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Income Tax - Case Laws
Showing 201 to 220 of 236 Records
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2010 (5) TMI 438
Reassessment – notice beyond 4 years - failure on the part of the assessee to disclose all material facts necessary for the assessment - assessee furnished complete details relating to the sale of equity shares - notice issued beyond four years, barred by limitation - petition allowed
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2010 (5) TMI 420
Business loss - In the return, filed declaring income, the assessee claimed 100 per cent. depre- ciation amounting to Rs. 3,60,19,500 as Cost - Since there is no business of lease transaction there cannot be any loss on such business - Neither is there any finding that the finding of the Assessing Officer or the first appellate authority that the alleged lease transaction is bogus is unsustainable nor that there was any lease transaction established - The additional documents produced before the Tribunal as well as before this court are not better than the documents produced before the Assessing Officer and rejected by him, which was confirmed by the first appellate authority - Held that: entire lease transaction are bogus and mere paper transactions - attempts to evade tax – Held that: - respondent is not entitled to any deduction towards the business loss - Decided against the assessee
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2010 (5) TMI 277
Audit of accounts u/s 142(2D) – remuneration to be paid to the auditors – fixation
Held that: The auditor, to whom the work is assigned, is not under any obligation to accept the assignment and is very much at liberty, while making offer for appointing him as Special Auditor or while accepting the assignment, to insist upon payment of such fee as he may deem adequate for the work assigned to him. Therefore, necessarily he needs to know, what will be paid to him for the work proposed to be assigned to him. If the remuneration demanded by the person proposed to be appointed as Special Auditor is not acceptable to the Chief Commissioner or the Commissioner, as the case may be, he may not assign the work to him. But it would be difficult to accept that the special audit can be assigned to a person without fixing either the remuneration or the norms on which the remuneration is to be calculated after the work is completed and conveying the same to him. Taking such a view would amount to giving an arbitrary power to the Chief Commissioner or the Commissioner, as the case may be, to fix any fee which he may decide to fix irrespective of the quantum of the work and the scale on which the remuneration is to be determined taking the quantum of work into consideration. This, to our mind is not the scheme of Section 142(2D) of the Act.
Under the Scheme of the Act, the assessee has no role to play in determination of the remuneration by the Commissioner of Income Tax and it has to pay, to the Special Auditor, whatever amount is determined by the Commissioner. Hence, the mutual agreement between the Auditor and the assessee in no case could have been the sole basis of the order passed by him. Of course, there could be no objection to the Commissioner accepting any amount agreed to by the Special Auditor, in case the amount otherwise determined by him was found to be higher than the amount agreed to by the Auditor. But, before doing that he must apply his mind to all the factors and determine the amount which in his opinion should be paid to the Auditor.
CIT is directed to re-determine the remuneration of the petitioner on the basis of the scale approved by the Institute for the nature of the work carried out by the petitioner. If, however, the remuneration, payable to the petitioner in terms of the scale approved by the Institute, is found to be more than Rs 30 lakhs either for the year 2002-03 or for the year 2003-04 or for both, the remuneration will be restricted to Rs 30 lakhs for the year(s) for which it is found to be more than Rs 30 lakhs
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2010 (5) TMI 238
Income from House Property- The assessee firm has filed its return of income. The firm was engaged in real estate business and during the period from 1979 to 1984. It has constructed a commercial complex known as “Al Karim Trade Centre”. In response to the notices of hearing issued under sections 143(2) and 142(1) of the Income-tax Act, the counsel appeared and filed details called for from time to time. Mr. Syed Ghousuddin, who is supposed to be assisting the assessee-firm, and its auditor in their accounts, was present during the course of hearings. The managing partner of the firm, Sri Ghiasuddin Babukhan on oath stated that Mr. Syed Ghousuddin has prepared the profit and loss account and balance-sheet of the relevant previous year, Mr. Ghousuddin also gave statement on oath. Copies of these statements were made available to the assessee-firm. There was a search and seizure operation under section 132 of the Income-tax Act (for short “the Act”), in the case of the assessee-firm, and its partners. The seized books of account were examined and the assessee was allowed to take extracts of the seized papers, which would find mention later in this order. After examining the evidence and details furnished and evidence produced, and after giving due opportunity to the assessee-firm of being heard, the assessment was completed. Held that- the issue was to be decided favour of the assessee and against the revenue.
