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Showing 81 to 100 of 1254 Records
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2014 (8) TMI 1177
Deduction u/s 80-IA - as alleged assessee company executed works contract on behalf of other company and assessee company is only a sub-contractor executing contract on behalf of others - HELD THAT:- Isuue decided in favour of the assessee in its own case by the Tribunal for the assessment years 2003-04 to 2009-10 The issue has been consistently considered and decided by Income-tax Appellate Tribunal in assessee’s own case for all the earlier assessment years from 2003-04 to 2008-09. The Tribunal has accepted the contention of the assessee in the matter of its claim made under sec.80-IA. The case has been considered even after Explanation to sub-sec. (13) of sec.80-IA was inserted. Reference may be made to the orders of the Tribunal for assessment years 2007-08 and 2008-09. - Decided against revenue
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2014 (8) TMI 1176
Year of taxability of capital gain - when the development agreement was entered or when the built up area was completed and handed over to the assessee - handing over possession is relevant for capital gain tax - HELD THAT:- In the case of Commissioner Vs. D.K.Dayal [2012 (6) TMI 405 - KARNATAKA HIGH COURT], after noticing the case law on the point, has held that the date on which possession was handed over to the developer is relevant and therefore, the capital gain tax is payable for the assessment year in which the possession was handed over in terms of the joint development agreement. Therefore, on mere entering into a joint development agreement there is no transfer. The “transfer” in the Income Tax Act takes places on the date the possession of the property is delivered though not a registered document is executed conveying the title.
In the instant case, the authorities have held that the capital gain tax is payable in the assessment year 1995-96 when the joint development agreement was entered into by the assessee with the developer for transfer of 66% interest in an undivided immovable property and possession of the land was handed over and not when the built up area was completed and handed over to the assessee in the assessment year 1998-99. Hence, we answer the substantial question of law raised in favour of the assessee
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2014 (8) TMI 1174
Winding up - working of the office of the Official Liquidator completely collapsed - HELD THAT:- Assistant Official Liquidators who are qualified Advocates hardly attended to the matters in Court. The Advocates appearing before the Court repeatedly made a grievance that the entire office of the Official Liquidator would be deserted by 5.30 p.m. and no one would be available to assist them. Advocates briefed in the matters to represent the Official Liquidator also complained that they were receiving briefs at 10.30 in the morning on the day the matter was placed for hearing and no instructions would be forthcoming from the office of the Official Liquidator. The above pathetic functioning of the working in the office of the Official Liquidator had to be brought to the notice of the Learned Chief Justice who was pleased to immediately appoint a Committee to look into and supervise the working of the office of the Official Liquidator. During the initial meetings of the Committee, even the Regional Director was requested to remain present and was apprised of the above state of affairs.
Though with the appointment of Mr. S. Ramakantha, there seems to be some improvement, the office of the Official Liquidator needs a complete revamp. Officers like Mr. Reddy and Mr. Gupta are required to be forthwith transferred. The Ministry of Company and Corporate Affiars, New Delhi should ensure that the Officers who were appointed as Deputy and Assistant Official Liquidators are willing workers and well versed with the provisions of the Companies Act. In view thereof, a copy of this order shall immediately be forwarded to the Secretary, Ministry of Company and Corporate Affairs, New Delhi for immediate action.
Mr. Reddy is called upon to show cause as to why except for writing two letters to the Directors of the Company – Amar Remedies Ltd. calling upon them to submit the statutory records, no action was taken by his office pursuant to his appointment as the provisional Liquidator of the Company by an order dated 31st July, 2013. Mr. Reddy shall give his explanation on affidavit and appear before this Court on 12th September, 2014.
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2014 (8) TMI 1173
Best judgment assessment - CIT-A non considering submissions and the evidences filed during the course of appellate proceedings - remand report not supplied to the assessee by the CIT(A)- HELD THAT:- A.O. submitted the remand report vide letter dated 11-3-201 and the assessee appeared before the A.O. on 20-3-2013, 22-3-2013 and 25-3-2013 but the A.O. never informed him that he has already submitted the remand report on 13-3-2013. Even the copy of the remand report was not supplied to the assessee by the ld. CIT(A). Considering all these facts in totality in the light of the affidavit filed by the assessee, in our considered opinion, the issue needs to be re-adjudicated afresh by the ld. CIT(A).
