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2012 (2) TMI 548
Addition of bogus purchases and payments - Held that:- The present assessee who has been maintaining cash book, purchase register, sales register, stock register, ledger account etc., and also his case comes under the purview of the provisions of section 44AB Act.
We are of the firm view that if the disallowance is restricted/sustained to the extent of 12.5% on account of the bogus purchases, it would meet the ends of justice. It is, therefore, ordered accordingly. Revenue’s appeal is dismissed.
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2012 (2) TMI 547
... ... ... ... ..... perty on 30.12.2002 and not from the date of possession of the property i.e. 2.1.1991 and the fact that the assessee has taken the possession of the property on 2.1.1991 was not controverted by the Revenue even at this stage. Since the property was sold on 3.1.2003 i.e. beyond 36 months, the income is chargeable under the head ‘capital gains’ as long term capital gains and not as short term capital gain. The decision relied on by the ld.DR in Dr.V.V.Mody (supra) is prior to the amendment and the decision in CIT V/s Podar Cement Pvt. Ltd.(supra) and Mysore Minerals Ltd. V/s CIT (supra), therefore, the same is distinguishable and not applicable to the facts of the present case. Accordingly the AO is directed to assess the capital gain as long term capital gain and not short term capital gain. The grounds taken by the assessee are, therefore, allowed. 13. In the result, the assessee’s appeal stands allowed. Order pronounced in the open court on 10th Feb.,2012.
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2012 (2) TMI 546
... ... ... ... ..... the result, the appeal of the assessee is allowed for statistical purposes.” 4. Learned DR is heard on the issue. 5. We have heard rival submissions and gone through the relevant material available on record. Following the above order of the ITAT in the case of Sangeeta Jain, the issues have to go back to the file of AO. Besides we have been informed that Hon’ble Supreme Court by a latest decision in the case of Topman Exports Civil Appeal no. 7699 of 2012 (SLP © no. 26558/2010) , dealt with the issue as decided by the Hon’ble Bombay High Court in the case of Kalpataru Colours and Chemicals (supra). Consequently, in both the assessment years the issues are restored back to the file of AO, who is directed to adjudicate the issue afresh in accordance with law, keeping in view the above judicial authorities. We order accordingly. 6. In the result, assessee’s appeals are allowed for statistical purposes. Order pronounced in open court on 17-02-2012.
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2012 (2) TMI 545
... ... ... ... ..... udgment and dispose off the issue afresh after giving adequate opportunity of being heard to the assessee. This ground is, thus, allowed for statistical purposes. 54. In the result, assessee’s appeal as well as Revenue’s appeal are partly allowed. 55. We now take up assessee’s cross objection, which is arising out of ground no.1, raised in Revenue’s appeal. 56. Since the issue of sustaining part of the addition on account of unutilized CENVAT credit by the Commissioner (Appeals) has been set aside and restored to the file of Assessing Officer in this order, the ground raised by the assessee in the Cross Objection becomes infructuous. Consequently, this ground is dismissed as infructuous. 57. In the result, cross objection by the assessee is dismissed. 58. To sum up, assessee’s appeal as well as revenue’s appeal are partly allowed and the cross objection of the assessee is dismissed. Order pronounced in the open Court on 29th February 2012.
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2012 (2) TMI 544
... ... ... ... ..... ly, 1999 before issuance of show cause notice. The assessee had explained why they have stopped using pentaeryphritol w.e.f. January, 2000. It was explained they were able to find a substitute and secondly there was fall in the market price of the final product i.e. Cable Filling Compound. It was not the case of the appellant that the respondent-assessee was using pentaeryphritol for manufacture of some other substance/final product. 6. In case the Revenue wanted to rely upon a statement of a scientific expert or literature, it was open to them to file the said material or statement before the Tribunal. The appellant did not file/ produce the said material/ statement before the tribunal. 7. Keeping in view the factual position quoted above and the factual findings recorded by the tribunal, we do not find that any substantial question of law arises in the present appeal and the same is dismissed. It is not possible to hold that the order of the tribunal is perverse. No costs.