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2010 (5) TMI 178
Non filing of an appeal against an earlier order CIT(A) earlier – impact – revenue tried to justify the non filing of appeal in respect of the assessment year 2002-03 on the ground that the amount involved was less than two lakhs and therefore no appeal was preferred – Held that: - Had that been the legal position then there was bound to be a decision on record showing the reasons of non filing of appeal in respect of assessment year 2002-03. If the reason of non filing of appeal was monetary limit, then there was no difficulty in producing on record the decision to that effect. Moreover, there was no necessity of seeking explanation of the Assessing Officer for not preferring an appeal against the order of the CIT(A) dated 31.3.2006 - the appeal has not been filed by the Revenue for reasons other than the monetary limits – revenue appeal dismissed.
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2010 (5) TMI 177
Delay in filing of an appeal – condonation of delay – delay of 120 days - application under Section 5 of the Limitation Act, 1963 – Held that: - The reasoning adopted by Hon’ble the Supreme Court in the case of Hongo India Private Limited (2009 -TMI - 32749 - SUPREME COURT) is fully applicable to the question raised in the present appeals. Therefore, we are of the view that the applications seeking condonation of delay filed under Section 5 of the Limitation Act cannot be accepted. - , the applications filed under Section 5 of the Limitation Act seeking condonation of 201 days delay in filing the appeals is dismissed.
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2010 (5) TMI 176
Late deposit of employee’s contribution to the PF – Additions on account of late deposit of EPF and FPF - . The CIT(A) held that since all the payments were made within the grace period the relief of Rs.21,99,799/- deserves to be granted. - Tribunal upheld the order of the CIT(A) by observing that payments have been made within the grace period, the additions made by the Assessing Officer have been rightly deleted by the CIT(A). – Held that: - Hon'ble the Supreme Court (in Alom Extrusions Limited - 2009 -TMI - 35073 - SUPREME COURT) has held that the omission of the 2nd proviso to Section 43 B of the Act by Finance Act 2003 operated retrospectively from 1.4.1988 - The Honble Supreme Court further held that before amendment of the 2nd proviso to Section 43 B of the Act, the assessee were entitled to deduction only if the contribution stood credited on or before the due date given in the Provident Fund Act which created further difficulties. On a representation made to the Finance Ministry, one more amendment was made by Finance Act No. 2003 which was to apply retrospectively w.e.f. 1.4.1988. The rationale of Hon'ble the Supreme Court is that when a proviso in a section is inserted to remedy unintended consequences and to make the section workable, the proviso which supplies an obvious omission therein is required to be read retrospectively in operation, particularly to give effect to the section as a whole. In order to achieve that object strict and literal construction should be avoided.
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2010 (5) TMI 174
Capital receipt versus revenue receipt – receipt of donation – concept of mutuality – society - the ITAT observed that the donation of Rs. 20,50,000/- being donation and Rs. 1,46,200/- being TDS debited to P&L Account, as capital receipts not liable for tax – Held that: - The doctrine of mutuality has been applied to the assessee Society on the ground that no one can make a profit out of himself. It has been found as a fact that when a number of persons combine together and contribute to a common fund for an object and in that regard they do not have any dealings or relations with anybody outside the body then any surplus remaining to such a body is not to be regarded as a profit. Accordingly, if the participators to the fund are also the contributors and such an identity is established then the test of mutuality is fulfilled - The school is being run by the Society for the children of its members and any surplus remaining of the school attract the principle of mutuality. Any dealing done by the assessee Society or by the school with the non-members would not attract the principle of mutuality - Once the Assessing Officer has excluded Rs. 15,00,000/- received from Punjab Government on account of infrastructure fund donation then it follows that donations received by the assessee Society for development account from other have to be regarded as ‘capital receipt’. Accordingly, the orders passed by the CIT (A) and the Tribunal are not open to challenge
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2010 (5) TMI 172
Unexplained expenditure u/s 69C – Income from undisclosed sources u/s 68 – Additional evidence before CIT(A) under rule 46A – Held that: - where the difference in the cost of construction estimated by the DVO and the one proffered by the assessee is less than 10% then such a difference has to be ignored for the purpose of making addition to the income of the assessee - no exception is provided to entertain the appeal because once additional evidence of impeccable character has been lawfully entertained by the CIT(A) by confronting it to the Assessing Officer and the donors have come forward by confirming the donations by disclosing their Permanent Account Numbers and balance sheets etc. then doubts entertained by the Assessing Officer with regard to donations are rendered merely conjectures. If there was any suspicion then the Assessing Officer could have opened the assessment of the donors and not that of the assessee-respondent. - The version of the Assessing Officer that it was assessee’s own money which was routed through various donors has been found to be conjectural.
