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Showing 321 to 340 of 1831 Records
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2017 (5) TMI 1515
Issues Involved:
1. Confirmation of Rs. 7.5 lakhs as unexplained money under Section 69A of the Income Tax Act, 1961.
2. Addition of Rs. 15 lakhs as unaccounted sales based on loose papers recovered during a search.
3. Delay of 1382 days in filing the appeal by the assessee and whether such delay can be condoned.
Detailed Analysis:
1. Confirmation of Rs. 7.5 Lakhs as Unexplained Money under Section 69A of the Income Tax Act, 1961:
The assessee challenged the confirmation of Rs. 7.5 lakhs to their income under Section 69A of the Income Tax Act, 1961, as unexplained money. This amount was based on two vouchers dated 14/06/2006 and 08/06/2006, representing cash transactions. However, due to the absence of the assessee during the hearing and no adjournment petition being moved, the tribunal proceeded ex-parte and relied on the material available on record. The tribunal upheld the First Appellate Authority's decision, confirming the addition of Rs. 7.5 lakhs as unexplained money.
2. Addition of Rs. 15 Lakhs as Unaccounted Sales:
The assessee also contested the addition of Rs. 15 lakhs as unaccounted sales, which was based on loose papers recovered during a search. Similar to the first issue, the tribunal noted the absence of the assessee and the lack of any adjournment petition. Consequently, the tribunal upheld the First Appellate Authority's decision, confirming the addition of Rs. 15 lakhs as unaccounted sales.
3. Delay of 1382 Days in Filing the Appeal and Condonation of Delay:
The tribunal noted that the appeal was time-barred by 1382 days, and the assessee had not provided any explanation for the delay. The tribunal emphasized that it was the duty of the assessee to explain the delay for each day, which was not done. The tribunal referenced the decision in the case of B.S. International (ITA No.4683/Mum/2012) and other judicial pronouncements, highlighting that the delay must be supported by sufficient and good reasons. The tribunal found that the assessee's approach was casual and negligent, and no leniency could be extended. The tribunal concluded that the delay was not beyond the control of the assessee and was a result of a conscious decision to file the appeal late. Therefore, the tribunal did not condone the delay and dismissed the appeal as not admitted.
Conclusion:
The tribunal dismissed the appeal on all counts. The confirmation of Rs. 7.5 lakhs as unexplained money and Rs. 15 lakhs as unaccounted sales was upheld due to the absence and negligence of the assessee. Additionally, the appeal was dismissed due to the inordinate delay of 1382 days in filing, which was not satisfactorily explained by the assessee. The tribunal emphasized the importance of adhering to the prescribed period of limitation and found no substantial reason to condone the delay.
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2017 (5) TMI 1514
Raising of funds through SPN - business expenditure allowability - whether capital borrowed on which interest was paid related to same business or not and if the answer is NO, then claim cannot be allowed. - Held that:- The transaction which has taken place in this manner, according to the AO, was not in accordance with law. But he failed to point out which provision of the Income Tax Act has been violated by the assessee or which guidelines of the SEBI has not been adhered to. According to the assessee, treatment made by the investor is of no consequences as far as allowance of expenditure in the case of assessee-company is concerned. As far as fact that this capital was raised for the purpose of business is concerned, nobody has denied it because in earlier years, this fact has been approved by the Hon’ble High Court, the AO has not discovered any new facts. He considered this exercise at the end of the assessee as a colourable exercise only under the impression that the assessee has claimed deduction of interest expenditure, whereas corresponding equal amount was not offered for tax in the hands of the applicants. To our mind, it cannot be reason for disallowing the claim of the assessee. If earning of equal amount of income is considered as basic principle for allowance of expenses, then no assessee would suffer any loss. Incidence of taxability has occurred in the hands of the applicants in a different manner. They were investors. They have shown capital gain on their investment. Therefore, if incidence of interest income not resulted to them cannot be a ground to doubt the business expenditure of the assessee.
Other reasons assigned by the AO would indicate that the AO tried to take business decision in the case of the assessee. He was of the view that there was no necessity of issuing any instrument like SPN, because other associate companies of the assessee had their own surplus funds from which they can finance Bhavnagar project. Similarly, according to the AO, claim of issuance of SPN should not be formulated in this manner. To our mind both these reasons are contrary to the principle laid down by the Hon’ble Supreme Court in the case of Hero Cycles Pvt.Ltd. [2015 (11) TMI 1314 - SUPREME COURT OF INDIA] as well as Taparia Tools Ltd (2015 (3) TMI 853 - SUPREME COURT). Thus, steps at the end of the AO amounts to interference in taking business decision, which is not permissible to him.
