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Showing 241 to 260 of 2067 Records
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2017 (11) TMI 1829
Service of notice - Sections 8 and 9 of I & B Code - Rules 4,5 and 6 of the Rules - Territorial Jurisdiction - Default for the payment committed by the petitioner / Corporate Debtor - whether operational creditor has admittedly not sent notice to the registered office, but the Tribunal below, without considering the said fact, admitted the application by the order impugned and, therefore, it is liable to be set aside? - HELD THAT:- On perusal of the records filed by the operational creditor, it is seen, that the registered office of the corporate debtor is at Nagercoil, whereas, notices were served at the office at Chennai. When the corresponding rules to Sections 8 and 9 of Code clearly specify that the application can be filed after expiry of ten days from the date of delivery of the notice or invoice demanding payment under sub-section (1) of Section 8, if the operational creditor does not receive any payment from the corporate debtor or notice of the dispute under sub-section (2) of Section 8, the operational creditor may file an application before the Adjudicating Authority. Also, when Sections 8 and 9 of the Code clearly specify the delivery of demand notice on the unpaid operational debtor in such form and manner as may be prescribed, it has to be followed in its true spirit.
When it is mandatory to deliver the demand notice prior to filing the application, the same cannot be violated. The Tribunal below has not noticed the non-service of the mandatory notice at the registered office, which is a preliminary requirement for presenting the application for adjudication.
Section 8 of the Code clearly mandates that the demand notice shall be delivered in such form and manner, as may be prescribed, and Rules 5 and 6 of the Rules mandate that the notice shall be served at the registered office of the corporate debtor. This is a mandatory requirement and it cannot be violated.
Admittedly, the documents clearly show that the notice was served at the branch office, but not at the registered office. In the given situation, this Court can very well interfere with the failure of the Tribunal, in exercising its jurisdiction. It cannot be said that it is a factual dispute. The Tribunal below ought to have exercised its power vigilantly, as, non-exercise of the same in this case has resulted in miscarriage of justice. Hence, on this occasion of failure of justice, this Court has ample power to interfere with the order passed by the Tribunal below.
Accordingly, the impugned order [2017 (7) TMI 1299 - NATIONAL COMPANY LAW TRIBUNAL, CHENNAI] passed by the Tribunal is set aside.
Civil Revision Petition is allowed.
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2017 (11) TMI 1828
CENVAT Credit - input services - outward transportation - cost of transportation was included in the FOR - disputed period is June, 2009 to May 2010 - HELD THAT:- The identical issue has come up in the assessee – appellant’s own case for the subsequent period in M/S ARL INFRATECH LIMITED VERSUS CCE, JAIPUR [2017 (8) TMI 1542 - CESTAT, DELHI] where it was held that appellant is entitled to avail Cenvat credit on outward goods transportation agency services - credit allowed - appeal allowed - decided in favor of appellant.
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2017 (11) TMI 1827
TDS u/s 194A - disallowance u/s 40(a)(ia) - assessee paid interest on NBFCs without deduction of tds - scope of second proviso to Sec. 40(a)(ia)amended - retrospectivity - it is assessee’s contention that the amounts of interest paid by the assessee have been offered to tax by the respective recipients and as proof of the amount offered by the respective recipient to tax is also certified by their Chartered Accountants and the necessary C.A. Certificates - HELD THAT:- We find that the Co-ordinate Bench of Pune Tribunal in the case of Yamazaki Mazak [2016 (10) TMI 1038 - ITAT PUNE] after considering the decision of PRUDENTIAL LOGISTICS [2015 (2) TMI 847 - KERALA HIGH COURT] and Ansal Land Mark [2015 (9) TMI 79 - DELHI HIGH COURT] has held that the second proviso to Sec. 40(a)(ia) inserted by the Finance Act, 2012 is retrospective in nature.
