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Income Tax - Case Laws
Showing 421 to 440 of 743 Records
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2012 (9) TMI 543
Addition for expenditure incurred earning dividend income u/s 14A - CIT(A) deleted the addition - Held that:- In terms of decision of in Maxopp Investment Ltd. & Others Versus Commissioner of Income Tax (2011 (11) TMI 267 - DELHI HIGH COURT ) even where the assessee claims that no expenditure has been incurred in relation to income which does not form part of total income, the AO is required to verify the correctness of such claim but in the instant case the AO was handicapped, because of failure of the assessee to furnish relevant details/particulars and accounts while making the disallowance in terms of provisions of sec. 14A. - set aside the order of the ld. CIT(A) and restore the matter to the file of the AO for deciding the issue, afresh - in favour of revenue for statistical purposes.
Payment of royalty - Revenue expenditure or capital expenditure - CIT(A) deleted the addition - Held that:- As the assessee was granted a licence for using the know-how to be applied in the manufacturing process. The assessee was required to pay royalty for using such know-how. However, the assessee never became the owner of such know-how but was merely granted a licence to use the same in manufacturing process. The know-how at all the time remains the property of the licensor. At the end of the licence period the assessee was to forthwith return all the plates and drawings, data material and other documents supplied by the licensor to it. Therefore, in view of the ratio laid down by the Hon’ble Supreme Court in the case of CIT Vs. 69 ITR 692 of India Ltd. [1967 (12) TMI 3 - SUPREME COURT] the payment is to be considered as revenue expenditure and no part thereof can be considered as capital expenditure - in favour of assessee.
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2012 (9) TMI 542
Application of Circular dated 9th February, 2011 - Held that:- Liberty is given to the Department to move the High Court pointing out that the Circular dated 9th February, 2011 (regarding monetary limit of appeals by the Department), should not be applied ipso facto, particularly, when the matter has a cascading effect. There are cases under the Income Tax Act, 1961, in which a common principle may be involved in subsequent group of matters or large number of matters. In our view, in such cases if attention of the High Court is drawn, the High Court will not apply the Circular ipso facto. See Surya Herbal Ltd (2011 (8) TMI 137 - SUPREME COURT OF INDIA)
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2012 (9) TMI 541
Bad debt u/s 36 – Whether assessee has to establish that debt has become irrecoverable to claim expense – Assessee is in business of money lending for many years - The debtor company is under the same management - Doing business from the same premises - Directors have substantial interest in it – Held that:- Following the decision of Supreme court in case of T.R.F.Ltd. (2010 (2) TMI 211) it is not necessary for the assessee to establish that the debt, in fact, has become irrecoverable. It is enough if the bad debt is written off as irrecoverable in the accounts of the assessee. AO has not examined whether, in fact, the bad debt or part thereof is written off in the accounts of the assessee. It is not the case of the revenue to disallow any part of such bad debt as has been written off by the lender in its books of accounts. Appeal decides in favour of assessee
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2012 (9) TMI 540
Reassessment - section 150 - assessment in pursuance of an order on appeal – AO added back amount written off by bank, which was payable by assessee by invoking Sec.41(1) – High court accepted the fact that amount was not eligible for tax in the year of appeal but for subsequent years – “Hon'ble Court held that "if the same is not disclosed by the assessee in the subsequent year, it is open to Revenue to take action in accordance with law” – Assessee did not file any return in subsequent year for said income – AO initiated proceedings u/s 147 to tax the said amount by issuing notice u/s 148 in accordance with Sec 150(1) – Held that:- Following the decision of Supreme Court in case of Rajinder Nath (1979 (8) TMI 3) in this case HC held (i) the High Court gives liberty to the assessee to show the said amount in the subsequent years, and (ii) If the same is not shown by the assessee in the subsequently years, it is open for the revenue to take action in accordance with law. Therefore, it is clear that the order passed by the Hon'ble High Court in the assessee’s case for the said Assessment Year was not in the nature of a direction hence the provision of Sec. 150(1) of the Act will not be applicable. Decision in favour of assessee.
