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Income Tax - Case Laws
Showing 241 to 260 of 743 Records
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2012 (9) TMI 834 - ITAT MUMBAI
Penalty u/s 271(1)(c) - search and seizure - penalty levied in respect of additions made due to filing of inaccurate particulars of income and the resultant attempt to conceal its true income chargeable to tax - Held that:- In respect of addition made on account of payment of sub-brokerage to Mr Jain on ground of ingenuity of transaction it is observed that Mr jain entered into a contract for the purchase of unit of UTI totaling to Rs. 13.48 crores, surprisingly without paying a single rupee as margin money and amount of 15 lakhs became due to him on sale of such units. It is observed that assessee has grossly failed to substantiate its explanation and establish the genuineness of the transaction. Also, assuming yet not accepting, in this transaction also assessee must have received brokerage and the profit on the above said transactions is earned by Mr Jain, which the assessee has paid to Mr Jain, then , how can this payment of Rs.15 lacs be claimed as expenses by the assessee. In view of aforesaid, penalty is confirmed
Payment of sub-brokerage to Shri Rana - fixed monthly payments - Held that:- Brokerage is always paid as a fixed percentage agreed by the party on the value of the transaction. However, in the instant case, the payment is majorly uniform throughout the year. Though payments have been paid by account payee cheque, but the assessee has failed to substantiate as to why a fixed sum of money has been paid to a sub – broker. Genuineness of the transaction has not been proved by bringing any cogent material on record. Penalty confirmed.
Payment to D&Co - cash method of accounting - dis-allowance on ground that cheque was not cleared before the end of the accounting year - Held that:- No penalty can be levied on this dis-allowance which is only based on the accounting principles.
Payment to R&Co. - difference in security - Held that:- Whatever has been brought on record has only confirmed the payment but the genuineness of the transaction has not been proved. Even the bank advice and the confirmation filed do not have the details of transaction nor any contract note has been filed or brought on record. As the assessee has grossly failed to substantiate its explanantion on each account and is hit by explanation 1B of sec 271[1][c] - Decided partly against assessee
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2012 (9) TMI 833 - ITAT MUMBAI
Block-assessment - search and seizure - addition made on account of undisclosed investment based on the entries found on the seized documents - Held that:- From records it is observed that there was justification for AO for coming to the conclusion that the figures were coded and CIT(A) was not justified in concluding that AO had acted on presumptions. In case, there is material to show that the figures are coded, the computation of income from the transactions has to be done on the basis of real figures and not coded figures. We are therefore, unable to sustain the order of CIT(A) in allowing relief to the assessee and same is therefore, set aside and addition is upheld.
Addition as unaccounted sales - whether the entire sales should be added to the total income or only GP on the sales - Held that:- Once certain sales are found as unaccounted in the books, the assessee has to explain the investment in the corresponding purchases. In case the purchases are accounted, the entire sales had to be added to the trading account and in case sales as well as corresponding purchases both are unaccounted then, in addition to GP, the corresponding investment i.e. purchase value is also required to be added. Thus, in either case the total sales will have to be treated as undisclosed income. CIT(A) has not given any basis as to why only GP should be added. Order of CIT(A) set aside and addition made by the AO is confirmed.
Addition on account of undisclosed stock - assessee had explained the stock as belonging to M/s. P Corporation - AO did not accept the explanation as figures were not matching - CIT(A) while deleting addition observed that discrepancy found represented the stock position of different dates - Held that:- In case no date is mentioned the document has to be taken as of the current date unless the assessee explains with evidence that the same related to earlier period. Therefore, the transactions had to be treated as part of the block period. The assessee had not produced any evidence to show that the said stock was part of the common business and had already been declared in the common accounts. addition made by AO is confirmed - Decided in favor of Revenue
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2012 (9) TMI 832 - ITAT MUMBAI
Trading addition - rejection of books of account - authenticity of labour charges - partial payment in cheque, partial by cash - non-confirmation by laborers - CIT(A) while making trading addition observed that no addition can be made u/s 69C and only possibility is to reject the books of accounts and estimate the income - Held that:- It is not in dispute that the A.O. neither rejected the books of accounts u/s 145 nor applied the percentage of profit on the gross receipt. CIT(A) without giving any opportunity of being heard to the assessee has rejected the books of account. In the absence of any finding recorded by the CIT(A) that he is not satisfied about the correctness or completeness of the accounts of the assessee or that the method of accounting has not been regularly followed by the assessee, CIT(A) was not justified in rejecting the books of accounts and in estimating the profit. This being so, and keeping in view that the outstanding payment made by the assessee during April, 2006 to October, 2006 was not disbelieved by the A.O., addition sustained by CIT(A) is not sustainable in law and accordingly the same is deleted.
