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Income Tax - Case Laws
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2011 (8) TMI 1184
... ... ... ... ..... , did not pursue the matter further. The Revenue did not examine the source of income of the said alleged creditors to find out whether they were creditworthy. There was no effort made to pursue the so-called alleged creditors. In those circumstances, the respondent could not do anything further. In the premises, if the Tribunal came to the conclusion that the respondent had discharged the burden that lay on it, then it could not be said that such a conclusion was unreasonable or perverse or based on no evidence. If the conclusion was based on some evidence on which a conclusion could be arrived at, no question of law as such arose”. In view of the above factual and legal position, we are of the view that this issue is squarely covered in favour of the assessee and against the revenue. We reverse the orders of the lower authorities and allow appeals of the assessee. 7. In the result, appeals of the assessee are allowed. 8. Order is pronounced in open court on 12.08.11.
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2011 (8) TMI 1183
... ... ... ... ..... art of sale proceeds and recognized as income when sale took place by way of transfer u/s 2(47) of the IT Act. In this view of the matter, we agree with the findings of the ld.CIT(A) in all respects.” 5. There is no dispute on the fact of offering of the sum of ₹ 7.5 lakhs in the AY 2003-04 and taxing of the same in that year, the year of completion of the project. The dispute relate if the said receipt should have been offered to tax in the AY 1999-00 on cash basis, when the receipt is undisputedly linked to the project. In our opinion, this issue is settled vide the discussion extracted above. Considering the above, we are of the opinion that the order of the CIT(A) has to be reversed on this issue. Factually, the said decision of the Tribunal was filed before the CIT(A) in the first appellate proceedings. Accordingly, the grounds raised by the assessee are allowed. 6. In the result, appeal of the assessee is allowed. Order pronounced in the court on 26-8-2011.
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2011 (8) TMI 1182
... ... ... ... ..... alore and in the case of M/s TaxCorp e-Practice Mega DVD reported in (2009) 30 SOT 1(Mum.), it has been held that where the assessee has made an application to the authority seeking extension for receipt of remittance as per FEMA regulation and the RBI has taken the remittance on record then it should be assumed that RBI has given deemed approval and such receipt is to be considered for deduction u/s 10B of the IT Act. 10.2 Having heard both the parties and having gone through the material on record and also judicial precedents cited supra, we find that the order of the CIT(A) is in consonance with the above decisions. Respectfully, following the decision of the co-ordinate benches, we do not find any reason to interfere with the order of CIT(A), hence the revenue’s appeal is dismissed. 11. In the result, the appeal of the assessee is partly allowed for statistical purposes and the appeal of the revenue is dismissed. Order pronounced in the open court on the 05-08-2011
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2011 (8) TMI 1179
... ... ... ... ..... (22)(e) of the I.T. Act and this ground is allowed.” 11. After hearing both the parties, perusing the record and going through the provisions of section 2(22)(e), we are of the considered opinion that in the light of the intention of the provisions of section 2(22)(e) of the Act and in the absence of indication in said section to extend the legal fiction to a case of loan or advance to a non-share-holder also, loan or advance to a non-share-holder cannot be taxed as deemed dividend in the hands of a non-share-holder. Since the assessee is not a registered share holder of the lender company, the provisions of section 2(22)(e) are not attracted in this case and, therefore, the ld. CIT(A) has rightly held that the AO was not justified in making the addition of ₹ 3,56,878/- as deemed dividend u/s 2(22)(e) of the Act. This ground of Revenue is also dismissed. 12. In the result, the appeal filed by the Revenue is dismissed. Order was pronounced in open Court on 5/8/11.
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2011 (8) TMI 1178
... ... ... ... ..... utside. No office or staff was maintained by the assessee for looking after the purchase and sale of shares. In the earlier as well as subsequent years, the surplus from the sale of shares was accepted as capital gain. Therefore, in our opinion, the above decision of the ITAT, Ahmedabad Bench would be squarely applicable. Similar view is taken by the ITAT in other decisions relied upon by the learned counsel for the assessee. In view of the above, we respectfully following the above decisions of the ITAT, direct the AO to treat the sum of ₹ 2,41,132/- as short term capital gain. Accordingly, the assessee’s appeal on the ground nos.1 to 5 is allowed. 6. Ground No.6 is against the charging interest under Section 234A, 234B and 234C, the ground being consequential, the AO is directed to charge interest after re-computation of the income, as per our above order. 7. In the result, assessee’s appeal is allowed. Order pronounced in Open Court on 12th August, 2011.
