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Income Tax - Case Laws
Showing 61 to 80 of 182 Records
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2009 (3) TMI 636
Penalty - For failure to deduct tax at source ... ... ... ... ..... o laid down by the Hon rsquo ble Supreme Court in the case of Hindustan Steels Ltd. reported in 83 ITR 26, the assessee could always claim bona fide and there is nothing unreasonable in such claim. 37. Looking to these facts, we are of the considered opinion that the assessee had reasonable cause in not adhering to the provisions of section 194A read with section 271C of the Act and the assessee rsquo s explanation being bona fide, was covered by section 273B of the Act. Under these circumstances, no penalty under section 271C of the Act was warranted. We, therefore, cancel the penalty under section 271C sustained by the learned CIT (Appeals) for all the years. 4. In view of the above facts and circumstances of the case, the penalty imposed by the learned Addl. CIT is liable to be quashed. Accordingly, we delete the penalty imposed under section 271C and allow all the four appeals filed by the assessee. 5. In the result, all the four appeals filed by the assessee are allowed.
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2009 (3) TMI 635
Deletion of penalty u/s 271(1)(c) - wrong claim for deduction u/s 80-IA - claimed deduction u/s 35 for scientific research expenses at hundred per cent inter alia towards the cost of motor car purchased - concealment of income - AO added back amount and allowed depreciation at 20 per cent by treating it as car used for ordinary business purposes not connected with the scientific research and development activity - addition was confirmed up to the Tribunal level - penalty imposed by AO on this count has been overturned by CIT(A), against which the revenue is aggrieved -
HELD THAT:- In our considered opinion the mere fact of confirmation of addition cannot per se lead to the confirmation of the penalty. It is obvious that both the quantum and the penalty proceedings are independent of each other. In the penalty proceedings the assessee is given chance to show that why the penalty be not imposed with reference to the addition made or confirmed in the quantum proceedings. If the assessee succeeds in explaining his case then no penalty can follow and vice versa.
It is, therefore, amply clear that the confirmation of the addition by the Tribunal in quantum proceedings cannot mean that the penalty be automatically confirmed. If the contention of the ld. DR is taken to the logical conclusion then the penalty proceedings would require obliteration from the statute and the very act of making addition in quantum should entitle AO to impose penalty simultaneously.
Section 271(1)(c) provides that if AO or CIT (A) or the Commissioner, in the course of the proceedings in this Act, is satisfied that any person has concealed the particulars of his income or furnished inaccurate particulars of such income, he may direct that such person shall pay by way of penalty a sum which shall not be less than but which shall not exceed three times the amount of tax sought to be evaded by reason of the concealment of particulars of his income. Seven Explanations are there to section 271(1). The necessary elements for attracting this Explanation are three-fold.
(a)the person fails to offer the explanation, or
(b)he offers the explanation which is found by the authorities to be false, or
(c)the person offers explanation which he is not able to substantiate and fails to prove that such explanation is bona fide and that all the facts relating to the same have been disclosed by him.
If the case falls in any of these three ingredients, then the deeming provision comes into play and the amount added or disallowed in computing the total income is considered as the income in respect of which particulars have been concealed for the purposes of clause (c) of section 271(1) and the penalty follows. If the assessee successfully comes out of the above three constituents then he cannot be deemed to have concealed the particulars of his income with reference to the amount added or disallowed in computation of total income.
That the penalty proceedings are distinct from the assessment proceedings and hence it becomes amply clear that any addition made does not automatically lead to the imposition of penalty u/s 271(1)(c). In the penalty proceedings the assessee is given a chance to explain his case. If he successfully explains his position and is not trapped within the parameters of clause (c) of section 271(1) along with the Explanations deeming the concealment of income, the penalty cannot be imposed.
Adverting to the facts of the instant case we find that the assessee had bona fidely made a claim for deduction u/s 35 in respect of cost of car purchased for the purpose of R&D activity by disclosing all the necessary particulars in the audit report. The facts that the car was purchased by the assessee and also used for the purpose of the business have not been controverted by AO. Further the granting of depreciation at 20 per cent instead of hundred per cent deduction claimed by the assessee shows that there was a genuine difference of opinion between the assessee and AO on this aspect of the matter. It cannot be said that the assessee, under such circumstances, has concealed his income and is caught within the four corners of section 271(1)(c). We, therefore, hold that the learned CIT(A) has rightly not imposed penalty on this addition.
