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Showing 181 to 200 of 1052 Records
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2011 (4) TMI 1376
Issues involved:
The judgment involves issues related to exemption u/s 54 against capital gain from the sale of property and the allowance of transfer fees while determining the cost of the original asset.
Exemption u/s 54:
The assessee claimed deduction u/s 54 for the purchase of a new residential unit, but the AO restricted the deduction to 1/3rd of the price as the property was purchased in the joint name of the assessee's wife and son. The CIT(A) allowed the claim to the extent of the amount utilized by the assessee for the purchase. The revenue contended that the deduction cannot exceed the share purchased by the assessee. However, the AR argued that since the investment was made by the assessee, the deduction should be allowed accordingly. The Tribunal referred to a previous decision and held in favor of the assessee, stating that the entire amount spent by the assessee should be considered for the deduction u/s 54.
Transfer fee allowance:
The AO disallowed the claim of transfer fee made by the assessee due to lack of evidence. On appeal, the CIT(A) allowed the claim after considering the details provided by the assessee. The CIT(A) determined the proportionate share of the transfer fee to be considered as an expenditure for the purpose of section 48(i) of the IT Act. The Tribunal found that the assessee had produced relevant records supporting the claim, and upheld the decision of the CIT(A) in allowing the transfer fee as an expenditure.
In conclusion, the Tribunal partly allowed the appeal filed by the revenue, upholding the decision regarding the exemption u/s 54 and the allowance of transfer fees as determined by the CIT(A).
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2011 (4) TMI 1375
Claim of the assessee for renewal of exemption u/s 080 - educational institution - the assessee is running various educational institutions which are also recognized by the Government bodies and Universities. It was continuously enjoying exemption u/s 080G and for renewal of same, an application was filed. CIT has refused to grant renewal of exemption u/s 80G.
HELD THAT:- The certificate granted to the assessee u/s 012A treating it as charitable institution is subsisting and has not been shown to have been withdrawn till date. If it is so, then, in our considered opinion, renewal of exemption u/s 080G(5) could not be denied to the assessee and the case relied upon by Ld. AR and reproduced in the above part of this order fully supports such conclusion. Therefore, we find no justification in rejection of the claim of the assessee unless it is shown that the charitable status granted to the assessee by the certificate issued u/s 012A has been withdrawn. Therefore, we direct Ld. DIT (E) to grant the renewal to the assessee u/s 080G.
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2011 (4) TMI 1374
The Delhi High Court dismissed an appeal regarding the addition of loans taken from a company as deemed dividend under Section 2(22)(e) of the Income Tax Act. The court upheld the decision to delete the additions as the amount received was share application money, not a loan or advance. The appeal was accordingly dismissed.
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2011 (4) TMI 1373
Deduction u/s 80IB - Commercial Area - Assessee was engaged in the construction of two buildings known as ‘Amurt Dham’ and ‘Vidhi Complex’ - As per AO, in Project Vidhi Complex there was commercial area and since it was not a building project in the sense consisting of only buildings for residential purposes, the deduction was not to be allowed - Assessee contended there is no commercial area in vidhi complex but in Amrut Dham project for which deduction is not claimed
HELD THAT:- AO will verify the sanctioned plan to find out if the Project Vidhi Complex has any commercial area.The fact that commercial area in the form of shops exist in the buildings Amrut Dham which is part of the same sanctioned layout, but not forming part of the housing project Vidhi Complex, for which deduction u/s.80-IB(10) is claimed will not in any manner vitiate the claim for deduction u/s.80- IB(10).
Decision of SAROJ SALES ORGANISATION. VERSUS INCOME-TAX OFFICER. [2008 (1) TMI 420 - ITAT BOMBAY-E] supports the view that the existence of commercial area for the project for which deduction u/s.80-IB(10) is claimed alone should be seen though commercial area is built in the same sanctioned layout but in a different project. On verification, if commercial area is found to exist in the project Vidhi Complex AO will also verify if such area is within the permitted limits as laid down in Sec.80-IB(10).AO is accordingly to directed to verify the facts in this regard and while considering the claim for deduction u/s.80-IB(10)
Total area of the plot on which the project was constructed - Condition for allowing deduction u/s.80-IB(10) of the Act is that the project is on the size of a plot of land which has a minimum area of one acre - whether the area given for the purpose of forming DP road has to be excluded or included for the purpose of calculating the size of the plot on which the housing project has been constructed? - CIT(A) held plot is less than one acre, Also, project is not sanctioned by KDMC, thus not eligible for deduction - HELD THAT:- We find that in the case of UMIYA ENTERPRISES VERSUS INCOME TAX OFFICER-WARD-3 (3) , KALYAN (W) [2010 (2) TMI 1187 - ITAT MUMBAI] has considered this issue, wherein it was held that there is no condition in the clause (b) of Section 80IB (10) that recreation area has to be excluded while examining whether the plot is of the size of one acre or less. For the purpose of clause (b) of section 80IB(10), the plot area has been taken at 4189 sq. metres, if not at 4600 sq. metres, even on this basis, the size of the plot is more than one acre. In our opinion, the CIT(A) committed an error in simply excluding 656.75 sq.metres from the area of 4600 sq.metres without appreciating that the exclusion is only for the purpose of D.P. Road which does not reduce the size of the plot as a whole.
