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Showing 501 to 520 of 1740 Records
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2019 (9) TMI 1243
Release of detained goods - section 130 of the Central Goods and Services Tax Act, 2017 - HELD THAT:- The respondents are directed to release the goods under detention upon payment of the tax and penalty as demanded by the respondents, which shall be subject to the final outcome of the petition. In case, the action of the respondents is upheld, the petitioner shall be liable to pay the differential amount.
Issue Notice, returnable on 3rd October 2019.
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2019 (9) TMI 1242
Pre-Deposit - Appealable order before tribunal but tribunal yet to be constituted under GST - Section 112 of the Uttar Pradesh Goods and Services Tax Act, 2017 - HELD THAT:- the petitioner is ready to deposit the amount as per the provisions of Section 112 of the Uttar Pradesh Goods and Services Tax Act, 2017, which is a pre-condition for filing the appeal. He prays for fifteen days' time to comply the terms and conditions as provided under Section 112 of the Uttar Pradesh Goods and Service Tax, 2017 and submit a receipt of the same - Prayer is allowed.
List immediately after fifteen days.
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2019 (9) TMI 1241
Entitlement to benefit u/s 80IB - assessee company is a private company, engaged in manufacture and trade of electronic and electrical equipments and goods - CIT(A) accepted assessee's plea and held that the turnover stipulations in terms of the investments in the fixed assets by Note 1 of the DIPP circular had been complied with also affirmed by ITAT - HELD THAT:- SLP dismissed on the ground of low tax effect.
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2019 (9) TMI 1240
Stay of demand - conditional stay was granted subject to the petitioner paying 20% of the tax amount attributable to the additions to income made under Section 68 - Deduction u/s 80(P) (2) (a) (i) - additions to the income declared by the petitioner under Section 68 - HELD THAT:- Taking note of the judgment of this Court in Mavilayi Service Co-operative Bank Limited v. Commissioner of Income Tax [2019 (3) TMI 1580 - KERALA HIGH COURT] in the context of the deduction claimed under Section 80P of the Income Tax Act, as also the directions stated to have issued by a Division Bench in writ appeals, that only 1% of the tax amount confirmed against assessees under Section 68 of the Income Tax Act, need to be deposited, pending disposal of the appeals by the First Appellate Authority, I dispose the writ petition by directing the 2nd respondent to consider and pass final orders on Ext.P3 appeal pending before him, within an outer time limit of four months from the date of receipt of a copy of this judgment, after hearing the petitioner.
It is made clear that till such time as orders are passed by the 2nd respondent in the appeal as directed, and the order communicated to the petitioner, further proceedings including those pursuant to Exts.P7 and P8 communications, for recovery of amounts confirmed against the petitioner by Ext.P5 order, shall be kept in abeyance on condition that the petitioner pays an amount equivalent to 1% of the tax demanded on the additions made in the assessment order under Section 68 of the Income Tax Act, within one month from today.
It is made clear that the attachment over the accounts of the petitioner, as contemplated in Exts.P7 and P8, shall stand lifted forthwith on the petitioner depositing the aforementioned 1% amount with the respondents.
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2019 (9) TMI 1239
Adjustment towards interest payable u/s 234B(2)(ii) - filing return of income i.e. when payment of Self-Assessment Tax u/s 140A is required to be made - whether the AO was correct in computing interest on the date of payment of taxes by the assessee and adjusting the amount so paid towards interest? - HELD THAT:- As per section 140A of the Act where any tax is payable on the basis of any return, the assessee shall be liable to pay such tax together with interest and the return is required to be accompanied by proof of payment of such tax and interest. Thus, the computation of interest and liability to pay such interest arises at the time of filing return. The Explanation below this Section 140A of the Act in fact supports the above interpretation. As per this explanation, where the amount paid by the assessee under this section falls short of the aggregate of the tax and interest, the amount so paid shall first be adjusted towards the interest payable and the balance shall be adjusted towards the tax payable. The amount paid here will be the aggregate of the amount paid under this section not the individual amount. This exercise is to be done at the time when the return is being filed so that in case any assessee has not paid the full amount i.e. tax and interest then, the amount paid shall first be adjusted towards interest and liability to pay interest on balance tax shall continue.
The judgment delivered in the case of M/s Patson Transforms Ltd. Vs. DCIT [2005 (11) TMI 388 - ITAT AHMEDABAD] relied upon by the CIT (Appeals) and the Tribunal has examined this issue in detail with example. We are in agreement with the conclusion of CIT(Appeals) and the Tribunal based on the above judgment.
Question answered in favour of the assessee and against the Revenue.
