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Showing 401 to 420 of 1404 Records
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2016 (10) TMI 1004
Valuation - enhancement of value of the item Copra Expeller Cake where values of US$ 145 and US$ 142 per MT have been enhanced to US$ 158 per MT - Held that: - The Revenue has enhanced the value giving the reason that the goods having same description were being cleared through Tuticorin Port at US$ 158 per MT. We find that the subject goods have been imported at Cochin Port and the value cited for comparison by the Revenue is for the goods which were imported at Tuticorin Port. Further, Revenue does not mention anything about quality and quantity of the goods with which the comparison has been made - The importer-appellant produced the relevant documents in support of the invoice value, however, the lower Revenue authorities did not give any reasons for rejecting the contents of the said documents.
The orders of the lower Revenue authorities do not have sufficient legal justification to sustain the enhancement of the values; the enhancement of values ordered by the impugned orders appears to be more in the nature of an arbitrary act; and therefore, it is unsustainable.
Reliance placed on the decision of the case of Eicher Tractors Ltd. vs. CC, Mumbai [2000 (11) TMI 139 - SUPREME COURT OF INDIA].
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2016 (10) TMI 1003
Appeal admitted on the following reframed substantial question of law:“
Whether on the facts and circumstances of the case and in law, the Tribunal was justified in directing the AO to treat the profit arising on the frequent and voluminous transactions initiated with borrowed funds in shares as 'Short Term Capital Gain' instead of 'Business Income'?”.
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2016 (10) TMI 1002
Recognition certificate holder u/s 8-A of the U.P. Trade Tax Act, 1948 - Section 4-B of the Act - purchases of raw material at the concessional rate of tax against Form III-B - purchases of natural gas against Form III-B at the concessional rate of tax, and manufacture of the notified goods, fertilizers, transferred outside the State of Uttar Pradesh - Whether under the facts and circumstances of the case, the Commercial Tax Tribunal were legally justified in granting the exemption on purchase of raw material against Form III-B whereas the dealer has made a stock transfer of finished goods which is not permissible under law?
Held that: - Sub-section (2) to Section 4-B requires that the notified goods should be “intended” to be sold by the dealer within the State or in the course of inter-State trade or commerce or in the course of exports out of India. The expression “intended” is significant and important. It refers to the intention of the dealer after the goods are manufactured and packed. The expression “in the course inter-State trade or commerce” is quite broad and wide. An issue may arise as to whether the stock transfer outside the State in terms of directions issued by the Central Government can be considered as sale or transaction in the course of inter-State trade or commerce.
Sub-section (6) is a specific provision which deals with the case of the dealer who has been issued the recognition certificate and has purchased goods without payment of tax or at concessional rates, but has sold the manufactured goods or packaged goods otherwise than by way of sale in the State, or in the course of inter-State trade or commerce or export out of India. The provision specifically deals with cases where the dealer manufactures or packs the notified goods and has taken benefit of lower/concessional or nil rate of tax on the raw material but is unable to fulfill the intendment, i.e., he has not been able to sell the notified goods by way of sale within the State or in course of inter-State state or commerce or by way of export. In such cases, the dealer is liable to pay the amount of difference on the amount of sale or purchase of such goods on which concession or nil rate of tax was paid on account of issue of the requirement certificate and the amount of tax calculated @ 4%. The sub-section is a particular and a specific section which deals with and specifies the consequences when the dealer is unable to meet and comply with intendment. The sub-section (6) would, thus, be applicable.
Section 3-B undoubtedly commences with a non-obstante clause, but the provision has to be read harmoniously with sub-section (6) to Section 4-B. Any other interpretation would make sub-section (6) a dead letter, for if we accept the plea of the Revenue whenever there is violation or failure to abide with the “intendment”, Section 3-B would be invoked and applied, not sub-section(6) to Section 4-B. Section 3-B would apply when a false and wrong certificate or declaration is made. Sub-section (6) on the other hand, deals with cases where the dealer is unable to comply with the intendment, i.e., for some reason he is unable to sell the goods within the State, export them or sell them in the course of inter-State trade or commerce. Intendment of the said nature has not been treated as false or wrong declaration as consequences have been prescribed in sub-section (6). It is essential to be stated that consistency and certainty in tax matters is necessary. In cases relating to “Indirect Taxation”, this principle is even more important. Clarity in this regard is a necessity and the interpretative vision should be same.
