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Showing 61 to 80 of 1387 Records
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2016 (2) TMI 1333
Application for considering charging of interest at the lower rate is pending consideration - HELD THAT:- The matter is disposed off at this stage directing the competent authority to decide the petitioners' application by reasoned and speaking order after given them an opportunity of hearing within three months from the date of production of certified copy of this order.
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2016 (2) TMI 1332
Seeking winding up of the respondent-company - order of admission was obtained without mentioning the relevant facts - violation of principles of natural justice - HELD THAT:- The petitioner has approached this Court to obtain a discretionary order. It also obtained discretionary order of admission on 16.03.2012 of admitting the Petition based on false averments in the Petition. It is a different matter that the order was later recalled. The indisputable fact is the petitioner had obtained an order on false averments to his knowledge. It is settled law that when a discretionary relief is obtained by misrepresentation, a dishonest litigant loses his remedy. There should be no concealment of material facts. The facts should be stated in a manner not to mislead the Court as to the true facts.
Inspite of the Courts repeatedly stating and reaffirming the principle that it is the duty of a party to bring to the notice of the Court all facts material and relevant to the issue, litigants continue in their efforts to obtain favourable orders from the court, even exparte, without disclosing all the material facts to the court. This Petition is an ideal example of how an order of admission was obtained without mentioning the relevant facts.
Petition dismissed.
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2016 (2) TMI 1331
Service of notice - order passed by the Commissioner of Customs (Preventive) on the ground that a notice for hearing dated August 4, 2015 was received by the assessee on August 11, 2015, one day after the scheduled date of hearing on August 10, 2015 - HELD THAT:- Since the facts are undisputed and it is evident that the petitioning assessee was prevented by sufficient cause from being represented at the hearing, the order impugned dated August 13, 2015 is set aside and the relevant Commissioner is requested to cause a fresh notice to be issued to the petitioning assessee for further hearing before passing an order in accordance with law.
Petition allowed.
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2016 (2) TMI 1330
Seeking to consider the Rectification Petitions - petitioner filed petitions under Section 84 of the TNVAT Act to revise the order and till date no orders have been passed - HELD THAT:- The respondent are directed to consider the petitions dated 22.12.2015 filed by the petitioner and pass orders on merits and in accordance with law within a period of four weeks from the date of receipt of a copy of this order. It is needless to say that the respondent shall not proceed further in the matter till orders are passed in the Section 84 petitions.
The Writ Petitions are disposed of.
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2016 (2) TMI 1329
Reopening of assessment u/s 147 - Nature of expenditure - Disallowance of expenditure on construction of compound wall in place of replacement of Barbed wire fencing as capital expenditure - HELD THAT:- As disputed disallowance on the issue of allowability of expenditure of replacement of compound wall was not discussed as referred at page no.3 of assessment order. Since there is no opinion was formed at the time of regular assessment u/s.143(3) of the Act completed on 30.11.2010 and the assessee has filed objections to reopening of the Act and ld. Assessing Officer considered the objection of the assessee on the reopening of assessment and disposed off by separate order dated 22.01.2014. Considering all we dismiss the appeal on the ground of re-assessment.
Nature of expenditure - On Comparison with the provisions of Sec.37(1) and the nature of expenditure and the treatment of expenditure in the books of Accounts also factual circumstances and Apex Court decisions relied by the assessee the expenditure takes the characteristic of Revenue in nature though ld. Assessing Officer in his order has mentioned that this decision is not applicable for the issue in dispute as it pertaining to assessment year 1995-96 and 1997-98 and due to amendment in Sec.30 of the Act. Considering the factual circumstances the claim of the assessee fall under residual sec. of 37(1) were the expenditure has been incurred wholly and exclusively for the purpose of business and expenditure being a replacement cost to the existing asset which satisfy the functional test of revenue expenditure and also follow the jurisdictional High Court decision CIT vs. Southern Roadways Ltd [2007 (6) TMI 193 - MADRAS HIGH COURT]
we set aside the order of the Commissioner of Income Tax (Appeals) on this ground and Direct the Assessing Officer to allow the deduction of replacement of barbed wire fencing with compound wall as revenue expenditure - Decided in favour of assessee.
