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Income Tax - Case Laws
Showing 181 to 200 of 236 Records
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2010 (5) TMI 539
Reassessment - Deduction u/s 80IA - Assessing Officer was not correct in invoking the provisions of section 80IA(10) as well as re-determining the profits on the basis of tariff order of MERC which was altogether for the different purpose. Even otherwise, quantum of determination of profits having been contested in appeal and got concluded in the original assessment proceedings, the re-determination by the Assessing Officer in reassessment proceedings is not correct. - Decided in the favour of the assessee
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2010 (5) TMI 536
Survey – Unaccounted money - Liability where the assessee was not under search u/s 132 - who was under search u/s 153A - Held that: - it is undisputed fact that though warrant of authorization is issued in the name of the assessee being Managing Trustee of the Trust, but it is admitted fact that no search operation was conducted in the premises of the assessee. Even in the warrant of authorization, the address of the place to be searched is not the address of the assessee individual. Admittedly, no Panchnama is also drawn in pursuance with the warrant of authorization in the case of the assessee. No documents were seized or impounded as such during the course of search from the assessee. The warrant of authorization dated 29.10.2004 in the name of the Trust and the assessee stands unexecuted in the case of assessee individual. Since in this case only survey operation under section 133A is conducted in the premises of the assessee’s Trust, it would not satisfy the requirements of section 153A of the Act. - AO was not justified in initiating proceedings or assuming valid jurisdiction under section 153A of the Act against the assessee
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2010 (5) TMI 535
Deduction under section 80-IB(10) - The assessee-company is engaged in the business of development and construction – Disallowance of certain deduction - The Assessing Officer while completing the assessment also initiated penalty of ₹ 267644 proceeding under section 271(1)(c) of the Act on the amount of miscellaneous income ₹ 7,31,491 as the same is not eligible for the said deduction - Hon’ble Supreme Court in CIT v. Reliance Petroproducts (P.) Ltd. ([2010 (3) TMI 80 - SUPREME COURT] – Mere making wrong claim is not at par with concealment or giving of inaccurate information, which may call for levy of penalty under section 271(1)(c) – Appeal is dismissed
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2010 (5) TMI 532
Addition of income - AO noted that assessee company has paid royalty of Rs. 8,22,773/- @ 3% of the net value of the “electrical yarn cleaner & classikin” - There was an agreement between Shri Rajan Patwa and RJK Industries to allow PKE to exploit the device commercially on payment of royalty - The ld. AR submitted that in the past no disallowance of royalty paid has been made - Ld. DR in rejoinder submitted that merely maintenance or development or upgradation of technology used by an assessee company cannot be made equivalent to a patent or any intellectual property right entitling the assessee company to make the payment of royalty – The claim of royalty as such cannot be allowed except to the extent of maximum permissible remuneration Disallowance of 1/3 motor car and depreciation expenses & telephone expenses – On the basis of the decision in ITA No.55/Ahd/2002 for Asst. Year 1997-98 - In the result, appeal of Revenue is allowed for statistical purposes and the appeals of assessee are partly allowed for statistical purposes
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2010 (5) TMI 530
Arm's length price - The assessee justified the transactions under the overall TNM Method - The Assessing Officer thus made an addition of3,39,63,606 on account of disallowance of arms length u/s. 92C(4) of the Act - the submission of the learned counsel for the assessee that the operating profit/sales of the assessee at 3.56% being higher than the industry margin, therefore, The transactions between the assessee and its AEs are at arms length - Appeal is dismissed
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2010 (5) TMI 528
Survey - Addition - Unexplained income - The reconciliation filed by the assessee before the Assessing Officer could not be verified with the factual position as on the date of survey - The physical stock inventory taken partly by physical counting and partly on the basis of details given by the branches cannot be said to be a correct method of taking physical stock during the survey - assessee has explained each and every item of difference by reconciliation - Merely on the basis that at the time of survey, some differences were found in stock that does not mean that there will be an automatic addition on account of differences - assessee has reconciled the differences with reasons and the revenue authorities did not point out anything contrary that how the reconciliation done by the assessee was incorrect Regarding cash credit - The assessee filed explanation with evidence, under that circumstance the revenue authorities have to go through those evidences and record the reasons why they are not accepting the explanation filed by the assessee - There is no finding that the cash balance shown in the cash book was not with the assessee or the cash balances were used by those concerns for some other purpose - Under the circumstance such evidence cannot be rejected merely on the basis of presumption - addition deleted.