Appeal dismissed - decided against Appellant.
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2016 (10) TMI 1001
Validity of order of assessment - large tax payers unit - dealer who falls within the jurisdiction of a 'large tax payers unit' has been dealt with in an arbitrary and unreasonable manner in the matter of production of C-Forms - Held that: - this Court is of the view that the assessment should be redone and the petitioner should be afforded an opportunity of personal hearing, moreso, when the petitioner would now take a stand that they have received C-Forms from their clients who are all registered dealers. In the impugned order, the respondent has not disputed the fact that the petitioner's clients are registered dealers in other States. Further, the petitioner has questioned the formula which has been adopted for reversal of the Input Tax Credit. Adequate opportunity having not been granted to the petitioner, the impugned order is held to be in violation of principles of natural justice - Writ Petition allowed - the impugned order set aside - matter remanded to the respondent for fresh consideration, who shall afford an opportunity of personal hearing, after receiving the C-Forms that may be produced by the petitioner and redo the assessment in accordance with law.
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2016 (10) TMI 1000
Demand and recovery of tax after 1485 days - validity of assessment orders - the assessment for the years from 1983-84 to 1996-97 were framed by the assessing authority by passing orders on different dates in April, 2002 - limitation bar u/s 11 (4) of the Act - Held that: - the decision in the case of State of Punjab and others vs. Patiala Cooperative Sugar Mills Limited, Rakhra, District Patiala [2015 (9) TMI 1327 - PUNJAB AND HARYANA HIGH COURT] relied upon where it was held that assessments upto the years 1997-98 could not validly be passed after April, 2001 - all assessment orders barred by limitation.
Condonation of delay not considered as will be a futile exercise to conduct another round of litigation as the matter is already decided on merits - appeal of state dismissed - tax cannot be recovered after 5 years - decided against Revenue.
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2016 (10) TMI 999
Maintainability of appeal when AO has rectified or refused to rectify an order - validity of Return memo - return of appeal petitions filed by the petitioner against the rectified assessment orders - appeals presented after a gap of more than ten months from the date of original order of assessment - what would be the effect of a rectified order? - Section 55(4) of the Act - Held that: - similar issue decided in the case of State of Tamil Nadu vs. Sabarigir Industries [2014 (3) TMI 193 - MADRAS HIGH COURT] where it was held that When the rectification proceedings resulted in a positive action, which has the effect of destroying the finality of original assessment, thereby reopening the assessment order itself, then the provisions relating to appeal would lie. On the other hand, when the Assessing Officer refuses to interfere with the original order and that order is allowed to remain intact, the said order would not be amenable normally to appeal remedy. In so holding, this Court referred to the provisions under Section 55(4) of the Tamil Nadu General Sales Tax Act, 1959, inserted by Amendment Act No. 31 of 1972, providing for appeal and revision remedy when an order of rectification is made, and not when the authority concerned refuses to pass an order of rectification - decided against Revenue.
Whether the appeal petition, which was filed after the passing of the revised order of assessment, could be held to be presented within time, in accordance with the provisions of Section 31 of the Tamil Nadu GST Act and whether remittance made by the petitioner recording the pre-depsoit was valid? - Held that: - The decision in the case of State of Tamil Nadu vs. E.P.Nawab Marakkadai [1995 (8) TMI 293 - MADRAS HIGH COURT] relied upon and it was held that limitation for filing the appeal would commence from the date of receipt of the rectified order i.e. dated 1.6.2016 and if the said date is reckoned, then the appeal petition is still within the period of limitation.
Petition disposed off - impugned return memos are set aside, leaving it open to the petitioner to raise all the contentions before the Appellate Authority. The petitioner is directed to re-present the appeal along with a copy of this order and the Appellate Authority shall entertain the appeal and deal with the same in accordance with law - decided partly in favor of petitioner.
