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Income Tax - Case Laws
Showing 361 to 380 of 743 Records
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2012 (9) TMI 629
Penalty u/s 271 - difference in amount of loan shown in assessee's books of accounts and in decree filled for outstanding amount - Held that:- As in the Books of Accounts of the assessee, the outstanding amount, as on 30th April, 1982, was Rs.52,07,873/-, including interest. However, the decree in favour of the Bank was for Rs.42,45,477/- because that was the amount indicated as the outstanding amount due and payable by the assessee to the Bank in its Books of Account. It appears that the Bank has not calculated the interest over the years possibly for the reason that, in its Accounts, this amount was classified as 'NPA', thus Section 271(1)(c) is not applicable - in favour of assessee.
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2012 (9) TMI 628
Rate of Depreciation u/s. 32 - should not be at the rates prescribed by the income-tax Rules, as amended with effect from 2.4.1983 - Held that:- As decided in Karimtharuvi Tea Estate Ltd. v. State of Kerala [1965 (12) TMI 35 - SUPREME COURT] any amendments in the Act which come into force after the first day of April of a financial year, would not apply to the assessment for that year, even if the assessment is actually made after the amendments come into force.” Therefore, whatever is the rate of tax as on April 1, of the financial year 1983-84 is applicable to the assessment year 1983-84 though the assessment is made subsequent to the amendment. Since the higher rates of depreciation have been brought into force on April 2, 1983, they cannot be made applicable to the assessee for the assessment year 1983-84 - assessee's demand for higher depreciation is quashed - against the assessee.
Disallowance of expenditure - Rent to be treated as capital expenditure - Held that:- The Tribunal, after analyzing the documents, held that the arrangement between the parties conferred the benefit of ownership upon the assessee without the actual sale during the current accounting year. The Tribunal observed that the assessee had the right of user of the property for a long period and also obtained a future right to exercise the option to purchase the property after five years from the date of commencement of the lease. The Tribunal held that the assessee had acquired a capital asset and the expenditure had to be treated as capital expenditure - against assessee.
Disallowance of depreciation - payment which was treated as capital expenditure for acquiring a capital asset - Held that:- There appear to be contradictory findings by the Tribunal. On the one hand, the Tribunal held that the arrangement between the parties was to confer the benefit of ownership upon the assessee and that the assessee had acquired a capital asset and the expenditure in doing so had to be treated as capital expenditure. On the other hand, the Tribunal held that the assessee being a lessee under the agreement, cannot be said to be the owner of the property and was, therefore, not entitled to depreciation under section 32 - as arrangement between the lessor and the assessee was, in effect, an agreement of sale of the property by the lessor to the assessee he is entitled to claim depreciation - in favour of assessee.
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2012 (9) TMI 627
Deduction u/s 10-B - STPI unit - income derived from export of computer software - ITAT allowed the claim as assesses had received approval to start 100 per cent EOU under STP scheme - whether this approval can be deemed one under Section 10-B? - Held that:- For that purpose a 100 per cent EOU is only that which is so approved by the Board appointed by Central Government in exercise of powers conferred under Section 14 of IDAR Act, 1951. The pre-conditions that govern units set up under STP scheme are different from those that govern the units set up as 100 per cent EOUs and so approved by the Board. Some conditions may undoubtedly overlap yet, criteria, such as fulfillment of the employment criteria, foreign exchange, etc., are not common.
There is no notification or official document suggesting that either the Inter Ministerial Committee, or any other officer or agency was nominated to perform the duties of the Board (constituted under Section 14 of the IDR Act), for purposes of approvals under Section 10-B. Though the considerations which apply for granting approval under Sections 10-A and 10-B may to an extent, overlap, yet the deliberate segregation of these two benefits by the statute reflects Parliamentary intention that to qualify for benefit under either, the specific procedure enacted for that purpose has to be followed. There is nothing in any of the Circulars or instructions relied on by the Tribunal in all the orders, implying that approval for purposes of an STP also entitled the unit to a benefit under Section 10-B. The orders of the Tribunal are consequently erroneous, and its reasoning, unsupportable - in favour of the revenue
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2012 (9) TMI 626
Revision ou/s 263 - proportionate expenditure related to the dividend income claimed exempt u/s 10 (33), as per provisions of section 14A - revenue appeal - Held that:- The record reveals that the AO had issued notice and held proceedings on several dates (of hearing) before proceeding to frame the assessment. He added nearly Rs. 2 crores to the income at that time. The Commissioner took the view that the assessment order disclosed an error, in that the deduction under Section 14-A had not been made. Now, while the statutory direction to the AO to calculate, proportionately, the expenditure which an assesse may incur to obtain dividend income, for purposes of disallowance, cannot be lost sight of, equally, such a requirement has to be viewed in the context and circumstances of each given case.
