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Showing 81 to 100 of 1076 Records
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2014 (10) TMI 1005
Revision u/s 263 - merger of an order with appellate order - independent enquiries made by the AO or not - Failure of the AO to make the addition on the basis of the statement - non genuine unsecured loans - HELD THAT:- It is not a case where it can be said that the assessing officer has not examined the issue relating to the addition of ₹ 4.5 crores as well as land dealing. If the assessing officer has taken a concious view after appreciating the evidences, documents, papers found during the course of search, the order passed by the assessing officer in our opinion cannot become erroneous merely that it is not in accordance with the whims and fancies of the CIT or addition has not been made as the CIT feel appropriate.
It is not the case of the revenue that the view taken by the assessing officer was unsustainable in law. This is also an undisputed fact that against this addition, the assessee went in appeal before the CIT(A) and CIT(A) has duly considered this issue in his order the copy of which is placed before us in the paper book. The order of the assessing officer to that extent got merged with the order of the CIT(A) and therefore the CIT in view the explanation (c) to section 263 does not have any jurisdiction to revise the assessment on this issue.
Failure of the assessing officer to make the addition on the basis of the statement 20.8.2008 - HELD THAT:- The assessing officer after examining the statement of the assessee did not prefer to make the addition. The income has been surrendered by the assessee on the basis of the documents found and seized during the course of the search as is apparent from the computation statement of income on the basis of which the returns have been filed by the assessee in response to notices issued u/s 153A, the copy of which we pursued and placed before us in the paper book filed before us. On this basis it cannot be said that additions of ₹ 4 crores were not surrendered by the assessee. In fact, the assessee made the disclosure in all these years much more than ₹ 4 crores. Therefore on this issue also in our opinion the order passed by the assessing officer cannot be regarded to be erroneous and prejudicial to the interest of the revenue.
Surrender of income - non genuine unsecured loans appearing in the balance sheet - HELD THAT:- There is proper application of mind on the part of the assessing officer but CIT did not appreciated the fact properly and correctly and remained under the incorrect assumption as if addition of ₹ 25,00,000/- was not made. On this basis the order passed by the assessing officer cannot be regarded to be erroneous and pre-judicial to the interest of the revenue.
Loan taken from M/s Shikhar builders - HELD THAT:- Issue has duly been discussed and examined by the assessing officer and after discussing, he came to the conclusion that this loan is genuine one. This is included within the sum of ₹ 1.11 lacs as mentioned in the preceding paragraph. This cannot be regarded to be a case where no enquiry has been conducted by the AO and thus there is no error in our opinion in the order of the assessing officer giving the jurisdiction to the CIT u/s 263. DR even though vehemently supported the order of the CIT but could not convince us whether the view taken by AO is unsustainable in law.
Payment made to sukhram in cash - HELD THAT:- The assessee has duly disclosed undisclosed income in the A.Y.2008-09 to the extent of ₹ 1800000/- in addition to the other undisclosed income in different assessment years, as enumerated by us in the preceding paragraphs and which we verified, the income so disclosed is sufficient to cover these declarations and in our opinion also there was no need to make further addition once the assessee has duly declared the income more than what he surrendered during the course of search in this regard. On the basis of this fact it cannot be said that the order passed by the assessing officer is erroneous and prejudicial to the interest of the revenue. It is not the case of the revenue that the assessee has not surrendered additional income during the assessment year 2008-09.
Where the A.O. do not agree with the Assessee, he should discuss the same in the Assessment Order so that the assessee should know the reasons thereof and file the appeal. In this case the A.O. after examining the issues, on some points preferred not to make the addition. Therefore, in our opinion, there is no error in the order of the A.O if he has not discussed the issue relating to each every income which is surrendered by the assessee in the return, in the Assessment Order. It is only the queries raised by the A.O. and the submissions made by the assessee will speak of whether the A.O. has applied his mind or not.
It is not the case of the revenue that the statement recorded during the course of the search were not looked into by the assessing officer during the course of the assessment proceedings. The assessing officer has duly examined the statements given by the assessee as is apparent from the assessment order in the case of the assessee while completing the assessment.
In view of various decisions as discuss by us in the preceeding paragraphs and finding given by us, we are of the view that the CIT was not correct in law in exercising the jurisdiction u/s 263, and cancelling the assessment and accordingly we quash the order passed u/s 263. - Decided in favour of assessee.
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2014 (10) TMI 1004
Unexplained cash credits u/s 68 - As per AO identity of creditors, capacity of creditors to advance the money and genuineness of transaction were not proved during the assessment proceedings - CIT-A deleted the addition - HELD THAT:- When the member of co-operative society deposits money in his account maintained with the co-operative society, the money does not become unexplained cash credit of the society, unless the identity of the member is not proved. In the case on hand no such evidence has been gathered by the AO. On the other hand the assessee has given evidence as to the identity of the member. The factual finding of Ld. CIT(A) could not be controverted by the DR. Hence, we have to uphold these factual findings of Ld. CIT(A)
In view of the above discussion and in view of the fact Ld. Departmental Representative could not controvert the factual recording made by the first appellate authority and as the assessee has filed all necessary evidence before the revenue authorities, we uphold the order of first appellate authority and dismiss this ground of revenue.
