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Case Laws
Showing 201 to 220 of 1967 Records
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2014 (1) TMI 1769
Unexplained cash deposits - Held that:- A cursory glance of the Bank statements provided by assessee clearly show that withdrawals made by the assessee were substantially in cash. There were very few entries of withdrawals other than through cash. When cash withdrawals and cash deposits were available, in our opinion Assessing Officer ought have considered the withdrawals as a source for explaining the deposits.
Assessee had all along stated that the withdrawals and deposits were only on account of his cash purchases and sales of garments. Ld. CIT(Appeals) in his order for an earlier assessment year 2005- 06 had considered the peak credit in the bank account after considering cash withdrawals and cash deposits. In such work out he had excluded the withdrawals which were not made in cash. Thus in our opinion ld. CIT(Appeals) had properly gone through the Bank statements and held that only the peak credit could be assessed to tax. In doing so, ld. CIT(Appeals) also considered the peak credits already considered in the preceding assessment year 2005-06. In fact, Revenue has not been able to point out whether any appeal has been filed before this Tribunal against the order of ld. CIT(Appeals) for assessment year 2005-06. - Decided against revenue
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2014 (1) TMI 1768
Allowance of depreciation on the written down value (WDV) as being carried over - Held that:- The depreciation on goodwill having been in fact allowed by the Revenue for A.Ys. 2000-01 and 2002-03, as also the subsequent years. In view of the foregoing; there being no finding that the said asset/s has been removed from the relevant block of assets, we have no hesitation in following the said decision for the current year as well. Accordingly, the assessee’s claim merits being upheld.
Genuineness of expenses - Disallowance u/s. 40(a) - Held that:- the assessee, apart from a debit note, which is not legible at all, could hardly furnish any material or evidence with regard to the rendering of the services, i.e., as was the case before the Revenue authorities. The ld. AR also conceded before us to no material being available with the assessee to establish the rendering of the relevant services, which though is rendered of no consequence in the facts of the case. - Expenses not allowed.
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2014 (1) TMI 1767
Unexplained cash credit u/s 68 - Held that:- The assessee has provided PANs of the share applicants. The mode of payment has also been made explained. There is no direct or indirect relation between the assessee company and the share applicants. The statements recorded during survey has got no evidentiary value and the law is very much settled on this issue. In any case, even under the provisions of Section 68 of the Act, the assessee cannot be forced to prove the source of the source. The law on this subject is also settled by numerous decisions. The alleged report of the Inspector of the Department who is stated to have visited at the given addresses of the share applicants was never put or confronted to the assessee. The cumulative effects of these reasons is that the impugned addition cannot be added in the hands of the assessee company. Accordingly, we order to delete the entire additions and allow the appeal of the assessee.
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2014 (1) TMI 1766
Deduction under section 80IB - excise duty refund - Held that:- The issue arising in the present appeal are identical to the issue before the Tribunal in earlier years and following the same parity of reasoning, we uphold the order of the CIT (Appeals) in holding that the excise duty refund was capital receipt in the hands of the assessee
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2014 (1) TMI 1765
MAT computation - addition made while computing its book profit under section 115JB in respect of provision for diminution in the value of investments and provision for doubtful debts - Held that:- Once assessee has reduced amount shown by it as a provision for diminution of investment from its total value of investment, it no longer remained a provision. Effectively it was a write off. This view is supported by the decision of the Hon’ble Apex Court in the case of Vijaya Bank –vs.- CIT (2010 (4) TMI 46 - SUPREME COURT ). Therefore claim of assesee with regard to diminution in value of investment has to succeed.
For claim in respect of provision for bad and doubtful debts it is not clear whether the total debts of ₹ 23,366.55 lakhs is after deducting the provision of ₹ 1,063.70 lakhs. The amount of ₹ 624.70 lakhs considered by the Assessing Officer for addition is obviously difference between opening provision of ₹ 439 lakhs and closing provision of ₹ 1063.70 lakhs, mentioned in the above schedule. If the provision debited by assessee is indeed deducted from the total debts and only the net balance shown in the balance-sheet then by virtue of decision of the Hon’ble Karnataka High Court in the case of Yokogawa India Ltd. (2011 (8) TMI 766 - KARNATAKA HIGH COURT ) there cannot be any addition of such amount under section 115JB of the Act. However, as mentioned by us, this aspect is not clear. Hence we are of the opinion that the issue regarding provision for doubtful debts requires a fresh look by the Assessing Officer. We, therefore, set aside the order of authorities below in so far as this aspect is concerned, and remit the matter back to the file of Assessing Office for consideration afresh in accordance with law.
