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Showing 221 to 240 of 628 Records

• 2011 (12) TMI 574
  
  Issues involved: Assessment of income based on total contract receipts, disallowance of machinery hire charges, addition of additional income, delay in filing appeal.
  
  Assessment of income based on total contract receipts: The assessee contested the estimation of income on the entire receipts without considering commission received from subcontracting. The CIT(A) directed income estimation at 8% instead of 12.5% determined by the assessing officer. The Tribunal held that profit should be estimated on the main contract amount excluding subcontract payments. Referring to a previous case, income from subcontract was to be considered at 5% instead of 8%, ensuring the total income does not fall below the returned income.
  
  Disallowance of machinery hire charges: As the assessee did not maintain separate accounts for expenses, the Tribunal estimated income from machinery hire charges at 50% of the charges received.
  
  Addition of additional income: The assessing officer added extra income despite the assessee offering additional income during a survey. The Tribunal held that sustaining the additional income offered was not proper when the returned income was not accepted. The final income determined could not be lower than the total returned income plus the additional income offered.
  
  Delay in filing appeal: The Tribunal condoned the delay in filing the appeal after considering the reasons provided by the assessee.
  
  Conclusion: The appeal of the assessee was allowed, and the Cross Objection filed by the Revenue was dismissed as infructuous.

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• 2011 (12) TMI 573
  

  Claim of deduction u/s 80IB - Held that:- For allowing deduction to the assessee u/s 80-IB, the increased income after making disallowance u/s 40(a)(ia) should be considered.

  Disallowance u/s 40A(2b) - The assessee is eligible for deduction u/s 80-IB and hence, this amount should also be considered as income of the assessee while computing deduction allowable to the assessee u/s 80- IB.

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• 2011 (12) TMI 572
  
  Issues involved:
  Challenge to notice for reopening of assessment u/s 148 of Income Tax Act, 1961 and preliminary order for reassessment proceedings.
  
  Details of the judgment:
  
  Issue 1: Reopening of assessment beyond the prescribed period
  - Petitioner filed return for assessment year 2004-05 with all annexures and deduction u/s 80IB(10) was granted after scrutiny assessment.
  - Assessing Officer seeks to reopen assessment beyond 4 years without indication of non-disclosure of material facts, making the notice untenable.
  
  Issue 2: Reasons for reopening assessment
  - Reasons furnished by respondent stated that deduction under Section 80IB(10) was wrongly allowed due to the petitioner not undertaking a housing project as claimed.
  - Petitioner objected, arguing no concealment and reopening based solely on Finance Act amendment.
  - Assessing Officer rejected objections, citing duty of assessee to disclose all material facts and reliance on Supreme Court decision for reopening jurisdiction.
  
  Issue 3: Assessment order passed before court's permission
  - Court issued notice to respondent, directing not to pass final assessment without permission.
  - However, Assessing Officer passed assessment order on the same day, disallowing deduction under Section 80IB(10) and issuing demand notice and penalty.
  
  Issue 4: Court's decision
  - Court noted previous assessment details where deduction was allowed after due consideration of petitioner's business activities.
  - Court referred to previous cases where failure to disclose material facts was crucial for reopening jurisdiction.
  - Court allowed petition, quashing the notice for reopening and subsequent assessment order, as petitioner had disclosed all necessary facts for assessment.
  
  Separate Judgment:
  - Division Bench in Aayogan Developers case and Sadbhav Engineering Co. Ltd. case held that failure to disclose material facts is essential for reopening assessment.
  - Court in Pravinkumar Bhogilal Shah case also ruled in favor of assessee, emphasizing the need for full disclosure of material facts.
  - Court concluded that petitioner, being a works contractor, should be entitled to deduction under Section 80IB(10) and quashed the reopening notice and assessment order.
  
  This judgment highlights the importance of full disclosure of material facts by the assessee for assessment purposes and the limitations on the jurisdiction of reopening assessments beyond the prescribed period without evidence of non-disclosure.

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• 2011 (12) TMI 571
  

  Computing the exemption u/s 10A - Held that:- While computing the exemption u/s 10A, if the export turnover in the numerator is to be arrived at after excluding certain expenses, the same should also be excluded in computing the export turnover as a component of total turnover in the denominator.

