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Showing 281 to 300 of 639 Records
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2010 (6) TMI 621
Service agents - payment of commission disallowed - Held that:- The commission payments have been proved by the assessee not only by internal evidence in the form of books of account, but also by external evidence in the form of TDS particulars + confirmation letters received from the payees. It is to be further seen that the assessee has achieved a high amount of turnover which justifies the payment of commission to procure business. Further the assessee has also received commission from their principal of an amount almost equal to commission payments. Thus CIT(Appeals) is justified in accepting the bona fides of these payments as necessary expenditure incurred for the purpose of carrying on of the business.In favour of assessee.
Unexplained cash credit - as per AO advance stated to be received from the said party has not been proved by the assessee - Held that:- The circle of the transaction has been established by the assessee by providing the different links of the transactions with documentary evidence. The amount was in fact received by the assessee as advance against supply of machineries. This position is proved by the materials evidencing the sale of machineries to M/s. Kartika Metal Crushers and adjustment of the advance against the billed amount. The accounts itself show that the advance amount has been subsequently converted into sale proceeds of the assessee which has been accepted by the AO as part of the turnover of the assessee. In favour of assessee.
Purchase disallowance - Held that:- As the assessee had already produced invoices from M/s. Hydrotech Tamilnadu for a sum of Rs. 1,40,400. It was on the basis of the above evidence, the Commissioner of Income-tax (Appeals) has granted commensurate relief to the assessee. In favour of assessee.
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2010 (6) TMI 620
Depreciation on account of foreign exchange fluctuation disallowed - Held that:- As decided in CIT v. Woodward Governor India (P.) Ltd. [2009 (4) TMI 4 - SUPREME COURT] additional liability due to exchange fluctuation would result in modification of the actual cost in the year in which increase or decrease arises on account of such fluctuation - thus value of the asset would move in accordance with change in foreign exchange rates as on the last day of the previous year and assessee would be eligible for claiming depreciation based on such value, for the impugned assessment year - Decided in favor of the assessee
Provision of leave encashment disallowed - Held that:- Revenue has not disputed that assessee had made the provision for leave encashment in accordance with actuarial valuation - As held in Bharat Earth Movers (2000 (8) TMI 4 - SUPREME Court), liability that could arise on account of leave encashment, was in praesenti. Assessee has made available actuarial certificate and provision was an ascertained liability. Just because in the earlier years, it was accounting leave encashment based on actual payment, cannot preclude it from moving to a scientific method, especially when it was following mercantile system of accounting - no error in the order of the CIT(A) in deleting such addition while computing the book profits for the purpose of ascertaining MAT liability - Decided in favor of the assessee.
Provision for bad and doubtful debts disallowed - Held that:- Parliament in its wisdom chose to add cl. (g) to the Explanation to s.115JA whereby any amount set aside for diminution of value of any asset had to be added back to the net profit as shown in the P&L a/c, for computing the book profit for ascertaining the MAT liability. As held in Mysore Breweries Ltd. (2009 (9) TMI 829 - KARNATAKA HIGH COURT) retrospective insertion of cl. (g) had to be considered. Hence, provision for bad debt needed to be added back to the net profit while working out MAT liability. In favour of revenue.
Loss from assessee's windmill operations - whether be deleted while working out the MAT liability - Held that:-he amount of profits derived by the industrial undertaking from the business of generation and distribution of power has to be reduced from the net profit, irrespective of the fact that whether such profits appear in the P&L a/c or not. If that be so, can we extend it to say that even if it were losses then also it had to be considered as an addition. In our opinion, the clear answer is a 'no' - AO does not have any jurisdiction to go beyond the net profit shown in the P&L a/c, the except to the extent provided in the Explanation. Further, we also find that assessee had never claimed any loss as such, but on the other hand, receipts and expenses were separately shown and AO had himself computed a loss and made the addition. Thus the AO had made a wrong application of the Explanation. He misinterpreted cl. (iv) thereof, by making an addition, relying on that clause which specifically provided for reduction. CIT(A) was justified in deleting the addition made to the net profit of the assessee, the losses arising to it on windmill operation. In favour of assessee.
Disallowance towards provision for wealth-tax while computing its book profits for the purpose of ascertaining MAT liability - Held that:- The provision for wealth would come within the ambit of cl. (a) of Explanation to 115JA of the Act. We set aside the order of the CIT(A) in this regard and restore the order of the AO. In favour of revenue.
