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Income Tax - Case Laws
Showing 81 to 100 of 236 Records
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2010 (5) TMI 812
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... ... ..... no legs to stand. Therefore, we consider it just and proper to issue a direction to Ld. A.O. not to continue with the assessment proceedings in pursuance to the order u/s 263 up to 30th September 2010. Even after 30th September 2010 ample time will be available to the A.O. to frame the assessment in case the validity of 263 is upheld. Considering the entirety of facts we issue such direction to the A.O. not to proceed with the assessment proceedings up to 30th September 2010 or till the disposal of the present appeals whichever is earlier. The situation thereafter can be reviewed according to the facts prevalent at that time. These directions were pronounced in the open court on the date of hearing i.e. 21.05.2010. Both the parties had taken note of these directions. 14. In the result, the stay applications Nos. 24, 25,26,27,28,29 & 30/Del/2010 filed by the assessee are allowed in the manner aforesaid. 15. This decision was pronounced in the open court on 21st May, 2010.
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2010 (5) TMI 810
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... ... ..... that on merits the assessee has a good case and there was a justifiable case for the delay in filing the appeal which could not be brought on record at the time of filing the appeal. 4. In our considered opinion, the Bench having already taken a conscious decision of the reasons for the delay, by stating that despite a defect memo the assessee-Society did not come forward to explain the reasons for the delay, reconsidering the same issue in a misc. application would amount to review of the matter which is not permissible u/s.254(2) of the Act. Since we are satisfied that the assessee has not given satisfactory explanation for non-appearance on the date fixed for hearing and also because of the fact that the appeal was dismissed as unadmitted on account of the defects pointed out in the impugned order, we do not find any merit in the misc. application filed by the assessee-Society. Accordingly, the misc. application is rejected. Order pronounced on the 14th day of May, 2010.
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2010 (5) TMI 809
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... ... ..... ding the appeal, the learned CIT(A) shall pass a speaking order, keeping in mind, inter alia, the mandate of provisions of sec. 250(6) of the Act and ensuring that the conditions of section 80HHC are satisfied in the instant case while computing the deduction allowable to the assessee .With these directions, ground no. 3 in ITA no.1089/Ahd/2008, ground no.2 in ITA nos. 1242&3557/Ahd./2007 are disposed of. 35 Ground nos. 8 & 9 in ITA No.546/Ahd/2007, ground nos. 4 & 5 in ITA no. 546/Ahd./2007 and ground nos. 3 & 4 in ITA no.3242/Ahd./2007, being general in nature, do not require any separate adjudication while no additional ground having been raised in terms of residuary ground no. 4 in ITA no.1089/Ahd/2008, ground no.3 in ITA no. 1242& 3557/Ahd./2007 in these appeals, all these grounds are ,therefore, dismissed. 36. In the result, these three appeals of the Revenue are dismissed while those of the assessee are partly allowed, but for statistical purposes.
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2010 (5) TMI 808
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... ... ..... assessee to the seller. The Income Tax Appellate Tribunal relied upon a decision of the Supreme Court in the case of K.P. Varghese vs. ITO 131 ITR 597(SC) as also on the decision of this Court in CIT vs. Shakuntala Devi 316 ITR 46. In the latter decision, a Division Bench of this Court held that there must be a finding of the Revenue that the assessee had received amounts over and above the consideration stated in the sale deed. This is the primary burden which has been cast upon the Revenue and it is only when such burden is discharged that it would be permissible to the valuation as given by the DVO. In the absence of the burden having gone into being discharged, it was not permissible in law to make any inferences against the assessee. The Tribunal has merely followed the law which has been settled by the Supreme Court as well as by this Court. There is no question of law involved in the present case what to speak of a substantial question of law. The appeal is dismissed.
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2010 (5) TMI 794
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... ... ..... ced officers of the Govt., who do nothave an interest, it is thus expected that their decision will be fair and honest. Even if the Department / Public Sector Undertaking finds the decision unpalatable, discipline requires that they abide by it. Otherwise, the whole purpose of this exercise will be lost and every party against whom the decision is given will claim that they have been wrong and that their rights are affected. This should not be allowed to be done. ” 5. Since the Revenue for agitating the matter before this Tribunal has not obtained COD approval, we dismiss the appeal as un-admitted for want of such approval. In case the Revenue desires to prosecute the appeal on receipt of permission of C.O.D., they may file Misc. Petition before the Tribunal for recalling of the appeal by adducing reasons for delayed receipt of permission of C.O.D. 6. In the result, the appeal filed by the Revenue, is dismissed. The order pronounced in the open court on 17th May, 2010.