In view of the decision of the Tribunal referred above we are of the view that the order of the CIT(A) on this issue has to be reversed. We direct accordingly. Assessee would be entitled to deduction under section 10 IB(10) of the Act subject to the verification of the existence of commercial area in the project Vidhi Complex. The fact that the commercial complex exists in the Amurt Dham Project would not be relevant for denying the claiming of the assessee for deduction under section 80IB(10) of the Act for the Project Vidhi Complex.
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2011 (4) TMI 1372
Issues Involved:
1. Validity of initiation of proceedings u/s 147.
2. Reopening of assessment after four years.
3. Assessment of share capital money as unexplained investment u/s 68.
Summary:
1. Validity of initiation of proceedings u/s 147:
The assessee challenged the validity of the initiation of proceedings u/s 147, arguing that the notice u/s 148/147 was issued after the expiry of four years from the end of the relevant assessment year (A.Y. 2001-2002). The original assessment was made u/s 143(3) on 27.1.2003, and the notice for reopening was issued on 25.3.2008. The assessee contended that there was no failure on their part to disclose all material facts necessary for the assessment, as required by the proviso to section 147.
2. Reopening of assessment after four years:
The Ld.CIT(A) held that the reopening was valid as the AO had formed a "reason to believe" based on specific information from the Investigation Wing, which indicated that the assessee had received accommodation entries from certain companies. The AO's belief was deemed rational and based on relevant material. The reopening was within six years from the end of the relevant A.Y., and the income alleged to have escaped assessment was more than Rs. 1,00,000/-. The Ld.CIT(A) concluded that the proceedings u/s 147 were validly initiated.
3. Assessment of share capital money as unexplained investment u/s 68:
The AO treated the share capital money received from three companies as unexplained investment u/s 68, based on statements from the directors of these companies. The assessee argued that all necessary details were disclosed during the original assessment, and the AO had made independent enquiries u/s 133(6). The Tribunal found that the reopening was based merely on information from the Investigation Wing without independent application of mind by the AO. Citing various judicial precedents, the Tribunal held that the reopening was not valid as there was no failure on the part of the assessee to disclose material facts fully and truly.
Conclusion:
The Tribunal quashed the reassessment on jurisdictional grounds, rendering the Revenue's appeal on the merits of the case academic and infructuous. The assessee's Cross Objection was allowed, and the Revenue's appeal was treated as infructuous.
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2011 (4) TMI 1371
Issues Involved
1. Deletion of addition on account of unexplained investment in construction of building.
2. Deletion of additions by treating them as agriculture income against the business income.
3. Deletion of addition on account of unexplained advances received.
4. Confirmation of addition towards advance received from various persons for purchase of plots as non-genuine.
5. Confirmation of addition on account of purchase of water pump.
6. Validity of service of notice under section 143(2) of the I.T. Act.
Issue-wise Detailed Analysis
1. Deletion of Addition on Account of Unexplained Investment in Construction of Building
The Department contended that the CIT(A) erred in deleting the addition of Rs. 4,75,456/- on the grounds that the source of investment was not furnished before the Assessing Officer (A.O.). The CIT(A) admitted additional evidence without recording reasons in writing, violating Rule 46A of I.T. Rules. The assessee argued that no additional evidence was furnished before the CIT(A), but the source of investment was explained from the entries in the books of account produced before the A.O. The CIT(A) verified the sources and provided relief, which the tribunal found justified.
2. Deletion of Additions by Treating Them as Agriculture Income Against the Business Income
The Department argued that the CIT(A) erred in deleting additions of Rs. 6,57,493/- and Rs. 80,000/- by treating them as agriculture income, contrary to the A.O.'s treatment as business income. The CIT(A) failed to appreciate the Lekhpal's report denying the growing of certain crops. The tribunal did not provide a specific ruling on this issue due to the legal issue's precedence.
