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Showing 201 to 220 of 920 Records
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2010 (7) TMI 1037
Addition on account of suppression of sale value to RPIPL - HELD THAT:- In the instant case the AO has brought on record that flats in the same building have been sold at a higher price than the sale price to RPIL and since the company has not paid the advance of ₹ 62 lakhs but only the directors of the company have paid such advance, we, therefore, are of the opinion that the CIT(A) was not justified in deleting the addition made by the AO. In this view of the matter, we set aside the order of the CIT(A) on this issue and restore that of the AO. This ground by the Revenue is accordingly allowed.
Deleting the addition - unaccounted profit - compensation for surrender of tenancy rights - HELD THAT:- We find the AO had conclusively proved that the tenancy right in case of Shri Vinay Bhasin is a bogus one. We find the CIT(A) in a very brief and cryptic order deleted the addition without any sound reasoning. In our opinion, if any wrong has been done in the past the same cannot be perpetuated in the subsequent assessment years. Since no evidence whatsoever was furnished either before the AO or before the CIT(A) that Shri Vinay Bhasin was a tenant in the erstwhile ‘Mariam Villa’, therefore, in our opinion, the CIT(A) was not justified in deleting the addition made by the AO. We accordingly set aside the order of the CIT(A) and restore that of the AO.
Disallowance of deduction - municipality taxes, maintenance charges etc - business expenditure - HELD THAT:- It is the settled proposition of law that for claiming any expenditure as business expenditure the onus is always on the assessee to substantiate with evidence to the satisfaction of the AO that such expenditure is wholly and exclusively for the purpose of business of the assessee. In the instant case the assessee has failed to discharge the onus cast on it. The learned CIT(A) without any proper evidence was simply carried away by the mere statement of the counsel which, in our opinion, is not proper. We, therefore, set aside order of the CIT(A) on this issue and restore that of the AO. The ground raised by the Revenue is accordingly allowed.
In the result, the appeal filed by the Revenue is allowed.
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2010 (7) TMI 1036
Issues involved: Appeal against deletion of penalty u/s 271(1)(c) by ITAT Ahmedabad.
Summary:
1. The Revenue appealed against the deletion of penalty u/s 271(1)(c) by the Commissioner of Income Tax (Appeals) for the Assessment Year 2006-07.
2. The Revenue contended that the assessee did not voluntarily add back the security transaction tax to the business profit, leading to the penalty imposition. The assessee claimed deduction for security transaction tax but failed to add it back as required by law.
3. The Commissioner of Income Tax (Appeals) deleted the penalty, considering the mistake as bonafide, as the amount was debited in the Profit and Loss account and credit was claimed for the tax. The mistake was attributed to oversight due to workload.
4. The ITAT observed that the mistake was not willful but a bonafide error by the Chartered Accountant. The Revenue argued that the tax should have been added back as per Section 40(a)(ib) of the Act, but the ITAT upheld the deletion of the penalty.
5. The ITAT found no concealment of income or inaccurate particulars, as the mistake was related to the computation of total income. The assessee admitted the error during assessment proceedings, showing cooperation with the authorities.
6. Considering the conduct of the assessee during assessment, the ITAT dismissed the Revenue's appeal, affirming the decision of the Commissioner of Income Tax (Appeals) to delete the penalty u/s 271(1)(c).
Judgement: The appeal of the Revenue against the deletion of penalty u/s 271(1)(c) by ITAT Ahmedabad was dismissed, upholding the decision of the Commissioner of Income Tax (Appeals).
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2010 (7) TMI 1035
Issues involved: Appeal against order u/s 263 of the Income Tax Act for assessment year 2005-06.
Summary:
1. The appeal was filed by the Revenue against the order passed by the Administrative Commissioner-VI, Hyderabad u/s 263 of the IT Act. The Commissioner found a capital accretion and unexplained cash deposits in the assessee's account.
2. The assessee submitted that the difference in the balance sheets was due to disclosing personal assets in the revised balance sheet. The assessing officer accepted the tax paid by the assessee. The representative argued that the Commissioner erred in revising the order.
3. The departmental representative contended that the increased capital needed proper explanation and the cash deposits were not adequately accounted for. The Commissioner rightly exercised powers u/s 263.