In the present case, it was repeatedly emphasized that the assesse’s dividend income was confined to what it received from investment made in a sister concern, and that only one dividend warrant was received. These facts were material, and had been given weightage by the Tribunal in its impugned order. There is no dispute that the investment to the sister concern, was not questioned even the Commissioner has not sought to undermine this aspect. Equally, there is no material to say that apart from that single dividend warrant, any other dividend income was received. Furthermore, there is nothing on record to say that the assessee had to expend effort, or specially allocate resources to keep track of its investments, especially dividend yielding ones. In these circumstances, it can be said that whether the deduction under Section 14-A was warranted, was a debatable fact. In any event, even if it were not debatable, the error by the AO is not “unsustainable”. Possibly he could have taken another view yet, that he did not do so, would not render his opinion an unsustainable one, warranting exercise of Section 263 - in favour of assessee.
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2012 (9) TMI 625
Notice u/s 271(1)(c) - two impugned notices were issued to the petitioner in respect of deposits in accounts held by him in various banks - Held that:- This Court is of the opinion that the proceedings pending before the TRO should be concluded after involving the writ petitioner and making available to him such material as the tax authorities choose to rely against him in support of their position that the monies and deposits which are said to be the subject matter of judgment under Section 226(3) do not belong to him but to the assessee - Copies of such materials, if in the possession of the TRO shall be made available within two weeks to the petitioner, who shall thereafter make written representation within a week thereafter, setting-out the grounds or reasons why the course of action proposed in attaching the amounts is not feasible or legal
The interim arrangement subsisting and binding the parties whereby the amounts lying in deposit are not to be withdrawn.
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2012 (9) TMI 624
DTAA between India and Japan - technical services - the sum payable was “Industrial or Commercial Profits” within the meaning of the Article III of the DTAA - permanent establishment - Held that:- technical services were rendered by Toyo through the medium of the technicians. - It is not the assessee's case that the technicians were not answerable to Toyo. Nor is it the assessee's case that there was a separate agreement between the technicians and itself and that the only role played by Toyo was the provision of technicians and not the rendering of technical services through them. - Where technical services are rendered by an enterprise to another, the same falls within the ambit of the expression “technical services” and constitute the rendering of technical services even though the same required technicians to be deputed for carrying out the work. - A view to the contrary would render the working of the DTAA difficult - in favour of Revenue.
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2012 (9) TMI 623
Addition u/s 69A - reassessment proceedings - ITAT uphold CIT's order of upholding deletion as appropriate opportunity had been denied to the assessee - Held that:- As decided in Dhakeswari Cotton Mills Limited Versus Commissioner Of Income-Tax, West Bengal [1954 (10) TMI 12 - SUPREME COURT] the Tribunal ought not to have merely upheld the CIT (Appeal)’s order but should have remanded the proceeding to correct the irregularities which crept in during the reassessment proceedings.
A close reading of the assessment order discloses that neither has the contentions of the assessee been discussed nor any attempt made to connect entry 177 with the assessee. It is also apparent from the Appellate Commissioner’s order that these matter were not put to the assessee. Consequently, there cannot be two opinions of the fact that assessee was denied proper opportunity to deal with the materials sought to be relied upon - direction the AO to consider the entire matter afresh after giving all the necessary materials in his possession which deemed are adverse, to the assessee and also after further affording an opportunity for cross-examination of such witnesses.
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2012 (9) TMI 622
Deduction u/s 80I - cutting of jumbo rolls of photographic films into smaller marketable sizes - `manufacture' - Held that:- As decided in M/s India Cine Agencies & Computer graphics Ltd.Versus CIT [2008 (11) TMI 15 - SUPREME COURT] by process of manufacture something is produced and brought into existence which is different from that, out of which it is made in the sense that the thing produced is by itself a commercial commodity capable of being sold or supplied - The word 'production' or 'produce' when used in juxtaposition with the word 'manufacture' takes in bringing into existence new goods by a process, which may or may not amount to manufacture. It also takes in all the byproducts, intermediate products and residual products, which emerge in the course of manufacture of goods - in favour of assessee.
