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Showing 461 to 480 of 1407 Records
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2015 (2) TMI 952
Unaccounted cash credit - addition u/s 68 - CIT (A) deleted the additions - Held that:- The initial onus to show the genuineness and identity of transaction and the credit worthiness of the party is no doubt upon the assessee. Once that is done in the form of prima facie credible material, the AO has to then exert himself/herself to quote relevant material to disprove that onus and discharge the burden placed upon the Revenue. In this case, this procedure was clearly not adopted in respect of the sum of ₹ 20,37,05,000/-. As far as the amount of ₹ 4,32,07,394/- is concerned, it reflected a solitary transaction which too was done in the course of the banking channels. The ITR and the concerned balance sheets etc. of the said company were placed on record and considered by the CIT (A) - though not by the AO. The amounts were reflected in the balance sheets. In these circumstances, the finding of fact arrived at by the CIT (A) and the ITAT cannot be considered unreasonable. - Decided in favour of assessee.
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2015 (2) TMI 951
Non deduction of TDS - assesse in default - initiation of proceedings against the assessee in default who does not deduct tax as held by revenue - whether proceeding under Section 201 is barred by time? - Held that:- Ruling of this Court as to the period of limitation, i.e., Commissioner of Income Tax v. NHK Japan Broadcasting Corporation, (2008 (4) TMI 182 - DELHI HIGH COURT) and CIT Vs. Hutchison Essar Telecome Ltd. (2010 (4) TMI 45 - DELHI HIGH COURT) concludes the issue wherein ruled that the foundational requisite for initiation of proceedings under Section 201 is a period of four years if no limitation is prescribed. An added reason why the submission of the Revenue is unacceptable is that had the Parliament indeed intended to overrule or set aside the reasoning in NHK Japan (supra), it would have, like other instances and more specifically in the case of Section 201 (1A), brought in a retrospective amendment, nullifying the precedent itself. That it chose to bring Section 201 (3) in the first instance in 2010 and later in 2014 fortifies the reasoning of the Court. - Decided against the Revenue.
Deemed dividend - Merits the applicability of Section 2 (22) (e) - Held that:- If a person is a registered shareholder but not the beneficial shareholder then the provision of section 2 (22) (e) will not apply. Similarly, if a person is a beneficial shareholder but not a registered shareholder then also the first limb of the provisions of section 2 (22) (e) will not apply. Concededly in the present case the individual Harjit Kaur was not a shareholder of the present assessee but rather the shareholder of another concern which held shares in assessee company. is, therefore, clear that in the absence of any finding that Harjit Kaur owned the shares in terms of Section 201A or was beneficial owner in terms of such provision - on both counts - the findings being adverse to the Revenue - Decided against the Revenue.
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2015 (2) TMI 950
Deduction u/s. 36(1)(viii) - revision u/s 263 - ITAT allowing deduction following the decision in the case of Union Bank of India v/s. ACIT [2012 (6) TMI 500 - ITAT MUMBAI] - whether financial corporation are separate and distinct entities different from scheduled banks which are covered by the provisions of Banking Regulation Act as held by revenue? - Held that:- When Revenue challenges the order of the Tribunal which in turn relies upon another decision rendered by it on the same issue, then in cases where the Revenue has accepted the order by not preferring any Appeal against the earlier order, the Revenue should not challenge the subsequent order on the same issue. In case an appeal is preferred from the subsequent order, then the Memo of appeal must indicate the reasons as to why an appeal is being preferred in later case when no appeal was preferred from the earlier order of the Tribunal which has merely been followed in the later case. In any case, the Officer concerned must atleast file an Affidavit before the matter comes up for admission, pointing out distinguishing features in the present case from the earlier case, warranting a different view in case the appeal is being pressed. The absence of this being indicative of nonapplication of mind, does undoubtedly give an opportunity to the Revenue to arbitrarily pick and chose the orders of the Tribunal which they would challenge in the Appeal before the this Court. Uniformity in treatment at the hands of law is a basic premise of Rule of Law.
In the facts of the present case, there is no occasion for the CIT to exercise his powers under Section 263 of the Act as the view taken by the Assessing Officer granting deduction under Section 36(1)(viii) to the Respondent Assesseee was a possible view. This possible view is further fortified by the decision of the Tribunal in Union Bank of India (supra) which has also been accepted by the Revenue. Even Explanation to Section 36(1)(viii) of the Act as existing at the relevant time, a Financial Corporation has been defined to include a Public Company and the Government Company.- Decided in favour of assessee.