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2010 (5) TMI 792
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... ... ..... Ltd as OTS, cannot be related to purchase of plant and machinery, it cannot be reduced from the cost for the purposes of reducing allowable depreciation.” 18. That, in the year under consideration the Assessing Officer has to allow the depreciation on the W.D.V as brought forward from the earlier year. We therefore direct him to allow the depreciation on W.D.V as worked out after giving effect to the above order of ITAT in the assessee’s own case for the Assessment Year 2002-03. 19. The next ground of appeal is against charging of interest under Section 234B & 234C. At the time of hearing before us, the learned counsel fairly admitted the charging of interest is consequential. We, therefore, direct the Assessing Officer to recompute the interest-if any after determination of income as per our order. 20. In the result assessee’s appeal is partly allowed, while Revenue’s appeal is dismissed. This order is pronounced in open Court on 14th May, 2010.
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2010 (5) TMI 785
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... ... ..... is regard has been met out at the stage of learned CIT(A). In other words, the long-term capital gain from sale of house as shown by the assessee has been accepted. Thus, in this appeal, we are not concerned with this matter any more though this matter was also restored back to the Tribunal to the file of the CIT(A) for his fresh adjudication and during the course of fresh appellate proceedings, the learned CIT(A) has accepted the assessee’s claim. Let it be further mentioned that assessee’s claim for deduction u/s 54 against the capital gain arising from transfer of house property has also been accepted by the learned CIT(A) and AO has been directed to allow the assessee’s claim of deduction u/s 54 of the Act. Therefore, this issue is also not a matter of consideration in this appeal. 17. In the result, this appeal filed by the assessee is partly allowed in the manner as indicated above. 18. This decision was pronounced in the Open Court on 14th May, 2010.
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2010 (5) TMI 782
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... ... ..... t a subsidy or sale pesticides as reduced price the Revenue cannot sit over their judgment unless so empowered under law. The sale at reduced price is a business decision and cannot be substituted by the decision of the assessing authority. There is no allegation of any contumacious conduct by the Revenue. One of the grounds taken for disallowance is that there is no business connection which is not considered as sound. There is a clear business connection. So far as bye-laws are concerned it is for the principals to decide whether such subsidy can be granted without authority of byelaws. In our considered view, it is not for the Revenue to disallow the claim if it is otherwise connected with the business purpose of the assessee. As a result, we uphold the order of the learned Commissioner of Income-tax (Appeals) and dismiss the appeal filed by the Revenue. 9. In the result, the appeal filed by the Revenue is dismissed. The order pronounced in the open court on May 28, 2010.
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2010 (5) TMI 753
Disallowance of reimbursement of medical expenses – Held that:- The assessee being a company, the expenditure could not be held as personal expenses of the company as directors were appointed for the business purposes of the company – relying upon Sayaji Iron & Engg. Co. Vs. CIT [2001 (7) TMI 70 - GUJARAT High Court]- no material was brought on record to show that such payment was not in accordance with the terms of employment of Directors and was not authorised by the Board specially keeping in view that similar reimbursement was allowed in the immediately preceding year - no disallowance in the hands of the assessee company can be made on the ground that any amount of perquisite which was taxable in the hands of Director employee was not shown by such employee Director in his return of income - the action of the department should be against the said employee Director and not in the hands of assessee company- thus there is no reason to interfere with the order of the CIT(A) – Decided against revenue.
Proportionate disallowance of interest – Interest free advances – Held that:- Revenue could not point out how the advances given to different persons were not business advances of the assessee. In absence of any material brought on record, tribunal confirmed CIT order that the above advances were for the business purpose of the assessee and no disallowance of interest in respect of such interest free business advances can legally be made - interest free funds available with the assessee company was much more than interest free advance given to Karnataka Jewels Ltd. and no material on record to show that there was a nexus between interest bearing funds and interest free advance to the said Karnataka jewels Ltd.- the order of CIT(A) upheld - Decided against revenue.
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2010 (5) TMI 752
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... ... ..... on Vs. Deputy Commissioner of Income Tax settled that U.P. Forest Corporation is eligible for grant of certificate under Section 12-A of the Income Tax Act, 1961. In view of law settled by Hon ble Supreme Court there appears to be no justification to admit the appeal on the same issue. So far as condonation of delay is concerned once delay has been condoned there appears to be no justification to admit the appeal on the same issue. Being concluded by finding of fact no substantial question of law involved to entertain the appeal under Section 260 A of the Income Tax Act. Accordingly, appeal is dismissed in limine.