  Disallowance u/s 40(a)(i)- Payments made by assessee to Cerner, USA - reimbursement of expenses OR “fees for technical services” (FTS)- Held that:- Both parties had agreed that the reimbursement payment cannot be liable to tax and the issue is covered by the order of the Tribunal in the case of IDS Software Solutions (India) Pvt. Ltd.(2009 (1) TMI 363 - ITAT BANGALORE-A ). Since the facts being identical, respectfully following the decision of the co-ordinate Bench of the Tribunal, we hold that the AO is not justified in making disallowance of Rs. .2,74,59,496 u/s 40(a)(i)

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• 2011 (12) TMI 569
  
  Issues involved: Appeal against order of CIT(A) dismissing appeals in limine for non-payment of admitted taxes u/s 249(4)(a) of the Act.
  
  Summary:
  The Appellate Tribunal ITAT Hyderabad heard two appeals by the assessee against a common order of the CIT(A)-I, Hyderabad for the assessment years 2006-07 and 2007-08. The main grievance of the assessee was against the CIT(A) dismissing the appeals in limine without considering the merits due to non-payment of admitted taxes as required u/s 249(4)(a) of the Act.
  
  The assessee submitted a letter to the CIT(A) stating that the admitted taxes had been paid for both assessment years, with a delay due to the collapse of the real estate market. The Tribunal found that the CIT(A) had not considered this letter and had dismissed the appeals solely based on non-payment of taxes. As the Departmental Representative did not contest the submissions of the assessee, the Tribunal set aside the CIT(A)'s order and directed the CIT(A) to admit the appeals, consider the request for condonation of delay in tax payment, and decide on the merits in accordance with the law.
  
  Ultimately, both appeals of the assessee were allowed for statistical purposes, and the order was pronounced in court on 26.12.2011.

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• 2011 (12) TMI 568
  
  Issues Involved:
  1. Deletion of addition of Rs. 37,77,847/- made by the Assessing Officer u/s 68.
  2. Deletion of addition of Rs. 1,88,890/- on account of alleged commission paid to broker.
  
  Summary:
  
  Issue 1: Deletion of Addition u/s 68

  During the assessment proceedings, the Assessing Officer (AO) noted that the assessee had shown Long Term Capital Gain (LTCG) from the sale of shares amounting to Rs. 37,77,847/-. The AO concluded that the income shown as LTCG was a sham transaction and added the amount u/s 68 of the Act, treating it as unexplained cash credit. The AO's conclusion was based on several observations, including the non-receipt of dividends, unserved letters to brokers, and discrepancies in the company's letterhead.

  In response, the assessee provided detailed submissions and evidence, including broker notes, contract notes, share certificates, and Demat account statements, to establish the genuineness of the transactions. The CIT (A) found that the AO failed to bring any evidence to show that the transactions were bogus or that the assessee paid unaccounted cash to the brokers. The CIT (A) held that the purchase and sale of shares were genuine and that the profit from the sale of shares was assessable as LTCG, not as unexplained cash credit u/s 68.

  The Tribunal confirmed the findings of the CIT (A), noting that the transactions were executed at prevailing market rates, the shares were credited to the Demat account, and the sale proceeds were received through account payee cheques. The Tribunal found no infirmity in the CIT (A)'s findings and upheld the deletion of the addition of Rs. 37,77,847/-.

  Issue 2: Deletion of Addition on Account of Alleged Commission

  The AO made an addition of Rs. 1,88,890/- on the basis that the transaction of sale of shares was an accommodation entry and that the assessee must have paid some commission to the broker. The CIT (A) deleted this addition, holding that since the transaction of purchase and sale of shares was genuine, there was no question of the assessee paying any commission over and above what was shown.

  The Tribunal confirmed the deletion of the addition, agreeing with the CIT (A) that the transaction of purchase and sale of shares was genuine and that there was no evidence to support the AO's claim of commission payment.

  Conclusion:

  The Tribunal dismissed the department's appeal, confirming the CIT (A)'s findings that the transactions were genuine and that the additions made by the AO were not justified.

