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Showing 461 to 480 of 1439 Records
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2015 (7) TMI 983
Re-compute the deduction u/s 10A - disallowance made by the AO was allowed ignoring the facts that the foreign exchange fluctuation gain received has not been earned by the assessee through export of software - Held that:- There is no dispute as the assessee engaged in the business of software development realized a higher sale price on account of foreign exchange fluctuation. The assessee by way of a revised return included this gain also in its claim of exemption u/s 10A.
Considering the provision of section 10A(1) of the Act and the decisions referred to by the CIT(A) read along with the decision of the Madras High Court in the case of CIT vs Penatsoft (2010 (7) TMI 75 - MADRAS HIGH COURT ), we find that the Revenue’s challenge has to fail. The gain in the sale price as a result of fluctuation in the foreign currency has a direct nexus and is of the first degree and cannot be equated to situations where surplus funds are parked in Fixed Deposits yielding "interest income". The increase in sale price as a result of currency fluctuation impacts the sale price on which the exemption is to be calculated.
The issue under consideration was whether on the ECB loan (external borrowings) which yielded a gain as a result of foreign exchange fluctuation was a capital receipt or a Revenue receipt. Considering the principle laid down by the Apex Court in Woodward Governor (2009 (4) TMI 4 - SUPREME COURT), it was held that it is a Revenue receipt on the principle that if a loss suffered on account of foreign exchange fluctuation is allowable as a Revenue expenditure then the gain on such a receipt would be a revenue receipt. The issue was in the content of utilization of the loan at the relevant point of time. In the facts of the present case, the gain due to foreign exchange fluctuation is in the sale price and not on account of external borrowing. The gain following the principle of FabIndia Overseas Ltd.(1979 (11) TMI 36 - DELHI High Court) can be considered to be arising on account of additional sale proceeds. The view is also supported by the decision of the Madras High Court. Decided against revenue.
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2015 (7) TMI 982
Carry forward depreciation to assessee disallowed u/s. 154/ rws 263 - CIT(A) allowed claim - Held that:- The restriction of eight years was removed. Even though Special Bench decision of the ITAT in the case of DCIT Vs. Times Guaranty Ltd., [2010 (6) TMI 516 - ITAT, MUMBAI ] was relied on by the CIT at the time of passing the order u/s. 263, subsequently, Hon'ble Gujarat High Court in the case of General Motors India Pvt. Ltd., Vs. DCIT (2012 (8) TMI 714 - GUJARAT HIGH COURT ) has held that restriction is not valid and unabsorbed depreciation could be set-off against the profits and gains of subsequent years. In view of this, I agree with the order of the CIT(A) and reiterate that assessee is entitled to set-off the carried forward depreciation of AY 1996-97 and 1997-98. In view of this, we direct the AO to modify the orders if not done so far and allow the set-off accordingly. - Decided against revenue.
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2015 (7) TMI 981
Addition made u/s. 68 - Held that:- The unsecured loans received during the year of ₹ 3,00,000/- have been held to be unexplained cash-credits within the meaning of section 68 of the Act. We find that in the impugned assessment, which has been affirmed by the CIT(A) also, there is no material referred by the Assessing Officer which came to his notice subsequent to the assessment order dated 28.03.2003(supra). Pertinently, in the assessment order dated 28.03.2003 (supra), the statement of Shri Nitin J. Rughani sought to be relied upon by the Assessing Officer in the impugned assessment, was very much available and it is not a new material. In fact, in the course of the assessment dated 28.03.2003 (supra), the Assessing Officer carried out detailed enquiries including examination of the concerned parties u/s 133(1) of the Act. An affidavit was also filed by Shri Nitin J. Rughani pointing out that so far as the transactions relating to the assessee were concerned, the same are genuine. All these assertions have been made before the CIT(A). So however, we find that the CIT(A) has glossed over the same and he has merely referred to the material with the Assessing Officer prior to the finalization of assessment order dated 28.03.2009(supra). Ostensibly, such material was put to verification by Assessing Officer and only thereafter, he has accepted the transactions as genuine in the assessment dated 28.03.2003 (supra). Considering the entirety of facts and circumstances of the present case, we are unable to uphold the assertions of the Assessing Officer that the unsecured loans of ₹ 3,00,000/- received by the assessee during the year under consideration were unexplained within the meaning of section 68 of the Act. As a consequence, we set aside the order of CIT(A) and direct the Assessing Officer to delete the addition of ₹ 3,00,000/-. - Decided in favour of assessee.
