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Showing 341 to 360 of 1677 Records
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2016 (9) TMI 1343
Admit on the following substantial questions of law.
(1) Whether the provisions of 194 LA qua the TDS are to be determined only on the basis of records furnished by assessee and no inquiry, investigation, physical varification is permissible/desirable at the end of assessing officer to ascertain the nature of land whether it is agricultural or non agricultural?
(2) Whether General law can override the provisions of Income Tax Act when the Special Act defines agricultural land, Agricultural income and provisions of Chapter-XVII and intends to Tax the land on which no agricultural operation are carried out as per mandate of Sections 2 (1A), 2(14), 2(24), 2(31), 10(1A) and 194LA?
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2016 (9) TMI 1342
Non-service of the intimation for appearance - principles of Natural justice - Held that: - There is no doubt at all that the order dt. 26.6.2015 was passed by Tribunal exparte in absence of appellant who makes the above grievance for non-service of the intimation for appearance - Registry is directed to record restoration of appeal in its register for issuance of notice in due course, for hearing of appeal - appeal restored.
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2016 (9) TMI 1341
Revision u/s 263 - addition under section 40A(2)(b) - exercise of revision jurisdiction even when an assessment is framed without any enquires - Held that:- It is an undisputed fact that the Assessing Officer had framed a regular assessment. He issued section 142(1) notice dated 23.12.2011. Specific query seeking details of the impugned interest expenses raised. This question raised is at sl. no.19. The assessee filed reply thereto placing on record all necessary details for the interest expenditure in question. Page no.35 is annexure-III depicting comparative chart of the two payees. DR raises a very strong objection that the assessee has not deliberately placed on record Annexures-I & II filed before the CIT. We put up a special query as to whether there is any attempt to mislead the bench or contents of the relevant paper book are not correct. The reply received is in negative. The Revenue’s objection is accordingly overruled.
We proceed further to notice that the assessee had acquired the sum in question of ₹ 5 crores in lieu of reserving 50000 sq. mtr. plot in its project submitted in correspondence with the payee dated 04.08.2008. It accepted MPSEZ’s booking withdrawal on 01.04.2009 sought vide letter dated 17.03.2009 with interest stipulation @ 18% till actual payment. Assessee’s ledger maintained disclosing payment of ₹ 5 crores and interest in question made between 18.02.2010 to 26.03.2010. All this followed the regular assessment dated 28.05.2012 not making any interest disallowance. These facts indicates that the Assessing Officer had made all due enquiries, examined the interest issue in question and find it a fit case for not invoking section 40A(2)(b) of the Act.
At this stage relies upon section 263 Explanation 2 inserted in the Act by the Finance Act 2015 w.e.f. 01.06.2015 envisaging exercise of revision jurisdiction even when an assessment is framed without any enquires and verification which should have been, in the opinion of revisional authority, deemed to be erroneous in so far as prejudicial to the interest of the revenue.
Next argument of the assessee is that it is payee M/s MPSEZ has already been assessed at maximum marginal rate. It quotes board’s circular dated 06.07.1968 clarifying that an interest expenditure is not to be disallowed in case there is no tax saving at payee’s behalf. Learned authorised representative places on record M/s MPSEZ’s return filed for the impugned assessment year itself stating net total income of ₹ 1,27,39,970/- i.e. taxable at maximum rate. There is no rebuttal coming at Revenue’s instance.
