in holding that certain expenses claimed by the assessee are not allowable as revenue expenses.
Details:
The assessee society, registered u/s 12A, running a school, claimed exemption u/s 11. The Assessing Officer considered the school as a profit-making entity and rejected the exemption claim. The assessee argued that the school's surplus was for expansion and not profit-sharing. The ITAT held that imparting education is a charitable purpose, different from a profit-making business, and allowed the exemption u/s 11.
Key Points:
- The society's objective is to provide education without profit motive.
- Assessing Officer treated school income as business income.
- ITAT ruled that imparting education is a charitable purpose.
- Previous ITAT orders and circulars supported the assessee's case.
- The ITAT allowed the exemption u/s 11 for the assessee society.
This summary highlights the issues involved in the legal judgment and provides a detailed overview of the arguments and decisions made by the authorities involved.
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2012 (11) TMI 1143
Issues involved: Appeal against order dated 09.11.2010 passed by CIT(A)-1, Mumbai for assessment year 2007-08 regarding treatment of Rent & Service Charges, disallowance of maintenance expenses, rejection of expenses u/s. 14A, and disallowance of Portfolio Management Fees.
Treatment of Rent & Service Charges:
The Assessing Officer treated rent and service charges as income from house property, while the First Appellate Authority assessed it as business income, allowing deduction for repair and maintenance expenses. The Tribunal upheld the AO's treatment, citing the assessee as deemed owner u/s 27(iiib) of the Act, dismissing the appeal by the assessee.
Disallowance u/s. 14A:
The AO disallowed expenses related to exempted income under section 14A by applying Rule 8D. However, the FAA held that Rule 8D was not applicable for the relevant assessment year based on the decision in the case of Godrej Boyce Mfg. Co. Ltd. The Tribunal endorsed the FAA's decision, directing the AO to decide the disallowance afresh after affording a reasonable opportunity to the assessee.
Disallowance of Portfolio Management Fees:
The AO disallowed Portfolio Management Fees (PMF) paid by the assessee, stating that the expenditure could not be allowed under section 40A and 112. The FAA upheld the AO's decision, emphasizing that PMF was not allowable under the head capital gains. The Tribunal dismissed the cross objections filed by the assessee, following previous decisions and coordinating benches' rulings.
Conclusion:
The Tribunal partly allowed the appeal filed by the AO and dismissed the cross-objection filed by the assessee, maintaining the treatment of rent and service charges, disallowance u/s. 14A, and disallowance of Portfolio Management Fees. The orders were pronounced on 7th November 2012.
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2012 (11) TMI 1142
Issues involved:
1. Exclusion of mobilization charges from gross revenues for income computation under Section 44BB of the Income Tax Act, 1961.
2. Allowance of set off of unabsorbed depreciation against current year income under Section 44BB.
Issue 1: Exclusion of mobilization charges from gross revenues:
The High Court referred to the case of Sedco Forex International Inc. vs. Commissioner of Income Tax and another, (2008) 299 ITR 238, to determine whether mobilization charges should be excluded from gross revenues for income computation under Section 44BB. The Court ruled in line with the aforementioned judgment, holding that mobilization charges are to be excluded from gross revenues for the purpose of income computation under Section 44BB.
Issue 2: Allowance of set off of unabsorbed depreciation:
The question raised was whether the ITAT was correct in allowing the claim of the assessee to set off unabsorbed depreciation of earlier years against the current year income computed under Section 44BB. Section 44BB does not explicitly address set off, focusing instead on the reduction of deemed profit. The Court noted that the accounts were maintained, audited, and submitted as required by Sub-Section (3) of Section 44BB. The presence of unabsorbed depreciation carried forward to the next year did not violate any accounting principle. Consequently, the Court ruled in favor of the assessee, as the accounts demonstrated that the actual profit earned was less than the deemed profit specified in Section 44BB of the Act.
The appeal was thus disposed of by the High Court, with decisions made in favor of the assessee on both issues presented.
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2012 (11) TMI 1141
Issues Involved:
1. Validity of proceedings u/s 153C r.w.s. 153A.
2. Classification of income from sale of agricultural land as 'capital gains' or 'business income'.
3. Levy of interest u/s 234A, 234B, and 234C.
Summary:
Issue 1: Validity of Proceedings u/s 153C r.w.s. 153A
The assessee challenged the legality of the initiation of proceedings u/s 153C r.w.s. 153A for A.Ys. 2006-07 and 2007-08. The CIT(A) upheld the validity of these proceedings, relying on the case law of Harvey Heart Hospitals Ltd. vs. ACIT. However, the Tribunal found that the search was conducted at the residential premises of the Director and not at the assessee's premises. The seized material, which included fixed deposit receipts, was already declared in the returns filed by the assessee. Citing the Special Bench decision in All Cargo Global Logistics vs. DCIT, the Tribunal concluded that there was no incriminating material found during the search that was not produced in the original assessment. Therefore, the initiation of proceedings u/s 153C was deemed invalid, and the issue was decided in favor of the assessee.
