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Showing 201 to 220 of 1194 Records
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2013 (8) TMI 997
Penalty levied u/s 271AA - international transaction entered upon by the assessee with its associate concern - Held that:- We are in conformity with the findings of CIT (Appeals) that the order levying penalty under section 271AA of the Act was passed in perfunctory manner without giving requisite show cause notice and without affording proper opportunity to the assessee. Further there is no merit in the levy of penalty under section 271AA of the Act even on the merits of the case as the Inspector deputed to inspect the record of the assessee had given a report that the assessee had maintained requisite documents. No reliance can be placed on the second report of the Inspector as the same was not confronted to the assessee. Even otherwise there is no merit in the levy of penalty under section 271AA of the Act for the default of not maintaining details as per clause (a), (h) and (l) of Form No.10D, which were not maintainable by the assessee. The international transaction entered upon by the assessee with its associate concern has been held to be at arms’ length and as such there is no merit in the levy of penalty under section 271AA of the Act - Decided in favour of assessee.
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2013 (8) TMI 996
Addition on account of damaged/expired goods - Held that:- It is practice in the pharmaceuticals business that some products have to be expired or damages and all the retailers are not able to sell the goods within expiry of date, even branded goods some time expired. The appellant had shown expiry of goods’ percentage more than 4%. During the year, goods expired was ₹ 7,94,441/- and goods replaced at ₹ 1,46,60,484/- which is 2.46%, is reasonable. Keeping in view the past history of the assessee, the ld. A.O. had not brought on record any evidence that the appellant had made sale outside the books. Even, no evidence during the course of search were found, which was relevant to A.Y. 2005-06. The Settlement Commission also accepted the assessee’s disclosure of further any additional disclosure on this issue
Addition on account of non-genuine payment to M/s. Saffroys - Held that:- As the appellant had filed confirmation before the A.O. with signature and PAN no., if she has any doubt on confirmation, she should have verified this confirmation from her counter part at Kolkata. Ld. A.O. had given sufficient power under the IT Law, which has not been used by her. In absence of any contrary evidence against the appellant, the addition cannot be confirmed.
Addition on account of bogus purchases - Held that:- The search was relevant to A.Y. 2005-06, whatever evidences found during the course were relevant to A.Y. 2005-06 not 2006-07. The appellant had furnished the confirmation with PAN no. with full address of the purchase parties. On the basis of past history, no addition can be made without brining out any contrary evidence on record. If the A.O. has any doubt about the genuineness of the purchase, she should have inquire directly form the supplier or made any inquiry as per law. The ld. A.O. had not made out the case on the basis of evidence. The addition was made on the basis of evidence found in past, cannot be sustained
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2013 (8) TMI 995
Proceedings u/s 201 - Held that:- The survey proceedings and assessment proceedings are two different and distinct proceedings . The letter dated 14-01- 2009 was in continuation to the information gathered on 29-12-2008. Therefore, it cannot be said that proceedings u/s 201 of the Act was initiated. A bare reading of Section 201 makes it clear that it is invoked as a consequence of failure to deduct or pay tax. Therefore, in our considered view, the information gathered during survey proceeding and on the basis of such information, if the AO finds that assessee was required to deduct tax and the assessee has not deducted the tax or has not paid the tax after deduction then he would be empowered to invoke the provisions of Section 201 of the Act by issuing show cause notice for initiation of proceedings u/s 201 of the Act. Hence, the point of time when the AO finds that the assessee was required to deduct tax and has not deducted or paid consequence thereof, he issues the show cause notice to the assessee would be starting point for reckoning limitation for the purpose of Section 201 of the Act. In view of the above discussions, we find no merit in the ground raised by the assessee and the same is hereby rejected. - Decided against assesse.
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2013 (8) TMI 994
Issues Involved: Challenge to seizure of goods despatched from Delhi, lack of necessary documents for consignment, maintainability of writ petition, determination of legality of goods brought into Tripura, jurisdiction of assessing authorities.