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2015 (2) TMI 949
Gain arising out of share transaction - short term and long term capital gains or business income - Held that:- The issue of taxability of gain arising out of share transaction as short term and long term capital gains and not as business income, is covered in favour of the assessee as relying on assessee's own case for AY 2005-2006 [2015 (2) TMI 934 - ITAT AHMEDABAD] wherein held that the profits on share transaction were assessable as long term and short term capital gain and not as business income. - Decided against revenue.
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2015 (2) TMI 948
Non deduction of TDS - assesse in default - ITAT affirmed an order of the CIT (Appeals) as proceeding under Section 201 is barred by time - Held that:- Ruling of this Court as to the period of limitation, i.e., Commissioner of Income Tax v. NHK Japan Broadcasting Corporation, (2008 (4) TMI 182 - DELHI HIGH COURT) and CIT Vs. Hutchison Essar Telecome Ltd. (2010 (4) TMI 45 - DELHI HIGH COURT) concludes the issue wherein ruled that the foundational requisite for initiation of proceedings under Section 201 is a period of four years if no limitation is prescribed. An added reason why the submission of the Revenue is unacceptable is that had the Parliament indeed intended to overrule or set aside the reasoning in NHK Japan (supra), it would have, like other instances and more specifically in the case of Section 201 (1A), brought in a retrospective amendment, nullifying the precedent itself. That it chose to bring Section 201 (3) in the first instance in 2010 and later in 2014 fortifies the reasoning of the Court. - Decided against the Revenue.
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2015 (2) TMI 947
Disallowance of employees' contributions to ESI and PF - whether amounts of ₹ 1,14,309 and ₹ 17,137 towards Provident fund and ESI respectively to the account of the employees before the due date for filing of return of income and the same should be allowed under section 43B - Held that:- There is no dispute with regard to the delay in the remittance of the above amounts to the concerned authorities by the assessee, but it is the contention of the assessee that since such remittances have been made before the filing of the return of income, it is an allowable expenditure and no addition is called for. See CIT V/s. Sabari Enterprises [2007 (7) TMI 169 - KARNATAKA HIGH COURT] & CIT V/s. AIMIL Ltd. [2009 (12) TMI 38 - DELHI HIGH COURT] - Decided in favour of assessee.
Disallowance u/s. 40(a)(ia) - Non deduction of TDS on payments to contractors - CIT(A) deleted the disallowance - Held that:- As decided in DCIT vs. M/s. Liquidz India Pvt. Ltd [2015 (2) TMI 890 - ITAT HYDERABAD] the impugned amendment to section 40(a)(ia) permits remittance of TDS to the Central Government account on or before the due date of filing return of income u/s. 139(1) of the Act is retrospective in nature. Thus as the assessee having deposited TDS amount before the due date of filing the return u/s. 139(1) no disallowance can be made by invoking the provisions contained u/s. 40(a)(ia) of the Act - Decided in favour of assessee.
Estimated profit on cancelled sales and sales returns - Held that:- The internal control system in the bills do not permit any corrections and the only way is to cancel and enter again. The bills have to be cancelled in case the bills which are entered in one firm's name are going to another concern's name due to technical snag. Sometimes, the quantities were entered wrongly and the invoices have to be prepared again reflecting the correct quantities. Name of the dealer/customer if entered wrongly is to be rectified for preparing the invoice in the correct name. in the absence of any evidence to prove that the assessee had tampered the bills to suppress gross sales the contentions of Revenue cannot be accepted. Further, the assessee has prepared the reconciliation and table the CIT(A) has stated as follows: "Further, the appellant had also produced before the AO, copies-of individual cancelled bills along with copies of sales bills in support of the reconciliation statement. The very same reconciliation statement along with party-wise break up for cancelled bills which are filed before me are verified. The AO's rejection of appellant's explanation in this regard is not based on sound footing. - Decided in favour of assessee.
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2015 (2) TMI 946
Unexplained investment - block assessment - addition of ₹ 11 lacs on unexplained investment in Himmatpur land u/s 69 - assessee relying on the ancestral “Bahi” for explaining the cash payment of ₹ 11 lakhs to Kulanand Bhartiyaya on different dates paying from money accumulated out of agricultural income of assessee’s father HUF named and styled of Durga Singh and Sons HUF - Held that:- The assessee has placed on record to show that there was a HUF and such HUF had agricultural income as is evidenced by certificates issued by Patwari. Such income according to the Officer has been utilized for expenses of the family members though there is no evidence to that effect despite fresh innings having been granted to the Assessing Officer, yet it would be reasonable to appropriate percentage of such income towards the expenditure. We therefore find force in the contention of the appellant that monies was available for investment by the appellant out of the funds available with the HUF after appropriating 15% of the said receipt towards expenditure. We find from the details on record that agricultural income as per the certificates of Patwari for financial year 1986-87 upto financial year 1994-95 aggregates to ₹ 8,41,600/- and thus, out of the said sum an amount of ₹ 7,15,360/- can reasonably be assumed to be available with the appellant for investment for purchase of land from one Shri Kulanand Bhartiya. Accordingly, addition made of ₹ 7,15,360/- is deleted and balance sum of ₹ 3,84,640/- is upheld. - Decided partly in favour of assessee.