As before us assessee has placed reconciliation statements showing the amount of interest paid by the assessee and that are offered by the respective recipients of interest in their income and that there are certain difference which the assessee has not been able to reconcile. We therefore find force in the argument of Ld.A.R. that to the extent the amounts have been reconciled, the assessee be allowed the expenditure.
There is no finding on this issue by the lower authorities. In such a situation, we are of the view that the matter be remanded back to AO to verify the contention of the assessee - Appeal of assessee allowed for statistical purposes.
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2017 (11) TMI 1826
Addition of unclaimed refunds - whether unclaimed refunds of application money outstanding in the Books of Accounts of the assessee can be treated as its income? - assessee’s contention that its liability to refund does not cease to exist as it continues to reflect it as liability in the Balance Sheet and would be liable to refund the amount whenever claimed in future or adjust it against allotment of any plot of land - HELD THAT:- Out of the outstanding liability on account of un-claimed refund of ₹ 3,67,81,729/-, liabilities which have been outstanding for a period of more than three years, after the issuance of cheques of refund, only be treated as the income of the assessee subject to adjustment being made out of them on account of the following:
a) The refunds against which cases, filed by the applicants for allotment of plots, in courts are pending.
b) The amounts which have been subsequently adjusted by way of allotment of plots.
c) The amounts which have been subsequently adjusted by way of refund claimed /issued even after the expiry of three years from the date they became due to the claimants/applicants. - Ground of appeal No.1 of the assessee is, therefore, disposed off in above terms and stands partly allowed.
Addition on account of income from Industrial Area Activity - addition made relates to profits earned from Industrial Estate development activity, which the assessee claimed was being carried out on a no loss no profit basis, accounted for on cash basis and surplus or deficit in the receipt over expenses reflected in the Balance Sheet, while the Revenue negated this contention stating that profit was actually earned by the assessee, from the indirect cost component recovered on account of the said activity ,which was thus liable to be taxed - HELD THAT:- In the light of certificate filed by the assessee to this effect from the statutory auditors of the company, we consider it fit to restore the issue to the Assessing Officer to verify the correctness of the claim made in the certificate that the income for the impugned year had been reflected in assessment year 2014-15 and further to verify that the same had been included in the taxable income of the assessee for the impugned year and due taxes paid thereon, and thereafter decide the issue in accordance with law. We may add that the assessee be given due opportunity of hearing and is free to adduce all evidences it wishes to rely upon. Ground of appeal No.2 raised by the assessee stands allowed for statistical purposes.
Correct head of Income - gain on sale of shares - Capital Gain or Business Income - Nature of the activities carried out by the assessee - HELD THAT:- As in PUNJAB STATE INDUSTRIAL DEVELOPMENT CORPORATION LIMITED. VERSUS DEPUTY COMMISSIONER OF INCOME-TAX, SPECIAL RANGE - II, CHANDIGARH. [2006 (4) TMI 187 - ITAT CHANDIGARH] issue decided in favour of the assessee holding the profits earned to be in the nature of capital gains
At the time of the start of the project, the assessee corporation makes investment and when the production in the projects reaches upto a certain level where after the projects become self-sufficient, it disinvests those holdings in that project by selling it to the other promoter with a view to realize funds for investments in other projects. Thus basically the investment in shares of companies which were jointly promoted by the assessee alongwith other industrial undertakings is in the nature of an investment and any profit/gain earned by the assessee on the realization of such an investment is liable to tax under the head 'Capital gains' and this position has all along been accepted even by the departmental authorities upto the assessment year 1989-90. Accordingly we hold that the profit and gain realized by the assessee on account of disinvestment of shares is liable to tax as capital gains.
Whether the deduction u/s 80M on the dividend earned was to be determined after deducting proportionate administrative expenses or interest expenses? - HELD THAT:- Since inception the assessee has been claiming the profits earned from sale of shares as capital gains which has never been disturbed by the Revenue. No change in the circumstances in respect of the impugned assessment year have also been brought to our notice. Therefore, we agree with the Ld. counsel for assessee that there was no reason to disturb that position in the impugned year.
