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Income Tax - Case Laws
Showing 41 to 60 of 641 Records
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2015 (3) TMI 1341
Penalty u/s 271(1)(c) - assessee on various dates had not attended the assessment proceedings - admission of additional evidence - Held that:- Though it is a fact that assessee was provided a number of opportunities to submit details as mentioned in Ld. CIT(A)’s order yet the fact remains the additional evidence go to the root of the matter, which were not taken into account by CIT(A) especially in view of the fact that A.O. had issued remand report also.
We deem it appropriate to set aside the order of Ld. CIT(A) and remit back the issue to the office of Ld. CIT(A) who should readjudicated on the grievances of the assessee after taking into account the additional evidence and remand report. We also direct the assessee to present itself before Ld. CIT(A) for speedy disposal of its appeal and the opportunity granted to assessee should not be misutilized. - Decided in favour of assessee for statistical purposes.
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2015 (3) TMI 1339
Reopening of assessment - non supplying of reasons to believe to assessee - Held that:- We find that this letter is nothing but a questionnaire served upon the assessee. By any stretch of imagination, a questionnaire cannot replace or supplement the supply of reasons to the assessee which in the light of the judicial decisions discussed hereinabove is sine-qua- non for reassessment - DR could not adduce any evidence which could suggest that the reasons were actually supplied to the assessee. Considering the facts of the case in the light of the judicial decisions referred to hereinabove, we set aside the assessment order for want of jurisdiction and quash the reassessment order for both the years under consideration. - decided in favour of assessee,
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2015 (3) TMI 1338
Bogus share transaction - Unexplained cash credit for Capital Gains - correct head of income - treatment of gain arising on the transaction of sale, purchase of shares - to be assessed under the head income from long term capital gains as per the assessee or income from other sources as determined by the authorities below - Addition on the basis statement of third party and evidence collected by the department - non giving opportunity of being heard as well as cross examining the person concerned - Held that:- As decided in case of Smt. Smita P. Patil & Ors. Vs. ACIT [2013 (7) TMI 950 - ITAT PUNE] the transaction was with regard to purchase of shares of M/s. Fast Track Entertainment Ltd., which in turn were purchased through the share broker M/s. DPS Shares and Securities Ltd. and the Tribunal had accepted the said transaction as genuine.
The transaction of purchase and sale of shares of M/s. Fast Track Entertainment Ltd. was a genuine transaction and the claim of long term capital gain was allowed in the hands of the assessee therein. In the totality of the above we direct the Assessing Officer to compute the income in the hands of the assessee under the head ‘income from long term capital gains’. - Decided in favour of assessee.
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2015 (3) TMI 1336
Nature of expenditure - disallowance of product development expenditure - revenue or capital expenditure - Held that:- The expenditure under consideration is similar to the expenditure claimed by the assessee in the earlier years and following the same parity of reasoning, we hold that the assessee is entitled to the claim of expenditure on account of product development as revenue expenditure. See MAX INDIA LTD. [2006 (6) TMI 422 - ITAT AMRITSAR]
Claim of the sales tax subsidy - Held that:- As relying on assessee's own case we direct the Assessing Officer to treat the sales tax subsidy as capital receipt in the hands of the assessee.
Allowability of payments made to M/s L&T Infotech Ltd. on account of annual maintenance charges - Held that:- As in assessment year 2003-04, held that the said expenditure was revenue in nature as it cannot be said to have brought in enduring benefit. The expenditure claimed by the assessee, during the year under consideration, was similar to the expenditure claimed in the earlier years and following the same parity of reasoning, we hold that the annual maintenance charges of ₹ 24,37,500/- paid to L&T Infotech Ltd. is to be allowed as a revenue expenditure.
Expenditure incurred on technical know-how i.e. reimbursement of salary, etc. to John Deere India Pvt. Ltd. - The said disallowance was made in the hands of the assessee following the earlier years starting from assessment year 2001-02 - Held that:- From ratio laid down by the Tribunal in assessee’s own case from year to year, we find no merit in the ground of appeal Nos.3 and 4 raised by the Revenue and hold that the expenditure incurred on technical know-how i.e. reimbursement of salary payable to the John Deere India Pvt. Ltd. is an allowable expenditure
Allowability of deferred sales tax equalization liability confirmed.
