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2016 (3) TMI 1234 - MADRAS HIGH COURT
Validity of Show cause notice issued by Estate Officer, Assistant Commissioner of Police, City Crime Record Bureau, Tirunelveli City - Held that:- Show cause notice, dated 11.12.2015, issued under Section 4 of the Tamil Nadu Public Premises (Eviction of Unauthorised Occupants) Act, 1975 (Tamil Nadu Act I of 1976) in our view, does not call for any interference. There is no manifest error, in issuing a show cause notice. The impugned order of the Writ Court is sustained.
The only course open to the party-in-person is, to submit his reply to the show cause notice. Hence, while dismissing the appeal, we permit the party-in-person, to submit his reply, to the show cause notice, within the time provided therefore.
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2016 (3) TMI 1233 - ITAT CHANDIGARH
Addition u/s 40A(3) - purchase of land by making cash payment to the Sellers - Held that:- From the perusal of accounts filed before us, we see that no claim of any expenditure or even purchases have been made during the year. The lands purchased have been transferred to ‘project in progress’ account. The language of the section is very clear that in cases of expenditure incurred by the assessee in cash, no deduction on account of that expenditure is allowed under this provision. We are aware of the proposition that even if the expenditure is in the nature of purchases, the same is prone to disallowance under section 40A(3) of the Act. However, when no claimed of any such expenditure or purchases has been made, how can a disallowance be made. In view of this, we direct the Assessing Officer to delete the disallowance. - Decided in favour of assessee
Disallowance u/s 40A(3) - proof of genuineness of the transaction being carried out of business exigency. - Held that:- Even if the assessee does not fall in any of the clauses of Rule 6DD, being the exceptions provided invoking the provisions of section 40A(3) of the Act can be dispensed with if the assessee is able to prove the business expediency out of which it had to make the cash payments and the genuineness of the transaction has also to be proved. We observe that none of the lower authorities have questioned the genuineness of the transaction. The only reason for disallowance is the provisions of section 40A(3) of the Act. The assessee had all along stated the reason of business exigency out of which he had to make cash payments, which were also not doubted by any of the lower authorities. Further, we see that the facts of the case are exactly same as that of Gurdas Garg (2015 (8) TMI 569 - PUNJAB & HARYANA HIGH COURT ). Therefore, we are inclined to hold that the said cash payments cannot be disallowed to the assessee. The addition is hereby deleted.- Decided in favour of assessee
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2016 (3) TMI 1232 - ITAT CHANDIGARH
Appeal to produce additional evidence - interest earned was on the FDRs - Held that:- In the present case, we see that in order to bring out the fact on record whether the funds are inextricably linked to the setting up of plant or not. These evidences which are filed before us under Rule 29 are very important. The fact remains that the assessee has not taken any new plea and the same has been taken all along before the lower authorities. We find that there is a substantial cause for admitting these evidences and we hereby admit these evidences and send the matter back to the file of the Assessing Officer to consider the same and decide the issue as per law. If it is found that the funds were deployed for some reason which is inextricably linked with the setting up of the plant and not for running the plant, then relief be given to the assessee, otherwise, the stand taken by the Assessing Officer in first round may be confirmed. Appeal of the assessee allowed for statistical purposes.
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2016 (3) TMI 1231 - ITAT CHANDIGARH
Revision u/s 263 - non recording or wrong recording of certain transactions - Held that:- Some of the observations made by the learned Commissioner of Income Tax with regard to wrong noting and not noting of certain entries may be correct, as we see that even the assessee has admitted to that. However, these mistakes do not given the learned Commissioner of Income Tax jurisdiction under section 263 of the Act, there are other mechanisms provided under the Act to correct these anomalies. Further, in this context, we also observe that if all these corrections are done, whether the tax imposable on the assessee will increase or decrease, this fact also remains under the clouds. In such circumstances, how can the learned Commissioner of Income Tax infer that these mistakes lead to the order being prejudicial to the interest of the Revenue, it may result into being prejudicial to the interest of assessee also. Therefore, we see that the learned Commissioner of Income Tax ’s act of assuming jurisdiction under section 263 of the Act is not as per law.
The issue of recording, non-recording, under recording of entries etc. are all inter-related and the Assessing Officer as well as CIT (Appeals) have already applied their mind to the same, how can the wrong recording or under recording can be considered an issue independent of non-recording, we do not understand. Otherwise also, as we have held elsewhere in this order, there are other mechanisms under the Act to correct these kind of anomalies, if any. - Decided in favour of assessee.
