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Showing 481 to 500 of 1327 Records
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2012 (11) TMI 853
Undisclosed Income u/s 68 - held that:- While examining creditworthiness and genuineness of the transactions u/s 68 of the IT Act what is to prove is the source of the assessee and not source of the source ignoring the circumstantial evidences, surrounding circumstances - Revenue submitted that CIT was not justified in deleting the additions made under Section 68 of the Act, as the depositors credit worthiness is not proved. The submission is wholly misconceived. CIT(A) has found that the companies are genuine and they are on the record. Copies of the audit report of the depositor companies have also been filed and merely because the names have been changed would not mean that they are not genuine. However the deposit made by the account payee cheque was from their own fund. The finding of CIT (appeal) is based on material on record - No Legal infirmity in the impugned order passed by the Tribunal - appeal fails and is dismissed.
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2012 (11) TMI 852
Capitalization of Depreciation amount and setting off and carry forward against interest income - highway construction - A.O. held that the basic element for claim of depreciation is absent in the case of the assessee. The depreciation on equipment or assets used to construct the highway is itself a capital expenditure till the completion of the same and commencement of the commercial operation. - held that:- In Commissioner of Income Tax v. Sakthi Soyas Ltd. [2006 (2) TMI 87 - MADRAS HIGH COURT] it was held that - “Capitalisation of those expenditure in the books of account alone was not the decisive factor in examining an expenditure for the purpose of income-tax. The name given to an expenditure or a nomenclature given to an expenditure in the books of account of the assessee is not the litmus test to decide the exact nature of expenditure for the purpose of income-tax. The purpose of the Companies Act is different from the purpose of the Income-tax Act. Therefore, the classification of those expenses as capital in nature for the purpose of the Companies Act, does not ipso facto make that expenditure a capital expenditure for the purpose of the Income-tax Act.”
Application of section 143(3) - held that:- sub-section (3) in this case has no manner of application as it is not a case here that the appellant has frequently shifting its accounting process and method. In this case the accounting system is uniform however, while filing returns the depreciation of those assets have been claimed under the provisions of the law in its return.
It is not a case that the said assets and properties do not belong to the appellant, therefore depreciation in any assets and properties is a regular phenomenon and deduction on this account is allowable under Section 32 automatically.
Tribunal while reading Section 32 of the Act has accepted the legal principle but unfortunately while granting relief as rightly pointed out by Mr. Khaitan has not allowed the setting off of the interest income as regard the aforesaid amount of depreciation. - A.O.is directed to work out again allowing the deduction and setting off of the amount of interest income and to allow carry forward - Decided in favor of assessee.
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2012 (11) TMI 851
Dividend declared on the units of U.T.I. after purchase of the units by the assessee but before their registration in the name of the assessee as the transferee, accrued to the assessee though an unregistered purchaser - held that:- Units of the UTI not being shares, do not attract Sec 8 of the Act - decided in favour of Revenue.
Disallowing the entirety of the expenditure of foreign tour of Rs. 83,54,857/-, overruling the allowance by the CIT (Appeals) of Rs. 41,92,429/- being 50% thereof and in disregard of its own order for such allowance under similar circumstances in the past - held that:- In regard to previous judgement in assessee's own case issue is decided in favour of Revenue - appeal dismissed against assessee.
Decision in THE PEERLESS GENERAL FINANCE & INVESTMENT CO LTD Versus COMMISSIONER OF INCOME TAX, WB-I, KOLKATA [2012 (10) TMI 896 - CALCUTTA HIGH COURT] followed.
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2012 (11) TMI 850
Capital Gain - Tripartite agreement for sale of land - purchase of land by the directors - person liable to tax against capital gains - reassessment proceedings - held that:- if the power of attorney holder is already having any interest in the property as per the deed dated 2.9.1991, then the deed of power of attorney must carry some reference to the first of the agreements to accept the contention of the assessees that they had divested their rights over the property in favour of the power of attorney holder and that they had handed over the property in part performance of the agreement and hence the sale consideration could not be assesseed to capital gains at the hands of the respective assessees.
One and only agreement on which the assessee had divested its interest to atleast to the extent of 83.96% in favour of M/s.Sundsun Housing Development (I) Ltd. for which consideration of Rs.90 lakhs/- was fixed is the agreement dated 29.10.1994 and that Emerald Promoters Private Limited acted only as a power of attorney holder on behalf of the vendors.
