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Income Tax - Case Laws
Showing 41 to 60 of 806 Records
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2015 (11) TMI 1838
Reopening of assessment u/s 148 - HELD THAT:- In the cases where assessments are being reopened after the end of four years from the end of relevant assessment year, and where original assessment is completed under section 143(3), it is sin qua non that the Assessing Officer demonstrates that there was failure on the part of the assessee to disclose all the related material facts. No such exercise has been carried out on the facts of the present case. In the reasons recorded by the Assessing Officer it is not even his case that any material facts were withheld by the assessee. In this view of the matter, we quash the reassessment proceedings. The assessee gets the relief accordingly.
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2015 (11) TMI 1837
Revision u/s 263 - Capital gain assessed in the hands of the larger HUF or in the case of the assessee member of HUF - CIT directing the Assessing Officer to disallow deduction allowed under section 54F of the Act in the hands of the assessee - CIT was of the view that sale proceeds have to be assessed in the hands of legal heirs of late A.R.Pandurangan - HELD THAT:- The assessee is one of the legal heirs of late A.R.Pandurangan who disclosed capital gains on his share after claiming deduction under section 54F of the Act. The Assessing Officer while completing the assessment called for details in respect of claim for deduction under section 54F and capital gains reported by the assessee HUF and accepted the exemption claimed under section 54F of the Act on the sale proceeds reported by the assessee HUF.
The Hon’ble Andhra Pradesh High Court in the case of Addl. CIT Vs. P.Durgamma [1986 (9) TMI 58 - ANDHRA PRADESH HIGH COURT]considered the scope of section 171 of the Act deeming HUF to be undivided.
In the case on hand, no evidence has been brought on record to suggest that late A.R.Pandurangan HUF has been assessed. In such circumstances, the sale proceeds of the property cannot be assessed in the hands of late A.R.Pandurangan (HUF). We also see no reason to disbelieve the memorandum of oral recording partition furnished by the assessee. Thus the contentions of the Commissioner of Income Tax that sale proceeds have to be assessed in the hands of late A.R.Pandurangan (HUF) is not sustainable in law. Thus, we set aside the order of the Commissioner of Income Tax passed under section 263 and restore that of the Assessing Officer since the assessment order cannot be said to be erroneous and prejudicial to the interests of the Revenue. - Decided in favour of assessee.
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2015 (11) TMI 1832
Exemption u/s 11 denied - AO treated the society maintenance fees receipts as business income and not incidental to the attainment of the objects of the assessee society - No separate books of accounts have not been maintained which is violative of provisions of s.11 and 12 -society maintenance fee, being in the name of franchisee income earned by the assessee was taxable - CIT-A deleted the addition - HELD THAT:- The issue is covered in favour of the assessee and against the Revenue by a series of decisions of the Tribunal in the assessee’s own case. The Ld. CIT(A) has followed the binding decisions of the ITAT in the assessee’s own case for the A.Y. 1998-99, 1999-2000, 2001-02, 2003-04 and ITAT orders for the A.Y. 2004-05.
We find no infirmity in the order of the Ld. CIT(A) and we dismiss both the appeals of the Revenue.
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2015 (11) TMI 1830
Disallowance on account of service tax and insurance claim by holding that the assessee could not offer any valid explanation for such writing off during the year - assessee had written off service tax which is not available for set off against the CENVAT payable by the assessee and short insurance claim i.e claim not admitted and paid by the insurance company - HELD THAT:- In the case of service tax, we note that ₹ 2,05,177/- were written off by the assessee because the set off of such service tax was not available against the central excise duty. In our opinion, the amount of service tax which is paid by the assessee on the expenditure incurred and for which no set of was available was rightly written off and the order of the ld. CIT (A) cannot be sustained on this point.
Assessee has rightly written off the un-receivable insurance claim during the year which were either rejected or short accepted by the insurance company. More so when these expenses are not related to the prior period as the circumstances and facts under which these amounts were written off came to be finalized during the year.
Assessee further pointed out that the similar expenditure were allowed by the Department in the earlier years. All these write offs are necessitated when their adjustments or recovery is not possible to be made in the in the normal course of business . In the case of CIT Vs Excel Fashion Pvt Ltd.[2007 (5) TMI 647 - DELHI HIGH COURT] has upheld the order of Tribunal in which the tribunal allowed the irrecoverable Export Incentives as bad debt. Under these facts and circumstances order passed by CIT(A) can not be sustained and disallowance of service tax and the insurance claim ordered to be deleted. - Decided in favour of assessee.
