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Showing 181 to 200 of 1387 Records
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2016 (2) TMI 1213
Disallowance u/s 14A r.w. Rule 8D - sufficiency of own funds - Held that:- We find it is not in dispute that assessee has not earned any dividend income or any kind of exempt income from the investments made. The Hon’ble Delhi High Court in the case of Cheminvest Ltd [2015 (9) TMI 238 - DELHI HIGH COURT] after discussing the entire law on this point including the decision of Hon’ble Supreme Court in the case of CIT vs Rajendra Prasad Moody [1978 (10) TMI 133 - SUPREME COURT].
Thus we hold that, no disallowance u/s 14A is called for, once there is no exempt income received or receivable by the assessee during the relevant previous year. Accordingly, the ground raised by the assessee is treated as allowed.
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2016 (2) TMI 1212
Reopening of assessment - correctness of the "Reasons to believe" - addition on account of notional foreign exchange gain - Held that:- There was full discloser on the part of the assessee in accounts filed with the return of income. The AO recorded the ‘Reasons’ on the basis of information disclosed by the assessee in his return, accounts and audit report. Thus, the reopening is clearly barred by limitation and beyond the provisions of law in view of aforesaid proviso to section 147.
no fresh tangible material has come into the possession of the AO, at the time of the recording of the ‘Reasons’. It is settled law that in absence of a fresh tangible material coming into the possession of the AO, no belief can be formed about escapement of income. It is further noted by us that ‘Reasons’ have been recorded on the ground that foreign exchange fluctuation gain was taxable on notional basis.
The belief of escapement of income is without any legal basis the AO has not even analysed the facts properly before recording the ‘Reasons’. It has not been mentioned in the ‘Reasons’ whether the impugned foreign exchange fluctuation gain, sought to be taxed on notional basis, was on account of revenue or capital transactions. It could be brought to tax as income, if at all it was feasible under the law, only when the resultant gain was on account of revenue transactions. If underlying transactions leading to foreign exchange fluctuation gain were on capital account, then it could not be treated as income. Thus, in our considered view the impugned ‘Reasons’ are factually and legally invalid in the eye of law - Decided in favour of assessee
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2016 (2) TMI 1211
Reopening of assessment - as per the lease agreement there does not exist any building on the land leased out - Held that:- As per the letters of 05.09.2015 and 10.11.2015 of Lafarge India Pvt. Ltd., (erstwhile Larson and Toubro Limited, the tenant of the assessee) and the assessee’s AO, it now stands admitted by the assessee’s tenant that there does exist a building on the land in question and thus, it is this building alongwith the land, which was leased out to the said tenant by the assessee, though the lease agreement was qua the land. The building is used for cement storage as per mutual understanding. M/s. Lafarge India Pvt. Limited has also admitted that the photographs of the building are correct.
Since these documents and photographs go to the root of the dispute, they are necessary to be taken into consideration. Accordingly, these documents are admitted in evidence. Now, since the orders of the taxing authorities found as their basis, the fact that as per lease agreement, there was no building in existence on the land and the erstwhile M/s. Larson and Toubro Limited, now, M/s. Lafarge India Pvt. Limited, have admitted of the building existing on the land in question, we remit this matter to the file of the AO to be decided afresh - Decided in favour of assessee for statistical purposes.
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2016 (2) TMI 1210
Correct head of income - bogus LTCG - income from sale of shares - income from other sources OR long term capital gains - Held that:- In the case of the assessee as well as in the case of Jagdish H. Shah(2012 (9) TMI 1154 - ITAT MUMBAI) the shares were purchased from the same broker namely DPS Shares and Securities Pvt. Ltd.
AO carried out a verification exercise which involved recording of statement of one Shri Raj Kumar Masalia, Principal Officer of DPS Shares & Securities Ltd.; similar action was taken in the case of Jagdish H. Shah (supra) also. It is quite clear that the stand of the Revenue as well as the assessee in the present case is on similar footing to their respective stands in the case of Jagdish H. Shah (supra).
