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Showing 501 to 520 of 1387 Records
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2016 (2) TMI 888
Bogus purchase - addition as assessees income - Held that:- AO was not justified in holding that the entire bogus purchases by the assessee from the aforesaid two parties in the assessee’s undisclosed income.
The assessee had earned commission @ 5% for clandestinely facilitating the bogus transactions of the parties to purchases and sales.
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2016 (2) TMI 887
Eligibility of registration u/s 12AA - Held that:- It is now well settled that at the time of grant of registration u/s 12AA, the ld. Commissioner is required only to examine the objects of the society. A bare perusal of the objects of society makes it clear that the pre-dominant object of the society is to impart education. - Decided in favour of assessee
As we have directed for registration of society u/s 12AA in terms of observations the assessee’s claim for approval u/s 80G(5)(vi) is allowed.
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2016 (2) TMI 886
Entitlement to deduction u/s 11 - Held that:- Merely because the assessee receives some recognition fees will not deviate the fact that the main object of the assessee is to promote sports which is apparently for the advancement of general public utility as provided in Section 2(15) of the Act which defines charitable purposes. The words "advancement of any other object of general public utility" would exclude objects of private gain; but this requirement is also stratified in the present case because the object of private profit is eliminated by the assessee under the objects as per Memorandum of Association of Society which was quoted in Assessment Order. The test to be applied is whether the predominant object of the activity involved in carrying out the object of general public utility is to subserve the charitable purpose or to earn profit. Where the predominant object of the activity is to carry out the charitable purpose and not to earn profit, it would not lose its character of a charitable purpose merely because some profit arises from the activity. The exclusionary clause does not require that the activity must be carried on in such a manner that it does not result in any profit. The restrictive condition that the purpose should not involve the carrying on of any activity for profit would be satisfied if profit making is not the real object. Therefore the assessee is entitled for the deduction under Section 11 of the Act. - Decided in favour of assessee.
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2016 (2) TMI 885
Penalty u/s 271(1)(c) - income offered by the assessee pursuant to search carried out at his premises - advances received in cash from the customers and gifts received - Held that:- In the facts of the present case, we hold that the declaration made by the assessee on account of advances received in cash from the customers which was shown in the books of account, balance sheet and even in the return of income, filed before the date of search, in view of the declaration of the assessee while recording the statement under section 132(4) of the Act, during the course of search and seizure action at the premises of the assessee on 06.01.2010, represents the additional income in the hands of the assessee, which have been declared by the assessee in the return of income filed pursuant to issue of notice under section 153A of the Act. Such additional income offered by the assessee falls within the purview of Explanation 5A to section 271(1)(c) of the Act of the Act and t he assessee is liable for levy of penalty under section 271(1)(c) of the Act on the aforesaid amounts offered by the assessee on account of advances received in cash from customers shown in the balance sheet.
Similarly, the gifts shown in the books of account which have been offered as additional income by the assessee during the course of search itself, in the statement recorded under section 132(4) of the Act is liable for levy of penalty under section 271(1)(c) of the Act i.e. on offer of income of ₹ 90,000/- in assessment year 2006-07 and ₹ 8,17,200/- in assessment year 2007-08. We find no merit in the order of CIT(A) in this regard that where the advances from customers, gifts received by the assessee and unsecured loan have been shown in the books of account and were part of the balance sheet filed by the assessee along with return of income originally filed by the assessee prior to date of search does not warrant the levy of penalty under section 271(1)(c) of the Act.
In view of the amended provisions of Explanation 5A to section 271(1)(c) of the Act, the said finding of the CIT(A) is reversed and we hold that the assessee is liable to levy of penalty under section 271(1)(c) of the Act on the income offered by the assessee pursuant to search carried out at his premises, during the course of recording of statement under section 132(4) of the Act and by way of additional income in the return of income filed pursuant to issue of notice under section 153A of the Act.
Similarly, unsecured loans shown in assessment year 2007-08 is liable for levy of penalty under Explanation 5A to section 271(1)(c) of the Act, which was offered by the assessee as additional income during the course of search and also declared in the return of income filed pursuant to notice under section 153A of the Act.