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2011 (8) TMI 1177
... ... ... ... ..... ia, the creditor. Regarding second plea of the assessee, that the assessee never maintained the books of accounts and therefore, the addition under section 68 can not be made, is also not tenable as the Hon’ble Kerala High Court, in a latest decision in the case of Smt. Indira Rani-vs- CIT reported in 211 ITR 346 (Ker.), has held that in absence of proper explanation, addition under section 68 can be made for the credit in bank account. The ld. CIT(A) also followed the decision of the Hon’ble Rajasthan High Court in the case of Indian Woollen Carpet Factory -vs- ITAT reported in 260 ITR 658 (Raj.). Therefore, I am of the view that addition of ₹ 1,50,000/- was rightly made by the AO and confirmed by the ld. CIT(A), in the impugned order. Hence, I incline to uphold the order of the ld. CIT(A). Resultantly, the appeal of the assessee is dismissed. 8. In the result, the appeal filed by the assessee is dismissed. Order pronounced in the Open Court on 30.08.2011.
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2011 (8) TMI 1176
... ... ... ... ..... by the appellant in its proper perspective. Revenue's appeal " 1. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in directing the A.O. to recompute the excess/ short consumption on the basis of directions given by his predecessor in assessee's own case for A.Y. '02-03, without considering the merits of the case" 54. The only issue in these cross appeals relate to addition of ₹ 32,08,452/- made the A.O. on account of excess consumption of raw material. The facts are similar to A.Y. 1998-99. Since the facts are similar to A.Y. 1998-99, for the reasons therein, vide paras 27 to 31, the ground of assessee are allowed and the ground of the Revenue is rejected. 55. In the result, appeal in ITA No. 5318/Mum/2006 is partly allowed, ITA No. 5319/Mum/2006 & ITA No. 447/Mum/2009 are allowed, ITA Nos.5540 & 5541/Mum/2006 and ITA No. 682/Mum/2008 are dismissed. Order pronounced in the open court on 19th August 2011.
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2011 (8) TMI 1175
... ... ... ... ..... onferring double benefit. His view was affirmed by the CIT(A) but the Tribunal allowed the assessee’s appeal. On further appeal by the revenue to the High Court, it was held that the income of the assessee being exempt, the assessee was only claiming that depreciation should be reduced from the income for determining the percentage of funds which had to be applied for the purposes of the trust. There was thus no double deduction claimed by the assessee. In coming to this conclusion the Punjab & Haryana High Court, inter alia, followed the judgment of the Hon’ble Bombay High Court cited above and distinguished the judgment of the Supreme Court cited supra. In this view of the matter, and respectfully following the judgment of the Punjab & Haryana High Court and the Bombay High Court cited above, we affirm the decision of the CIT(A) and dismiss the appeal filed by the revenue with no order as to costs. Order pronounced in the Open Court on 10th August 2011.
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2011 (8) TMI 1174
Disallowance of depreciation to assessee trust - Held that:- The income of the assessee being exempt, the assessee was only claiming that depreciation should be reduced from the income for determining the percentage of funds which had to be applied for the purposes of the trust. There was thus no double deduction claimed by the assessee.
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2011 (8) TMI 1172
... ... ... ... ..... ent angle. Suppose the assessee had not revised the return at all and no loss was shown in the original return due to some mistake but the AO in the assessment under section 143(3) is required to compute income or loss correctly. Once the loss has been determined by the AO under section 143(3), it cannot be said that the loss cannot be allowed to be carried forward when return has been filed within time allowed under section 139(1). We are therefore of the view that loss is required to be carried forward. This view is also supported by the decision of the Tribunal in case of Ramesh R. Shah vs. ACIT in ITA No.4312/Mum/2009 (supra), in which under identical circumstances loss arising from sale of shares of M/s. Phlox Pharma Ltd. has been allowed to be carried forward. We therefore, set aside the order of the CIT(A) and allow the claim of the assessee to carry forward the loss. 5. In the result, appeal of the assessee is allowed. Order pronounced in the open court on 17.8.2011.
