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Showing 461 to 480 of 1478 Records
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2016 (3) TMI 1024
Penalty proceedings under section 271(1)(c) - Held that:- The initiation and levy of the penalty should be on a specific charge otherwise the whole proceedings is bad in law and gets vitiated. This principle has been followed by the Tribunal in several cases. Before us, no contrary decisions of any other High Court have been brought to our notice, accordingly, we are of the view that the entire proceedings of initiation and levy of penalty under section 271(1)(c) is bad in law and hence, the penalty levied by the AO and as confirmed by the CIT(A) is quashed. - Decided in favour of assessee
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2016 (3) TMI 1023
Validity of assessment u/s 153C - real owner of the document seized - presumption - Held that:- The satisfaction note recorded by the AO is identical for all the years except for difference in the assessment year. From the material seized, though there was a reference to the name of the assessee-firm, equally there are some documents which do not even contain name of the assessee-firm but there is nothing to indicate that these documents were disclaimed by Indian Builders Corporation in whose case search was conducted. The AO has not referred to any material to indicate that the assessee is the owner of those seized documents. Therefore, the presumption cast under provisions of section 132(4A) of the Act, comes into play. The said provision stipulates that where any document is found in the possession or control of any person in the course of search it may be presumed that such document belongs to such person. Further, even the provisions of section 292C(1) also provide the same. This presumption was not rebutted by the AO of the searched person. Therefore, it cannot be said that assessee-firm is the owner of the seized material based on which the impugned additions were made. Furthermore, even in terms of law laid down by the Hon’ble Supreme Court in the cases of Bishwanath Chatterjee [1976 (4) TMI 1 - SUPREME Court ] and late Nawab Sir Mir Osman Ali Khan [1986 (10) TMI 2 - SUPREME Court ], assessee-firm cannot be said to be the owner of the document seized. - Decided in favour of assessee
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2016 (3) TMI 1022
Addition made on account of unexplained cash credit in Mauritius Bank Account - Held that:- Find merit in the plea of assessee that where additional income is being added to the income of assessee, then credit for the amount offered by way of additional income, while recording the statement under section 132(4) of the Act should be allowed to the assessee. Another aspect to be noted in this regard is that the CIT(A) vide para 8.7 at page 8 has also allowed the said addition of Euro 2000 equivalent to ₹ 1,03,560/- to be adjusted out of additional income offered of ₹ 10 lakhs. The Revenue is not in appeal against the said finding of CIT(A). In the entirety of the above said facts and circumstances, we direct the Assessing Officer to allow the credit of the balance of ₹ 10 lakhs against the addition made on account of Euro 26000 i.e. ₹ 14,78,360/- and balance amount is to be added in the hands of assessee. However, since the bank account relates to the assessee, we uphold the addition made on account of interest credited to the bank account of Euro 268.43 equivalent to ₹ 15,413/-. - Decided partly in favour of assessee
Addition on account of Bandra Home on protective and substantive basis - Held that:- First of all, the figure mentioned on the said document is 20.00 and in the absence of Assessing Officer establishing 20.00 stands for ₹ 20 lakhs, the said addition cannot be upheld in the hands of assessee. Secondly, the said document has not been proved to relate to the assessee and merely because the assessee had given certain information about Bandra flat, which admittedly is owned by one person and was being used by him and was later owned by some other person, we find no merit in the presumption and assumptions made by the Assessing Officer that the entries in the document relate to a rental income of ₹ 68 lakhs, against which the assessee has earned commission of ₹ 20 lakhs. The said flat was being used as guest house and there was no question of earning rental income. Consequently, the objections and assumption raised by both the authorities that the assessee is aware of such flat in Bandra and hence, the name of Ajay relates to the assessee is baseless. First of all, before making any addition in the case of any of assessee, complete details should be available. It is not even clear as to which Bandra flat, the said paper relates and it is also not clear what are the entries made on that document whether relating to sale of the property or giving the same on rent. In the absence of any clarity, the said document at best is a dumb document and entries in the said document are not relatable to the assessee. Both the authorities below have failed to establish connection of the assessee with the said document, which is annexed to PIL and have also failed to establish that the said entries relate to the assessee himself. In the absence of the same, we find no merit in the aforesaid additions either on protective and / or substantive basis and we delete the same. Also once if commission income was added in the hands of assessee, then no addition is warranted on account of rental income, since apparently, the assessee was only a broker and cannot be both a broker and owner in the same breath. We find no merit in the orders of authorities below in this regard - Decided in favour of assessee