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2015 (11) TMI 1829
Assessment of trust - Anonymous donations u/s. 115BBC - failure on the part of the donors to file confirmation; in response to the notice issued u/s.133(6) - HELD THAT:- In the present case it is an admitted fact that the assessee is registered u/s 12AA of the Act and its income is exempt u/s 11 - AO while framing the original assessment vide order dated 31.03.2011 categorically stated that the activities of the assessee are charitable within the meaning of Section 2(15) of the Act and there was no change in the aims and objects of the assessee as compared to the earlier years.
As the assessee is established for religious and charitable purposes and the anonymous donation was not received with specific direction that such donation is for any university or other educational institution or any hospital or other medical institution run by the assessee trust. Therefore, the AO was not justified in making the addition by invoking the provisions of Section 115BBC(1) of the Act and the ld. CIT(A) rightly deleted the said addition in view of the provisions of Section 115BBC(2)(b) - Decided against revenue.
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2015 (11) TMI 1827
Nature of expenses - research and development expenses - revenue or capital expenditure - Revenue pointed out that the expenditure claimed by the assessee on research and development was because of the own R&D expenses carried on by the assessee - HELD THAT:- Looking at the nature of expenditure incurred by the assessee, we are of the view that the same is revenue expenditure allowable as deduction in the hands of assessee either under the provisions of section 35(1)(i) or 37(1) - expenditure having been incurred by the assessee by way of research, which resulted in reduction in the weight of body parts and also generation of revenue in the hands of assessee to the extent of ₹ 4.20 crores cannot be said to be capital expenditure.
Even if the expenditure is of enduring benefit, but having not been incurred in the capital field, is to be allowed as deduction in view of the ratio laid down by Pune Bench of Tribunal in Opus Software Solutions (P.) Ltd. . [2012 (11) TMI 619 - ITAT PUNE]- As the nature of expenditure is not such that it can be said to be capital expenditure and in the absence of product developed by the assessee having been patented, we find no merit in the order of Assessing Officer in this regard - Decided against revenue
Disallowance of premium paid on cancellation of foreign currency cover - CIT-A allowed claim - CIT(A) was of the view that the aforesaid expenditure related to payment of commitment charges for canceling agreement entered into by the assessee for FOREX cover, purchased for Dollar fluctuation relating to repayment of ECB loan and interest, therefore, the same was not in the nature of interest - HELD THAT:- In order to avail the foreign exchange cover offered by Citi Bank, it had to close its agreement with DBS Bank and for pre-mature closure of the offer made by DBS Bank, the prepayment charges / commitment charges relating to the cancellation of the said foreign exchange cover was paid by the assessee. The said commitment charges are not relatable to the acquisition of any foreign assets, but are on account of business agreement entered into by the assessee, which because of its business exigencies, had to be foreclosed, in view of the offer made by the principal lender i.e. Citi Bank.
Such commitment charges paid by the assessee having been paid during the course of carrying on its business are allowable as revenue expenditure in the hands of the assessee. The same are not relatable to loan taken by the assessee from Citi Bank for acquisition of assets. However, the foreign exchange cover was taken by the assessee in order to prevent itself from future currency rate fluctuations. The expenses have been incurred for the purpose of business are incidental to carrying on of the business by the assessee, are allowable as expenditure under section 37(1) - See Hon’ble Supreme Court in DCIT Vs. Gujarat Alkalies & Chemicals Ltd. [2008 (2) TMI 11 - SUPREME COURT] and Addl.CIT Vs. Akkamba Textiles Ltd.[1996 (10) TMI 71 - SC ORDER] for the said proposition. We uphold the order of CIT(A) in this regard. - Decided against revenue.
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2015 (11) TMI 1826
Disallowance u/s.80IA - assessee company engaged in the business of spinning cotton yarn and generation of electricity through wind mill - AO disallowed the claim of the assessee u/s.80IA on the reason that the Special Leave Petition filed by the Revenue is pending before the Apex Court against the judgment of the Jurisdictional High Court in the case of Velayuthasamy Spinning Mills [2010 (3) TMI 860 - MADRAS HIGH COURT] - HELD THAT:- It is not the case of the Revenue that the judgment of the Madras High Court in Velayudhaswamy Spinning Mills P. Ltd(supra) is stayed by the Apex Court. This Tribunal is of the considered opinion that mere pendency of SLP before the Apex Court cannot be a reason for not following the judgment of the jurisdictional High Court. In other words, the judgment of the jurisdictional High Court is binding on all authorities in the States of Tamilnadu and Pondicherry. The CIT(A) has rightly allowed the claim of the assessees by following the judgment of the Madras High Court in Velayudhaswamy Spinning Mills P. Ltd. (supra). Therefore, this Tribunal do not find any infirmity in the orders of the CIT(A) and according the same are confirmed.