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2011 (8) TMI 1171
... ... ... ... ..... els have fairly agreed to, adhering to the doctrine of staire decises, we uphold the order of the Ld. Commissioner of Income Tax (Appeals) and decided the issue in favour of the assessee. ” o p /o p 7. Since the facts and the documents involved in the appeals before us are the same as referred to in the decision of DCIT Vs. M/s. Indication Instruments Ltd. (supra) to which the ld. Sr. DR had fairly agreed, respectfully following the decision of the ITAT in the case of DCIT Vs. M/s. Indication Instruments Ltd. (supra) it is held that in the absence of any material brought on record by the assessing officer, the addition cannot be made merely on the basis of entries recorded on the paper found during the course of search at the place of a third party. We, therefore, decide both the appeals in favour of the assessee. o p /o p 8. In the result, both the appeals filed by the assessee are allowed. o p /o p The order pronounced in the open court on 05th August, 2011. o p /o p
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2011 (8) TMI 1170
Difference with ALP in respect of transactions with AEs - Costing Method adopted by AE's - The assessee-company has many ‘Associated Enterprises’ (AEs) with whom it has ‘international transactions' - The assessee-company has revenue billings with 2 AEs only upon which TPO has reproduced the working given by the assessee company of the profit margin in the case of transactions with those two AEs in which there is revenue billing and also with non-AEs.
HELD THAT:- We are of the considered opinion that the majority view adopted by the TPO has to be reversed and the view taken by the single member of the DRP has to be upheld being found by us to be correct as per law. In our opinion, the majority view, that the internal comparables are reliable than external comparables, which gives a more precise computation of ALP is a wrong inference based on misconception of facts because the assessee has considered transactions of only with two AE's as compared with the non-AEs. There is no dispute in connection with the method of determination of AlP in applying TNMM in respect of transactions with AEs because the MAM and TNMM adopted by the assessee have been accepted by the TPO.
TPO is not correct in observing that the transactions with AE at 40% and transactions with non-AEs at 2.44% do not reflect the true market conditions. She is not correct in her observation that the costs adopted by the assessee-company in arriving at the net margin of its transactions with its AEs and non-AEs needs to be rejected since the cost work is skewed(doctored). In our opinion, the assesseecompany has given proper explanation for the basis of costing adopted by the AE. There is no material on which the TPO has rested her above observation.
We are not in agreement with the ld. CIT/DR when he submits that the assessee-company is not correct in splitting its results to suit its convenience. It is not a case of convenience, the assessee company is undeniably having revenue billing with only two AEs. The decision in the case of PANASONIC INDIA PVT. LTD. VERSUS ITO [2010 (9) TMI 682 - ITAT, DELHI], as suggested by the ld. CIT/DR, would not apply here. The simple reason being that the facts of that case are entirely different and distinguishable.
Hence, with the force of the principle laid down in the above decisions regarding the scope and application of TNMM method fully support the assessee’s contention. This issue is, therefore, allowed in favour of the assessee and against the Revenue.
Interest on Advances made to AE's - The assessee-company had paid some amount to two of its subsidiaries as advance during the financial year but it has not charged any interest from both the transactions. AO invoked the interest. The ld.AR has assailed the jurisdiction of the Assessing Officer to touch this issue of charging interest as it was not a part of DRP’s directions.- HELD THAT:- We hold that the Assessing Officer has jurisdiction to consider this issue, as per law and as per the majority view (DRP view). These advances have been made on account of commercial expediency only as has been claimed by the assessee-company. The Assessing Officer has not disproved the reasons given in this regard. Therefore, the cumulative effect of these factual matrix is that this interest has been wrongly charged. As a result, we allow this issue in favour of the assessee.
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2011 (8) TMI 1169
Assessment of income - business center income - income from house property or business income Held that:- The property can be used only for a specific purpose i.e., I.T. operation and the assessee has provided complex service facilities and infrastructure for operating such business and on this factual matrix, we uphold the contention of the assessee that the income in question should be assessed under the head “Income From Business & Profession”.
Claim for deduction under section 80IA(4)(iii) computation - Held that:- Assessing Officer is directed to allow the claim of expenses as the disallowance was made only on the ground that the income is assessable under the head “House Property”. Consequent to our decision in ground no.1, we direct the Assessing Officer to allow both the expenditure claimed as well as the claim for deduction under section 80IA(4)(iii). Consequently, we set aside the order passed by the Commissioner (Appeals) and allow the ground no.2 and 3 raised by the assessee.
As the income in question is assessable under the head “Income From Business”, the addition made under section 23(1)(a) is to be necessarily deleted
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2011 (8) TMI 1168
Deduction u/s 80IA(4) - Retrospective Effect of Explantion u/s 80IA - Assessee has entered into infrastructural development project promoted by State Govt - AO disallowed such deduction on the basis of explanation added in section 801A(4) through Finance Act, 2007 and 2009
HELD THAT:- We have gone through the facts of case, the case of the department is that the explanation added to section 80IA(4) by Finance Act, 2007 with retrospective effect from 1.4.2000 and thereafter amended by Finance Act, 2009 with retrospective effect from 1.4.2000 is applicable. Since the explanation to section 80IA(4) has been added and as per explanation if any work is allotted to an assessee on contract basis then no deduction under section 80IA(4) is allowable.
