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Showing 221 to 240 of 1247 Records
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2012 (9) TMI 1038
Issues Involved:
1. Disallowance u/s 14A of the Act.
2. Rebate allowable u/s 88E.
3. Gross income from SIT transaction.
4. Addition of SIT paid to Total Income.
5. Deduction of direct expenses for determining income from dealing in shares & securities.
Summary:
1. Disallowance u/s 14A of the Act:
The assessee challenged the disallowance of expenditure u/s 14A by the Assessing Officer (AO). The CIT(A) held that Rule 8D was not applicable for the AY under consideration but section 14A was applicable. The CIT(A) directed the AO to re-compute the disallowance by applying a ratio based on the proportion of transactions yielding dividend income to total transactions. The Tribunal found no specific expenditure incurred for earning dividend income and ruled that no disallowance is called for when no actual expenditure has been incurred by the assessee for earning dividend income, following the decision of the Karnataka High Court in CCI Ltd vs JCITG.
2. Rebate allowable u/s 88E:
The AO restricted the rebate allowable u/s 88E to Rs. 12,31,251/- by applying a ratio of share trading income to total income. The CIT(A) upheld this methodology. The Tribunal directed the AO to apportion the common expenditure based on turnover rather than income and to verify whether the gross income shown by the assessee was before or after the deduction of STT. If the gross income was without deduction of STT, then no addition can be made for computation of rebate u/s 88E.
3. Gross income from SIT transaction:
The AO adopted the gross income from SIT transaction at Rs. 99,15,737/- as against Rs. 71,79,060/- declared by the assessee, alleging no specific denial by the assessee regarding the deduction of STT paid. The Tribunal directed the AO to verify whether the gross income shown by the assessee was before or after the deduction of STT and to consider the addition accordingly.
4. Addition of SIT paid to Total Income:
The AO added Rs. 27,36,677/- paid as STT to the total income, alleging no specific denial by the assessee. The Tribunal directed the AO to verify the facts and consider the addition based on whether the gross income was shown before or after the deduction of STT.
5. Deduction of direct expenses for determining income from dealing in shares & securities:
The AO did not adjust the direct expenditure of Rs. 12,37,578/- while computing the total income. The CIT(A) directed the AO to allow this deduction while determining the income related to STT. The Tribunal clarified that the deduction of Rs. 12,37,578/- is allowable both for computing the STT income for rebate u/s 88E and for computing the total income.
Conclusion:
The appeal filed by the assessee was partly allowed for statistical purposes, and the appeal of the revenue was dismissed. The Tribunal directed the AO to re-compute the disallowances and rebates based on the clarified methodologies and verifications.
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2012 (9) TMI 1037
Eligibility for benefit u/s 11 - unexplained investment in building - In respect of unexplained expenditure in the form of difference in building as per assessee’s books of accounts and as per estimate made by the Valuation Officer, we observe that the difference is very small and it cannot be considered for making addition because 10% of difference is always justified between physical valuation of a building and the amount appearing the books of accounts of the assessee. Therefore, we hold that Ld CIT(A) had rightly deleted the additions and we do not find merits in the appeal of revenue.
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2012 (9) TMI 1036
Rejection of books of accounts - profit estimation - Held that:- Similar books of account were rejected. In the grounds of appeal, there is no challenge to the rejection of books of account. There is no change in the facts and circumstances of the case as compared to the earlier year. The Tribunal in the earlier year confirmed the application of profit rate of 8%, but deleted the separate addition on account of interest income. Following the order of the Tribunal in earlier assessment year, we confirm the orders of the authorities below in applying the profit rate of 8%. However, the interest income of ₹ 78,200/- should not be added separately. The orders of the authorities below to that extent are set aside and modified and we direct that no separate addition on account of interest income be made in the case of assessee. Thus, the assessee will get relief of ₹ 78,200/- and rest of the order of the ld. CIT(A) is confirmed.