Assessee’s third argument is that its interest outgo of 18% & 10% in question is very much distinguishable. We have already indicated in preceding paragraphs that assessee had incurred 10% interest qua a claim raised under section 36(1)(ii) of the Act in respect of capital borrowed as against that @ 18% in question arising from retention of booking advances of ₹ 5 crores. These two interest sums stand on different footings. We find that hon’ble jurisdictional high court in case of CIT vs. Sarjan Realties Limited (2014 (8) TMI 206 - GUJARAT HIGH COURT) is of the view that section 40A(2)(b) disallowance does not arise because of the mere fact that an assessee has paid different interest rate to different payees thereby comparing the same in order to hold the higher outgo as excessive. There is no issue that the CITs finding in question take into account assessee’s interest expenses difference i.e. 18% and 10% (supra) for directing AO to frame a fresh assessment. These two interest sums arise in totally different backgrounds not having any similarity. We are further of the opinion that the CIT has erred in directing the Assessing Officer to frame a fresh assessment in these peculiar facts and circumstances. We accept assessee’s arguments to reverse the CIT’s order under challenge in view of our discussions hereinabove. No other point was argued in the course of hearing except those specifically dealt in our instant adjudication. Assessee’s appeal is allowed
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2016 (9) TMI 1340
Early disposal of proceedings - The petitioner’s grievance is that the respondents - Customs authorities are not concluding their proceedings expeditiously - goods imported for re-export, abandoned - Held that: - The materials on record show that the respondents acted on the basis of the information by the DRI and have seized the goods - the respondents shall take steps to conclude the investigation and take appropriate follow-up action as is necessary having regard to the outcome of the investigation at the earliest convenience - petition allowed.
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2016 (9) TMI 1339
Refund claim - Section 27(1) of the Customs Act, 1962 - rejection on the ground that as per the proviso (3) to Section 26A ibid, no refund of custom duty on the imported goods shall be granted in case an offence has been committed at the time of import - Held that: - it is evident from the fact of this case that the subject goods were not cleared by the Department for home consumption. Hence, the duty paid on such goods should be eligible for refund under Section 27 ibid - appeal allowed - decided in favor of appellant.
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2016 (9) TMI 1338
Additional depreciation claimed under section 32(1)(iia) - disallowance of claim on new plant and machinery on the methodology that 50 per cent. of 20 per cent. of the new plant and machinery installed after 30th September and the rest in the ensuing year - Held that:- This is a case where the assessee has purchased and installed the new plant and machinery during the preceding assessment year, i.e., the assessment year 2011-12. The said new plant and machinery was purchased and installed in the preceding assessment year after September 30, 2010 and therefore, in the preceding assessment year the assessee was allowed 50 percent. of the additional depreciation allowable at 20 per cent. in respect of the new plant and machinery which has been put to use during the previous assessment year for less than 180 days, i.e., in the preceding assessment year the assessee was allowed additional depreciation at 10 per cent. in respect of the new plant and machinery. During the impugned assessment year the assessee claimed the balance 50 per cent. of 20 per cent. i.e. 10 per cent. additional depreciation on these plant and machinery which were installed during the preceding assessment year after 30th September. There is no dispute about the working of the additional depreciation. There is no dispute that the assessee was entitled for additional depreciation in the plant and machinery acquired and installed in the preceding assessment year. In our opinion, now this issue is duly covered by the decision of the hon'ble Karnataka High Court in the case of CIT v. Rittal India P. Ltd. [2016 (1) TMI 81 - KARNATAKA HIGH COURT]. Thus Additional depreciation being 50 per cent. of 20 per cent. of the cost of new plant and machinery installed by the assessee during the preceding assessment year after September 30, 2010 as has been allowed to the assessee in the preceding assessment year i.e. the assessment year 2011-12 allowed - Decided in favour of assessee.
