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Income Tax - Case Laws
Showing 461 to 480 of 515 Records
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2013 (8) TMI 142 - GUJARAT HIGH COURT
Deduction u/s 80IB(10) - Assessee not owner of land - Tribunal deleted disallowance - Held that:- Assessee took the full risk of executing the housing project and thereby making profit or loss as the case may be. The assessee invested its own funds in the cost of construction and engagement of several agencies. Land owner would receive a fix predetermined amount towards the price of land and was thus insulated against any risk - Supreme Court dismissed decision appeal in case of CIT v. Radhe Developers[2011 (12) TMI 248 - GUJARAT HIGH COURT] - Therefore, Decided against Revenue.
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2013 (8) TMI 141 - GUJARAT HIGH COURT
Deduction u/s 80IB - Disallowance of labour expenses u/s 40(a)(ia) - Tribunal allowed deduction - Held that:- It may be that certain expenditure may be disallowed on the ground that tax deductible at source at the time of making such payment was done by the assessee. Nevertheless, no effect of such disallowance would be there on the assessee's profit from its construction activity since it would be increased to that extent. Nevertheless, such increased income would also qualify for deduction, even otherwise, available under the statute - Following decision of CIT v. Radhe Developers [2011 (12) TMI 248 - GUJARAT HIGH COURT] - Decided against Revenue.
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2013 (8) TMI 140 - GUJARAT HIGH COURT
Undervaluation of closing stock - CIT confirmed the addition - Tribunal deleted addition - Held that:- assessee had wherever found that the rough diamonds are having cost less than the market value, it had valued them at the cost. Wherever the market value of the rough diamonds is less than the cost, the assessee has applied the market value. This fact was not denied by the Assessing Officer. Any objection raised by the Assessing Officer was against the market value determined by the assessee. The onus is on the assessee to prove that the market value of the stock is less than the cost but it is a case where there is no independent evidence available which may confirm the market value. In the case of rough diamonds it is only the estimate, which can work out by the expert. If the Assessing Officer was not satisfied with the market value taken by the assessee, he could have taken the assistance of the expert but the Assessing Officer merely rejected the method of valuation consistently followed by the assessee and accepted by the Revenue in the earlier year and hence without obtaining any expert's opinion on the subject the Assessing Officer could not have rejected market value taken by the assessee - Following decision of The Assistant Commissioner of Income Tax Versus B. Sureshkumar & Co (RF) [2008 (7) TMI 849 - GUJARAT HIGH COURT] - Decided against Revenue.
Genuineness of the transactions - Certificate for deduction at lower rate issued - Tribunal deleted addition - Held that:- when the certificate for deduction at source has already been issued, the question of doubting the identity of the payee or the genuineness of the transaction would not arise - No substantial question of law arises - Decided against Revenue.
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2013 (8) TMI 139 - ITAT DELHI
Non-deduction of TDS u/s 194C - franchise fees paid by the assessee to the Licensee - CIT(A) deleted the addition - Held that:- As decided in assessee's own in [2012 (4) TMI 440 - DELHI HIGH COURT] it is held that the tenor and purport of the terms of the agreement were that it was not a case where the licensee was doing any work for the assessee even within the wider meaning of the term “any work” as defined in Section 194C - In favour of assessee.
Disallowance u/s 14A read with Rule 8D - CIT(A) partly deleted the addition - Held that:- CIT(A) has sustained the disallowance just by an estimate based at the rate of 5% without looking into whether the expenditure which has been disallowed has a proximate relationship with the income which has been earned by the assessee not forming part of total income. Therefore, set aside the order of the CIT(A) and restore taback to the file of AO with a direction to re-decide after giving the finding with all the expenditure whether have a proximate relationship with the income earned by the assessee on the shares and than accordingly he should estimate the disallowance - in favour of revenue for statistical purposes.
Bonus paid to directors - disallowance u/s 36(1)(ii) - CIT(A) deleted the addition - Held that:- As decided in assessee's own case [2010 (12) TMI 746 - ITAT, Delhi] wherein held that as one of the directors would have received the bonus as dividend in case bonus was not paid. Otherwise, the bonus has been paid as per resolution of the Board of Directors. Therefore, the provision contained in section 36(1)(ii) is not applicable - Decided in favor of assessee.