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2016 (2) TMI 1328
Assessment u/s 153A - Proof of incriminating material found in search - HELD THAT:- The assessee’s arguments are in tune with those made in the lower appellate proceedings that his regular assessment stood completed well before search and the AO ought not to have invoked section 153A in absence of any incriminating evidence. We find that he has also placed on record relevant panchnama drawn on 09-09-2011. The Revenue fails to rebut this factual position.
Thus initiation of section 153A proceedings in absence of any incriminating evidence is not sustainable. The same is accordingly quashed - Decided in favour of assessee.
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2016 (2) TMI 1327
Addition u/s 69B - Addition on basis of valuation report of the DVO - Onus to prove - HELD THAT:- Burden of proof lies upon the person who alleges that the apparent is not real. In the facts of the present case, the ld. Assessing Officer, therefore, must prove that the falsity of the entries/transactions in the books of accounts as maintained by the assessee, on the basis of material/evidences on record.
In the facts of the present case, as it is apparent from the assessment order that the ld. AO has not brought any evidence/material on record to show that the assessee has received more than what has been declared by him. AO has merely made an addition on the basis of the report obtained from the DVO without bringing any evidence on record. He has also not established that the details/evidences filed by the assessee are wrong. Under such circumstances, we do not find any infirmity in the findings of the ld. CIT(A) and the ld. CIT(A) has rightly deleted the addition made by the ld. Assessing Officer. We, therefore, dismiss the ground of appeal filed by the revenue.
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2016 (2) TMI 1326
Rectification of mistake u/s 154 - amount received against TDR/FSI as a capital receipt which is not chargeable to capital tax - HELD THAT:- Shri Bharat R. Patel who had claimed the sale of development right as a LTCG which was denied to him by the AO and treated the same as income from other sources, however, the same was allowed by CIT(A) in its order dated 30.03.2010. The assessee claimed the amount received against TDR/FSI as a capital receipt which is not chargeable to capital tax. However, the AO treated the same as income from other sources by concluding that it is not a transfer falling within the provision of section 45 of I.T. Act.
Though the assessee and his brother received the amount from builder but since beginning both the brother set up their different claim in respect of amount received under TDR agreement for the purpose of assessment. The case of assessee was considered by CIT(A) on which conceivably two opinion are available. Since Ld. CIT(A) has taken one of the possible views, his order cannot said to suffer from mistake apparent from record.
CIT(A) while exercising the power u/s. 154 of the Act are ignored the principle and basic scope of rectification of order as discussed in paras 5 to 8 supra. Hence, the order dated 20.07.2010 passed by CIT(A) is not sustainable under the scrutiny of law and the same is set-aside.
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2016 (2) TMI 1325
Condonation of delay - sufficient cause of delay - HELD THAT:- A casual or a negligent litigant who has acted with utter irresponsible attitude, cannot claim the condonation of delay in law when the right has accrued to the other side. The expression "sufficient cause" will always have relevancy to reasonableness. The actions which can be condoned by the Court should fall within the realm of normal human conduct or normal conduct of a litigant. It is neither expected nor can it be a normal conduct of a public servant or a litigant that they would keep the files unmoved, unprocessed for months together on their tables. How the power of condonation of delay is to be exercised, has been explained by the Apex Court in the case of Collector, Land Acquisition v Mst. Katiji And Others. [1987 (2) TMI 61 - SUPREME COURT]
We considering the factual aspects of the case, the delay in filing the appeal was not a wonton act as sworn in the affidavit by the director of the assessee company that they were under bonafide belief that Sec.154 petition was filed and the assessee is praying remedy u/sec154 with a hope that the matter will be solved but the ld.Assessing Officer rejected petition for various reasons observed in his order
We as a quasi judicial body draw support from the decision of Supreme Court in the case of Mela Ram & Sons [1956 (2) TMI 5 - SUPREME COURT] and we found there is sufficient cause considering the factual circumstances in the interest of justice, we direct the Commissioner of Income Tax (Appeals) to condone the delay and admit the appeal and adjudicate the grounds on merits after giving adequate opportunity of hearing to the assessee. Appeal of the assessee is partly allowed for statistical purpose.
