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Showing 81 to 100 of 1515 Records
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2016 (1) TMI 1442
Reopening of assessment u/s 147 - vague notice - non communicating the reasons recorded as per law and without obtaining the valid sanction as per law and without complying with other mandatory conditions as envisaged u/s 147 to 151 - HELD THAT:- AO has not applied his mind so as to come to an independent conclusion that he has reason to believe that income has escaped during the year. In our view the reasons are vague and are not based on any tangible material as well as are not acceptable in the eyes of law. The AO has mechanically issued notice u/s. 148 of the Act, on the basis of information allegedly received by him from the Directorate of Income Tax (Investigation), New Delhi. Keeping in view of the facts and circumstances of the present case and the case law applicable in the case of the assessee, we are of the considered view that the reopening in the case of the assessee for the asstt. Year in dispute is bad in law and deserves to be quashed. See Pr. CIT-4 vs. G&G Pharma India Ltd. [2015 (10) TMI 754 - DELHI HIGH COURT] and Signature Hotels (P) Ltd. vs. ITO [ 2011 (7) TMI 361 - DELHI HIGH COURT] - Decided in favour of assessee.
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2016 (1) TMI 1441
Offence of perjury - firing of empty cartridges - presence of the firearm for examination - HELD THAT:- The appellant has all through been consistent that as an expert, a definite opinion in the case could be given only if the suspected firearm is available for examination. It is nobody’s case that scientifically an expert can give a definite opinion by only examining the cartridges as to whether they have been fired from the same firearm. It was the trial court which insisted for an opinion without the presence of the firearm, and in that context only, the appellant gave the non-specific and indefinite opinion. An expert, in such a situation, could not probably have given a different opinion.
Expert evidence needs to be given a closer scrutiny and requires a different approach while initiating proceedings under Section 340 of CrPC. After all, it is an opinion given by an expert and a professional and that too especially when the expert himself has lodged a caveat regarding his inability to form a definite opinion without the required material. The duty of an expert is to furnish the court his opinion and the reasons for his opinion along with all the materials. It is for the court thereafter to see whether the basis of the opinion is correct and proper and then form its own conclusion. But, that is not the case in respect of a witness of facts. Facts are facts and they remain and have to remain as such forever. The witness of facts does not give his opinion on facts; but presents the facts as such.
Merely because an expert has tendered an opinion while also furnishing the basis of the opinion and that too without being conclusive and definite, it cannot be said that he has committed perjury so as to help somebody. And, mere rejection of the expert evidence by itself may not also warrant initiation of proceedings under Section 340 of CrPC.
As a matter of fact, even in the written opinion, appellant has clearly stated that a definite opinion in such a situation could be formed only with the examination of the suspected firearm, which we have already extracted in the beginning. Thus and therefore, there is no somersault or shift in the stand taken by the appellant in the oral examination before court.
Appeal allowed - decided in favor of appellant.
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2016 (1) TMI 1440
Capital gain/loss - relinquishment of an asset/ extinguishment of right in shares - transfer of capital asset u/s 2(47) - long term capital loss on account of reduction in paid up equity share capital - HELD THAT:- This issue has been decided in case of Bennett Coleman & Co. Ltd. [2011 (9) TMI 1 - ITAT MUMBAI] loss arising on account of reduction in share capital cannot be subjected to provisions of sec.45 r.w.s. 48 and, accordingly, such loss is not allowable as capital loss. At best such loss can be described as notional loss and it is settled principle that no notional loss or income can be subjected to the provisions of the I.T. Act.
Reopening of assessment u/s 147 - HELD THAT:- We are in agreement with the findings of ld. CIT(A) that the issue under consideration was such that prima facie it was possible to entertain a view that the assessee had wrongly claimed capital loss on account of calculation of shares and thereby resulting into escapement of income. Therefore, we endorse the finding of ld. CIT(A) in holding that the AO had reason to believe that income had escaped assessment and he was within his competence to invoke the powers contained in section 147 to initiate reassessment of the income of the assessee. In the result, cross objection is dismissed.
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2016 (1) TMI 1439
Condonation of delay for filling Rectification of mistake - reopening of assessment being without jurisdiction - recording of not pressing its grievance with regard to reopening of the assessment at the time of hearing of an appeal - HELD THAT:- The impugned order dated 5th June, 2009 of the Tribunal had no occasion to deal with the issue of reopening of the assessment. The Applicant, if aggrieved by the decision dated 5th June, 2009 of the Tribunal, incorrectly recording its withdrawal of challenge to the reopening of the assessment, the Applicant should have been filed an application for rectification immediately. The Applicant accepted the order of the Tribunal on the issue of reopening of assessment and chose not to file any Miscellaneous Application, seeking to rectify any mistake in order dated 5th June, 2009. This itself would be an indication of the fact that the Applicant was not aggrieved by the Tribunal recording that the issue of reopening of an assessment was not being pressed. This is so, as if the Applicant had any grievance, it would have filed a Miscellaneous Application. In any case, the right of filing an appeal in respect of reopening of an assessment arose when the order dated 5th June, 2009 of the Tribunal was received by the Applicant. The right of appeal of the Applicant on the issue of reopening of assessment did not arise as a consequence of the order of the Tribunal dated 23rd March, 2010 allowing the Revenue's application for rectification, withdrawing the benefit of Section 80IB of the Act to the Applicant. There is no explanation as to what prevented the Applicant from filing an application for rectification before the order dated 23rd March, 2010 of the Tribunal allowing the Revenue's application for withdrawing the benefit of Section 80IB of the Act. This event viz: order dated 23rd March, 2010 does not explain the delay from order dated 5th June, 2009 (received on 30th June, 2009) upto its first applications for rectification on 22nd February, 2011.