Addition u/s 68 - unsecured loans - non-confirmation - Held that:- It is observed that assessee at this stage has filed the same along with the PAN with a request to admit the same as an additional evidence. Matter remitted back to decide the same afresh - Decided partly in favor of assessee
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2012 (9) TMI 831 - ITAT MUMBAI
Determination of annual letting value (ALV) in terms of section 23(1) - as per Municipal Valuation or market value as contended by Revenue - assessee owns two commercial premises, however, no income from house property was shown in the return of income on ground that neither the property nor any part of the said property was let out during the year - Held that:- It has not been disputed that both the properties have not been let out at all and, therefore, annual value has to be determined as per section 23(1)(a). From the plain reading of the section, it would be seen that nowhere it has been provided that market rent is to be applied for the purpose of determining ALV. Rather, it envisages that “property might reasonably be expected to let from year to year”. For the purpose of Section 23(1)(a), the municipal valuation has been held to be correct value for determining ALV by various Courts. Assessing Officer directed to adopt the municipal valuation/rateable value adopted by the municipal authorities - Decided in favor of assessee
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2012 (9) TMI 830 - ITAT CHENNAI
Validity of revisionary order passed u/s 263 on 19-3-2012, setting aside reassessment order passed on 18-11-2009 u/s 143(3), r.w.s. 147 - period of limitation - assessee submitted that the assessment for 2002-2003 was completed u/s 143(1) by intimation dated 28.02.2003 and as such the period of limitation u/s 263 expired on 31.03.2005, being 2 years from the end of the FY in which the assessment was originally completed - Held that:- Contention of the assessee that the limitation for the purpose of the impugned revision order should be reckoned with the earlier order passed u/s 143(1), is not sustainable in law. This is because section 143(1) does not permit an Assessing Officer to make any addition or dis-allowance, and thus cannot be a basis for examining whether the final assessment order passed by the AO is erroneous or prejudicial to the interests of the Revenue. Moreover any proceeding of an authority under the Income-tax Act is amenable to the revisional jurisdiction of the Commissioner of Income-tax. Therefore, assessment order passed by the AO u/s 143(3), r.w.s.147, by itself is independently amenable to the revisional jurisdiction of the CIT - Ground of assessee rejected
On merits it is held that Section 14A, read with Rule 8D, is not applicable to the impugned AY 2002-03. In view of aforesaid, revision order is not sustainable in law. Moreover, while examining the reassessment order in the light of section 14A, the CIT has not made any prima facie finding that in fact the assessee had incurred expenditure to earn the tax-free income and that expenditure has been claimed as a deduction in computing its taxable income. Hence, impugned revision order passed by the CIT is not sustainable on facts also - Decided in favor of assessee.
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2012 (9) TMI 829 - ALLAHABAD HIGH COURT
Appeal against order of Tribunal setting aside the order passed by CIT on the ground that CIT has nowhere recorded his satisfaction, but it was the satisfaction of Income-tax Officer (Technical), who is not competent to revise order u/s 263 - Held that:- Provisions of Section 299-BB deals with the procedure for service of notice and in case, there is a defective service of notice, it provides that if the assessee has cooperated, it will not be open for him to raise the plea, whereas in the instant case, it is not the case of the service of notice, but the initial issuance of notice, which has not been signed by the competent authority as a finding has been recorded by the Tribunal that the notice has been issued under the signature of Income-tax officer (Technical), whereas in view of the provisions of powers u/s 263 (1), it is only the CIT to issue notice. Order of Tribunal upheld.