Having regard to the aforesaid similarities, which are not controverted by the Revenue, we deem it fit and proper to rely upon the reasoning taken by the Co-ordinate Bench in the case of Jagdish H. Shah(supra) and hold that the income tax authorities have erred in treating the sale consideration on the sale of shares of Robinson Worldwide Trade Ltd. as an income from undisclosed sources - decided in favour of assessee.
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2016 (2) TMI 1209
Principles of natural justice - It is the case of the petitioner that the first respondent even without considering the certificates produced by the petitioner has passed the impugned order - Held that:- The impugned order dated 08.07.2015 is set aside and the matter is remanded back to the first respondent for fresh consideration - The first respondent is directed to consider the certificates produced by the petitioner and decide the matter afresh after giving an opportunity of personal hearing to the petitioner - petition allowed by way of remand.
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2016 (2) TMI 1208
Assessment u/s 153C - non recording of reasons - Held that:- Proceedings initiated under S.153C of the Act for the two years deserve to be quashed in as much as the concerned Assessing Officer has admittedly not recorded any satisfaction before forwarding the files to the Assessing Officer in whose charge, the assessee herein is assessed. The assessments made under S.153C of the Act are hereby quashed. In this view of the matter, the other grounds urged by the Revenue as well as the assessee have no legs stand, since the assessments for both the years are quashed. - decided in favour of assessee.
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2016 (2) TMI 1207
Assessment u/s.153A - what is the scope of assessment or reassessment of total income under section 153A(1)(b) and the first proviso? - Held that:- When the original assessment for the assessment years 2005-06 & 2006-2007 has already been completed or time limit to complete the assessment has been lapsed and no incriminating material found during search operation, the assessment u/s.153A to be made only as per the original assessment which was made u/s.143(1) or u/s.143(3). It is an admitted fact that in these assessment years there was no incriminating material discovered in the course of search action. There was also no allegation that the assessee has failed to produce books of accounts and documents in the course of original assessment. Being so, the assessments for the assessment years 2005-06 and 2006-07 are bad in law. This also finds support from the decision of Special Bench in the case of All Cargo Global Logistics Ltd. v. Dy. CIT [2012 (7) TMI 222 - ITAT MUMBAI(SB)] - decided in favour of assessee.
Addition invoking the provisions of sec.40A(3) - cash credits in excess of ₹ 20,000/- otherwise than by cross cheque and demand draft - assessee is in the business of land aggregation - Held that:- The payment between the assessee and the vendors which are reflected in the sale deed executed by the vendors in favour of the assessee for which the assessee made a payment in excess of ₹ 20,000/- otherwise by issue of cheque or demand draft, these payments cannot be considered for invoking the provisions of sec.40A(3). To that extent the assessee gets relief, over and above relief granted in earlier para 10.1, as the exceptions contained in Rule 6DD are not exhaustive and that the said rule must be interpreted liberally as held by the Rajasthan High Court in the case of Smt. Harshila Chordia v. ITO [2006 (11) TMI 117 - RAJASTHAN HIGH COURT] - Where the payment made by the assessee to the vendors in a village or town, which on the date of such payment is not served by any bank, to any person, who ordinarily resides, or is carrying on his business therein that village or town and that payment should be excluded by invoking the provisions of sec.40A(3) in view of Rule 6DD(j). See case of Dy. CIT v. Abhinandan Housing (P.) Ltd.[2014 (12) TMI 251 - ITAT HYDERABAD] and Sahitya Housing (P.) Ltd. v. Dy. CIT [2014 (2) TMI 811 - ITAT HYDERABAD]. Accordingly, this ground of appeal of the assessee is partly allowed with direction to A.O. to decide afresh.