Applying the ratio laid down by the Pune Bench of Tribunal in Sarita Kaur Manjeet Singh Chopra Vs. ITO (2015 (12) TMI 1025 - ITAT PUNE ), we hold that the assessee is exigible to levy of penalty under Explanation 5A to section 271(1)(c) of the Act on the incomes offered in the return of income pursuant to issue of notice under section 153A of the Act. - Decided against assessee
Addition made on account of undisclosed rent from shop and house on estimated basis - Held that:- The assessee offered to tax the notional income in respect of the said vacant house at Malegaon and shop at Nashik. The assessee admittedly, had not received any income from two properties and the income was assessed in the hands of assessee on notional basis as the assessee owned one self occupied property at Nashik. The said addition was made in the hands of assessee during the course of assessment proceedings and no information in this regard was found during the course of search proceedings. In view thereof, the provisions of Explanation 5A to section 271(1)(c) of the Act are not applicable. However, the substantive provisions of section 271(1)(c) of the Act are attracted, but in view of the notional income being assessed in the hands of assessee and in the absence of any evidence found during the course of search or otherwise as to the receipt of rental income from the said properties, we find no merit in the levy of penalty under section 271(1)(c) of the Act on such notional rent - Decided against revenue
Addition made on account of notional rental income from hotel - Held that:- The offer of the rental income during the course of assessment proceedings was to buy peace of mind and to avoid litigation. However, there is no finding of any of the authorities that the assessee had indeed received the aforesaid rental income from the said hotel. In view of the explanation of the assessee, which was not accepted by the Assessing Officer and addition was made in the hands of assessee on notional basis, does not justify the levy of penalty under section 271(1)(c) of the Act. We further hold that on such additions made in the hands of assessee and in the absence of any evidence found during the course of search, Explanation 5A to section 271(1)(c) of the Act is not attracted. Accordingly, we upho ld the order of CIT(A) in deleting penalty - Decided against revenue
Addition on account of undisclosed profit on sale of flat - Held that:- The claim of the assessee in this regard is that the said income was voluntarily offered by the assessee and was not found during the course of search. In case, no evidence was found during the course of search, then admittedly, the provisions of Explanation 5A to section 271(1)(c) of the Act are not attracted. However, the assessee is exigible to levy of penalty for concealment under section 271(1)(c) of the Act under the substantive provisions since the assessee had failed to disclose the profits earned by it on the sale of flats of ₹ 22,500/- and 42,250/- in assessment years 2008-09 and 2009-10. Accordingly, we reverse the order of CIT(A) in this regard and direct the Assessing Officer to levy penalty under section 271(1)(c) - Decided against assessee
Addition of on-money received on sale of plot - Held that:- Where the assessee had not offered true taxes on the income declared by the assessee and addition was made on account of on-money received on sale of plots in the hands of assessee, then the provisions of section 271(1)(c) of the Act with regard to concealment of income are attracted and the assessee is liable to levy of penalty under substantive provisions of section 271(1)(c) of the Act. We reverse the order of CIT(A) in this regard and uphold the levy of penalty under section 271(1)(c) of the Act on receipt of on-money of ₹ 12,000/- in assessment year 2006-07 and ₹ 10,000/- in 2007-08.- Decided against assessee
Disallowance of labour payment for non-payment of taxes at source - Held that:- The addition was made in the hands of assessee by the Assessing Officer for non-deduction of tax at source and in view of the provisions of section 40(a)(ia) of the Act. The disallowance was made in the hands of assessee on account of deeming provisions of the Act. However, it is not the case of Revenue authorities that the aforesaid amount on account of labour was not paid by the assessee. Merely because the addition has been made in the hands of assessee, does not justify the levy of penalty under section 271(1)(c) of the Act. We hold that there is no merit in the order of Assessing Officer in this regard and upholding the order of CIT(A) in deleting the penalty levied on the said addition - Decided against revenue
Change in head of income - long term capital gains offered to tax in the return of income was assessed as business income in the hands of the assessee by the Assessing Officer - Held that:- The assessee is undoubtedly carrying on the business of developers, but it can hold assets in two fields i.e. on account of trading or on account of investment. Merely because the assessee was not able to substantiate its claim before the Assessing Officer and had offered the said income to be assessed as business income, instead of under the head ‘capital gains’ as shown in the return of income, does not justify the levy of penalty under section 271(1)(c) of the Act See CIT Vs. Bennet Coleman & Co. Ltd. [2013 (3) TMI 373 - BOMBAY HIGH COURT] . Accordingly, we uphold the order of CIT(A) in this regard as where the assessee only changed head of account and in the absence of any facts that claim of assessee was not bonafide, the deletion of penalty under section 271(1)(c) of the Act by the Tribunal was upheld. - Decided against revenue
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2016 (2) TMI 884
Eligibility of benefit of deduction u/s.80IB(10) - case of the Revenue that since the assessee has not completed the B2 project, therefore, the assessee is not entitled to deduction u/s.80IB(10)- Held that:- We find the assessee in the instant case has constructed the housing project namely “Kumar Paradise” at Hadapsar, Pune on Plot No.2 Survey No.134/1/1A/1. The said plot is divided into 3 parts, Part A, Part B and Part C. The first layout of the plan of the entire scheme was sanctioned by the local authority, i.e. PMC on 21-10-2003. The assessee proposed 2 separate projects Part A and B on the aforesaid plot. The project A of the plot comprised of the Buildings A1 and A2 and project B comprised of Buildings B1, B2, B3 and B4. The total area of the project A was 8,853 sq.mtrs. The construction of the building A1 was started vide commencement certificate dated 08-01-2004 and the said building A1 comprising of 108 units was completed on 06-07-2006. Similarly, Building A2 which was commenced vide commencement certificate dated 18-05-2004 consisting of 108 units was completed on 06-11-2007. The project B comprising of 10, 394.66 sq.mtrs of Part B and 1606.02 sq.mtrs of Part C. The Building B1 commenced construction vide commencement certificate dated 28-06-2006 and the same comprised of 44 residential units and the said building B1 was completed on 18-03-2008. The other building B2 was commenced vide commencement certificate dated 28-06-2006. However, the same was not completed as according to the assessee there was inadequate FSI to complete the entire building since the same was sanctioned with only 16 units with an FSI of 677.64 sq.mtrs. Since according to the assessee the same was not economically viable the assessee did not complete the residential floors but only completed the parking floors for want of adequate FSI. However, subsequently, the assessee renewed the same on 22-06-2010 vide a separate commencement certificate. For the other 2 buildings, i.e. B3 and B4 on Part C of the plot another commencement certificate was obtained and building plan was sanctioned as there was no adequate FSI for building B2 itself.