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2016 (3) TMI 1230 - ITAT CHANDIGARH
Disallowance of interest free advance to Nihal Singh Pahwa Charitable Hospital - Held that:- No hesitation in holding that no disallowance of interest can be made in this case; particularly when the advances are made out of the own funds of the assessee and the amount advanced to the sister concern / hospital / trust was by way of commercial expediency. Accordingly, we delete the disallowance made us/ 36(1)(iii) of the Act. - Decided in favour of assessee.
Addition u/s 14A - Held that:- No disallowance u/s 14A /Rule 8D of the I.T. Rules can be made if investment is out of own funds and reserves. We may also add here that Rule 8 D of I.T. Rules, 1962 is not applicable to the year under consideration in this case. However, Rule 8-D is applicable from assessment year 2008-09 as it has been held by the Hon'ble Bombay High Court in the case of Godrej & Boyce Mfg. Co. Ltd Vs. DCIT (2010 (8) TMI 77 - BOMBAY HIGH COURT ). Even on this score also, we hold that disallowance made by the Assessing officer and confirmed by the CIT(A) is bad in law. - Decided in favour of assessee.
Penalty u/s 271(1)(c) - Held that:- There remains no basis for levying the penalty u/s 271(1)(c) of the Act for furnishing the inaccurate particulars of income. It is well settled law that where the additions made in the assessment order, on the basis of which penalty u/s 271(1)(c) was levied, are deleted, there remains no basis at all for levying the penalty u/s 271(1)(c) of the Act and, therefore, in such a case, no such penalty can survive and the same is liable to be cancelled. - Decided in favour of assessee.
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2016 (3) TMI 1229 - ITAT CHANDIGARH
Disallowance of discounts - Held that:- Self contained code and allowability or non-allowability of any such expenditure are to be looked within the Act itself. There is no provision in the Act to disallow such discount. It is a matter on record that the Assessing Officer has not doubted the genuineness of these discounts. If there is any violation of such Rules, there may be consequential provision in the INS Rules itself, it is not for the Assessing Officer, acting as per the mandate of Income Tax Act, to disallow the said expenses. We also observe that in the same Rule of the INS, in the second part some consequential act in the case of contravention of the Rule has also been prescribed.
With regard to learned CIT (Appeals) observation that the assessee is not supposed to give unnecessary discounts, we want to state that it is a businessman’s prerogative to run his business the way he wants. The Income Tax Authorities cannot sit in the armchair of the businessman and guide him as to how much of expenditure he should incur. - Decided in favour of assessee.
Adition on account of interest - Advances given to staff - business expediency - Held that:- We find ourselves in agreement with the submission of learned counsel for the assessee that the advances given to staff are out of commercial expediency. Once a person is employed in a business, all his family needs are to be fulfilled from that business only and to retain the staff, business has to extend these kinds of facilities. In view of this the Assessing Officer is directed to delete the addition made on account of interest to these two persons.- Decided in favour of assessee.
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2016 (3) TMI 1228 - ITAT CHANDIGARH
Penalty levied u/s 271(1)(c) - liability u/s 43B disallowed - Held that:- Assessing officer raised the query in the order sheet. It is clear that a photocopy of the Form 3CD annexed by the tax auditor to Form No. 3CA was produced before the lower authorities. It is noticed that at Sr. No.21 of this form, the auditor has mentioned ₹ 16,55,846/- was a liability u/s 43B disallowed during the earlier years and paid during the previous years. Therefore, person who made computation of income for filing income tax return of the assessee claimed that there are expenses for the assessment year 2006-07. This was an inadvertent mistake on the part of the tax auditor.
During the course of assessment proceedings, when it came to the notice of the assessee that similar deduction has already been allowed in the preceding assessment year, and the mistake was brought to the notice of the Assessing officer. Thus, considering the entire facts and circumstances of the present case, we are of the opinion that in this case, penalty u/s 271(1)(c) of the Act is not leviable. Accordingly, we cancel the penalty regarding the addition - Decided in favour of assessee.