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2010 (5) TMI 719
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... ... ..... cession Act, 1925, in favour of the assessee vide order dated November 3, 2000. Considering all these facts and the relevant legal provisions, we are of the humble opinion that the Assessing Officer is not justified in reducing the amount of TDS from the amount of assessed tax for the purpose of computing interest liability of the assessee under sections 234A and 234B from the date of actual TDS by the bank, i.e., payer whereas interest has been charged by him under these two sections from the first date of the relevant assessment year under section 234B and from the due date of filing of return of income for the relevant assessment year. In our humble opinion, interest from the first relevant date as per the provisions of these two sections shall be computed after reducing the amount of TDS from the amount of assessed tax. We order accordingly. In the result, all these four appeals of the assessee are allowed. This decision was pronounced in the open court on 31st May, 2010.
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2010 (5) TMI 718
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... ... ..... he order of the Commissioner of Income-tax (Appeals). We have heard the rival submissions and considered the facts and materials on record. Even the apex court in the latest decision in the case of T. R. F. Ltd. v. CIT 2010 323 ITR 397 has held that after the amendment of section 36(1)(vii) of the Income-tax Act, 1961, with effect from April 1, 1989, 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. Following the above said decision of the apex court, we do not find any infirmity in the order of the Commissioner of Income-tax (Appeals) and as such, we uphold the same by rejecting this ground of the Revenue. In the result, Appeal No. 1606/Mds/08 is partly allowed for statistical purpose and Appeal No. 1607/Mds/08 is dismissed. The order was pronounced in the court on May 26, 2010.
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2010 (5) TMI 717
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... ... ..... rch 17, 2010 2010 322 ITR 158 has held that the law laid down in Dilip Shroff v. Joint CIT 2007 291 ITR 519 (SC) as to the meaning of word concealment and inaccurate continues to be a good law because what was overruled in Dharamendra Textile Processors case 2008 306 ITR 277 was only that part in Dilip Shroff case where it was held that mensrea was an essential requirement of penalty under section 271(1)(c). The hon ble apex court also observed that if the contention of the Revenue is accepted then in case of every return where the claim is not accepted by the Assessing Officer for any reason, the assessee will invite the penalty under section 271(1)(c). This is clearly not the intendment of the Legislature. In the background of the aforesaid discussion and precedent, we set aside the orders of the authorities below and delete the levy of penalty of Rs. 60,000. In the result, this appeal filed by the assessee is allowed. The order pronounced in the open court on May 14, 2010.
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2010 (5) TMI 716
Disallowance u/s 43A - not adding the loss incurred on account of difference in rate of exchange in foreign currency contract, to the cost of the asset - AO disallowed the claim on the ground that the payments were not actually made by the assessee-company and further forward contracts are not covered by section 43A - HELD THAT:- Amended law of section 43A applies. Now whether the assessee is entitled for claiming the loss on account of settlement of the foreign exchange forward contract or not, has to be considered in the light of the recent judgment of the hon'ble Supreme Court in the case of Asst. CIT v. Elecon Engineering Co. Ltd.[2010 (2) TMI 23 - SUPREME COURT] as considered the impact of section 43A both before amendment and after amendment. The court was in fact examining the deductibility of roll over premium in respect of foreign exchange forward contracts. The court has held that wherever the foreign exchange loans were availed of for securing capital assets, the decrease or increase would affect the capital asset. If the foreign exchange loan was acquired for working capital or other revenue commitments, the fluctuation effect shall be adjusted in revenue account.
Till the amendment brought in by the Finance Act, 2002, this adjustment has to be made on yearly basis evaluating the position on the last day of the concerned previous year. But after the amendment, the adjustment shall be made on the actual payment or settlement of contracts and dues. This position has been made clear by the hon'ble court in the above case.
The hon'ble court has further deliberated upon the capital nature and revenue nature of such adjustments arising out of foreign exchange fluctuation. Apart from the above general proposition of law, the hon'ble court further examined whether the roll over premium in respect of foreign exchange forward contract is eligible for depreciation in the nature of expenditure to be added to the cost of the capital asset ; or to be debited in the profit and loss account, if it is in the revenue account. If roll over premium on forward contract by itself is held to be admissible as a deduction or adjustment, then there is no doubt that the loss arising out of the forward contracts would be very much entitled to deduction or adjustment if it is a loss.
We are of the view that the issue raised by the assessee is squarely covered by the judgment in the case of Asst. CIT v. Elecon Engineering Co. Ltd.[2010 (2) TMI 23 - SUPREME COURT]. In the present case, there is no dispute regarding the facts of the case as explained by the assessee that the foreign exchange contracts were made for the purpose of acquiring capital assets and the forward contracts were settled during the previous year relevant to the AY under appeal.