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• 2011 (12) TMI 567
  
  The Appellate Tribunal CESTAT Mumbai rejected the revenue's application for rectification of mistake in an order, as the decision of the Bombay High Court relied upon was stayed by the Hon'ble Apex Court. The Tribunal found no mistake in relying on the Bombay High Court decision.

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• 2011 (12) TMI 566
  
  Issues involved: Application for waiver of pre-deposit of duty and penalty, determination of assessable value of goods cleared on stock transfer basis, violation of principles of natural justice.
  
  Summary:
  The case involved applications for waiver of pre-deposit of duty and penalty by M/s. Shyam Sel & Power Ltd. and M/s. Bajrang Lal Agarwal. The appellants were manufacturing Ingots and Sponge Iron and had cleared goods to their sister units on stock transfer basis. A show cause notice was issued alleging integrated method of determination of assessable value. The Adjudicating Authority confirmed the method and imposed duty on the differential value and penalty. The Tribunal remanded the case to decide afresh considering the principles of law laid down in a previous case.
  
  In the de novo adjudication, the impugned orders were passed. The Ld. Consultant argued that relevant documents were not considered, violating principles of natural justice. The Department argued that the adjudicating authority rightly determined duty liability and penalty based on valuation rules and verification reports.
  
  The Tribunal found that the invoices submitted by the appellants were not considered by the adjudicating authority. The Ld. Consultant failed to produce the invoices before the Bench for verification. Without submission of relevant invoices, it was not possible for the adjudicating authority to determine if prices of goods sold were applied to stock transfer goods. The Tribunal directed the appellants to deposit a specified amount within eight weeks, failing which the appeal would be dismissed.
  
  In conclusion, the Tribunal found that the appellant had not made a strong prima facie case for complete waiver of pre-deposit of duty and penalty. Compliance with the deposit directive was necessary to avoid dismissal of the appeal.

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• 2011 (12) TMI 565
  
  Issues Involved:
  The judgment involves the issue of disallowance of depreciation on goodwill for the assessment years 2004-2005, 2005-2006, and 2006-2007.
  
  Disposal of Appeals:
  The four appeals by the Revenue were directed against the order of the Commissioner of Income-Tax (Appeals), Ahmedabad and were disposed of with a consolidated order.
  
  Grounds for Disallowance:
  The main ground in all appeals was the deletion of additions on account of disallowance of depreciation on goodwill for different assessment years.
  
  Arguments Presented:
  The learned DR relied on the orders of the AO, while the counsel for the assessee relied on the orders of the CIT(A). The assessee-firm had paid amounts towards commercial rights to retiring partners and had exclusive rights for marketing products of its sister concern.
  
  Consideration of Submissions:
  After considering the submissions and orders, it was found that the common issue in all appeals was regarding the disallowance of depreciation on goodwill. The assessee had claimed depreciation on the intangible asset of "Goodwill" acquired from outgoing partners under Section 32(1)(ii) of the IT Act.
  
  Decision and Rationale:
  The CIT(A) found that the payments were made for acquiring intangible assets and tools of business, not just for goodwill. The retirement deed supported the position that the payments were for acquiring exclusive marketing and business rights. The order of the CIT(A) was upheld, confirming that denial of depreciation on goodwill was not justified.
  
  Outcome:
  The appeals of the Revenue were dismissed, and the order was pronounced in Open Court.

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• 2011 (12) TMI 564
  
  Issues involved: Challenge to order for confiscation and destruction of goods u/s Prevention of Food Adulteration Act, 1954; Request for permission to reprocess and re-export tea consignment.
  
  Confiscation and Destruction Order: The petitioner, engaged in tea import and export, faced rejection of 12 out of 13 containers of Indian Black Tea exported to Iraq due to non-conformance with standards u/s Prevention of Food Adulteration Act, 1954. Port Health Officer's analysis revealed excessive crude fiber percentage and inadequate shelf life. Petitioner's request for re-processing and re-exporting the goods was denied, leading to an order for confiscation, destruction, and a penalty of Rs. 10,00,000.
  