AO cannot contend that how much finance and at which rate would be sufficient for the assessee for running its business. His area would be whether the assessee has incurred any undue expenditure, which was not required for the purpose of business or not. Thus in our view, there is no disparity of facts from the earlier years, which can persuade ld.Revenue authority to take a different view. Issue in dispute is squarely covered in favour of the assessee
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2017 (5) TMI 1513
Treatment of sales tax/purchase tax subsidy received from SICOM - whether capital receipt or revenue receipt - Held that:- The facts and issue arising in the present appeal are identical to the issue before the Tribunal in assessee's own case and hence to avoid repetition, we adopt our reasoning given in assessment year 2006-07 for holding that the sales tax/purchase tax subsidy received by the assessee is capital receipt. We find that the said scheme of Government of Maharashtra was considered by the Hon'ble Bombay High Court in CIT v. Kirloskar Oil Engines Ltd. (2014 (5) TMI 586 - BOMBAY HIGH COURT ) and it has been held that the object of assistance under subsidy scheme to enable assessee to set up new unit, was a capital receipt. Following the same parity of reasoning, we hold that the subsidy received by the assessee was capital in nature.
Ad hoc disallowance of royalty paid by the assessee company to its associated enterprises - Held that:- Pune Bench of Tribunal in M/s. Spicer India Limited v. ACIT (2017 (4) TMI 908 - ITAT PUNE), wherein there was similar case of payment of royalty where the TPO has violated the provisions of the Act and proposed the TP adjustment, but no separate adjustment was made on account of another adjustment and the same was subsumed in that; wherein the other TP adjustment was deleted by the DRP and the Assessing Officer in the final assessment order proposed the TP adjustment on account of royalty. Such procedure has not been followed by the TPO/Assessing Officer in the present facts and accordingly, we hold that there is no merit in the ad hoc disallowance of ₹ 7.50 crores.
Coming to the merits of the case, where the royalty has been paid by the assessee at a rate lesser than 3% as against which the RBI has approved the rate at 3% for payment of royalty, then the same is at arm's length and this issue also considered by the Pune Bench of Tribunal in M/s. Spicer India Limited v. ACIT (supra). The Hon'ble Bombay High Court in CIT v. SGS India Pvt. Ltd. [2015 (11) TMI 1619 - BOMBAY HIGH COURT] had held the rate of royalty approved by SIA/RBI would constitute cup data and the transaction would be at arm's length price. Accordingly, we hold that where the payment of royalty by the assessee to its associated enterprises is at rate less than 3%, then the same is liable to be considered at arm's length rate and no addition is warranted on this account. Accordingly, we hold so.
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2017 (5) TMI 1512
TDS u/s 194C - existence of a payer and payee - Held that:- As gone through the relevant record and impugned order, Section 194(c) presupposes existence of a payer and payee. We find that in the case of the assessee identity of payee was not established at all. When the contractors are not identifiable at all and also not identified by the Department even otherwise the question of TDS liability anyway does not arise. The AO has just passed the order on the basis on assumptions without disproving the facts reported by the assessee that no payment to the contractors was made. Therefore, we do not find any infirmity or illegality in the order passed by the learned CIT(A). - Decided against revenue.
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2017 (5) TMI 1511
Disallowance of interest u/s 36(1)(iii) for making interest free advance to various persons - Held that:- We find that it is a fact that in original assessment proceedings, the Assessing Officer had made disallowance of interest u/s 36(1)(iii) in respect of 10 parties , whereas the Assessing Officer in the second round of proceedings examined 14 parties and made disallowances accordingly which is not as per directions of Hon'ble ITAT.
Therefore, we direct the Assessing Officer to restrict the disallowance if any in respect of only 10 parties which were originally listed in the original assessment order. We further find that in a few cases, the amount of advances was as opening balances and there are judgments of Amritsar Tribunal holding that in respect of old advances from earlier years, no disallowance u/s 36 (1) (iii) was warranted. Further the disallowance if any u/s 36(1)(iii) has to be restricted to the amounts of loans which exceeded the capital of the assessee as has been held by Hon'ble Amritsar Bench in various case laws relied on by assessee. Therefore, the Assessing Officer is directed to restrict the disallowance of interest on loan amounts exceeding the available capital of the assessee. With these directions the appeal of the assessee is set aside to the office of Assessing Officer to reframe the assessment order in terms of above said directions. - Decided in favour of assessee for statistical purposes.