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2016 (2) TMI 1324
Utilisation of CENVAT credit - reverse charge mechanism - HELD THAT:- The question of law as framed on behalf of the Appellant in the present appeal following COMMISSIONER OF CENTRAL EXCISE, CHANDIGARH VERSUS M/S NAHAR INDUSTRIAL ENTERPRISES LTD AND OTHERS [2010 (5) TMI 608 - PUNJAB AND HARYANA HIGH COURT] has already been decided by a Division Bench of this Court in Union of India v. Mohini Industries [2015 (3) TMI 702 - CHHATTISGARH HIGH COURTtaking the same view and additionally relying upon COMMISSIONER OF SERVICE TAX VERSUS HERO HONDA MOTORS LTD. [2012 (12) TMI 734 - DELHI HIGH COURT] holding that payment of service tax through reverse charge mechanism by utilisation of CENVAT credit was in accordance with law.
Appeal dismissed - decided against Revenue.
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2016 (2) TMI 1323
Termination of service - it was held by Rajasthan High Court that The position would have been different if the petitioner would have been going to have regular recruitment against the posts occupied by the original applicants but that is not the case of the petitioner. The petitioner want to remove the original applicants from service just to have labour through contractor with a view to reduce expenditure but that object, as already stated, cannot be served as the applicants too are working on casual basis only.
HELD THAT:- SLP dismissed.
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2016 (2) TMI 1322
Penalty levied u/s. 271(1) (c) - Defective notice - non specification of charge - addition made by the ld.AO towards cash deposits in the bank account u/s. 68 and interest income from deposits - HELD THAT:- We find lot of force in the arguments of the assessee that the ld.AO had not mentioned any specific charge on which the said penalty proceedings have been initiated by him either in the assessment order or in the show-cause notice issued u/s. 271(1) ( c) r.w.s 274 of the Act. We hold that mentioning specific charge is pre-requisite for initiating the penalty proceedings on the assessee.
Show cause notice u/s. 274 of the Act is defective as it does not spell out the grounds on which the penalty is sought to be imposed. Following the decision of MANJUNATHA COTTON AND GINNING FACTORY, MANJUNATH GINNING AND PRESSING, VEERABHADRAPPA SANGAPPA AND CO., V.S. LAD AND SONS, G.M. EXPORT [2013 (7) TMI 620 - KARNATAKA HIGH COURT] we hold that the orders imposing penalty in all the assessment years have to be held as invalid and consequently penalty imposed is cancelled - Decided in favour of assessee.
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2016 (2) TMI 1321
Seeking grant of Regular Bail - Cheating - economic offence/heinous offence - Offence u/s 420/467/468/471/120B/34 IPC - HELD THAT:- The present case, as is evident from the facts, is that the applicant has been charged with an economic offence which cannot by any stretch of the expression be called a heinous offence of the category of which the applicants had been charged - In the present case, it is observed that there is no material to suggest that the applicant was tampering with the evidence. There is also no hint or allegation that he will influence the witnesses. The applicant has already been enlarged on bail, under Sections 420/467/468/471/120B/34 IPC and is not stated to have abused the terms and conditions of that order of bail.
The submission made on behalf of the prosecution to the effect that the applicant's son Sanjay Kumar was evading arrest and that circumstance disentitles the applicant from grant of bail, is not tenable, inasmuch as, the latter has already been enlarged on bail by the concerned Magistrate - Furthermore, the contention of the prosecution that the applicant had evaded arrest on an earlier occasion is not sustainable, inasmuch as, no proceedings under Sections 82 and 83 Cr.P.C. had admittedly been instituted against him at any point of time.