Receipts from CDM - Revenue or capital receipt - Whether CDM receipts being the one which has been received on account of the power generated through windmills would also qualify for the benefit u/s.80IA.? - HELD THAT:- Receipt from sale of carbon credits has to be considered as capital receipt and accordingly, it is not taxable. Thus, there is no question of considering the same for deduction u/s.80IA.
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2015 (11) TMI 1825
Disallowing the business advances written off and claimed as deduction u/s 37(1) - HELD THAT:- As not been disputed by the department that the amount which was advanced was not for the purchase of raw material i.e., not for business purpose or the advance given has been received back by the assessee, rather their case is that the assessee is not in the business of giving advance, therefore such a bad debt of advance is not allowable. If the assessee has claimed that these advances have become bad i.e. neither the raw material has been supplied nor advance has been given back, then the same amounts to loss incurred during the ordinary course of business and same has to be allowed u/s 37(1) as business expenditure. No merit in the reasoning of the CIT(A) that such an advance can only be given when the assessee is in the business of financing or advancing money. The advance can be given to a supplier in the ordinary course of business and if such an advance has been turned out to be bad or irrecoverable, then it has to be allowed as loss.
Disallowing foreign travel expenditure of the Directors - HELD THAT:- Specific purpose for which the foreign tours were undertaken by the Directors are not available on records. No doubt if the Directors or the employees have undertaken to foreign travelling for exploring of prospective business, acquisition of latest machinery and for other business purpose then same has to be allowed. There has to be some prima facie evidence to substantiate such an explanation. For the AY 2008-09, the Tribunal has noted down the specific details of the tour undertaken by various persons and based on that, finding was given in favour of the assessee. In the interest of justice and for proper examination of this matter, we restore this issue to the file of the AO who shall consider the necessary explanation and evidences and decide the same afresh. Accordingly, the issue of foreign travelling expenses is set aside to the file of the AO to be decided afresh after giving due opportunity to the assessee.
TDS u/s 195 - enhancement of disallowance by CIT(A) of market research expenditure u/s 40(a)(i) for making the payment to an AE - Non deduction of assessee - HELD THAT:- TDS was required to be deducted on such a payment, because the said entity has a business connectin in India by virtue of having offices located at various places as noted by him and also had a help-desk etc. such an observation of Ld. CIT(A) for making the disallowance cannot be upheld, because if the payment made to M/s Mintel International Group Ltd. is a business income, then it has to be established as a matter of fact that the said entity does has a business connection in India or has a PE in terms of Article 5 of DTAA. Nowhere it has been brought on record that M/s Mintel International Group Ltd. had any kind of PE in India or any kind of business connection in India. Rather there is a letter on record, wherein, M/s Mintel International Group Ltd. has categorically stated and certified that it has no PE or business connection in India. Once that is so, then assessee was not required to deduct TDS on such a payment and, therefore, there is no violation of section 195 and consequently no disallowance u/s 40(a)(i) can be made in the hands of the assessee.
Treatment of subsidy - Capital receipt or revenue receipt - HELD THAT:- In PONNI SUGARS & CHEMICALS LTD. [2008 (9) TMI 14 - SUPREME COURT] has laid down a very important proposition that the test of character of the receipts in the hands of the assessee has to be determined with respect to the purpose for which the subsidy is given. Hence, the “purpose test” has to be applied. The point of time at which subsidy is paid is not relevant, neither the source nor the form of subsidy is material - as held that if the subsidy has been given for setting up of new units or substantial expansion of the existing unit, then same is to be treated as capital account. If the object of the subsidy scheme is to enable the assessee to run the business more profitably then the receipts is on revenue account.