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2015 (7) TMI 980
Diversion of income by overriding title - payment to expartners or spouses of deceased partners - CIT(A) deleted addition - whether the aforesaid payment is nothing but diversion of income by overriding title? - plea of the assessee was that, the amount was a prior and overriding charge on the receipts of the firm in terms of the partnership deed and the actual income can be arrived at only after reducing the impugned payments from the gross receipts of the year - Held that:- Similar dispute for assessment years 2000-01, 2001-02 and 2003-04 was decided by the Tribunal in favour of the assessee. The CIT(A) noted that there was no material change in the relevant clause of the partnership deed when compared to year which were before the Tribunal. Therefore, following the precedents, he correctly allowed the claim of the assessee that the impugned payment to retired partners or spouses of the deceased partners under the terms of the partnership deed is diverted by overriding title.- Decided against revenue.
Disallowance under section 14A - interest expenditure incurred for earning dividend income from the preference shares - Held that:- he ultimate conclusion of the CIT(A) in directing the Assessing Officer to recompute the disallowance u/s 14A of the Act in accordance with the decision of the Hon’ble High Court in the case of Godrej & Boyce (2010 (8) TMI 77 - BOMBAY HIGH COURT ) is hereby affirmed - Decided against assessee.
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2015 (7) TMI 979
Reopening of assessment - Addition on account of negative cash balance as on 31.03.2002 - Unexplained receipts - CIT(A) deleted the addition - Held that:- The impugned order of reassessment passed by the AO without disposing off the objections raised by the assessee against the issuance of notice u/s 148 by a separate order is liable to be quashed. See ACIT, Cen.Cir.-2, Baroda vs. M/s Sagar Developers [2015 (7) TMI 718 - ITAT AHMEDABAD] and General Motors India P. Ltd. vs. DCIT [2012 (8) TMI 714 - GUJARAT HIGH COURT] - Decided in favour of assessee.
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2015 (7) TMI 978
Eligibility for exemption u/s. 194A(3)(v) from TDS on interest paid/credited on time deposits to its members - assessee is a cooperative bank - Held that:- Considering all the facts in totality in the light of the memorandum explaining the provisions in the Finance Bill 2015 and the clarification by the Board that the Circular has not been withdrawn, makes it ample clear that the impugned provisions relating to the liability of TDS would come with effect from 01/06/2015, we, therefore, set aside the findings of the Ld. CIT(A) and direct the Assessing Officer to delete the impugned additions made in the order u/s. 201(1) & 201(1A) of the Act. See case of Belgaum District Central Cooperative Bank Ltd. [2015 (7) TMI 719 - ITAT PANAJI] - Decided in favour of assessee.
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2015 (7) TMI 977
Valuation of land - fair market value of the land - cost of improvement of ₹ 1,00,000 being declined in the computation of capital gains by the revenue - Held that:- In the light of Hon’ble Supreme Court’s judgment in the case of Mehraban & Ors [1997 (4) TMI 497 - Supreme Court Of India], a copy of which was filed before us as well, there is indeed no error in rejecting in valuation @ ₹ 70 per square yard adopted by the a.o. However, learned CIT(A) was in error to the extent that solatium is required to be treated as a part of the compensation, for income tax purposes, in the light of Hon’ble Gujarat High Court’s judgment in the case of Vadilal Soda Ice Factory Vs CIT [1970 (9) TMI 12 - GUJARAT High Court], and, therefore, as against valuation at ₹ 85 per square yard, he should have taken the same as at ₹ 110 per square yard as claimed by the assessee.
As regards the cost of improvement, there is no dispute about the fact of the levelling having been done but the claim is declined only for want of evidences. In the case of expenses of this nature, i .e on levelling etc, it is not always possible to have third party evidences of expenses. The assessee is an individual and not a corporate. Keeping in view all these factors, and smallness of amount, we see no reasons to decline the claim. - Decided against Revenue.