Allowability of aircraft flying rights charges - Held that:- As decided in assessee's own case for previous assessment year we find that the assessee adduced necessary material to indicate that the aircraft was taken on hire for its business purposes. The Assessing Officer is not competent to decide the business expediency of incurring any expenditure. Be that as it may, it is observed that the Assessing Officer did not deny that log book of the aircraft was not furnished but only that the purpose for which the journeys were undertaken or the names of the persons who undertook the travel was not specified in the log book. It is in such circumstances, that he held 25% of the expenditure for non-business purpose. It is relevant to note that we are dealing with a case of a limited company. It is a settled legal position that there can be no disallowance of any expenditure on account of personal use by the directors of the company.
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2014 (1) TMI 1764
Eligibility of exemption u/s 12A - grants and advances or loans receipts - Held that:- As where the authority had been constituted by the Government for the specific purposes of carrying on the activities of the Government and where the grants and advances or loans are disbursed by the Government to the assessee, the said grants, advances cannot not be held to the income of the assessee as the said grants/advances are released to the assessee for the specific purposes for carrying on the development work. In the facts of the present case the Government of Haryana had given a grant of ₹ 25.10 crores during the financial year 2007-08 for the specific purposes of utilizing the same in providing infrastructural facilities to the allottees of residential plots under Mahatma Gandhi Gramin Basti Yojana. The assessee during the year under consideration had received ₹ 25.10 crores on 28.3.2008, which could not be utilized for the specific purposes before the end of the year, which in turn was utilized in the succeeding years for the said specific purposes. In the totality of the facts and circumstances, where the assessee was acting on the directives of the Government of Haryana in implementing the scheme of the Government of Haryana, the grants so received by the assessee were not the income of the assessee and do not form the corpus of the assessee. Such grants are not donations or voluntary contribution under section 12 of the Act and thus the same should not be considered as income of the assessee for the relevant assessment year. The assessee had shown the said amounts as receipts in the receipts and expenditure account but the same in no manner can be held to be the income of the assessee and were not assessable in the hands of the assessee for the relevant assessment year, as no part of the said grants had been utilized for the specific purposes for which it was granted, before the close of the year.
Thus the grant of ₹ 25.10 crores received by the assessee during the year under consideration is not the income of the assessee for the relevant assessment year. In view thereof, the said grant was received by the assessee for the purpose of disbursement for the promotion of the schemes of Government of Haryana and was not its income as the assessee was acting as a nodal agency for the disbursement of the grants only. Accordingly, we direct the Assessing Officer to delete the addition of ₹ 25.10 crores in the hands of the assessee. - Decided in favour of assessee.
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2014 (1) TMI 1763
Eviction of the respondent and recovery of arrears of rent - Restriction on eviction of tenants - Held that:- A reading of Section 13, in our view clearly indicates that the payment or the deposit of rent into the court by the judgment debtor (tenant) is contemplated only during the pendency of the suit for eviction or an appeal (by the tenant) against a decree or order of eviction. Section 13 has no application to the execution proceedings of a decree for eviction.
The language of Section 13(1) is very clear and explicit in this regard. We fail to understand as to how the Court could read into Section 13, a possibility of enabling the judgment debtor (tenant) to protect his possession by making the payment during the execution proceedings in spite of the fact that he had already been adjudged to be in default of payment of the rent to the landlord. Such an interpretation of Section 13 would be wholly destructive of Section 12(1)(a). Therefore, not only the language of Section 13(1), but also an irreconcilable inconsistency that would arise between Section 12(1)(a) and Section 13(1) if the interpretation placed by the executing court is accepted - in our view is sufficient to hold that the executing court’s interpretation of Section 13(1) is unsustainable.
