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Income Tax - Case Laws
Showing 261 to 280 of 662 Records
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2012 (12) TMI 730
Net interest and commission received from head office - CIT(A) deleted the addition - Held that:- Following the precedent for assessment year 1997-98 wherein relying on the case of Sumitomo Mitsui Banking Corpn. v. Dy. DIT (IT) [2012 (4) TMI 80 - ITAT MUMBAI] wherein held that neither any interest/commission received by the Indian PE from HO/other overseas branches can be charged to tax, nor there can be any deduction towards interest/commission expenditure incurred by the assessee towards HO /overseas branches & restored the matter to the file of AO with a direction to exclude the such amount and also not to grant deduction in respect of interest/commission received from the overseas HO/branches.
Disallowance of broken period interest on PSU bonds - Held that:- The assessee switched over from one recognized method of valuation of bonds and securities to another recognized method in the previous year relevant to the assessment year under consideration in respect of PSU bonds. Broken period interest which was hither to capitalized came to be considered as deduction in the year of purchase. This changed method has been undisputedly followed by the assessee consistently in subsequent years. Considering the earlier order passed by the Tribunal in assessee's own case for AY 1991-92, the Tribunal decided it in favour of the assessee by holding that interest paid on broken period was liable to be allowed as deduction against the interest received in respect of the broken period - in favour of assessee.
Interest on NOSTRO account - CIT(A) deleted charging of interest & enhancement to the tune of Rs. 27,31,95,602 u/s 14A - Held that:- Following the precedent for assessment year 1997-98 the interest of Rs. 3.98 crore on NOSTRO account is chargeable to tax and resultantly the disallowance u/s 14A made to the tune of Rs. 27.31 crore is deleted - grounds raised by the assessee as well as Revenue in this regard are allowed.
Taxability of income at the rate of 48% as applicable to non-resident company - Held that:- The assessee fairly admitted that this issue has been decided against the assessee in earlier years - The impugned order on this issue for the current year as well and dismiss this ground.
Interest received from branches on placement of overseas deposits - should it be charged to tax - Held that:- The interest received from branches should not be charged to tax as it is a transaction with self, the view has consistently been taken in earlier years but since the exact amount of interest received by the assessee from its HO/overseas branches is not emanating from record, AO is directed to find out such amount of interest received from HO/overseas branches and exclude it from the computation of total income - in favour of assessee for statistical purposes.
Disallowance of loss on revaluation of unmatured forward foreign exchange (Forex) Contracts - Held that:- As decided in DCIT Versus Bank of Bahrain & Kuwait [2010 (8) TMI 578 - ITAT, MUMBAI] the loss incurred by the assessee on account of evaluation of the contract on the last day of the accounting year i.e. before the date of maturity of the forward contract, is allowable as deduction - AO directed to allow loss of Rs. 7.14 crore in this year and compute loss/profit on Forox contract maturing in the previous year relevant to the assessment year 1999-2000 by considering the impact of allowing of loss of Rs. 7.14 crore - in favour of assessee.
Exemption of gross interest earned from tax free securities u/s 10(15) - Held that:- Exemption u/s 10(15) is to be allowed on gross interest and not on the net interest.
Disregard the refund while calculating the interest u/s 234B - Held that:- CIT(A) has rightly considered the mandate of sections 234B and 234D. Obviously, the interest u/s 234B is required to be calculated on the basis of total income computed without considering the refund determined u/s 143(1).
Disallowance of interest earned from HO was lower as compared to interest paid for FCNR-B Deposit - Held that:- Simply because the assessee paid interest on domestic deposits at a little higher rate than that it received on FCNR-B Deposits, it cannot be said that the interest paid should be disallowed to that extent.
