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Showing 401 to 420 of 888 Records
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2010 (12) TMI 880
Capital or revenue expenditure - Software Expenses and web-hosting expenses - Depreciation - It was his submission that the expenditure pertains to the purchase of licences/packages of computer programs which are application programmes/upgrading the programs - assessee is following the consistent practice of writing off the software for a period of 12 to 24 months in the business of 'comprehensive, systematic, consistent, object, well documented quest research pre-employment screening program - it is noticed that there are certain OS licences as well as application licences - in the case of Amway India Enterprises (2008 -TMI - 64346 - ITAT DELHI-C) - Held that: fact that software becomes obsolete with technological innovation and advancement within a short span of time, it can be said that where the life of the computer software is shorter (say less than 2 years), it may be treated as revenue expenditure - Since the functionality test is to be examined with reference to the items of licensed software purchased/expenditure claimed in the interest of justice - Appeal is allowed by way of remand to AO Regarding web-hosting expenditure - The advance of technology and the wide spread use of the internet has provided a very powerful medium to companies to publicize their activities to a larger spectrum of people at a much lower cost - Since the details of expenditure were not examined by the A.O., we are of the opinion that he might have considered the entire expenditure towards web hosting expenditure - It is directed to treat as revenue expenditure - In the result, appeal is allowed for statistical purpose
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2010 (12) TMI 879
Disallowance - Closure of unit or closure of business - the closure of Kavesar unit had no impact on the main business of the Assessee company viz., that of manufacture of paints - whether various activities carried on by the Assessee constitute the same business or separate business no single test can be devised as universal and conclusive - held that:- alternative claim of the Assessee that expenses incurred to protect a business asset should be allowed as deduction - the claim for depreciation is also directed to be allowed - In the result, the ground of appeal of the revenue is dismissed while that of the Assessee is partly allowed Regarding disallowance u/s 14A - specific plea has been taken by the assessee before the Assessing Officer that no expenses were incurred by the assessee for earning the tax free income - As rightly contended on behalf of the assessee, the assessee should not be put in more disadvantageous position in the set aside proceedings before the Assessing Officer. The Assessing Officer will take into consideration all aspects and compute the disallowance to be made under section 14A of the Act - Appeal is allowed for statistical purpose
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2010 (12) TMI 876
Addition - Waiver of term loan - assessee had taken loans from State Bank of India for its operation and due to circumstances which were beyond its control, it could not repay the loan and the bank came forward with one time settlement and settled the loan - assessee has received deposits in the course of trading transactions and the assessee had treated them as capital receipt and not offered them to tax in the earlier years - Held that:- the reduction of the liability on account of term loan and other loans payable to the bank under one time settlement scheme, does not result into income to the assessee either u/s.28(i) or u/s.28(iv) or u/s.41(1) of the Income-tax Act, 1961 - Decided in favor of assessee. Continuance of business - When the assessee filed returns of income before the department, wherein it is clear that the assessee had revived its business, the Revenue cannot overlook the evidences and hold that the business can never be revive - it was not a complete breakdown of business but it was a case of mere lull in business due to some restrictions of prawn farming by the Hon'ble Supreme Court and also the facts demonstrate that there is revival of business - Therefore, the decision of Hindustan Chemical Works (1979 -TMI - 36807 - BOMBAY High Court) squarely apply to the present case. - Decided in favour of the assessee
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2010 (12) TMI 875
Estimation of profit - Notional profit - when asked by the AO the assessee could not explain such a presumption that there would have been a loss - assessee itself admitted that there was understanding with the group company to reimburse the cost and pay some reasonable profit but no profit was charged by the assessee - assessee was doing the business of development of project and sale thereof - This is a case of rejection of accounts and estimation of profit which is legally in order - the estimation of profit is held appropriate and the order of CIT(A) is upheld.
Expenditure incurred as work-in-progress - there was no dispute that till financial closure the expenditure incurred was shown by the assessee in the balance sheet as advance recoverable. - as and when the project came to financial closure and the revenue was realized from the project, the expenses could be allocated on pro-rata basis depending upon the volume of revenue and other financial parameters. - Decided against the assessee.