Tribunal has committed serious error in not analysing the documents in proper perspective, particularly, in the face of the power of attorney and the tripartite agreement not making any reference at all to the first of the agreements dated 23.10.1991 entered into by the assessee with M/s.Emerald Promoters Pvt. Ltd. to accept the contention of the assessee that possession was handed over to Emerald Promoters Pvt. Ltd. in November 1991 itself. - Decided in favor of revenue.
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2012 (11) TMI 849
Reopening the assessment - loss by embezzlement of funds - To scrutinize claim for Bad debts – Held that:- Conditions precedent for exercise of powers under section 147 of the Act after the expiry of a period of four years from the end of the relevant assessment year have not been satisfied. Even if, Assessing Officer submits that the claim for bad debts had been erroneously allowed were to be accepted, even then in the absence of any failure on the part of the petitioner to disclose fully and truly all material facts the reopening of assessment under section 147 of the Act is without jurisdiction. Consequently, the impugned notice issued under section 148 of the Act cannot be sustained - petition succeeds and is, accordingly, allowed. The impugned notice dated February 27, 2003, issued by the respondent seeking to reopen the assessment of the petitioner for the assessment year 1996-97 is hereby quashed and set aside.
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2012 (11) TMI 848
Deduction u/s 80O or 80HHE - development or production of computer software - Manpower deputation to foreign customers – Export of software – Technical service rendered outside India - Also utilised for rendering services in computer software even in India – Held that:- When the specific provision u/s 80HHE is concerned about technical services rendered in connection with software development, we do not approve of the line of reasoning of the Tribunal. - one cannot make Section 80-O as an alternate to an allowability of the deduction under Section 80HHE for the purpose of better tax deduction. - Decided in favor of revenue.
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2012 (11) TMI 847
Valuation of the Land – Held that:- Valuation done by the Valuation Officer taking note of the sale instances which are near to the date of sale merit acceptance is correct. As far as the land value of 23.60 grounds is concerned, the value arrived at by the District Valuation Officer at Rs.8,30,800/- does not call for any disturbance in determining what could be the value of the deemed gift for the purpose of assessment. Apart from that, the building portion value arrived at by the Gift Tax Act at Rs.24,46,711/- is to be considered with appropriate depreciation at Rs.1.125 per year to arrive at annual letting value at 9% return. Thus after arriving at the annual letting value, deducting the outgoings and adopting 8% capitalisation factor, the value has to be arrived at by Revenue which would be in the spirit of Schedule II of the Gift Tax Act - In the circumstances, Tax Case (Appeal) filed by the assessee is partly allowed only to the extent referred to above taking into consideration the matter of valuation done by the Assessing Authority by adopting the District Valuation Officer including the reversionery interest - valuation of the land as done by the valuation officer is upheld, however on the portion of the building accepting the valuation in calculating the annual letting value, the Officer shall take note of depreciation allowed on the building portion and adopt capitalisation factor at 8% to arrive at the valuation for the purpose of assessment - To the above stated extent, the order of the Tribunal stands modified.
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2012 (11) TMI 846
Whether Explanation 1(iv) to Section 158BE is retrospective in nature – the period taken to approach the Settlement Commission and its rejection is to be excluded - Held that:- given the fact that the scope of Explanation is clarificatory in nature all that the insertion of the Explanation under the Finance Act 2002 does is to bring in is what was contemplated under Section 245HA since omitted with effect from 1.6.2002 under the Finance Act 2002. In other words what was provided for under Section 245HA is now brought in by way of Explanation 1(iv) under the Finance Act 2002 which by deleting 245HA substitutes Exp. 1 to 158 BE .
Explanation, clause (iv) in Section 158BE is retrospective - if a statute deals merely with the matters of procedure and does not affect the rights of parties, the new procedure would prima facie apply to all pending as well as future actions
Regarding the levy of interest under Section 158 BFA – Held that:- Contention of the assessee that the delay in furnishing the block return was due to non-supply of the copies of the seized materials to it by the Income Tax Authorities was devoid of merits as the assessee has not brought any positive evidence on record to show that it was in need of vital information without which it was not in a position to complete its block return - In the absence of any materials placed before the Tribunal, the said contention was rejected
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2012 (11) TMI 845
Capital Receipt vs Revenue Receipt - Deduction u/s 80IB - Excise duty refund, interest subsidy and insurance subsidy – Held that :- Incentives provided to the industrial units, in terms of the new industrial policy, for accelerated industrial development in the State, for creation of such industrial atmosphere and environment, which would provide additional permanent source of employment to the unemployed in State of Jammu and Kashmir, were in fact, in the nature of creation of new assets of industrial atmosphere and environment, having the potential of employment generation to achieve a social object. Such incentives, designed to achieve public purpose, cannot, by any stretch of reasoning, be construed as production or operational incentives for the benefit of assesses alone – Order of CIT(A) in holding that the Excise Duty refund is to be treated as ‘capital receipt’ in the hands of the assessee and not liable to be taxed is confirmed – appeal by revenue is dismissed.