Addition u/s 14A read with rule 8D(2)(ii) - - Held that:- The provisions of section 14A(2) are explicitly clear. This provision does not empower the Assessing Officer to disallow any expenditure by just applying directly, rule 8D. No contrary decision was brought to our knowledge by the learned Departmental representative as against Shri Laksyhmi Cotsyn Ltd. case [2016 (11) TMI 957 - ITAT LUCKNOW] which may take a view that the Assessing Officer can compute the disallowance under rule 8D without recording the non-satisfaction about the creditworthiness of the claim of the assessee in respect of the expenditure in relation to the income which does not form part of the total income on the basis of the account of the assessee. Respectfully following the aforesaid decision, we set aside the order of the Commissioner of Income-tax (Appeals) so far it relates to the sustenance of disallowance of ₹ 9,76,395 and confirm the order of Commissioner of Income-tax (Appeals) so far it relates to deletion of disallowance
Disallowance made under section 36(1)(va) - amount not deposited the employees' contribution towards PF and ESI within the prescribed due date although the payment was made before the due date of filing of the return - Held that:- We noted that the said issue is duly covered by the decision of the honourable Supreme Court in the case of CIT v. Alom Extrusions Ltd. [2009 (11) TMI 27 - SUPREME COURT]. Respectfully following the said decision of the honourable Supreme Court, we confirm the order of the Commissioner of Income-tax (Appeals) deleting the disallowance.
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2016 (9) TMI 1337
Addition u/s 68 - assessee failed to establish the identity, genuineness and creditworthiness of the share applicants - Held that:- all the share applicants stand identified. The assessee has provided permanent account numbers of the share applicants. The mode of payment has also been explained. There is no direct or indirect relation between the assessee-company and the share applicants. The statements recorded during survey has got no evidentiary value without any supporting documents or evidence. - Decided in favour of assessee.
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2016 (9) TMI 1336
Eligibility to deduction under section 80IA - Held that:- The audit report submitted by the assessee during the assessment proceedings and not along with the return of income does not debar assessee from claiming the deduction u/s 80IA as held by Hon’ble Delhi High court in CIT Vs. Centimeter Electricals Ltd. [2008 (12) TMI 4 - HIGH COURT DELHI ] that requirement of filing the audit report along with the return is not mandatory but directory and therefore if the audit report is filed at any time before passing of the assessment order it satisfied the requirement. Therefore on this ground deduction cannot be denied to the assessee. In view of the above facts and following the decision of the coordinate bench in assessee’s own case for earlier years we set aside the issue back to the file of Assessing Officer to grant deduction to the assessee in similar manner. - Decided in favour of assessee for statistical purposes
Addition of outstanding amount in subscriber deposit account - Held that:- . We do not agree with the finding of the ld CIT(A) to the extent of confirmation of the addition partly merely because reconciliation in these accounts with respect to the live connections are pending. The observation of the ld CIT(A) is also not correct that assessee submitted that this amount is under reconciliation and to that extent such credits are not fully explained. Before him assessee submitted that it is under reconciliation. Further when the character of deposit is determined, looking to the nature of operation geographically as well as large subscriber’s base, it is not correct to hold that pending reconciliation the deposit become income of the assessee. In view of this we set aside this issue back to the file of the Assessing Officer to give proper opportunity to the assessee to provide reconciliation of the same and then if the amounts are not at all identifiable with respect to the customers then to that extent addition may be restricted. However, if this amount is identifiable with the subscriber and even if it is not claimed by the subscriber despite disconnection of the services assessee is under obligation to repay whenever demanded by the customer. Therefore, ld Assessing Officer is directed to grant an opportunity to the assessee for reconciliation of the above deposit as held above and then decide the issue afresh.
Also disallowance of interest accrued on outstanding subscriber deposit also set aside to the file of the Assessing Officer to determine amount of disallowance of interest after determining the amount of taxability of subscriber deposit.
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2016 (9) TMI 1335
N.P. rate determination - Held that:- The assessee submitted that he earned his commission income of ₹ 61,546/- @3% after deducting various expenses. Therefore, the AO estimated NP of 10% on turnover of ₹ 3,07,73,348/- and made the addition of ₹ 30,73,334/-. I further find that assessee had not disclosed these transactions in return of income and neither at assessment nor at appellate stage did he submit any cogent evidence that these transactions relate to commission income. Therefore, Ld. CIT(A) applied NP rate of 8% instead of 10%, which is quite reasonable and justifiable and rightly sustained the addition to the extent of ₹ 24,61,867/- and accordingly, the assessee gets a relief of ₹ 6,11,467/-, which does not need any interference on my part, hence, WE uphold the order of the Ld. CIT(A) on the issue in dispute and accordingly, the appeal of the Assessee is dismissed.
