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Case Laws
Showing 181 to 200 of 1429 Records
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2014 (12) TMI 1256
Entitlement to depreciation - whether sanitary and pipe fittings fixed to the hotel building constituted 'plant'? - Held that:- Considering the decision of the cases of CIT v. Taj Mahal Hotel, [1971 (8) TMI 2 - SUPREME Court ] and CIT v. Anand Theatres [2000 (5) TMI 4 - SUPREME Court ] which has been considered by the Rajasthan High Court in the case of CIT v. Jodhan Real Estate Development Co. (P.) Ltd. [2002 (8) TMI 9 - RAJASTHAN High Court which has been relied upon by the Tribunal, the questions which are raised in the present appeal are required to be answered in favour of the assessee. We are not giving further elaborate reasons for the same as in the aforesaid case, the Apex Court has already held that the sanitary and pipeline fittings as well as electrical installations fell within the definition of "plant". The court also held that the fact that the assessee claimed depreciation on the basis that sanitary and pipeline fittings fell under "furniture and fittings" in rule 8(2) of the Indian Income-tax Rules, 1922, did not detract from its position as the rules cannot take away what is conferred by the Act or whittle down its effect. - Decided in favour of the assessee.
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2014 (12) TMI 1255
Rejection of claim for deduction u/s 54 of the Act in respect of second house property - Held that:- The flats were having door numbers 103 and 104 i.e they were contiguous to each other. Further they were combined into one unit having common kitchen. Under these set of facts, the Hon’ble High Court in the case of Devdas Naik [2014 (7) TMI 173 - BOMBAY HIGH COURT] has held that both the units should be considered as one unit and hence the assessee was entitled for deduction u/s 54 of the Act. The ratio of these decisions shows that the Hon’ble jurisdictional High Court has expressed the view that the deduction u/s 54 / 54F shall be available only in respect of one residential house only. If two different contiguous flats are combined together into a single unit, then the deduction u/s 54 and 54F shall be available in respect of the cost of both the flats combined together.
There is no doubt that the decision rendered by the Jurisdictional High Court is binding on all authorities and assessees falling under the purview of that High Court. In the instant case, the flats purchased by the assessee were located at two different places. It was not a case of combining of two contiguous flats. Hence, we are unable to follow the decisions rendered by the Hon’ble Karnataka High Court, which was relied upon by the assessee, since the said decisions are contrary to the decision rendered by the Hon’ble jurisdictional Bombay High Court in CIT Vs. Khoobchand M Makhija [2013 (12) TMI 1525 - KARNATAKA HIGH COURT] . Accordingly we uphold the order of the ld. CIT(A) on this issue, since it is in accordance with the decision rendered by the Hon’ble Bombay High Court. Accordingly, we hold that the assessee shall be entitled for deduction u/s 54 of the Act only in respect of one residential flat.
Assessment of value of two garages for the purpose of computation of capital gains - Held that:- We notice from the assessment order that the AO has computed the sale consideration relating to garages purely on surmises and conjuncture without bringing any material on record to show that the assessee had received any money separately for garages over and above the amount declared in the agreement. Hence, we are of the view that the ld. CIT(A) was not justified in confirming the assessment of value of the garages, which was assessed purely on presumptive basis. The alternative view taken by the AO that the cost pertaining to the garages has to excluded from the cost as on 1.4.1981 is also based on surmises and conjecture and hence we are of the view that the ld. CIT(A) was not justified in confirming the alternative view of the AO also. Accordingly, we set aside the order of ld. CIT(A) on this issue.