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2016 (10) TMI 998
Trademark licence fee payments - claim of expenditure u/s 37(1) - commercial expediency - Held that:- The assessee is exploiting the trademark "REDINGTON" for the purpose of carrying on its business. Therefore, there is nothing uncommon in assessee's making payment to the use of the trade-mark to M/s Redington Distribution Pte. Ltd., Singapore. It is not necessary for the TPO to go beyond this plausible explanation, since it is a widely accepted business practice around the world. This is not an unique case for the assessee company alone. Further, it is for the assessee to decide the dynamics of its business. The assessee is the best judge to decide on such issues. The Hon'ble Supreme Court in the case of S.A. Builders vs. CIT (2006 (12) TMI 82 - SUPREME COURT ) has held that any expenditure incurred by the assessee, if justified by commercial expediency, is an expenditure allowable for the purpose of taxation and what is commercial expediency is a matter to be decided by the assessee. In the facts and circumstances of the case, the said addition is deleted.
Disallowance under Section 14A - Held that:- We remit the issue back to the file of the Assessing Officer to verify and exclude the investments made in subsidiary companies for the purpose of calculation of disallowance under Rule 8D(2) of the Income-tax Rules, 1962 and also verify interest expenditure whether directly attributable to the exempt income.
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2016 (10) TMI 997
Addition u/s 68 - Held that:- In the instant case, we notice that the assessee has furnished copies of Certificate of Incorporation of the share applicants and the PAN numbers. The same establishes their identity. It is not in dispute that the share application money was received through banking channels. In fact, the AO himself has verified the same by calling for account copies from the respective bank accounts. Hence the genuineness of the transaction also stands proved.
All the share applicants are also regularly filing return of income and the assessee has furnished copies of returns of income filed by them. It is seen that these companies have made other investments also. Thus, we notice that the assessee has discharged the initial onus placed upon it u/s 68 of the Act. - Decided in favour of assessee
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2016 (10) TMI 996
Allowability of deduction u/s 80IAB on the interest - netting off of interest expenses against the interest income - Held that:- The interest income received by the assessee is inextricably linked with the business of the Assessee and is therefore eligible for deduction u/s.80IAB of the Act more so when interest income has been taxed as business income and not as “income from other sources” by the Revenue meaning thereby that the income from interest being business income has accepted by Revenue. We are of the view that the interest income is eligible for deduction u/s 80IAB of the Act. Further we also find that while deciding the issue of netting off of interest expenses against the interest income, ld.CIT(A) has allowed netting of interest income against interest expenses for the reason stated by ld.CIT(A) in his order. In such a situation the netting off of interest income against the interest expenses also does not require interference. We thus allow this ground of the Assessee.
Disallowance u/s.14A - Held that:- In the present case, it is an undisputed fact that the assessee has earned exempt income of ₹ 33,01,981/- and the disallowance u/s.14A r.w.s.Rule 8D has been worked out at ₹ 4,19,65,021/- which is about 1270 times the exempt income and thus the disallowance u/s.14A of the Act worked out by the AO is much more than the income liable to tax. Considering the facts of the present case in the light of the decision of Hon’ble Delhi High Court in the case of Joint Investments (P.) Ltd. vs. CIT (2015 (3) TMI 155 - DELHI HIGH COURT ) and in the absence of any contrary binding decision pointed out by Revenue, we are of the view that the disallowance as worked out by the AO is not warranted. We therefore direct that the disallowance u/s.14A in the present case be restricted to ₹ 33,01,981/-, being the exempt income, earned by the assessee. Thus, this ground of assessee is allowed.
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2016 (10) TMI 995
Disallowance of loss made on account of fire claim & loss of cylinders - Held that:- There is no dispute about the genuineness of the claim of the assessee about loss due to fire and insurance claim. Ld. Assessing Officer on presumption has held that the assessee has recouped loss without giving any cogent findings. Ld. CIT(A) has elaborately discussed the facts and circumstances; and based thereon has held that there is no evidence to substantiate the findings of the ld. AO. In view thereof, I see no infirmity in the order of the ld. CIT(A) on this issue which is upheld.
