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Showing 301 to 320 of 1621 Records
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2016 (5) TMI 1326
Privilege fee - whether is in the nature of revenue expenditure and deductible expenditure under Section 37(1)? - Held that:- Taking into consideration all the facts and in particular the provisions of the Excise Act, in our view, the Tribunal was correct in holding the said expenditure of privilege fee as allowable expenditure and thus the said question is answered in favour of the assessee and against the Revenue.
Excise duty addition to closing stock - applicably of provisions of section 145A - Held that:- The liability to excise arises when goods are removed from the factory/bonded warehouse. The taxable event is manufacture/ production but the liability to pay the duty is postponed till the time of removal under Rule 9A. In our view, under Section 145A only the tax duty, cess or fees actually paid or incurred by the assessee to bring the goods to its place of location forms part value of stock. Unpaid excise duty on goods in stock that have not left the premises/factory/bonded warehouse, could not be added to the value of closing stock. We have taken into consideration the judgments of the Apex Court in the case of Wallace Flour Mills Co. Ltd. Vs. Collector of Central Excise (1979 (9) TMI 70 - SUPREME Court ) and CIT Vs. Dynavision Ltd. [2012 (9) TMI 265 - SUPREME COURT] to come to the aforesaid opinion. In fact, even the Revenue has relied upon the judgment of Wallace Flour Mills Co. Ltd. Vs. Collector of Central Excise (supra) but in our view, taking into consideration the view of the Apex Court that a taxable event though is manufacture but the liability to pay duty is postponed till the time of removal under Rule 9A of the said Rules and admittedly, there is a finding of fact recorded by the authorities that the goods were lying in the bonded warehouse/factory and had not come out of the bonded warehouse/factory, in our view, the judgment of Wallace Flour Mills Co. Ltd. Vs. Collector of Central Excise (supra) supports the contention of the assessee rather than of the Revenue. - Decided in favour of the assessee
Addition on account of depositing the PF/ESI payment beyond the prescribed time - Held that:- The issue is squarely covered by the judgment of this Court in the case of Commissioner of Income Tax Vs. M/s. State Bank of Bikaner & Jaipur and Commissioner of Income Tax Vs. Jaipur Vidyut Vitaran Nigam Ltd. (2014 (5) TMI 222 - RAJASTHAN HIGH COURT ) and CIT Vs. Udaipur Dugdh Utpadak Sahkari Sangth Ltd.(2014 (8) TMI 677 - RAJASTHAN HIGH COURT ) wherein, this Court, after taking into consideration the judgments of the Apex Court, has come to the conclusion that if PF/EPF/CPF/GPF etc., if paid after due date under the respective Act but before filing of the return of income under Section 139(1) of the IT Act, the same cannot be disallowed. - Decided in favour of the assessee.
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2016 (5) TMI 1325
Assessments made u/s. 153A - documents found at the time of search which were considered as incriminating for making the impugned assessments - involvement in IPO shares - Held that:- IPO transactions relate to 2005 and, therefore, cannot be considered as incriminating material in the assessments prior to that date because in our considered opinion, the incriminating material should be for each assessment year in the block of six assessment years. Since the impugned/alleged incriminating material did not pertain to conclude assessment years namely A.Y. 2000-01 to 2004-05. Thus we direct the A.O to delete the impugned additions made u/s. 153A of the Act for assessment years 2000-01 to 2004-05. The first issue is decided in favour of the assessee and against the revenue.
Several gift deeds found at the time of search - Held that:- AO had proceeded on the basis of gift deeds and copies of return of income of the donors and the post search inquiries to conclude that the gifts received by the assessee are bogus gifts. Before us, Revenue has not placed any material on record to demonstrate that the gifts deeds and copies of return of income of the donors found at the time of search were different documents from those that were considered by the Assessee while claiming the amounts to be the gifts. As decided in the case of CIT vs. Ashok Dua [2008 (8) TMI 897 - DELHI HIGH COURT] all that was found were the gift deeds and the affidavits and there was no incriminating material found in the course of search to suggest that the gifts were bogus. - Decided in favour of the assessee.
Treatment of capital gains as business income - Held that:- The intention of the assessee at the time of the purchase of shares is paramount. If the assessee has clear intention of being an investor and showing the shares as investment, we do not find any reason to disturb the intention of the assessee. The assessee's under consideration are investors and, therefore, any gain arising out the transfer of shares should be treated as capital gains be it short term or long term. Thus we direct the A.O to treat the gains arising out of the sale of shares under the head capital gains be it short terms or long term as the case may be.- Decided in favour of the assessee.
Denial of the set off of losses on sale of shares - transactions have been done through a related party and the transactions are off market transactions and, therefore, not verifiable - Held that:- We do not find force in the allegations made by the A.O. Firstly, merely because the transactions were with related party would not make the transaction sham or bogus. We find that the accounts of M/s. Grace Investment are audited and even if the transactions are off market transactions, the purchase and sale price are easily verifiable from the stock market. Since the assessee is having a running account with Grace Investment, it is not necessary to make payments for every purchases and receive consideration for every sale. It is customary of such type of transaction to have a running account with the principal broker/intermediary and settle the accounts, debit or credit, at the end of a certain period.Most importantly in similar transactions wherever there was gains, the A.O has accepted such gains as it is, therefore, we do not find any logic/reason in discarding the losses made by the assessee on sale of shares. The revenue cannot blow hot and cold in the same breath for similar transactions. Thus the losses on sale of shares deserve to be set off and we direct the A.O accordingly.- Decided in favour of the assessee.