Issue 2: Classification of Income from Sale of Agricultural Land
The assessee claimed the income from the sale of agricultural land as 'capital gains', while the Revenue treated it as 'business income'. The CIT(A) partially agreed with the assessee for A.Y. 2006-07 but sided with the Revenue for A.Ys. 2007-08 and 2008-09. The Tribunal noted that the land was held as agricultural land until it was converted to a residential zone in 2004. The assessee had declared agricultural income in preceding years and sold the land in plots due to debts, not as a business activity. The Tribunal referred to multiple case laws, including CIT vs. Sairam and Shyamala Pictures Pvt Ltd vs. CIT, which supported the treatment of such transactions as capital gains. Consequently, the Tribunal ruled that the income from the sale of land should be treated as 'capital gains' for all assessment years, deciding the issue in favor of the assessee.
Issue 3: Levy of Interest u/s 234A, 234B, and 234C
The issue of levy of interest u/s 234A, 234B, and 234C was treated as consequential in nature and was not separately adjudicated upon.
Conclusion:
- The appeals filed by the assessee (ITA Nos. 238 to 240/Mds/12) are allowed.
- The appeal filed by the Revenue (ITA No. 219/Mds./12) is dismissed.
Order pronounced on Monday, the 26th November, 2012 at Chennai.
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2012 (11) TMI 1140
Registration and Cancellation of institution u/s 12AA- Charitable Purpose u/s 2(15) - Administrative Commissioner withdrew the registration u/s 12AA on the ground that the institution's aggregate value of the receipt from the charitable activities exceeds ₹4 crore which is beyond the limit as mentioned in s. 2(15), therefore, the taxpayer is not charitable institution.
HELD THAT:- If the aggregate contract receipts exceed ₹ 10 lakhs in any of the years, at the best, the assessing officer may deny exemption at the time of assessment proceedings. In view of the above, this Tribunal is of the considered opinion that the subsequent amendment to section 2(15) of the Act by introducing Proviso fixing the monetary limit in respect of public utility services cannot be a reason to cancel the registration.
The Commissioner cannot go beyond the conditions provided in section 12AA(3) for cancelling the registration that are - (1) when the activity of the trust or institution is not genuine; (2) when the activity is not being carried out in accordance with the object of the trust / institution. In other words, the registration can be cancelled only if the Commissioner is satisfied that the object of the trust is not genuine or the activity of the taxpayer society was not carried out in accordance with the object.
Decision in favour of assessee.
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2012 (11) TMI 1139
Levy of penalty u/s 272B - non quoting/wrong quoting of PANs in the TDS Return 24Q - Held that:- As per section 272B(1) of the Act If a person failed to comply with the provision of section 139A, the Assessing Officer may direct that such person shall pay, by way of penalty a sum of ₹ 10,000/. thus the penalty u/s 272B of the Act at is restricted to ₹ 10,000/- appeal of the Revenue is dismissed.
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2012 (11) TMI 1138
Allowing the interest expenses and general administration expenses by holding that the new project was a part of the existing business - Held that:- Expenses incurred by the assessee were in respect of the existing business and similarly interest and miscellaneous receipts were part of the existing business which had already commenced and hence liable to be treated as business receipts. Since the decision of the Tribunal in allowing the expenditure as business expenditure and treating the receipts as business receipts is based on facts of the case and there is no infirmity in it, we see no reason to entertain the question.
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2012 (11) TMI 1137
Issues involved: Appeal against deletion of penalty u/s 271(1)(c) of the Income-tax Act, 1961 by CIT(A) for AY 2002-03.
Summary:
1. The appeal was filed by the Revenue against the CIT(A)'s order setting aside the penalty imposed u/s 271(1)(c) of the Act.
2. The Revenue raised grounds challenging the deletion of the penalty amount.
3. The facts of the case involved additions made by the Assessing Officer and subsequent penalty proceedings initiated u/s 271(1)(c).
4. Both parties presented their arguments, including references to relevant court judgments.
5. The assessee's representative provided copies of orders from the Supreme Court and High Court supporting the deletion of penalty.
6. The Tribunal considered the judgments and observed that the penalty cannot be imposed based on additions made under regular provisions.
7. The Tribunal referred to a previous case involving the same issue where the penalty was deleted.
8. Ground no.1 of the appeal was decided in favor of the assessee based on previous judgments, leading to the dismissal of the Revenue's appeal.
9. Cross objections filed by the assessee were also dismissed as they became academic after the main appeal was decided in favor of the assessee.
10. Ultimately, both the appeal of the Revenue and the cross objection of the assessee were dismissed.
Judgment Date: 16.11.2012
Court: Appellate Tribunal ITAT DELHI
Citation: 2012 (11) TMI 1137 - ITAT DELHI
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2012 (11) TMI 1136
Assessment u/s 153A - addition u/s 68 - Held that:- Authorities below could have presumed that the assessee has spent the difference of amount in question somewhere as per cash in hand as per books of account and lesser cash as per seized documents, but that would also not suffice to make addition under any of the above provisions because every person is at liberty to spend their own amount anywhere as per his choice because the assessee has not claimed any deduction in this case. Examining the case of the assessee from every possible angle, we find the addition of ₹ 37,30,710/- wholly unjustified.
