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Showing 481 to 500 of 1439 Records
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2015 (7) TMI 963
Maintainability of appeal - Availability of alternate remedy - Held that:- appeal is not covered by Section 35-L (B) of the Central Excise Act, 1944 and therefore is not maintainable. The only remedy that could be available to the appellant -Department is to approach the High Court by way of an appeal under Section 35-G. - there is no substantial question of law involved in this appeal and, therefore, the appeal before the High Court also is not permissible. However, we leave it for the High Court to decide as to whether any substantial question of law arises or not. - Appeal disposed of.
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2015 (7) TMI 962
Valuation - deduction from assessable value - appellant could not produce the evidence to prove the expenditure incurred under certain heads - Held that:- The position that was taken by the assessee before the authorities was that these expenditures could be actually ascertained only afterwards and for this reason, even a request was made to the assessing officer for provisional assessment as the actual expenditure could not be communicated at the time of assessment having regard to the nature of such expenses. - vital aspect of the matter is glossed over by the CESTAT [2005 (4) TMI 335 - CESTAT, NEW DELHI]. It is also pointed out before us that in the next assessment year, i.e., assessment year 1995-1996, this very contention is accepted by the Commissioner when actual expenses were produced and benefit thereof has been extended to the assessee. - Matter remanded back - Decided in favour of assessee.
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2015 (7) TMI 961
SSI Exemption - Denial of the benefit of Notification No. 175/86 dated 01.03.1986 - Use of other company brand name - Held that:- No doubt, when the brand name or trade name of another person is used by an SSI unit then the SSI unit shall not be entitled to the exemption from payment of excise duty under the aforesaid Notification No. 175/86. However, what is relevant is that the other unit of whose brand name or trade name is used, should be a unit which is not eligible for grant of exemption under this Notification. In the present case, we find that M/s Vikshara Trading itself was a SSI unit which has been claiming exemption and the same was allowed by the Tribunal in 'C.C.E., Ahmedabad v. Vikshara Trading and Investment Pvt. Ltd.' [1996 (8) TMI 204 - CEGAT, NEW DELHI] and the said judgment of the Tribunal has been upheld by this Court which is reported in [2003 (8) TMI 49 - SUPREME COURT OF INDIA]. Accordingly, we set aside the impugned judgment of the Tribunal and hold that the appellant shall be entitled to the exemption under the aforesaid Notification - Decided in favour of assessee.
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2015 (7) TMI 960
Validity of Tribunal's order - CESTAT has relied upon the earlier decision of the Customs, Excise and Gold (Control) Appellate Tribunal in the case of 'Web Impressions (India) Pvt. Ltd. v. CCE Calcutta' [2001 (9) TMI 202 - CEGAT, KOLKATA] - Held that:- CESTAT has further observed that against that judgment, appeal was preferred by the Revenue and the said decision of the CEGAT was upheld. This is factually incorrect inasmuch as the appeal of the Revenue against the aforesaid judgment was not dismissed by this Court. On the contrary, this Court had set aside that order of the CEGAT and remanded the case back to the CEGAT for fresh adjudication of the appeal. - Matter remanded back - Decided in favour of Revenue.
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2015 (7) TMI 959
Waiver of pre deposit - Undue hardship - Held that:- For waiver of the pre-deposit, the appellant is required to show undue hardship that would be caused, in the event, they are required to deposit the amount. In the instant case, we find that no agreement has been raised with regard to hardship. However, prima facie, we find that once the authority permitted the appellant to cross-examine the witnesses, the same should have been done unless further orders denying such cross-examination was passed - appeals directing the appellant to deposit 30% of the duty within four weeks - If the amount is deposited, the Tribunal will ensure and decide the appeal within one year. - Decided conditionally in favour of assessee.
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2015 (7) TMI 958
Denial of refund claim - period of limitation - duty was paid under protest or voluntary - Exemption at consessional rate of duty vide Notification No.140/83-CE dated 5th May, 1983 - Held that:- Appellant had specifically indicated in the declaration form under Rule 173B that they are paying the duty under protest, which was part of their letter dated 24th December, 1996 in which the appellant had categorically insisted that no duty was payable on the product manufactured by them. - The language and content of the letter dated 24th December, 1996 read with the declaration form as reproduced above leaves no room for doubt that the appellant had pleaded in unequivocal terms, namely, that duty was not payable on shampoo manufactured by them. The contents of the letter makes it clear that despite the appellant having lodged the protest in the declaration form, the department was insisting on payment of duty on the manufacture of shampoo and hence, the appellant had put on record for paying the amount under protest with a further prayer to permit the appellant to avail the provisional assessment to duty under Rule 9B of the Rules till the case was finally decided.
