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Showing 201 to 220 of 1266 Records

• 2012 (10) TMI 1076
  
  Issues involved: Jurisdiction of SSI exemption for manufacturing units using the same brand name.
  
  Summary:
  The case involved M/s. Gobind Expeller Company Pvt. Ltd., M/s. Shri Guru Nanak Dev Engineers, and M/s. Gobind Expeller Co. Pvt. Ltd. facing a show cause notice for non-payment of duty and penalty u/s 11AC of the Central Excise Act, 1944. The Commissioner confirmed duty demands and penalties, stating that the brand name "Anand" belonged to Shri Jagtar Singh, rendering the appellants ineligible for SSI exemption.
  
  The appellants argued that a Memorandum of Understanding (MOU) signed between Jagtar Singh and his sons Gurpreet Singh and Arminder Singh established joint ownership of the brand name "Anand," citing legal precedents supporting their claim. However, the MOU was not presented during the investigation or mentioned in the proceedings before the Commissioner, weakening the appellants' case.
  
  Considering the facts, the Tribunal directed both appellants to deposit 50% of the confirmed duty demand within eight weeks. Upon compliance, the pre-deposit requirement for the remaining amount, interest, and penalty would be waived, and recovery stayed until the appeal's disposal.
  
  The decision emphasized the lack of evidence supporting joint ownership of the brand name, leading to the denial of waiver from pre-deposit requirements for the appellants. Compliance was mandated by a specified date, with the order pronounced on 23.10.2012.

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• 2012 (10) TMI 1075
  
  Issues Involved:
  1. Deletion of addition on account of suppression of production.
  
  Summary:
  
  1. Deletion of Addition on Account of Suppression of Production:

  The Revenue appealed against the order of the CIT(A)-II, Surat, which deleted an addition of Rs. 27,72,458/- on account of suppression of production. The assessee, engaged in dyeing and printing of cloth on a job-work basis, disclosed a gross profit rate of 9.42% and net profit rate of 0.77%. The AO found the assessee's books unreliable due to the absence of a day-to-day production register and inconsistent consumption records of colors, chemicals, electricity, and gas. The AO rejected the books u/s 145(3) of the IT Act and estimated the gross profit at 15% of the turnover, leading to the addition of Rs. 27,72,458/- for suppressed production.

  The assessee contended before the CIT(A) that the AO's estimation was based on monthly variations in electricity and gas consumption without understanding the nature of the business. The CIT(A) agreed, noting that variations in consumption were due to the production process's complexity and stages. The CIT(A) found the AO's method of using May's consumption as a benchmark for other months inappropriate and concluded that the addition was based on guesswork without corroborative evidence. The CIT(A) deleted the addition, stating that the AO should have made inquiries with the assessee's clients to verify any suppressed production.

  Upon appeal, the Tribunal upheld the CIT(A)'s decision, agreeing that the AO's addition was speculative and unsupported by concrete evidence. The Tribunal noted that similar cases had been decided in favor of the assessee, confirming that the addition was not sustainable. Consequently, the Revenue's appeal was dismissed.

  Order pronounced in open Court on 26.10.2012.

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• 2012 (10) TMI 1074
  
  Issues involved: Stay petition for waiver of pre-deposit of amounts confirmed by adjudicating authority, imposition of penalties on the appellant Company, and personal penalty on the authorized signatory.
  
  The Appellate Tribunal CESTAT AHMEDABAD considered a stay petition filed by the appellant for the waiver of pre-deposit of amounts confirmed by the adjudicating authority, including penalties imposed on the appellant Company and a personal penalty on the authorized signatory. The appellant had defaulted in making payments as per the facility granted under Rule 8 of Central Excise Rules, 2002. The Tribunal noted that the issue seemed to be covered by previous decisions, including the case of Solar Chemferts Pvt. Limited. Relying on decisions in other cases such as Baba Viswakarma Engg. Company Pvt. Limited, Saurashtra Cement Limited, and Lloyds Steels Industries Limited, the Tribunal found that the appellant had made a case for the waiver of pre-deposit of amounts involved. Consequently, the applications for the waiver of pre-deposit were allowed, and recovery was stayed pending the disposal of appeals.