The applicant is entitled to grant of bail pending trial on stringent conditions. Also, the circumstances that the investigating agency has already completed investigation; the charge sheet has been filed; order on charge has been rendered on 12th February, 2016; and the applicant has been in judicial custody since 19.04.2015 cannot be lost sight of - thus, the presence of the applicant in further custody is not necessary.
It is directed that the applicant be released on regular bail pending trial on his furnishing a personal bond in the sum of ₹ 1,00,000/- with two sureties of the like amount to the satisfaction of the Trial Court subject to the further conditions imposed - application allowed.
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2016 (2) TMI 1320
Assessment u/s 153A - incriminating documents found in search or not? - HELD THAT:- We hold that the incriminating documents pertaining to the various assessment years even for years where the assessments are not abated, were found and seized. The assessee himself had admitted before the Assessing Officer that several loose papers seized as Annexure LPS 1 to LPS 5 and BS-1 to BS-5 are having entries relating to personal unaccounted business of the assessee. The assessee himself had prepared a cash flow statement of these unaccounted cash transactions incorporating debit and credit cash transactions. The unrecorded sales and unaccounted assets were also discovered in the search operation. The assessee has also admitted undisclosed income on the basis of these documents and assets. Therefore, the ratio laid down in case laws relied on by the learned counsel for the assessee is not applicable to the facts of the assessee’s case. Considering all these factual aspects, we dismiss all these grounds for all the assessment years raised before us.
Unexplained investment in the share - Proof of unaccounted transaction - HELD THAT:- The revenue’s claim that no promoter would divest with such a huge holding at a very nominal profit is without any basis and only a guess work. The assessee’s contention that the promoters were intended to go for public issue is well established by the fact that expenditure incurred in this regard has been debited in the books of accounts of Adroit Industries Ltd., therefore, the revenue’s contention that the promoters were not intended to go for public issue is not correct - all such allegations are wild and without any basis. The revenue has even failed to bring anything on record to establish that any unaccounted transaction in any form was done by any of the persons of this group and associates. There is no evidence against the assessee with regard to transfer and reacquisition of shares of Adroit Industries Ltd. during the relevant period to the assessment years 2007-08, 2008-09 and 2010-11 respectively. The revenue’s allegations are general and not supported by any evidence - no addition could be sustained only on the basis of guess work or in the absence of any positive evidence. In view of this factual matrix, we find no merit in the addition made - Decided in favour of assessee.
Addition on account of undisclosed income admitted by the assessee in his statement recorded u/s.132(4) - Whether addition was not represented by corresponding unexplained assets, unexplained investment or unexplained transactions in the seized material etc? - HELD THAT:- The judgments relied upon by the first appellate authority while making addition on the basis of assessee’s statement are not applicable to the facts of the assessee’s case in as much as in all the cases either the assessee claimed the statements having been given under threat or intimidation whereas it was a voluntary statement or retraction was filed after many years or no reasons were assigned for retraction or retraction was made despite existence of incriminating material. The facts of the assessee’s case are totally different.
While offering undisclosed income for taxation, the assessee categorically stated that the declaration was on the basis of provisional verification of seized material. While filing return of income pursuant to notice u/s.153A, the assessee scientifically analysed the entire seized material as well as undisclosed investment and assets, worked out peak credit by datewise chronologically arranging unaccounted cash receipts and cash payments and offered the same for taxation as undisclosed income. No income was offered for taxation for assessment year 2012-13 because the undisclosed income determined in earlier assessment years and recovery of cash advanced in earlier period was sufficient for explaining cash payments and undisclosed investments during the year. In view of the facts and legal position discussed above, the assessee humbly request deletion of the addition sustained by the C.I.T.(A) and determine undisclosed income offered by the assessee on the basis of peak credits for various assessment years on the basis of cash book prepared by him and placed before the Tribunal as well as the lower authorities.