Levy of penalty u/s. 271(1)(c) - Held that:- Since, we have directed the A.O to treat the surplus on sale of shares under the head capital gains and since, we have directed the A.O to allow the set off of losses against the gains, there remains nothing for the levy of penalty u/s. 271(1)(c) of the Act.- Decided in favour of the assessee.
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2016 (5) TMI 1324
CENVAT credit - duty paying documents - the invoices were not in the name of the appellants nor were they endorsed in their favor - Rule 7(1)(e)(b) of the CCR, 2002 - Held that: - The original documents cannot be endorsed to more than one person, however, endorsement by a separate letter can be done to any number of people. It is not understood as to why the appellant had not got the said documents endorsed by the supplier on the body of the documents. The same cannot be considered as a mere procedural formality. Since there is an easy and specific provision in the rule, not following the same, leads to suspicion of evasion.
I find no logical reason for appellants to not have followed such an easy procedure prescribed in Rule 7 and getting endorsement on the body of the invoice - benefit not to be extended to appellant - appeal dismissed - decided against appellant.
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2016 (5) TMI 1323
Supply of tangible goods (STGU) - transfer of possession and effective control of the tankers - import of services - Levy of service tax on reverse charge basis - Section 65(105)(zzzzj) of the Finance Act, 1994 - extended period of limitation - appeal was filed after a delay of 385 days - vacation of stay sought for - the decision in the case of PETRONET LNG LTD Versus COMMISSIONER OF SERVICE TAX [2013 (11) TMI 1011 - CESTAT NEW DELHI] appealed against - Held that: - the respondent is a conglomerate of four Public Sector Undertakings. In view of the fact that the appellant does not appear too keen on an interim order from this Court but was compelled to apply for an interim order, also there is a delay of 385 days in filing the appeal and also the respondent is a conglomerate of four Public Sector Undertakings, the interim stay granted by this Court on 8th January, 2016 ought to be vacated.
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2016 (5) TMI 1322
Entitlement to claim the left over portion of additional depreciation being the carry forward figure from the previous year u/s. 32(1)(iia) - Held that:- As decided in assessee's own case [2015 (5) TMI 647 - ITAT KOLKATA] issue on proposition of law regarding allowance of remaining additional depreciation in the next assessment year u/s. 32(1)(iia) of the Act was covered in favour of assessee and against revenue by the decision of in the case of Birla Corporation Ltd. Vs. DCIT [2014 (12) TMI 436 - ITAT KOLKATA ] wherein it was held that extra depreciation allowable u/s. 32(1)(iia) is an extra incentive which has been earned and calculated in the year of acquisition but restricted for that year to 50% on account of usage. The so earned incentive must be made available in the subsequent year. The overall deduction of depreciation u/s. 32 shall definitely not exceed the total cost of machinery and plant. Thus, assessee is entitled for the balance 50% additional depreciation in view of sec. 32(1)(iia) of the Act in the next assessment year for remaining unutilized additional depreciation.- Decided in favour of assessee.
Disallowance u/s 14A - Held that:- The assessee has got sufficient own funds which are several times more than the investments made by the assessee. Hence, it can be safely concluded that borrowed funds have not been utilized for the purpose of making investments. Accordingly, we hold that the provisions of Rule 8D(2)(ii) of the Rules could not be invoked in the facts and circumstances of the case. - Decided in favour of assessee.
Whether disallowance u/s. 14A could be made to the book profit computed u/s. 115JB - Held that:- In this regard we have already held that no disallowance u/s. 14A of the Act could be made in the facts and circumstances of the case. Accordingly, ground raised by the assessee are allowed.
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2016 (5) TMI 1321
TPA - ALP determination - Held that:- TPO is empowered to substitute the arm's length price on the basis of material or information furnished by the assessee or collected by him. In case, such an authority has been delegated to the TPO and in exercise of such authority, certain information is collected by the TPO, which in turn, is confronted to the assessee and thereon applied to determine the arm's length price of international transaction, the said exercise of the jurisdiction by the TPO cannot possibly be questioned.Accordingly, we find no merit in the claim of assessee in this regard and upholding the action of TPO, the grounds of appeal raised by the assessee are dismissed.
Disallowance of stock written off in Domestic Tariff Area unit - Held that:- The assessee has furnished additional evidence along with letter dated 29.12.2012, wherein the assessee has submitted the evidence in relation to stock written off in the case of materials with Excise Registers and in the case of finished goods trading with quarterly excise returns. The assessee claimed that it had written off its stock, however, evidence in this regard has been filed by way of additional evidence before us. We are of the view that the said evidence going to the root of the issue, needs to be admitted and after admitting the same, we deem it fit to restore this issue back to the file of Assessing Officer, who shall verify the claim of assessee in this regard and decide the issue in accordance with law.