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2012 (2) TMI 543
TDS u/s 194H - Disallowance under section 40(a)(ia) - non deducting the TDS on the service fees charged by bank on credit card transactions - Held that:- There is no such relation between the bank and the shop keeper which establishes the relationship of a Principal and Commission Agent. Technically it may be written that bank will charge certain percentage of commission but this is not a commission because assessee sells its goods against credit cards, and on presentation of bills, the bank has to make the payment. It is not the case that bank has advised the assessee to sell their goods to its customers then he will pay the commission.
It is reversed in a situation as bank issued credit cards to the credit card holders on certain fees or whatever the case may be and the card holder purchases material from the market through his credit card without making any payment and that shop keeper presents the bill to the bank against whose credit card the goods were sold and on presentation of bill as stated above the bank makes the payment. Therefore, provisions of section 194H are not attracted in this type of transaction. Therefore, we hold that addition made and confirmed by ld. CIT (A) was not justified. See case of M/s. Gem Paradise [2012 (2) TMI 521 - ITAT JAIPUR ] - Decided in favour of assessee.
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2012 (2) TMI 542
... ... ... ... ..... t on which the farm house if located and the land appurtenant there to has to be considered for the purpose of se. 54F of the Act. The assessee has not brought on record any material to contend that the entire area of 1.92 acres should be considered as the land appurtenant there to. In our view also, only a reasonable area can be considered for the said purpose and not the entire portion of land. In these circumstances, in order to resolve the dispute, we are constrained to make an estimate of the value of the plot on which the farm house is located and the value of land appurtenant there to. Hence, on a conspectus of the matter, we estimate the value of plot and the land appurtenant to the farm house at ₹ 2 lakh and accordingly, direct the AO to allow the same as deduction u/s. 54F of the Act in addition to the value of the super structure of the farmhouse already allowed by him. 7. In the result, the appeal of the assessee is partly allowed. Pronounced on 17-02-2012.
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2012 (2) TMI 541
... ... ... ... ..... 002 would cover Mumbai City District and Mumbai Suburban District both. I am of the view that the Commissioner of Customs (Prev.) has jurisdiction over Sahar Air Cargo Complex falling under the jurisdiction of Mumbai Suburban District. 29. In view of the above, I agree with the view expressed by the Hon’ble Member (Technical) Shri P.R. Chandrasekharan. 30. The Registry is directed to place the matter before the Division Bench for further necessary action. (Order pronounced in Court on 10-8-2012) MAJORITY ORDER 31. We are in agreement with the majority decision that the Commissioner of Customs (Prev.) has jurisdiction over Sahar Air Cargo Complex at Sahar Airport and has jurisdiction to issue show cause notice in the instant case and, accordingly, the Registry is directed to list the stay application before the Bench for consideration on merits. (Pronounced in open Court) Sd/- (P.R. Chandrasekharan) Member (Technical) Sd/- (Ashok Jindal) Member (Judicial)
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2012 (2) TMI 540
... ... ... ... ..... es after furnishing copies of the additional evidence to the Assessing Officer and seeking his report. It has come on record that the revenue has not been able to controvert the additional evidence adduced by the assessee-respondent. On the other hand, the assessee-respondent has been able to prove that none of the notices under Sections 143(2)/142(1) of the Act were either served or refused by any of the directors of the assessee company. Ample evidence has also come on record showing the transaction of the amount in dispute, as is evident from a bare reading of para 15 of the order passed by the Tribunal. The Tribunal and the Commissioner have recorded a categorical finding that the assessee-respondent has established the identity, creditworthiness and genuinenss of the transactions. In these circumstances we see no legal infirmity in the view taken by the Tribunal and the Commissioner, warranting admission of the instant appeal. The appeal is without any merit. Dismissed.
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2012 (2) TMI 539
Disallowance on account of debit balance written off - Held that:- When the mater was carried before the 1st appellate authority, he has perused the details and outstanding balance and has noted that it was a business decision to write off the amount as bad debt for the year under consideration. With this brief background, we have been informed that now this issue stood settled by the Hon’ble Supreme Court in the case of TRF Ltd as reported in (2010 (2) TMI 211 - SUPREME COURT). This ground of the revenue is therefore, dismissed.
