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2012 (12) TMI 1183
... ... ... ... ..... d that all the facts relating to the same have been disclosed by him, the assessee will escape the guillotines of the rigours of this Explanation or for that matter of sec. 271(1)(c) of the Act. 13. In this case, the assessee-company has disclosed all the material facts relating to these expenses. The assessee-company bona fidely believed that these expenses can be claimed towards business expenses. The learned CIT(A) has even accepted this proposition by deleting these expenses. The AO has not and cannot come to a conclusion in the given facts of the case that claim is false. Thus, neither the assessee-company has concealed particulars of income nor it has furnished inaccurate particulars of its income. Accordingly, on merits also, no penalty under sec. 271(l)(c) is leviable and is liable to be deleted. As a result, we order to delete the impugned penalty in toto, and allow the appeal of the assessee-company. 14. In the result, this appeal of the assessee-company is allowed.
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2012 (12) TMI 1182
... ... ... ... ..... under review. The High Court and the Supreme Court would be powerless to interfere so as to keep the administrative officer within the limits of the law. The result would be that the power of judicial review would be stultified and no redress being available to the citizen, there would be insidious encouragement to arbitrariness and caprice. If this requirement is insisted upon, then they will be subject to judicial scrutiny and correction.” 7. If we look at the order of Ld DRP extracted (supra) in the light of above proposition, it will reveal that DRP has not applied its mind. The assessee had filed objections running into several pages and not a single objection has been discussed by the Ld DRP. Therefore, we set aside the order of Ld DRP and remit the issue back to the file of Ld DRP for re-adjudication. 8. In view of the above, the appeal filed by the assessee is allowed for statistical purposes. 9. Order pronounced in the open court on 14th day of December, 2012.
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2012 (12) TMI 1179
... ... ... ... ..... on different footings and are not relevant for deciding the issue before us. Further the reliance placed by the learned A.R. for the assessee on the ratio laid down in CIT Vs. Arisudana Spinning Mills Ltd. (supra) in respect of non allowance of deduction claimed under section 80IA of the Act on account of different legal propositions vis-à-vis the deduction claimed. The said ratio is not applicable to the facts of the case before us where admittedly the surrendered income was offered by the assessee as additional income and thereof deduction under section 80IB of the Act was denied to the assessee on such surrendered income. The deduction under section 80IB of the Act was claimed. In the totality of the facts and circumstances, we uphold the levy of penalty u/s 271(1)(c) of the Act. The ground of appeal raised by the assessee is thus dismissed. 14. In the result, the appeal of the assessee is dismissed. Order Pronounced in the Open Court on 6th day of December, 2012.
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2012 (12) TMI 1178
... ... ... ... ..... at the ld. CIT(A) has rightly deleted the disallowance made by the AO as the interest on sales tax was a compensatory in nature and not a penal in nature. We further find that the ratio of decision as relied by the ld. CIT(A) in deleting the disallowance made by the AO is squarely applicable to the facts of the present case. Therefore, the same is upheld. The ground taken by the department is hereby dismissed. 4. We further find that in the impugned order passed by the ld. Commissioner, Commissioner has merely followed the above observations and decision taken by the Coordinate Bench. In this view of the matter, and respectfully following the decision of the Coordinate Bench of this Tribunal in assessee’s own case for the assessment year 2002-03, we see no reason to interfere in the impugned order. We accordingly confirm and uphold the same. 5. In the result, the appeal filed by the Revenue is dismissed. Order pronounced in the open Court on 28th day of December, 2012.
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2012 (12) TMI 1175
... ... ... ... ..... R that the cost of acquisition of the property would be the market value of tenancy right as on 04.03.2003 plus the sum of ₹ 45,062 paid by the assessee to Government. We however did not agree with the submission of Ld.AR that the cost of acquisition would be the market value of property as on 04.03.2003, because the property had been acquired under the scheme of Government which would not necessarily be at market price. Though the assessee had submitted the valuation report regarding market value of tenancy right, before CIT(A) the same remained unexamined. We therefore, set aside the order of CIT(A) and restore the matter to the file of Assessing Officer for passing a fresh order after necessary examination of the cost of acquisition in the light of our observations made above and after allowing a reasonable opportunity of being heard to the assessee. 6. In the result, the appeal is allowed for statistical purpose. Order pronounced on this 19th day of December, 2012.