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2012 (9) TMI 1035
Scheme of Amalgamation - Held that:- The shareholders have unanimously approved the Scheme and the aspect that it has been stated in the affidavit filed by Milestone Tradelinks Pvt. Ltd., the petitioner Transferee Company, that it shall make all necessary disclosures in its Financial Statements as enumerated under Section 211(3B) of the Act, after the Scheme is sanctioned by this Court, there does not appear to be any legally justifiable reason for withholding sanction to the Scheme.
Considering the facts and circumstances of the case, it appears that the Scheme is in the interest of the Shareholders and Creditors of the respective Petitioner Companies.
Accordingly, all the petitions are allowed and the Scheme is sanctioned.
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2012 (9) TMI 1034
Deduction u/s. 80IA(4) - Held that:- Before us the assessee filed certain copies of tenders suggesting nature of activity carried on by the assessee and argued that the issue is already decided by this Tribunal in favour of the assessee by various decisions cited supra. However, at this stage we are not in a position to express any opinion on the nature of activities carried on by the assessee. The lower authorities had no occasion to examine the nature of activities carried on by the assessee.
It is appropriate to remit the issue back to the file of Assessing Officer for fresh consideration. While doing so, the Assessing Officer has to see whether the assessee carried on contract for sale or contract for work and the applicability of Explanation below section 80IA(13) of the Act.
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2012 (9) TMI 1033
Issues involved: Alleged action of Customs Authorities in withholding passport, legality of such action under Customs Act and Passports Act.
Details of the judgment:
Issue 1: Alleged action of Customs Authorities in withholding passport
The petitioner's passport was withheld by Customs Authorities after an incident involving the discovery of vaccines and injections in the petitioner's baggage. The petitioner was arrested under Section 104 of the Customs Act, 1962, and remanded to jail custody. Despite repeated requests, the passport was not returned to the petitioner. The Customs Authorities claimed the right to withhold the passport, but there was no provision under the Customs Act, 1962 allowing such action.
Issue 2: Legality of withholding passport under Passports Act
The Passports Act, 1967 governs passports and allows impoundment or revocation if criminal proceedings are pending. The Supreme Court in Suresh Nanda vs. CBI clarified that the Passport Authority has the power to impound passports under the Act. The Court held that the Customs Authorities had no jurisdiction to retain the petitioner's passport and ordered its return within 30 days. The Customs Authorities were advised to approach the passport authorities under Section 10 of the Passports Act, 1967 if necessary.
Significant legal references:
- Suresh Nanda vs. CBI highlighted the distinction between the Passports Act and general provisions like Section 104 of the Criminal Procedure Code regarding passport impoundment.
- Avinash Bhosale vs. Union of India emphasized that the Passports Act is a complete code for dealing with passport impoundment, and executive authorities cannot impound passports under other Acts like the Income-tax Act.
The judgment concluded by directing the return of the petitioner's passport and reminding the petitioner to comply with bail conditions. The writ application was disposed of, allowing for the issuance of an urgent certified copy of the order to the parties upon request.
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2012 (9) TMI 1032
Issues Involved:
1. Deletion of disallowance of depreciation on dumpers.
2. Deletion of disallowance of depreciation on tankers.
3. Deletion of disallowance of depreciation on windmill.
Summary:
Issue 1: Deletion of disallowance of depreciation on dumpers
The first issue raised in ITA No. 315/JU/2009 for Assessment Year 2006-07 pertains to the deletion of disallowance of depreciation on dumpers. The assessee claimed depreciation at 30% on dumpers, arguing they were transport vehicles registered under the Motor Vehicle Act. The Assessing Officer (AO) allowed only 15% depreciation, considering dumpers as construction equipment. The CIT(A) allowed 30% depreciation, following an earlier order. The Tribunal, referencing its previous decision in the assessee's case for Assessment Years 2004-05 and 2005-06, upheld the AO's view, stating dumpers are not transport vehicles and restored the AO's decision.
Issue 2: Deletion of disallowance of depreciation on tankers
The second issue involves the disallowance of depreciation on tankers. The AO disallowed depreciation, citing an inflated cost due to unaccounted discounts. The CIT(A) deleted the disallowance, referencing earlier appellate orders. The Tribunal, following its prior decision for Assessment Year 2005-06, found the CIT(A) exceeded jurisdiction and restored the AO's decision. For ITA No. 438/JU/2012, the Tribunal remanded the issue back to the AO for fresh consideration, aligning with observations from the earlier order.