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2017 (5) TMI 1510
Estimation of agricultural income - Held that:- Referring to to the appeals by/against other family members of Bagwan Group [2017 (2) TMI 1112 - ITAT PUNE] the assessee is not maintaining the books of account regularly. We have already held that there is need for estimation for agricultural income in the hands of the assessee. The Ld. Authorised Representative for the assessee before us agreed to the proposition laid down by the Pune Bench of the Tribunal that 80% of the standard yield reported by ICAR in the case of Vegetable yield be adopted to work out the income from Vegetables and flowers in the hands of the assessee on the basis of individual land holdings. Accordingly, we hold so. Necessary evidence would be furnished in this regard by the assessee. The Assessing Officer shall give reasonable opportunity of hearing to the assessee. In case there is yield from fruits, then 80% of the standard yield reported by NHB should be adopted to work out the income in the hands of the assessee based on their land holding. However, in case the assessee has already shown the yield below 80% of the standard yield reported by the above said Government bodies, then the Assessing Officer is directed not to disturb the same and accept it.
Expenses on contractual factor - We have already decided the issue of estimation in the hands of the assessee in the paras hereinabove with our directions. We further hold that no further deduction is to be made on account of contractual farming factor @50%. The basis for the said estimation is pursuant to the facts of Shri Badshah Bagwan and where the statement of the said person was never confronted to the assessee nor the information supplied to the assessee, the said information cannot be applied to decide the issue against the assessee. In any case, in the facts of the case, the assessee has claimed that it has grown vegetables on its agricultural land holding and he pleads that the said vegetables are not grown on sharing system basis. We find merit in the plea of the assessee in this regard and accordingly we hold so.
Estimation of agricultural income in the hands of the assessee is on account of sugarcane wherein part of the land was under the crop of sugarcane from A.Y. 2001-02 onwards. The question arose of estimation of the said agricultural income from sugarcane produce relying on the facts of Shri Badshah Bagwan and 50% was deducted towards agricultural expenses and paid towards contractual farming. Since the facts of the present case are at variance to the facts in Shri Badshah Bagwan, we find no merit in deducting any amount towards batai expenses in respect of the estimation of income arising from sugarcane plantation. We direct the Assessing Officer to apply 80% of the rates available to the surgarcane produce as sugarcane is sold to Mills. Necessary evidence would be furnished by the assessee to establish its case. The Assessing Officer shall give reasonable opportunity of hearing to the assessee before adjudicating the issue of income arising from sugarcane produce and also as held in the case of vegetables and flowers.
Assessee had declared the amount as agricultural income, part of which has been accepted as agricultural income by the authorities below and the balance amount has been assessed as income from other sources in the hands of the assessee. Once the income is estimated in the hands of the assessee the same is presumably held to have been utilized for the acquisition of the assets and there is no merit in any other addition in the hands of the assessee on account of unexplained investment in assets found during the course of search. We hold so. The appeal filed by the assessee is partly allowed and the appeal filed by the revenue is dismissed.
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2017 (5) TMI 1509
Existence of Raibagh Sahakari Factory - Sugar Factory - whether it is within the radius of 15 km from the Appellant's factory or not? - Clause 6A of the Sugarcane (Control) Amendment Order, 2006 - Restriction on setting up of two sugar factories within the radius of 15 km. - Held that: - Notwithstanding anything contained in Clause 6, no new sugar factory shall be set up within the radius of 15 km of any existing sugar factory or another new sugar factory in a State or two or more States - Clauses 6A to 6C and 6E of the Sugarcane (Control) Order mentions the steps which an entrepreneur has to take in an establishment of a sugar factory. These provisions also mention time limit to implement IEM provisions which are made for extension of time as well. Consequences of non-implementation of the provisions are also laid down - Clause 6A also defines what is an existing sugar factory and what is a new factory. This Clause also stipulates the distance requirement and how the minimum distance of 15 km provided therein shall be determined.
Distance requirement as provided for under Clause 6A was not applicable in the instant case. It was also emphasised that M/s. Raibag Sahakari had not crushed sugarcane since 2001-2002 i.e. in the last five crushing seasons prior to June 08, 2006, which was also a relevant consideration to hold that distance requirement was inapplicable in this case - the requirement of distance mentioned in the Amendment Order was inserted keeping in mind the benefit of the existing sugar factories. In a situation like this, when such a factory itself gave 'no objection' certificate, thereby waived the requirement, the bonafides of the Appellant cannot be doubted.
Appellant is allowed to continue its factory operation subject to the condition that 14 villages which were originally assigned to Respondent No. 1 would be re-allotted to it after taking these villages from the Appellant - appeal allowed.
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2017 (5) TMI 1508
Deemed dividend u/s.2(22)(e) - whether the assessee-company can be taxed towards the loans/advances received from the lender by virtue of deeming fiction under s.2(22)(e) where the assessee-company itself is not a shareholder of the lending company, notwithstanding the fact that both the companies (lender-company and assessee-company) had common shareholders having substantial interest in both the companies? - Held that:- The dividend taken note of by this provision is a deemed dividend and not a real dividend. Loans or advances given by company to its shareholder is actually not a dividend. In fact, such a loan to a shareholder has to be returned by the shareholder to the company. It does not become income of the shareholder. Notwithstanding the same, for certain purpose, the legislature deemed such a loan/advance as of ‘dividend’ and made it taxable at the hands of the said shareholder. It is therefore ostensible that such a provision which is a deeming provision and fictionally creates certain kind of receipts as dividends is to be given strict interpretation. It follows that unless all the conditions contained in the said provision are fulfilled the receipt cannot be deemed as dividend.