Addition on a/c of non-refundable portion of advance fee - CIT(A) deleted the addition - Held that:- As decided in assessee's own case [2010 (12) TMI 746 - ITAT, Delhi] only that part of the receipt is taxable in this year which accrued to the assessee as income. Decided in favor of assessee.
Addition on a/c of bad debts - CIT(A) deleted the addition - Held that:- As decided in TRF Ltd. Vs. CIT [2010 (2) TMI 211 - SUPREME COURT] w.e.f. 01.04.1989, in order to obtain a deduction in relation to bad debts, it is not necessary for the assessee to establish that the debt, in fact has become irrecoverable. It is enough of the bad debt is written off as irrecoverable in the accounts of the assessee. In favor of assessee.
Addition on a/c of processing charges - CIT(A) deleted the addition - Held that:- As decided in India Cement Ltd. Vs. CIT [1965 (12) TMI 22 - SUPREME Court] such expenses are clearly allowable under section 36(1)(iii). In favor of assessee.
Addition on a/c of advance written-off - CIT(A) deleted the addition - Held that:- The assessee has written off the advance given to the employees, when the employees left the employment as the amount no more could be recovered from the employee. CIT(A) although deleted the disallowance u/s 36(1)(vii), but section 36(1)(vii) is not applicable, but this will be a loss incidentally to the business of the assessee as the advance was given during the course of business. In favor of assessee.
Disallowance of 4/5 of the advertisement expenditure - Held that:- the expenditure on publicity and advertisement has to be treated as revenue in nature which is allowable fully in the year in which it has been incurred. The expenditure was incurred to facilitate the appellant's trading operations. No fixed capital was created by this expenditure and there was no advantage which accrued to the appellant in the capital nature. Once the assessee claims the deduction for whole amount of such expenditure, even in the year in which it is incurred, and the expenditure fulfills the tests laid down u/s 37 and it has to be allowed. Only in exceptional cases of the nature of expenses as mentioned in Madras Industrial Investment Corporation Ltd. (1997 (4) TMI 5 - SUPREME Court), the expenditure can be allowed to be spread over, that too when the assessee chooses to do so. The same ratio has been laid down in the case of CIT vs. CITI Financial Consumer Finance Ltd [2011 (3) TMI 622 - Delhi High Court]. In favor of assessee.
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2013 (8) TMI 138 - ITAT MUMBAI
DTAA between India and Singapore - assessee is a company resident of Singapore engaged in the business of Computerized Reservation System (CRS) - assessee received payment from its activity of providing airline reservations in India, which was not offered for taxation stating that it did not have any permanent establishment (PE) in India - AO estimated of the profit margin at 10% of the receipts attributable to Indian operations - Held that:- Considering the assessee's own case for the earlier years ITAT has held that 15% of the receipts should be attributed as income accruing or arising in India and since 25% of the receipts were paid to ADSIL in India as marketing fees, there was no income chargeable to tax as relying on Galileo International Inc. v. DCIT [2007 (11) TMI 329 - ITAT DELHI-B] as affirmed by Hon'ble Delhi High Court [2009 (2) TMI 497 - Delhi High Court].
Refund by the Income-tax Department which included interest - Revenue taxed it at 20% as per section 115A as per Article 24 of Indo-Singapore DTAA wheres assessee claimed taxation of such interest @ 15% as per Article 11 of the DTAA - Held that:- The burden is on the assessee to prove that the amount of income was remitted to or received in Singapore. This burden can be discharged by showing a credit in the bank account maintained by the assessee in Singapore. Production of a copy of pay in slip showing deposit of refund voucher in a bank a/c in Singapore which is eventually credited to the bank account, or even a certificate from a Bank in Singapore in this regard, are the instances of sufficient compliance of the requisite condition. A bald submission not backed by any supporting evidence to prove the fulfillment of the requisite condition, cannot be a good reason for drawing an inference in favour of the assessee. It is more so because there is an unambiguous command of Article 24 which casts obligation on the assessee to prove this fact positively. Thus the authorities below were justified in refusing the benefit of Article-11 of the DTAA by taxing the interest on I.T. refund @ 20% as per section 115A.
Claim of reimbursement of expenses - Held that:- As seen from the findings given by the CIT (A) on the first issue is viewed in the light of superseding order holding the attribution of income from Indian operations at 15% of the gross receipts, there remains no doubt that the marketing fees paid to ADSIL is still more than the income attributable to the business operations in India including the amount of ₹ 1.72 crore - ground raised by the assessee that the expenses reimbursed by the ADSIL amounting to ₹ 1.72 crores should be considered as reimbursement of expenses is liable to be and hereby dismissed. Against assessee.