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2014 (12) TMI 1254
Direction to appellant to deposit 50% duty confirmed against them - Held that:- the issue is contentious and arguable and the appellant has made an offer to deposit 7.5% of the duty confirmed against them in terms of the subsequent amendment to the provisions of Section 35 F, which are effective from 6.8.2014. We find the above offer to be reasonable, just and fair. We accordingly direct the applicant to deposit 7.5% of the duty demand within a period of 8 weeks. - Stay petition disposed of
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2014 (12) TMI 1253
Invokation of extended period of limitation - Cenvat credit - various iron and steel items - used as supporting structurals for fabrication of capital goods - Held that:- demand is clearly barred by limitation. Identical issues stand decided by the Tribunal in number of decisions and it stand held that inasmuch as law was declared subsequently, no malafide can be attributed to the appellant for the purpose of alleging suppression and for invoking the longer period of limitation. As the entire demand is barred by limitation, the impugned order is set aside. - Decided in favour of appellant
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2014 (12) TMI 1252
Deduction u/s 80HHC - whether Appellate Tribunal is justified in holding that the “total turnover” for the purposes of reduction u/s.80HHC will not include Central Sales Tax, Gujarat Sales Tax and Excise Duty even after insertion of Section 145A - Held that:- This question of law raised for consideration in the present Tax Appeal is now not res integra in view of the decision of this Court in the case of Commissioner of Income-tax vs. Meghmani Organics Ltd [2014 (3) TMI 29 - GUJARAT HIGH COURT] wherein has held that excise duty is required to be excluded from the ‘total turnover’ for the purpose of computation of deduction u/s. 80HHC. Also see Pogagen and Nagarsheth [2014 (3) TMI 934 - GUJARAT HIGH COURT]
Allowance of expenditure claimed on repairs of building - Held that:- It is a settled position of law that the expenditure to preserve and maintain an already existing asset would constitute repairs. We are of the opinion that the Tribunal was justified in considering the replacement of flooring amounting to ₹ 1,30,500/- and replacement of wall amounting of ₹ 1,92,920/- as revenue expenditures. However, we find that the Tribunal has committed an error in not considering the expenses incurred for erection of new wall to the tune of ₹ 1,40,000/- and erection of wall to the tune of ₹ 1,68,000/- as capital expenditure. The CIT(A) has proceeded on the footing that the company had erected fencing wall long back with barbed wires with cement poles and was capitalized and that after a long period it was necessary to repair the same by re-erection using old major materials liked barbed wires etc. The CIT(A) observed that in the process the company spent on repairing without bringing out any new asset in existence. The Tribunal has confirmed the said finding. We, however, do not agree with the said findings. The expenditure incurred on erection of wall is required to be termed as capital expenditure.
The expenditure incurred in replacement of flooring and replacement of wall will be considered as revenue expenditures whereas expenses incurred for erection of new wall and erection of wall to the tune shall be considered as capital expenditure. Moreover, excise duty is required to be excluded from the ‘total turnover’ for the purpose of computation of deduction u/s. 80HHC of the Act
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2014 (12) TMI 1251
Eligibility of Master Circular on Wilful Defaulters issued by the Reserve Bank of India - whether is not a piece of subordinate legislation and, therefore, it is not binding on a bank carrying on banking business in India? - Held that:- Master Circulars being issued under Section 35A of the Banking Regulation Act, 1949 are binding upon the banks and financial institutions carrying on banking business in India
Number prescribed for constituting the Identification Committee and the Grievance Redressal Committee in Regulations 3(i) and 3(iii) of the Master Circular dated July 1, 2014 is mandatory.
The Master Circular on Wilful Defaulters of the Reserve Bank of India requires every bank to undertake the exercise of identifying and declaring a borrower as a wilful defaulter if he is so. This exercise should be undertaken independent of the view expressed by a member bank of the consortium or any other bank. This is so as the account of the borrower has to be adjudged under the Master Circular in relation to the transactions that the borrower had with the concerned bank. Once a borrower is declared to be a wilful defaulter by a bank, the rigours under the Master Circular would kick in. Non-declaration of wilful defaulter even after an enquiry to such effect under the Master Circular being undertaken by a bank will not bind any other bank with such view as a borrower has to be adjudged as a wilful defaulter in relation to the transactions that the borrower had with the considering bank. Viewed in such context the letter of State Bank of India is of little consequence. In fact, State Bank of India is required to undertake the exercise under the Master Circular also notwithstanding its letter. The letter is not by the Grievance Redressal Committee of State Bank of India.
