|
Advanced Search Options
Case Laws
Showing 261 to 280 of 1051 Records
-
2013 (1) TMI 803
Legal validity of additions made under section 153A - Held that:- Additions in the assessments made under section 153A could be made only on the basis of incriminating material found during the search, except in cases where assessment has abated - here no proceedings are abated thus no addition could be made unless some incriminating material was found - addition made on the facts of case are legally invalid - Decided in favor of assessee
-
2013 (1) TMI 802
Whether deduction under section 10A or brought forward losses and unabsorbed depreciation shall first be allowed from business income - Held that:- Section 10A is a provision which is in the nature of a deduction and not an exemption - The deduction under section 10A has to be given effect to at the stage of computing the profits and gains of business - Hence it is clear that exemption under section 10A, is to be allowed without setting off carry forward unabsorbed losses and the depreciation from the earlier AY or current AY Decided in favor of assessee
-
2013 (1) TMI 801
TPA - selection of comparable - Held that:- Assessee is a service provider operating with limited or no risk at all thus companies functionally dissimilar with that of assessee need to be excluded from final list of comparable.
Deduction under s. 10A - Held that:- We direct the AO to recompute the deduction under s. 10A after reducing communication charges both from the export turnover as well as the total turnover.
-
2013 (1) TMI 800
Issues involved: Appeal against deletion of penalty u/s.271(1)(c) of the Income Tax Act.
Issue 1: Penalty imposed under section 271(1)(c) for different additions
The issue pertains to the penalty imposed by the Assessing Officer under section 271(1)(c) of the Act for various additions. The Commissioner (Appeals) confirmed the penalty on inflated purchase of Rs. 1.42 crores but deleted the penalty related to other additions and disallowances. The Tribunal upheld this decision, stating that the penalty was not sustainable for various reasons. The Tribunal also noted that the disallowance of deduction u/s.80IA was not sustainable based on the judgment of the Hon'ble Apex Court in the case of CIT v. Reliance Petroproducts Pvt. Ltd. The Tribunal found no infirmity in the order of the Commissioner (Appeals) and confirmed the cancellation of penalty, leading to the dismissal of the Tax Appeal.
Issue 2: Confirmation and deletion of penalty by CIT (Appeals) and Tribunal
The documents on record revealed that part of the penalty was confirmed by the CIT (Appeals) while the rest was deleted. The Tribunal agreed with the CIT (Appeals) on this matter. Several additions were rejected during the assessment proceedings and were sent for reconsideration. Regarding the disallowance of deduction under section 80IA of the Act, it was held that the claim was not incorrect, and based on the decision in the case of CIT v. Reliance Petroproducts (P.) Ltd., the penalty was deleted. The Tribunal emphasized that the penalty was based on the appreciation of facts, and since a substantial portion of the penalty was related to additions that were not sustained, it could not be imposed, especially in the context of disallowance of the deduction under section 80IA.
In conclusion, the judgment dismissed the Tax Appeal, stating that no question of law arose in this case.
-
2013 (1) TMI 799
Levy of purchase tax - purchase of low pressure natural gas which is used as fuel in the boiler during the manufacturing process - refund of amount paid as purchase tax - extended period of limitation - Held that: - we simply fail to understand how the department can withhold the refund payable to the petitioner arising out of the finalised assessment order which has attained such finality that it is simply not possible to modify the same under any of the provisions contained in the Gujarat Sales Tax Act noticed by us, merely on the ground that the legal issue regarding chargeability of purchase tax on purchase of low pressure natural gas used for fuel is pending before the Supreme Court - petition allowed.
-
2013 (1) TMI 798
Issues involved: Appeal against order of CIT(A) for assessment year 2008-09 regarding disallowance u/s 14A of IT Act and exempt income u/s 10(34)/(35).