It is the case of the assessee that it has completed A1, A2 and B1 of the project and because of inadequate FSI the assessee did not complete B2 building as it was not economically viable. Therefore, on stand alone basis itself, it is entitled to deduction u/s.80IB(10) in respect of whatever portion is completed. It is also the case of the assessee that in A.Y. 2007-08 the deduction claimed u/s.80IB(10) was allowed in order passed u/s.143(3). In A.Y. 2008-09 the deduction claimed was allowed in the order passed u/s.143(3)/147. Therefore, there is no justification for denying the claim of benefit of deduction u/s.80IB(10).
There is no dispute to the fact that the assessee in the instant case has completed the B1 building consisting of 44 flats. As mentioned earlier the building B1 is having built up area of more than 1 acre. The built up area of all the residential units are less than 1,500 sq.ft. and there is no commercial construction and the building independently on standalone basis satisfies all the conditions u/s.80IB(10). It has been held by various decisions that deduction u/s.80IB(10) of the Income Tax Act, 1961 is to be allowed on standalone basis on satisfaction of the conditions prescribed under the said section. - Decided in favour of assessee
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2016 (2) TMI 883
TDS u/s 194I or 194C - logistic service for carrying goods by sea route in containers - Held that:- The use of containers is incidental to the whole process of transportation of goods between ship and shore and it cannot be considered as a standalone transaction in its own character. The question of tax deduction under section 194I could have, if at all, arisen only when it was a rental simplictor of the equipment. That is not even the case here. No doubt the bills have been raised on the basis of the size of the container because irrespective of the weight of the container, it is size which determines how much space is taken by the goods transported. The billing on the basis of the size of the container cannot lead to the conclusion that the billing is for container rental rather than transportation of goods contained in the container. The very foundation of the impugned demands raised by the Assessing Officer is thus devoid of any legally sustainable foundation.
The activity, for which the impugned payments are made, is the activity of transporting the goods which is a service in nature. The assessee was thus quite justified in deducting tax at source under section 194C. What is to be seen is whether use of the asset which is said to have been used, is incidental activity for attaining some other goal or is it the core activity which can be viewed on standalone basis in its own character. On the facts of this case, as we have held earlier in the order, the use of containers is only incidental and cannot be viewed as a core or standalone activity. It is merely incidental to transportation of, or loading and unloading of, cargo. The payments cannot, therefore, be treated as constituting payment for rent of containers.
In any event, tax deduction at source liability is only a vicarious liability and when the principal liability of the assessee is discharged, it ceases exist. In the present case, the assessee has filed tax returns of the recipient to demonstrate that the recipient has duly included the payments in question in the computation of his income, and duly discharged tax liability on the same. No infirmity is pointed out in the information so furnished. The Assessing Officer was, for this reason also, not justified in raising the demands in question. He had noted the contention of the assessee, in this respect, but left it at that. Such an approach cannot meet any judicial approval.