In the case of Radha Soami Satsang Vs. CIT [1991 (11) TMI 2 - SUPREME COURT] held that where fundamental aspect permeating through different assessment years has been found as a fact one way or the other and parties had allowed that position to be sustained by way of not challenging that order, then it would not at all be appropriate to permit that position to be challenged in subsequent year.
We hold that the profits earned by the assessee from sale of shares be treated as capital gain and addition made by treating the same as income from business of the assessee be deleted. Ground therefore stands allowed.
Addition u/s 14A - HELD THAT:- The Finance Act, 2003 inserted clause (34) to section 10 which deals with income which are exempt from taxation and do not form part of the total income at all, excluding the income by way of dividend from the purview of taxation. At the same time, we find section 115O was inserted in the Act making the companies distributing dividend to pay tax at a specified rate thereon. Thus taxation of dividend changed hands from the recipient to the payer of dividend by virtue of this amendment brought about in the Act. Dividend of all nature and colour whether sourced from the business activities of the assessee or otherwise is not taxable in the hands of the recipient but is to be taxed by the payer of dividend or in other words, the companies declaring and distributing dividend. In view of the same, therefore, we cannot agree with the contentions of the Revenue that the said dividend is to be taxed in the hands of the assessee being in the nature of business income. The reliance placed on the decision in the case of Brook Bond India Ltd. [1986 (9) TMI 2 - SUPREME COURT] does not apply to the present case since it related to the assessment year 1955-56 and 1956-57 when the position of law vis-à-vis taxation of dividend was governed by the Income Tax Act, 1922 which taxed dividend in the hands of the recipient.
Even otherwise we have already held that the income earned from sale of shares be treated as capital gains, holding the activity of the assessee as investment and not trading in shares, therefore, the dividend income earned from the shares cannot be said to be from business activity of the assessee.
However since the dividend income is exempt from tax, the provisions of section 14A disallowing expenses incurred for earning the same, are attracted.For the limited purpose of applying the provisions of section 14A ,the issue is restored back to the file of the AO,with a direction to decide the issue in accordance with law after giving due opportunity of hearing to the assessee.
Addition made to the income of the assessee on account of dividend income is, therefore, deleted. And the issue of determining the expenses disallowable as per section 14A is restored to the file of the Assessing Officer.
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2017 (11) TMI 1825
Bogus purchases - addition @6% - addition on the basis of information from the Sales Tax department in respect of bogus suppliers - HELD THAT:- CIT(A) concluded that the entire purchases cannot be held to be bogus merely on the bases of the statement of the seller, who was never cross examined by the assessee. It was also observed that corresponding sales/consumption shown by the assessee accepted by the Department.
After applying various Judicial pronouncements the CIT(A) restricted the addition to the extent of 6% on the alleged bogus purchases. Nothing was brought to our notice by DR to persuade us to deviated from the finding recorded by the CIT(A) restricting the addition to the extent of 6%. Accordingly we do not find any reason to interfere in the order of the Ld. CIT(A). - Decided against revenue.
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2017 (11) TMI 1824
Levy of penalty u/s. 271(1)(c) - whether the ‘revision’ by the assessee of her return of income, admitting additional income is voluntary or not? - HELD THAT:- Both in the assessment and the penalty proceedings, the assessee explained that her act was voluntary and guided only by her intent to purchase peace and avoid litigation. How, then, one may ask, can under the circumstances it be said that the assessee is not communicated or aware of the basis or the ground on which penalty is proposed to be levied, or the same are not known to her. There is, however, no explanation on merits, much less substantiated. And, in-as-much as the revision is prompted by the unearthing of the unexplained investment in the company, the same cannot be regarded as voluntary.