Write off of premium paid on purchase of securities amortised over the life of investments - Held that:- In agreement with the view canvassed by the CIT(A) as that when the assessee is purchasing securities as stock-in-trade, there can be no question of amortizing the premium paid for the purchase of securities over the life of such securities. The purchase price so paid has to be taken as such by disregarding the assessee's view point that the premium on purchase of securities should be amortized over the life of investment. To this extent the view taken by the CIT(A) approved with a little modification that not only when the securities are not only sold but also even when these get matured, income from then should be computed with reference to the cost of purchase of securities.
Deduction independent of the provisions of section 44C - CIT(A)deleted the expenses claimed by the assessee on account of HO expenses independent of the provisions of section 44C - Held that:- Facts and circumstances of this ground are similar to those prevailing in the earlier years in which it has been held that the deduction has to be allowed independent of the provisions of section 44C - if during the fresh examination, the AO finds that the expenses of Rs. 1.06 crore or any part thereof represent apportionment of HO expenses as per Explanation to section 44C, such allocated expenses will not be allowed as deduction independent of section 44C. To the extent the expenses are found to be exclusively incurred by HO for the assessee, they will not fall within the definition of HO expenses and accordingly allowed as deduction independent of section 44C. This ground is, therefore, allowed for statistical purposes.
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2012 (12) TMI 729
Undisclosed Rental Income – CIT(A) deleted the addition - Held that:- According to the rent agreement, if the figure of 10% increase is used, the rent receivable from 7.12.2006 onwards should have been Rs. 63,888/- p.m. Similarly, the rent receivable from 7th December, 2007onwards should have been Rs. 70,2777- as per the rent agreement.However, the assessee is only showing rental income of Rs. 55,000/- p.m. in the return of income - As per the agreement
actual rent receivable is to be ascertained with reference to the relevant clause of the Rent Agreement, as relied upon by the AO. The CIT(A) has not disputed the correctness of the said clause. Also the said agreement has been entered by the concerned party at will and voluntarily, therefore, there is no statutory bar u/s 23(1) to exclude the said express terms, for the purpose of enhancement of rent in the said Rent Agreement. Having regard to factual matrix of the case, documentary evidence in the form of Rent Agreement cannot be ignored and, hence, the findings of the CIT(A) are reversed and findings of the AO restored - in favour of revenue.
Subsidy receivable – Capital vs Revenue Receipts – Held that:- A bare perusal of the Office Memorandum issued by Govt. of India dated 07.01.2003, as reproduced above, clearly reveals the eligibility for such capital investment subsidy @ 15% of their investment in Plant & Machinery subject to ceiling of Rs.30 lacs. The subsidy is also avai lable to the existing units, on their substantial expansion - following case of CIT V Ponni Sugars & Chemicals Ltd. (2008 (9) TMI 14 - SUPREME COURT) that subsidy for repayment of capital loan is capital receipt. It was held by the Hon'ble Apex Court that where main eligibility condition in scheme, under which assessee Sugar Mill was granted subsidy, was that subsidy must be utilized for repayment of loans taken by assessee to set-up new unit or for substantial expansion of existing unit. In such a situation, the subsidy is in the nature of capital receipt and not exigible to tax - in favour of assessee
Capitalization of Water and Electricity Expenses - Held that:- Copy of account, from which addition has been made, represents details of electricity expenses, which had already been transferred to pre-operative expenses under the head Fixed Assets and no deduction has been claimed in the Profit & Loss Account. Having regard to such contention of the assessee, duly supported by documentary evidence, CIT(A) deleted the addition in respect of such transferred pre-operative expenses - no infirmity in the findings of the CIT(A), and hence, the same are upheld - against revenue.