It is an undisputed fact that the assessee-company is not a shareholder per se in the lender company of the Act. We note that the CIT(A) has decided the issue in favour of assessee on the ground that the deemed income can be taxed only in the hands of shareholder of the lending company notwithstanding the fact that both the lender-company as well as the assessee-company has common shareholder having substantial interest in both the companies. For this proposition, the CIT(A) relied upon certain judicial precedents as noted in the operative para quoted above.
We find that the legal fiction in section 2(22)(e) enlarges the definition of dividend but does not extend to or broaden the concept of a ‘shareholder’. As the assessee is not a shareholder of the lendercompany, the receipt is not susceptible to tax under s.2(22)(e) in its hands in view of long line of judicial precedents including Baumik Colour Pvt.Ltd.(2008 (11) TMI 273 - ITAT BOMBAY-E). - Decided against revenue.
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2017 (5) TMI 1507
Insolvency Resolution process against the Respondent / Corporate Debtor - petition as time barred - Held that:- We are unable to appreciate the arguments advanced by the Ld. Counsel for Operational Creditor. The email dated 07.02.2014, no doubt acknowledges the debt, but extends the period of limitation by three years from that date. The argument that limitation would stand extended from the period when the corporate debtor received their own payments from Senbo Engineering Ltd. i.e. in February, 2015 is misconceived.
In view of the above, we find that this petition which was filed on 26.04.2017 is time barred and therefore not a legally recoverable debt.
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2017 (5) TMI 1506
Deduction towards the license fee of phase-I under Section 35ABB - Phase-I license was no longer in force - Held that:- The purport of the said questions raised by the Revenue are that Phase-II licence regime was not in continuation of Phase-I when in fact it was. It is on this basis that the amount equivalent to 1/10th of the total capital expenditure was allowed proportionately over 10 year period in accordance with Section 35ABB (1) of the Act. It provides that any capital expenditure actually incurred by the Assessee on the acquisition of any right to operate telecom services is to be allowed as a deduction in equal instalment over the period for which the licence remains in force. The concurrent findings of the ITAT and CIT (A) in this regard are not shown to be perverse or contrary to the express terms of those licenses. Consequently, the Court declines to frame the questions as posed by the Revenue at 2.1 to 2.3 above.
Carry forward business loss/unabsorbed depreciation - Held that:- It is pointed out that what the Assessee claimed was brought forward unabsorbed depreciation in terms of Section 32 (2) of the Act and not unabsorbed brought forward business loss. The CIT (A) directed the AO to verify from the Respondent’s record and only permit claim relating to unabsorbed brought forward depreciation. This is not prohibited under Section 79 of the Act even when there is a change in the shareholding of the Respondent. Consequently, the Court is not inclined to frame question 2.4 as a substantial question of law.
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2017 (5) TMI 1505
Rejection of books of accounts - non presenting true and correct picture - Held that:- Merely because of non maintenance of a detailed qualitative and quantitative register alone, the same could not be a valid reason to reach a finding that books of account do not present true and complete picture of accounts and financial transactions. The finding by the assessing authority being perverse is, therefore, set aside.
Invoking provisions of section 145 - non verification of some of the vouchers relating to payment in respect of direct expenses - Held that:- The perusal of the impugned order reveals that this was only a prima facie view which the assessing authority entertained before issuing a show cause notice to the assessee for rejecting its accounts by invoking provisions of section 145(3) of the Act. He has not been able to point out as to which of these payments in respect of direct expenses could not be verified by him nor the Assessing authority is shown to have required the assessee to get payment of any specific amount of direct expenses verified. Merely for saying it could not be taken a lacuna in the books of account of the assessee and take the same as a reason for rejecting the books of account that were maintained by assessee in regular course of its business.
Search proceedings revealed incriminating documents which contained nothings of receipt of cash "out of books" by the members of Unique Group of which the assessee is an important member - Held that:- There is also a feeble observation inthe orders of the authorities below for rejecting the accounts that in the trade of real estates 'notorious trade practices' are prevailing. The Ld. Counsel for the assessee has placed reliance on the judgment by Hon'ble Apex Court in the case of Lalchand Bhagat Ambica Ram vs. CIT (1959 (5) TMI 12 - SUPREME Court) in which the practice of making additions in the assessment on mere suspicions and surmises or by taking note of the 'notorious trade practices' prevailing in trade circles has been disapproved. Having considered the aforesaid view, the finding of "on-money transactions" in the appellant's case by the authorities below is found without any basis and found perverse on facts. It, therefore, could not be a reason for rejecting the books of account maintained by the assessee in regular course of business.