Addition on account of entry made in the computer in the name of Kohinoor’s account - Held that:- As third party confirmed by way of Affidavit filed before the Assessing Officer that the said Excel files related to him and he also confirmed all these facts by way of e-mail to the e-mail ID of Assessing Officer and also filed the requisite passport details in this regard that he was in Pune during the period and those documents were prepared by him and they belonged to him.The onus in this regard was upon the Assessing Officer to verify the claim of assessee and not to merely reject the same. The assessee was engaged in the business of real estate and the transaction had to be seen with an angle of business carried on by the assessee. We find no merit in the aforesaid addition made by the Assessing Officer in the hands of assessee, which in turn, has been clarified by him that in case evidence is filed, the same would be deleted. Further, the learned Authorized Representative for the assessee has fairly pointed out that in order to cover up discrepancy from year to year, it has offered additional income in its hands of ₹ 40 lakhs up to 31.03.2007 and ₹ 10 lakhs in the current year under appeal. In the totality of the above said facts and circumstances, we delete the addition of ₹ 47 lakhs. - Decided in favour of assessee
Addition made on account of cash seized at the time of search - Held that:- With regard to observation of CIT(A) vis-à-vis remaining cash in hand being available on the date of search, we find no merit in the said stand of the authorities below. With regard to entries in the books of account, which were made on a later date, however, looking at the difference between the cash found of ₹ 3,78,500/- and the availability of cash as per cash book of ₹ 42,31,973/-, we are of the view that the presumption is in favour of the assessee that the cash found during the course of search is duly explained. In view of the smallness of cash found during the course of search as against the large amount shown in the books of account, we accept the plea of the assessee. However, this decision of our, shall not be used as precedent in any other case. - Decided in favour of assessee
Addition on account of entries under the head ‘Sai Account’- Held that:- The assessee admits to have included the said sum of ₹ 13,62,000/- in the declared income of ₹ 70 lakhs for the year under consideration and since the amount was additional income, there was no merit in any further addition. We find that the CIT(A) vide para 58.7 at page 68 has directed the Assessing Officer to verify the claim of the assessee in this regard and we find no merit in the ground of appeal raised by the assessee - Decided against assessee
Addition computed on the basis of cumulative total of credit entries on the seized document - Held that:- In the entirety of the above said facts and circumstances, we find merit in the claim of the assessee that the addition cannot be made in the hands of assessee by only totaling of credit side of the entries. The debit side entries, if any, on the said seized document, needs to be considered and only difference of the entries is to be added in the hands of assessee. Further, the assessee claims that it had already offered ₹ 70 lakhs as additional income against the discrepancy, if any, found in the seized documents. The CIT(A) had taken note of the fact that the Assessing Officer had not allowed the benefit of ₹ 70 lakhs while computing addition in the hands of assessee. The Assessing Officer in the remand report has admitted that the same is allowable to the assessee. Accordingly, we direct the Assessing Officer to re -compute the income on the basis of entries in the said document, both credit and debit and to give benefit of additional income of ₹ 70 lakhs before making any addition in the hands of assessee. It may also be clarified here that the additional income of ₹ 70 lakhs also covers the addition of ₹ 13,62,000/-, which has been confirmed by us in respect of ground of appeal No.3. The Assessing Officer shall give reasonable opportunity of hearing to the assessee while re-computing the income of the assessee.
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2016 (3) TMI 1021
Addition made u/s.69B on account of difference in valuation - addition on the basis of the valuation report - Held that:- We find in the instant case the addition has been made by the AO mainly based on the valuation report of the DVO. The Hon’ble Delhi High Court in the case of Punnet Sabharwal (2010 (12) TMI 846 - Delhi High Court ) has held that addition to income based solely on report of DVO is not valid in absence of any evidence of understatement of consideration. There is no other material available with the revenue to show that assessee has paid anything more than what has been stated. Since the Ld.CIT(A) has given a factual finding that the price paid by the assessee for Flat No.7 is more than the price paid by another purchaser being Flat No.201 in the same building and since the addition has been made by the AO only on the basis of the valuation report of the DVO, therefore, in absence of any contrary material/evidence brought before us by the revenue authorities that the assessee has paid anything beyond whatever has been disclosed we find no infirmity in the order of the CIT(A) deleting the addition - Decided in favour of assessee
Deduction u/s 80IA(4)(i) in respect of profit earned by the assessee from development of infrastructure facilities - Held that:- We find merit in the submission of the Ld. Counsel for the assessee that netting of interest should be allowed for computation of deduction u/s.80IA in the light of the ratio of the decision of Hon’ble Supreme Court in the case of ACG Associated Capitals Vs. CIT [2012 (2) TMI 101 - SUPREME COURT OF INDIA ]. We accordingly set aside the order of the CIT(A) and direct the AO to recompute the deduction u/s.80IA by netting the interest.- Decided in favour of assessee