3. Deletion of Addition on Account of Unexplained Advances Received
The Department contested the deletion of Rs. 6,77,600/- on account of unexplained advances, arguing that the CIT(A) failed to appreciate that the identity and genuineness of transactions remained unexplained before the A.O. The tribunal did not address this issue separately due to the resolution of the legal issue regarding the service of notice.
4. Confirmation of Addition Towards Advance Received from Various Persons for Purchase of Plots as Non-Genuine
The assessee argued that the CIT(A) erred in confirming the addition of Rs. 3,95,000/- out of Rs. 5,87,000/- appearing as liability towards advance received for purchase of plots. The assessee claimed that the advances were through account payee cheques, and the onus was discharged. The tribunal did not address this issue separately due to the resolution of the legal issue regarding the service of notice.
5. Confirmation of Addition on Account of Purchase of Water Pump
The assessee contended that the CIT(A) erred in confirming the addition of Rs. 12,800/- for the purchase of a water pump, arguing that there was sufficient cash balance to prove the purchase. The tribunal did not address this issue separately due to the resolution of the legal issue regarding the service of notice.
6. Validity of Service of Notice Under Section 143(2) of the I.T. Act
The primary issue was the validity of the service of notice under section 143(2). The assessee filed the return on 08/11/2007, and the A.O. issued a notice dated 29/09/2008, which was sent by Speed Post to an incorrect address. The tribunal found that the notice was not served within the stipulated period, rendering the assessment proceedings null and void. The tribunal referenced various case laws supporting the requirement of timely service of notice, including CIT vs. AVI-Oil India Ltd. and Nulon India Ltd. vs. Income Tax Officer. The tribunal concluded that the assessment framed without serving the notice was void ab initio and quashed the assessment.
Conclusion
The tribunal allowed the Cross Objection of the assessee on the legal issue of the validity of the service of notice under section 143(2) and dismissed the Department's appeal. The assessment framed under section 143(3) was declared invalid due to the failure to serve the notice within the stipulated period.
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2011 (4) TMI 1370
Issues involved: The imposition of penalty under Section 271D of the Income Tax Act and whether it was barred by limitation under Section 275 (1) (c).
Summary:
The Gujarat High Court heard an appeal by the Revenue against the Tribunal's decision regarding the imposition of penalty under Section 271D of the Income Tax Act. The Tribunal had dismissed the Revenue's appeal, and the High Court was tasked with considering whether the penalty was barred by limitation under Section 275 (1) (c). The Court noted that the Tribunal had not provided reasons for its decision, prompting the Court to issue a Notice for final disposal. The CIT (A) had previously deleted the penalty, citing that the proceedings were barred by limitation. The Tribunal's decision was based on the CIT (A)'s order and various decisions of High Courts and Tribunals without detailed reasoning.
The High Court emphasized the importance of Tribunals providing reasons for their decisions, especially in tax matters. It highlighted that the Tribunal's role as a final fact-finding authority necessitates clear reasoning to facilitate judicial review. Citing legal precedent, the Court underscored that recording reasons is essential for transparency, accountability, and ensuring justice is not only done but also appears to be done. The Court set aside the Tribunal's order and remanded the proceedings for fresh consideration with proper reasoning, without expressing an opinion on the merits decided by the CIT (A).
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2011 (4) TMI 1369
Issues involved: Appeal by Revenue against deletion of addition of expenses of personal nature for Assessment Year 2005-06.
Deletion of Addition of Expenses of Personal Nature:
The only issue in consideration was the deletion of addition of Rs. 14,87,799/- made by the Assessing Officer on account of expenses of personal nature. The Assessing Officer disallowed the amount after finding that the expenses claimed were in the shape of hotel bills of the directors, concluding them to be personal expenditure. However, on appeal, it was argued that the company's accounts were audited under the Companies Act and Income Tax Act without any qualification regarding unverifiable expenses. The Ld. CIT(A) observed that no ad-hoc disallowance could be made on the ground of personal expenses in the case of the assessee, and hence, deleted the addition.
Arguments and Decision:
During the appeal, the Ld. Sr. DR supported the assessment order, stating that the disallowance was justified as the expenses were of personal nature. Conversely, the Ld. A.R. for the assessee contended that as a legal entity, the company would not have any element of personal nature, citing a decision of the Hon'ble Gujarat High Court. The Tribunal noted that the Assessing Officer did not establish how the expenses were not incurred wholly and exclusively for business purposes. Additionally, the audited books of account did not indicate personal expenses of directors. It was emphasized that expenditure incurred by directors for business purposes should not be disallowed without proper justification. As there was no evidence to suggest the expenses were not for business purposes, the Tribunal upheld the Ld. CIT(A)'s decision to delete the addition.