CIT(A) has made the addition of difference between the income offered in the statement recorded u/s 132(4) and confirmed in the letter submitted to the Investigation Wing for the assessment year 2012-13 - The peak credit in view of various issues decided in these appeals including appeal in Signet Industries Limited needs to be reworked out. The income worked out of poly product sold out of books and under-invoiced for assessment years 2006-07, 2007-08 and 2008-09 have been held to be taxed in the hands of Signet Industries instead of the assessee. Part of this income was offered by the assessee in his return of income for these years which shall be reduced in view of these facts. Further, various other issues are also restored to the file of the Assessing Officer. Assessing Officer is also directed to rework out the peak amount.
Unaccounted sales and underinvoicing which formed part of income from unaccounted sales and underinvoicing assessed in the case of Signet Industries Ltd.- HELD THAT:- As have already decided this issue in the case of Signet Industries Limited wherein we have upheld the addition in the hands of Signet Industries Limited. The addition upheld in the hands of Signet Industries Ltd. on the basis that these unaccounted sales of poly product and under-invoicing of poly product were product of Logic Poly Products which is a unit of Signet Industries Ltd. Further Signet Industries Limited has filed settlement petition before the Customs & Central Excise Commission and admitted it as unaccounted transaction in its own hands. We have sustained the addition totaling to ₹ 8,13,29,014/- for three assessment years 200607, 2007-08 and 2008-09 in the hands of Signet Industries Limited. We have also directed that this amount may be reduced in case of Mukesh Sangla(assessee) , therefore, on this account we allow this grounds of assessee’s appeal.
Addition on the basis of entries of cash payments and cash receipts recorded in the material found and seized during search - assessee claimed that he has prepared cash receipt and cash payments account on the basis of these documentsand the excess amount has been offered for taxation while the revenue’s claim is that the assessee has not given full details regarding the incoming and outgoing of the cash amounts, therefore, the addition of both cash receipt and cash payment is justified - HELD THAT:- In the case of Signet Industries Limited we have upheld the addition made on the basis of loose papers found and seized by the Central Excise & Customs Department, part of which was offered as income in the hands of the assessee after filing the revised return. We have sustained the addition in the case of Signet Industries Limited with regard to poly product sold out of books and sold by under-invoicing. Therefore, the same amount shall not be available with the assessee to explain various entries for the assessment years 2006-07, 2007-08 and 2008-09 in the assessee’s hands.
We do agree with the pleadings of assessee that once the inflow and outflow of the cash payments is scientifically prepared datewise on the basis of the documents seized during the search operation then the addition can be sustained only of the peak so arrived at. The revenue is not allowed to selectively overlook the entries recorded in the seized material resulting in multiple additions. After considering the complexity of this issue and considering the impact of the issue decided in the case of Signet Industries Limited, we find it appropriate that the issues raised in the various grounds of these appeals of the assessee deserve to the restored to the file of the Assessing Officer with the direction to prepare a scientific datewise receipt and payment account of cash and work out the peak for these years and then make the addition accordingly.
Unaccounted polymer trading - HELD THAT:- We find that on the issue of initial investment we find it appropriate to restore the issue to the file of the Assessing Officer for the reason that we have directed to sustain the addition of peak amount in earlier years. If such amount is available for telescoping the initial investment, this addition shall be deleted. On the issue of the quantum of addition, we hold that it is on higher side as the addition is almost 50% of the unaccounted trading - we direct to reduce the addition if finally sustained to the tune of 10% of the total unaccounted sales of polymer trading. On the issue of estimating the net profit we hold that we have already held 4% of sales as reasonable profit on such sales, therefore, the addition for determining the NP shall be worked out @ 4% of such sales. Since the addition has been made on estimated basis, therefore, no addition is called for by invoking the provisions of section 40A(3)
Bogus purchases of polymer - We uphold the addition up to the NP rate of 4% after considering various pleadings and aspects of the case.