Unexplained investment in stock - Held that:- When inventory of stock was taken at the close of the accounting period, the same was not recorded therein. Next, in respect of the other item of controversy, a list of all the sales involved through which the stock was dispatched to various parties along with their names, invoice number, placed on record. As per the said details, the dates of invoices were starting from 28.03.2005 to 31.03.2005 and on this basis, it is claimed that the said stock was not accounted for in the books of account. We are of the view that the reason given by the assessee for non inclusion of these two items in the books of account on account of close of accounting period was genuine as also acceptable. We, therefore, find no fallacy in the relief granted by the Ld. CIT(A). The same is hereby confirmed and this ground of the revenue is dismissed.
Addition on expenditure incurred on foreign raining of the Director’s daughter as employee of the assessee company - Held that:- This issue is squarely covered by the decision of Hon’ble Karnataka High Court rendered in the case of RAS Technologies (2010 (7) TMI 670 - KARNATAKA HIGH COURT ) wherein the expenditure for foreign education of Managing Director’s son was held as business expenditure and therefore, directed to allow the same. Following this decision and the decision referred by Ld. CIT(A), we hereby confirm the relief and resultantly, this ground of the revenue is hereby dismissed.
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2012 (2) TMI 538
... ... ... ... ..... Mercantile Corporation (P.) Ltd. (supra), it has been held that the income from leasehold property is assessable as business income and not under section 12 of the old Act. There is no quarrel with the principle enunciated in the aforesaid decision. However, the issue in the present appeal is entirely different therefore, the decision relied on by the AO is misplaced. 11. Since we have decided the issue on merits, therefore, we do not consider it necessary to adjudicate the assessee’s oral plea to dismiss the Revenue’s appeal on the ground of less tax effect as held by the Hon’ble Delhi High Court in the case of Manglam Ricinus Ltd.(supra). 12. For the reasons as discussed above, we are of the view that the ld. CIT(A) was fully justified in deleting the addition made by the AO. The grounds taken by the Revenue are , therefore, rejected. 13. In the result, the appeal filed by the Revenue stands dismissed. Order pronounced in the open court on 24th Feb.,2012.
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2012 (2) TMI 537
... ... ... ... ..... of a factory, premises of provider of output service or an office relating to such factory or premises, advertisement or sales promotion, market research, storage upto the place of removal, procurement of inputs, activities relating to business, such as accounting, auditing, financing, recruitment and quality control, coaching and training, computer networking, credit rating, share registry, and security inward transportation of inputs or capital goods and outward transportation upto the place of removal. As the applicant is under the contractual obligation of after sales service during the warranty period, therefore as the applicants are recipient of taxable service, hence prima facie the applicant has a strong case in view of the above decision of the Tribunal and of the Hon’ble High Court. The pre-deposit of the duty, interest and penalty is waived and recovery of the same is stayed during the pendency of the appeal. The stay petition is allowed. (Dictated in Court)
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2012 (2) TMI 536
Determination of unaccounted investments - Held that:- Deletion of addition on the reason that there is no seized material to estimate the turnover and thereby estimate the income. Similarly, for determination of expenditure which was claimed in the regular returns cannot be disallowed in the block assessment consequent to the search action as the disallowance is only could be subject matter in regular assessment not in the block assessment.
Estimation of the income at 15% of the undisclosed turnover and disallowing net cash expenditure at 7% - Held that:- Assessing Officer has not only enhanced the gross profit rate but also increased the estimate and increased the quantum of turnover. The assessee has not disputed the quantum of suppressed turnover. However, the assessee challenged the rate of net profit and filed a chart as above. As regards the net profit, we find that in earlier years records and past history could be the basis to determine the rate of profit provided if the book results are actually accepted by the Department in earlier years. In the present case all the assessments from 2002-03 to 2008-09 are subject matter of dispute before us and we cannot take the result of these assessment years as base to determine the net profit. In our opinion, considering the nature of industry and prevailing market conditions, it is reasonable to estimate net profit at 8% of the suppressed turnover. Accordingly, we direct the Assessing Officer to estimate the income of the assessee at 8% of the suppressed turnover in addition to the income from regular business. The ground raised by the assessee for these three assessment years i.e., 2006-07, 2007-08 and 2008-09 is partly allowed.