  Legal Challenge: Petitioner challenged the order, seeking permission to clear the tea consignment to a 100% export-oriented unit for re-processing and re-export. Argument centered on circulars indicating restrictions on clearance for domestic consumption, not export-oriented units. Petitioner proposed reprocessing at an export-oriented unit to improve quality and shelf life. Respondent contended goods unfit for domestic consumption due to non-compliance with standards.
  
  Judgment: The Court noted circulars referred to in the order pertained to goods imported for domestic consumption, not those rejected for re-import. Previous case precedent allowed reprocessing to meet standards. Petitioner's proposal for reprocessing at an export-oriented unit was deemed feasible to ensure compliance. Court directed the respondent to consider a realistic approach, permitting reprocessing and re-exporting upon submission of a representation, with conditions to prevent domestic sale. Decision to be expedited within a week, without interference in the penalty imposed. Petitioner retains the right to challenge the order through appropriate means.

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• 2011 (12) TMI 563
  
  Issues involved: Cross appeals by the assessee and Revenue against the order dated 6.5.2005 passed by the Ld. CIT (A) for the assessment year 2002-2003.
  
  Issue 1 - Disallowance of interest related to u/s 14A:
  - The assessee had invested borrowed funds in shares, resulting in disallowance of interest.
  - Ld. CIT (A) directed AO to calculate disallowance based on previous order.
  - Tribunal set aside the matter for fresh adjudication based on recent decisions and High Court rulings.
  - Grounds 1, 2, and 3 in assessee's appeal and Ground No. 1 in Revenue's appeal addressed this issue.
  
  Issue 2 - Disallowance of interest on interest-free loans:
  - AO disallowed interest on interest-free loans given to group companies.
  - Ld. CIT (A) directed AO to disallow interest as per previous calculation.
  - Tribunal held that interest-free loans were for business purposes and deleted the disallowance.
  - Ground No. 4 in assessee's appeal and Ground No. 2 in Revenue's appeal focused on this issue.
  
  The Tribunal, after considering submissions and legal precedents, set aside the orders passed by Revenue authorities on both issues. The matters were sent back to the AO for fresh adjudication in light of recent decisions and High Court rulings. The appeals were partly allowed for statistical purposes, with the disallowances of interest related to u/s 14A and interest on interest-free loans being deleted based on the Tribunal's findings.

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• 2011 (12) TMI 562
  
  Issues:
  - Allowance of depreciation amounting to Rs. 93,70,596 on certain fixed assets leading to possible double deduction.
  
  Detailed Analysis:
  
  Issue 1: Allowance of Depreciation and Double Deduction
  The appeal by the department challenged the order of the Ld. CIT(A) regarding the allowance of depreciation amounting to Rs. 93,70,596 on specific fixed assets for the assessment year 2007-08. The AO had initially disallowed depreciation, citing the possibility of double deduction. However, the assessee contended that depreciation should be allowed, referencing various case laws such as 198 ITR 598 (Guj.) and CIT vs. Rao Bahadur Calavala Cunnan Chetty Charities (1982) 135 ITR 485. The Ld. CIT(A) accepted the appeal, particularly relying on the judgment of the Punjab & Haryana High Court in the case of CIT vs. M/s. Tiny Tots Education Society, distinguishing it from the case of Escorts Ltd. & Others. The High Court clarified that allowing depreciation for computing income under Section 11 did not result in double deduction.
  
  Issue 2: Appeal by the Department
  The department, aggrieved by the decision of the Ld. CIT(A), filed an appeal seeking to set aside the order and reinstate that of the AO. The department's primary contention was that allowing the assessee's claim for depreciation would lead to double deduction, which was not permissible under the law.
  
  Issue 3: Arguments and Counter-Arguments
  During the proceedings, the counsel for the assessee supported the decision of the Ld. CIT(A) and urged for its confirmation. It was highlighted that multiple High Courts had taken a similar stance on the issue, and the Ld. CIT(A) had correctly relied on the recent judgment of the Punjab & Haryana High Court in favor of the assessee. On the other hand, the department reiterated its stance on the possibility of double deduction and sought the restoration of the AO's order.
  