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2010 (5) TMI 526
Survey - Addition of income - Estimation of income without rejection of books of accounts - Computation of waste during manufacturing process - Held that:- We are of the view that the AO has to give a finding of fact i.e. whether or not income can properly be deduced from the accounts maintained by the assessee, even if the accounts are correct and complete to the satisfaction of the Assessing Officer and the income has been computed in accordance with the method of accounting regularly employed by the assessee. What is to be determined by the Assessing Officer in exercise of his power is a question of fact. i.e. whether or not income chargeable under the Act can properly be deduced from the books of account, and he must decide the question with reference to the relevant material and in accordance with the correct principles. Assessing Officer has not rejected the book results of the assessee in all the seven assessment years and there was no defects pointed out by the Assessing Officer, the estimation made by the AO and consequently enhancement made by the CIT(A) in four assessment years, is arbitrary and without any basis - the additions made by the Assessing Officer in these seven assessment years, including the four assessment years where the CIT(A) has enhancement the assessment deserves to be deleted.
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2010 (5) TMI 524
Income escaping assessment - Reopening of assessments with regard to assessment years 1999-2000 to 2001-02 - The view taken in a particular assessment year cannot bind the Assessing Officer for subsequent assessment years - Supreme Court in the case of CIT vs. Kelvinator of India Ltd. (2010 -TMI - 35201 - SUPREME COURT OF INDIA ) - Held that the tangible material available with the Assessing Officer is that the assessee has received certain subscription from customers only a portion of which has been declared as income - Therefore, it can be said that the Assessing Officer had reason to believe about the escapement of income - It is valid ground for reopening of assessment reopening for assessment year 1998-99 - On the merits of the re-opening of the assessment, here also as in other assessment years, the main contention is that all the relevant material was on the record of the department furnished at the time of the assessment of the previous year - Each issue has to be weighed on its own merits and legal principles cannot be sacrificed on the altar of consistency - the assessment for 1998-99, though re-opened after four years, is validly re-opened - In the result, the cross objections of the assessee for all the years are dismissed Accrual of income - Thousands of litres of ink have been consumed lavishly over the past more than hundred years in discussing the concept of accrual and yet there is no end to it, and rightly so as it indicates the ever changing dynamics of business and commerce. Hospitality business, though in existence since more than hundred years, it has come into limelight recently with several variants and sale of timeshare unit is one such variant with which are concerned in the present group of appeals. Membership Fees - Addition - The entire membership fee received by the assessee is treated as revenue receipt, but the entire amount collected is not recognised as revenue and offered for taxation in the year of its receipt -Regarding ratio of revenue receipt - Supreme Court in the case of Madras Industrial Investment Corporation Ltd. v. CIT (1997 -TMI - 5591 - SUPREME Court) - Accordingly, to answer the question posed to the Special Bench, the entire amount of timeshare membership fee receivable by the assessee up front at the time of enrolment of a member is not the income chargeable to tax in the initial year on account of contractual obligation that is fastened to the receipt to provide services in future over the term of contract - Appeals are dismissed
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2010 (5) TMI 523
DTAA - TDS – International charges – Whether Bauxite testing charges is a Fees for technical services - The basic thrust of assessee’s contentions is that, since no part of the testing services was rendered in India, the Chinese company did not have any tax liability in India in respect of the bauxite testing charges - The Assessing Officer thus concluded that in terms of the treaty provisions, the Indian company was to withhold tax @ 10% of the gross amount of remittance to the Chinese company - The concept of territorial nexus, for the purpose of determining the tax liability, is relevant only for a territorial tax system in which taxability in a tax jurisdiction is confined to the income earned within its border - It is no longer necessary that, in order to invite taxability under section 9(1)(vii) of the Act, the services must be rendered in the Indian tax jurisdiction - It is accordingly liable to be