Issue 3: Deletion of disallowance of depreciation on windmill
The third issue in ITA No. 438/JU/2012 concerns the deletion of disallowance of depreciation on windmill components. The AO allowed lower depreciation rates on civil work, electric items, and common power evacuation charges, disallowing Rs. 34,82,233/-. The CIT(A) allowed 80% depreciation, considering these components integral to the windmill. The Tribunal upheld the CIT(A)'s decision, referencing its earlier order in a similar case, stating the expenses were necessary for the windmill's installation and operation, thus qualifying for higher depreciation.
Conclusion:
The appeal in ITA No. 315/JU/2009 is allowed, restoring the AO's decisions on dumpers and tankers. The appeal in ITA No. 438/JU/2012 is partly allowed, with the issue of tankers remanded for fresh consideration and the CIT(A)'s decision on windmill depreciation upheld.
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2012 (9) TMI 1031
Issues involved: Assessment of penalty u/s 271(1)(c) for difference in stock valuation between bank statement and books of accounts.
Summary:
The appeal pertains to the assessment year 2001-2002 challenging the penalty imposed u/s 271(1)(c) by the Ld CIT(A) for a variance in stock valuation between the bank statement and books of accounts. The AO added an amount due to the difference in closing stock values as per the stock statement submitted to the bank and the P&L account. The penalty was confirmed by the CIT(A), leading to the second appeal by the assessee.
The assessee contended that the stock valuation was inflated to secure a higher loan amount from the bank, not with the intention of concealing income. The assessee cited precedents to support the argument that non-acceptance of explanation does not warrant penalty. The Revenue, however, maintained that the penalty was justified due to inaccurate particulars furnished by the assessee.
Upon review of submissions and orders, it was observed that the stock statement to the bank was for loan purposes and did not indicate deliberate concealment of income. The practice of showing inflated stock values to banks for financial benefits was considered common in business circles. Citing the decision of the Calcutta High Court, it was concluded that penalty u/s 271(1)(c) cannot be imposed solely based on figures provided to the bank for loan purposes. Consequently, the penalty was deemed unjustified, and the appeal of the assessee was allowed.
In conclusion, the penalty u/s 271(1)(c) for the variance in stock valuation between the bank statement and books of accounts was deemed unwarranted, and the lower authorities' orders were set aside in favor of the assessee.
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2012 (9) TMI 1030
The Supreme Court granted leave for the appeal to be heard on the SLP paper book, allowing parties to file additional documents if needed. (Case: 2012 (9) TMI 1030 - SC)
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2012 (9) TMI 1029
Issues involved: Appeals against two different orders dated 16.08.2011 passed by the ld. CIT(A)-II, Agra for the A.Ys. 2006-07 & 2007-08.
Addition of &8377; 15,37,500/- disallowance out of interest payment:
The assessee, engaged in real estate development, borrowed money, paid interest, and gave interest-free advances to sister concerns. The A.O. disallowed &8377; 15,37,500/- of interest payment claimed under section 36(1)(iii) of the Act. The CIT(A) upheld the disallowance as the assessee failed to prove the advances were for business purposes. However, the I.T.A.T. found that the assessee had sufficient own capital and reserves to cover the interest-free advances, following precedents. The additions were deleted for both A.Ys. 2006-07 & 2007-08.
Addition of &8377; 24,69,235/- under section 14A of the Act:
The A.O. disallowed &8377; 24,69,235/- under section 14A of the Act for investments in shares, citing Rule 8D. The CIT(A) confirmed the disallowance, noting the increase in share investments without apportioning any expenses. However, the I.T.A.T. held that no disallowance was warranted as the assessee had sufficient interest-free funds to cover the investments, as per various judicial pronouncements. The additions were deleted for both A.Ys. 2006-07 & 2007-08.
Separate Judgement:
The I.T.A.T. allowed both appeals, deleting the additions made by the A.O. for disallowance of interest and under section 14A of the Act for both A.Ys. 2006-07 & 2007-08, based on the assessee's sufficient own capital and reserves to cover the transactions.