Deletion of penalty on interest accrued but not disclosed by the assessee - addition u/s 41(1) on cessation of liability - AO made addition and levied the penalty, which came to be deleted in the first appeal - There may be several situations when the money is not claimed or paid by one party to another within three years and thereafter the claim is made and honored by the other. So simply because a particular amount is outstanding for a period of more than three years, that does not constitute income u/s 41(1).
The act of the assessee in agreeing for the inclusion of such amount in the total income during the course of assessment, subject to the condition that the deduction will be claimed as and when the amount is paid to the third parties, manifests that the assessee had not concealed its income or furnished inaccurate particulars of its income for which he could be visited with the penalty. The discussion made supra qua the confirmation of deletion of penalty on deduction claimed by the assessee u/s 35 holds good here also. Thus we approve the view taken by CIT(A).
Penalty u/s 271(1)(c) - reduction in deduction u/s 80HHC - AO found that the assessee had claimed higher deduction u/s 80HHC in respect of AY's 1997-98 and 1998-99 for Rs. 79,331 in total, because of the bad debts claimed as deduction in this year as relating to those years.
HELD THAT:- AO proceeded to reduce the claim of deduction in this year instead of the right course available to him for rectifying orders for the earlier two assessment years in which deduction u/s 80HHC was found to have been over claimed. Be that as it may there is no dispute that the amount of bad debts was deductible in entirety as having been written off in the books of account for this year itself. How Penalty u/s 271(1)(c) can be imposed in this year qua the reduction of claim for deduction u/s 80HHC in respect of earlier assessment years is beyond our comprehension. CIT(A) too mechanically upheld the penalty on this aspect without applying his mind to the real controversy. If the claim for deduction in an earlier years is found to be untenable, the proper course available to AO is to make rectification of such earlier years’ orders and consider the imposition or otherwise of the penalty in those years.
AO committed primary mistake by reducing the claim of bad debts in this year and then again the mistake was repeated by imposing penalty u/s 271(1)(c) on this amount. Therefore, CIT(A) erred in upholding the imposition of penalty. We, therefore, order for the deletion of penalty to this extent.
In the result, the appeal by the assessee is allowed and that of the revenue is dismissed.
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2009 (3) TMI 634
Local authority ... ... ... ... ..... tion 10(20) was not granted only for the assessment year 2003-04. 35. In the instant case also, keeping in view the ratio laid down in above referred to case of Hon rsquo ble Delhi High Court, it can be held that assessee was entitled to exemption under section 10(20) of the Act for the assessment year under consideration because the year falls prior to assessment year 2003-04 i.e., assessment year from which the status of Local Authority is not available to the assessee. We, therefore, in view of the aforesaid discussions, set aside the orders of the authorities below on the issue relating to the status of Local Authority to the assessee and direct the Assessing Officer to consider assessee as Local Authority for the purposes of section 10(20) of the Act. 36. Before parting, it is made clear that no other ground was argued by either of the party. Therefore, no finding has been given for the same. 37. In the result, appeal by the assessee is partly allowed as indicated above.
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2009 (3) TMI 633
Deemed dividend - engaged in the business as general sales agent for passenger sales and cargo - AO observed that since shares of M/s. Jetair Pvt. Ltd. stood registered in the name of the assessee-firm through its partners, it was the assessee’s firm, who was the only registered owner of the shares - According to him, the partnership firm was not a legal person, and, therefore, whenever it enters into any transaction relating to any property such a transaction invariably has to be entered through the partners only - AO invoked the provisions contained in section 2(22)(e) and treated the loan given by M/s. Jetair Pvt. Ltd. to the assessee-firm as deemed dividend, and added the same to the assessee’s total income as deemed dividend assessable under the head "Income from other sources" - CIT(A) held that the assessee-firm was not a shareholder as per law and, therefore, the loan received by it from the company M/s. Jetair Pvt. Ltd. cannot be treated as deemed dividend within the meaning of section 2(22)(e).
HELD THAT:- In the present case, Shri Naresh Goyal, Shri Surender Goyal and Jet Enterprises Pvt. Ltd. are the registered shareholders of M/s. Jetair Pvt. Ltd. They are the partners in the present assessee partnership firm having share in profit of 35 per cent, 15 per cent and 50 per cent respectively. M/s. Jetair Enterprise Pvt. Ltd. is holding shares in Jetair Pvt. Ltd. only to the extent of 8.77 per cent, which is less than the 10 per cent of voting power. Similarly, Shri Surender Goyal is a shareholder in M/s. Jetair Pvt. Ltd. to the extent of 7.02 per cent, which is also less than 10 per cent of the voting power. However, Shri Naresh Goyal is a registered shareholder in M/s. Jetair Enterprise Pvt. Ltd. with 51 per cent of shareholding satisfying the first limb of section 2(22)(e).