Unaccounted cash - addition of ₹ 32,69,744/- out of the cash found as a result of search of ₹ 39,00,000/- - Held that:- Assessee had placed on record evidence in the shape of statement of Shri Mohan Singh Rawat, affidavit of Shri Govind Sharma to establish that there was refund by Shri Kulanand Bharatiya to the appellant of ₹ 11 lacs. The statement being relied upon by the revenue of Shri Kulanand Bharatiya was not confronted to the assessee despite his repeated request and accordingly, we hold that such a statement has to be excluded as such. In view of the above, we hold that sum of ₹ 11 lacs is also available as evidence with the appellant to explain the source of availability of cash on the date of search with the appellant. Accordingly, the appellant is entitled to the benefit of ₹ 11 lacs and ₹ 1,23,250/- (85% of ₹ 1,45,000/-) being the agricultural income for the financial year 1995-96. Thus, the assessee is entitled to total benefit of ₹ 12,23,250/-. Accordingly, assessee is entitled to a relief of ₹ 31,73,250/-. The Assessing Officer has made addition of ₹ 32,69,744/- and if the amounts as stated above of ₹ 31,73,250/- is excluded, the balance sum of ₹ 96,494 /- is sustained and assessee is entitled to a relief of ₹ 31,73,250 /-. - Decided partly in favour of assessee.
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2015 (2) TMI 945
Reopening of assessment - Under assessment of income under section 143(3) with reference to the intimation under section 143(1) - Treating business income as short-term capital gains - Held that:- Merely because material lies embedded in the material or evidence produced by the assessee, which the Assessing Officer could have uncovered but did not uncover that is not a good ground to cancel the reassessment proceedings. The Assessing Officer could have found the truth, but he did not, does not preclude the Assessing Officer from exercising the power of re-assessment to bring to tax the escaped income. In the present case, as seen from the reasons recorded, there is a prima facie escapement of income. Hence, the Assessing Officer after recording the reasons, issued notice to the assessee under section 148 of the Act. We do not find any infirmity in the order of the lower authorities to reopen the assessment. - Decided in favour of revenue
Source of income - Sale of shares - business income or capital gains - Held that:- In the light of the various parameters and the decision of the Andhra Pradesh High Court in the case of P. V. S. Raju v. Addl. CIT [2011 (7) TMI 818 - Andhra Pradesh High Court ] and on perusal of the statements incorporated by the Assessing Officer in the assessment order, we find that the assessees have made several transactions of purchase of shares during the relevant year under consideration, and if there high volume, frequency and regularity of the activity carried on by the assessees in a systematic manner, it would partake of the character of business activities carried on by the assessee in shares, and it cannot be said that the assessees have merely made investments in shares. - Decided in favour of assessee
Diminution in the value of shares - assessee made an alternative claim that in the event of the Tribunal confirming the action of the Assessing Officer, reduction in market value of shares has to be allowed as deduction - Held that:- Claim of the assessee is appropriate. However, we make it clear that the shares are to be valued at market price or cost, whichever is less. Accordingly, while passing a consequential order, the Assessing Officer shall consider the same and decide the issue accordingly. - Decided partly in favour of assessee for statistical purposes.
Expenses to be allowed under business - Held that:- AO is required to consider what are the expenses relating to the sale transactions to be allowed while computing the income of the assessee, if it is not allowed already. - Decided in favour of assessee for statistical purposes.
Disallowance under section 40(a)(ia) - Held that:- This ssue is squarely covered by the order of the Special Bench of the Tribunal, Mumbai in the case of Bharati Shipyard Ltd. v. Deputy CIT [2011 (9) TMI 258 - ITAT MUMBAI] wherein held that the disallowance under section 40(a)(ia) of the Act cannot be made invoking retrospective amendment. - Decided in favour of assessee
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2015 (2) TMI 944
Transfer Pricing Adjustment - selection of comparable - Held that:- For exclusion of Kals Information System Ltd. the said concern is engaged in development and sale of software product, etc., which is distinct from the software development services rendered by the assessee to its associated enterprise. Thus, we are inclined to uphold the plea of the assessee that the M/s Kals Information System Ltd. (applications software segment) is functionally incomparable to the assessee. - Decided in favour of assessee.