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2019 (9) TMI 1238
Addition u/s 68 - unsecured cash credit - tribunal upholding the action of the authorities in invoking Section 68 - HELD THAT:- The appeal has to fail. The Tribunal noticed that it was very strange that the appellant would keep his entire savings in cash. We further find it strange that if on 16.5.2013, the appellant decided to change his method of saving and put his money in the bank, why he did not put the entire savings in the bank and why he retained a sum of ₹ 2,40,000/- with him in cash. Chiman Lal is admittedly not an income tax assessee, thereby strengthening the view that not only he is not a rich man but he is barely able to make the ends meet. - Decided against assessee.
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2019 (9) TMI 1237
Recovery proceedings - attachment (Lien) of bank account - No notice u/s 226(3)(iii) to joint account holder - HELD THAT:- Revenue fairly submits that no such notice under Section 226(3)(iii) of the Act has been served on the petitioner - Joint Account Holder of the Savings Bank Account, regarding which notice has been issued to the bankers.
In view of the aforesaid, it is discernible that no notice issued under sub-section 3[ii] was forwarded to the petitioner which is sine qua non for the recovery of tax as provided under Section 226 of the Act. The mandatory requirement is not complied with by the revenue, in terms of Section 226(3)(iii) of the Act. - Notice quashed.
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2019 (9) TMI 1236
Penalty u/s 271(1)(c) - exemption u/s 10(20A) - HELD THAT:- In a number of cases that ‘in the absence of non-recording of satisfaction note by the AO during the course of assessment proceedings regarding concealment or furnishing of inaccurate particulars of income, penalty u/s 271(1)(c) is not impossible. It can be seen from the records that since Assessment Year 1996-97 (first year for which Income-Tax return was filed by the assessee company) exemption u/s 10(20A) was being claimed which was denied at the level of Assessing Officer and CIT(A). Against this decision, the assessee company has filed second appeals before the ITAT, right from Assessment Year 1996-97 onwards which are pending for adjudication before the ITAT. Since it is a matter of legal opinion whether exemption u/s 10(20A) is allowable or not, it cannot be said that the assessee company concealed its income or furnishing inaccurate particulars of its income. Hence Penalty u/s 271(1)(c) was not leviable.
AR also pointed out that there is no satisfaction note regarding concealment or furnishing of inaccurate particulars of income was recorded by the Assessing Officer during the course of assessment proceedings. The question whether exemption u/s 10(20A) is allowable or not, is a question of law which is pending for adjudication before the ITAT. This issue, thus is debatable on which two opinions are possible and hence penalty u/s 271(1)(c) is not leviable.
Under the penalty u/s 271(1)(c) is required to be imposed with reference to tax sought to be evaded. In the order imposing penalty, this requirement of law has not been fulfilled in as much as tax sought to be evaded has not been worked out. There is no tax which is sought to be evaded. The assessee company had paid full tax on income declared in the return without taking into consideration its claim for exemption u/s 10(20A). These facts were properly adjudicated by the CIT(A) and thus, there is no need to interfere with the findings of the CIT(A). - Decided against revenue
Revision u/s 263 - assessment of income under head “other sources” and not ‘business income" - HELD THAT:- From the perusal of the said order it can be seen that in the earlier years, the order u/s 263 has been sustained by the Tribunal on the similar issue. In the present year as well the assessee has not demonstrate before the AO whether actual business was commenced or not and at the same time whether investment has inextricable link in respect of the project and not that of pre-operative expenses. As per the Hon’ble Delhi High Court decision in case of Indian Vaccination Corporation Ltd. [2014 (3) TMI 299 - DELHI HIGH COURT] when there is no inextricable link between investment and project, interest income on said investment could not be permitted to be adjusted against pre-operative expenses in respect of said project. The case laws referred by the assessee are not applicable in the present case as the provisions under Section 263 are properly invoked by the Commissioner of Income Tax. Therefore, the order under Section 263 of the Act passed by the Commissioner of Income Tax is just and proper. There are no two views expressed but there is a failure on part of the Assessing Officer because of which there is escapement of income.
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2019 (9) TMI 1235
Penalty u/s 271(1)(c) - additional income declared in the revised return filed u/s 153C pursuant to search in connected groups cases - HELD THAT:- Application of pre-amended Explanation was limited to non-filer assessee whereas this anomaly was corrected in substituted Explanation. To elaborate, while the original Explanation 5A introduced by the Finance Act, 2007 w.e.f. 01.06.2007 held the persons guilty of concealment where the return was not filed only, the substituted Explanation 5A roped in with retrospective effect from 01.06.2007 by Finance (No.2) Act, 2009 attempted to cover both filers of return of income as well as non-filers for the purposes of penalty on undisclosed income found. Thus, when viewed the law as existing on the date of initiation of search, Explanation 5A was attracted only where the assessee failed to file return of income altogether.