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2012 (12) TMI 1168
... ... ... ... ..... o the AO or the ld. CIT(A) has not brought any comparable case for application of NP rate of 8%. The Ld. counsel for the assessee, Mr. P.N.Arora has brought on record decisions of ITAT Amritsar Bench in the case of ITO vs. Surinder Pal Nayyar, contractors, passed in ITA No.366(Asr).2010, order dated 30.04.2012 where NP rate of 5% is applied and in the case of Sh. Mohan Singh Contractor vs. ITO passed in ITA No.59(Asr)/2012, dated 5th June, 2012, where also NP rate of 5% has been applied. Therefore, considering the irregularities in the books of account mentioned above, the AO is directed to apply NP rate of 5% on the net contract receipts declared by the assessee and further directed to delete the addition made of ₹ 1,26,64,682/-. The assessee gets part relief accordingly. Thus, the appeal of the assessee is partly allowed. 11. In the result, the appeal of the assessee in ITA No.450(Asr)/2012 is partly allowed. Order pronounced in the open court on 27th December, 2012.
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2012 (12) TMI 1167
... ... ... ... ..... s of the case in the light of the judgement of Delhi High Court in the case of Lovely Exports Pvt. Ltd. (supra), then it will be noticed that the assessee has given the identity of the subscribers but genuineness of the transaction and creditworthiness of the transaction is not established. Being so, In our opinion, the deletion of addition by the CIT(A) is not justified. 10. In our opinion, in spite of opportunities given, the assessee having failed to prove the genuineness and creditworthiness of the parties, the addition is to be sustained. We place reliance on the judgement of Delhi High Court Full Bench in the case of CIT vs. Sophia Finance Ltd. (204 ITR 98) and also on the order of the Delhi Bench in the case of Ekta Agro-Industries Ltd. v. ITO (8 DTR 239) (Delhi). Accordingly, the order of the CIT(A) is reversed and that of the Assessing Officer is restored. 11. In the result, appeal of the Revenue is allowed. Order pronounced in the open court on 20th December, 2012.
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2012 (12) TMI 1166
Comparable selection - Determination of the arm's length price - export incentives received for sales of export of finished goods - reduction of export incentive from goods sold - TPO held that export incentive cannot be deducted from cost of goods sold - Assessee during the relevant previous year, inter-alia, entered into international transactions of export of finished goods to its associated enterprises, comprising of export of manufactured products and export of traded products. The assessee has purchased finished goods, viz., certain varieties of tyres from Good Year South Asia Tyres Pvt. Ltd. (GSATL) for export to the associated enterprises (AEs) - appellant follows a similar economic model for pricing its exports, be it exports of manufactured goods or traded goods.
HELD THAT:- We find that the reasoning adopted by the TPO has considerable cogency. The export benefits are given to the taxpayers to promote and stimulate the growth of exports of goods and services in India. They are also meant to earn valuable foreign exchange for the country. The export incentive was available to the assessee only after trading exports made by the assessee. Global Transfer Pricing policy of the group company mentions cost in inter company transfer before the goods and services are dispatched from the premises of a company to the other company. In the Global Transfer Pricing Policy the future value of benefits which may be available in a few countries cannot be included as this will disturb the very basis/purpose or providing uniform return to teach and every enterprise which is a member of global transfer pricing policy. The very purpose of global transfer pricing is to provide a minimum amount of return to the members of global transfer pricing policy.
The assessee who is involved in controlled transaction this approach actually results in transferring, benefit from Government granted incentives to AE. Moreover, the entities transfer pricing policy cannot override the basic fundamental of transfer pricing analysis. If assessee’s method of calculation of cost of goods sold is followed, it would tantamount to a claim of benefit, which has not yet accrued at the time of sale of goods, being treated as a component of cost of goods sold.
TPO has rightly observed that export incentives does not form part of the invoice price of goods sold. In such a case, it cannot be reduced from the cost of goods sold. We agree with the TPO that an expenditure that does not form part of the books of accounts cannot be treated as an expense for the purpose of transfer pricing accounting.
Hence, we are of the opinion that TPO has rightly held that export incentive cannot be deducted from cost of goods sold.