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2012 (9) TMI 539
Capital Gain – Assessee enter into Joint Development Agreement with developer in respect of land – Assessee get 45% of the built up area in lieu of transfer of 55% of the undivided portion of the vacant land in favour of the developers for construction – AO treat it as transfer of 55% of the land in favour of the developer was a deemed transfer in year in which agreement enter into & deposit also – AO made addition on basis of value determined by sub- registrar as deemed consideration u/s 50C – Held that:- As the information obtained by AO u/s 133(b) from sub registrar regarding deemed consideration, could not use against the assessee before the same was put to the assessee. Violating of the principles of natural justice. Therefore issue remand back to AO.
Non-refundable deposit in respect of enter into agreement for transfer of land - The assessee received a non-refundable deposit - Held that:- AO determine deemed consideration in respect of transfer of land as per sec. 50C. Therefore non-refundable deposit is not justifiable as the AO has estimated the amount of consideration chargeable to tax u/s. 50C. Decides in favour of assessee
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2012 (9) TMI 525
Penalty u/s 271D - whether transactions effected through journal entries would amount to acceptance of any loan or deposit otherwise than by account payee cheque or account payee bank draft within the meaning of Section 269SS to attract levy of penalty under Section 271D of the Income Tax Act, 1961 - Held that:- Receiving loans / deposits through journal entries would be in violation of Section 269SS but the transactions in question were undertaken not with a view to receive loans / deposits in contravention of Section 269SS but with a view to extinguish the mutual liability of paying / receiving the amounts by the assessee and its sister concern to the customers. In the absence of any material on record to suggest that the transactions in question were not reasonable or bonafide no reason to interfere with the order of the Tribunal in deleting the penalty of ₹ 22.99 crores.
Deletion of penalty of ₹ 2.10 crores a specific finding of fact recorded by the Tribunal is that the loan was received by the assessee by way of a cheque. The above finding is based on the documents produced before the Tribunal. Nothing is brought on record even in this appeal to suggest that the loan was received otherwise than account payee cheque. Accordingly, deletion of the penalty of ₹ 2.10 crores cannot be faulted - appeal decided in favour of assessee.
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2012 (9) TMI 524
Expenditure on Joint Venture for Insurance business and other expenses - market research expense on life insurance business in India - ITAT allowed it as deductible expenditure in the hands of assessee - Held that:- the mere circumstance that common funding of the (proposed) business existed, and there was a management which conceived the start of the new business activity, did not make the proposed joint venture business an “existing business” for the expenditure to qualify as revenue expenditure - These expense are pre-start up expenses in respect of an aborted activity - against assessee.
Deduction towards provision for salary, Provident Fund, Monesana Wage Board - Held that:- The character of the amounts in this case is pure and simple arrears of wages, which were directed to be paid as a result of wage revision exercise mandated by an award. - the Tribunal was justified in holding that the liabilities arising out of the Monesana Wage Board award were justifiably deductible as expenditure, and not covered by Section 43-B - As the Tribunal itself did not grant relief in respect of contributions to Provident funds, and allowed only such portions as were actually paid - against revenue.
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2012 (9) TMI 523
Delay in filing the special leave petitions - Held that:- Where huge revenue/demand from the Department is involved, invariably, there is inordinate delay in filing appeals before the High Court under Section 260A and in filing special leave petitions before this Court - direct the Registry to forward a copy of this Order to the Hon'ble Finance Minister and Hon'ble Law Minister for doing the needful at the departmental level so that such cases of revenue leakages do not recur.
Place these matters on 17th September, 2012, in order to enable learned Additional Solicitor General to make a statement in this regard.