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• 2012 (10) TMI 1073
  

  Maintainability of appeal - Held that: - The applicant is a PSU and the appeal was filed on 24th August, 2010. They did not produce any clearance from COD nor they have produced any evidence that their application for clearance from COD is pending as on 8/2/11, on which date the Hon’ble Supreme Court pronounced decision on ECIL - appeal not maintainable - appeal dismissed.

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• 2012 (10) TMI 1072
  

  Tax appeal is admitted for consideration of following questions only:-

  "(a) Whether on the facts and in the circumstances of the case, the Tribunal was right in law in disallowing ₹ 1,33,99,935/- paid to M/s. Gharda Chemicals Ltd. under section 40A(2)(b) of the I.T. Act, 1961?

  (b) Whether on the facts and in the circumstances of the case, the Tribunal was right in law in holding that the interest of ₹ 38,81,250/- had really accrued on the inter corporate deposit with Nipun Investment Pvt. Ltd?"

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• 2012 (10) TMI 1071
  

  Additions on account of unexplained purchases u/s 69C - sale/ purchase made in cash as genuine - disallowance of expenditure - Held that:- there cannot be addition u/s 69C for expenses recorded in the books - sec 69C refers to the source of the expenditure and not to the expenditure itself - decision of Hon'ble Delhi High Court in case of CIT vs. Radhika Creation [2010 (4) TMI 100 - DELHI HIGH COURT] followed - Decided in favor of assessee

  Held that:- all sales made by the assessee stood recorded in the books, which included the sales and purchase vouchers and stock registers maintained on a day-to-day basis - Decided in favor of assessee

  Genuineness of cash expenditure - Held that:- The expenditure were incurred wholly and exclusively for the purpose of the business - disallowance was made completely on ad hoc basis - Decided in favor of assessee

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• 2012 (10) TMI 1070
  

  Deduction of tax at source (TDS) for payments made to RSAMB for the construction and repair work - Held that:- Decision of Jodhpur Bench rendered in the similar case [2011 (12) TMI 598 - ITAT JODHPUR] wherein held the funds so provided by the KUMS to Agricultural Produce Marketing Board are not refundable but are to be utilized for the specific purposes. The contribution made by KUMS to the Agricultural Produce Marketing Board is an application of income. The contracts if any are made by the Agricultural Produce Marketing Board with the parties, therefore, there is no case of any deduction of tax at source by the assessee, moreover, in the case of the trust or society registered u/s 12A of the Act, the profit is to be computed on the basis of the commercial principles. The income is not be computed under different heads. Hence the provisions of Section 40a(ia) are not applicable. - Decided in favour of assessee.

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• 2012 (10) TMI 1069
  
  Issues involved:
  1. Disallowance of loss and bad debts claimed by the assessee before ITAT.
  2. Filing of revised return by the assessee for assessment year 2003-04.
  
  Issue 1: Disallowance of loss and bad debts:
  The revenue filed a Miscellaneous Application (M.A.) challenging the ITAT's decision to admit the claim of the assessee for disallowance of loss and bad debts. The revenue alleged that the authorized representative of the assessee did not press these grounds before the CIT(A), leading to a misleading representation. The ITAT, after considering submissions from both sides, decided to set aside the matter and restore it to the file of the Assessing Officer for fresh consideration. The tribunal emphasized that the power under section 254(2) is limited to rectifying mistakes apparent on record and cannot be used to change decisions based on new arguments. The Supreme Court's ruling in Honda Siel Power Products v. CIT was cited to support the principle that the tribunal should rectify mistakes that cause prejudice to a party. Ultimately, the ITAT dismissed the M.A. filed by the revenue.
  
  Issue 2: Filing of revised return for assessment year 2003-04:
  In another case, the DCIT filed a Miscellaneous Petition stating discrepancies in the grounds mentioned by the assessee in the additional grounds for the assessment year 2003-04. The DCIT pointed out inaccuracies in the revised return filed by the assessee, including claims related to animation projects, software under production, and non-collectible loans. The ITAT found that the AO had completed the assessment without considering the revised return filed by the assessee. The tribunal, after examining the submissions and facts presented, decided to remit the matter back to the AO for fresh consideration in the interest of justice. The ITAT dismissed the M.A. filed by the revenue, emphasizing that the order passed was correct based on the facts presented during the proceedings.
  