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2016 (2) TMI 882
Entitlement to exemption u/s 10(34) - dividend income distributed as per the provisions of Sections 115-O and 115-R - Held that:- CIT(A) have taken a wrong view by holding that the assessee cannot grow tax free income u/ss 10(34) and 10(35) of the Acts unless additional tax has been paid as per the provisions of Sections 115-O and 115-R of the Act and as such the exemption claimed u/ss 10(34) and 10(35) is to be allowed only if the dividend income distributed as per the provisions of Sections 115-O and 115-R whereas, the conditions laid down u/s 115-O to avail the exemption u/s 10(34), is to be complied with at the level of venture capital undertaking and not at the stage when the investor, the assessee in this case, received the dividend income from VCF. So, the assessee is entitled for exemption u/s 10(34) of the Act and its share of dividend income is out of dividend income received by SARA fund. When the company with which SARA Fund has been invested, had already paid additional income tax on the earned dividend as required u/s 115-O of the Act, SARA fund was not required to pay additional income tax second time on the same income - Decided in favour of assessee
Disallowance of expense - taxing the share of appellant as interest income from VCF under the head ‘other income’ on gross basis and not on net basis - Held that:- The provisions contained u/s 115U discussed in the preceding paragraphs which mandates that venture capital company and venture capital fund is given the status of pass through vehicle for the purpose of treatment of income received on account of investment made in the venture capital undertaking. A person who makes investment in the venture capital company or venture capital fund, the assessee in this case, earned the income out of such investment which income shall be treated firstly as investment directly in the venture capital undertaking and venture capital fund or venture capital company is only a pass through vehicle. So, in these circumstances, the assessee company is entitled to book expenditure incurred by SARA fund as if the same has been incurred by the assessee directly in the venture capital fund. So, we are of the view that the expenses of ₹ 1,13,11,955/- disallowed by Ld. CIT(A) by taking the shares of the assessee in interest income from VCF under the head other sources on gross basis and not the net basis, which requires to be determined by treating the same nature of income like long term capital gain, short term capital gain, dividend and other income such as interest etc - Decided in favour of assessee
Taxability of assessee’s share in the payment @ 22.23% - assessable in assessee’s hands as ‘income from other sources’- Held that:- The assessee in this case, earned the income out of such investment, which income shall be treated as if the investment was directly in the VCU and VCF and VCC is only a pass through vehicle. So, the assessee has rightly taken the net income for tax at ₹ 11,97,38,454/- by subtracting the amount of ₹ 5,62,61,546/- and the assessee is liable to be taxed accordingly. So, Ld. CIT(A) has erred in holding that the appellant’s share in the payment of ₹ 5,62,61,546/- (17,60,00,000 – 11,97,38,454) @ 22.73% i.e. ₹ 1,27,88,250/- as income from other sources in the hands of assessee, which is required to be assessed in view of the provisions contained u/s 115U of the Act - Decided in favour of assessee
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2016 (2) TMI 881
Liability to pay tax on long term capital gains - cancellation document - Transfer - Held that:- If there was any cancellation document which has taken place, the original document would have been with the assessee, as the assessee would have been the sole beneficiary of said document . In our view, the alleged cancellation agreement between the assessee and the purchaser, if accepted, is a title document qua the assessee that will nullify the effect of the original sale deed as per the assessee (though this contention of nullifying the effect of registered document is highly disputable and debatable in view of provisions of Transfer of Property Act). But since the cancellation document as is alleged is the title document in favour of the assessee, therefore, the original document should have been in possession of the assessee, but the assessee has failed to produce the original document during the assessment proceedings, in our view, it goes against the assessee. Therefore, we have no hesitation to hold that the complete transfer in accordance with law has taken place on account of registered sale deed dated 16.04.2007 and, therefore, the assessee is liable to pay the long term capital gain on sale of the capital asset on DLC rate of the property at ₹ 11,40,453/-. Accordingly, this issue is decided against the assessee.
Applicability of provisions of section 53A of the Transfer of Property Act - Held that:- Provisions of section 53A of the Transfer of Property Act is not attracted as the assessee has failed to produce the written contract between the assessee and Shri Praveen Kumar Jain, pursuant thereof in part performance of the contract, the possession of the property was handed over to Shri Praveen Kumar Jain. Therefore, the issue is decided against the assessee.
Entitlement to benefits under 54F - Held that:- The comparison of the two registered sale documents clearly shows that the property which was earlier sold by the assessee to the purchaser, namely Praveen Kumar Jain was later on transferred by Shri Praveen Kumar Jain to the assessee by registered sale document. Both the transactions i.e. one between the assessee and Praveen Kumar Jain dated 16.04.2007 and another between Praveen Kumar Jain and assessee dated 23.02.2008 have taken place within the A.Y. 2008-09 and in both the sale transactions the DLC rate is applied was ₹ 11,40,453/-, though in the later transaction the sale consideration was mentioned as ₹ 3,00,000/- whereas in the earlier sale consideration received by the assessee was ₹ 1,05,000/-. Thus the assessee had paid ₹ 1,95,000/- more for getting back the title in respect of the same property on 23.02.2008. If we examine the issue, the in the light of above facts, in our view, there is no income which can be subjected to tax as the income which was received by selling the property was ₹ 1,05,000/- and the amount paid for purchase of the said property was ₹ 3,00,000/-. The full value consideration in the case of selling the property to Shri Praveen Kumar Jain was required to be considered as ₹ 11,40,453/- in accordance with sec. 50C. However, the same yardstick is required to be applied when it comes to sale consideration paid by the assessee. In our view, for the purpose of the cost of the new asset, the same principle, in the peculiar facts and circumstances is required to be applied. The assessee cannot be axed twice. In fact, if we see the fate of transactions, the genuineness of the transaction is loud and clear and is apparent though we have held that the transfer has taken place between the assessee and Shri Praveen Kumar Jain, but nonetheless the re-transfer/fresh sale deed was also executed by Shri Praveen Kumar Jain in favour of the assessee on 23.02.2008. Therefore, in our view, the assessee is entitled to the relief claimed under this provision. Thus, we hold that the assessee is entitled to the benefit of the amount spent by him for purchase of plot for the sale consideration of ₹ 3,00,000/- and any other addition caused which may have been incurred by him on the said purchase of the land. The same parameters should be applied for giving the benefits under 54F as had been applied under section 50C.