Unexplained investment in jewellery - HELD THAT:- CIT(A) has rightly sustained the addition up to ₹ 74,72,863/- on the diamond ornaments. Similarly, the addition sustained on the silver wares was also justified as the assessee was having no explanation for the same. The assessee himself has offered the silver wares of ₹ 49,49,402/- in his return of income. Moreover, the assessee has disclosed the unaccounted income for the assessment year 2012-13 at ₹ 12,61,00,000/- in the statement recorded u/s 132(4) and the learned CIT(A) has made further addition of ₹ 9,43,55,415/- on the basis of difference between the undisclosed income declared by the assessee in the statements recorded u/s 132(4) and the addition sustained of ₹ 3,17,44,585/- for the assessment year 2012-13. Therefore, we find no merit in these grounds of the assessee’s appeal.
Telescoping of unaccounted income - Addition of peak credit as per cash flow statement prepared from entries recorded in loose paper found and seized during search - HELD THAT:- On perusal of available cash balances for the entire block period as per the cash flow statement, it is quite manifest that Shri Mukesh Sangla had sufficient funds with him to set off addition on account of share application money, share capital, silver wares, Gold and diamond jewellery, unsecured loans, cash transaction with Shri Deepak Kalani and Shri Pankaj Kalani, initial investment for undisclosed polymer trading business etc. Therefore, the addition of peak credit as per cash flow statement prepared from entries recorded in loose paper found and seized during search in Shri Mukesh Sangla’s case as well as addition on account of share application money, share capital, silver wares, Gold and diamond jewellery, unsecured loans, cash transaction with Shri Deepak Kalani and Shri Pankaj Kalani, initial investment for undisclosed polymer trading business etc. in the case of Shri Mukesh Sangla and other group entities would amount to double addition.
From the seized documents, it is clear that the source of undisclosed income in the case of Shri Mukesh Sangla was unaccounted polymer business and other sources. The undisclosed income so generated was available with him to set off against addition on account of share application money, share capital, unsecured loans, cash transactions with Shri Pankaj Kalani and Shri Deepak Kalani etc. Therefore, it is humbly submitted that the addition on account of share application money, share capital, unsecured loans, cash transactions with Shri Pankaj Kalani and Shri Deepak Kalani etc. should be set off against undisclosed income determined on the basis of seized material in the case of Shri Mukesh Sangla.
In all these grounds the assessee has raised the issue of telescoping. After hearing both the sides, we are of the view that wherever it is possible to telescope the unaccounted income with the unxplained investment in any other asset including the jewellery, unexplained cash credits, unexplained investment or unexplained bank transactions, etc. relating to the assessee then such telescoping shall be justified.
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2016 (2) TMI 1319
Loss from Jeevan Suraksha Fund - Whether loss from Jeevan Suraksha fund can be set off against taxable income of the assessee corporation despite the fact that Jeevan Suraksha Fund is covered u/s 10(23AAB) whereby the income including the loss is not includible in the total income? - HELD THAT:- As noticed that while computing the taxable surplus, the negative reserves were ignored. On being show caused as to why the negative reserves should not be treated as income of the assessee, it was pointed out that the computation was in terms of the actuarial valuation carried out in accordance with Sec. 13, 15, 49 & 64V of the Insurance Act, 1938 and in terms of the IRDA regulations. It was also asserted that the prescribed methodology for valuation of the assets and determination of the liabilities was followed, on the basis of which, the actuarial valuation of surplus was arrived at for the purpose of taxation. The contentions of the assessee were not accepted by the Assessing Officer and accordingly he disallowed the adjustment of negative reserves amounting.
As a common point between the parties that the decision of the Tribunal dt. 3.4.2013 [2013 (6) TMI 377 - ITAT MUMBAI] pertaining to Assessment Year 2009-10 on an identical issue continues to hold the field as it has not been altered by any higher authority. As a consequence, we find no error on the part of the CIT(A) in deleting the impugned addition. Ground of appeal no. 1.2 raised by the Revenue is also dismissed.