Be that as it may, even if we accept the submission made on behalf of the Applicant that the time spent between 22nd February, 2011 to 17th December, 2014, in prosecuting the repetitive Miscellaneous Application on the same issue before the Tribunal, filing Writ Petition and appeal from the order on the Miscellaneous Applications is a bonafide and diligent pursuit of a remedy, yet the affidavit in support of the Notice of Motion makes no attempt to explain the period spent between 30th June, 2009 to 22nd February, 2011.
In the present facts, we are of the view that the rectification application was moved on the ground that the recording of not pressing its grievance with regard to reopening of the assessment at the time of hearing of an appeal, leading to the impugned order dated 5th June, 2009, was not correct. Therefore, even if we exclude the period between 22nd February, 2011 to 30th October, 2014, no satisfactory explanation for the time spent between 30th June, 2009 to 22nd February, 2011,when the first Miscellaneous Application was filed i.e. 18 months. Besides, affidavit in support does not explain the delay of approximately one and half months after the withdrawal of the Appeal from the order on the Miscellaneous Application up to the filing of the accompanying appeal on 17th December, 2014. Thus, there being no explanation even attempted in the affidavit in support of the notice of motion, no occasion to condone the delay can arise.
Application for condonation of delay cannot be allowed as the Applicant has not made out sufficient cause for condoning the delay.
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2016 (1) TMI 1438
Disallowance of Business Development Exp - allowable revenue expenses - HELD THAT:- Assessee has stated to have availed the services of Mrs. Vidya Ramanarayanan Iyer and the nature of services stated to have been rendered is being produced in the preceding para, however, the assessee has not proved the rendering of services by her wife with adequate evidences/documents. On going through the tax return, it is not clear that the income of ₹ 9,44,810/- was included in the said return of income for the assessment year 2006-07.
Interest of justice will be best served if the issue is set aside to the file of A.O. for de-novo consideration of the issue, after considering the submissions and evidences filed by the assessee to support his contentions . The assessee is directed to file necessary evidences/documents before the AO to substantiate his claim with respect to allowability of business development expenses claimed as revenue expenditure by the assessee to have been incurred wholly and exclusively for the purposes of the business. Accordingly, we set aside this matter to the file of A.O. who will decide the issue afresh in the light of evidences and explanations filed by the assessee
Disallowance of consulting charges - HELD THAT:- The assessee has stated that the said professionals shifted their address and hence it was time consuming to get the confirmations etc. but the primary and initial onus is on the assessee which the assessee has to discharge to get the benefit of allowability/deduction as business expenses u/s 37(1) of the Act of these expenses and in our considered view interest of justice will be best served, if this issue is restored to the file of the A.O. for denovo consideration and determination of the issue. Accordingly , we set aside this issue to the file of the A.O. for deciding the same afresh .
Disallowance of entertainment expenses - HELD THAT:- Ad-hoc disallowance of 40% of entertainment expenditure of ₹ 8,81,488/- was made by the AO amounting to ₹ 3,36,595/- on ad-hoc basis , which disallowance was further reduced to 20% amounting to ₹ 1,68,298/- by the CIT(A) and again on ad-hoc basis whereby no specific defects has been pointed by the CIT(A) in the vouchers/books of accounts nor it is proved that these expenses are bogus expenses and also books of accounts have not been rejected by the CIT(A). The books of accounts are duly audited by a qualified chartered accountant. This disallowance of ₹ 1,68,298/- being 20% of total entertainment expenditure of ₹ 8,81,488/- cannot be sustained when no defect has been pointed by the authorities below nor are they been proven to be bogus expenses claimed by the assessee and the books of accounts have also not been rejected by the Revenue, thus this confirmation of disallowance by the CIT(A) of 20% of entertainment expenditure being ₹ 1,68,298/- out of total entertainment expenditure of ₹ 8,81,488/- on ad-hoc basis is ordered to be deleted.
Expenses on ad-hoc basis @ 50% of the total expenses of travelling, vehicle expenses and telephone expenses for which proper books were not maintained - HELD THAT:- Ad-hoc disallowance of expenditure was made by AO which was further reduced to 20% by the CIT(A) which is again on ad-hoc basis without rejecting the books of account and without pointing out any specific defects in the vouchers or establishing that these expenses are bogus. Thus disallowance on ad-hoc basis of expenses cannot be sustained when no defect has been pointed nor is it proved that these are bogus expenses, thus this disallowance of expenses on account of travelling, vehicle expenses and telephone expenses as sustained by the CIT(A)is ordered to be deleted. Similarly, addition of ₹ 41,600/- to the income of the assessee being disallowance of depreciation on car being sustained by the CIT(A) is hereby ordered to be deleted. Similarly, with regard to new year expenses and Diwali expenses, the additions is ordered to be deleted. We order accordingly.
Addition on account of expenditure claimed by the assessee for the office rent, salary and wages and staff welfare - HELD THAT:- Disallowance was made based on the Ward Inspector’s report. The copy of the said ward inspector report was not given to the assessee to rebut the allegation which is a serious breach of principles of natural justice. The assessee has duly submitted all the details of these expenses and accounts of the assessee are duly audited by a qualified chartered accountants.