Appellant had established beyond doubt that the appellant had always been contesting the department's claim for levying duty on the product manufactured by them and regularly agitated that no such duty was payable. In our view, if the appellant was disputing the levy of duty and was agitating that no duty was payable and that payment was being made because of insistence of the department to pay under threat of seizure of the product, it cannot be said that payments made by the appellant was not made under protest. We are of the opinion that the assessee had lodged the protest in accordance with Section 11B of the Act read with Rule 233B of the Rules of 1994. - Tribunal and the departmental authorities have committed a manifest error in non-suiting the appellant's application for refund on the ground that no protest letter was filed in accordance with the procedure prescribed under Rule 233B of the Rules. Since we have held that the protest letter was filed by the appellant, the question of the application being barred by limitation under Section 11-B of the Act does not arise. - Matter remanded back - Decided in favour of assessee.
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2015 (7) TMI 957
Invocation of extended period of limitation - determination of relevant date for issue of notice within 5 years - Duty demand u/s 11A - Held that:- If the goods and which are excisable have to be cleared on payment of duty, but if they are exempted from payment of such duty, it does not mean that there is no power in the authorities to verify and scrutinise the documents based on which the clearance is made. One of the documents at the stage of clearance refers to the Exemption Notification and thereafter the person clearing the goods or removing them urges that there is no duty liability, then, what terms and conditions have been prescribed or whether the exemption is absolute are matters which are to be checked and determined by the authorities - Once it is possible to scrutinise and verify the compliance of the terms and conditions on which the exemption has been issued in this case, then, it will not be possible to hold that a separate period is prescribed for recovery of duty in case of this nature or that the period of five years prescribed would have to be computed only when the breach or violation of the Exemption Notification has come to the knowledge of the Department subsequently. It may be that such fact is discovered or comes to the knowledge of the authorities subsequent to the clearance, however, when the Department desires to recover the amount of duty, then, it must adhere to the period prescribed
By section 5 remission of duty on goods found deficient in quantity is dealt. Section 5A confers power to grant exemption from duty of excise. If the Central Government is satisfied that it is necessary in the public interest so to do, it may, by notification in the Official Gazette, exempt generally either absolutely or subject to such conditions (to be fulfilled before or after removal) as may be specified in the notification, excisable goods of any specified description from the whole or any part of the duty of excise leviable thereon. - Equally, if there is any condition to furnish a Bond and in that behalf it is prescribed that in the event the terms and conditions on which the bond has been given and accepted are breached and violated, a demand can be raised, that that stipulation will not mean that the mandate of section 11A is any way diluted or can be interpreted with the aid of such term or condition of the Bond. Thus, the terms and conditions of the Exemption Notification or of the Bond cannot be of any assistance. That only would enable recovery of duty and further levy of interest, recovery thereof and equally of penalty. In these circumstances, we do not find any provision which would enable us to conclude that the date of knowledge or the date of discovery of the fraud by the Revenue will be the determinative and decisive date. If that is beyond the period of five years, then, section 11A will have to be interpreted accordingly is the express stand and which we find cannot be accepted because the plain language of the statute or the words of the section cannot be brushed aside or ignored.
In the light of the clear language of the Statute the Hon'ble Supreme Court arrived at somewhat similar conclusion. In the case of Ahmedabad Manufacturing and Calico Printing Co., Ltd. (supra) the Hon'ble Supreme Court concluded that the mistake can be corrected but the tax can be recovered in the light of the provisions enabling such recovery and in that case, it was held that if the language of the law has clear meaning, it must be given that effect. In the case of S. S. Gadgil (supra), the Hon'ble Supreme Court, after underlying this difference, concluded that a provision of the nature and carved out like section 11A is really not a provision of limitation but a fetter or restriction on the power of the authority to bring to tax escaped income. This is what is clearly held by us. If there is a power to recover and within a specific period, then, the exercise of that power is contemplated within the said period, else there is a fetter or restriction to recover the duty.
Tribunal's order is ex-facie erroneous and unsustainable in law. It is vitiated by complete non application of mind as well. That the fraud is of great magnitude and that involvement or the act is admitted does not mean that recovery of duty because of such fraud or as a result of it can be made at any time under section 11A. This was clearly lost sight of by the Tribunal. We do not find that this approach of the Tribunal can be sustained in law - Decided in favour of assessee.
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2015 (7) TMI 955
Penalty levied under Sec.271C - Non deduction of TDS on interest paid thus violation of Section 194A - Whether in the light of the specific exemption provided in section 194A (3)(iv) to such income credited or paid by a firm to a partner of the firm, the assessee is reasonably entitled to entertain the belief that payment of interest by the partners to the firm is similar or similarly placed? - ITAT deleted penalty levy - Held that:- While Section 194A provided for deduction of tax on interest, by virtue of the provisions contained in sub section (3), only such income credited or paid by a firm to a partner of the firm is exempted from deduction. The language of the provision does not leave scope for any ambiguity on the liability of a partner to deduct tax on interest paid by him to the firm and there is absolutely no warrant for a belief to the contrary. That being the legal position, we do not know how the assessees, who admittedly are persons having the services of experienced chartered accountants at their disposal, could entertain a belief that they were not liable to deduct tax at source on the interest paid to the firm. This, therefore, means that the alleged belief of the assessees is certainly not one a reasonable person would have entertained nor such persons would have acted in the same way given the totality of circumstances.