Dispute over disallowance u/s 14A:
The appellant, a company engaged in manufacturing and trading of Fine Chemicals, contested the disallowance of &8377; 11,93,964 u/s 14A of the Act for the assessment year 2008-09. The appellant argued that the investment in Mutual Fund generating exempt income was from retained profits, not borrowed funds, and there was no nexus between interest expenditure and the investment amount. The AR presented financial data showing an increase in own funds and profit exceeding the investment in mutual funds, indicating no use of borrowed funds for investments. The Tribunal referred to Rule 8D of IT Rules, 1962, and the judgment of the Hon'ble Bombay High Court in Reliance Utilities and Power Ltd. Vs CIT, 313 ITR 340, which held that if own funds exceed investments, such investments are from own funds. Consequently, the disallowance of interest expenditure was deleted.
Other expenses disallowance:
Regarding the balance disallowance of &8377; 42,790 for other expenses, the Tribunal found it justified as the appellant failed to provide evidence of expenses incurred for earning business income. The AR's argument that no actual expenses were incurred was dismissed, citing the need for expenses related to managing investments in mutual funds, including account maintenance and decision-making costs. The disallowance was upheld as per Rule 8D.
Comparison with Tribunal's decision:
The Tribunal distinguished the present case from the decision in Kamal Madmohan Mangaldas Vs ITO, where non-taxable income was in the personal profit & loss account with no claimed expenses. In contrast, the appellant's dividend income was reflected in the company's profit & loss account, making the cited decision inapplicable. Ground No.2 of the appeal was partly allowed based on this distinction.
Conclusion:
The appeal was partly allowed, with the disallowance of interest expenditure u/s 14A deleted but the disallowance of other expenses upheld. Ground No.3 was rejected as it mirrored the issue addressed in Ground No.2. The order was pronounced on 31-01-2013.
-
2013 (1) TMI 797
Determination of arms length price - Nature of Business - whether support services or merchant banking - Selection of comparables to determine ALP - International transaction like consultancy Services, reimbursement of expense, recovery of expenses incurred and receipt of share application money - Held that:- TPO has rejected the comparables selected by the assessee on the ground that the activities of the assessee are of investment advisory services and not of support services.
Held that:- The primary role of the assessee is limited to collecting information, providing recommendations and advice on the basis of information collected - assessee has no functional, asset and business risk - assessee has no role in transfer of funds or investment in India - assessee has located the comparables which are in similar activity of advisory/support services - assessee is providing only advisory services and support services to its AE, who in turn takes a decision for potential investment - It is that the assesse’s role is only to furnish the requisite information and not to participate in the actual decision making - Comparables selected by assessee are correct - Decided in favor of assessee
Held that:- As regards to the adjustment of +/-5% can be made when some real and accurate effect of such differences are brought on record - assessee has not properly quantified the alleged adjustments on account of differences in asset employed and risk assumed - Decided against the assessee
-
2013 (1) TMI 796
Nature of Fees for technical services - Held that:- The assessee co. is incorporated in Hongkong and belongs to the CLSA Group of companies - amount in question received by the assessee company from CLSA India Ltd. - It was contended that the said contribution was paid towards reimbursement of various indirect overhead expenses incurred by the assessee company without any markup or service charges and the same being recovery of the overhead expenses actually incurred by the assessee company without any profit element, the same did not constitute income of the assessee company - the additional evidence filed by the assessee is very much relevant for deciding the issue under consideration - matter is remitted to CIT (Appeals) in order to give an opportunity to the learned CIT (Appeals) to verify the additional evidence and decide the issue afresh on such verification - Matter remanded back for statistical purposes
Addition made on account of referral fees treating it in the nature of fees for technical services - whether the referral fees received by the assessee who is a non-resident in India from CLSAI is chargeable to tax in India - Held that:- there was no business income in India of the applicant u/s 9(1)(i) nor even the deemed income as per Explanation 2 to sec 9(1)(i) - the referral fees paid by the Indian company was not fees for technical services u/s 9(1)(vii) - the referral fees received by the assessee is not taxable in India as per the case of Cushman and Wakefield (S) Pet. Ltd. (supra) - addition made by the AO and confirmed by the CIT on this issue is deleted - Decided in favor of assessee