CIT(A) is directed to consider all the evidences afresh and also furnish a copy of the remand report to the assessee. The assessee is directed to file necessary details before the ld. CIT(A). - Assessee appeal allowed for statistical purpose.
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2014 (8) TMI 1172
Penalty levied u/s 271(1)(c) - bonafide claim - disallowance of assessee’s claim of brought forwarded expense by the AO - assessee had furnished inaccurate particulars of income or had concealed its income - HELD THAT:- In the quantum appeal proceedings, the AO had allowed the work in progress to be capitalized during the earlier assessment years. In none of the earlier assessment years, the AO had computed the income of the assessee under the percentage completion method. Under such circumstances, it cannot be said that the assessee’s claim was not bonafide.
The computation adopted by the assessee was according to one of the possible views/methods of accounting, which though was not accepted by the AO and further by the Tribunal, but was held to be justified by the CIT(A) in quantum assessment/appellate proceedings.
Merely because the accounting method of the assessee was not accepted by the AO or that the claim of brought forwarded expenses was disallowed because of the peculiar fact that no construction activity could be carried out by the assessee during the past years, that itself, ipso facto, cannot be a ground in holding that the assessee had furnished inaccurate particulars of income or had concealed its income - It is not a fit case for levy of penalty and accordingly the penalty levied by the lower authorities is hereby set aside. - Decided in favour of assessee.
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2014 (8) TMI 1171
Renewal of mining leases - execution of second renewal lease deeds - principles of promissory estoppel - Section 8(2), read with the provisions of Section 24A(3) of MC Rules - Held that:- The renewal beyond the first renewal for a period of twenty years is conditional upon the State Government forming an opinion that in the interest of mineral development, it is necessary to do so and also conditional upon the State Government recording reasons for such renewal of a mining lease in respect of iron ore which is not specified in Part A and Part B of the First Schedule - In Tata Iron and Steel Co. Ltd. v. Union of India and Anr. (supra), this Court has held that the language of Sub-section (3) of Section 8 is quite clear that ordinarily a lease is not to be granted beyond the time specified in Sub-section (2) and only if the Government is of the view that it would be in the interest of mineral development, it is empowered to renew lease of a lessee for a further period after recording sound reasons for doing so. This Court has further held in the aforesaid case that this measure has been incorporated in the legislative scheme as a safeguard against arbitrariness and the letter and spirit of the law must be adhered to in a strict manner.
The MC Rules have been made under Section 13 of the MMDR Act by the Central Government and obviously could not have been made in a manner inconsistent with the provisions of the Act. Sub-rule (6) of Rule 24A of the MC Rules provides that if an application for the renewal of a mining lease made within the time referred to in Sub-rule (1) is not disposed of by the State Government before the date of expiry of the lease, the period of the lease shall be deemed to have been extended by a further period till the State Government passes order thereon. This sub-rule cannot apply to a renewal under Sub-section (3) of Section 8 of the MMDR Act because the renewal under this provision cannot be made without express orders of the State Government recording reasons for renewal in the interest of mineral development.
Sub-rule (6) of Rule 24A of the MC Rules will apply to a case of first renewal under Sub-section (2) of Section 8 of the MMDR Act other than a case covered under Sub-rule (9) of Rule 24A of the MC Rules, but will not apply to renewal under Sub-section (3) of Section 8 of the MMDR Act. In our view, the deemed mining leases of the lessees in Goa expired on 22.11.1987 under Sub-section (1) of Section 5 of the Abolition Act and the maximum of 20 years renewal period of the deemed mining leases in Goa as provided in Sub-section (2) of Section 8 of the MMDR Act read with Sub-rules (8) and (9) of Rule 24A of the MC Rules expired on 22.11.2007.
Admittedly, there is no challenge to Section 8(3) of the MMDR Act and it can hardly be suggested that this provision is impliedly struck off by the Supreme Court.
In the case in hand, admittedly, all the petitioners have made applications for second renewal within the time limit i.e. before expiry of the term of first renewal of the mining leases. The mining plans for the second renewal, thereafter, came to be approved by the IBM. The IBM also recorded its subjective satisfaction that the same is in the interest of mineral development. Thus, there is enough material on record to show that the Government agreed to grant the second renewal of mining leases under Section 8(3) of the MMDR Act and thereafter amended the Stamp Act and directed some of the petitioners to pay the stamp duty and even accepted the same. Thus, the Government gave promise that the mining leases would be executed under Section 8(3) and pursuant to the promise, the petitioners altered their position by depositing the huge stamp duty - the principle of promissory estoppel is squarely applicable to the facts of the present case.
