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Income Tax - Case Laws
Showing 441 to 460 of 743 Records
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2012 (9) TMI 509
Assessment u/s 147 without disposing objection raised by assessee – Held that:- Assessment framed without disposing of the objections raised by the assessee deserves to be set aside. In the case of GKN Driveshafts (India) Ltd. (2002 (11) TMI 7) Supreme court held that on receipt of reasons, the noticee is entitled to file objection to issuance of notice and the AO is bound to dispose of the same by passing a speaking order. If the AO proceeds with the proceedings without disposing of the objections raised by the assessee, the entire proceedings are vitiated. Decision in favour of assessee
Validity of notice u/s 148 – Time limit for issuing notice u/s 148 – AO issue notice after the expiry of 4 years - Held that:- Onus is upon the AO to bring something on record to establish that the income chargeable to tax has escaped assessment on account of failure on the part of the assessee to disclose fully and truly all material facts necessary for assessment, for that assessment year. Nothing has been recorded by the AO in the reasons recorded for reopening the assessment that the income chargeable to tax has escaped assessment on account of failure on the part of the assessee to disclose fully and truly all material facts necessary for assessment. The assessment framed consequent to the invalid notice issued under section 148 of the Act deserves to be annulled. Appeal decides in favour of assessee
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2012 (9) TMI 508
Suppression of stock – Assessee made advance payment to party against purchase of land – Balance amount to be paid to seller was added to closing stock and same was offered for Tax u/s 153A – Closing stock become opening stock of next year – Held that:- As the variance in the closing stock as a result of advance amounts having been considered as part of the closing stock. By deleting the advance drive correct value of closing stock. Therefore, upheld the order of CIT(A). Decision in favour of assessee
Interest u/s 234A & 234B – Held that:- If AO made the impugned addition and same is deleted by CIT(A) & ITAT. When there is no demand of Tax then on what amount interest is to be levied. Therefore, Decision in favour of assessee.
Whether only income which escapes assessment can be brought to tax in assessment u/s.153A – Held that:- Assessee can claim any new deduction out of the income assessed u/s 153A. The AO will ascertain if the incurring of the liability is certain and that it has been estimated on a reasonable basis. He will allow the deduction subject to satisfaction. Therefore case remand back to AO.
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2012 (9) TMI 507
Addition on account of Opening cash balance in books of accounts – During survey u/s 133A, neither the books of accounts nor the vouchers were made available - In course of assessment proceedings, the cash book and ledger and two Nandi files containing vouchers relating to previous assessment years are produced and the same was impounded – AO made addition on the basis of such opening cash – Held that:- As the receipts from business were deposited in another account and the same was also withdrawn as self- withdrawals. The opening cash balance cannot be said to be any sum found credited in the books of the assessee maintained for the previous year. Upheld the decision of CIT(A) in favour of assessee
Addition on account of unexplained creditor u/s 68 - Assessee did not produce creditor, to satisfactorily explain the credit in his account – Held that:- The said sum in creditor’s account was already disallowed u/s 40(a)(ia), which was of labour charges paid to creditor. Therefore CIT(A) was justified in his conclusions, as sustaining the said disallowance would amount to making disallowance twice. Decision in favour of assessee
Addition on account of outstanding amount towards expense - Books of account and other relevant materials were impounded during assessment proceeding by AO - AO has not allowed the assessee to take photocopies of the impounded books of account and other documents – Held that:- As the assessee was not in a position to furnish the name and complete addresses of the creditors. In the remand report, the AO is silent on this aspect except merely stating that the assessee failed either to furnish the full address of the persons. Therefore issue remand back to AO
Disallowance in respect of cash payment of expenses exceed Rs.20,000/- AO invoking provisions of Sec.40A(3) disallowed 20% thereof in addition to the total income – Held that:- These expenses are in respect of labour charges which are already disallowed. Therefore making disallowance u/s 40A(3) of the Act would amount to double disallowance. Decision in favour of assessee
Disallowance of certain expense on account of failure to produce relevant detail - The assessee could not furnish the full details viz., name and address of the persons to whom the payments of expenses were made - AO has not reported any specific finding as to whether the expenditure claimed is excessive, bogus or not related to the assessee business. Books of account were impounded and kept under his custody and copies of the same were not provided to the assessee. Therefore, assessee could not furnish the requisite details. Issue remand back to AO.