When seen with reference to date of search 11.02.2009 in the present case, the provisions of erstwhile Explanation 5A were not attracted to the assessee as the return of income was already filed prior to search and put on record. The application of amended provisions of Explanation 5A of Section 271(1)(c) of the Act which came into force by an amendment subsequent to search albeit with retrospective effect thus cannot be applied when seen with reference to cause of action i.e. date of search. It is to be borne in mind that Explanation 5A appended to s.271(1)(c) of the Act is a legal fiction for deeming concealment against the assessee in search cases.
Both original return under u/s 139 of the Act as well as revised return under s.153C of the Act had been filed before the amended provisions were brought into force. Hence, we are of the view that shelter of substituted provisions of Explanation 5A to Section 271(1)(c) of the Act could not be taken to the instant case for fastening concealment penalty. The assessee having filed the return under s.139 of the Act prior to search as well as return under s.153C of the Act prior to substituted Explanation coming into force, would be governed by pre amended Explanation 5A and thus would escape the clutches of penalty under s.271(1)(c) of the Act due to non-fulfillment of conditions of pre amended Explanation.
All of the broad contours complement the plea of assessee for deletion of penalty. The imposition of penalty with the aid of Explanation 5A to Section 271(1)(c) of the Act is thus not found to be objectively justifiable in the captioned appeals.
AO is directed to cancel the penalty under s. 271(1)(c) - Decided in favour of assessee.
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2019 (9) TMI 1234
Revision u/s 263 - AO allowing deduction under section 54(1) - till the actual date of filing of return of income by the assessee for the impugned assessment year, the capital gain had not been utilized for purchase of new residential house - HELD THAT:- Though, the provision of section 54(2) of the Act encompasses due date of filing of return of income not only as per section 139(1) but even section 139(4) and 139(5) of the Act, however, the condition of section 54(2) of the Act would stand satisfied if the assessee invests the unutilized capital gain in purchase of new house property before the actual date of filing of return of income for the subject assessment year even within the extended time permitted under section 139(4) and 139(5) of the Act.
That being the case, it cannot be said that the decision of the Assessing Officer is in accordance with the legal position prevailing at the relevant point of time. The other decisions cited by the learned Authorised Representative challenging the validity of exercise of jurisdiction under section 263 of the Act, would not help the assessee in view of the specific fact involved in the present case.
Thus, on overall consideration of facts and the decision of the Hon'ble Jurisdictional High Court in Humayun Suleman Merchant [2016 (9) TMI 70 - BOMBAY HIGH COURT] we have no hesitation in holding that learned Principal Commissioner has correctly exercised his power under section 263 of the Act to revise the impugned assessment order. Accordingly, we uphold the order passed under section 263 of the Act by dismissing the grounds raised by the assessee.
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2019 (9) TMI 1233
Reopening of assessment u/s 147 - Long Term Capital Gains with evidences of sale deed/purchase deed/additions made in each year and also explain deduction claimed u/s 54 - HELD THAT:- No specific information was noticed by the Revenue on the basis of which re-opening has been made, the fact remains that there is nothing placed on record by the AO or tax authorities to justify the claim that the re opening was warranted beyond the period of four years.
In the facts of the present case, we find that on merits, the case of the assessee deserves to be allowed. The addition made by way of a disallowance on the claim of exemption cannot be upheld for the detailed reasons addressed herein above which are in line with the position of law as argued before the CIT(A) and canvassed before us. Even otherwise we find that in the facts of the present case, nothing has been brought on record by the revenue to demonstrate that the action was warranted beyond a period of four years in the facts as they stand. Accepting the explanation offered and on consideration of facts, circumstances and position of law as discussed herein above, the appeal of the assessee is allowed.
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2019 (9) TMI 1232
Addition on account of outstanding balance of sundry creditors - whether the impugned sundry creditors for the purchases and the expenses are liable to be taxed under section 41 (1) of the Act or 68 ? - HELD THAT:- Regarding the applicability of the provisions of section 41(1) of the Act, we note that it is applicable when the assessee has claimed deduction in respect of any loss, expenditure or trading liability and subsequently such liability ceases to exist. Indeed, the assessee in the case on hand has claimed the deduction for the purchases and the expenses incurred by it.
But the same has not ceased to exist in the books of accounts. Therefore we are of the view that the provisions of section 41(1) of the Act cannot be applied to the case on hand.
As per scheme, the assessee would enroll a member, who would deposit a sum of ₹ 500 with the company. If such member in turn enrolls four members within a period of 12 month, would be entitled to get a black and white TV set manufactured by the assessee for free of cost. By this scheme assessee has collected huge sum of 7.87 cr. treated the same as outstanding trade liability under the head customer advances. In the subsequent year assessee used the fund for investment purpose and earned interest income on the same.
The fact of the above case is completely different from the case under observation, in current case sundry creditors are against the purchases and expenses incurred in earlier year and as well as in year under consideration. However in case of Gujtorn Electronics [2017 (7) TMI 574 - GUJARAT HIGH COURT] as per scheme it was very clear that the scheme was for 12 months and after that right of the member will be seized. Therefore in our opinion above case submitted by learned DR is not applicable to the case under observation.