Disallowance u/s.40(a)(ia) - reimbursement of export clearing & forwarding charges without TDS which had been clubbed in same bill raised for contractual payments liable to TDS - Held that:- From the record it clearly emerges that the impugned amount paid by the assessee is in the nature of reimbursement of expenses for which there is no liability of TDS u/s 194H. The ld. AO has grassed over the pertinent facts which have been rightly streamlined by the ld. CIT(A). No infirmity in the order of the ld. CIT(A) on this issue, which is upheld.
Disallowance on account of Commission Expenses - Held that:- From the record it clearly emerges that the assessee has submitted full address and PAN of the commission agents. It is also observed that the amount has been paid through cheque by deducting TDS which clearly indicates that the services have been rendered by these commission agents for the appellant’s business. Therefore, find no infirmity in the order of the ld. CIT(A) on this issue, which is upheld.
Disallowance of interest u/s 40A(2)(b)- Held that:- CIT(A) has duly considered the factual aspect and demonstrated that the Barclays Bank loan in effective terms cost 18.31% to the assessee as against assessee has charged 18% from the related parties. Section 40A(2)(b) is not applicable to assessee’s case. Thus, the order of the ld. CIT(A) is upheld on this issue and this ground of the Revenue is dismissed.
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2016 (10) TMI 994
Determination of capital gain on transfer of land - long term capital gain v/s capital loss - Held that:- If we exclude the DVO’s report, there is no other evidence available with the AO, except the calculation submitted by the assessee based on an exercise of reverse indexation from the order of the Deputy Secretary, Revenue determining fair market value of the land in this area. Other evidence collected by the AO from Sub-Registrar was not considered by the AO himself, because, the DVO has reported value of this property at ₹ 192/- per sq.yard. Value considered by the AO at ₹ 2/- per sq.yard was not supported by any corroborative evidence. The assessee has pointed out that the rates considered by the AO were not of similar land. These were for agriculture land having different geographical locations, whereas the land sold by the assessee was of an industrial land. Therefore, the calculations made by the assessee deserve to be accepted. We set aside the orders of the Revenue authorities on this issue and direct the AO to take figure of long term capital loss of ₹ 52,50,759/-.- Decided in favour of assessee
Addition on on-money received over and above, the amounts stated in the sale deed - Held that:- AO failed to bring conclusive evidence on record to say that the assessee has received on-money. It is also pertinent to mention that AO has made an addition of ₹ 1,92,06,000/- in the total income of the assessee. To our mind, the AO has erred in making a separate addition. At the most, it could be part of total sale consideration, and the capital gain ought to be computed on the basis of taking this amount. A thought struck to our mind that let it be inquired again at the level of AO, but when we appraised ourselves about the ultimate tax effect on this exercise, then it revealed that even if for argument sake this amount is added, then, long term capital gain on it will be roughly ₹ 38 lacs. It will be set off against the LTC loss accepted at ₹ 52,50,759/-. The assessee is a salaried person. No carry forward of loss would affect him. Thus, in view of the above discussion, we are of the view that addition of ₹ 1,92,06,000/- is not sustainable in the case of the assessee, because AO failed to bring conclusive evidence on record. We allow this ground of appeal, and delete this addition. - Decided in favour of assessee
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2016 (10) TMI 993
Disallowances of various expenses - vouchers not produced - Held that:- We take note that in all these assessment years the assessments were completed under section 143(3) of the Act. The assessee is engaged in the same kind of business and without bringing any comparable cases and without rejecting the books of account, the estimation made on ad hoc basis cannot be countenanced. If there were any item-wise expenses, which could not have been supported by vouchers, then the Assessing Officer was at liberty to disallow the expenses item-wise and ought not to have gone for ad hoc disallowances. However taking into consideration the fact that certain vouchers regarding expenses could not be produced before the Assessing Officer to his satisfaction and taking into consideration disallowances made from assessment year 2008-09 to 2013-14, we would like to take an average of ad hoc disallowance which comes to 3%. Barring this year, we find that in assessment year 2008-09 onwards the ad hoc disallowances were @ 0.74%, 1.65%, 0.57%, 0.88% and in assessment year 2013-14 it was 2.47%. In such a scenario taking into consideration the fact that the Assessing Officer has made disallowance of 30.64% in this assessment year and the ld. CIT(A) has restricted it to 4.56%, it would be fair and reasonable if we could fix the percentage of disallowance at 3% and we order accordingly.