In the case on hand the tenant was clearly in arrears of the rent which fact is acknowledged by the compromise memo signed by the tenant which was incorporated in the decree. Looked at any angle, we are not able to agree with the judgment under appeal, nor able to sustain the executing court’s order dismissing the landlord’s execution petition. The appeal is accordingly allowed. The execution petition filed by the appellant is also allowed.The executing court will now take necessary steps for evicting the respondent from the disputed premises and handing over the possession of the same to the appellant
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2014 (1) TMI 1762
Allowable deduction from the estimated income - CIT(A) allowing depreciation, interest to bank and remuneration to partner out of net income estimated by applying net profit rate of 8% by the AO - Held that:- There is no difference in the quantification of the relief to the assessee. However, the objection of the assessee is that consecutively in assessment years as discussed above, year after the year, a net profit rate of 8% further subject to depreciation, interest and remuneration paid to partners have been held to be justified in assessee's own case and by adopting net profit rate only and not mentioning further deduction on account of depreciation, interest and remuneration paid to partners. It is likely to set a wrong precedent in assessee's own case which may lead to complexities sometimes in future. Since there is no difference between the findings of the ld. CIT(A) in this year vis-a-vis earlier assessment years. However, the objection of the assessee seems to be justified. Therefore, we amend the later part of the findings of the ld. CIT(A) where he adopted the net profit rate of 5.12% on total contract receipts allowing depreciation, interest and remuneration paid to partners. In our considered opinion, the law demands consistency to avoid any future misunderstanding and to keep the findings in the same manner we hold that net profit rate of 8% further subject to depreciation, interest and remuneration paid to partner could be final finding. Accordingly, we hold as above and allow the appeal of the assessee to that extent.
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2014 (1) TMI 1761
Waiver of pe-deposit - petitioner failed to remit the assessed liability of service tax plus 25%, the penalty - under-remittance of service tax - Held that:- we are disinclined to grant waiver of pre-deposit in full. We accordingly grant waiver of pre-deposit and stay further proceedings pursuant to the impugned order dated 17-7-2012, on condition that the petitioner remits the entirety of the assessed liability of service tax plus the corresponding interest and 50% of the penalty under Section 78 of the Act in addition to penalty of ₹ 10,000/- assessed under Section 77 of the Act, within 4 weeks from today. - Petition disposed of
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2014 (1) TMI 1760
Whether the applicant is eligible for approaching the Settlement Commission for settlement of the case in the circumstances where no return was filed for the period in dispute and there was retrospective legislation regarding recovery of service tax - Held that:- the pre-requisite conditions have been laid down under Section 32E of the Central Excise Act, 1944, which provides that no application for settlement shall be made unless “the applicant has filed returns showing production, clearance and Central Excise duty in the prescribed manner”. The above provisions have been made applicable to service tax matters under Section 83 of the Finance Act, 1994. Filing of returns is a pre-requisite for approaching the Settlement Commission. No return has been filed by the applicant for the period in question, which fact has also been mentioned in its application while coming before the Settlement Commission.
Therefore, filing of returns is a pre-requisite and there is no provision for filing of ‘returns’ in a consolidated manner. Service tax returns have not been filed for the period in dispute in the present case of M/s. Kaysons Enterprises Private Limited, either before the 8th day of May, 2010, that is, the date of the retrospective amendment made vide Section 77 of the Finance Act, 2010, or afterwards. Shri Jagjit Singh, Director in his statement dated 10-1-2012 has stated that he would file the return for the period 2007-08 up to March, 2011 very shortly. However, before coming to the Settlement Commission, he has not filed the returns, which is admitted in the application for settlement. Under clause (a) of proviso to Section 32E(1) of the Central Excise Act, 1944, no application can be made unless the applicant has filed returns. Considering filing of returns as a requirement to be fulfilled by the applicant applying for settlement and which requirement has not been fulfilled in this case, the Bench finds that the applicant is not eligible to approach the Settlement Commission and accordingly the application is liable to rejection. - Decided against the applicant
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2014 (1) TMI 1759
Allowance of 10% of advertisement expenditure on permanent pavilion site as revenue expenses and directing to spread the same over a period of 10 years equally - Held that:- No basis on which the Ld. CIT(A) could have held that the benefit of payment in question will be available for 10 years only and consequential deduction is to be allowed over a period of 10 years. It is observed that the benefit was not for any fixed period. We agree with the Ld. CIT(A) that the expenditure in question is revenue in nature and no capital asset of enduring nature was acquired by the assessee by making the payment in question and therefore, the entire payment is allowable as deduction to the assessee in the year on incurring of the expenditure. We, therefore, modify the order of the Ld. CIT(A) and direct the Assessing Officer to allow deduction for entire ₹ 7,00,000/- during the year under consideration. Thus, relevant ground of appeal of the Revenue is dismissed and relevant ground of cross-objection of the assessee is allowed.