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2015 (7) TMI 976
Disallowance u/s 14A r.w. Rule 8D - Held that:- Every economic activity, particularly in today’s extremely competitive environment, entails some degree of cerebral activity. There is, however, no corresponding expenditure, or claim in its respect, while the issue at hand is the apportionment of such expenditure. Income, which may or may not arise on incurring expenditure, and again with no certainty as to its quantum, cannot by itself form the basis of either incurring or allocation of expenditure. - Revenue’s reading of r. 8D as equally misplaced. The estimate per r. 8D(2) is only qua expenditure relatable to tax exempt income/s. The expenditure claimed stands debited in the assessee’s accounts, which could be inquired in to as to their purpose. For all we know, the assessee may be managing his investments in instruments yielding tax exempt incomes, which are at a healthy sum of ₹ 21.71 cr., i.e., on an average for the year, on his own, or could also be assisted by personnel, who stand remunerated. No inquiry in this regard stands made, while the assessee has maintained proper accounts, duly audited and, further, bases his claim of having incurred a lower expenditure than that per the statutory prescription of r. 8D, thereon. - The ingredients of s. 14A(2) r/w r. 8D(1) are clearly not satisfied in the instant case. We, accordingly find no infirmity in the assessee’s claim of disallowance u/s. 14A(1) at ₹ 1,00,000 - Decided against assessee.
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2015 (7) TMI 975
Tax Audit - Determination of turnover for the purpose of section 44AB - Penalty u/s 271B - Held that:- The sale of stamp papers by licensed vendors is a government assigned function to facilitate the stamp sales at various locations. The government appoints licensed agents which are remunerated at a prescribed fee scale/commission, which is mentioned in the written submissions and the stamp rules. The stamps are sold by the assessee on behalf of the government, which is further reflected by the fact that if the license is cancelled for any reason, all the unsold stamp, stamp papers, seals etc. are to be returned to the treasury which are reimbursed, thus the government retains over all control over the stamps. - assessee was having bona fide belief that his case is not liable to audit of the books as the value of stamp is not his turnover and has a role of commission agent. Under these facts and circumstances, I hold that the assessee was under a bona fide belief of being not liable for audit of accounts u/s 44AB; therefore, the penalty imposed u/s 271B is deleted. - Decided in favour of assessee.
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2015 (7) TMI 974
Transfer pricing adjustment - Applicability of interest rate - Held that:- Assessee employed the CUP method for depicting that this international transaction was at arm’s length price. The applicability of the CUP as the most appropriate method or the selection of comparable uncontrolled transaction has not been disputed by the TPO. - assessee paid interest to Bank of Nova Scotia @ 9% per annum, which has not been disputed by the TPO. He simply picked up the above extracted clause from the Sanction letter indicating that in the event of any default or untimely repayment by the assessee, penal interest will be charged by the bank @ 18.5%. The assessee’s categorical statement before the TPO that there was no default committed by it in making repayment leading to payment of interest at such higher rate to the bank, has remained uncontroverted. It means that the assessee actually paid interest @ 9% during the year and no eventuality of paying interest @ 18.5% due to default or untimely repayment arose during the year. Since the CUP method talks of making a comparison of the international transaction with the actual ‘price charged or paid’ in a comparable uncontrolled transaction, which is 9% in the present case, we cannot accept the view point of the authorities below in substituting the hypothetical price of 18.5%, which would have been paid in the case of an eventuality, that never occured.
Actual interest paid by the assessee to its bank @ 9% per annum constitutes a comparable uncontrolled transaction. Since the assessee itself charged interest from its AE @ 9% on the amounts due, the same makes up arm’s length price of the transaction not warranting any transfer pricing adjustment on this score - Decided partly in favour of assessee.
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2015 (7) TMI 973
Capital gain - Valuation of property - stamp valuation u/s 50C - Rectification of an order u/s 154 r.w.s. 155(15) - Held that:- D.R. has given detailed findings on page No. 5 and 6 of her order and concluded that even subsequent second sale was taken by the Stamp Authority @ 1650 per sq.mtr. whereas DLC rate revalued by the Stamp Authority in assessee’s case @ 2160 per sq.mtr., which has been challenged before the Additional Collector (Stamp), Jaipur and matter is pending before him. As per Section 50C(2), the DVO had estimated value of the concerned property at ₹ 8,10,000/-. Therefore, there is no justification in applying sale consideration at ₹ 33,35,000/. If the learned CIT(A)’s observation is that if any variation in valuation came on account of final decision of Additional Collector (Stamp), can be rectified U/s 155(15) within four years from the end of the previous year, in which the order revising the value was passed in appeal or revision or reference. - Decided against Revenue.
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2015 (7) TMI 972
Appeal admitted on following questions:-
Whether on the facts and in the circumstances of the case and in law, the Tribunal correct in interpreting that on account of “legisltion by incorporation”, 'only' the “unamended” Insurance Act 1938 and the Regulations thereunder became part of Section 44 r.w. Rule 2 of the First Schedule of the I.T. Rules?