Insofar as the new category of payment which has been considered as dividend by the Finance Act, 1987 with effect from 1-4-1988, Shri Naresh Goyal is holding more than 20 per cent of shares in the present partnership firm to which the loan has been granted by M/s. Jetair Pvt. Ltd. However, we are not concerned with the question as to whether deemed dividend within the meaning of section 2(22)(e) can be assessed in the hands of Shri Naresh Goyal or other partner of the assessee firm in respect of the loan granted by M/s. Jetair Pvt. Ltd. to the present assessee partnership firm, but we are called upon to decide as to whether the deemed dividend within the meaning of section 2(22)(e) can be assessed in the hands of the present assessee firm in respect of the loan given to the assessee firm by M/s. Jetair Pvt. Ltd.
Since the present assessee firm is not a registered shareholder of M/s. Jetair Pvt. Ltd., the condition necessary to invoke section 2(22)(e) is not satisfied. The Special Bench in Bhaumik Colour (P.) Ltd.[2008 (11) TMI 273 - ITAT BOMBAY-E] has taken a view that the deemed dividend can be assessed only in the hands of a person, who is a shareholder of the lender company and not in the hands of a person other than a registered shareholder.
Respectfully following the decision of Special Bench in the case of Bhaumik Colour (P.) Ltd.[2008 (11) TMI 273 - ITAT BOMBAY-E], we are inclined to uphold the order of ld. CIT(A) in deleting the addition made by AO on account of the deemed dividend u/s 2(22)(e).
Similarly in the AY 2004-05, the order of ld. CIT(A) in deleting the addition made by AO on account of loan treating the same as deemed dividend u/s 2(22)(e) on identical facts is upheld. It is pertinent to know that the ld. CIT(A) has decided this issue in the AY 2004-05 by following his decision for the year 2003-04. We order accordingly.
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2009 (3) TMI 628
Depreciation - Held that:- cost incurred towards the construction activity for a holiday resort by depicting the estimated cost thereof. on the basis of the estimated cost, it was not possible for the Revenue to deter-mine the quantum of depreciation that had to be allowed to the respondent-assessee under section 32 of the Income-tax Act, 1961. The Assessing Officer required the actual cost to be determined by the District Valuation Officer and on the basis thereof, allowed a deduction in the nature of depreciation to the respondent-assessee, depreciation on the expenses incurred by the respondent-assessee on the construction of its holiday resort could not have been determined on the basis of any rough estimate. remanded the matter back to the Assessing Officer.
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2009 (3) TMI 626
Addition u/s 144 - best judgement assessment - admission of additional evidence by the commissioner (appeals) - Rule 46A - Held that - The application of the assessee made under rule 46A of IT Rules, however, was required to be disposed of first before he heard the appeal and decided the same on merits. Having not done that his order has to be set aside. - Accordingly setting aside the order of learned CIT(A), we direct him to first dispose of assessee's application made under rule 46A of IT Rules, 1962 by way of a reasoned order in terms of sub-rule (2) of rule 46A of IT Rules, 1962 and thereafter proceed to dispose of the appeal on merits
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2009 (3) TMI 614
Best judgment assessment - Survey - Addition - unaccounted income/unexplained investment - It was pointed out that the past assessment has been completed without scrutiny, therefore, the assessee had no occasion in the past - there is no estoppel in law - the purchase of land was an individual affair of the members and therefore the issue of investment in the subjected land was considered in their respective hands, pointed out the learned Authorised Representative - there was no written agreement amongst the purchasers to form an AOP to purchase the lottery ticket for winning a prize - they made their intentions clear immediately after the result and demanded payment of their individual shares which was accepted and payments were made by deducting the income-tax at source from their respective shares of prize money - The purchasers of the lottery ticket did not form an AOP and the income from lottery was not liable to be assessed in the hands of such an association all the four persons, never intended to carry out a regular business of real estate, i.e. the purchase, sales and construction of apartments etc - It was only a spontaneous later development that keeping in view of the need of liquidity, they proceeded to construct some shops and offices - It was at the best a case of co-ownership and not more than that - In the case of Saroj Kumar Mazumdar vs. CIT, the Hon'ble Supreme Court held that in the absence of any evidence to support the inference that the isolated transaction constituted an adventure in the nature of trade, it should be regarded as on capital account - Appeal is allowed Regarding unaccounted income - the difference between declared consideration and stamp valuation of Rs. 4,82,355 - assessee in the present case is purchaser and not the seller in which case provisions of s. 50C are applicable for the purpose of computation of capital gain under s. 48 of the Act - it appears that the AO and the learned CIT(A) have not appreciated the material facts that all the purchasers are income-tax assesses being in the services of the State Government for last several years and in some cases the spouse is also in services, it should not have been difficult for them to have invested Rs. 5 lacs, when individual share, if assumed, comes below Rs. 1.25 lacs each - Appel is allowed