Conclusion:
The Tribunal dismissed the appeal filed by the revenue, affirming the deletion of the addition of expenses of personal nature.
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2011 (4) TMI 1368
Issues involved: Appeal against order of CIT(A) for assessment year 2007-08 regarding deletion of addition on account of fuel and petrol, repair and maintenance expenses, and disallowance of vehicle hiring expenses and parking charges u/s 40(a)(ia) of the Act.
Issue 1 - Deletion of addition on account of fuel and petrol, repair and maintenance expenses:
The Assessing Officer disallowed 20% of the claimed expenditure for personal use without log book maintenance. CIT(A) deleted the disallowance stating no adhoc disallowance for genuine expenses. ITAT restricted the disallowance to 10% considering lack of log book maintenance.
Issue 2 - Disallowance of vehicle hiring expenses and parking charges u/s 40(a)(ia) of the Act:
Assessing Officer disallowed expenses for failure to deduct TDS u/s 194C, contending it was applicable to individuals. CIT(A) deleted the disallowance based on absence of sub-contract evidence and incorrect application of law. ITAT upheld CIT(A)'s decision citing the case of Mythri Transport Corporation and concluded that payments did not fall under sub-contract, hence no TDS was required.
In conclusion, the ITAT partly allowed the revenue's appeal by restricting the disallowance on fuel and petrol expenses and dismissing the disallowance on vehicle hiring expenses and parking charges.
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2011 (4) TMI 1367
Issues involved: Challenge to denial of deduction u/s 80IB(10) for a housing project due to presence of commercial area exceeding specified limits.
Summary:
1. The Revenue challenged the order of the Ld. CIT(A) disallowing deduction u/s 80IB(10) for the A.Y. 2005-06, citing the presence of a commercial area exceeding limits in the housing project. The AO denied the deduction based on the amendment to section 80IB(10) from 01.04.2005. The assessee contended that the project commenced before this date and relied on a High Court decision supporting their claim.
2. The Tribunal noted that the assessee, a builder and land developer, initiated the project prior to 01.04.2005. Referring to the case law of CIT vs. Brahma Associates, it was established that the amendment to section 80IB(10) was prospective in operation. As the project in question began in December 2003, the Tribunal held that the amendment did not apply, and the assessee was entitled to the deduction u/s 80IB(10). The Tribunal upheld the Ld. CIT(A)'s decision in favor of the assessee.
3. Consequently, the Revenue's appeal was dismissed by the Tribunal, affirming the allowance of deduction u/s 80IB(10) for the housing project. The order was pronounced on April 27, 2011.
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2011 (4) TMI 1366
Issues Involved:
1. Validity of Assumption of Jurisdiction under Section 153C
2. Additions on Account of Unaccounted Investments
3. Additions on Account of Agricultural Income
4. Additions on Account of Household Expenditure
5. Additions on Account of Marriage Expenses
6. Additions on Account of Gross Profit
7. Additions on Account of Evaporation Expenses
8. Additions on Account of Deposits in Bank Accounts
9. Additions on Account of Unexplained Cash Credits
10. Additions on Account of Capital Gains
11. Additions on Account of Commission Expenses
12. Disallowance of Salary Expenses
13. Additions on Account of Unaccounted Sales and Adulteration in Diesel
Detailed Analysis:
1. Validity of Assumption of Jurisdiction under Section 153C:
The assessee challenged the assumption of jurisdiction under Section 153C, arguing that no satisfaction was recorded by the Assessing Officer (AO) in the case of the searched person. The Tribunal found that the AO did not respond to the objections raised by the assessee and proceeded to make the assessment under Section 153C. The Tribunal referred to the decision of the coordinate Bench in the case of Chirchind Hydro Power, which required satisfaction to be recorded before assuming jurisdiction under Section 153C.
2. Additions on Account of Unaccounted Investments:
The AO made several additions on account of unaccounted investments, such as investments in plots and deposits in bank accounts. The Tribunal found that the AO did not provide any corroborative evidence to support these additions and that the investments were already disclosed by the respective parties in their returns of income. The Tribunal upheld the CIT(A)'s deletion of these additions.
3. Additions on Account of Agricultural Income:
The AO treated a portion of the agricultural income declared by the assessee as income from undisclosed sources. The Tribunal found that the assessee had sufficient agricultural land and had consistently declared agricultural income in earlier years, which was accepted by the Department. The Tribunal upheld the CIT(A)'s deletion of the addition.