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2016 (9) TMI 1334
TPA - ALP determination - MAM selection - TNMM OR CUP Method - Held that:- TPO, as in the previous year, accepted TNMM as the most appropriate method with regard all the international transactions of the assessee except the receipt of inter group services.
The TPO applied an approach similar to Bright Line Test Approach under the Comparable Uncontrolled Price (CUP) method to ascertain the arm’s length price of the inter group services received. He made an adjustment of ₹ 16.06 crore. The DRP followed the earlier year’s approach and accepted part of the services to be at arm’s length and upheld the balance adjustment of 13.48 crore. The TPO did not follow the orders of the DRP and in the final assessment order made an adjustment of ₹ 16.06 crore. The assessee has moved an application u/s 154 of the Act for rectification of the mistake. This is pending adjudication. We find that the very same issue has been dealt by the Tribunal in the assessee’s own cas for AYs 2007-08 and 2008-09 [2015 (12) TMI 1620 - ITAT DELHI]. Consistent with the view taken herein, we uphold the contention of the assessee and delete the TP adjustment. Appeals of the assessee are allowed.
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2016 (9) TMI 1333
Validity of assessment proceedings initiated u/s 153A - incriminating materials found - Held that:- As per the ratio laid down by Hon'ble Delhi High Court in case of Kabul Chawla (2015 (9) TMI 80 - DELHI HIGH COURT ), only pending assessment can abate and completed assessment remain unaffected unless Assessing Officer has any seized material that can justify the addition.
In this case, return of income for the year under consideration was filed on 06.11.2007 has attained finality on passing the assessment order u/s 143(3) on 30.12.2008. As it is observed from the records placed before us that there has been no reference to any incriminating document in respect of the addition made by the Assessing Officer. The Assessing Officer has completed the assessment and made addition without there being any seized material / documents.
The case of the assessee is squarely covered by the decision of CIT Vs Kabul Chawla (supra). For the reasons set out above, we uphold that legal issue raised by the assessee in the cross objection and hold the impugned assessment as null and void. - Decided in favour of assessee.
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2016 (9) TMI 1332
Adjustment made by the TPO on account of AMP expenses incurred by the assessee - Held that:- Both the parties agreed that in view of the decision of Hon’ble Delhi High Court in the case of Sony Ericsson Mobile Communications Vs. CIT (2015 (3) TMI 580 - DELHI HIGH COURT) the matter needs to be restored back to the file of ld. AO/TPO for de novo consideration.
Disallowance of market to market loss of restatement of assets and liabilities as on balance sheet date - Held that:- Accounting Standard 11 states that all unpaid monetary liabilities should be restated at closing value as on the balance sheet date. Any exchange gain or loss arising thereon is considered as an income or an expenditure as the case might be
Thereafter ld. DRP considered the CBDT Instruction relied upon by AO and observed that MTM loss claimed by the tax payer was on actual monetary items appearing in the balance-sheet due to their reinstatement and not on forex derivatives. The department has not brought any material to controvert these factual aspects noted by ld. DRP. We, therefore, sustain the order of ld. CIT(A) following the decision of Hon’ble Supreme Court in the case of Woodward Governor India P. Ltd. (2009 (4) TMI 4 - SUPREME COURT) wherein it has been held that the loss incurred by the assessee on the date of balance-sheet is an allowable loss u/s 37(1).
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2016 (9) TMI 1331
Deduction under section 10B - Held that:- The issue was set aside to the AO to find out whether the assessee has earned profit on sale of outsourced items and claimed deduction under section 10B of the Act. The profit derived by an assessee on self-manufactured item was considered to be eligible for deduction under section 10B of the Act. No such circumstances are there in the present appeals. Therefore, in our opinion, the ld.CIT(A) has erred in allowing deduction to the assessee in both these years. We set aside order of the ld.CIT(A) and restore that of the AO on this issue.