It is also relevant that pleas can be raised only out of the judgment passed by the Tribunal or other authorities, but the plea, which was not raised at any stage, cannot be raised for the first time before this Court. No other arguments have been advanced in respect of other questions framed in the memo of appeal.
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2012 (9) TMI 828 - ITAT, PUNE
Whether transacting in shares/mutual funds by engaging a Portfolio Management Services(PMS) held as an investment or trading activity – AO treat trading in shares by PMS provider is to be seen as one which has been done on behalf of the assessee and all the transactions carried out through the PMS provider were short term in nature with the motive of selling the shares at higher rates and booking profits – Held that:- As envisages that what the assessee was looking for by engaging the services of an expert, namely, the PMS provider, was appreciation and maximization of wealth and not merely en-cashing of profits with a view of a trader. Therefore, investments carried out by the assessee through the PMS provider do not result in a gain assessable as business income. - Decision in favour of assessee
Annual value of property u/s 23 under head house property - Assessee had declared its annual value at NIL by applying Sec.23(1)(c) on the ground that such property remained vacant during the year under consideration - Annual value of the property was adopted on the basis of fair rent of ₹ 20,000/- per month and after allowing statutory deduction of 30% u/s 24, income chargeable under the head house property was computed at ₹ 1,68,000/ - Held that:- As concluded from the facts in the case allowing the benefit of Sec 23(1)(c) to the assessee, it is for the assessee to establish that the property was intended to be let and it remained vacant in the absence of it being occupied by a tenant. Therefore, it cannot be made out that the property was “intended to be let out”. Appeal decides in favour of revenue.
Disallowance of expenditure incurred on earning exempt income u/s 14A - Whether the provisions of Sec. 14A are applicable to the expenses incurred in the course of its business merely because earning dividend income when there was no material brought to show that incurred expenditure for earning dividend income which is exempted from taxation – Held that:- Following the decision in case of CCI Ltd (2012 (4) TMI 282 - KARNATAKA HIGH COURT) when assessee has not retained shares with the intention of earning dividend income and dividend income is incidental to the business of sale of shares, it cannot be said that the expenditure incurred in acquiring the shares has to be apportioned to the extent of dividend income so as to be disallowed. Appeal decides in favour of assessee
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2012 (9) TMI 827 - ITAT, MUMBAI
Unexplained cash credits u/s 68 – AO added the entire amount from sale of shares as income from undisclosed sources – Held that:- As the purchase of shares, sold during the respective assessment years was already disclosed by the assessee in her regular books of account as well as in the returns of income filed. AO made the addition mainly relying on the statement of a broker. The AO was relying on the statement of a person, the onus was on the AO to enforce the attendance of that person for cross examination of the assessee but no such opportunity was provided in spite of the fact that the assessee requested to cross examine the share broker who earlier had confirmed but later on contradicted the confirmatory letter. Therefore appeal decides in favour of assessee
Addition on account of low household withdrawal - AO had noted that certain invoices of expenditure were found from the premises of the assessee during the search - Held that:- income of the assessee AO had considered withdrawal made by the assessee only-he completely ignored the withdrawals made by the husband of the assessee. The assessee, her husband and HUF were withdrawing sufficient amounts in all the five assessment years under consideration. Therefore appeal decides in favour of assessee.
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2012 (9) TMI 826 - ITAT, MUMBAI
Deduction u/s 43B – Whether deduction u/s 43B can be claimed for pre-paid expenses – AO reject the said claim on ground that only expenses incurred during the year can be allowed u/s 43B – Held that:- As these amounts in respect of which deduction has been claimed are covered u/s 43B and have actually been paid during the year. Thus, the sum which is actually paid irrespective of the year in which the liability to pay such sum had incurred even according to the method of accounting regularly employed by the assessee, has to be allowed in view of the provisions of Sec 43B. Assessee also contended that these amounts which have been debited in the profit and loss account has not been claimed in the subsequent year and has been accepted by the department as well as by the assessee. Therefore deduction allowed. Issue decides in favour of assessee
Taxability of Advance licence benefit receivable - The benefit of concession in custom duty during import goods - Imports were not done during the accounting year and, therefore, no benefits is derived - The entries made in the P&L are notional in nature as the same represents the notional value of benefits under EXIM – Held that:- Following the in assessee own case for another assessment years, the issue is decided against the department.
