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Showing 301 to 320 of 925 Records
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2012 (6) TMI 633
Income form sale of land - Business Income or Capital gains - assessee, engaged in the business of real estate, constructing flats, sale of land - Held that:- In the present case, property has been committed to a trade and the assessee earned profit in the course of carrying on the business. Assessee never intended to be owner of the land in question and it was not a simple purchase and sale transaction. Rather, the assessee facilitated the development and sale of land in question apart from taking responsibility of getting the process of disputes with respect to the land settled expedited. Therefore, it is clear that the assessee was carrying on business with the above business objectives in mind. Hence, having regard to the nature of activities carried on by the assessee it has to be construed as trading activity of the assessee and the income emerged from this transaction has to be considered as income from business.
Non-allocation of indirect expenditure other than interest to the projects under construction - 84% of the work of the company during the year related to the projects under construction - Revenue apportioned indirect expenditure to to Work-in-progress - Held that:- Non allocation of the indirect expenses to the work-in-progress truly affects correct reflection of the profit and loss of the assessee-company. Being so, AO is justified in reallocating the indirect expenses to the capital project of the assessee.
Depreciation of centring material - dis-allowance - Held that:- The assessee claimed all this depreciation is relating to the project under construction. The project under construction being the capital asset, depreciation cannot be allowed - Decided in favor of Revenue
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2012 (6) TMI 632
Deduction u/s 10A - denial on ground of non-satisfcation of conditions of Section 10A - change in organization status of STPI undertaking - assessee company entirely held by M/s. Samsung Electronics Company Ltd., South Korea (SECL), engaged in the business of software development for its parent company - Held that:- Assessee undertaking existed in the same place, form and substance and did carry on the same business before and after the change in the legal character of the form of the organization. Formerly it was a branch establishment of a non-resident company/foreign company, but later on it was converted into a subsidiary company. However, for the above change of organization status, same unit continued to function throughout the time and even Software Technology Parks of India (STPI) authority gave the approval for transfer of STP activities of M/s. SECL to the assessee w.e.f. 01.12.2005. Therefore a mere organizational change was not a ground for the AO to hold that the assessee was not entitled for deduction u/s. 10A within the meaning of section 10A(2) - Decided in favor of assessee.
For the purpose of computation of deduction u/s. 10A, if any expenditure is excluded from the export turnover, the same has to be excluded from the total turnover also.
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2012 (6) TMI 631
Whether CIT(A) is right in allowing interest u/s.244A of the Act where refund arose on account of payment of self-assessment tax without appreciating that the words in any other case occurring in section 244A(1)(b) cannot be construed to include in clause (a) of section 244A(1) of the Act Held that:- in the case of CIT vs. SIV Industries Ltd. (2007 (2) TMI 130 (HC)) held that self assessment tax paid u/s.140A should also be taken into consideration while determining the interest u/s.244A. order of ld. CIT(A) confirmed.
Whether CIT(A) is right in holding that no interest u/s. 234D is chargeable for A.Y. 2001-02 - DR submitted that there was no provision in the Act for allowance of interest on interest Held that:- in the case of Sandvik Asia Ltd.( 2006 (1) TMI 55 (SC)) has clearly held that when amounts are wrongfully retained by the Government, then, on general principle, interest has to be paid. AO directed to allow interest on interest in accordance with the decision of Honble Supreme Court in the case of Sandvik Asia Ltd. (supra).
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2012 (6) TMI 630
Block assessment search undisclosed income - assessment orders under section 158BC were passed in these cases on 6-7-2007 - satisfaction note/letter was written on 13.7.2007 - Revenue has placed no material on record to show any undisclosed income Held that:- in the case of Mukta Metal Works (2011 (2) TMI 250 (HC)) was held that according to the provisions of section 158BD of the Act the satisfaction has to be recorded between the initiation of the proceedings u/s 158BC and before completion of block assessment u/s 158BC of the Act in the case of person searched. It could not be after the conclusion of the block assessment as there was no occasion for an AO to examine the seized material or documents of the person searched when the block assessment proceedings had concluded and no other proceedings were pending before him. order passed was contrary to the provisions of section 158BD of the Act and needs to be quashed. Decided in favor of assessee.