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2012 (9) TMI 522
Validity of notice issued u/s 148 - non-fulfillment of mandatory requirement of Section 151(2) - approval of the Joint Commissioner not taken - Held that:- Respondents have failed to produce the approval of the Additional Commissioner or the Joint Commissioner either in the affidavit in reply or even otherwise. Whether the approval was granted or not is an objective fact which can be established only by producing the approval. It is not the respondents' case that the approval was in fact granted, but is misplaced. In affidavit in reply, it is expressly stated that the impugned notice was issued “with the approval of CIT-2, Mumbai.” There is not a whisper about the Additional Commissioner or the Joint Commissioner having granted the approval. The alleged approval therefore, in any event, is contrary to the provisions of section 151 and therefore notice reopening the assessment cannot be sustained in law - Decided in favor of assessee
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2012 (9) TMI 521
Interest income arising on the difference between purchase price of the debenture and redemption price after six years - Taxation on interest income on accrual basis in the year of allotment of debenture itself or to be taxed on spread-over basis - Held that:- The case of Taparia Tools Limited vs. JCIT [2003 (1) TMI 83 - BOMBAY HIGH COURT] refers to matching principle in order to arrive at the real income of the assessee wherein it is held that in this case as concerning with the ascertainment of true profits under the Income-tax Act and in order to ascertain such profits the true accounting principles need to be followed and to apply those principles in the light of the method of accounting followed by the assessee.
As find from the records that the assessee has computed his interest income arising on the difference between purchase price of the debenture and redemption price after six years and calculated the income on amortization basis - the civil appeals filed by the assessees allowed.
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2012 (9) TMI 520
Power to transfer cases - Shift of registered office from Delhi to the State of Maharashtra - Held that:- The Director General or Chief Commissioner or Commissioner may, after giving the assessee a reasonable opportunity of being heard in the matter, wherever it is possible to do so, and after recording his reasons for doing so, transfer any case from one or more Assessing Officers subordinate to him (whether with or without concurrent jurisdiction) to any other Assessing Officer or Assessing Officers (whether with or without concurrent jurisdiction) also subordinate to him - the word “may” in Section 127 should be read as “shall”. The requirement of giving an assessee a reasonable opportunity of being heard wherever it is possible to do so, is mandatory. The discretion of the authorities is only as to what is a reasonable opportunity in a given case and on the question, whether it is possible in a given case to provide the opportunity.
As in the present case assessee on several occasions had appeared before respondent no.1 who had passed the impugned order - the petitioners' objections were filed on 19.12.2011 and the impugned order was passed on 05.01.2012 i.e. within 16 days as the Paragraphs 6 & 7 of the affidavit in rejoinder refer to the petitioner's letter dated 19.12.2011 and the impugned order dated 05.01.2012 respectively. No details have been furnished as to when the petitioner's Counsel were heard. Paragraph 8 merely states that the sequence of facts and correspondence indicate that sufficient opportunities of being heard were given to the petitioner without furnishing details in respect of the alleged hearing. Paragraph 8 of the rejoinder further states that the petitioner had indicated in its letter that it preferred to submit its objection in writing and that the same were therefore considered before passing the impugned order. This is incorrect. In the correspondence which we have already referred to the petitioner had expressly requested for a personal hearing, thus he impugned order is liable to be set aside on the ground that the petitioner had not been heard - in favour of assessee.
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2012 (9) TMI 519
Whether interest paid in respect of borrowings for acquisition of capital assets not put to use in the concerned financial year can be permitted as allowable deduction under section 36(1)(iii) of the Income-tax Act, 1961? - Held that:- Yes, as decided in Dy. CIT v. Core Health Care Ltd. [2008 (2) TMI 8 - SUPREME COURT OF INDIA ] - in favour of assessee.
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2012 (9) TMI 518
Rectification of mistake - Notice u/s 154 - Held that:- The said notice is totally vague as AO has not even indicated as to on what basis he has allowed excess set-off - notice u/s 148 issued squarely on the basis of notice under Section 154 - both the noticses set aisde - in favour of assessee.