Disallowance u/s 43B - PF and employees contribution to the Provident Fund and EPF paid beyond the due date but before the end of the previous year – Held that:- Following the decision of the Tribunal in the earlier years, that no disallowance is called for as the same is covered by the decision of the Alom Extrusions Ltd (2009 (11) TMI 27 - SUPREME COURT), wherein it has been held that the amendment in second proviso is with retrospective effect. Therefore, the amendment takes retrospective effect and accordingly any contribution to approved PF paid before the filing of the return has to be allowed as a deduction. Decision in favour of assessee
Whether Excise Duty and Sales Tax is part of total turnover while computing deduction u/s 80HHC – Held that:- Following the decision in case of Lakshmi Machine Works(2007 (4) TMI 202 - SUPREME COURT) wherein it was held that excise duty and sales tax would not have an element of turnover and they ought not to be included in the total turnover or export turnover. Appeal decides in favour of assessee
Whether other income is a part of total turnover while computing deduction u/s 80HHC - AO has included the items of other income like dividend, interest, royalty and technical fees, rent, sales-tax refund etc as part of turnover - Since, the Hon’ble Supreme Court also has confirmed in the case of Laxmi Machine Works that even excise duty and sales tax which do not have any element of profit cannot be included in the total turnover, similar logic also applies to the other incomes which does not have any bearing on the export turnover and total turnover, while working out the deduction under section 80HHC. Appeal decides in favour of revenue
Exclusion of export proceeds not realized within Six months from the total turnover for the purpose of deduction u/s 80HHC – Held that:- Following the decision in case of Abad Fisheries (2002 (8) TMI 95 - KERALA HIGH COURT) wherein the Hon’ble High Court held that if the exports sales proceeds which could not be brought into India in convertible foreign exchange and could not be included in the profits, the same cannot also be included in the total turnover for the purpose of computation u/s 80HHC. Decision in favour of assessee
Whether Profits of foreign branch is part of the turnover while calculating deduction u/s 80HHC – AO while computing the deduction u/s 80HHC has not reduced the profit of foreign while computing the profits of the business as per Clause (baa) of Explanation Section 80HHC(4B) – Held that:- From the reading of the said clause, it is abundantly clear that the profit of the foreign branch has to be reduced and if there is any loss, that should be added back. Issue decided in favour of assessee
Deduction u/s 80IB - Profit of the unit calculated without deducting the losses incurred by the other units – Following the decision in case of Canara Workshops Ltd. (1986 (7) TMI 5 - SUPREME COURT) and ITAT in earlier years in assessee own case and decided in favour of assessee. Appeal decides in favour of assessee
Deduction of penalty under Sales Tax Act – Assessee contended that nature of fines and penalties, were compensatory in nature – Held that:- Following the decision in case of Lachmandas Mathuradas (1997 (12) TMI 16 - SUPREME COURT) which was a penalty levied u/s 45(6) of Gujarat Sales Tax Act, is compensatory in nature and not in the nature of penal violation.