Allowance of 10% of the receipts from export incentives as deduction from indirect cost while computing deduction u/s 80HHC on trading exports - Held that:- In the instant case, the assessee is engaged in export of trading goods and therefore, is eligible for deduction u/s 80HHC in respect of profit derived from export of trading goods. The assessee claimed deduction u/s 80HHC at ₹ 13,33,39,275/- whereas the Assessing Officer allowed such deduction on ₹ 13,15,00,727/-. Thus, the Assessing Officer granted lesser deduction of ₹ 18,78,548/- u/s 80HHC than the amount claimed by the assessee. The above difference arose because the assessee reduced its indirect cost relatable to the export of trading goods by 10% of export incentives of ₹ 1,87,85,483/- which was not accepted by the Assessing Officer. On appeal, the Ld. CIT(A) allowed the claim of the assessee by following CBDT circular no. 621 dated 19.12.1991. We find that the issue is squarely covered by decision of the Hon’ble Supreme Court in the case of Hero Exports Vs. CIT (2007 (11) TMI 13 - Supreme Court of India ) in favour of the assessee wherein held that for the purpose of determining export profit u/s 80HHC(3)(b) in case of trader exporter indirect cost can be reduced by 10% of export incentives etc. Therefore, we do not find any error in the order of Ld. CIT(A)
Deduction u/s 80HHC in respect of income of marine division - Held that:- In the instant case, there is loss in export of trading goods which could not be passed on to supporting manufacturer by issuing disclaimer certificate in view of the decision of the Hon’ble Supreme Court in the case of IPCA Laboratory (2004 (3) TMI 9 - SUPREME Court ). In view of the above after taking into consideration 90% of export incentive, there was a positive profit of ₹ 20,24,198/- in the instant case. Therefore, the assessee was entitled for deduction u/s 80HHC in respect of ₹ 20,24,198/- only. We, therefore, modify the order of the Ld. CIT(A) to the above extent.
Deduction u/s 80HHC resulting in computation of income lower than shown by the assessee in revised return of income - Held that:- We are of the considered view that the income of the assessee is to be computed as per provisions of the law and simply because an assessee has suffered more amount on tax than what is legally due, then the Department can not assess the income at a higher figure but should assess the income at correct amount as per the provisions of law. We, therefore, do not find any merit in this ground of appeal of the Revenue and hence, the same is dismissed.
Disallowance of registration fee and stamp charges for increasing the authorized share capital of the company - Held that:- In view of the decision of the Hon’ble Supreme Court in the case of Punjab State Industrial Development Corporation Limited Vs. CIT (1996 (12) TMI 6 - SUPREME Court ) wherein it was held that amount paid to the registrar of companies as filing fee for enhancement of capital is capital in nature.
Advertisement expenses are revenue in nature and allowable during the year under consideration in entirety,
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2014 (1) TMI 1758
Eligibility of Deduction u/s.54EC - Held that:- The assessee is entitled to deduction u/s.54EC for the amount of ₹ 50 lakhs each invested in two different financial years which otherwise are invested within a period of 6 months from the date of sale of the capital asset. We accordingly setaside the order of the CIT(A) and direct the Assessing Officer to allow the claim of deduction u/s.54EC made by the assessee. The ground raised by the assessee is accordingly allowed. See ACIT Vs. Shri Raj Kumar Jain & Sons (HUF) [2012 (3) TMI 257 - ITAT JAIPUR ]
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2014 (1) TMI 1757
Rejection of application for rectification - set off of long term brought forward capital loss against the capital gain - Held that:- In the instant case, the order dated 25/01/2011 was passed during the remand proceedings pursuant to the remand order dated 06/01/2011 passed u/s 254(4) of the Act and in terms of directions issued by the Tribunal, therefore, this order can only be a part of the appellate proceedings/order of the CIT(A) and does not assume a character of the independent assessment order for the purpose of section 154 of the Act.
Our attention was also invited to the provisions of section 154(1A) of the Act, according to which, a rectification can be sought with respect to any matter other than the matter, which has been so considered and decided by the Appellate Authority meaning thereby the Appellate Authority has jurisdiction to entertain the request of rectification with respect to those matters, which are not subject matter of the appeal before it.
Therefore, at the most the assessee could have approached to CIT(A) for such rectification but according to us, he cannot approach the Assessing Officer for rectification in the order passed on 25/01/2011 as it was passed consequent to the directions of the CIT(A) and the Tribunal. Therefore, the limitation can only start from the original assessment order for rectification as the original assessment cannot be called to have been merged with the order dated 25/01/2011 for the purpose of section 154 of the Act. We, therefore, are of the considered view that the CIT(A) has properly adjudicated the issue in the light of various judicial pronouncements and since we do not find any infirmity therein, we confirm his order. - Decide against assessee.