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2012 (9) TMI 621
Computation of deduction admissible to supporting manufacturer u/s 80HHC(3A) - Whether 90% of export benefits have to be reduced in terms of Explanation (baa) of Section 80HHC - Held that:- As decided in CIT v. Baby Marine Exports [2007 (3) TMI 206 - SUPREME COURT] on a plain construction of section 80HHC(1A), the respondent is clearly entitled to claim deduction of the premium amount received from the export house in computing the total income. The export house premium can be included in the business profit because it is an integral part of business operation of the respondent which consists of sale of goods by the respondent to the export house - appeal of revenue is dismissed.
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2012 (9) TMI 620
AO allocated the R & D expenses debited to the head office to the units proportionate to the turn over of the units. - Consequently the AO reduced the appellant's claim for the said deductions under Chapter VI-A in respect of the said units. - Held that:- In the present case, the said R & D activities were in relation to the new drugs. There is nothing to indicate that in the event of the assessee deciding to commercially exploit the benefits of the R & D work, the products would be manufactured by the said units. The fallacy in the submissions proceeds on the hypothetical basis that the said products would be manufactured by each of the units or any one of them. - Allocation of head office expenses on R&D activity among the manufacturing units is not correct to re-calculate the deduction u/s 80IA. - In favor of assessee.
The fallacy also arises on account of an erroneous presumption that the benefit of any R & D activity can only be exploited by an enterprise utilizing the same in its manufacturing activities. An enterprise can always assign the benefit thereof to a third party. It can always grant a licence in respect of any patent or design to a third party. In that event, the other units would not derive any benefit in respect thereof. The presumption of a nexus between the R & D activities and the units is not well founded - in favour of assessee.
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2012 (9) TMI 619
Non-appearance of assessee – Appeal was filed on 10/01/2007 and same was fixed for hearing for 04/02/2009 – Appeal was adjourned twice on assessee request- And finally the appeal was dismissed for non-prosecution - assessee filed miscellaneous petition on 16/09/2011 for restoration of the appeal – Due to non-appearance petition dismissed – Assessee again file miscellaneous application on 28/11/2011 – Despite of several adjournments, finally it adjourn to 06/07/2012 - Held that:- During hearing when the ld. Counsel for the assessee was asked for non-appearance on earlier occasion, it was merely stated that it was the fault of the earlier counsel. One fact is clearly oozing out that the assessee has merely filed the appeal and the miscellaneous application and is not interested to pursue the same. It is clearly the casual approach of the assessee. Therefore, no merit in the second application of the assessee, it is dismissed, especially when the assessee had nothing to say even when opportunity was granted in spite of above facts. Appeal of assessee dismissed
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2012 (9) TMI 618
Addition made on account of substantial cash in bank account – Assessee receive cash from family settlement agreement – Inspite of giving so many opportunities, the assessee did not furnish any documentary evidence nor the explanation for deposit of huge cash in the bank account – Held that:- Cash so deposited in the bank account was received by him out of family settlement and deed executed between the assessee and his brothers was duly submit before CIT(A). Bank entries are also duly supported by confirmation. Appeal decides in favour of assessee.