Disallowance u/s 80P as against the denial of deduction u/s 80P(2)(i) - AO rejected the claim for the reason that the books of accounts have been rejected by him - CIT(A) has reversed this decision - HELD THAT:- Under these circumstances we uphold the finding of the first appellate authority that deduction u/s 80P(2)(i) is to be granted. - Decided against revenue
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2014 (10) TMI 1003
Admission od additional evidence -non deduction of tds u/s 195 - HELD THAT:- Application has been made for admission of additional evidence and it is submitted that these evidences would be material and would help in deciding the issue. Considering the fact that the additional evidences would help in deciding the issue the same are admitted. However since these evidences were not available before lower authorities and also the case laws which were relied upon by the Assessee were not considered by the lower authorities, we are of the view that in the interest of justice and fair play, the issues raised in the appeal needs to be considered afresh in the light of additional evidence submitted by the Assessee and the other decisions on which it would like to rely upon - remit the issue to the file of A.O to decide the issue afresh after considering the submissions of the Assessee, the decisions relied upon by Assessee and in accordance with law. - Appeal of Assessee are allowed for statistical purposes.
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2014 (10) TMI 1002
Disallowance of interest expenses u/s 14A - HELD THAT:- Conclusion arrived at by the Tribunal is based upon a finding of fact recorded by it after appreciating the evidence on record. On behalf of the appellant, nothing has been pointed out to dislodge the finding of fact recorded by the Tribunal, nor is it the case of the appellant that the Tribunal has taken into consideration any irrelevant material or that any relevant material has been ignored. Under the circumstances, in the absence of any perversity in the finding of fact recorded by the Tribunal, the same does not give raise to any question of law. The said ground of appeal is, therefore, rejected.
Disallowance of additional depreciation u/s 32(1)(iia) - HELD THAT:- As submitted that as on 31.03.2002, the company had no installed capacity in respect of manufacturing of parts and therefore, the manufacturing in the current year may be considered as 100% increase in installed capacity in respect of manufacturing of parts. The Tribunal, in the impugned order, has concurred with the above findings of fact recorded by the Commissioner (Appeals) while upholding the deletion. Even before this court, on behalf of the revenue, nothing has been pointed out to controvert the concurrent findings of fact recorded by the Tribunal. Under the circumstances, the conclusion arrived at by the Tribunal being based upon concurrent findings of fact after appreciation of the evidence on record, does not give rise to any question of law.
Disallowance of royalty - recurring expenditure payable on the basis of sales - HELD THAT:- Tribunal observed that since it was a recurring expenditure payable on the basis of sales and the assessee has not acquired any capital asset or permanent right, the payment of royalty is allowable as business expenditure. On behalf of the revenue nothing has been pointed out to controvert the findings of fact recorded by the Tribunal. Under the circumstances, the conclusion arrived at by the Tribunal being based upon findings of the fact recorded after appreciating the evidence on record, in the absence of any perversity being pointed out therein, does not give rise to any question of law. The said ground of appeal is also rejected.
Addition on account of arm's length price in respect of sale of material to associated concern - HELD THAT:- After recording the explanation given on behalf of the assessee, viz., that the transactions considered by the Assessing Officer are not substantial as compared to the volume of the transactions, the Tribunal further found that in most of the transactions, the assessee had earned higher sales price and in totality, the assessee had gained higher prices as was seen from the paper book. On behalf of the revenue nothing was pointed out to controvert the above facts by pointing out any material to the contrary. The conclusion arrived at by the Tribunal, thus being based upon concurrent findings of fact, does not give rise to any question of law. Resultantly the said ground of appeal is also rejected.
MAT - Adjustment for the purpose of computation of the book profit under section 115JB - HELD THAT:- Tribunal has merely applied the decision of the jurisdictional High Court to the facts of the case. Under the circumstances, the said ground of appeal does not give rise to any question of law and is, accordingly, rejected.
ADMIT. The following substantial questions of law arise for consideration:
(1) Whether the Income Tax Appellate Tribunal has substantially erred in upholding the deletion of disallowance under section 14A of the Act of ₹ 13,44,076/while computing the book profit under section 115JB of the Income Tax Act, 1961 ?
(2) Whether the Income Tax Appellate Tribunal has substantially erred in upholding the deletion of addition of ₹ 44,74,000/being provision for doubtful debts, while computing the book profit under section 115JB of the Income Tax Act, 1961 ?'
(3) Whether on the facts and in the circumstances of the case, the Income Tax Appellate Tribunal has erred in upholding the deletion of addition of ₹ 21,74,000/being provision for warranty, while computing the book profit under section 115JB of the Income Tax Act, 1961 ?”
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2014 (10) TMI 1001
Deduction u/s 80IB(10)(d) - as per tribunal it is apparent that Assessee cannot be termed as a mere contractor. He is a developer and claiming rights in the land/immoveable property, that is how he proceeded to execute necessary agreements and appoint agents to carry out the construction - HELD THAT:- Tribunal's order, confirming that of the Commissioner, does not raise any substantial question of law. It was not for the Assessing Officer to have sat in judgment over the satisfaction of the statutory Authorities. The documents in that behalf together with recitals were conclusive of the rights of the Assessee. - Decided against revenue
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2014 (10) TMI 1000
Legality of notice issued u/s 142(1)/143(2) - scrutiny through CASS - notices issued by the ITO, Ward 1(1), Bathinda, himself not by the ITO, Faridkot - Jurisdiction of ITO - notices invalid and without the authority of law - Jurisdiction of Assessing Officers - Transfer u/s 127 - HELD THAT:- The Accountant of the assessee-firm represented the matter who stated the case of the assessee was assessed with A.O., Bathinda and accordingly the assessee was required to file the copy of the return, etc. The objection of the CIT(A) is that this is an information which has been noted in the order-sheet dated 15.09.2009 and no legal objection was in the proper form.