4. The Tribunal found that the difference in balance sheets was due to including personal assets in the revised one. The order of the assessing officer was deemed not erroneous or prejudicial to Revenue's interests.
5. Regarding cash deposits, the Tribunal noted that the disclosed income was sufficient to cover the expenditure. The Commissioner's restriction on considering only part of the income was deemed unjustified.
6. Referring to a previous Tribunal decision, it was emphasized that agreements between the assessee and the department should not be ignored unless fraudulent intentions were proven. The Tribunal set aside the Commissioner's order and allowed the appeal of the assessee.
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2010 (7) TMI 1034
Computation of capital gains - adoption of a higher value by invoking the provisions of section 50C on the date of sale agreement - AO adopted the value determined by the SRO - HELD THAT:- There is no dispute that the assessees herein entered into sale agreements on 04-6-2005 and the sale value fixed on that date was equivalent to the SRO rates fixed for stamp duty purposes. The conveyance deed was registered on 25.8.2005, i.e. within a period of three months. Though the SRO rates had been raised upwards on that date, the assessees herein have fulfilled a contractual obligation, which they are bound by law to carry out.
Since the process of sale has been initiated from the date of sale agreement, the applicability of provisions of section 50C should be looked at only on the date of sale agreement. In the instant cases, the question of adoption of a higher value by invoking the provisions of section 50C on the date of sale agreement does not arise as the sale value fixed by the assessees was equivalent to the SRO value for stamp duty purposes.
Therefore, we set aside the orders passed by CIT(A) in the hands of these two assessees and direct the AO to delete the addition made in the computation of capital gains in the hands of both the assessees.
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2010 (7) TMI 1033
Issues involved:
The judgment involves issues related to the initiation of proceedings under section 147, addition of unexplained cash credit under section 68, and the assessment under section 143(3)/147.
Initiation of proceedings under section 147:
The appeal was against the order confirming the Assessing Officer's action in making the assessment under section 143(3)/147. The AO initiated reassessment proceedings under section 147 by issuing notice under section 148 before the time limit for issuing notice under section 143(2) had expired. The argument was that income can be said to have escaped assessment only after the proceedings have been terminated by assessment under section 143(3) or when the time limit for issuing notice under section 143(2) has expired. Citing the case of Super Spinning Mills Ltd. Vs. Addl. CIT, it was concluded that the AO cannot initiate proceedings under section 147 when the time for issuing notice under section 143(2) has not expired. The Tribunal quashed the orders of the lower authorities and allowed the grounds of appeal of the assessee.
Addition of unexplained cash credit under section 68:
The Commissioner of Income-tax(Appeals) confirmed the action of the Assessing Officer in making an addition of Rs. 6,56,554 as alleged unexplained Cash Credit under section 68. The Commissioner held that the appellant had failed to explain the source for the Cash Credited in the Books. However, since the reassessment proceedings were quashed, there was no need to adjudicate this issue on merit.
Assessment under section 143(3)/147:
Ground Nos. 1 and 2 of the appeal were against the action of the Ld. CIT(A) in confirming the AO's action in making the assessment under section 143(3)/147 of the Income Tax Act. The AO had issued notices under sections 143(2) and 142(1) to the assessee and completed the assessment under section 143(3). The Ld. Counsel for the assessee argued that the AO cannot come to the conclusion of any escapement unless the return filed by the assessee is scrutinized. It was emphasized that income can be said to have escaped assessment only after the proceedings have been terminated by assessment under section 143(3) or when the time limit for issuing notice under section 143(2) has expired. The Tribunal, following the decision in the case of Super Spinning Mills Ltd. Vs. Addl. CIT, quashed the reassessment proceedings, thereby allowing the appeal of the assessee.
In conclusion, the Appellate Tribunal quashed the reassessment proceedings initiated under section 147 due to the premature issuance of notice before the expiration of the time limit for issuing notice under section 143(2). As a result, the appeal of the assessee was allowed, and there was no need to address the other grounds on merit.
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2010 (7) TMI 1032
Issues involved: The judgment involves the confirmation of addition on account of undisclosed income from discounting of cheques u/s.143(3) of the Income-tax Act, 1961 for the assessment year 2000-01.
Issue 1 - Undisclosed Income from Discounting of Cheques:
The assessee had surrendered an amount as current income during a survey u/s.133A, claiming inability to clarify the source immediately. The Assessing Officer added an amount as undisclosed income from discounting of cheques, based solely on the statement made during the survey. The CIT(A) upheld this addition, attributing the income to three concerns equally. The assessee challenged this in appeal.
