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Showing 181 to 200 of 886 Records
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2013 (3) TMI 712
The Appellate Tribunal ITAT Mumbai dismissed the Miscellaneous Applications filed by the assessee regarding the deduction of interest under section 80HHC of the Income Tax Act, citing decisions of the jurisdictional High Court and the Supreme Court. The applications were dismissed as the question of law was already admitted by the Hon'ble High Court. The order was pronounced on 15th March, 2013.
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2013 (3) TMI 711
The Gujarat High Court admitted a tax appeal to consider whether certain lands are considered 'assets' under the Wealth-tax Act, 1957 for the assessment year 2000-2001. A civil application was disposed of as the applicant did not press it at that stage.
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2013 (3) TMI 710
Issues involved: The issue in this case revolves around the eligibility of the assessee for deduction u/s. 80IA of the Income-tax Act, 1961 in relation to a new power plant being recognized as a new industrial undertaking.
Summary:
Issue 1: Eligibility for deduction u/s. 80IA of the Act
The assessee filed a Miscellaneous Application (MA) contending that the Tribunal had dismissed the issue raised by the assessee regarding eligibility for deduction u/s. 80IA of the Act in respect of a new power plant. The Tribunal had based its decision on a previous order from AY 2001-02. The assessee pointed out a similar mistake in the Tribunal's order for AY 2001-02, which led to the Tribunal recalling its decision on the issue in that year. During the hearing, the AR of the assessee reiterated the contentions and submitted that the Tribunal's orders should be recalled for deciding the issue afresh. The Revenue, represented by the SRDR, argued that there was no mistake in the Tribunal's order.
Decision:
After considering the submissions, the Tribunal found that the only basis for deciding against the assessee on the issue in the present year was the Tribunal's order for AY 2001-02. Since the decision on this issue in AY 2001-02 had been recalled for a fresh decision, the Tribunal decided that the issue in the present year also needed to be decided afresh following the fresh decision in AY 2001-02. Consequently, the Tribunal recalled its order in respect of ground No.3 and directed the Registry to schedule the appeal for hearing to decide the issue afresh. As a result, the MA of the assessee was allowed.
Conclusion:
The Tribunal's decision highlights the importance of consistent application of legal principles and the need to revisit decisions when errors are identified, ensuring fair treatment for the assessee in matters of tax deductions u/s. 80IA of the Income-tax Act, 1961.
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2013 (3) TMI 709
The Supreme Court dismissed the special leave petition and clarified that the Company Judge should decide the Company Petition without being influenced by previous observations made by the Division Bench.
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2013 (3) TMI 708
Issues Involved:
1. Taxation of commission earned on hawala entries.
2. Taxation of unaccounted sales.
3. Addition on account of cash credit u/s 68.
4. Deletion of addition on account of unexplained cash credit.
5. Deletion of addition on account of cash withdrawals by family members.
6. Disallowance of interest on car loan and telephone expenses.
7. Taxation of commission income.
8. Addition of cash credit u/s 68.
Summary:
I.T.A. No.2978/M/2007 (AY:1999-2000)
1. Taxation of Commission Earned on Hawala Entries:
The assessee contested the rate of commission taxed by the AO at 4% on Rs. 10,39,48,162/- instead of the claimed 1.25%. The Tribunal directed the AO to adopt a net commission rate of 3.02% after considering hidden expenses, reducing the taxable income accordingly.
2. Taxation of Unaccounted Sales:
The Tribunal set aside the issue to the AO for fresh examination after admitting additional evidence, as the CIT (A) had previously rejected the evidence due to procedural lapses.
3. Addition on Account of Cash Credit u/s 68:
Similar to the unaccounted sales, this issue was also set aside to the AO for fresh examination after admitting additional evidence regarding loans from Minalshree Chemicals Private Limited.
I.T.A. No.2427/M/2007 (AY: 1999-2000) (By Revenue)
4. Deletion of Addition on Account of Unexplained Cash Credit:
The CIT (A) deleted the addition of Rs. 15,32,800/- as the origin of cash was explained by the assessee. The Tribunal upheld this decision, confirming that the provisions of section 68 were not applicable.