The Respondent-State of Goa is directed to execute the lease deeds under Section 8(3) of the MMDR Act in favour of the petitioners/lease holders who/which have already paid the stamp duty pursuant to the orders of the Government, in accordance with the Goa Mineral Policy, 2013 - So far as the petitioners/lease holders who/which have not paid the stamp duty are concerned, the Respondent-State of Goa is directed to decide their renewal applications under Section 8(3), as expeditiously as possible, and preferably within a period of three months from the date of receipt of copy of this order.
Petition disposed off.
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2014 (8) TMI 1170
Allocation of coal blocks for the period 1993 to 2010 - Non-compliance of the mandatory legal procedure under the Mines and Minerals (Development and Regulation) Act, 1957 - Breach of Section 3(3)(a)(iii) of the Coal Mines (Nationalisation) Act, 1973 - Violation of the principle of Trusteeship of natural resources by gifting away precious resources as largesse - Arbitrariness, lack of transparency, lack of objectivity and non-application of mind - Allotment tainted with mala fides and corruption and made in favour of ineligible companies tainted with mala fides and corruption.
Held that:- The entire allocation of coal block as per recommendations made by the Screening Committee from 14.07.1993 in 36 meetings and the allocation through the Government dispensation route suffers from the vice of arbitrariness and legal flaws. The Screening Committee has never been consistent, it has not been transparent, there is no proper application of mind, it has acted on no material in many cases, relevant factors have seldom been its guiding factors, there was no transparency and guidelines have seldom guided it. On many occasions, guidelines have been honoured more in their breach. There was no objective criteria, nay, no criteria for evaluation of comparative merits. The approach had been ad-hoc and casual. There was no fair and transparent procedure, all resulting in unfair distribution of the national wealth. Common good and public interest have, thus, suffered heavily. Hence, the allocation of coal blocks based on the recommendations made in all the 36 meetings of the Screening Committee is illegal.
The allocation of coal blocks through Government dispensation route, however laudable the object may be, also is illegal since it is impermissible as per the scheme of the CMN Act. No State Government or public sector undertakings of the State Governments are eligible for mining coal for commercial use. S
It is worthwhile to note that the 1957 Act has been amended introducing Section 11-A w.e.f. 13.02.2012. As per the said amendment, the grant of reconnaissance permit or prospecting licence or mining lease in respect of an area containing coal or lignite can be made only through selection through auction by competitive bidding even among the eligible entities Under Section 3(3)(a)(iii), referred to above. However, Government companies, Government corporations or companies or corporations, which have been awarded power projects on the basis of competitive bids for tariff (including Ultra Mega Power Projects) have been exempted of allocation in favour of them is not meant to be through the competitive bidding process.
As it is already found that the allocations made, both under the Screening Committee route and the Government dispensation route, are arbitrary and illegal, what should be the consequences, is the issue which remains to be tackled. To this limited extent, the matter requires further hearing.
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2014 (8) TMI 1169
Claim u/s 80IA(4) - HELD THAT:- The statutory provision under Section-80IA(4) states that where the total income of the assessee includes any profit and gain from the enterprises i.e. joint venture or Special Private Venture (S.P.V.) carrying on the defined business of developing or operating or maintaining any infrastructure finally then assessee would be liable for deduction.
It is also provided that the project should be owned by the company or consortium of companies, who got the contract from the State, as mentioned in Article-12 of the Constitution. But this facility is available only w.e.f. 01.04.1995, as per the amended provision and for the assessment year it is applicable. When it is so, then we find no reason to interfere with the impugned order passed by the Tribunal. The same is hereby sustained along with the reasons mentioned therein. Substantial questions of law is in favour of the assessee and against the department.
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2014 (8) TMI 1168
Eligibility to section 80IB / 80IA - assessee be denied deduction u/s 80IB(3) in subsequent years as the assessee from investment point of view, matures out of SSI definition, when the assessee is a SSI in the initial years of deduction - HELD THAT:- There is no dispute on the fact that the assessee is a SSI in the initial years. It is prospered and is no longer a SSI. Further, the assessee was given benefit of deduction u/s 80IB(3) of the Act in earlier years. Under these facts, we find the above judgment in the case of M/s. Ace Multi Axes Systems Ltd [2014 (8) TMI 596 - KARNATAKA HIGH COURT], has applicability to the present issue. CIT (A) has rightly adjudicated the issue under consideration while granting the relief to the assessee. Accordingly, we find no infirmity in the order of the CIT (A) and it does not call for any interference. Accordingly, the grounds raised by the Revenue are dismissed.