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2013 (8) TMI 137 - ITAT HYDERABAD
Disallowance made u/s 40(a)(ia) - not deposit of TDS before the expiry of time prescribed under sub-section (1) of section 200 - Held that:- As decided in CIT vs. Virgin Creations [2011 (11) TMI 348 - CALCUTTA HIGH COURT] amendment to the provisions of sec. 40(a)(ia) by the Finance Act, 2010 would be applicable retrospectively from 1-4-2005 & if an assessee has deposited the TDS amount before due date of filing of return u/s 139(1), no disallowance can be made u/s 40(a)(ia) of the Act. In the facts of the present case, there is no dispute that the assessee has deposited TDS amount before the due date of filing the return u/s 139(1), hence, the no disallowance can be made by invoking the provisions contained u/s 40(a)(ia) - appeal filed by the assessee stands allowed.
Unaccounted cash credit - CIT(A) deleted the addition - whether assessee has not substantiated the sources for the credits/deposits made into the bank account with corroborative documentary evidence - first group of deposits - Held that:- The assessee has submitted that these amounts had been deposited out of the cash withdrawal of ₹ 4,90,000 on 27-5-2008 which had been withdrawn for hte medical treatment of the assesse's (aunt). AO has not accepted this explanation stating that the sum of ₹ 4,90,000 had been used for repayment of loan to Sri P. Nageswara Rao. It is seen from the entries in the bank account and the assessee 's explanation that the repayment has taken place subsequently, i.e., on 27-8-2008 and on 11-9-2008. Before this, the assessee had made a self withdrawal of ₹ 4,91,500 on 31-5- 2008. However, as per the assessee, this amount was eventually not utilised and was re-deposited on the dates mentioned above. AO has ignored this withdrawal of ₹ 4,91,500 in his order without giving any justification. Thus the assessee's explanation is reasonable and deserves acceptance. Against revenue.
Second group of deposits - Held that:- The assessee submitted that he had borrowed a sum of ₹ 6 lakhs from Sri Rajeev Aurangabadkar for the purpose of development of land at Gandhamguda village. The borrowals are not disputed by the Assessing Officer. The assessee further submitted that he had paid advances to Sri M.V. Bhadra Rao (contractor for electrical works) and Sri G. Shanker (contracator for civil works). Since the project did not materialise, the assessee recovered the advances from the two persons and the deposits were made out of these amounts. The fact that payments were made to these two persons is borne out fo the bank details extracted in the assessment order. The subsequent deposits also tally exactly with the subsequent disputed deposits. The assessee 's explanation, therefore, is logical and reasonable.
Third set of deposits - Held that:- The fact remains that the assessee had returned an income of ₹ 2,61,250/- and agricultural income of ₹ 72,630/- which has been accepted by the Assessing Officer in his order. These amounts, which reflect the net income of the assessee, would themselves be sufficient to explain the deposits of ₹ 1,44,500/-. It would also be safe and logical to presume that the deposits were made out of the gross receipts of the assessee which naturally would be more than the returned (and net) income. The explanation of the assessee is, therefore, accepted as reasonable.
Determination of net profit at the rate of 5% of the purchases and stock put for sale during the year - Held that:- Income of the assessee in this particular line of business of liquor has to be estimated at 5% on purchase of stock put for sale as decided in case of M/s Amaravati Wine Shop [2012 (8) TMI 706 - ITAT, HYDERABAD].
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2013 (8) TMI 136 - ITAT MUMBAI
Sale and purchase of shares - capital gain v/s business income - Held that:- Total number of transaction is 68 out of which 40 transactions relate to LTCG. 15 transactions relate to STCG and 30 transactions relate to close out transaction of STCG. The total number of scrips dealt by the assessee is 26. Further average holding period for capital gains is 37 days or 1.75 years. The average holding period for STCG is 217 days. These facts speak for themselves. The past history of the assessee also shows that right from assessment years 2001-02 to 2006-07, when the assessments has been made after thorough scrutiny u/s 143(3) the Department has accepted the profit under the head capital gain. Thus following rule of consistency no reason to take a different view as from the past assessment of the assessee. Against revenue.