Deduction on account of proportionate interest on diversion of funds for non business purposes - CIT(A) allowed the claim - Held that:- The factual finding given by the CIT(A) that the advances were made to the sub contractors namely Sunil Construction and Ashok Chipre since 2001-02 and 2002-03 and therefore disallowance, if any, could have been made in those years and not in this year also could not be controverted by the Ld. DR. Further the finding given by the Ld.CIT(A) that the own capital and free reserves of the assessee company is much higher than the amount of advances given and no interest bearing funds were utilized to carry the load of these advances in the future years also could not be controverted by the Ld. Departmental Representative. In view of the above and in view of the detailed reasoning given by Ld.CIT(A) while deleting the addition and in absence of any contrary material brought to our notice by the Ld. Departmental Representative we do not find any infirmity in the order of Ld.CIT(A). Accordingly, we uphold the order of the CIT(A) on this issue.- Decided in favour of assessee
Deduction on account of Pooja Expenses - CIT(A) allowed the claim - Held that:- In our opinion the expenditure incurred in Pooja could not be treated as expenditure wholly and exclusively for the purpose of business or profession of a company and the assessee could not be allowed any deduction u/s.37(1) of the Act towards such expenditure. For the above proposition, we find support from the decision of Hon’ble Bombay High Court in the case of Kolhapur Sugar Mills Vs. CIT [1977 (8) TMI 19 - BOMBAY High Court ] wherein it has been held that expenses incurred for Pooja is not an allowable deduction. - Decided against assessee
Assessee also entitled to deduction u/s.80IA(4) on the additional income
Addition on Unexplained expenditure - Held that:- Various expenses incurred on hotel, gold purchases, plywood purchase, mobile bills of Naveen, Dynapac list etc.. Page no. 4 contains details of expenses incurred by both Mahalaxmi Construction Corporation Ltd. and B T Patil and Sons and the receivable position as on 11/07/2007. The contents on page no. 5 arc details of various expenses including those which are written as 'K' expenses. The total of 'K' expenses is ₹ 26,13,500/- which is incurred on various dates between 26/12/2008 to 24/01/2009. Page no. 7 contains working of interest payment on purchase of tender documents, bank guarantees for EMDs, FDs to be kept for EMDs and EMDs required for procuring mobilization advances. It appears that this is a working or estimate of money required by Mahalaxmi Construction Corporation Ltd. and B T Patil and Sons for giving various bank guarantees and meeting EMD requirements. In fact, the word 'official' is also mentioned against these workings. In my opinion, the contents of page 7 do not reflect the unaccounted expenses of the appellant and the assessing officer is directed to reduce this sum from the total for assessment year 2010-11 and thereafter work out the expenses incurred on the basis of these papers as additional income of the assessee. - Decided in favour of assessee
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2016 (3) TMI 1020
Eligibility of exemption claimed u/s. 10B on call centre operation - denial of claim on the ground that the assessee company did not have any ‘Certificate of Approval’ from the Board of Approval appointed in that regard by the Central Government - also the assessee could not submit any ratification obtained from the ‘Board of Approval’ as required as per the clarification of the CBDT dated 09.03.09 - Held that:- It is not in dispute that a call centre operation has been duly notified as IT enabled services and thereby eligible for deduction for 100% export oriented unit contemplated u/s. 10A/10B of the Act.
Instruction (F.No.178/19/2008-IT-I) dated 9th March’ 2009 issued by CBDT clarifies that the power to grant approval u/s. 14 of industrial (Development & Regulations) Act, 1951 has been delegated to Development Commissioners and approval granted by the Development Commissioner shall be considered valid for the purpose of exemption u/s. 10B. It would be pertinent to note that in the instant case approval under the STP scheme is granted by the Designated Officer, Department of Information Technology and by the Inter-ministerial Standing Committee (IMSC). Hence, the approval granted under STP Scheme complies with all the requirements contemplated u/s. 10B of the Act when read with Industrial (Development & Regulations) Act, 1951, Foreign Trade Policy 2004-2009, Hand book of Procedures (Volume-I) & Appendix to the Handbook
As find that the contents of audit report in form no. 56F and 56G together with the computation mechanism remains the same for claiming the deduction u/s. 10A/10B of the Act.the assessee is entitled to claim the benefit of deduction under the provisions of section 10A as well as section 10B of the Act. Hence we find no infirmity in the impugned orders of the ld.CIT(A) in deleting the disallowance as made by the ld.AO on this issue. We uphold the impugned orders of the ld.CIT(A). - Decided against revenue
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2016 (3) TMI 1019
TDS u/s 194C(2) - non deduction of tds on payments made to transporters - whether no relationship of a contractor between the appellant and the small contractor exists? - CIT(A) held that non-existence of a "formal contractual agreement" vitiates the very existence of an "oral contract" - disallowance u/ section 40(a)(ia) - Held that:- Since no amount of the freight was unpaid or was payable as on 31-03-2007 we hold that the provisions of section 40(a)(ia) are not attracted and in this view of the matter we are of the opinion that Revenue's appeal is liable to be dismissed.