Regarding penalty - It is a case of estimation of income and addition to total income. Such addition as we have held earlier is covered by the provisions of Explanation 1 to section 271(1)(c) and penalty is leviable. Even the Hon'ble Supreme Court in case of Reliance Petro Products Ltd. (2010 (3) TMI 80 - SUPREME COURT) have held that for levy of penalty it has to be seen that conditions of section 271(1)(c) are applicable. In the present case we have held that the provisions of Explanation 1 are applicable and penalty is leviable. - Decided against the assessee
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2010 (12) TMI 872
Capital or revenue expenditure - In the course of three previous year period, when the expenditure were incurred by the assessee-company, those expenditure were debited in the accounts of the assessee- company under the head "expenditure pending allocation" - When the assessee has offered the recovered amount as its income, it is quite rightful in its part to claim the earlier expenditure as deductions in computing the income arising out the amount recovered from Indonesian subsidiary - accounting treatment given by the assessee-company can be justified for the reason that the real character could be decided only when the assessee-company was able to recover the amounts from its Indonesian subsidiary - Decided in favor of the assessee Regarding disallowance u/s 40(a)(i) - After examining the scheme of sec.195, the Board has clarified that no tax is deductible under sec.195 and consequently the expenditure on export commission and other related charges payable to a non-resident for services rendered outside India becomes an allowable expenditure - If the tax is not so assessable, there is no question of tax at source being deducted - The Court in its earlier decision what was held is that the Assessing Officer has to be approached under sec.195(2), to decide the correct amount of deduction where tax is deductible and not to invoke sec.195(2) indiscriminately without bothering and looking into whether the payments contained element of income or not.
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2010 (12) TMI 871
Claim of Expense - If assessee follows merchantile system expenditure should be claimed in the same year in which it is incurred except deferred expenditure if they are covered under provisions of Section 35D (CIT Vs Bharat Aluminium Co. Ltd. [2009 -TMI - 96479 - DELHI HIGH COURT]).
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2010 (12) TMI 865
Penalty u/s 271D - assessee had received an amount of loan of Rs.26,16,588/- from M/s. Nakshatra Software Pvt. Ltd. and a loan of Rs.9,99,97,540/- from M/s. Panther Ind. Product Ltd., otherwise than by Account Payee Cheque or Draft in violation of Section 269SS - CIT(A) himself has followed the Coordinate Bench decision in assessee's own case for A.Y. 1999-2000, the extract of which was mentioned in his order - There are number of orders on this issue as submitted by the learned counsel for the assessee and in all the cases it is felt that provisions of section 269SS/271D are not warranted when the amounts are received by way of journal entries in the books of account - Decided in favour of the assessee
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2010 (12) TMI 862
Reopening - Capital gain - In the instant case, the sale and purchase is subject to the approval of the Reserve Bank of India, and the approval granted by the Reserve Bank of India, also specifically refers to the consideration - In the present case, the assessee was allotted shares in CEPL against relinquish-ment of shares which he has already acquired in VML and CPL - There is nothing on record to show that the transactions entered into by the assessee in acquiring the shares in VML and CPL and later in CEPL are different links of the same chain - When there is no basis to come to such a conclusion, there is no sanctity in comparing the purchase value of shares of ORE and by the assessee to hold that the differential amount of Rs. 504.15 per share would be in the nature of short-term capital gains in the hands of the assessee - In the present case, as already stated ORE is having a dominant position not only in the shareholding of CEPL but also in the corporate and operational matters - Therefore, the addition made by the assessing authority towards short-term capital gains in the hands of the assessee deleted. - Appeal is allowed
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2010 (12) TMI 861
Addition - Cash credit - It is not in dispute that the creditor Shri Maheshbhai Shah obtained two demand drafts of Rs.2 lacs each on 16-06-2004 and 17-06-2004 for giving the same to the assessee - Since the creditor was not assessed to tax and his income was blow taxable limit, therefore, it would support the findings of the authorities below that the creditor was not having source to make cash deposit in his bank account in June, 2004 and was not a man of means and that the transaction in question is not genuine - The Hon'ble Supreme Court in the cases of Durga Prasad More (1971 -TMI - 6269 - SUPREME Court) and Sumati Dayal (1995 -TMI - 5469 - SUPREME Court) held that "the Courts and Tribunal have to judge the evidences before them by applying the test of human probabilities after considering the surrounding circumstances - The assessee has failed to establish the source of the cash deposited in the bank account of the creditor as well as failed to prove genuineness of the transaction in the matte - Decided gainst the assessee
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2010 (12) TMI 858
Deduction u/s 36(i)(vi)- Whether Tribunal was legally justified to hold the sundry debts of trading receipts as bad debt to allow its deduction u/s 36(1) (vii) of I.T. Act - The decision in the case of Taylor Instrument Co. India Ltd. Vs. CIT[2001 -TMI - 12853 - DELHI High Court]wherein on similar facts and circumstances, the issue was held to be allowable as bad debt supports the case of the assessee - The CIT(A) had recorded a finding of fact that the amount had become irrecoverable and, therefore, was bad debt - The said finding had been affirmed by the Tribunal - Decided in favour of assesee.