2) Whether on the facts and in the circumstances of the case and in law, the Tribunal correct in interpreting Section 44 r.w. Rule 2 of the First Schedule that the legislature consciously omitted incorporation of the provision of Insurance Regulatory and Development Authority Act 1999 and Regulations made thereunder in Rule 2 of the First Schedule which 'refers' only to unamended Insurance Act 1938 and Regulations made thereunder?
3) Whether on the facts and in the circumstances of the case in in law, the Tribunal is correct in allowing the relief to the assessee by holding that “surplus” available both in Policy Holders Account and Share Holder's Account is to be consolidated and only “net surplus” is to be taxed as income from Insurance Business?
4) Whether on the facts and in the circumstances of the case and in law, the Tribunal was justified in holding that provisions of Section 14A of the Act did not apply to Insurance business, even when the assessee has claimed exempted income u/s.10 of the I.T. Act and has also itself made some disallowance u/s 14A of the Act in the return?
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2015 (7) TMI 971
Waiver of pre deposit - Misdeclaration of goods - Misdeclaration of value of goods - Wrongful availment of MODVAT Credit - Held that:- The Tribunal has examined whether the appellant had a strong prima facie case that would result in its exoneration from the imposition of duty. In this connection, the Tribunal has recorded a finding against the appellant on each of the three components of duty/modvat credit. In respect of the goods cleared by the appellant as OAS Billets during the relevant period from 5 August 1993 to February 1994 and thereafter from March 1994 upto July 1994, the Tribunal has concluded from the test reports of the samples drawn during this period that the goods that were cleared were SS billets and not OAS billets. In respect of the Modvat Credit, the Tribunal has observed that the appellant was unable to make out a prima facie case. The Tribunal, therefore, concluded that the appellant had failed to make out a case for total waiver of pre-deposit. - The effect of the application filed by the appellant before the BIFR was also examined. The Tribunal, after taking notice of the statement of learned counsel for the appellant that the application filed before the BIFR had subsequently been dismissed, concluded that this was also a reason for imposing the condition for safeguarding the interest of the Revenue. - no good reason to interfere with the direction issued by the Tribunal - Decided against Assessee.
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2015 (7) TMI 970
Denial of CENVAT Credit - Whether certain pollution control services availed by the appellant are eligible to CENVAT Credit under CENVAT Credit Rules 2004 or not - Appellant was required to maintain certain standards of effluent from Appellant's factory as a mandatory and statutory necessity. - Held that:- permissions granted by Gujarat Pollution Control Board under The Water (Prevention And Control of Pollution) Act, 1974, that Appellant was required to maintain certain standards of effluent from Appellant's factory as a mandatory and statutory necessity. When the activity is required to be done mandatorily under a statutory obligation, then it cannot be said that the same is not in relation to the manufacture of finished goods in Appellant's factory. This principle was settled by Hon'ble Supreme Court in the case of Indian Farmers Fertilizer Co-op. Ltd Vs CCE Ahmedabad (1996 (7) TMI 141 - SUPREME COURT OF INDIA), where duty free raw material Naptha used for effluent treatment plant, was held to be eligible for exemption. - treatment of effluent from a factory has to be considered as essential and integral part of the process of manufacture. The ratio of this judgment will be applicable to the services availed by the Appellant - Decided against Revenue.
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2015 (7) TMI 969
Admissibility of CENVAT Credit - outdoor catering services - Held that:- It is the claim of the Appellant that no expenses paid to the service provider is borne by the staff of the Appellant. For this purpose, Appellant filed certain documents for the first time before the Bench. Once certain documents are produced for the first time before the Bench, the case cannot be decided directly on the basis of these documents. The same are required to be examined by the Adjudicating authority to see whether the services of outdoor catering are received by the Appellant and entire cost absorbed by him. - Matter remanded back - Decided in favour of assessee.
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2015 (7) TMI 968
Penalty u/s 76, 77 & 78 - non-payment of service tax due to financial hardship - Appellant is not contesting the Service Tax liability alongwith interest but are claiming waiver of penalty under Section 80 of Finance Act, 1994 - Cleaning services - Held that:- The amount of Service Tax required to be paid for this period was more than ₹ 1 Crore. There is weight in the argument of the Appellant that due to payment of earlier dues, there was a financial difficulty in making the payment when the amounts received from the client for the year 2010-2011 and 2011-2012 were used for making the payments for the earlier Service Tax dues.