Hence in this case if we see the “Preface” of the “Madhya Pradesh Udyog Nivesh Samvardhan Yogna” of Industrial Promotion Policy of 2004 of the Madhya Pradesh Government, it provides that the subsidy would be given for setting up of a new industrial units at various places for employment generation and to accelerate the pace of industrialization in Madhya Pradesh. From the reading of the entire scheme, it is absolutely clear that the subsidy provided is not for assisting the assessee for augmenting the profit or help in running of the business, albeit it is for setting up of new industrial unit, for promotion of employment, growth, infrastructure in the backward areas of Madhya Pradesh. Thus, such a subsidy though given in the form of refund of VAT or CST is on capital account. Accordingly, we hold that the subsidy received by the assessee cannot be taxed as revenue, as it is on capital account, hence capital receipt.
Product development expenses - Revenue or capital expenditure - HELD THAT:- As relying on assessee's own case A.Y. 2007-08 assessee has changed the design of the bottle the expenditure would generally be on the revenue account, even though the advantage may have an enduring benefit for a brief period and the colour of the cap as is a regular phenomenon to be carried out between one to two years which cannot be held to be for an enduring benefit or major change in the profit making apparatus. Such, expenditures are required for either augmenting the sale or to survive in the market the market under stiff competition. Therefore, such expenditure has to be treated as revenue expenditure and, accordingly, the disallowance as confirmed by the learned Commissioner (Appeals) under the head product development expenditure is allowed.
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2015 (11) TMI 1824
Reopening of assessment - four years has expired from the end of the relevant assessment year as on the date of issuance of notice u/s. 148 - change of opinion - Unexplained divided received - HELD THAT:- In this case, the assessee has filed complete details as is evident from the above facts and the details in respect of divided received and also the details of expenditure, which have been filed by the assessee vide different letters addressed to the AO, we feel that the reopening is just merely a change of opinion and nothing else. The change of opinion is not permissible in law as held by the Hon’ble Apex Court in the case of Foramer France[2003 (1) TMI 101 - SC ORDER] and JINDAL PHOTO FILMS LTD. [1998 (5) TMI 20 - DELHI HIGH COURT]
Thus we are of the view that even in post-1989 amended provision of Section 147 of the Act, change of opinion is not permissible. Accordingly, we allow this legal issue of the assessee’s appeal and reverse the order of lower authorities on this issue.
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2015 (11) TMI 1823
Disallowance u/s 14A r.w.r. 8D - Need for recording of satisfaction before making addition - HELD THAT:- It is incumbent upon the Assessing Officer first to be satisfied that the claim made by the assessee as to whether any expenditure has been incurred or not, in relation to the income which does not form part of the total income under the Act, is correct. The perusal of the assessment order in the case of assessee, very clearly reflects that the Assessing Officer vide para 3.1 had noted the fact that the assessee had declared the exempt income, but had not debited any expenses in the books of account against the said exempted income. In view thereof, the assessee was requested to explain the reasons for the same and as to why the provisions of section 14A of the Act read with Rule 8D of the Rules should not be invoked. In view of the same, we find no merit in the plea of the assessee in this regard. The satisfaction is deemed to have been recorded and we proceed to decide the issue on merits.
Whether any disallowance is warranted out of dividend income received on account of dividend on mutual funds? - In view of the binding preceding being available in assessee’s own case with regard to the investments, which admittedly were not made in the instant assessment year, but were brought forward from the earlier years, then disallowance if any worked out in the preceding year is to be applied for the year under consideration also since the funds have been deployed in the earlier years and not in the current year. Accordingly, we direct the Assessing Officer to compute the disallowance, if any, in the hands of the assessee in line with working of the disallowance under section 14A(2) of the Act read with Rule 8D(ii) of the Rules in the preceding year. Further, no bifurcation of investments and stock in trade was raised in earlier year, hence this plea is dismissed as investments are old.
Disallowance under section 14A of the Act i.e. the administrative expenses relatable to earning of exempt income - From the details, it is not clear that as to whether any disallowance was made under Rule 8D(iii) of the Rules in the hands of assessee in the preceding year. In view thereof, in case no such disallowance is made in the hands of assessee in the earlier years, then we hold that no disallowance was warranted in the year under consideration. However, in case the assessee has accepted the disallowance made under Rule 8D(iii) of the Rules in the preceding year, then the facts of the case being identical, we find no merit in the claim of the assessee in this regard. The Assessing Officer shall verify this aspect from the assessment records for assessment year 2008-09 and decide the issue accordingly. AO shall afford reasonable opportunity of hearing to the assessee while deciding the issue of disallowance under section 14A of the Act.