Addition on outstanding creditors for labour, stone cutting and polishing charges and outstanding labour dues payable - Held that:- The Assessing Officer asked for name and addresses of the individuals to whom the payments were out-standing and to ascertain this fact he issued notice under section 133(6) of the Act to 200 labours at the first instance and to 51 labours after some time. Out of that notices sent, 103 notices returned back with the postal remark that no one was residing and it was incomplete address. Therefore, we find from this fact itself that 148 notices could be served, which means more than 50% notices could be served on the labours to whom the assessee has to pay outstanding dues. Therefore taking into consideration the overall facts, wherein we have already taken note that from assessment year 2008-09 to 2013-14 the assessments were infact carried out under section 143(3) of the Act and disallowances have been very less when compared to this particular assessment year, however, taking into consideration that less than 50% of the notices have been received back without being served, it would be reasonable to both sides if we restrict the disallowance to 50% of ₹ 42,58,791/- which comes to ₹ 21,29,395/-
Ad hoc disallowance under the head labour charges - Held that:- Assessing Officer had sent notices to 241 labourers of which only 82 notices have come back. It means 159 notices have been served on the labourers. Therefore the list given by the assessee cannot be disbelieved in toto. There may be various reasons why the notices could not have been served on the labourers in the given addresses. These skilled labourers as we understand are mainly coming from Rajasthan and used to camp in an address/ place for some time which is adjacent to place of work and once the work is over or discontinued, they will move to other locations and thus addresses also keeps changing depending on the location of work they get. Moreover, these labourers cannot be presumed to be literate, so the address might also have some deficiencies and may be incomplete. We also take into account the fact that while adjudicating ground no. 2 of the assessee, we have sustained 50% of the outstanding credits inrespect to labour outstanding and sustained ₹ 21,29,395/-. So we are of the considered opinion that there is no need of any further disallowance and therefore, we delete the addition sustained by the ld. CIT(A) on this issue.
Disallowance under the head stone joining & cutting expenses - Held that:- We take note that out of the 51 letters sent, 21 came back which means that 30 notices could be served on the addresses of the labourers. The assessee has handed over the list of 319 labourers and the Assessing Officer preferred to send notices only to 51, out of which 31 could be served. So it cannot be said that the assessee has inflated the expenses by showing huge outstanding dues to the labourers. Not only that, we have already held above that ad-hoc disallowances should not be resorted to and if the Assessing Officer finds that the assessee is unable to produce vouchers item-wise, then the said expenses on those items can be treated as non-genuine and item-wise dis-allowance can be resorted to by the AO. The ad-hoc disallowance is an arbitrary exercise of power, which cannot be countenanced. Therefore, we delete the ad-hoc disallowance made on this count.
Ad-hoc disallowance with respect to business promotion of the unit - Held that:- We do not agree to the ad-hoc disallowances as made above. For the same reasons which we have reiterated hereinabove, we delete the ad-hoc disallowance sustained by the Ld. CIT(A) and, therefore, we direct deletion of ₹ 30,000/- on this issue.
Non-acceptance of agricultural income - Held that:- We take note that in the Assessment Year 2011-12, assessee has shown an income of ₹ 7,95,000/- as agricultural income of which ₹ 2,50,000/- has been disallowed by the Assessing Officer and in Assessment Year 2013-14, the assessee has shown an agricultural income of ₹ 4,50,000/- and the Assessing Officer has made disallowance of ₹ 1,50,000/- taking into consideration the overall facts stated by the Assessing Officer in respect to the yield from 7.3425 hectare as well as the Department’s stand on the agricultural income claimed by the assessee in subsequent assessment years, we are of the opinion that the confirmation made by the Ld. CIT(A) of ₹ 7,40,000/- is fair and reasonable, so we sustain it ; and therefore we dismiss both the assessee’s appeal as well as that of Revenue on this issue.