Assessee is bound to explain the additional income per her ‘revised return’ or, per contra, the omission of the said disclosure per her original return, satisfying the conditions of Explanation 1 to s. 271(1)(c),
The plea as to ‘by peace’ or ‘avoid litigation’, etc., cannot be countenanced, even as explained in Mak Data [2013 (11) TMI 14 - SUPREME COURT] which is clearly applicable in the facts of the case. Reference in this context also be made to the recent decision in CIT v. Usha International Ltd. [2012 (11) TMI 589 - DELHI HIGH COURT] - Decided against assessee.
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2017 (11) TMI 1823
Penalty u/s 271D - violation of Section 269SS - “reasonable cause” for violation to comply with the provisions of Law - HELD THAT:- In this case, the A.O. merely initiated penalty proceedings separately for violation of Section 269SS of the I.T. Act. He did not record any satisfaction under section 271D of the I.T. Act before initiating the penalty proceedings under section 271D.
The explanation of assessee on merit clearly suggest that assessee had a “reasonable cause” for violation to comply with the provisions of Law because no cash given directly to assessee but deposited at Shilong Branch over which assessee did not have any control. The assessee immediately acted on the matter and refunded the amount in question. The finding of fact recorded by CIT(A) have not been disputed through any evidence or material on record. Therefore, considering the issue in the light of “reasonable cause” under section 273B of I.T. Act, for failure to comply with the provisions of Law, no penalty is leviable in the matter.
In the light of judgment of the Hon’ble Supreme Court in the case of CIT vs. Jai Laxmi Rice Mills [2015 (11) TMI 1453 - SUPREME COURT] set aside the orders of the authorities below and cancel the entire penalty. - Decided in favour of assessee
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2017 (11) TMI 1822
The Delhi High Court dismissed the petition as withdrawn after the petitioner sought permission to do so following the issuance of a show cause notice. The petitioner was granted liberty to take further proceedings in accordance with the law. The date of 24.01.2018 was cancelled. Application disposed of.
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2017 (11) TMI 1821
Deduction u/s 80P - disallowance of overdue interest - HELD THAT:- By Common Order [2017 (9) TMI 1815 - TELANGANA AND ANDHRA PRADESH HIGH COURT] this Court has allowed appeal filed by the respondent-assessee and held that the hierarchical orders including that of the Tribunal were erroneous and that the respondent is entitled to exemption under Section 80P(2) of the Income Tax Act, 1961. Also as the respondent is held entitled to exemption from payment of tax, a further question as to whether the overdue interest is allowable for deduction or not would not arise.
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2017 (11) TMI 1820
Penalty u/s 271(1)(c) - Deemed dividend addition u/s 2(22) (e) - HELD THAT:- AO has levied penalty on the basis of information gathered during the course of assessment proceedings for the AY 2008-09 which revealed that the assessee has borrowed loan from a company in which he was a beneficial shareholder. The said information has been gathered from the financial statement of the assessee. The assessee has disclosed loan borrowed from the company in his balance-sheet. We further notice that the AO has made addition u/s 2(22)(e) for the assessment year 2009-10 for the first time.
No such addition has been made in the preceding financial years. The assessee claims that he was under a bonafide belief that deeming fiction provided u/s 2(22)(e) for the purpose of making addition towards loans and advances borrowed from a company in the hands of the director cannot be extended to penalty provisions provided u/s 271(1)(c) to hold that non disclosure of deeming dividends in the return of income would amount to furnishing of inaccurate particulars of income.
We find force in the arguments of the assessee for the reason that deeming fiction provided u/s 2(22)(e) for making addition towards loans and advances from a closely held company in the hands of the directors cannot be considered as furnishing of inaccurate particulars of income; despite the assessee has disclosed borrowings from the company in its balance-sheet. AO has made addition for the first time in the financial year under consideration - explanation offered by the assessee that no penalty can be levied towards addition made by invoking deeming provisions for levying penalty appears to be bonafide. - Decided in favour of assessee.