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2014 (8) TMI 1167
Surrender /termination of the lease - whether mere writing of letters by a tenant to the landlord calling upon him to take the possession of the tenanted premises would tantamount to surrender /termination of the lease? - Held that:- Vacant possession of the leased premises could be handed over to the lessor only after removal of its belongings by the lessee. Let us now examine what is the effect of three letters dated 22nd July, 2008; 23rd August, 2008 or 20th September, 2008 written by the lessee to the lessor. None of these communications specifically state that the lease would stand terminated. The letters also do not state that the appellant had removed its installations and vacated the premises and therefore, the lessor should visit the spot on any particular specified date or month to take over the vacant possession in accordance with the law in terms of Clause- 1 (d) of the said Lease. These letters thus do not contain a clear demand upon the lessor to take back the possession at a particular date and time.
Thus, the embedded installations of the LIC thus had not been removed prior to or even after sending the letter dated 22nd July, 2008. They were still in place almost two years thereafter on the 6 th of March, 2010, when the Local Commissioner visited the leased premises and the LIC sought time from the Local Commissioner for vacating the premises.
Whether merely writing such communications absolve the tenant of the liability to pay rent for the period till such time the premises were actually handed over to the landlord? - Held that:- Given the clear stipulation in the lease deed as well as the requirement under the Transfer of Property Act, it was the responsibility of the tenant to invite the landlord on a date and time as to when it was going to hand over the vacant possession of the property. The tenant made no efforts to remove its fittings and fixtures and was not in a position to hand over the vacant and physical possession even on the visit of Local Commissioner on 6th March, 2010. As such the landlord is within his rights to seek recovery of rent. Therefore, it has to be held that the three letters written by the lessee though terminated the lease, therefore, did not express intention to hand over vacant and peaceful possession of the premises. These communications therefore do not absolve LIC from its liability to pay rent.
The respondent's letter dated 22nd July, 2008 could be deemed to be notice of termination of the lease but it certainly does not invite the plaintiff as to when the vacant possession should be taken in terms of Clause-1(d) of the Lease Deed dated 9th May, 2008. The other two letters are of identical tenor and effect. In the instant case, the lessee was bound by virtue of Clause-1 (d) of the Lease Deed dated 9th May, 2008 to put the landlord in vacant possession of tenanted premises and the provisions of Section 108 (q) of Transfer of Property Act.
The suit filed by the appellants-plaintiffs is decreed against the respondent-defendant directing it to pay the appellants/ plaintiffs rent @ `3,18,750/- per month w.e.f. 1st June, 2008 till 15th April, 2010 together with costs all throughout - Appeal allowed.
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2014 (8) TMI 1166
Refusal on the part of the Adjudicating Officer to consider decision of another Adjudicating Officer of SEBI - Penalty u/s 15HA of SEBI Act, 1992 - Object of conferring penal powers upon the Adjudicating Officer - Held that:- Object of conferring penal powers upon the Adjudicating Officer is to ensure that the market players who violate the provisions of SEBI Act and the Rules and Regulations made there-under are brought to book and punished if found guilty, so that the order acts as a deterrent to other market players and carry on their trades in securities market in accordance with law.
In an Adjudication proceedings, if a party relies on adjudication order passed in an another case, then, judicial discipline demands that the Adjudicating Officer considers that order and thereafter passes an order either to follow or distinguish the earlier order or disagree with the order by recording reasons as to how that order is erroneous and ought not to be followed.
In the present case, the Adjudicating Officer has flatly declined to consider the order passed by another Adjudicating Officer on ground that such an order does not have binding effect and that he would prefer to form an independent view. Unless facts and circumstances set out in an order passed by Adjudicating Officer are materially different from the facts and circumstances of the case in hand, it would be just and proper for the Adjudicating Officer to follow the earlier order so that there is uniformity in the quasi judicial orders passed by the Adjudicating Officers' of SEBI.