taxed in India under the domestic tax law whether or not the income earned by the Chinese company is liable to be taxed in India under Article 12 of the India China tax treaty - That’s a conscious choice by the respective Governments, and just because China Pakistan have negotiated a bilateral tax treaty in a particular manner, it does not mean that India China tax treaty should also be construed on the same basis - . In the case of Hindalco Industries Ltd Vs ACIT this Tribunal had an occasion to set out the principles on the basis of which tax treaties are to be interpretated The impugned payment to the Chinese company, therefore, is covered by the scope of “fees for technical services” within meanings assigned to that expression under Article 12 of the Indian China tax treaty, and is taxable in India as such – The appeal of the assessee is dismissed
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2010 (5) TMI 519
Penalty - Survey - Concealment of income - When the assessee failed to discharge the onus laid down upon him in terms of explanation 1 to section 271(1)(c) of the Act, the order of the CIT(A) is upheld to the extent penalty is imposable in this case on the difference between the income worked out @ 7% of the receipts from security services and that returned by the assessee in its profit and loss account - The rule of mens rea has to be established beyond all reasonable doubt in criminal cases, but it is not so in the case of an economic offence - In the light of provisions of sec. 271(1)(c) of the Act read with explanation 1 thereto and the aforesaid judicial pronouncements, it is well established that whenever there is difference between the returned and assessed income, there is inference of concealment - In the case under consideration the desire to conceal is apparent when the assessee was not maintaining the accounts in the course of business and inflated expenses were being debited year after year in the books written well after the close of the year even when payments for such expenses was not being made It is thus clear that all the material facts and particulars relating to the assessee's computation of income were never disclosed by the assessee, and it is further clear that the explanation offered by the assessee has not been substantiated and as well as it is not found to be plausible and bona fide one and it is against all human probabilities, especially when the conduct of the assessee shows that he has been inflating expenses and had been writing books well after the close of the year not only in the year under consideration but even in the preceding three assessment years also - Decided against the assessee
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2010 (5) TMI 513
Disallowance u/s 40A(3) - Freight Charges - The Assessing Officer had noticed from the LRs that each payment has made is more than Rs. 20,000 in cash in violation of provisions of section 40A(3) of the Act - Accordingly, the Assessing Officer has disallowed 20 per cent of the total freight - Held that: - since the assessee had not claimed any expenditure in respect of payment to lorry owners, either as lorry hire charges or under any other head of account, the provisions of section 40A(3) cannot be made applicable by artificially holding that the said payments are debitable to profit and loss a/c. In view of the above, after considering the totality of the facts and circumstances of the case, the disallowance made under section 40A(3) of the Act for the assessment year under consideration cannot be sustained. Hence the addition made on this account is to be deleted. - since the assessee had not claimed any expenditure in respect of payment to lorry owners, either as lorry hire charges or under any other head of account, the provisions of section 40A(3) cannot be made applicable by artificially holding that the said payments are debitable to profit and loss a/c. In view of the above, after considering the totality of the facts and circumstances of the case, the disallowance made under section 40A(3) of the Act for the assessment year under consideration cannot be sustained. Hence the addition made on this account is to be deleted. Turnover for the purpose of Sec. 44AB - Income on the basis of TDS certificate - where the receipts consisted on two accounts on account of assessee’s own trucks as well as on account of trucks owned by others but hired by the assessee, the whole of the receipts computed on the basis of TDS certificates could not be attributed as receipt on account of plying of trucks on assessee’s own account and the total receipts computed on the basis of TDS certificates could not be considered as assessee’s own receipts for the purpose of section 44AB of the Income-tax Act. The other issue raised in this appeal is with regard to disallowance of telephone expenses of Rs. 25,840 - this issue was not considered by the CIT(A) in his order - matter remanded back for this issue.