The assessee is a transport contractor. The assessee was awarded contract of transportation to various locations of Ambuja Cement, Manigarh Cement, Maratha Cement etc. The assessee received freight charges from these companies. The contract with these companies shows that the assessee was responsible for transportation of cement from one destination to other. The contractual liability was discharged by transporting cement through assessee's own trucks and also from hired trucks belonging to outside parties. It is clear from the facts on record that the risk and responsibility for carrying out the contract work was solely that of the assessee. There is no material to suggest that there was any contract or sub contract written or oral with the outside truck owners and the assessee. It is in these circumstances that when these outside truck owners do not have any responsibility or liability towards the Ambuja Cement or other principals then in absence of any privity the obligation to deduct the tax at source was not that of the assessee.
Since we have already held that the provisions of section 40(a)(ia) were not attracted inasmuch as no amount was payable as on the close of the year as well as in absence of any contracts, there was no obligation on the part of the assessee to deduct the tax at source - Decided in favour of assessee
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2016 (3) TMI 1018
Penalty made u/s.271(1)(c) - merger expenses - Held that:- Assessee had shown a merger expenditure of ₹ 15,99,298/- in its profit and loss account and suo motu added it back in its computation statement. As per the Ld. AR, merger related expenditure to the extent of ₹ 5,14,240/- was accounted by the assessee under various other heads which came to light only during the course of verification. Nevertheless what we find is that even for this amount assessee was eligible for claiming 1/5th write off u/s.35DD of the Act. Thus at the best, claim can be considered to be erroneously made and not one done with any malafide intention or with any intention to conceal. Whether a particular expenditure can be related to merger cost itself is debatable. In our opinion, levy of penalty ought not have been done on such amount.
Levy of penalty relating to prior period expenditure admittedly the Tribunal in assessee’s appeal held the differential CST of ₹ 91,89,001/- to be an allowable claim. Vide the very same para it also held that differential property tax of ₹ 23,46,492/- to M/s. Nagar Nigam paid was also an allowable claim. CIT (A) at page 5 of his order in assessee’s appeal against levy of penalty, deleted the penalty levied of ₹ 1,49,658/- made for expenses relating to earlier years. What is left out of the above amounts is ₹ 4,96,780/- being obsolete stock written off and ₹ 37,06,054/- being advance to Balbir Distilleries.
In so far as obsolete stock is concerned, addition was sustained for a reason that assessee could furnish details for ₹ 20.73 lakhs against the claim of ₹ 25,69,780/-. Tribunal has has clearly mentioned this. Tribunal has also mentioned that what assessee has produced was a list of small items. Non-production of supporting records to show value of obsolete stock could, in our opinion, be a reason for disallowance. However, we cannot say that such a claim is far fetched or an illegitimate one. Just because the claim was disallowed, in our opinion, penalty ought not have been levied on the said amount.
Disallowance towards advance to Balbir Distilleries which was written off by the assessee, this Tribunal sustained the order of CIT (A) wherein he deleted the disallowance to the extent of ₹ 33 lakhs. AO had disallowed the claim for a reason that it was a capital loss being an advance, given for acquiring capital asset. There is no finding by the lower authorities that the advances were not related to the business of the assessee. Whether write off of advance can be considered as a capital loss or revenue loss is, in our opinion, is a debatable issue not amenable to a levy of penalty.
Write off of bad debts disallowed by the AO on which penalty has been levied, CIT (A) in assessee’s appeal had deleted the penalty relatable to the sum of ₹ 15,79,679/-. When the matter reached this Tribunal it deleted the disallowance made by the AO in full. Hence penalty levied on such amount cannot be sustained. Levy of penalty is deleted on all. - Decided in favour of assessee
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2016 (3) TMI 1017
Treatment to interest income - Held that:- We find that in assessment year 2005-06 and 2006-07 and also in assessment year 2009- 10, the Tribunal has restored back the matter to the file of the Assessing Officer for fresh decision with the direction to readjudicate the issue afresh in the light of the order of the State Government dated 03/04/80. Hence, in the present year also, we set aside the order of CIT(A) and restore the matter back to the file of the Assessing Officer for fresh decision in the light of the order of State Government dated 03/04/80. - Decided in favour of assessee for statistical purposes.