Assessee has not followed Accounting Standards 9 & 7 which tantamount to not following Accounting Standard-1 as prescribed under section 145(2) - Held that:- Completed contract method followed by the appellant, therefore, could not be faulted with by the revenue and the assumptions made by the Assessing Officer that by not following AS-9 & 7 the same tantamount to not following prescribed AS1 under section 145(2) of the Act are found misplaced, unnecessary and uncalled for besides being contrary to principles of interpretation of the statutory provisions. The same, therefore, could not be taken a valid basis for change of method regularly employed by the appellant. The Income-tax Authority, therefore, has no option or jurisdiction to meddle in the matter either by directing the assessee to maintain its account in a particular manner or adopting a different method for valuing work-inprogress. It also cannot recompute income by adopting any method other than that regularly employed by the assesseeappellant in a case like this nor make the same as basis to reject its accounts.
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2017 (5) TMI 1504
Exemption of income u/s 14A - Disallowance of claim of deduction for advances made by rural branches u/s 36(1) (viia) - Held that:- In view of the decision of the Supreme Court in Godrej & Boyce Manufacturing Company Ltd.(2017 (5) TMI 403 - SUPREME COURT OF INDIA it is true that disallowance which are made by the department is required to be rejected and the asseseee will be entitled for the benefits conferred u/s 14A. Thus, the order of the disallowance is reversed and claim which has been made 14A is required to be upheld, therefore, issue is required to be decided in favour of the assessee.
However, operative question regarding disallowing the claim of deduction for advances made by Rural Branches U/s 36(1) (viia)/B such order is concerned, in view of the decision in The Commissioner of Income Tax vs. The Catholic Syrian Bank Ltd [2010 (10) TMI 1068 - KERALA HIGH COURT ]the issue is answered in favour of the assessee to the extent that in view of the observations made by the Supreme Court, no disallowance will be made u/s 14A.
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2017 (5) TMI 1503
Allowable business expenditure - Held that:- Initially the Corporation has not accepted the liability, therefore, the observations which are made by the Tribunal for the year 1991-92 were in the peculiar facts where the liability was not accepted but subsequently for the year 1992-93, the Corporation has accepted the liability which was shown in the books of account and in view of the matter additions made by the tribunal for the relevant year would not be applicable in the changed circumstances. Since, they accepted the liability, the resolution which is sought to be passed on 28.8.1992 was administrative formality but for the Income-tax purpose it is shown in the books of account mercantile system, therefore, though the point raised by Mr. Singhi is remained an academic issue but facts and law in mercantile system which is debited for the relevant year i.e. 1992-93.
It is thus very clear that the survey expenses are almost identical and hence required to be allowed as revenue expenses.
In view of the observations made by the Supreme Court in the Judgment of Empire Jute Co. Ltd. vs. Commissioner of Income Tax (1980 (5) TMI 1 - SUPREME Court), we are of the opinion that the expenses which gives fruitful result require to be done according to the necessity of relevant time and development with the nature of expenses. - Decided in favour of the assessee.
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2017 (5) TMI 1502
Whether the CESTAT was justified in allowing the abatement under the Notification No.15/2004-ST dated 10.9.2004, as amended, without passing a speaking order? - Held that: - the Tribunal was not justified in allowing the abatement under Notification No.15/2004-ST dated 10.09.2004 as amended, through the order impugned in this Appeal, which is a non-speaking one on the relevant issue.
The Revenue is entitled to an opportunity of consideration of its submissions on facts and in law by the CESTAT. Accordingly, the impugned order is only to set aside and an order of remit is made thereby restoring the case.
Appeal allowed by way of remand.
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2017 (5) TMI 1501
TPA - comparable selection criteria - Held that:- Assessee provides IT and Financial back office support services to various entities/ subsidiaries of its Parent Company all across the world. The assessee alongwith BC holdings (UK Limited) is a part of British Council which is an international organization based in UK, established for fostering educational opportunities and cultural relations.In the transfer pricing study report, the assessee has characterized itself as a service provide, thus companies functionally dissimilar with that of assessee need to be deselected as final list of comparable.
Transfer pricing adjustment on account of imputing the interest on outstanding receivables - Held that:- Here in this year also, the fact remains the same that assessee is a debt free and it has neither received any interest from any creditors nor paid interest to debtors and no borrowed funds have been utilized for extending the time period of the receivables. Apart from this, it is also a fact that credit period extended to third parties is also same as provide to the AE, hence no adjustment is required to be made by treating it to be loan transaction and imputing interest on the delayed period receivables. Since similar facts and finding of Revenue authorities are permeating in this year also therefore, our finding given in the appeal for the AY 2011-12 would be squarely applicable and accordingly, this issue is decided in favour of the assessee.