  In conclusion, both the Miscellaneous Applications filed by the revenue were dismissed by the ITAT, upholding the decisions made in each case after careful consideration of the facts and legal principles involved.

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• 2012 (10) TMI 1068
  
  Issues involved: Impugned first appellate order deleting addition of Rs. 50,29,506/- for repair and maintenance expenses.
  
  Summary:
  The revenue challenged the first appellate order which deleted the addition of Rs. 50,29,506/- for repair and maintenance expenses. The assessee company had a license agreement with a partnership firm for office premises, declaring taxable rental income of Rs. 2,81,21,300/- after a 30% statutory deduction for repairs u/s 24 of the Income Tax Act, 1961. The AO disallowed Rs. 50,29,506/- of total repair and maintenance expenses, stating that further deduction for repairs is not allowable since 30% of license fees was claimed as deduction u/s 24. The assessee argued that expenses were reimbursed as per the agreement, not affecting the company's profit. The CIT(A) deleted the addition based on similar Tribunal decisions for the assessment year 2006-07.
  
  The Tribunal upheld the first appellate order, citing a similar issue decided in favor of the assessee for the assessment year 2006-07. The Tribunal found no infirmity in the first appellate order and rejected the raised ground, resulting in the dismissal of the appeal.
  
  The order was pronounced on 26th October, 2012.

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• 2012 (10) TMI 1067
  
  Issues involved: Appeal against addition of unexplained jewellery u/s 69A.
  
  Summary:
  
  Issue 1: Addition of unexplained jewellery u/s 69A
  
  The appeal was filed by the Revenue against the deletion of the addition of Rs. 2,10,65,665 made by the AO u/s 69A on account of unexplained jewellery. The assessee, a partnership firm dealing in gold, silver, and diamonds, claimed to have stock of jewellery brought forward from earlier years. The AO treated this stock as unexplained and added its value to the total income of the assessee u/s 69A. The CIT(A) deleted the addition, stating that the jewellery was introduced by the partners in the previous year and the source was explained. The Tribunal upheld the CIT(A)'s decision, noting that the jewellery was accepted as capital by the Department in the relevant year, and the source was duly explained. Therefore, the addition u/s 69A was not justified.
  
  This summary provides a detailed overview of the legal judgment, highlighting the issues involved and the key points of the decision regarding the addition of unexplained jewellery u/s 69A.

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• 2012 (10) TMI 1066
  
  Issues involved: Disallowance of expenses u/s 40A(2)(b), suppression of sales, adhoc disallowance of expenses.
  
  Disallowance of expenses u/s 40A(2)(b): The assessee appealed against the disallowance of expenses totaling Rs. 95,754, comprising conveyance, miscellaneous expenses, and salary payments. The AO was not satisfied with the credibility of the vouchers provided by the assessee, leading to the disallowance. The CIT(A) confirmed this disallowance. However, the ITAT directed that a portion of the conveyance expenses be allowed based on estimated reasonable deduction, citing a judgment of the Kerala High Court. The disallowance of miscellaneous expenses was also upheld as reasonable based on the business activities and turnover. Regarding the disallowance of salary payments, a portion paid to a relative was disallowed u/s 40A(2)(b) as excessive, while the balance amount paid to other employees was allowed as a deduction.
  
  Suppression of sales: The CIT(A) upheld the additions of Rs. 2,98,629 and Rs. 62,536 as suppression of sales and gross profit margin. The ITAT found that the shortage of stock revealed during a survey indicated sales made outside the books. It was determined that only the gross profit margin on such sales should be treated as income. The AO was directed to apply the gross profit margin declared by the assessee on the sales amount, resulting in a partial sustenance of the additions.
  
  Adhoc disallowance of expenses: Ground No. 4, related to adhoc disallowance of expenses, was not pressed by the assessee and was dismissed accordingly.
  
  In conclusion, the ITAT partially allowed the assessee's appeal, granting relief in terms of the disallowance of conveyance and salary expenses, while upholding the disallowance of miscellaneous expenses and a portion of the salary payment to a relative. The additions related to suppression of sales were partially sustained based on the gross profit margin calculation.