Judgment Details:
1. The petitioner challenged the order seizing goods despatched from Delhi without necessary documents for consignment meant for B.S.F and C.R.P.F canteen stores. The High Court emphasized the need for caution when sending large consignments via courier service to prevent tax evasion. The State was advised to issue instructions on the maximum quantity of goods allowed through courier to avoid tax evasion.
2. The Court held that the writ petition was not maintainable at that stage, and the petitioner should approach the assessing authorities. The legality of bringing goods into Tripura and the location of sale were factual and legal questions to be determined by the assessing authority. The petitioner was given liberty to submit all supporting documents to the Assessing Officer within 15 days, along with a bank guarantee to cover any potential liabilities.
3. The assessing authority was directed to decide on the matter within 30 days of receiving the representation and documents. The final assessment by the Officer would be binding, and encashment of the bank guarantee would depend on the Officer's decision, not on higher appellate authorities. Upon furnishing the bank guarantee, the seized goods would be released to the petitioner.
4. The High Court disposed of the writ petition with the above observations, emphasizing the importance of complying with tax regulations and providing necessary documentation for goods transported into Tripura.
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2013 (8) TMI 993
Issues involved: Interpretation of settlement agreement, effect of interim orders on contract liability, stay against fresh tendering process, termination of contract, continuation of contract for different zones.
Interpretation of settlement agreement: The petitioner claimed a composite settlement, while the respondent Corporation admitted the settlement but argued that the petitioner still had a liability to pay as per the tender agreement. The Court noted that the interim order restrained the respondent from inviting fresh tenders, affecting the contract for Zone Nos.3 and 4.
Effect of interim orders on contract liability: The Court granted interim relief against the tendering process, blacklisting, and termination of the contract. However, on a subsequent date, the interim relief was modified, and the order regarding the contract was not extended, resulting in its vacation. The Court clarified the impact of these orders on the parties.
Stay against fresh tendering process: The Court differentiated between zones where the contract period had expired and those where it had not. For zones 1 and 2, where the contract had ended, the stay against fresh tendering was vacated. For zones 3 and 4, where the contract was ongoing, the matter was deferred for consideration when the regular bench is available.
Termination of contract: The respondent Corporation suggested withdrawing the termination order to allow the contract to continue and enable revenue generation. The petitioner indicated readiness to respond based on the Corporation's decision.
Continuation of contract for different zones: The Court allowed the Corporation to proceed with issuing fresh tenders for zones 1 and 2 following a clarification. The decision on continuing the contract for zones 3 and 4 was deferred for future consideration.
Conclusion: The matter was adjourned for further consideration, allowing time for the parties to address the issues raised during the proceedings.
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2013 (8) TMI 992
Issues involved: Pertaining to issuance of fresh tender notice and termination of contract.
Issuance of fresh tender notice: The case involved Special Civil Application No.3737 of 2013 concerning the issuance of a fresh tender notice. The respondent-Municipal Corporation accepted a proposal from Sun Communications, Vadodara, as communicated on 21.08.2013. The proprietor of Sun Communications, Mr. Kiranbhai Vasantrav Kadam, assured the Court of compliance with the proposal. As the respondent accepted the proposal, the petitioner had no remaining grievance, leading to the disposal of the Special Civil Applications with the discharge of the rule and vacation of interim relief.
Termination of contract: Special Civil Applications No.16742 of 2012, 16743 of 2012, and 16744 of 2012 were related to the termination of a contract. The Court noted that since the proposal made by the petitioner was accepted by the respondent-Corporation, the petitioner had no surviving grievance. Consequently, the Special Civil Applications were not pressed and disposed of with no order as to cost. Additionally, Civil Applications No.1947 of 2013 in Special Civil Application No.16743 of 2012 and Civil Application No.1945 of 2013 in Special Civil Application No.16744 of 2012, filed by the Municipal Corporation to vacate interim relief, were found to no longer survive and were disposed of accordingly.
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2013 (8) TMI 991
Rejection of books of accounts - Held that:- It would be appropriate that the issue is set aside to the file of the Ld.CIT(A) to adjudicate afresh on merits in respect of the issue pertaining to the rejection/reliability of the books of accounts produced by the assessee after giving due opportunity of being heard to the assessee for defending his case.