Disallowance on chance of inflation of expenditure under the head production expenditure, employee benefits and administrative expenditure - Held that:- The assessee is a subcontractor. Assessee is engaging labour at site at far flung places. In such circumstances, it is difficult to have documents for such expenditure, to the satisfaction of the assessing officer. It is also difficult to verify the identity of the labour, after lapse of many years. The accounts of the assessee have been audited and auditor's certificate under section 44AB has also been furnished. The assessing officer has not analysed the expenses compared to the turnover for the earlier years. A search has been made in the premises of the assessee and no incriminating evidence in this regard has been found. Only an ad hoc disallowance of expenditure claimed by the assessee has been made. However, from the observations of the lower authorities it can be inferred that full details of expenditure have not been properly documented. Hence, the possibility of some inflation of such expenses cannot be ruled out. Considering totality of facts and circumstances of the case, we are of the opinion that disallowance of 5% of labour and site expenses are reasonable
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2012 (2) TMI 535
Deduction u/s 10A - Netting of Income and Expenditure - Income received by the assessee from liquidated damages recovered from suppliers, write back of retention moneys, sales tax recoveries, exchange fluctuation gain, write back of credit balance in customer accounts were disallowed - HELD THAT:- Assessee is in the course of export business. While calculating the profit of the eligible business the expenses and income of the same unit are required by netting the expenses and the income are eligible to the same nature. Therefore, when there is a direct nexus between the export business and the aforesaid income, that should be treated as profits and gains from exports and deduction u/s 10A of the Act is allowed.
Decision in favour of the assesse.
Discontinuation of Business - Assessee business was discontinued, therefore the assessee’s valuation was not accepted and the loss was disallowed by AO as the items were imported and they are presumably of high value. - HELD THAT:- Once the principal himself in carrying on the business and that the agent has discontinued the business the chances of anybody approaching the agent to get those product is remote and once the assessee closed his account discontinuing the business, the products which were in stock naturally would not have any value. Also, technological obsolence and cannibalization of equipment to spare parts due to non supply appears plausible in the realm of business and such occurrence is not rare. Therefore, the loss claimed by the assessee is allowable as deduction.
Decision in favour of the Assesses.
Payment of Gratuity and PF - Covered u/s 36(1)(va) & 2(24) or not? - Deduction u/s 43B - Payment of provident fund and gratuity was not considered as allowable deduction u/s 43B by Tribunal - HELD THAT:- Relying on the judgement of COMMISSIONER OF INCOME-TAX VERSUS SABARI ENTERPRISES [2007 (7) TMI 169 - KARNATAKA HIGH COURT], they are liable for deduction u/s 36(1)(va) read with section 2(24) (x), the same can be claimed deduction by the assessee only if the contribution is paid within the due date for claiming exemption.
Decision in favour of Assessee.
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2012 (2) TMI 534
TDS u/s 195 - Held that:- When the equipments were not operated, used or under the control of the assessee, then the payments made for availing the services of Rackspace cannot be said as royalty. When the payments are not in the nature of royalty as per Indo-USA DTAA as well as per Explanation 2 (via) of Sec. 9(1) of the I T Act, then recipient of the said payments being non-resident having no PE is not liable to tax in India. Therefore, the payments in the hands of Rackspace are not taxable in India and consequently, no tax required to be deducted u/s 195 on such payment/remittance by the assessee as held by the Hon’ble Supreme Court in the case of GE India Technology Centre P. Ltd. v. Commissioner of Income-tax reported in [2010 (9) TMI 7 - SUPREME COURT OF INDIA ].