Key Details:
- The assessee argued that the transactions were recorded in the books of account, and all relevant details were available in various records.
- The lower authorities did not consider the evidence provided by the assessee, including vouchers, registers, and statements.
- The addition was made solely on the basis of the statement recorded during the survey, without proper verification of the evidence.
- The assessee cited legal precedents to support the argument that additions cannot be made solely based on statements recorded during surveys.
Decision:
The Tribunal found that the addition was made solely on the basis of the statement recorded during the survey, without proper evidentiary support. Citing legal precedents, the Tribunal held that such statements during survey proceedings have no evidentiary value for assessment purposes. Consequently, the Tribunal allowed the appeals of the assessees, overturning the decisions of the lower authorities.
Conclusion:
The Tribunal ruled in favor of the assessees, highlighting the importance of proper evidence and legal principles in making additions to undisclosed income. The judgment emphasized the need for thorough verification and adherence to legal procedures in such cases.
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2010 (7) TMI 1031
Issues:
1. Claim of deduction u/s 80IB in original vs. revised return
2. Entitlement to claim deduction u/s 80IB after disallowance of deduction u/s 10B
3. Violation of Rule 46A in admitting an alternate claim without granting an opportunity to the AO
Analysis:
Issue 1: Claim of deduction u/s 80IB in original vs. revised return
The appeal was filed by the Revenue challenging the order of the ld. CIT(A) regarding the assessee's claim of deduction u/s 80IB. The ld. CIT(A) allowed the claim of deduction u/s 80IB for the first unit, even though the claim was withdrawn in the revised return. The Revenue argued that once a claim is withdrawn in the revised return, it cannot be entertained, citing various judgments. However, the Tribunal held that if the conditions for deduction u/s 80IB are satisfied, the claim can be considered, especially if directed by the appellate authority. The Tribunal relied on precedents to emphasize that if the claim is on record, it should be examined and decided in accordance with the law.
Issue 2: Entitlement to claim deduction u/s 80IB after disallowance of deduction u/s 10B
The assessee initially claimed deduction u/s 10B, which was disallowed by the AO. Subsequently, the assessee sought to claim deduction u/s 80IB for a separate unit. The AO rejected this claim due to procedural defects and investment exceeding the limit specified for the deduction. The ld. CIT(A) directed the AO to consider the claim of deduction u/s 80IB for the first unit, emphasizing that if the assessee is not entitled to deduction u/s 10B, a claim u/s 80IB can be made if the conditions are met.
Issue 3: Violation of Rule 46A in admitting an alternate claim without granting an opportunity to the AO
The Revenue contended that there was a violation of Rule 46A in admitting an alternate claim without providing an opportunity to the AO to rebut the claim. However, the Tribunal found no merit in this argument as there was no evidence of additional documents or evidence admitted by the ld. CIT(A) without due process. Therefore, the Tribunal rejected this ground raised by the Revenue.
In conclusion, the Tribunal dismissed the appeal filed by the Revenue, upholding the order of the ld. CIT(A) to allow the claim of deduction u/s 80IB for the first unit. The Tribunal emphasized the importance of examining claims based on the facts and legal provisions, even if initially withdrawn in a revised return, as long as the conditions for the deduction are met.
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2010 (7) TMI 1030
Issues Involved:
1. Validity of assessment orders passed u/s 143(3) in the name of a dissolved company.
2. Disallowance of foreign traveling expenses.
3. Treatment of non-competition fee as capital receipt versus revenue receipt.
Summary:
Issue 1: Validity of Assessment Orders
The primary issue raised by the assessee in the Cross Objection was the validity of the assessment orders passed u/s 143(3) in the name of Spice Corporation Ltd., which had been dissolved following its amalgamation with Mcorp Global P. Ltd. w.e.f. 1.7.2003. The assessee contended that the assessment orders were invalid and void ab initio. The CIT(A) upheld the assessment orders, considering the procedural defect as curable u/s 292B of the Act. The Tribunal concluded that the assessments were, in substance and effect, made against the amalgamated company, Mcorp Global P. Ltd., and thus were not invalid. The Tribunal held that the omission to mention the name of the amalgamated company was a procedural defect covered by Section 292B. The assessments were restored to the AO for fresh assessment after correcting the procedural defect, with a direction to provide a reasonable opportunity of being heard to the assessee.