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2012 (9) TMI 506
Disallowance of interest expense – AO is of view assessee paid higher interest on borrowings and gave those funds at lower rate of interest - Difference between interest paid and interest received was treated as expenditure not incurred for the purpose of business and disallowed – Held that:- Assessee having both interest free funds and interest bearing funds were used for the purpose of business of the assessee and there was necessity to borrow funds. Therefore with regard to the interest free funds having been given owing to commercial expediency also requires examination. Case remand back to AO.
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2012 (9) TMI 505
Block assessment - addition on account of agricultural income - assessee disclosing higher agricultural income - Held that:- Though the assessee claims that a rubber plantation to the extent of 1.85 acres was purchased on 17-10-1996, no material is produced to support the contention of the assessee either before the lower authorities or before this Tribunal. Moreover, no material was found during the course of search operation. Hence, CIT(A) rightly restricted agricultural income at Rs.2,46,000 as against Rs.5,46,926 adopted by the AO.
Addition on account of deficiency found in the cash flow statement of assessee's wife - Held that:- No material was found during the course of search operation. CIT(A) rightly observed that if at all there is any deficiency, the same has to be considered as undisclosed income of the assessee’s wife and not as undisclosed income of the assessee.
Addition towards low personal expenses - Held that:- In the absence of any material found during the course of search operation this Tribunal find that there cannot be any addition as undisclosed income. Deletion of addition is confirmed.
Direction of the CIT(A) to verify the confirmation letter in respect of loan of Rs.2 lakhs - Held that:- When the assessee filed the confirmation letter, it is the duty of the AO to examine the same. The creditworthiness, identity of the creditor and genuineness of the transaction has to be examined in the light of the material available on record.
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2012 (9) TMI 504
Validity of Best Judgement assessment framed u/s 144 on opinion that return filed pursuant to notice u/s 148 was belated - assessee contesting the order on ground that neither a notice u/s 142(1) nor a notice u/s 143(2) was issued before completing the best of judgment assessment - Held that:- Admittedly, assessee had filed return u/s 139(1) and assessee was not issued a notice u/s 143(2) nor u/s 142(1). Hence, none of the three conditions which, would have given the AO power to make a best judgment assessment, was satisfied. Further, the assessee had filed a return pursuant to the notice u/s 148 though beyond the period mentioned in the said notice, and this was done before the date of assessment. AO having considered such return for finalizing the assessment, was duty bound to comply with the requirement of the Act for issuing notices.
Requirement of Section 143(2) would apply even where re-assessment proceedings are initiated. Since no notice was issued either u/s 143(2) or 142(1), CIT(A) was justified in holding the re-assessment to be not valid and quashing such re-assessment - Decided in favor of assessee
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2012 (9) TMI 502
Dis-allowance u/s 40(a)(ia) - non-deduction of taxes at source from transportation charges - Held that:- In view of the fact that the assessee has duly filed all the relevant 15J declarations, the CIT(A) was justified in deleting impugned dis-allowance u/s 40(a)(ia) r.w.s. 194C
Dis-allowance u/s 40(a)(ia) - assessee claims it to be reimbursement of expenses - Held that:- Matter is to be restored to the file of the Assessing Officer for verification as to whether the payments are in the nature of reimbursements or not, and with a direct ion that if the payments are indeed in the nature of reimbursements, the disallowance u/s. 40(a) (i), to that extent, will stand deleted.