Revenue has not brought on record any cogent material to prove that these expenses are bogus expenses and are not allowable while the assessee on the other hand has duly given all details. The books of accounts of the assessee which are also audited were not rejected by the Revenue. In our considered view, the CIT(A) is quite right in allowing the claim of the assessee with respect to these expenses on account of expenditure for office rent , salary and wages and staff welfare as business expenses deductible as revenue expenditure under the Act and we confirm the orders of the CIT(A) dated 22.03.2010 with respect to this addition and we order the deletion of the same as we have not found any infirmities in the order of the CIT(A) with respect to the deletion of addition made by the AO. Hence, the ground raised by the Revenue is dismissed.
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2016 (1) TMI 1437
Disallowance of broken period interest Settlement paid to Standard Chartered Bank - HELD THAT:- We find that this ground raised by the assessee is covered in favour of the assessee by the orders and decisions of various courts including those of the co-ordinate benches of the Tribunal in the assessee’s own case [2015 (11) TMI 1792 - ITAT MUMBAI] . Respectfully following the aforesaid decisions, we reverse the order of the CIT(A) in confirming the disallowance on account of broken period interest and allow the assessee’s claim in this regard. Consequently ground no. 1 of the assessee’s appeal is allowed.
Interest accrued but not due - HELD THAT:- Tribunal in the assessee’s own case [2015 (11) TMI 1792 - ITAT MUMBAI] issue is covered against the assessee and therefore uphold the order of the ld. CIT(A) on this issue.
Disallowance of NRI Deposit Mobilization Expenses - HELD THAT:- Revenue has not been able to bring on record any material evidence to controvert the view taken therein, we, therefore, following the decisions of the co-ordinate benches of this Tribunal in Asst. Year 1999-2000, rendered at paras 59 to 62 thereof, allow the assessee’s claim put forth in ground no. 3 of its appeal.
Disallowance of penal interest paid to RBI - HELD THAT:- Penal interest charged by RBI for violation of its guidelines/directives in respect of CRR, SLR etc. is not in the nature of infraction of law and is therefore allowable as deduction while computing the business income of the assessee and therefore allow the assessee’s claim in this regard
Settlement paid to Standard Chartered Bank - HELD THAT:- The client ‘SCB’ claimed that the securities delivered to it were not those listed out by it for which an amount of ₹ 70.25 crores was admittedly paid by it, but others purchased from different counter parties. Obviously, ‘SCB’ being a reputed client and keeping in mind, its own market reputation, the matter was settled through mediation agreement and Deed of Release and Indemnity by which the dispute was settled by the assessee making payment of ₹ 34.50 crores to ‘SCB’. On a careful appreciation of the facts and material on record and the judicial decisions cited, we are of the view that the decision of the co-ordinate bench in the assessee’s own case [2015 (11) TMI 1792 - ITAT MUMBAI] for Asst. Year 2000-01 cited by the assessee, where a similar issue of claim of business loss on payment to a client was allowed, we are of the view that the payment of ₹ 34.50 crores to ‘SCB’ by the assessee was also made in the normal course of its business and is to be allowed.
Salary paid to expatriate employees – HELD THAT:- In the factual matrix of the case, in this year, i.e. Asst. Year 1995-96, we find that it is similar to those prevailing in the case on hand for Asst. Year 1992-93. As brought out by the co-ordinate bench in its order [2015 (11) TMI 1792 - ITAT MUMBAI] after considering the CBDT’s circular no. 685, the assessee’s admitted position being that the taxes were not deducted or paid as per the requirements of Chapter XVII-B, it is hit by the provisions of section 40(a)(iii) of the Act and therefore the assessee’s claim cannot be entertained
Disallowance u/s 37(2A) payment of subscription to Clubs - HELD THAT:- Issue decided in favour of assessee as relying on own case [2015 (11) TMI 1792 - ITAT MUMBAI] following the decision of the Hon’ble Bombay High Court in Otis Elevators [1991 (4) TMI 53 - BOMBAY HIGH COURT] We also find that this issue in question is no longer res integra in view of the decision of the Hon’ble Apex Court in the case of United Glass Manufacturing [2012 (9) TMI 914 - SUPREME COURT]
Expenditure on entertainment disallowed - HELD THAT:- As decided in APPAREL EXPORT PROMOTION COUNCIL [2008 (5) TMI 730 - DELHI HIGH COURT] assessee is entitled to deduction for the expenditure incurred for entertainment of staff as well as outsiders for the promotion of business.
Exemption of interest on tax free bonds - HELD THAT:- We find that the issue of the assessee’s claim for exemption of interest on investment in purchase of tax free bonds has been considered and adjudicated upon by a co-ordinate bench of this Tribunal in the assessee’s own case [2015 (11) TMI 1792 - ITAT MUMBAI] the co-ordinate bench affirmed the order of the ld. CIT(A) for that year wherein the ld. CIT(A) had relied upon his predecessors order for Asst. Year 1998-99 dt. 4.6.2001; which incidentally is the order and assessment year under consideration in this appeal.