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2012 (12) TMI 728
Disallowance of interest u/s 36 - There was a debit balance throughout the year and there was opening debit balance and even on closing of the year there was a debit balance - Assessee has in fact made purchases of Rs. 5.40 crores and even sales have been made at Rs. 3.10 crores – Held that:- As concluding from the fact of the case assessee had made regular business dealings and the amounts going into debit are on account of sales when the assessee was doing business with the sister concern then it is natural that some time account may be in debit. Addition deleted. In favour of assessee
Disallowance of expense u/s 14A – Expense incurred in relation to earn exempt income – Assessee has incurred interest expenses whereas income from investments was found to be exempt - Held that:- As the disallowance u/s 14A is based on Rule 8D which has been noted above was applicable during the year under consideration and which is in consonance with the decision of Godrej and Boyce Manufacturing Co. Ltd. (2010 (8) TMI 77 - BOMBAY HIGH COURT). Therefore, restore that of the AO by confirming the disallowance u/s 14A rule 8D of IT Rules is applicable in the year before us and disallowance has been worked out as per Rule 8D. Issue remand back to AO in favour of assessee
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2012 (12) TMI 727
Non deduction of TDS on interest accrued on FDRs - Interest charged u/s 201/201(1A) - Held that:- The Jammu Development Authority is in exempted category where the provisions of section 194(1) are not applicable. Also that exception provided in section 194A(3)(iii)(f) and as per notification No.3489 dated 22.10.1970 the Jammu Development Authority is a creation of J & K Development Act and satisfies the condition at Entry No.39 of the said notification thus uphold that no tax was deductible on accrued interest on FDRs of Jammu Development Authority with J & K Bank Ltd - in favour of assessee.
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2012 (12) TMI 726
Deduction u/s 80IB - Central Excise Duty refund & Interest subsidy - Capital or revenue receipt - Held that:- Looking to the the incentives provided to the industrial units, in terms of the new industrial policy, for accelerated industrial development in the State which is certainly a purpose in the public interest, the incentives provided by the office memorandum and statutory notifications issued in this behalf, to the appellants-assessees, cannot be construed as mere production and trade incentives & by any stretch of reasoning, be construed as production or operational incentives for the benefit of assesses alone - Following the decision of court in case of Shree Balaji Alloys v. CIT and Another [2011 (1) TMI 394 - JAMMU AND KASHMIR HIGH COURT] the receipt of Central Excise Duty Refund and interest subsidy to be treated as a ‘Capital Receipt’ as against its treatment as ‘Revenue receipt’ by the A.O and not liable to be taxed - Decided in the favour of the assessee.
Late deposit of PF and disallowance u/s 40(a)(ia) – Held that:- first appellate authority has passed a well reasoned order based on facts and materials available on record, which requires no interference at our level - ground of the Revenue dismissed.
Addition on account of late deposit of EPF u/s 36 and deduction u/s 80IB – Held that:- FAA has passed a well reasoned order based on facts and materials available on record, which requires no interference following the decision of the ITAT, Amritsar Bench, in the case of M/s. Sun Pharmaceuticals [] which is squarely applicable to the facts of the issue in hand, this ground of the revenue is dismissed - this ground of the Revenue is also dismissed.
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2012 (12) TMI 725
Deduction u/s 80IB - Central Excise Duty refund & Interest subsidy - Capital or revenue receipt - Held that:- Following the decision of court in case of Shree Balaji Alloys v. CIT and Another [2011 (1) TMI 394 - JAMMU AND KASHMIR HIGH COURT] the receipt of Central Excise Duty Refund and interest subsidy to be treated as a ‘Capital Receipt’ as against its treatment as ‘Revenue receipt’ by the A.O - Decided in the favour of the assessee.
Transport Subsidy – Held that:- Transport subsidy is not derived from the activity of the industrial undertaking though it may be attributable to it and therefore, cannot be said to be treated as part of the profits and gains derived from the industrial undertaking - no deduction is available u/s 80IB on the amount of freight subsidy - order of A.O. is affirmed/confirmed.
Treating interest as income derived from industrial undertaking - Held that: - Following the decision of in case of M/s. Pandian Chemicals [2003 (4) TMI 3 - SUPREME COURT] interest cannot be treated as income derived from industrial undertaking for the purpose of computation of deduction u/s 80IB – ground of assessee is dismissed.