Disallowance u/s 14A - Held that:- in the present case, the Assessing Officer has recorded his satisfaction with proper reasons that the assessee’s claim regarding the amount to be disallowed u/s 14A is not correct. At the cost of repetition, we again narrate the reasoning given by the Assessing Officer in the assessment order for the present year. In Para 5 of the assessment order, the Assessing Officer has stated that the computation of disallowance u/s 14A of the Act is not in accordance with the provisions of Rule 8D and thereafter, the Assessing Officer has worked out the disallowance as per Rule 8D of the Act. We have also discussed earlier in this order that if the assessee gives actual working of the amount of expenses incurred for earning exempt income then the same has to be examined by the Assessing Officer and before rejecting the same, the Assessing Officer has to give proper reasons but if the working of the assessee is of the estimated expenditure then in our considered opinion, such working itself is not as per Rule 8D because Rule 8D prescribes a particular manner and method for estimation of expenses incurred for earning exempt income and therefore, if actual detail and working is not made available by the assessee then there is no other option but to adopt the basis of estimation as per Rule 8D and since the working of the assessee regarding estimation of the expenses is not as per Rule 8D, the reasoning given by the Assessing Officer for not accepting the working of the assessee that the same is not as per Rule 8D, is cogent reasoning in our considered opinion and therefore, none of the various judicial pronouncements cited by Learned A. R. of the assessee is rendering any help to the assessee in the present case. - Decided against assessee
Addition of amount received for up gradation and development of computer labs - Held that:- We find that this is the claim of the assessee that the amount in question was retained by Inotech for providing training and therefore, even if this amount is considered as income being grant received, then the expenses on account of training has to be allowed resulting into no effective addition and in view of these facts, we hold that this addition made by the Assessing Officer is not justified in the facts of the present case. The same is deleted. - Decided against revenue
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2016 (3) TMI 1016
Rental Income - “Income from business” or “Income from house property” - nature of income - Held that:- In the present case, the assessee has acquired the land on lease basis in various places i.e. Mumbai, Kolkata, Bangalore, Chennai and constructed commercial complexes and leased out the same to the commercial entrepreneurs such as Standard Chartered Bank, Bata India Limited, EDS Electronic Data Systems India (P) Ltd. and Spencers for a higher rental amount. The intention of the assessee is very clear from the date on which it is existed is to carry out the business activity such as to construct the godowns or residential or commercial buildings or commercial shops, etc. the lands owned by firm or by taking land on long lease from others is the activity of the assessee. In our opinion, the judgement of the Hon’ble Supreme Court in the case of M/s. Chennai Properties and Investments Ltd.[2015 (5) TMI 46 - SUPREME COURT ] squarely applies to the facts of the case and we hold that the income earned by the assessee is “Income from business” and not “Income from house property”. - Decided in favour of assessee
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2016 (3) TMI 1015
Exemption u/s 54F - whether two flats owned by the assessee are commercial and assessee is eligible for exemption under sec. 54F for acquiring 3 flats in lieu of development agreement - Held that:- In the present case on hand, the records show that the assessee along with family members purchased incomplete residential apartment consisting of 8 flats. The assessee has taken housing loan from bank. The plan sanction was also for the purpose of residential purpose. The revenue records show that properties are residential in nature. Just because, the flats are let out for commercial purposes for financial viability, it cannot be said that the properties lose its basic nature and characteristics. From the facts, it is undoubtedly clear that as on the date of transfer of original asset, the assessee has owned two residential flats. Therefore, we are of the opinion that the assessee is not eligible for exemption u/s 54F of the Act for the flats received in lieu of joint development agreement. The CIT(A) has rightly confirmed the order of the assessing officer denial of claim - Decided against assessee.
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2016 (3) TMI 1014
Addition pertaining to interest income - Held that:- We are of the view that there is merit in the contention of the assessee that the period of “Jan – Dec” stated in the later part of the loose paper should relate to the calendar year 2001. Since the assessee is following cash system of accounting and since these figures have been claimed to have been noted by the broker, there is merit in the submission of the assessee that the broker has noted down the prospective interest income of the calendar year 2001. Accordingly, we are of the view that the above said amount of ₹ 3,36,000/- could not be assessed in AY 2001-02, since there is no evidence to show that the assessee has received this interest income. Accordingly, we set aside the order of Ld CIT(A) on this issue and direct the AO to delete the addition of ₹ 3,36,000/- pertaining to interest income.
Addition of loan - Held that:- As observed by us in the earlier paragraphs, the question before us is about the interpretation of the entries found noted in the loose paper. It is also a fact that the entries made in the loose paper have not been corroborated with any other material. There is no dispute that the money lending business was carried on by assessee’s spouse and it has been inherited by the assessee. Further, these transactions have been accepted to have been made through a broker and the receipt of ₹ 2.00 lakhs on 6.6.2000 supports the contentions of the assessee the amount of ₹ 22.00 lakhs were deployed prior to 1.4.2000. This is also supported by the fact that an amount of ₹ 1,08,000/- was shown as adjusted against the amount of ₹ 2.00 lakhs, meaning thereby the amount of ₹ 1,08,000/- pertain to the period prior to 6.6.2000, in which case, the corresponding principal amount of ₹ 12.00 lakhs should have been available prior to 1.4.2000. Further, it is seen that the broker Shri Chottu has deployed the amount of ₹ 10.00 lakhs on various dates and he has been working from the firm R.Ravinder & Co. also. Hence it is seen the loans were given as and when there was a demand and hence the claim of the assessee that the amount of ₹ 10.00 lakhs was also available with the assessee prior to 1.4.2000 is, in our view, finds merit. Accordingly, we set aside the order of Ld CIT(A) on this issue and direct the AO to delete the addition of ₹ 22.00 lakhs.