Computation of deduction under section 10B - Held that:- Applying the ratio laid down by the Hon’ble Bombay High Court in CIT Vs. Black & Veatch Consulting Pvt. Ltd. (2012 (4) TMI 450 - BOMBAY HIGH COURT) we hold that the deduction under section 10B of the Act is to be computed before adjusting brought forward unabsorbed losses/depreciation. The learned Authorized Representative for the assessee had not raised any other issue except pointing out that the issues stands covered by the order of Tribunal. In view thereof, we direct the Assessing Officer to recompute the deduction under section 10B of the Act without setting of brought forward and unabsorbed depreciation of earlier years.
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2016 (5) TMI 1320
Disallowance of inventory written off - Held that:- We are of the view that it will be just and proper to set aside this issue to the file of Assessing Officer for verification to the limited extent and the assessee shall put before him necessary details which can prove that some process has been followed for selling such scrap items and specific scrap value of the inventory written off has been accounted for as an income in the books of account. Ld. AR agreed to the same and no objection was raised by the ld. DR to this fact and accordingly, we set aside this issue to the file of Assessing Officer as discussed and needless to say that proper opportunity of being heard to the assessee would be given by Assessing Officer. This ground is allowed for statistical purposes.
Disallowance on account of depreciation on plant and machinery covered under sale lease back transaction with RSEB - Held that:- We find that in the case before us the invoices are in the name of the assessee as is clear copy of these invoices therefore, transaction in question is held to be genuine one and , therefore, we set aside the order of the CJT(A) and direct the assessing officer to allow depreciation to the assessee.
Disallowance on account of proportionate interest and administrative expenses - Held that:- Calculation of disallowance u/s 14A as per Rule 8D of the IT Rules, is applicable w.e.f. Asst. Year 2007-08 and we are dealing with appeal for Asst. Year 2005-06 and accordingly the decision of the co-ordinate bench squarely applies on this ground taken up by Revenue and therefore, in the given circumstances, when there is no satisfaction placed on record by Assessing Officer during assessment proceedings nor any specific defect has been pointed out, disallowance made by assessee at its own ₹ 6 lacs. should have been accepted by the Assessing Officer and no further disallowance was called for. Accordingly this ground of Revenue is dismissed.
Disallowance on account of reimbursement of holiday home expenses - Held that:- CIT(A) has rightly observed that expenditure on holiday home has been incurred for the purposes of keeping healthy relation with its employees and therefore the same is purely business expenses. Ld. Assessing Officer has not been able to substantiate the claim of such disallowance and could not prove the same as bogus or non-business expenses. Accordingly in these circumstances, when there is no specific detection of any mistake in the books of account of assessee, such estimated disallowance is uncalled for. We, therefore, find no reason to interfere with the order of ld. CIT(A). Accordingly this ground of Revenue is dismissed.
Disallowance on account of Gas day expenses and Family meet expenses - Held that:- Disallowance of 20% was made by ld. Assessing Officer on estimate basis, without pointing out any defect in the books of account of assessee. Applying our decision of ground no.3 on this issue, the ground raised by the Revenue is dismissed.
Addition on account of unutilized modvat/cenvat credit - Held that:- Unutilized modvat payment is in the nature of advance payment and should not be treated as income and, therefore, we find no reason to interfere with the order of ld. CIT(A) and uphold the same.
Disallowance on account of provision of traveling expenses - Held that:- From going through the submissions made by ld. AR, we find that at the time of finalizing of accounts at the end of the year some provisions are required in respect of expenses which have been incurred in the last month of the financial year but the bills/claim in respect thereof are still awaited and, therefore, provisions of such expenses are necessary to be made. Certainly the provisions involve some elements of estimation but in the next year such provisions are reversed and actual expenses are booked and accordingly if there is any expenditure the same is adjusted in the next year. This accounting practice has been followed consistently by the assessee. We are, therefore, of the view that ld. CIT(A) has rightly deleted the disallowance.
Addition on account of project loss in relation to amount receivable from Mahanagar Gas Ltd. - Held that:- We are of the view that regular books are being maintained by the assessee and accounting policies and standards are consistently followed and looking to the past history of assessments of assessee, we understand that such claim was allowed by the Revenue in the past also. We, therefore, find no reason to interfere with the order of ld. CIT(A) who has rightly deleted the disallowance made on account of project loss from MGL.
Disallowance u/s 14A should be sustained at ₹ 6,00,000/- only which has been suo moto accepted by the assessee as disallowance u/s 14A of the Act while furnishing of income tax return. As the ground of revenue has already been dismissed, the Cross Objection raised by the assessee has become infractuous and is dismissed accordingly.
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2016 (5) TMI 1319
Validity of reopening of assessment - notice to company being dissolved - Held that:- The company was not in existence at the time when the notice was issued u/s.148, therefore, respectfully following the decision of the Delhi Bench of the Tribunal in the case of Impsat Pvt. Ltd. Vs. ITO [2004 (7) TMI 299 - ITAT DELHI-A ] we hold that the issue of notice u/s.148 after the company was dissolved and its name struck off the register of the Registrar of Companies is without jurisdiction, invalid and unlawful in the eyes of law. The subsequent proceedings on the basis of such invalid notice are also not tenable, therefore, ground of cross objection No.1 raised by the assessee is allowed.