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2012 (12) TMI 724
Long term capital gain – Purchase and sale of Property - whether for making profits or to use it for Residential purposes - Held that:- It is a residential house, which is a subject matter of long term capital gain u/s 54 and it is any other asset which is not a residential house which is a matter of capital gain u/s 54. There is no finding of the AO that the assessee has claimed exemption u/s 54F. It is also undisputed that the assessee was the owner of residential house/flat at Delhi at Vasant Kunj which was sold during the impugned year and capital gain was earned by the assessee which was invested by purchase of a residential house at Amritsar. These facts are coming in the order of the CIT(A) itself and as per statement of total income of the assessee it will be interest of justice, if the matter is setaside to the file of the CIT(A) who after considering the provision of section 54 instead the provisions of section 54F will decide the issue afresh.
Trading addition being difference between sundry debtors and the sales – Held that:- Books of account of the assessee have not been rejected. The assessee having filed all the copies of account of trade creditors as confirmed by the AO by issuing notice u/s 133(6) therefore, the genuineness of the trade creditors cannot be doubted - ground raised by revenue dismissed
Addition due to inadequate household withdrawals – Held that:- Assessee was living in a joint family and A.O. has not considered the withdrawals made by other members of the family, which were on record CIT(A) after considering the submissions of the assessee deleted the addition made by the AO on account of household withdrawals - CIT(A) rightly deleted the addition.
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2012 (12) TMI 723
Allocation of expenditure between the brokerage business and trading - Speculation Loss – Held that:- Upholding the allocation of expenditure between the two lines of business, only 5% of the expenditure be allocated against the income from trading in shares in the Assessee’s own name (speculation income) and the balance against the brokerage business Income. In this expenses of Kakinada Branch should be excluded. The same ratio will be applicable to depreciation as well. The balance expenditure should be set off against the brokerage income. As Assessee had earned profits in the business of trading in shares in their own name and there is no carried forward speculation losses to be set off. Profit from trading in shares in Assessee’s own name is to be treated as speculative profits - ground of appeal of the Assessee is treated as partly allowed.
Trade credit accounts under sec 68 - Held that:- Assessee has to prove the identity of the creditors, genuineness of the transaction and capacity of the creditors. The onus is on the assessee to substantiate it’s claim and the assessee has not discharged the same. Accordingly, in the interest of justice The issue set aside to the file of the AO directing assessee to substantiate its claim - in favour of assessee for statistical purposes.
Software expenses - Capital vs. Revenue expense - Held that:- Expenditure incurred for upgradation of software with new regulations of SEBI and not for acquiring any new software - revenue in nature and not Capital as no new asset is created - in favour of assessee.
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2012 (12) TMI 722
Claim of deduction u/s 80HH - denial - Held that:- Provision providing exemption, concession or exceptions in a fiscal statute has to be interpreted strictly. A person who claims exemption or concession, is required to establish clearly that he is covered by provision concerned and as per this decision of the constitutional Bench, in the case of any ambiguity, benefit will give go to the State. Section 80HH states that an industrial undertaking has to begin manufacture or production in a backward area. Mere intention to begin manufacture or production and making investment would not suffice for that purpose
CIT(Appeals) fell in error in giving very liberal interpretation to Section 80HH and holding that assessee's intention and investment to start an industry would suffice and actual manufacture or production could have been started even after the location went out of backward areas. There has to be actual manufacture or production. Hon'ble Apex Court in the case of CCE v. Hari Chand Shri Gopal [2010 (11) TMI 13 - SUPREME COURT OF INDIA] unequivocally held that provision providing exemption, concession or exceptions in a fiscal statute has to be interpreted strictly. A person who claims exemption or concession, is required to establish clearly, therefore set aside the orders of CIT(Appeals) and hold that assessee was not eligible to claim deduction under Section 80HH - against assessee.
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2012 (12) TMI 721
Undisclosed income - Block Assessment – Held that:- As seen from the impugned document, it is just a signed by a single party which was found in the course of search action at the assessee premises. The impugned document is only circumstantial evidence which required to be corroborated with other evidence. Though there is no necessity in law that the assessing officer is supposed to discharge tax liability by direct evidence only, there should be enough evidence to support the addition.