Addition from her brother in law - Held that:- We notice that the seized documents as well as the explanations furnished by the assessee would show that Ld CIT(A) has proceeded to make this addition on wrong presumption. The seized documents as well as the evidences furnished by the assessee show that the brother in law of the assessee had included his name along with the name of original owner of the flat. Later on the flat has been claimed to have been sold for a sum of ₹ 61.00 lakhs and the brother in law of the assessee has been claimed to have appropriated a sum of ₹ 20,25,000/- in settlement of loan obtained by him from State Bank of India. Thus, we notice that the brother in law of the assessee has indulged in the property transaction and it is claimed that the assessee later on lodged her claim over the sale consideration. Accordingly, in a family settlement, it is claimed that the brother in law of the assessee paid a sum of ₹ 28.50 lakhs to the assessee, which was shown as gift. Due to family dispute about the ownership of flat, it is stated that the incidence of capital gains tax, if any, is required to be addressed separately. It is an undisputed fact that the details of property transactions are available in the seized records. Considering the contents of the seized records as well as the explanations furnished by the assessee, we are of the view that the claim of receipt of ₹ 28.50 lakhs from her brother in law cannot be doubted with. Accordingly, we are not inclined to agree with the view taken by the Ld CIT(A) in the peculiar facts and circumstances of the instant case. Accordingly, we set aside his order on this issue and direct the AO to delete the addition - Decided in favour of assessee
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2016 (3) TMI 1013
Disallowance of carry forward of loss - Held that:- Since no claim of set off of loss is made by the assessee in this year the action of AO in rejecting to allow carry forwarded is not tenable as it preempts the future quasi-judicial powers of the AO who has to actually set off of the loss if and when there are profits. Therefore, the remarks/ findings of the ld. AO denying claim of carryover of earlier losses and unabsorbed depreciation are expunged. The legality of claim of set off will be considered by AO who will deal with the aspect of set off. See Manmohan Das [1965 (11) TMI 33 - SUPREME Court ]. Thus the grounds of the assessee to this extent are allowed.
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2016 (3) TMI 1012
Nature of receipts of the assessee - income from salary or professional receipts - whether the relationship between the assessee and the Resonance was of employee and employer or Consultant and Principal? - Held that:- The document before us i.e. Consultancy Agreement is not colorful device but only an admitted document and no material whatsoever has been brought on record to show that it is a colorful device. No notice u/s 131 was issued to Resonance Institute to confront that the agreement is a colorful device. In view of that we decide the issue in favour of the assessee and against the revenue.
Once we have held that the relationship between the assessee and the Resonance was of Consultant/Professional, therefore, the consequences of being professional are required to be given to the assessee. As per the ld. CIT (A), the only reason for denying the expenses etc was that the assessee has been treated as a salaried employee instead of Consultant. Once we have held that the assessee is a consultant, therefore, as a consequence, the assessee is entitled to benefit under the Act. Therefore, ground no. 1.1 and 1.2 are also decided in favour of the assessee. No reason whatsoever has been given by the authorities below for rejecting the books of account. The sole reason given by the authorities below was that the assessee is a salaried employee and not the professional. Since we have held that the assessee is a professional, therefore, this ground is also decided in favour of the assessee.