Set off of carried forward business losses against the capital gains computed u/s.50 of the Act in view of provisions of section 72 - whether the deeming fiction created under section 50 is restricted to section 50 only or is it applicable to section 54E of the Income-tax Act as well ? - Held that:- The fiction created under section 50 is confined to the computation of capital gains only and cannot be extended beyond that. Thirdly, section 54E does not make any distinction between depreciable asset and non-depreciable asset and, therefore, the exemption available to the depreciable asset under section 54E cannot be denied by referring to the fiction created under section 50. Section 54E specifically provides that where capital gain arising on transfer of a long-term capital asset is invested or deposited (whole or any part of the net consideration) in the specified assets, the assessee shall not be charged to capital gains. Therefore, the exemption under section 54E of the Income-tax Act cannot be denied to the assessee on account of the fiction created in section 50.
The benefit of section 54E will be available to the assessee irrespective of the fact that the computation of capital gains is done either under sections 48 and 49 or under section 50. The contention of the Revenue that by amendment to section 50 the longterm capital asset has been converted into a short-term capital asset is also without any merit. As stated hereinabove, the legal fiction created by the statute is to deem the capital gain as short-term capital gain and not to deem the asset as shortterm capital asset. Therefore, it cannot be said that section 50 converts a long-term capital asset into a short-term capital asset. The assessee in our opinion is entitled to set off the brought forward business loss from the deemed short term capital gain. Therefore, the order of the CIT(A) is upheld and the ground rasied by the revenue is dismissed.
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2016 (5) TMI 1318
CENVAT credit - credit taken on certain inputs denied on the ground that these were not actually received by the appellant’s manufacturing unit - Held that: - Appreciating the certificate of Chartered Engineer and also the records maintained by the appellant regarding receipt of material, I find that denial of credit to the appellant is not sustainable. Considering the nature of goods apparently no separate transport documents or lorry/freight payment, etc., is involved in these types of items - appeal allowed - decided in favor of appellant.
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2016 (5) TMI 1317
Penalty u/s. 271(1)(c) - Held that:- It is not in dispute in the plea of assessee that a substantial question of law has been admitted by Hon’ble jurisdictional High Court on quantum appeal. Thus no penalty can be levied on the debatable and arguable issue. Admittedly, substantial question of law had been admitted by the Hon’ble High Court on the assessee’s appeal.
In view of the above legal discussion, the penalty order u/s 271(1)(c) of the Act was not justified when debatable and arguable issue on substantial question of law has been admitted by the Hon’ble High Court. - Decided in favour of assessee
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2016 (5) TMI 1316
Valuation - Differential duty - Penalty - Related Parties - Held that: - both the appellants and M/s. Taj Services Ltd., are Companies incorporated under Companies Act, 1956. Therefore, in terms of ruling by the Hon’ble Supreme Court in the case of Calcutta Chromotype Ltd. [1998 (3) TMI 138 - SUPREME COURT OF INDIA], we hold that M/s. Residency Foods & Beverages Ltd. and M/s. Taj Services Ltd., during the period covered by the appeal, were not related persons.
We find that as per the provisions of law as existed during the material period, the said deductions were allowable for arriving at the assessable value. After allowing the said deductions, there is no differential duty demandable from the appellants - The finalization of the assessment was not challenged by the Revenue before the ld. Commissioner (Appeals). Therefore, the impugned show cause notice is hit by limitation - Appeal allowed.
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2016 (5) TMI 1315
Jurisdiction - the alleged smuggled article was intercepted at Ghaziabad, outside the jurisdiction of Delhi Court - whether the accused could be prosecuted at Delhi? - Held that: - in case the complaint is ordered to be returned to Ghaziabad Court, it will be difficult for them to pursue the proceedings, as such, counsel submits that the matter be remanded back to the Trial Court where necessary submissions will be made - The matter is remanded back to ACMM, New Delhi who will decide the same after considering the rival submissions - matter on remand.
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2016 (5) TMI 1314
100% EOU - Refund claim - the appellants have filed a B-17 bond and not B-1 bond/letter of undertaking - rejection on the ground that the appellants have not followed the following conditions prescribed in the N/N. 05/2006-C.E. (N.T.), dated 14-3-2006 - Held that: - B-17 bond is a multi purpose bond which covered not only the Customs requirements but also Central Excise requirements. Circular No. 76/99, dated 17-11-1999 has been issued to extend a facility to 100% EOU. The body of the B-17 bond includes the conditions required to safe guard the Central Excise duty.
Matter remanded to the original adjudicating authority to decide the issue afresh only with respect to the allegations regarding non-submissions of documents and unjust enrichment - appeal pertly allowed by way of remand.
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2016 (5) TMI 1313
Unexplained gold jewellery - search operation - Held that:- As a matter of fact, none of the figures given even in the belated explanation matches with the gold jewellery actually found in possession of the appellant. The clear stand in the submission of the assessee was that as much as 1500 gms. of gold jewellery by net weight was still lying with the appellant but much less gold jewellery have been shown in the returns filed by the family members of the appellant than what has been actually found in the course of search. A deviation between the same or inconsistency in the figures was for the assessee to explain and upon failure to do so, the explanation could have been found to be unsatisfactory by the Assessing Officer or at the appellate stage and could have been rejected, which has been done in the present matter.