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2009 (3) TMI 613
Disallowance - Bad debts - whether the respondent-assessee could claim a deduction on the basis of the bad debt written off was re-examined - Since the assessee had taken over the assets and liabilities of the predecessor firm and since the successor firm continued the business and was even assessed to tax on the income accrued on the debt which was taken over the assessee could write off the debts and claim deduction thereof - It is apparent from the plain reading of the aforesaid provision that an assessee is entitled to a deduction equivalent to the amount of a written off debt, under section 36(1)(vii) of the 1961 Act - There is also no material whatsoever on the record of this case, on the basis whereof an inference can be drawn that the respondent-assessee was treating the aforesaid debt as its income - assessee did not fulfil one of the aforestated mandatory conditions, namely, the debt in question was never reflected in the accounts of the respondent-assessee as its income, the respondent-assessee would not be entitled to a deduction on the basis of its having written off the debt under reference - Decided against the assessee
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2009 (3) TMI 610
Penalty - Search and seizure - Undisclosed income - -assessee has declared undisclosed income while making a statement on October 10, 1988 and he has not disclosed the said income in his returns filed on October 5, 1988 - Having regard to clause (2) whatever was required has been complied with by the assessee - The Appellate Tribunal simply referring to the immunity provided under section Explanation 5 of section 271(1)(c) has given immunity to the assessee by deleting the 100 per cent. penalty of tax levied - The appeal is dismissed
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2009 (3) TMI 609
Tax evasion - Self assessment - assessee did not pay the due tax and did not avail of the offer of compounding - whether the matter can be compounded after an order of conviction and sentence was passed against the present petitioners by a criminal court, if so, its effect - It is in this context that application for compounding of offence was not moved by the petitioner-firm before the conviction order passed by the criminal court - the application for compounding of offence was moved after the conviction order passed by the criminal court and therefore, the question of compounding of offence particularly when conviction and sentence against the present petitioners had already been passed by the Chief Judicial Magistrate does not arise - Decided in the favour of assessee
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2009 (3) TMI 598
TDS - Section 194H – Commission on Air Tickets - In order to deduct tax at source the income being paid out must necessarily be ascertainable in the hands of the assessee -The airlines would have no information about the exact rate at which the tickets were ultimately sold by their agents since the agents had been given discretion to sell the tickets at any rate between the fixed minimum commercial price and the published price and it would be impracticable and unreasonable to expect the assessee to get a feed back from their numerous agents in respect of each ticket sold - The airlines have discretion to sell the tickets at the price lower than the published price then the permission granted to the agent to sell it at a lower price, according to us, can neither amount to commission nor brokerage at the hands of the agent - The appeal is dismissed
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2009 (3) TMI 594
Income escaping assessment - In the assessment order passed under s. 147 on 8th Feb., 2006, the total income was assessed at5,52,14,264 and the book profit under s. 115JA was computed at ₹ 7,03,89,722 - s. 147 of the Act does not postulate conferment of power upon the AO to initiate reassessment proceedings upon a mere change of opinion - Where the initiation of proceeding under s. 147 takes place after the expiry of four years from the end of the relevant assessment year, the proviso to s. 147 is attracted and no action can be taken under s. 147 unless such income has escaped assessment by reason of the failure on the part of the assessee to disclose fully and truly all material facts for his assessment for the assessment year. - the said period of four years has not expired, the conduct of the assessee regarding disclosure of material facts need not be the basis for initiating the proceedings and they can be commenced if the AO has 'reason to believe' that the income has escaped assessment notwithstanding that there was full disclosure of material facts on record. - It was held that the impugned notice under s. 148 was issued within a period of four years from the end of the relevant assessment year Section 72A - The accumulated loss and the unabsorbed depreciation of the amalgamating company shall be deemed to be the loss/depreciation of the amalgamated company for the previous year in which the amalgamation takes place - AO reduced the net profit accordingly - he language of s. 72A(1) and of cl. (iii) of Explanation to s. 115JA(1), as reproduced above, are unambiguous and leave no scope for doubt. The accounts prepared under the Companies Act must be modified, wherever necessary, to comply with the provisions of s. 115JA of the Act, for the computation of minimum alternative tax. This is precisely what the AO did in this case.Accordingly the appeal is dismissed