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2016 (3) TMI 1011
TDS u/s 194C - non tds on advertisement expenses - disallowance u/s 40(a)(ia) - revision u/s 263 - Held that:- find from the amended provision of Finance Act, 2012 that in case, assessee fails to deduct TDS from the payment of expense to the party concerned and receiver of the payment has paid tax on the amount received then assessee should not be held as guilty for default of TDS u/s 40(a)(ia) of the Act. Ld. AR submitted that a certificate from Chartered Accountant certifying that the party i.e. M/s I.S. Trading to whom the advertisement expenses were paid by assessee that the income tax on the amount received from assessee has been duly paid which is placed on page 26 and 27 of the paper book. Therefore, we are of the considered view that the observation of Ld. CIT u/s. 263 of the Act that the order is erroneous is correct observation. However, as per the provision of Sec. 263 of the Act the order of the AO should not only be erroneous but also to the interest of revenue. So in this view of the matter the order passed by Assessing Officer is not prejudicial to the interest of revenue. Regarding the claim of assessee that the printing material expense is out of the purview of TDS provision, we find that this is a transaction of purchase of printing material as evident from the bill of the party concern M/s Jyoti Enterprise which are placed at page No. 6 to 8 of the paper book. We also find that there was no contract between the assessee and the party M/s Jyoti Enterprise for attracting the provision of Sec. 194C of the Act. In our considered view, we reverse the order of Ld. CIT - Decided in favour of assessee
Revision u/s 263 - addition of interest income - Held that:- CIT found the order of the AO erroneous and prejudicial to the interest of Revenue as the income of the interest was understated by the assessee by an amount of ₹ 1,30,145/-. However before us the ld. AR has submitted the reconciliation statement for the interest income and the explained that part of the interest income was pertaining to the earlier year. Therefore we reverse the order of the ld. CIT passed under section 263 of the Act.- Decided in favour of assessee
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2016 (3) TMI 1010
Penalty u/s 271B - accounts of the assessee from speculative business were not audited u/s 44AB - whether the assessee's speculative transaction on NCDEX can be considered as actual transaction liable for provision of audit u/s 44AB read with Section 271B or they are mere speculative profit and transaction value and the entire notional transaction value cannot be treated as turnover of the assessee? - Held that:- ITAT Pune Bench in the case Banwari Sitaram Pasari HUF vs. ACIT [2013 (1) TMI 234 - ITAT PUNE] and Growmor Exports Ltd. vs. Asstt. Commissioner (2000 (6) TMI 774 - ITAT MUMBAI) have held that the notional value of such speculative transactions cannot be held as turnover as the assessee is eligible only to income or loss and delivery of the commodities is not exchanged. Thus find force in the contentions of the ld. AR of the assessee that ITAT Mumbai Bench in the case of Anahaita Nalin Shah Vs. DCIT [2014 (1) TMI 1582 - ITAT MUMBAI] has not considered these two published decisions in the cases of ITAT Pune Bench in the case Banwari Sitaram Pasari HUF vs. ACIT and Growmor Exports Ltd. vs. Asstt.Commissioner (supra).
The contention of the ld. AR of the assessee is that when there are two views on same issue, the issue favorable to the assessee should be considered for which the ld. AR of the assessee relied on the decisions of CIT vs. Vegetable Products Ltd. [1973 (1) TMI 1 - SUPREME Court] and CIT vs. Vatika Township (P) Ltd. (2014 (9) TMI 576 - SUPREME COURT). - Decided in favour of assessee
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2016 (3) TMI 1009
Accrual of income - Assessment of income - nature of receipt - assessee has received power escalation charges from CSEB - department has taken a view that the said amount is taxable on accrual basis, therefore, made additions for the assessment year 2008-09 - Held that:- CIT(A) after considering the facts and circumstances of the case, held that it is settled principles of law that there cannot be double taxation of any income and set aside the issue to the file of the A.O. with a direction to consider the assessee’s submissions. In case the appeal of the assessee for the assessment year 2008-09 is dismissed, then the relief should be allowed for assessment year 2009-10. In case, the appeal of the assessee for the assessment year 2008-09 is allowed in favour of the assessee, then no relief should be given for the assessment year 2009-10. The sum and substance of the CIT(A)’s order is that the income is taxable either for the assessment year 2008-09 or for the assessment year 2009-10 and it cannot be taxed for both the assessment years. We concurred with the decision taken by the CIT(A). It is settled proposition of law that no income shall be taxed twice. In the present case on hand, the A.O. has accepted that the income has been taxed by the department for the assessment year 2008-09. As rightly contended by the assessee it can be taxed either for the A.Y. 2008-09 or 2009-10 and it cannot be taxed for both the years. Therefore, we are of the opinion that, the CIT(A) has rightly set aside the issue to the file of the A.O. with the above direction. We do not find any error or infirmity in the order passed by the CIT(A) - Decided against revenue
Disallowance of sales tax and service tax on payment basis - addition u/s 43B - Held that:- We are of the opinion that CST and Service tax paid under protest is deductible in the year in which such liability was paid u/s 43B of the Act, irrespective of whether such liability was incurred in any previous year. Therefore, we direct the A.O. to delete the additions made u/s 43B of the Act.- Decided against revenue
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2016 (3) TMI 1008
Computation of income from business u/s 45(2) when a capital asset converted into stock in trade - A.O. computed long term capital gain for conversion of capital asset into stock in trade as on the date of conversion and also computed income from business proportionately to the area of site sold during the year under consideration - Held that:- When a capital asset is converted into stock in trade, as per section 45(2) of the Act, it is certain that the assessee needs to compute long term capital gains as on the date of conversion and pay tax as and when such capital asset is sold. But, when it comes to calculation of capital gain as well as income from business, there won’t be any difference in the area of capital asset converted into stock in trade and stock in trade used for business purpose.