The assessee is not entitled for any deduction under section 10B in these assessment years, then, whether this claim of interest income is admissible or not, would be altogether an irrelevant issue. The assessee is not entitled for the deduction under section 10B of the Act, because at threshold, ten years have already been expired. In view of the above discussion, both the appeals of the Revenue are allowed.
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2016 (9) TMI 1330
Reopening of assessment - assessee being a mutual benefit organization, was not entitled for exemption u/s 11 in respect of interest income and rental income - Held that:- It is undisputed that the receipt, other than the interest income and rental income, is from the members of the club and, therefore, would fall within the ambit of mutuality as defined by Hon’ble Apex Court in the case of Bankipur Club Ltd. (1997 (5) TMI 392 - SUPREME Court). The Assessing Officer had also accepted that the assessee club is entitled to benefit of mutuality. In our opinion, the view taken by the Assessing Officer is well –supported by the decision of Hon’ble Apex Court in the case of Bankipur Club Ltd. (supra), Chelmsford Club (2000 (3) TMI 4 - SUPREME Court) as well as Bangalore Club (2013 (1) TMI 343 - SUPREME COURT). Therefore, on this point, we reverse the order of learned CIT(A) and restore that of the Assessing Officer i.e., all receipts of the assessee club except receipt from interest as well as rent is out of the purview of taxation on account of the doctrine of mutuality. Insofar as interest income and rental income are concerned, we, respectfully following the above hold that the same cannot be said to be governed by the concept of mutuality because the receipt is not from the members of the club. Accordingly, the assessment of these two incomes in the hands of the assessee is upheld.
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2016 (9) TMI 1329
Reopening of assessment - whether the assessee has rightly accounted for claim received from the Insurance Company for plant and machinery and fixed assets or the same should have been accounted for in AY 2005-06 and 2006-07? - Held that:- Since the assessee did not have break up of the claim received from the Insurance Company in the assessment years 2005-06 and 2006-07 which was finally received in AY 2007-08 and this was correctly accounted for by the assessee. The disallowance of depreciation by the AO by reopening the assessment in assessment year 2005-06 has resulted into double disallowance one by the assessee suo mottu in assessment year 2007-08 and secondly by the AO in assessment year 2005-06 and 2006-07 which is not correct in terms of provision of the Income Tax Act, 1961 as the same disallowance cannot be made twice. The depreciation has to be allowed in one year. Moreover, while framing the assessment u/s 143(3) read with section 147, the AO has not carried out any rectification in respect of assessment year 2007-08 or nor any such direction was given by ld.CIT(A). In view of this, it would be reasonable and proper if the disallowance as made by the AO in AY 2005-06 is deleted. - Decided in favour of assessee.
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2016 (9) TMI 1328
TPA - application of turnover filter - Held that:- We are of the view that the turnover filter must be applied not as a tool for cherry picking at a later stage but at the time of the search process and by applying a quantitative filter. It can not be one sided process to exclude companies after the qualitative level based on FAR analysis where no filter has been applied in the earlier. Consistency also requires that it can not be used to exclude it in an individual given year, when it has not been applied in earlier year and subsequent year. There can not be a pick and choose of comparables every year unless there are some material differences in facts and circumstances. Therefore, based on the above cited reasoning we direct the DRP/TPO/AO to delete this addition.
Determination of higher profitability for advertisement receipts received by STAR Ltd. - whether it was a Non-Associated Enterprise (Non-AE) receipt, hence, outside PSM - Held that:- We noticed merit in the submissions of the Ld. AR for the assessee, as the combined net profit as per the PSM under Rule 10B (1) (d) at 17.30% has been found to be at arm’s length except for the exclusion of 3 companies for 10% turnover filter applied by the TPO. On the present facts, all the international transactions in respect of the advertisement and distribution stream cannot be separated. We therefore set aside the orders of lower authorities on this issue and restored the same back to AO/TPO for deciding afresh in terms of our above discussion.