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2016 (10) TMI 992
Disallowance of expenses which were considered to be capital in nature by the AO - Held that:- We find that the ld.CIT(A) while deciding the issue has given a finding that considering the nature of activities undertaken by assessee, there is lot of wear and tear to the building which necessitates incurring of expenditure and the expenses were normal repair expenditure. He has further noted that going by the nature of expenses incurred it cannot be stated that any new asset has come into existence and that similar expenses were incurred by the assessee in earlier years and have been allowed by the Revenue in scrutiny assessments and that AO has not brought any material which could prove of bringing any new asset into existence or that the expenditure was towards replacement of existing assets. Before us, Revenue has not brought any material on record to point out any fallacy in the finding of ld.CIT(A).
Software expenses - revenue or capital expenses - Held that:- Revenue has not placed on record any material to demonstrate that the expenditure incurred by assessee is for the purchase any new software nor has pointed out any distinguishing feature in the facts of the case in the year under consideration and the facts of the case for earlier years. Before us Revenue has also not placed any material to demonstrate that order of the Coordinate Bench of Tribunal in assessee’s own case for earlier years has been set aside by higher judicial authorities. In view of the aforesaid facts and following the reasoning given by the Coordinate Bench while deciding the issue in earlier years, this ground of assessee is allowed.
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2016 (10) TMI 991
Addition on account of unaccounted receipts on the basis of certain loose papers in the form of chits found and seized during the course of search - Held that:- In the instant case, nothing is brought on record that the assessee in fact received any amount from Sh. Sohanraj Mehta. It is well settled that as per the provisions of Section 292(1) of the Act, the documents found during the course of search may be presumed to be belonging to the person in whose possession those documents were found, however, in the present case no such document was found from the possession of the assessee and in those documents which were found and seized during the course of search in Dhariwal Group of cases, there was no indication that the figures referred therein reflected any quantity of goods or amount of money which related to the assessee. It is not in dispute that the presumption available u/s 132(4A) can be drawn against the person in whose case search was authorized and from whose possession or control documents/books of account or diary etc. were found but the presumption regarding correctness of contents of those documents/books of accounts etc. can be raised against the third party only when the documents are speaking one. In the present case, no document was found from the possession of the assessee and a bunch of loose papers which were seized from the premises of third party did not indicate the unrecorded sales made to the assessee. Moreover, no opportunity was granted by the AO to cross examined Sh. Sohanraj Mehta, on the basis of whose statement the AO presumed that unaccounted sale was made by the assessee. We, therefore, considering the totality of the facts of the present case, do not see any valid reason to interfere with the findings of the ld. CIT(A) who rightly deleted the addition made by the AO.
Treatment to agricultural income declared by the assessee as income received from undisclosed sources - Held that:- In the present case, the assessee furnished the documents relating to the land holding which were not doubted by the AO. The assessee entered into an agreement for cultivation of the agricultural land with Sh. Dhirender Bhati and furnished the certificate dated 20.08.2010 from Tehsilpatwari which revealed that vegetables were grown on the assessee’s agricultural land for the past many years. The AO in the present case, did not examine Sh. Dhirender Bhati with whom the assessee entered into an agreement and also did not make any enquiry from Tehsilpatwari Sh. Jagdish Prasad Sharma who issued a certificate stating therein that the vegetables were grown on the agricultural land of the assessee. Therefore, the impugned addition was made by the AO on the basis of presumption only which is not tenable in the eyes of law. In that view of the matter, we are of the view that the ld. CIT(A) rightly deleted the addition made by the AO.
Addition of disallowance of interest made u/s 36(1)(iii) - interest bearing funds were diverted for non-business purposes - Held that:- In the present case, the ld. CIT(A) had given a categorical finding that the assessee advanced the money to those concerns in which he was either a director or a partner and there was business expediency, the said categorical finding of the ld. CIT(A) was not rebutted. We, therefore, do not see any valid ground to interfere with the findings of the ld. CIT(A).