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2016 (1) TMI 1436
TP Adjustment - comparable selection - Exclusion of M/s. E-clerk Services Ltd and Infosys BPO Ltd, from the list of comparables selected by the TPO, for bench marking the pricing of the international transactions of the assessee with the Associated Enterprise - TPO had applied turnover filter of ₹ 200 crores - HELD THAT:- Given this situation, we are of the opinion that the filters set out by the coordinate bench in the case of Genisys Integrating Systems (India) P. Ltd [2011 (8) TMI 952 - ITAT BANGALORE] based on Dun and Bradstreets analysis can be followed.
We are therefore of the opinion that DRP was justified in directing exclusion of companies having turnover in excess of ₹ 200 crores. Grounds 1 and 2 of the Revenue stand dismissed.
Foreign exchange loss/ gain - considered to be operating in nature by the DRP though such loss / gain was not attributable to the operating activity of the assessee - HELD THAT:- Sole business revenue of the assessee was from the billings on its AE abroad for the services rendered by it. Nothing has been brought on record to show that any of the foreign exchange loss / gain had come from any hedging activity or any other line of activity undertaken by the assessee. Unless rebutted a safe presumption can be made that foreign exchange loss / gain arose out of the business activity of the assessee which was entirely providing ITES services to its principal abroad. We cannot say that foreign exchange loss / gain had no nexus with such activity. We are therefore of the view that the DRP took a correct view on this issue. DRP had accepted the submission of the assessee that such gains / losses were closely linked to its business operation did and not relate to any extra ordinary or abnormal events. Grounds 3 and 4 stand dismissed.
Grant of risk adjustment without advising a reasonably accurate method for its determination - Assessee in its TP study had not made any adjustment for risk while calculating of PLI - HELD THAT:- Assessee itself had never made any attempt in its TP study to quantify the risk. On the other hand, assessee itself had mentioned the difficulties of attempting a risk adjustment.
DRP was putting the onus on TPO to give a risk adjustment on the PLI, when assessee had never discharged its onus in its TP study. Perceived single party risk is purely hypothetical and since assessee’s AE is its holding company, it is in its best interest that work is given to the assessee. It is not that assessee could not have had other client, but it chose to service only its principal. Thus the perceived risk even if any, has been voluntarily taken by the assessee. An adjustment for such a perceived or hypothetical risk can never be factored while working out the Profit Level Indicator. In the circumstances, we are of the opinion that DRP ought not have directed the TPO to consider the risk adjustment at 1%. We find merit in this ground taken by the Revenue. Ground 5 of the Revenue is allowed.
Comparability of Acropetal Technologies Ltd (seg) - HELD THAT:-When segmental results were available, where expenditure have also been allocated, it would be improper to exclude the company only for a reason that it was into high-end services. Within a given segment there cannot be further classification based on high-end and low-end services. In taking this view we are fortified by the Special Bench decision in the case of Maersk Global Centres (India) P. Ltd v. ACIT [2014 (3) TMI 891 - ITAT MUMBAI] . Analysis of voluminous data and deciphering meaningful information therefrom which helps build core business strategy is a highly skilled function, requiring advanced programming skills and knowledge of data mining. Data analytics is no ordinary job like daily business accounting or book-keeping. It is in no way comparable to a low end business process outsourcing function. Accordingly, we are of the opinion that Acropetal Technologies Ltd (seg), cannot be excluded from the list of comparables. Ordered accordingly.
ICRA Online Ltd - HELD THAT:- We are of the opinion that the question whether the foreign exchange earnings of ICRA was above or below the limit of 75% was not verified by any of the lower authorities. We are therefore of the opinion that the issue regarding comparability of ICRA Online Ltd, requires a fresh look by the AO / TPO. We set aside this issue back to the file of AO / TPO for consideration afresh so that he can correctly calculate the export sales ratio of the said company to its total revenues for applying the 75% filter.
Exclusion of rental income from the business income - AR submitted that when rental income was excluded while calculating the PLI of the assessee, corresponding rental expenditure was also required to be excluded - HELD THAT:- AO in the assessment done pursuant to the DRP directions had excluded rental income from the business income. As per the assessee it had incurred expenditure of ₹ 23,75,000/- which is relatable to the earning of rental income. We are of the opinion that once rental income is excluded from the business income of the assessee while calculating the PLI of the assessee, as a natural corrolary expenditure incurred for earning such rental income is also required to be excluded. We therefore set aside the orders of authorities below and direct the AO / TPO to rework the PLI by excluding both rental income and the expenditure relatable to the rental income after proper verification. Ground 7(h) of the assessee is treated as allowed for statistical purpose.
Working capital adjustment though directed by the TPO to be given in the order passed u/s.92CA - HELD THAT:- It is clear that AO had omitted to give the working capital adjustment. We therefore direct the AO to give working capital adjustment of 0.23% as recommended by the TPO. Accordingly ground 7(i) of the assessee stands allowed.
Rental income under the head 'income from other sources' had not reduced the expenditure relatable to such rental income - HELD THAT:- Case of the assessee is that for earning the rental income it had incurred expenditure of ₹ 23,75,000/. Assessee had by itself reduced the rental income from its business head and shown it under the head 'income from other sources' since the rental were earned from sub letting. We find that AO has not mentioned anything regarding the claim of rental expenditure made by the assessee. We are of the opinion that the matter requires a fresh look by the AO we direct the AO to verify whether the claim of expenditure against the rental income earned by the assessee from sub-letting is allowable in accordance with Section 57(iii) of the Act and proceed in accordance with law.