  Issue 4: Tribunal Decision
  After hearing both parties and examining the evidence and precedents presented, the Tribunal upheld the decision of the Ld. CIT(A). The Tribunal found the Ld. CIT(A)'s reasoning just and appropriate, noting the absence of any contradictory judgments from the jurisdictional High Court or a higher court. Consequently, the Tribunal dismissed the appeal of the revenue, affirming the allowance of depreciation and rejecting the claim of double deduction.
  
  In conclusion, the Tribunal's judgment supported the allowance of depreciation on fixed assets, emphasizing that such allowance did not result in double deduction as feared by the department. The decision was based on a thorough analysis of relevant case laws and the specific circumstances of the case, ultimately upholding the appeal of the assessee and dismissing the revenue's appeal.

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• 2011 (12) TMI 561
  
  Issues involved: Appeal against CIT(A) order for Assessment Year 2005-06.
  
  Ground no. 2 - Municipal Taxes:
  The assessee claimed deduction for municipal taxes paid on adjoining premises used for business. Lack of evidence of actual business use led to disallowance of the claim. Appeal dismissed.
  
  Ground no. 3 - Repairing Charges:
  Discrepancy in TDS amount on repairing charges received from an associate concern. Entries in ledger accounts clarified the correct amounts. AO's addition based on TDS discrepancy deemed unjustified. Issue decided in favor of the assessee.
  
  Ground no. 4 - u/s 14A Disallowance:
  Dispute over disallowance u/s 14A of the IT Act on dividend income. Citing legal precedents, the matter was remanded to the AO for a fresh decision with proper consideration of expenses related to dividend income.
  
  Conclusion:
  The appeal was partly allowed, with the decision pronounced on 02-12-2011.

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• 2011 (12) TMI 560
  
  Issues involved:
  The judgment deals with the disallowance of deduction u/s 80IB of the Income Tax Act for the assessment year 2006-07.
  
  Issue 1: Disallowance of deduction u/s 80IB:
  The appellant filed its return of income after the specified due date u/s 139(1) of the Act. The appellant argued that the CBDT order extended the due date for filing the return of income for corporate assessees in the state of Gujarat. The assessing officer did not accept this contention, stating that the extension did not apply to Daman, where the appellant was based. The CIT(A) held in favor of the appellant, considering them as an income tax assessee in Gujarat. The Tribunal cited a similar case where the issue was decided in favor of the assessee, emphasizing that the jurisdiction of the assessing authority at Daman falls within Gujarat. The Tribunal upheld the CIT(A)'s decision, stating that no interference was warranted as the issue was already settled in favor of the assessee.
  
  Issue 2: Disallowance u/s 40(a)(ia) and deduction u/s 80IB:
  The revenue challenged the CIT(A)'s decision to allow deduction u/s 80IB on the disallowance u/s 40(a)(ia), arguing that it would lead to double benefit for the assessee. The Tribunal referred to a previous decision where it was held that even if an addition is sustained under section 40(a)(ia), the assessee would still be entitled to deduction u/s 80IB as it pertains to business profit. The Tribunal upheld the CIT(A)'s decision based on this precedent, stating that no contrary decision was presented. Therefore, the grounds raised by the revenue were rejected, and the appeal was dismissed.
  

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• 2011 (12) TMI 559
  
  Issues Involved:
  The appeal involves issues related to acceptance of additional evidence without opportunity to Assessing Officer u/s Rule 46A of IT Rules and deletion of disallowance u/s 43B of the Income-tax Act.
  
  Acceptance of Additional Evidence:
  The revenue appealed against the order of the CIT(A) for accepting additional evidence without affording any opportunity to the Assessing Officer u/s Rule 46A of IT Rules. The department alleged a violation of Rule 46A, stating that the evidence was not confronted with the assessing officer. However, the appellate tribunal found that the copies of RG 23 register were indeed filed before the assessing officer and referred to during appellate proceedings. Thus, the tribunal concluded that there was no violation of Rule 46A and dismissed the ground raised on this issue.
  