The circumstances surrounding the case were not strong enough to justify the rejection of assessee's plea as outrageous. On consideration of the assessee's arguments, no rejection of the same is called for on the reason that the sale agreement dated 6.2.98 is only a Xerox copy signed by the assessee alone and not by the vendees. As held by the Supreme Court in the case of Moosa Madha & Azam S. Madha vs. CIT (1973 (2) TMI 5 - SUPREME COURT) that Photostat copies have very little evidentiary value. Being so, Xerox copies of any document cannot be itself considered as evidence for the purpose of making addition in this assessment. Further the consideration at Rs. 12.25 lakhs per acre cannot be said to have been paid as the transfer has not materialised and litigation is going on. Further the payment of Rs. 1 crore to Smt. Savitramma is also not supported by proper evidence to bring the same into taxation in the block assessment. Thus the unsigned document is a dumb document and cannot be relied upon for making addition in this case - in favour of assessee
Levy of interest u/s. 158BFA - Held that:- Levying of interest u/s. 158BFA is consequential and mandatory and no adjudication is required on this issue - appeal of the assessee is partly allowed
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2012 (12) TMI 720
Sale of shares - Nature of Income - Business Income v/s Capital Income - Held that:- It is a settled legal proposition that mere entry of transactions as investment in the books of accounts of the assessee is not conclusive in matters of deciding the capital nature of the shares transactions. However, it is also settled legal principle, the entries in the books as investment is just one of facets helpful for deciding the said nature. Therefore, the initial intention and consequential entries of transaction in the books of the assessee support the claim of the assessee with regard to the short term capital gains.
Regarding the allegation of high frequency, high volume or magnitude, regularity etc, as already discussed, there is no definition for these expressions. It is the opinion of the AO/CIT(A) which is formed not based on any comparable cases or case laws. For somebody, one transaction for a day and many not be high for the others, it is many be a case of insignificant. Neither the CIT(A) nor the AO has brought out any comparable cases to demonstrate that the tranactional frequency or number of transactions have to be bracketed as ‘high’ and therefore, the dominant intention of the assessee in purchase of the shares is to resell the same and not for investment - set aside the impugned orders to the files of the CIT(A) on this issue, and direct him define the high frequency with the help of the comparable cases on hand. Assessee is also directed to assist the CIT(A) in this regard. If needed, he may file any fresh documents before the CIT(A) that would help the CIT(A) to come to the correct conclusions. On the issue of applicability of the apex court’s judgment in the case of Gopal purohit [2009 (2) TMI 233 - ITAT BOMBAY-G] there is no adequate data before us at least in the case of assessee. CIT(A) is directed to examine the applicability of the said case after obtaining adequate and relevant data. CIT(A) is also directed to examine each of the criteria set by various courts in various cases including the criterion of ‘dominant intention’ - the assessees’ grounds on this issue are adjudicated pro-tanto.
Depreciation on UPS and LCD – 60% v/s 15% - Held that:- Following the decision CIT V/s. Orient Ceramics & Industries Ltd. [2011 (1) TMI 26 - DELHI HIGH COURT] that peripherals such as UPS, printers, scanners, modem, NT servers, etc. form integral part of the computer and hence the same are eligible for depreciation at the rate applicable to computers, viz. 60% - Assessees’ grounds on this issue are allowed.
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2012 (12) TMI 719
Write off of bad debt in the books of account u/s 36(1)(vii) – Held that:- Following the decision in case of T.R.F. LTD. Versus COMMISSIONER OF INCOME-TAX [2010 (2) TMI 211 - SUPREME COURT] 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 of the bad debt is written off as irrecoverable in the accounts of the assessee - matter remanded to the Assessing officer to examine, solely to the extent of write off, whether the debt or part thereof was written off in the accounts of the assessee.