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2010 (12) TMI 857
Exemption u/s 10A - transfer of existing businss from ‘Non-SEZ Area’ to ‘Falta Free Trade Zone’ - splitting up or reconstruction of a business already in existence - held that:- the unit of the business of the assessee at SEZ at Falta is the new one and merely some old stocks of the raw materials were used in old business does not amount to reconstruction. It is to be found on evidence that materials were brought and with the running of the old business simultaneously at non SEZ. Under this circumstances, neither the learned Tribunal nor the Assessing Officer on the given fact correctly interpreted the reconstruction. - Decided in favor of assessee.
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2010 (12) TMI 856
Penalty levied u/s 271(1)(c) - Depreciation - The Tribunal opined that the departmental authorities were justified in incoming to the conclusion that the assessee has failed to satisfactorily prove that the trial production has in fact started - It was also held that there is no evidence like production report indicating the quality of raw material consumed and production of noodles and the names of dealers to whom the alleged noodles were distributed for marketing - The Tribunal ultimately held that the assessee is not entitled to depreciation as well as the claim of expenses in relation to the alleged trial production which is not supported by any evidence - Hence,the learned CIT(A) was not justified in canceling the penalty by passing a non-speaking order. Claim u/s 80 I - Mere making a claim which is no sustainable in law, by itself will not amount to furnishing of inaccurate particulars regarding income of the assessee - Rely upon the decision of the Hon'ble Supreme in the case of Reliance Petroproducts Pvt. Ltd. (2010 -TMI - 75701 - SUPREME COURT) - Do not find any infirmity in the order of the learned CIT(A) in canceling the penalty on this issue - The finding of fact recorded by the learned CIT(A) is accordingly confirmed - Thus, departmental appeal on this issue is dismissed.
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2010 (12) TMI 852
Concealment of income - Penalty u/s 271(1) - Limitation - held that:- there is no support to the assumption in the order of the Tribunal that addition was on account of material which did not relate to concealment by the assessee. - Finding recorded by the Tribunal vitiated by perversity. Thus, substantial question as to perversity of finding of Tribunal arises and has to be answered in favour of the revenue.