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2016 (1) TMI 1435
Maintainability of suit - suit dismissed on the ground that the suit plaint does not disclose the cause of action - partition of HUF property - share as a coparcener in the aforesaid suit properties on the ground that the properties when they were inherited by late Sh. Jage Ram were joint family properties, and therefore, status as such of these properties as HUF properties have continued thereby entitling the plaintiff his rights in the same as a coparcener - HELD THAT:- A reference to the plaint in the present case shows that it is claimed that ownership of properties by late Sh. Jage Ram in his name was as joint Hindu family properties. Such a bald averment in itself cannot create an HUF unless it was pleaded that late Sh. Jage Ram inherited the properties from his paternal ancestors prior to 1956 or that late Sh. Jage Ram created an HUF by throwing his own properties into a common hotchpotch. These essential averments are completely missing in the plaint and therefore making a casual statement of existence of an HUF does not mean the necessary factual cause of action, as required in law, is pleaded in the plaint of existence of an HUF and of its properties.
The requirement of pleading in a clear cut manner as to how the HUF and its properties exist i.e whether because of pre 1956 position or because of the post 1956 position on account of throwing of properties into a common hotchpotch, needs to be now mentioned especially after passing of the Benami Transaction (Prohibition) Act, 1988 and which Act states that property in the name of an individual has to be taken as owned by that individual and no claim to such property is maintainable as per Section 4(1) of the Benami Act on the ground that monies have come from the person who claims right in the property though title deeds of the property are not in the name of such person. An exception is created with respect to provision of Section 4 of the Benami Act by its sub-Section (3) which allows existence of the concept of HUF. Once existence of the concept of HUF is an exception to the main provision contained in sub-Sections (1) and (2) of Section 4 of the Benami Act, then, to take the case outside sub-Sections (1) and (2) of Section 4 of the Benami Act it has to be specifically pleaded as to how and in what manner an HUF and each specific property claimed as being an HUF property has come into existence as an HUF property. If such specific facts are not pleaded, this Court in fact would be negating the mandate of the language contained in sub-Sections (1) and (2) of Section 4 of the Benami Act.
This Court is flooded with litigations where only self-serving averments are made in the plaint of existence of HUF and a person being a coparcener without in any manner pleading therein the requisite legally required factual details as to how HUF came into existence.
Actually the application filed under Order VII Rule 11 CPC in fact is treated as an application under Order XII Rule 6 CPC, inasmuch as, it is observed on the admitted facts as pleaded in the plaint that no HUF and its properties are found to exist. There is no averment in the plaint that late Sh. Jage Ram inherited property(s) from his paternal ancestors prior to 1956. In such a situation, therefore, the properties in the hands of late Sh. Jage Ram cannot be HUF properties in his hands because there is no averment of late Sh. Jage Ram inheriting ancestral property(s) from his paternal ancestors prior to 1956. There is no averment in the plaint also of late Sh. Jage Ram’s properties being HUF properties because HUF was created after 1956 by late Sh. Jage Ram by throwing properties into a common hotchpotch.
The application is allowed and the suit is accordingly dismissed as there is no cause of action which is found to exist with respect to existence of an HUF and its properties.
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2016 (1) TMI 1434
Addition on account of cash found at the residence of assessee - search and seizure operation conducted at the residence of the assessee - undisclosed income - HELD THAT:- Addition sustaining cash was properly explained by the assessee and there was case made out to the extent that there were several members in the family who would require the medical assistance at any time. The fact that ₹ 2,00,000/- was surrendered by the assessee should be in support of the assessee and hence the said addition of ₹ 77,200/- is allowable and AO as well as CIT(A) has overlooked the said factor
Gold jewellery seizure - CIT(A) has rightly directed the AO restricting the same as to the balance after giving the benefit of 1500 grams only and while giving the appeal effect, the value of the jewellery may be worked out.
Addition on account of undeclared business income - CIT(A) has justified its finding by stating that AO has come to the conclusion on the basis of the seized documents which was not challenged by the assessee at any point of time.
Addition on account of low drawings made by the assessee for household expenses to the extent of ₹ 3,00,000/- are properly dealt by the CIT(A).
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2016 (1) TMI 1433
Disallowance of amount transferred to Statutory Reserve in compliance with the mandatory provisions of Reserve Bank of India - HELD THAT:- As decided in own case [2013 (4) TMI 864 - ITAT CHENNAI] this is only an appropriation of profits for purposes which have not yet been specified. Moreover, amount involved is very much under the control of the assessee and is lying in its business. Hence, in the background of aforesaid discussion and precedents, we uphold the well reasoned order of the learned Commissioner of Income Tax (Appeals) in this regard and decide the issue against the assessees.
Allowability of interest levied under section 234D of the Income Tax Act under section 36(1)(iii) or 37 - HELD THAT:- The interest charged under section 234D is on par with the interest charged under section 234A or 234B or 234C of the Act. The Government has not advanced any money to the assessee so as to call it is a loan. The interest is compensatory not only charged to the assessee and it cannot be allowed as a business deduction while computing the business income. Accordingly, this ground of appeals of the assessee is rejected.
Short credit given towards TDS - HELD THAT:- AO while restricting the claim for TDS has observed that credit for TDS, advance tax and prepaid tax, taxes are allowed as per the AST and it was allowed as per NSDL data. However, the ld. CIT(A) has given a finding that to verify once again the same. Being so, we do not find any infirmity in the order of the ld. CIT(A) and the same is confirmed and the ground of appeal of the assessee is rejected.