Foreign exchange gain or loss is operating in nature - Held that:- As already held that it is part of the operating income and therefore, it cannot be removed from the computation/working of the PLI. Accordingly, in view of the finding given in the appeal in the assessment year 2012-13, this issue too his decided in favour of the assessee.
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2017 (5) TMI 1500
Allowance of business expenditure u/s. 37 incurred on foreign tour of wife of the Director of the Company - Held that:- Claim allowed as relying on Appollo Tyres Ltd [1998 (8) TMI 68 - KERALA High Court ]
Allowing 100% deduction u/s.80IA specifically when the assessee company itself and claimed deduction @ 30% u/s. 80IA - Held that:- The issue is now covered by the decision of Madras High Court in the case of Tamilnadu Petro Products Ltd. Vs. Assistant Commissioner of Income-tax- (2010 (11) TMI 645 - MADRAS HIGH COURT ), wherein it has been held as we dealt with the issue in the light of Section 80-IA and in particular Sub-clause (iv) of the said section which provides for the benefit even in respect of electricity generation plant established by the Assessee and the income derived from such enterprise of the Assessee, it will have to be held that the Assessee fully complied with the requirements prescribed under Section 80IA in order to avail the benefits provided therein. Therefore, the contention based on the interpretation of the expression 'derived from' can have no application to the case where the provisions of Section 80-IA get attracted - Decided in favour of assessee.
Computation of Minimum Alternate Taxation (MAT) u/s 115JA - Entitled for consequential relief in computing income tax payable u/s. 115JA specifically when the assessee company did not distribute the power and the plant was set up for manufacturing of fertilizer and the power plant was a part of fertilizer unit of the company - Held that:- Issue is squarely covered by the decision of Supreme Court in the case of Commissioner of Income-tax Vs. DCM Shriram Consolidated Ltd.- (2015 (2) TMI 759 - SUPREME COURT) wherein it has been held that it is quite evident that assessee's CPPs can as a matter of principle derive profits which is in point of fact embedded in the ultimate profit earned on the sale of the final product. - Assessee is entitled to reduce from its book profits, the profits derived from its CPPs, in determining tax payable for the purposes of Section 115JA of the Act. - Decided in favour of assessee.
Cancelling the rectification order under Section 154 and deleting the interest levied u/s.234C by ITAT - Held that:- since the issue of charging of interest under section 234C of the Act under the facts and circumstances of the present case was debatable one and hence the AO was not justified in charging the same by passing an order under section 154 of the Act. The Hon’ble Supreme Court in the case of CIT vs. Hero Cycles Pvt. Ltd (1997 (8) TMI 6 - SUPREME Court ) was pleased to hold that the condition precedent for initiating the proceedings under section 154 the mistake should be glaring and obvious and it should not be debatable and, therefore, even if there are two views on the issue the proceedings under section 154 cannot be initiated - Decided in favour of the assessee
Validity of revised return - justification of holding that the revised return u/s 139(5) was a valid return - Held that:- Supreme court in the case of Goetze (India) Ltd. Vs. Commissioner of Income Tax [2006 (3) TMI 75 - SUPREME Court] held that the decision in question is that the power of the Tribunal under section 254 of the Income Tax Act, 1961, is to entertain for the first time a point of law provided the fact on the basis of which the issue of law can be raised before the Tribunal. The decision does not in any way relate to the power of the assessing officer to entertain a claim for deduction otherwise than by filing a revised return. In the circumstances of the case, we dismiss the civil appeal. However, we make it clear that the issue in this case is limited to the power of the assessing authority and does not impinge on the power of the Income Tax Appellate Tribunal under section 254 - Decided in favour of the assessee
Addition account of downward impact of Retention Price Subsidy - whether Tribunal was justified in allowing the Retention Price Subsidy specifically when it was an unascertained liability and represented "reverse" which is not allowable? - Held that:- AO has only power to make adjustment as provided in explanantion. The amount set aside for making the ascertained liability cannot be added to the book profit. Hence, sub clause (c) to explanation (1) of Section 115 JB is not applicable. The amount so debited is not a reserve to be covered under sub-clause (d) to explanation 1 of Section 115JB of the Act. We do not agree with the contention ld. AR the Retention Price Subsidy credited be not treated as part of the book profit. If the assessee is crediting the Retention Price Subsidy in the books of accounts and such subsidy is included in the accounts approved in General Body Meeting, the same cannot be excluded from the book profit. One has to consider the method of accounting being followed by the assessee consistently. Accordingly we hold that the debit in respect of Retention Price Subsidy on account of notification dated 15.04.2009 is allowable. - Decided in favour of the assessee.