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2017 (11) TMI 1819
Deduction u/s. 80IB(10) - HELD THAT:- It is pertinent to mention that on the same project the CIT(A) as well as the Tribunal has decided the appeal in favour of the assessee for the earlier assessment year 2007-08.
The relevant assessment year, the CIT(A) has also made a finding that the project was designed as a composite project at the proposed site at survey no.486/1 & 482. The project of the assessee was also in an area more than one acre. The approvals were obtained on unit basis only for the benefit of taking advantage of the relevant rules of the local authority.
From the order of the CIT(A), it is apparent that he had arrived at the conclusion in favour of the assessee after considering the facts of the case and the decision of various higher judiciaries on the identical issue. Therefore in these circumstances we do not find it necessary to interfere in his order. Hence the Revenue’s appeal is devoid of merits.
Reopening of assessment u/s 147 - HELD THAT:- At the time of hearing, AR did not advance any argument on this issue. We also find that this ground is neither raised before the Ld.AO nor the CIT(A) on the earlier occasions. Therefore we do not find any merit in this ground raised by the assessee. Accordingly this ground raised by the assessee is also devoid of merits.
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2017 (11) TMI 1818
Disallowance of interest u/s 36(1)(iii) on advances - assessee utilized mixed funds for investment - HELD THAT:- In the case of Bright Enterprises Pvt. Ltd. Vs. CIT [2015 (11) TMI 342 - PUNJAB & HARYANA HIGH COURT] it was held that if there are interest free funds available then it will be presumed that these have been made out of interest free funds. Similar view was held in the case of CIT Vs. Kapsons Associates Investment Pvt. Ltd. [2015 (8) TMI 1277 - PUNJAB AND HARYANA HIGH COURT] wherein, held that interest on investment in other properties not for business purpose cannot be disallowed if the assessee is having sufficient interest free funds at its disposal.
Similar view was taken in the case of Hero Cycles Pvt. Ltd. [2015 (11) TMI 1314 - SUPREME COURT] once it is a established that there is a nexus between the expenditure and the purpose of the business no disallowance is called for. Thus the disallowance made on account of interest is hereby deleted.
Addition under section 14A - disallowance based on the calculation made as per Rule 8D(2) taking the total interest expenditure, average value of investments, average value of assets and half percentage of average value of investments into consideration - HELD THAT:- Delhi High Court in case of Joint Investments Pvt. Ltd. Vs. CIT [2015 (3) TMI 155 - DELHI HIGH COURT], AMAR PACKAGING PVT. LTD. [2016 (5) TMI 282 - ITAT DELHI] and M/S DAGA GLOBAL CHEMICALS PVT. LTD. [2015 (1) TMI 1204 - ITAT MUMBAI] has taken view that disallowance cannot exceed the exempt income.
Hence keeping in view the abovementioned judgments it is hereby directed the disallowance under section 14A read with Rule 8D be restricted to the exempt income earned by the assessee. The appeal of the Revenue is allowed for statistical purposes.
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2017 (11) TMI 1817
Use of Brand name - N/N. 3/2005-CE dated 14/02/2005 as well as under Notification No. 12/2012-CE dated 17.03.2012 - exemption denied on the ground that the appellant has used the brand name and exemption is not for the brand items - principles of natural justice - HELD THAT:- The appellant was never providing an opportunity to put his defence against above evidences - matter remanded to the Adjudicating Authority to decide the issue de novo but by providing an opportunity of hearing - appeal allowed by way of remand.
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2017 (11) TMI 1816
Bogus purchases - purchases from the open/grey market - estimation of profit margin - HELD THAT:- CIT(A) had rightly appreciated that the addition in the hands of the assessee was liable to be restricted only to the extent of the profit element which was embedded in making of purchases from the open/grey market. CIT(A) though was not oblivious of the fact that in respect of bogus purchases made in a normal business, the courts had consistently estimated the profit margin involved in making of purchases from the open/grey market @ 12.5% of the value of the bogus purchases, but then, not loosing sight of the fact that unlike those cases, in the trade line of diamond business the profit margin did not exceed 3%, had thus in all fairness restricted the addition in the hands of the assessee to 3% of the aggregate value of the bogus purchases which were claimed to have been made from the aforesaid parties.
