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2014 (4) TMI 1243 - DELHI HIGH COURT
Jurisdiction - Section 27 of the Right to Information Act, 2005 - HELD THAT:- It is trite that an executive instruction if in violation of a statutory rule or a regulation must yield to the statutory rule or regulation.
The demand by the respondents from the petitioner to pay fee in sum of ₹ 500/- per subject/answer book copy whereof is sought is not sustainable.
Appeal disposed off.
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2014 (4) TMI 1242 - ITAT MUMBAI
Eligibilty for deduction u/s 36(1)(vii) and 36(1)(viia) - benefit of deduction of provision for bad and doubtful debts u/s 36(1)(viia) - HELD THAT:- Hon’ble Supreme Court in the case of Catholic Syrian Bank vs. CIT [2012 (2) TMI 262 - SUPREME COURT OF INDIA] wherein it was held that provision of ss. 36(1)(vii) and 36(1)(viia) are distinct and independent items of deduction and operate in their respective fields.
It was held that proviso to section 36(1)(vii) operates only in cases falling under Cl. (viia) to limit the deduction to the extent of difference between the debt or part thereof writtenoff in the previous year and the credit balance in the provision for bad and doubtful debts made under clause (viia). It was held that the scheduled and non scheduled commercial banks are entitled to full benefit of write off or irrecoverable debts u/s 36(1)(vii) in addition to the benefit of deduction of provision for bad and doubtful debts u/s 36(1)(viia) - Appeal of the assessee treated as allowed for statistical purpose.
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2014 (4) TMI 1241 - ITAT CHANDIGARH
Reopening of assessment based upon the opinion of the DVO - addition of the difference of amount as disclosed by the assessee and the amount estimated by the DVO - non independent application of mind by AO - HELD THAT:- AO had not any other information or reason to believe that the income disclosed by the assessee had escaped assessment except the report of the DVO. The reopening was made merely on the basis of estimation of investment made by the DVO. The Hon'ble Supreme Court in the case of ACIT Vs. Dhariya Construction Company [2010 (2) TMI 612 - SUPREME COURT OF INDIA] has held that the opinion of the DVO per se is not an information for the purpose of reopening of assessment u/s 147.Such a reopening which is based on merely upon the opinion of the DVO was held to be bad in law.
Neither any information nor any such material was in possession of the Assessing Officer from which it could have been gathered that the income of the assessee has escaped assessment nor the Assessing Officer rejected the books of account of the assessee. The addition was made only on the basis of information / estimation of the DVO, which per se, is not an information for the purpose of reopening of assessment u/s 147 - Decided in favour of assessee
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2014 (4) TMI 1240 - SC ORDER
Rent-a-cab service - transportation services - transportation of papers/answer sheets, examiners – agreement terms indicating vehicle itself not given for operation under ownership and management of client - payments made for operating trips to various places. - Non filing of ST-3 returns - levy of penalty - Held that:- Issue notice.
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2014 (4) TMI 1239 - ITAT MUMBAI
Disallowing loss incurred on account of revaluing the outstanding forward contract entered with Banks - Losses on account of outstanding / open foreign exchange forward contracts - Business loss or Notional loss - HELD THAT:- The assessee has demonstrated that forward contract of foreign exchange were entered into by it in regard to its activity of import and export of diamonds. If such is the position then the issue will be covered in favour of the assessee by the aforementioned decisions which have been relied upon by AR. See ACIT CIRCLE–16(3), MUMBAI VERSUS M/S. S. RAJIV & CO. [2015 (5) TMI 38 - ITAT MUMBAI].
Accordingly, we hold that CIT(A) has erred in sustaining the disallowance and the addition sustained by him is deleted. The ground raised by the assessee is allowed.
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2014 (4) TMI 1238 - ITAT DELHI
Admission of additional ground - Order of assessment framed on a non-existing entity - scheme of amalgamation conceived - TP adjustment - HELD THAT:- It is an admitted position before us that the additional ground as admitted above was not agitated before the DRP. Thus, we find that the matter has neither been agitated nor decided by the DRP. Therefore, we find that the appellate process will be short circuited if the matter is decided for the first time by us. Both the counsel fairly agreed that the matter may be restored to the file of the DRP to hear the assessee in the matter and decide, as per law. The matter is restored to the file of the DRP to hear the assessee on this matter and decide, as per law.