Though section 50C(2) provides that it is for the assessee to claim before the AO that the value adopted by the stamp valuation authority exceeds the fair market value, in that eventuality the AO may refer to the Valuation Officer for the valuation of the capital asset in accordance with law. In the present case no request has been made before the AO. The perusal of the paper book and record shows that even before the AO or before us, the assessee has not filed any fair market value of the property to the estimation of the assessee. Further, the assessee has not challenged the value adopted by the stamp valuation authority either at the time of selling the property to Shri Praveen Kumar Jain or at the time of purchasing the property from Shri Praveen Kumar Jain. In our view the ground of the assessee is required to be dismissed and accordingly we dismiss the ground of the assessee.
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2016 (2) TMI 880
Cost of acquisition - capital gain on account of sale of TDR as long term capital gain - assessee along with his family members owned an ancestral land near Parvati, Pune which was reserved and subsequently acquired by PMC - Held that:- As regards the contention of the assessee that since the land was acquired by the PMC in the F.Y. 1999-2000 and TDR was received in the month of March 2000 for which the gain arising on account of acquisition of the land could not be taxed in A.Y. 2001-02 is without any merit. The tax has been levied on the basis of the sale of TDR during the impugned assessment year. The TDR has been obtained on account of acquisition of land by PMC. It is not a case that the value of the land is not ascertainable. Therefore, the argument of the Ld. Counsel for the assessee that the assessee is not liable to capital gain tax at all or that it cannot be taxed in this year because it relates to A.Y. 2000- 2001 is without any merit. Therefore the additional ground on this issue is dismissed.
Adoption of rate of ₹ 120.98 per sq.ft. as the sale consideration is concerned, we find the Ld.CIT(A) on the basis of the entries found on the seized documents of the loose paper Bundle No.12 has computed rate per sq.ft. at ₹ 120.98 per sq.ft. The Ld. Counsel for the assessee could not controvert the factual analysis done by the Ld.CIT(A) on the basis of the seized document. Merely because the department did not find any unaccounted asset cannot be a ground to adopt the sale consideration at ₹ 80/- per sq.ft. as against ₹ 120.98 per sq.ft. computed by the CIT(A) on the basis of the seized document. In view of the detailed reasoning given by the CIT(A) adopting the rate per sq.ft. at ₹ 120.98 per sq.ft. and in absence of any cogent material brought to our notice by the Ld. Counsel for the assessee against the same the order of the CIT(A) determining the rate per sq.ft. at ₹ 120.98 per sq.ft. is upheld and the ground raised on this issue is accordingly dismissed.
Determination of FMV per sq.ft. as on 01-04-1981 - in absence of any satisfactory reply from the valuer whose statement was recorded u/s.131 on 15-09-2004 the AO rejected the valuation report given by the valuer - Held that:- We find a somewhat similar case had come up before the Pune Bench of the Tribunal in the case of Sathe Biscuit and Chocolate Company Ltd. (2010 (9) TMI 1107 - ITAT PUNE) Tribunal after considering the above circular considered the rate of the land as on 01-04-1981 at 40% of the value determined as on 01-04-1989. After considering the fact that the property of the assessee was having at a better location and holding that the stamp valuation rates are generally lesser than the FMV, the Tribunal determined the FMV at ₹ 630/- per sq.mtr. Adopting the principle laid down by the Pune Bench of the Tribunal in the case of Sathe Biscuit and Chocolate Company Ltd. (Supra) we find the FMV of the said land as on 01-04-1981 comes to ₹ 55.74 per sq.ft. if the ready reckoner rate of 1989 at ₹ 1,500/- per sq.mtr is considered. Since the assessee has adopted the rate of ₹ 20/- per sq.ft. as against ₹ 55.74 per sq.ft. as per the ready reckoner rate of 1989 and proportionately brought down to 1981 rate the same appears to be reasonable. In this view of the matter, we direct the AO to adopt the rate of ₹ 20/- per sq.ft. as the cost of acquisition as on 01-04-1981 and compute the capital gain.