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2016 (3) TMI 1227 - ITAT CHANDIGARH
Revision u/s 263 - Allowability of sales tax paid has not been properly examined - Held that:- In the present case, as can be seen from the Paper Book, it cannot be said that there is no enquiry. Certainly, enquiries have been conducted by the Assessing Officer with regard to the issues of sale tax. As far as adequacy of enquiry is considered, there is no law which provides the extent of enquiries to be made by the Assessing Officer. It is Assessing Officer’s prerogative to make enquiry to the extent he feels proper. The learned Commissioner of Income Tax by invoking revisionery powers under section 263 of the Act cannot impose his own understanding of the extent of enquiry. There are a number of judgments by various High Courts in this regard. We are not referring to the same for the sake of brevity. In this view, we do not find any error in the order of the Assessing Officer.- Decided in favour of assessee.
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2016 (3) TMI 1226 - ITAT CHANDIGARH
Disallowance on account the depreciation claimed on building - Held that:- During the course of assessment proceedings for the year 2007-08, the assessee admitted in his letter dated 27.11.2009 that the building in question is a residential house and one floor of which was sold during the year and the proceeds from the sale were invested in construction of other floors of the building. The Assessing Officer disallowed a sum of ₹ 1,09,873/- on account of depreciation claimed on the building in question. There is no evidence on record to show that there was a change in the user of building. It is also clear that the assessee has accepted the order passed by the Income Tax Authorities for the assessment year 2007-08. Considering the entire facts and circumstances of the present case, we do not find any merit in this ground of appeal and accordingly, the same is dismissed.
Profit on sale of immovable properties - treated as income from business and profession - estimating the profit on sale of flats @ 30% of the sales value - Held that:- A profit rate of 21% will meet the ends of justice in this case. It is relevant to observe here that the assessee failed to give his past tax history. The assessee has also not shown any profit on sale of immovable properties. It is evident from the record that the assessee is executing contract work and is also engaged in the construction of building and selling the same regularly. We may also observe there that the gross profit rate cannot be uniform in all the years and the profit rate depends on many factors. Therefore, the gross profit rate of 21% for the year under consideration should not be guiding factor in other years. Accordingly, we direct the Assessing Officer to apply a profit rate of 21% as against 30% applied by the revenue authorities. The Assessing Officer should give a relief to the assessee accordingly.
Addition under section 69C - Held that:- The entire expenditure has been routed through the books of account of the assessee and the copy of the building account and copies of the cash book on various dates, on which the expenditure was booked were placed on record as a proof of the source of expenditure in question. The Assessing Officer has accepted the books of account. It is true that the expenditure in question also appears in the Balance Sheet, relevant to assessment year under consideration. In our opinion, the entire expenditure has been booked through the books of account and, therefore, there was no question arises for assessing the same under section 69C of the Act. It appears that the addition has been made just for the sake of making addition and the same is not sustainable in law. Accordingly, we delete the addition of ₹ 5,01,860/- made under section 69C of the Act by the Assessing Officer and confirmed by the learned CIT (Appeals).
Addition u/s 68 - Held that:- There is no material on record to controvert the above contention of the learned counsel for the assessee. The Revenue has also not proved that the assessee had received more than the sale consideration mentioned in the sale deed and, therefore, on this score also, no addition can be made. Considering the facts and circumstances of the present case, we delete the addition made by the Assessing Officer and confirmed by the learned CIT (Appeals).
Addition u/s 68 - Held that:- According to the learned counsel for the assessee, this amount was available for depositing in Account No. 09250110004692 with UCO bank, Ram Bazar, Shimla in the name of assessee’s minor child Sanchit. There is no evidence on record to controvert the above contention of the learned counsel for the assessee. The amount received on the maturity of FDR was available for making deposits. This is not a case of the Revenue that the amount received on maturity of FDR was invested somewhere else. In the absence of such evidence, there is no reason to disbelieve the version of the assessee. Accordingly, we delete the addition made by the Assessing Officer and confirmed by the learned CIT (Appeals). This ground of appeal stands allowed.
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2016 (3) TMI 1225 - ITAT CHANDIGARH
Revision u/s 263 - premium paid by the assessee on the life insurance of its key man being the partner of the firm disallowed - Held that:- On the perusal of the cover note issued by the insurers it is very clear that the policies are Keyman insurance policies, whether these are term policies or not is not a question to be decided by any of the revenue authorities. We are in total disagreement with the CIT in holding that the premium paid by the assessee on the Keyman insurance policies are not allowable in view of the fact that the policies are not the valid policies. The policies are issued by the insurer and premiums are being paid as per the policy terms and conditions. There is no condition of the Income Tax Act which has been not complied with while making payment of these premiums. Therefore the premium paid by the assessee on the life insurance of its key man being the partner of the firm are therefore allowable expenditure.