-
2013 (1) TMI 795
Determination of Arms length price of transaction - Held that:- TPO rejected twelve out of 16 comparables submitted by the assessee and injected its own eleven comparables - also TPO removed bank interest, discounting and finance charges to arrive at the operating margin - also he included domestic transactions in turnover for calculation of ALP - Hence the case is referred back to AO as only the export transaction, i.e. the international transaction is considered for the purposes of determining the ALP - Also foreign exchange fluctuation gain is nothing but an integral part of the sale proceeds of an assessee carrying on export business thus the same shall be included in revenues - On the issue of exclusion of discount chargesit is held that they cannot form part of the operating cost, as they shall fall under the ambit of non operating expenses - Thus TPO shall determine the ALP afresh as per the proviso to section 92C(2) - Remanded back for statistical purposes
-
2013 (1) TMI 794
Determination of Arm's length Price - Held that:- assessee adopted transaction net margin method (TNMM)to determine the ALP - TPO however rejected the assessee’s objections and selected 26 external companies as comparables - In the case of software services rendered by the appellant to its AE the functions performed by the appellant were the same as those performed by unrelated parties (Non-AEs) - internal” TNMM was selected as the most appropriate method - internal comparables are more appropriate and are to be given precedence over external comparables - The computation of arm’s length price in case of TNMM is done as per Rule 10B(1)(e) - assessee had also filed detailed functional similarity as well as the methodology of apportionment of expenses - TPO to adopt the internal TNMM instead of external TNMM - TPO to verify the cost allocation and the PLI and margin computation of software services rendered by the assessee to its AE - Remanded back for statistical purposes
Deduction u/s 10A - computed the business loss - Held that:- deduction under section 10A is undertaking specific and should be computed without considering the losses of other industrial units, which is a non-STP unit - Decided in favor of assessee
-
2013 (1) TMI 793
Whether addition made u/s 68 on unsecured loans are bogus - Held that:- The assessee had filed before the authority the confirmations of bank account - creditors of the assesses are existing asseseess of the department having permanent account numbers - money has been received by cheque thus genuineness of transaction has been rightly accepted - hence the assessee has satisfactorily discharged its onus in establishing the genuineness of the claimed credit - Decided against the revenue
-
2013 (1) TMI 792
Disallowance of depreciation on wind mills - Denial of rate of depreciation @80% - Held that:- Assessee has incurred the expenditure on foundation/civil work and erection and commissioning work and claimed depreciation at 80% on this - cost of foundation is the integral part of the wind mill and same is eligible for depreciation at the rate which is applicable to the wind mill - Decided in favor of assessee
-
2013 (1) TMI 791
Issues Involved: Whether the assessee was liable to deduct TDS in respect of payment made to Albatross CFS Pvt. Ltd.
Issue 1: Liability to Deduct TDS
The assessee made a payment of &8377; 46,419/- to Albatross CFS Pvt. Ltd., claiming it as reimbursement for rail freight charges. The Assessing Officer (AO) disallowed this amount u/s 40 (a) (ia) for not deducting TDS. The CIT (A) upheld this decision, leading to the present appeal by the assessee.
Details: The first payment of &8377; 35,094/- was for reimbursement of rail freight charges paid by the payee on behalf of the assessee. The second payment of &8377; 11,325/- was below the TDS limit of &8377; 20,000/-. The assessee argued that the reimbursement nature of the payments exempted them from TDS, citing CBDT circulars and relevant case laws.
Decision: The Tribunal found that the payments were indeed reimbursements without any profit element, thus not requiring TDS deduction. Citing precedents, the Tribunal ruled in favor of the assessee, stating that the disallowance under Section 40 (a) (ia) was unjustified.
Conclusion: The Appellate Tribunal ITAT Delhi ruled in favor of the assessee, holding that the payments made to Albatross CFS Pvt. Ltd. were reimbursements and not subject to TDS deduction. The decision was based on the nature of the payments and relevant legal interpretations, leading to the allowance of the appeal.