Issue 2: Disallowance of Foreign Traveling Expenses
The revenue appealed against the CIT(A)'s decision to disallow the foreign traveling expenses. Since the assessment order was restored to the AO for fresh assessment, this issue was also remanded to the AO for fresh adjudication. The AO was directed to examine the facts and circumstances, including evidence produced by the assessee, to determine the connection of the foreign traveling expenses to the business activity of the assessee.
Issue 3: Treatment of Non-Competition Fee
In the Asstt. Year 2002-03, the revenue also contested the CIT(A)'s treatment of the non-competition fee as a capital receipt instead of a revenue receipt. This issue was similarly restored to the AO for fresh adjudication, with instructions to provide a reasonable opportunity of being heard to the assessee and to examine the evidence regarding the nature of the non-competition fee.
Conclusion:
The Cross Objections filed by the assessee were partly allowed for statistical purposes, and the appeals filed by the revenue were treated as allowed for statistical purposes. The Tribunal ordered the AO to conduct fresh assessments after addressing the procedural defect and providing a reasonable opportunity of being heard to the assessee.
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2010 (7) TMI 1029
Issues involved: Appeal against addition of unexplained cash credit under Section 68 of the Income Tax Act for A.Y. 2004-2005.
Summary:
The appeal was filed against the addition of &8377; 17,74,813/- as unexplained cash credit under Section 68 of the Income Tax Act for the assessment year 2004-2005. The assessee had given an advance to Bharat Jari Works (BJW) during the financial year 1-4-2001 to 31-3-2002, and a major part of the advance was returned. However, a portion of the repayment was mistakenly credited to the account of Shri Sultan Virani instead of BJW. The AO made the addition based on this credit entry in BJW's account. The assessee argued that no actual credit was received from BJW during the relevant accounting year and that the transaction with BJW occurred in the financial year 2001-2002. The Tribunal held that Section 68 can be applied only if there is an actual receipt of money by the assessee during the relevant accounting year. Since no amount was received from BJW during the relevant year and the transaction was completed in the previous financial year, the addition under Section 68 was deleted.
The learned DR contended that the credit entry in BJW's account justified the application of Section 68 by the AO. However, the Tribunal disagreed, emphasizing that Section 68 requires an actual receipt of money during the relevant accounting year. As no amount was received from BJW in the relevant year and the transaction occurred in the previous financial year, the Tribunal concluded that Section 68 could not be applied in this case. Therefore, the addition made by the AO was deleted, and the assessee's appeal was allowed.
The Tribunal ruled in favor of the assessee, stating that Section 68 of the Income Tax Act can only be applied if there is an actual receipt of money by the assessee during the relevant accounting year. Since no amount was received from BJW in the year under consideration and the transaction took place in the previous financial year, the addition made by the AO was deemed unjustified and was consequently deleted.
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2010 (7) TMI 1028
Issues Involved:1. Whether the sum of Rs. 3,80,02,500 received by the assessee on account of a business agreement should be treated as capital gain or business income. Summary:Issue 1: Treatment of Rs. 3,80,02,500 as Capital Gain or Business IncomeThe revenue appealed against the order of Ld. CIT(A)-IX, New Delhi, which treated the sum of Rs. 3,80,02,500 received by the assessee from a business agreement as capital gain instead of business income. The appellant company, incorporated in 1995, entered into a 'Specified Assets Transfer Agreement' with M/s. CMP Medica India Private Limited on 10th March 2006, transferring all rights, titles, and interests in its Healthcare Journals & Communications business. The assets transferred included periodicals, products, business intellectual property rights, customer database, records, editorial materials, and contracts. Additionally, the appellant relinquished the right to carry on any competing business for six years, retaining only a limited right to use the customer database for clinical trials. The Ld. CIT(A) decided in favor of the assessee, following the Tribunal's order in Rohan Software Pvt. Ltd. Vs ITO and ITO Vs Gurinder Kaur, directing the A.O. to assess the receipt as 'long term capital gain'. The revenue contended that the A.O. correctly assessed the receipt as 'business income' u/s 28(va) of the I.T. Act, arguing that the assessee did not sell the whole business but only surrendered rights regarding the publication of journals. The revenue also suggested allocating a portion of the sale consideration towards a non-compete fee, which should be assessed as business income. The assessee's counsel argued that the agreement primarily involved the transfer of intangible assets and not the non-compete undertaking. The consideration received was for the transfer of these intangible assets, and hence, it should be assessed as long-term capital gain. The Tribunal noted that u/s 28(va), sub-clause (a) does not apply if the amount is received on account of the transfer of the right to carry on any business, chargeable under 'capital gains'. The assessee transferred all trademarks, periodicals, product databases, editorial materials, and goodwill, and agreed not to compete for six years, indicating the receipt was for the transfer of business rights, not just a non-compete agreement. The Tribunal upheld the Ld. CIT(A)'s findings that the appellant transferred all intangible assets and gave up the right to carry on the Healthcare Journals & Communications business, making the receipt taxable as long-term capital gain. The Tribunal also rejected the revenue's argument that the assessee did not transfer the whole business, noting that the business of healthcare journals and clinical trials were independent. The appeal of the revenue was dismissed, and the decision was pronounced on 02nd July 2010.