Decision in favour of assessee
Deduction in respect of advances written off – Assessee invest in a project turned out to be non-viable and was thus abandoned before any installation took place – Said expenditure incurred for development of the project was written off during the current assessment year - AO treated the said expenditure as capital expenditure and disallowed the same – Assessee contended that the said expenses incurred were mostly revenue in nature relating to travelling, salary and other administrative expenses – Held that:- Following the decision in the case of Indo Rama Synthetics (I) Ltd (2009 (9) TMI 635 - DELHI HIGH COURT) if the advances are completely in the nature of salary, wages and other administrative expenses as contended by assessee, then the same is to be treated as revenue expenditure. However, this finding is purely subject to verification by the AO. Appeal decided in favour of assessee subject to verification by AO
Deduction of demerger expense u/s 35DD - AO did not grant deduction u/s 35DD in respect of 1/5th pertaining to the relevant AY on the ground that the said expenses were not debited in accounts for the AY – Held that:- Assessee incurs an expenditure on or after 1st day of April, 1999, wholly and exclusively for the purpose of amalgamation or demerger of an undertaking, the assessee shall be allowed the deduction of an amount equal to one-fifth of such expenditure for each of five successive previous years beginning with the previous year in which the amalgamation or de-merger takes place. Hence, 1/5th of the expenditure has to be allowed in this year which is beginning of the previous year in which de-merger has taken place. Appeal decides in favour of assessee
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2012 (9) TMI 825 - ITAT, BANGALORE
Deemed dividend u/s 2(22)(e) - Assessee held 97.83% shares in the company from which advance was received against sale of property - Assessee furnished a copy of the agreement to sell before the AO – Held that:- As the advance received by the assessee from the company in which she is a substantial shareholder, was for a transaction relating to sale of property, the deeming provisions of Sec. 2(22)(e) of the Act were not applicable. If the advance was not in the nature of lending money, it cannot be held as dividend. In the present case, the assessee received the advance against sale of property belonging to her, therefore the transaction could not be brought under the provisions of Sec. 2(22)(e). Appeal decides in favour of assessee
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2012 (9) TMI 807 - ITAT MUMBAI
Indo-Swiss DTAA - assessee, a Swiss company, operated India specific websites providing an online platform for facilitating the purchase and sale of goods/services to users in India - entered into a Marketing Support Agreement with eBay India and eBay Motors which are eBay group companies in connection with its India specific websites - assessee contended that such revenue from the operations of its websites was not taxable as business profits as per Article 7 of the Indo-Swiss DTAA since it did not have a PE in India as per Article 5 – AO contended that assessee had connection in India as eBay India and eBay Motors were group companies rendering services to it and the entire income of Indian companies was derived from such services and accordingly held income to be taxable as 'Fee for Technical Services' – CIT(A) however, in the absence of the assessee furnishing any supporting evidence to prove the genuineness of the claim of expenses, invoked Rule-10 and held that 10% of the revenue to be taxed as business profits.
The term 'managerial services' refers to managing certain affairs, a quid pro quo for which will be described as fees for technical services. Assessee becomes entitled to the user fee when there is a successful completion of sale between the buyer and seller through its website. The assessee's websites are analogous to a market place where the buyers and sellers assemble to transact. By providing a platform for doing business, the assessee can, by no standard, be considered as having rendered any managerial services either to the buyer or to the seller, for which it received fee from the seller, hence it is in nature of 'Business profits'.
There is no dispute about the fact that eBay India and eBay Motors are providing their exclusive services to the assessee. It has been fairly admitted that these two entities have no other source of income except that from the assessee in lieu of the provision of service as set out above. In view of the fact that eBay India and eBay Motors are exclusively assisting the assessee in carrying on business in India, they definitely become dependent agents of the assessee. The next question, however, is whether or not these dependent agents constitute permanent establishments of the assessee as per conditions of Article 5(5).
Clause (ii) of Article 5(5) has no application in this case because there is no requirement on the part of eBay India or assessee to maintain any stock of goods or merchandize on behalf of the sellers. Clause (iii) is also not applicable since eBay Motors is not required to manufacture or process the goods or merchandise on behalf of the assessee. As per Clause (i), it is to be seen whether eBay India and eBay Motors do or habitually exercise 'an authority to negotiate and enter into contracts for or on behalf of the assessee.' Simply by providing marketing services to the assessee or making collection from the customers and forwarding the same to the assessee, it cannot be said that eBay India entered into contracts on behalf of the assessee. Neither there is any mention in the assessment order nor the Revenue has specifically pointed out towards any contract entered into by eBay India or eBay Motors, during the discharge of their functions or otherwise, for or on behalf of the assessee. Thus the test laid down as per clause (i) of Article 5 (5) also fails in the present case.