Therefore, we cannot accept the plea that the belief allegedly entertained by the assessees was a bonafide one or could be accepted as a reasonable cause as provided under Section 273B. In effect, the defence put forward by the assessees is one of ignorance of law. Ignorance of law, it is trite, is no excuse in law and if that be so, ignorance of law cannot also be a reasonable cause as contemplated under Section 273B.
As contended by assessee it may be true that penalty levied under section 201 read with Section 221 has been set aside by the Tribunal accepting the plea of "good and sufficient" reasons urged by the assessees. However, the object of these provisions being different from section 194A read with Section 271C, such an order passed by the Tribunal cannot come to the rescue of the assessees. In any case, principles of res-judicata and estoppel are alien to tax jurisprudence and therefore, this contention also cannot improve the case of the assessees. One another reason which has weighed with the Tribunal is that the firm had declared the interest received in its return and that since the firm had returned loss and was not liable to any tax, no loss was caused to the revenue. In our view, even if the findings are factually correct, statutory provisions do not recognize this as a defence in a proceeding under Section 271C. Thus the orders of the Tribunal are unsustainable - Decided in favour of revenue.
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2015 (7) TMI 954
Claim of registration under Section 12A - whether Tribunal erred in allowing the appeal by ignoring the clauses found in the Memorandum of Association, which permitted the assessee to utilize the funds for religious purposes and carry on commercial activity by constructing and letting out community hall? - Held that:- It is settled law that in the first year when the trust is sought to be registered, it could not have carried on any activity, thus the question of verifying the genuineness of such activities cannot be considered. The refusal to register the Trust on such ground by the DIT (Exemptions) could not thus be justified. The Tribunal has relied on case of Sanjeevamma Hanumanthe Gowda Charitable Trust – vs - Director of Income Tax (Exemptions) [2006 (3) TMI 91 - KARNATAKA High Court] wherein held that for arriving at the satisfaction for genuineness of the Society or Trust, the Commissioner has to look at the objects of the Trust and it is not authorized to go into the nature of the activity by which the income is derived by the Trust.
In the present case, the question is with regard to the registration of the Trust in question wherein the objects have been clearly specified. The question of assessing the activities of the Trust would arise only after the Trust is registered and carries on the activities. At the time of initial registration, the same cannot be a question to be considered. In our view, the Tribunal has rightly allowed the appeal and directed the DIT (Exemptions) to register the Society as a religious Trust under Section 12A of the Act. - Decided in favour of the assessee
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2015 (7) TMI 953
Reopening of assessment - reopening based on information that two Horses Tuscan and Brave Act were purchased at ₹ 1,38,729/- and ₹ 10,09,641/- was actually ₹ 5,32,784/- and ₹ 2,16,96,697/- respectively as detected by Directorate of Revenue Intelligence and customs duty of ₹ 1,87,540/- and ₹ 58,54,471.68 having been paid - Held that:- Bare reading of Section 147 of the Act would indicate that it empowers the assessing Officer to assess or re-assess the income chargeable to tax if he has reason to believe that income for any assessment year has escaped assessment. In the instant case, the assessing officer on conclusion of the assessment for the year 2003-04 on 29.10.2004 has issued the notice for its re-opening and the reason assigned as could be discerned from the order sheet was on account of the information which has been secured from the Directorate of Revenue Intelligence, Mumbai Zonal Unit, I floor, Construction House, Ballard Estate, Mumbai that assessee had indulged in under invoicing its imports and consequent to investigation, the suppressed customs duty payable by the assessee has been quantified at ₹ 89,43,152/-.
On issuance of show cause notice by the Directorate of Revenue Intelligence, the jurisdictional assessing Officer has formed an opinion about there being escapement of income of the assessee chargeable to tax. As to whether the said "reason to believe" of such escapement of income to tax by the assessee is justifiable or not, would not be an exercise which can be undertaken by the assessing Officer at the stage of issuing of notice. In that view of the matter, contention of the assessee cannot be accepted.
CIT(Appeals) as well as the Appellate Tribunal were not justified in arriving at a conclusion that re-opening the assessment under Section 147 of the Act by issuance of notice under Section 148 by the assessing Officer was improper. Hence, the substantial questions of law framed hereinabove have to be answered in favour of the revenue.
Perusal of records that the jurisdictional assessing Officer in the reassessment order dated 21.07.2006 has arrived at the value of "Brave Act" horse at ₹ 2,16,96,697/- and that of "Tuscan" horse at ₹ 5,32,784/- which undisputedly was not the value determined by the Settlement Commission while accepting the claim of the assessee for arriving at a settlement and directing payment of differential customs duty. In that view of the matter, we are of the considered view, it would be just and appropriate to remit the matter back to the assessing Officer for adjudicating said factual aspect. Accordingly, matter is remitted to the assessing Officer.