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2014 (4) TMI 1237 - ITAT PUNE
Denial of exemption u/s 80P(2)(a)(i) on interest income earned on investments made with the banks - HELD THAT:- In the instant case there is no dispute to the fact that the society is a credit cooperative society authorised by the registrar of cooperative societies for accepting deposits and lending money to its members as per license granted by the registrar of cooperative societies and the main object of the society is to provide credit facility to members who can be any person of the society. We find the Pune Bench of the Tribunal in the case of Mahavir Nagari Sahakari Pat Sanstha Ltd. [2000 (2) TMI 234 - ITAT PUNE] has held that the credit society which is carrying on the business of banking activity and providing credit facility to its members is eligible for deduction u/s.80P(2)(a)(i). Case followed M/S. THE TOTGARS´ COOPERATIVE SALE SOCIETY LIMITED VERSUS INCOME TAX OFFICER. KARNATAKA [2010 (2) TMI 3 - SUPREME COURT] - Decided in favour of assessee.
Cross-appeal of revenue relates to the decision of the CIT(A) in holding that the interest income earned from the investments made with other co-operative banks is eligible for the exemption u/s 80P(2)(d) - HELD THAT:- Provisions of section 80P(2)(d) of the Act which reads as follows :-
“(d) in respect of any income by way of interest or dividends derived by the co-operative society from its investments with any other co-operative society, the whole of such income;” - Thus Decision of the CIT(A) to allow exemption u/s 80P(2)(d) of the Act is expressly in accordance with the provisions of clause (d) of subsection (2) of section 80P of the Act and no infirmity on the same has been pointed out by the learned Departmental Representative before us. Accordingly, we hereby affirm the order of the CIT(A) and the Revenue fails in its cross-appeal.
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2014 (4) TMI 1236 - ITAT MUMBAI
Disallowance of interest - HELD THAT:- As the issue involved in the present appeals of the assessee as well as all the material facts relevant thereto are similar to the case of Shri Hitesh S. Mehta [2013 (10) TMI 1065 - ITAT MUMBAI] decided by the Tribunal, the ld. Representatives of both the sides have agreed that the issue involved in the present case relating to disallowance of interest expenditure should also be sent back to the ld. CIT(A). Accordingly, we set aside the impugned orders of the CIT(A) confirming the disallowance made by the A.O. on account of interest expenditure and remit the matter back to him for deciding the same afresh.
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2014 (4) TMI 1235 - ITAT MUMBAI
Treatment of income declared by the assessee during the survey proceedings u/s 133A - income from other sources OR business income claimed by the assessee - HELD THAT:- In the absence of any evidence brought by the authorities below to disprove/disbelieve the claim of the assessee treating the impugned receipt under the head 'business income', the authorities below are not justified in treating the same under the head 'income from other sources'.
D.R. could not bring before us any contrary fact or case law which may justify departure from the above finding of the Tribunal given in the case of other partner of the firm namely Mr. Hansat Maneklal Savani [2013 (12) TMI 1364 - ITAT MUMBAI]. So respectfully following the same, for the sake of consistency, this issue is allowed in favour of the assessee and the income declared by the assessee during the course of survey is directed to be treated under the head ‘Business income’ as has been claimed by the assessee.
Disallowance of interest paid by the assessee to the firm in which he has been a partner - HELD THAT:- The partners are entitled to interest on the credit balance in the capital account, as prescribed u/s 40(b)(iv) of the I.T. Act 1961 @ 12%. The partners are also liable to pay interest on the debit balance in capital account on similar basis. It is further submitted that the liability to pay interest arises out of contractual obligation. The perusal of the copy of the Firm's assessment order for Asst. Year 2008-09 available at Paper Book Page 30 reveals that in the case of the firm M/s. MSN Enterprises the said interest has been assessed as income of the firm. Having considered the rival submissions, reasoning of the lower authorities and material on record, we are of the considered view that the claim of the assessee is emanating out of contractual obligation and is in consonance with the provisions of law.
D.R. could not bring before us any contrary fact or case law which may justify departure from the above finding of the Tribunal given in the case of other partner of the firm namely Mr. Hansat Maneklal Savani. So respectfully following the same, for the sake of consistency, this issue is allowed in favour of the assessee.