Purchase of potatoes unexplained - Held that:- In the absence of any incriminating material or evidence against the assessee, we are of the view that the huge addition made against the assessee was merely based on presumption and assumptions of facts, which cannot take place of legal proof. No evidence of purchase, sales or unaccounted stock belonging to the assessee during the course of search or survey was found or established. Thus, the assessee has been able to prove that the assessee acted only as a bailee and earned rental income. Thus, the authorities below have acted against the assessee in haste in making substantive addition without any basis and without considering entire seized material. We, therefore, do not find any justification for the authorities below to make or confirm the addition of the aforesaid nature. We accordingly, set aside the orders of the authorities below and delete the addition.
Addition under the head ‘diesel expenses’ - Held that:- The diesel is used in generator, which is necessary for running of cold storage due to frequent failure of electricity in the State of U.P. Therefore, it was necessary component/expense for running the cold storage. Considering the above, it would be reasonable and appropriate to restrict the addition by disallowing 5% of the expenses instead of 10% confirmed by the authorities below.
Disallowance of petrol expenses and disallowance under the head depreciation on car for personal user - Held that:- Addition appears to be excessive in nature We, accordingly, modify the orders of the authorities below and restrict the disallowance to 5% of the expenses on both these disallowances of expenses. The AO is directed to disallow 5% of expenses instead of 20%. These grounds of appeal of the assessee are partly allowed.
Addition on account of addition under the head ‘building’- Held that:- There were no reasons to discard the books of account merely because the same were not found during the course of survey. The AO should have verified each and every entry from the books of account of the assessee on this issue before making reference to the DVO. However, no such findings have been given and the AO merely because the assessee did not produce bills and vouchers referred the matter to the DVO for estimating cost of construction - restore the matter to the file of the AO with direction to re-decide the issue by considering the books of account produced by the assessee
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2012 (11) TMI 1135
Issues Involved:
1. Assessment of total income at Rs. 43,99,220 instead of NIL.
2. Disallowance of deduction under Section 80-IB(10) due to non-ownership of land.
3. Disallowance of deduction under Section 80-IB(10) due to excess commercial construction.
4. Allegation of income from the sale of Floor Space Index (FSI).
5. Alternate plea of disallowing part of the deduction under Section 80-IB(10) related to the sale of FSI.
Detailed Analysis:
1. Assessment of Total Income:
The appellant contested the assessment of total income at Rs. 43,99,220 instead of NIL. However, this ground was deemed general and no specific finding was provided on this issue.
2. Disallowance of Deduction under Section 80-IB(10) Due to Non-Ownership of Land:
The appellant claimed a deduction of Rs. 48,99,220 under Section 80-IB(10) for the development and building of a housing project. The Assessing Officer (A.O.) disallowed this deduction on the grounds that the appellant was not the owner of the land, which was in the name of Smt. Kokilaben Narendrabhai Dalwadi and others. The CIT(A) confirmed this disallowance, referencing the cases of M/s. Radhe Developers and M/s. Shakti Corporation, which emphasized the need for the assessee to satisfy all conditions laid down in Section 80-IB(10) cumulatively.
3. Disallowance of Deduction under Section 80-IB(10) Due to Excess Commercial Construction:
The A.O. also disallowed the deduction under Section 80-IB(10) because the commercial construction exceeded the limit prescribed in Clause (d) of subsection (10) of Section 80-IB. The CIT(A) upheld this view, noting that the built-up area of the shops and other commercial establishments exceeded the permissible limit, thus making the appellant ineligible for the deduction.
4. Allegation of Income from Sale of FSI:
The A.O. held that the appellant earned profit from the sale of unutilized FSI, which was included in the profit from the housing project. The appellant contended that it neither sold any FSI nor earned any income from it. The CIT(A) found that the appellant had indeed sold unutilized FSI and confirmed the addition made by the A.O.
5. Alternate Plea of Disallowing Part of the Deduction under Section 80-IB(10) Related to Sale of FSI:
The A.O. took an alternate plea that out of the total deduction claimed under Section 80-IB(10), Rs. 39,27,168 was disallowable as it pertained to the sale of FSI. The appellant argued that no part of the deduction was disallowable since it had not sold any FSI. The CIT(A) allowed the appeal in favor of the appellant, referencing the ITAT Ahmedabad's decision in the case of M/s. Radhe Developers, which stated that there is no mandatory requirement to fully utilize permissible FSI under Section 80-IB(10).
Conclusion:
The Tribunal considered the facts and submissions, and the decision of the Hon'ble Gujarat High Court in the case of Manan Corporation vs. ACIT, which held that the amended provisions of Section 80-IB(10) are not applicable to projects sanctioned before 01.04.2005. Consequently, the Tribunal allowed the appeal in favor of the appellant regarding the disallowance of the deduction under Section 80-IB(10). However, the Tribunal dismissed the grounds related to the sale of FSI, upholding the CIT(A)'s decision.
Final Judgment:
The appeal was partly allowed, with the Tribunal ruling in favor of the appellant on the deduction under Section 80-IB(10) but dismissing the grounds related to the sale of FSI. The orders were pronounced in open court on 09.11.2012.
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9911796707