Disallowance u/s.14A read with Rule 8D of Income Tax Rules, 1962 - HELD THAT:- The satisfaction that has to be recorded by the Assessing Officer has to be relevant and reasonable enough for a common man to come to a conclusion that the disallowance suo motu made by the assessee is incorrect. The factual finding in this regard has to be a reasoned one and cannot be simply based on comparison of the amount with total investments. In our opinion, just because amount of indirect cost offered by the assessees against tax-free investments was very low, vis-à-vis the total investments made by the assessee, it cannot be concluded that the claim by itself was incorrect. In such circumstances, we are of the opinion that Assessing Officer erred in rejecting the disallowance suo motu made by the assessees and imposing on them a disallowance under Rule 8D(iii) of the Act. We delete the disallowance made u/s.14A while computing income, both under normal provision as well as under provisions of Section 115JB
Disallowance to royalty payment - CIT(A) has deleted the addition treating it as revenue expenditure - HELD THAT:- As decided in own case [2013 (4) TMI 864 - ITAT CHENNAI] Payment made for the user of the logo is always revenue in nature.
Provision for non-performing assets [NPA] - assessee has claimed non-performing assets as bad debts - AO has disallowed the same as the assessee has made two sets of accounts i.e. one set of books of account for Income Tax Act and another set of accounts for Companies Act purposes - HELD THAT:- Assessing Officer has not examined as to whether the debt has, in fact, been written off, in the accounts of the assessee. This exercise has not been undertaken by the Assessing Officer. Hence, the matter is remitted back to the Assessing Officer for de novo consideration of the above mentioned aspect only, that too only to the extent of written off. Moreover, in our opinion, the facts of the assessee’s case squarely fit into the ratio laid down by the above judgement of the Hon’ble Supreme Court rather than the order of the Tribunal in assessee’s own case cited (supra). Being so, in our view, it is appropriate to remit back the entire issue to verify whether the debt is actually written off in the Audited books of accounts passing enough entries towards written off to the individual account and then only the assessee is entitled for deduction as bad debt provided the assessee fulfils the condition such as satisfaction of Income Tax Act as contemplated under section 36(2) - direct the Assessing Officer to verify the requirement of section 36(2) and decide thereupon. Accordingly, this issue raised by the Revenue is remitted back to the Assessing Officer for fresh consideration.
Disallowance made towards ESOP expenditure treating it as revenue expenditure - HELD THAT:- The question is whether ESOP could be allowed as staff welfare expenditure, has already been answered by Hon'ble jurisdictional High Court in its decision in the case of PVP Ventures Ltd. [2012 (7) TMI 696 - MADRAS HIGH COURT]
Foreman Dividend - HELD THAT:- We are of the opinion that similar issue came up for consideration before this Tribunal in assessee’s own case for the assessment year 1998-99 wherein the issue was decided against the assessee observing that the principle of mutuality does not apply to the assessee’s case and thereby addition was confirmed.
Disallowance u/s.40(a)(ia) - HELD THAT:- The case of Shri N.Palanivelu Vs. ITO, Salem [2015 (10) TMI 1415 - ITAT CHENNAI] wherein it was held that the disallowance under section 40(a)(ia) of the Act was not applicable, when there was no outstanding balance at the end of the close of the previous year. The assessee failed to bring details of outstanding expenses or schedule of sundry creditors showing whether the amount was outstanding at the end of the close of the previous year in the name of the party or outstanding expenses - AO was to verify the matter and examine afresh. If no amount was outstanding at the close of the previous year in respect of the expenses either as outstanding expenses or as sundry creditors, the amount could not be disallowed. Hence the amount outstanding as payable at the end of the close of the Financial year i.e. 31st March only be disallowed by applying the provisions of Sec.40(a)(ia) of the Act. Accordingly we direct the ld. AO to disallow the only amount which is outstanding at the end of the close of the previous year relevant to the assessment year and accordingly for limited purpose to verify the outstanding amount towards impugned amount at the end of the close of the previous year relevant to the assessment year, we remit the issue back to the file of the ld. Assessing Officer.
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2016 (1) TMI 1432
Validity of assessment order - refund of the amounts payable to the petitioner have not yet been passed by the respondent - HELD THAT:- As the applications filed by the petitioner for refund in terms of the orders referred to in Exhibit A, B, E & F are still pending for consideration by the respondent no.4, we find it appropriate to direct the respondent no.4 to take a decision on such refund applications on the assessment orders referred to at Exhibit A, B, E & F within 3 months from today in accordance with law.
Petition disposed off.
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2016 (1) TMI 1431
Transfer Pricing adjustments - comparability of the companies selected by the Transfer Pricing Officer (TPO) - Related Party Transactions (RPT) - HELD THAT:- If the comparables of international transactions are easily available, then, this tolerance of RPT should be restricted to minimum. There is no specified tolerance range in the Act or Rules under the Transfer Pricing provisions, however, in due course of discussion and adjudication of this issue in a series of decisions of this Tribunal, commonly accepted tolerance range of 5% to 25% of the total revenue from RPT has been considered as reasonable depending upon the facts and circumstances of each case. In the case on hand, the availability of the comparables is abundant in number as the assessee selected 44 comparables whereas the TPO selected 20 comparables by applying the filter of 25% of revenue from related parties. Therefore, in this case, good number of comparables are available and there is no difficulty in searching the comparables. Accordingly, in order to determine the ALP by considering the comparable uncontrolled transactions, it should be kept in mind that the uncontrolled transactions should be least influenced by the RPT.