Advance against sale of land – Assessee enter into an agreement for sale of agriculture land - Advance money was also received – Advance was repaid due to breach of agreement - As per family settle deed brothers of the assessee willing to retain the immovable properties and other assets and in turn compensated the assessee by making payment – Held that:- As the advance was repaid is not supported by proper evidence on record. When the agricultural land was alleged to be given in family settlement to other brothers, no question arises for the assessee selling any ancestral agricultural land. Nothing was also brought on record as to when this agricultural land was bought by the assessee and the consideration paid for the same. AO has not given any positive remand report nor the CIT(A) has recorded any of his own finding to the effect that he has examined the proposed buyer of the agricultural land. Therefore issue remand back to AO
Assessee receive gift by way of Demand draft from 2 persons – Receive gift of Rs. 1 lacs drawn on three drafts – Receive another gift of Rs. 4 lacs drawn on ten demand drafts i.e. Rs 40000 each - Gift deed submit before CIT(A) - Held that:- Gift have been shown as given in the form of demand drafts which seem to have been purchased in cash as more than or equal to Rs.50,000/- drafts are prepared by banks normally only after the draft purchaser quotes his PAN no. Therefore, Gifts so received were not genuine and the credit worthiness of the donors was not proved. Nothing was brought on record to persuade us to deviate from the findings recorded by lower authorities. Accordingly upheld the addition. Decides in favour of revenue
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2012 (9) TMI 617
Suppression of income - Addition made due to difference in income shown in P&L and TDS certificate – Assessee made freight payment on behalf of another person - Railway freight incurred by the assessee which was directly debited to the said person and when he paid the amount subject to deduction of tax at source u/s 194C – Discrepancy was found due to reimbursement of expenses which was neither shown as income nor the payments made were shown as expenditure - Held that:- The assessee cannot be said to have made the profit from railways insofar as due to provisions for Railways the freight has to be paid by the owner of goods and not the contractor. It was only a portion of the amount owed to the deductee which was paid to the Government Exchequer. The assessee could therefore only claim this amount back from deductor as adjustment of amount on account of railway freight to be borne by the deductor by filing its return under the provisions of the I.T.Act for claiming the tax paid as TDS has been noted by the AO. Appeal decides in favour of assessee
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2012 (9) TMI 616
Validity of notice issued u/s 143(2) – Assessee file ROI on 02/08/2007 – AO issue notice u/s 143(2) on 18/9/2008 – Before 01/04/2008 time limit for issuance of notice u/s 143(2)(ii) within 12 months from the end of the FY, in which the ROI is filed – Period reduce to 6 months w.e.f 01/04/08 – Held that:- The proviso to section 143(2) had undergone a change when the limitation for issuance of notice u/s. 143(2) was still live in the assessee’s case i.e. on 1-4-08 the AO had time to issue notice u/s. 143(2). The provisions of section 143(2) of the Act are procedural in nature. The notice issued u/s. 143(2) by the AO on 18/9/08 and served on the assessee 19-09-2008 is within time. Appeal decide in favour of revenue
Income Tax on winning of lottery in Sikim – Whether Income Tax can be levied twice upon a same income, being income on account of winning of Sikkim Lottery, once under Sikim Income Tax Rules, 1948 and again under the Indian Income Tax Act, 1961 in the situation where Sikim is a state of India - Held that:- Since the assessee was not resident within the territories comprised in the of State of Sikkim, the provision of section 10(26AAA) was not applicable to him and income from winning of lottery in Sikkim was liable to tax under the provisions of Indian Income-tax Act, 1961. Following the decision of Bombay High Court in case of Nirmala Mehta (2004 (4) TMI 43). Issue decided in favour of revenue
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2012 (9) TMI 615
Transfer Pricing u/s 92C – Calculation of Arm Length Price – Assessee is an exporter 5 types of minerals – In 3 types of minerals TPO apply CUP (Comparable Uncontrolled Price) method instead of TNMM (Transaction Net Margin Method) method applied by assessee – AO issue draft assessment order by making addition to income – Same was also upheld by DRP – Held that:- TPO had not made suitable study of the case such as: has not made any external comparison of the prices, adopted the special sale price attributable to non-Associates Enterprises on small quantity by instead of AE’s for bulk and regular sales, ignored the factors like additional capital and risk involved, difference in FOB and CIF value, not considered quality variation in different consignments and the corresponding variations reflected in the pricing of exports. - ALP addition deleted - Therefore, appeal decides in favour of assessee
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2012 (9) TMI 614
Assessee is a broking house for public issue. - Assessee had paid sub brokerage to its Holding Co which is a Merchant Banker - primary market brokerage was received by the assessee, whereas the entire work was done by availing the services of the sister concern company. -
Held that:- As the payment made by the assessee to its holding company were actually being disbursed to the sub-brokers and the incurrence of such expenditure was for the business expediency of the assessee. The disallowance could not be made under section 40A(2)(a) and also that the amount paid by the assessee was allowable under section 37(1). No controverting material has been placed on record by AO. Decision in favour of assessee
Bad debt written off & waiver of interest – Interest waived off in same year in which it was provided in books - Assessee has borrowed interest bearing funds and at the same time advanced interest free loans to its holding company – Assessee also use facilities provided by its holding company – Disallowed u/s 40A(2)(a) claim of expenditure is excessive and unreasonable – Held that:- Since the holding company incur heavy losses. Simultaneously assessee did not pay any compensation to the said concern with regard to facilities being availed by it. Therefore said amount is allowable. Decision in favour of assessee.