Disallowance u/s 14A - CIT(A) restricted the disallowance u/s 14A to Rs. 18,65,942/- whereas the disallowance as per Rule 8D worked out to Rs. 2,96,23,551/- - Held that:- As it is settled that Rule 8D is prospective as held in Godrej and Boyce Mfg. Co. Ltd. vs. DCIT (2010 (8) TMI 77 - BOMBAY HIGH COURT), . However , at the same time a reasonable disallowance accepted to be made so far as earning of exempt income is concerned CIT(A) has restricted the disallowance to the extent of expenditure claimed. Thus no reason to interfere with the finding of CIT(A). Against revenue.
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2013 (8) TMI 135 - ITAT MUMBAI
Levy of penalty u/s 271(1)(c) - payment of fee for technical services to non-resident without deduction of TDS thus disallowance u/s 40(a)(i) - technical default of delay in payment - Penalty upheld by CIT(A) - Held that:- The facts as stated by the CIT(A), rather than being adverse to the assessee favour it. This is as it is clear that the assessee was of the clear view that tax was not deductible on the said payment. Accordingly, neither any tax stood deducted, nor paid to the credit of the Central Government. It is only subsequently, on being so pointed out by the tax auditor, that the said default came to light, and the assessee realized his mistake in having not deposited the tax on the impugned sum. The matter stands duly reported by the tax auditor in his report u/s.44AB, and which accompanies and forms part of the assessee's return of income. How could, therefore, it be said that the assessee has not disclosed the correct particulars of its income. Further, following the advice of its tax advisor, tax has also been deposited to the account of the Government on 20.11.2003, prior to the filing of the return for the relevant year on 27.11.2003.
No doubt, it does not explain the basis of the claim for the current year; the provision itself providing for the contingency and consequence of delayed payment, deferring the claim to the year of actual payment – the fact remains that the deduction becomes exigible for the subsequent year.
The assessee would be entitled to claim the deduction for the immediately succeeding year, and which it has ostensibly not. In terms of the provision itself, therefore, it becomes a case of satisfaction of the principal condition for deduction, i.e., the payment of TDS, though subsequently. It is this that prompted us to state of the provision as having been substantially complied with. It would decidedly be a different matter if the provision made no such exception, as in that case there would be no question of the principal condition of the payment having been met and, thus, of the assessee being substantially compliant. This, therefore, serves as a valid explanation under Explanation (1B) to section 271(1)(c). In favour of assessee.
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2013 (8) TMI 113 - KARNATAKA HIGH COURT
Deduction u/s 80IA - Industrial park - Nature of Income from renting - Business income or income from house property or income from other sources - various agreements - Held that:- What is the object of entering into more than one said transactions is to be looked into. However, if for enjoyment of lease, the subject matter of all the agreements is necessary, then notwithstanding the fact that there are more than one agreement or one lease deed, the transaction is one. As all the agreements are entered into contemporaneously and the object is to enjoy the entire property viz: building, furniture and the accessories as a whole which is necessary for carrying on the business, then the income derived there from cannot be separated based on the separate agreement entered into between the parties. What has to be seen is, what was the primary object of the assessee while exploiting the property. If it is found applying such principle that the intention is for letting out the property or any portion thereof, the same may be considered as rental income or income from properties. In case, if it is found that the main intention is to exploit immovable property by way of complex commercial activities, in that event it must be held as business income.
If they are inseparable and the intention is to carry on the business of letting out the commercial property and carrying at complex commercial activity and getting rental income therefrom, then such a rental income falls under the heading of profits and gains of business or profession. In fact, any other interpretation would defeat the very object of introduction of Section 80-IA as well as the scheme which is framed by the Government for development of industrial parks in the country. In that view of the matter, the finding recorded by the Appellate Authority as well as the Tribunal is in accordance with law and does not suffer from any legal infirmity which calls for interference. - Decided in favor of assessee.
Short term Capital Gain - sale to sister concern at the rate of less than market value - Held that:- the sale of land to the sister concern is not in dispute. The legality of the said transaction is not questioned. The consideration received under the said agreement is also admitted. Further, admittedly, the said consideration is more than guidance value prescribed by the Government for sale of such property. As it is clear from the material on record that the assesse has borrowed money from financial institution, it has crossed its limit, it needed further funds. The land which is sold to the sister concern was lying idle. It is in those circumstances, the said sale transaction came into effect. The earlier sale made in favour of the sister concern is not vitiated in any manner whatsoever. Therefore, the Assessing Authority was not justified in taking the market value. The property sold to a third party cannot be the basis for determining the capital gain tax in respect of a sale in favour of the sister concern. - Decided against Revenue.