Share transactions - short term capital gain OR income from other sources - Held that:- In the present case, it is an admitted fact that the assessee did not produce the broker for verification of genuineness of transaction. However, it is not clear as to whether the AO asked the assessee to produce the broker. It is also not clear as to whether the shares were transferred in D-mat account of the assessee and if those were not transferred to the D-mat account what was the reason for the same. This issue was although discussed by the AO but it had not been touched by the ld. CIT(A). We, therefore, in the absence of the clear facts available on the record, deem it appropriate to set aside this issue back to the file of the AO for fresh adjudication in accordance with law after providing due and reasonable opportunity of being heard to the assessee.
Addition in respect of cash found during the course of search from the premises of the assessee - Held that:- In the present case, it appears that the family members of the assessee had owned the money which was reflected in their books of accounts as cash in hand, those books of accounts were not doubted. Therefore, the ld. CIT(A) rightly deleted the addition made by the AO.
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2016 (10) TMI 990
Determination of principal business of the assessee - Held that:- In the instant case, the principal business of the assessee is trading in shares as held that there was loss of ₹ 1.80 crores from the trading of the shares and income from the other activities are lower than the loss claimed by the assessee. Therefore we conclude that principal business of the assessee is the business of trading in shares.
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2016 (10) TMI 989
Disallowance made by the Assessing Officer out of prepayment charges made to NHB(National Housing Bank) - NCD(non-convertible debenture) expenses - Held that:- The issue raised in these two assessment years with regard to NHB prepayment charges is the similar issue that we already dealt with while dealing the issue of NCD expenses, where following the decision of Hon’ble Supreme Court in Taparia Tools Ltd (2015 (3) TMI 853 - SUPREME COURT ), we held that assessee is entitled to the entire deduction of NCD expenditure.
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2016 (10) TMI 988
Disallowance u/s. 14A read with Rule 8D - AO has invoked the provisions of rule 8D holding that the implication of the said rule is automatic and has nothing to do with the earning of income during the year under consideration - CIT(A) has upheld the addition made by the AO by holding that the provisions of section 14A are also applicable in case of stock-in-trade - Held that:- As during the year under consideration, assessee had a long term capital gain of ₹ 54,74,924/- alongwith dividend income on mutual funds and shares for ₹ 46,55,903. Also further note that the assessee has incurred bank charges and interest expense amounting to ₹ 19,42,045.95 during the year under consideration, complete details were filed by the assessee before the AO as well as Ld. CIT(A) and no loan has been taken by the assessee during the year as is evident from the balance sheet of the assessee. The said interest has been paid by the assessee to the financiers who have funded the IPOs as is evident from the records, and there is no dividend income from transaction. Since the business of the assessee is sale and purchase of shares, all the interest has been paid in relation to normal business income, and cannot be allocated for the purpose of disallowance u/s. 14A read with Rule 8D. Find considerable cogency in the contention of the Ld. Counsel of the assessee that it is a settled law that the disallowance u/s. 14A read with Rule 8D should only be made with regard to investments and not with the regard to share held as stock-in-trade.
The assessee is in the business of sale and purchase of shares and mutual funds and the shares were held as stock in trade, therefore, provisions of section 14A read with Rule 8D are not applicable. - Decided in favour of assessee.
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2016 (10) TMI 987
Share transactions - nature of income - LTCG or business income - Held that:- There might be various reasons for all of sudden increase in the price of the shares. One possible reason could be permission to construct a tower on the land owned by “PMCB”. Even a single transaction can be treated as a venture into a trade, but the AO failed to point out those peculiar circumstances. Reasons given by the ld.CIT(A) in the finding extracted supra would indicate that the assessee has not borrowed funds for making investment. She has not shown shares as stock-in-trade. She did not take help of experts; she did not incur any expenditure towards selling consultancy or maintaining of any office. She has not purchased shares of any other companies in this period. Thus, facts emerge out from the record, if we examine in the light of various tests propounded by the Hon’ble jurisdictional High Court as well as by the ITAT in the case of Sarnath Infrastructure Pvt. Ltd.[2007 (12) TMI 261 - ITAT LUCKNOW-B ] then it would reveal that theld.CIT(A) has taken a correct view of treating the transaction as simplicitor investment.