Since the issue of allowability of premium on accrual basis has not been dealt with by the CIT in his order, we do not find any need to adjudicate the same. Otherwise also we see that in the original assessment the assessing officer has placed a specific query regarding the Keyman insurance policy premium paid by the assessee vide its note sheet entry and a detailed reply has been filed by the assessee together with the relevant evidences. Thus the assessing officer has made enquiry regarding the Keyman insurance which had been duly replied by the assessee. The AO was open to the issue of Keyman insurance and has applied his mind while allowing this expenditure to the assessee. The order passed by the CIT under section 263 of the Act is not as per law - Decided in favour of assessee.
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2016 (3) TMI 1224 - ITAT CHANDIGARH
Addition under section 68 - proof the creditworthiness of the creditors and genuineness of the transactions - Held that:- Restore the matter in issue to the file of the Assessing Officer with direction to the assessee to produce all the four creditors before the Assessing Officer for verification and examination and the assessee shall not seek unnecessary adjournment in the matter. The assessee is directed to prove the creditworthiness of the creditors and genuineness of the transactions and also directed to explain as to in what circumstances the commodity profits have been received by the creditors from M/s Satyam Commodities and M/s B.K. Commodities from whom the assessee was also taking commodity entries.
Assessing Officer shall give reasonable sufficient opportunity of being heard to the assessee. I make it clear that in case the assessee fails to produce any of the creditors before the Assessing Officer, the Assessing Officer is at liberty to draw any adverse inference against the assessee and shall pass assessment order in accordance with law, strictly on merits of the case, as have been discussed and considered in the assessment order. Appeal of the assessee is allowed for statistical purposes.
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2016 (3) TMI 1223 - ITAT CHANDIGARH
Levy of penalty under section 271(1)(c) - N.P. determination - Held that:- Whole complexion of the penalty matter has changed because of the subsequent event i.e. the order passed by the Tribunal. The Assessing Officer considered the penalty matter on the basis of part addition sustained by ld. CIT(Appeals) by applying profit rate of 55%, however, Assessing Officer made specific additions on account of disallowance of various expenses by giving specific findings of fact against the assessee. Therefore, in our view the penalty matter shall have to be re-considered in the light of findings of Assessing Officer given in the assessment order because the order of the Assessing Officer have been restored by the Tribunal and as such, the penalty matter need not to be decided on the basis of findings given by the ld. CIT(Appeals) computing the income of the assessee by applying profit rate of 55%.
Also here that since the finding of fact recorded by the Assessing Officer have not been considered in the penalty matter, therefore, the matter would also require re-consideration because the additions would be higher now on passing the final order passed by the Assessing Officer. Appeal of the assessee is allowed for statistical purposes.
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2016 (3) TMI 1222 - ITAT CHANDIGARH
Addition on account of difference in the figures of purchases, sales and closing stock as per books of account and those as per figures given to the bank for raising loan- Held that:- Assessing Officer has made addition on account of all the figures without considering the facts that when he has believed trading and Profit & Loss Account filed with the bank as correct as per the figures given thereon, then the profit declared therein should have been accepted by the Assessing Officer. No further calculation should be made for the purpose of making addition against the assessee. We, therefore, set aside and modify the orders of authorities below and direct the Assessing Officer to adopt net profit of ₹ 1,06,980/- as declared in the trading and Profit & Loss Account submitted to the bank instead of ₹ 75,546/- declared in the return of income. We, therefore, confirm the finding of authorities below to that extent and direct the Assessing Officer to adopt the profit of ₹ 1,06,980/- for the purpose of computing income of the assessee. - Decided partly in favour of assessee.
Addition on account of college fee payment and deposit in the bank account of Shri Navneet Singh Lamba - Held that:- No merit in this ground of appeal of the assessee. The ld. counsel for the assessee admitted that son of the assessee Shri Navneet Singh Lamba was dependant and that no evidence have been produced to explain the above additions. Since the source of fee deposited in the account of Shri Navneet Singh Lamba and source of bank deposit in the account of Shri Navneet Singh Lamba have not been explained who is admitted to be minor son of the assessee, authorities below were justified in making and confirming both the above additions in the hands of the assessee. In the absence of any explanation, no evidence or cogent material on record, we do not find any error in the orders of authorities below in making the addition - Decided against assessee
Addition on account of college fees payment of son of the assessee and addition on account of deposit in State Bank of India, Paonta Sahib - Held that:- It is admitted fact that son of the assessee was dependant upon assessee and no source. There is a deposit of the fees in the Law College in the name of son of the assessee and bank deposit with State Bank of India, Paonta Sahib. The assessee failed to explain source of these deposits therefore, authorities below were justified in making the addition in the hands of the assessee. No evidence have been produced before us to explain both these additions therefore, in the absence of any evidence on record, we confirm both the additions and dismiss this ground of appeal of the assessee.