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2012 (6) TMI 629
Validity of revisionary order passed u/s 263 - Asset Management Company - initial issue/launch expenses - revenue expenditure or capital expenditure - Held that:- It is found that SCN u/s 263 was specific and related to the question as to whether the expenditure was capital or revenue. However, while passing the order u/s.263, the CIT proceeded on a totally different directions by treating the expenditure as revenue expenditure and further examined the question as to whether the they can be claimed in one year or have to be amortized as contemplated by the SEBI Regulations and decision in case of Madras Industrial Investment Corporation. No opportunity being given to assessee to explain its stand on amortization of initiation expenses. The action of the CIT in revising the order of the AO on this basis cannot be sustained.
Further, as to whether the decision in case of Madras Industrial Investment Corporation (1997 (4) TMI 5 (SC)) will be relevant in the context of an AMC which manage funds on behalf of mutual fund companies and derives income from managing a fund in the form of fee for managing the fund, is again debatable. On such debatable issues where two views are possible jurisdiction u/s.263 is not to be exercised. We accordingly hold that exercise of jurisdiction u/s.263 could not have been made. In the result the order u/s. 263 of the Act, in so far as it relates to the initial issue expenses, are hereby quashed - Decided in favor of assessee.
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2012 (6) TMI 628
Penalty under section 271(1)(c) - unaccounted sale of raw-material - addition was made on estimate basis - Held that:- It is well settled that the addition made purely by way of estimate should not be made the basis for levy of penalty for concealment of income. It is not the case of the revenue that the assessee has not disclosed the material facts relevant to the assessment. The issue of burning loss and consequential consumption of raw-material was worked out on estimation only to determine the unaccounted sale of raw material and the estimation differed at different levels of the revenue authorities. Assessing Officer has not pin-pointed any discrepancy or irregularity in the records. The possibility of sale of raw material outside the books was not based upon any material evidence but on suspicion which was created on account of non-availability of certain specific record. Mere possibility or suspicion or difference of opinion on some issue is not sufficient to impose penalty for concealment of income or filing of inaccurate particulars of income. No penalty under section 271(1)(c) was leviable on addition made on account of unaccounted sale of raw-material.
Regarding penalty levied for diversion of income by sale to sister concern - addition was made due to the reason that the assessee-firm had disclosed lower profit on sale made to sister concern - Held that:- There is no definite finding that the transaction of sale made to 'ME' was a sham transaction. The figures of sale made to 'ME' (sister concern) were disclosed in the accounts statement and those figures had not been disputed by the department. The conduct of the assessee was bona fide. Material particulars with regard to the sale made to 'ME' were disclosed by the assessee, at the time of filing of its return of income with the department. Facts of the case may justify the addition made on account of low rate of profit on sale made to the sister concern but were not sufficient to sustain the penalty imposed under section 271(1)(c).
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2012 (6) TMI 627
Penalty under section 271(1)(c) - penalty immunity - search - assessee had already enhanced the income declared which was disclosed during the search to purchase peace of mind and avoid litigation Held that:- Explanation 5 to section 271(1)(c) clearly shows that if income has not been declared before the expiry of time under sub-section (1) of section 139, then immunity is not available. Provisions of section 153A clearly show that rule of abatment applies to an assessment or re-assessment which is pending on the date of initiation of the search. This means all the returns filed earlier will not abate but only in cases where assessments are still pending would abate. Despite search, assessee did not want to disclose the concealed income which was found during the course of search. Legal principles are clearly applicable to the facts of the case because during the search certain bundles of bills were found which pertained to undisclosed sales which were not recorded in the books of account and this fact was admitted during the search and, therefore, offence of concealment was complete. Therefore, penalty on additional incomes declared in the returns is clearly leviable. Penalties levied by the Assessing Officer are confirmed. Revenue's appeals are allowed. Decided in favour of revenue.
