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Income Tax - Case Laws

Showing 181 to 190 of 190 Records

• 2012 (1) TMI 39
  

  Penalty u/s 271(1)(c) – two views were possible regarding taxability in the hands of the members of the A.O.P or in the hands of A.O.P. - matter referred to Special Bench – decided in favor of Revenue - Held that:- There were two views possible inasmuch as the Tribunal itself was in doubt as to which of the two views were to be preferred. And for this very reason, Tribunal required the matter to be considered by a Special Bench. It cannot be said that prior to that date, the assessee could not have had such a doubt in its mind when it had indeed filed its return. It is a settled principal of law that where two views are possible a penalty cannot be imposed on the assessee – Decided in favor of assessee.

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• 2012 (1) TMI 35
  

  Whether the provisions of section 32 of SICA would override the effect on the provisions of section 43B – BIFR recommended to consider granting exemption from the provisions of Section 43B – Tribunal relied on circular No.523 dated 05.10.1988 and 576 dated 31.08.1990 issued by the BIFR while allowing appeals - Held that:- Circular No.523 dated 05.10.1988 relates to the provisions of section 41(1), 79 and 115J and not section 43B. Thus, such reliance placed is unsustainable.

  By virtue of the provisions of section 32 of SICA, the scheme framed u/s 18 shall have the effect of overriding the provisions of the Income Tax Act, be it even the provisions of section 43B. Though u/s 43B, the A.O. may not have any discretion to allow any deduction in respect of interest payable, it is the case of the revenue that by virtue of the provisions of section 32 of SICA, the assessee, who has taken over the sick industry, would have the benefit of the provisions of the scheme. Therefore, the substantial question of law is answered in the negative i.e. against the revenue.

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• 2012 (1) TMI 34
  

  Fund or institution established for charitable purposes - Application for registration u/s 10(23C)(iv) rejected by the Director General of Income Tax(Exemptions) on ground that records and accounts were not properly maintained – Held that:- In the present case, the reasons given in the order do not appear to be germane to the conclusion reached. As indicated the explanation/justification of the petitioner has not been considered. Keeping in view the aforesaid aspects we set aside the order and pass an order of remit and direct the respondent to decide the application for registration u/s 10(23C)(iv) afresh keeping in mind the observations made in the case of American Hotel and Lodging Association Educational Institute vs CBDT & others (2008 - TMI - 4477 - Supreme Court Of India).

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• 2012 (1) TMI 25
  

  Dis-allowance of interest expense from allegadly interest income by Revenue – assessee, wholly owned subsidiary of Power Finance Corporation (PFC) was incorporated as a special purpose vehicle (SPV) for inviting bids for construction and building of an ultra mega power project - Commitment Advance received from Power Procurement Utilities of the States concerned transferred to PFC - PFC paid interest on the unutilized Commitment Advance - interest paid to the Power Procurement Utilities on the Commitment Advance reduced from interest income received from PFC credited to the capital work in progress - Held that:- CIT (Appeals) and Tribunal have specifically held that the interest income & interest expense, both were on capital account. This is not a case of surplus funds, which were available and investment were made in fixed deposits to earn interest. The interest paid to the power procurement utilities on commitment advances was capitalized. Interest paid and interest received were inextricably linked and have a commonality about their nature and character. They cannot be treated differently. - Decided against the Revenue

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• 2012 (1) TMI 24
  

  Penalty for concealment u/s 271(1)(c) – Business of money-lending – share application money deposited converted into loan in A.Y. 98-99 – non-acknowledgement of debt by receiver company(DISL) – no interest charged on such converted loans – wrote off loan as bad debts – deduction of bad debts disallowed by Department – Held that:- Though assessee furnished the director’s report, the actual write off, filing of balance sheets, memorandum and articles of association, letter to DISL etc. however, the assessee did not bring to the notice of the A.O. that no interest from the converted loan had been offered and assessed to income tax in any of the earlier previous years. If no interest was charged the amount cannot be considered as a money lending advance since the essence of money lending business is the charging of interest. When one of the important conditions for the allowability of bad debt u/s 36(2)(i) was not satisfied and the same was within the knowledge of the assessee, it was duty bound to disclose the same in order to show its bonafide. The particulars furnished by the assessee were thus not complete, and were, therefore, inaccurate. Order of the Tribunal restoring the penalty is upheld. - Decided against the Assessee.

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• 2012 (1) TMI 12
  

  Deduction u/s 80IC – Quantum of deduction u/s 80IC – new industrial undertaking set up by the assessee in the A.Y. 2005-06 at Dehradun – various documents placed by assessee to prove the existence of Dehradun unit/undertaking - Held that:- In view of the factual findings recorded by the CIT (A), affirmed by the Tribunal, and non-placement of any contrary material or documents by Revenue, there is no reason to interfere with the order of allowing deduction u/s 80IC to assessee. - Decided against the Revenue.