Expenditure incurred for fly air ash collection system - revenue v/s capital - Held that:- Assessee for the purpose of collecting the fly ash had made a construction in a property not owned by it on a condition agreed with TNEB, that the construction and the equipment would become latter's property. If that be so, we wonder how it could be considered as capital asset of the assessee. Just because it facilitated the smooth procurement of an essential raw material, it could not be said that any enduring benefit had come to the assessee. As decided in CIT v. TVS Lean Logistics Ltd. [2007 (6) TMI 44 - HIGH COURT, MADRAS] wherein it was held that hen an assessee had constructed a building on a leasehold land, it could not be considered that there was any acquisition of capital asset. In favour of assessee.
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2010 (6) TMI 616
Extension of export obligation - Held that:- It is pertinent to note that despite the fact that a period of almost three years has elapsed since the passing of the order by the Tribunal, the petitioner is still not ready and willing to deposit the amount directed by the Tribunal, petitioner is not in a position to discharge the liability by making pre-deposit even if extension of time and/or installments are granted, petition fails and is accordingly rejected. Interim relief granted stands vacated.
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2010 (6) TMI 615
Duty and penalty - respondent’s eligibility for exemption under the notifications - Held that:- Sections 35G and 35L make it very clear that High Court has no jurisdiction to entertain an appeal against the order of the Tribunal where at least one of the issues raised pertains to rate of duty of goods or classification or valuation of goods, Tribunal has not considered exemption claim based on condition in the notifications, that is whether manufacture of final product through contract units entitles assessees for exemption under the notifications, appeals are not maintainable and appeals rejected.
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2010 (6) TMI 614
Condonation of the delay - reason stated by the department for the condonation of the delay of nearly 300 days is that the officers concerned were transferred during the material period - chronology of events furnished by the SDR has given a different picture, from which it appears that a major part of the delay is on the side of the review committee - Held that:- appellant has not satisfactorily explained the above delay of the appeal, COD application is rejected and consequently the appeal also gets dismissed as time-barred. The stay application also gets dismissed.
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2010 (6) TMI 612
Whether assessee is entitled to deduction of substantial amount paid towards interest on the borrowed funds utilised for acquisition of shares in a company of which the assessee acquired controlling interest of up to 90 per cent - assessee had received dividend income and no other benefit is derived from the company for the business carried on by it - Held that:- reasoning given by the Tribunal for disallowance by applying section 14A, squarely applies for the interest paid on the borrowed funds because it is on record that the entire funds borrowed were utilised for acquisition of shares by the assessee in the company, assessee would be entitled to deduction of interest under section 36(1)(iii) of the Act on the borrowed funds utilised for the acquisition of shares only if shares are held as stock in-trade which arises only if the assessee is engaged in trading in shares. So far as acquisition of shares is in the form of investment and the only benefit the assessee derived is dividend income which is not assessable under the Act, the disallowance under section 14A is squarely attracted and the Assessing Officer, in our view, rightly disallowed the claim, dividend income received by the assessee during the previous year was a meagre sum of Rs. 3 lakhs. This only shows that the business carried on by the leasing company was not very substantial to justify the assessee's investment through borrowed funds. Therefore, principle of commercial expediency gone into by the Supreme Court does not apply to the facts of this case. Therefore, we hold that the Tribunal in principle rightly held that the utilisation of the borrowed funds for acquisition of shares will not entitle the assessee for claiming deduction of interest paid on such borrowed funds. However, we hold that the Tribunal was not justified in allowing the claim in excess of Rs. 2 lakhs. For the same reasoning applied by the Tribunal, the assessee is not entitled to deduction of any amount towards interest paid on funds borrowed by way of fixed deposits taken for acquisition of shares in the company, which helped the assessee only to earn some dividend. Consequently we allow the appeal by reversing the order of the Tribunal and by restoring the disallowance confirmed in first appeal.
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2010 (6) TMI 608
Unsecured loans - assessee had not provided the addresses of the depositors, failed to prove the identity of the loan creditors, capacity of the depositors and source from where loan was given to the assessee - Held that: loan taken by the assessee was not a bona fide transaction - penalty imposed - Appeal dismissed
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2010 (6) TMI 607
Cenvat credit - assessee not availed the cenvat credit for the service receiver to avail 75% abatement as per the notification No. 32/04-ST, dated 03.12.2004 - declaration need not be made on each consignment note and separate declaration by service provider is efficient for service receiver to avail abatement in terms of the notification. Accordingly no merit in the appeal filed by the Revenue hence rejected. Cross objection filed by the respondents also get disposed of.
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2010 (6) TMI 604
Set off of interest expenditure with interest income - income from other sources - AO is of the opinion that cannot claim the adjustment of interest payable against interest so earned and assessable under section 56.- Held that:- the borrowing has been made exclusively and solely for the purpose of earning interest in which case alone it should be taken as an income which should be deducted from the interest receipts. - there is direct nexus between the amount advanced and amount borrowed - Decided in favor of assessee.