Taxation of entire amount in this year - the assessee has sold the TDRs in different assessment years - Held that:- The assessee in the paper book filed has furnished the details of party-wise summary along with copies of TDR/DRC allotted by PMC on 03-03-00 at paper book pages 248 to 348. These documents were very much available before the AO as well as the CIT(A). Even the AO in the assessment order at page 3 has mentioned the date of issue of DRC as on 03-01-00 and 03-03-00. The details of utilization of DRC and transfers, copies of which are placed at pages 256 to 347 show the sales in different financial years. For example Certificate No.0002195 shows sale of 297 sq.mtrs on 01-02-00 to Shri D.M. Bhutala, another 392 sq.mtrs on 01-02-00 to Shri S.S. Raut. The assessee has sold 69 sq.mtrs on 18-10-00 to Shri Vimalkumar Jain and another 25 sq.mtrs on 11-11-00 to Shri V.D. Dhattar, 100 sq.mtrs on 19-12-00 to Shri Anjum Parvez Patel. The assessee has sold 62 sq.mtrs on 27-04-2002 to Shri Anjum Parvez Patel. As per Certificate No.0002196 the assessee has sold 561 sq.mtrs to Shri Vimalkumar Jain on 18-10-00. As per Certificate No.0002340 apart from sale of TDR during F.Y. 2000-01 the assessee has sold 28.81 sq.mtrs to Shri Sayed Abbas Zaidi on 16-12-2002. These are only some of the examples. The various certificates filed in the paper book show sale of TDR in different financial years and the entire sale does not relate to the current assessment year. Although documents were very much available with the AO as well as the CIT(A) they have not considered the year of taxability on the basis of sale of TDR. Therefore, we find some force in the submission of the Ld. Counsel for the assessee that correct income has to be taxed in the impugned assessment year. We therefore direct the AO to verify from the details furnished before him from the utilization of DRC and transfer certificates and bring to tax the correct income for the impugned assessment year.
So far as sale proceeds in the assessment years other than the impugned assessment year the AO will follow due process of law for bringing to tax the capital gain on transfer of TDRs in respective years. We hold and direct accordingly.
Actual area transferred by the Raut family - Held that:- Restore the issue to the file of the AO with a direction to verify the exact area considering the actual area of TDR sold and compute the capital gain accordingly.
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2016 (2) TMI 879
Deduction claimed under section 80P(2)(a)(i) - interest income earned on investment / deposits with other banks -assessee is a credit co-operative society, which is accepting deposits from its members and using the same for giving loans to its members - Held that:- The surplus amount which was on account of amount received from its members only, which had not been advanced to any of the members was invested in the banks, against which the said investment was made out of surplus funds available with the assessee, which in turn, were amounts advanced by the members itself. The said parking of funds with the co-operative banks was claimed by the assessee to be in the nature of its business activity as it was the requirement of Maharashtra Co-operative Societies Act, 1960, that 20 to 30% of total deposits are to be parked in the investments with co-operative banks. It is not the case of the Department that the amount invested by the assessee was out of any liabilities due by the assessee. In the absence of the same and following the same parity of reasoning laid down by the Hon’ble High Court of Karnataka in Tumkur Merchants Souharda Credit Co-operative Ltd. Vs. ITO ([2015 (2) TMI 995 - KARNATAKA HIGH COURT]) and the facts of the present case being at variance to the facts before the Hon’ble Supreme Court in Totgar’s Co-operative Sale Society Ltd. Vs. ITO (2010 (2) TMI 3 - SUPREME COURT) we hold that the assessee is entitled to the claim of deduction under section 80P(2)(a)(i) - Decided in favour of assessee.
Profit from other activities and services - deduction under section 80P(2)(a)(i) - relief allowed by the CIT(A) - Held that:- The perusal of the details filed of receipts totalling ₹ 50,21,759/-, out of which some details totalling ₹ 44,21,523/- are tabulated at page 9 of the CIT(A)’s order, it reflects that the assessee has received dividend of ₹ 160/-. The assessee had received interest income from savings account totalling ₹ 3,28,820/- and service charges of ₹ 4,48,431/-, cheque return charges of ₹ 68,680/- and charge and DD commission of ₹ 93,131/-, processing fees of ₹ 10,38,970/-, loan form fees of ₹ 10,780/- and interest received account of ₹ 24,15,280/-. As against the receipt of ₹ 44,21,523/- + other receipt from MSEB of ₹ 32,356/- and ₹ 4,65,343/-, totalling ₹ 50,21,759/-, proportionate expenditure relatable to such receipts at ₹ 43,01,457/- has been allowed by the Assessing Officer. The CIT(A) on the other hand, had upheld the order of Assessing Officer in respect of interest / commission from MSEB and had worked out the balance receipt eligible for deduction under section 80P(2)(a)(i) of the Act at ₹ 44,21,523/-. The proportionate expenditure on the same was allowed and the balance profit was determined as ₹ 6,34,206/- being eligible for deduction under section 80P(2)(a)(i) of the Act. We find no merit in the aforesaid order of CIT(A) in view of the nature of receipts in the hands of assessee being not covered by the provisions of section 80P(2)(a)(i) of the Act. The interest from savings bank account and the other receipts are not eligible for the aforesaid deduction under section 80P(2)(a)(i) of the Act. Accordingly, we reverse the order of CIT(A) in this regard - Decided in favour of revenue
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2016 (2) TMI 878
Validity of penalty orders u/s 271(1)(c) - period of limitation - Held that:- The case of Rayala Corporation Pvt. Ltd. Vs. UOI & Ors. (2006 (4) TMI 96 - MADRAS High Court) has considered proviso to section 275(1)(a) of the Act vis-à-vis appeal to the Tribunal and held that the proviso to section 275(1)(a) of the Act, does not nullify the availability to the third respondent of the period of limitation of 6 months from the end of the month when the order of the Tribunal, is received by the third respondent. The Hon’ble Madras High Court also supports our view expressed above. In view of the above, we find that the Ld. CIT(A) has rightly held that the penalty order passed by the A.O. within the period of limitation i.e. within 1 year as per the proviso to section 275(1)(a) of the Act. Thus, we uphold the order of the CIT(A). This ground of appeal raised by the assessee is dismissed.