For exclusion of M/s. FCS Software Solutions Limited the application support services and infrastructure management services, which constitute 11% and 15% respectively of the total income, are IT enabled services and not linked to the software development services. Once the segment of application support and infrastructure management services are removed along with the exclusion of E-learning and Digital consulting segment, then the income of the said concern from software development services falls below 75% of its total income and therefore, it deserves to be excluded even on the basis of the filter applied by the TPO. - Decided in favour of assessee.
For inclusion of CG-VAK Software Systems Limited (Software Services Segment) the said concern cannot be excluded merely because of incurrence of loss in this year, especially when the said loss has not been established to be an abnormal business condition and more so in the context that the said concern is not denied to be functionally comparable to the assessee. Therefore, on this aspect, we uphold the plea of the assessee for including the said concern in the final set of comparables in order to determine the arm's length price of the international transaction. - Decided in favour of assessee.
For inclusion of M/s. Thinksoft Global Services Limited The argument being set up by the lower authorities that the ‘Verification’ and ‘Validation’ are steps to test the efficiency of the software, but not a part of software development, in our view is a hairsplitting argument, which is not justified in the context of the present comparability analysis. Ostensibly, ‘Verification’ and ‘Validation’ are broadly speaking, a part and parcel of the process of software development. Therefore, on this aspect, we are unable to uphold the action of lower authorities in excluding the said concern from the final set of comparables. - Decided in favour of assessee.
For exclusion of M/s. Maars Software International Limited TPO justifiably excluded the said concern because it is only the information available in public domain, which can be the basis to effectuate comparable analysis. The assertions in the Directors report, which do not find any contradiction in the other financial statements accompanying such Directors report, have to be relied upon. Thus, on this point itself, we find no merit in the plea of the assessee for including the said concern in the final set of comparables. - Decided in favour of revenue.
For exclusion of Akshy Software Technologies Limited TPO was justified in excluding Akshy Software Technologies Limited from the final set of comparables as the business model of the assessee i.e. provision of off-shore services to its associated enterprise stands on a different footing than the on-site services being rendered by Akshy Software Technologies Limited. The assertions of the assessee that its arrangement with associated enterprise does not rule out provision of on-site services does not distract from the fact that the tested transactions undertaken by the assessee involve off-shore rendering of services, which is incomparable to the on-site services being rendered by Akshy Software Technologies Limited to its clients abroad. - Decided in favour of revenue.
For exclusion of M/s. R.S. Software (India) Limited the said concern was predominantly an on-site service provider and therefore, it was excludible. Secondly, the TPO also correctly observed that the said concern was engaged in research and development work as mentioned in its Annual accounts. We hereby affirm the stand of the TPO in rejecting M/s. R.S. Software (India) Limited from the final set of comparables.- Decided in favour of revenue.
Exclusion of comparable applying a Turnover filter - while in the show-cause notice the TPO had proposed to consider Persistent Systems Ltd., Mindtree Ltd. (IT Services), Larsen & Turbo Infotech Ltd. and Sasken Communication Technologies Ltd. (Telecom Services Segment) as comparables whereas in the subsequent order passed u/s 92CA(3) the TPO has excluded the same by applying a Turnover filter, whereby the concerns with sales/turnover in excess of ₹ 200 crores have been excluded - Held that:- In the present case it is axiomatic that so far as the issue of the adoption of Turnover filter of ₹ 200 crores to exclude the aforesaid four concerns in concerned, the same has been adopted by the TPO without giving the assessee any opportunity of being heard and therefore in our view the matter ought to be remanded back to the AO/TPO for consideration afresh. - Decided in favour of assessee for statical purposes.
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2015 (2) TMI 943
Unexplained money - sale of plots - Held that:- From the record we found that during the course of survey, the assessee was found to be in receipt of “on money” in respect of sale of industrial plot of land. On the basis of seized material, the A.O. computed the on money received by the assessee amounting to ₹ 1,50,000/- per guntha. The statement of the assessee was also recorded where he agreed for receipt of “on money” which has not been accounted for in the regular books of account. In the statement, the assessee also surrendered cash component of ₹ 1,21,24,500/- as additional income in addition to its regular income shown in the books of account.