Assessee is purely a software development service provider to its parent company thus companies functionally dissimilar with that of assessee need to be deselected from final list.
Deduction under Section 10A - not allowing the deduction of telecommunication and conveyance charges incurred in foreign exchange outside India while computing the total turnover of the company - HELD THAT:- This issue is covered in favour of the assessee by the decision of the Hon'ble jurisdictional High Court of Karnataka in the case of CIT V Tata Elxsi Ltd & Others [2011 (8) TMI 782 - KARNATAKA HIGH COURT] wherein it has been held that while computing the exemption u/s 10A, if the export turnover in the numerator is to be arrived at after excluding certain expenses, the same should also be excluded from the total turnover in the denominator.
Not allowing deduction under Section 10A of the Act before set off of brought forward business losses - HELD THAT:- By virtue of the amendment and substitution of provisions of sec.10A and 10B, the incentive u/s 10A and 10B was no longer in the nature of exemption but it is in the nature of deduction.
Accordingly by following the latest judgment of the Hon'ble jurisdictional High Court based on the substituted/amended provisions of sec.10A/10B which are applicable in the case of the assessee as well as the decision of the Tribunal in case of Biocon [2014 (12) TMI 838 - ITAT BANGALORE] , we decide this issue in favour of the assessee and direct the AO to allow deduction u/s 10A without setting off the domestic losses.
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2016 (1) TMI 1430
Permission for leave to appeal - accused-respondents were acquitted of the charges - HELD THAT:- At the time of arguments, nothing has been argued as to how the findings given by learned Court below are perverse or against the law. Nothing has been pointed out as to which material evidence has been misread or which material evidence has not been considered by the Court below. The perusal of the findings given by learned Magistrate show that these are as per evidence and law and have been given after appreciating the evidence in right perspective.
The Court held that the base of existing liability for present case is not on the basis of rendition of accounts but is on the basis of compromise dated 25.11.2011. It is further held by the Magistrate that out of ₹ 7.35 crores, ₹ 2.75 crores have been paid by the accused to the complainant. It was also held that after receiving ₹ 3.25 crores, the complainant party was to help the accused party in getting the FIR quashed. It is also admitted that FIR has not been quashed so far - Keeping in view these facts and circumstances, the Court below held that the existing liability is not proved.
The findings given by learned Court below in the impugned judgments dated 25.11.2014 are correct, as per evidence and law. Learned Magistrate has appreciated the evidence in right perspective. In no way, the findings given by Court below can be held as perverse or against the law.
Thus, no ground is made out to grant permission for leave to appeal - application dismissed.
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2016 (1) TMI 1429
Illegal gratification - demand of bribe - Sections 7 and 13(1)(d) read with 13(2) of the Prevention of Corruption Act, 1988 - HELD THAT:- On the basis of factual and legal aspects of the case and evidence on record produced in the case, it is clear that the High Court has recorded the concurrent findings on the charges framed against the Appellant in the impugned judgment and order. It has also failed to re-appreciate the evidence on record properly and consider the law on the relevant aspect of the case. Therefore, the said findings are not only erroneous in law but also suffer from error in law. Hence, the same is liable to be set aside.
After a careful reading of the evidence of the complainant-Jai Bhagwan (PW-2), statements made by the Appellant in his examination Under Section 313 of Code of Criminal Procedure as well as the evidence of Anoop Kumar Verma (PW-6) and inspector-Sunder Dev (PW-12), it is clear that there was no demand of bribe money by the Appellant from the complainant-Jai Bhagwan - It is well settled position of law that the demand for the bribe money is sine qua non to convict the accused for the offences punishable Under Sections 7 and 13(1)(d) read with Section 13(2) of the PC Act.
The approach of both the trial court and the High Court in the case is erroneous as both the courts have relied upon the evidence of the prosecution on the aspect of demand of illegal gratification from the complainant-Jai Bhagwan (PW-2) by the Appellant though there is no substantive evidence in this regard and the Appellant was erroneously convicted for the charges framed against him - The prosecution has failed to prove the factum of demand of bribe money made by the Appellant from the complainant-Jai Bhagwan (PW-2), which is the sine qua non for convicting him for the offences punishable Under Sections 7 and 13(1)(d) read with Section 13(2) of the PC Act.
The impugned judgment and order of the High Court is not only erroneous but also suffers from error in law and therefore, liable to be set aside - Appeal allowed.
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2016 (1) TMI 1428
Tour Operator Services - Appellant had conducted "Outbound Tours" of Haj-Umrah to Makkah and Madina, during the material period and did not discharge the service tax liability on the amounts so collected - HELD THAT:- The appeal is dismissed.
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2016 (1) TMI 1427
Disallowance u/s 14A r.w.r. 8D - HELD THAT:- Similar issue has already been remanded to the file of AO in the assessee’s own case for AY 2008-09 [2015 (11) TMI 1058 - ITAT MUMBAI] AO has proceeded to compute the disallowance as per rule 8D of IT Rules without satisfying himself that the claim of the assessee was not correct by having regard to the accounts of the assessee. Hence, the disallowance computed by the AO and that confirmed by CIT(A) was not in accordance with the mandate of law. We are of the view that this issue requires fresh examination at the end of the assessing officer.