Disallowance of foreign content fees and uplinking cost under Section 40(a)(ia) - Held that:- We noticed the merit in the submissions of the Ld. AR for the assessee, hence, in the light of the order of AO and the Hon’ble ITAT for A.Y. 2007-08 in the case of assessee that disallowance under section 40(a) (i) of the Act uplifted the profitability and increasing the assessee’s profit chargeable to tax in India. It is wholly inconsistent and contrary to Law, not to allow the reversal in the years when the taxes have been deducted and paid in accordance with section 40(a) (i) of the Act, merely on the erroneous contention that no disallowance had been made by him under section 40(a) (i) of the Act in A.Y. 2007-08 while determining the final taxable income at 27.18%, therefore, we allow the appeal of the assessee on this ground.
Disallowance of Transponder hire charges under section 40(a)(i) paid to Asia Sat while computing the profitability of 22.57% - Held that:- As gone through the facts and circumstances of the case and perused the material available on record. We noticed that the provisions of section 195 of the Act do not apply to transaction between one non-resident to another non-resident and it is supported by the case law cited above, therefore, we allow the appeal of the assessee on this ground.
Double disallowances of Transponder hire charges under section 40(a) (i) paid to Asia Sat - Held that:- We noticed the merit in the proposition canvassed by the Ld. AR for the Assessee, as he submitted that the assessee had already made disallowance under section 40 (a) (i) of the Act while computing PSM profit percentage and despite the same the AO also made further disallowance under section 40(a) (i) of the Act again, which is not justified, accordingly we direct the AO to verify the same should delete the addition after proper verification. We direct accordingly.
Levy of interest under section 234B and 234C - Held that:- We noticed the merit in the proposition of the assessee and found that, if the non-resident assessee is not liable to pay advance tax then there is no any question to levy interest under sections 234B and 234C of the Act. For this purpose reliance can be placed on the decision of Bombay High Court in the case of DIT Vs. NGC Network Asia LLC, (2009 (1) TMI 174 - BOMBAY HIGH COURT) wherein similar issue has been decided by the Bombay High Court, and therefore, we allow the assessee’s appeal on this ground.
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2016 (9) TMI 1327
Rejection of books of account - applying net profit rate @ 8% - Held that:- Apart from facts the bills and vouchers cannot be admitted as there were neither filed during the course of assessment proceedings nor during the course of remand proceedings and there is no justification offered for the same. No respectability is attached to these vouchers filed at this stage particularly when payments are paid in cash in respect of these bills. Looking into these facts it is to be held that books of accounts are not reliable and therefore rejection of the same is upheld. Similarly, estimating the net profit @ 8% is also as proper on the facts and the case.The first ground is therefore rejected.
Addition u/s 68 towards unexplained cash credit - Held that:- All the impugned transactions of cash credits are duly explained and identity, genuineness and creditworthiness of each of them are proved in the form of bank account, confirmations, reply of cash creditors u/s 133(6) of the Act in some cases, confirmation leters. We are, therefore, of the view that addition u/s 68 needs to be deleted.
Disallowance u/s 41(1) - Held that:- No addition is called for u/s 41(1) of the Act with regard to the sundry creditors. See CIT vs. Bhogilal Ramjibhai Atara [2014 (2) TMI 794 - GUJARAT HIGH COURT]
Disallowance of depreciation - Held that:- As regards addition on account of plant and machinery, assessee produced bills of ₹ 2,90,183/- for verification. For the remaining amount of addition towards factory building and plant and machinery assessee neither produced any evidence before the assessing authority nor ld. AR has been able to improve his case further than over the facts brought in before the assessing authority in remand report. We are, therefore, of the view that out of the disallowance of depreciation of ₹ 90,730/- assessee should be allowed depreciation on ₹ 729/- towards factory building and depreciation on plant and machinery at ₹ 2,90,183/- as per applicable rates and on the basis of date of purchases of assets. We direct the Assessing Officer to calculate the depreciation accordingly.