Sale tax collection - capital v/s revenue receipt - assessee has been granted subsidy in respect of sales tax receipt – Held that:- As decided in Sahney Steel & Press Works Ltd v CIT [1997 (9) TMI 3 - SUPREME COURT] the subsidy by way of refund of sales tax on purchase of machinery is operational subsidy and hence revenue receipt - set aside the issue to the files of the AO to consider whether the present subsidy scheme enjoyed by the Assessee is identical with that of the scheme framed by the Government of Maharashtra in 1979, considered in the case of DCIT Versus Reliance Industries Limited [ 2003 (10) TMI 255 - ITAT BOMBAY-J] and if so teat it as a capital receipt.
Disallowance of discount given to stockists – Held that:- What is offered by the assessee to the stockists are nothing but discount because the assessee sells the goods to the stockists, who is turn sells the goods to the consumer. In the sale transaction between the assessee and the stockists there cannot be payment of commission to the purchaser himself. Here stockists themselves are buying goods and it cannot be said that they are rendering any service in the course of such buying of goods which will render any payment to them as commission. Thus confirming findings of the CIT(A) that what was offered to the stockists is nothing but discount under provisions to sec.194H will not apply – in favour of assessee.
Computation of capital gains arising from transfer of undertaking – Held that:- Merely because the land was not conveyed by means of a registered conveyance deed, it cannot be said that the transferee who was permitted to enjoy complete domain over the land is not owner of the land. (Mysore minerals). Hence,transfer of the undertaking by the Assessee for a lumsum consideration should be considered as a slump sale to which provisions of sec 50B will be applicable. Hence in such cases provisions of sec 50C can not be applied in view of Explanation (2) to sec 2(42C) which has clarified that assignment of value for land and building the purpose of registration would not affect the computation of capital gains u/s 50B. Further in this case there was no stamped conveyance deed for transferring land - Order of the CIT(A) is upheld - revenue’s appeal is dismissed on this issue - In the result, the appeal of the revenue is partly allowed for statistical purposes.
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2012 (12) TMI 718
Jurisdiction u/s 263 - assessee engaged in Civil Contract work u/s 44AD – directing AO to estimate the profit @ 8% on gross receipts as against the net receipts in the assessment – Held that:- Though the sub-contract agreement provides for recovery of materials and consumables, but the claim of such recovery has to be supported by necessary evidence and it was incumbent on the part of the AO to verify the claim of the assessee by enquiring the same. As the assessee has shown gross receipt of Rs.5,00,14,972 in Profit & Loss A/c the assessment order does not reveal that the AO has made any such enquiry before accepting the claim of the assessee. As the assessment order is very cryptic and there is nothing in it to show that the AO has verified the correctness of the claim of the assessee towards the recoveries made by the principal contractor or for supply of materials or other recoveries from gross receipts the CIT was correct in exercising his jurisdiction u/s 263 in setting aside the order of assessment
CIT was not correct in directing the AO to estimate profit at 8% on the gross receipts simply on the view that the assessee is a sub-contractor to the main contractor and supply of materials or recoveries are not properly verifiable and therefore, an element of profit cannot be ruled out. When no enquiry has been made by the AO regarding the claim of the assessee, the CIT was not justified in coming to a conclusion that the supply of materials, consumables are not properly verifiable. When the sub-contract agreement expressly provides for deduction from the gross amount towards materials and consumables and other recoveries, it cannot be said that such income has accrued to the assessee without bringing sufficient material on record to that extent - direct the AO to make proper enquiry regarding the claim of the assessee - partly in favour of assessee.
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2012 (12) TMI 717
Diminution in the value of Government securities - Held that:- It is seen that the assessee has treated the purchase of Government of India security as its current investment and has followed a consistent policy for valuing the current investments at the year end. It is not shown to us that the said accounting policy followed by the assessee is not permissible under the law. Instead, according to the assessee, the said policy is perfectly within the permissible accounting systems. Income tax authorities are not right in law in disallowing the claim of made by the assessee - direct the AO to delete the above said disallowance - in favour of assessee.