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2012 (9) TMI 1028
Activity of transacting in shares/mutual funds by engaging a Portfolio Management Service - capital gains OR business income - Held that:- The Investment Objective of the assessee mandated to the PMS provider was to achieve growth prospects and the actuality of transactions carried out by the PMS provider in order to achieve the stated Investment objective of the assessee cannot be made a basis to charge the assessee of having a different objective. Considering the aforesaid matters, we, therefore, are of the view that the objections made out by the Assessing Officer have been adequately addressed by the Commissioner of Income-tax (Appeals) in coming to his findings that the investments carried out by the assessee through the PMS provider do not result in a gain assessable as business income.
Addition u/s 14A - Held that:- CIT(A) has given a categorical finding that expenditure on PMS has not been claimed by the assessee and there does not remain any other expenditure other than this expenditure, therefore, no disallowance u/s.14A r.w. Rule8D can be made. The above factual finding given by the learned CIT(A) could not be controverted by the learned DR. Under these circumstances, we hold that the learned CIT(A) was justified in deleting the disallowance made by the AO.
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2012 (9) TMI 1027
Deduction u/s 80JJAA - workmen as employed for more than 300 days - loss on damage - shipment of computers - revenue or business loss - TP Adjustment - capital loss u/s 45(1) - HELD THAT:- As a matter of fact, the assessee had placed order for supply of machinery. When the equipment was in transit, according to the assessee, it got damaged and returned to the supplier. The Insurance Company had compensated the assessee a part of the cost of the asset so damaged. As rightly pointed out by the AO, the difference between the cost of the equipment and the amount so reimbursed by the Insurance Company was a capital loss having been incurred in relation to acquisition of a capital asset. The nature of expenditure has to be decided by the objective with which it is incurred and not by the nomenclature or the accounting treatment given to the expenditure.
The main objective of the assessee was to acquire the machinery and naturally the entire expenditure for its acquisition will have to be capitalized. In the instant case, the equipment got damaged while in transit, the Insurance Company after duly assessing the damage compensated a portion of the cost of the equipment. Moreover, the assessee had treated the receipt of the insurance claim as a capital receipt in its accounts. Thus, the remaining portion of the cost of the equipment, as rightly observed by the AO and subsequently sustained by the CIT (A), cannot be allowed as a revenue loss.
Therefore, we are of the considered view that the AO was fully justified in rejecting the assessee’s claim of deduction being the loss on account of damage to an asset.
We find that there has been no finding recorded by the first appellate authority. With regard to the assessee’s other alternative claim of loss on account of damage of computer equipments constitutes short term capital loss u/s 45(1A) of the Act, we would like to point out that the assessee had not raised this contention before the lower authorities. However, since the claim is purely a legal issue, in the interest of justice, we are of the view that the matter needs to be considered by the CIT(A).
Thus, both the alternative claims are restored back to the file of the CIT (A)-LTU with a specific direction to address to the grievance of the assessee after obtaining the required clarifications from the assessee, if need be, and to take appropriate action in accordance with the provisions of the relevant Act. It is ordered accordingly.
TP Adjustment : We are of the view that since the CIT(A) has not considered the issue, the matter needs to be restored to the CIT(A) for denovo consideration. It is in doubt, after having accepted the MAP resolution passed by the competent authority, whether the ALP arrived at can be altered. However, since the issue was not disposed off by the CIT(A), addressing the assessee’s contention, we deem it fit and proper to restore the matter to the CIT(A).
Accordingly, ground no.9 raised by the assessee is treated as allowed for statistical purposes.
Deduction u/s 80JJAA - Employees worked for less than 300 days in the previous year - We have perused the findings of the Hon’ble earlier Bench for the AYs 2001-02 and 2002-03 in the assessee’s own case wherein the Hon’ble Bench had allowed the claim of deduction.