Addition on account of investment in FDRs by two sons of the assessee - Held that:- No merit in this ground of appeal of the assessee as it is admitted fact that assessee purchased FDRs in the names of two of his sons during assessment year under appeal. The assessee failed to explain source of the purchase of the FDRs and also failed to explain that when both of his sons were students, how they could have purchase the FDRs. In the absence of any evidence or material on record, we confirm the addition and dismiss this ground of appeal of the assessee.
Disallowance on account of various expenses - Held that:- We are of the view addition is excessive. The personal user of these expenses cannot be ruled out. However, considering the nature of business carried out by the assessee, 30% of expenses is on higher side. We, accordingly, set aside and modify the disallowance and direct the Assessing Officer to make disallowance of 10% out of these expenses. In the result, this ground of appeal of the assessee is partly allowed.
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2016 (3) TMI 1221 - ITAT CHANDIGARH
Addition on account of unexplained cost of construction of resort - Held that:- Nothing specific have been explained as to how Assessing Officer made the above additions against the assessee. The Assessing Officer, without any justification or cause, did not place reliance upon the report of the DVO which is binding on the Assessing Officer. Since reference is made by the Assessing Officer to the DVO, therefore, Assessing Officer was bound to adopt valuation disclosed by the DVO in his report. However, the Assessing Officer merely placed reliance upon seized document which did not disclose specifically the quantum of cost of construction invested by the assessee in the resort. Therefore, the finding of the DVO in the valuation report that most of the papers are dumb documents, is relevant and admissible. The report of the DVO clearly shows that no investments in construction have been made in assessment year 2005-06.
In assessment year 2006-07 we are of the view that since there is not much difference between the cost of construction reported by the DVO and disclosed by the assessee in the books of account of assessment year 2007-08, therefore, no addition can be made against the assessee even in the remaining assessment years 2006-08 and 2007-08. - Decided in favour of assessee
Addition on account of accretion in capital account of partners - Held that:- Since in this case the partners of the assessee firm have admitted their capital contribution in their accounts, therefore, no addition could be made in the hands of the assessee firm.We, accordingly, set aside the orders of authorities below and delete both the additions. See case of Metachem Industries [1999 (9) TMI 21 - MADHYA PRADESH High Court] - Decided in favour of assessee
Addition as income from business - Held that:- No specific arguments or material have been pointed out to show that how this addition is unjustified. The Assessing Officer noted certain functions have been organized during assessment year under appeal in the premises of the assessee and the assessee in their statement also admitted arranging such functions. The Assessing Officer found certain credit entries in the bank account of the assessee. Wherever assessee was able to explain the entries, no adverse view was taken by the Assessing Officer. However, rest of the addition of amount of ₹ 2,33,147/-, no explanation was filed before Assessing Officer. Therefore, Assessing Officer treated the same to be income of the assessee. In the absence of any evidence or material on record, we do not find any justification to interfere with the order of the authorities below. - Decided against assessee.
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2016 (3) TMI 1220 - ITAT CHANDIGARH
Addition of exhibition expenses - CIT(A) noted that no specific details of vouchers, which were not produced by the assessee have been mentioned. Therefore, it appears to be an addition on adhoc basis and accordingly, restricted the addition to ₹ 20,000/-- Held that:- The assessee has specifically stated before the learned CIT (Appeals) that it is not possible to get each and every voucher of expenses incurred during the course of exhibition. However, the learned CIT (Appeals) has already granted sufficient relief to the assessee. Therefore, in the absence of production of complete vouchers of expenses, the addition was rightly made of ₹ 20,000/-. This ground of appeal raised by the assessee is, therefore, dismissed.