As agreement with the view taken by the CIT(A). We thus being of the considered view that the CIT(A) had fairly concluded that the addition in respect of the purchases which were claimed by the assessee to have been made from the aforementioned bogus concerns, viz. (i) Mohit Enterprise; (ii) Mayur Exports; and (iii) Prime Star, were liable to be restricted to 3% of the aggregate value of the purchases, therefore, find no reason to dislodge his well reasoned order. We thus, in the backdrop of our aforesaid observations, finding ourselves as being in agreement with the view taken by the CIT(A), dismiss the appeal of the assessee.
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2017 (11) TMI 1815
Chargeability of interest income on deposits to tax - whether CIT-A was justified in confirming the addition made on account of interest income on deposits earned by the assessee? - HELD THAT:- It is not in dispute that the business of setting up of a steel plant had not commenced during the year under appeal. It is not in dispute that the assessee had received share capital from its shareholders and also term loans from banks for the purpose of its business of setting up of a steel plant. The unutilized portion of the said funds were invested in short term deposits with banks and interest income derived thereon by the assessee.
We are unable to sustain the view taken by the CIT-A by placing reliance on Tuticorin Alkali Chemicals [1997 (7) TMI 4 - SUPREME COURT] . The interest income derived by the assessee in the sum of ₹ 3,50,47,844/-, being the amounts invested in deposits out of share capital, would be capital receipt and would go to reduce the project cost of steel plant as it is inextricably linked with the setting up of the power plant. Following the same judgement, we hold that the interest income derived in the sum of ₹ 18,88,559/- from deposits invested out of borrowed funds, would be liable to tax under the head income from other sources, which would be in line with the decision of the Hon’ble Apex Court in the case of Tuticorin Alkali Chemicals.
Deposits were invested with bank for obtaining Bank Guarantees in favour of Customs Department which is inextricably linked with the business of setting up of steel plant of the assessee. Hence the ratio laid down in the decisions in the case of CIT vs Bokaro Steel Ltd [1998 (12) TMI 4 - SUPREME COURT] ; CIT vs Karnal Co-operative Sugar Mills Ltd [1999 (4) TMI 7 - SUPREME COURT]; and Bongaigaon Refinery & Petrochemicals Ltd vs CIT [2001 (7) TMI 4 - SUPREME COURT] would be squarely applicable to the instant case and hence the interest income derived thereon would only go to reduce the project cost of steel plant and hence had to be construed as capital receipt. Accordingly, the grounds raised in this regard by the assessee are allowed
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2017 (11) TMI 1814
Appointment of an Arbitrator - Whether a party, who appoints an arbitrator knowing fully well that such arbitrator is suffering from a disability that falls under any of the categories specified in the Seventh Schedule of the Act and shall be ineligible to be appointed as an arbitrator, can later challenge his appointment on the ground that he was ineligible to be appointed as an arbitrator under Section 12(5) of the Act?
HELD THAT:- The petitioner, knowing fully well that the arbitrator suffered from an ineligibility in terms of Section 12(5) of the Act proceeded to nominate him as a Sole Arbitrator after the disputes had arisen between the parties and the Respondent concurred in such appointment and even proceeded to file its Statement of Claim before the Arbitrator. Though it was contended that the appointment was made before the decision in TRF LTD. VERSUS ENERGO ENGINEERING PROJECTS LTD. [2017 (7) TMI 1288 - SUPREME COURT] , this would not help the petitioner inasmuch as TRF Ltd. only applied Section 12(5) of the Act to the facts of the case therein.