4. Additions on Account of Household Expenditure:
The AO estimated household expenses at a higher amount without any basis. The Tribunal found that the AO did not consider the withdrawals made by other family members and that no material was found during the search to suggest inadequacy of household expenditure. The Tribunal upheld the CIT(A)'s deletion of the addition but retained 25% of the addition on account of lower household expenses shown by the assessee.
5. Additions on Account of Marriage Expenses:
The AO estimated marriage expenses of the assessee's daughter and made an addition. The Tribunal found that no evidence was found during the search to support this estimation and that the marriage expenses were already shown by the wife of the assessee. The Tribunal upheld the CIT(A)'s deletion of the addition.
6. Additions on Account of Gross Profit:
The AO made trading additions on the allegations of mixing in diesel and petrol. The Tribunal found that no evidence was found during the search or post-search inquiry to support these allegations. The Tribunal upheld the CIT(A)'s deletion of the trading additions.
7. Additions on Account of Evaporation Expenses:
The AO disallowed a portion of the evaporation expenses claimed by the assessee. The Tribunal found that the evaporation claimed was within the norms issued by the Oil Company and that the quantitative details were maintained by the assessee. The Tribunal upheld the CIT(A)'s deletion of the disallowance.
8. Additions on Account of Deposits in Bank Accounts:
The AO made additions on account of deposits in various bank accounts. The Tribunal found that the assessee had sufficient cash available as per the cash flow statement and that the AO did not provide any evidence to suggest that the cash was utilized elsewhere. The Tribunal upheld the CIT(A)'s deletion of these additions.
9. Additions on Account of Unexplained Cash Credits:
The AO made additions on account of unexplained cash credits. The Tribunal found that the assessee had submitted confirmation letters, complete addresses, cheque numbers, and PANs to prove the genuineness of the cash creditors. The Tribunal upheld the CIT(A)'s deletion of these additions.
10. Additions on Account of Capital Gains:
The AO made an addition on account of capital gains from the sale of a shop. The Tribunal found that the assessee had not given possession of the property and that the sale was not completed. The Tribunal upheld the CIT(A)'s deletion of the addition.
11. Additions on Account of Commission Expenses:
The AO disallowed commission expenses claimed by the assessee. The Tribunal found that the commission was paid to procure business due to stiff competition and that the expenses were duly supported by evidence. The Tribunal upheld the CIT(A)'s partial deletion of the disallowance.
12. Disallowance of Salary Expenses:
The AO disallowed salary expenses as excessive and unsupported by evidence. The Tribunal found that the salary expenses were incurred wholly and exclusively for the purpose of business and that the AO did not point out any part of the salary as unsupported by vouchers. The Tribunal upheld the CIT(A)'s deletion of the disallowance.
13. Additions on Account of Unaccounted Sales and Adulteration in Diesel:
The AO made additions on account of unaccounted sales and adulteration in diesel. The Tribunal found that no evidence was found during the search to support these allegations and that the assessee maintained qualitative and quantitative controls as per the norms of the Oil Company. The Tribunal upheld the CIT(A)'s deletion of these additions.
Conclusion:
The Tribunal upheld the CIT(A)'s deletion of most of the additions made by the AO, finding that the AO did not provide sufficient evidence to support the additions. The Tribunal also found that the assessee had sufficient cash available as per the cash flow statement and that the expenses claimed were duly supported by evidence. The Tribunal retained 25% of the addition on account of lower household expenses shown by the assessee and confirmed the disallowance of a portion of the conveyance and general expenses.
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2011 (4) TMI 1365
Issues Involved:
1. Addition towards the difference in value of closing work-in-progress.
2. Disallowance of subcontract expenses.
Issue-wise Detailed Analysis:
1. Addition towards the difference in value of closing work-in-progress:
The assessee company, engaged in contract works, filed its return for the assessment year 1998-99. The Assessing Officer (AO) noticed discrepancies in the value of the closing work-in-progress, specifically the uncertified work-in-progress amounting to Rs. 49,21,063, scaled down by 20% by the assessee to Rs. 38,64,239. The AO recomputed this by scaling down by only 10%, adding Rs. 5,64,717 to the income. The CIT(A) upheld this addition, noting the AR's admission that only 85% to 90% of the value of uncertified progressive bills should be considered as work-in-progress.
2. Disallowance of subcontract expenses:
The assessee claimed Rs. 9.5 crores towards subcontract expenses. The AO requested detailed documentation but received incomplete or no responses from several subcontractors. Consequently, the AO disallowed Rs. 2,29,72,845 due to unverifiable payments. The CIT(A) initially deleted these additions but upon remand, upheld the AO's disallowance, citing the lack of compliance and corroborative evidence from the assessee.