Addition in respect of fees paid to a consultant for drafting the shareholders agreement - Held that:- The appellant company has incurred expenditure of ₹ 11.62 lakhs in connection with drafting of stock subscription and share holders agreement for acquiring stock/equity shares of Novasoft Information Technology Corporation , USA. The Expenditure is directly relatable to the acquisition of shares/equity of another company but not in relation to the share capital of the appellant company. Hence, it can not be directly considered as capital expenditure. If the shares so acquired have been treated as non-trade investment, then it would have added to the cost of shares (being asset). However, on perusal of balance sheet, it is seen that these shares have been treated as trade investment and accordingly the expenditure so incurred may be considered as allowable revenue expenditure. However, by virtue of provisions of Section 145A the direct expenses or fees (by whatever name called) incurred in acquiring the traded items will have to be added for the purpose of valuation of closing stock for determining the income chargeable under the heads profit and gains of the business. Accordingly, for determining income from profits and gains of the business, same is directed to be added in view of the discussion made above - Decided in favour of assessee
Addition made on account of purchase of software being capital in nature - Held that:- In that view of the matter, the software which are purchased are installed are revenue expenditure and not of capital expenditure. Therefore, we are in complete agreement with the view taken by the Tribunal. - Decided in favour of assessee
Depreciation on catalyst not allowable under Section 32 - Held that:- Catalyst is required for initiating the chemical process for the maufacture of a product. The expenditure incurred on the consumption of a consumable item is Revenue. Since the assessee was following consistent method of accounting, therefore the AO should not have deviated from the consistent method which has been followed. There is no change in the facts and circumstances of the case - Decided in favour of assessee
Accrual of income - Held that:- The question whether there was real accrual of income to the assessee-Company in respect of the enhanced charges for supply of electricity has to be considered by taking the probability or improbability of realisation in a realistic manner. If the matter is considered in this light, it is not possible to hold that there was real accrual of income to the assessee-Company in respect of the enhanced charges for supply of electricity which were added by the Income-tax Officer while passing the assessment orders in respect of the assessment years under consideration. The Appellate Assistant Commissioner was right in deleting the said addition made by the Income-tax Officer and the Tribunal had rightly held that the claim at the increased rates as made by the assessee-company on the basis of which necessary entries were made represented only hypothetical income and the impugned amounts as brought to tax by the Income-tax Officer did not represent the income which had really accrued to the assessee-Company during the relevant previous years - Decided in favour of assessee
MAT computation - AO jurisdiction - Held that:- Assessing officer while computing the income under Section 115J has only the power of examining whether the books of account are certifies by the authorities under the Companies Act as having been properly maintained in accordance with the Companies Act. The assessing officer thereafter has the limited power of making increases and reductions as provided for in the Explanation to the said section. To put it differently, the assessing officer does not have the jurisdiction to go behind the net profit shown in the profit and loss account except to the extent provided in the Explanation to Section 115J.
Allowable business expenditure - Held that:- The true test for qualification of expenditure under Section 37 of the Act is that it should be incurred wholly and exclusively for the purposes of business and the expenditure should not be towards capital account. In the instant case, as discussed above, the admission fee paid towards corporate membership is an expenditure incurred wholly and exclusively for the purposes of business and not towards capital account as it only facilitates smooth and efficient running of a business enterprise and does not add to the profit earning apparatus of a business enterprise.
Addition u/s 40A - Held that:- The expression used in this provision is "incurs any expenditure in respect of which payment has been or is to be made to any person" (emphasis supplied). The emphasised words clearly show that actual payment must be made and there has to be an expenditure incurred before the provision can be said to be applicable. A trade discount, and admittedly it is not in dispute that the subject matter of the claim is a trade discount, and not an expenditure, clearly therefore there does not arise the question of applicability of Section 40-A(2)(b).
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2017 (5) TMI 1499
Allowance of fluctuation loss - method of accounting followed by the respondent company - Held that:- quarely covered by the decision of Supreme Court in the case of Commissioner of Income Tax vs. Woodward Governor India (P) Ltd. (2009 (4) TMI 4 - SUPREME COURT) thus the issues with regard to fluctuation loss are to be decided in favour of the assessee.
Provision of bad and doubtful debts - claim allowed - Decided in favour of assessee.