Disallowance of interest expense - Held that:- We find that we have set aside the issue of disallowance of interest in the case of the assessee to the file of the AO,while deciding the appeals filed by her for the AYs.1005-06 to 2007-08. Following our above referred order,we restore the issue to the file of the AO for fresh adjudication.He is directed to afford a reasonable opportunity of hearing to the assessee. As a result, appeals filed by the assessee for the AYs 1998-99 and 2000-01 stand partly allowed.
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2013 (8) TMI 990
Levy of penalty under Section 271(1)(c) - Held that:- No definite finding of fact or any contrary material has been brought on record to prove that the assessee has filed inaccurate particulars of income. In the absence any detailed discussion, any material on record, we are of the view that levy of penalty under Section 271(1)(c) of the Act in the facts and circumstances of the case at estimate of income, would not be warranted. - Decided in favour of assessee
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2013 (8) TMI 989
NP rate sustained at 7% subject to the depreciation and interest to the third parties - Held that:- In the present case, it is an admitted fact that certain discrepancies were pointed out by the AO in the books of accounts maintained by the assessee in his regular course of business. Therefore, the provisions of Section 145(3) of the Act were applicable and the books were liable to be rejected. When the books were rejected, the only way left to determine the income is estimation by applying the GP rate or NP rate. In the present case, the AO applied NP rate of 12.5%, which was reduced to 7% by the ld. CIT(A). The said estimates were without any basis or comparable case. It is also an admitted fact that in such type of cases, past history or comparable case is to be considered to estimate the income, but preference is to be given to the past history of the assessee’s own case. In the instant case, it is noticed that the NP rate shown by the assessee for the year under consideration was at 3.26% in comparison to 3.08% in the immediately preceding year. Therefore, keeping in view the past history of the assessee’ own case, it can be said that the NP rate shown by the assessee was progressive, so, no addition was called for even after rejecting the books of accounts.
Addition made by treating the FDR interest as income from other sources - Held that:- , it is not the case of the department that the FDRs were purchased by the assessee from surplus money, which was lying idle and had been deposited in the bank for the purpose of earning interest. On the contrary, the FDRs were purchased from out of money, which were necessary to get bank guarantee which was assessed to get the contract and there was a direct link with the purchase of FDRs and the contract awarded to the assessee. Therefore, ld. CIT(A) was not justified in holding that the AO rightly taxed the interest income as income from other sources. We, therefore set aside the impugned order of the ld. CIT(A) on this issue and direct the AO to treat the amount in question as business income.
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2013 (8) TMI 988
Issues Involved:
1. Deletion of addition on account of excess payment of interest to sister concern.
2. Deletion of addition u/s 40A(2)(b) on excess discount allowed to sister concern.
3. Deletion of addition u/s 40A(2)(b) on account of suppression of charges received for job work.
4. Deletion of addition on account of dividend stripping.
5. Confirmation of addition for the value of work-in-progress.
6. Charging of interest u/s 234A, 234B, 234C, and 234D.
Summary:
1. Excess Payment of Interest to Sister Concern:
The CIT(A) deleted the disallowance of Rs. 17,30,267/- made by the AO on account of excess interest paid to Vareli Fabrics Pvt. Ltd., following the Tribunal's decision for AY 2003-04. The Tribunal noted that the AO found the interest rate of 18% excessive compared to the market rate. The Tribunal remanded the matter back to CIT(A) for fresh decision, directing examination of the prevailing market rate during AY 2005-06 and applicability of Section 40A(2)(b).
2. Excess Discount Allowed to Sister Concern:
The AO disallowed Rs. 1,76,93,464/- u/s 40A(2)(b) for rate difference allowed to Kamla Associates, a sister concern. The CIT(A) deleted the addition, noting that Kamla Associates was the biggest customer, justifying the discount. The Tribunal remanded the matter back to CIT(A) for fresh decision, emphasizing the need to examine any agreement between the parties and consistency of such discounts in earlier or later years.