Whether the impugned sundry creditors can be treated as unsecured cash credit within the meaning of the provisions of section 68 ? - HELD THAT:- Provisions of section 68 do not apply to the sundry creditors for the purchases and expenses. It is because such sundry creditors are represented against the purchases and the expenses. In case the AO was to disturb the sundry creditors, then he cannot do so without disturbing the corresponding purchases or expenses. Therefore in our considered view the provisions of section 68 are not applicable with respect to the sundry creditors for the purchases and the expenses.
In addition to the above, we also note that the impugned sundry creditors for the purchases of ₹ 98,26,896/- are representing the opening balances which were carried forward from the earlier year except for 1 for the amount of ₹ 5,72,360/-. Thus it is inferred that the account of the assessee was not credited in the year under consideration. If At all the addition needs to be made under section 68 of the Act, then it can be made in the preceding previous year in which such credit was found in the books of accounts.
Disallowance being 1/5 of the other expenses - HELD THAT:- There is no provision under the Act to make the disallowance on ad-hoc basis and without pointing out any specific defect in the claim of the assessee. Therefore, we disagree with the finding of the learned CIT (A). However, at the same time we note that the assessee has not discharged his onus by furnishing the supporting vouchers and the bills in respect of such expenses. Therefore, we are not inclined to delete the addition made by the learned CIT (A) in its entirety.
To our mind, the justice will be served to both the assessee and the revenue, if the disallowance is restricted to the tune of 10% of all the other expenses except depreciation. Accordingly we direct the AO to restrict the disallowance of all the expenses except depreciation to the tune of 10% claimed in the profit and loss account under the head other expenses. Hence the ground of appeal of the assessee is partly allowed.
Addition on account of interest income - HELD THAT:- Copy of form 26AS was not supplied to the assessee by the AO on the basis of which the addition was made to the total income on account of interest income. However, we are of the view that the assessee should have been supplied the information based on which the addition was made by the AO. Thus in the interest of justice and fair play we are setting aside the issue to the file of the AO for fresh adjudication as per the provisions of law and after giving the due opportunity to the assessee. Hence the ground of appeal of the assessee is allowed for statistical purposes.
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2019 (9) TMI 1231
Unexplained investment - deposit of cash made by the assessee in the bank accounts, investment in the lands and the loan provided to KIT - HELD THAT:- Regarding the argument of the AR for the availability of cash in his hands out of the earlier years from the source of agricultural activity, we note that the assessee failed to file any documentary evidence suggesting that there was some cash available with him out of the agricultural operations carried on by him. Therefore, in the absence of such documentary evidence we reject the contention of the assessee.
Regarding the surplus cash of ₹ 21,45,000 as claimed by the ld. AR, available with the assessee, we note that the benefit for all the deposit of cash has already been provided by the ld. CIT-A. Therefore, we are of the view that the same cannot be adjusted against the deposit of cheques in the central bank of India. Therefore, we reject the contention of the ld. AR for the assessee.
Regarding the addition of ₹33.50 lakhs, we note that these payments were made through the banking channel by the assessee. It is also not in dispute that the entire credit entries reflecting in the Central Bank of India has been added to the total income of the assessee, therefore we are of the view further addition of the impugned amount will result the double addition to the income of the assessee. Therefore we are inclined to delete the addition of ₹33.50 lakhs.
Regarding the investment made by the daughter in law namely Ms. Margi Darpan Shah of the 57 Lacs, we note that the assessee has vide letter dated 24-12-2012 has admitted that the impugned fund was provided by the assessee to his daughter in law. Moreover, the assessee has not explained the source of such investment before the authorities below. Even before us, the ld. AR could not controvert the finding of the ld. CIT-A. Accordingly, we reject the contention of the assessee.
Regarding the addition of ₹15 lakhs, we note that there was no addition made on account of the deposit of cheque of ₹15 lakhs in the State Bank of India. Therefore, we reject the contention of the assessee. Hence the ground of appeal of the assessee is partly allowed.
Appeal filed by the assessee is partly allowed.
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2019 (9) TMI 1230
Addition on account of interest income treating the same as inextricably linked with the business and accordingly reduced from the cost of the project - HELD THAT:- If the AO was not satisfied about the utilization of the fund, then he should have treated the interest income and interest expenses in the similar fashion. In other words, the AO should have treated the interest income from other sources and against that interest expenses should have been allowed as expenses against the same as these are inextricably linked. But the AO has not done so. Accordingly, we are of the view that the AO erred in treating the interest expenses and income differently despite these are inextricably linked. Thus, we are of the view that once the AO has accepted the interest cost as part of the project then the same treatment needs to be given even to the interest income by adjusting the same against the part of the project cost as the interest expense and income are inextricably linked. Accordingly, we do not find any reason to disturb the finding of the ld. CIT-A.