  Deletion of Disallowance u/s 43B:
  The dispute revolved around the disallowance made under section 43B of the Act concerning an outstanding excise duty liability. The assessee argued that the excise duty was paid before the due date by adjustment in the RG-23 register, which was not considered by the Assessing Officer. The CIT(A) examined the evidence and noted that the excise duty adjusted exceeded the outstanding liability, making any disallowance under section 43B unnecessary. The appellant also cited the Hawkins Cookers Ltd. case, where adjustment against MODVAT account was considered as payment of excise duty. The tribunal upheld the CIT(A)'s decision, stating that it was supported by the Hawkins Cookers Ltd. case and found no infirmity in the decision. Consequently, the appeal of the revenue was dismissed.
  

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• 2011 (12) TMI 558
  
  Issues Involved:
  1. Treating the return of block period as non-est.
  2. Confirming various additions as undisclosed investments and capital gains.
  3. Completing the assessment for the block period without issuing a notice u/s 143(2).
  
  Summary:
  
  Issue 1: Treating the Return of Block Period as Non-Est
  The assessee filed a return of undisclosed income for the block period on 13.11.2000, admitting 'Nil' income, in response to a notice u/s 158BC dated 31.5.2000. The CIT (A) observed that the return was filed beyond the 45-day period prescribed u/s 158BC, making it invalid. The CIT (A) cited case laws, including CIT v. S Raman Chettiar and Auto & Metal Engineers v. Union of India, to support the position that a return filed after the statutory period is 'non est'. Consequently, the requirement to issue a notice u/s 143(2) did not arise, as the return was invalid. The Tribunal upheld this view, agreeing that the AO followed the correct procedure by issuing a notice u/s 142(1) to complete the assessment.
  
  Issue 2: Confirming Various Additions
  The AO made several additions, including Rs. 51,000 as undisclosed investment in the Santej/Kalol land transaction, Rs. 13 lakhs as unexplained investment, Rs. 2.80 lakhs for the construction of a boundary wall and borewell, Rs. 13.4 lakhs as short-term capital gains on the sale of Santej land, and Rs. 58.55 lakhs as undisclosed capital gain related to payments to M/s. Maruti Construction. The CIT (A) dismissed the grounds related to these additions, as the assessee's representative chose not to press these grounds during the appellate hearing. The Tribunal noted that the assessee did not dispute this during the hearing and thus, these grounds required no further adjudication.
  
  Issue 3: Completing the Assessment Without Issuing Notice u/s 143(2)
  The assessee argued that the assessment was invalid due to the lack of a notice u/s 143(2). The CIT (A) and the Tribunal found that since the return was filed beyond the statutory period, it was invalid, and thus, the AO was not required to issue a notice u/s 143(2). The Tribunal upheld the CIT (A)'s finding that the AO correctly proceeded with the assessment by issuing a notice u/s 142(1), as mandated by clause (b) of s. 158BC.
  
  Conclusion:
  The Tribunal dismissed the assessee's appeal, affirming the CIT (A)'s decision that the return was 'non est' and that the AO followed the correct legal procedure in completing the assessment.

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• 2011 (12) TMI 557
  

  Share trading loss and profit from derivative transactions - Held that:- Trading of shares which is done by delivery transactions are not hit by Sec.43(5) as speculation. Similarly, derivative transaction in shares profit/loss is also not hit by Sec.43(5) of the I. T. Act, which deals about speculation transaction. As such, both profit/loss from all the share delivery transactions and derivative transactions are having the same meaning, so far as, Sec.43(5) of the I. T. Act is concerned.

  When once we held that the transactions done by delivery as well as the transactions of derivatives are not hit by section 43(5) of the Act it is in our considered view that the aggregation of the share trading loss and profit from derivative transactions should be done before the application of the Explanation to section 73 of the IT Act is applicable.

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• 2011 (12) TMI 556
  

  Share trading loss and profit from derivative transactions - Held that:- We are of the view that trading of shares which is done by delivery transactions are not hit by Sec.43(5) as speculation. Similarly, derivative transaction in shares profit/loss is also not hit by Sec.43(5) of the I. T. Act, which deals about speculation transaction. As such, both profit/loss from all the share delivery transactions and derivative transactions are having the same meaning, so far as, Sec.43(5) of the I. T. Act is concerned.

  When once we held that the transactions done by delivery as well as the transactions of derivatives are not hit by section 43(5) of the Act it is in our considered view that the aggregation of the share trading loss and profit from derivative transactions should be done before the application of the Explanation to section 73 of the IT Act is applicable.