Before us, learned counsel for the appellant sought to argue that approximately 300 gms. net weight each shown by the two brothers of the husband of the assessee could add up to the figure of defence in the present matter. The same does not match the stand taken before the Assessing Officer and is a last ditch effort to show the consistency in a manner to seek re-appreciation of the evidence, for which the last forum of facts was the Tribunal. - Decided against the assessee.
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2016 (5) TMI 1312
Declaration of unrecorded / unaccounted Stock - taxable u/s 69 as undisclosed investment or u/s 28 - stock of jewellery found during search - Held that:- The declaration was related to business stock in trade hence it is evident that the declaration amount is required to be assessed under the head' Income from Business or profession. Thus, the undisclosed income of ₹ 13,47,63,640/- declared voluntarily by the assessee for A.Y. 2011-12, is undisclosed stock held under the customary trading of the business and hence should be treated as the business income of the assessee firm and not as undisclosed investment as held by the AO. If all the three conditions of Section 69 exist together, the unrecorded investment or value of assets can be deemed to be assessee's income of the relevant financial year. In the present case all three conditions as required under section 69 are not fulfilled because the appellant has offered explanation and nature of source of acquisition as undisclosed stock received from the unaccounted trading of diamond as source of income. The partner of the firm has time and again stated in his statement that diamond found in the premises during the search is out of unrecorded trading of diamonds hence the third part of section 69 is not satisfied hence the said stock is not taxable under section 69 of the Act.
Taxability of stock of diamond - Held that:- The stock of diamond declared during the search is taxable under the heads of income as defined in section 14 read with section 56 and not taxable separately. As there cannot be taxable income of income out of the 5 heads of income as specified in section 14 of the Act. Hence the stock of diamond of ₹ 13,47,63,640/- is taxable either under Income from Business & Profession or under income from other sources.
Rejection of books of account u/s.145(3) - Held that:- AO fail to appreciate the fact that appellant has declared income during search operation at ₹ 13.47 crores and accordingly recorded the same in its books of accounts. The valuation carried out by another Govt. Approved valuer has nothing to do with the amount declared by the assessee but the same was done to prove on the part of assessee that the value of diamond found during the search was much less therefore the assessee has to sell it at lower value. The AO has wrongly mistaken the purpose of second valuation. Thus the assessee has fully discharged its onus to disclose this stock and offer it as income.
CIT(A) has given categorical finding to the effect that the AO has considered gross profit based on SEZ Unit on A’ Star Exports at Surat. We found that SEZ Unit operates on fiscal benefits available to SEZ unit and is a manufacturing activity cannot be compared with trading activity. The loss has arisen because of the value considered as its cost. However, there is no evidence of cost in the books of accounts. Further the valuation made at the time of search is a mere one page summary which gives no description of the diamonds and is merely total value of 5-6 packets. Thus, no meaningful comparison can be made. The CIT(A) has categorically dealt with each and every documents and after giving detailed finding in para 4.11, reached to the conclusion that rejection of books of accounts and estimation of gross profit by the AO was not justified on the facts of this case. The findings recorded by CIT(A) are as per material on record and do not require any interference on our part.
Set off of business loss against income declared during search - Held that:- Section 115BBE bar from claiming any expenses or allowance from the income taxable under section 68, 69, 69A, 69B, 69C, or 69D of the Act. In the instant case before us the claim was of set off of business loss against income declared during search. There is vital difference between the loss and expenses/ allowance. Hon'b1e Supreme Court in case of CIT Vs. Wallford share & Stock brokers Pvt. Ltd (2010 (7) TMI 15 - SUPREME COURT ) while discussing the issue that losses incurred in mutual fund from which dividend received, can not be considered for the purpose of section 14A of the Act and held that: "We may reiterate that one must keep in mind the conceptual difference between loss expenditure, cost of acquisition, etc. while interpreting the scheme of the Act."
In view of the decision of Hon’ble Supreme Court, business loss cannot be treated at par with the expenses / allowances and such business loss can be set off against any type of income as section 71 do not debar from setting off such losses.
Thus we do not find any infirmity in the order of CIT(A) for allowing set off of business loss against income declared during the course of survey/search, accordingly, this appeal of the revenue is also dismissed.
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2016 (5) TMI 1311
Entitlement for deduction u/s. 80P - provisions on account of diminution of value of securities in earlier financial years - Held that:- The deduction is allowed after giving effect to all the statutory deductions available to the assessee. Though the assessee has not claimed the statutory deduction on diminution of value of securities for the simple reason that its income was eligible for deduction u/s. 80P of the Act, be as it may. By claiming the diminution of value of securities during the year under consideration, the assessee is making itself entitled to a double benefit which has been declined by the A.O and has been confirmed by the First Appellate Authority as mentioned hereinabove.
After giving a thoughtful consideration to the facts in issues qua the findings of the First Appellate Authority, we do not find any reason to interfere with the same.
However, in all fairness, the assessee is very much entitled for the diminution in the value of securities for the financial year 2007-08 which is relevant for the assessment year under consideration. We, therefore, direct the A.O to allow the claim of F.Y. 2007-08 as per the provisions of the law. With the above directions, appeal filed by the Assessee is dismissed.