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2010 (12) TMI 851
Non Reconciliation of professional fee received with TDS certificates - assessee contended that the entire fees received by him are by cheques, which may come from the clients or from instructing advocates or Chartered Accountants in case they have collected the amounts from the clients; therefore, it is not practically possible for him to give a detailed party wise breakup of fees received. - Held that:- in absence of any contrary material brought by the revenue authorities that the assessee has received amount more than the professional fees than what has been declared by him, no addition should have been made. It is also a fact that the professional income declared by the assessee far exceeds the professional fees as per AIR information. There may be so many reasons such as low deduction of tax, non-deduction of tax, deduction on account of reimbursement of expenses etc., for which the figure as per the AIR may not tally with the income declared by the assessee on account of professional fees from various clients. - addition of Rs.47,37,000/- deleted - Decided in favor of assessee. Unexplained investment - investment in mutual funds - held that:- As per the certificate issued by the mutual funds, the name of assessee appears as second holder - held that:- Assessing Officer has already informed the Assessing Officer having jurisdiction of the above two persons (first holder) as per his letter dated 17.11.2009 to take necessary action at their end. Therefore, in our considered opinion, the addition is uncalled for on this account in the hands of the assessee. In this view of the matter, we set aside the order of the CIT(A) and direct the Assessing Officer to delete the addition of Rs.75 lacs. - Decided in favor of assessee. Disallowance u/s 14A / Rule 8D - expenses related to exempted income - Dividend income of Rs.6.39 crores - the expenditure disallowed by the Assessing Officer at Rs.50,000/- appears to be very reasonable considering the volume of dividend income. In this view of the matter, we do not find any infirmity in the order of the CIT(A) sustaining the disallowance of Rs.50,000/- made by the Assessing Officer.
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2010 (12) TMI 850
Deduction u/s 80HHE - Disallowance - the recovery of salary, air fare incentive and service charges, reversal of provision of bad and doubtful debts and scrap sale - The sale of special import license - The phrase “profit derived from” has been defined in sub section 3 as the profit of business in the ratio of export turnover to total turnover - held that:- all these items of income have to be taken into account while computing the profit of business under the head “profit and gains of business or profession” while computing deduction under section 80HHG. - Decided in favor of assessee.
Business income or income from other sources - Assessee received interest and rental income from three companies and treated as a business income - Merely because the properties had been let out with some facilities income cannot be assessed as business income - Interest income had arisen from fixed deposits, interests on loan to employees and interest on income-tax refund. Such items of income in our view has to be assessed as income from other sources - Accordingly interest income and the rental income has been treated as income from other sources
Addition of expenses attributable to the earning of exempt dividend income under clause (f) of the Explanation 1 to section 115JB(2) - The dispute is regarding addition of the expenditure relatable to the exempt dividend income under clause (f) of Explanation 1 to section 115JB(2). The AO had attributed a sum of ₹ 13,35,850/- relating to the dividend income and therefore while computing the book profit he added the same under clause (f). We have already considered the issue of attribution of expenses relating to dividend income while dealing with the earlier ground and are held that only a sum of ₹ 25,000/- will be considered against dividend income. We therefore modify the order of CIT(A) and hold that a sum of ₹ 25,000/- shall be added under clause (f) while computing the book profit.
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2010 (12) TMI 846
Determination of fair market value of property - reference to District valuation officer - section 48 read with section 45(5) - Whether AO bound to accept the value stated in the registered sales deed - held that:- the primary burden of proof to prove understatement or concealment of income is on the Revenue and it is only when such burden is discharged that it would be permissible to rely upon the valuation given by the District Valuation Officer. It was also held that the opinion of the Valuation Officer per se was not an information and could not be relied upon without the books of account being rejected which had not been done in that case. - Decided in favor of assessee.
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2010 (12) TMI 844
Addition - Bad debts - Refer to the decision of the Supreme Court in T. R. F. Ltd. v. CIT (2010 -TMI - 76626 - SUPREME COURT) in which it has been held that for allowance of bad debts, it is enough if bad debts are written off as irrecoverable in the accounts of the assessee and it is not necessary for the assessee to establish that the debt, in fact, has become irrecoverable - Decided in favour of assessee. Diminution in the value of investments - As per the decision of the hon'ble Supreme Court in the case of CIT v. Cocanada Radhaswami Bank Ltd. [1965 -TMI - 49308 - SUPREME Court], held that the assessee is entitled to the claim of diminution in the value of securities which are held for the purpose of its business - Decided in favour of assessee. Long-term capital loss - Hence, the issue being covered in favour of the assessee by the order of the Tribunal in the assessee's own case for the assessment year 2005-06 - Observe that the computation done by the parties has not been assailed by providing any alternate computation ; and commercial transactions to run two separate legal entities, may be belonging to the same group, have to be dealt with as per law and cannot be thrown on that ground alone - Do not find any valid basis for disallowance of long-term capital loss by the Assessing Officer Decided in favour of assessee. Collaboration agreement - Royalty - Revenue expenditure or not - As per the decision of the hon'ble Supreme Court in the case of Jonas Woodhead and Sons (India) Ltd. v. CIT [1997 -TMI - 5553 - SUPREME Court], found that their Lordships of the Supreme Court were actually considering a case of composite agreement which involved an agreement to implement a turnkey project right from providing design, etc. in establishing the factory and user of the technical know-how - Thereafter their Lordships of the Supreme Court have clearly held that payment made for the user of the logo is always revenue in nature - Decided in favour of assessee.