3. Suppression of Charges for Job Work:
The AO added Rs. 91,75,606/- for suppressed receipts from Kamla Associates compared to other parties. The CIT(A) deleted the addition, stating that job work for Kamla Associates involved larger lots, justifying lower rates. The Tribunal remanded the issue back to CIT(A) for fresh decision, requiring examination of the quality difference in job work between Kamla Associates, Garden Silk Mills, and outside parties.
4. Dividend Stripping:
The AO added income on account of dividend stripping, disputing the record date. The CIT(A) found the record date to be 24-02-2005, not 01-02-2005 as claimed by the AO. The Tribunal upheld CIT(A)'s finding, rejecting the Revenue's ground.
5. Value of Work-in-Progress:
The AO added Rs. 10,11,910/- for work-in-progress not shown in closing stock. The CIT(A) confirmed the addition. The Tribunal deleted the addition, following its decision in a similar case, noting no difference in facts.
6. Charging of Interest u/s 234A, 234B, 234C, and 234D:
The Tribunal noted that charging of interest is consequential and ordered accordingly.
Conclusion:
The appeal of Revenue is partly allowed for statistical purposes, and the CO of the assessee is partly allowed.
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2013 (8) TMI 987
Addition on the basis of admission obtained in the statement recorded u/s 133A - Held that:- here is a circular of CBDT No. 286/2/2003, and dated 11/03/2003, which restrain the survey team from taking forcible surrender. The mere fact that the survey team collected cheques in respect of advance tax payable on such surrender, is self evidence of possible pressure which may have been exerted on the assessee.The assessee has filed detailed working of stock available on the date of survey, the copies of which are again enclosed in AR’s paper book on page 28 to 36. The A.O. has made a addition of ₹ 25,68,277/- solely on the basis of the statement recorded at the time of the survey. This addition has been reduced by a sum of ₹ 3,24,000/- by correcting mistakes pointed out in the inventory, and has been sustained at ₹ 22,46,217/-. There are a raft of decision to the effect that solely on the basis of admission obtained in the statement recorded u/s 133A no addition can be made. - Decided in favour of assessee
Disallowance of interest paid to the creditors - Held that:- In fact a sum of ₹ 2.5 lacs was paid to S.P. Jain Management Institute, Mumbai, for the admission of his son in MBA. Later this amount was referred to the assessee who debited the same in his books in the name of S.P. Jain Management Institute instead of debiting his capital account. So the authorities guessed that this amount has been availed of without paying interest and therefore, an addition of ₹ 30,000/- as notional interest was made. Thus it is undisputedly found that there was a opening capital of ₹ 55,97,139/-and closing capital was of ₹ 75,52,870/- (APB – 22) on which no interest has been claimed. In these circumstances, the charging of notional interest is not justified. The A.O. has not even been able to establish nexus between the two. - Decided in favour of assessee
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2013 (8) TMI 986
Issues: Treatment of income from sale of shares as short term capital gain or business income.
Analysis:
The judgment deals with an appeal by the Revenue against the order of the Commissioner of Income-tax (Appeals) regarding the treatment of income from the sale of shares for the assessment year 2007-2008. The primary issue revolves around whether the income of Rs. 41,25,225 from the sale of shares should be considered as short term capital gain or business income.
Upon reviewing the facts, it was found that the assessee had earned income from the sale of shares amounting to Rs. 41.25 lakh, treated as short term capital gain. However, the Assessing Officer contended that this amount should be considered as business income instead of short term capital gain. The Commissioner of Income-tax (Appeals) disagreed with the Assessing Officer's assessment.
The Tribunal considered the submissions and the relevant material on record. It noted that in previous years, the profit on short term capital assets was consistently treated as short term capital gain. The Tribunal also observed that in the immediately succeeding assessment year, the income from the sale of shares under similar circumstances was accepted as short term capital gain. The Tribunal referred to a precedent set by the Hon'ble jurisdictional High Court emphasizing the principle of consistency in such matters.