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2010 (6) TMI 602
Power of CIT(A) - reference to valuation officer u/s 142A by CIT(A) - Held that:-The first appellate authority has all the powers which the original authority may have. In the absence of any statutory provision to the contrary, the appellate authority is vested with all plenary powers which the subordinate authority has in the matter. This view finds support from the decision of Hon'ble Calcutta High Court rendered in the case of CIT v. Ranicherra Tea Co. Ltd. (1993 -TMI - 20375 - CALCUTTA High Court). The Revenue, however, laid no record before us to show that the learned CIT(A) has acted unreasonably or beyond the scope of his powers.
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2010 (6) TMI 600
Search and seizure - Undisclosed income - Share application money, Gift, Set off of loss and cash credit - During the course of search and seizure operation, certain assets and documents including cash, jewellery etc. were found - Held that: company had received share application money to the extent of Rs. 25 lakhs. In the instant case, money has been withdrawn by the assessee being director of the said company from company’s bank account - There is no material available on record that the amount of Rs. 20 lakhs was utilized or invested elsewhere by the assessee - Decided in favor of the assessee Regarding gift - In the instant case, the identity of the alleged donor has not been proved. The alleged gift deed does not disclose complete address of Shri Naveen Khera, the alleged donor - The assessee did not produce alleged donor for examination before the lower authorities for the reasons best known to him. There is no evidence on record to show the capacity of the donor in making the alleged gift - Decided against the assessee Regarding set off of loss - assessee submitted a return of income under section 153A of the Act disclosing additional income of Rs. 25 lacs on estimate basis on account of loose papers found during’ the course of search - Held that: ld.A.M. was not correct in stating that the assessee is not entitled to set-off of Rs. 5,28,302 against the addition of Rs. 12 lakhs confirmed by the ld.CIT(A) on account of blank cheques found with the assessee - assessee has discharged the onus of proving the identity of the creditor, the capacity of the creditor and the genuineness of the transaction - Decided in favor of the assessee Regarding addition of Rs. 2 laks, I find that Shri Shri Dataram Tehlani is regularly assessed to Income-tax - It seems that the Assessing Officer had made the addition without proper verification and without giving finding in respect of the creditor. In my opinion, the assessee has discharged the onus of proving the identity of the creditor, the capacity of the creditor and the genuineness of the transaction - Decided in favor of the assessee
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2010 (6) TMI 598
Interest earned on deployment of surplus funds assessed under the head 'Income from other sources- assessee reducing such income from capital work in progress- assessee treating such income to be business income & claiming revenue expenditure against it- Held that:-Assessee company was in the process of establishing research and training institute which was under construction and since no allied activities were carried out by the assessee company, the company has not commenced its business and, therefore accordingly, there cannot be any question of assessment of its income as income from business. At the same time, it does not mean that until the company commences its business, income from other sources will not be taxed. See Tuticorin Alkali Chemicals & Fertilizers Ltd vs CIT (1997 - TMI - 5601 - Supreme Court). However, while treating the income as 'income from other sources' the AO should also consider the expenses incurred for the purpose of earning such income and allow the same u/s 57 of the IT Act. Income from other sources could be deductible from the project cost, when these items were directly related to the execution of contract for successful completion of the project. See CIT vs Bokaro Steel Ltd.(1998 - TMI - 5705 - Supreme Court) Further, revenue expenditure cannot be allowed as business expenditure unless the business has commenced. - Decided against the assessee.