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2013 (8) TMI 112 - GUJARAT HIGH COURT
Deduction u/s 80IB - Work contract - Tribunal granted deduction - Held that:- assessee took the full risk of executing the housing project and thereby making profit or loss as the case may be. The assessee invested its own funds in the cost of construction and engagement of several agencies. Land owner would receive a fix predetermined amount towards the price of land and was thus insulated against any risk - Therefore, it cannot be said that the assessee acted only as a works contractor - Following decision of CIT v. Radhe Developers [2011 (12) TMI 248 - GUJARAT HIGH COURT] - Decided against Revenue.
Deduction u/s 80IB(10) - Interest received from the purchases on delayed payments - Income from development of housing project - Tribunal deleted disallowance - Held that:- during the course of business in developing housing project, assessee had made payments to the suppliers towards various purchases made. On such payments, the assessee would occasionally deduct some amounts and pay the bill. Difference between the bill amount and payment actually made would be the amount generated during the course of business. Assessee therefore, contended that same should form part of eligible deduction under section 80IB(10) of the Act - as is likely to happen in any business of similar nature, the supply of material may be found wanting at a later stage. They may either be defective or sometimes minor unintentional short supply. This could be the reason why assessee instead of making full payment, deducts a portion of the supplier's bill - such margin would go to reduce the assessee's cost of acquisition of the supply. Such amount therefore, cannot be dissociated or divested from assessee's business. Such receipt therefore, cannot be stated to be not arising out of the assessee's business of development of housing project - Following decision of Nirma Industries Ltd. v. Deputy Commissioner of Income-tax[2006 (2) TMI 92 - GUJARAT High Court] - Decided against Revenue.
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2013 (8) TMI 111 - GUJARAT HIGH COURT
Undisclosed income - Difference in opening and closing stock - CIT upheld addition - Tribunal deleted addition following previous decisions - Held that:- assessee had filed his return of income for the AY 99-00 earlier and the Revenue had not initiated any proceedings u/s 147 of the act for that year - Therefore, the capital of the assessee as n individual together with the capital of Nanak Cutlery Mart as reflected in that return of income should be taken into consideration by the AO while determining the difference between closing balance for the AY 1999-00 and the opening balance for AY 2000-01 and the difference between the same would be upheld as addition - However, this had not arisen from the seizure of the assets/records during search; therefore, such addition cannot be made - Following decision of N.R. Paper & Board Limited & Ors. vs. DCIT[1998 (3) TMI 102 - GUJARAT High Court] and CIT vs. Shambhulala C. Backkaniwala[1999 (9) TMI 25 - GUJARAT High Court] - Decided against Revenue.
Undisclosed income - Gift from mother - Tribunal deleted addition - Held that:- identity of donor had been proved and the cash book of donor was found to be having sufficient cash balance to gift - There was a declaration of gift executed and all the accounts of the donor had been maintained by computerized books - no error in the reasonings of the Tribunal to interfere as the assessee succeeded in proving identity, genuineness of the transaction and creditworthiness of the donor. The assessee had discharged the burden - Decided against Revenue.
Unaccounted investment - Investment in Co-op. Housing Society - Held that:- there was no conclusive documentary evidence to hold that the assessee-respondent had invested a sum in Ninad Co-op. Housing Society by using his four employees as conduits for booking of flats - No opportunity of cross objection was given to person in whose books of account, the said transaction of Co-op. Housing Society had emerged - when the Tribunal found that there was violation of principles of natural justice by not allowing cross examination despite such request coupled with absence of any evidence, no error much less any substantial error is committed by the Tribunal in deleting the said amount - Decided in favour of Revenue.
Unaccounted investment - Investment made in house property - Held that:- The statement of person with whom transaction was done was recorded by the Assessing Officer, however, no permission was granted to cross examine him. Although it can be noticed that the legal suit was initiated against the builder & necessary documents were also produced. The agreement concerned was of March, 1995 whereas the block period was from 01.04.1996 to 06.09.2001. The Tribunal rightly held that the transaction would not fall within the block period under consideration - Decided against Revenue.