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2015 (3) TMI 1335
Unexplained credit u/s 68 - CIT-A deleted the addition by admitting additional evidence at appellate stage - Held that:- As far as the issue of admission of additional evidences is concerned before us the assessee has filed only copies of the accounts and copies of the TDS certificate, which cannot be construed as evidences because for proving the loans u/s 68. Assessee is required to file confirmation as well as show credit worthiness of such parties therefore we decline to admit these papers as additional evidence because assessee is in the guise of these copies of accounts asking for more opportunity which is not permissible under the law. Therefore, application for admission of additional evidence is rejected.
In the light of the rejection of application for additional evidence the ground raised by the assessee required to be dismissed because assessee has miserably failed to prove the loans to the extent of ₹ 41,59,000/- because no confirmation or any evidence proving such transaction was furnished before AO or even before CIT(A) or even before us.
CIT(A) has discussed four items of loans in case of G.S.Bricks, New Bharat Shuttering Store, Pyare Lal Rajinder Kumar, Punjab Trading Co. from whom loans of ₹ 2 Lacs, ₹ 2 Lacs, ₹ 3 Lacs, and ₹ 3.50 lacs have respectively been taken. However the relief has been allowed to the extent of ₹ 20 lacs without any discussion in respect of the rest of the items amounting to ₹ 9,50,000/-. In the four cases, in our opinion the CIT has correctly accepted the loans because the amount comes through cheques and confirmation of PAN numbers were furnished.
However, since no discussion has been made in respect of other loans to the extent of ₹ 9,50,000/- therefore we set aside the order of Ld. CIT(A) in respect of the rest of the items amounting to ₹ 9,50,000/- and remit the matter back to his file with a direction to decide the issue after recording findings in respect of such items also - Appeal of the Revenue is partly allowed for statistical purposes.
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2015 (3) TMI 1334
Disallowance paid by the assessee to ITC Health Club and India Habitat Centre Health Club - Allowable business expenditure - Held that:- AR has canvassed that the assessee is a very eminent Doctor and he has taken the membership in order to visit the people who undergo cardio training/exercise at the health clubs and monitor their performance of heart functions in order to ascertain the necessity of cardio exercises for the wellness of heart and also to determine the correlation between the cardio exercise and its effect on the overall health of the people at these health clubs.
There is no documentary or any other evidence in support of such pleadings. Assessee’s plea is completely baseless and not convincing. Therefore, we are unable to agree with this contention of theAR. The membership taken by the assessee is purely for his personal benefit and it has nothing to do with the profession and business of the assessee. - Decided against assessee.
Disallowance of amount actually paid to event management services - amount was paid without deducting the TDS - Held that:- This amount for event management services was paid without deducting TDS. Assessee himself had given in writing that amount be offered for taxes. The assessee’s submission with regard to offering amount to taxes has in a way restricted Assessing Officer to make further inquiry on these expenses. In these factual matrix of this case, we find that the decision of ITAT, Special Bench in the case of Merilyn Shipping and Transporters vs. Addl. CIT [2012 (4) TMI 290 - ITAT VISAKHAPATNAM] is not applicable to the facts of the assessee’s case. Therefore, we find no merits on this issue in the assessee’s appeal and the same is accordingly rejected.
Disallowance u/s 14A r/w Rule 8D - Held that:- We find that the expenditure related to the earning of exempted income like STT and brokerage were shown in the withdrawals. The assessee is also having personal drawings of ₹ 27,97,024/- for the year under consideration. All these facts show that the assessee is not debiting the expenditure related to the exempted income in its Income& expenditure account and the revenue has failed to pinpoint any specific instance in this regard. Therefore, we allow this ground of assessee’s appeal.
Disallowance u/s 14A r/w Rule 8D - direct and proximate nexus between the exempted income and the expenditure claimed - Held that:- Revenue has failed to pinpoint any expenditure in the Income & expenditure account. Further, the assessee is incurring such expenses from his personal drawings. Accordingly, this ground of assessee’s appeal is allowed.