-
2013 (1) TMI 790
Whether on the facts and in the circumstances of the case and in law the ITAT did not err in holding that no approval could be said to have been given when in fact the Joint CIT has duly applied his mind and corrected the draft assessment order and the changes were incorporated by the AO in the final assessment order? - Held that:- Admittedly the finding of fact was recorded by the Tribunal that no prior approval of the Joint Commissioner was taken before Income Tax officer passing the order. In view of the above, we see no reason to entertain the proposed question. Hence, the aforesaid appeals are dismissed with no order as to costs.
-
2013 (1) TMI 789
Issues involved: Appeal against deletion of addition u/s 80IB(10) of the Income Tax Act, 1961.
The issue pertains to the deduction claim by the assessee u/s 80IB(10) of the Act on the development of a housing project. The Revenue contended that the respondent-assessee did not own the land on which the project was developed. However, the Tribunal found that as per the development agreement, the assessee bore all expenses for the development and had the right to allot possession of the units. The Tribunal relied on a previous decision where it was held that the assessee had taken full responsibility for the project, including engaging professionals, enrolling members, and bearing the profit or loss. The Tribunal concluded that the assessee had total and complete control over the land and the project, assuming all risks and responsibilities.
The Court examined the terms and conditions of the development agreements and the agreement of sale between the parties involved. It was noted that the landowner had received part of the sale consideration and granted development permission to the assessee. The assessee was responsible for constructing residential units on the land, bringing in technical knowledge, paying fees to professionals, appointing subcontractors, and managing financial arrangements. The Court found that the assessee had undertaken the entire development task, including construction, sale of units, and financial arrangements, demonstrating total control and responsibility over the project. The Court emphasized that the risk element was borne entirely by the assessee, while the landowner received a fixed price for the land, insulated from any project risks.
In conclusion, the Tax Appeal was dismissed, upholding the Tribunal's decision to delete the addition u/s 80IB(10) of the Income Tax Act, 1961.
-
2013 (1) TMI 788
Eligibility for the claim of deduction u/s.80IA - Held that:- An undertaking to be regarded as small scale industrial undertaking there must not have investment in plant and machinery exceeding ₹ 1 crore u/s 11B at the end of the previous year - simply because in a earlier year an assessee had satisfied the condition of small scale undertaking, it cannot ipso facto be taken that the assessee would be regarded as small scale industrial undertaking in the subsequent years also - it is observed that the assessee’s investment in plant and machinery exceeded the limit specified u/s 11B of the Industries (Development and Regulation) Act - Hence the deduction is not allowed - decided against the assessee
-
2013 (1) TMI 787
Issues Involved: Condonation of delay in filing appeal u/s Section 86(3) of the Finance Act, 1994.
Summary:
The judgment by the Appellate Tribunal CESTAT, Bangalore dealt with an application for condonation of delay in filing an appeal by a Public Sector Undertaking. The appellant sought condonation of a delay of 181 days and 1 or 2 more days transit time in filing their appeal. Despite notice, there was no representation for the appellant, and no request for adjournment was made. The appellant had previously proposed to file an application under Section 74 of the Finance Act, 1994, but failed to do so. The Tribunal was inclined to dispose of the application due to lack of documents from the appellant.
The impugned order was received by the appellant on 14/01/2011, and an appeal should have been filed within three months from that date u/s Section 86(3) of the Finance Act, 1994. However, the appeal was filed on 01/12/2011 with a delay of around 225 days. The appellant failed to explain the actual delay and only sought to explain the delay of 181 days and 1 or 2 more days transit time. The appellant claimed to have filed an application under Section 74 of the Finance Act, 1994 seeking rectification, but failed to produce the relevant documents. The Tribunal noted that the delay of around 225 days remained unexplained and dismissed the condonation application and the appeal as time-barred.
The Tribunal did not allow the condonation application for several reasons:
(a) The appellant did not explain the delay in excess of 181 days and 1 or 2 more days transit time.
(b) The appellant filed the Section 74 application long after the statutory period of limitation ran out, indicating a lack of bona fides.
(c) The appellant's claim of awaiting results from the Section 74 application was deemed unreasonable as the impugned order advised them to appeal within 3 months.