Tribunal's Findings:
- Disallowance of Subcontract Expenses:
The Tribunal noted that the AO doubted the genuineness of the payments but did not conclusively prove that the payments were not made. The Tribunal emphasized that the burden of proof lies with the assessee to substantiate the genuineness of the expenses. However, the AO's failure to conduct further investigations or reconcile discrepancies between the amounts debited and payments made was highlighted. The Tribunal directed the AO to exclude payments covered by TDS and confirmation letters and disallow 15% of the unproved payments, considering potential inflation of expenses.
- Valuation of Closing Work-in-Progress:
The Tribunal directed the AO to value the closing work-in-progress consistently with the method followed in previous years, thereby maintaining uniformity in the assessment process.
Conclusion:
The appeal was partly allowed, with specific directions to the AO to reassess the subcontract expenses and closing work-in-progress valuation based on the Tribunal's guidelines. The Tribunal's decision underscores the importance of thorough verification and consistent application of valuation methods in tax assessments.
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2011 (4) TMI 1364
Unexplained cash credit - sale of shares - The AO treated the transaction as ingenuine and bogus by observing that the assessee used colourable device in connivance with stock brokers to introduce the assessee’s undisclosed income in the guise of transactions in penny stock of Bolton Properties and Blue Chip. He, therefore, rejected the contention of the assessee and treated the sale consideration of Shares of ₹ 39,80,980/- as unexplained cash credit and made the addition. Likewise, in HUF’s case also the AO rejected the assessee’s claim and treated the LTCG of ₹ 68,89,850/- as unexplained cash credit on the self same reasoning. In appeal, the Ld. CIT(A) deleted both the additions by stating that since the appellant has furnished satisfactory evidence in support of the purchase and sale of shares, the AO is not correct in assessing capital gain as unexplained credit u/s. 68.
HELD THAT:- In this view of the matter and in the absence of any contrary material brought on record by the revenue at the time of hearing before us, we do not find any infirmity in the order of the Ld. CIT(A) and the same is hereby upheld.
the appeal of the revenue in respect of individual assessee is concerned - the assesee claimed interest expenditure of ₹ 1,68,592/- on the loan. At the time of assessment proceedings, the AO asked for details regarding the nexus between the loan taken and the investments made. Since the assessee filed no explanation before the AO, he disallowed the interest claimed of ₹ 1,68,592/-. In appeal, the Ld. CIT(A) directed the AO to delete the addition. Aggrieved, the revenue is now in appeal before us. HELD THAT:- since the assessee failed to file any explanation and details regarding the nexus between the loan taken and the investments made. In appeal, while allowed the assessee’s claim, by the Ld. CIT(A). In the absence of any controverting material brought on record by the revenue authorities to rebut the finding of the Ld. CIT(A), we do not find any infirmity in his order and the same is hereby upheld. This ground of appeal of the revenue is dismissed.
Disallowance on account of depreciation - HELD THAT:- We find that since the assessee failed to furnish necessary details regarding acquisition, transportation, installation and use of plant and machinery, the Assessing Officer has disallowed the depreciation as claimed by the assessee. In appeal, the Ld. CIT(A) while allowing the assessee’s ground of appeal. In the absence of any controverting material brought on record by the revenue authorities to rebut the finding of the Ld. CIT(A), we do not find any infirmity in his order and the same is hereby upheld. This ground of appeal of the revenue is dismissed.
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2011 (4) TMI 1363
Issues involved: Assessment of interest under section 57(iii) of the Income Tax Act, 1961 and determination of annual rental value under section 23(1)(a).
Assessment of interest:
The appellant claimed interest payable of Rs.30,000 from the interest received on FD, savings bank interest, and interest from ICICI Safety Bonds. The Assessing Officer disallowed the interest claim as the nexus between the expenditure and income was not proven as required under section 57(iii) of the Act. The appellant argued for consistency based on past practice and legal precedent, citing the Karnataka High Court judgment. The Tribunal allowed the interest claim of Rs.30,000, emphasizing the importance of consistent practice and legal support for the appellant's claim.
Determination of annual rental value:
The appellant owned three flats, with two remaining vacant. The Assessing Officer determined the fair market rent based on Times of India reports, which the appellant contested. The CIT(A) upheld the Assessing Officer's decision, stating the appellant did not make efforts to let out the properties. The Tribunal, considering previous decisions, ruled in favor of the appellant, stating that the Municipal Corporation's rateable value should be accepted as the annual letting value. The Tribunal directed the Assessing Officer to accept the income returned by the appellant for the vacant flats, Capri and Kodinar.