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2012 (2) TMI 533
... ... ... ... ..... 038/-. The break-up of the said amount has been given in the order passed by the CIT (Appeals). The same is as follows - i) Personnel Expenses ₹ 17,733/- ii) Administrative Expenses ₹ 1,08,829/- iii) Selling and Distribution Expenses Rs. 46,476/- Total ₹ 1,73,038/- It is apparent that the assessee while disallowing ₹ 1,73,038/- has included the indirect expenses. We may note that the Assessing Officer in the assessment order has not gone into the direct and indirect expenses or commented about the deduction made suo motu by the assessee. The Assessing Officer applied Rule 8D, which has been inserted with effect from 24th March, 2008. It has been held by this Court in the case of MAXOPP INVESTMENT LTD Vs. COMMISSIONER OF INCOME-TAX, NEW DELHI, ITA No.687/2009 that the aforesaid amendment is not retrospective and does not apply to the assessment year 2007-08. In view of the above, we do not find any merit in the present appeal and the same is dismissed.
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2012 (2) TMI 532
Deduction of maintenance charges for the purpose of computing net annual value u/s.23 - CIT (A) held that maintenance charges are eligible for deduction within the limit of 30% u/s.24 - Held that:- ITAT, Mumbai in the case of Sharmila Tagore (2004 (6) TMI 591 - ITAT MUMBAI) in the said case it is held that the maintenance charges paid by the assessee have to be deducted even determining the annual value of the property u/s.23. We, accordingly, following the decision of the co-ordinate Bench allow the grounds taken by the assessee and direct the A.O. to re-compute the income under the head ‘income from house property’. Assessee’s appeal is allowed.
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2012 (2) TMI 531
... ... ... ... ..... nt. It has been found that there was no investigation regarding the actual payment in respect of the transaction. The Tribunal has also pointed out glaring discrepancy in the document relied upon by the department. The Commissioner (Appeals) in his order has specifically mentioned that the invoice relied upon by the appellant to show the price as 19,000 Euros was not a signed invoice and could not have been relied upon. On that basis, the Commissioner (Appeals) had set aside the order-in-original passed by the adjudicating authority. Infact there was no evidence sustainable in law to initiate proceedings against the importer-respondent. The view taken by the Commissioner (Appeals) has been accepted by the Tribunal and we find no ground to interfere in the same as these are pure findings of fact. It is thus patent that no question of law much less a substantive question of law would arise for adjudication of this Court. Accordingly, the appeal fails and the same is dismissed.
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2012 (2) TMI 530
... ... ... ... ..... Assessing Officer treated the income from sub-leasing of properties as income from house property. The ld. CIT(A) confirmed the order of the Assessing Officer relying on the order of the Tribunal in assessee’s own case in I.T.A. No. 103/Mds/2005 dated 26.04.2007 and in I.T.A. Nos. 387 & 388/Mds/2006 dated 22.09.2006 for assessment years 2002-03 and 2003-04. It is argued by the ld. AR that the issue is covered against the assessee by the aforesaid orders as well as the order of the Tribunal for the assessment year 2005-06 dated 02.12.2009 in I.T.A. No. 1473/Mds/2009. As the facts in the present year are identical with the facts of the case in earlier years, respectfully following the orders of the Tribunal, we confirm the order of the ld. CIT(A). 7. No other point has been urged by the assessee except the above point. 8. In the result, the appeal of the assessee is dismissed. Order pronounced at the close of the hearing in the presence of the parties on 06.02.2012.
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2012 (2) TMI 529
Addition u/s 68 - bogus investors - Held that:- The finding recorded is essentially of fact and particularly that the persons who are alleged to be the bogus investors have been traced and identified. Once the authorities have got all the details, including the names and addresses of the shareholders, their PAN/GIR number, so also the name of the Bank from which the alleged investors received money as share application, then, it cannot be termed as "bogus". Tribunal's finding that there is no justification in the addition made under Section 68 of the Income Tax Act, 1961 neither suffers from any perversity nor gives rise to any substantial question of law.
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