(d) The proceedings under Section 74 could have been resumed while the appeal was pending, and the delay in filing the appeal could not be justified by the Section 74 proceedings.
In conclusion, the Tribunal dismissed the appeal as time-barred due to the unexplained delay of around 225 days and the lack of justification for the delay provided by the appellant.
-
2013 (1) TMI 786
Disallowance of expenditure incurred in relation to income not includible in total income u/s 14A - Held that:- AO will have to verify the correctness of the claim that no expenditure has been incurred in relation to income which does not form part of total income - AO has to accept the claim of the assessee -after giving the reasonable opportunity with the correctness of the claim AO can reject the claim and state the reasons for doing do - further AO will have to determine the amount of expenditure incurred in relation to such income - As per the judjement of Hon’ble Jurisdictional High Court in [T.C.(A.) No. 2621] of 2006 titled as M/s. Simpson and Co. Ltd. vs. DCIT - it would be reasonable and appropriate if the disallowance is restricted @2% of the exempt income as returned by the assessee - decided partly in favor of assessee
-
2013 (1) TMI 785
Deduction u/s. 36(1)(viii) - Assessee, govt company claimed deduction in respect of special reserves created in the balance-sheet, as it is a financial corporation which is engaged in providing long-term finance for development of infrastructure facilities - Claim was rejected on the ground that it is neither a financial corporation nor a public-company. - HELD THAT:- In Sec. 36(1)(viii) ‘financial corporation’ is defined to “include a public company and a Government company". Any entity incorporated under a statute carrying on the business of financing would come under the definition of financial corporation. The definition is not an exhaustive definition and the term financial corporation has been defined in an inclusive manner so as to include a Govt. company and a public company. Even otherwise the assessee is a Govt. company since the Central Govt. holds more than 51% of the share capital of the bank and as defined in Sec. 617 of the Companies Act.
Relying upon the own case, UNION BANK OF INDIA VERSUS ASSISTANT COMMISSIONER OF INCOME-TAX [2012 (6) TMI 500 - ITAT MUMBAI], matter was remitted back to AO to verify and examine the deduction, which has been transferred to the special reserves subject to the prescribed percentage of profits derived from providing long-term finance for the approved purposes mentioned in section 36(1)(viii).
Matter restored back.
Deduction on Notional gain on Derivatives - Assessee submitted that trading derivatives held by the bank constitute its stock in trade and according to the accepted basis, valuation of closing stock it should be valued at cost or market price, whichever is lower. Therefore, while the loss arising on account of revaluation of trading derivatives must be allowable as deduction. CIT rejected the contention as assessee didn't follow RBI guidelines for recognizing profit and loss.
HELD THAT:- Assessee is entitled to claim loss on revaluation of trading derivatives. The notional unrealized gain cannot be charged to tax. It is settled principle of law as laid down by Hon'ble Apex Court in the case of CHAINRUP SAMPATRAM VERSUS COMMISSIONER OF INCOME-TAX, WEST BENGAL [1953 (10) TMI 2 - SUPREME COURT], that while anticipated loss is taken into account in valuing closing stock, the anticipated profit in the shape of appreciated value of the closing stock is not brought into account. No prudent businessmen or trader will show increased profit on unrealised gain. Findings of the CIT(A) were reversed and it was held that the assessee is entitled to claim loss on revaluation of trading derivatives
Decision in favour of assessee.
Applicability of sec. 115JB on Banks - Assessee, a banking company's accounts are being prepared as per Schedule III of Banking Regulation Act and not as per Schedule VI of the Companies Act. It was contended that in the earlier years provisions of s.115JB of IT Act were applicable on it. - HELD THAT:- Relying on the judgement of KRUNG THAI BANK PCL VERSUS JOINT DIRECTOR OF INCOME TAX - INTERNATIONAL TAXATION, MUMBAI [2010 (9) TMI 18 - ITAT, MUMBAI], it was held that provisions of section 115JB are not applicable in the case of the assessee.
Decision against Assessee.