Once in a particular year an assessee has been declared as a Developer then on the same set of facts the assessee cannot be held as a Contractor in a subsequent year. Therefore, the contention of ld. A/R that once assessee has been held as a Developer then in next year or the year under consideration it cannot be held as a Contractor, is acceptable.
We have seen the Explanation added to section 80IA by Finance Act, 2007 and amended by Finance Act 2009 and found that there is no material difference in the language of Explanation added by Finance Act, 2007 and amended by Finance Act, 2009. There is only difference of words i.e. the Central or State Government were included by the Finance Act, 2009. Otherwise, the language is same. The language of the Explanation says that if the Enterprise is a contractor then deduction under section 80IA (4) will not be allowable.
After going through clauses of agreement, according to which assessee has to develop the design and has to be approved by the Engineer-in-Charge and thereafter the manufacturing of Gate has to be started. The awardee has to develop the design itself. If there was no development of design then there could not have been payment on account of development of design. Tender specifications specifically provide the cost of design which is 2%. There is also clause of payment on account of maintenance and running and from all these clauses it is established that assessee is not merely a contractor but a Developer also and as per Explanation added to section 80IA the Developer is not barred for deduction under section 80IA(4).
On ground that assessee has not invested its own funds as they were taken from the VIDC. We have discussed various clauses of detailed Tender Notice, the assessee has invested its own money in developing the design of Gates and manufacturing the Gates after approval of the Engineer-in-Charge of the VIDC. After getting satisfied, then only payment is to be approved and made. Therefore, this is not a case of financing the project by the Corporation or reimbursement of expenses by the Corporation. It is the investment of the assessee only and, therefore, the argument of ld. D/R does not have weight on this point.
The ld. CIT D/R has relied on the decision of Special Bench in the case of BT. PATIL & SONS BELGAUM CONSTRUCTION (P.) LTD. VERSUS ASSISTANT COMMISSIONER OF INCOME-TAX, CIRCLE 2, KOLHAPUR [2009 (10) TMI 521 - ITAT MUMBAI]. This decision of Special Bench has been over ruled now by the Hon’ble Bombay High Court in case of COMMISSIONER OF INCOME-TAX VERSUS ABG HEAVY INDUSTRIES LIMITED [2010 (2) TMI 108 - BOMBAY HIGH COURT].
In the present case the facts are on more stronger footing as assessee has to develop the design of gates of dam and thereafter they have to fix the gates in the dam and they have to operate and look after the maintenance also for two years. Therefore, in our humble view the assessee is entitled for deduction under section 80 IA(4) even after the decision of Special Bench in case of M/s. B.T. Patil & Sons and even after Explanation added in section 80IA(4) by Finance Act, 2007 and amended by Finance Act, 2009 with retrospective effect from 1.4.2000 - Decision in favour of Assessee.
Disallowance on account of Traveling, telephone and Prior Period Expenses - AO made disallowance as such expenses were not for business purposes - Also, being prior period expenses disallowance was made - HELD THAT:- Regarding traveling and telephone expenses - how the expenses are not for business purposes, AO has not brought any material on record. Assessee filed full details regarding such expenses, therefore, we delete the addition on account of telephone and traveling expenses - Decision in favour of Assessee.
Regarding disallowance of expenses being prior period expenses, assessee did not produce any evidence in support of his claim. Therefore, the expenditures were disallowed by AO and confirmed by ld. CIT (A) - Decision against Assessee.
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2011 (8) TMI 1167
... ... ... ... ..... his income and/or that it represented his concealed income. Here again it is case where the surrender was not made by the Assessee under circumstances under which the surrender was made by the Assessee in the case before us. 15. We are of the view that imposition of penalty would depend on facts and circumstances of a given case. On the facts of the present case, we are of the view that the circumstances under which surrender was made by the Assessee , the fact that due his age he could not travel to Calcutta to verify details, the fact that he wanted to buy peace and avoid litigation etc., shows that the explanation offered by the Assessee is bonafide. In the circumstances, we are of the view that penalty should not be imposed on the Assessee. We therefore direct that the penalty imposed should be cancelled. We order accordingly. The appeal of the Assessee is allowed. 16. In the result, the appeal is allowed. Order pronounced in the open court on the 5th day of Aug., 2011.