Such type of objection or information do not make any difference since the ITO has noted the facts of the case and accordingly the file was transferred but only on 18.01.2010, which in fact, could have been done immediately on 15.09.2009, keeping in view the provisions contained u/s 124(3)(a), but the same was not done. Treat the said information dated 15.09.2009 as legal objection u/124(3)(a) of the Act. Therefore, the assessee and in the absence of any transfer order of the case from ITO, Bathinda, to ITO, Faridkot, the argument made by the learned DR do not help the revenue and the notice issued is bad in law and the assessment so made is directed to be quashed. Thus, ground no. 1 of the assessee is allowed.
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2014 (10) TMI 998
Addition u/s 43B r.w.s. 36(1)(ii) V/s allowable business expenditure u/s 37 - “good work reward” - assessee has not submitted evidence to show that actual payment has been made before filing the return of income as bonus - whether “good work reward” constitutes bonus within the meaning of the section 36(1)(ii)? - assessee is engaged in providing recruitment consultancy - HELD THAT:- As decided in SHRIRAM PISTONS AND RINGS LTD. VERSUS COMMISSIONER OF INCOME-TAX [2008 (4) TMI 273 - DELHI HIGH COURT] such expenditure paid for good work reward is allowable as business expenditure u/s 37 (1) of the Ac.
These payments were not of the type contemplated by the Payment of Bonus Act. It was held that it was an ex gratia payment or some sort of reward given to an employee for the good work done by him and would therefore, fall within the category of expenditure incurred for the purpose of business expediency and for improving the working of the assessee. Therefore, it would not fall within the meaning of section 36(1)(ii) of the Act but would fall within the ambit of section 37 of the Act. - decided in favour of assessee.
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2014 (10) TMI 997
Deduction u/s. 80P(2)(a)(i) - HELD THAT:- Assessee has filed the copies of the decision of the Pune Bench of the Tribunal in Niphad Nagari Sahakari Patsanstha Ltd. (2015 (1) TMI 1004 - ITAT PUNE) on record and the Departmental Representative for the Revenue has neither controverted the same nor referred to any contrary decisions. In view thereof and for the sake of consistency, we uphold the plea of the assessee that it is entitled to the claim of the deduction under section 80P(2)(a)(i) of the Act
We direct the AO to allow claim of deduction under section 80P(2)(a)(i) of the Act on the interest income received from the bank. The grounds of appeal raised by the assessee are thus, allowed.
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2014 (10) TMI 996
Claim of deduction u/s 80P(2)(a)(i) on the interest income received from the bank - HELD THAT:- We direct the Assessing Officer to allow claim of deduction under section 80P(2)(a)(i) of the Act on the interest income received from the bank. The grounds of appeal raised by the assessee are thus, allowed. See ITO Vs. Niphad Nagari Sahakari Patsanstha Ltd. [2015 (1) TMI 1004 - ITAT PUNE] - Decided in favour of assessee.
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2014 (10) TMI 995
Whether on the facts and in the circumstance of the case and in law, the Tribunal is right in confirming the order of CIT(A) in allowing assessee's claim to carry forward deficit
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2014 (10) TMI 994
Disallowance under section 43B - liabilities disallowed in earlier years which are paid/written back in the current year - Held that:- Tribunal in earlier years i.e assessment years 1993-94 to 1998-99 and 2000-01 in assessee’s own case, copy of which was placed on record. We find that similar issue was considered by the Tribunal in A.Y. 2000-01 vide order dated 9-10-2013 wherein the ground taken by the assessee was dismissed as the same has become infructuous. It was found by Tribunal that it is an alternative plea which relates to A.Y. 1993-94 decided by the Tribunal in assessee’s favour. The appeal filed by the Department has been dismissed by the Tribunal vide order dated 20-12-2001. As the facts and circumstances during the year under consideration are para materia wherein appeal of department in earlier year was dismissed by the Tribunal, therefore, ground taken by assessee for disallowance during the year has become infructuous
Exchange Fluctuation loss - Held that:- We find that the Tribunal has already rejected the Department’s appeal for 1996-97 to 2000-01. Accordingly this ground taken by the assessee becomes academic and accordingly rejected.
Notional interest accrued but not due on securities - Held that:- In assessee’s own case in its favour in A.Y. 1998-99 and also by the Hon’ble Bombay High Court in assessee’s own case for assessment years 1994-95, 1995-96 wherein it was held that such interest are taxable in subsequent year when securities are sold. Respectfully following the decision of the Tribunal as well as Hon’ble Bombay High Court in assessee’s own case as referred, we do not find any merit for taxing the interest accrued but not due on securities during the year under consideration.