Regarding the interest income from GMDCL, we note that such income was earned by the assessee on the fixed deposits on the bank guarantee made in connection with the project awarded by GMDCL. This fact can be verified from the bank guarantee furnished by the Axis Bank Ltd on behalf of the assessee. There was also no allegation that such bank guarantee represents the circular transaction.
Moreover, there was no defect pointed out by the authorities below in the bank guarantee furnished by the assessee. Accordingly, we disagree with the finding of the learned CIT (A). Hence the ground filed by the assessee in its CO is allowed. Ground of appeal of Revenue is dismissed and the ground filed by the assessee in its CO is allowed.
Addition on account of CENVAT Credit - contention of the assessee by observing that as per the provisions of section 145A of the Act the assessee is liable to include the amount of duty, cess, tax etc in the amount of purchases, sales and the closing stock - CIT(A) deleted the addition made by the Assessing Officer by observing that the assessee has been following its method of valuation consistently and there was no dissatisfaction of the Assessing Officer about the correctness/completeness of the books of accounts of the assessee - HELD THAT:- we note that the assessee has been recording its transactions of purchase, sales, and valuation of inventories, net of CENVAT consistently. Thus, if the inventory of closing stock is enhanced by the amount of CENVAT credit attributable to it, then the amount of corresponding purchases should also be increased by the said amount which will result in tax neutral exercise. Thus, in our considered view, the Assessing Officer erred in enhancing the value of the closing stock without giving effect to the purchases. See GUJARAT GAS COMPANY LTD. AND 1 [2017 (2) TMI 649 - GUJARAT HIGH COURT]. There is no ambiguity that the assessee has been following the exclusive method of accounting. In view of the above, we concur with the view of the Ld. CIT(A) and accordingly decline to interfere in his order.
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2019 (9) TMI 1229
Addition u/s 2(22)(e) as deemed dividend - accumulated profit needs to be worked out on the date of such payment/advancement of loan - HELD THAT:- In case only a single amount has been advanced to the assessee, then we may have set aside the issue to the file of the Ld. A.O to work out the amount of accumulated profits as on the date of giving advance. However from perusal of the fund flow statement we find that the assessee company started receiving funds from AOPL from 2.4.2014 and thereafter almost on 50 more occasions the amount have been received and there is alleged investment in other companies as per the strategic investment plan. Therefore in case of the assessee it will not be practicable to compute the accumulated profits on 50 days during the year since at some point of time there may be addition to the accumulated profit and at some time there may be reduction in the accumulated profits. Therefore without giving a general finding for the adoption of accumulated profits as on date of payment, in the instant case since the first day of receiving the fund from AOPL is 2.4.2014, therefore only the opening balance of the accumulated profits as on 1.4.2014 at ₹ 38.76 crores should have been considered for computing the amount of deemed dividend as per the provisions of section 2(22)(e)
Disallowance of ROC expenses and stamp duty incurred for increase in share capital - HELD THAT:- Following the judgments BROOKE BOND INDIA LIMITED VERSUS COMMISSIONER OF INCOME-TAX [1997 (2) TMI 11 - SUPREME COURT] as mentioned above we are of the view that Ld. CIT(A) has rightly confirmed the disallowance of ROC fees incurred exclusively for increase in share capital.
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2019 (9) TMI 1228
Addition u/s 40A(3) on account of payment in cash - genuineness of the transactions - HELD THAT:- Since the genuinity of the payments made to the party is not doubted by the revenue, the provisions of section 40A(3) could not be made applicable to the facts of the instant case - assessee had taken enough precautions from his side to ensure that the payee also don't escape from the ambit of taxation on these receipts by paying cash. This fact is also not disputed by the revenue - consequence, which were to befall on account of non-observation of section 40A(3) must have nexus to the failure of such object.
Assessee made bank draft of ₹ 5,00,000/- to pay to M/s Mahima Alekha Coal Traders, but he refused to take bank draft therefore in order to run the business the assessee did not have any option but to make payment in cash. Had the assessee not been paid cash to M/s Mahima Alekha Coal Traders, his business would have been stopped or restricted to that extent. The purpose of section 40A (3) is not to restrict the assessee`s genuine business activity.
As genuineness of the transactions and identity of the payee is established. Assessee has proved the pressing circumstances. The assessee acted with bona fide intention, as he made demand draft of the bank to make the payment to payee but later on it was cancelled on the request of the payee therefore, intention of the assessee was to make payment through banking channel only. This is exceptional circumstances where the assessee made payment in cash. It is observed that the assessee had taken enough precautions from his side.Hence, in the facts and circumstances as discussed above, the payment should not be disallowed as held in the case of Girdharilal Soni vs. CIT [1989 (3) TMI 84 - CALCUTTA HIGH COURT] - Decided in favour of assessee.