Determination of Dividend Distribution Tax in terms of Sec. 115O - AO Noted that the assessee had distributed/paid to the Government of India on which Dividend Distribution Tax in terms of Sec. 115O of the Act was not levied - HELD THAT:- CIT(A) upheld the plea of the assessee following the decision of the Tribunal in the assessee‟s own case for Assessment Year 2006-07 - As a consequence, the stand of the assessee was allowed and the Assessing Officer was directed to delete the tax liability imposed u/s. 115O - As a consequence, the order of the CIT(A) is hereby affirmed and the Revenue fails on this aspect also.
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2016 (2) TMI 1318
Sanction of the Scheme of Amalgamation - Section 391 and 394 of the Companies Act 1956 - HELD THAT:- In terms of the provisions of Section 391 and 394 of the Act, and in terms of the scheme the entire undertaking, properties, rights and powers of the transferor companies, will stand transferred to and/or vest in transferee company, without any further act or deed. Similarly, in terms of the scheme, all liabilities and duties of the transferor companies shall stand transferred to transferee company, without any further act or deed - as per clause 4.12 of the scheme, the transferor companies shall stand dissolved without being wound up. The petitioners will comply with the all provisions of the scheme.
In view of the approval accorded to the scheme by the shareholders and unsecured creditors of the petitioners and, given the fact, that the there are no objections by the RD and the OL, there appears to be no impediment in the grant of sanction to the scheme. Consequently, sanction is granted to the scheme in terms of Section 391 and 394 of the Act - Petition allowed.
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2016 (2) TMI 1317
Revision u/s 263 - CIT has objected that the increase in consumption by 5.41% this year as compared to the last year was not examined by the AO - HELD THAT:- As the issue of consumption of colour and chemicals has been examined by the survey team and based on that, the assessee has surrendered certain amount and reported in his return of income which has been accepted by the AO - AO has carried out the examination of assessee’s books of accounts which includes the manufacturing and trading account and based on better GP results which includes the consumption of colour and chemicals shown by the assessee, the same have been accepted - AO in his order has stated clearly that he has examined the manufacturing and trading account and felt satisfied. Accordingly, on this account, it cannot be said that AO has not the examined the matter or there is no application of mind which warrant an intervention by ld CIT under section 263 of the Act.
Addition or invoking section 41(1) - As submitted that these are the same creditors from whom the purchases of color and chemicals have been made and therefore, both the allegation are part of the one single issue and cannot be seen separately. CIT also therefore rightly did not alleged making any separate addition or invoking section 41(1) - We agree with the contention of the ld AR that where the balances of sundry creditors having been examined during the course of assessment proceedings, the fact that these creditors relates to consumption of colour and chemicals and CIT not invoking section 41(1) the issue has to be seen in the context of consumption of colour and chemicals which we have already discussed above. Accordingly, on this account, it cannot be said that AO’s order under section 143(3) call for intervention of ld CIT under section 263.
Excess stock of gray cloth - AO has not examined the value taken for the purposes of valuation of gray cloth in the stock inventory as on 31st March 2011 and selling price of gray cloth processed which has been sold - From the perusal of the computation of income (PB 143), it is noted that in addition to profit as per profit and loss account, the assessee has offered an amount which is the amount surrendered during the course of survey. The said amount includes an amount towards stock of gray cloth. Given this undisputed facts where the assessee has offered the whole of the purchase stock to tax and which has been accepted by the AO, we are unable to understand the prejudice which has been caused to the Revenue in this regard. In any case, the purchase and resultant sale of gray stock and profit arising therefrom has been factored in the Gross profit which has been examined by the AO. Accordingly, on this account, it cannot be said that AO’s order under section 143(3) call for intervention of ld CIT under section 263.
Cash payment and related disallowances u/s 40A(3) - As submitted by AR that admittedly, the assessee made payments below ₹ 20,000/- to the small persons engaged in the work of washing etc. which does not require much investment and they are financially weak and therefore, they always insist for cash payment. They even do not have their bank a/c and therefore, cash payment has to be made. It was further submitted that the AO has verified the cashbook produced before him alongwith the Tax Audit Report in which the Tax Auditor has not reported any contravention of sec. 40A(3). On pursual of the assessment order, it is noted that the cash book was produced during the course of hearing on 15.01.2013 and it is also stated that the AO has done the verification of the cash deposits. It therefore cannot be said that the AO has not verified the cash book and it is likely that on examination of such cash book, he has found the same to be in order including compliance with section 40A(3). Accordingly, on this account, it cannot be said that AO’s order under section 143(3) call for intervention of ld CIT under section 263 of the Act.