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2012 (9) TMI 517
Chargeability of interest u/s 234D - excess refund made on the assessee - assessee contested no interest apply to refunds granted prior to 1/06/2003 even in respect of assessments completed after the cut-off date of 1/06/2003 - Held that:- As there was no provision of interest on the grant of refund under Section 143(1) it became necessary to provide for the same by having a charging provision. This was done by section 234D in respect of all pending assessments in which refund was given. Thus even if, a refund has already been granted the same would be subject to the provisions of section 234D
A declaratory amendment in an Explanation 2 to section 234D which specifically provides that it shall also apply to an assessment year commencing before 1/06/2003. The only qualifying criterion is that proceedings in respect of such assessment is completed after 1/06/2003. Once the Explanation is held to be retrospective in relation to the assessment years commencing before 1/6/2003 it would not be open to restrict the operation of section 234D only with effect from 1/6/2003.
Under the Act what is brought to tax is not the income of the assessee in the assessment year but the income of the assessee in the previous year. The liability to tax arises on account of the Finance Act which fixes the rate at which the tax is to be paid. The law to be applied is as existing on the 1st day of April of the previous year - in favour of revenue.
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2012 (9) TMI 516
Reopening of assessment u/s 147 - denial of benefit of Section 80HH - Held that:- Law as declared by the jurisdictional High Court that the civil construction work carried out by the assessee would be entitled to the benefit of Section 80HH which view was squarely reversed in the case of Commissioner of Income-Tax vs. N.C. Budharaja and Co. and Another, reported in [1993 (9) TMI 6 - SUPREME COURT] thus any subsequent reversal of the legal position by the judgment of the Supreme Court does not authorise the Department to reopen the assessment, which stood closed on the basis of the law, as it stood at the relevant time - in favour of assessee
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2012 (9) TMI 515
Contingent liability - Disallowance claim of deduction for wage revision - ITAT allowed it - Held that:- Relying on the decision of Bharat Earth Movers Versus Commissioner of Income-Tax [2000 (8) TMI 4 - SUPREME COURT ] in this case, the Tribunal had noticed that there was no dispute as regards the terms of employment of the workers and officers & that provision for wage revision was based on past experience, interim Pay Commission of government employees, previous Pay Commission’s reports of public sector employees, union demands and other relevant factors. The Tribunal also held that with the expiry of one wage settlement or agreement, invariably, there is a time lag when another fresh wage revision agreement is negotiated and entered. The deduction claimed for that period cannot be termed as contingent because the wage and the probable revision or rates of revision would be within the fair estimation of the employer, thus liability could not be characterized as contingent but was in fact ascertained the quantification, however, had not happened - in favour of assessee
Denial of benefit claimed u/s 10 (15) (iv) (h) - interest earned on tax free bonds between the date of their application by the assessee and the date of their allotment - Held that:- Interest payable on “bonds or deposits” [referred to Section 10(15)(1)(iv)(fa)] would mean interest earned by such amount or deposit. On the other hand, interest paid in respect of such bonds, as is the case with tax free interest bonds under sub-section 15(1)(iv)(h), connotes an entirely different intention. The expression “in respect of,” unlike the term “on,” has a wider connotation and would embrace a larger subject matter. On the other hand, “interest … on the bond or deposit” would mean what is actually yielded by the bonds and nothing else. The Tribunal noticed correctly that interest would include hedging transaction charges payable on account of currency fluctuation. Such being the amplitude of the provision, the fact that interest was paid for a brief period of about six days in the present case would not make it any less an amount of interest payable “in respect of the bonds” in question - the conclusion by the AO might have been justified but this case, the time lag is extremely small less than a week - in favour of assessee.
Disallowance of donations claimed as business expenses u/s 37 (1) - assessee had claimed expenditure on account of donations under section 80G of the Act in its returns - Held that:- Parliament having chosen one method of dealing with donations i.e. as in the case of section 80G, the adoption of another route as business expenditure would not be permissible - against assessee.