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2015 (3) TMI 1333
Receipt being rent of "Infrastructure Facilities" installed in the property Let Out - "Business Income" OR "Income from House Property" - whether receipts for providing certain facilities to its tenants can be called to be part of rental income of the assessee - Held that:- As perused the lease deed and infrastructure agreement executed on 1.9.2003 and other relevant documents we find that the assessee has claimed these receipts as income from house property in assessment year 2005-06 and the Assessing Officer has accepted the same.
Once the AO has treated these receipts as income from house property in assessment year 2005-06, we find no justification in treating the same receipts in succeeding year as business income - where the assessee has received certain charges for providing certain facilities along with rental income, the entire receipts shall be income from house property and not business income. We, therefore, find no merit in the order of the CIT(A) confirming the infrastructure receipts as business income of the assessee.
Disallowance of foreign travel expenses incurred towards the visit of the Director, Shri. U.S. Halwasia and his wife to Egypt and U.S.A - Held that:- We find force in the contention of the Revenue that if the assessee has undertaken the foreign travel to explore business opportunities, there must have been some correspondence exchanged between the assessee and its foreign clients/consultant/advisers, but nothing is placed on record. He has also placed reliance upon the aforesaid judgments, but on a careful perusal, we find that in those judgments, it has been held that onus is upon the assessee to prove that foreign visits were undertaken for the business purpose. No doubt, assessee can undertake foreign travel to explore business opportunities, but the onus is entirely upon the assessee to establish, by placing some documentary evidence, that the foreign travel was undertaken for the business purpose. In the absence of any documentary evidence, we are unable to accept the contention of the assessee that the foreign travel was undertaken to explore the business opportunities. We, therefore, find no infirmity in the order of the CIT(A) on this issue and we accordingly confirm the same.
Disallowance of the educational expenses incurred in connection with sponsorship of the educational expenses of Shri. Mukund Halwasiya, Director for his studies abroad for professional course in Accounts and Finance - Held that:- Tribunal in the assessee's own case for assessment year 2005-06 with the submission that the impugned issue was raised before the Tribunal and the Tribunal has decided the issue in favour of the assessee by holding that the expenditure was incurred for business purposes. Copy of the order of the Tribunal is placed on record. Since the impugned issue has already been adjudicated by the Tribunal in assessment year 2005-06 and the claim of expenditure incurred on education of Shri. Mukund Halwasiya was allowed, we find no reason to disallow the claim in the impugned assessment year. We, therefore, following the order of the Tribunal for assessment year 2005-06, allow the claim of the assessee after setting aside the order of the ld. CIT(A) in this regard.
Disallowance of business promotion - held that:- Disallowance was made on ad hoc basis. It has been repeatedly held by various judicial forums that if the Assessing Officer is not satisfied with the maintenance of the books of account, he may dispute the particular entry and make disallowance, but disallowance on ad hoc basis should be avoided. In the instant case, nothing is borne out from the orders of the lower authorities as to whether the AO has raised any query in respect of a particular entry. He has simply made ad hoc disallowance, which is not permissible under the law. We accordingly set aside the order of the ld. CIT(A) and delete the addition in this regard.
Disallowance under section 14A - Held that:- We are of the view that no disallowance under section 14A of the Act can be made on account of this investment made for allotment of shares under section 14A of the Act. Moreover, provisions of sub-section (1) and (2) of section 14A were introduced by the Finance Act, 2006 w.e.f. 1.4.2007 relevant to the assessment year 2007-08. Therefore, these provisions cannot be invoked for making disallowance under section 14A of the Act.
As carefully examined the provisions of rule 8D and we find that this rule was introduced w.e.f. 24.3.2008, and the relevant assessment year would be 2008-09. Therefore, computation of disallowance under rule 8D is not called for in the impugned assessment year i.e. assessment year 2006-07. CIT(A) has not examined the issue of investment in shares and mutual funds at ₹ 19,91,741/-, but in any case for making disallowance, sub-sections (1) & (2) of section 14A cannot be invoked in the impugned assessment year i.e. assessment year 2006-07, as it was introduced w.e.f. 1.4.2007 by the Finance Act, 2006. Therefore, we are of the considered view that no disallowance under section 14A is called for for investment in shares and mutual funds and advances given to M/s G.R. Maintenance & Services Pvt. Ltd. for allotment of shares. We accordingly set aside the order of the CIT(A) in this regard and delete the addition.