As far as the taxability of interest the same is assessable in the year in which the refund has been granted alongwith interest. However, if in the subsequent year refund of interest is withdrawn, then the same should be reduced from the total income of the assessee. Accordingly we direct the A.O. to tax interest income in terms of the order of the tribunal for A.Y. 1993-94 as reproduced above, keeping in view our above observation.
Allowability of technical assistance fees as revenue expenditure - Held that:- The Hon’ble Bombay High Court in the case of Tata Engineering & Locomotive Co. Pvt. Ltd. [1979 (2) TMI 20 - BOMBAY HIGH COURT] held that expenditure incurred for acquiring technical know-how on training of personnel is revenue expenditure. No merit for disallowing the technical fees expenditure incurred by the assessee as revenue in nature.
Claim of deduction u/s 80HH - whether to be allowed on the profit of the company as a whole or separately for each unit? - Held that:- The issue has been decided against the assessee by the Tribunal in the A.Y. 1996-97 & 1997-98. As the facts and circumstances during the year under consideration are same, we do not find any infirmity in the order of the lower authorities for allowing the claim of deduction u/s 80HHC of the Act to be computed on the profit of the company as a whole, rather than unit-wise.
Deduction u/s 80HHC with respect to interest income - Held that:- The issue under consideration is squarely covered by the decision in the case of ACG Associated Capsules Pvt. Ltd.[2012 (2) TMI 101 - SUPREME COURT OF INDIA] wherein it was held that net interest income is to be excluded from the eligible profit for computing deduction u/s 80HHC rather than gross interest. Explanation to section 80 HHC to be applied on net interest and not on gross interest. Accordingly, we direct the AO to apply clause (baa) in respect of interest receipt. We accordingly direct the A.O. to exclude the excess of interest income over interest expenditure from the eligible profit of the company while computing deduction u/s 80HHC of the Act.
Deduction of inter-divisional transfer from the total turnover - Held that:- This issue has been settled by the Tribunal in assessee’s own case for the A.Ys. 1986-87 to 1989-90, 1994-95, 1995-96, 1996-97 & 1998-99 wherein it was held that interdivisional transfer is to be reduced from the total turnover for computing deduction u/.s 80HHC of the Act. Alter hearing both the sides, we find similar issue had come up before the Tribunal in assessee’s own case and the Tribunal in its consolidated order for A.Ys. 1986- 87 to 1989-90. Respectfully following the decisions of the Tribunal, the claim of the assessee is directed to be accepted.
Loss on export of traded goods and for not adjusting the same against profit on export of manufactured goods for computing deduction u/s 80HHC - Held that:- Assessee fairly conceded that this issue is now settled by the Hon’ble Supreme Court against the assessee in the case of Ipca Laboratories [2004 (3) TMI 9 - SUPREME COURT]. Respectfully following the proposition laid down by the Hon’ble Supreme Court in the case of Ipca Laboratories (supra), we do not find any infirmity in the order of the lower authorities adjusting the loss on export of traded goods against profit on export of manufactured goods for computing deduction u/s 80HHC.
Interest u/s 244A - Held that:- Tribunal in assessee’s own case for 1998-99 vide order dated 10th August, 2012 has restored similar matter to the file of the A.O. for considering the assessee’s claim of interest after taking into account the judicial pronouncements as referred above. Respectfully following the decision of the Tribunal, we restore the computation part of interest u/s 244A of the Act to the file of the A.O. for deciding as per the direction given by the Tribunal in its order dated 10th August, 2012.
Appropriation of HO expenses in computing deduction u/s 80-O - Held that:- there is no necessity for allocating the head office expenses to the units claiming deduction u/s. 8OHH, 801, 80M and 80-0. The order of the CIT(A) on this issue is accordingly set aside and the grounds raised by the assessee are allowed.
Sales tax exemption benefit being capital receipt not chargeable to tax - Held that:- A similar issue has been restored back by the Tribunal in A.Y. 2000-01 in assessee’s own case to the file of the A.O. to decide after considering the decision of Special Bench in the case of DCIT vs. Reliance Industries Ltd. [2003 (10) TMI 680 - ITAT MUMBAI]. Respectfully following the said decision of the Tribunal, we restore this issue back to the file of the A.O. for deciding the same in the light of the findings of the Tribunal in assessee’s own case for A.Y. 1999-2000 in ITA No. 5631/Bom/2002, wherein the Tribunal has restored the issue back to the file of the A.O.to decide the issue afresh - the issue is restored back to the file of the A.O. for deciding the same afresh.
Disallowance of royalty and interest on royalty u/s 43B of the Act treating it as tax to be allowed
Profits of the USA & UK branch - Held that:- CIT(A) deleted the addition by observing that the action of the A.O. in not excluding profit of foreign branch amounting to ₹ 2,63,29,807/- from the taxable profit was not justified. From the record we found that the issue has been decided by the Tribunal in assessee’s own case in its favour in assessment years 1996-97 to 2000-01. We also found that the Department is not in appeal on this ground in the Hon’ble High Court against the order of the Tribunal for the assessment years 1996-97, 1997-98 and 1998-99. Respectfully following the order of the Tribunal, we do not find any reason to interfere with the order of the ld. CIT(A) directing the A.O. to exclude the profit of foreign branch from the taxable profit.
Disallowance of interest on estimated basis to earn tax free income - Held that:- We found that similar issue has been dealt with by the Tribunal in A.Y. 2000-01 wherein the disallowance was restricted to 1.5% of the exempt income. As the facts and circumstances during the year under consideration are same, we direct the A.O. to restrict the disallowance to 1.5% of the exempt income.