5. Deletion of Addition on Account of Cash Withdrawals by Family Members:
The CIT (A) deleted the addition of Rs. 13,57,427/- as the source of cash withdrawals was explained. The Tribunal upheld this decision, confirming that the provisions of section 68 were not applicable.
I.T.A. No.1947/M/2007 (AY:2000-2001) (By Assessee)
6. Disallowance of Interest on Car Loan and Telephone Expenses:
The assessee did not press these grounds, and they were dismissed as not pressed.
7. Taxation of Commission Income:
The Tribunal applied the same reasoning as in the AY 1999-2000, directing the AO to adopt a net commission rate of 3.02% for AY 2000-2001.
8. Addition of Cash Credit u/s 68:
The Tribunal set aside the issue to the AO for fresh examination after admitting additional evidence regarding loans from Minalshree Chemicals Private Limited.
Conclusion:
The appeals were partly allowed for statistical purposes, with directions for fresh examination of certain issues by the AO after admitting additional evidence. The Tribunal provided specific instructions on the commission rate to be applied for the relevant assessment years.
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2013 (3) TMI 707
Issues Involved:
1. Penalty u/s 271(1)(c) for disallowance of deduction claimed u/s 80IB.
2. Interpretation of Section 80AC and its application to the case.
3. Whether the claim of deduction u/s 80IB despite late filing of return constitutes furnishing inaccurate particulars of income.
Summary:
Issue 1: Penalty u/s 271(1)(c) for disallowance of deduction claimed u/s 80IB
The Revenue filed appeals against the orders of the Commissioner of Income-tax (Appeals) which deleted the penalties imposed u/s 271(1)(c) of the Income-tax Act, 1961. The Assessing Officer had imposed penalties on the assessee for furnishing inaccurate particulars of income by claiming deductions u/s 80IB, which were disallowed due to late filing of returns.
Issue 2: Interpretation of Section 80AC and its application to the case
The Assessing Officer disallowed the deductions claimed u/s 80IB for the assessment years 2006-07 and 2007-08 because the returns were filed beyond the due date specified u/s 139(1), as required by Section 80AC. The assessee could not justify the delay in filing the returns.
Issue 3: Whether the claim of deduction u/s 80IB despite late filing of return constitutes furnishing inaccurate particulars of income
The CIT(A) and ITAT held that merely making a claim which is not admissible does not attract penalty u/s 271(1)(c). The assessee had disclosed all relevant particulars and the claim was made under a bona fide belief. The penalty provisions cannot be invoked merely because the claim was ultimately found to be legally unacceptable. The ITAT cited the Supreme Court's decision in CIT Vs. Reliance Petro Products Pvt. Ltd. (322 ITR 158) which held that making an incorrect claim in law does not amount to furnishing inaccurate particulars of income.
Conclusion:
The ITAT upheld the CIT(A)'s order deleting the penalties, stating that the assessee had not furnished inaccurate particulars of income and the claim was made under a bona fide belief. The appeals filed by the Revenue were dismissed.
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2013 (3) TMI 706
Issues involved: The eligibility for claiming benefit u/s section 11 of the Income Tax Act and the requirement of maintaining separate Books of account for claiming benefit u/s 10(23C)(via), and the allowability of the claim of depreciation.
Eligibility for claiming benefit u/s section 11:
The Appellate Tribunal ITAT Mumbai addressed the issue of eligibility for claiming the benefit u/s section 11 of the Income Tax Act. The assessee, a charitable trust managing 'Saifee Hospital,' had its exemption claim under section 11 disallowed by the AO due to amendments in the trust deed. However, the Ld.CIT(A) allowed the claim, stating that the object clauses in the original and amended trust deed were identical. The Tribunal upheld the Ld.CIT(A)'s decision, emphasizing that the trust had valid registration u/s 12A and 10(23C)(iv)(a) of the Act, and the amendments made did not change the main object of the trust. The Tribunal also noted that the trust had complied with informing the CIT about the changes, even though there was no specific time limit for such compliance. The Tribunal rejected the AO's argument that the trust was not eligible for exemption u/s 10(23C)(vi) or u/s 11, as the trust had applied over 85% of its income for charitable purposes. Therefore, the Tribunal upheld the eligibility of the trust to claim the benefit of section 11.