Therefore, we are of the considered view that the issue requires re-examination. The CIT(A) had set aside the assessment giving specific direction to Assessing Officer to disallow the 80JJAA claim in respect of permanent employees salary who have worked for less than 300 days in the concerned previous year. The CIT(A) has not considered the assessee’s elaborate submission in respect of the issue. Therefore, in the interest of justice and equity, the matter is remanded to the CIT(A) for fresh consideration. It is ordered accordingly.
In the result, the assessee’s appeal is partly allowed for statistical purposes.
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2012 (9) TMI 1026
Issues involved: Reopening of assessment u/s 148, Addition u/s 2(22)(a) of the Act, Validity of reassessment proceedings.
Reopening of assessment u/s 148:
The appellant objected to the reopening of the assessment, contending that it was bad in law. The appellant raised additional grounds challenging the validity of the reassessment proceedings. The CIT(A) noted that the appellant did not file clarification on the additional ground raised, which was based on legal issues. The CIT(A) observed discrepancies in the reasons recorded by the Assessing Officer for reopening the assessment. The CIT(A) analyzed the issues considered for reopening and concluded that the AO did not exceed the scope of section 147 of the Act. The additional ground raised by the appellant was dismissed by the CIT(A).
Addition u/s 2(22)(a) of the Act:
The Assessing Officer made an addition of &8377; 44,04,467/- u/s 2(22)(a) of the Act, pertaining to deemed dividend on a gift received from a company. The appellant challenged this addition before the CIT(A), arguing that the issue of deemed dividend was not part of the original assessment u/s 143(3). The CIT(A) reviewed the reasons recorded for reopening and found that the issue of deemed dividend was considered along with other issues. The CIT(A) held that the reassessment order was valid in this regard.
Validity of reassessment proceedings:
The appellant contended that the reassessment proceedings should be quashed as there was no failure to disclose material facts. The appellant cited various case laws to support this argument. The Tribunal noted that the reasons recorded for reopening were not furnished to the assessee in a timely manner, as required by law. Citing legal precedents, the Tribunal held that the reassessment order passed without supplying the reasons for reopening was invalid. Consequently, the Tribunal set aside the assessment as invalid and allowed the appeal of the assessee.
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2012 (9) TMI 1025
Issues Involved:
1. Deletion of addition out of repair expenses treated as capital expenditure.
2. Deletion of addition on account of fall in gross profit.
3. Deletion of addition u/s 40(a)(ia) on account of non-deduction of TDS on ocean freight expenses.
4. Deletion of addition on account of under valuation of closing stock u/s 145A.
Summary:
1. Deletion of Addition out of Repair Expenses Treated as Capital Expenditure:
The Revenue challenged the deletion of Rs. 29,52,263/- out of repair expenses treated as capital expenditure. The Assessing Officer (AO) had allowed only 25% of the claimed expenses as revenue expenditure, adding the remaining amount to the assessee's income. The CIT(A) found that the expenses were for repairs and replacements, not capital in nature, and improved yield and productivity without creating new assets or enduring benefits. The Tribunal upheld the CIT(A)'s decision, noting the AO's failure to identify specific items as capital expenditure and confirming that the expenses were necessary due to the nature of the business and the age of the machinery.
2. Deletion of Addition on Account of Fall in Gross Profit:
The Revenue contested the deletion of Rs. 44,68,426/- added due to a fall in gross profit (GP). The AO had estimated the GP rate at 24% due to a significant decline from the previous year's 50.70% to 3.96%. The CIT(A) accepted the assessee's explanations, including lower production levels, change in product mix, and increased excise duty, and found no defects in the maintenance of accounts. The Tribunal partially upheld the Revenue's appeal, restricting the GP addition to 10%, directing the AO to recalculate the income accordingly.
3. Deletion of Addition u/s 40(a)(ia) on Account of Non-Deduction of TDS on Ocean Freight Expenses:
The Revenue appealed against the deletion of Rs. 3,71,878/- added u/s 40(a)(ia) for non-deduction of TDS on ocean freight expenses. The CIT(A) relied on Circular No. 723, which states that provisions of section 172 override section 194C, and no TDS is required for payments to non-resident shipping companies. The Tribunal upheld the CIT(A)'s decision, confirming that the payments were reimbursements to non-resident shipping agents and not subject to TDS u/s 194C.