The Master Circular requires the banks and financial institutions to undertake such exercise expeditiously and to report on the same so that a wilful defaulter is dealt with in a manner commensurate with its status. Therefore, every individual banker under the consortium will be entitled to proceed and deal with the writ petitioners under the Master Circular notwithstanding the contents of the letter date January 31, 2012 of the lead banker. The letter dated January 31, 2012 will not impede State Bank of India itself to invoke the provisions of the Master Circular. Such letter, therefore, by no stretch of imagination can be held to impede the invocation of the Master Circular by other members of the consortium.
This will not prevent the United Bank of India to proceed against the writ petitioners to classify them as wilful defaulters under the relevant Circulars of the Reserve bank of India in accordance with law and in terms of the orders passed in the earlier writ petition.
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2014 (12) TMI 1250
Short term capital loss on sale of mutual funds within one day after earning tax free dividend income thereon - Held that:- We hold that the Tribunal was right in allowing the short term capital loss on sale of mutual funds within one day after earning tax free dividend income thereon. See CIT., Mumbai Versus M/s. Walfort Share & Stock Brokers P. Ltd. [2010 (7) TMI 15 - SUPREME COURT ] - Decided in favour of assessee
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2014 (12) TMI 1249
Claim of set off of loss of earlier years incurred on derivative transactions to adjust against profit earned on derivative transactions of current year - Held that:- It is not in dispute that the assessee has earned profit from the same business in which losses were incurred in the earlier years. The loss brought forward during all these years and gain made during the year is having same nature. There is no change in the nature earning of income during the year. In all the preceding years he was incurring losses in futures and options transactions but in current year he made gain. Nothing was brought on record by AO to allege that profit earned during the year was not out of future and option transaction. Thus the assessee was entitled to set off the carried forward losses of earlier assessment years against profits of the same business in this assessment year.
The classification of business for the limited purpose of set off of past losses, into speculative and non-speculative is to be done on uniform basis and losses incurred in the same business in earlier assessment years are to be treated as eligible for set off against profit of the same business in the subsequent assessment years. For this reason also the assessee deserves to be allowed to set off of brought forward losses from business of dealing in derivatives, incurred in assessment years prior to assessment year 2006-2007 against profit of the same business in current assessment year 2006-2007. Thus speculative losses made on future option transactions in earlier years are eligible to be allowed to set off against the business income of future option transactions of current year. Based on the same in the present case the assessee is entitled to set off the carried forward losses of earlier year from the same business against profit of the business in this assessment year. - Decided in favour of assessee
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2014 (12) TMI 1248
Levy of penalty for aid and abetment in duty evasion - It is the case of the Revenue that most of the MOP available in India is imported into India for industrial use and the appellants aided and abetted in the export of such MOP after importation by mis-declaring the same as Feldspar Powder, Industrial Salt etc. - Held that:- Looking to the extent of manipulations and scale of transactions, prima-facie, we do not find that all the appellants have made out a case for complete waiver of penalties and are required to be put to certain conditions. - all the appellants should deposit an amount equivalent to 1 % (One per cent) of the total penalties imposed upon each appellant under Section 114(i) and Section 114AA of the Customs Act, 1962 within eight weeks from the date of receipt of this order and report compliance to the Deputy Registrar by 04.02.2015. - stay granted partly.
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2014 (12) TMI 1247
Levy of entry tax on purchases of modem, GSM phones, data cards, scrap etc. and to entry tax under the provisions of U.P. Tax on Entry of Goods into Local Areas Act, 2007 on telecom goods, D.G. set, air conditioner, cable etc - Held that:- the applicant has strong prima facie case and it is entitled to absolute stay during pendency of the appeal. In view of the above, the impugned order of the Tribunal dated 7.11.2014 is hereby set aside. It is further provided that there shall be complete stay during the pendency of the appeal. Since the revisionist is a Government Company, I am of the opinion that it is not required to furnish any security.