On the basis of the impounded documents, Proprietor Shri Aslam Chand Khan had agreed that ₹ 1.5 lacs in the above noting indicates the cash component received over and above the registration charges from individuals to whom the land was sold. Even before the ld. CIT(A), full opportunity was given to the assessee, however, nothing was brought on record by the assessee with regard to the actual receipt of on money. The ld. CIT(A) has also dealt with the assessee’s contention regarding projections and not actual, after recording detailed finding and the ld. CIT(A) reached to the conclusion that note book contained the details of actual and it is not projections as claimed by the assessee. The ld. CIT(A) has also dealt with various judicial pronouncements in support of his contention that mere retraction of the statement by filing the affidavit is not an acceptable evidence in the eyes of law. The ld. CIT(A) has dealt with each and every objection of the assessee with regard to the findings recorded by the A.O. and after considering the same, he confirmed the findings recorded by the A.O. to the effect that the assessee has actually received on money which was over and above the amounts in the books of account. No reason to interfere with the findings recorded by the lower authorities with respect to the addition of ₹ 1,21,24,500/- on account of on money received on sale of plots which has not been accounted for in the books of account. - Decided against assessee.
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2015 (2) TMI 942
Pre commencement expenditure disallowed - Held that:- It is an un-denied fact that the assessee company was incorporated in 2008 and in the interim period the business was dormant but the assessee had advanced its funds to acquired certain real estate for development. To come to a conclusion that expense shall be allowed only when there is corresponding income, is only a wishful thinking by the revenue authorities. The revenue authorities could not at any stage derail the assessee’s argument that the business had been set-up. The phrase set-up has been distinguished from the phrase start up by various fora in various judicial decisions. Thus the amount of ₹ 28,89,560/- deserves to be allowed as revenue expense, as the assessee had already undertaken the course of business. - Decided in favour of assessee.
General Reserve held as share premium amount by the revenue authorities - whether share premium is an amount which could be brought to tax as canvassed by the revenue authorities or independently, it is an item in the capital field, which otherwise would not be taxable? - Held that:- Simply going with the facts of the case, the revenue authorities could not have brought to tax the amount in question, because, the income so disputed never belonged to the assessee, as the assessee did not exist at the time, when the income was actually generated. It changed hands, it went to individual persons, named earlier. The amount actually came into the account books of the assessee as per the order consequential to the scheme approved by the Hon’ble Bombay High Court. Undisputedly it was a case of amalgamation, wherein, as seen from the order of Hon’ble Bombay High Court, the amounts collected as share premium by those three companies were ordered to be brought into the books of the assessee either as General Reserve or as Goodwill. This amount was shown by the assessee company in the General Reserve. The receipt in the hands of the assessee shown as General reverse could not be brought to tax. This for two reasons (a) the receipt does not carry the character of income under any provision of the Act, and (b) it became a receipt in the hand of the assessee on a specific direction of Hon’ble Bombay High Court, relevant portion, as extracted earlier in the order. Thus revenue authorities cannot change the character of receipt from General Reserve to share premium Reserve and tax the same u/s 56(1). - Decided in favour of assessee.
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2015 (2) TMI 941
Penalty 271(1)(c) - Held that:- The assessee's contention that the entire purchases as had been made had been recorded in the primary and final books, such as stock and ledger books have not been negated or controverted by the revenue authorities and even by the DR. The assessee had also shown the evidence of movement of goods in and out of the warehouse and goods transport receipts. These evidences bore the character of bonafide conduct of business by the assessee. The revenue authorities therefore, clearly erred in holding the issue against the assessee, even on an assumption.
Whether or not a person has acted bona fide reflects the state of his mind in respect of his conduct, and, therefore, the assessee has his inherent limitations in establishing this aspect of the manner. It was in this regard that the higher judicial fora has tried to keep mens rea outside the perimeters for sustaining the penalty under normal business conduct or explanations of the assessee. All that the assessee can do, is to explain the circumstances in which he has acted in a particular manner and set out the related facts. This gets proved in favour of the assessee, when the AO writes in the assessment order, “on careful perusal of all submissions, it cannot be denied that purchases have not been made”. Hence The assessee’s explanation regarding bona fides of claim did not suffer from any apparent in consistencies or factual errors and it was quite in line with human probabilities and market trends, therefore, there was no good reason to reject the explanation and proceed to initiate and levy of penalty under section 271(1)(c).
Thus explaining as to where the penalty is to be levied and to be deleted, we are of the view that the years under consideration, the revenue authorities erred in initiating penalty proceeding and levying of penalty. - Decided in favour of assessee.
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2015 (2) TMI 940
Deduction u/s. 80IB(10) denied - According to the AO, development of the land is carried out by the sister company and not by the assessee - CIT(A) directed the AO to allow deduction u/s. 80IB(10) on a sum of ₹ 1,15,18,769 - Held that:- The entire profit earned by a developer was part and parcel of the over all profits derived from the housing project. We are, therefore, of the considered view that the exclusion of the profit on the sale of land on a sole ground that the assessee had shown the profits separately and the same would not relate to the assessee was misconceived and, thus, exclusion of the profit on sale of land was rather unjustified. - Decided in favour of assessee.