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2012 (6) TMI 626
Royalty payment - in the nature of revenue expenditure or capital expenditure - Held that:- Considering the terms of the Technical Assistance Agreement entered between the assessee and MMB entitlement to use the know-how supplied by MMB for the manufacture of the products. The know-how and information received by the assessee directly or indirectly was to be kept strictly confidential and was entitled to use the trade mark "Golden Eagle" of MMB. The payment of royalty was, therefore, in the nature of expenditure incurred for carrying on business with available know-how rather than for accretion to the capital base or gain an advantage in the capital field of the assessee - in favour of assessee.
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2012 (6) TMI 624
TDS denial credit of tax based on TDS certificates Held that:- respondents-assessee are not entitled to credit of tax on the interest income based on TDS certificates issued by the banks, the assessees are entitled to credit of tax based on the very same TDS certificates in the year in respect of which the subject-matter of deduction of tax is assessed. Decided in favour of revenue.
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2012 (6) TMI 623
Deduction of interest - Investment of interest free funds - commercial expediency - held that:- it is clear that no interest bearing funds were utilized by the assessee for the purpose of subscribing to the share capital of its subsidiary company.
So long as the interest bearing funds are used for the business purpose, whether for investment in fixed or circulating capital, the amount of interest shall be allowed as deduction. If answer to stage (a) turns out to be in negative, only then the question of examining the stage (b) arises as to whether investment for non-business purpose was made out of interest free funds. If such investment for non-business purposes is out of interest free funds, then there cannot be disallowance of interest and vice versa. The second stage arises for consideration on the assessee's failure to succeed in the first. As in the instant case, the assessee failed to amply prove the business purpose in terms of S.A. Builders Ltd. [2006 (12) TMI 82 (SC)], but succeeded in proving that interest free funds were utilized for subscribing to the share capital of its subsidiary company, in my considered opinion the addition cannot be sustained. - Decided in favor of assessee. - Third member bench decision.
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2012 (6) TMI 622
Rejection of books of accounts - estimation of deduction u/s 10A - there is undisputed and excess mistakes in the accounts. - It is a fact the said inaccuracy amounts to ₹ 124.04 lakhs and works out to nearly 6% of the profits and the assessee describes the same as trivial and ignorable. Stand of revenue in this regard is that the AO has only to establish the inaccuracy in the books of accounts maintained by the assessee and the triviality of otherwise is not the issue. - held that:- the triviality of the default is no excuse as per the amended provisions of section 145 of the Act. Further, the default, which is quantified to be around ₹ 1.24 cr in our opinion, cannot described trivial in this case as it is the case of exemption u/s 10A of the Act and the assessee is expected to be extremely responsible in matters of maintenance of the books of such exempt undertakings. Without going into the reasons, whether bona fide or otherwise, we are of the considered opinion, the AO has rightly rejected the books as per the provisions of section 145(3) of the Act.
Best judgement assessment - Estimation of Profits of the STP Units - held that:- the AO and the CIT(A) have not done the best judgment in the manner provided in section 144 of the Act. There are large number of judicial precedents in operation on the issue of 'best judgment' referred to in section 144 of the Act. In principle, the best judgment does not mean wild and unreasonable estimations. The very expression 'best judgment assessment' imply the judgment of the AO and the said judgment must be supported by the material or data gathered by him for this purpose both from internal as well as the external sources. Thus, we can not approve the 'best judgment assessment' made by the AO and sustained by the CIT(A) in the present form. Therefore, we are of the considered opinion, the AO must make 'best judgment assessment' as per the manner provided in section 144 of the Act and for this we have decided to set aside the order of the CIT(A) for this limited purpose. It goes without saying that the AO must grant reasonable opportunity of being heard to the assessee.