Decisions in in the case of Shree Balaji Alloys v. CIT and Another [2011 (1) TMI 394 - JAMMU AND KASHMIR HIGH COURT] followed.
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2012 (11) TMI 844
Capital Receipt vs Revenue Receipt - Deduction u/s 80IB - Excise duty refund, interest subsidy and insurance subsidy – Held that :- Incentives provided to the industrial units, in terms of the new industrial policy, for accelerated industrial development in the State, for creation of such industrial atmosphere and environment, which would provide additional permanent source of employment to the unemployed in State of Jammu and Kashmir, were in fact, in the nature of creation of new assets of industrial atmosphere and environment, having the potential of employment generation to achieve a social object. Such incentives, designed to achieve public purpose, cannot, by any stretch of reasoning, be construed as production or operational incentives for the benefit of assesses alone – Order of CIT(A) in holding that the Excise Duty refund is to be treated as ‘capital receipt’ in the hands of the assessee and not liable to be taxed is confirmed – appeal by revenue is dismissed.
Decisions in in the case of Shree Balaji Alloys v. CIT and Another [2011 (1) TMI 394 - JAMMU AND KASHMIR HIGH COURT] followed.
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2012 (11) TMI 843
Set off of Loss and Shortage of Stock – retraction of surrendered income - Held that:- the assessee having declared the sales of Rs.17.92 lacs in the trading account and inspite of the fact that shortage of stock amounting to Rs.17.92 lacs has not been explained will not make any effect on the profitability of the assessee. Once there is no defect in the books of account pointed out by the AO and the surrender made is proved to be false, then the assessee has right to retract from the statement made during the course of survey and declare the correct income as per books of account.
In the present case, having not pointed out any defect by the AO in the accounts of the assessee, assessee has rightly declared the income by claiming the loss as per books of account. In such facts and circumstances of the case, even if the assessee accepts any invalid addition, he is at liberty to challenge the same - AO is not justified in making any addition either of loss or stock - order of CIT(A) is reversed - grounds of appeal of the assessee are allowed.
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2012 (11) TMI 842
Payment of stipend - allowable expenditure - Sustaining 50% addition out of stipend account - Held that:- This is not a case where no details with regard to the payment of stipend is there with the assessee but the same were not filed by the assessee during the assessment proceedings, which were filed before CIT(A) but were appreciated for the reasons mentioned in his order. Therefore, keeping in view the facts and circumstances of the present case, CIT(A) has rightly allowed 50% of the claim made by the assessee and has rightly disallowed the balance of the claim - no infirmity in his order - ground of the Revenue are dismissed.
Disallowance of various expenses - Held that:- Bills and vouchers were not produced during the assessment proceedings. It was argued that the assessee is having all the evidences of the expenditure so incurred and only vouchers were produced before the AO but the same were not admitted as additional evidence. The defects pointed out by the AO were few as compared to the total expenditure incurred by the assessee at Palwal Unit - no infirmity in order of CIT(A) in allowing for expenses as done by AO - In the result, the appeal of the assessee and the appeal of the Revenue are dismissed.
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2012 (11) TMI 841
Disallowance of Business Promotion expenses – Held that:- Assessee had incurred expenses for the purpose of business and to maintain cordial relations with the suppliers and other persons and to maintain good business reputation and to meet the market competition. Also there is no dispute of having incurred expenditure which have been argued to have been incurred by making account payee cheques for purchasing the said gifts. No such expenditure, which has been prohibited by law, has been brought on record by the AO and in the facts and circumstances of the case, such expenses by taking the volume of the turnover and the income declared being second year operation of the assessee’s business, the expenditure incurred is reasonable - no infirmity in the order of CIT(A), who has rightly deleted the addition so made - this ground of the revenue is dismissed.