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2010 (5) TMI 511
Reference u/s 50C(2) of the Income-tax Act, 1961 - the assessee had, in the relevant previous year, sold a property by a deed registered on May 4, 2006 - Held that:- Failure of the Assessing Officer to refer valuation to the Valuation Officer definitely prejudiced the assessee to its detriment and also took away from it, a valuable right vested in it under the statute. - Matter remanded back to AO with direction.
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2010 (5) TMI 506
Business income or Other sources - Business premises was let out to M/s. Sai Service Station Ltd. and M/s. Sai Automobile Sales & Services Pvt. Ltd. and as per the agreements entered into on 24-6-2002 royalty was payable to the assessee-company @ Rs.1,70,000/- per month from each of the above two companies and the period of agreement was 3 years from 24-6-2002 - Upon perusal of the agreements and other details AO observed that the so-called royalty income is assessable to tax as ‘income from other sources - Under the peculiar circumstances of the case, “the rule of consistency” or “res judicata” cannot be applied to the facts on hand and the issue has to be decided independently - Held that the income earned by the assessee is assessable to tax under the head “income from other sources” and not as “business income Deemed dividend u/s 2(22)(e) - receipt of loan of Rs. 11,10,000 - in view of decision of Hon’ble Bombay High Court in the case of Universal Medicare Private Ltd. (2010 -TMI - 76961 - BOMBAY HIGH COURT) issue decided in favor of assessee – In the result, appeal filed by the assessee partly allowed
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2010 (5) TMI 499
Search and seizure - Undisclosed income - assessee made investments in LIC policies in the assessment year under appeal in her name and in the name of her husband - According to the award all the LIC policies have been given to the assessee of Rs. 20,00,000/- which were already purchased prior to the arbitration agreement and the award - Held that: - The story set up by assessee that this amount was invested by the brother of the assessee after settlement through arbitration award is clearly afterthought and against all human probabilities. The contention of the assessee thus cannot be accepted. It is also unnatural conduct of the assessee and her brother that despite their father expired in September, 1993, the assessee and her brother suddenly awake up after expiry of around 10 years in 2003 for making reference for arbitration. The conduct of the assessee and her brother speak against themselves. The assessee has thus failed to explain the source of investments in purchase of LIC policies and amount received of Rs. 4,51,000/-. No earning of agricultural income is also proved. The alternate contention of the assessee has also no merit because the assessee has not disclosed any agricultural income in the assessment year under appeal. In the absence of any evidence of earning of agricultural income, the alternate contention of the learned Counsel for the assessee cannot be accepted. - Addition made by AO confirmed.
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2010 (5) TMI 497
Gift u/s 56 - Addition of income - minor children of the assessee received gifts from the blood brother of the assessee’s mother - Held that: - When section 56 of the Act deems a particular receipt as income from other sources, irrespective of the genuineness of the gift, it is difficult to appreciate as to why the learned CIT(A) had given prominence to the availability of copy of passbook and the mode of receipt of the gift etc., though it was neither the case of the assessee nor the case of the Assessing Officer at the assessment stage - AO was justified in bringing to tax the gift in the hands of the assessee by invoking the provisions of section 56 read with section 64 of the I.T. Act.