Ad hoc additions - addition of purchases from 13 parties, carriage and wages and Transport charges - Non rejection of books of accounts - HELD THAT:- Here in this case,assessee submitted books of accounts and details during the assessment proceedings, however, the AO has passed order u/s 144/147 of the Act. The AO thus without rejecting the books of account of the assessee has gone for estimation on suspicion and conjectures that the assessee may be inflating its various expenses. While scrutinizing the expenditure if the expenses claimed are not having any nexus to the business of the assessee or if there is deficiency in the vouchers or there is no bills supporting the incurrence of an expenditure, at the most expenses to the extent that are not supported by the vouchers can be held to be non-genuine and can be disallowed by the AO; and item-wise the AO could have disallowed the expenditure rather than going for ad hoc disallowance of percentage basis of the expenses claimed by the assessee which action of the AO is arbitrary in nature and cannot be sustained. Therefore, the various ad hoc additions is to be deleted. - Decided in favour of assessee.
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2019 (9) TMI 1227
Re-opening of assessment u/s 147 - computation of LTCG - assessee had not filed his return of income within the due date allowed either u/s 139(1) of the Act or u/s 139(4) - HELD THAT:- In the case on hand the assessee has not filed his return of income u/s 139(4) of the Act and whereas in the case of UP Housing & Development Board [2015 (1) TMI 570 - ITAT LUCKNOW] the return of income was filed on 30.03.2006. There was no intention to file the return of income before 31.03.2010. The return of income was filed only on 26.11.2015. Thus we cannot apply the ratio of this order to the case on hand.
In view of the above we hold that re-opening of assessment is valid. Hence this ground of the assessee is dismissed.
Computation of LTCG - adoption of value fixed by the DVO - There were a total of three properties which were sold. As regards the property located at Mouza Mashapur, P.S. Diamond Harbour and property located at Chowbaga (West) which was sold by way of a registered sale deed, we find no infirmity in the order of the ld. CIT(A) in directing the AO to adopt the value as fixed by the DVO. In the case of the sale of the third property i.e. Chowbaga (West) which was sold by way of a Power of attorney there is no value fixed by the Stamp Valuation Authority as there was no sale deed. This was the reason why the DVO did not fix any value to the property. In our considered opinion, as the properties at Chowbaga (West) are located adjacent to each other, the value fixed by the DVO for plot no. 2, may be taken as the value of plot no. 3 for the purpose of Section 50C of the Act.
When this is computed on proportionate basis, the sale value of property would work out to ₹ 6,87,382.39. In our view this value would be fair and reasonable and may be considered as the value fixed by the DVO. Hence we direct the AO to adopt this figure as the full value of consideration u/s 50C of the Act for the purpose of computing LTCG of property no. 3 as this is the sale value declared by the assessee and is in excess of ₹ 6,87,382.39 computed above. Appeal of the assessee is partly allowed.
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2019 (9) TMI 1226
Rectification u/s 154 - TDS u/s 194H - Disallowance u/s.40(a)(ia) - one time premium paid by the assessee to the bank - HELD THAT:- We find from the submissions made by the assessee before the lower authorities, which had been completely ignored by the AO and by the ld. CIT(A) that assessee has made payment of one time non-refundable premium to bank of Nova Scotia for purchase of gold for the purpose of his business in order to ensure continuous and uninterrupted supply of gold by the bank to the assessee.
We find the bank had also confirmed the receipt of said sum of ₹ 20 lakhs towards one time non-refundable premium from the assessee. Hence, this transaction of payment of one time premium would effectively go to add to the purchase cost of the gold and cannot be categorised as commission. Accordingly, there is no requirement of deduction of tax at source on the part of the assessee in terms of Section 194H of the Act and consequently, no disallowance u/s.40(a)(ia) of the Act would come into operation thereon.
CIT(A) had completely shifted the stand taken by the AO by considering that the said payment of one time premium is capital expenditure as against the claim of revenue expenditure made by the assessee. It is well settled that the issue of capital vs revenue expenditure is always a debatable issue. Hence, we hold that the debatable issue cannot be the subject matter of rectification proceedings u/s.154 of the Act as it would not fall within the ambit of patent, glaring, apparent issue from the records. Reliance in this regard is placed on the decision of Hon’ble Supreme Court in the case of TS Balaram, ITO vs. Valkart Bros [1971 (8) TMI 3 - SUPREME COURT]
Hence, we hold that the impugned disallowance of ₹ 20 lakhs could not be done in the proceedings u/s.154 of the Act. In view of the aforesaid submissions, the additional grounds and regular grounds raised by the assessee are allowed.