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2010 (7) TMI 1027
Issues involved:
The issue involved in this case is whether the Income-tax Appellate Tribunal was correct in deleting penalties imposed under section 271(1)(c) for non-inclusion of interest free advances received by the assessee from a company in which she had substantial interest, as deemed dividend in her income.
Judgment Details:
The assessing officer imposed penalty assuming deliberate income concealment by the assessee, but the Commissioner of Income Tax (Appeal) found that the appellant was ignorant of the law and had no intention to conceal income, leading to deletion of the penalty. The Tribunal affirmed this decision, citing the principle that ignorance of law can be a valid defense. The Tribunal referenced judgments by the Apex Court and Bombay High Court emphasizing that penalty cannot be imposed solely due to ignorance of the law. It was noted that mere omission from the return does not constitute concealment unless there is evidence of intention to hide income. The Tribunal found no evidence that the assessee failed to disclose the advance payments with any intention to conceal income or provide inaccurate particulars.
The Court, under Section 260(A), concluded that no question of law was involved as the Tribunal had correctly decided all legal and factual aspects. Therefore, the appeal was dismissed, and parties were instructed to act on a signed copy of the order.
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2010 (7) TMI 1026
Issues involved: Assessment proceedings u/s 143 (1) and 148, non-issuance of notice u/s 143 (2), validity of assessments u/s 147, compliance with Sections 148 to 153, mandatory nature of notice u/s 143 (2), effect of non-issuance of notice on assessment validity.
The judgment pertains to assessment proceedings of a Company running a Hospital, where income tax returns for 1998-99 and 1999-2000 initially showed a loss. Subsequently, assessments for both years were reopened u/s 148, with notice u/s 148 issued. A notice u/s 142 (1) was also issued, and assessments were completed u/s 147/148 resulting in revised total incomes. The assessee raised a plea regarding non-issuance of notice u/s 143 (2), contending that it vitiates the assessment process. The Tribunal allowed the appeal based on this ground, leading to the Revenue filing present appeals.
The substantial questions of law admitted by the High Court included the justification of the Tribunal's decision regarding the validity of assessments u/s 143 (3)/147 without notice u/s 143 (2). The appellant argued that compliance with Sections 148 to 153 should suffice, without an additional requirement of notice u/s 143 (2). The issue of whether the assessee's participation in assessment proceedings without challenging the non-issuance of notice u/s 143 (2) constitutes acquiescence or waiver was also raised.
The appellant contended that the plea regarding non-issuance of notice u/s 143 (2) was not raised before the assessing authority, citing relevant case law. On the other hand, the respondent emphasized the mandatory nature of notice u/s 143 (2), citing judgments including one by the Supreme Court which deemed non-issuance of such notice as not curable and vitiating the assessment process.
Considering the arguments and precedents, the Court upheld the mandatory requirement of notice u/s 143 (2) for assessments u/s 147, emphasizing its non-curability and impact on assessment validity. Consequently, the appeals were dismissed, with the substantial questions framed being answered in favor of the assessee.