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2010 (5) TMI 487
Business income or Income from House Property – Right from the assessment years 1986-87 to 1992-93, the Department accepted the claim of the assessee to the effect that the rental income was taxable under the head "Profits and gains of business or profession - The order for other years was passed under section 143(1)(a) of the Act treating the income from house property. In the assessment years 1993-94 and 1994-95, the Assessing Officer taxed the income under the head "Income from house property" without looking into the past assessments right from 1986-87. - Held that: - As a general rule, each year's assessment is final only for that year and does not govern later years, because it determines the tax for a particular period. It is, therefore, open to the Revenue/taxing authority to consider the position of the assessee every year for the purpose of determining and computing the liability to pay tax or octroi on that basis in subsequent years. A decision taken by the authorities in the previous year would not estop or operate as res judicata for subsequent year. the Revenue cannot act mechanically without applying its mind to earlier facts and circumstances under which a view was taken by the taxman and the facts and circumstances of the assessment year in question calling to depart from earlier view. Where there is a fundamental aspect permeating through different assessment years allowed by the authorities to sustain, it would not be appropriate to change the view in a subsequent year except on justifiable grounds like change of circumstances or non-consideration of relevant material or statutory provisions, or failure on the part of the assessing or appellate authority to exercise jurisdiction for extraneous reason or small amount of revenue involved or other justifiable ground depending on the facts of each case. The assessee constructed the "Goel Complex" exclusively as part of its commercial activity to earn income by letting it on rent. Accordingly, the income so drawn shall be business income.
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2010 (5) TMI 484
Block assessment - undisclosed income – Search - key of the property and the property in was admittedly belonging to the assessee – Assessee could not explain the source of investment – no dispute that investment in the property was also not shown to the Revenue Department prior to the search - assessee explained that investment in property after inheriting cash amount through the Will - assessee in his statement did not explain the execution of Will or inheritance of any amount through the Will - Will is unregistered - authorities justified in making the addition on account of undisclosed income in the block period - investment was also not shown to the Revenue Department prior to the search and the assessee has not established that he had any intention to show the above investment to the Revenue Department r. Admittedly, reference to the DVO is made after the search on 18-10-2005 to make the valuation of the property. No evidence is found in the course of search or requisition or in post search enquiries that the assessee made any further investment in the property in question. The DVO filed his report of calculation on 25-11-2005. Thus, the reference to the DVO and his report of valuation cannot be treated as evidence found during the search or requisition u/s 132A of the IT Act. - orders of the authorities modified, restrict the addition to Rs. 4 lacs as against Rs. 15,20,000 made by the authorities – Appeal partly allowed
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2010 (5) TMI 469
Interest Tax Provisions - Whether the Appellate Authorities were correct in holding that the Assessee had entered into only a hire, purchase transaction with third parties and therefore no interest was received by the Assessee - by following the judgment of the Division Bench in the case of ICDS Ltd. - order set aside and the matter remitted back to the appellate authority – Decided in favor of the assessee by way of remand to appellate authority
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2010 (5) TMI 464
Block assessment proceedings - AO did not found any undisclosed income from the seized record of the persons searched, but he has initiated the block assessment proceedings just to examine the veracity of the creation/source of investment - block assessment proceedings can be initiated only for assessment of undisclosed income found as a result of search and not for the verification of capital accretion or source of investment - observation not tenable in view of the decision of the Hon’ble Supreme Court in the case of Manish Maheshwari [2007 (2) TMI 148 - SUPREME COURT OF INDIA] wherein held that satisfaction must be recorded by the AO that any undisclosed income belongs to any person other than the person with respect to whom search was made u/s 132 of the Act - matter remanded to regular Bench for deciding the appeals in conformity with the opinion of the majority
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2010 (5) TMI 453
Reimbursement of expenses - deduction u/s 44BB - Held that: - deduction of an amount received on account of reimbursement of mobilization charges by the NRC in respect of the transportation of rigs outside territorial waters of India is answered in favour of the Revenue and against the assessee in Sedco Forex International Inc. Vs. Commissioner of Income Tax & another, (2007 -TMI - 3679 - UTTARAKHAND HIGH COURT) The reimbursed amount (under reference) was the amount paid to the respondent on account of supply of plant and machinery to be used in the prospecting for, or extraction, or production of mineral oils in India. - the same is squarely covered, in favour of the Revenue and against the respondent / assessee, in view of the judgment rendered in Sedco Forex International Inc.'s case (2007 -TMI - 3679 - UTTARAKHAND HIGH COURT).
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