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2012 (9) TMI 486
Assessment of capital gain for Asst. Year 2007-08 - transfer of property - assessee contested that as per Joint development agreement or the Supplementary agreement no event resulting in transfer of property took place in the previous year relevant to Asst. Year 2007-08 but in 2006-07 - Held that:- A contract can be termed to be "of the nature referred to in Section 53A of the Transfer of Property Act" it is one of the necessary preconditions that transferee should have or is willing to perform his part of the contract - on examining the JDA dated 21.12.2005 and the Supplementary Agreement dated 3.4.2006 fact revealed is that the assessee given possession of the property vide clause No. 6, however, the consideration receivable by the assessee in the form of flats is specifically determined by the Supplementary Agreement dated 3rd April, 2006. Being so, there is no progress pursuant to the Development Agreement in the A.Y. 2006-07 and nothing has been brought on record by the assessee to show that the development activities and determination of the consideration in A.Y. 2006-07 and no material is brought on record regarding the construction cost incurred in the year 2006-07, hence developer in the A.Y. 2006-07 had not shown his readiness or having made preparation for compliance of the agreement - thus as it is not possible to hold that the transferee is willing to perform his obligation in the A.Y. 2006-07 though the JDA was entered on 21.12.2005 the conditions laid down in section 53A of Transfer of Property Act were satisfied in A.Y. 2007-08, capital gain has to be taxed in A.Y. 2007-08 only - aginst assessee.
Determination of cost of construction with regard to transfer of long term capital asset - Held that:- The sales consideration 'in the case of developer's case cannot be adopted because while selling the properties, the developer may have considered several factors like the floor on which a particular premises is situated, personal relationship between the buyer and the developer and so on & if the assessee itself had constructed the property, it can be presumed that the assessee also must have incurred, by and large, the same cost thus it is the actual cost of construction only which should be, adopted as the sales consideration in the case of the assessee - thus in the present case the cost of construction as determined in the case of the developer and adopted by the AO cannot be accepted, accordingly direct the AO to consider price inflation for each assessment year from 2001-02 to 2008-09 and determine the cost of construction per flat to be received by the assessee - in favour of assessee for statistical purposes.
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2012 (9) TMI 485
Addition u/s 43B - Conversion of interest payable in equity shares - interest was neither paid during the financial year nor within the due date - CIT(A) deleted the addition - Held that:- As decided in CIT v. Reinz Talbros Pvt. Ltd [2001 (3) TMI 26 - DELHI HIGH COURT] the liability was discharged by way of issuance of shares & when the assessee issues shares the assessee does not incur any expenditure as the assessee is not to make any payment legally towards shares issued. The shares cannot be equated with debentures, which is purely by way of loan and the same are required to be repaid on maturity. However, in respect of shares the company is under no obligation to make any payment in respect of such shares where share holders accept payment of pro rata dividend when such dividend is declared. Thus by issuance of shares the assessee cannot be said to have incurred any expenditure and hence issuance of shares in lieu of interest liability cannot be considered to have been payment towards expenditure. Accordingly the interest liability discharged is not an allowable expenditure.
As liability can be discharged in a number of ways, it does emphasize the fundamental principle that unless 'actual payment' is made, the restriction placed in section 43B will hold good and deduction cannot be allowed. In view of these discussions, as also bearing in mind entirety of the case, the grievance of the Assessing Officer is upheld and restore the disallowance of ₹ 68,18,318/- - against assessee.
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2012 (9) TMI 484
Concealment of income - survey u/s 133A - assessee contested as error in exercise of jurisdiction by the Asstt. Commissioner of Income Tax, Circle-IV (1) Agra as the corporate office was shifted to Delhi - Held that:- The petitioner did not file income tax return at Agra for the assessment year 2000-2001. Without any intimation or getting the jurisdiction transferred to Delhi the assessee had filed return at Delhi for the assessment year 2002-03. The Assistant Commissioner of Income Tax-IV (1) Agra proceeded in accordance with the law requiring the petitioner to furnish return/information. The petitioner participated in the proceedings. It was only at the end of the assessment period that the petitioner company intimated with AO at Agra that his office has shifted from Agra to Delhi and that he has filed income tax return with ACIT, Range-I, Delhi. Earlier no information was given of this suo-moto change of place of filing of return at Delhi.