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2015 (7) TMI 952
Penalty under Section 271(1) - ITAT deleted penalty - Held that:- AO initiated penalty proceedings in respect of the addition made and confirmed it. The CIT (Appeals) was of the opinion that in the given circumstances of the case since the appellant upon receipt of notice filed a revised return that circumstance weighed predominantly AO to impose penalty. The CIT(A) consequently set aside the penalty; the revenue's grievance that this score was rejected by ITAT. We considered the circumstance of the case. It is quite evident from the materials on record that the AO was considerably swayed by the revised return and the figures disclosed therein. The CIT(A) correctly understood the law in the light of the decision of Supreme Court in CIT V. Reliance Petroproducts Pvt. Ltd. [2010 (3) TMI 80 - SUPREME COURT ] and directed the revocation of penalty. The ITAT affirmed the decision. Being factual in nature and disclosing no apparent loss or perversity, this Court is of the opinion that no substantial question of law arises. - Decided in favour of assessee.
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2015 (7) TMI 951
Unexplained purchases - ITAT directing the estimate of addition as made by the CIT(A) be further reduced to 10% of the alleged purchases - Held that:- It is non speaking and non reasoned order and as such no reasons have assigned while restricting the disallowance to 10% of the unexplained purchases. Therefore, as such the matter is required to be remanded.
However, instead of remanding the matter to the learned ITAT considering the request made by the learned counsel for the respective parties, on merits we ourselves have considered the matter on merits and on the basis of admitted facts. It has come on record and it is not disputed by the Revenue that in the case of assessee GP rate was higher compared to the subsequent assessment year. The GP disclosed at the rate of 1.11% by the assessee is satisfactory as compared to AY 200001 where the GP was of 0.98%. Under the circumstance, in the peculiar facts and circumstance and considering the decision of the Division Bench of this Court in the case of Simit P Sheth (2013 (10) TMI 1028 - GUJARAT HIGH COURT) where this Court confirmed the final order passed by the learned ITAT restricting the disallowance to 10% of the unexplained purchases, though not approving the method and manner in which the learned Tribunal has decided the appeal, however on merits and in the peculiar facts and circumstances narrated herein above, we confirm the ultimate final order passing by the ITAT. Consequently, present Tax Appeal is dismissed. - Decided against assessee.
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2015 (7) TMI 950
Disallowance of claim of depreciation on (i) Residential house property at 10, Mistry Manor, 62A, Napean Sea Road, Mumbai and (ii) Premises at C-6, Corianthian, 17 Off Arthur Bunder Road, Colaba, Mumbai - CIT(A) allowed claim - Held that:- D.R. even though vehemently relied on the order of the Assessing Officer but could not adduce any cogent material or evidence before us, which may compel us to reverse the finding of the CIT(Appeals). It is not denied that the property No. 10, Mistry Manor, 62A, Napean Sea Road, Mumbai was allotted to Smt. Anita Krishna, Di rec tor so that she can look after business activity carried on by the assessee-company in Mumbai. Similarly in respect of property at C-6, Corianthian, 17 Off Arthur Bunder Road, Colaba, Mumbai, no evidence was brought to our knowledge by the ld. D.R. which may prove that the assessee was not having its Office there - Decided in favour of assessee.
Addition of annual value as income from house property under section 22 for two properties - Held that:- Since we have already confirmed the order of CIT(Appeals) that both the properties acquired by the assessee during the year were being used for the purpose of business and, therefore, the assessee was entitled for the depreciation, and no question of adding annual value as income from house property under section 22 arises. - Decided in favour of assessee.
Addition on set off of the past business losses - CIT(A) deleted addition - Held that:- Provisions of section 79 are applicable where there is a change on the last day of the previous year the shares of the company carrying not less than 51% of the voting power were beneficially held by the persons who beneficially held shares of the company not less than 51% of the voting power on the last date of the year or years in which the loss was incurred. The preamble of this section requires that there must be a change in the shareholding. In the case of the assessee, we noted that there is no change in the shareholding pattern, the old 10 shareholders, who were having the entire share capital as on 31.03.2004 continues to hold the shares as on 31.03.2007. In the case of the assessee the change in the shareholding pattern is due to the induction of the fresh capital not due to the transfer of the shares from one shareholder to another. In view of this fact, we do not find any illegality or infirmity in the order of the CIT(Appeals). We accordingly confirm the order of the CIT(Appeals) directing the Assessing Officer to allow the set off of brought forward loss from the assessment year 2004-05. - Decided in favour of assessee.