4. Deletion of Addition on Account of Under Valuation of Closing Stock u/s 145A:
The Revenue challenged the deletion of Rs. 1,49,882/- added for under valuation of closing stock without including excise duty as required u/s 145A. The CIT(A) relied on the Supreme Court decision in CIT v. Indo Nippon Chemicals Co. Ltd. and other precedents. The Tribunal set aside this issue, remitting it back to the AO to recalculate the closing stock as per section 145A, considering the amendment effective from 1-4-1999.
Conclusion:
The Tribunal partly allowed the Revenue's appeal for statistical purposes, upholding some findings of the CIT(A) while remanding others for recalculation.
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2012 (9) TMI 1024
Concept of real income approved in the case of banking business - whether Assessee can offer his interest received from bad and doubtful debts (NPA) on actual basis as per RBI guidelines even though assessee is following mercantile systems of accounting - section 43D applicability - Held that:- We find that this issue stands squarely covered in favour of the assessee by the decision of the ITAT,”A” Bench, Pune, in the case of CIT, Cir 3, Nanded Vs. Osmanabad Janta Sahakari Bank Ltd. [2015 (3) TMI 886 - ITAT PUNE].
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2012 (9) TMI 1023
Addition made on account of sticky advances - Decided in favour of assessee - See ACIT Versus Osmanabad Janta Sah. Bank Ltd. [2015 (3) TMI 886 - ITAT PUNE]
Accrual of interest - interest on FDRs with NDCC Bank accrued with period of time - Held that:- there is no dispute to the factual position that the NDCC Bank is restrained from carrying on routine business transactions, inter alia, which pertains to accepting fresh deposits and/or repaying existing deposits, etc. As a consequence, it is quite clear that there is a genuine impairment on the part of the assessee to earn the impugned amount of interest on FDRs with NDCC Bank. In this background, the ultimate direction of the CIT(A) that the Assessing Officer may tax the interest on accrual basis, whenever NDCC Bank is allowed by the Reserve Bank of India to repay deposits or interest to the assessee, is reasonable and cannot be faulted with. We accordingly find no justifiable reasons to uphold the action of the Assessing Officer in taxing the amoun
Addition made on account of payment of ex-gratia - Held that:- We find no error on the part of the CIT(A) in giving a direction to the Assessing Officer to verify the facts and then allow the deduction subject to payment having been made. We uphold the order of the CIT(A) on this issue.
Addition on leave encashment - Held that:- The account statement shows that the expenditure claimed and actually paid during the year which reflects the liability arising during the year itself and it has been actually paid. In this view of above factual matrix, we find that the CIT(A) made no error in deleting the addition
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2012 (9) TMI 1022
Disallowance of deduction u/s 80-IB(10) - Held that:- If there is no evidence that the builder has combined the flats and the adjoining flats are combined by the customers, there was no reason to compute the built up area as required for clause (i) of section 80-IB(10) of the Act after combining the flats. In this view of the matter, we are therefore, of the opinion that the built-up of the flats have to be considered independently, as rightly concluded by the CIT(A). If so done, in the present case, we find that the condition prescribed in clause (c) to section 80-IB(10) of the Act is met. Therefore, on this aspect, the order of the CIT(A) is affirmed.
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2012 (9) TMI 1021
Expenditure incurred by the Assessee company on foreign education and travel of son of the Managing Director of the Company - Allowable business expenditure - Held that:- The purpose of Section 40A is to prevent the abuse of fund by the company for personal interest. There should be dividing line between personal interest and the interest of the company. A personal interest means the expenditure incurred not for the purpose of company but for own interest of the office bearers of the company or their sons and relatives but in case an expenditure is incurred by the company to send someone for training or higher education and after returning back in pursuance to contractual obligation, such person joins the company itself, then in such circumstances, it may not be treated as expenditure for personal reason because of relationship with an office bearer. The expenses incurred should be for the purpose of the company which has been benefitted because of training and higher education imparted to the person concerned. - Decided in favour of assessee
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2012 (9) TMI 1020
Issues Involved:
1. Deletion of addition made by the A.O. disallowing a claim for provision made towards exchange fluctuation loss on forward contracts.