Unaccounted investment in shares - Held that:- Assessing Officer did not consider the genuineness of the entries appearing in computerized cash book - Majority of the investments made through cheques and the paper books presented had contained all the details - Tribunal has reduced the disallowance made by A.O. - Decided against Revenue.
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2013 (8) TMI 110 - GUJARAT HIGH COURT
Registration u/s 12A and 12AA - DIT(E) refused to grant registration - Tribunal granted registration - Held that:- only because the Trust has not commenced the activities, the Commissioner would have no authority to ipso facto reject the application for registration on that count alone - there was nothing to indicate any material to conclude that the objects of the Trust or the activities of the Trust were not genuine or any doubt arose in respect of the genuineness of the activities - Decided against Revenue.
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2013 (8) TMI 109 - GUJARAT HIGH COURT
Validity of notice u/s 148 - Claim u/s 10B scrutinized in original assessment - Tribunal held notice not valid - Held that:- claim of the assessee for exemption under section 10B of the Act was scrutinized by the Assessing Officer in detail in the original assessment - The claim of exemption under section 10Bof the Act was not disturbed and this was done without giving detailed reasons for the same - The mere fact that the Assessing Officer did not give reasons for not disturbing the claim made by the Assessee in the final order of assessment would not authorize the Assessing Officer to reopen the same issue even within a period of four years from the end of relevant assessment year - Following decision of Gujarat Power Corporation Ltd. Vs. Assistant Commissioner of Income Tax [2012 (9) TMI 69 - Gujarat High Court] - Decided against Revenue.
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2013 (8) TMI 108 - ITAT AGRA
Unproved freight and route expenses payable - CIT(A) deleted the addition - assessee is engaged in the business of transportation on contract basis - Held that:- A.O. did not appreciate the system of accounting and the entries passed in the books of account. The procedure available for accounting freight payable in the books of account explained to A.O. vide assessee letter dated 18.11.2010 which stated that the assessee has submitted the desired details of freight payable with Freight memo number, date, amount etc. before your good self for your verification.
AR in support of the procedure of making entries in books of account demonstrated by referring various pages of the paper book where copies of relevant challans and builty, copies of freight memo for engaging the truck, consignment note, consignment receipt note etc. He has also demonstrated that the assessee has followed such practice and such amounts were shown payable in past years. In the past years the revenue has accepted the system of accounting followed by the assessee and did not make such addition.
Thus AR has demonstrated that the outstanding freight payable were paid in subsequent years and in subsequent year the payment to this outstanding freight has been accepted by the A.O. while making the assessment under Section 143(3). The list showing freight payable with date of its payment has been placed. In the light of above admitted facts and as per the detailed dissections made by the CIT(A) CIT(A) has rightly appreciated the system of accounting maintained by the assessee & has rightly deleted the addition - appeal of the Revenue is dismissed.
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2013 (8) TMI 107 - ITAT MUMBAI
Disallowance u/s.14A r.w.r. 8D - Held that:- CIT(A) following the decision of Godrej & Boyce Manufacturing Co. Ltd (2010 (8) TMI 77 - BOMBAY HIGH COURT) substituted the same with an illogical formula, i.e.,total expenditure (direct and indirect) x the value of transactions yielding tax-exempt income/value of the total transactions in shares. The same has no basis in facts. In fact, in the assessment for A.Y. 2005-06 u/s. 143(3), 2% of the dividend income had been disallowed by the Assessing Officer (AO). A similar disallowance for the current year would, it was pleaded by him, meet the ends of justice. Against assessee.
Bad debts disallowed - assessee-company a share broker has only the brokerage as embedded in the value of shares purchased or sold, i.e., as included in the debt being written off, that could be subject to an allowance u/s.36(1)(vii) in view of section 36(2)(i) - Held that:- As in CIT vs. Shreyas S. Morakhia [2012 (3) TMI 103 - BOMBAY HIGH COURT] clarified that both the brokerage as well as the principal sum of the shares transacted by a broker on behalf of his clients form part of the debt realizable there-from and, thus, is to be considered as taken into account in computing the income of the assessee-broker in terms of s.36(2)(i). Thus entire such amount would stand to be considered as eligible for deduction u/s. 36(1(vii). In favour of assessee.