Disallowance of set of loss of one project eligible for deduction u/s 80 HHB against the profits of other projects - Held that:- the deduction is allowable to the assessee in regard to each project. - the deduction u/s 80HHB is to be computed in regard to each project separately - loss from another unit cannot be reduced from the profit of eligible unit - following the decision in Commissioner of Income-Tax, (Central) Madras Versus Canara Workshops Pvt. Limited [1986 (7) TMI 5 - SUPREME COURT] decided in favour of assessee.
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2012 (9) TMI 514
Disallowance of short term capital loss on sale of mutual funds units - assessee contested that the capital loss on sale of units would be covered by Section 94(7)(b)(i) and in such case the units which are in fact securities are required to be kept only for a period of three months after the recorded date and not for a period of nine months as required under Section 94(7)(b)(ii) - Held that:- The submission made by assessee that “units” are included within the meaning of the word ”securities” and therefore, Section 94(7)(b)(i) is applicable and the period of holding has to be only three months does not impress us. The Parliament has not only used two different terms namely “securities” and “units” in Section 94(7)(b)(i) and 94(7)(b)(ii) but has dealt with them separately providing different minimum periods of holding for “securities” and “units”. It is settled position in law that Parliament would not have used words in vain and a construction which renders redundant any part of the statute must be avoided. Therefore, units would be governed by the provisions in respect thereof in Section 94(7)(b)(ii).
A view to the contrary would render the provisions of Section 94 relating to units otiose. Further, there is no warrant to read the meaning of the word securities as defined in the Securities Contract (Regulation) Act, 1956 to interpret the meaning of the word securities in Section 94(7). Clause (d) of the Explanation to Section 94(7) provides that units shall have the meaning assigned to it in clause (b) of the Explanation to Section 115AB. Section 115AB Explanation (b) defines units to mean a unit of a mutual fund specified in Section 10(23D) or of the Unit Trust of India. The definition therefore identifies the type of unit. It does not equate units with securities or vice versa. Section 10(23D) does not do so either. The reliance upon Section 10(23D) Explanation (c) is entirely misplaced. It refers not to securities but to the SEBI - No substantial questions arises - against assessee.
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2012 (9) TMI 513
Penalty u/s 271(D) - Difference of opinion between the members of Tribunal on stay application - notice demanding payment of the penalty and threatening of coercive action in the event of default issued - Held that:- As a case of stay is pending before tribunal it shall expeditiously hear and pass orders on stay and in the meantime subject to the petitioner remitting an amount of Rs.15,00,000/- towards penalty within three weeks from today, further proceedings pursuant to Ext.P6 notice will be kept in abeyance.
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2012 (9) TMI 512
Whether interest u/s 234B is chargeable in the case on the revised computation of income at a higher figure made consequent to withdrawal of claim for exemption u/s 80IB(9) in the light of retrospective amendment to section 80IB by Finance Act(2) of 2009 - Held that:- Assessee is not liable for interest u/s 234B on ground that assessee had not withheld any money belonging to the Government and the interest payable on account of enhanced compensation was unknown to the assessee on the date of completion of assessment. Therefore, the assessee could not have included the interest received on enhanced compensation in the assessment year while estimating his income for the purposes of calculation of advance tax for the relevant years. Therefore, there was no question of levying interest u/s 234B. See CIT vs. Anand Prakash (2009 (2) TMI 30 - DELHI HIGH COURT) - Decided in favor of assessee
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2012 (9) TMI 510
Disallowance of Licence fees – AO made addition on basis that mere existence of an agreement is not sufficient to prove commercial expediency in respect of this payment - Held that:- As in earlier years Tribunal in its appellate order held that the licence fee paid to M/s RPG Enterprises was an allowable expenditure. Therefore, there cannot be any dispute that the question of existence of commercial expediency has to be decided on the facts prevailing in each case. Decides in favour of assessee
Disallowance of interest expenditure – Relating to investment in subsidiary company – Whether there was any commercial expediency in making the investment in subsidiary companies or whether the interest bearing funds have actually been diverted - Held that:- Assessee has established the commercial expediency in making interest free advances to its subsidiary companies. It has also established that it has only utilized only interest free funds for the said purpose. Following the decision of Hon’ble Supreme Court in the case of S.A. builders delete the addition. Case decides in favour of assessee.