In the present case, since the Adjudicating Officer of SEBI has committed impropriety of refusing to consider the decision of another Adjudicating Officer which according to the Appellant has direct bearing on the facts of present case, without going into the merits of the case we set aside the impugned order and direct SEBI to pass fresh order.
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2014 (8) TMI 1165
Eligibility to claim of deduction u/s 80IB(10) - assessee has not filed return of income within the time limit u/s 139(1) and when section 80AC - mandation of filing of return under section 139(1) within the due date - Held that:- Issue raised in the present appeal is squarely covered against the assessee by the decision of the Special Bench of the Tribunal in the case of Saffire Garments Vs. ITO (2012 (12) TMI 193 - ITAT RAJKOT) wherein it has been held that the restriction provided by way of the proviso to section 10A(1A) is mandatory as the matter governs filing of the return of income within the due date provided under section 139(1). Therefore, we find that the said decision of the Special Bench applies not only to section 10A, but also to sections 10B and 80AC.
Thus filing of return under section 139(1) within the due date prescribed under law is a mandatory provision. If the assessees wants to claim deduction under section 80IB(10), it is necessary that the assessees must file the returns of income before the due date prescribed under section 139(1) of the Income-tax Act, 1961. - Decided in favour of revenue.
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2014 (8) TMI 1164
Disallowance of claim of exemption u/s 54F - capital gains arising out of sale of long term capital asset - Held that:- We find that the assessee has placed the electricity as well as Internet bill before the CIT(A) and the copies of the property tax receipt were not filed before either of the authorities below. In our opinion, these documents go to prove that the assessee had, in fact, completed the construction within the period of three years from the date of sale of the property. However, in our opinion, these documents have not been verified by the authorities below and therefore, the issue needs to be remitted to the file of the AO for verification of these details filed by the assessee. We remit the issue back to the file of the AO only to examine the veracity and authenticity of the documents filed by the assessee and if the documents are found to be genuine, then the AO is directed to allow exemption u/s 54F of the Act. In the result, the assessee’s appeal is allowed for statistical purposes.
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2014 (8) TMI 1163
Concession of pre-arrest bail - offence under PMLA - Held that:- There is no absolute par in granting the concession of pre-arrest bail in proceedings under the Prevention of Money Laundering Act, 2002.
Petitioner in this case is entitled for pre-arrest bail - the interim order dated 2.7.2014 is hereby confirmed. The petitioner will remain on bail against the bail bond/surety bond already furnished by him subject to the condition that he will not tamper with the evidence in any manner and will not cause obstruction in the proceedings of the complaint case and will not absent himself without any sufficient cause and that he will not commit the similar offence of which he is accused of during the course of trial.
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2014 (8) TMI 1162
Issues of applicability of Net Profit Rate arising out in Revenue’s appeal and with regard to inclusion of Bank Interest as income from other sources by the AO have been dealt in assessee’s appeal in therefore, our order in assessee’s appeal's identically applicable in the present appeal. Accordingly, all the grounds of the Revenue i.e. grounds No. 1 to 5 are dismissed.
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2014 (8) TMI 1161
Allowable busniss expenditure - research and development expenditure - Held that:- Since no evidence has been filed regarding expenditure on research and development, therefore we decide this issue against the assessee.
Addition u/s 40(a)(ia) - Held that:- Section 40(a)(ia) would cover not only to the amounts which are payable as on 31st March of a particular year but also which are payable at any time during the year. Of course, as long as the other requirements of the said provision exist. In that context, in our opinion the decision of the Special Bench of the Tribunal in the case of M/s. Merilyn Shipping & Transports vs. ACIT [2012 (4) TMI 290 - ITAT VISAKHAPATNAM] does not lay down correct law.
Previous year Expenses allowable in current year - Held that:- Previous year expenses could be allowed only if it is proved that such expenditure crystallized during the year. This fact has not been proved and therefore there is nothing wrong with the order of the CIT(A) and accordingly we confirm the same.
Deduction u/s. 80IB on its Parwanoo Unit No. 2 - interest and other items cannot be said to have been derived from industrial undertaking
Profits eligible for deduction u/s. 80IB - R & D expenses should be allocated on the basis of actual expenditure incurred. We therefore set aside the order of Ld. CIT(A) and direct the Assessing Officer to allocate the expenses actually incurred by the assessee on R & D in the eligible unit.