Disallowance of Legal and Professional charges - Held that:- Amount has been paid through cheques after deducting tax at source. Copies of the bills and TDS certificate are on record. Moreover, the AO can not sit in the arms of the businessman and cannot decide how to run the business. This is a well settled legal proposition laid down by various courts of law. In the facts and circumstances of the case, no infirmity in the order of CIT(A), who has rightly deleted the addition so made - ground raised by Revenue is dismissed.
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2012 (11) TMI 840
Adhoc disallowance - held that:- Ld. CIT(A) has confirmed an adhoc disallowance of Rs. 1,00,000/- after observing that assessee has not supported the claim with documentary evidence. We agree with Ld. CIT(A) that mere claim of deduction is not sufficient and it should be supported by some material. - Decided against the assessee.
Head office expenses - Restrictions u/s 40C - Held that:- Expenses incurred on soliciting NRI deposits are in the nature of head office administration and supervision expenses, since they have been incurred entirely for the Indian operations and are not allocable to any other country in which the appellants have operations, the provisions of Sec. 44C are not applicable as the essential requirement of section 44C is that expenses are required to be allocated since they are for the supervision of all locations other than the head office - in favour of assessee
Net loss on unmatured forward exchange contracts - anticipated loss - held that:- anticipated losses on account of existing obligation as on 31st March, determinable with reasonable currency, being in the nature of expenditure/accrued liability, have to be taken into account while preparing financial statement. - matter restored to AO to consider liability which has accrued as per Accounting Policy consistently followed by assessee as on 31.3.1998 and accordingly to allow said claim to that extent.
TDS - payment to Master Card International - scope of Sec.9(1)(vi) and Article-12 of DTAA - held that:- after Mutual agreement entered into between India and USA, these two entities namely Visa International and Master Card International are deemed to be having Permanent Establishment in India; but in the relevant assessment year and at the time when assessee made payments to these two entities, said dispute was there - even if assessee bank failed to deduct TDS on the payments made to Visa International and Master Card International, same could not be disallowed as per provisions of Sec. 40A(i) of the I.T. Act - Decided in favor of assessee.
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2012 (11) TMI 839
Rectification of mistake - held that:- It appears that this vital and material fact brought specifically to the notice of the Tribunal, however, appears to have escaped the attention of the Bench and the matter has been sent back to the AO for further examination after observing that it is not clear whether the expenses were claimed by the assessee in the earlier years and if so the result thereof. In our opinion, once the deduction u/s 35DD was allowed in the initial year i.e. assessment year 2002-03 after necessary verification/examination in the assessment completed u/s 143(3) when the total expenditure is eligible for the said deduction was actually incurred by the assessee, the same could not be disallowed in the subsequent years for want of relevant details or documentary evidence especially when the assessment for the initial year on this issue was not disturbed or modified.
There is a mistake in the order of the Tribunal in deciding this issue overlooking the important and material aspect which has a direct bearing on the ultimate decision and the same being apparent from record - Para no. 28 of the order [2010 (1) TMI 908 - ITAT, MUMBAI] modified.
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2012 (11) TMI 838
Validity of reopening of the assessment - assessee contended that he disclosed all the relevant particulars fully and truly and the facts of the property in question were also disclosed by the assessee – Held that:- Mere production of the balance-sheet, profit and loss account or account books will not necessarily amount to disclosure within the meaning of the proviso - Assessing Officer over-looked the aforestated item. That, he noticed it subsequently. That, at the time of passing the original order of assessment, he could not be said to have opined on the above item - there was no change of opinion – against assessee
Natural justice – alleged that no reason has been given by the assessee for its failure to file the same before the authorities below, it is observed that the documents sought to be filed by the assessee as additional evidence have already been filed by it before the A.O. during the course of re-assessment proceedings for A.Y. 2002-03 and 2003-04 and the same have also been filed by the assessee during the course of appellate proceedings before the ld. CIT(A) for A.Y. 2004-05 wherein a similar issue is involved – matter remanded to AO
Disallowance u/s 14A by applying Rule 8D of the I T Rules - alleged that assessee has no business during the year and it had invested in the shares including in the Group Companies for earning dividend income which has been claimed as exempt u/s 10(34) as well as long term capital gains claimed u/s 10(38) of the IT Act - expenditure is for earning the exempt income i.e. dividend and long term capital gain – Held that:- Assessee has closed its business; therefore, even if there is no business during the year under consideration the entire expenditure cannot be assigned to exempt income i.e. dividend and capital gain. As it is clear from the details of the expenses that these expenses are for general administration and for maintaining the status of the assessee as a company; therefore, these expenses are not directly related to the exempt income. Further, Rule 8D is not applicable for the Assessment Year under consideration – matter remanded to AO
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2012 (11) TMI 837
Stay of recovery - penalty under section 271(1)(c) of the Income Tax Act – – Held that:- there was adequate disclosure of the facts in the notes to the return of income about the interest income of Rs. 8.10 crores receivable from MBPL and the Assessee’s action in not having been considered as income by the assessee. As to whether the stand of the assessee was correct or not is not relevant in the context of penalty proceedings. - there is a prima facie case made out by the assessee.