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2012 (6) TMI 621
Levy on interest u/s 234B, 234C on arrears of tax payable due to retrospective amendment - amendment to Section 115JB of the Act - held that:- liability to pay interest would only arise on default and it is in the nature of a quasi-punishment. - Such liability although created retrospectively could not entail punishment by payment of interest with retrospective effect. such a liability could be created retrospectively, when such a liability is retrospectively created, the assessee cannot be accused of committing default and he cannot be charged with interest for such default. As the assessee was under no obligation on the date of the alleged default to pay tax at that particular rate, he cannot be accused of having committed default and made to pay interest as compensating the revenue for having not paid the money. assessee is liable to pay advance tax as per the amended provisions of Section 115JB for the relevant period. However, he is not liable to pay interest on the amount due as per the amended provision. no liability to pay interest on the difference in the tax paid. - Decided in favour of the assessee and against the Revenue
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2012 (6) TMI 620
Commission paid by the assessee to the doctors - illegal payment Held that:- commission paid to private doctors for referring patients for diagnosis could not be allowed as a business expenditure. The amount which can be allowed as business expenditure has to be legitimate and not unlawful and against public policy - In favour of the Revenue
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2012 (6) TMI 619
Bad debt disallowance of deduction - assessee had created a provision for bad and doubtful debts under section 36(1)(viia) of the Act Held that:- Assessee is entitled to the deduction of any bad debt which is written off in its books of account to the extent it exceeds the credit balance in the provision for bad and doubtful debts accounts - Provision created by the assessee and claimed as deduction under section 36(1)(viia) will also be considered while computing the deduction under section 36(1)(vii) In favor of Revenue
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2012 (6) TMI 618
Reassessment - Search and seizure undisclosed income tuition work - additional income not been declaring in the return of income Held that:- Seized document, annexure A 20, it is clear that the assessee had been carrying on tuition work at a large scale - submission of the assessee that he undertook such work for coaching some brilliant students is without any merit - assessee had undisclosed income from tuition work and the additions to the extent noticed in the order on that account was justified.
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2012 (6) TMI 617
Powers of Commissioner under section 263 of the Act - condition precedent for exercise of power - Commissioner did not reach any firm conclusion about evasion of tax - Commissioner called for record Held that:- Nothing in section 263(1) to show that before passing the final order under that section, the Commissioner must necessarily and in all cases record final conclusions about the points in controversy before him - assessment was to be freshly made by the Income-tax Officer, the only proper course for the Commissioner was not to express any final opinion as regards the controversial points - In favour of the Revenue
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2012 (6) TMI 616
Reassessment income escaped assessment under section 147 of the Act Addition subsequently in the course of assessment proceedings Held that:- Explanation 3 to section 147 clearly depicts that the Assessing Officer has power to make additions even on the ground on which reassessment notice might not have been issued in case during the reassessment proceedings, he arrives at a conclusion that some other income has escaped assessment which comes to his notice during the course of proceedings for reassessment under section 148 of the Act. The provision no where postulates or contemplates that it is only when there is some addition on the ground on which reassessment had been initiated, that the Assessing Officer can make additions on any other ground on the basis of which income may have escaped assessment Against Assessee.
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2012 (6) TMI 615
Deduction u/s 37 - Expenditure incurred on account of commercial expediency - illegal gratification - Commission paid to directors for awarding construction contract - Seizure of books of account by the Department Income-tax Officer disallowed the said claim for commission - expression 'commercial expediency' - doctrine or rule of pari delicto - Maxim "pari delicto portior est conditio possidentis".