Addition towards inflated purchase cost of land - main contention of the ld. AR is that notice for enhancement was given only to enhance the purchase cost of land at ₹ 5,07,95,250/- however, additional income was made on the higher side at ₹ 21,77,33,047/- - Held that:- to the extent of confirmation filed by the respective intermediaries who transacted the purchase of land, cannot be considered for enhancement in the hands of the assessee. In respect of other agents who have not appeared before the AO and the assessee has filed affidavits from them, which are not examined by the AO, the same are required to be examined by the Assessing Officer and without examination, it cannot be rejected as held by the Supreme Court in the case of Mehta Parikh & Co. v. CIT [1956 (5) TMI 4 - SUPREME COURT] - the amounts considered as receipts in the hands of recipients, cannot be doubted in the hands of the assessee so as to enhance the cost of land as bogus. Accordingly, with this observation, we direct the Assessing Officer only to consider the payments for enhancement which are not confirmed/disclosed by the recipients in their return of income. The enhancement of income for the assessment years 2005-06 and 2006-07 does not survive in view of quashing of assessment for these two assessment years. Thus, the assessee gets relief out of ₹ 5,07,95,250/- as above and the balance amount only to be considered as directed above
Addition invoking the provisions of sec. 40(a)(ia) / 40A(2)(b) / 37 - technical/consultancy paid to assessee's group concerns stating that the following payments have been made without compensating service being received - AO held that the payments are unreasonable and excessive in nature and hence the provisions of sec.40A(2)(b) are attracted - Held that:- The payment is not outstanding at the end of the close of the financial year and therefore, the disallowance cannot be warranted as held in the case of N. Palanivelu v. ITO [2015 (10) TMI 1415 - ITAT CHENNAI].
On the payment made to Santha Build tech India Pvt. Ltd., the A.O. also invoked the provisions of sec.40A(2)(b) of the Act. The CIT(Appeals) deleted this addition by observing that the A.O. has not made out a case that the payments made to group concerns are excessive. Hence, he observed that application of sec.40A(2)(b) of the Act is not correct. We do not find any infirmity in the order of the CIT(Appeals) on the deletion of the addition made u/s.40A(2)(b)
Disallowance of expenses incurred relating to registration of the property - Held that:- As it is clearly mentioned that the purchaser would bear the cost of registration and therefore, the assessee is not supposed to incur the abovesaid expenditure, if the land is registered in favour of other parties. Further, the expenses incurred for facilitating registration and these expenses are reimbursed by principal and shown as income of the assessee, then there cannot be any further addition on this count. Otherwise, it amounts to double addition. However, if the assessee purchases the land in its own name, then the expenditure incurred by the assessee should be part of the cost of land, which is the value of closing stock and due credit to be given to the assessee. With this observation, we remit this issue to the file of the A.O to examine, whether the expenditure is incurred by the assessee for registration and whether the assessee is purchased the land in its own name and decide the issue accordingly. This ground of appeal is allowed for statistical purposes.
Disallowance on capital expenditure - Held that:- This expenditure was disallowed on the reason that they are capital in nature and the assessee has not produced any details for the same. In our opinion, neither the AO nor the CIT(Appeals) have gone through the nature of expenditure specifically, Therefore, it is appropriate to remit the issue to the file of the AO for fresh consideration and the assessee is directed to place necessary bills and vouchers/receipts to show that this expenditure is not in the nature of capital and this expenditure was incurred wholly and exclusively for the business expediency.
Enhancing the income towards difference between income admitted and income returned - Held that:- A.R pleaded before us that an opportunity be given to reconcile the differences. Considering the request, we remit this issue to the Assessing Officer with a direction to reconsider the issue afresh after giving an opportunity of hearing to the assessee.
Levy of interest u/s.234A & 234B - Held that:- The interest u/s 234A is chargeable from the date of expiry of the notice period given u/s 153A to the date of completing the assessment u/s 143(3) r.w.s 153A as held by the Tribunal in the case of Asstt. CIT v. V.N. Devadoss [2013 (2) TMI 871 - ITAT CHENNAI]. The interest u/s 234B is to be levied only on the additional tax levied on the enhanced income determined u/s 143(3) r.w.s 153A. Therefore, the period of charging of interest should be from the date of determination of income u/s 143(3) or 143(3) to the determination of enhanced income u/s 143(3) r.w.s 153A of the Act.