Excluding the provision for bad and doubtful debt for the purpose of Section 115JA? - retrospective amendment introduced in Section 115JA - Held that:- With the introduction of the said amendment with retrospective effect from 01.04.1998, the provision for doubtful debts and the provision for doubtful advances, which are nothing but provision for diminution in the value of asset, are specifically covered under clause (g) of the said Explanation. Consequently, the question insofar as it relates to provision for doubtful debts and provision for doubtful advances, requires to be answered in favour of the revenue and against the assessee. See CIT. Versus ILPEA PARAMOUNT (P) LTD. [2010 (2) TMI 45 - DELHI HIGH COURT ]
Disallowance of sum incurred on building by holding the same to be of revenue nature - Tribunal deleted the addition - Held that:- Claim allowed of assessee as relying on CIT Versus Dr. AM Singhvi [2007 (8) TMI 265 - RAJASTHAN HIGH COURT]
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2017 (5) TMI 1498
Deduction under section 80IA – contention of the revenue is that the assessee was not engaged in developing the facility at all and that under the contract that was entered into between the assessee and JNPT all that the assessee was required to carry out was to supply and install cranes at the Port – Held that:- As decided in Commissioner of Income Tax vs. ABG Heavy Industries Ltd. & ors [2010 (2) TMI 108 - BOMBAY HIGH COURT] JNPT issued a certificate confirming the award of contracts to the assessee for supply, installation, testing, commissioning, and maintenance of container handling equipment on lease for a period of ten years for loading and unloading of containers at the port and that the cranes that were to be supplied by the assessee formed an integral part of the port. The condition of a certificate from the port authority was fulfilled and JNPT certified that the facility provided by the assessee was an integral part of the port. The findings that the assessee had developed the infrastructure facility and that it was engaged in operating the cranes was, therefore, based on the material on record. The fact that the assessee was also maintaining the cranes was not disputed. The assessee was entitled to the special deduction under section 80IA.
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2017 (5) TMI 1497
Addition u/s 36(1)(vii) on account of provisions of bad and doubtful debts - Held that:- Bad debts clai is to be allowed. See T.R.F. Ltd. vs. CIT [2010 (2) TMI 211 - SUPREME COURT]
Addition on account of foreign exchange fluctuation - Held that:- Addition made is to be deleted. See Commissioner of Income Tax vs. Woodward Governor India [2009 (4) TMI 4 - SUPREME COURT ]
Addition made on account of disallowance of depreciation - effective ownership - Held that:- Tribunal correctly deleted the addition as relying upon the decision of Delhi High Court in the case of CIT vs. Bharat Aluminum Company Ltd. (2009 (10) TMI 505 - DELHI HIGH COURT) and CIT vs. Yamaha Motors India Pvt. Ltd. [2009 (8) TMI 27 - DELHI HIGH COURT] and CIT vs. Sonal Gum Industires [2009 (2) TMI 84 - GUJARAT HIGH COURT ] as held as held that though as per section 32(1), in order to get entitled to claim depreciation, asset is to be owned by the assessee and it is also be used for the purpose of business and profession but this expression when applied to block of assets and not any specific building, machinery, plant or furniture in said block of assets as individual assets loose their identity after becoming inseparable part of block of assets. Condition for eligibility of depreciation that machinery is used for the purpose of business would mean that discarded machine is used for the purpose of business in the earlier years for which depreciation is allowed.
Addition made while computing book profits u/s.115 JB - Held that:- In computing the income u/s 115JA the AO while computing the income has only the power of examining whether the books of accounts certified by the auditors under the Companies Act has been maintained in accordance with schedule VI. The AO thereafter has the limited power of making increases and reduction as provided for in the explanation to the ld section. Since the so-called excess depreciation provided by the assessee is not in deviation from the accounting principles and standards laid down by the Companies Act/ICAI, this cannot be added in computing the book profit u/s 115JB. This addition to the book profit is therefore directed to be deleted. See Apollo Tyres Ltd. vs. CIT [2002 (5) TMI 5 - SUPREME Court]
Assessee appeal allowed.
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2017 (5) TMI 1495
Addition on delay in deposit of employees’ contribution to CPF/GPF/ESI u/s 36 (1)(va) - Held that:- If the amount has been deposited on or before the due date of filing the return under Section 139 and admittedly it was deposited on or before the due date then the amount cannot be disallowed under Section 43B of the I.T. Act or under Section 36(1)(va) of the Act. See CIT Vs. Jaipur Vidyut Vitran Nigam Limited [2014 (1) TMI 1085 - RAJASTHAN HIGH COURT] - Decided against Revenue.
TDS u/s 194J - payments on account of transmission/wheeling/SLDC Charges to M/s RRVPN - Held that:- No liability to deduction tds required. See Commissioner of Income Tax Vs. Bharti Cellular Ltd. (2010 (8) TMI 332 - Supreme Court of India ), Commissioner of Income Tax Vs Bharti Cellular Ltd (2008 (10) TMI 321 - DELHI HIGH COURT ) wherein decided providing assistance or aid, services not involving human interface, hence services are not technical services as contemplated under Explanation 2 to section 9(1)(vii) - interconnect charges/port access charges cannot be regarded as fees for technical services, hence not liable for tax deduction at source - Decided against revenue
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