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2014 (12) TMI 1246
Addition made on account of difference in stock - difference in statement as furnished before the bank as compared to shown in books of account for availing higher credit facility - Held that:- As in the case of Riddhi Steel and Tubes (2013 (10) TMI 291 - GUJARAT HIGH COURT ) it is held by this Court that only on account of inflated statements furnished to the banking authorities for the purpose of availing of larger credit facilities, no addition can be made if there appears to be a difference between the stock shown in the books of account and the statement furnished to the banking authorities. Accordingly, the question is answered in the affirmative i.e. against the appellant – revenue and in favour of the assessee.
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2014 (12) TMI 1245
Eligibility to claim deduction under sec.80IA - Held that:- We find that the issue in appeal has already been considered and decided in favour of the assessee by the Hon’ble Jurisdictional High Court in the case of Velayudhaswamy Spinning Mills [2010 (3) TMI 860 - Madras High Court ].- Decided in favour of the assessee.
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2014 (12) TMI 1244
Revision u/s. 263 - taxability of the amount received by the assessee on retirement from the partnership firm - Assessing Officer accepted the contention that the amount received was not taxable - Held that:- Assessing Officer conducted an enquiry on the issue of taxability the amount received by the assessee on retirement from these two partnership firms and examined the deed of retirement and reconstitution as well as the submissions of the assessee. It is manifest from the notice issued u/s 142(1) along with questionnaire, reply furnished by the assessee along with the relevant documents on the point that the Assessing Officer has examined the issue and then accepted the claim of the assessee. Therefore, it is not a case of lack of enquiry. Even the CIT has also not alleged that the Assessing Officer has not conducted any enquiry. Once the case does not fall under the category of lack of enquiry then the revisionary powers u/s 263 can be invoked by the CIT only when the claim of assessee allowed by the Assessing Officer is impermissible under law. It is settled legal proposition of law that if two views are possible on an issue and Assessing Officer has taken one of the possible views then the Commissioner has no jurisdiction to revise the order of Assessing Officer on the ground that he did not agree with the view taken by the Assessing Officer.
As decided in Tribhuvandas G. Patel Versus Commissioner of Income-Tax [1996 (2) TMI 16 - SUPREME Court] even where a partner retires and some amount is paid to him towards his share in the assets, it should be treated as falling under clause (ii) of section 47.
The view taken by the Assessing Officer on this question of taxability of the amount received by the assessee on retirement from the partnership firm is certainly not an impermissible or impossible view rather the view taken by the Assessing Officer is a proper and more logical view as it is fortified by the series of decisions of Hon'ble Supreme Court, Hon'ble High Court as well as of this Tribunal. There is no quarrel on the point that if the Assessing Officer has failed to apply his mind and taken a view which is not permissible under the law then the order will be considered as erroneous so far as prejudicial to the interest of revenue. However, when the Assessing Officer has conducted an enquiry and taken a possible and rather a proper view then the Commissioner is not permitted to exercise the revisionary powers u/s 263 merely on the ground that he does not agree with the view taken by the Assessing Officer or even on the ground that there are divergent view on the issue. - Decided in favour of assessee.
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2014 (12) TMI 1243
Input tax credit - genuineness of purchase - It is stated that unless the tax collected on sales by the selling dealer is remitted to the Government, the set-off of tax paid on purchase from such dealer does not qualify for rebate/input-tax credit - The submission of the learned Additional Government Advocate is that for having found some discrepancies, the notice has been issued under section 39(1) of the Act. In the event, the petitioner furnishes all the documents that could be looked into and the matter could be closed and subsequently, demand would be raised depending upon the correctness of the documents produced by the petitioner. However, the stand of the counsel for the petitioner is that it is not only the purchase of goods but, they have collected the tax at their level which could have been taken note by the Department where they have collected the tax and the same has been remitted to the Government or that could have been taken for reassessment, if there is any suppression or misrepresentation.
Held that:- it is for the respondent-authorities, before passing the order, to call upon the petitioner to submit the documents and consider the said documents produced, give an opportunity of hearing to the petitioner and thereafter, pass appropriate orders in accordance with law. - Petitioner may be given due opportunity to cross-examine the dealers who have filed the returns to ascertain whether there may be suppression at their level.