Disallowance of foreign travel expenses - Assessing Officer noted that the explanation given by the assessee was without any specific details, or supported by any evidence, even the details of various destinations travelled by her were not furnished and in the absence of any evidence that foreign travel expenses were incurred for the business, the expenditure claimed by the assessee was disallowed - HELD THAT:- The assessee is making this plea from assessment year 2006-07 onwards, but till the instant assessment year i.e. 2009-10, no such investment has been made by the assessee. The statement by the assessee is without support of any iota of evidence and hence, cannot be accepted. Even during the course of hearing, the assessee was asked to produce evidence of business meetings undertaking by the assessee or the proposed investors met by the director of the assessee company on her foreign visit. The learned Authorized Representative for the assessee admitted that no such details were available. In the above said facts and circumstances, we find no merit in the claim of the assessee whatsoever. However, following the earlier order of the Tribunal, we restrict the disallowance to 75% of expenditure and direct the Assessing Officer to allow 25% of expenditure. The ground of appeal raised by the assessee is thus, partly allowed.
Computation of profits of the windmill power generation unit - HELD THAT:- In the case of the assessee, the matter in assessment year 2008-09 travelled to the Tribunal and the Tribunal upheld the order of Assessing Officer in computing disallowance by allocating the indirect expenses on the basis of turnover of respective businesses. The Tribunal upheld the order of lower authorities. However, directions were given to the Assessing Officer to re-calculate the computation of disallowance on the basis of working that may be furnished by the assessee. The said directions were given by the CIT(A) and were upheld by the Tribunal. Following the same parity of reasoning, we uphold the order of CIT(A) in this regard. However, in line with earlier directions, we direct the Assessing Officer to recompute the disallowance in line with directions of the Tribunal in assessment year 2008-09. The ground of appeal raised by the assessee are decided as indicated above.
Deduction u/s 80IA(4) on account of profit earned from the business of windmill power business - HELD THAT:- The Tribunal had allowed the claim of the assessee by following the earlier decision of Pune Bench of Tribunal in Serum International Ltd.[2013 (1) TMI 688 - ITAT PUNE] wherein the issue had been decided following the ratio laid down by the Hon’ble Madras High Court in Velayudhaswamy Spinning Mills (P) Ltd. [2010 (3) TMI 860 - MADRAS HIGH COURT] - Before us also, no other contrary decision has been brought to our notice, therefore, in the above said background and in view of the identical issue having been decided in assessee’s own case for assessment years 2006-07 [2012 (2) TMI 604 - ITAT PUNE]and 2008-09 [2013 (12) TMI 1708 - ITAT PUNE] we find no merit in the grounds of appeal raised by the Revenue and the same are dismissed.
Disallowance u/s 14A - HELD THAT:- We remit this issue also back to the file of Assessing Officer to determine the source of funds in the hands of assessee in line with the ratio laid down by the Tribunal in Lap Finance & Consultancy Pvt. Ltd. [2013 (12) TMI 1708 - ITAT PUNE] in assessment year 2008-09. The matter is remitted back to the file of Assessing Officer with same directions as above.
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2015 (11) TMI 1821
Bogus purchases - Estimation of income - Decline in net profit shown - purchases were made from a Firm whose registration was cancelled - HELD THAT:- Purchases were made from M/s Riddhi Siddhi Enterprises in spite of the fact that Registration of the said firm had been cancelled - no evidence to indicate that M/s Riddhi Siddhi Enterprises had provided accommodation bills to the assessee in respect of the materials purchased and consequently, concluded that there was no evidence to show that bogus purchases were made by the assessee.
Appellate authority further found that sales made by the assessee had been accepted by the assessing officer. Once the sales have been accepted, it necessary falls that the assessee had also made purchases and it cannot, therefore, be held that bogus purchases were made. Consequently, the mere fact that purchases were made from a Firm whose registration was cancelled does not mean that bogus purchase were made by the assessee or that the Firm was a non-existing Firm. Deletion was rightly made by the first appellate authority. - Decided in favour of assessee.
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2015 (11) TMI 1820
TDS u/s 194C - disallowance of payment of liquidated damages on account of non-supply of material - Addition 40(a)(ia) - HELD THAT:- We are of the considered view that let the AO examine the details of recipients of liquidated damages, which are to be filed by assessee and in case these receipts are included in their respective return of income and paid taxes thereon, the AO will delete the disallowance made u/s. 40(a)(ia) of the Act in view of the decision in the case of Ansal Land Mark township (P) Ltd. [2015 (9) TMI 79 - DELHI HIGH COURT] - Assessee’s appeal is allowed for statistical purposes.