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2010 (12) TMI 842
Assessee in default - Tds u/s 194J or 194I - national roaming costs - application of rule of ejusdem generis - held that:- Here, the words "of similar nature" clearly make room for the application of the rule of ejusdem generis in the sense that the other business or commercial rights must be of the same nature as those listed in the earlier part of the provision (viz., patents, copyrights, trade-marks etc.). Such restrictive words are not present in Explanation (i) below section 194-I. - the rule of ejusdem generis does not apply to the interpretation of Explanation (i) of section 194-I. Regarding TDS u/s 194I - The payment of roaming charges by the assessee to the other service providers cannot be considered as rent within the meaning of the Explanation below section 194-I. Therefore, there was no liability on the part of the assessee to deduct tax from the same under that section. Regarding TDS u/s 194J - the CIT(A) has not in fact decided the issue of applicability of section 194J. - in view of the observations of the Supreme Court in the case of CIT vs. Bharti Cellular Ltd. (2010 -TMI - 202748 - Supreme Court of India ) matter remanded back to AO to decide afresh. Regarding double payment of tax - After the judgment of the Supreme Court in the case of Hindustan Coca Cola Beverage (P) Ltd. (http://www.taxmanagementindia.com/visitor/detail_case_laws.asp?ID=1676), there is no merit in the contention that taxes can be recovered from the deductor even though taxes were paid by the deductees. - CIT(A) ought to have directed the Assessing Officer to invoke his powers under the Act and have the payment of taxes by the payees verified from the respective Assessing Officers assessing the payees with the help of the Permanent Account Numbers of the payees made available by the assessee - If upon verification it is found that the taxes have been paid by the payees fully in respect of the roaming charges received by them from the assessee, nothing survives - Appeal is partly allowed
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2010 (12) TMI 840
Exemption u/s 54F - Bogus transaction - specific records maintained by the company and stock exchange showing the claimed transaction of shares having not taken place - Held that:- It is well settled that burden of proving genuineness of a transaction of receipt of income by him from a claimed source particularly income on the basis of which exemption of tax is claimed is on the assessee - The said burden can be discharged by him either by leading evidence or from the circumstances on record. - In absence of positive evidence of the assessee, the Assessing Officer, by applying test of human probabilities can draw an inference of money being undisclosed income of the assessee - the burden on the assessee which he failed to discharge and, therefore, test of human probabilities could be relied upon to reject the claim of the assessee that income was generated from the source of sale of shares which was exempted from tax under section 54F of the Act. - Decded against the assessee
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2010 (12) TMI 838
Erroneous decision - We have gone through the order of Tribunal minutely and found nowhere the comments in respect to detailed finding given by learned CIT(A). At one or two points the Tribunal has observed that learned CIT(A) was not correct in holding that provisions of s. 145(3) are not applicable. How the learned CIT(A) is not correct, no finding has been given by the Tribunal. Regarding the GP rate also, the Tribunal has observed that order of the AO seems to be correct. However, regarding the finding of learned CIT(A), the only observation that "the learned CIT(A), in our considered view, was not justified in accepting the trading result declared by the assessee". How the trading result accepted by the learned CIT(A) are not correct, no finding or discussion has been made by the Tribunal. - a mistake has been crept in the order of the Tribunal by not taking into consideration the vital aspect of the case and various case laws - the order of the Tribunal is recalled in toto to decide the same afresh after hearing both the parties afresh.
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