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2014 (1) TMI 1756
Disallowance of Loss on sale of investments - addition as short term capital gain on sale of investments - Held that:- Since neither the Assessing Officer nor the ld. CIT(A) has examined the details of various schemes, whether any record date was involved or not and have decided the issue on assuming that there is a record date in these schemes. In our opinion, the details of the schemes need to be examined to find out whether any record date was involved or not and therefore, in the interest of justice, we set aside the order of the Ld. CIT(A) and remit the same back to the file of Assessing Officer with a direction to first find out whether any record date is involved and then decided the issue as per law.
Disallowance made u/s 14A - Held that:- Rule 8D is not applicable in Assessment year 2005-06 i.e. the year before us in view of the decision of Hon'ble Bombay High Court in case of Godrej & Boycee Mfg. Vs. DCIT (2010 (8) TMI 77 - BOMBAY HIGH COURT ). However, at the same Hon'ble Bombay High Court also held that when Rule 8D is not applicable, reasonable disallowance can be made. We further find that during the year the assessee has made investment only to the tune of ₹ 19.40 crores in various mutual funds whereas the assessee had cash profit for ₹ 20 crores, therefore, considering the overall circumstances we are of the opinion that lump sum disallowance of ₹ 5 lakh would meet the ends of justice. Therefore, we set aside the order of the Ld. CIT(A) and direct the AO to make disallowance of ₹ 5 lakhs u/s 14A of the Act.
Nature of income - agricultural income v/s income from other sources - Held that:- Though it is possible for assessee to grow some crops in the vacant land but at the same time, some details should have been filed. In the absence of details, the ld. CIT(A) has already granted reasonable relief and his order does not require any further interference. Accordingly we confirm the order of the ld. CIT(A) as noted that the assessee failed to furnished the details but at the same time the amount was very small and therefore, 50% of the agricultural income was accepted.
Addition u/s 40A - Held that:- If an assessee makes payments at different times during the day and he has no idea that he has to pay to the same person on more than one occasion, he cannot be subjected to the statutory provision contained in s.40A(3) of the Act, unless any one payment is above ₹ 2,500. The statutory limit of ₹ 2,500 under s. 40A(3) of the Act applies to payment made to a party at a time and not to the aggregate of the payments made to a party in the course of the day as recorded in the cash book.” It is to be noted that law was amended later on w.e.f. 1.4.2009 by Finance Act, 2008 by which the expression was changed from “sum exceeding ₹ 20,000/-“ to “expenditure in respect of which a payment or aggregate of payment made to a person in a day.” Thus it is clear that because of decision of Hon'ble Orissa High Court and other High Courts law has been amended only w.e.f. 1.4.2009. Therefore, in the present year i.e. Assessment year 2005-06 we are bound to follow the decision of Hon'ble Punjab & Haryana High Court in case of CIT Vs. Bal Krishan Jagdish Chand (2007 (7) TMI 664 - PUNJAB & HARYANA HIGH COURT). Accordingly we set aside the order of the Ld. CIT(A) and delete the addition
Fees paid to the Registrar of Companies for filing of Form 5 for increase of authorized capital - Held that:- This issue is squarely covered against the assessee by the decision of Hon'ble Supreme Court in case of Punjab State Industrial Development Corporation Ltd. Vs. CIT (1996 (12) TMI 6 - SUPREME Court as well as in case of Brooke Bond India Ltd Vs. CIT [1997 (2) TMI 11 - SUPREME Court] wherein held that fees paid to the Registrar of Companies for expansion of the capital base of a company is directly related to the capital expenditure incurred by the company and although incidentally that would certainly help in the business of the company and may also help in profit-making, it still retains the character of capital expenditure since the expenditure is directly related to the expansion of the capital base of the company.
Consent fees to Punjab Pollution Control Board (PPCB) for enhancement of plant capacity - Held that:- Similar expenditure was held to be allowable by Hon'ble Punjab & Haryana High Court in case of CIT Vs. Industrial Cables (India) Ltd. (2006 (12) TMI 499 - PUNJAB & HARYANA HIGH COURT) wherein pollution certificate was valid for 15 years but still the expenditure was held to be allowable. Following this decision we set aside the order of the Ld. CIT(A) and delete the addition.
Allowability of business promotion expenditure - 50% deduction was allowed u/s 80G - Held that:- First of all the assessee has not submitted any details regarding a sum of ₹ 5 lakh towards Indo-Pak Games. In any case no TDS has been deducted and therefore Section 40(a)(ia) is also applicable and these payments are not allowable. As far as payment to Mother India Foundation is concerned, same is eligible for deduction u/s 80G and 50% deduction has been allowed by the Assessing Officer then this amount cannot be allowed even as business expenditure. Therefore, we find nothing wrong with the order of the Ld. CIT(A) and confirm the same.