HELD THAT:- It is a case of return of the advantage which he obtained under the contract, to the person who is lawfully entitled to the same. Instead of restoring the advantage to the company which paid him the amount, he has repaid the said amount to the directors of the company. The said payment is not made for any services rendered by them. Therefore, the said amount cannot be construed as commission or expenditure incurred under section 37 of the Act so as to be eligible for being deducted in arriving at income of the assessee under the head "Profits and gains of business or profession" because it is not an expenditure laid out or expended fully and exclusively for the purpose of business.
Another way of looking at things is, there is a clear case of collusion between the directors of the company and the assessee. In the tender which is floated, they have submitted prices which are higher than the normal price. Accordingly, the payment is made. After awarding the contract, they have reduced the price and agreed to receive the difference of price in their name. The assessee has obliged them. It is obvious that it is a kick back or bribe. It is an illegal gratification. It is a scheme adopted to siphon out the money belonging to the company. They want to lend respectability to it by calling it as a "commission". Therefore, seen from any angle, it cannot be construed as an expenditure at all, let alone commission.
The doctrine or rule of pari delicto is the embodiment of the principle that the courts will refuse to enforce an illegal agreement at the instance of a person who is himself a party to an illegality or fraud. It is a maxim of taw established not for the benefit of either of the parties to the litigation but is founded on the principles of public policy, which will not assist a party who has paid over money, or handed over property, in pursuance of an illegal or immoral contract to recover it back; "for the courts will not assist an illegal transaction in any respect".
The maxim is, therefore, intimately connected with the more comprehensive rule of law, ex turpi causa non oritur actio on account of which no court will allow itself to be made the instrument of enforcing obligations alleged to arise out of a contract, or transaction which is illegal, and the maxim may be said to be a branch of that comprehensive rule. If he requires aid from the illegal transaction to establish his case, the court will not entertain his claim.
Expenditure incurred in such immoral acts cannot be construed as expenditure incurred for the purpose of profits and gains of business or profession and the benefit of deduction or allowance under Parliamentary legislation cannot be extended to such persons or to such expenditure - commission not deductible u/s 37 - appeals are dismissed.
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2012 (6) TMI 614
Appeal against reduction of redemption fine and penalty by Commissioner (Appeals) - assessee alleged of violating provisions of Rule 23 of the Drugs and Cosmetics Rules, 1945 - permission to re-export goods stands granted - Held that:- Issue stands rejected by the Tribunal in case of same assessee earlier AY wherein it was held that finding of Commissioner that there is no malafide on the part of the importer does not stand rebutted by the Revenue. Need to re-export of the impugned goods arose only because the importer could not get licence from the Drugs Controller of India. There is no dispute that the goods were correctly declared by the by the appellant. Following the earlier decision, we find no infirmity in the impugned order of reducing redemption fine and penalty - Appeal rejected.
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2012 (6) TMI 613
Scheme of arrangement - Petitioners herein are the creditors of the Company-in-liquidation - all creditors have approved the scheme of arrangement, but on the other hand, the two shareholders have voted against the scheme - Held that:- One of the shareholders of the company in liquidation is the first petitioner in this company petition who has identified the second petitioner to revive the company in liquidation. This clearly shows that he is not the propounder of the scheme of arrangement for revival of the company. The second petitioner is neither a member nor a creditor of the company. He is willing to settle the claims of the creditors of the company with a view to revive the company in liquidation, provided the entire share capital of the company is transferred in his favour and his nominees. In order to attract section 391 it is necessary that a compromise or arrangement between a company and its creditors or any class of them, or between the company or its members or class of them should propose a compromise or arrangement, which was not present here.
The petitioners herein are not the actual propounders of the scheme so as to revive the company for the benefit of the company or its members. The petitioners being few among the investors for purchase of flats, thereby having become the creditors as they have not been allotted the flats have lent their names to a propounds who does not qualify under section 391 - Mere settling the outstandings of certain class of persons to the detriment of the company or its members is not the object. In any event, the recovery and disbursement would be done in the process of winding up - prayer made by the petitioners is therefore rejected.
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9911796707