Therefore, though eBay India and eBay Motors are dependent agents of the assessee, but do not constitute 'Dependent agent PEs' of the assessee in terms of Article 5. Further, these concerns cannot be treated as the PEs of the assessee in terms of Article 5(2)(a) of the DTAA. Since the assessee has no PE as per Article 5, there can be no question of computing business profits of the assessee as per Article 7 in relation to the revenue generated from India – Decided in favor of assessee
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2012 (9) TMI 806 - SUPREME COURT
Plea against rectification order passed u/s 154 - application u/s 154 moved by assessee to carry forward and set off unabsorbed depreciation and losses of earlier AYs - DCIT while determining the taxable income, reduced the deduction admissible u/s 80HHC allowed in the original assessment order by reducing the unabsorbed depreciation and brought forward losses for the earlier AYs from current year's business profits for determining "profits of the business" - assessee contesting the re-computation of deduction u/s 80HHC(3)
Held that:- Section 154 finds place in Chapter XIV which deals with PROCEDURE FOR ASSESSMENT. If one examines the scheme of Chapter XIV, it becomes clear that the said Chapter not only deals with assessment and re-assessment, it also deals with re- computation. The object of re-computation is to assess (quantify) the correct taxable income. Such re-computation of a correct taxable income is a matter of procedure. In order to arrive at a correct amount of taxable income, DCIT had to compute deduction u/s 80HHC(3) which had to be deducted from the gross total income - Decided against assessee
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2012 (9) TMI 805 - SUPREME COURT
Deduction u/s 36(1)(vii) - bad debts - period prior to 1st April, 1989 - Held that:- Deduction for bad debts required satisfaction of two conditions at the relevant time, namely, that (a) bad debt must be established to have become bad in that year; and (b) bad debt should have been written off in the books of account of that year. In present case, appellant satisfied both the conditions for claiming deduction for bad debt u/s 36(1)(vii) r.w.s.36(2)(i)(b). Firstly, the appellant is a State Public Sector Undertaking; and secondly, the appellant was the promoter of M/s. V Ltd. Assessee in the course of business of promoting industrial development in the State of Kerala, had promoted M/s. V Ltd. As a promoter, it was in a position to find out whether M/s. V Ltd was in a position to carry on business in future.
Thirdly, M/s. V Ltd was a typical Public/Private partnership(PPP). None of these aspects have been considered by the Tribunal as well as by the High Court. Lastly, the Reference Application was made in February, 1988; declaration was made in February, 1988, by BIFR that M/s. V Ltd has become a sick Company. Till the end, the Company could not even be revived. It has been wound up. In the circumstances, applying the commercial test and business exigency test, we are of the view that both the conditions u/s 36(1)(vii) r.w.s. 36(2)(i)(b) are satisfied. Deduction thus allowed - Decided in favor of assessee
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2012 (9) TMI 804 - ITAT MUMBAI
Addition made on account of alleged consideration in the form of constructed area as capital gain - assessee company, owner of two plots of land 256 & 257, sold development rights in respect of plot no 257 to a builder for total consideration of 16.11 crores and construction of 18000 sq.ft. of carpet area for the benefit of the assessee on plot No. 256 for the benefit of the assessee - capital gain arising from sale of plot No. 257 was offered to tax by taking into account the consideration of Rs.16.11 crores and constructed area of 18,000 sq.ft. was not taken into account - assessee contended that before said Builders could start the construction work, the entire property comprising of plot No. 256 and 257 was sold to a third party M/s F Ltd. by a tripartite conveyance deed for a total consideration of Rs.29.11 crores - assessee thus never received the constructed area of 18,000 sq.ft. and whatever was received as additional consideration of Rs.13 crores (29.11 crores - 16.11 crores) was offered to tax in AY 2008-09 as capital gain
Held that:- Consideration in the form of constructed area of 18,000 sq.ft. as agreed in terms of the development agreement was not actually accrued to the assessee as a result of subsequent developments/events going by the doctrine of real income and the same, therefore, cannot be taken into account for the purpose of computation of capital gain arising from transfer of capital asset as pet the development agreement. It is also worthwhile to note here that the total consideration actually received by the assessee from transfer of its entire property comprising of plot No. 256 and 257 as per the tripartite conveyance deed was Rs.29.11 crores and the same having been entirely offered to tax in AYs 2007-08 and 2008-09, there is no loss to the Revenue on this count as rightly contended by assessee. Addition made is therefore deleted - Decided in favor of assessee.