Deduction allowed u/s. 80IB(10) of the Act by the CIT(A) viz., a sum of ₹ 3,50,92,256 - AO was of the view that assessee allocated COH expenses in such a way that less COH is shown in projects eligible for deduction u/s. 80IB(10) and more expenses are shown in the projects not eligible for deduction u/s. 80IB(10) of the Act. This, according to the AO, would reduce the total income in respect of profits of the assessee derived from projects which are not eligible for deduction u/s. 80IB(10) - Held that:- We are of the view that the order of CIT(Appeals) does not call for any interference. As rightly observed by him, in para 4.10 of the order of assessment, the AO has given no basis for allocating COH at 4% as against 3.27% adopted by the assessee. The AO’s conclusion is that allocation of COH at 3.27% is very low compared to the turnover of assessee. He has also given no basis for adopting 4%. As rightly observed by the CIT(Appeals), the AO has proceeded on surmises that assessee was increasing the profits of 80IB(10) units and decreasing the profits of non-80IB units to gain tax advantage. There is no basis whatsoever for this assumption of the AO. There is no dispute also that allocation of COH based on turnover will result in distortion of profits of 80IB(10) units and non-80IB(10) units. - Decided in favour of assessee.
Computation of book profits u/s. 115JB - whether amount of expenditure relatable to any income to which section 10 applies, should be added to the profit as per the P&L account? - Held that:- In the issue of reducing/excluding the share of profits from the profit as per the P&L account, in view of clause (ii) to Expanation (1) to section 115JB(2) of the Act, viz., the amount of income to which any of the provisions of section 10, we are of the opinion that the contentions put forth by the assessee that it is not fair to deny the Assessee a relief purely on technicalities, when otherwise, the Assessee was entitled to the same.are acceptable. In this regard, we are also of the view that decision rendered by the Bangalore Bench of the Tribunal n the case of Sri Lakhan Singh v. ACIT, [2013 (2) TMI 319 - ITAT BANGALORE] referred to by the ld. counsel for the assessee clearly supports the stand taken by the assessee. - Decided in favour of assessee.
Whether Sec. 14A of the Act read with Rule 8D of the rules can be imported into the provisions of clause (f) to Explanation (1) to section 115JB? - Held that:- There is no difference between the expression "expenditure relatable" and the expression "expenditure incurred by the Assessee in relation to". Both the expressions mean that whatever expenditure are incurred to earn income which does not form part of the total income under the Act, both direct and indirect expenditure, have to be disallowed. There is no basis for the argument u/s. 115JB of the Act, it is only direct expenses that are contemplated as capable of being added to the profits as per P&L account under clause (f) to Expln.1 below Sec.115JB(2) of the Act. The quantum of expenditure disallowed by the AO by invoking the provisions of Sec.14A of the Act while computing total income under the normal provisions of the Act has not been challenged by the Assessee and the said disallowance has been accepted by the Assessee. In such circumstances, we do not see any reason why the same disallowance cannot be adopted while arriving at the book profits u/s.115JB (2) of the Act read with Explanation 1(f) thereto. In our view the CIT(A) has fallen into an error in coming to a conclusion contrary. - Decided in favour of revenue.
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2015 (2) TMI 939
Capital gain determination - compulsory acquisition - in lieu of the acquisition of land, certain area of residential and commercial plots allotted to assessee - assessee has sold converted plots in the same financial year just after taking the possession and allotment of the said land - agriculture land or not - As per assessee’s submission, the land was agricultural land and was purchased on 21/04/2005, which was acquired by the JDA and in lieu of it, residential and commercial plots were allotted on 22/05/2008, thus period of holding was more than three years. - whether date of transfer of immovable property in the case of compulsory acquisition will be the date when final award was given to the assessee and not the date when the assessee extinguished her rights in the property by accepting terms of acquisition and made unconditional surrender of her rights in the land in pursuance of notification for acquisition of land?