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2014 (4) TMI 1234 - ITAT PUNE
Exemption u/s 80P(2)(a)(i) on interest income as earned on the fixed deposits fro banks - income declared by the assessee was directly attributable to investments made with non-members, namely, banks - assessee before us is a Co-operative Society registered under the Maharashtra Co-operative Societies Act, 1960 - Held that:- As decided in ITO WARD-1(4), NASHIK VERSUS NIPHAD NAGARI SAHAKARI PATSANSTHA LTD. [2015 (1) TMI 1004 - ITAT PUNE] the society is a credit cooperative society authorised by the registrar of cooperative societies for accepting deposits and lending money to its members as per license granted by the registrar of cooperative societies and the main object of the society is to provide credit facility to members who can be any person of the society. A credit society which is carrying on the business of banking activity and providing credit facility to its members is eligible for deduction u/s.80P(2)(a)(i). - Decided in favour of assessee.
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2014 (4) TMI 1233 - ITAT CHENNAI
Penalty levied u/s. 271(1)(c) - assessee had filed his revised return of income voluntarily declaring the capital gain accrued to him from the sale of agricultural land measuring about 1 acre at Kalapatty village - Reopening of assessment - Held that:- One cannot simply presume, the assessee had filed the revised return only after he came to know about the survey proceedings in the premises of the Shri Chinnasamy Selvaraj. There is no categorical finding on this aspect also by the AO, which CIT (A) had clearly observed in his order.
The concept of presumption or an after-thought by the assessee cannot be plainly inferred only by considering the chronological events of the fact without looking at the root of the basic facts. There is also no finding by the Ld. Assessing Officer on the fact that the relevant asset was located within 8 Kilometers radius from the municipal limit of Coimbatore town, which the assessee had himself voluntarily admitted.
It is worthwhile to mention here that under normal circumstances one does not always realize the location of his assets with respect to its distance from the municipal limit of a particular city.
In the present case the asset is located beyond the municipal limit of Coimbatore city; though within 8 Kilometers from the radius of such prescribed limit. Therefore, there is a possibility of bona fide misconception by the assessee on the issue. However, when the assessee realized his folly, he earnestly computed his tax liability under the head capital gain and voluntarily filed the revised return of income promptly along with proof of payment of tax.
AO after obtaining the relevant information from the revised return, treated the return of income as lodged, however acted upon the return filed by the assessee by accepting the income declared in the revised return subsequent to issuance of notice U/s. 148 and on receipt of the reply from the assessee to treat the revised return as return filed in response to notice U/s 148 and further proceeded to levy penalty. But this is not a case suitable for levy of penalty u/s. 271(1)(c) because, the entire addition has resulted from the voluntary disclosure by the assessee, though omitted to be disclosed while filing the original return of income due to bonafide reasons. - Decided in favour of the assessee.
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2014 (4) TMI 1232 - ITAT HYDERABAD
Disallowance of 2/3rd of expenses on medicines - estimation of income - this claim of expenditure is an afterthought though entire suppressed turnover could not be considered as income and expenses on such turnover are to be allowed - Held that:- In the present case, the AO accepted that there is existence of undisclosed expenditure in the form of medicines and given credit at 1/3rd of that expenditure and rejected 2/3rd of the same. In these circumstances, the AO only doubted the quantum of expenditure. We have gone through the details of suppressed expenditure. We have also gone through the net profit rate as per original and revised return of income.
When we compare the original rate of net profit with revised rate of net profit, the revised rate of net profit is very high. From that we can infer that even after considering the suppressed expenditure, the net profit is very high which is higher than the normal net profit in this line of business. The average net profit for the last four years is worked out at 23.02%. Being so, in our opinion, to settle the dispute it is appropriate to consider the average net profit to work out the income of these assessment years which is below the average rate. Thus, for A.Ys. 2006-07 and 2007-08, income is to be estimated at 22.02% of the gross receipts and there is no change in the A.Ys. 2008-09 and 2009-10 as the declared rate of net profit is higher than the average net profit rate. Accordingly, we are of the opinion that entire gross receipts cannot be considered as income of the assessee.
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2014 (4) TMI 1231 - ITAT HYDERABAD
Rejection of books of accounts - estimation of profits - determination of profits in the business of wines - Held that:- In similar matters, the Coordinate Benches of the Tribunal have been consistently directing adoption of rate of 5% of the purchase value or stock put to use whichever is more.
As decided in ITO, Warangal vs. Shri P. Ramaiah and others [2013 (12) TMI 1001 - ITAT HYDERABAD] income of the assessees in the line of liquor business has to be estimated at 5% cost of sales made by them - decided against revenue
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2014 (4) TMI 1230 - ANDHRA PRADESH HIGH COURT
Loss/expenditure claimed by assessee on account of fluctuation in the rate of foreign exchange i.e., Market to Market (MTM) loss - whether cannot be considered to be notional as per the CBDT instruction No.3 of 2010, when the said amount was rightly disallowed by the Assessing Officer in terms of proviso ‘D’ of Section 43(5)? - Held that:- Tribunals consistently held that the loss/expenditure claimed by the assessee on account of fluctuation in the rate of foreign exchange couldn’t be considered to be notional by following the instruction No.3 of 2010 of CBDT. Therefore, we do not find any element of law to be decided in this appeal.