Disallowance u/r 8D - Held that:- AO as per rule 8D of the rules and we find that the Assessing Officer has treated the investment out of mixed funds and he has computed the disallowance by applying the formula given in rule sub-rule (2) clause (3) of rule 8D of the rules; whereas no disallowance can be made where it is established that the investment in shares are made out of own funds available with the assessee. In the instant case, it has been established that the investment in shares were made by the assessee out of own funds available with it. Therefore, no disallowance can be made on account of expenditure incurred by way of interest during the previous year. Whatever disallowances are to be made that can only be made as per clause (3) of sub-rule(2) of rule 8D of the rules. We, therefore, set aside the order of the ld. CIT(A) and direct the Assessing Officer to re-compute the disallowance as per clause (3) of sub-rule(2) of rule 8D of the rules.
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2015 (3) TMI 1331
Deduction claimed u/s 10B denied - claim disallowed by the AO by holding that Prajna (India) was formed by a splitting up of the business of M/s. Dynamech - rectification petition - Held that:- As already held that for splitting up to be effective, transfer of assets needs must be there from the old unit, to the new unit, which is entirely absent here. Then, the facts of the present case are not in pari materia with those of ‘Chenab Information Technologies (P) Ltd.’ [2008 (8) TMI 597 - ITAT MUMBAI] in as much as it has been observed therein that the new unit carried on the existing business of the old unit, using the same employees.
Herein, as noted, the employees of M/s. Dynamech have not been proved to have carried on the business of Prajna (India). In ‘Chenab Information Techonologies (P) Ltd.’ (supra), some of the existing staff was found to have been shifted to the new office in the same area taken on lease by making a small investment of about ₹ 2 lakhs in furniture and equipment. These, evidently, are not the facts of the present assessee. In ‘Chenab Information Technologies (P) Ltd.’ (supra) itself, it has been observed that each case has to be evaluated on its own facts to determine whether it is a case of splitting up of existing business or not. In assessee’s case, as discussed, the facts do not lead to a conclusion of Prajana (India) having been formed by a splitting up of the business of M/s. Dynamech.
To sum up, we hold that:
a) The Tribunal rightly recalled its order dated 31.08.2009 in its entirety, for hearing afresh and no prejudice was caused to any interest of the Revenue thereby.
b) The ld. CIT(A) went wrong in holding it to be a case of transfer of capital from the existing business to the new one.
c) The ld. CIT(A) has erred in holding that orders for manufacture were shifted from the existing business to the new one.
d) The ld. CIT(A) has fallen into error in holding that there was a unity of control in the two businesses.
e) The ld. CIT(A) has wrongly held that there was a shifting of staff from the existing unit to the one newly set up.
f) The ld. CIT(A) has erroneously held that tax evasion was the sole reason for setting up the new unit.
f) The ld. CIT(A) has, on the basis of the above misplaced findings, incorrectly held it to be a case of splitting up of existing business.
Thus we hold that the ld. CIT(A) has misdirected himself in sustaining the disallowance of deduction claimed by the assessee u/s 10B of the Act. - Decided in favour of assessee.
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2015 (3) TMI 1330
Exemption u/s 80P denied - income byway of interest generated on the deposits made in National Saving Certificates and Kisan Vikas Patras cannot be treated as income forming part of the banking business and as such the same is not exempted under Section 80P( 2)(a)(i) - Held that:- The Division Bench of this Court in the case of CIT vs. Ratnagiri Dist. Central Cooperative Bank Ltd. [2001 (9) TMI 60 - BOMBAY HIGH COURT] considered income by way of interest derived by assessee formed part of banking business and therefore entitled for exemption under Section 80P(2)(a)(i).