Held that:- For determining whether the assessee was using the agricultural land for agriculture purposes during the period of two years immediately preceding the date of transfer, the date of transfer is material effect. When the assessee relinquished their rights in land on 30/5/2006, the assessee has not completed two years and has not used the agricultural land for agriculture purposes. It is a fact that the compulsory acquisition proceedings were completed on 29/12/2007 and when award was passed by the Land Acquisition Officer U/s 12(2) of the Act. The assessee was allotted residential and commercial plot on 21/8/2008 at village Khatwada, Tehsil- Sanganer, district- Jaipur. The assessee received the compensation on 21/8/2008. The learned Assessing Officer has adopted the reserve rate fixed for residential plot @ 2800 per sq. mt and ₹ 5600 per sq.mt for commercial plot on the basis of reserve rate fixed by the JDA for villages Jhai, Khatwada, Bagru, Khurd, Palri and Bhambhoria. The residential and commercial plots allotted to the appellant in the area of Khatwara. Therefore, the Assessing Officer concluded short term capital gain on the basis of reserve rate is justified. The learned CIT(A) was not justified by holding that agricultural land was not a capital asset on the basis of certificate issued by the Tehsildar, Tehsil- Sanganer, that land was situated in village Khatwada, which was beyond 8 K.M. from the municipal limit. - Decided in favour of revenue.
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2015 (2) TMI 938
Revision u/s 263 - AO has failed to disallow/make addition on account of commission to foreign agents - Held that:- Detailed explanation furnished by the assessee was examined by the Assessing Officer before accepting the claim of the assessee. Moreover, on this issue there are series of orders of the Tribunal and the judgment of the jurisdictional High court, in which it has been held that TDS is not required to be deducted on the payment of commission to foreign agent. In the light of these facts, we are of the view that this issue was duly examined by the Assessing Officer. Therefore, the order of the Assessing Officer cannot be held to be erroneous and prejudicial to the interest of the Revenue on account of lack of enquiry - Decided in favour of assessee.
AO failure to inquire into the source of the additional capital brought by the partners - Held that:- In the instant case, undisputedly the Assessing Officer has raised queries through questionnaire and in response thereto the assessee has filed reply furnishing complete details which were duly examined by the Assessing Officer before accepting the claim of the assessee. There is nothing on record to establish that the assessment order on this issue is erroneous and prejudicial to the interest of the Revenue on account of lack of enquiry. Therefore, we find no merit in the order of the ld. Commissioner of Income-tax in this regard, as the Assessing Officer has made enquiry on the issue of additional capital brought by the partners.- Decided in favour of assessee.
Unsecured loans not verifiable - Held that:- In this regard, the Assessing Officer has issued questionnaire and through query No.8, the assessee was asked to furnish details of unsecured credit along with address, PAN, address of the Assessing Officer, confirmations and copy of income-tax returns. In response thereto the assessee has furnished requisite information vide reply dated 28.7.2011.Therefore, it can be presumed that the Assessing Officer has made proper verification of the information furnished before him before accepting the claim of the assessee. Since the Assessing Officer has made necessary enquiry on the issues, the order of the Assessing Officer cannot be called to be erroneous and prejudicial to the interest of the Revenue on account of lack of enquiry. - Decided in favour of assessee.
AO failure to make enquiries in respect of payments made to the persons covered by section 40A(2)(b) - Held that:- Assessing Officer has made query through questionnaire dated 12.7.201 vide query No.25 which is available of the compilation of the assessee and the query was duly replied by the assessee vide reply dated 28.7.2011. Therefore, with regard to this issue, it can be held that the Assessing Officer has applied his mind to the information furnished before him and the assessment order cannot be held to be erroneous and prejudicial to the interest of the Revenue. - Decided in favour of assessee.
Closing stock wrongly valued - Held that:- The assessee has furnished relevant information pursuant to the query raised by the Assessing Officer. Therefore, it can be presumed that the Assessing Officer has applied his mind to the information furnished before him before accepting the claim. As held in the foregoing paragraphs that the Assessing Officer is not required to record reasons and findings on each and every issue, on which he is satisfied with the explanations of the assessee and the ld. Commissioner of Income-tax cannot set aside the order of the Assessing Officer only for the simple reason that the finding of the Assessing Officer is not acceptable to him - Revision order u/s 263 setaside - Decided in favour of assessee.
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2015 (2) TMI 937
Amount received by discounting the maturity value of loan portfolio on assignment to commercial banks - treated as income during the year - Held that:- Principles of bill discounting and accounting entries are similar to the portfolio sale/securitization of loan portfolios, being the method involved being same, we uphold the orders of AO and CIT(A) on the issue. In fact, both Assessing Officer and CIT(A) analyzed the accounting principles, agreements and came to conclusion that the amounts have accrued at the time of sale of portfolio. We affirm the same and hold that the amount of ₹ 13,09,44,315/- being the amount of discounted future interest received by assessee during the year is taxable in the year. Accordingly, we uphold the orders of Assessing Officer and reject the ground of assessee. - Decided in favour of revenue.