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2016 (9) TMI 1326
Disallowance of assessee’s claim of interest on refund - Held that:- CBDT abiding by the view expressed by the Hon'ble Supreme Court in Tata Chemicals Ltd. (2014 (3) TMI 610 - SUPREME COURT ) had issued Circular no.11 of 2016 dated 26th April 2016, wherein, it is stated that if a resident deductor is entitled for refund of tax deposited, then it has to be refunded with interest under section 244A from the date of payment of such tax. In the said Circular, Departmental Authorities have also been advised not to contest the claim of interest in appeal. Thus, in view of the decision of the Hon'ble Supreme Court as referred to above and the CBDT circular no.11 of 2016 dated 26th April 2016, we hold that the assessee is entitled to receive interest on excess TDS refunded to him from the date of payment.
Interest on interest - Held that:- The primary facts relating to the payment of excess TDS to the Government account as well as claim of interest on refund are available in the records of the Department, therefore, the legal issue pertaining to the assessee’s claim of interest on interest can be decided on the basis of those facts. In that view of the matter, the learned Commissioner (Appeals) was not justified in rejecting additional ground raised by the assessee. We, therefore, restore this issue back to the file of the Assessing Officer for deciding assessee’s claim of interest on interest in the light of the facts and material on record and in consonance with the relevant statutory provisions as well as the decisions which may be relied upon by the assessee.
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2016 (9) TMI 1325
Rejection of account books u/s. 145(3) - computing the net profit from contract business by applying net profit rate of 8% on the gross receipts as contemplated u/s. 44AD - Held that:- In the instant case, the authorities below have applied the net profit rate of 8% on gross receipts as per section 44AD which section does not apply to the present case, as the assessee is not a civil contractor but is engaged in the business of electro-mechanical and civil engineering contractor and carried out the erection of Extra High Voltage Overhead transmission lines, installation of underground EHV power cables, Microbe and telecom towers, repair and maintenance of EHV transmission and distribution equipments for electrification.
The turnover of the present assessee exceeds the sum of ₹ 40 lacs which bars the application of section 44AD or the profit rate prescribed therein. Therefore, the conclusion reached by AO to apply the profit rate as contemplated u/s. 44AD cannot be supported. CIT(A) has justified the profit rate of 8% after considering the results of assessment year 2006-07 in the instant case for A.Y. 2003-04, which is not appropriate.
The profit rate applied by the authorities below is not based on correct appreciation of facts or any rational. In order to justify the best judgment assessment, support could be derived from the previous history of the assessee and the comparable cases of the same line of business. We deem it expedient in the interest of justice to restore the matter to the file of AO for deciding the issue afresh in view of the observations made in the body of this order. Accordingly, the appeal of the assessee deserves to be allowed for statistical purposes.
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2016 (9) TMI 1324
Addition on account of addition to partners’ capital - Held that:- Both the partners are assessed to tax separately. CIT(Appeals) specifically noted in his findings that partners have made deposit in the accounts of the assessee firm therefore, when the partners of the assessee firm have accepted having made deposit in the assessee's firm in their capital account, no addition could be made against the assessee firm of the aforesaid amount. Since both the partners are assessed to tax separately, therefore, these amounts may be considered in their individual cases. The impugned addition in the hands of the assessee firm is, therefore, wholly unjustified. The judgements relied upon by ld. counsel for the assessee above squarely support the case of the assessee that addition is wholly unjustified in the hands of the assessee firm.
Set aside the orders of authorities below and delete the addition in the hands of the assessee firm. - Decided in favour of assessee.
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