Proportionate interest has to be disallowed because the assessee had admittedly diverted interest bearing funds to the sister concern
Variations for deduction to be allowed u/s. 80IB - Held that:- after per using the order of the income tax authorities, we do not find that such burden has been discharged by the Assessing Officer so as to reject the profits declared by the assessee in the respective units. Therefore we are not inclined to uphold the order of assessment as made by the Assessing Officer. Quite clearly, the assessee brought out before the Assessing Officer as well as before the Ld. CIT(A) that the manner of maintenance of the records and the system of apportionment of impugned expenditure on the basis of the proportionate turnover of various units was accepted in the past and there no cogent reasons have been brought out by the revenue which would require departure from the same.
Addition u/r 8D - Held that:- Rule 8D is not applicable in this year. Reasonable disallowance in this year is held to be ₹ 3 lakh and therefore we set aside the order of the CIT(A) and direct the Assessing Officer to disallow a sum of ₹ 3 lakhs.
Disallowance u/s 14A - Held that:- We find that Hon'ble Bombay High Court in case of Godrej & Boycee [2010 (8) TMI 77 - BOMBAY HIGH COURT] has clearly held that rule 8D would be applicable from assessment year 2008-09, Therefore in this year rule 8D has to be applied and disallowance has to be made as per calculation of Rule 8D. Therefore we find nothing wrong with the order of Ld. CIT(A) and confirm his order.
Addition invoking the provisions of section 145A - Held that:- Similar issue has been decided in favour of the assessee by the Hon'ble High Court of Punjab & Haryana in case of Nahar Spinning Mills Ltd. [2008 (2) TMI 316 - PUNJAB AND HARYANA HIGH COURT]. The Ld. CIT(A) following that decision decided the issue in favour of the assessee.
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2014 (8) TMI 1160
Penalty u/s 271(1)(c) - addition in respect of interest on fixed deposits with bank - Held that:- We are unable to approve the stand of the Revenue that the said income has been detected by the Assessing Officer before its declaration by the assessee. No doubt, it was not declared in the return of income but was declared by way of a revised computation of income filed during the assessment proceedings. Every mistake or omission does not ipso facto lead to levy of penalty u/s 271(1)(c) of the Act. In so far as the present issue is concerned, the overall circumstances explained by the learned counsel before us, in our view, mitigate the rigors of section 271(1)(c) of the Act qua the impugned sum of ₹ 4,60,091/-. Therefore, we set-aside the order of the CIT(A) on this aspect and direct the Assessing Officer to delete the penalty levied with respect to the addition at ₹ 4,60,091/- on account of interest on FDRs with Dena bank.
Addition on account of land as short term capital gain - Held that:- The ingredients necessary to impose penalty u/s 271(1)(c) of the Act qua the impugned transaction are fulfilled. In the present case, it is quite evident that the transaction resulting in short term capital gain on sale of Pirangut property was not declared in the return of income filed. It is also clear 7 that the purchase as well as sale of the property is by way of duly executed conveyance deeds and therefore it is not a case where assessee was not aware of the income accruing to her on account of the impugned transactions. Considering the totality of facts and in the absence of any plausible and bonafide explanation coming-forth from the assessee, we find that the said income has been rightly subjected to levy of penalty u/s 271(1)(c) of the Act. We hereby affirm the orders of the authorities below on this aspect.
Income by way of TDR sale receipts - Held that:- For addition on account of sale of TDR it is not in dispute that the same reflects a transaction undertaken by assessee’s late husband Satish D. Misal prior to his death in the year 2003. It is quite evident that assessee was not a party to the transaction and that she is in receipt of money as legal heir of her deceased husband -merely because an assessee has agreed to an addition, cannot be conclusive for the purpose of penalty u/s 271(1)(c) of the Act. Quite clearly, it is a trite law that assessment proceedings and the penalty proceedings are independent proceedings and that the findings in the assessment proceedings are not conclusive for the purposes of adjudicating the levy of penalty although such findings may be relevant for the purposes of 10 penalty proceedings. In-fact, as per case of Anantharam Veerasingaiah & Co. vs. CIT [1980 (4) TMI 2 - SUPREME COURT] penalty proceedings are independent of the assessment proceedings and penalty cannot be levied merely on the basis of the findings in the assessment proceedings. Penalty u/s 271(1)(c) of the Act is not attracted - Decided in favour of assessee.