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2010 (7) TMI 1025
Additions u/s 69A - Undisclosed income - HELD THAT:- We find that the Ld. CIT(A) while partly allowing the assessee’s appeal held that the addition made by the AO on account of deposits in undisclosed bank accounts is directed to be restricted to the combined peak credit of ₹ 22,80,206.63. In this view of the matter, and in the absence of any controverting 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. Therefore, the appeal of the revenue is dismised.
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2010 (7) TMI 1024
Issues involved:
1. Exclusion of modvat/cenvat receipts for 80IB computation.
2. Netting off freight receipts for 80IB computation.
Exclusion of modvat/cenvat receipts for 80IB computation:
The appeal was filed by the Revenue against the order of the CIT(A)-II, Hyderabad for the assessment year 2006-07. The main issue was whether modvat/cenvat receipts should be excluded for 80IB computation. The Tribunal referred to the judgment of the Hon'ble Supreme Court in the case of Liberty India Vs. CIT, stating that duty drawback receipts and DEPB benefits do not form part of the net profits of eligible industrial undertakings for the purpose of deduction u/s 80I/IA/IB of the IT Act, 1961. The Tribunal emphasized that deductions under sections 80IA and 80IB are linked to profits derived from eligible business, not ownership, and any industrial undertaking eligible for deduction is entitled only to the profits derived from that undertaking. DEPB/Duty drawback incentives were deemed ancillary profits and not profits derived from industrial undertakings u/s 80IB. The Tribunal rejected the arguments of the assessee's representative, upholding the Revenue's appeal based on the Supreme Court's judgment.
Netting off freight receipts for 80IB computation:
The second issue pertained to whether freight receipts should be netted off against gross receipts for 80IB computation. The Tribunal cited a previous order in the case of Nirma Industries Ltd. Vs. ACIT, where it was held that only net transport receipts should be considered for exclusion while computing deduction u/s 80IA. Based on this precedent, the Tribunal confirmed the order of the CIT(A) on this issue. Consequently, the appeal of the Revenue was partly allowed.
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2010 (7) TMI 1023
Issues involved:
The issues involved in this judgment are the deletion of penalty u/s 271(1)(c) for quantum addition of commission paid to directors u/s 36(1)(ii) for assessment year 2003-04, and the deletion of addition made on account of commission paid to Director of the company and the allowance of depreciation on computer peripherals and accessories for assessment year 2007-08.
Issue 1: Deletion of penalty u/s 271(1)(c) for quantum addition of commission paid to directors u/s 36(1)(ii) (A.Y. 2003-04):
The revenue appealed against the deletion of penalty u/s 271(1)(c) by CIT(A) based on the ITAT's deletion of the quantum addition of commission paid to directors u/s 36(1)(ii). The ITAT upheld the CIT(A)'s decision, stating that since the quantum addition was deleted, the penalty was rightly deleted.
Issue 2: Deletion of addition made on account of commission paid to Director and allowance of depreciation on computer peripherals and accessories (A.Y. 2007-08):
The revenue contested the deletion of addition made on account of commission paid to Director and the allowance of depreciation on computer peripherals and accessories. The CIT(A) relied on the ITAT's order in the assessee's own case for A.Y. 2003-04 to delete the disallowance of commission paid to directors u/s 36(1)(ii). The CIT(A) also allowed depreciation @ 60% on computer peripherals and accessories, following Tribunal's decisions. The ITAT upheld the CIT(A)'s decisions on both grounds, dismissing the revenue's appeals.
This judgment highlights the importance of consistency in decisions across different assessment years and the significance of following Tribunal's orders in similar cases for the proper application of tax laws.
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2010 (7) TMI 1022
deduction of payment made to AWSC - HELD THAT:- we hold that the AO was in error in not following the order of the Tribunal on the very same issue on identical facts and circumstances and also in deviating, without reasons, from the observation of his predecessor A.O and also we hold that the first appellate authority was in error in confirming the order of the A.O.