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2011 (8) TMI 1166
... ... ... ... ..... held that even under the amend provision of section 147 the concept of change of opinion has not been oblitrated and it is an inbuilt test to check abuse of power by the Assessing Officer. Their lordship have observed that the AO has power to reopen provided tangible material to come to the conclusion that there is escapement of income from assessment. In view of the above discussion and when that there is no new information or material came to the knowledge of the AO after passing the original assessment u/s.143(3), the reopening of the assessment is not sustainable and liable to be set aside. Accordingly we hold that the reopening of the assessment in this case is against law and consequent reassessment is null and void. In view of our finding that the reassessment is invalid, no propose to go to the merit of the addition made on the issue of technical know how fee. 11. In the result, the appeal of the assessee is allowed. Order pronounced on this 24th day of August, 2011.
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2011 (8) TMI 1165
... ... ... ... ..... hat even in the remand report, the AO had reported that some of the vouchers were self made and the supporting bills were not equivalent to vouchers.” o p /o p 17. Having heard the rival contentions and having perused the material on record, we see no reason to interfere with the well reasoned order of the CIT(A). As has been rightly observed by the CIT(A)that the AO has not pointed out any specific discrepancy or defects in the vouchers produced by the assessee and has simply disallowed 20 of the expenditure on the ground that some of the vouchers are self made. This kind of adhoc disallowance is devoid of any legally sustainable foundation and based on generalized and vague observation which cannot meet 0judicial approval. The CIT(A) has rightly deleted the impugned disallowance. We approve and confirm his action. o p /o p 18. Ground No.3 is dismissed. o p /o p 19. In the result, appeal is dismissed. o p /o p Pronounced in the open court on 29th August, 2011 o p /o p
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2011 (8) TMI 1163
Penalty u/s 271(1)(c) - TDS default - Held that:- Tribunal was of the opinion that due to ignorance of the provision containing in Section 40(a)(ia) of the Act, the assessee did not deduct TDS from the payment made to labour, transport and carting expenses. Tribunal was also actuated by the fact that the C.A. who audited the accounts of the assessee under Section 44AB did not point out any infirmity on account of non-deduction of TDS otherwise, all the relevant accounts were adduced before the Assessing Officer. Thus, when the Tax audit report also did not point out the TDS default to the assessee, the Tribunal concluded that the mistake made by assessee was bonafide and the explanation was found genuine.
The Tribunal drew support from the order of CIT(A) that there was no concealment nor was this is a case of furnishing of inaccurate particulars. The reasonings given by both the adjudicating authorities concurrently cannot be held as perverse nor are there any grounds made out by the Revenue to dislodge the findings.
Resultantly, when there is no concealment nor any occasion of furnishing inaccurate particulars to bonafide mistake, Tribunal rightly uphold the order of CIT(A), deleting the penalty, therefore, this Tax Appeal merits no consideration as question of law is to be determined. Hence, same is dismissed.
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2011 (8) TMI 1162
... ... ... ... ..... d instead, they pay the monthly subscription after deducting the amount of dividend earned. Members who have bid for the chit in auction have the liability to keep the contribution to the chit till the end of the chit period and the prized members get dividend in future months also. Usually the discount, namely, the sum of money, which the prized subscriber is required to forgo, decreases over periods. The person getting money in the last period received the full scheme amount.” 5. In view of the above findings of the various courts, we are of the opinion that the CIT(A) is justified in holding that the payment of dividend to the subscribers of a chit towards dividend does not partake the character of interest and accordingly the assessee is not liable to deduct TDS u/s. 194A of the Act and not liable for interest u/s. 201(1) and 201(1A) of the Act. 6. In the result, both the appeals of the Revenue are dismissed. Order pronounced in the Open court on 11th August, 2011.
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2011 (8) TMI 1161
... ... ... ... ..... of transfer of capital asset is less than the value adopted for the purpose of payment of stamp duty, the value so adopted shall be deemed to be the full value of consideration for such transfer. But these facts alone are not sufficient to conclude that assessee concealed his income or furnished inaccurate particulars. 8. On similar facts, the Chennai Bench of the Tribunal in the case of Mrs. N. Meenakshi, 319 ITR 262, the penalty has been deleted. In this case also the addition was made in view of provisions of section 50C. The matter reached to the Tribunal and the Tribunal cancelled the levy of penalty by holding that no income was concealed as no inaccurate particulars were furnished. 9. In view of the above facts and circumstances, we hold that ld. CIT (A) was justified in canceling the levy of penalty. Accordingly, the order of ld. CIT (A) is confirmed. 10. In the result, appeal of the department is dismissed. 11. The order is pronounced in the open court on 19.8.2011.
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