Disallowance in respect of delayed payments of Employees Contribution to PF, Labour welfare fund and ESI – Payment made before the date of filing of return u/s 139(1) - Held that:- Following the order of the Tribunal in the appellant’s own case previous assessment year, the disallowance of delayed payments of Employee’s contribution to provident fund, labour welfare fund and employees state insurance respectively which were paid before the due date of filing of the return is deleted. Decision in favour of assessee
Addition of amount realised on sale of old and unyielding rubber trees – AO treating it as revenue receipt under Rule 7A - Rule 7A, the income from rubber estate has to be apportioned in the ratio of 65 : 35 and the 35% of the income is to be assessed as business income - AO brought to tax 35% of the amount realised on sale of old and unyielding trees as salvage value got from an exhausted stock – Held that:- As Rule 7A applies only to a person who carries on the combined activity of growing rubber trees and also manufacturing or processing of field latex or coagulum obtained from rubber plants. Following the decision of Supreme Court in case of Kalpetta Estates Ltd (1996 (7) TMI 4) in holding that the Rubber trees constitute Capital assets shall hold good even after the introduction of Rule 7A. Decides in favour of assessee
Disallowance of loss from business units – AO hold that these are defunct units and no business is carried on therein and further there is no possibility of revival of these units – Held that:- As the assessee has proved the fact of generation of income from these two activities. And AO has disallowed the claim of loss from these units without properly appreciating the facts. Decision in favour of assessee
Capital Gain on sale of trees - Trees are grown to afford shade to the tea bushes – AO was taking consistent stand in the earlier years that no capital gain or capital loss can be computed on sale of Grevelia trees, as the cost of acquisition could not be ascertained - Held that:- The AO has changed his stand in the instant year and has proceeded to assess the Capital gain on sale of Grevelia trees. Therefore, the legal position with regard to the taxability of the old Grevelia trees cannot be changed in the year under consideration, merely because the present AO has a different view. And also AO has not brought any new fact or view regarding taxability. Decision in favour of assessee
Capital gains on slump sale u/s 50B – Assesse sold its two rubber estates – Assessee did not return any capital gain as these estates are agricultural lands - AO took the view that the transfer has been made on going concern basis – Held that:- Following the decision with same facts in assessee’s own case by ITAT in earlier years that the assessee did not conduct any slump sale of an undertaking even though in the sale deed it was stated that the sale of rubber estate was made on going concern basis. Therefore sale of two estates in the year under consideration cannot be termed as “slump sale”. Decision in favour of assessee
Computation of Book profit u/s 115JB – Inclusion of profit on sale of two rubber estates - Assessee claimed the profit on sale of the two estates as agricultural income which is exempt u/s 10 – Held that:- In previous year judgement given by Tribunal in assessee’s own case held that sale of rubber estate is agricultural income and hence it is not required to be included in computing the book profit u/s 115JB. Decision in favour of assessee
Disallowance of Provision for gratuity in computation of Book Profit u/s 115JB – Held that:- On the basis of decision in case of ILPEA Paramount (2010 (2) TMI 45) & Eastern Power Distribution Co. of AP Ltd.(2011 (3) TMI 547) held that the provision for gratuity liability cannot be added for the purpose of computation of book profit. Decision in favour of assessee
Disallowance of share capital related expense – AO disallow share transfer charges and the professional charges paid to registrar and share transfer agents – Held that:- AO disallowed the above said expenses under the impression that they have been incurred in connection with the sale of shares, the capital gain of which is exempt. Therefore AO made the impugned disallowance without properly appreciating the nature of expenses. Decision in favour of assessee
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