Deduction of rebate /discount - We find that as per the agreement assessee is entitled for rebate of 3% on cost of goods purchased for exports to AE as well as to unrelated parties. We find that the above reasoning adopted by the AO in disallowing the deduction is not cogent. That the assessee has not made any such claim initially cannot act as estoppel against the proper and valid claim. We agree with the ld. Counsel of the assessee company that the rebate received is inextricably linked with the cost of purchase. We further note that in subsequent assessment years for AY 2007-08 and 2008-09 the TPO has accepted the contention of the assessee that the rebate received upon purchase of goods is deductible from the value of cost of goods sold. Hence, in our considered opinion, assessee is entitled for deduction of rebate received upon purchase of goods from the value of goods sold.
We further find that the rebate amount was netted off and net amount of purchase cost shown in the profit and loss account. In this regard, TPO has contended that the said amount was not reflected in the books and accounts of the assessee. In our considered opinion, this factual aspect needs verification. Hence, we remit this issue regarding verification of netting off of rebate from cost of purchase to the file of AO. Needless to add that the assessee should be given adequate opportunity of being heard.
Disallowance on machinery repair and maintenance - HELD THAT:- We find that on this issue AO has made an adhoc disallowance of 20% of the expenditure incurred on machinery repair and maintenance on the premise that the same is capital expenditure. AO has not identified as to which items in his opinion are in capital expenditure. In this regard, we also note that such adhoc disallowance were also made by the AO in the preceding years in the case of the assessee. But the Delhi Tribunal in assessee’s own case for AY 2003-04 and 2004-05 upheld the order of the Ld. CIT (A) deleting the similar disallowance of expenditure out of repair and maintenance expenses for plant and machinery.
We also note that Revenue has not filed any appeal before the High Court of Delhi against the aforesaid order passed by the Tribunal. Hence, we set aside the order of the AO and decide the issue in favour of the assessee.
Claim towards provision for warranty - AO disallowed provision for warranty by holding that the said liability was an uncertain contingent liability - HELD THAT:- We agree with the assessee’s contention that provision for estimated expenditure to be incurred for warranty obligation in respect of sales made in the relevant previous years is to be accounted as expenditure in the year of sale, in order to match the cost with revenue. The provision for warranty is necessarily required to be made by the companies which are required to follow mercantile system of accounting. In this regard, we further find that Courts have consistently held the view that liability for provision for warranty for replacement on account of manufacturing defects arises at the time of sale and is to be allowed as deduction in that year on the basis of rational /scientific estimate, notwithstanding that the exact amount of liability is ascertained at a later date.
Hence, we hold that provision for warranty made by the assessee is allowable. Hence, we set aside the order AO on this issue.
Claim on excise duty - disallowed in AY 2005-06 - During the present year out of the AY 2005-06 excise duty has been paid during this year. Hence, it has been claimed that the same should be allowed in terms of section 43B of the I.T. Act - AO held that for want of proper break-up and other details a sum was paid as excise duty, after the due date, is again disallowed, as per the provisions of section 43B.
HELD THAT:- We agree with the assessee’s counsel contention that AO has not properly dealt with this claim of the assessee. Assessee’s claim is that in terms of section 43B the excise duty on closing stock disallowed in the preceding previous year and paid during the relevant previous year should be allowed as deduction. The claim needs factual verification, hence, we remit this issue to the file of the AO.
In the result, the appeal filed by the Assessee is partly allowed.
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2012 (12) TMI 1165
... ... ... ... ..... pplied their mind to these obvious and very important infirmities. However, we find it is the duty of the assessee to file proper confirmation letters not only confirming the opening and closing balances but also giving the full particulars of the transactions reported in the year as well as the full signature of concerned creditors and not his accountants, who is not duly authoritised. In any case, Ld AR made a statement at Bar for removal of these infirmities before the AO, if a chance is granted. Otherwise, the loan creditors are assessed to tax and their credit worthiness was never doubted by the AO. Subjected to the removal of these deficiencies, thus, we agree with the AO who accepted the unsecured loan/refunds claimed by the assessee as genuine and the unsecured loans and the refunds of them constitutes the source of the cash deposits. 28. In the result, the appeal of the assessee is partly allowed. Order pronounced in the open court on this 5th day of December, 2012.