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2015 (7) TMI 949
Chargeability of interest income - claimed to be capital receipt by the assessee and set off against the project development expenditure - Held that:- Ratio of the finding of in the case of Indian Oil Panipat Power Consortium Ltd. vs. ITO, (2009 (2) TMI 32 - DELHI HIGH COURT ) would be squarely applicable to the facts of the assessee’s case, because admittedly in the case under appeal before us the share capital as well as loans were raised for the specific purpose of setting up of the power generation plants. The business of the assessee has not been commenced and therefore, as per above decision, the interest received in the period prior to commencement of business was in the nature of capital receipt and hence was required to be set off against the pre-operative expenses. The assessee has already set off the interest income against the pre-operative expenses which is titled as “project development expenditure”. In view of above, we are of the opinion that the interest income of ₹ 1,35,87,158/- as well as ₹ 7,91,51,306/- was a capital receipt not chargeable to tax during the year under consideration. - Decided in favour of assessee.
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2015 (7) TMI 948
Disallowance of Short-landing i.e. short receipt of goods - AO held that the assessee had unnecessarily claimed this amount in the books of account, but that the assessee should have recovered this amount from its principal companies which supplied the goods to it short either through raising debit notes or reducing the bills amount - Held that:- As during the relevant financial year, the short-landing is only 0.05% on sales and 0.07% of the cost of goods sold by the assessee. It is also worth mentioning that the loss is not pertaining to a single item but is the total of many items imported by the assessee. In the case of shipment, it cannot be disputed that there is a possibility of wastage in quantity due to various factors such as leakage, drying up, evaporation etc., particularly since the goods imported are chemicals. In such a scenario, wastage in transit appears to be common and loss of such shortage of goods delivered to the assessee particularly when it is negligible has to be allowed as expenditure to the assessee. We appreciate the contention of the assessee that raising debit or credit note on small amounts might be more costly than setting off the above shortage. Further, it is to be left to the wisdom of the businessman as to the method he wants to adopt to make a transaction cost-effective. Therefore, we are of the opinion that the claim of the assessee of short-landing particularly because it is negligible as compared to its sales and cost of goods sold, has to be allowed. - Decided in favour of assessee.
Error in preparation of goods receipt and physical difference - disallowance of these items on the ground that the difference is due to the error committed by the warehouse personnel and that the assessee should have claimed the loss from such contractor and further that it is not the expenditure of the assessee - Held that:- As long as the loss is arising out of the business operations of the assessee and the genuineness of the same is not doubted by the AO, it is immaterial as to whether the loss is arising out of error committed by the external service provider or the assessee, it is the loss of the assessee and it can be claimed by the assessee. Further this view is in consonance with the decisions relied upon by the assessee (cited supra). The argument of the assessee that write off of negligible amount of loss on account of above error is cost effective as compared to claims to be made against the third party and the costs involved in processing such claims finds favour with us particularly since loss on account of these two items is only 0.01% and 0.02% on sales and cost of goods respectively. - Decided in favour of assessee.
Disallowance of Breakage charger @ 50% - Held that:- The only reason for making disallowance is that handling of these bottles is by a professional agency and therefore the loss should also have been claimed from them because the assessee is making payment to the professional agency towards these services. On going through the chart filed by the learned counsel for the assessee showing the ratio of the loss on such breakage to sales, we find that loss on account of breakage is 0.07% of the sales during the relevant assessment year which is negligible as compared to the huge turnover of the assessee. The assessee is making payment to the professional agency for the services rendered by them but the breakage is not attributable to the employees of the professional alone. In such a situation, we do not agree with the observation of the AO that the assessee should have claimed the loss from the professional agency only. As long as the loss is on account of business activity carried on by the assessee, it cannot be disallowed.- Decided in favour of assessee.
Management fee paid to Sigma Aldrich USA disallowed - Held that:- Neither the AO nor the CIT(A) has brought out any details of the services rendered by the AEs to the assessee and as to how the knowledge is made available to the assessee to bring it within the provisions of section 40(a)(ia) of the Act for non-deduction of tax at source. For coming to the conclusion that the knowledge is made available to the assessee, the nature of the transaction has to be looked into. Merely holding that the work of catalogue printing, brochures etc., is not a highly specialized one and is available within the country, cannot be said to be a specialized activity requiring making available of the technology to the assessee. Therefore, we deem it fit and proper to remit this issue to the file of the AO for reexamination of the nature of the transaction and only if it falls within the definition of ‘technical and consultancy services’ under the India- USA DTAA, the provisions of sec. 40(a)(ia) can be applied. Decided in favour of assessee for statistical purposes.
Disallowance of staff welfare expenses - Held that:- It the assessee has not furnished bills and vouchers in support of its claim. The burden is on the assessee to furnish the necessary details in support of the claim of expenses made by it. In the absence of such details, the AO has made disallowance which has been restricted to 15% by the CIT(A). We do not see any reason to interfere with the order of the CIT(A) on this issue. - Decided against assessee.