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2009 (3) TMI 589
Unexplained investment - identical controversy as against the same assessee pertaining to the assessment year 1996-97 was allowed in favour of the respondent assessee on the same facts and circumstances, as in the present appeal - respondent-assessee had produced confirmations from all vendors on plain paper, along with affidavits of as many as 20 such vendors affirming the transfer of funds by them to the respondent assessee on account of sale/purchase of lottery tickets – No addition could be made - appeal dismissed
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2009 (3) TMI 588
Valuation - difference in the valuation - authorities not adverted to any details with regard to the unexplained difference nor any reference been made to the source of such investment - absence of reasons given to hold the same, the orders of the authorities set aside
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2009 (3) TMI 587
Capital or revenue expenditure – lease rent paid for the use of land for ninety nine years - assessee, a company, claimed deduction of lease rent - assessee carrying the business more profitably by paying nominal rent on the land - land is not obtained by the assessee – lease rent deductible
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2009 (3) TMI 585
Conversion charges - only job work receipts which could not be considered as turnover - Assessing Officer held that the receipts had the character of turnover and, therefore, included the conversion charges in the total turnover - in the case of CIT v. Metal Powder Co. Ltd. [2007 -TMI - 4036 - MADRAS HIGH COURT], it was held that conversion charges have to be excluded from the turnover for the purpose of calculation of deduction under section
80HHC of the Act.
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2009 (3) TMI 528
Waiver of penalty - section 273A - penalty levied u/s 271(1)(c) of the Act for concealment of income - Order of the CIT u/s 273A not appealable - The petitioner filed an application under section 273A of the Act before the Commissioner of Income-tax for waiver of the penalty but by the impugned order dated September 17, 2002, the Commissioner of Income- tax rejected the application after holding that the returns of income of the petitioner have been upwardly revised by the assessee only after survey and special audit and, hence, the revised return filed by the petitioner can- not be said to be voluntary and in good faith and since the requirement of section 273A of the Act for waiver of penalty have not been met the application was liable to be rejected. - Held that: - The order passed by the Commissioner, therefore suffers from non-application of mind and a grave error. - Since there was no appeal available under the Act against the impugned order passed by the Commissioner of Income-tax under section 273A of the, order of CIT quashed
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2009 (3) TMI 525
Advance Tax – Interest - The judgment of Karnataka High Court in Kwality Biscuits Ltd vs. CIT 2008 -TMI - 15292 - KARNATAKA High Court, was taken in appeal before the Supreme Court by way of special leave petition. The appeal were heard meaning thereby the leave was granted and the appeal were dismissed. The dismissal of the appeal by the Supreme Court in the case of CIT v Kwality Buscits Ltd. Would amount to confirmation of the law as held by the Karnataka High Court. Held that- the Tribunal was correct in law, in directing the Assessing Officer to delete the amount charged as interest under section 234B and 234C on the minimum alternate tax levied under section 115J of the book profit.
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2009 (3) TMI 521
Business Expenditure- On account of the strike of the worker, the assesse was not able to pay the full bonus on or before the due date for filing the return of income. The assesese handed over a sum, by cheque to the trustee of the worker’s bonus payment trust with the object of disbursing bonus to the workers. The Assessing officer allowed the sum actually paid before the due date for filing the return and the balance. The Commissioner (Appeals) deleted the disallowance and this was upheld by tribunal. Held that- assessee was entitled to the deduction made towards bonus. The assesese had made the payment prior to the date of omission of the proviso and payment made to the trust being irrevocable would tantamount to payment of bonus to workers.
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2009 (3) TMI 520
Business Income- Whether the Tribunal was right in coming to the conclusion that the value of the assets taken over on amalgamation should be taken at book value as was existing in the hands of the amalgamated company for working out the cost of the shares for purposes of determining the gains or loss thereon ? Held that- the Income Tax Officer thus rightly held that there was incurred loss of Rs. Only 8,850. The Income tax Officer was therefore also right in allowing loss of Rs. 876 for sale of the shares of the second company, as against profit of Rs. 7974 out of sale of the shares held by the first company. Instead of allowing total loss as claimed, the Income Tax Officer correctly disallowed loss.
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