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2010 (5) TMI 171
Exemption to supporting manufacturer u/s 80HHC – ITAT directed the AO allow deduction under Section 80-HHC, on export incentives, received by the assessee, as a supporting manufacturer in the same manner, as in the case of direct exporter, treating the supporting manufacturer at par with the direct exporter and ignoring the provisions of Section 80 HHC(IA) read with Section 80-HHC(3A) read with clause (baa) of explanation to Section 80HHC(4C) of the Act – Held that: - Assessee is a manufacturer and exporter of Handloom products, where assessee manufactured the products and supplied to another exporter who finally exported these products, therefore, the assessee is supporting manufacturer and exporter. The assessee has received a disclaimer certificate from the main exporter for claiming benefit u/s 80HHC – Benefit of exemption to be extended to supporting manufacturer.
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2010 (5) TMI 170
Exemption u/s 10(23C)(iv) – CIT rejected the application of the petitioner for grant of exemption under Section 10(23C) (iv) of the Income Tax Act, 1961 on the ground of commercial activities - society was set up by the Government of Haryana to facilitate and simplify the admission procedure to the Technical Institutes in the University Departments, Government/Government aided/ Private Institutions located in the State of Haryana. – Held that: - merely because the society has accumulated some profit, does not mean that the petitioner –society is not achieving its object for which it was established. Merely because the society has earned some profit, does not make the society disentitle for the exemption - The Chief Commissioner, Income Tax, Panchkula is directed to decide the application of the petitioner
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2010 (5) TMI 102
Exemption u/s 10(23C)(vi) – public charitable trust - CIT declined to grant approval to the Petitioner under Section 10(23C)(vi) - Until Assessment Year 2004-05, the Petitioner was allowed an exemption under Sections 10(22) and 10(23C)(vi) in addition to Section 11 - CIT rejected the applications submitted by the Petitioner by an order dated 28 March 2009. While rejecting the application, the First Respondent held that the objects of the Trust permitted the construction of Ashrams for Gujarati Hindu women and hence, the Trust existed for objects other than education. - The second ground on which the applications were rejected was that the Trust had a surplus in excess of twelve percent from its activities and that the balance sheet for three years showed that the surplus was invested in making additions to the assets and increasing Bank deposits. Held that: the rejection of the approval by the First Respondent was manifestly misconceived. Only two reasons have weighed with the First Respondent in rejecting the approval, both of which have been found to suffer from manifest error. In Aditanar Educational Institution (2008 -TMI - 5552 - SUPREME Court), the Supreme Court, while construing the provisions of Section 10(22), held that the availability of exemption should be evaluated each year to find out whether the institution has existed during the relevant year solely for educational purposes and not for the purposes of profit. If after meeting the expenditure, a surplus results incidentally from an 19 activity lawfully carried on by the educational institution, the institution will not cease to be one existing solely for educational purposes since the object is not to make profit. – CIT directed to grant the approval
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2010 (5) TMI 99
Depreciation on membership card – membership card of Bombay Stock Exchange - The petitioner acquired a membership card of the Bombay Stock Exchange for a consideration of Rs.1.81 crores which was paid to an existing member of the Stock Exchange. The Assessing Officer did not accept the case of the assessee that it would be entitled to depreciation on the cost of the membership card. – CIT(A) allowed the claim of depreciation on the cost of the membership card “treating it as a plant” – ITAT disallowed the claim of depreciation saying that membership card could not be considered as an asset for allowing depreciation. Held that: it would be necessary to note that the distinguishing features in the case of Khandwala Finance Limited (a decision of the tribunal) which have been pointed out during the course of submissions by Counsel for the assessee are sufficient for this Court to hold that an opportunity should be granted to the petitioner to place its case on the applicability or otherwise of the decision in Khandwala Finance Limited before the Tribunal. – matter remanded back to tribunal
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2010 (5) TMI 98
Tax Deducted at Source (TDS) u/s 194J – liability of TPA - whether, while making payments to hospitals TPAs are required to deduct tax at source under the provisions of Section 194J – meaning of professional services - Circular 8/2009 dated 24 November 2009 Held that: a hospital by itself, being an artificial entity, or a corporate enterprise which conducts the hospital is not a medical professional. - when it imposed an obligation under Section 194J to deduct tax, Parliament imposed that obligation on any person (not being an individual or a Hindu Undivided Family) who is responsible for paying to a resident any sum by way of fees for professional services and the expression “professional services” has been defined to mean services rendered by a person in the course of carrying on inter alia the medical profession. Where the provision of medical services takes place within the institutional framework of a hospital, services are rendered as part of an umbrella of services provided by the hospital which engages qualified medical professionals who practise the medical profession. These are services rendered in the course of the carrying on of the medical profession. Hence, it is not possible to accept the submission that TPAs, when they make payments to hospitals are not liable to deduct tax at source under the provisions of Section 194J. – TPAs are required to deduct tax at source (TDS) Circular no. 8/2009 regarding imposition of penalty is in violation of the restraints imposed upon it by the provisions of sub section (1) of Section 119. To that extent, therefore the circular that was issued by the Board would have to be set aside and is accordingly set aside.