Exchange rate fluctuation loss on conversion of trading assets and liabilities - Held that:- The issue has been decided by the Tribunal in assessee’s own case in its favour in assessment years 1998-99 to 2000-01. Furthermore, the Department is not in appeal on this ground before the Hon’ble High Court against the Tribunal order. The Hon’ble Supreme Court in the case of Woodward Governor India Pvt. Ltd. [2009 (4) TMI 4 - SUPREME COURT] has decided this issue in favour of the assessee. Accordingly, we do not find any reason to interfere with the order of the ld. CIT(A) deleting the disallowance
Crystallization of liability - Held that:- As found that after considering the decision of Hon’ble Supreme Court in the case of CIT vs. Swadeshi Cotton Flour Mills Pvt. Ltd. [1964 (4) TMI 8 - SUPREME COURT] on this issue, the ld. CIT(A) reached the conclusion that liability has been crystalised under consideration, the same is therefore allowable. We do not find any reason to interfere with the order of the ld. CIT(A)
Deduction against bad debts - Held that:- Actual write off was in A.Y. 2000-01 and the same was again allowed by the ld. CIT(A). Since the claim was pertaining to the A.Y. 1996-97 which have already been allowed by the A.O. when the matter was remanded back by the Tribunal, allowing of the claim by the ld. CIT(A) during the year under consideration amounts to double deduction of the same amount. Accordingly we set aside the order of the ld. CIT(A) on this ground and allow this ground in favour of the Revenue.
Expenses incurred in connection with the assessment of the loss and insurance claim reduced from insurance claim received. (Net insurance amount received is reduced from block of assets by the assessee) - addition was made by the A.O. holding that gross amount of insurance claim received on destruction of capital asset is to be reduced from block of asset - Held that:- CIT(A) held that the A.O. should have reduced from the block of assets the net amount i.e. the amount received from the insurance company, net of the expenses incurred of ₹ 62.30 lacs and allow depreciation thereon. We do not find any infirmity in the order of the ld. CIT(A) in directing the A.O. to recompute the depreciation on the above lines.
Disallowance of expenses incurred for making advertisement films - Held that:- We found that the issue has already been settled by the Tribunal in assessee’s own case in A.Y. 1976-77 and no ground was taken by the Department before the Hon’ble High Court. Similar issue has been decided by the Hon’ble Supreme Court in the case of Empire Jute Co. Ltd. [1980 (5) TMI 1 - SUPREME COURT]. Accordingly, we do not find any infirmity in the order of the ld. CIT(A) deleting the disallowance by observing that advertisement film was made only for advertisement and its useful life is very short and such films do not add to the capital structure of the company.
Computation of deduction u/s 80HHC of the Act before setting off of the unabsorbed depreciation and business losses of earlier years - Held that:- This issue has already been decided by the Hon’ble Supreme Court in the case of CIT vs. Shirke Construction [2007 (5) TMI 194 - SUPREME COURT] in Revenue’s favour. Respectfully following the same, we do not find any merit in the order of the ld. CIT(A) for directing the A.O. to compute deduction u/s 80HHC of the Act before setting off of the unabsorbed business losses and unabsorbed depreciation of the earlier years against the current years income. Accordingly this ground of the Revenue is allowed.
Direct the A.O. to reduce the net amount of interest expenditure out of allowable income of the assessee for the purpose of computing deduction u/s 80HHC of the Act.
Excluding the amount of excise duty and sales tax from the total turnover for computing deduction u/s 80HHC - Held that:- This issue has been settled by the Hon’ble Supreme Court in the case of Lakshmi Machine Works [2007 (4) TMI 202 - SUPREME COURT] - No infirmity in the order of the ld. CIT(A) in directing the A.O. to exclude the amount of excise duty and sales tax from the total turnover of the assessee while computing deduction u/s 80HHC of the Act.
Increase profits of the business by the loss of foreign branch and the loss on export of trading goods for the purpose of computation of deduction u/s 80HHC - Held that:- CIT(A)’s direction to the A.O. to increase profits of the business by the loss of foreign branch and the loss on export of trading goods for the purpose of computation of deduction u/s 80HHC of the Act. We found that this issue is covered against the assessee and in favour of Revenue by the decision of Hon’ble Supr4eme Court in the case of Ipca laboratories, [2004 (3) TMI 9 - SUPREME COURT]. Respectfully following the said decision of Hon’ble Supreme Court in the case of Ipca Laboratories (supra), we do not find any merit in the order of ld. CIT(A) for allowing the assessee’s claim.
Deduction u/s 80-IA of the Act in respect of Vikram Power Unit to be allowed.
Direction of the ld. CIT(A) to the A.O. to recompute the amount of deduction towards export profit for the limited purpose of computing book profit in accordance with the Circular No. 680 dated 21-02-1994 issued by the CBDT - No infirmity in this direction of the ld. CIT(A) to the A.O., hence allowed this ground of the assessee.