The Judgment of the Apex Court in a case of Madhya Pradesh Cooperative Bank Ltd. vs. Additional C.I.T., referred [1996 (1) TMI 8 - SUPREME COURT] relied on by the Appellant has been overruled in the subsequent Judgment in the case of Commissioner of Income Tax vs. Karnataka State Cooperative Apex Bank [2001 (8) TMI 9 - SUPREME COURT]. In the said case, the Apex Court came to the conclusion that interest income arising from investment made out of reserve fund is exempted under Section 80P( 2) (a)(i) of the Income Tax Act. Tribunal has rightly considered that the said deposit is concerned with the banking business and as such the assessee is entitled for exemption under Section 80P(2)(a)(i) - Decided against revenue.
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2015 (3) TMI 1329
Revision u/s 263 - reassessment passed under Section 148 - Change of registered office - sufficient cause from attending the hearing - Held that:- The petitioner company changed its registered office upon due intimation to the assessing officer and by filing the relevant Form 18 under the Companies Act, 1956, but the notice issued by the Commissioner was at the old address.
Since it is evident that the petitioning assessee was prevented by sufficient cause from attending the hearing or otherwise participating in the proceedings under Section 263 of the Act, it is desirable that the order impugned dated March 21, 2014, which the petitioners have received on February 6, 2015, be set aside with a direction on the relevant Commissioner to issue a notice to the petitioners at the petitioner company’s present address at Room No.865, 8th Floor, 33/1, Netaji Subhas Road, Kolkata-700001.
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2015 (3) TMI 1324
Nature of expenditure - capital expenditure or revenue expenditure - amortization of premium paid for acquisition of securities categorized as Held to Maturity (HTM) - Held that:- The issue arising in the present appeal is identical to the issue decided in the case of Pune District Central Cooperative Bank Ltd. (2015 (4) TMI 662 - ITAT PUNE) and in the case of HDFC Bank Ltd. (2014 (8) TMI 119 - BOMBAY HIGH COURT), and following the same parity of reasoning, we hold that the assessee is entitled to the deduction being the premium on Amortization of Securities. We hereby affirm the action of CIT(A) in deleting the disallowance representing amortization of premium paid on Government Securities under the HTM category. - decided against revenue
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2015 (3) TMI 1320
Payment made on account of corporate services - ALP determining - Held that:- How assessee has received the financial services which have led to the benefits to the assessee to the tune of ₹ 8.88 crores. Therefore, we set aside the order of Assessing Officer and direct him to re-compute the amount of adjustment by reducing 50% of ₹ 8.88 crores from the total Corporate service charges i.e. ₹ 7,99,31,741/- minus ₹ 4.44 crores (i.e. 50% of ₹ 8.88 crores) i.e. (Rs. 7,99,31,741 – ₹ 4,44,00,000) = ₹ 3,55,31,741/-. The Assessing Officer may also examine the amount of benefit calculated by the assessee and verify the amount if the conclusion is different, the Assessing Officer may decide the issue accordingly. Otherwise adjustment shall be made for ₹ 3,55,31,741/-.
Payment of commission to the non resident parties to the file of Assessing Officer for reexamination in terms of direction contained in the order of Tribunal for assessment year 2006-07. Therefore, this aspect is allowed for statistical purposes.
Disallowance u/s 14A - Held that:- If there is no exempt income then provisions of section 14A cannot be invoked. Therefore, in our opinion, if there was no income during the year then no disallowance is called for. Since in the case before us investment itself has been written off, therefore, there could not be any income. Accordingly we delete this addition.
Disallowance of proportionate interest in terms of provisions of section 36(1)(iii) - Held that:- No particular loan has been taken for the asset which has been shown under the head ‘capital work in progress’ then disallowance could not have been made. However, each loan and its utilization requires fresh examination, therefore, we remand this issue to the file of Assessing Officer with a direction to ascertain details of various loans and how they were fully utilized and then only decide the issue in accordance with law.
TDS u/s 194H - non deduction of tds - Held that:- It is not clear from the records whether these amount pertains to bank charges because Schedule 20 simply shows financial charges, therefore, we remit this matter back to the file of Assessing Officer with a direction to verify whether assessee has paid bank charges to different banks, then no disallowance is required to be made otherwise the issue may be decided in accordance with the law.