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2010 (5) TMI 70
Cost of acquisition – computation of capital gains – applicability of section 49 – cost of the previous owner - assets disposed of under family arrangement - According to the assessees, by virtue of the said family arrangement, half of the company’s said property came to the share of the present assessees and the other half went to the share of another family group. The half that came to the share of the present assessees was sold for an amount of Rs 2.09 crores. The Assessing Officer assessed capital gains at the hands of the present assessees on the basis of the said seized document. - The assessees herein sought to invoke the provisions of Section 49(1) of the Income Tax Act, 1961. The said plea was accepted by the Tribunal and the revenue is in appeal before us on this issue. Held that: Section 49(1) deals with the computation of cost with reference to certain modes of acquisition. It, inter alia, provides that where the capital asset became the property of the assessee on any distribution of assets on the total or partial partition of a Hindu Undivided Family or on any distribution of assets on the liquidation of a company, then the cost of acquisition of the asset shall be deemed to be the cost for which the previous owner of the property acquired it, as increased by the cost of any improvement of the assets incurred or borne by the previous owner or the assessee, as the case may be. In the present case, we find that the asset in question, namely, C-101 Maya Puri Industrial Area was not the property of a Hindu Undivided Family. Secondly, it was owned by the said company, namely, Ambitious Gold and there was no distribution of its assets because there was no liquidation of the company. - Section 49(1) same is not at all applicable. – Decided against the assessee
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2010 (5) TMI 69
Capital Gains – indexed cost of acquisition – cost of improvements - Receipt of an amount towards settlement – sale of property - It was agreed that out of a total consideration of Rs.15,76,05,316/- payable by the developer qua that property, Rs.4 Crores would be given to the appellant and remaining amount was to be paid to Reeta Wahi. - Receipt of this amount was treated as capital gain by the Assessing Officer (AO). The appellant resisted this move of the AO contending that he was not the owner of the property nor had any tenancy rights therein. He was only staying in the said property for the last more than 45 years and sum of Rs.4 crores was received by the appellant for handing over the vacant possession of the property in question in terms of Settlement Deed dated 25.11.2006. - Therefore, this amount was not received against transfer of any capital asset as defined under Section 2(14) of the Income Tax Act and was thus not taxable as capital gain. The AO rejected this contention taking note of the facts narrated above. – CIT(A) and ITAT also decided against the assessee. Held that: entire indexed cost of acquisition has to be deducted from the amount received by the appellant. – The question of law decided in favor of assessee
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2010 (5) TMI 68
Validity of assessment under section 147 - original assessments had been completed prior to four years of their reopening and, therefore, the notices under Section 148 could only be issued by invoking the proviso to Section 147 of the Income Tax Act, 1961. The said proviso makes it clear that no case can be re-opened after four years from the end of the relevant assessment year unless there is any income chargeable to tax which has escaped assessment for such assessment year, inter alia by reason of the failure on the part of the assessee to disclose fully and truly all material facts necessary for the assessment of that assessment year. Held that: It is clear that for invoking the proviso to Section 147 beyond the period of four years, there must be failure on the part of the assessee to either make a return under Section 139 or in response to a notice under Section 147/148 or to disclose fully and truly all material facts necessary for the assessment for that assessment year. Insofar as the filing of the return is concerned, that is not in dispute and, therefore, the focus is entirely on whether the assessee had failed to disclose fully and truly all material facts necessary for the assessment. – Decided in favor of assessee It was not expected of the assessee to foresee or forecast a future amendment which was to be brought into effect retrospectively. Therefore, The Tribunal has rightly concluded that the proviso to Section 147 could not be invoked merely because there was an amendment in the future which was introduced retrospectively and covered the period in question.