Disallowance of Staff Welfare Expenditure – Held that:- Amount contributed by it on behalf of its employees was treated as salary income in the hands of respective employees and income tax was also deducted there on. The amount accumulated in the name of employees were collectively accounted as “Staff Welfare Scheme” and the accumulated balance was not invested any where else. Instead, the assessee itself has used such contributions for its own business purpose. Thus, the net effect of this arrangement is that the amounts credited to the “Employees Welfare Scheme a/c” represents the amounts collected from employees only. The assessee has also provided for interest on the liability amount held under the “Staff welfare scheme a/c” and claimed the same as expenditure - “Staff welfare scheme a/c” can only be taken as a creditor account and not as welfare scheme account as defined in sec. 2(24)(x) - final decision reached by CIT(A) on this issue is confirmed - Relief granted by CIT(A) on this issue is upheld - In the result, appeal filed by the assessee is partly allowed.
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2012 (12) TMI 716
Writing off Advances as Bad Debts – nature of the assessee’s business - Held that:- Considering the exact nature of assessee’s business as mentioned in assessment order the assessee is in the financial sector, whereas in the written submissions the assessee has stated that it is in the investment company & if it is found that the assessee is an investment company and the advances made by the assessee to M/s BPL Ltd., and its sister concerns are for the purpose of investments in shares, then the advances written off by the assessee cannot be considered as a trading loss or bad debt but has to be treated as capital loss which is not eligible for deduction u/s 36 or 37 while computing the income from business u/s 28 - As neither the AO nor the CIT(A) has actually gone into this aspect of the issue nor have they examined the correct nature of advance given by the assessee or the purpose of such advances the issue is to be remitted back to the file of the AO for verification - in favour of assessee for statistical purposes.
Set off income offered against the disallowance of deduction u/s 36(1)(vii) - Held that:- Unable to accept the contention of the assessee that if the claim of advance written off by the assessee is not accepted, the same analogy has to be applied to the liabilities written back by the assessee. Each claim of the assessee has to be considered independently and in accordance with law. As rightly pointed out by the DR, the nature of the liability and the condition under which the liability has been written back has not bee explained by the assessee and in fact it is the assessee which has treated the same as its income. The claim of the assessee to set off is not permissible until and unless there is clear nexus between the two which is absent in the present case. As the nature of the liability written back has not been examined by any of the authorities below it is desirable to remit issue back to AO for consideration - in favour of revenue for statistical purposes.
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2012 (12) TMI 715
Disallowance u/s 40A(3) – Held that:- AO has not exhaustively considered the mitigating circumstances as per the Proviso to section 40A(3) r.w.r. 6DD before making the disallowance of cash payments. CIT(A) has not addressed the issue in proper perspective and in providing the assessee adequate opportunity in the matter in accordance with the principles of natural justice, therefore remit the matter back to the file of the AO to consider the issue and also to consider and examine the judicial decisions relied upon by the assessee - appeal of assessee allowed for statistical purposes.
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2012 (12) TMI 714
Provision for Warranty – disallowance as assessee not following any scientific way of debiting the expenditure - Held that:- As decided in CIT Versus Vinitec Corporation Pvt. Ltd. (2005 (5) TMI 54 - DELHI HIGH COURT) warranty liability is not a contingent liability. If the assessee is maintaining the accounts on mercantile system on liability accrued, though to be discharged at a future date, would be a proper deduction while working out the profit and accounts of the business.
As decided in CIT v Sony India (P) Ltd. [2006 (4) TMI 457 - DELHI HIGH COURT] liability arising out of a warranty is an allowable deduction even when amount payable by assessee is quantified and discharged in future - Thus looking to the quantum of sales effected during the year, the net provision of Rs.24,20,522/- debited in profit and loss account is not excessive. The assessee has submitted that it is in the business of selling the equipment since 1995 and the provision is being made on the basis of the past experience. Hence, CIT(A) was justified in deleting the addition - in favour of assessee.