Disallowance of interest - interest was earned by the assessee from the loan & advance made to Director and Group concern - HELD THAT:- As assessee stated that there are interest received and also interest paid on these amounts and there are no interest free loans. Assessee tried to file details but these are new evidence but he requested that let this issue be set aside to the file of AO for fresh examination. On query from the Bench, Ld. Sr. DR has not objected to the proposal. In view of the above facts and circumstances, we set aside this issue to the file of AO to re-decide the issue after taking into consideration the details filed by the assessee whether the assessee has received interest and paid interest also. In view of the above, the AO will re-decide accordingly.
Addition of difference in stock found during the course of survey - HELD THAT:- AO has not gone into the reconciliation statement filed by assessee vide letter dated 17.12.2008, whereby the complete stock statement as on the date of survey i.e. 27.12.2005 was filed. Even the CIT(A) without going into the issue of reconciliation confirmed the addition. In view of the above fact, we are of the view that reconciliation should have been considered by the lower authorities and accordingly, we set aside this issue to the file of AO for fresh adjudication after considering the reconciliation. This issue of assessee’s appeal is allowed for statistical purposes.
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2015 (11) TMI 1819
Filing of belated returns - set off of unabsorbed depreciation, investment allowance and 80J exemption denied - HELD THAT:- This aspect of the matter is extensively considered in the case of Brahmavar [1998 (11) TMI 91 - KARNATAKA HIGH COURT] and has held that there is no time limit provided for carry forward of depreciation of earlier years and unabsorbed depreciation and investment allowance, stands differently than that of the business loss. In respect of other assesses other than in case of amalgamation the unabsorbed depreciation or investment allowance, if claimed in a return filed after the time prescribed under Section 139(1) is not restricted.
Belated filing of the returns would not curtail the right of the assessee to claim unabsorbed depreciation, investment allowance and 80J exemption under the Act.
Tribunal has proceeded hypertechnially in rejecting the claim of the assessee on the ground that rectification application was filed by the assessee before the Assessing Officer after giving effect to the order of the CIT(A). It is significant to note that in the Circular issued by the Central Board of Direct Taxes No. 14 (XL35) of 1955, dated April 11, 1955 it has categorically held that the Officers of the Department must not take advantage of the ignorance of an assessee as to his rights. It is one of their duties to assist a taxpayer (assessee) in every reasonable way, particularly in the matter of claiming and securing reliefs and in this regard the officers should take the initiative in guiding a taxpayer where proceedings or other particulars before them indicate whether some refund or relief is due to the assessee, which would benefit the Department and it would inspire confidence in the assessee. In such view of the mater the Tribunal ought to have taken a wider look in allowing the claim of the assessee even if the return for the assessment year 1986-87 is belatedly filed, which would not restrict the rights of the assessee to claim the benefit of unabsorbed depreciation, investment allowance and 80J exemption. - Decided in favour of assessee.
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2015 (11) TMI 1817
Correct head of income - income received by way of amenities - income from house property or income from other sources/business income - CIT-A treating amenity charge as income from house property and thereby allowing deduction u/s 24 - HELD THAT:- If the observation made in the assessment order, leading to addition made to the total income, conclusion drawn in the impugned order, material available on record, assertions made by the ld. respective counsel, if kept in juxtaposition and analyzed, we note that the amenities available in the building was RCC Frame Structure, Marvel/granite in the common areas, lobbies, etc, Kotah in staircases, two elevators, control room: CCTV in common areas, water supply, electricity, AHU Room and Fire Control System.
If the nature of these amenities are analyzed, these are clearly part and partial of the building. Both the agreements of leave and licence and other for amenities are composite one and one cannot be enforced without the other. These are the basic agreement and are integral part to use of licence premises and their uses coextensive/coterminous, therefore, these cannot be segregated, thus, the charges for amenities were rightly held to be income from house property, thus, the claimed deduction is also allowable, therefore, we affirm the stand of the ld. Commissioner of Income Tax (Appeals). - Decided against revenue.