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2019 (9) TMI 1225
Disallowance u/s.36(1) (vii) and 36(1) (viia) - bad & doubtful debt or mere Provisions were made - HELD THAT:- Now the law is settled to the extent that provisions u/s.36(1) (vii) and 36(1) (viia) of the Act are separate and independent to each other - CIT(A) has rightly observed that, creation of provisions for bad and doubtful debts by debiting profit and loss account reducing the same from debtor account constitutes write off.
It is an admitted fact that in the year subsequent recovery, the same credited to Profit and Loss account and offered to tax. We find merit in the submissions of the assessee bank that the CIT(A) grossly fell in error in combining the provisions of Section 36(1) (vii) and 36 (1) (viia) of the Act ignoring the principle emanated by the Hon’ble Supreme Court in the case of Catholic Syrian Bank Ltd [2012 (2) TMI 262 - SUPREME COURT]
Matter remanded back to the file of the Assessing Officer for limited purpose of verifying the amount of write off debited to provisions of bad and doubtful debts and reduced from advance account in the Accordingly, this ground of appeal raised by the assessee is partly allowed for statistical purpose.
Disallowance of loss on account of shifting of securities - as during the previous year relevant to assessment year, the assessee bank had shifted certain securities from AFS to HTM in order to comply with the RBI guidelines in preparation of accounts - AO disallowed the claim on the ground that RBI guidelines are not binding while computing taxable income and the ld. CIT(A) confirmed the findings - HELD THAT:- Assessee bank has shifted the investment from one category to another is of no relevance, in as much as, fall in value of investment is held to be allowable as deduction. Thus, ground of appeal filed by the assessee is allowed. See CANARA BANK VERSUS JOINT COMMISSIONER OF INCOME-TAX, LTU AND VICE VERSA [2017 (11) TMI 1425 - ITAT BANGALORE]
Disallowance u/s.14A - HELD THAT:- AO had not assigned any reason whatsoever as to how the claim of the assessee is incorrect. In the similar facts, the Hon’ble Supreme Court in the case of Maxopp Investment Ltd. vs. CIT, [2018 (3) TMI 805 - SUPREME COURT] held that in the absence of the finding of the Assessing Officer resort to provisions of Section 14A of the Act r.w.r 8D of the Rules cannot be made
Interest accrued on Government securities - HELD THAT:- This issue is covered in favour of the assessee in assessee’s own case by the Jurisdictional High Court in [2014 (8) TMI 604 - MADRAS HIGH COURT] held that the assessee is taxable for interest on securities only on specified dates when it becomes due for payment, in view of third proviso to Section 145(1) of the Act, which was in force during the relevant assessment years.
Allowance of depreciation u/s.36(1) (vii) and 36(1) (viia) of the Act to the extent of the provision created by debiting the profit and loss and reducing the sundry creditors account. The decision of the ld. CIT(A) is based on the law laid down by the Hon’ble Supreme Court in the case of Vijaya Bank [2010 (4) TMI 46 - SUPREME COURT] and Catholic Syrian Bank Ltd [2012 (2) TMI 262 - SUPREME COURT] and therefore we do not find any merits in the grounds of appeal filed by the Revenue
Premium paid on purchase of securities as cost of acquisition in the year of investments itself though amortized in the books of accounts. This issue is decided against the Revenue and in favour of the assessee in assessee’s own case following the decision of Hon’ble Jurisdictional High Court in assessee’s own case reported [2007 (2) TMI 187 - MADRAS HIGH COURT]
No addition can be made on account of stale drafts and cheques - amount cannot be brought to tax as a cessation of trading liability u/s. 41(1) of the Act, where the appellant had not written off the liability
Depreciation at 60% on ATM treating it as computers - See M/S. SARASWAT INFOTECH LTD. [2013 (1) TMI 861 - BOMBAY HIGH COURT]
TDS u/s 194A - TDS liability on interest in respect of recurring deposit - HELD THAT:- CIT(A) held that interest in respect of recurring deposit cannot be disallowed for non deduction of TDS thereon. The ld. CIT (A) had referred to the relevant provisions of Section 194A of the Act and amendment made by Finance Act, 2015. The decision of the ld. CIT(A) is based on proper appreciation of the legal position.
Addition u/s 36(1) (viii) - AO had disallowed a sum on the ground that the assessee had not made advance to eligible activities - HELD THAT:- CIT(A) taking note of the fact that the Assessing Officer had made disallowance based on the names of the borrowers without looking into purpose of the loan, deleted the addition. The ld. CIT(A) order is based on proper appreciation of the legal positions and evidence. We do not find any reason to interfere with the order of the ld. CIT(A). Accordingly, ground No.8 filed by the Revenue is dismissed.