Citing the case law, the Tribunal upheld the impugned order, stating that there should be uniformity and consistency in treatment when the facts and circumstances are identical. As the income from the sale of shares had been consistently accepted as short term capital gain in preceding and succeeding years, the Tribunal found no reason to deviate from this approach for the current year. Therefore, the Tribunal upheld the decision of the Commissioner of Income-tax (Appeals) regarding the treatment of the income from the sale of shares as short term capital gain.
In conclusion, the Tribunal pronounced the order on August 23, 2013, affirming the treatment of the income from the sale of shares as short term capital gain based on the principle of consistency and precedent established by the Hon'ble jurisdictional High Court.
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2013 (8) TMI 985
Issues: The judgment involves the taxation of interest on Income Tax refund at a lower rate as per the Double Taxation Avoidance Agreement (DTAA) between India and Japan.
Summary:
The appeal by the Revenue challenged the order directing the Assessing Officer (AO) to tax the interest on Income Tax refund at a lower rate as per the DTAA between India and Japan. The assessee, a company incorporated in Japan with a Permanent Establishment (PE) in India, claimed that the interest on Income Tax refund should be taxed at the rate provided in the DTAA. The CIT(A) allowed the claim based on the decision of the Special Bench of the Tribunal in the case of Clough Engineering Ltd. vs. ACIT.
The Tribunal noted that the issue was covered by the decision of the Special Bench in the case of ACIT vs. Clough Engineering Ltd. The Coordinate Bench also decided a similar issue in the case of Bechtel International Inc. vs. ADIT, following the Special Bench decision. The Tribunal interpreted the term "attributable" in the DTAA as equivalent to "effectively connected," leading to the conclusion that the interest income on Income Tax refund should be taxed under Article 11(2) of the DTAA, not under Article 11(5).
Based on the decisions of the Special Bench and the Coordinate Bench, the Tribunal upheld the order of the CIT(A) in favor of the assessee, deciding the issue in favor of the assessee. Consequently, the appeal of the revenue was dismissed.
The judgment was pronounced in the open court on August 8, 2013.
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2013 (8) TMI 984
Issues: Denial of recognition u/s 80G(5)(vi) of the Income-tax Act, 1961 to the assessee-society engaged in charitable activities.
The Appellate Tribunal ITAT Lucknow heard the appeal filed by the assessee against the order of the ld. Commissioner of Income-tax denying recognition u/s 80G(5)(vi) of the Income-tax Act. The assessee-society had applied for recognition on the grounds of engaging in charitable activities, supported by evidence of organizing Yoga camps. The ld. Commissioner denied recognition stating the dominant object of the society was to establish hospitals and provide medical treatment to the poor and senior citizens. However, no evidence was presented to show the society engaged in non-charitable activities. The Tribunal found the denial unjustified and directed the ld. Commissioner to grant recognition u/s 80G(5)(vi) to the assessee-society, as organizing Yoga camps was deemed charitable. The appeal of the assessee was allowed, and the order was pronounced on 7.8.2013.
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2013 (8) TMI 983
Disallowance of deduction u/s. 80IB - Held that:- As decided in assessee’s own case for AY 2007-08
the assessee’s eligible undertaking itself was independently carrying out the complete activity i.e. from mixing, grinding till the pelletisation. The raw materials once consumed cannot be reconverted into the same position. Its utility gets changed. The prime raw materials such as, maize, soya oil, rice bran, etc. can no more be regarded to be the rice bran, soya oil, maize.
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2013 (8) TMI 982
Issues involved: Denial of registration u/s 12AA and approval u/s 80G of the Income-tax Act, 1961.
Denial of registration u/s 12AA:
The appellant filed appeals against denial of registration u/s 12AA and approval u/s 80G. The Tribunal had directed the Commissioner to re-examine the claim independently. However, the Commissioner did not pass any order within the prescribed period. The appellant argued that as per precedents, if the Commissioner does not decide within six months, registration should be deemed granted. The Department contended that there is no provision for deemed grant if the order is not passed within six months. The Tribunal noted that the Commissioner's orders were passed after the six-month period. Referring to legal precedents, the Tribunal held that non-consideration within the specified time would result in deemed grant of registration. Consequently, the Tribunal directed the Commissioner to grant registration u/s 12AA.