Disallowance of Travelling expenses - Held that:- CIT(A) on perusal of the evidence filed by the assessee has observed that several of these are invoices drawn by Wipro towards ‘SAP Functional Consultancy Charges’ rather than involving travel per se. He also observed that both the invoicing and invoiced parties are addressed at Bangalore and therefore they do not support the assessee’s contention of having provided full and complete details of travel before the AO. The learned counsel for the assessee has not produced before us any other supporting evidence other than that filed before the AO and the CIT(A) to rebut the above finding of the CIT(A). Therefore, we do not see any reason to interfere with the order of the CIT(A) on this issue. - Decided against assessee.
Treatment of SAP costs - AO disallowed 50% of the same and brought it to tax - CIT(A) deleted disallowance - Held that:- Genuineness of the payment made by the assessee is not doubted by the AO nor is the purpose of the program being for assessee’s business is doubted by the AO. As long as the expenditure is for the purpose of business, the same cannot be disallowed. As rightly pointed out by the CIT(A), questioning the speed or validity of the SAP system for the assessee’s business for purpose of disallowance of expenditure is beyond the scope of the AO unless he points to specific reasons to hold that the system is not used for business of the assessee. Therefore, we do not see any reason to interfere with the order of the CIT(A) - Decided against revenue.
Payment towards logistic services, warehouse management and customs clearances disallowed - Held that:- The only ground on which the AO has disallowed is that at the time of inspection, very few of the employees of the contractor were present at the premises. The contention of the assessee that the time of inspection was 6 PM is not rebutted by the department. Such being the time of inspection, explanation of the assessee that the employees of the contractor have already left for the day is not unacceptable. Since the expenditure is for the business purpose of the assessee, an ad hoc disallowance of the same is not justified - Decided against revenue.
Expired inventory disallowed @ 50% - Held that:- On nature of the assessee’s business, we agree with the contention of the assessee that the goods of the assessee which are nearing expiry date have to be written off. Further, the ratio of such goods to sale is only 0.12% on sales and 0.18% on cost of goods sold. Therefore, we are of the opinion that such disallowance is not called for. - Decided against revenue.
Stock issued for Genosys production as consumables disallowed - Held that:- Though the assessee has claimed that Genosys Production has manufactured the products and offered income from sale of these products as assessee’s income, the CIT(A) has not verified the same and has accepted the contentions of the assessee at face value and allowed relief to the assessee. In view of the same, we deem it fit and proper to remit this issue to the file of the AO to verify the assessee’s contention and if it is found to be correct, then no disallowance shall be made. - Decided in favour of revenue for statistical purposes.
Quality rejects disallowed - Held that:- Neither the AO nor the CIT(A) has doubted the genuineness of the expenditure and the CIT(A) has allowed 25% of the claim as allowable deduction by holding that the quality check measures are an integral part of any professionally managed company and it is not likely that quality measures would be treated in a casual manner, thus requiring significant write off. From the chart given by the assessee, we find that the quality rejection amounts to 0.13% of sales and 0.17% on cost of goods sold. Considering the nature of the goods manufactured by the assessee, it cannot be presumed that the quality of goods is always met and that write off is not necessary. Therefore, since genuineness of the expenditure has not been doubted by the authorities below, we are inclined to grant full relief to the assessee on this issue - Decided in favour of assessee.
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2015 (7) TMI 947
Rectification of mistake - indirect expenses debited to the profit and loss account by the assessee - Held that:- Assessing Officer has asked the assessee to furnish complete details and the assessee could not furnish the same. Similar was the position before the ld. CIT(A), but the ld. CIT(A) has deleted the addition having observed that the assessee was not under any obligation to maintain separate balance sheet and profit and loss account for each and every unit. While adjudicating the issue, the Tribunal has given a categorical finding that the assessee is not under any obligation to prepare separate balance sheet and profit and loss account for each and every unit, but whenever the assessee was asked by the Assessing Officer to furnish the details of a particular expense debited to the profit and loss account, the assessee is under obligation to furnish the complete details. Since the assessee has not furnished complete details before the ld. CIT(A), the deletion of addition was not proper. However, the Tribunal has restored the matter to the ld. CIT(A) for re-adjudicating the impugned issue afresh. The Tribunal has examined the facts and given a categorical finding on this issue. The findings of the Tribunal cannot be reviewed under the garb of rectification. If the assessee is aggrieved with the findings of the Tribunal on a particular issue, the remedy available to the assessee is not under section 254(2) of the Act but lies somewhere else.
The ld. counsel for the assessee has tried to dispute the findings of the Tribunal and seeking a review of the order of the Tribunal which is not permissible under section 254(2) of the Act and we accordingly reject this Miscellaneous Application. - Decided against assessee.
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2015 (7) TMI 946
Deduction u/s.80P(2)(a)(i) - interest earned on the FDs placed by with banks - Held that:- In view of the judgement of in the case of CIT v. Tumkur Merchants Souharda Credit Cooperative Ltd. [2015 (2) TMI 995 - KARNATAKA HIGH COURT] it has been clearly mentioned that the money meant for lending, remaining surplus, there being no takers, if deposited in banks for earning interest, such interest income would be attributable to the business of banking carried out by the assessee. We are of the opinion that the facts of the case here fit perfectly well with the facts in the judgment mentioned above. We, therefore, hold that assessee was eligible for claiming deduction u/s.80P(2)(a)(i) of the Act, on the interest earned on the FDs placed by it with banks, this being a part of its business income. We do not find it necessary to interfere with the order of the CIT (A). - Decided in favour of assessee.