Penalty levied by the Stock Exchange - Held that:- As it has been consistently held by the tribunal as being not toward any default constituting any offence in law, so as to attract disallowance with reference to Explanation to Section 37(1). The same is clarified to be in respect of procedural defaults, which cannot be equated with any violation or contravention of any law, therefore, direct its deletion. In favour of assessee.
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2013 (8) TMI 106 - ITAT AGRA
Unaccounted receipts of hiring charges - CIT(A) deleted part additions - Held that:- As decided in CIT Vs Krishnaveni Ammal (1983 (1) TMI 3 - MADRAS High Court) law of evidence mandates that if the best evidence is not placed before the court, an adverse inference can be drawn as against the person who ought to have produced it. Similar is the circumstances in the case under consideration that the assessee simply contended that the receipt belonged to his elder brother but failed to furnish the necessary evidence before the Revenue authorities and before us also. As regards merit of the case, we noticed that the A.O. made addition on the ground of amount of freight whereas the CIT(A) was of the view that only profit is to be added which is correct therefore no infirmity in the order of the CIT(A) in sustaining the addition of Rs.16,78,774/- on account of hiring charges.
Unexplained cash deposits in bank - Zero house hold expenses as appearing in bank statement - CIT(A) deleted additions of Rs.11,55,000/- on the ground that he has allowed set off against the addition of Rs.16,78,774/- confirmed on account of truck hiring receipt and the amount of Rs.11,55,100/- and Rs.1,44,000/- were not separately added - Held that:- The CIT(A) in principle upheld the addition but relief was allowed by allowing benefit of its telescoping as above. No infirmity in the order of CIT(A) as against the order of Rs. 11,55,100/- and Rs.1,44,000/- as the addition of Rs.16,78,774/- has been sustained which is sufficient for set off of these two addition of Rs.11,55,100/- and Rs.1,44,000/-.
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2013 (8) TMI 105 - ITAT AGRA
Initiation of proceedings u/s. 153C as no paper, document or any adverse material relating to assessment years were found during the search - additions on account of determination of Annual Letting Value u/s. 23(4) of the properties at 7% of investments - Held that:- No material is produced to prove that the AO in the case of person searched was satisfied that any money, bullion, jwellery or other valuable articles or things or books accounts or documents seized or requisitioned belongs to or belong to a person other than the person referred to in sec. 153A. No material is produced to show if any satisfaction was recorded by the AO in that case that the seized material belongs to any person other than the person with respect to whom search was made u/s 132. DR did not produce any material to show if any such satisfaction as required u/s 153C was recorded by the AO in the case of person searched. No material is produced to show that books accounts or documents or assets seized had been handed over to the AO having jurisdiction over such other person. In the absence of any adequate material produced by DR, the contention of assessee was justified that in this case, the AO has not recorded any satisfaction that any seized document or material belongs to any person other than the person searched - therefore no infirmity in the order of the CIT(A) in quashing the proceedings u/s 153C.
The AO did not make any addition against the assessee on the basis of any adverse material. The AO passed the assessment order u/s. 153C making addition on account of determination of Annual Letting Value u/s. 23(4) of the property at 7% of investments only on notional basis and for that, no incriminating material was found against the assessee. Therefore, all the additions made in the assessment orders u/s. 153C would stand deleted. In favour of assessee.
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2013 (8) TMI 104 - ITAT AGRA
Addition on account of sale, purchase and manufacture of silver ornaments etc. out side the books - as per AO assessee could not establish the job work during the course of assessment proceedings - CIT(A) deleted the addition - search u/s 132 - Held that:- CIT(A) after a detailed discussion in his order found that the assessee is engaged in job work business and not in purchase and sale of silver ornaments & was able to show that the contents of the documents seized as per Annexure-7 related to job work undertaken by the assessee for various constituents whose name along with quantity of alloy received on different dates and subsequent return of processed goods after job work to them is written.
A.O. was not able to place on record or identify any bills either found in the course of search proceedings or in the course of assessment proceedings to support the stand that the assessee has made alleged purchases of silver weighing 2441 kgs. and effected sales of Rs.60,00,000/- each in Assessment Year 2002-03 and for the part period in 2003-04. CIT(A) found that there is no material on record to suggest that the details of job work noted against the names of the persons in any way could be presumed or inferred as purchase and sale business of the assessee as held by the A.O. on mere presumption. The CIT(A) further noticed that even at the time of search under section 132 in the course of recoding of his statement under section 132(4) the assessee has categorically stated that the papers relate to business of job work done in his individual capacity. The A.O. has converted the job work into purchase and sale on the basis of presumption. Thus no infirmity in the order of CIT(A) - appeal of the Revenue dismissed.