Denial of approval u/s 80G:
The Commissioner had denied approval u/s 80G based on the denial of registration u/s 12AA. Since the Tribunal directed registration u/s 12AA, the basis for denying approval u/s 80G ceased to be valid. Therefore, the Commissioner was directed to grant approval u/s 80G to the assessee. As a result, both appeals of the assessee were allowed.
*Order pronounced on 7.8.2013.*
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2013 (8) TMI 981
Issues Involved:
1. Restriction of deduction u/s 36(1)(viia) to the extent of provision made in the profit and loss account.
2. Applicability of CBDT Instruction No.17/2008 over Circular No.702/1995.
3. Interpretation of section 36(1)(viia) in light of the Supreme Court decision in the case of Catholic Syrian Bank Ltd. vs. CIT.
Summary:
Issue 1: Restriction of Deduction u/s 36(1)(viia)
The assessee, a Cooperative Bank, claimed a deduction u/s 36(1)(viia) of Rs. 77,62,589, but the Assessing Officer restricted it to Rs. 6,50,000, the amount actually provided for in the books. The CIT(A) upheld this restriction, referencing Instruction No.17/2008, which mandates that the deduction for provision for bad and doubtful debts should be limited to the amount actually created in the books or the amount calculated as per section 36(1)(viia), whichever is less.
Issue 2: Applicability of CBDT Instruction No.17/2008
The CIT(A) noted that Instruction No.17/2008 prevails over Circular No.702/1995 and is binding on all officers within the jurisdiction of CBDT. The CIT(A) suggested that if the assessee is aggrieved by such circular, the proper course would be a Writ Petition before the High Court.
Issue 3: Interpretation of Section 36(1)(viia)
The assessee argued that the deduction should be based on a certain percentage of the total income and aggregate average advances made by rural branches, as per the decision of the ITAT Bangalore Bench in the case of Syndicate Bank. The assessee also cited the Supreme Court decision in Catholic Syrian Bank Ltd. vs. CIT, which held that clauses (vii) and (viia) of section 36 are distinct and independent. The Supreme Court emphasized that the legislative intent was to encourage rural advances and that the provisions should be interpreted to serve this legislative object.
Judgment:
The Tribunal noted that the decision in Catholic Syrian Bank Ltd. was not available to the Assessing Officer or CIT(A) at the time of their orders. Therefore, the Tribunal restored the issue to the file of the Assessing Officer for fresh adjudication in light of the Supreme Court decision and in accordance with the law, after giving due opportunity to the assessee. The appeals for both assessment years 2007-08 and 2008-09 were allowed for statistical purposes.
Conclusion:
The Tribunal directed the Assessing Officer to re-evaluate the assessee's claim for deduction u/s 36(1)(viia) considering the Supreme Court's interpretation in the Catholic Syrian Bank Ltd. case, ensuring the legislative intent of encouraging rural advances is upheld.
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2013 (8) TMI 980
Issues Involved:
1. Treatment of advances received for production of advertisement films as income.
2. Charging of interest on advances made to Directors.
3. Applicability of provisions of section 40(a)(ia) regarding TDS remittance.
Summary:
Issue 1: Treatment of Advances Received for Production of Advertisement Films as Income
The Revenue contended that advances received for production of advertisement films should be treated as income in the years they were received. The Assessing Officer (AO) added Rs. 76 lakhs and Rs. 2,28,62,500/- to the income of the assessee for assessment years 2008-09 and 2009-10 respectively, arguing that once a bill is raised, the amount received gains the character of income. The AO also noted that TDS was deducted on these advances.
The CIT(A) deleted these additions, observing that the assessee followed the project completion method of accounting, where income is recognized upon completion of the project. The CIT(A) found no infirmity in this method as the expenses related to incomplete projects were carried forward and claimed in the year the income was offered for tax.