A survey was conducted u/S 133-A on 24.4.2001 in which a large number of incriminating documents were found depicting serious defects in the books of accounts. Shri Ravindra Kumar Agrawal-the Director of the company had created large number of fictitious concerns, which were not doing any business. In the circumstances the AO completed the assessment on protective basis - As the Director of the company appeared and filed reply to the notice and clearly stated before the AO that his company was assessed to tax with Company Circle-1 (2) at Agra. The petitioner thus acquiesced to the jurisdiction which the AO at Agra already possessed and allowed him to complete the assessment proceedings for the assessment year 2001-02 in the circumstances no error in exercise of jurisdiction by the Asstt. Commissioner of Income Tax, Circle-IV (1) Agra is found - against assessee.
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2012 (9) TMI 483
Disallowance of deduction towards renovation of property - AO treated the transactions as bogus - ITAT allowed it - Held that:- The expenditure was incurred, according to the assessee, in anticipation of its entering into joint venture agreement with the Japanese collaborator & the premises in question over which the expenditures were made were leased to the assessee for a period of five years, the assessee further subleased the premises for the same period - it is not understandable as to why the original lease could not be cancelled when the original owner PHWA and sublessee i.e. PWH are under the same management - There is nothing mentioned in clear words in the said agreement as to why lease rental to be charged from PWH is as high as Rs. 461, 500/- per quarter as against Rs. 105, 000/-per quarter payable by assessee to PWHA, in fact in agreement dated 28-05-1996 even the basic facts would as to how assessee acquired the right to lease the premises to PW- H are not mentioned. As there is no reference of earlier agreement dated 05-04-1996 in agreement dated 28-05-1996 in spite of the fact that both agreements were signed by the same person these facts leads to the conclusion that the said arrangement of lease and sublease is not bona fide genuine - against assessee
Disallowance of depreciation on renovation - ITAAT allowed it - Held that:- As the transaction of lease and sub lease was proved to be bogus no question of allowance of depreciation arises here - against assessee
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2012 (9) TMI 482
Gift from NRIs - Department queried about financial capacity of the donors to make the gift(s) - Held that:- As the ITAT has only stated that the two donors were assessed to tax at Singapore but not at all answered about the financial capacity of the donors this not answer the query raised by the Department.
The burden is on the assessees to show that the amount received by purported gift(s) from the two donors was a "gift" in the legal sense who contended that no opportunity was given to prove their case - the impugned Orders of the High Court and the ITAT is set aside and ITAT is directed to re examine - open to the assessees to produce relevant evidence in the light of case of Commissioner of Income Tax vs. P. Mohanakala [2007 (5) TMI 192 - SUPREME COURT] transactions though apparent were held to be not real ones. May be the money came by way of bank cheques and was paid through the process of banking transaction but that itself is of no consequence - in favour of Revenue by way of remand.
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2012 (9) TMI 481
Claim of revenue expenditure u/s 37 - assessee had actually imported the "knowhow" - claim of the assessee for deduction of earlier years' expenditure pertaining to AY 1991-1992 cannot be allowed in AY 1992-1993 - Held that:- No view on the applicability of Section 35AB or Section 37 is required as during the pendency of this civil appeal, the assessee has got deduction u/s 37 as claimed, thus at this point of time, it would not be fair to ask the assessee, who has already got deduction under Section 37 to re-work and claim the benefit under Section 35AB on the basis of amortization of capital expenditure - against revenue.