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2014 (8) TMI 1159
Disallowance of deduction in respect of writing off of the irrecoverable advances and other debit balances - Held that:- We are of the view that the amounts towards EMDs, was having nexus with the business of the assessee, and therefore, the same needs to be allowed. With respect to the “Employees’ Welfare Trust”, amounting to ₹ 7,31,425/-, in the absence of any details, we are of the view that the same has rightly been disallowed by the AO. With respect to the balance written amount of ₹ 30,48,835/-, from the list placed it is seen that it contained various amounts which are shown to be not recoverable from the parties. However, it also includes certain amounts like provision for gratuity, salary payable, PF payable, staff loan etc. from which the full details thereof not placed before us Considering totality of the facts, we are of the view that disallowance in the present be restricted to ₹ 1,00,000/- (Rupees One Lakh) to cover such amounts. We direct accordingly, and the ground no.2 of the appeal are partly allowed.
Disallowance of deduction as business expenditure - amount given as donation to the Red Cross society - Held that:- From the details of the donation given at page no.14 of the paper book, it is seen that the major amount of ₹ 42,320/- is donation to the Red Cross society, and therefore, claimed as business expenditure. The aforesaid submission of the assessee has not been controverted by the Revenue by bringing any material on record. We, therefore, are of the view that same needs to be allowed. With respect to other donations, considering meagerness/smallness of the amounts, aggregating to ₹ 3900/-, and considering the peculiar facts of the case we consider that the same be allowed. Thus, we allow this ground of the appeal of the assessee.
Adjustment in respect of international transaction of royalty payment - Held that:- As only stated rate is not decisive and effective rate has to be considered, and when the amount of royalty paid by the assessee is considered with ex-factory sale value, without deducting various expenses, such as dealer commission, special commission, warranty etc., as has been noted by the learned CIT(A) at page no.4 of his order, then the effective rate worked out is only 2.3% on sale, as against 3% paid by other group entities. This finding of the fact given by learned CIT(A) could not be controverted by the learned DR of the Revenue, and hence, on this aspect, we hold that no interference is called for in the order of the learned CIT(A), and accordingly, the ground no.5 of the Revenue is rejected.
Disallowance on account of provision of obsolescence of inventory - Held that:- CIT(A) has directed the AO to allow the claim of the assessee subject to the assessee furnishing the complete particulars in this regard, if necessary, with adequate proof. Hence, in our considered opinion, no interference is called for in the order of the CIT(A) on this issue, because he has taken proper care to ensure that all the details and evidences are obtained and are examined by the AO and only thereafter, deduction is to be allowed, if the assessee is able to establish before the AO that such write off in respect of provision for obsolescence of inventory claimed by the assessee is in line with the accepted method of valuation of stock, i.e. at cost or market price, whichever is lower.
Disallowance on account of warranty expenses - Held that:- Since it is admitted by both the parties that the facts of the case in the year under appeal are identical to that of earlier years, we respectfully following the decision for A.Y.2004-5 and with similar directions restore the issue of warranty expenses for A.Y.2005-06 to the file of the CIT(A) for decision afresh. Needless to state that CIT(A) shall grant adequate opportunity of hearing to both the parties. Thus, this ground of Revenue is allowed for statistical purposes.
Claim for deduction for the debit balances written off for the sums which were due from different parties for and on connection with the assessee’s business in spite of the fact that the claim was allowable u/s.28 or 37 - Held that:- There is no dispute to the fact that the loss of ₹ 1,58,529/- incurred during the course of business and that the assessee has written off the said amount from its accounts, as the same became irrecoverable. The Hon’ble Apex Court in the case of T.R.F. Ltd. Vs. CIT [2010 (2) TMI 211 - SUPREME COURT] held that in order to obtain a deduction in relation to bad debts, it is not necessary for the assessee to establish that the debt, in fact, has become irrecoverable; it is enough if the bad debt is written off as irrecoverable in the accounts of the assessee. This being so in the case of assessee, we are not inclined to take a different view on this issue, and accordingly, this ground of the CO of the assessee is allowed.
Addition u/s 40(a)(ia) - Pursuance of the provisio to section 40(a)(ia) as amended retrospective with effect from 1.4.2005 by the Finance Act, 2008 - Held that:- We find that this claim of the assessee for further deduction was not before the CIT(A) or the AO, before passing their respective orders. Therefore, we deem it fit to send this issue to the file of the AO for considering admissibility or otherwise of the claim of the assessee as per the law. The assessee shall furnish all the details, as required by the AO for determination of the claim of the assessee, and accordingly, this ground of the CO of the assessee is allowed for statistical purpose.