Requirement of maintaining separate Books of account:
The Tribunal also deliberated on the requirement of maintaining separate Books of account for claiming the benefit u/s 10(23C)(via). The AO treated the activities of running Cafeteria, Gymnasium, and Pharmacy in the hospital premises as business activities due to the lack of separate books of account. However, the Ld.CIT(A) held that these activities were integral to the trust's main charitable activity and not independent business activities. The Tribunal agreed with the Ld.CIT(A), stating that these departments were directly related to the trust's main object and necessary for its fulfillment. Citing the jurisdictional High Court's decision in Baun Foundation Trust Vs CIT, the Tribunal emphasized that incidental activities like running a chemist shop did not change the charitable nature of the trust. Therefore, the Tribunal dismissed the ground related to the requirement of maintaining separate Books of account for claiming the benefit u/s 10(23C)(via).
Allowability of claim of depreciation:
Regarding the claim of depreciation on fixed assets purchased from donations received in earlier years, the AO disallowed the claim, citing potential double deduction. However, the Ld.CIT(A) directed the AO to allow the claim, considering that the trust had incurred costs for asset acquisition and met the conditions for depreciation. The Tribunal noted that the donations received were exempt income in previous years under sections 11 to 13 of the Act. The Tribunal rejected the argument of double deduction, stating that the claim of depreciation on assets acquired through donations did not amount to double deduction. Relying on judicial precedents, including the decision in Institute of Bombay Personnel Selection (IBPS), the Tribunal upheld the Ld.CIT(A)'s decision to allow the claim of depreciation. Consequently, the Tribunal dismissed the issue related to the allowability of the claim of depreciation.
In conclusion, the Appellate Tribunal ITAT Mumbai dismissed the appeal filed by the Revenue, upholding the eligibility of the trust to claim the benefit u/s section 11, the decision on maintaining separate Books of account for claiming benefit u/s 10(23C)(via), and the allowability of the claim of depreciation on fixed assets purchased from donations.
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2013 (3) TMI 705
Issues involved:
The judgment involves the following issues:
A. Granting exemption u/s.10AA of the Income Tax Act to the assessee regarding manufacturing jewelry in SEZ unit.
B. Granting exemption u/s.10AA based on separate assessments and the principle of res judicata.
C. Deleting the addition made on account of unexplained partners' capital.
Issue A: Granting exemption u/s.10AA for manufacturing jewelry in SEZ unit:
The Assessing Officer rejected the deduction claim of the assessee amounting to &8377; 3,87,83,095 in the return filed for the A.Y 2008-09, stating the inability to manufacture jewelry in the SEZ unit. The CIT [A] concurred with the Assessing Officer. However, the Tribunal allowed the claim of the assessee after detailed examination of purchase bills, plant, machinery, and other details. The Tribunal found no valid basis to doubt the purchase of machinery or the readiness of the unit for production. It concluded that the assessee's claim under Section 10AA was allowable, as per the facts and reasons presented.
Issue B: Granting exemption u/s.10AA based on separate assessments and res judicata:
The Tribunal noted that the grant of exemption in previous or subsequent years is not the sole ground for granting exemption u/s.10AA in the year under consideration. It found Question 'B' to be more argumentative and not raising any substantial question of law. Therefore, it rejected this question as it did not present any legal issue for further consideration.
Issue C: Deleting addition on account of unexplained partners' capital:
The Tribunal relied on the decision of the Court in the case of CIT v. Pankaj Dyestuff Industries, where it was held that the issue of unexplained partners' capital is covered. Consequently, the Tax Appeal was dismissed based on this precedent. The Tribunal emphasized that the firm is a separate entity and has to explain its sources of funds, indicating that the addition can be made only at the hands of the partner, not the firm itself.