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2014 (10) TMI 993
Deduction u/s 36(1) (vii) - provision for bad and doubtful debts created by the assessee in relation to the advances of the rural branches - held that:- The provisions of clause (vii) deal with ‘bad debts’, whereas, provisions of clause (viia) deals with ‘provision for bad and doubtful debts’. The distinction which the assessee has tried to create by dividing the provisions of clause (viia) into two parts is merely self-drawn. Both the parts of clause (viia) are joined with conjunction “and”. Therefore, both the limbs of clause (viia) have to be read together and not as alternate. The Hon’ble Supreme Court of India in the case of Catholic Syrian Bank Ltd. vs. CIT ( [2012 (2) TMI 262 - SUPREME COURT OF INDIA] has categorically held that the provisions of section 36(1)(vii) deals with general deduction available to a bank and even non-banking business. The provisions of section 36(1)(vii) operate in their own field and are not restricted by the limitation of section 36(1)(viia) of the Act.
Depreciation on valuation of investment portfolio by treating the investments held by the bank as stock-in-trade - Held that:- AO in the order giving effect to the order of the CIT(A) has factually found that the bad debts claimed as deduction u/s.36(1)(vii) of the Act has actually been written off in the books of accounts of the Assessee. There is, therefore, no basis for the revenue to raise the aforesaid additional grounds before the Tribunal. The additional ground sought to be raised is therefore not admitted for adjudication. In this regard, we are also of the view that decision rendered by the Tribunal in assessee’s own case for the A.Y. 2010-11 on an identical additional ground, will also be applicable in the present case. The additional ground sought to be raised are therefore dismissed as not admitted for adjudication.
Addition u/s 14A - Held that:- Perusal of the financial statements of the Assessee for the relevant financial year shows that Investments of the assessee in tax free securities as on 31.3.2007 was ₹ 592.48 Crores and the same as on 31.3.2008 was ₹ 850.23 crores. Own interest free funds available with the Assessee 31.3.2007 was ₹ 10,542.77 Crores and the same as on 31.3.2008 was ₹ 14,734.64 Crores. Therefore, available of interest free funds for making the investments which yielded tax free income cannot be disputed by the revenue. It is clear from the statement of available own funds and balance sheet that the assessee had enough funds out of which investments yielding tax free income were made. Therefore, no disallowance of interest expenses can be made applying Rule 8D(2)(i) or (ii) of the Rules.
In the present assessment year, assessee has not made any disallowance on his own u/s. 14A of the Act. Under the circumstances, it would be just and proper to sustain disallowance of 5% of the tax free income. We hold and direct accordingly.
Not giving credit being additional income tax paid u/s 115(O) on the dividend received from a 100% subsidiary of the appellant - Held that:- It is the claim of assessee that it had received a sum of ₹ 84,97,160 from its 100% subsidiary and that the subsidiary has paid tax u/s. 115-O on such dividend distributed. The assessee has therefore prayed that assessee should be given credit for the aforesaid sum, which was, by mistake, paid by the assessee. The ground being a legal ground which can be decided on the basis of facts available on record, we deem it appropriate to consider the claim of the Assessee notwithstanding the fact that the said ground was withdrawn before CIT(A). In tax matters there cannot be any estoppel. Tax determination and collection has to be in accordance with law and not based on any concession of legal rights by an Assessee. We are of the view that it would be just and proper to direct the AO to examine the claim of assessee and if found correct, to allow the same.
Refund arising u/s 115WE(3) being the excess payment of fringe benefit tax - Held that:- It would be just and appropriate to direct the AO to consider the claim of assessee for credit of a sum of ₹ 1,20,08,840 being the refund arising u/s. 115WE(3) of the Act, which his claimed by the assessee as excess payment of fringe benefit tax. If the claim of the assessee is found to be correct, then assessee should be given appropriate credit in accordance with law. We hold and direct accordingly.
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2014 (10) TMI 992
Clandestine Removal - principles of natural justice - case of appellant is that they were not given an opportunity to cross examine the witnesses and the whole case of the department is based upon the unsigned store register - Held that:- When the CEO and the Works Manager themselves admitted to the fact of such clearances as recorded in their own store despatch register. Their contention that they were not given the opportunity to cross-examine the witnesses and that violated the principles of natural justice is devoid of merit, more so when their statements were inculpatory and were never retracted.
An admitted fact hardly needs to be proved - In the present case, apart from the inculpatory statements evidence in the form of the written record, the godown despatch register is also available.
Appeal dismissed.
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2014 (10) TMI 991
Drawal of fresh samples and retest of imported “zinc skimming” - test report, received pursuant to test conducted on the representative sample already drawn, is seriously disputed - Held that:- As the petitioner not only disputes the test report but also the drawing of the remnants sample, the writ petition is disposed of by directing the respondents to draw a fresh homogenuous representative sample and thereafter forward it for analysis - petition disposed off.
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2014 (10) TMI 990
Benefit of N/N. 21/2002-Cus. as amended by N/N. 61/2007 - difference of opinion - Held that:- The co-ordinate Bench of the Tribunal in the case of CC, New Delhi v. Sameer Gehlot [2010 (11) TMI 85 - CESTAT, NEW DELHI] has taken a view that the benefit of Notification No. 21/2002-Cus. is available to the assessee and another co-ordinate Bench of the Tribunal in the case of King Rotors & Air Charter Pvt. Ltd. [2011 (6) TMI 276 - CESTAT, MUMBAI], has taken a diagonically opposite view and denied the benefit of exemption notification to the assessee.