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2015 (7) TMI 945
Validity of assessment order under section 144 - Held that:- Assessee could not substantiate the incorrectness in the action of the Assessing Officer for passing the assessment order under section 144 of the Act. We, however, have carefully perused the orders of the lower authorities and we find that the requisite information sought by the Assessing Officer were not furnished by the assessee before him, therefore, the action of the Assessing Officer was approved by the ld. CIT(A) and during the course of hearing of the appeal no defect was pointed out in the order of the ld. CIT(A). We accordingly confirm the order of the ld. CIT(A) approving the action of the Assessing Officer for completing the assessment under section 144 of the Act. - Decided against assessee.
Profit inclusive of reversal of NPA provisions - Whether CIT(A) correct dismissing the additional ground taken by the appellant that the profit of ₹ 2,86,25,894/-was inclusive of reversal of NPA provisions of ₹ 2,01,97,000/-initially made by the appellant in A.Y, 2004-2005 and 2006-2007 respectively without appreciating the fact that the profit to the extent of Rs,2,01,97,000/- was only the book entry and not the actual profit? - Held that:- The ld. CIT(A), re-examined the issue in detail and has finally held that the Assessing Officer is free to allow loss to the assessee after revising the assessed loss in assessment years 2004-05 and 2006-07 after carrying out proper verification for relevant assessment records of the earlier assessment years, instead of giving a proper direction to re-compute the income keeping in view the provisions for reversal entries initially made in earlier years. Assessing Officer is required to assess proper income in the hands of the assessee. Therefore, the events of earlier years should be kept in mind while computing the real income of the assessee. Since the assessee has placed evidence with respect to the provisions of NPA in earlier years, the said facts require a proper verification. We accordingly modify the order of the ld. CIT(A) and direct the Assessing Officer to examine the claim of the assessee in the light of earlier assessment orders relevant to the assessment years 2004-05 and 2006-07. - Decided in favour of assessee for statistical purposes.
Addition on account of possible leakage - Held that:- The assessee has claimed expenses at ₹ 12,32,067/- but it could not produce the supporting evidence before the Assessing Officer and the Assessing Officer has made disallowance of 20% of the total claim which was reduced by the ld. CIT(A) to 10%. Since the assessee could not produce evidence in support of the expenses, we find no infirmity in the ad hoc disallowance made by the ld. CIT(A). - Decided against assessee.
Non-deduction of tax on interest debited to the profit and loss account - disallowance u/s 40(a)(ia) - Held that:- Disallowance of ₹ 2,58,538/- is proper for want of non-deduction of TDS under section 40(a)(ia) of the Act.
So far as deletion of addition of ₹ 23,37,707/- on account of production of form 15H is concerned, we raised a specific query from the ld. counsel for the assessee as to when it was filed and whether any comments were called from the Assessing Officer, as there is no specific finding of the ld. CIT(A), but the ld. counsel for the assessee could not furnish any explanation to the satisfaction of the Bench. We are, therefore, of the view that this issue with regard to production of form 15H relating to ₹ 23,37,707/- requires fresh adjudication by the Assessing Officer. We accordingly set aside the order of the ld. CIT(A) and restore the matter to the file of the Assessing Officer with a direction to verify the production of form 15H and after making verification, disallowance under section 40(a)(ia) of the Act may be re-computed - Decided partly in favour of assessee for statistical purposes.
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2015 (7) TMI 944
Addition on confiscation of stocks of scrap Rail and scrap Cast Iron by the District Authorities against the dues of KESCO - Held that:- CIT (A) decided the issue against the assessee by holding that there is no dispute regarding the value of confiscated stock of ₹ 50,92,490/- for which only possession has changed but the right remains with the assessee only. Before us also, same argument is made without establishing that entire stock of 832.809 M.T. was auctioned for ₹ 2.03 lacs because on page 24 of the paper book, no quantity is mentioned and hence it is very much possible that this sale proceeds of ₹ 2.03 Lacs is for sale of only a small part of 832.809 M.T. and the remaining part is still unsold or was sold by the assessee prior to seizure. Moreover, this amount of ₹ 2.03 Lacs is said to have been adjusted against outstanding demand of KESCO of ₹ 71,21,300/-. If this demand of KESCO of ₹ 71,21,300/- or any part thereof is already accounted for in books, then the payment to KESCO is to reduce sundry creditor only and in that situation, sale proceeds of stock has to be considered as income only and the balance has to be considered as stock in absence of any evidence that entire stock was sold for ₹ 2.03 Lacs. If this demand of KESCO is other than liability as per books than also the assessee has to establish that deduction is allowable for the same but the assessee has not even explained the nature of the liability said to be payable to KESCO. Hence, we do not find any reason to interfere in the order of learned CIT (A) on this issue. - Decided against assessee.