Therefore, the claim of the assessee to adjust for the loss is legitimate. As the settlement has resulted in loss to the above extent, the said amount needs to be added to the cost of the concerned capital assets. Depreciation shall be allowed on the enhanced value of the capital assets. This issue is decided in favour of the assessee.
Alternative contention that the amount be allowed as revenue expenditure - This alternate contention is not sustainable in view of the judgment of the hon'ble Supreme Court in the case of Asst. CIT v. Elecon Engineering Co. Ltd [2010 (2) TMI 23 - SUPREME COURT]. The alternate ground is rejected.
Levy of interest u/s 234B - amount of tax payable u/s 115JB - add back the deferred tax provision to compute the book profits - Finance Act, 2008, has made a retrospective amendment to section 115JB by inserting clause (h) in Explanation 1 to section 115JB, according to which the book profit is required to be increased by an amount of deferred tax and provision thereof - HELD THAT:- As in the case of Royal Jordanian Airlines [2008 (8) TMI 392 - ITAT DELHI-A] that where one assessee is under a bona fide belief that income is not chargeable to tax, interest cannot be levied under section 234B. This proposition, tremendously supports the case in hand. Not only bona fide belief, but even the statutory mandate to add back the deferred tax provision to the book profits under section 115JB was unknown during the period of the relevant previous years.
We hold that the levy of interest under section 234B on the incremental amount of tax computed under section 115JB is not justified in the present case. Accordingly, the levy of the said interest is deleted.
Allowable business expenditure or not? - inter-corporate deposits written off - Case of the Revenue is that the business of the assessee-company is manufacture and sale of pellets, hot and cold rolled coils and sheets, etc., and not the activity of making investments and in dealing with finances - HELD THAT:- As decided in assessee own case memorandum of association of the assessee-company enables the assessee to carry on the business of investment for inter-corporate deposits, etc., and the assessee has indulged in such business by virtue of special resolution passed by the shareholders as required by the Companies Act and, therefore, the contention of the assessee that the loss was in the nature of business loss has to be accepted. The Tribunal accepted the contention of the assessee and held that the amount of inter-corporate deposits written off by the assessee was entitled to deduction in computing the taxable income. The Commissioner of Income-tax (Appeals) has allowed the ground raised by the assessee on this point following the above order of the Tribunal. The Revenue has not placed any order reversing the said order of the Tribunal or the judgment of any other High Courts before us. Therefore, the Commissioner of Income-tax (Appeals) as well as the Tribunal both are bound to follow the earlier order of the Tribunal.
Recompute the book profits u/s 115JB by deleting debenture redemption reserve from the net profit - HELD THAT:- In the present case, the debenture redemption reserve, even though in the nature of provision for ascertained liabilities, is in the capital account. When the debentures were issued and monies were collected by the assessee, the proceeds were not treated as income of the assessee-company. They were treated as loans, which always come in the category of capital liability. When the same capital loan is returned it would be a capital expenditure. So also the provision made for such repayment of debenture loan is capital in nature and not deductible in working out the net profits. Therefore, in the present case, even if the DRR set apart by the assessee-company is the provision for ascertained liabilities, it cannot be deducted in computing book profits. This position is supported by clause (b) of Explanation 1 to section 115JB.
Therefore, we find that the Commissioner of Income-tax (Appeals) has erred in allowing the assessee to deduct Rs. 25 crores from computation of book profits under section 115JB. We reverse the order of the CIT (Appeals) on this point and restore the order of the Assessing Officer to add back the amount to the book profits of the assessee-company.
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2010 (5) TMI 715
Disallowance u/s 40A(2)(b) - assessee has paid interest to relatives at the rate of 24 percent whereas interest is allowed to the outsiders at 12 percent
HELD THAT:- When the income-tax authorities have found that the borrowing transactions were not illusory or colourable and that the capital was borrowed by the assessee for the purpose of business and the amount of interest was paid, they have no jurisdiction to determine whether the rate of interest agreed to pay was reasonable or not and to disallow a portion of the interest which has been paid.
As in the case of Omkarmal Gaurishankar [1990 (9) TMI 123 - ITAT AHMEDABAD-C] held that the rate of 24 percent cannot be treated as unreasonable or excessive and therefore, directed allowance of the entire interest. Further, it is held that deposits being old, interest thereupon was never disallowed in the past, no disallowance in respect of interest is validly being made.