In the result, we allow this ground of the assessee and direct the AO to allow deduction of payment made to AWSC on cash basis.
disallowance of repair and maintenance expenditure - HELD THAT:- The expenditure on repairs, as per the AO, are in the capital field. We are unable to endorse such a view. Just because the assessee has to incur expenses of repairs and maintenance, when the premises is given on lease, it cannot be held that the same becomes inadmissible. In any event, adhoc disallowances cannot be upheld. Respectfully applying the proposition laid down in case laws to the facts in the case of CIT vs. Binny Ltd. [1994 (11) TMI 27 - MADRAS HIGH COURT] and CIT vs. Jafarbhai Akbarlal and Bros. [1992 (1) TMI 17 - BOMBAY HIGH COURT] we delete the adhoc disallowance as confirmed by the first appellate authority, as none of the expenditure mentioned is in the capital field.
adhoc disallowance from out of professional fees paid, travel and conveyance expenses, staff training expenses, motor car expenses, telephone, fax and courier expenses and miscellaneous expenditure - HELD THAT:- The first appellate authority, in our considered opinion, has also not judiciously dealt with the matter. No disallowance can be made just for the sake of disallowance. In view of the lack of proper appreciation of the facts and lack of investigation and proper reasoning, we delete the disallowance and allow the appeal of the assessee.
deleting the addition of ₹ 2 crores - HELD THAT:- The CIT(A) held that ''In a scrutiny assessment of this nature, specific additions should be made and where the estimate is inevitable proper opportunity should be given to the appellant and a proper basis should be determined of the estimated disallowance. This has not been done in this case. This addition is, therefore, not sustainable and is ordered to be deleted. The appellant gets a relief of ₹ 2 crore''. Therefore, We agree with these findings of the CIT(A) and dismiss the appeal of the Revenue.
deletion of penalties u/s 271(1)(c) - THAT, we have deleted all the additions/disallowances made for both the assessment years in the quantum appeal, the penalties have no legs to stand on. Thus we quash the penalties levied for the assessment years 2003-04 and 2004-05 u/s 271(1)(c) and allow the appeals of the assessee.
In the result, we direct the AO to grant deduction to the assessee on all the remittances made to AWSC and claimed as deduction, and also to delete the addition as income under para 8.2(A) of the agreement with AWSC.
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2010 (7) TMI 1021
Issues Involved:
The issue in this case involves the treatment of loss incurred on derivative transactions as speculation loss or business loss for assessment year 2006-07.
Details of the Judgment:
Issue 1: Treatment of Loss on Derivative Transactions
The Assessing Officer (A.O.) found that the assessee claimed a loss on derivative transactions, which was not categorized correctly in the Profit and Loss (P/L) Account. The A.O. considered the loss incurred up to a certain date as speculation loss and the subsequent profit as business profit. The A.O. disallowed setting off the loss against other business income. The Commissioner of Income Tax (C.I.T.) upheld this decision. The appellant challenged this treatment, arguing that the loss should be considered a business loss, citing relevant case law.
Issue 2: Applicability of Special Bench Decision
During the hearing, the appellant's counsel referenced a decision by the Income Tax Appellate Tribunal (I.T.A.T.) in a similar case, where the Tribunal treated the loss on derivative transactions as a business loss. The Tribunal analyzed the provisions of Section 43(5) and the relevant clauses to determine whether the transactions fell under speculative business. The Tribunal concluded that the loss should be treated as a business loss based on the specific criteria outlined in the law.
Conclusion:
The Tribunal, based on the precedent and interpretation of the law, ruled in favor of the appellant. It held that the authorities erred in treating the loss on derivative transactions as speculation loss instead of business loss. Therefore, the addition made to the total income of the assessee was deleted, and the appeal was allowed.
This judgment clarifies the distinction between speculation loss and business loss concerning derivative transactions, emphasizing the importance of adhering to statutory provisions and case law in determining the tax treatment of such losses.
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2010 (7) TMI 1020
Issues Involved:
1. Whether the petitioner institution has been established by the Christian community which is a notified minority community.
2. Whether the petitioner institution has been established for the benefit of the Christian community.
3. Whether the petitioner institution is being administered by the Christian community.
Issue-wise Detailed Analysis:
Issue 1: Establishment by Christian Community
The petitioner school claimed it was established by the Buckley Primary School Trust, constituted by members of the Christian community. The petitioner provided the original trust deed of Buckley Primary School, Cuttack, proving that all trustees were from the Christian community. Additionally, a letter from the Director of Elementary Education, Orissa, confirmed the school's recognition by the State Government and its establishment in 1837 by the Diocese of Cuttack. The respondent did not contest these facts. The evidence showed that the school was founded by the Christian community to provide moral and liberal education in a Catholic atmosphere. Thus, it was concluded that the petitioner institution was established by the Christian community.