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2010 (6) TMI 597
Deduction u/s 80-IB(10) - The first objection of the Assessing Officer in denying the exemption under section 80-IB(10) is sale of land by the assessee before the start of the project and consequently lesser area available with the assessee than the area, which were submitted for approval of the project - The basic condition for availing exemption under section 80-IB(10) of the Act is approval of the project as housing project by the prescribed authority on a plot of area of more than 1 acre - Held that: Assessing Officer and CIT(A) have failed to consider the same in the right perspective - After the town planning scheme was approved for development of 8.7 acres, assessee sold plot area of 3 acres, which is permissible under law, as clarified by the Executive Officer, Municipal Council, Zirakpuar Regarding commercial area - Assessee claims that (a) no commercial unit was sold during the year; (b) some commercial plots were sold by assessee, on which no deduction under section 80-IB(10) was claimed and (c) it had developed only a office block in the project - In case plea of the assessee is found to be correct that no such deduction is claimed on the commercial area, then there is no merit in the disallowance on this count Regarding covered area of each unit was found to be in excess of 1500 sq. feet as per the report of DVO - assessee admits that the DVO had visited their premises but strongly objects to the reference made to DVO and the findings of DVO - Held that: assessee has been denied opportunity of hearing and meeting the objections raised by DVO. The Assessing Officer/DVO have failed to give proper opportunity of hearing to the assessee - Appeal is partly allowed
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2010 (6) TMI 594
Deduction for accumulation of income to the extent of 15 per cent - assessee had shown total receipt of ₹ 1,32,19,569 as per receipt and payment account, however, the Assessing Officer had calculated the exemption @15 per cent under section 11(1)(a) of the Act with reference to ₹ 68,32,435 - Apex Court in the case of Programme for Community Organisation [2000 (11) TMI 4 - SUPREME Court] wherein it was held that - from the plain language of section 11(1)(a) of the Act, it was clear that a charitable or religious trust is entitled to accumulate 25 per cent of its income derived from property held under trust and in the said case, the donations received by the assessee were of ₹ 2,57,376 which constituted this property and was held to be entitled to accumulate 25 per cent there out and not merely 25 per cent of the balance of ₹ 87,0107 - Decided in favor of the assessee
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2010 (6) TMI 592
Non-availability of Creditors - The authorities had brought to tax in respect of Non-available 2 creditors of designing and printing, which remained outstanding at the end of this year also. - Held that:- the liability has not been written off in the accounts of the assessee. In such circumstances, non-availability of the creditor and lack of any correspondence with them does not obliterate the debt, as the assessee continues to show the same in its books of account. Thus, the provision contained in section 41(1) is not applicable. Decided in the favour of Assesee.
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2010 (6) TMI 591
Best Judgement Assessment - Carriage contractor-Held that:- The flat GP rate or net profit can very well be applied by the AO as it is mandated under section 145 of the Act if the assessee fails to support his trading results by production of books of account. However in the interest of justice rate applied should be in comparison with rate of various other assessees dealing in the same trade. Partly decided in favor of the assessee.
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2010 (6) TMI 588
Deduction u/s 80HH & 80-I - interest earned from the fixed deposits. - Held that:- the words "derived from an industrial undertaking" would mean that the income has been derived from industrial activity which the industry is undertaking and it does not mean any industrial activity undertaken by the assessee, it has been held that loans are advanced by an undertaking to a third party and earning interest therefrom cannot be said to be an industrial activity of the assessee so as to entitle it for benefit u/s 80HH and 80-I. - Decided against Assessee.
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2010 (6) TMI 587
Computation of deduction u/s 80HHC worked out by the AO based on the export turnover (FOB) minus direct cost minus indirect cost cannot be taken into account. - AO can Value of exports (FOB) otherwise than given in the audit report submitted. - Section 80HHC does not contemplate exclusion of freight and insurance expenditure from both export turnover and total turnover. - the said authorities rightly did not exclude the freight and insurance charges within the computation of export turnover in the instant case arriving at a figure for the purpose of computation under section 80HHC of the Act. - Decided in favor of revenue.
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2010 (6) TMI 586
Levy of interest in case of minimum alternate tax (MAT) - Difference between section 115J and 115JB - held that:- it is only a deemed income which is taken into consideration under section 115J and in the absence of any specific provisions being made applicable the same could not be applied by creating a further deeming fiction and it is in that context held that interest under sections 234B and 234C was not leviable when the case of the assessee falls under section 115J. However, under section 115JA as well as under section 115JB, there are specific provisions making applicable other provisions of the Act to an assessee being a company coming under the relevant sections. In view of the specific provision, particularly, under section 115JB under which the case of the present assessee falls we hold that the ratio of Kwality Biscuits (1999 -TMI - 15292 - KARNATAKA High Court) cannot apply to the case of the assessee herein which is covered under section 115JB of the Act, wherein sub-section (5) makes all other provisions of the Act applicable. - the case of the assessee falls under section 115JB of the Act and not under section 115JA. - Decided in favor of revenue.
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2010 (6) TMI 582
Provisions - Rule 4(5)(a) of the CENVAT Credit Rules, 2002/2004 and Notification No. 214/86 - Whether, the Hon’ble Tribunal has rightly come to the conclusion that Rule 4(5)(a) of the Rules provides for facility of exemption from payment of duty on the goods at the time of clearance from the job worker’s premises even in absence of corresponding exemption notification exempting such goods from payment of duty on clearance from factory gate - The Commissioner in his order has given detailed reasons as to why Rule 4(5)(a) would not be attracted insofar as the question as to whether a job worker manufacturer is required to pay any duty or not is concerned - The Tribunal, in the impugned order, has not assigned any reasons as to how the findings and conclusions recorded by the Commissioner are erroneous - Therefore, Court observed that the CEGAT had not dealt with the decision on which strong reliance had been placed by the learned Solicitor General and accordingly, set aside the impugned orders of the Tribunal and remitted the case to the Tribunal.
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9911796707