In this case also, interest has been paid in the past at the rate of 24 percent In view of the above, it is held that funds being used for business purposes coming over from the preceding assessment years, in the past years it having been allowed at the rate of 24 per cent., interest of 24 percent being not excessive or unreasonable in view of the factum that the assessee did not have to pledge any title deeds or security for obtaining loan as against banking formalities which being cumber some and lot of compliances, the funds being like a deposit in the account of the assessee, the disallowance being unjustified and deserves to be deleted. Thus the same is deleted and the appeal of the assessee is allowed.
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2010 (5) TMI 714
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... ... ..... ded back. It is clear from the above that nowhere has the Assessing Officer stated that the said amount of excise duty has been claimed as deduction by the assessee either in the profit and loss account or in the computation of income. There was claim of Rs. 90 lakhs for such reimbursement in the earlier assessment year 2005-06 but not in the assessment year 2006-07 which is under consideration. Since the amount was neither claimed in the profit and loss account nor in the computation of income for any excise duty demand during the assessment year 2006-07 under consideration, the disallowance of the same was a mistake apparent from record. Accordingly, we do not find any infirmity in the order of the Commissioner of Incometax (Appeals) holding that disallowance of Rs. 392 lakhs on account of excise duty reimbursement was a mistake apparent from record. In the result, the appeal filed by the Revenue is dismissed. The decision pronounced in the open court on the 31st May, 2010.
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2010 (5) TMI 713
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... ... ..... he law laid down in the Dilip N. Shroff v. Joint CIT 2007 291 ITR 519 (SC) as to the meaning of the word concealment and inaccurate continues to be a good law because what was overruled in the Dharamendra Textile Processors s case 2008 306 ITR 277 (SC) was only that part in Dilip N. Shroff s case where it was held that mens rea was an essential requirement of penalty under section 271(1)(c). The hon ble apex court also observed that if the contention of the Revenue is accepted then in the case of every return where the claim is not accepted by the Assessing Officer for any reason, the assessee will invite the penalty under section 271(1)(c). This is clearly not the intendment of the Legislature. In the background of the aforesaid discussion and precedent, we set aside the orders of the authorities below and delete the levy of penalty. In the result, the appeal filed by the assessee is allowed. The order pronounced in the open court on May 31, 2010 upon conclusion of hearing.
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2010 (5) TMI 712
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... ... ..... issue relating to allowability of interest expenditure to the file of the Assessing Officer with a direction to the Assessing Officer to verify utilisation of borrowed funds in acquisition of securities out of which the assessee has earned short-term capital gain, and to allow interest attributable to such borrowed funds, out of income offered under the head Short-term capital gain . We direct accordingly. Since there is no disparity on facts therefore respectfully following the order of the Tribunal in the case of the assessee s husband we allow the appeal of the assessee partly for statistical purposes. In the present case the assessee has also shown short-term capital gain of Rs. 5,20,417. The Assessing Officer shall examine this issue in accordance with the directions issued by the Tribunal in the case of her husband extracted supra. In the result appeal of the assessee is partly allowed for statistical purpose. The order pronounced in the open court on the 6th May, 2010.
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2010 (5) TMI 711
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... ... ..... 50C(2) of the Act and then to decide the issue accordingly, as per law. The Assessing Officer shall provide reasonable opportunity of being heard to the assessee. The matter with regard to the determination of sale consideration and capital gain shall remain open before the Assessing Officer, and both parties shall be at liberty to raise any other contention/contentions supported by any other document/documents as they may think fit and proper under the law. The assessee shall be at liberty to raise all other alternative contentions before the Assessing Officer and to produce any other further evidence or evidences, as he may be advised, which shall be duly deliberated upon, considered and decided by the Assessing Officer by passing a speaking order and reasoned order. In the result, both these appeals filed by two different assessee are allowed for statistical purposes. This decision was pronounced in the open court on 25th May, 2010 immediately after the hearing was over.
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2010 (5) TMI 710
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... ... ..... fee paid by the assessee for sale in foreign market has been held to be genuinely incurred. The Assessing Officer held only part of it allowable as revenue expenditure. In our view, penalty should not be levied merely because it is lawful to do so, as held by the hon ble Supreme Court in the case of Hindustan Steel Ltd. v. State of Orissa 1972 83 ITR 26 (SC). Looking at entirety of the facts and circumstances, in our view, a clear and bona fide debate existed vis-a-vis the assessee incurring expenses on drug registration fees being capital or revenue. With this bona fide debate, it cannot be held that the assessee furnished inaccurate particulars or concealed the particulars in respect of these expenses. In our view, the assessee s case by no means calls for imposition of penalty under section 271(1)(c) which is deleted. In the result, the appeal of the assessee is allowed. The order pronounced in the open court on this 25 day of May, 2010 after the conclusion of the hearing.
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