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2012 (9) TMI 613
Dis-allowance u/s 40(a)(ia) - expenses towards commission, interest on unsecured loan and machinery hire charges without making any tax deduction at source - Held that:- In view of ruling in case of Merilyn Shipping & Transports (2012 (4) TMI 290 - ITAT VISAKHAPATNAM ) wherein it is held that Section 40(a)(ia) is applicable only amount payable as on 31st March of year under consideration. Dis-allowance is directed to be deleted - Decided in favor of assessee
Dis-allowance 40A(3) on ground that assessee has paid Rs.6,68,920/- in cash in a day to various parties towards material purchased - assessee contended that that each transaction in a single day is less than Rs.20,000/- and the amended provision under which aggregation of payments made in a single day is to be considered is w.e.f. 1-4-2009 and hence is not applicable for the year under appeal - AY 08-09 - Held that:- In view of decision in case of Shree Mahaveer Corporation vs. ITO, we are inclined to allow the claim of the assessee.
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2012 (9) TMI 612
Penalty u/s 271(1)(c) - bogus claim of exemption of interest income on FDRs u/s. 80IB - Revenue contended interest on FDRs to be income from other sources - Held that:- Appellant has demonstrated that interest on FDRs and interest received from customers had nexus with business inasmuch as such a claim made by the assessee in the immediately preceding assessment year 2001-02 where miscellaneous income including interest was disclosed at Rs.22,30,180 as his business income, the AO himself allowed deduction u/s 80IB on such claim made by him. It is in this backdrop the assessee can be said to have acted bona-fidely while claiming deduction on similar interest as his income derived from industrial undertaking thereby claiming deduction u/s 80IB in the same manner as was done in the immediately preceding year. In any event, at the time when the assessee returned income and made claim, there were two views possible on the issue under consideration and as such the assessee cannot be said to have made a false or mala-fide claim in the return of income filed by him. Assessee having demonstrated that he made a bona-fide claim. Merely because it is held that claim is not sustainable in law that by itself will also not amount to furnishing of inaccurate particulars regarding income of the assessee and as such it would not attract penalty u/s 271(1)(c) - Decided in favor of assessee
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2012 (9) TMI 611
Genuineness of amounts payable to land owners - Revenue contended that this claim was later on made by the assessee only after it was found that the claim of deduction u/s 80IB initially raised by the assessee was not sustainable in law - whereas assessee contended that land on which flats were constructed was not sold to the assessee company, there was only an agreement to build flats on the land and as per the agreement, the consideration for the ultimate transfer of land was to be paid in progression to the sale proceeds of the flats constructed by the assessee - Held that:- Arguments of assessee are relevant in determining the nature of transactions. It is also to be seen that as per the agreement the land owner had a fifty per cent share in the profits of the project. These matters have not been considered by the Ao. The CIT(Appeals), even though might have appreciated these facts, have not brought out the same in his order. Since both the authorities have discussed only half truth, hence matter is remitted back to the file of the AO
Dis-allowance u/s 40(a)(ia) - non-deduction of TDS u/s 194C - Held that:- Both the authorities have not examined whether such services were required in the business carried on by the assessee. Matter remitted back to the Assessing Officer for fresh consideration of the issues.
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2012 (9) TMI 610
Addition made by disallowing the provision for standard assets on ground that u/s 36(1)(viia) only provision for bad and doubtful debts was allowable and nature of standard assets as per RBI guidelines are performing assets and thus they are not bad and hence not covered in 36(1)(viia) - Revenue contesting deletion of addition by CIT(A) on ground that CIT(A) should not have decided the matter without admitting the guidelines of RBI, not provided by assessee before AO, as an additional evidence as per Income Tax Rules, 1962 - Held that:- CIT(A) is not justified in accepting the explanation of the assessee which was not made before the A.O. The same should have either been admitted under Rue 46A of the I.T. Rules, 1962 and by having a remand report from the A.O. The same has not been done by the CIT(A). Therefore, the order of CIT(A), at the outset, is against the principles of natural justice and deserves to be reversed. Hence, matter is set aside to the file of the A.O. who will examine the claim of the assessee and find out whether the provisions made is a provision for bad and doubtful debts, first and if so thereafter apply the limit as provided under clause (a) to section 36(a)(viia) - Decided in favor of assessee for statistical purposes.
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