Addition u/s 40A(2)(b) - applicable to the technical/consultancy charges paid to the group concern on the ground that the AO had made out a clear case for the same - Held that:- CIT(Appeals) deleted this addition by observing that the A.O. has not made out a case that the payments made to group concerns are excessive. Hence, he observed that application of sec.40A(2)(b) of the Act is not correct while disposing of the assessee's appeal. We do not find any infirmity in the order of the CIT(Appeals) on the deletion of the addition made u/s.40A(2)(b).
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2016 (2) TMI 1206
Levy of penalty u/s 271E and 271D - non recording of satisfaction - Held that:- It is imperative for satisfaction to be recorded in the assessment order for initiation of penalty u/s 271E of the Act. Proceedings u/s 271D of the IT Act, also in our opinion will stand on the very same footing. If satisfaction has to be recorded with respect to proceedings u/s 271E of the IT Act, similar satisfaction has to be recorded for the proceedings u/s 271D of the IT Act, 1961 also. These have not been done in the case before us. Accordingly, by virtue of judgment of the Hon’ble Apex Court in the case of CIT Vs Jai Laxmi Rice Mills [2015 (11) TMI 1453 - SUPREME COURT] we are of the opinion, that the levy of penalty u/s 271D & 271E of the IT Act, 1961 cannot survive. Such orders are set aside and the appeals of the assessee are allowed
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2016 (2) TMI 1205
Penalty u/sec. 271(1)(c) - non-deduction of tds - disallowance of commission/professional charges and accountancy charges u/s 40(a)(ia) for default of non-payment of TDS - Held that:- As consider the dicta the preposition rendered by ITAT Delhi SMC-1 Bench in the case of M/s Syndicate Labels Vs. ACIT [2015 (10) TMI 2745 - ITAT DELHI] it is ample clear that in a situation when disallowance has been made under section 40(a)(ia) for non deduction of tax at source from payments made or credited to the respective payees and the assessee made a proper disclosure about the expenses claimed by it as deduction which was neither bogus nor otherwise non deductible then penalty under section 271(1)(c) of the Act is not validly imposable - AO is directed to delete the impugned penalty imposed under section 271(1)(c) - decided in favour of assessee.
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2016 (2) TMI 1204
Bogus purchases - purchases from grey market - Held that:- AO without rejecting the books of account of the assessee for the year under consideration has observed that the genuineness of the purchases is not established and has made the addition whereas the Tribunal has proceeded on the footing that the AO has recognised the purchases made by the assessee and the question is not of quantitative details. Tribunal has also observed that the AO has accepted the sales made by the assessee and if that be so, it would indicate that the assessee must have made purchases, otherwise it would not be possible for the assessee to make the sales. Thus, even as regards the basic facts, the Tribunal has proceeded on an erroneous footing.
As regards the cheque issued in favour of A.K. Textile which is withdrawn by the proprietor of A.K. Textile named "Aaisha" a perusal of the table at paragraph 4 of the assessment order shows that an amount of ₹ 50140/- has been withdrawn in cash in respect of cheque No.446893 and an amount of ₹ 52451/- has been withdrawn in cash in respect of cheque No.446894 and the assessee in his reply has clearly admitted that payment was made in cash and has stated that 20% thereof be disallowed. However, the same has been totally disregarded by the AO as well as the Tribunal.
The court is of the view that the Tribunal while passing the impugned order has lost sight of the directions contained in its previous order and has recorded findings which are not in consonance with the record of the case and are, therefore, perverse. The impugned order of the Tribunal which suffers from various infirmities as noted hereinabove, therefore, cannot be sustained. - Decided against the revenue.