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2014 (12) TMI 1242
Reopening of assessment - addition based on information received regarding the collation and dissemination of information from Foreign Tax Authorities(U.S. tax authorities) towards transaction carried out with Bridgewater, New Jersey, USA - Held that:- Since the AO’s reopening was based on tangible material received by AO from US tax authorities, it cannot be said that there was mere change of opinion. The CIT(A) upheld the reopening of assessment. We also found that after receipt of information from US tax authorities, the AO compared the information which he had in the record and informed some receipts from US authorities, which were not matching with regard to the names and account of transaction. Thus, it cannot also be said that there was true and correct disclosure by the assessee in the return of income. Accordingly, we do not find any infirmity in the reopening of the assessment u/s.147.
We found that aggregate transaction value of design services provided to the group company were USD 221,223, account copies of break up of the Revenue received from various countries in India and also from other countries were furnished before the AO. While making addition, the AO could not prove that this transaction is not part of the transactions which is shown by the assessee as Revenue which was built to Aker Kvaerner Pharmaceuticals which was on the same address i.e. Bridgewater, New Jersey, USA. We also found that the aggregate transaction value of USD 221,223 with its group company Aker Kvaerner Pharmaceuticals for the year reflected in contract revenue and offered to tax was much higher than the amount of USD 43,592 indicated in the notice. Thus, the aggregate contract revenue reflected by the assessee in its books and already offered to tax is more than the transaction value provided. Accordingly, the addition of USD 43,592 made by the AO is tantamount to double taxation of the very same income. The detailed finding recorded by the CIT(A) at para 4.3 has not been controverted. Accordingly, we do not find any reason to interfere in the order of CIT(A) for deleting the addition of USD 43,592.
Disallowance u/s 14A - Held that:- We found that the CIT(A) while dealing with the issue has observed that assessee invested an amount of ₹ 23,19,77,841/- for earning the exempt income and invested ₹ 22,33,76,732/- in growth funds of mutual funds. Grow funds of the mutual funds are taxable under the Act. The assessee receives the income in the short term or long term capital gains based on the time the assessee keeps its investments. Hence, investment under growth scheme cannot be considered as investment in income which does not form part of the total income, as this income is taxable, the expenditure incurred for it cannot be disallowed as this will not come under purview of sec.14A. Therefore, the CIT(A) directed the AO to exclude the investment from the growth fund while applying the Rule 8D and restricted the disallowance to ₹ 1,47,887/-. From the observation of the CIT(A), we found that the investments in mutual fund with growth scheme have not generated any tax-free dividend income, therefore, the CIT(A) has rightly excluded the same from the total value of investments. Accordingly, we do not find any reason to interfere in the order of the CIT(A)
Accrual of income - Addition on reversal of Income and the expenses of earlier years - CIT(A) deleted the addition - Held that:- We do not find any infirmity in the order of CIT(A) insofar as he has brought to tax income of the prior year and at the very same time directed the AO to allow expenditure of prior period. The detailed finding recorded by CIT(A) has not been controverted. Accordingly, we do not find any reason to interfere in the order of CIT(A)
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2014 (12) TMI 1241
Valuation - determination of amount and time when the consideration was received - Construction of Residential Complex Service - Service tax of ₹ 2,27,94,428/- with interest has been demanded from the appellant on the ground that the amount collected from the buyers towards ‘Undivided Share of Land’ can be taken as consideration attributable to the land owners under the Joint Development Agreement and be subjected to service tax - Held that:- As per Notification No. 36/2010-S.T. dated 28.6.2010, in respect of new services introduced by Budget 2010, if value towards any service has been received before 1.7.2010, service tax on such value is exempted.
In this case, the agreement was entered into on 26.4.2010 and on that date the land was handed over, it can be said that consideration of construction of residential complex was received by the appellant on that date.