Accordingly, we dismiss the appeal. Miscellaneous petitions pending, if any, shall also stand closed.
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2014 (4) TMI 1229 - ITAT VISAKHAPATNAM
Deduction u/s 80IA on the profits of the power generation unit - allocation of losses - cost of steam is what is to be allocated between the power plant and the rice mill - Held that:- From the assessee’s reply it is evident that there is loss of heat in the process. This loss has to be allocated between power generation unit and rice milling unit. Assessee’s argument that loss cannot be shared is not an acceptable proposition. Hence go on to allocate these losses equally between the power generation unit and rice milling unit. Thus, the loss allocated to power generation unit is worked out to 5.05%. This coupled with the heat used for power generation of 10.70% works out to 15.75%. Thus, the percentage of rice husk utilization for power generation is pegged at 15.75% instead of 10% as calculated by the assessee. Thus AO is directed to reallocate the profits from power generation unit after allocating 15.75% of the expenditure of boiler unit towards power generation instead of 10% as taken by the assessee.
Once we come to our conclusion that 10% of the steam is utilized by the power generation plant, then all the cost i.e. attributable and relatable to the generation of steam has to be allocated only on that basis. The cost of steam cannot be segregated into that which is incurred up to a particular point and cost incurred after a particular point. This to our mind is not logical. Thus the allocation made by the assessee to our mind is justified. Hence, we allow this ground of the assessee.
Report u/s 10CCB within time is not mandatory - Held that:- This issue is covered in favour of the assessee and against the revenue by the decisions of the Hon’ble Delhi High court in the case of CIT Vs. CONTIMETERS ELECTRICALS Pvt. Ltd. [2008 (12) TMI 4 - HIGH COURT DELHI].
Adoption of husk consumption rate - CIT(A) held that the assessing officer had not pointed out errors nor rejected the data as per the records maintained by the assessee, before taking up comparable cases such as M/s. Sudha Agro Oils and Gautam Solvents for coming to such conclusions - Held that:- We find that this conclusion of the Ld. CIT(A) is as per law for the reason that no estimates can be made without rejection of the books of accounts and without pointing out errors in those books of accounts. When the assessee is maintaining detailed records of husk consumption, electricity production, etc., the assessing officer has to point out errors in these records, reject the same and then only go for comparable cases. As the assessing officer has not done the same, CIT(A) is right in his finding.
Non-maintenance of separate books of accounts for power generation business - dis-entitle the assessee for making the claim u/s 80IA - Held that:- As pointed out that in the assessment year 2009-10 the assessing officer, on the very same set of facts, accepted that books of accounts maintained by the assessee on the ground that they fulfill the requirements of separate books of accounts as the purpose of having separate books of accounts, is to enable the assessing officer to ascertain the profits from power generation business. When this objective is fulfilled and when the assessing officer in the subsequent year holds so, we are of the considered opinion that the finding of the Ld. CIT(A), which is in consonance with circular no.1 of 13 dated 17.1.2013 issued by the CBDT requires to be upheld.
Allocation of husk cost - Held that:- Allocation of husk @10% is reasonable, suffice to say that consistent with the view taken on this issue for the earlier assessment year, we allow this ground of the assessee.
Disallowance u/s 40(a)(ia) - expenditure is paid during the year and not payable as at the end of previous year - Held that:- Case of Merilyn Shipping and Transport Vs. ACIT [2012 (4) TMI 290 - ITAT VISAKHAPATNAM] has since been suspended and the Hon’ble Kolkata High Court in the case of CIT Vs. Crescent Export Syndicate [2013 (5) TMI 510 - CALCUTTA HIGH COURT] held that the law laid down in the case of Merilyn Shipping and Transport (Supra) is not a good law. Further, it was held that the provisions of S.40(a)(ia) are applicable even when the expenditure is paid during the year and not payable as at the end of previous year.-
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2014 (4) TMI 1228 - CESTAT CHENNAI
Variation in the value of sales figure as reported in Profit and Loss Account and Sales Tax Returns with ER-1 returns for the years 2007-08 and 2008-09 - Demand of Central excise duty - Held that:- The appellant had placed the records. The learned Authorised Representative also made submission to distinguish these evidences. So, it is appropriate that the matter is required to be examined by the adjudicating authority after considering these evidences - appeal allowed by way of remand.