2. Deletion of addition made by the A.O. disallowing a provision made for operations and maintenance.
3. Deletion of disallowance made by the A.O. relying on Section 14A of the Act and Rule 8D of Income-tax Rules, 1962.
Summary:
Issue 1: Exchange Fluctuation Loss on Forward Contracts
The Revenue's grievance was that the CIT(Appeals) deleted an addition made by the A.O. disallowing a claim for provision made towards exchange fluctuation loss on forward contracts. The A.O. had disallowed the provision on the grounds that the loss was notional and anticipated, relying on CBDT Instruction No.03/2010. The CIT(Appeals) allowed the claim, referencing the decision in CIT v. Woodward Governor India P. Ltd. and the Special Bench decision in DCIT v. Bank of Bahrain & Kuwait. The Tribunal upheld the CIT(Appeals)'s decision, stating that the provision was not a foreign exchange derivative contract and thus CBDT Instruction No.03/2010 was not applicable. The Tribunal found that the loss was deductible by valuing the outstanding liability at the market rate as on the date of closing of accounts.
Issue 2: Provision for Operations and Maintenance
The Revenue contended that the CIT(Appeals) wrongly deleted an addition of Rs. 6.19 Crores made by the A.O. disallowing a provision for operations and maintenance. The A.O. considered the provision as ad hoc and not based on scientific calculation. The CIT(Appeals) allowed the claim, stating that the liability had accrued during the year and was based on scientific calculation in line with agreements with M/s GE Inc. USA. The Tribunal found that the matter required re-verification by the A.O. to ensure the provisioning was in accordance with the agreements. The issue was remitted back to the A.O. for fresh consideration.
Issue 3: Disallowance u/s 14A and Rule 8D
The Revenue challenged the deletion of disallowance of Rs. 84.02 lakhs made by the A.O. under Section 14A and Rule 8D. The A.O. had applied Rule 8D, attributing a portion of the expenditure to the activity of earning dividend on investments. The CIT(Appeals) deleted the disallowance, noting that the investments were in debt-oriented mutual funds and the balance was NIL by the end of the year. The Tribunal remitted the issue back to the A.O. for verification of whether the investments were indeed in debt-oriented mutual funds and if the gains were offered to tax. If proven correct, Section 14A would not apply.
Conclusion:
The Tribunal dismissed the Revenue's appeal regarding the exchange fluctuation loss, allowed the appeal for statistical purposes concerning the provision for operations and maintenance, and remitted the issue of disallowance u/s 14A back to the A.O. for fresh consideration. The order was pronounced on 24th September 2012, at Chennai.
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2012 (9) TMI 1019
Issues involved:
The appeal concerns the refusal of registration u/s. 12A of the Income-tax Act, 1961 by the Director of Income-tax (Exemptions) [DIT(E)], Hyderabad.
Issue 1: Refusal of registration u/s. 12A
The appellant sought registration u/s. 12A of the Act, but it was denied by the DIT(E) citing non-commencement of operations and unverifiable payments. The appellant contested this decision, arguing that commencement of activities is not a prerequisite for registration u/s. 12A, citing relevant case law. The appellant maintained that the trust meets the requirements for registration, referring to additional case law and Tribunal decisions supporting their position.
Key details for Issue 1:
- The appellant's application for registration u/s. 12A was rejected due to alleged non-commencement of operations and unverifiable payments.
- The appellant argued that commencement of activities is not a mandatory condition for registration u/s. 12A, supported by legal precedents.
- The appellant claimed that the trust fulfills the necessary criteria for registration, citing relevant case law and Tribunal decisions in their favor.
- The Tribunal remitted the issue back to the DIT(E) for reconsideration in light of the presented arguments and legal decisions, directing a decision in accordance with the law.
- The appeal of the assessee was allowed for statistical purposes.
This summary provides a detailed overview of the issues involved in the legal judgment regarding the refusal of registration u/s. 12A of the Income-tax Act, 1961.
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9911796707