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2013 (3) TMI 704
Penalty under section 271(1)(c) - Tribunal deleted the penalty on the ground that in quantum appeal, the disallowance made by the Assessing Officer has been deleted - revenue has filed appeal before this Court, wherein the revenue has sought to justify the disallowances by placing reliance on Explanation 5 introduced to section 9 of the Act by the Finance Act, 2012 with retrospective effect from 1st June, 1976 - Held that:- The very fact that the law has been amended with retrospective effect clearly shows that the issue was debatable and in the absence of any failure to disclose material facts necessary for the purpose of assessment, the deletion of penalty levied under section 271(1)(c) of the Act cannot be faulted. - Decided in favour of assessee.
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2013 (3) TMI 703
The Bombay High Court dismissed the Revenue's appeal for the Assessment Year 2005-06. The court found that the project completion method applied by the Assessee was correct and no enhancement notice was issued by the CIT(A). The appeal was dismissed with no order as to costs.
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2013 (3) TMI 702
Addition u/s 68 - Held that:- The entire issue is in the realm of appreciation of facts. It also has come on record, barring one creditor, all other creditors are not even taxpayers. Assessing Officer had made sufficient inquiries and found that the entire transaction is not genuine and essentially amounted to rooting the cash amount of the assessee through alleged source.
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2013 (3) TMI 701
Issues Involved:
1. Rejection of books of account u/s 145(3) of the Act.
2. Alleged receipt of on money based on documents/statements of another group.
3. Application of 'percentage completion method' of accounting.
4. Accrual of income at the time of agreement/receipt of advance.
5. Addition to total income based on AO's calculation.
6. Reference to Department Valuation Officer (DVO) u/s 142A.
7. Addition u/s 69 based on DVO's valuation report.
8. Levy of interest u/s 234B.
Summary:
Rejection of Books of Account u/s 145(3):
The Tribunal upheld that the rejection of books of account by the Assessing Officer (AO) u/s 145(3) was not justified. The AO's reasoning, including the lack of a detailed qualitative and quantitative stock register and discrepancies in direct expense vouchers, was found inadequate. The Tribunal emphasized that the assessee's accounts were audited and maintained in compliance with commercial accounting standards, and no material discrepancies were found.
Alleged Receipt of On Money:
The AO's allegation of receipt of on money based on documents/statements related to another group was dismissed. The Tribunal noted that the assessee had no involvement in the transactions of the separated group and that the statements made by members of the other group did not pertain to the assessee's business.
Application of 'Percentage Completion Method':
The Tribunal found that the AO's decision to change the accounting method from 'project completion method' to 'percentage completion method' was not warranted. The assessee had consistently followed the project completion method, which is a recognized method under the Income Tax Act. The Tribunal held that the AO could not change the method of accounting without justifiable reasons.
Accrual of Income:
The Tribunal rejected the AO's view that income accrues at the time of agreement or receipt of advance from customers. The Tribunal reiterated that the project completion method, which recognizes income upon completion and delivery of the project, was appropriate for the assessee's business.
Addition to Total Income:
The Tribunal overturned the AO's addition of Rs. 54,24,471/- for AY 2008-09 and Rs. 1,07,80,447/- for AY 2009-10, based on the percentage completion method. The Tribunal emphasized that the AO's basis for changing the accounting method was flawed.
Reference to DVO u/s 142A:
The Tribunal found the reference to the DVO u/s 142A for determining the value of the land in "Unique Destination" to be invalid. The reference was made before the initiation of assessment proceedings, which was not permissible.
Addition u/s 69 Based on DVO's Report:
The Tribunal deleted the addition of Rs. 76,93,120/- for AY 2008-09 and Rs. 11,70,242/- for AY 2009-10, made by the AO based on the DVO's valuation report. The Tribunal held that no evidence suggested that the assessee had made any unaccounted investment in the land. The primary burden of proof to show understatement of investment was on the revenue, which was not discharged.