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2014 (8) TMI 1158
Addition on account of prior period expenses - Held that:- Normally prior period expenses cannot be allowed because the income has to be determined on yearly basis. However, in this case certain income relating to prior period was also offered to tax and even after adjusting the expenses of ₹ 238344/- net amount resulted in income because prior period income was ₹ 618088/-. In such situation we are of the opinion that expenditure has been rightly allowed by the LD. CIT(A). Accordingly we confirm the order of the CIT(A)
Addition on account of notional interest on land purchases - CIT-A deleted the addition - Held that:- CIT(A) rightly decided the issue because the Assessing Officer has not shown that any amount was borrowed for purchase of land. Further in case of land there is always gap between the payment and registration of the sale deed and such gap can not lead to the conclusion that the land has not been capitalized. In view of this we confirm the action of the CIT(A).
Treating employees contribution towards EPF as income as per provisions of section 2(24)(x) - not allowing deduction of the same as per section 36(1)(va) - CIT-A deleted the addition - Held that:- This issue is squarely covered against the Revenue and in favour of the assessee by the decision in case of CIT V Nuchem Ltd.[2010 (2) TMI 959 - PUNJAB AND HARYANA HIGH COURT] wherein following decision of CIT V. Alom Extrusions Ltd. [2009 (11) TMI 27 - SUPREME COURT] it was held that if the payments have been made before the due date of filing of return then such payments have to be allowed. Perusal of the assessment order clearly show that provident fund dues were paid before the due date of filing of return
Addition on account of depreciation on electric installation - assessee had claimed depreciation @ 25% in respect of electrical equipments which was reduced to 10% by following earlier assessment year - CIT-A deleted the addition - Held that:- Even on electrical installations depreciation is to be allowed @ 25%. In view of this order which have been followed by the CIT(A), we confirm her order.
Addition u/s 40(a)(ia) - Held that:- We are of the opinion that Section 40(a)(ia) would cover not only to the amounts which are payable as on 31st March of a particular year but also which are payable at any time during the year. Of course, as long as the other requirements of the said provision exist. In that context, in our opinion the decision of the Special Bench of the Tribunal in the case of M/s. Merilyn Shipping & Transports vs. ACIT (2012 (4) TMI 290 - ITAT VISAKHAPATNAM), does not lay down correct law.
Addition excessive expenses on repair and maintenance by restricting the disallowance of repair and maintenance to 1% of the value of the building as directed by the Tribunal in some earlier year - Held that:- We are not sure under what circumstances 1% repair and maintenance expenses was held to be reasonable by the Tribunal. Normally allowance on account of repair and maintenance is to be examined with reference to each item and the items which are not capital in nature have to be allowed. However, no detail is available in the assessment order with reference to repair and maintenance. There is some force in the submissions the assessee that 1% criteria cannot be followed in the latter year, therefore in the interest of the justice, we set aside the order of the Ld. CIT(A) and restrict he disallowance of repair and maintenance at ₹ 1,50,000/ We have already observed that since the details are not available and this is a small matter and therefore there is no purpose for remitting the same to the file of Assessing Officer and we have preferred to make reasonable disallowance.
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2014 (8) TMI 1157
Addition u/s 68 - discharge of onus with regard to share application money received from 5 different parties - Held that:- Identity of the 5 parties investing in the share capital is not in doubt - They are body corporates and their complete addressees are on record. This is the very first assessment in the life of the assessee company. The amounts were deposited by these 5 corporates per account payee cheques.
These parties were not shareholders of the assessee company at the time when the case was reopened u/s 147 or when the summons were issued to them. The assessee has filed before the A.O. copies of share application forms duly signed along with the complete addresses of the investors along with their I.T. file numbers, account payee cheque numbers and the assessee’s bank statements disclosing the deposits of these amounts. The assessee has discharged its initial onus to prove the identity of the investors as well as their creditworthiness. It is not the case of the Revenue that the investor parties did not exist or that the money was not invested by them through banking channels.
Having found such, the Tribunal had relied on the judgement in Hindusthan Tea Trading Co.Ltd. v. CIT (2003 (3) TMI 53 - CALCUTTA HIGH COURT) to uphold the order of the CIT. No substantial question of law arises
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