Disallowance u/s 40(a)(ia) - Why the third parties making the payment to the assessee have not made TDS and also the present AO has not intimated to the concerned AO of the such persons making payment to make disallowance u/s 40(a)(ia). In our view, the same cannot form the basis for assuming jurisdiction under section 263 in the case of the assessee.
Payment of job work charges - CIT believes that the Assessing officer ought to have examined whether TDS are made or not and whether the provisions of section 40a(ia) is applicable in the assessee’s case. In this regard, it is noted that the assessee vide its letter dated 11.01.2013 has submitted copy of TDS returns as well as copy of account of job work/process charges where it is shown that the assessee has done TDS on such payments. In our view, the same cannot form the basis for assuming jurisdiction under section 263 in the case of the assessee.
We are of the view that the order passed by AO under section 143(3) cannot be held to be an erroneous order which is prejudicial to the interest of Revenue. The AO has made sufficient enquiries, considered the survey records and the surrender made by the assessee and after considering the submissions of the assessee and due application of mind completed the assessment proceedings under section 143(3) of the Act. Hence, the impugned order issued by ld CIT under section 263 lacks the inherent jurisdiction. - Decided against revenue.
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2016 (2) TMI 1316
Computation of deduction u/s 10B - exclusion of expenses incurred in foreign exchange and telecommunication expenditure incurred in Indian currency from export turnover - HELD THAT:- Following the decision of Special Bench of Chennai Tribunal in the case of ITO Vs. Sak Soft Ltd [2009 (3) TMI 243 - ITAT MADRAS-D] CIT(A) directed the AO to reduce such expenses from both the export turnover and total turnover.
Disallowance of expenditure attributable for earning exempt income u/s.14A - CIT(A) directed the AO to disallow 5% of exempt income as the expenses attributable for earning exempt income in so far - HELD THAT:- CIT(A) estimated the expenditure at 5% of gross exempt income as the expenditure attributable to earning exempt income for assessment year 2005-06 and we find that this is quite reasonable - in the order of the Ld. CIT(A) in confirming he disallowance made u/s.14A r.w Rule 8D(2)(iii) of Income Tax Rules.
Expenditure incurred in foreign exchange which has been specifically excluded from export turnover would also not form part of total turnover for the purpose of sec.10B.
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2016 (2) TMI 1315
Contribution made by the assessee to the superannuation fund - allowable revenue expenses u/s 37(1) - HELD THAT:- Admittedly, the assessee was established by the State Government. By a Government Order, the State Government gave option to the employees of the erstwhile Port Department to work under the assessee-board. The Government categorically clarified that the employees who opted to work under the assessee-board would have the same tenure, remuneration, rights and privileges as to pension and gratuity. The Government employees who were transferred to the assessee-board will have the same rights and privileges in respect of superannuation and pension.
The contribution made by the assessee to the superannuation fund has to be allowed atleast u/s 37 of the Act as found by the Madras High Court in Kattabomman Transport Corporation Ltd [1998 (9) TMI 2 - MADRAS HIGH COURT] - Absorption of the Government employees by the assessee-board will not make any distinction in respect of payment for superannuation fund. Therefore, this Tribunal do not find any error in the order dated 21.8.2015 much less a prima facie error. There is no merit at all in the miscellaneous petition filed by the Revenue. Accordingly, the same is dismissed.
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2016 (2) TMI 1314
Condonation of delay in filing appeal - Process amounting to manufacture or not - deemed manufacture - activity of labeling undertaken by the assessee - credit wrongly availed - HELD THAT:- The delay is condoned.
Issue notice.
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