Levy of Interest u/s 234B:
The Tribunal noted that the levy of interest u/s 234B is consequential and does not require separate adjudication.
Conclusion:
The Tribunal allowed the appeals of the assessee for AY 2008-09 and AY 2009-10 in part, rejecting the AO's changes to the accounting method and deletions based on the DVO's report. The department's appeal for AY 2009-10 was rejected.
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2013 (3) TMI 700
Issues involved: Challenge to order dismissing appeal due to delay in filing u/s 85 of Finance Act, 1994; Interpretation of power to condone delay u/s 85(3) of Finance Act, 1994; Comparison with previous judgments; Interpretation of power of Appellate Tribunal u/s 86(5) of Finance Act, 1994.
Issue 1: Challenge to order dismissing appeal due to delay in filing u/s 85 of Finance Act, 1994
The writ petition challenged an order by the Customs, Excise and Service Tax Appellate Tribunal dismissing the appeal due to a delay in filing beyond the prescribed time limit u/s 85 of the Finance Act, 1994. The Tribunal held that the appeal was filed after the permissible period of three months, extendable to another three months, and there was no provision to condone the delay beyond this period. Consequently, the appeal was dismissed.
Issue 2: Interpretation of power to condone delay u/s 85(3) of Finance Act, 1994
The Commissioner, Central Excise (Appeals) refused to admit the appeal citing a delay of seven months and twenty-six days, stating that u/s 85(3) of the Finance Act, 1994, the delay cannot be condoned if it exceeds three months from the date of receipt of the order-in-original. The Commissioner expressed that the power to condone delay is limited by the statutory provisions, and in this case, the delay could not be condoned.
Issue 3: Comparison with previous judgments
The petitioner referred to the judgment in the case of ITC Ltd. v. Union of India, where the Supreme Court allowed an appeal to be filed within a month from its order. However, the judgment in Singh Enterprises v. Commissioner of Central Excise emphasized that specific limitation periods should not be overridden. The petitioner also highlighted Section 86(5) of the Finance Act, 1994, which allows the Appellate Tribunal to admit an appeal after the expiry of the relevant period if sufficient cause is shown.
Conclusion:
The High Court held that the judgment in ITC Ltd. did not apply in this case, as clarified by the Supreme Court in Singh Enterprises. The Court noted that the question was not about the Tribunal's power to admit appeals after the prescribed period but whether the delay could be condoned by the Commissioner (Appeals). As such, the provisions of Section 86(5) were not applicable. The writ petition was dismissed, and parties were directed to bear their own costs.
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2013 (3) TMI 699
Issues involved:
The judgment deals with the following Issues:
1. Whether the Tribunal was justified in allowing exemption u/s.11 of the Income Tax Act, 1961 to the respondent-assessee despite the argument that it cannot be considered a valid trust.
2. Whether the absence of profit motive is a decisive factor for eligibility of exemption u/s.11 and 12 of the Act.
Issue 1: Exemption u/s.11 of the Income Tax Act:
The respondent-assessee was granted registration u/s 12AA of the Income Tax Act and subsequently claimed exemption of its entire income u/s 11 of the Act. The assessing officer denied the exemption and sought to tax the entire income. However, the CIT (A) allowed the appeal of the respondent-assessee based on the decision of the Apex Court in CIT V/s. Gujarat Maritime Board. The Tribunal, in the impugned order, held that the respondent-assessee was established to provide residential settlement to slum dwellers without any profit motives. The Tribunal concluded that the primary purpose of the respondent-assessee was to promote the welfare of the general public by providing accommodation to economically weaker sections of society. Following the decision in Gujarat Maritime Board, the Tribunal determined that the purpose and object of the respondent-assessee was charitable in nature, leading to the dismissal of the revenue's appeal.
Issue 2: Profit Motive for Exemption:
The Tribunal found that the respondent-assessee had no profit motive and its primary purpose was to promote the welfare of the general public by providing accommodation to economically weaker sections of society. The Tribunal held that when the primary purpose is to promote the welfare of the general public, it qualifies as a charitable purpose for the Act. Therefore, the Tribunal did not find any reason to entertain the proposed question of law raised by the revenue.