Issue 2: Benefit to Christian Community
The trust deed indicated that the beneficiaries of the petitioner school were members of the Christian community. This was further supported by an unchallenged affidavit from the Head Mistress of the petitioner school. There was no evidence to the contrary. Therefore, it was held that the beneficiaries of the petitioner institution were members of the Christian community.
Issue 3: Administration by Christian Community
The trust deed and a memo from the Director of Elementary Education confirmed that the petitioner institution was managed by the Diocese of Cuttack, which is part of the Christian community. This was corroborated by the affidavit from the Head Mistress. Consequently, it was held that the petitioner institution was administered by the Christian community.
Additional Considerations:
The issue of the percentage of Christian students admitted to the school was raised. The petitioner argued that a fixed percentage criterion for minority status was impractical and violated Article 30(1) of the Constitution, which guarantees minorities the right to establish and administer educational institutions. The Supreme Court's decisions in T.M.A. Pai Foundation, Islamic Academy of Education, and P.A. Inamdar were referenced to support this argument. These cases emphasized that minority institutions should primarily cater to their community's needs but also admit a reasonable number of non-minority students.
The court noted that the Christian population in Orissa was only 2.439%, making it difficult for the petitioner school to admit 50% Christian students. It was argued that rigid percentage criteria would undermine the rights guaranteed under Article 30(1). The court concluded that the identifying criteria of a fixed percentage for minority admissions was impractical and unconstitutional.
Conclusion:
The petitioner institution, Buckley Primary School, was established and administered by the Christian community and primarily benefited that community. The court declared the school eligible for minority status under Section 2(g) of the National Commission for Minority Educational Institutions Act and directed that a certificate be issued accordingly.
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2010 (7) TMI 1019
Issues involved: Appeal against order of CIT(A)-II, Surat regarding compensation received for granting right of user of agricultural land for laying out pipelines.
Details of the judgment:
1. The appeal was made by the assessee against the order of the CIT(A)-II, Surat dated 04.12.2009. The only ground raised in the appeal was regarding the compensation received from M/s. Gujarat Gas Co. Ltd. for granting the right of user of the agricultural land for laying out pipelines, questioning its taxability under the Income Tax Act, 1961.
2. During the hearing, it was explained that the Gujarat Gas Company Ltd. laid down underground pipelines in the assessee's agricultural land and paid compensation amounting to &8377; 2,80,245. The AO treated this compensation as income from other sources, while the CIT(A) considered it a capital receipt but directed the AO to compute capital gains. The Revenue accepted the CIT(A)'s order, leading the assessee to appeal before the ITAT against the direction to charge capital gains tax on the compensation.
3. The counsel argued that since there was no transfer of agricultural land or any other capital assets by the assessee, the compensation received should not be subject to capital gains tax. It was requested to modify the CIT(A)'s direction and hold that the compensation is a capital receipt not chargeable to tax.
4. The learned DR supported the CIT(A)'s orders, pointing out that the assessee had alternatively claimed in written submissions before the CIT(A) that the capital receipt may be charged to capital gains tax. However, the counsel clarified that the assessee had also detailed in the same submission that the capital receipt should not be taxed as capital gains due to the absence of asset transfer.
5. After considering the arguments and evidence, it was noted that there was no dispute that the compensation was received for laying down underground pipelines in the assessee's agricultural land. Since there was no transfer of capital assets to the Gujarat Gas Company Ltd., it was concluded that the receipt cannot be charged to capital gains tax as per section 45 of the Income Tax Act. Therefore, the order of the CIT(A) was partly modified, holding that the compensation received is a capital receipt not subject to tax.
6. Consequently, the ITAT allowed the assessee's appeal, and the order was pronounced in Open Court on 30/07/2010.
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2010 (7) TMI 1018
Liability of interest - the appellants have reversed the credit taken wrongly before utilization of the same - Held that: - similar issue decided in the case of Indo Shell Mould Ltd. Vs. CCE, Coimbatore [2010 (3) TMI 512 - CESTAT, CHENNAI], where in the light of the decision of Ind-Swift Laboratories Ltd. v. UOI [2009 (7) TMI 98 - PUNJAB & HARYANA HIGH COURT], it was held that no interest is chargeable - appeal allowed - decided in favor of assessee.
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