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2016 (5) TMI 1310
Allowing the claim of expenses i.e. compensation on account of redemption of units - Held that:- We are of the view that in the present case the unit holders, who made claim with the transfer agent, are entitled for return of their money invested in assessee’s mutual fund. Even the SEBI Regulation states so and if there is violation of the same, SEBI can prosecute the assessee. It means that the liability paid by assessee is in the nature of statutory as well as contractual. The assessee has paid the legitimate claim of the unit holders, who have lodged the claim with the Registrar and Transfer Agent of the issue. We are of the view that this expenditure is incidental to trade itself and Assessing Officer cannot ignore the same. We are of the view that even this comes within the ambit of commercial expediency for the reason that this is indirectly for facilitation of carrying on of the business of the assessee. In view of this reasoning, we allow the claim of the assessee and the orders of the lower authorities on this issue are reversed. This issue of assessee’s appeal is allowed.
Disallowance of claim of assessee in respect to redemption of units on forced redemption request in the case of TIFPL - Held that:- We find that the assessee kept the demand alive for the claim of the provision on account of this embezzlement in the AY 2005-06 also. The assessee in the financial year relevant to this assessment year paid to TIFPL an amount of ₹ 4,42,73,539 vide cheque No.112500 dated 28/7/2006 as full and final settlement for the pending dispute. This payment was made against the opening provision of ₹ 3.92 corers provided in the FY 2004-05. The assessee accordingly claimed ₹ 3,92,15,599 on payment basis and also ₹ 50,57,940 which was paid to TIFPL on account of the interest accrued on such liability. The AO has allowed the claim of ₹ 3.92 crores, however, did not allow the claim of ₹ 50,57,940 on the ground that the assessee has filed suit against the various parties and therefore, the claim has not reached its finality. We find that the assessee has been pursuing his claim with the Banking Ombudsman as well as filing of an FIR with the Police but no result was coming out of the same. The fact that the assessee had paid a sum of ₹ 4,42,73,539 has not been denied by the AO. The assessee has reached the settlement after waiting so long and paid the final amount to TIFPL and finally settled the issue with TIFPL. In the present case before us the assessee had pursued the matter and side by side made payment to TIFPL on account of redemption of debentures, which has rightly been paid to the legitimate party and claimed the same as deduction. In the given facts and circumstances, we are of the view that the CIT(A) has rightly allowed the claim of the assessee and we confirm the same.
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2016 (5) TMI 1309
Suppressed production and suppressed turnover - Several incriminating documents, loose sheets etc were seized during the course of search proceedings from the premises of Shri Sohanraj Mehta - Held that:- No evidence was found with the figures mentioned by the assessee in his letters to Shri Sohanraj Mehta are in coded figures. No evidence was found that the assessee has checked and okayed the notings of Shri Sohanraj Mehta. We therefore find some force in the arguments of the Ld. Counsel for the assessee that Shri Sohanraj Mehta has not maintained these accounts/details for the purpose of reporting to the assessee or for the purpose of giving account of unaccounted transactions to the assessee. Merely because Shri Sohanraj Mehta filed his return disclosing some commission as his additional undisclosed income and the department accepted the same without even making protective addition in his hands the same in our opinion cannot be the basis to compute huge suppressed turnover to the tune of about ₹ 340 crores as assessee’s unaccounted turnover especially when not a single piece of unaccounted purchase or sales voucher or transport receipt or unaccounted purchase receipt was found. This in our opinion is also an indicator that no such unaccounted business was carried out by the assessee as alleged by the AO and upheld by the CIT(A). Even under the theory of probability also no such unaccounted business is possible under the facts and circumstances discussed above.
In view of the above, it has to be held that the huge suppressed production and suppressed turnover and thereby generation of huge unaccounted income as determined by the AO, in our opinion, is incorrect. Therefore, the addition made by the AO and partly sustained by the CIT(A) on account of unaccounted profit on suppressed production and sale thereof is directed to be deleted.
It is also an admitted fact that certain chits duly signed by the assessee were found from the possession of Shri Sohranraj Mehta during the course of search on 10-10-2009. Those chits were in the hand writing of the assessee for different years. It is not known as to why and for what purpose the assessee used to give such chits in his hand writing. Further, the amount of such chits according to the assessee is about ₹ 61 lakhs whereas the Revenue has considered the same at about ₹ 61 crores by adding two zeros to the figures. We have already held at Para No.133 of this order that in absence of any cogent evidence in the hands of the revenue, it is not proper to decode the same by adding two zeros. The argument of the Ld. Counsel for the assessee that certain sales tax refunds were due to be received by Shri Sohanraj Mehta for which he has issued chits to be handed over to them is not borne out of records. Considering the totality of the facts of the case, in our opinion, addition of an amount of ₹ 20 crores for the A.Yrs. 2004-05 to 2008-09 will meet the ends of justice under the facts and circumstances of the case. We therefore direct addition of ₹ 20 crores for the period from A.Yrs. 2004-05 to 2008-09 to be spread over equally. - Decided partly n favour of assessee
Treatment of sales tax subsidy received - revenue receipt OR capital receipt - Held that:- Tribunal in assessee’s own case for A.Yrs. 2003-04 to 2005-06 has decided the issue and held that the sales tax subsidy received by the assessee in the instant case was in the course of carrying of its trade more profitably for which it cannot be held as capital receipt and the order of the CIT(A) treating the same as revenue receipt has been upheld. The Ld. Authorised Representative also conceded that the issue has been decided against the assessee by the order of the Tribunal in assessee’s own case. In view of the decision of the Tribunal in assessee’s own case this ground by the assessee is dismissed.