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• 2012 (10) TMI 1065
  
  Issues Involved:
  1. Deletion of addition on account of suppression of production.
  
  Summary:
  
  Issue 1: Deletion of addition on account of suppression of production

  The Revenue appealed against the order of the CIT(A)-II, Surat, which deleted an addition of Rs. 27,72,458/- made by the AO on account of suppression of production. The AO observed that the assessee, engaged in dyeing and printing of cloth on a job-work basis, did not maintain reliable books of account, including day-to-day production registers and records of consumption of colors and chemicals. The AO noted significant monthly variations in dyeing and printing charges, electricity, and gas consumption, leading to the conclusion that the assessee suppressed production. Consequently, the AO rejected the assessee's books u/s 145(3) of the IT Act and estimated the gross profit (GP) at 15% of the turnover, resulting in the addition.

  The assessee contended that the GP rate had increased compared to the preceding year and provided historical GP rates to support their claim. They argued that variations in consumption ratios were due to the nature of their business, involving multiple stages and varying complexities. The CIT(A) accepted the assessee's explanation, noting that the AO's method of estimating suppressed production based on monthly consumption ratios was flawed. The CIT(A) emphasized that the AO did not consider the complexities of the production process and the lack of corroborating evidence for suppressed production.

  The Tribunal upheld the CIT(A)'s decision, agreeing that the AO's addition was based on conjecture and lacked concrete evidence. The Tribunal noted that the AO did not make any inquiries with the assessee's clients to verify suppressed production. The Tribunal also referenced similar cases where such additions were not sustained. Consequently, the Tribunal dismissed the Revenue's appeal, confirming the deletion of the addition of Rs. 27,72,458/-.

  Order pronounced in open Court on 26.10.2012

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• 2012 (10) TMI 1064
  
  Issues Involved:
  1. Treatment of loss as business loss and its carry forward.
  2. Deduction of interest expenditure as business expenditure.
  3. Validity of service of notice u/s 143(2).
  
  Summary:
  
  1. Treatment of Loss as Business Loss and its Carry Forward:
  The AO challenged the CIT(A)'s direction to treat the loss of Rs. 6,41,470/- as business loss and allow it to be carried forward for set-off against future business income. The Tribunal upheld the CIT(A)'s decision, dismissing the AO's appeal.
  
  2. Deduction of Interest Expenditure as Business Expenditure:
  The AO contested the CIT(A)'s decision to allow the deduction of interest expenditure of Rs. 15,48,694/- as business expenditure, not speculative business. The Tribunal upheld the CIT(A)'s decision, dismissing the AO's appeal.
  
  3. Validity of Service of Notice u/s 143(2):
  For AY 2003-04, the assessee argued that the notice u/s 143(2) was not served at the correct address. The Tribunal initially set aside the FAA's order and directed the AO to reconsider the service of notice. Upon reassessment, the AO maintained the validity of the notice. However, the FAA and subsequently the Tribunal found that the notice was not validly served, as it was sent to an old address and received by an unauthorized person. The Tribunal upheld the FAA's decision, dismissing the AO's appeal and allowing the assessee's cross-objections.
  
  For AY 2005-06, the AO's notice u/s 143(2) was also contested for being served late and improperly. The FAA found the service invalid, and the Tribunal upheld this decision, dismissing the AO's appeal.
  
  Conclusion:
  The Tribunal dismissed the AO's appeals for both AY 2003-04 and AY 2005-06, upholding the FAA's decisions on all contested grounds, including the treatment of losses, interest deductions, and the validity of notice service u/s 143(2). The Tribunal emphasized the importance of proper service of notice for the validity of assessment proceedings.

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• 2012 (10) TMI 1063
  
  Issues Involved:
  1. Double Income-tax Relief (DITR) under the DTAA between India and Thailand.
  2. Interest under Section 244A of the Income Tax Act.
  3. Provision for bad and doubtful debts.
  4. Loss on revaluation of assets.
  