Payment to Truck Operators Union (TOU) - Held that:- The consideration was charged by the transporter from the truck owner and or operator and hire charges were paid by the assessee directly to the truck owner and therefore, it was held that there was no contract between the assessee and local purchaser and truck owner. But in case before us, the payment has been made directly to the TOU from whom the trucks have been arranged most probably at fixed rate therefore, the contract has to be assumed between the assessee and the TOU because all the payments have been made to the TOU. Even the bills were issued by the TOU are not in respect of trip but they are in terms of ₹ 50,000 for various trucks put together. Since the assessee has not submitted further details therefore, only assumption is that the assessee had a contract with the TOU and paid freight accordingly. therefore, we confirm the addition of ₹ 67,57,763/-.
As far as the payment to M/s Chenab Textile is concerned a different legal principle would be applicable. In that case the assessee was selling goods to Chenab Textile and the goods were sent on FOR basis but the freight was paid by M/s Chenab Textile which in turn was raising debit notes to the assessee against the payment of freight. Therefore, what ever TDS was required to be deducted from the truck that should have been deducted by M/s Chenab Textile. As far as the assessee is concerned, it was only reimbursement of expenditure incurred by M/s Chenab Textile and therefore, no TDS was required to be deducted and therefore, we set aside the order of the Ld. CIT(A) and delete the addition of ₹ 8,54,452/-.
Sales tax subsidy - revenue v/s capital receipt - Held that:- There was no other document or material to substantiate the assessee’s contention that the sales tax subsidy of the kind under consideration should be treated as capital receipt and not a revenue receipt or to show that the kind of subsidy under consideration was given to the assessee for creation of capital assets as an aid to setting up of the unit. Rather, it was evident that the subsidy was an operational subsidy provided by the State after the industry had been set up and commenced commercial production. In the absence of material to show that the subsidy was to enable it to carry out capital investment it could not be presumed that such a subsidy was a capital subsidy
Additions u/s 145A - AO found that the Excise duties and other dues etc. have not been included in the valuation closing stock, therefore, he included these sums in the closing stock but refused to add the same in the opening stock - Held that:- Adjustment to be made u/s 145A is to be made both in respect of opening stock as well as closing stock. we set aside the order of Ld. CIT(A) and direct the Assessing Officer to adjust the value of opening as well as closing stock and only the net difference should be added to the income of the assessee.
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2014 (1) TMI 1755
Penalty imposed u/s 271 AAA - Held that:- The assessee has declared undisclosed income in the return filed u/s 153A and paid tax along with the interest and the provision of section 271AAA(1) will not be applicable as the assessee complied with the conditions mentioned u/s 271AAA(2) of the Act. The assessee admitted the undisclosed income in the course of search in the statement recorded u/s 132(4) of the Act and also specific manner in which the income has been derived by him. The manner disclosed by the assessee had been accepted by the AO. The assessee has also paid the tax and interest in respect of undisclosed income. The undisclosed income as well as the specified year are defined in the Explanation 2 to section 271AAA of the Act. Thus in our opinion the assessee has complied with the conditions as given u/s 271AAA(2) - Decided in favour of assessee.
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2014 (1) TMI 1754
Exemption u/s 11 - whether pharmacy run by the assessee-society is a separate unit, running as a business? - whether certain activities pointed out by the assessing authority are in fact carried out in the nature of business/commercial activities? - Held that:- The pharmacy is not situated in any commercial area or outside the hospital compound with the intention to invite the public at large to purchase medicines from the pharmacy run by the assessee-society. The assesseesociety is running the pharmacy within the premises of the hospital and as part of the hospital itself. It is clear that the pharmacy is run by the assessee-society only for the purpose of running the hospital. The hospital cannot be run without a pharmacy attached to it. If an assessee wants to run a hospital, running of the pharmacy is also a must. Therefore, running of the pharmacy by the assessee-society is not an activity carried on by the assessee incidental to the running of the hospital; but, on the other hand, it is an integral part of the hospital run by the assessee.