  The assessee may be eligible u/s 80 IC but the quantum of deduction is an incidental but an important aspect which must be considered and examined even though no question has been raised by the appellant on this aspect. The Tribunal did not examine the question of quantum of deduction inspite of the factual matrix referred to and stated in the assessment order. Therefore, the matter is remitted to the Tribunal to decide afresh the quantum of deduction u/s 80IC. - Decided in favor of revenue.

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• 2012 (1) TMI 10
  

  Levy of interest u/s 220(2) - requirement of notice – Held that:- (a) fresh notices of demand need not be issued every time the total income undergoes a change due to appellate or revisional orders - (b) a case where the assessee has paid the full amount of tax demanded by the AO pursuant to the assessment order stands on a different footing from a case where such demand was not satisfied in full and different considerations shall apply to such a case; (c) the original demand made by the AO on the basis of the assessment order is merely kept in abeyance or suspension during the entire proceedings by way of appeal or revision taken against the assessment and gets revived from inception once the assessment gets finally confirmed in those proceedings; (d) when the assessment order is finally affirmed, the doctrine of merger also applies and interest being compensatory in nature, the revenue is entitled to charge the same from the date of the original order which merged with the final appellate order; (e) as a corollary to the above, it follows that where an assessment is restored and the original demand gets revived from inception, the assessee is liable to pay interest u/s.220(2) of the Act from that date on the unpaid amount and any variation in the amount of the demand favourable to the assessee which was directed by any of the appellate authorities in the interregnum has no effect on the liability of the assessee to pay the interest.

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• 2012 (1) TMI 9
  

  Indo French DTAA - foreign company's business of operations of ships in international traffic carried out through agents's fixed place in India – question of existence of a Permanent Establishment – Dependent Agent Permanent Establishment(DAPE) or independent agent - Article 5, 7 & 9 of Indo French DTAA - determination of profits attributable to PE – Relief under article 9 – levy of interest u/s 234B - Held that:- Permanent establishment in the present case will be governed by Article 5(5) read with Article 5(6) of Indo French DTAA. Since there are no findings by the A.O., or the DRP, to the effect that the transactions between the agent and the assessee are not at an arm's length price, the agent is treated to be an independent agent in view of the provisions of Article 5(6). Such a finding by the revenue is a sine qua non for existence of DAPE. Thus, it is held that the assessee did not have any PE in India.

  Having held that the PE did not exist on the facts of this case, it is not really necessary to deal with profit attribution in the case of PEs.

  With respect to relief under Article 9 in respect of freight earnings it is held that the issue is covered against the assessee by a coordinate bench's decision in assessee's own case for the assessment year 2001-02 therefore, the assessee may take up the issue before Hon'ble Courts.

  Levy of interest under section 234 B – A.O. is directed to grant necessary relief. - Decided partly in favor of assessee.

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• 2012 (1) TMI 6
  

  Validity of re-opening of assessment – erroneous deduction u/s 80HHC & 80IA – change in opinion – Held that:- The question of deductions u/s 80IA and 80HHC were specifically examined at the time of original assessment proceedings. Assessee had justified the claim and furnished documentary evidence or proof. The quantification of the claim was justified. This is a case of change of opinion. The opinion of the Assessing Officer may have been legally erroneous but this cannot be a ground for initiation of re-assessment proceedings. An erroneous decision which is prejudicial to the Revenue can be revised but the said option was not exercised. - Decided against the Revenue.

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• 2012 (1) TMI 5
  

  DTAA with AUSTRALIA – Fees for technical services (FTS) or inclusive contracts of technical nature - applicability of Articles 7 or 12 of the DTAA – assessee having PE in India – whether income to be construed as 'business income' or gross receipts to be taxed without any deduction – assessee opted to be taxed as per the provisions of the DTAA - Held that:- The payment in the present case is for furnishing of evaluation report. The assessee undertook certain tests, mapping and studies. Drilling for tests as to evaluate is to gain information and knowledge. The payment made is to acquire technical information. Therefore, it is fee for technical services.

  As per articles of DTAA, once an assessee has a PE in the contracting state of which he is not resident, then paragraphs 1 and 2 of the Article 12 of DTAA would not apply. In such cases Article 7 or 14 would apply. Thus, it is held that Article 12 of the DTAA is not applicable.

  Article 7 deals with business profits and will apply. Expenses incurred by the assessee can be claimed as a deduction but only in accordance with and subject to limitation stipulated in the Act. Section 44D postulates non-applicability of Sections 28 to 44C in case of foreign company earning income by way of royalty or fees from technical services. Thus, Section 44D is applicable to compute taxable Income. - Decided against the Revenue

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