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2016 (2) TMI 1203
Allowance of MAT credit u/s.115JAA - Surcharge and Education cess included in the MAT credit - Held that:- As decided in WYETH LIMITED VERSUS ASSISTANT COMMISSIONER OF INCOME TAX, LARGE TAXPAYERS UNIT, MUMBAI [2015 (1) TMI 1299 - ITAT MUMBAI] the MAT as well as normal tax before allowing the MAT credit has to be taken on parity either exclusion of surcharge and education cess or inclusive of surcharge and education cess or inclusive of surcharge and education cess. Accordingly we set aside the orders of authorities below and direct the Assessing Officer to allow the MAT credit against the tax liability payable before surcharge and education cess or alternatively the amount of MAT credit should also be inclusive of surcharge and education cess and then allow the credit against the tax payable inclusive of surcharge and education cess - decided against revenue.
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2016 (2) TMI 1202
TDS u/s 195 - payments to non-residents under the heads training fee,service fee and royalty payment - PE in India - scope of amendment of act - Held that:- The payments in question are covered by the provisions of section 9, that the non residents had no PE in India, that the assessee was not liable to deduct tax at source for these payments. We are of the opinion that his order does not suffer from any legal infirmity. Here, we would also like to mention that the issue of taxability of these three payments had arisen because of the retrospective amendment to section.
The assessee had managed its affairs as per the provisions of existing law and at the time of filing of return, it had not to deduct the tax. The settled principle of jurisprudence stipulates that impossible acts cannot be expected to be performed by an assessee. In the case of IDBI Capital Market Services Ltd.(2015 (5) TMI 1169 - ITAT MUMBAI)the Tribunal has, in almost similar circumstances, held that if at the time of filing of its return the assessee is not required to deducted tax as per the existing provisions and later on because of the retrospective amendment or judgment of a court liability to deduct Tax at Source arises, the assessee cannot be held responsible for not deducting of tax at the time of filing of return. - Decided against revenue
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2016 (2) TMI 1201
The Supreme Court of India ordered SLP (Crl.) No.9528 and 9945 of 2015 and W.P. No.189 of 2015 to be listed on 12.04.2016 for final disposal. The interim order remains in force until the next hearing.
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2016 (2) TMI 1200
Addition u/s 14A - Held that:- The undisputed facts of the case are that the assessee has not received any tax-free income during the year. Neither the learned CIT (Appeals) nor the learned D.R. during the course of hearing before us has controverted this fact. In this factual situation, the I.T.A.T., Chandigarh Bench in M/s BCL Industries & Infrastructures Ltd. [2016 (1) TMI 1250 - ITAT CHANDIGARH] No disallowance under section 14A of the Act can be made if there is no taxable income earned during the year.
Assessee has not been able to demonstrate before us with the help of documents that no tax free income has actually been earned during year. In view of this, we think it proper to send the case back to the file of the Assessing Officer. If there is no tax free income during the year, the Assessing Officer is directed not to make disallowance under section 14A of the Act. Otherwise, he has to decide the case as per law. - Decided in favour of assessee.
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2016 (2) TMI 1199
Interest on delayed refund - Held that:- There remains no doubt that the amount of refund was paid to the appellant on 1-7-2014, and therefore, there is no ambiguity with regard to the liability of interest which has to be paid upto the date of refund as per Section 11BB of Central Excise Act, 1944 - the appellant is entitled to interest on the amount of refund paid on 1-7-2014 for the period from 13-4-2012 to 1-7-2014 - appeal allowed.