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2012 (12) TMI 1162
... ... ... ... ..... decision of the Tribunal in assessee’s own case in ITA.No.1496/Mum/2009 and ITA.No.949/Mum/ 2009 pertaining to assessment year 2005-2006 and submitted that the Tribunal has dismissed Revenue’s appeal holding that section 2 (22) (e) is applicable in the case of deemed dividend only in the hands of shareholder. In the case under consideration the assessee-company is not share holder of NFSPL. Therefore, in the light of judgment of jurisdictional High Court in the case of Universal Medicare 190 Taxmann 144 (Bom.) held that deemed dividend under section 2 (22) (e) cannot be taken in the hands of the assessee. As no distinguishable facts has been brought on record by the D.R. we have no hesitation to follow the findings of the Tribunal in assessee’s own case in ITA. No. 1496/Mum/2009 and ITA.No.949/Mum/ 2009 (supra). Ground No.2 is accordingly dismissed. 30. In the result, appeal filed by the Revenue is dismissed. Order pronounced in the open Court on 12-12-2012
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2012 (12) TMI 1161
... ... ... ... ..... the Tribunal in the case of DCIT vs. UDHE GmbH (supra) and in the case of CSC Technology, Singapore Pte. Ltd. vs. ADIT (supra) and respectfully following the said judicial pronouncements, we hold that the amounts payable by BAH India to the three overseas group entities in Germany, Singapore and U.K. could not be brought to tax in India during the year under consideration as fees for technical services as per the relevant provisions of the DTAAs since the same had not been paid to the said entities. Ground No. 7 of ITA No. 4502, 4506 and 4508/Mum/2003 is accordingly allowed. 19. Ground Nos.7, 8 and 9 raised in ITA No. 4503/Mum/2011 are not pressed by the learned counsel for the assessee at the time of hearing before us. The same are accordingly dismissed as not pressed. 20. In the result, assessee’s appeals being ITA Nos. 4502, 4503, 4504, 4506 and 4508/Mum/2003 are partly allowed and ITA No. 4507/Mum/2003 is dismissed. Order pronounced on this 21st day of Dec., 2012.
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2012 (12) TMI 1160
... ... ... ... ..... 2011 has held that when there was an agreement between the assessee and the company for sale of property belonging to the assessee, it cannot be said that the agreement was not genuine only for the reason that it was not registered, particularly when the AO did not bring any material on record to substantiate that the said agreement was not a genuine agreement. It was further held that where advance received by the assessee from the company in which he or she is a substantial shareholder was for a transaction relating to sale of property, the deeming provisions of section 2(22)(e) of the Act are not applicable. As the facts and circumstances in the present case are also similar, respectfully following the decision of the Co-ordinate Bench in the case of Smt. T. Vaishnavi Tekumalla (supra), we see no reason to interfere with the order of the CIT(Appeals). 9. In the result, the revenue’s appeal is dismissed. Pronounced in the open court on this 26th day of December 2012.
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2012 (12) TMI 1159
... ... ... ... ..... ppeals) cannot be faulted. 11. Coming to addition of 19,63,956/- made for assessment year 2003-04, which was deleted by the CIT(Appeals), and on which Revenue is on appeal before us, such amounts had admittedly come from pre-closure of lease contract. Assessee having considered leased assets as its own, the amounts received on pre-closure were adjusted against the block of assets on which depreciation was claimed. Therefore, depreciation was allowed to it was only after reduction of such amounts. This being the case, considering such amounts as part of its lease rentals, would have resulted in a double addition. Ld. CIT(Appeals) had rightly deleted such disallowance. 12. We are, therefore, of the opinion that there is no merit in the appeals filed by the assessee, nor in the appeal filed by the Revenue. 13. In the result, all the appeals filed by the assessee and Revenue are dismissed. The order was pronounced in the Court on Thursday, the 20th of December, 2012, at Chennai.
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2012 (12) TMI 1158
... ... ... ... ..... ed for by the assessee'. In this case also, similar situation has occurred. The only difference is that the CIT has registered the Institution but w.e.f. 1st April, 2005, ignoring the date of registration given in the Form No. 10A. The ratio of the above Tribunal order of the Special Bench the application is 'deemed allowed' as applied for by the assessee. Since the assessee had applied to get registration from the date of its inception, it is wrong and illegal to allow the same w.e.f. 1st April, 2005 under this deeming provision. This registration has to be treated to have been granted with effect from the date of its inception i.e. 9th Nov., 1985. Accordingly, we direct the CIT to grant registration to the appellant w.e.f. 9th Nov., 1985, which already deemed to have been granted. In view of our above finding, the other appeal would be of academic interest only. 12. In the result, both the appeals stand allowed. Order Pronounced in the Open Court on 19.12 2012.