The Assessing Officer has observed that the assessee-society has maintained separate accounts for the pharmacy section. Maintaining accounts separately for pharmacy section does not decide the nature of the activities carried on by the assessee through running of the pharmacy. Separate accounts are maintained by the assessee for the purpose of proper accounting and internal control. Even in the case of charitable hospital, it is not possible to provide medicines to every patient, free of cost. It is only in very deserving cases, a charitable institution could provide medicines free of cost. Therefore, running of a pharmacy set up as part of the hospital, involves purchase and sale of medicines. Therefore, not much discussion is necessary to come to a conclusion that in the case of a full-fledged hospital, pharmacy is an essential part thereof and as such, the pharmacy is run as part of the hospital establishment.
Thus the collection received by the assessee from its pharmacy section cannot be excluded from computing the income eligible for exemption under Section 11 of the Income-tax Act, 1961. The pharmacy collection also forms part of the collections accounted by the assessee from its charitable activities. Therefore, Assessing Officer is directed to give exemption under Section 11 in respect of the pharmacy collection as well. - Decided in favour of assessee.
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2014 (1) TMI 1753
Recovery of the balance - Contract of indemnity - Period of limitation - Held that:- When the Corporation takes steps for recovery of the amount by resorting to the provisions of Section 29 of the Act, the limitation period for recovery of the balance amount would start only after adjusting the proceeds from the sale of assets of the industrial concern. As the Corporation would be in a position to know as to whether there is a shortfall or there is excess amount realised, only after the sale of the mortgage/ hypothecated assets.
Merely because the Corporation acted under Section 29 of the State Financial Corporation Act did not mean that the contract of indemnity came to an end. Section 29 merely enabled the Corporation to take possession and sell the assets for recovery of the dues under the main contract. It may be that only the Corporation taking action under Section 29 and on their taking possession they became deemed owners. The mortgage may have come to an end, but the contract of indemnity, which was an independent contract, did not. The right to claim for the balance arose, under the contract of indemnity, only when the sale proceeds were found to be insufficient. The right to sue on the contract of indemnity arose after the assets were sold. The present case would fall under Article 55 of the Limitation Act, 1963 which corresponds to old Articles 115 and 116 of the old Limitation Act, 1908. The right to sue on a contract of indemnity/ guarantee would arise when the contract is broken.
Therefore, the period of limitation is to be counted from the date when the assets of the Company were sold and not when the recall notice was given.
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2014 (1) TMI 1752
Additional depreciation in respect of power plant - Held that:- CIT(A) has relied upon the decisions of the Hon’ble Madras High Court in the cases of Hi-Tech Arai Limited [2009 (9) TMI 60 - MADRAS HIGH COURT ], VTM Limited [2009 (9) TMI 35 - MADRAS HIGH COURT ] and Texmo Precision Castings (2009 (10) TMI 140 - MADRAS HIGH COURT ) for the purpose of holding that the assessee is eligible for additional depreciation as per provisions of section 32(1)(iia) of the Act. In the absence of any decision to the contrary much less any decision of the Hon’ble Jurisdictional High Court on the issue to the contrary, we are of the view that the order of the ld.CIT(A) on this issue is on a right footing and does not call for any interference - Decided against revenue
Deduction u/s. 35D - CIT(A) allowed the claim admitting additional evidence - Held that:- . A perusal of the order of the ld.CIT(A) clearly shows that the ld.CIT(A) has deleted the disallowance by holding that the payments are in the nature of expenditure for underwriting commission and brokerage paid for certification fees allowable under section 35D of the Act. Admittedly, the fact that the AO is able to extract the figures in paras 4.8 and 4.9 of his order would clearly show that all the papers were before the AO. Further, no affidavit has been filed before the tribunal under Rule 11 of the I.T Rules nor the revenue has been able to substantiate that such evidences were not before the AO by production of any record. In the circumstances, we are of the view that the finding of the ld.CIT(A) on this issue is on a right footing and does not call for any interference - Decided against revenue
Disallowance u/s 43B - as per the assessee that service tax has been paid before the due date as provided u/s. 43B - Held that:- Admittedly, the provisions of section 43B of the Act applies to payment of service tax. It is noticed that service tax along with interest for an amount of ₹ 9,20,997/- has been paid on 5-12-2007 as per challans. The service tax relates to assessment year 2007-08, which has been paid during the assessment year 2008-09. Consequently, in view of the provisions of section 43B of the Act as the service tax is paid on 5-12-2007, the same is liable to be allowed in computing the total income for the assessment year 2008-09. Consequently, the AO is directed to grant the assessee the benefit of deduction u/s. 43B of the Act towards service tax paid by the assessee to the extent of ₹ 9,20,997/- - Decided in favour of assessee
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2014 (1) TMI 1751
Benefit of section 10A - assessee excluded communication charges, expenditure incurred in foreign currency from export turnover and also from the total turnover - Held that:- The admitted factual position in the present case is that the assessee is in the business of exporting computer software and therefore the expenses incurred in foreign exchange cannot be said to be one incurred by the assessee in connection with providing technical services outside India. The assessee does not claim exclusion of telecommunication charges or insurance attributable to the delivery of software outside India. The claim for exclusion from the export turnover is made by the assessee only in respect of expenses incurred in foreign currency in providing technical services outside India. We however do not have the break-up of the item of expenditure incurred in foreign currency outside India.