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2013 (8) TMI 103 - ITAT AHMEDABAD
Deduction of Interest from income from house property - deduction u/s 24(b) - assessee contended that he has paid interest on borrowed capital for construction of house to City Bank of Rs.52,964/- which was related to pre-construction period. The assessee has claimed this interest as part of cost of construction and accordingly claimed in the return of income. It is further submitted that the interest expense related to pre-construction period either can be added to cost of construction or can be claimed 1/5th every year. - Held that:- the assessee is entitled for deduction u/s.24(b) of the Act. The AO directed to delete the addition - decided in favor of assessee.
Exemption u/s 10(13A) - house rent allowance (HRA) - As per AO assessee and his wife are living together as a family. Therefore, it can be inferred that the house owned by wife of the assessee is occupied by the assessee also - Held that:- the requirement of the section is that any allowance (by whatever name called) granted to an assessee by his employer to meet expenditure actually incurred on payment of rent in respect of residential accommodation occupied by the assessee, to such extent as may be prescribed. However, the exemption is not available in case the residential accommodation occupied by the assessee is owned by him or the assessee has not actually incurred expenditure on payment of rent (by whatever name called) in respect of the residential accommodation occupied by him.
Assessee paid the rent - The assessee has fulfilled twin requirements of the provision, i.e. occupation of the house and the payment of rent. Under these circumstances, the assessee is entitled for exemption u/s.10(13A) of the Act. - Additions made by the AO deleted - decided in favor of assessee.
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2013 (8) TMI 102 - DELHI HIGH COURT
Recovery of dues - Notice u/s 226(3) - appropriating a sum of Rs. 95,85,30,934/- which was lying in escrow with the bank - Held that:- Section 226(3) of the Act neither confers jurisdiction nor provides a machinery for an Assessing Officer to adjudicate the indebtedness of a third party to the assessee and the provisions of section 226(3) must be confined to those cases where a third party admits to owing money or holding any money on account of the assessee or in cases where it is indisputable that the third party owes money to or holds money on account of the assessee. However, in cases where there are contentious issues raised by a third party who disputes his liability to pay any money to the assessee there is no mechanism provided or jurisdiction conferred upon the Assessing Officer to proceed further in the matter and take upon himself the mantle of adjudicating the said disputes.
It is well settled that even in cases of garnishee proceeding under Order 21 Rule 46 of the Code of Civil Procedure (hereinafter referred to as the “CPC”), the Court may pass a garnishee order enabling a judgment creditor to obtain satisfaction of his claim only in those cases which are similar in scope as to judgments on admission under Order 12 Rule 6 of the CPC. A Court cannot issue garnishee order under Order 21 Rule 46 of the CPC against a debtor of the judgment debtor who disputes his indebtedness unless an issue in this regard is struck and tried as provided under Order 21 Rule 46C of the CPC. Unlike the CPC, Section 226(3) of the Act does not have any provision similar to Order 21 Rule 46C of the CPC which confers jurisdiction on the Assessing Officer to adjudicate the question regarding indebtedness of a third party to an assessee who disputes the same.
Once the third party noticee has disputed that he owes any money or holds any money on account of the assessee, the Assessing Officer would not have any jurisdiction to proceed further against the third party. This is also abundantly clear from the language of clause (vi) of Section 226(3) of the Act.
There is also no reason why either the purchaser of shares of a company or the selling shareholders have any occasion to pay any part of the consideration for sale and purchase of shares of a company to the company. A company is an independent entity completely distinct from its shareholders. A transaction relating to sale and purchase of shares is a transaction inter-se the selling shareholders and purchasers and a company cannot stake claim to any part of the consideration as shares of a company are not the assets of the company but those of its shareholders. The assessee company is neither a party to the Share Purchase Agreement or the Escrow Agreement nor can claim any sum from the parties to the Escrow Agreement.
No money is due to the assessee company by respondent no.2 or is held by or may subsequently be held by Respondent no. 2 on account of the assessee company. The conclusion of the Assessing Officer that the amount of money kept with respondent no. 2 in escrow is available to the assessee for meeting its income-tax demand is thus erroneous. - revenue directed to refund the amount collected from the bank. - Decided in favor of assessee.
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