After careful consideration of the orders of the authorities below and also particularly the penalty order passed by the A.O., we find that the assessee has not filed the details in respect of interest payment, unexplained investment in jewellery, bogus sundry creditors. Therefore, the A.O. after considering the non-filing of the above details and held that the assessee has concealed the income and came to a conclusion that it is a fit case to levy the penalty and accordingly penalty has been levied. We find that the assessee has not filed details in respect of the interest payment, unexplained investment in jewellery, sundry creditors. Therefore, by filing inaccurate particulars, the assessee has concealed the income. In the present case, section 271(1)(c) of the Act attracts on both the counts i.e. concealment of particulars of income and furnishing inaccurate particulars. Therefore, the penalty levied by the A.O. is justified and the notice issued by the A.O. cannot be said that a vague notice. - Decided against assessee
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2016 (2) TMI 877
TDS U/s 194J - sharing of fees - payments made by the appellant to ITGK for its share in RS-CIT course fees - Held that:- As decided in assessee’s own case for A.Y. 2009-10 to 2011-12 the uncontroverted fact which emerges from the record is to the effect that the payments in question were not made by assessee qua any service of professional or technical nature rendered to the payee. All the above entities by a valid collaboration, formed a business module on the revenue sharing basis for imparting computer education to Rajasthan Govt. employees and others. The services if any were provided to the students and the payee in question. The nature of internal distribution of revenue based on the mutual agreements can’t be held to be rendering of professional or technical services by any stretch of imagination. We find merit in the erudite contentions of ld. counsel for the assessee. Our view is reinforced by Hon’ble Delhi High court judgment in the case of Career Launchers [2012 (4) TMI 440 - DELHI HIGH COURT], the act of sharing of revenue in a multi entity business model cannot be held as contract payments and taking the logic further they cannot be held as payments on account of rendering of any professional or technical services as contemplated by Section 194J of the Act - Decided in favour of assessee
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2016 (2) TMI 876
Claim of deduction written off on account of unrecoverable advance made for purchase of machinery - Held that:- As second installment of the claim made on account of unrecoverable advance to the extent of 30% of the total amount. The facts and issues arising in the present captioned assessment year are identical to the facts and issues in assessment year 2009-10 and following the same parity of reasoning, we hold that the assessee is entitled to the claim of deduction of ₹ 43,34,640/-, written off on account of unrecoverable advance made for purchase of machinery. - Decided in favour of assessee
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2016 (2) TMI 875
Computation of deduction under section 80IA - assessee had already claimed deduction under section 80HHC - Held that:- We modify the directions of the CIT(A) and direct the Assessing Officer to first compute the deduction under section 80IA of the Act and restrict the deduction under section 80HHC of the Act to the profits of business that remains after excluding the profits on which deduction under section 80IA of the Act is allowed. Further, the Assessing Officer is directed to restrict the total deduction to be allowed under sections 80IA and 80HHC of the Act to the extent of 100% of the eligible profits as directed by the Hon’ble Bombay High Court in Associated Capsules (P.) Ltd. Vs. DCIT (2011 (1) TMI 787 - BOMBAY HIGH COURT ).
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2016 (2) TMI 874
Transfer pricing adjustment - computation of ALP based on interim and unaudited financial statements - Held that:- We are of the considered opinion that we have to restore the entire issue of determination of ALP to the file of the A.O. for fresh adjudication in accordance with law. When audited financial statements are available in the public domain, computation of ALP based on interim and unaudited financial statements cannot be accepted. A fresh exercise has to be done based on the audited financial statements of each of the parties for all the segments/international transactions.