In conclusion, all the appeals filed by the revenue for the assessment years 2005-06, 2007-08, and 2008-09 were dismissed by the High Court, with no order as to costs.
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2013 (3) TMI 698
The Bombay High Court dismissed the revenue's appeal for the assessment year 2006-07 regarding deduction under Section 36(1)(iii) of the Income Tax Act, upholding the Tribunal's decision based on previous rulings. The appeal was not entertained due to similar past cases. No costs were awarded.
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2013 (3) TMI 697
Issues involved: Assessment of provisions for costs on completed contracts, provisions for loss on incomplete contracts, disallowance of credit for tax deducted at source, levy of interest under Section 234D.
Assessment of provisions for costs on completed contracts and loss on incomplete contracts: The Appellant-Assessee raised questions regarding the disallowance of provisions for costs on completed contracts and provisions for loss on incomplete contracts. The total amount in question was Rs. 8,61,19,588. The Appellant argued that these provisions were identified, determined, and ascertained present liabilities payable in respect of completed and incomplete contracts, and therefore should be allowable. The Tribunal was criticized for not appreciating the reality of the situation where liabilities actually arose during the year and the provisions were existing as on 31st March, 2003, determined based on technical assessments. The Appellant contended that these liabilities were ascertained, crystallized, and determined, making them allowable expenses.
Disallowance of credit for tax deducted at source: The Tribunal was accused of wrongly interpreting the provisions of section 199 of the Income Tax Act and not following the Tribunal's order in the Appellant's own case for the preceding year. The Appellant challenged the confirmation of the withdrawal of credit for tax deducted at source, arguing that the Tribunal erred in its interpretation of the law.
Levy of interest under Section 234D: The Tribunal's decision to uphold the levy of interest under Section 234D was contested by the Appellant. It was argued that the said section should not apply as the assessee denied the liabilities to be levied with interest. However, the Counsel for the parties agreed that the issue raised in this regard was covered in favor of the Revenue and against the Respondent Assessee by a previous decision of the Court. Consequently, Question (e) was not entertained.
Conclusion: The High Court admitted the appeal on Questions (a), (b), (c), and (d), indicating that these issues would be further deliberated upon.
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2013 (3) TMI 696
Issues Involved: The judgment involves various substantial questions of law related to capital expenditure, revenue expenditure, development expenses, subsidy receipts, retirement expenditure, warranty liability provision, ESOP expenses, club expenses, transfer pricing adjustments, capital loss, non-compete covenant, and the correctness of the Tribunal's order.
Capital Expenditure: The Tribunal's decision on whether certain expenditures amount to capital expenditure is challenged. The appellant questions the Tribunal's characterization of specific expenses totaling &8377;7,61,33,928/- and &8377;1,20,21,845/- as capital expenditure, seeking clarification on the nature of these expenses and their treatment for depreciation under Section 35.
Revenue Expenditure: The Tribunal's ruling on the deductibility of &8377;60,44,001/- paid to an Austrian company as revenue expenditure is disputed. The appellant argues for deductibility either as revenue expenditure or under Section 35, highlighting inconsistencies with previous Tribunal decisions and the need for clarity on the treatment of such expenses.
Subsidy Receipts: The Tribunal's classification of octroi subsidy amounting to &8377;17.9 crores as a revenue receipt is contested. The appellant points to a previous favorable Tribunal decision and challenges the current characterization of the subsidy, seeking a reconsideration of its treatment for tax purposes.
Retirement Expenditure: The Tribunal's disallowance of voluntarily retirement (VRS) expenditure in the form of special pension valued at &8377;48,87,957/- as revenue expenditure is challenged. The appellant argues for deductibility as revenue expenditure or under Section 35DDA, emphasizing the actuarial valuation and the need for consistent treatment.
Warranty Liability Provision: The Tribunal's decision to set aside the provision for warranty liability amounting to &8377;44,20,09,000/- is questioned. The appellant highlights the Tribunal's past decisions in their favor and seeks justification for the current reversal, emphasizing the need for consistency in interpreting and applying tax provisions.