Prior Period Expenses - Assessee claimed some amount as prior year expenses, it was submitted that the liability to pay said expenses arose only during the year, and hence cannot be considered as prior period expenses. HELD THAT:- Incurring of expenses is a continuous process and there cannot be cut-off date at any point of time to be classified as prior period expenses.
Decision in the case of TOYO ENGG. INDIA LIMITED. VERSUS JOINT COMMISSIONER OF INCOME-TAX. [2005 (9) TMI 237 - ITAT BOMBAY-J], relied upon and the contention of the assessee was upheld that it has branches all over the country, where incurring of expenses is a continuous process and there cannot be cut-off date at any point of time to be classified as prior period expenses liable to be disallowed.
Decision in Favour of Assessee.
Bad and Doubtful Debts u/s. 36(1)(viia) - AO restricted the deduction in respect of provision for bad and doubtful debts. Assessee claimed entire eligible amount as per the sec. 36(1)(viia) should be allowed as deduction instead of restricting it to the amount of provisions made in the books of account. - HELD THAT:- Provisions of section 36(1)(viia) are very clear which provides that in respect of ‘any provision’ made for bad and doubtful debts an amount not exceeding 7.5% of the total income and an amount not exceeding 10% of the aggregate average advances of the rural branches of such bank shall be allowed as deduction. Once a provision for bad and doubtful debts are made by the scheduled bank having rural Branches, the assessee is entitled to a deduction, which is quantified not with reference to the amount provided for in the account but with respect to certain percentage of the total income and also certain percentage of aggregated advances.
Decision in favour of Assessee.
-
2013 (1) TMI 784
Issues Involved:
1. Validity of the assessment order u/s 143(3) of the Income Tax Act, 1961.
2. Disallowance of business loss of Rs. 6,75,273.
3. Disallowance of various expenses including traveling, repairs & maintenance, rates & taxes, and maintenance charges.
Summary:
1. Validity of the Assessment Order u/s 143(3):
The assessee challenged the assessment order passed by the Assessing Officer (AO) u/s 143(3) of the Income Tax Act, 1961, claiming it was bad in law and invalid. However, the Tribunal did not find merit in this contention and upheld the validity of the assessment order.
2. Disallowance of Business Loss of Rs. 6,75,273:
The AO disallowed the business loss claimed by the assessee on the grounds that no business activities were carried out during the assessment year. The assessee argued that it was engaged in investment activities and letting out property, and had incurred various expenses related to these activities. The Commissioner (Appeals) upheld the AO's decision, noting that the income earned was attributable to heads other than business and profession. The Tribunal agreed with the lower authorities, stating that the loss was not on account of any business activities and thus, the claim of business loss could not be allowed.
3. Disallowance of Various Expenses:
The AO disallowed certain expenses claimed by the assessee, including traveling expenses, repairs & maintenance, rates & taxes, and maintenance charges, due to the absence of business activities. The Commissioner (Appeals) partially allowed some expenses necessary for maintaining the corporate status. The Tribunal, referencing the Supreme Court's judgment in CIT v/s Raghunandan Prasad Moody and the Calcutta High Court's judgment in Ganga Properties Ltd., concluded that expenses necessary for maintaining the corporate establishment and complying with statutory obligations should be allowed. Consequently, the Tribunal allowed the following expenses:
- Directors Remuneration: Rs. 2,58,000
- Salaries: Rs. 63,000
- Staff Welfare: Rs. 707
- Audit Fees: Rs. 22,472
- Insurance: Rs. 6,381
- Other Expenses: Rs. 12,700
- Postage, Telegram & Telephone Expenses: Rs. 3,345
- Printing and Stationary: Rs. 350
- Rates and Taxes: Rs. 830
- Repairs and Renovation: Rs. 38,916
- Traveling Expenses: Rs. 1,00,609
- Professional Fees: Rs. 30,000
Conclusion:
The Tribunal partly allowed the assessee's appeal, permitting the deduction of various expenses necessary for maintaining the corporate establishment and complying with statutory obligations, while upholding the disallowance of the business loss.
............
|
9911796707