Addition under Explanation to section 37(1) - payments in the nature of bribe - Held that:- CIT(A) correctly deleted the addition made by the AO on the ground that the AO in the instant case has made the addition of the unaccounted income by applying the GP ratio and considered as added the entire GP and taxed, therefore, nothing further remains to be considered for disallowance as the entire expenses are deemed to have been disallowed and held to be part of the addition of unaccounted income, therefore, it cannot be added once again.
Disallowance u/s.36(1)(va) on account of delayed payment of employees contribution to PF and ESI - Held that:- Admittedly, the assessee has deposited the employees’ contribution to PF and ESI before the due date of filing of the return. The Coordinate Benches of the Tribunal are taking the consistent view that if the assessee has deposited the employees’ contribution to PF and ESI before the due date of filing of the return then no disallowance is called for. Since the assessee in the instant case has admittedly deposited the amounts before the due date of filing of the return, a finding given by the CIT(A) and not controverted by the revenue, therefore, we do not find any infirmity in his order.
Claim of depreciation on assets of Hyderabad Division - block of assets installed in Hyderabad Division, were not used in previous year, current year and subsequent years - Held that:- We find the issue has been decided in faovur of the assessee by the decision in the case of G.R. Shipping Ltd.(2009 (7) TMI 1169 - BOMBAY HIGH COURT ). In that case the assessee was engaged in shipping business and owned a barge which was included in the block of assets. The barge met with an accident and sunk on 06-03-2000, i.e. relevant to A.Y. 2000-01. As the efforts to retrieve the barge was uneconomical the barge was sold on as is where is basis for ₹ 55 lakhs in the month of May 2001 relevant to A.Y. 2002-03. As the barge was non operational and not used for business at a later date in A.Y. 2001-02 the AO denied depreciation. The Tribunal held that after the concept of “Block of Asset” w.e.f. 01-04-1988, individual assets had lost their identity once it entered with the Block of Assets and only the Block of Assets had to be considered. It was held that the test of user had to be applied upon the block of assets as a whole and not on individual assets. On appeal by the Revenue, the Hon’ble High Court dismissed the appeal filed by the Revenue. Therefore, since the Ld.CIT(A) in the instant case has allowed the claim of depreciation on the block of assets installed at Hyderabad Division which were not used during the impugned assessment year by following the decision of Hon’ble Bombay High Court, therefore, in absence of any contrary material brought to our notice we do not find any infirmity in the order of the CIT(A).
Disallowance u/s 14A - Held that:- AO disallowed ₹ 8,64,152/- being administrative expenses incurred for earning the exempt income. We find the Ld.CIT(A) considering the totality of the facts of the case has restricted such disallowance to ₹ 3,50,000/- which in our opinion is a reasoned one. We uphold the order of the CIT(A) on this issue and the grounds raised by the assessee as well as the revenue on this issue are dismissed.
Depreciation on windmill - whether power generation from windmill is manufacturing activity of article or things? - Held that:- Since the Ld.CIT(A) while allowing the claim of additional depreciation has relied on various decisions including the decisions of Hon’ble Madras High Court in the case of VTM Ltd. (2009 (9) TMI 35 - MADRAS HIGH COURT ) and M/s. Hitech Arai Ltd. (2009 (9) TMI 60 - MADRAS HIGH COURT) and since nothing contrary was brought to our notice against the above decisions, therefore, we do not find any infirmity in the order of the Ld.CIT(A) allowing the claim of additional depreciation on windmills installed by the assessee during the year.
Addition made on the documents pertained to Dhariwal and Doshi Pvt. Ltd. - Held that:- The findings given by the CIT(A) that the notings made on page no.4 seized from the premises of the assessee at Baroda records the details of the pet jars which is actually utilized by DDIPL which is engaged in the Tea business could not be controverted by the Ld. Departmental Representative. We find the AO in the instant case made the addition based mainly on the statement of Shri Ajit Jain without any verification and his finding is also not supported by any independent evidence. The assessee has already explained during the course of assessment proceedings itself that since the said page itself is titled DDIPL, addition if any, can be made in the hands of DDIPL and cannot be made in the hands of the assessee. In absence of any independent evidence that the said page belongs to the assessee company, we are of the considered opinion that addition cannot be made merely on the basis of the statement of Shri Ajit Jain. The Ld.CIT(A) in the instant case has given justifiable reasons for deleting the addition.
Addition on difference in stock of packing material - Held that:- From the order of the AO as well as the submission of the assessee it is not verifiable as to what method of accounting for valuation of stock was being adopted by the assessee. If the valuation is being made as per actual invoice price, then taking average price will give a distorted figure. In view of the above discussion and keeping in mind the interest of justice, we deem it proper to restore the issue to the file of the AO with a direction to give one more opportunity to the assessee to substantiate with evidence to his satisfaction regarding the difference between physical stock and the stock as per books. Ground raised by the assessee is accordingly allowed for statistical purposes.