Addition on the basis of profit on sale outside books of excess stock shown in the stock statement ubmitted to the bank by the assessee - CIT(A) deleted the addition - Held that:- The present issue is covered in favour of the assessee by the judgment of Hon’ble Jurisdictional High Court rendered in the case of CIT vs. Khan & Sirohi Steel Rolling Mills (Supra). Learned CIT (A) has decided this issue by following this judgment and learned DR could not point out any difference in facts. Hence, we decline to interfere in the order of learned CIT (A) on this issue. - Decided against revenue,
Unexplained investment made in the purchase of unrecorded stock - CIT(A) deleted the addition - Held that:- CIT (A) has given a categorical finding that purchase shown in the stock statement submitted to bank almost tallies with value reflected in books of accounts. He has also given this finding that books of accounts are not rejected and no other adverse circumstantial evidence is brought on record by the A.O. After making these observations, he has decided this issue by following this judgment of Hon’ble Jurisdictional High Court rendered in the case of CIT vs. Khan & Sirohi Steel Rolling Mills (2005 (1) TMI 680 - ALLAHABAD HIGH COURT). Learned DR of the revenue could not controvert these categorical findings of CIT (A) and he could not show as to how this judgment of Hon’ble Jurisdictional High Court rendered in the case of CIT vs. Khan & Sirohi Steel Rolling Mills (Supra) is not applicable. Hence, we decline to interfere in the order of learned CIT (A) on this issue also - Decided against revenue.
Disallowance out of depreciation on plant & machinery which as per the assessing officer were not put in to use during the period under reference - CIT(A) deleted the addition - Held that:- none of the judgments followed by learned CIT (A) is applicable in the present case. Moreover, this is admitted position of facts that the industrial unit was not working and although it is claimed that some machines were used in course of trading but no evidence is brought on record in support of this contention. No evidence is brought on record in support of this contention also that the machines were kept ready for use. This also is not the case of the assessee that the operation of industrial unit has restarted even till now i.e. in the year 2015. Considering all these facts, we hold that the order of learned CIT (A) on this issue is not sustainable and therefore, we reverse the same and restore that of the A.O. - Decided in favour of revenue.
Addition u/s 43B on account of penal interest charged by the bank and interest payable to bank - CIT(A) delted addition - Held that:- Disallowance was made by the A.O. on account of interest payable on cash credit account and on account of penal interest charged by the bank. Learned CIT (A) has given a categorical finding that in the relevant year, section 43B did not cover interest on cash credit account. He has also given a finding that the penal interest was for contravention of contractual obligation between borrower and lender and not for infraction of any law. Learned DR of the revenue could not controvert any of these findings of CIT (A). Hence, we find no reason to interfere in the order of CIT (A) on this issue. - Decided against revenue.
Validity of assessment order u/s 143(3) - Held that:- Learned CIT (A) held that since the notice u/s 143 (2) was not validly served on the assessee within prescribed time, the assessment is void and he annulled the same. We find no infirmity in the order of CIT (A) in the facts of the present case and therefore, we decline to interfere in his order. See Anil Kumar Goel vs. ITO [2007 (2) TMI 260 - ITAT LUCKNOW-A ] - Decided against revenue.
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2015 (7) TMI 943
Addition u/s 68 - Production of cash book - Verification by AO - Onus to prove - Held that:- assessee had indeed produced a cash book before the AO. - Once assessee produced a cash book, the onus was on the assessee to prove the entries therein. If it was unable to do so, AO could certainly invoke Section 68, even otherwise AO can invoke Section 69, if source of investment is not properly explained. Assessee cannot wriggle out of its obligation under law, by citing a reason that books of accounts were prepared under the instruction of the AO. No doubt, assessee had returned its interest income under the head “Other sources”. But application of Section 68 and Section 69 are not restricted to business income. It can encompass any type of income, as the facts may call for.
Confirmation filed by the assessee at pages 22 to 36, did carry the address of the persons from whom it had received cash. None of these persons were examined by the lower authorities. Further, accumulation of cash in cash-book perse cannot be a reason for disbelieving the source of a deposit in Bank. An assessee might have myriad of reason for withdrawing cash from bank or keeping cash with him. Unless the distance of time is such as to make it unbelievable, in our opinion explanation of source should not be brushed aside. We are therefore, of the opinion, that rules of justice require a verification of the confirmation filed by the assessee, by the AO, by issuing proper summons. If the parties do not attend the summons on if the assessee fails to produce them, AO can take an adverse view and make an addition. For the limited purpose of this verification, we set aside the orders of the authorities below and remit the issue of addition of ₹ 12.00 lakhs back to the file of the AO. - Decided partly in favour of assessee.
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