Mode of computation of capital gain - Sale value of the shares taken - Held that:- The assessee has shown full value of the consideration as ₹ 12,500/- per share. The ld.AO intends to change this full value of the consideration. In his efforts, he made reference to the land holding owned by “PMCB”. He considered the value of such land holding, and divided that holding with total number of shares issued by the company. What is the basis of changing this pattern ? There is no evidence with the AO that the assessee has received more value than the one disclosed by her. Unless he possesses some evidences, demonstrating the fact that full value of the consideration disclosed by the assessee was incorrect, he cannot replace that value by estimation or on the basis of his own estimation. It is also pertinent to mention that his estimation is also not based on construction of facts in right perspective. The ld.CIT(A) has recorded that he failed to consider liabilities of “PMCB”. Had these liabilities been deducted against the total value of the land, and the value of the shares were worked out, that value would be lesser than the one shown by the assessee.he ld.CIT(A) has examined both these issues elaborately, and after going through the finding of the ld.CIT(A), we do not see any reason to interfere in it.
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2016 (10) TMI 986
Disallowance u/s 14A - computation of amount - Held that:- When the assessee has come up with a categoric plea that there is no increase in investment during the year under assessment and has not incurred any expenditure, the question of resorting to estimation by the AO does not arise particularly when AO has neither disputed the audited books of account maintained by the assessee in respect of investment and dividend income nor AO has recorded his dis-satisfaction as to how any expenditure has not been incurred by the assessee in maintaining the investment. In the given circumstance, the disallowance u/s 14A cannot exceed the amount of ₹ 28,666/- already claimed exempt u/s 10(34). CIT (A) has also failed to appreciate the arguments addressed by the assessee that when no fresh investment has been made by the assessee during the year under assessment nor it has incurred any expenditure the question of invoking provisions contained under section 14A read with Rule 8D does not arise.
Disallowance of interest - loans were utilized for non-business activities - Held that:- The complete nexus has been established between the funds borrowed and fund parked in the FDRs to be utilized for business purpose at the time of opportune time. So, in these circumstances, the revenue authority was not justified in disallowing the interest claimed by the assessee both in AY 2008-09 and AY 2009-10. - Decided in favour of assessee
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2016 (10) TMI 985
Non granting registration u/s 12A - partition of education society without seeking necessary approvals / sanctions from competent authority in terms of societies registration act - DIT (E) observed that the courses run by the trust (the appellant) are neither recognised nor a part of regular curriculum of any university / education programme; and further, that these were just skill development / enhancement courses / programme which cannot be termed as education
Held that:- Objects of the appellant trust included to establish, maintain, support and run schools, colleges, social service centres, industrial training centres, skill development centres, coaching institutes, boarding houses, day shelters, research and training centres and other institutions of education, having objects similar to those of this trust for imparting elementary and higher education, technical, industrial or commercial knowledge or training amongst public. These objects are clearly in the nature of charitable purposes, and more particularly, are to be regarded as “education”.
We have also already held that the courses and programs actually run by the aforesaid units of the appellant trust are to be regarded as “education”. Thus, the activities of the appellant trust are genuine. We have also found that Ld. DIT(E) has failed to bring out relevant and adequate materials on the basis of which it can be reasonably held that the activities of the appellant trust were not genuine. Further, we have also noticed that on identical facts the activities of the aforesaid educational units of the appellant trust were treated as “education” when these units were being run under R.K. Convent School Educational Society before transfer to the appellant trust who was granted registration u/s 12AA on the strength of educational activities since many years including the educational activities of the aforesaid educational units transferred subsequently to the appellant trust. Thus Ld. DIT(E) failed to make out a case for rejection of registration u/s 12AA / 12A of I.T. Act. Therefore, we direct Ld. DIT(E) to grant registration u/s 12AA/12A - Decided in favour of assessee
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