We also find that the submissions of learned counsel that no monetary consideration was agreed with the land owner and the appellant as per the JDA and therefore, consideration is not ascertainable has also some force. Once consideration is not ascertainable, valuation has to be done as per Section 67 read with Service Tax (Determination of Valuation) Rules, 2006. However, only with effect from 1.7.2012, Rule 3 covered cases where ‘value is not ascertainable’ and prior to this period, it only covered cases ‘where such value is not wholly or partly consisting of money’. - Prima facie case is in favor of assessee - stay granted.
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2014 (12) TMI 1240
Smuggling of wrist watches, micro SD cards, button cell etc. - Mis-declaration of description and value - Rejection of declared value - Confiscation in lieu of redemption fine and imposition of penalty - Appellant contended that post import was not covered under the section 111(l) & (m) of the Customs Act - Held that:- a gross mis-declaration was found when goods were smuggled at foreign post office from kowloon, Hongkong. Documents filed were not signed. Items declared were Wrist watches, items actually found was Micro SD Cards, Button Cell, watches straps, Sony Electric Part CCTV. Values were grossly under declared. All these goods were smuggled in the guise of postal import. It is settled law that fraud nullifier every things as held by Honble Supreme Court in the case of M/s Canded Enterprises. No relief on technical ground could be claimed once smuggling has clearly been manifested and admitted. Commissioner (Appeals) has already taken liberal view and has reduced redemption fine and penalty. Therefore, no interference in the order passed by Commissioner is warranted. - Decided against the appellant
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2014 (12) TMI 1239
Availment of Cenvat credit on angles, beams, channels etc. as capital goods - Held that:- The show cause notice is issued in the month of October, 2011, demanding to recover Cenvat credit which was lastly taken on 31-8-2009, is definitely time barred as it is undisputed that the appellant has been filing the regular returns with the authorities and were availing the Cenvat credit on the angles, beams, channels etc. There is also no dispute as to the duty paid nature of the goods.
Ld. Counsel was correct in bringing to our notice that the judgment of Hon’ble High Court of Gujarat in the case of N.R. Agarwal Industries (2014 (5) TMI 603 - GUJARAT HIGH COURT) squarely covers the issue in favour of the appellant.
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2014 (12) TMI 1238
Rate of depreciation - 80% or 15% - Renewable energy device - nature of power evacuation infrastructure attached to a wind mill - Held that:- See order of even date passed in Commissioner of Income Tax -I, Ludhiana Vs. M/s Eastman Impex.[ 2015 (1) TMI 436 - PUNJAB & HARYANA HIGH COURT]
A wind mill, which is admittedly a source of renewable energy, cannot possibly function without power evacuation infrastructure and, therefore, to hold that it is not integral to a wind mill would be travestying of facts and justice. It would be necessary to clarify that we are not dealing with an ordinary device, where transmission lines and electricity generation devices are involved but a wind mill, which obviously cannot supply electricity without power evacuation infrastructure as integral to its very functioning and user. ITAT was justified in law, in upholding the order of the Ld. CIT(A) wherein disallowance of higher depreciation @ 80% on account of expenditure on installation of electrical line for power transmission and metering treated as not part of wind mill by the A.O., was deleted by the CIT(A)- Decided against Revenue
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2014 (12) TMI 1237
Sale of shares - Short term capital gain or business income - Held that:- It is an admitted fact that around 90% of the total gains is from sale of the shares of FCS Softwares Solutions Ltd.
It is also an undisputed fact that the assessee had applied in the shares of the IPO of the said company from borrowed capital. Merely because the shares were applied through borrowed capital cannot be a ground for treating the capital gains as business income. The IPO funding availed by the assessee was to get more allotment but the fact of the matter is that the assessee was an investor and the sole intention of applying in the shares through IPO was to get higher allotment of shares. We also find that there are no repetitive purchase and sale of the same script which means that there is no churning of shares. The total number of days utilized by the assessee for investment in shares is 32 days. Considering all these facts in totality, we do not find any reason to treat the assessee as a trader. We, therefore set aside the findings of the Ld. CIT(A) and direct the AO to treat the Short Term Capital Gain on sale of shares as declared by the assessee. - Decided in favour of assessee.
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