Taxability of interest on NPA - AO brought to tax interest on NPA following the decision of Southern Technology Ltd. [2010 (1) TMI 5 - SUPREME COURT] - HELD THAT:- This issue was dealt by the Co-ordinate Bench of the Tribunal in the case of Karur Vysya Bank . [2017 (4) TMI 566 - ITAT CHENNAI] wherein after referring to the decision of Hon’ble Supreme Court in the case of CIT vs. Vasisth Chay Vyapar Ltd [2018 (3) TMI 56 - SUPREME COURT] - We further note that the decision of Hon’ble Supreme Court in the case of Vasisth Chay Vyapar Ltd (supra) is subsequent to the decision in the case of Southern Technology Ltd (supra). Therefore the decision of Hon’ble Supreme Court in the case of Vasisth Chay Vyapar Ltd (supra) shall prevail over the decision of Southern Technology Ltd. Therefore, we direct the Assessing Officer not to assess interest on NPA.
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2019 (9) TMI 1224
Disallowance on account of works contract tax - AO found that the sum was not related for the year under consideration - CIT(A) deleted the said disallowance - HELD THAT:- Although the learned DR has contended that the amount in question on account of works contract tax liability was not related to the year under consideration on the basis of deduction of the said tax by the concerned party and payment thereof in the subsequent year as mentioned in the relevant certificate, it is observed that the corresponding works receipts were accounted for by the assessee in the year under consideration as found by the Ld. CIT(A). As rightly held by him, when the works was executed and amount of erection sales was accounted for and offered to tax in the year under consideration, deduction for the corresponding amount of works contract tax incurred on such erection sales / works receipt was rightly claimed by the assessee as deduction. CIT(A) thus allowed the claim of the assessee by applying the matching principle and we do not find any infirmity in his impugned order - Decided against revenue
Disallowance on account of alleged unascertainable payments to subcontractors - said labour charges in the absence of TDS were not ascertainable - CIT(A) deleted the said disallowance - HELD THAT:- As explained by the assessee that the amount of unbilled sales represented revenue booked in the accounts on the percentage completion method for incomplete contracts at the end of the year. It was explained that corresponding expenditure incurred in relation to the unbilled sales including sub-contract charges for earning the revenue so booked was also provided for in the accounts. Since this method was followed by the assessee company consistently in the earlier years, the Ld. CIT(A) allowed the claim of the assessee as the same was made as per the method of accounting consistently followed by the assessee. Moreover, we are of the view that the said claim of the assessee is liable to be allowed even as per the matching principle. We, therefore, find no infirmity in the impugned order of the Ld. CIT(A) - Decided against revenue
Disallowance on account of excise duty - as there was no corresponding credit made by the assessee in the profit and loss account on account of Excise Duty, the AO disallowed the claim - HELD THAT:- Inclusive method was followed by the assessee in respect of excise duty and since the sales credited by the assessee to the profit and loss account as well as the stock of finished goods were inclusive of excise duty, there was no credit separately made on account of excise duty to the profit and loss account. It appears that this accounting treatment given by the assessee however was not appreciated by the AO while making the disallowance on account of excise duty. CIT(A), on the other hand, appreciated the said treatment in the right perspective and since he rightly allowed the claim of the assessee for excise duty on such appreciation, we do not find any justifiable reason to interfere with the impugned order of the Ld. CIT(A) on this issue. Ground No. 3 is accordingly dismissed.
Addition on account of profit on sale of fixed assets while computing the book profit u/s 115JB - HELD THAT:- As held by the Hon’ble Supreme Court in the case of Appollo Tyres Ltd vs CIT [2002 (5) TMI 5 - SUPREME COURT] relied upon by the AO in his order and cited by the learned DR at the time of hearing before us, the profit as shown in the accounts of the company, which are certified by the auditors of the company as having been maintained in accordance with the provisions of the Companies Act and which have been accepted in the general meeting of the company as well as by the Registrar of the Company, has to be taken as the starting point for computation of book profit u/s 115J and only the adjustments to the extent provided in the Explanation to Section 115J can be made. It appears that the Ld. CIT(A) however failed to consider this binding precedent and allowed the adjustment beyond what is provided in Explanation to Section 115JB by reducing the profit on sale of fixed assets which was credited by the assessee company to its profit and loss account.
We set aside the impugned order of the CIT(A) giving relief to the assessee on this issue and confirm the addition made by the AO on account of profit on sale of fixed assets while computing the book profit of the assessee company u/s 115JB of the Act.
Disallowance on account of charities and donations - HELD THAT:- As observed that the disallowance made by the AO on account of puja donations was deleted by the Ld. CIT(A) after having found that the said donations were made by the assessee to various local entities primarily towards community celebrations in order to build goodwill within the community and to ensure the smooth conduct of business. Being satisfied that the business expediency of the expenses incurred by the assessee on payment of the said donations, CIT(A) allowed the same u/s 37(1) of the Act and keeping in view the relevant facts of the case, we do not find any infirmity in the impugned order of the Ld. CIT(A) on this issue
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