Regarding the plea of the assessee to direct the A.O. to apply the Second Proviso to S.92(2) of the Act and to exclude comparables having related party transactions in excess of 25% and to direct the AO to grant working capital adjustment, we hold that the assessee would be free to take up any legal argument or contentions before the A.O. The law with respect to transfer pricing has developed over the period of time and the assessee/revenue should not be deprived of taking benefit of the latest legal developments on any issue. The AO is directed to consider all these fresh contentions and arguments raised by the assessee and dispose of the same and arguments in accordance with law. The AO/TPO shall afford adequate opportunity to the assessee. - Decided in favour of assessee for statistical purposes
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2016 (2) TMI 873
Classification of services - Levy of interest and penalty - It merely pleaded that there was no malafide intention in not remitting the tax and therefore, neither interest nor penalty should be levied. - Held that:- As the validity of the classification of the service is a factor integral to the legitimacy of levy and collection of tax, we have allowed the miscellaneous application for raising additional grounds and we consider the factual matrix of the Appellant’s rendition of service in the context of the two competing services ‘ ‘site formation etc.’ and ‘mining’ service.
On a true and fair construction of the matrix and bouquet of service provided by the Appellant, considered in the light of the two taxable services i.e. ‘site formation’ on the one hand and ‘mining’ on the other, and applying the provisions of Section 65A of the Act, the conclusion is compelling that since the essential character of the services provided by the Appellant is mining of Lignite and removal of Over Burdens is an activity incidental to facilitate and effectuate mining of lignite and as the quantum of lignite mined is also, under the schedule of quantities of the agreement between the Appellant and GHCL is predominantly, the contract should be considered in essential character as a contract for mining of lignite. On this reasoning, the service provided by the Appellant to GHCL clearly and undisputedly falls within the ambit of mining service and cannot be classified as “site formation etc” service.
Demand of service tax with interest and penalty set aside.
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2016 (2) TMI 872
Mandap Keeper services - Valuation - inclusion of catering charges - Held that:- the appellant’s claim that the entire charges relating to buffet dinner should be excluded from the assessing value in terms of notification No.12/2003-ST is clearly not sustainable.
However, it is also a fact that when the cost of food is included in the overall charges recovered by the appellant which included hall rent and buffet dinner charges it is entitled to the benefit of Notification No.12/2001-ST as amended by Notification No.8/2004-ST and the Commissioner has extended the said benefits and allowed abatement of 40% on the gross value charged by the appellant - No infirmity in the impugned order - Decided against the appellant.
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2016 (2) TMI 871
Levy of penalty - proprietary concern - it was pleaded that the definition given for the services in question namely “Commercial or Industrial Construction” defined under Section 65(105)(zzq) of the Finance Act, 1994 earlier used by words “Commercial Concern” which was substituted by wordings “by any other person” by Finance Act, 2006 dated 18.4.2006 with effect from 1.5.2006, and therefore, the respondents had been under the impression that they being “proprietary concern” were not covered by wordings “commercial concern” and were consequently not liable to payment of service tax.
Held that:- it is clear that there were sufficient reasons for the respondents in bona fidely believing that they were not liable to service tax during the relevant period especially when we view the amendments in the definition of “Industrial Construction” service made on 28.4.2006 by the Finance Act, 1994 made effective with effect from 1.5.2006 and the C.B.E.C’s letter No. 334/4/2006-TRU dated 28.2.2006; thus invoking the provisions of Section 80 of the Finance Act and the provisions of Section 73(3) of the Finance Act, 1994, the respondents’ case on non-imposition of penalty is sustainable and the appeal filed by the Revenue deserves to be rejected. - Decided against the revenue.
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2016 (2) TMI 870
Validity of rectification of its order by the Commissioner - principle of natural justice - although the respondent appeared before the Commissioner for hearing, it requested vide letter dated 29.03.2008 for one month's time. The Commissioner did not reject its request but at the same time went ahead and passed an order dated 30.04.2008 without notice to it and so the impugned order was in effect passed without personal hearing. Therefore, there was a mistake apparent from the records which needed rectification. - Held that:- Revenue has not been able to produce any evidence before us to show that vide letter dated 29.03.2008 the respondent had given up its right to be heard in person. It is thus evident that the order dated 30.04.2008 was passed without granting personal hearing when there was a request made for the same and without rejecting that request. It is certainly an error which is apparent from the records of appeal and such an error renders the orders to be a nullity. - Decided against the revenue.
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2016 (2) TMI 869
Claim of refund of service tax paid under reverse charge mechanism - export of services - non submission of BRC - whether service tax paid inadvertently, can be retained by the Govt. Exchequer on the ground of non-submission of BRC, especially in the contest of specific observations made by lower authorities that the appellant was not liable to pay service tax under Reverse Charge Mechanism. - Held that:- since the authorities below have specifically recorded the findings that the refund claim of service tax including interest paid by the appellant under Section 66A vide Challan No. 00037 dated 26.06.2011 against the services received during 01.01.2005 to 17.04.2006 from overseas agent is legally tenable, then rejection of refund claim on the ground of non-submission of BRC's is not supported by any provisions of law. - refund allowed - Decided in favor of assessee.
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