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2012 (12) TMI 701
Delay in filing appeal - disallowance of foreign travel expenses and levy of penalty u/s 271(1)(c) - Held that:- The assessee seems to be quite negligent by not taking the necessary steps for filing the appeal within the time prescribed by the statute. The conduct of the assessee reveals that the assessee takes the condonation of delay provision as granted. The assessee did not care to submit any request for condonation of delay, even when it was brought specifically to his notice at the time of filing of appeal itself.
As decided in the case of Ramlal v. Rewa Coalfields Ltd. [1961 (5) TMI 54 - SUPREME COURT]
the cause for the delay in filing the appeal, which by due care and attention, could have been avoided, cannot be a sufficient cause within the meaning of the limitation provision. The rule of limitation also contains a rule of justice, especially where a person chooses not to take up requisite legal remedies for an inordinate length of time and without reasonable cause, the Tribunal should apply the rule of limitation. Seekers of justice must come with clean hands. In the instant case, no reasonable cause is found for condoning the delay for a period of more than 902 days after the impugned order was served upon the delay. As the appeal is barred by limitation, it deserves to be rejected on this ground alone - against assessee.
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2012 (12) TMI 700
Unexplained creditors, fixed assets and advances - CIT(A) deleted the addition - Held that :- CIT(A) had failed to observe the procedure as laid down under Rule 46A of ITR 1962 as AO who has to be allowed reasonable opportunity to examine the additional evidences as well as, where deemed fit, cross-examine the witness(es) produced by the appellant.
In view of the foregoing, it is fit and proper to restore the matter back to the file of the AO for the consideration of the evidences/materials furnished by the assessee before the CIT(A) for the first time. The scope of the examination by the AO would be the same as that defined under rule 46A of the Rules with placing no fetters or restriction on either party in the ensuing proceedings. See Tin Box Co. v. CIT [2001 (2) TMI 13 - SUPREME COURT ] - Revenue's appeal is allowed for statistical purposes.
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2012 (12) TMI 699
Reopening of assessment - Eligibility of deduction u/s 54/54F - Held that:- On examination of the agreement dated 14.4.2002 and also the affirmation letter dated 21.4.2004, it appears that the AO has arrived at the belief that the capital gains would be assessable in the assessment years 2003-04 to 2005-06. These discussions would show that the AO had enough reasons to draw a belief of escapement of income in these three years. As stated earlier, it cannot be said that the AO had reached firm conclusion on the issue of year of assessment of the capital gains at the time of issuing notice u/s 148, hence dismissal of grounds raised with regard to the validity of the notice issued u/s 148 for the year under consideration.
Validity of assessment of capital gains - Selection of year of assessment - Held that:- On a careful reading of the agreement dated 14.4.2002 entered between the assessee and the builder, it is noticed that the said agreement is a development agreement, under which the builder has agreed for the development of the schedule property into multi storied residential building by name "Nikunjam Apartments" - the builder shall commence construction within 30 days from the date of entering the schedule property for the purpose of construction (clause 6.1). Further it is the responsibility of the builder to obtain necessary approvals. It is also mentioned in clause 2 of the agreement that the assessee has executed a registered general power of attorney in favour of the builder on the very same date, i.e., on 14.4.2002 - CIT(A) was right in law in confirming the action of the assessing officer in assessing the capital gain in the assessment year 2003-04, since the development agreement was entered into on 14.4.2002.
As assessee already declared capital gains in the assessment years 2005-06 and 2006-07 and hence the sale consideration declared in those years are required to be excluded in the assessment year 2003-04 - the right course for the assessee would be to approach the tax authorities for exclusion of the income, which was wrongly offered by him in the subsequent assessment years
Deduction u/s 54/54F - Held that:- The assessee is urging this plea for the first time set aside this matter to the file of the AO with the direction to examine the claim of the assessee - appeal of the assessee as partly allowed for statistical purposes.
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