Addition of telephone and petrol expenses - Held that:- The addition is excessive in nature. The nature of business of the assessee is manufacturing of potato chips and assessee filed the return of income at ₹ 1,61,877/-. It is also admitted fact that the assessee has not maintained any details of these expenses. Therefore, personal usage of these items cannot be ruled out. However, considering the nature of the business of the assessee and return of income so filed, I reduce the addition to ₹ 10,000/- as against the addition of ₹ 30,000/-.
Addition on account of household expenses - Held that:- Addition is still on excessive side. Even if no details of family contribution is filed, but it admitted fact that the assessee is living in joint family and other family members would also contribute for household expenses. Considering the nature of the business of the assessee and return of income filed at very low amount, the addition is restricted to ₹ 30,000/- as against ₹ 60,000/-. This ground is, therefore, partly allowed.
Not allowing benefit of unabsorbed losses of earlier years - Held that:- The assessee claimed set off of unabsorbed losses. Something different is mentioned in the assessment order of preceding assessment year 2007-08. The carry forward of loss or depreciation is notified in assessment year 2007-08, therefore, it is to be seen whether late return for assessment year 2008-09 has any impact on carry forward of loss/depreciation. This fact has been looked into by the learned CIT (Appeals). Therefore, it also requires verification of fact whether it was brought forwarded losses or brought forward depreciation. In view of the above, I set aside the order of the learned CIT (Appeals) and restore this issue to the file of the learned CIT (Appeals) with direction to redecide this issue on merits strictly in accordance with law by verifying the factual facts from the record and shall also take into consideration the decision of the Hon'ble Punjab & Haryana High Court in the case of Haryana Hotels Ltd. (2005 (2) TMI 63 - PUNJAB AND HARYANA High Court )
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2016 (3) TMI 1219 - ITAT CHANDIGARH
Levy of penalty under section 271(1)(c) - assessee wrongly claimed exemption under section 11 - Held that:- Merely because the claim of the assessee for deduction under section 11 of the Act was not accepted, may not be a ground for levy of penalty. Further, the assessee wrongly claimed exemption under section 11 on the basis of a legal advice and details furnished on record. Therefore, the assessee would not have any intention to conceal particulars of income from the Revenue Department. The assessee disclosed complete facts in the return of income as well as in the computation of income for receipt of the donations and incurring expenditure. The authorities below after granting deduction of the expenses claimed, made the small addition against the assessee considering the donations and corpus donations to be income under section 2(24). The assessee, therefore, disclosed complete facts before the authorities below and, therefore, could not be said to have concealed particulars of income. The small income was assessed against the assessee because no registration was granted under section 12A of the Act.
Assessing Officer should have followed the rule of consistency and on the same set of facts should not levy penalty against the assessee in assessment years under appeals. It is well settled law that the Income Tax Authorities shall have to maintain the rule of consistency. The explanation of the assessee was bonafide that since it is a registered trust and applied for registration of trust before the Commissioner of Income Tax, Patiala, therefore, the assessee on legal advice has made the claim of exemption of income under section 11 of the Act, therefore, no penalty is leviable against the assessee. - Decided in favour of assessee.
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2016 (3) TMI 1218 - ITAT KOLKATA
Revision u/s 263 - disallowance u/s.14A computation - AO proceed to apply the computation mode as specified in Rule 8D(2) of the Rules - Held that:- While examining the claim of the assessee regarding expenditure incurred in earning the exempt income including a claim that no expenses were incurred, the AO is bound to take note of such absurdities and refrain from invoking the method of disallowance of expenses as prescribed by Rule 8D(2) of the Rules. It is for this reason that the satisfaction of the AO regarding expenses incurred for earning exempt income is to be objective satisfaction. It is only when no reasonable and proper parameters for making disallowance can be arrived at, that resort to Rule 8D(2) can be had by the AO. Rule 8D(2) will thus be a last resort when it becomes impossible to arrive at a just conclusion on the amount of expenses that has to be disallowed as attributable or incurred in earning exempt income. It cannot therefore be said that once the AO rejects the mode of computation of disallowance u/s.14A of the Act as made by the Assessee, he has no other option but to resort to Rule 8D of the Rules.
Besides the above, we are also of the view that the AO has adopted one of the possible course open to him in law. The CIT cannot invoke jurisdiction u/s.263 of the Act just because he does not agree with the view of the AO. As u/s.263 of the Act, the CIT cannot substitute his view with that of the AO. The order of the AO was neither erroneous nor prejudicial to the interest of the revenue and therefore jurisdiction u/s.263 of the Act ought not to have been invoked - Decided in favour of assessee.