Disallowance being value of Employees Stock Option granted and opted by the employees - whether it as not business expenditure but a notional capital expenditure - Held that:- As decided in Biocon Ltd., Vs. DCIT [2013 (8) TMI 629 - ITAT BANGALORE] the difference (discount) between the market price of the shares and their issue price is "expenditure" in the hands of the assessee because it is a substitute to giving direct incentive in cash for availing the services of the employees. There is no difference between a case where the company issues shares to the public at market price and pays a part of the premium to the employees for their services and another where the shares are directly issued to employees at a reduced rate. In both situations, the employees stand compensated for their effort. By undertaking to issue shares at a discount, the company does not pay anything to its employees but incurs the obligation of issuing shares at a discounted price at a future date. This is nothing but "expenditure" u/s 37(1). The obligation to issue shares at a discounted premium does not arise at the stage the options are granted. It arises at the stage that the options are vested in the employees. The amount deductible has to be determined based on the period and percentage of vesting under the ESOP scheme. On facts, the assessee's method of claiming a larger deduction in the first year defies logic. As the options vest equally over a period of four years, the deduction ought to be claimed in four equal installments on a straight line basis. AO directed to work out the deduction keeping in mind the principle laid down - Decided in favour of assessee for statistical purposes.
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2015 (2) TMI 936
Deduction claimed u/s 80-IA - profits derived from the business of windmill - as per the Revenue, the losses incurred by the assessee for A.Y. 2002-03 and 2003-04 from the activity of windmill have to be reduced from the current year’s profits of the windmill activity in order to compute the amount eligible for deduction u/s 80-IA - Held that:- Assessee is eligible for claim of deduction u/s 80-IA of the Act for the year under consideration in a manner whereby the initial assessment year referred to in section 80-IA(5) of the Act is to be taken as the A.Y. 2004-05 and not the A.Y. 2002-03 as canvassed by the Revenue. Resultantly, we therefore, set aside the order of the CIT(A) and direct the Assessing Officer to recompute and allow the deduction to the assessee u/s 80-IA of the Act as above. - Decided in favour of assessee.
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2015 (2) TMI 935
Unaccounted cash credit - addition u/s 68 made by observing that commodity profit earned by eight family members is income from undisclosed sources of the assessee - Held that:- When loans have been taken from the family members and which have been routed through bank by most of such family members, they cannot be added as cash credits unless it is found as a fact that such bank accounts are benami of the assessee. In case before us, it cannot be alleged that bank account of various family members are benami of the assessee because loans have been taken from such family members for last many years and which have been shown as opening balance and have been accepted by the Department. We would like to point out that it was strongly contended by the ld. counsel of the assessee that similar profits were received by the same family members in the earlier years, therefore, even in this year without pointing out any defect in such amounts or without recording the finding of such profit was bogus, same could not have been addedto the income of the assessee. Thus additions deleted - Decided in favour of assessee.
Unaccounted loan - CIT(A) confirmed addition on amount received from Shri Vijay Kumar s/o of the Proprietor, despite confirmation and source of source of Shri Vijay Kumar explained during the course of assessment - Held that:- Burden casted on the assessee to prove the identity of creditor, genuineness of the transaction and credit worthiness of the person giving loan, is proved then such loans should have been accepted. Therefore, the addition is not justified and accordingly we set aside the order of the ld. CIT(A) and delete the addition. - Decided in favour of assessee.
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2015 (2) TMI 934
Share transaction - long term capital gain v/s business income - revision u/s 263 - Held that:- The intention of holding shares for a long period as investment does not amount to business income. The CIT has also dropped the proceedings initiated u/s. 263 of the I.T. Act in the immediately preceding assessment year 2004-05 on similar facts. Therefore, these transactions are to be treated as long term or short term capital gain and not business income. Thus these transactions are investment and not business. - Decided in favour of assessee.
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2015 (2) TMI 933
Sale of space of advertisement services - Advertisement in publication KALDARSHIKA - Covered in definition of Book or a business directory, yellow page etc. - Held that:- As against the factual finding as recorded by the first appellate authority, we find hat the revenue has not brought any material which is contrary to the facts as recorded by the first appellate authority. Be that as it may, we find that definition of ‘Sale of space for advertisement' as relied by the Departmental Representative falling under Section 65(105)(zzzm) would not cover the product published by the appellant, as the said publication cannot be considered a calendar, but an Almanac, which gives reader a host of information in respect of religions, cultural and historical events, as also the panchang.
We agree with the first appellate authority that the appellant's product KALDARSHIKA cannot be termed as a business directory, yellow pages or trade catalogue; hence it is to be held as ‘book' to be covered under the explanation (2) to the definition of the ‘Sale of Space for advertisement'. - Decided against the revenue.
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