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2012 (9) TMI 480
Texturing and twisting of polyester yarn - Denail of deduction u/s 80IA - Held that:- As decided in C.I.T., Mumbai Versus M/s. Emptee Poly-Yarn Pvt. Ltd. [2010 (1) TMI 18 - SUPREME COURT OF INDIA] if an operation/process renders a commodity or article fit for use for which it is otherwise not fit, the operation/process falls within the meaning of the word "manufacture - polyester yarn is a semi-finished product, it is a raw material/input. That raw material or input gets converted into a texturised yarn by reason of the thermo mechanical process held as amount to manufacture - in favour of assessee.
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2012 (9) TMI 479
Partial denial of deduction u/s 33AC - remanding the case back to the file of the Commissioner - Held that:- As decided in CIT Vs. Ganesh Builders [1977 (3) TMI 11 - BOMBAY HIGH COURT] in a case like where alternative arguments on facts are possible and varying findings can be given, it is desirable that the appellate authority gives all findings of fact and not dispose of the matter merely on a point of law. This would facilitate final disposal of the matter by the High Court, whose jurisdiction is limited merely to the question of law by the added Chap. XX-A.
Here in this case the ITAT has dealt with the finding that ITAT which was hearing an appeal from the order of the Assistant Commissioner of the Income Tax has substantially dealt with the ground no.2 referred to in the first para of its order and while deciding the ground no.2 against the appellant has also set aside the finding on the aforesaid question in the appellant's favour without substantially considering the same - the order in appeal of the ITAT is hereby set aside and the matter is remanded back to the ITAT for a fresh consideration.
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2012 (9) TMI 478
Disallowance of interest paid on borrowed loans on a pro-rata basis - ITAT allowed it - Held that:- As decided in DEPUTY COMMISSIONER OF INCOME-TAX Versus CORE HEALTH CARE LTD. [2008 (2) TMI 8 - SUPREME COURT OF INDIA] interest paid on borrowed funds has to be allowed in terms of Section 36(1)(iii)which provides that deduction should be allowed in respect of payment of interest on amounts borrowed even in respect of capital used for the purposes of business or profession - As in the present facts, there could be no dispute that the respondent-assessee was in the business of running business centers and the borrowed capital on which interest was paid was utilized for the purpose of constructing/establishing further business centers - thus the interest paid has to be allowed as deduction u/s 36(1)(iii) as in existence during the assessment year 1999-2000 as a transaction of borrowing is not the same as a transaction of investment - in favour of assessee.
Disallowance of repairs and maintenance charges - ITAT allowed it - Held that:- The appellant is in the business of running business centres which are required to be kept in proper condition with appropriate ambiance. Therefore, expenses on account of repairs and maintenance is an on going process for a business such as the one run by the respondent assessee. Further, the quantum of amount spent can never be a factor by itself to conclude that the expenses are of a capital nature and not expenses on revenue account. Thus the expenses are incurred not for bringing any new asset into existence and therefore the expenditure is incurred not on capital but revenue account - in favour of assessee.
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2012 (9) TMI 477
Addition on account of undisclosed gold ornaments - Held that:- Some of the jewellery was belonged to the assessee - The balance jewellery belonged to his wife and daughter and source of acquisition was explained - partly in favour of assessee.
Undisclosed Investments in shares & securities to be from - Held that:- The assessee’s wife as well as his daughter had disclosed all the shares and securities in their respective returns which had been filed before the date of search. - Decided in favour of assessee.
Addition on expenditure on furniture and renovation was made only statement recorded u/s 132(4). Thus, there is no basis of addition of ₹ 1,15,000/- and CIT(A) was not right in confirming the addition - in favour of assessee.
Expenditure on Religious fuctions - Held that:- appellant had not explained the source of expenditure on religious function. - the addition of ₹ 30,000/- on account of religious function - against assessee.
Addition on Expenditure on tour to Singapore & Goa - Held that:- The appellant had not filed any evidence regarding Singapore as well as Goa tour for explaining the source of expenditure. Therefore, CIT(A) was right in confirming the addition - against assessee.