ESOP Expenses: The Tribunal's disallowance of Employees Stock Option (ESOP) expenses totaling &8377;3,69,07,378/- is contested. The appellant challenges this disallowance, seeking clarity on the deductibility of ESOP expenses under the relevant provisions of the Act and questioning the basis for the Tribunal's decision.
Transfer Pricing Adjustments: The Tribunal's ratification of the transfer pricing adjustment of &8377;97,32,802/- reimbursed to Mahindra Inc, USA under Section 92CA is disputed. The appellant questions the Tribunal's decision, seeking a review of the transfer pricing adjustment and clarification on the applicability of Section 92CA in the given context.
Capital Loss: The Tribunal's disallowance of capital loss amounting to &8377;1,85,21,865/- related to the sale of Research and Development (R & D) capital assets is challenged. The appellant contests this disallowance, emphasizing the nature of the loss and seeking a reconsideration of its treatment under the relevant provisions of the Act.
Non-Compete Covenant: The Tribunal's characterization of &8377;10.5 crores received for a non-compete covenant as assessable revenue receipt under Section 28(va) instead of capital gains under Section 45 is disputed. The appellant challenges this characterization, highlighting the differing tax implications and seeking clarity on the correct tax treatment of such receipts.
Tribunal's Order: The overall correctness of the Tribunal's order dated 6th June, 2012 is questioned. The appellant argues that the order is flawed, contrary to the evidence and legal principles, and lacks proper reasoning on the various issues raised, urging a review based on established judicial precedents and fundamental legal principles.
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2013 (3) TMI 695
Issues involved: Appeal against CIT(A) order regarding addition of amount received from members and invested in Mutual Funds, claiming exemption under principle of mutuality for an association of Air Cargo Agents.
Summary:
Issue 1: Addition of amount received from members and invested in Mutual Funds
- The association received subscription from members for welfare activities, invested surplus in shares/mutual funds not related to its main object.
- AO contended contributions not covered by mutuality principles, hence taxable.
- Assessee argued contributions for members' benefit, covered by mutuality principles.
- CIT(A) accepted assessee's contention based on past assessments and Bombay High Court decision.
- Revenue appealed citing Bangalore Club case, claiming funds deposited in banks violated mutuality principles.
- Assessee distinguished case, emphasized funds used for members' benefit only.
- Tribunal upheld CIT(A) decision, citing Bombay High Court precedent supporting mutuality in such cases.
Conclusion: Revenue's appeal dismissed, CIT(A) order upheld based on mutuality principles and past assessments.
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2013 (3) TMI 694
Issues Involved:
1. Disallowance of interest paid at the time of purchase of securities.
2. Depreciation on investments.
3. Deduction u/s 36(1)(viia) for bad debts.
4. Proportionate expenses on tax-free bonds.
5. Deduction u/s 80M.
6. Interest paid to SIDBI and NABARD.
7. Other expenses.
8. Depreciation on leased vehicles.
9. Applicability of MAT provisions to banking companies.
10. Entertainment and pooja expenses.
11. Surplus on sale of jewelry.
12. Interest on non-performing assets (NPAs).
Summary:
1. Disallowance of Interest Paid at the Time of Purchase of Securities:
The assessee contended that the interest paid at the time of purchase of securities should be deductible. The Tribunal noted that similar issues had been decided in favor of the assessee in earlier assessment years by the Tribunal and the High Court. The Tribunal restored the matter to the Assessing Officer for factual verification and fresh adjudication.
2. Depreciation on Investments:
The Tribunal found that the issue of depreciation on investments had been decided in favor of the assessee by the Jurisdictional High Court in earlier years. The Tribunal restored the matter to the Assessing Officer for verification of facts and fresh adjudication.
3. Deduction u/s 36(1)(viia) for Bad Debts:
The Tribunal noted that the CIT(A) had allowed the deduction based on the Supreme Court's decision in the case of Catholic Syrian Bank Ltd. v. CIT. The Tribunal restored the matter to the Assessing Officer for fresh computation in light of the Supreme Court's judgment.