The learned Chartered Accountant also brought to the notice of the Bench certain letters issued by the tax recovery officers of the Income Tax Department written directly to the clients of the Appellant that amounts due to M/s Aqua Master Clean should be directly paid to the Income Tax Department. Though these letters were issued after the period involved in these demands, but it gives an indication that there was a financial hardship on the part of the Appellant for not discharging the duty liability for the year 2010-2011 to 2011-2012 in time. Accordingly, it is held that there was a reasonable cause and the case of the Appellant is covered by the provisions of Section 80 of Finance Act, 1994 - Decided in favour of assessee.
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2015 (7) TMI 967
Penalty u/s 76 & 78 - Business auxiliary services - Receipt of commission - Held that:- By not paying service tax during the relevant period appellant cannot claim the benefit of Section 80 of Finance Act 1994 and therefore penalty is imposable. - a lenient view is called for, which has been taken by the original authority in the facts and circumstances of the case which show that appellants promptly paid the tax as soon as the omission was pointed out. I also find that these were initial years of levy of service tax on the services and also initially commission agents were exempted and these are facts which have been rightly taken into account by the original authority - Decided in favour of assessee.
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2015 (7) TMI 966
Denial of CENVAT Credit - input services - non payment of service tax by the provider of serivces to the revenue - Invoices received by the appellant showed that they had paid rent on equipment and on this rent on equipment, service provider had charged service tax which was paid by them - Held that:- If service tax has been paid by the service provider and service receiver is eligible for the credit, it is not the responsibility of the service receiver to examine the correctness of service tax paid by the service provider. That amounts to assessment by the service receiver of the service received by him. It is not at all the responsibility cast on him. There are several decisions taking a view that examination of correctness of tax paid is not the responsibility of the service receiver and department cannot deny the credit of service tax on this ground.
In the case of Ultratech Cement Ltd Vs CCE Nagpur [2010 (12) TMI 90 - CESTAT, MUMBAI], it was held that departmental authorities have no jurisdiction over service recipient, cannot sit in judgment over the correctness of the tax paid and it is not proper to deny the assessee CENVAT credit of service tax paid by agencies engaged by them. In the case of Treads direct Ltd., Vs CCE Calicut [2013 (3) TMI 476 - CESTAT BANGALORE], it was held that the question as to whether input is dutiable cannot be agitated at the end of manufacturer of final product. - there is absolutely no case for the Revenue to deny the CENVAT credit and accordingly the impugned order is set aside - Decided in favour of assessee.
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2015 (7) TMI 965
Denial of refund claim - accumulated Cenvat Credit - Commissioner (Appeals), rejected their appeal holding that the amount of refund cannot exceed the amount of Cenvat credit as per S.T. 3 return and as the invoice for some services mentioned the Ranjangaon address being, not registered address - whether professional bills were addressed, is the address of the group company which was subsequently recognized as registered office of the appellant by Revenue - Held that:- Refund of Cenvat Credit cannot be restricted to the amount of credit availed during the period, as per the service tax return because, it is a case of continuous business activity under ‘business entity concept'. The appellant is entitled to avail refund under the spirit of Rule 5 of CCR read with notification No. 5/2006 (as amended) read with clarification Circular dt. 26.2.2010 (supra). Thus the appellant is also entitled to refund of ₹ 78,795/-, rejected on account of non-inclusion in service tax return for the period. Thus, the appeal is allowed and the impugned order is set aside so far as it relates to rejection of refund. - Decided in favour of assessee.
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2015 (7) TMI 964
Clandestine removal of goods - Undervaluation of goods - second show cause notice on the same cause of action - Held that:- On the statement of respondent No.5 given earlier, the adjudicating authority had dropped the proceedings accepting the explanation furnished. In view thereof, the CESTAT has held that there could not have been second show cause notice on the same cause of action. In this behalf we do not find any error in the order passed by the CESTAT.
Adjudicating authority had studied not only the evidence but also discussed the same in the show cause notice. He found that even when those particulars and materials which are against the respondent No.1 as disclosed in the show cause notice, the respondent No.1 said nothing in defence. This is precisely the reason given by the adjudicating authority in confirming the demand. Thus, we do not agree with the findings of the CESTAT that adjudicating authority has not given any reasons or discussed the evidence. When there was no repetition of the material and the evidence mentioned in the show cause notice by the respondent No.1 it was not necessary to discuss the same on that account and this course was adopted by the adjudicating authority, and rightly so, to avoid repetition. Thus, insofar as the issue of under-valuation is concerned, we find substance in these appeals and to that extent order of the CESTAT is contrary to law and is accordingly set aside. - Decided partly in favour of Revenue.
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