The appointment was accepted by the respondent who even proceeded to file the Statement of Claim before such arbitrator, without objections to his appointment or jurisdiction. Therefore, the disputes having arisen between the parties, both parties waived the applicability of Section 12(5) of the Act. The appointment being in writing and the filing of the Statement of Claim without any reservation also being in writing, in my opinion, in the facts of the case, the same would amount to an express agreement in writing as required under proviso to Section 12(5) of the Act.
Petition dismissed.
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2017 (11) TMI 1813
The Supreme Court dismissed the civil appeals after finding no merit in them. The delay was condoned.
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2017 (11) TMI 1812
Addition of provision for wage revision - AO disallowed the provision on the ground that it was only an estimated increase and no agreement for the increase was entered into by the assessee during the year - HELD THAT:- We find that the assessee had made provisions for the services rendered by the employees.There is no doubt that the assessee had to make payment once the negotiations were over.Thus,it was not an unascertained liability.So,confirming the order of the FAA,we decide the issue in favour of the assessee.
Income of foreign branches - DTAA provisions - HELD THAT:- Article 7 stated that if enterprise of one State carries on business in another State through permanent establishment then the State where the business is carried out would levy tax on the profits attributable to the permanent establishment. On analysis of these provisions the learned CIT(A) found that Article 7 of the different DTAA.s are specific provision while Articles 23, 24 and 25 are general provisions. The coordinate Bench in the case of the assessee, in the earlier year’s case held, “As a result he also found that the issue already decided by the Tribunal in assessee’s own case for the earlier years have to be followed. We do not find any infirmity in the above finding of the CIT(A). Therefore consistent with the earlier finding of the Tribunal in assessee’s own case for the earlier years case, we do not see any merit in the ground taken by the Revenue
Benefit u/s.36(1) (viii) applied only to Financial Corporations/Public Sector Co. Banking Co./Co-operative Bank/ Housing Finance Co.etc. - whether AO had adopted right method of allocation of expenses in arriving at the profits from eligible business - HELD THAT:- In AY 2007-08 [ 2016 (7) TMI 834 - ITAT MUMBAI ] the assessee is contesting the disallowance of claim made u/s 36(1)(viii) of the Act. We notice that this issue has been decided in favour of the assessee by the co-ordinate bench of Tribunal in AY 2006-07. The tax authorities had rejected the claim by holding that the provisions of sec. 36(1)(viii) shall be applicable only to “financial Corporations”. The Tribunal has held that the banks will also be covered by the inclusive definition given for the expression “financial Corporations” in sec. 36(1)(viii) of the Act. Consistent with the view taken therein, we set aside the order passed by Ld CIT(A) on this issue and direct the AO to allow the claim.
Disallowance made u/s.14 A - HELD THAT:- We notice that the Tribunal has restricted the disallowance to 1% of the exempt income in AY 2006-07 and earlier years. Consistent with the view taken therein we direct the AO to restrict the disallowance to 1% of the exempt income in AY 2007-08, since the provisions of Rule 8D are not applicable to this year.
In respect of AY 2008-09, the assessee is raising new contentions before us, viz., the investments are held as stock in trade, interest free funds available with it are in far excess of the investments etc. The Ld D.R submitted that the claim of the assessee that it is holding all its investments as stock in trade is farfetched one, since the assessee is required to hold certain funds as pure investments. We notice that this aspect of the submissions require verification at the end of the AO. Accordingly, we set aside the orders passed by Ld CIT(A) on this issue and restore the same to the file of the AO with the direction to examine this issue afresh in the light of fresh explanations that may be furnished by the assessee by duly considering various case laws relied upon by the assessee.