Conclusion:
The Tribunal allowed the appeal of the assessee concerning the assessment of interest and determination of annual rental value, emphasizing the importance of consistency, legal precedent, and acceptance of Municipal Corporation's rateable value for property assessment.
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2011 (4) TMI 1362
Issues Involved:
1. Classification of income from sale of shares as either business income or capital gains.
2. Treatment of shares held for less than 30 days.
3. Condonation of delay in filing Cross Objection by the assessee.
Summary:
1. Classification of Income from Sale of Shares:
The primary issue was whether the income from the sale of shares should be treated as business income or capital gains. The assessee declared a total income of Rs. 21,64,772/- from house property, other sources, and capital gains. The Assessing Officer (AO) argued that the frequency and volume of transactions indicated that the assessee was trading in shares rather than investing, thus treating the income as business income. The assessee contended that the shares were purchased with the intention of deriving dividend income and had been consistently treated as investments in previous years. The CIT(A) concluded that the assessee acted both as an investor and a trader, directing the AO to treat shares held for less than 30 days as business income and those held for more than 30 days as capital gains.
2. Treatment of Shares Held for Less than 30 Days:
The CIT(A) directed that shares held for less than 30 days should be treated as business income, while those held for more than 30 days should be treated as short-term capital gains. The revenue appealed against this decision, arguing that the 30-day holding period was arbitrary and not in line with CBDT instructions. The assessee filed a Cross Objection, challenging the treatment of shares held for less than 30 days as business income.
3. Condonation of Delay in Filing Cross Objection:
The assessee filed a Cross Objection with a delay of 89 days, which was condoned by the Tribunal after considering the reasons provided by the assessee.
Judgment:
The Tribunal, after considering the rival submissions and various judicial precedents, held that the transactions of purchase and sale of shares by the assessee should be treated as investments. The Tribunal noted that the assessee had declared long-term capital gains on shares held for periods ranging from 14 to 134 months and that the AO had accepted such gains in previous and subsequent years. Following the decision in the case of Nagindas P Sheth (HUF), the Tribunal directed that the profit from these transactions should be assessed under the head 'capital gains'. Consequently, the appeal filed by the revenue was dismissed, and the Cross Objection filed by the assessee was allowed.
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2011 (4) TMI 1361
Issues involved: Appeal regarding taxation of interest earned on funds in the bank, validity of enhancement for Assessment Year 2006-07 u/s 251.
Taxation of Interest Earned on Funds:
The appeals by the assessee for AYs 2006-07 and 2007-08 revolved around the interest earned on funds in the bank related to share application money and joint venture for land acquisition. The CIT(A) denied capitalization of interest, taxing it as income from other sources. The assessee argued that the funds were linked to business activities, citing precedents. The Tribunal agreed, noting the lack of surplus funds for interest income, and upheld the capitalization of interest to reduce preoperative expenses.
Validity of Enhancement for AY 2006-07 u/s 251:
For AY 2006-07, the CIT(A) enhanced income without proper notice u/s 251. The assessee contended this enhancement was invalid and should be deliberated as per the IT Act. The Tribunal acknowledged this concern but ultimately ruled in favor of the assessee, allowing the appeals.
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2011 (4) TMI 1360
Issues involved: The judgment involves issues related to the eligibility of the assessee for exemption u/s 11 of the IT Act, the requirement of obtaining notification u/s 10(23C)(vi) of the Act, and the verification of collection of donations or capitation fees by the assessee.
Revenue's Appeals: The Revenue contended that the assessees did not receive notification u/s 10(23C) of the Act, thus the claim of exemption should be denied. The assessees argued that they claimed exemption u/s 11 of the Act, not requiring notification u/s 10(23C)(vi). The assessees cited various court decisions supporting their position. The Tribunal upheld that an assessee can make an alternative claim for exemption u/s 11 without the need for notification u/s 10(23C)(vi), as established by previous decisions. The Tribunal confirmed the CIT(A)'s orders in favor of the assessees.
Cross Objections of the Assessees: The assessees objected to the CIT(A) directing verification of donations or capitation fees collected, as the assessing officer had already verified and found no such collections. The Tribunal noted that no prejudice was caused by the CIT(A)'s direction for verification. Following a previous decision, the Tribunal confirmed the CIT(A)'s order to verify collections and upheld that if no additional charges were collected from students, the assessees would be entitled to exemption u/s 11. The Tribunal rejected the assessees' objections and dismissed both the Revenue's appeals and the assessees' cross objections.