Claim/deduction u/s 36(1) (viii) - HELD THAT:- As in the assessee’s own case for AY 2008-09 [2015 (11) TMI 1058 - ITAT MUMBAI] workings given by the assessee, AO and Ld CIT(A) on approximate basis cannot be approved. Accordingly, in our view, this issue also requires reconsideration at the end of the assessing officer.
Deduction on account of Bad-debts written off - HELD THAT:- As in assessee’s own case in AY- 2007-08 the similar issue was raised by the revenue and the same was decided by this Tribunal against the revenue as held new Explanation 2, which covers both rural and non-rural advances, has been inserted under sec. 36(1)(vii) of the Act by the Finance Act, 2013 w.e.f. 1.4.2014 only and hence it cannot have retrospective effect, since it affects substantive rights of the assessees. Accordingly, we are of the view that there is no reason to interfere with the decision of Ld CIT(A) on this issue
Deduction u/s 36(1)(viii) - HELD THAT:- As decided in own case provisions for bad and doubtful debts should be allowed under section 36(1)(viia), to the extent of provision made and available in the books of account, whether made in the current previous year or in the preceding previous years as none of the lower authorities i.e. either Assessing Officer or the Commissioner (Appeals) has examined the issue under consideration from this angel and as the entire facts are not available for us to adjudicate the issue. In the interest of substantial justice, the orders of the lower authorities are to be set aside and the matter is remanded back to the file of Assessing Officer
Applicability of provision of section 115JB - HELD THAT:- Following the view taken by a coordinate Bench in the case of Maharashtra State Electricity Board Vs JCIT [2001 (8) TMI 310 - ITAT MUMBAI] which holds that provisions of MAT cannot be applied to electricity companies for mutually similar reason we uphold the plea of the assessee. The provisions of Sec. 115JB do not apply to the assessee, and, as such, the AO was in error in concluding that income had escaped assessment in the hands of the assessee.
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2016 (1) TMI 1426
Dutiability - determination of usage of “Residual Fuel Oil” (RFO) in generation of Power - adoption of mathematical formula of 8:13 - HELD THAT:- It is considered necessary that remand of the matter is essential to do justice to both sides on the very crucial issue that has emanated from para-1 of the SCN dated 04.02.02 to determine whether LSHS is equal to RFO and if equal, whether RFO is dutiable following the twin test i.e. process whether constituting manufacture and secondly marketability prescribed by Apex Court in the case of Board of Trustee (supra). So also it is necessary to determine whether the respondent had at any time manufactured RFO and cleared the same issuing any excisable invoice for marketing.
Appeal disposed off by way of remand.
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2016 (1) TMI 1425
Non prosecuting of appeal - HELD THAT:- Inspite of the date of hearing being mentioned in the notice of hearing, which has been issued and served on the assessee by registered post acknowledgement due, nobody was present on the date of hearing. In the circumstances, we are of the opinion that the assessee is not interested in prosecuting its case.
We dismiss the appeal following the decision of the Delhi Bench of the ITAT in CIT v. Multiplan India P.Ltd., [1991 (5) TMI 120 - ITAT DELHI-D] and Estate of late Tukoji Rao Holkar v. CWT [1996 (3) TMI 92 - MADHYA PRADESH HIGH COURT] as the appeal is infructuous for non-prosecution.
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2016 (1) TMI 1424
Payment of royalty and technical guidance fee - Revenue in nature - HELD THAT:- Question (1) is concerned, it has been answered in favour of the Assessee in Assessee’s own case CIT v. Hero Honda Motors [2015 (2) TMI 368 - DELHI HIGH COURT]. The Court, accordingly, declines to frame a question of law on this issue.
Addition u/s 40(a) (ia) - export commission is neither royalty nor fee for technical service - HELD THAT:- As far as Question (2) is concerned, learned counsel for the Revenue states that he would like to address arguments on the next date.
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2016 (1) TMI 1423
Review petition - Deduction u/s 80IB (10) (a) (ii) - delay in filing of review petitions - HELD THAT:- Neither the provisions of the Corporation Act which have been relied by the review petitioners in the present petitions nor the decision of the Supreme Court will be of any avail.
Review petitioners in all fairness submits that the decision of the Supreme Court in S. Sundaram Pillai's case [1985 (1) TMI 306 - SUPREME COURT] was not dealing with the express provision such as Explanation sub-Clause (ii) below Section 80IB (10) (a) (ii). As a result, no case for review is made out.
Review petitioners submits that the review petitioners be granted liberty to take recourse to remedy of appeal before the Supreme Court. It is open to the review petitioners to pursue such other remedy as may be permissible in law. This request, however, cannot be entertained in review petitions.
Review petitioner in Review Petition then submits that the remedy of appeal was not available to the Department in the fact situation of that case. For, the Tribunal had already set aside the decision of the lower Authority and referred back the matter to the AO. Even so, in our opinion, that would not warrant review of the judgment under consideration on that count, as the interpretation given to the provisions contained in Section 80IB (10) as amended by the Finance (No.2) Act, 2004 which came into force w.e.f. 1.4.2005, would still apply in all cases heard and disposed of together.
Taking any view of the matter all these review petitions must fail and the same are dismissed.
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