Addition on Household Expenses - Held that:- CIT(A) was right in holding the addition of ₹ 30,000/- on account of household expenditure - against assessee.
Addition on account of stamp paper purchase - Held that:- Persuing the statement u/s 132(4) the assessee had hardly purchased stamps valued ₹ 710/- during the year under consideration and remaining stamps were either purchased by other parties or purchased by the assessee in different years. Thus, the CIT(A) was not justified in holding the addition of ₹ 13,650/- - in favour of the assessee.
Addition on account of speculative trading - Held that:- It is evident from the documents seized that some of the dividends slips were in the name of assessee and his family members. - the estimate made by the A.O. appears to higher side further the assessee had disclosed shares and securities in the name of the family members in their return. Therefore the CIT(A) order is confirmed to the tune of ₹ 7,00,000/- instead of ₹ 15,00,000/- - partly in favour of assessee.
Addition on account of payment made to Modern Engineering and Moulding Company - Held that:- It is undisputed that this transaction is in the name of Assessee’s daughter who was assessed to tax and had own source of income. The payments were made though drafts which were not pertained to year under consideration. Therefore, CIT(A) was not justified in confirming the addition - in favour of assessee.
Estimation of professional income on the basis of general client ledger found at the time of search - Held that:- Except client general index register, nothing incriminating document was found whereas the appellant had admitted that he was not reflected full income in the regular books of account. - the addition made by the A.O. appears to higher side, therefore the addition under this head is confirmed to ₹ 2,00,000/- & remaining addition of ₹ 3,33,500/- is deleted - partly in favour of assessee.
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2012 (9) TMI 476
Addition to income on account of Indra Vikas Patra found from locker – AO issue notice u/s 148 on the basis of CBI raid - Held that:- Though assessee is also director in Company. The investment and income from IVPs has been duly reflected in the balance sheet & P&L of the company. As IVPs assessed in the hands of company then how these IVPs can assess in the hands of assessee. And there was nothing wrong to keep IVPs which are bearer in nature in the personal locker of directors. Appeal decides against department.
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2012 (9) TMI 475
Disallowance of commission expense - AO issue notice u/s 133 to service provider for examination in respect of commission income - Notice could not be severed due to change in name of payee’s companies at the address provided - AO directed assessee to produce service provider - Assessee unable to produce payee - Submit certificates along with replies from payee - Assessee submit details such as payment through cheque, TDS has been deducted & deposited, commission shown as income in ITR of recipient and confirmations along with agreements - Held that:- As assessee submit details such as payments were made by cheques and after deduction of TDS and the income was reflected in returns of income. If notice could not be served due to change in name of Company, then fresh notice needs to be issue with new name of recipient. Therefore, AO has to use his powers to issue notice u/s 133 of summon regarding examination of the payee.Case remand back to AO for fresh examination.
Can genuine business expenditure disallow merely because of wrong nomenclature - Assessee receives fund to finance its project - Assessee paid him certain sum which is compensatory in nature for providing fund & shown as commission expense - TDS has been deducted & also shown as income in return of recipient - Held that:- As the recipient confirmed the receipt, on which TDS deducted & shown as income in his return. Therefore it is genuine business expenditure of the assessee though wrongly claimed by assessee as commission expenditure. Decided in favor of assessee.
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2012 (9) TMI 474
Addition on account of accommodation entries - Reopening of assessment u/s 147 - Weather notice u/s 148 can be issued on the basis of information which AO already have – AO issue notice u/s 143(2) and 142(1) – Assessee did not appear before the AO - AO re-assess income u/s 144 read with section 147 – Held that:- During assessment u/s 143(3) AO gets information about search from investment wing before completion of assessment u/s 143(3) - Assessing Officer did not get any chance to examine the depositors – Case remanded back to AO
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