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2011 (4) TMI 1359
Issues involved:
1. Deletion of addition of unclaimed dividend
2. Deletion of addition of charity and donation
Deletion of addition of unclaimed dividend:
The Assessing Officer added an amount on account of unclaimed dividend not deposited in the Government account. The assessee, a cooperative society, argued that the dividend was post liability and not part of income. The CIT(A) accepted the contention, stating that the dividend was not charged to the P & L account and hence, not subject to Section 41(1). The ITAT upheld the CIT(A)'s decision, ruling that the addition was unjustified due to the nature of the dividend appropriation.
Deletion of addition of charity and donation:
The Assessing Officer added an amount under 'charity and donation' as income, contending it was not a genuine liability. However, the CIT(A) disagreed, noting that the society's net profits were allocated for various purposes, including charity, as per the U P Cooperative Society Act. The ITAT concurred, emphasizing that the amount shown in the balance sheet for charity was not charged to the P & L account, hence not liable to be added as income. The addition was thus deleted, affirming the CIT(A)'s decision.
Separate Judgement:
No separate judgment was delivered by the judges in this case.
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2011 (4) TMI 1358
Issues Involved:1. Delay in filing the appeal. 2. Disallowance of claim of Rs. 32.5 lakhs as business expenditure u/s 37 of the Income Tax Act. 3. Whether the non-recoverable deposits with KCC Bank qualify as business expenditure u/s 37. Summary:1. Delay in Filing the Appeal:The assessee Bank filed the appeal with a delay of three days, attributing the delay to the indisposition of its Manager. The delay was supported by a Medical Certificate. After due examination, the delay was condoned, and the appeal was accepted for consideration. 2. Disallowance of Claim of Rs. 32.5 Lakhs as Business Expenditure u/s 37:The assessee claimed Rs. 32.5 lakhs as business expenditure u/s 37, citing non-recoverable deposits and interest with KCC Bank, which had become sick. The AO disallowed the claim on the grounds that the assessee had not made any provision in its books of account for such a claim, as required u/s 37. The CIT (A) upheld the AO's decision, stating that the deposits were not written off in the books, and the entire deposit amount had not been claimed as irrecoverable. 3. Non-Recoverable Deposits with KCC Bank:The assessee argued that the deposits with KCC Bank were made as per RBI guidelines and had become irrecoverable due to the bank's sickness. The CIT (A) noted that no conclusive proof was provided to support the claim that KCC Bank had become sick. Furthermore, the CIT (A) observed that the liability of KCC Bank had not ceased, and the assessee had the legal right to recover the deposits. The CIT (A) also pointed out that the assessee had not taken any legal recourse to recover the deposits, and the claim of Rs. 32.5 lakhs as business expenditure was not justified. The Tribunal examined the rival submissions and found that the assessee had not provided any clinching evidence to justify the claim of irrecoverable deposits. The Tribunal agreed with the CIT (A) that the deposits had not become irrecoverable, as the assessee had renewed the deposits after maturity. The Tribunal also noted that the assessee had not shown the claimed amount as business expenditure in its balance sheet, but only in its computation of income. Based on the facts and circumstances, the Tribunal concluded that the assessee's claim of Rs. 32.5 lakhs as business expenditure u/s 37 was not allowable. The authorities below were justified in their stand, and the assessee's appeal was dismissed. Conclusion: The assessee's appeal was dismissed, and the claim of Rs. 32.5 lakhs as business expenditure u/s 37 was disallowed. Pronounced in the open court on this 8th day of April, 2011.
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2011 (4) TMI 1357
Issues involved:
The cancellation of registration granted to the assessee u/s.12A of the I.T. Act by the Director of Income Tax (Exemption), Mumbai based on the grounds of not carrying out activities in accordance with the trust's objects.
Cancellation of Registration u/s.12A:
The appeal was filed by the assessee challenging the cancellation of registration u/s.12A of the I.T. Act by the Director of Income Tax (Exemption), Mumbai. The grounds of appeal included the contention that the cancellation was erroneous and that the trust's activities were indeed charitable. The assessee trust, registered under the Bombay Public Trusts Act, had its registration cancelled due to spending on medical relief not covered by the trust's objects as specified by the City Civil Court in a scheme. The Director of Income Tax concluded that the trust's activities were in violation of the court's order and hence cancelled the registration u/s.12A.
Amendment to Section 12A and Decision:
The Tribunal considered the amendment to sub-section 3 of section 12A by the Finance Act, 2010, granting the Director of Income Tax the power to cancel registrations u/s.12A from 01.06.2010 onwards. As the cancellation in this case was dated 07.09.2009, the Tribunal held that the Director had no authority to cancel the registration at that time. Therefore, the Tribunal deemed the cancellation order as invalid and cancelled it, allowing the assessee's appeal.
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