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2015 (11) TMI 1816
Denying exemption u/s 10(23C)(vi) - assessee trust is solely engaged for educational purposes and thus there is no justification in denying exemption u/s 10(23C)(vi) though the trust deed was amended subsequently by the assessee - HELD THAT:- As perused the order of the Chief Commissioner. On a perusal of the object clauses of the trust deed, we find that the assessee is established not only for managing all types of educational institutions but also to promote finance, hospitals, research centers in medical science. On a perusal of the profit and loss account and income & expenditure account of the assessee, we find that the assessee incurred certain expenditure towards awareness on agriculture, awareness on scientific research programme and blood donor camp expenses, medical treatment expenses, free eye camp activity which goes to show that assessee’s activities are not confined only to the education during the year ended 31.03.2014.
The Chief Commissioner also observed that assessee trust amended its deed only on 29.07.2015 which is beyond the year ended 31.03.2014, therefore not relevant for the assessment year 2014-15 and he denied exemption holding that assessee trust is existing not only for education but also for other activities. We do not find any infirmity in coming to the conclusion by the Chief Commissioner in rejecting the application for exemption under section 10(23C)(vi) - Decided against assessee.
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2015 (11) TMI 1815
Reopening of assessment u/s 147 - Whether there is no negligence on the part of the assessee? - HELD THAT:- For reopening assessment within four years, it may not be necessary that there is negligence on the part of the assessee. What is necessary is to see whether any income of the assessee chargeable to tax escaped income. In this case, the AO came to a conclusion that there was reason to believe that the income otherwise chargeable to tax has escaped income since there was difference in the allotment of shares to the partners.
This Tribunal is of the considered opinion that the Assessing Officer has rightly reopened the assessment. Since no opinion was expressed in the original assessment, it is not the question of change of opinion. Therefore, the CIT(Appeals) may not be correct in saying that the Assessing Officer has no jurisdiction to reopen the assessment. This Tribunal is of the considered opinion that as the Assessing Officer has rightly reopened the assessment, the CIT(Appeals) has to dispose the appeal on merit on the basis of the grounds raised before him. Accordingly, the order of the CIT(Appeals) is set aside. The appeal is remitted back to the file of the CIT(Appeals) - Appeal of the Revenue is allowed for statistical purposes.
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2015 (11) TMI 1814
Validity of Section 234E - HELD THAT:- As considered by the Bombay High Court as well as Karnataka High Court and answered against the petitioner. The said provision has been held to be intra-vires to the Constitution. He, however, submits that the provision is given prospective effect by the Department, in view of the amendment in the Act w.e.f. 1.6.2015. In that case, petitioner may not pursue the matter any further.
We accordingly dispose of this petition, as prayed by the petitioner.
We make it clear that we are not expressing any opinion either way on the merits of the controversy regarding validity or application of the relevant provision.
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2015 (11) TMI 1812
Computation of deduction u/s 80HCC - exclusion of scrap sales in the total turnover for the purposes of deduction - CIT-A allowed relief to assessee - HELD THAT:- As perused the findings of the authorities below and considered the material available on record. We do not find any infirmity in the order of the learned CIT (Appeals) as he has given relief to the assessee following the earlier order in assessee's own case. Further, from the perusal of the judgment of the Hon'ble Supreme Court in the case of Punjab Stainless Steel Industries [2014 (5) TMI 238 - SUPREME COURT] we see that in a judgment running after analyzing the issue in detail, observed that the word "turnover" would mean "total sales". The said sales would definitely not include the scrap material which is either to be deducted from the cost of raw material or is to be shown separately under the different head.
No infirmity in the action of CIT (Appeals) in holding that the sale of scrap should be included in the total turnover for purposes of computation of deduction under section 80HHC of the Act.
Disallowance of expenses which actually related to the earlier years and not this year - HELD THAT:- It is a matter of record that for the last so many years the assessee has been following the practice of claiming litigation expenses @ 20% in a duration of five years. From the perusal of various orders of lower authorities for various assessment years, this is also observed that the Department has been accepting the claim as such. Since there is no change in the facts during the year even the learned D.R. could not bring to our attention any distinguishing facts in this year, we are not inclined to interfere with the findings given by the CIT (Appeals) on the basis of principle of consistency. It is a trite law that the principle of Estoppel is not applicable to the income tax matters, this is also settled that there being no distinguishing facts emerging during the year, the Department cannot take a different view other than taken in earlier years. See NEO POLY PACK (P.) LTD. [2000 (4) TMI 26 - DELHI HIGH COURT]
and RADHASOAMI SATSANG [1991 (11) TMI 2 - SUPREME COURT].