Expenditure incurred by the assessee company on payment of premium for purchase of its own shares from warring group of shareholders - revenue or capital expenditure - Held that:- Tribunal in case of Echjay Industries (P) Ltd (1987 (12) TMI 68 - ITAT BOMBAY-D) has held that even if it is assumed that an enduring benefit has been obtained, such enduring benefit is not relatable to fixed capital structure of the assessee company because it has neither increased the assessee's assets nor the assessee company could be said to have acquired any right of income yielding nature. Amount in question was paid to secure peace and harmony and smooth management of the company in the interest of business and the amount paid for this purpose was on revenue account. In view of aforesaid it is held that impugned expenditure is revenue in nature and the same being wholly and exclusively incurred for the purpose of its business, is allowable as deduction. Dis-allowance stands deleted - Decided in favor of assessee
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2012 (9) TMI 803 - BOMBAY HIGH COURT
Plea against failure of CIT to assume jurisdiction u/s 264 by dismissing the petitioner's revision application - petitioner on coming aware of the fact that exemption of dividend income and long term capital gains u/s 10(34) and 10(38) respectively were not claimed mistakenly at page 11 of the return of income where the computation of total income was worked out, moved the revision application on ground that it was an inadvertent error, obvious from the fact since in the return of income itself at page no. 24, the petitioner had claimed the dividend income and long term capital gains as being exempt, as income not to be included in total Income - Held that:- Government is obliged to collect only that amount of tax which is legally payable by an assessee. Officers of the Department must not take advantage of ignorance of an assessee as to his rights.
It is clear that the CIT committed a fundamental error in proceeding on the basis that no deduction on account of dividend income and income form capital gains u/s 10 was claimed, when the same has been claimed at Page 24 of the ROI under head 'Details of exempt Income". Therefore there is an error on the face of the order dated 7.04.2011 and the same is not sustainable. Order of CIT(A) set aside. Since petitioner's application for rectification u/s 154 filed on 8.02.2010, has not yet been disposed of, A.O. is directed to dispose off the application - Decided in favor of assessee
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2012 (9) TMI 802 - SC ORDER
Apex Court upheld the view taken by Tribunal (2007 (2) TMI 267 - ITAT MADRAS-C) and sustained by High Court(2007 (10) TMI 521 - MADRAS HIGH COURT) that that blending and bottling of IMFL would amount to ‘manufacture’ for the purpose of claiming deduction under Section 80IB - Civil appeal dismissed - Decided against Revenue
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2012 (9) TMI 801 - ITAT AHMEDABAD
Disallowance of expenditure on repairs to furniture and fixture - CIT(A) allowed it - By examining the invoices and other details of the expenses, it can be noticed that no new asset was created. The labour was engaged for replacement of old wooden panel and repair of the damaged furniture. On the basis of these facts, it can be held that the assessee being in hotel industry, therefore the expenditure incurred for interior decoration with a view to provide a comfortable stay to customers, the expenditure was nothing but revenue in nature allowable u/s.37.
By the study of the nature of expenditure, it can be ascertained whether the assessee has started a new line of revenue generation or started getting an altogether new advantage of enduring benefit. Therefore, it can be concluded that substantial repair may be advantageous for retaining an existing asset but such an enduring benefit may not lead to a conclusion that a capital asset has been created through which a new enduring advantage was created, thus expenditure in question was a business requirement as decided by the assessee to incur such huge expenditure on commercial consideration - in respect of hotel industry it was held that even the modernization of hotel building is allowable as revenue expenditure because such an expenditure was found to be incurred with a view to create a conducive and beautiful atmosphere for running hotel business - in favour of assessee.