  Issue-wise Detailed Analysis:
  
  1. Double Income-tax Relief (DITR) under the DTAA between India and Thailand:
  The Revenue challenged the CIT(A)'s direction to allow DITR in full, claiming that under Article 23(3) of the DTAA between India and Thailand, the credit should be limited to the Thai tax payable, which was `1,08,25,780/-. The Assessing Officer (AO) had allowed this amount as DITR relief, but the CIT(A) directed the AO to allow `1,86,74,470/-. The Tribunal noted that the AO had followed the tax credit method correctly as per the DTAA and departmental circular No. 91/2008. The Tribunal found the CIT(A)'s interpretation incorrect, holding that the AO's application of the DTAA provisions was proper. Thus, the Tribunal reversed the CIT(A)'s order and upheld the AO's decision, allowing the Revenue's appeal on this ground.
  
  2. Interest under Section 244A of the Income Tax Act:
  The CIT(A) had directed the AO to allow interest on any amount, including interest under Section 244A, following the decision in Sandvik Asia Ltd. The Revenue contested this, arguing that the term "refund" does not include interest on sums payable by the Revenue. The Tribunal found that the relevant material facts were not available to verify the calculations of interest by the AO and the CIT(A). Therefore, the Tribunal remitted the matter back to the AO to examine the entire facts and decide the issue afresh, considering the decisions relied upon by both parties. This issue was directed to be decided in line with ITA No. 213/Mds/2010, and the appeal was allowed for statistical purposes.
  
  3. Provision for bad and doubtful debts:
  The AO disallowed the assessee's claim for bad debts written off in excess of the credit balance in the provision for bad and doubtful debts account. The CIT(A) allowed the claim based on the Tribunal's decision in the assessee's own case for the assessment year 2003-04, directing the AO to allow bad debts written off relating to non-rural advances in full and to work out the credit balance for rural advances. The Tribunal upheld the CIT(A)'s order, finding no infirmity in the decision, and dismissed the Revenue's appeal on this ground.
  
  4. Loss on revaluation of assets:
  The AO disallowed the loss on revaluation of investments, arguing that the assessee had classified these as "Held to Maturity" and not as stock in trade. The CIT(A) allowed the claim, following judicial precedents, including the Supreme Court's decision in UCO Bank v. CIT. The Tribunal noted that the issue had been consistently decided in favor of the assessee in its own case and other similar cases, allowing the valuation of investments at lower of cost or market price. Thus, the Tribunal dismissed the Revenue's appeal on this ground.
  
  Conclusion:
  The Tribunal allowed the Revenue's appeals on the issue of DITR relief and remitted the issue of interest under Section 244A back to the AO for fresh consideration. The appeals concerning the provision for bad and doubtful debts and the loss on revaluation of assets were dismissed, upholding the CIT(A)'s orders. The decisions were pronounced on October 30, 2012.

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• 2012 (10) TMI 1062
  
  Issues Involved:
  1. Legitimacy of penalties imposed u/s 271(1)(c) for AY 2003-04 and AY 2004-05.
  2. Justification for non-production of evidence due to fraud by Vice President, Finance.
  3. Applicability of penalty provisions in light of the fraud and subsequent defalcation.
  
  Summary:
  
  1. Legitimacy of penalties imposed u/s 271(1)(c) for AY 2003-04 and AY 2004-05:
  The Revenue appealed against the orders of CIT(A)-21, Mumbai, which cancelled penalties of Rs. 87,05,126/- and Rs. 9,98,154/- imposed by the AO u/s 271(1)(c) for AY 2003-04 and AY 2004-05 respectively. The penalties were imposed due to various additions/disallowances made by the AO based on a special audit u/s 142(2A). The CIT(A) allowed partial relief and sustained some additions, leading to the initiation of penalty proceedings.
  
  2. Justification for non-production of evidence due to fraud by Vice President, Finance:
  The assessee, a pharmaceutical manufacturing company, faced a fraud/defalcation by its Vice President, Finance, Shri S.G. Teredesai, from 2001 to 2006. This led to the inability to produce supporting vouchers/bills/evidences during the special audit. The CIT(A) noted that the fraud was an admitted fact, accepted by the department in various assessment orders and by the ITAT in related cases. The CIT(A) held that the non-production of evidence was justified due to the fraud and that the AO was incorrect in not admitting evidence produced later.
  