Ex. gratia paid for earlier years u/s 43B read with section 36(1)(ii) - Held that:- Ex.gratia payment made to employees which consists of bonus payment over and above the Bonus Act should be allowed as business expenditure. Therefore, if sum of the ex.gratia payment was payable for that year, the same was required to be allowed on accrual basis as part of the business expenditure. Since this aspect has not been examined by the Assessing Officer, therefore, we set aside his order and remand the matter back to his file for reexamination of the computation of the ex.gratia payment and if some of the ex.gratia payment pertains to the assessment before us i.e. Assessment year 2009-10, then the same should be allowed on accrual basis as business expenditure otherwise the issue may be decided in accordance with law.
Taxable income on account of provisions written back - Held that:- No details are available in assessment order. We have also gone through paper book but do not find any detail therein, therefore, in the interest of justice we set aside the order of Assessing Officer and remit the same back to his file to examine whether any claim of expenditure was allowed in the earlier years when this provision was created. If no such expenses was allowed then writing back of the provisions cannot be treated as income, However, if such expenditure was allowed in the earlier years then the same is required to be added in the income. Therefore, he should decide the issue after examining these facts.
Penalty on custom duty - Held that:- Firstly the amount is ₹ 0.2 million i.e ₹ 2 lakhs and not ₹ 20 lakhs. Secondly, a contingent liability represents a liability which may arise or not arise on happening of a particular event and it is not the actual liability. Therefore, it cannot be said that assessee has claimed this amount as expenditure. Accordingly the amount mentioned under the head ‘contingent liability’ cannot be disallowed, therefore, we set aside the order of Assessing Officer and delete this addition.
Revenue expenditure - payment of royalty - Held that:- We set aside the order the Assessing Officer and hold that expenditure incurred for payment of royalty is allowable and therefore, delete the addition.
Disallowance on account of training expenses - Held that:- In any case when separate disallowance has been made for ₹ 14,82,137/- on account of training expenses this would amount to double disallowance. Therefore, in the interest of justice we set aside the order of Assessing Officer and remit the same back to his file for re-examination of the issue and, the same should be decided after considering the contention of double disallowance on account of training expenses as well as after verification of the supporting bills filed before the DRP.
Bad debt which are clearly allowable, by writing off such amounts because simply an amount has been shown as discount the same cannot be disallowed. Therefore, we set aside the order of Assessing Officer and delete this addition.
TDS u/s 195 - reimbursement of expenses incurred on the training of a particular employee abroad - Held that:- Merely reimbursement of expenses incurred on the training of a particular employee abroad cannot be termed as fee for technical services. Even if, assuming for the argument sake that this would amount to fee for technical services, then it is to be seen that such service was rendered in India, which has not happened. Therefore, in our opinion this amount of reimbursement of expenses does not attract provisions of section 195 and tax was not deductible. Accordingly we set aside the order of Assessing Officer and delete this addition.
MAT computation - provision for wealth tax and provision for FBT - Held that:- Wealth Tax is not enumerated in the provision to section 115JB, therefore, the same cannot be added to the book profits. This position was also confirmed by the Hon'ble Bombay High Court in the case of CIT v Echjay Forgings Pvt. Ltd [2001 (2) TMI 56 - BOMBAY HIGH COURT]. In our opinion, the same logic would apply in case of FBT. Therefore, we set aside the order of Assessing Officer and direct him to reduce the provision for wealth tax and provision for FBT from the book profit.
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2015 (3) TMI 1319
Non maintaining books of accounts - AO estimating the income of the assessee by applying net profit rate in the assessment order passed u/s 143(3) without invoking the provisions of s. 145(3)- best judgment assessment under s. 143(3) without invoking the provisions of s. 145(3) of the Act instead of making assessment under s. 144 - Held that:- The assessee has not complied with the two situations mentioned in s. 144 the assessee has not complied with the provisions of s. 142(1) where the assessee has failed to produce accounts, documents, information and statement of assets and liabilities. Secondly, having made a return filed and fails to comply with all the terms of a notice issued under s. 143(2) and moreover, as per proviso to s. 144, no show-cause notice for making ex parte assessment under s. 144 has been issued to the assessee.