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2016 (2) TMI 1198
Transfer u/s 127 - jurisdiction of AO - Held that:- Merely on the basis of PAN data base, the jurisdiction of AO cannot be decided. In the present case admittedly the assessee had filed the return giving Gurgaon address and, therefore, on the basis of territorial area, the jurisdiction lay with ACIT Circle 1(1), Gurgaon. This jurisdiction could not be transferred to DCIT Circle 47(1), New Delhi without the order being passed u/s 127, as per which the Commissioner has to provide a reasonable opportunity of being heard to the assessee and record his reasons before the case is transferred to the jurisdiction of another Commissioner, We, therefore, are in agreement with the findings of ld. CIT(A) that the assessment order passed by AO of Circle 47(1), New Delhi was without jurisdiction, hence the order is bad in law. Ground no. 1 is dismissed.
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2016 (2) TMI 1197
TPA - comparable selection criteria - Addition of 3% markup additionally made over and above the comparative margin arrived - Held that:- The assessee is a Private Limited Company incorporated in India and is 100% subsidiary of Tamasek Holdings Private Limited, Singapore (THPL). Assessee vide agreement dated 1st April 2004 with THPL agreed to provide Investment Advisory Services. While rendering these services, the assessee provides investment recommendation in India to THPL, whereas the later retains the right of the use of investment advice or information. Hence the advisory services provided by the assessee were in the nature of non binding advisory services for which assessee was compensated with cost plus markup.
The profitability derived from uncontrolled party engaged in similar line of business activity under similar circumstances, is the measure of arm's length results. If cost or sale is used as the base, then profitability depends largely upon the functions performed, therefore, in such a situation closer functionality is required preferably to an appropriate business segment or transaction.
Addition of 3% markup additionally made over and above the comparative margin arrived - additional mark-up applied by the TPO is without any FAR analysis or without any benchmarking exercise with any comparables and more importantly without any analysis of assessee's own facts. The assessee is providing non-binding investment advisory services to its AE and such services as highlighted by Ld. Counsel include; identifying and analyzing potential investment opportunities, evaluating and making recommendations to THPL with respect to specified investments. The monitoring functions performed by the assessee are part and parcel of the portfolio advisory services rendered by it because, the activities carried out by the assessee while undertaking portfolio monitoring activities include analysis of the latest development in the industry, ongoing performance of the industries and providing necessary information to its AE from time to time. This aspect has been noted by the ITAT, Mumbai Bench in the case of Carlyle India Advisors (P.) Ltd. (2013 (4) TMI 486 - BOMBAY HIGH COURT) and in other decisions cited above by the Ld. Counsel. Thus, we hold that no such addition or adjustment on account of extra markup can be made. Accordingly, we direct to delete the addition.
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2016 (2) TMI 1196
ADMIT the following substantial question of law arises for consideration:
“Whether the Income Tax Appellate Tribunal has correctly appreciated the facts on record so as to hold that an amount of ₹ 37,22,156/- represented goodwill and thereby allowing depreciation thereon?”
For proposed question No.2, as can be seen from the impugned order, the Tribunal has merely set aside the issue and restored the matter to the file of the Assessing Officer to verify the claim of the assessee that it did not claim any income to be exempt from payment of income tax. No infirmity can be found in the approach adopted by the Tribunal warranting interference. No question of law can be stated to arise qua the said issue. The said ground of appeal is, therefore, rejected.
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2016 (2) TMI 1195
Manner in which the income earned by the assessee is to be treated in the subsequent assessment years - Held that:- We find ourselves in agreement with the learned counsel that the CIT(A) has indeed made certain observations which pre-empt the case of the assessee for the subsequent assessment years as well. We, therefore, make it clear that the observations made by the CIT(A), so far as period outside the assessment year 2009-10 is concerned, are devoid of any basis and stand vacated. A fresh call on merits will have to be taken for the assessment years, uninfluenced by the stand taken by the CIT(A) in the assessment year 2009-10, and the observations in this order, to that extent, stand expunged. Learned counsel, in this background, does not press the ground of appeal on merits and he is content with the unwarranted observations of the CIT(A) being held to be devoid of legal force.
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2016 (2) TMI 1194
The Supreme Court dismissed the special leave petition after condoning the delay. (2016 (2) TMI 1194 - SC)
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