As the contradictory orders passed by benches comprises of same number of Members i.e. Division Bench, we are unable to come to conclusion as to which judgment should be followed as we find the issue involved is the same - we direct the Registry to refer this matter to Hon’ble President for constitution of Larger Bench to come to a conclusion as to which view is correct view.
Matter referred to Larger Bench.
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2014 (10) TMI 989
Income of the appellant as assessable under the head “income from other sources” OR “profits and gains of business or professions” - Held that:- The facts of the case are that since the profit which was shown by the appellant as income from business, the appellate Tribunal has committed error to shift it to income from other sources. It should have been assessed under the head 'profits and gains of business or profession’ and not under the head 'income from other sources’. In that view of the matter, we are of the opinion that the income should have been assessed under the head 'profits and gains of business or profession’ and not under the head 'income from other sources’. The issue is answered in favour of the appellant.
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2014 (10) TMI 988
Royalty payment - capital expenditure - whether transaction between Shri Tarun Mohan, Prop of M/s Phoneytunes.com and the company whereby 2% of sale consideration has been paid as royalty, is a sham transaction? - Held that:- Phoneytunes.com had invented technology of creating ring tones and it can be down loaded by individual mobile user and for this invention the company has agreed to pay a royalty @ 2%. The Revenue has rejected this contention in the absence of any documentary evidence.
It has to be appreciated that in case of intellectual property, it is not necessary that there would be a documentary evidence because invention is a technology and stored in the computer. The last allegation of revenue is that this is a colourable device used by the assessee to reduce the profits. We have already seen that this is not a colorable device but a pure and simple transaction through which the business of phoneytunes.com have been sold to the assessee-company and the assessee-company has agreed further to give royalty @ 2%. Secondly it is very important that the assessee-company and Tarun Mohan have duly paid the taxes on full amounts received against royalty and have not been set off against any losses etc.
It is absolutely clear that the assessee-company has paid royalty for the particular invention which belonged to phoneytunes.com and therefore in our opinion, the claim for payment of royalty deserves to be allowed - Decided in favour of assessee.
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2014 (10) TMI 987
TDS u/s 194I - disallowance of Compensation expenses paid on the ground of non deduction of TDS u/s. 40(a)(ia) - assessee has filed additional evidence in the fact that recipient of the amount Shri Sureshchandra J. Shah has shown the amount received in his return of income and paid tax thereon - Held that:- In view of Second Proviso to 40(a)(ia) of the Act inserted by the Finance (No.2) Act, 2004, w.e.f. 01.04.2004, which has been held to be retrospective in effect by the Agra Bench of the tribunal in the case of Rajeev Kumar Agarwal vs. ACIT [2014 (6) TMI 79 - ITAT AGRA], no disallowance can be made in the hands of the assessee of the expenditure claimed by the assessee. Therefore, we accept the additional evidence filed by the assessee and restore the matter back to the file of Assessing Officer for readjudication of the issue afresh after taking into consideration the additional evidences filed by the assessee as per law. As a result, this ground of appeal as well as additional ground is allowed for statistical purpose.
Amount received on sale of sales tax entitlements excluded from the profit derived from eligible unit being wind mill - Held that:- As decided in assessee [2014 (9) TMI 131 - ITAT AHMEDABAD] as held that the main purpose of the resolution was to modernize industries, which ordinarily would come at a considerable cost, particularly when such industries were located in under-developed areas - The industries will find it difficult without Government's incentive to undertake large-scale modernization with the use of modern technology.the benefit, though computed in terms of the Sales Tax liability in the hands of the recipient, the same was not mean to give any benefit on day-to-day functioning of the business, or for making the industry more profitable - The principle aim of the scheme was to cover the capital outlay already made by the assessee in undertaking special modernization of its existing industry – the matter is remitted back for fresh adjudication – Decided in favour of assessee.
Disallowance of deduction claimed u/s. 80IA for profits derived from electricity generation from wind mill at Bhogat, Gujarat - Held that:- As decided in assessee [2014 (9) TMI 131 - ITAT AHMEDABAD] tribunal has not erred in holding that there was no rectification possible u/s 80-I for reasons somewhat different from those which prevailed with the Tribunal - There was no carry forward of allowable deductions under the head depreciation or development rebate which needed to be absorbed against the income of the current year – re-computation of income for the purpose of computing permissible deduction u/s 80-I for the new industrial undertaking was not required in the present case - the assessee has not suffered any loss in the year - no brought forward loss or depreciation could be reduced for determining the amount in which the deduction is to be allowed u/s. 80IA of the Act – Decided in favour of assessee.