The Tribunal upheld the CIT(A)'s decision, noting that the project completion method is a recognized method of accounting. The Tribunal emphasized that merely raising an invoice for receiving advance does not conclude that the advance is income for that year. The Tribunal also referenced decisions from the Delhi and Mumbai Benches of the Tribunal supporting the assessee's method of accounting.
Issue 2: Charging of Interest on Advances Made to Directors
The AO observed that the assessee had given advances to Directors and should have charged interest on these advances, estimating interest at 18% per annum. The AO disallowed the interest expenditure claimed by the assessee on vehicle loans.
The CIT(A) deleted the disallowance, stating that the advances to Directors were not out of borrowed funds and that charging interest was a business decision. The Tribunal confirmed the CIT(A)'s order, noting that the interest expenditure was incurred on borrowed funds used for business purposes, and no interest-bearing funds were utilized for advances to Directors.
Issue 3: Applicability of Provisions of Section 40(a)(ia) Regarding TDS Remittance
The AO disallowed Rs. 1,42,24,749/- of expenditure for assessment year 2009-10, as TDS on this amount was remitted beyond 31.3.2009 but before the due date for filing the return of income.
The CIT(A) vacated the disallowance, following the decision of the Hon'ble Calcutta High Court in CIT vs Virgin Creations, which held that the amendment to section 40(a)(ia) by the Finance Act, 2010, allowing no disallowance if TDS is remitted before the due date of filing the return, is retrospective.
The Tribunal upheld the CIT(A)'s decision, noting that the TDS was deposited within the due date of filing the return of income, and thus, no disallowance u/s 40(a)(ia) was warranted.
Conclusion:
Both appeals of the Revenue were dismissed, and the Tribunal confirmed the orders of the CIT(A) on all issues.
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2013 (8) TMI 979
Disallowance of interest - CIT(A) allowed claim - Held that:- Merely because of some of the occasion, there were credit balance in the current accounts, will not disentitle assessee’s claim of interest on the fund borrowed for the purpose of business. The rate of interest on the unsecured loan taken from the relatives cannot be compared to the rate of interest on the funds borrowed from banks, in so far as borrowings from banks are always secured loan provided after taking collateral and other securities Bank also mortgage the immovable property of assessee against the loan. However, loan from friends are relatives are generally unsecured, therefore, terms and conditions vis-ŕ-vis rate of interest on secured loans and unsecured loans are always different. In the immediately preceding year, the Assessing Officer has allowed 18% interest on some borrowings while framing assessment u/s 143(3). Accordingly, we do not find any infirmity in the order of CIT(A) for deleting the disallowance of interest.
Nature of income earned on sale of shares and securities - Held that:- There are so many other factors which are required to be considered while deciding the nature of income earned on such shares like volume and frequency of transaction, period of holding, past track record of assessee etc. . The ld. CIT(A) has deleted the addition by observing that volume of transaction alone cannot lead to presumption that gain would be assessable as business income. The ld. CIT(A) was not justified in ignoring the volume and frequency of transaction, while deciding the nature of income earned on sale of shares and securities, which were held as investment. In the interest of justice, the matter is restored back to the file of A.O. for deciding afresh.
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2013 (8) TMI 978
Unexplained cash credit - Held that:- The sum received by the assessee from Shri O.G.Krishnam Raju has been shown as advance in the accounts of the assessee and reflected on the liability side of the balance sheet. The amount was kept as advance for the reason that the film was not released in the impugned previous year and therefore, the assessee could not give the exhibition rights to Shri O.G.Krishnam Raju during the previous year and as such, no income arose to the assessee during the impugned previous year. The film was released in the succeeding previous year and the exhibition rights were given in favour of Shri O.G.Krishnam Raju. At that point of time, the assessee transferred this advance to income account and finally offered the same for taxation as part of his income for the subsequent assessment year 2007-08. The Commissioner of Incometax( Appeals) has clearly stated that the assessee has included this income in the computation of taxable income of the assessee for the subsequent assessment year. He has also made it clear that the assessee is following mercantile system of accounting, on which the Revenue has no grievance. - Decided in favour of assessee
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