The assessee has already wound up its business activities. - the bank balance of the assessee as on 31/12/2011 is only Rs. 3,95,471/-. - Keeping in view the existence of a prima facie case, balance of convenience and hardship, there should be a stay of recovery of outstanding demand pending disposal of the appeal of the assessee by the Tribunal or for a period of six months from to-day whichever is earlier. - Stay granted.
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2012 (11) TMI 836
Addition under section 68 of the income tax act – Held that:- Loans which are not explainable, can be treated as income of the appellant – assessee submitted that loan creditors are minors and it was only the guardians, who could explain entries in the bank statement - AO, after examining the guardians of the minor children from whom the assessee stated to have been received the impugned loans, found that the said ladies could not explain the sources of cash deposits of Rs. 1,20,000/- in the bank account - AO treated the said amounts as unexplained and made addition of the same u/s 68 of the Act. We find no infirmity in the order of the CIT(A) in confirming the addition made by the AO and the same is hereby upheld – in favor of revenue
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2012 (11) TMI 835
Input - Input tax credit - Whether tax paid on the inputs for generating power can be set off against the tax payable on sale of aluminum, aluminum ingot and sheet etc when electrical energy is necessary to produce/manufacture and sale of aluminum, aluminum ingot and sheet etc – Held that:- The process of manufacturing of aluminum reveals that energy is required in such process of manufacturing. Electrical energy which is generated with the use of coal and other materials is only an intermediate product which is used in the process of manufacturing of final product viz. aluminum, aluminum ingots and sheets etc.
Coal, alum, caustic soda and other consumables purchased from market on payment of tax and used for generation of electrical energy in the Captive Thermal Plant of the petitioner which is used in the process of manufacture of finished product viz. aluminum, aluminum ingots and sheets etc. taxable under the OVAT Act. are input as defined under Section 2(25) of the OVAT Act and the tax which has been paid on such purchases can be claimed as input tax credit under Section 2(27) of the OVAT Act against the tax payable on sale of finished products i.e. aluminum, aluminum ingots and sheets etc. - Decided in favor of assessee.
Whether imposition of penalty under Section 43(2) of the OVAT Act can only be levied if the escapement is without any reasonable cause - held that:- VAT is indirect tax on consumption of goods. It is the form of collecting sales tax under which tax is collected in each stage on the value added to the goods. The basic object of VAT Scheme is to provide voluntary and self-compliance. It goes without saying that to plug the leakage of revenue, the Legislature enacted law authorizing imposition of penalty for infraction of any statutory provision. penalty proceedings are quasi-judicial in nature. Quantification of penalty under Section 43 of the OVAT Act is dependent upon the tax assessed under that Section.
Once the Assessing Officer comes to the conclusion that the dealer is indulged in fraudulent activities and assesses him under Section 43 of the OVAT Act, there is no need for the Assessing Officer to make further investigation to find out whether the escapement is without reasonable cause for the purpose of imposition of penalty under Section 43(2) of the OVAT Act.
The Hon’ble Supreme Court in the case of [Union of India & Others vs Dharamendra Textile Processors 2008 (9) TMI 52 - SUPREME COURT] held that wilful concealment is not an essential ingredient for attracting civil liability or penalty - In the result, writ petitions are allowed.
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2012 (11) TMI 834
Taxability of reimbursable expenses on travel local accommodation, etc. incurred by a Consulting Engineer – Following the decision of court in case of [Malabar Pvt Services Vs CCE 2007 (10) TMI 135 – CESTAT] Held that:- Such expenses would not form part of assessable value of services rendered by Consulting Engineers. In view of the clarification issued by CBEC and the decisions relied by the appellants, action of the appellant was bonafide and suppression cannot be alleged for invoking extended period of time for demanding such service tax - appeal allowed on this ground.
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9911796707