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2014 (4) TMI 1227 - ITAT COCHIN
Accrual of income - Taxability of freezer deposits received by these assessee from their customers - The only objection of the DR is that the appeal was filed against the order of the Tribunal and the same is pending before the High Court. But on a query from the Bench, DR submitted that he does not have knowledge of any stay granted by the Hon’ble High Court on the operation of the earlier order of the Tribunal.
Held that:- Since the CIT(A) has followed the order of the Tribunal, we are of the considered opinion that mere pending of the appeal before the High Court against the order of the Tribunal cannot be a reason to take a different view. Therefore this Tribunal is of the considered opinion that the deposits collected by the assessee for freezer cannot be considered as income of the assessee.
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2014 (4) TMI 1226 - ANDHRA PRADESH HIGH COURT
Entitled to claim deductions u/s 54B and 54F - two properties purchased by in the name of her two daughters, who are her only successors - 'Unmarried daughters'- Held that:- The words used in the Sections should be given liberal interpretation as the property has been purchased in the name of appellant's daughters who are also her heirs. The intention of the Legislature is to extend the benefit to the members of the family which includes married daughters who are possible legal heirs.
We are unable to accept the contentions as the language of the aforesaid Sections is very clear that it relates to unmarried daughters. Here the undisputed fact is that the property is purchased in the name of married daughters. When the Legislature thought it fit to specify the words 'unmarried daughters', the Court cannot substitute the words. No illegality or infirmity in the impugned judgment and order in any manner.
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2014 (4) TMI 1225 - CESTAT BANGALORE
Maintainability of appeal - Non-compliance with pre-deposit - Held that:- Pre-deposit order has not been complied with. In view of this position, the appeal is dismissed for non-compliance with the requirement of provisions under Section 35F of the Central Excise Act, 1944, made applicable to service tax matter - appeal dismissed.
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2014 (4) TMI 1224 - BOMBAY HIGH COURT
Adjustment contemplated by Section 10A - Tribunal has directed that the loss of one unit can be adjusted against the profit of another unit but after allowance of deduction under Section 10A of such profitable units - Held that:- The Tribunal has directed that the loss of one unit can be adjusted against the profit of another unit but after allowance of deduction under Section 10A of such profitable units. The loss of one unit under Section 10A of the Act shall be adjusted against the income liable for deduction under the same section but in relation to the income from other unit. As far as that aspect is concerned, the counsel agree that the same is answered in favour of the assessee and against the revenue. This controversy has been dealt with by a Division Bench of this Court in the case of Hindustan Uni Liver Ltd. v/s. Deputy Commissioner of Income Tax & anr. (2010 (4) TMI 206 - BOMBAY HIGH COURT) .
Deduction of data line cost from export turn over - Deduction u/s 10A - Expenses which AO desired to pick were not incurred in relation to export and, therefore, cannot be termed as deductions permissible from export turnover - Held that:- These expenses have been incurred for the purposes of the business of software development at the software units in India. It is that finding which the Assessing officer was unable to controvert or unable to bring any contrary material to disprove the same. Tribunal found that the AO could not have insisted on the deduction. It is that exercise undertaken by AO which has not been upheld but rather disapproved by the Tribunal. This is a finding purely on the facts and pertaining to the business of the assessee. The facts pertaining to the assessee's business of software development, the charges and which are claimed to have incurred, are in relation to the business of software development within India. They could not be said to be costs deductible from export turnover for the purposes of Section 10A of the Act. In such circumstances, we are of the opinion that any wider controversy or larger question does not require any answer.
Recompute the transfer pricing adjustment - Held that:- The Tribunal may have expressed some prima facie opinion in relation thereto, however, it has directed the Assessing officer to complete the same after giving an opportunity to the assessee in accordance with law. We are unable to find any substance in the complaint of Mr.Tejveer Singh that direction of the Tribunal or prima facie observations are binding the Assessing Officer in the fresh exercise. When the exercise is afresh the Assessing officer is directed to act in accordance with law, then, we do not think that any prima facie observation of the Tribunal will bind the Assessing officer or guide him to consider the claim in the particular manner. Additionally, we clarify that all contentions and objections in relation to this claim of both sides are kept open. The Assessing Officer shall decide the claim or issue strictly in accordance with law.
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