Deduction of amount written off under Agricultural Debt Relief and Waiver Scheme (ADRWS) - HELD THAT:- We find that Government of India had formulated a scheme of waiver of loans, that the assessee’s waived the loans of the farmers either partially or fully, that later on due to technical reasons government did not pay the waived amounts to the bank, that it wrote off the disputed amounts in its books of accounts.The departmental authorities have not doubted that the loan waiver was not a part of the business activity of the assessee. It is also a fact that the assessee had written of the disputed amounts in its P&L account.Even if the written off amount is not considered allowable as per the provisions of section 37,then same will have to be allowed u/s. 28 of the Act as Trading Loss.Considering all we decide the third ground of appeal in favour of the assessee.
Exclusion of income from house property at Kenya - DTAA entered into by India and Kenya - HELD THAT:- AO and the FAA had treated the business income and house property income as one source of income for tax purposes.But,the DTAA contains two different Articles.Business income is governed by Article 7 and Article 6 deals with house property income. Secondly, any notification or circular cannot alter the nature of income that has been specifically included in DTAA.s. Even amendment in a section of the Act would not affect the provisions of tax treaties,unless same are not rectified by both the signatories of the treaty.So,we hold that house property income had to taxed as per Article 6 of the DTAA and as per that Article income from Kenyan house property could not be taxed in India. Reversing the order of the FAA.
Disallowance of loss on sale of assets to Asset Reconstruction Company of India Ltd.(ARCIL) - HELD THAT:- We find the assessee had sold NPA.s to ARCIL,that as per the RBI instructions it did not claim the loss in the profit and loss account, that the claim was made before the Department authorities that it had suffered a loss on sale of NPA.s,that the AO and the FAA held that the assessee had not suffered real loss i.e. it was notional loss only.There is no doubt about selling of assets to ARCIL,that ARRIL is not a fake or bogus entity,that the sale has not been doubted by the AO/FAA,that the entry in the books of accounts have been made as per the instructions of the RBI.In our opinion, following of RBI instruction by a banking company cannot be basis for denying or allowing any claim.It is said that the entries in the books of accounts are not conclusive proof of taxability of any income.What has to be seen is the substance of the transaction.Considering the fact that the assessee had suffered loss while carrying out normal business activity i.e.selling its assets. Therefore,we hold that there was no justification for disallowing the loss suffered in the transaction.
Applicability of provisions of section 115 JB - HELD THAT:- As relying on assessee's own case the provisions of sec. 115JB shall not be applicable for both the years under consideration
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2017 (11) TMI 1811
Year of taxability of capital gain u/s 45(2) - land was treated by the assessee as her stock-in-trade - assessee entered into the development agreement-cum-GPA - HELD THAT:- Assessee entered into a business agreement for development of her piece of land. The year in which conversion of capital asset into stock-in-trade has taken place is not known nor is it the year before us.
Where any capital asset is converted in to stock-in-trade, the income would arise u/s 45(2) only in the year when the stock-in-trade is transferred/sold by the assessee. There is no doubt that during the relevant financial year, the assessee has entered into a development agreement only by contributing the land as her share of capital, while the developer was to invest in construction of the villas. The income would arise to the assessee only when the assessee sells her stock-in-trade but not when she contributes her stock-in-trade as her share of capital.
Therefore, as rightly pointed out by the CIT(A), no gains have arisen to the assessee during the year by entering into the JDA dated 10-05-2012 with M/s. Ramky Estates & Farms Ltd., much less on accrual basis. Therefore, we see no reason to interfere with the order of the CIT(A) which is in consonance with the legal provisions on the issue. Accordingly, the grounds of the Revenue are dismissed.
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2017 (11) TMI 1810
Addition u/s 43B - delay in remitting the employees contribution to Provident Fund (PF) accounts - assessee remitted the employees contribution beyond the due date specified u/s 36(1)(v) - HELD THAT:-As decided in M/S. EASTERN POWER DISTRIBUTION COMPANY OF A.P. LTD. AND VICA-VERSA [2016 (9) TMI 1040 - ITAT VISAKHAPATNAM] the employees contribution to PF required to be allowed even if the same is paid before the due date of filing the return u/s 139(1) of the Act. - Decided issue in favour of assessee.
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