  3. Applicability of penalty provisions in light of the fraud and subsequent defalcation:
  The CIT(A) concluded that the assessee's claims were bona fide and made under a bona fide belief, as the returns were filed before the fraud was detected. The CIT(A) emphasized that the penalty provisions were not attracted as the assessee provided a detailed and justifiable explanation for non-production of evidence, supported by facts on record. The CIT(A) also referenced the Supreme Court decision in CIT vs. Reliance Petro Product, stating that merely making an unsustainable claim does not attract penalty u/s 271(1)(c).
  
  Tribunal's Decision:
  The Tribunal upheld the CIT(A)'s orders, noting that the facts and circumstances were similar to the case of M/s Universal Medicare Pvt. Ltd., where the penalty u/s 271(1)(c) was found unsustainable. The Tribunal emphasized that the assessee was a victim of fraud, and the AO had allowed the defalcation amount in subsequent years. The Tribunal concluded that the assessee did not conceal income or furnish inaccurate particulars, and the penalties imposed by the AO were unjustified.
  
  Conclusion:
  Both appeals by the Revenue were dismissed, and the orders of the CIT(A) cancelling the penalties imposed u/s 271(1)(c) for AY 2003-04 and AY 2004-05 were upheld.

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• 2012 (10) TMI 1061
  

  Addition u/s 14A - Held that:- Hon’ble Bombay High Court in the case of CIT vs. Reliance Utility (2009 (1) TMI 4 - BOMBAY HIGH COURT) has held that if the interest free funds are available to an assessee sufficient to meet with investments and at the same time the assessee had raised a loan it can be presumed that the investments were from the interest free funds available. In the present case before us considering the finding of co-ordinate Bench and of the CIT (A). it can be presumed that assessee was having sufficient funds for investments.

  In view of these facts and respectfully following the decision of High Court we are of the view that in the present case no interference is called for in the order of CIT (A) with respect to the disallowance pertaining to disallowance of interest amounting to ₹ 15,50,415/-. With respect to the disallowance of ₹ 1,39,125/-on account of administrative expenses, the factual position is that the assessee has stated it has not incurred any administrative expenditure A.O. has also not given a finding to the effect that the assessee has incurred expenditure towards exempt income.

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• 2012 (10) TMI 1060
  
  Issues involved: Assessment of undisclosed income, applicability of section 56(2)(v) of the Income Tax Act, 1961.
  
  Assessment of undisclosed income: The appellant, the Revenue, challenged the deletion of an addition made by the Assessing Officer (A.O.) in the assessment of an individual's income for the Assessment Year (A.Y.) 2004-05. The A.O. reopened the assessment after finding undisclosed income from a transaction involving a property known as "Avasia House." The individual, the assessee, had received a sum of money which was not offered for taxation. The A.O. treated this amount as taxable income under the head "income from other sources" and completed the assessment accordingly. On appeal, the Commissioner of Income Tax (Appeals) deleted the addition based on a Tribunal order in a previous case. The Revenue challenged this deletion, but the Tribunal upheld the decision of the Commissioner, citing that the sum received by the assessee had a legal consideration and thus was not taxable under section 56(2)(v) of the Act.
  
  Applicability of section 56(2)(v) of the Income Tax Act: The Tribunal, in its order, explained that the sum received by the assessee was in consideration of giving up rights to contest a will, which constituted legal consideration as per the Indian Contract Act, 1872. The Tribunal held that this consideration prevented the application of section 56(2)(v) of the Act, as the sum received was not without any consideration. Therefore, the additions made by the A.O. were directed to be deleted. The Tribunal declined to interfere with the decision of the Commissioner in deleting the addition, as no distinguishing features were presented by the Revenue. Consequently, the appeal filed by the Revenue was dismissed, upholding the deletion of the addition made by the A.O.
  
  *Order pronounced on 17-10-2012.*

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• 2012 (10) TMI 1059
  
  Issues Involved:
  1. Addition of computer/software charges.
  2. Disallowance of R&D expenses.
  3. Adhoc disallowance of sales promotion expenses.
  4. Disallowance of excess provision for leave encashment.
  5. Disallowance of short provision for expenses and discount.
  6. Disallowance invoking Section 40A(2)(b) regarding excessive payments to related parties.
  7. Charging interest u/s 234B and initiation of penalty proceedings u/s 271(1)(c).
  