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2012 (12) TMI 1157
... ... ... ... ..... ents have been filed, as is evident from the Paper Book, filed by the assessee. 5. Ld. 'DR' did not controvert such assertions, made by the appellant in respect of payment of the impugned amount. However, he placed reliance on the order of the CIT(Appeals). 6. We have carefully perused and considered the rival submissions, facts of the case and the relevant records and found that the case of the assessee is covered under the provisions of section 273B of the Act, having regard to the entirety of the facts and circumstances of the case and conduct of the appellant in making the impugned payment and nonexistence of such default in subsequent years. In view of this, the assessee succeeds in his ground of appeal and, hence, the findings of the CIT(Appeals) in the matter, cannot be upheld. Hence, the impugned order of penalty, passed by the CIT(Appeals) is set aside. 7. In the result, appeal of the assessee is allowed. Order pronounced in the Open Court on 13th Dec.,2012.
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2012 (12) TMI 1156
... ... ... ... ..... d to compare the like nature of expenditure and if found excessive then only entitled to invoke the provision of the said Section. Since no comparable instance was cited from the side of the Revenue and this primary onus was not discharged, therefore totality of the circumstances thus warrants to reverse such an approach of the Revenue Department. We hereby accept the contentions of the appellant and by relying upon the aforesaid decision, this ground of the assessee is allowed.” 11. Considering the totality of facts, and after considering and respectfully following the aforesaid decision of co-ordinate Bench, we are of the view that in the present case, no case has been made out for disallowance u/s. 40 A(2)(b) and therefore no disallowance can be made. We therefore find no reason to interfere with the order of CIT (A). Thus this ground of the Revenue is dismissed. 12. In the result, appeal of the Revenue is dismissed. Order pronounced in Open Court on 28 - 12 - 2012.
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2012 (12) TMI 1155
Determination of annual letting value (ALV) of the property u/s 23(1) - whether it can be determined as per municipal valuation or not? - Held that:- Annual letting value of the property in question should be determined as per the municipal valuation/rateable value adopted by the municipal authorities. Accordingly, the Assessing Officer is directed to adopt the municipal valuation/rateable value adopted by the municipal authorities.
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2012 (12) TMI 1154
... ... ... ... ..... the law laid down in the Dilip Sheroff case 291 ITR 519 (SC) as to the meaning of word ‘concealment’ and ‘inaccurate’ continues to be a good law because what was overruled in the Dharmender Textile case was only that part in Dilip Sheroff case where it was held that mensrea was a essential requirement of penalty u/s 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 u/s 271(1)(c). This is clearly not the intendment of legislature. 13. In the background of the aforesaid discussions and precedents, we find that the levy of penalty in this case is not justified. Accordingly, we set aside the orders of the authorities below and delete the levy of penalty. 14. In the result, the appeal filed by the Assessee is allowed. Order pronounced in the open court on 14/12/2012.
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2012 (12) TMI 1153
... ... ... ... ..... s no infirmity in the findings of the learned CIT (A) and, thus, we are inclined to sustain the same in toto. It is ordered accordingly. 8.3.3. Before parting, we would like to reiterate that the case laws relied on by the learned D R have been kept in view while arriving at the above conclusion. 8.4. As clarified above, the reasons recorded by us in the case of the assessee - M/s. Kalyani Steels Limited - for both the assessment years under consideration are applicable in the case of M/s. Mukund Limited also as the issues raised by the Revenue were identical in the case of M/s. Mukund Limited to that of the present assessee M/s. Kalyani Steels Limited . 9. In the result (i) The Revenue’s appeals for the AYs 2008-09 and 2009-10 in the case of M/s. Kalyani Steels Limited are dismissed; and (ii) The Revenue’s appeals for the AYs 2008-09 and 2009-10 in the case of M/s. Mukund Limited are dismissed; The order pronounced on the 18th day of December, 2012 at Bangalore.
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2012 (12) TMI 1151
Addition made u/s 36(1)(ii) - Held that:- This was not a case where the amounts were to be added back under Section 36(1)(ii).
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