Addition of payment of bonus and leave with wages - which were not fully verifiable from the records produced by the assessee during the assessment proceedings - HELD THAT:- We see nowhere this fact is emerging from this order that the addition has been made on agreed basis. However, looking to the fact that certainly there was certain discrepancy in the bonus and leave with wages register, the Assessing Officer proceeded to make disallowance, which was a very small portion of the total expenses claimed by the assessee and also to the fact that the learned CIT (Appeals) deleted the disallowance in a very summary manner, we uphold the action of the Assessing Officer in making the disallowance. The ground of appeal raised by the Revenue is allowed.
Disallowance of foreign traveling expenses - Addition being personal expenses while on tour, as the assessee had not produced all the bills of traveling as well as hotel lodging and boarding or local traveling taxi bills etc., during the course of assessment proceedings - HELD THAT:- Disallowance has been made by the Assessing Officer on an arbitrary basis and even the CIT (Appeals) has restricted to it arbitrarily, we are in agreement with the findings given by the CIT (Appeals) that the assessee being in the business of export of products and visiting abroad for business purposes and not for leisure and trips are to be taken on year to year basis, therefore, we confirm the order of the learned CIT (Appeals) on this issue. The ground of appeal raised by the Revenue is dismissed.
Disallowance of general expenses as some vouchers pertaining to these expenses were appeared to be self made - CIT-A deleted the addition - HELD THAT:- AO has not brought on record any specific reason and any specific expense, which is not allowable under the Income Tax Act. By making an estimated disallowance out of the total expenses claimed by the assessee, the Assessing Officer in a way accepts the fact that the expenses have been incurred wholly and exclusively for the purposes of business. However, he makes an adhoc disallowance without pinpointing as to which component of the total expenses claimed by the assessee is not allowable. The manner in which the disallowance is made is totally arbitrary. Therefore, we uphold the action of the learned CIT (Appeals) in deleting the disallowance.
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2015 (11) TMI 1811
Estimation of profit - Bogus purchases - Addition on account of difference in purchase as per P&L A/e. & purchase register - HELD THAT:- CIT(A) has merely made estimation of GP ratio of 20% of the turnover without disclosing the basis of arriving at the figure of 20% and how the income based on the said GP ratio of 20% in case of the assessee is honest and fair as per mandate of KACHWALA GEMS VERSUS JOINT COMMISSIONER OF INCOME-TAX [2006 (12) TMI 83 - SUPREME COURT]. We set aside the order of the CIT(A) to the extent of estimation of income of the assesseee based on GP ratio @20% of turnover done by the CIT(A) in his orders dated 29.02.2012 and direct the CIT(A) to pass an order estimating income based on GP ratio based on financial data’s pertaining to the other entities belonging to the iron and steel industry so that honest and fair estimate of income of the assessee can be brought to tax.
The assessee is also directed to appear before the CIT(A) and produce all the relevant material required by the CIT(A) for estimation of GP ratio based on financial data’s pertaining to the other entities belonging to the iron and steel industry so that honest and fair estimate of income of the assessee can be brought to tax and such data as may be produced by the assessee shall be duly considered by the CIT(A) before making honest and fair estimation of GP ratio to determine correct income of the assessee chargeable to tax - Appeal filed by the Revenue is partly allowed for statistical purpose.
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2015 (11) TMI 1810
Taxing the entrance fees collected - Revenue or capital receipt - certain loose papers were found at assessee’s premises on the basis of which the AO inferred that assessee had given ₹ 50 lakhs to Sujan Parikh group - CIT(A) deleted the addition - HELD THAT:- A categorical finding has been recorded by the CIT(A) to the effect that no additional amount was paid, the amount so paid was part and parcel of the total consideration paid to Shri Sujan Parikh. From the record we found that Mr. Sujan Parikh has received the consideration for transfer of shares of NPCL in direct proportion of the market value of the properties held by NPCL in the month of April 2006.
There was no mention of any additional amount of ₹ 50 lakh. There was no other mention anywhere in the correspondence exchanged for family settlement which indicated that Mr. Sujan Parikh was paid ₹ 50 lakh extra over and above the consideration paid for sale of shares in the group companies. As per finding of the CIT(A) no cogent material was brought on record by the AO to hold that ₹ 50 lakhs was paid in addition to normal consideration so determined. Accordingly, we do not find any infirmity in the order of CIT(A) for deleting the addition of ₹ 50 lakhs - Appeal of revenue is dismissed.
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