Addition considering the statement of one the employee of the appellant company - Held that:- Since the paper was found from the Baroda office of the assessee company and the Chief Executive managing the affairs of the assessee company had explained the nature of each and every item, therefore, merely because the name of the assessee company was not mentioned in the seized paper, it cannot be said that it does not belong to the assessee company. Further, the figures mentioned in the said seized document are not round figures. Out of the 5 entries 4 entries are in odd figures. Therefore, it also cannot be said that these are baseless or some estimates etc. Since the assessee company is engaged in the business of Gutkha and one of the item of the seized document show “free pouches”, therefore, there is a strong indication that the same relates to the business of the assessee. Since the statement of the Chief Executive of the assessee company Shri Ajith Jain was recorded on oath u/s.132(4) of the I.T. Act wherein he has stated that these expenses relate to the Delhi office of the assessee company which are not recorded in the regular books of account, therefore, the presumption will be against the assessee especially when the paper is seized from the office premises of the assessee.
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2016 (5) TMI 1308
Revision u/s 263 - exemption under section 10AA eligibility - Held that:- Here is a case in which a claim was made by the assessee, which was apparently in order, and the Assessing Officer, after usual verification, accepted the same. As for the learned Commissioner’s observation that “it is evident that the Assessing Officer while finalized the assessment order u/s 143{3) of the Act without examining assessee's eligibility of claim of deduction u/s. 10AA of the Act for the year under consideration nor carried out any inquiry or cross verification regarding genuineness of assessee's claim that the said consultancy services were actually provided from the SEZ”, we are unable to see any merits in this observation.
Whether the Assessing Officer remained unduly passive on the facts which would trigger further inquiries by a reasonable man in his position? - Held that:- In our considered view, that’s not the case. An enterprising Assessing Officer, motivated by his passion and deep commitment, may indeed have discovered, even if that be so, a tax misadventure by an assessee, but that fact, even if correct, does not mean that those Assessing Officer who did not discover this misadventure were acting in a manner leading to their orders being rendered erroneous and prejudicial to the interest of the revenue. The action of the Assessing Officer was bonafide and correct and the conclusions arrived at by him were appropriate vis-à-vis material before him. The fact that he did not visit the assessee, that he did not visually examine the lock to find out when was in use or not, and put all the averments of the assessee on scanner cannot be put against him today. His order may not have discussed these aspects in great detail but then as is the settled legal position the mere fact that the Assessing Officer has not written a detailed order on an issue, even though the details have been called for and are on record, the order cannot be treated as erroneous for the purpose of Section 263 - Decided in favour of assessee
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2016 (5) TMI 1307
Validity of assessment u/s 153A - addition share capital and unsecured loans - Held that:- We do not find any merit for the addition made by the AO with respect to share capital and unsecured loans. The disallowance made by the AO on account of personal use of vehicles was on estimate basis, no incriminating material was found to indicate that directors of the company have used the vehicles for their personal purpose. Accordingly, disallowance made by estimating personal elements in respect of expenditure on vehicle is not justified u/s.153A when no incriminating materials in respect to personal use of vehicle were found during the course of search. Since we have already decided the legal issues in favour of the assessee, we are not going into merit of the addition so made.
Addition on account of unsupported purchases - Held that:- Copy of Ledger Account of the said party in the books of assessee; copy of Ledger Account of the said party in the books of Assessee Company in which it is reflected the invoices booked and the bank payment made against the said invoices; Copy of bank statement of the Assessee Company from which payment has been made to the said party; and Copy of Ledger Account of M/s. Soma Enterprise Ltd. (Customer) in the books of Assessee Company along with copies of invoices raised by Assessee on said party. For rendering of services to this customer assessee has availed services from M/s. Manav Impex.
It appears from the above-mentioned documents that the Assessee Company has made payment to M/s. Manav Impex towards charges for excavation of under-ground tunnel by shaft. The said subcontract work is a part of the main project work undertaken by the Company for M/s Soma Enterprise Limited in relation to the Koyan Dam Project. Further, it was also shown from the copy of bank statement and copy of ledger account that the payments made to M/s Manav Impex was through normal banking channels.
We set aside the issue of addition on account of purchase to the file of AO for deciding afresh by considering above documents discussed by us.
Disallowance on account of personal usage of car - AO has disallowed suo motu estimated 10% on account of personal use of car by the Director. The assessee is a corporate entity, therefore, in view of the decision of Hon’ble Gujarat High Court in the case of Sayaji Iron & Engg. Co. [2001 (7) TMI 70 - GUJARAT High Court] no disallowance on the plea of personal use can be made in the case of corporate entity. Accordingly, we direct the AO to delete the said disallowance.
Determining short term capital gain - Held that:- We have considered rival contentions and found that CIT(A) has already directed the assessee to approach the AO u/s.154 of the Act with the required details for seeking necessary rectification. Accordingly, we do not find any infirmity in the order of CIT(A). We further direct the AO to immediately dispose the application filed u/s.154 for correcting the error in the computation of short term capital gains offered by the assessee. We direct accordingly.
Allowing the set off of carry forward loss of earlier assessment years by the CIT(A) - Held that:- In the interest of justice, we restore this issue back to the file of CIT(A) for adjudicating ground with regard to set off of carry forward loss of earlier assessment years. The CIT(A) is also directed to give credit for taxed paid by the assessee or deducted at source while computing tax liability of the assessee.
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