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2016 (3) TMI 1217 - SUPREME COURT
Constitutional validity of the Land Acquisition (Goa Amendment) Act, 2009 challenged - repugnancy between the principal legislation (Land Acquisition Act) and the State Amendment - Held that:- Section 41(6) to (9) introduced in the Principal Act by the Goa State Amendment renders ineffective Clause 4(viii) of the Agreement executed by the parties under Section 41 of the Principal Act. With Clause 4(viii) being deleted the embargo on constructions on the acquired land is removed. It is the aforesaid Clause 4(viii) and its legal effect, in view of Section 42, that was the basis of the Court’s decision dated 20th January, 2009 holding the construction raised by the third respondent on the acquired land to be illegal and contrary to the Principal Act. Once Clause 4(viii) is removed the basis of the earlier judgment stands extinguished. In fact, it may be possible to say that if Clause 4(viii) had not existed at all, the judgment of the Court dated 20th January, 2009 would not have been forthcoming. It was therefore well within the domain of the legislature to bring about the Amendment Act with retrospective effect, the Legislative field also being in the Concurrent List, namely, Entry No. 42 of List III (Acquisition and Requisition of Property) of the Seventh Schedule to the Constitution.
Section 41 of the Principal Act and the terms of the agreement executed thereunder (even if the latter is understood to be ‘Law’ enacted by the competent legislature for the purpose of Article 254) are silent with regard to modification/variation or deletion/subtraction of the terms of the agreement. The State Amendment Act by bringing in Sub-sections (6) to (9) of Section 41 invalidates a clause of the agreement [Clause 4(viii)] by effecting a deletion thereof with retrospective effect i.e. 15.10.1964 (the date of coming into operation of the Principal Act to the State of Goa). The State Amendment, by no means, sets the law in a collision course with the Central/Principal enactment. Rather, it may seem to be making certain additional provisions to provide for something that is not barred under the Principal Act.
If the provisions of the State Amendment are to be tested on the anvil of the finding of this Court that the acquisition in the present case is under Section 40(1)(aa) of the Land Acquisition Act, the deletion of the relevant clause of the agreement as made by the said amendment may appear to be really in furtherance of the purpose of the acquisition under the Central Act. We, therefore, do not find any repugnancy between the Principal Act and the State Amendment, as urged on behalf of the petitioners in this case.
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2016 (3) TMI 1216 - ITAT JAIPUR
Addition of gross profit rate of 31% estimated by the AO - Held that:- As decided in assessee's own case for the assessment years 2008-09 and 2009-10 [2015 (12) TMI 1684 - ITAT JAIPUR] that the books of account cannot be rejected. Besides, in assessment year 2007-08, substantial gross profit addition was reduced by the ld. CIT(A) on same facts and circumstances of the case to a meager figure. The reason for fall in assessee's gross profit cannot be brushed aside. The fact is that there is a stiff competition in the global market and it is a buyer market which cannot be disputed. In view of these deliberations, we see no justification in making any gross profit addition. Thus we do not endorse the rejection of books of account and there is no justification in estimation of any gross profit addition - Decided in favour of assessee.
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2016 (3) TMI 1215 - ITAT MUMBAI
ALP adjustment in respect of the issuance of corporate guarantees - Held that:- Vide our order of even date, which is deemed to be attached and forming part of this order as well, we have deleted similar disallowance for the assessment year 2009-10. We see no reasons to take any other view of the matter for this year. Respectfully following the said order, we uphold the grievance of the assessee and direct the Assessing Officer to delete the impugned ALP adjustment
Disallowance under section 14A - Held that:- When there is no income in the hands of the assessee, which is exempt from tax, there cannot be any occasion to make disallowance under section 14A. This was so held by Hon’ble Delhi High Court in the case of CIT vs. Winsome Textile Industries Ltd (2009 (8) TMI 220 - PUNJAB AND HARYANA HIGH COURT ) - Thus addition deleted. - Decided in favour of assessee
Deduction u/s. 80IB(8A) allowed.
Disallowance of expenses on MS Office licence - Held that:- The amount paid is only an annual licence fees for use of software, the expenses so incurred is required to be treated as revenue expenditure. No material has been brought on record to demolish, or even dispute, this finding of fact. In view of these discussions, and bearing in mind entirety of the case, we approve the order of the CIT(A) on this point as well.
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