Treatment of the amount received on sales tax entitlement as capital receipt - Held that:- Set aside the order of lower authorities on the issue and remit this issue to the file of A.O. for re-adjudicating the issue as per direction of Tribunal given [2014 (9) TMI 131 - ITAT AHMEDABAD]
Disallowance of excessive expenditure claimed u/s.40A(2)(b) - Held that:- Similar issue arose in A.Y. 06-07 [2010 (3) TMI 1236 - ITAT AHEMDABAD] as held that it is nobody's case that the transactions of purchase from the sister concerns were not bona fide transactions nor is it the case of the Revenue that these were sham transactions or that the price paid in respect of each of these transactions by the assessee was other than the one set out in the books of account of the assessee. Under these circumstances it appears to us that the taxing authorities had no right to substitute the average price in place of the price or value agreed to between the parties to the transaction, since the transaction has not been shown to be a sham one nor has it been shown that the value was not the value in the books of account.In view of the foregoing, we are not inclined to agree with the reasons of the ld. CIT(A) and therefore, delete the disallowance made by the AO - Decided against revenue
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2014 (10) TMI 986
Levy of Local Body Tax in lieu of Octroi - Legality and validity of Section 127(2)(aaa), Section 99 (partly) and Section 152T of the Bombay Provincial Municipal Corporations Act, 1949 - vires of Part IXA of the Constitution of India and particularly Articles 243W and 243X - position and status of the Municipalities under the Constitution of India.
Held that:- It is evident that subject to the provisions of the Constitution, it is the Legislature of a State and which may by law endow the Municipalities with such powers and authority as may be necessary to enable them to function as Institutions of self Government. That law may contain provisions for the devolution of powers and responsibilities upon the Municipalities and that is how various aspects of planning, economic development, social justice and functions and duties in relation thereto have to be performed by the Municipalities. They have been entrusted to them. There is force in the contentions of Ms.Karnik that the provisions of every law and by which the powers, authorities and responsibilities have been endowed on the Municipalities must be construed in such a way so as to make existence of the Municipalities meaningful and purposeful. That it is an institution of self Government is, therefore, abundantly clear. That such Institution must have certain freedom, autonomy and independence is also apparent.
It is the Legislature of the State and which makes the law by which Municipalities are authorized to levy, assess, collect and appropriate such taxes, dues, tolls and fees in accordance with such procedure and subject to such limits. There could be assignment of duties to the Municipalities. The State Government may assign to a Municipality such taxes, duties, tolls and fees levied and collected by the State Government for such purposes and subject to such conditions and limits. Therefore, when the Legislature of the State has to endow the Municipalities and by law with powers and authority so as to enable them to function as institutions of self Government effectively, then, that position is in no way affected merely because the law authorizes the State to impose the taxes.
Eventually, the Municipality derives it's power and authority to impose the tax from the law made by the Legislature. That such law obliges the Corporation to impose the property tax and tax on vehicles, boats and animals, therefore, cannot be said to be encroaching on it's independence and autonomy.
The prayers in the Writ Petition and if carefully perused are not that this proviso should be declared as unconstitutional, null or void nor is there any plea, elaborate or otherwise, to be found in the grounds in the Writ Petition, which would denote that prior to imposition of Local Body Tax the power conferred by the proviso can be termed as unconstitutional. What has been emphasized before us and during the course of argument is that when it comes to Section 127(2) (aaa), there is no such proviso. In other words, there is a contention raised that the proviso below clause (aa) confers discretion in the State Government to direct levy of cess on entry of the goods into the limits of the city for consumption, use or sale therein, in lieu of octroi whereas in comparison clause (aaa) does not contain any such proviso. That the absence of any proviso to clause (aaa) would show that once the State directs that Local Body Tax should be imposed, then, the Corporation has no choice or option, but to so impose it.
Merely because a power is conferred in the State Government to issue instructions or directions, does not mean that the State would exercise it frequently and indiscriminately or as per it's whims and fancies. The power in the State is coupled with a duty.
The provisions relating to levy, collection and recovery of cess in lieu of octroi, contained in Chapter XIA shall mutatis mutandis apply to levy and collection of Local Body Tax. There, the levy and incidence of cess, certain goods not liable or exempt from cess, liability of cess in certain cases, cess authorities, registration, memorandum of sales or purchases, liability to maintain and produce accounts, production and inspection of accounts and documents and search of premises, seizure of books of accounts and goods, etc. are some of the matters and all the provisions in relation thereto as are to be found in Chapter XIA are made applicable to Local Body Tax. The Local Body Tax regime is, therefore, not such as could be termed as destructive of the constitutional scheme.
Whenever the State calls upon the Municipal Corporation to levy the Local Body Tax it is not imposing it on the Municipal Corporation, but reminding it to levy, assess and collect the tax which is more friendly and serving all people including traders. That the Local Body Tax has to be then levied, assessed and collected by the Municipal Corporation does not mean that the State takes an unilateral decision in all matters connected with the levy. Though the State takes a decision the Municipal Corporation is not overlooked and as understood above. Therefore, the determination of the rate of levy, selection of articles and goods, manner of levy, assessment and recovery though controlled by the State, but the Municipal Corporation has definite role to play in the same. Its role is by no means diluted or diminished. It is eventually the Local Body Tax and to be levied, assessed and recovered by the local body. Therefore, the State Government being empowered by the various provisions noted above to direct levy, to regulate and control its assessment and recovery, does not mean that the autonomy and independence or status and position of the Municipal Corporation is in any manner threatened leave alone defeated or frustrated.
There is no hesitation in rejecting the submissions of the Petitioners to the contrary - the Constitutional Scheme is in no way affected by the amendments made to the said Act.
Petition dismissed - decided against petitioner.
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2014 (10) TMI 985
Penalty under section 271(1)(c) - Addition had been sustained purely on estimate basis and no positive fact or finding had been had been found so as to even make the addition which was a pure guess work, no penalty under section 271(1)(c) of the Act could be said to be leviable on such guess work or estimation.
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