A copy of the agreement between the Assessee and Robert Bosch, Germany titled software project agreement (SPA) has been filed before us. We do not know as to whether the entire export turnover is in relation to this client alone or there were other clients for whom the Assessee rendered computer software development services. A perusal of the SPA filed before us shows that the Assessee agreed to carry out software development work for Robert Bosch Germany at Germany also. The terms of the agreement for rendering services on-site at clauses-5.2 to 5.2.6 of the agreement does not involve rendering of any technical services. The question as to whether the entire expenditure incurred in foreign exchange outside India relates to providing technical services outside India cannot be decided in the absence of the required information as stated above. If the claim of the Assessee that the entire expenditure incurred in foreign exchange outside India does not relate to providing technical services outside India, then the same cannot be excluded from the export turnover. Since the factual verification is required for adjudicating the aforesaid issue, we deem it appropriate to set aside the order of the CIT(A) and remand the issue to him with a direction to decide the issue - Decided in favour of assessee for statistical purpose.
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2014 (1) TMI 1750
Reopening of assessment - Eligibility for deduction u/s. 80IB - expansion of existing unit - Held that:- From the reply of assessee and the documents on the record shows that Unit-II was in exists as per the order of Commissioner of Income Tax which is on page 40 of the Paper Book No.1. In Assessment Year 2002-03 wherein firstly claim of adjustment of loss of Unit-II was claimed against the profit of Unit-I. We find that Assessment Year 2002-03 is not reopened. Secondly, we find that for Assessment Year 2004-05, the assessment was completed on 08.12.2006 and it is required to be reopened before 31st March 2009, but the assessment was reopened on October 31st, 2011 by issuing the notice on 24.3.2011. Therefore, the assessment is reopened after four years. If the assessment is reopened after four years there are settled law and in this respect section 149 says that no notice u/s.148 be issued for the relevant assessment year, if the four years have lapsed from the end of relevant assessment year unless the case falls under clause-B which says that if the four years but not more than six years have been lapsed from the end of relevant assessment year unless the income chargeable to tax which has been escaped assessment amount or likely to an amount of ₹ 1 lac or more for that year. We find that this contention is satisfied and secondly if the four years but not more than 6 years if the property is located outside in India. In our opinion, this clause has been inserted w.e.f 01.07.2012. Therefore, it is not applicable of this question. Therefore, in our opinion, in this case under consideration for Assessment Year 04-05 the reopen assessment is barred by limitation, therefore, we have no hesitation to hold that the assessment for A.Y. 04-05 is barred by limitation. Similarly for A.Y. 05-06, the assessment was completed on 20.11.2007. The assessment was required to be reopened on or before 31st March 2010 and the assessment was reopened on 24 March, 2011. Therefore, the reopening of the assessment for 04-05 is bad in law as per the Decision of Hon’ble Supreme Court in the case of Kelvinator of India [2010 (1) TMI 11 - SUPREME COURT OF INDIA ]. Therefore, we hold that the notice issued u/s. 148 of the Act for Assessment Year 2004-05 and 2005-06 is barred by limitation. - Decided in favour of assessee
Whether the assessee have separate Unit but maintaining the common record of excise duty, sales tax service tax, and having common registration and no separate permission from pollution department having a common electricity connection can be granted deduction u/s. 80IB(4)? - Held that:- Issue stands covered by the decision of the Hon’ble Jurisdictional High Court of Jammu & Kashmir, in the case of Shree Balaji Allows v. CIT and Another (2011 (1) TMI 394 - Jammu and Kashmir High Court ) where it has been held that the Excise Duty Refund is to be treated as ‘capital receipt’ and not liable to be taxed. Respectfully following the said judgment of Hon’ble J & K High Court, refund of excise duty of ₹ 4,66,88,681/- is held to be as ‘capital receipt’. - Decided in favour of assessee
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