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2012 (9) TMI 800 - ITAT AHMEDABAD
Addition on account of deemed rent - property was deemed to have been let out. - Held that:- On perusal of the agreement of sale dated 19th day of Septebmer-2007, it is evident from the schedule of payment that the same was agreed to be paid on the basis of the stage-wise completion of the construction. Due to this reason, the respondent-assessee has shown an outstanding current liability of Rs.11 lacs of Rajyog Enterprises as on 31.03.2008. The assessee has placed on record a possession letter through which it has also been established that the same was delivered in the following years on 15.12.2010. Under the totality of the circumstances, it is to be concluded that the addition made by the AO was merely on presumption, hence deserves to be reversed - in favour of assessee.
Addition on account of deemed rent of motor garage - Held that:- AO has presumed that the motor-car garage might have been let out by the assessee. In the absence of any evidence in his possession of letting out of the motor-car garage, thus AO has faulted in taxing an income merely on hypothesis - in favour of assessee.
Deemed dividend by invoking the provisions of section 2(22)(e) - assessee happened to be a beneficial holder of 50% share in company imparting loan - Held that:- As it was a trade transaction as evident from the copy of accounts placed on record and there are certain correspondences way back dated 8.2.2006, placed in the compilation, stated therein that the said deposit of Rs.5,00,000/- was towards supply of material on regular basis and that deposit was required to be adjusted against the pending dues, if any, thus the nature of deposit was not a “loan deposit” but in the nature of a “trade deposit” and out of purview of section 2(22)(e) - in favour of assessee.
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2012 (9) TMI 799 - ITAT AHMEDABAD
Addition on unaccounted purchase - Held that:- As it appears that the assessee has not disclosed these three items i.e. Fiberisor-25 units, Electric Spares-3 units and Nut Bolts-2 units in the closing stock and the CIT(A) has also confirmed this addition after giving detailed reasonings in his order. The appellant also furnished the inventory of closing stock for A.Y. 07-08 to 09-10. The appellant requested to set aside this issue to the CIT(A)is not acceptable as the issue is related to the closing stock and it requires verification by the A.O. Therefore, this order is set aside to the A.O. for de novo. The A.O. is also directed to give reasonable opportunity to the appellant - in favour of assessee for statistical purpose.
Relief of undisclosed income on the basis of fabricated evidences and overlooking the fact that entertaining fresh evidences is in contravention of rule 46A - Held that:- As grounds of revenue appeal revolve around Rule 46A & as the assessee’s appeal as discussed above, has been set aside to the A.O. Therefore, Revenue’s grievance automatically has been redressed - Revenue’s appeal is allowed for statistical purpose.
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2012 (9) TMI 798 - ITAT DELHI
Dis-allowance of selling and distribution expenses on the basis that samples and models for foreign buyers were sent by other party (M/s R) and not by the assesse – Held that:- CIT(A) deleted the dis-allowance on observation that these expenses are necessary for obtaining the export orders and have been incurred throughout the year. The samples to the prospective buyers abroad were sent through M/s R who in turn procure export orders for the assessee company. The assessee had also produced the details of foreign buyers to whom these samples and models were sent. Keeping all these material facts in mind, it is held that CIT(A) has rightly deleted the disallowance
Dis-allowance of write off of irrecoverable advances to the fabricators, employees and suppliers during the year 1996-1999 – claim dis-allowed on the basis that the assessee could not furnish documentary evidence in support that the expenses were related to business – Held that:- Contention of the assessee remained that advances were irrecoverable on ground that employees had left their job and the business with the old fabricators, suppliers were also discontinued. We are of the view that maintenance of books of account in regular course of business is also a good evidence to be relied upon. The same cannot be ignored simply because it is not supported with documents thereto when the details of the persons to whom the advances in question were made, were made available. Thus, CIT(A) has rightly accepted the claimed written off irrecoverable advances – Decided against Revenue
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