  Addition u/s 14A - Held that:- AO has not disallowed any expenditure on account of interest. Therefore, respectfully following the decision of the Hon’ble Bombay High Court in the case of Godrej and Boyce Mfg. Pvt. Ltd. (2010 (8) TMI 77 - BOMBAY HIGH COURT) we consider it to set aside this issue to the file of AO and direct the AO to determine the disallowance u/s 14A of the IT Act after giving a reasonable opportunity of being heard to assessee. The assessee is also at liberty to establish whether there is any nexus of the expenditure issue and the exempted dividend income.

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• 2011 (12) TMI 555
  
  Issues Involved:
  The judgment involves issues related to assessment under section 143(3) of the Income Tax Act, 1961 for the assessment year 2003-04. The key issues include the correctness of the CIT(A)'s order, invoking provisions of section 145(3) of the IT Act, diversion of profits to a related party, deduction under section 80 HHC on labor charges, deduction under section 80 HHC on DEPB, and treatment of sales tax subsidy as a capital receipt.
  
  Issue 1: Addition of Suppressed Sales
  
  The Assessing Officer questioned the correctness of the CIT(A)'s order deleting the addition of Rs. 1,96,85,581, based on the difference in sale prices of marbles. The AO rejected the book results due to lack of evidence on varying invoice rates. The CIT(A) relied on previous Tribunal decisions and the High Court's affirmation, leading to the deletion of the disallowance. The Tribunal upheld the CIT(A)'s decision, citing lack of contrary evidence from the revenue department.
  
  Issue 2: Diversion of Profits to Related Party
  
  The AO added Rs. 12,65,917 as suppressed sales, alleging diversion of profits to a related party u/s.40A(2)(b) of the IT Act. The Tribunal found the sale and purchase transactions duly recorded in the books of account, supporting the director's earnings. The Tribunal upheld the CIT(A)'s decision, noting the absence of contradictory higher forum decisions presented by the revenue department.
  
  Issue 3: Deduction under Section 80 HHC on Labor Charges
  
  The AO contested the CIT(A)'s direction to allow deduction under section 80 HHC on labor charges, arguing lack of nexus with the export business. The Tribunal referred to the judgment in CIT vs. Bangalore Clothing Co., supporting the allowance of the deduction. The Tribunal dismissed the AO's grievance, aligning with the CIT(A)'s decision based on the High Court's ruling.
  
  Issue 4: Deduction under Section 80 HHC on DEPB
  
  The AO challenged the allowance of deduction under section 80 HHC on DEPB, citing the decision in the case of M/s. Kalpataru Colours and Chemicals Ltd. The Tribunal agreed with the AO, following the High Court's ruling that DEPB sale proceeds cannot be bifurcated and must be considered as profits for section 80 HHC.
  
  Issue 5: Treatment of Sales Tax Subsidy
  
  The AO disputed the deletion of Rs. 6,79,18,854 relating to sales tax subsidy, claiming it as a capital receipt exempt from tax. The Tribunal referred to the decision in DCIT vs. Reliance Industries, where it was held that such incentives are capital receipts. The Tribunal upheld the CIT(A)'s order, as no contradictory decision was presented by the department.
  
  In conclusion, the appeal was partly allowed, with various issues being dismissed or allowed based on the Tribunal's analysis and alignment with relevant legal precedents.

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• 2011 (12) TMI 554
  

  Addition on account of waiver of principal amount of loan - Held that:- Counsel for the Revenue was unable to establish that the amount of ₹ 14.12 crores represented any part of interest. From the Assessing Officers order we notice that the amount of ₹ 24.10 crores represented the principal amount an ₹ 14.12 crores and the unpaid interest of 9.98 crores both of which were waived by the Bank. Since we are not concerned with the waiver of unpaid interest, we find that the issue is squarely covered by the decision in the case of Chetan Chemicals Pvt. Ltd [2001 (10) TMI 12 - GUJARAT High Court]. We make it clear that we have proceeded on the footing that amount of ₹ 14.12 crores represented the principal amount alone waived by the Bank.

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