4. Proportionate Expenses on Tax-Free Bonds:
The CIT(A) restricted the disallowance to 2% of the tax-free income, which was upheld by the Tribunal in line with the Jurisdictional High Court's decision in the case of M/s. Simpson and Co. Ltd. vs. DCIT.
5. Deduction u/s 80M:
The Tribunal did not specifically address this issue separately, implying it was covered under other related issues.
6. Interest Paid to SIDBI and NABARD:
The Tribunal allowed the deduction for interest payable to SIDBI and NABARD in the year of actual payment, as agreed by both parties.
7. Other Expenses:
The Tribunal found that the disallowance of 10% of other expenses by the Assessing Officer and CIT(A) was without specific material evidence. Therefore, the Tribunal accepted the assessee's contention and allowed the expenses.
8. Depreciation on Leased Vehicles:
The Tribunal upheld the CIT(A)'s decision to allow depreciation on leased vehicles, following the Jurisdictional High Court's decision in the case of CIT vs. Madan & Co.
9. Applicability of MAT Provisions to Banking Companies:
The Tribunal noted that the issue of MAT provision does not arise for the assessment year 2004-05. For subsequent years, the Tribunal found that the Assessing Officer had not applied MAT provisions, thus rejecting the assessee's argument.
10. Entertainment and Pooja Expenses:
The Tribunal allowed the deduction for entertainment and pooja expenses, citing the Jurisdictional High Court's decision in CIT vs. Aruna Sugars Ltd., which held such expenses as business expenses or welfare expenses of the staff.
11. Surplus on Sale of Jewelry:
The Tribunal deleted the addition of surplus on sale of jewelry, following its earlier decision in the assessee's own case, which held that the surplus amount did not form part of the income of the assessee-bank.
12. Interest on Non-Performing Assets (NPAs):
The Tribunal restored the issue of interest on NPAs to the Assessing Officer for fresh adjudication, as the CIT(A) had confirmed the disallowance without adequate details.
Conclusion:
The Tribunal partly accepted the assessee's appeals and restored several issues to the Assessing Officer for fresh adjudication. The Revenue's appeals were accepted for statistical purposes, with directions for re-examination of certain issues by the Assessing Officer.
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2013 (3) TMI 693
Issues involved: Appeal against order of ld. CIT(A) for A.Y. 2008-09, rejection of books of accounts u/s 145(3) of the Act, application of N.P. rate, trading addition, interest income related to business.
Issue 1: Rejection of books of accounts u/s 145(3) of the Act and trading addition
The assessee-firm derived income from Civil Contract Works and declared income for F.Y. 2007-08. The AO rejected the books of accounts u/s 145(3) of the Act due to lack of stock and material registers, applying N.P. rate of 8.5%. This resulted in a trading addition. The ld. CIT(A) restricted the addition but approved the application of section 145(3). The revenue challenged the reduction, while the assessee accepted the rejection of books. The Tribunal found the gross and net profits of two assessment years, agreeing with the ld. CIT(A) on adopting N.P. rate based on past history. The Tribunal confirmed the reduction of trading addition and did not interfere with the ld. CIT(A)'s findings.
Issue 2: Interest income related to business
The appeal also addressed interest income of the assessee-firm, earned from a compulsory deposit made in NSC for obtaining contracts. Both parties agreed that this interest income was directly related to the business activities. The Tribunal affirmed that the interest earned on securities for obtaining contractual work falls under 'income from business'. The deposit was crucial for securing contracts, making the interest income a necessary part of the business. The Tribunal upheld the ld. CIT(A)'s decision to delete this addition, dismissing the appeal on this ground.
Conclusion
The Tribunal dismissed the revenue's appeal against the order of ld. CIT(A) for A.Y. 2008-09, upholding the decisions on the rejection of books of accounts, trading addition, and interest income related to business. Ground No. (iii) was deemed general and required no further adjudication. The order was pronounced on 14th March, 2013.
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