  Summary:
  
  1. Addition of Computer/Software Charges:
  The assessee challenged the addition of Rs. 4,50,000/- as capital expenditure for computer/software charges. The Assessing Officer (A.O.) considered it as capital expenditure and allowed depreciation, resulting in a net disallowance of Rs. 3,15,000/-. The CIT(A) upheld this decision. However, the Tribunal found that no enduring benefit accrued to the assessee as the software project was not implemented and thus deleted the addition.
  
  2. Disallowance of R&D Expenses:
  The A.O. disallowed Rs. 2,35,743/- of R&D expenses, treating them as capital in nature, citing the Supreme Court's decision in Scientific Engineering House Pvt. Ltd. The CIT(A) confirmed this. The Tribunal, referencing the Himachal Pradesh High Court's decision in Engineering Innovation Ltd., remanded the matter back to the A.O. for fresh adjudication, allowing the ground for statistical purposes.
  
  3. Adhoc Disallowance of Sales Promotion Expenses:
  The A.O. disallowed 15% of sales promotion expenses amounting to Rs. 3,58,468/- due to lack of documentary evidence and personal element. The CIT(A) reduced this to 10%, amounting to Rs. 2,38,973/-. The Tribunal upheld the CIT(A)'s decision, finding no infirmity.
  
  4. Disallowance of Excess Provision for Leave Encashment:
  The A.O. disallowed Rs. 1,51,431/- as excess provision for leave encashment u/s 43B. The CIT(A) upheld this disallowance. The Tribunal, referencing the Calcutta High Court's decision in Exide Industries Ltd., found Clause-F of Section 43B arbitrary and deleted the disallowance.
  
  5. Disallowance of Short Provision for Expenses and Discount:
  The A.O. disallowed Rs. 4,39,182/- for short provision of expenses and discount, citing the mercantile system of accounting. The CIT(A) confirmed this. The Tribunal accepted the alternate plea to consider the allowability of these expenses in the respective years, allowing the ground for statistical purposes.
  
  6. Disallowance Invoking Section 40A(2)(b):
  The A.O. disallowed Rs. 8,03,556/- as excessive payment to a related party u/s 40A(2)(b). The CIT(A) upheld this. The Tribunal found no material evidence to show the payment was excessive and deleted the addition, as the onus of proof lies with the Revenue.
  
  7. Interest u/s 234B and Penalty u/s 271(1)(c):
  For the A.Y. 2005-06, the issue of research expenditure and sales promotion expenses were treated similarly to A.Y. 2004-05. The Tribunal allowed the research expenditure ground for statistical purposes, dismissed the sales promotion expenses ground, and allowed the disallowance invoking Section 40A(2)(b) ground.
  
  Conclusion:
  Both appeals were partly allowed for statistical purposes with specific directions for fresh adjudication on certain issues. The Tribunal pronounced the order in open Court on 31.10.2012.

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• 2012 (10) TMI 1058
  

  Whether expenditures incurred by the assessee are "fringe Benefits" u/s 115WB(2) - expenditures like Entertainment, Auditors Travelling, Driver Salaries etc. - Held that:- the expenses prescribed therein are liable to be considered as fringe benefits only to the extent the same are incurred in consideration for employment - the entertainment expenses have been incurred for guests of the company - Auditors are not employees of the assessee

  FBT on salary paid to driver - salary paid to a driver is taxable in his hands as Salary income and thus do not fall under of the provisions of section 115WB - Decided against the assessee.

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• 2012 (10) TMI 1057
  

  Disallowance of interest u/s 36(l)(iii) of the Act - Held that:- the money advanced by the assessee to M/s. Agarwal Steel was towards purchase of steel - made trade advances, which are adjusted against the purchases made during the year - it is evident that the money advanced by the assessee to M/s. Agarwal Steel is not an interest free loan, but a trade advance - Decided in favor of assessee

  Disallowance u/s 40a(ia) - whether TDS is applicable - Held that:- The amount has been paid by the assessee during the relevant previous year - no disallowance could be made under S.40a(ia) of the Act, in view of the Special Bench decision in the case of Merilyn Shipping Transports (supra)- Decided in favor of assessee

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