In the present case on hand, on perusal of the calculations provided by the A.O., we find that the A.O. has made basic mistake in calculating the proportionate land area for the purpose of computation of income from business, by ignoring the land earmarked for internal roads, drains and other civic amenities. Though assessee could not receive any value for such earmarked land, which is mandatory for any developer to allow setback as per the prevailing laws regulating such activities. Therefore, we are of the opinion that the A.O. was not correct in adopting gross land for computing long term capital gain and only saleable land for the purpose of income from business. The CIT(A) rightly deleted the addition. We do not see any error in the order of CIT(A). Hence, we inclined to upheld the order of CIT(A) and direct the A.O. to allow the cost of 9,778 sq.yds. land which is earmarked for roads, drains, parks and other civic amenities for the purpose of computation of income from business. - Decided against revenue
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2016 (3) TMI 1007
Disallowance of deduction u/s 80P(2)(i) - addition of gross interest income treating interest received from banks and govt. securities as income from other sources u/s 56 - Held that:- Major portion of interest income is from government securities and are not in the nature of short term deposits. Therefore, the facts of the case are clearly distinguishable from the facts discussed in the case of Totagars Co-op. Sale Society Ltd. vs. ITO (2010 (2) TMI 3 - SUPREME COURT) and that of co-ordinate bench in the case of Jafari Momin Vikas Co-op. Credit Society Ltd. [2014 (1) TMI 481 - ITAT AHMEDABAD]. This interest income is on investments not of short term nature except bank interest which too includes interest on Fixed Deposits. In these circumstances, we are of the view that as the assessee suo moto has given a proposition of taxing the interest and commission income on investments to be taxed u/s 56 of the Act and has also shown that proportionate expenses of ₹ 3,31,828/- have been incurred to earn the above income and the same has duly been accepted by the assessing authority, so we find it justified that Assessing Officer has rightly taxed the interest income of ₹ 2,16,689/- as income from other sources.
From going through the above provisions it is very clear that the assessee is eligible for deduction of ₹ 50,000/- under section 57 of the Act and the same should have been allowed by the Assessing authority. Partly allow the appeal of assessee and accordingly the addition made by Assessing Officer shall be reduced to ₹ 1,68,305/- [Rs.2,16,689/- minus ₹ 50,000/- deduction u/s 80P(2)(c)].
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2016 (3) TMI 1006
Revision u/s 263 - AO could not make the verification for the amount towards the income of labour charges which was not disclosed by assessee in his return of income - Held that:- AR had not brought anything on record that the disputed income was declared by the assessee in the subsequent year and the TDS was also deducted in the subsequent year. The case cited by the ld. AR above regarding the labour charges income is different from the facts of the instant case. The case law was on the issue of project completion method and percentage completion method for working out the profit of the assessee engaged in the construction of commercial and residential premises. Accordingly we are not inclined to interfere in the order of the ld. CIT. - Decided against assessee
Commission expenses unverified - Held that:- It is settled law that the commissioner of income tax can exercise his jurisdiction u/s 263 of the Act only in cases where no enquiry is made by the Assessing Officer. In the instant case, it is admitted by the Income Tax Department that the Assessing Officer had made some enquiries though according to them it was not a proper enquiry. In our view of the fat that some enquiry was made is sufficient to debar the authorities from exercising the powers u/s 263 of the Act. The Tribunal was accordingly justified in setting aside the order passed u/s 263 of the Act. We do not find any substantial question of law arising for consideration the appeal is accordingly dismissed. In the case one hand, the AO has made an addition by disallowing the commission expenses after making the necessary enquiry. The instant case is duly covered with the decision of Hon’ble Allahabad High Court M/s Ashok Handloom Factory Pvt. Ltd. (2016 (3) TMI 650 - ALLAHABAD HIGH COURT) as discussed above, therefore relying on the same, we reverse the order of Ld. CIT for u/s 263 of the Act. - Decided in favour of assessee
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2016 (3) TMI 1005
Revision u/s 263 - deduction in respect of excise duty on closing stock was claimed - Held that:- In the present case the facts are that a deduction in respect of excise duty on closing stock was claimed in AY 2009-10 and the same was added back in the computation of income for the following assessment year i.e. AY 2010-11. The tax rate for both the years was 33.99%. Similarly, a deduction was claimed in the earlier assessment year i.e. AY 2008- 09 and added back in the computation in AY 2009-10. The deduction was claimed and allowed in the assessment in line with the case of Berger paints India Ltd. (2004 (2) TMI 4 - SUPREME Court ) and as per the said decision of Hon'ble Supreme Court, deduction u/s. 43B is to be fully allowed for excise duty and other duties on payment basis inclusive of the amount included in closing stock. In view of above discussion, we find that the order passed by the ld. CIT u/s 263 of the Act is not erroneous in so far as it is prejudicial to the revenue.
Interest on the refund granted by the AO under section 244A - Held that:- The assessee is very much entitled to have the refund along with the interest. Therefore we deem it that the AO's order is not erroneous in so far as it is prejudicial to the revenue. Hence provisions of section 263 are not applicable and should be dropped we allow this ground of appeal of the assessee accordingly.
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