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2010 (5) TMI 67
Charge of interest u/s 234B and 234C – The Assessing Officer had passed an order under Section 154 of the Income Tax Act, 1961 on 25.10.2004 whereby excess MAT credit allowed earlier to the assessee was withdrawn and a demand of Rs 64,32,260/- was raised. The assessee’s contention was that the interest under Section 234B and 234C of the said Act should have been charged after setting off the MAT credit allowable under Section 115JAA. The Assessing Officer, however, did not agree with this submission of the assessee. – CIT(A) decided in favor of assessee and directed the Assessing Officer to allow MAT credit before charging interest under Section 234B and 234C – ITAT is a rectification order upheld the order passed by CIT(A). Held that: We find no infirmity in the order passed by the Income Tax Appellate Tribunal. No substantial question of law arises for our consideration. – revenue appeal dimissed.
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2010 (5) TMI 66
Capital gains – cost of shares - The actual cost of the shares sold was Rs 1,10,57,400/- and this figure was used for the purposes of computing capital gains under Section 48 of the Income Tax Act, 1961 (hereinafter referred to as “the said Act”). However, in the books of accounts, the assessee company followed Accounting Standard-13 and took the average cost of Rs 40,78,693/- as the cost price of these shares. The Assessing Officer issued a notice under Section 154 proposing to rectify the purported mistake in the intimation issued under Section 143(1)(a) of the said Act. - According to the Assessing Officer, the value of the shares was overstated in the balance sheet by Rs 69,78,707/- and the Assessing Officer required the assessee to indicate as to why the said amount should not be added to the returned income. Thereafter, in the order passed under Section 154/143(1)(a) of the said Act, the Assessing Officer made the aforesaid addition which was confirmed by the Commissioner of Income Tax (Appeals). ITAT deleted the additions. Held that: We agree with the conclusions arrived at by the Tribunal that this was a matter which could not have been adjusted under Section 143(1)(a) and certainly not a matter which could have been rectified under Section 154 of the said Act. We also note that the Assessing Officer as well as the Commissioner of Income Tax (Appeals) were confused by the two systems which were in operation. One was the manner in which the assessee was keeping his books in accordance with Accounting Standard-13 and other was the manner of computation of capital gains under the income tax regime. - What the assessee has done is to identify the 75,600 shares sold in the year in question and has taken the actual cost of these shares as Rs 1,10,57,400/- and indexed it and thereafter reduced the indexed cost from the actual sale price of the shares to arrive at the capital gains of Rs 3,40,11,091/-. This has been correctly computed in terms of the said Act and, therefore, there can be no grievance on the part of the revenue inasmuch as the capital gains has been correctly computed and tax thereon has been paid. – decided in favor of assessee
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2010 (5) TMI 65
Share application money - undisclosed income - During the course of assessment, when asked to prove the identity and creditworthiness of the applicants and genuineness of the transactions, the assessee company furnished copies of their applications for allotment of shares, confirmation of payments, copies of their Certificates of Incorporation, printouts of their PAN details, copies of their PAN cards as well as company details, downloaded from the site of the Department of Company Affairs, showing their addresses. Notices under Section 133(6) of the Act were issued to all the 12 applicants, who reiterated the confirmation given by them and also supplied copies of their accounts. The Assessing Officer, however, added the entire amount of ₹ 44 lakhs to the income of the assessee company, on the grounds that the parties were not produced by the assessee, some of the applicants had a common address during inspection by the Income Tax Inspector, five applicants were not found functioning at the given address and reply submitted by the applicants were late. – CIT(A) and ITAT deleted the addition. Held that: The Assessing Officer was not justified in adding the amount of share application money to the income of the assessee, merely because the applicants did not respond to the notices sent to them. If the Assessing Officer so wanted, he could have found out the current address of those applicants, who, according to the report of the Inspector, were not found functioning at the address given to the Assessing Officer, by summoning the Directors, etc. of those companies and asking them to furnish the current address of the company. The names and addresses of Directors, if not available with the assessee, could have been obtained from the office of Registrar of Companies or from the banks on which the cheques were drawn. No such attempt, however, was made by the Assessing Officer. In these circumstances, we found no reason to disturb the finding of fact recorded by the ITAT. – Decided in favor of assessee
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