AO was required to make best judgment assessment under s. 144 of the Act, which in fact, has not been made. AO proceeded to make assessment under s. 143(3) of the Act on the premise that the assessee has submitted some details and explanations called for which in fact have not been furnished is a matter of record. Such assessment made under s. 143(3) is liable to be quashed. We accordingly, direct the AO to quash the assessment so made by the AO.
Even if the assessment has been made under s. 143(3) or in a manner provided under s. 144 of the Act, the AO should have invoked the provisions of s. 145(3) of the Act, which has not been done. In the facts and circumstances of the case also, the assessment made by the AO is bad in law and is directed to be quashed. - Decided against revenue
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2015 (3) TMI 1318
Rate of estimation of income in the hands of the firm - estimation of income at 8% - allowance of deduction towards interest and remuneration paid to partners u/s.40(b) - Held that:- As seen from assessee's P&L A/c assessee's sales stood at ₹ 2.71 Crores, whereas its closing stock was at ₹ 2.88 Crores. Construction cost during the year is about ₹ 3.81 Crores. This indicate that the project has not yet been completed or partly completed. However, as seen from the P&L A/c placed on record which was basis for the Assessing Officer to make disallowances, assessee has earned gross profit at 15% and Net Profit 5.4%. Assessee has major liability in the form of interest on term loans for reduction in profit from 15% gross to 5% net. Keeping these factors and also the fact that assessee paid ₹ 14,51,871/- as interest on the term loans, apart from other expenditure to indicate that estimation by the CIT(A) at 8% on the gross receipts is reasonable. Revenue has not brought on record anything to counter how this estimation is less on the given set of facts. In view of this, we uphold the estimation at 8%.
Statutory allowance of deduction u/s.40(b)- Allowance of interest on partners' capitals and partners' remunerations - Held that:- All firms are uniformly assessable as firms only and there is no difference in tax rates. The profit derived from the partnership firm is exempt in the assessment of the partners as the same is being taxed at normal rates in the assessment of the partnership firm itself. Only salary or interest paid to the partners is subject to tax in the assessment of the partners as the same is excluded from the assessment of the partnership firm. Provisions of Section 40(b) allows interest paid to partners and remuneration paid to the partners as an allowable deduction, subject to certain conditions mentioned in Section 40(b) of the Act. Therefore, there is a change in the provisions itself from a disallowance provisions to allowance provisions subject to restrictions. Thus, w.e.f. 1993-94, Section 40(b) is enabling a deduction towards interest and remuneration paid to the partners by way of statutory deduction. Therefore, jurisdictional High Court judgment given for AY.1981-82 in the context of the provisions then existing is no longer applicable to the revised assessment procedure. This same view was held by various co-ordinate Benches - Decided against revenue
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2015 (3) TMI 1314
Exemption under section 11 denied - non adherence to provisions of Bombay Public Trust Act - Held that:- On perusal of the orders of both the tax authorities, we notice that the CIT(A) has given a specific finding that the assessee has not violated any of the provisions of Bombay Public Trust Act and the AO has not pointed out that the assessee has violated the conditions prescribed in sec. 13 of the Income Tax Act. Under these set of facts, we do not find any reason to interfere with the decision of the ld. CIT(A). - Decided in favour of assessee.
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2015 (3) TMI 1313
Transfer of case u/s 127 - Whether jurisdiction of the Bench of the Income Tax Appellate Tribunal had to be determined by the place of business or residence of the assessee? - Held that:- In the present case, the office of the Assessing Officer is situate at Jhunjhunu, and thus, the Jaipur Bench of the Income Tax Appellate Tribunal had the jurisdiction to decide the Appeal. The orders of the Assessing Authority and Appellate orders have merged in the order of the Income Tax Appellate Tribunal at Jaipur, and thus the Jaipur Bench of Rajasthan High Court has the jurisdiction to entertain and decide the Appeal under Section 260A of the Act.
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2015 (3) TMI 1310
Income from transaction of shares - capital gain or business income - Period of holding of shares - CIT-A treated it as income from capital gain - Held that:- We find that Ld. CIT(A) has exhaustively and extensively dealt with the issue and after verification of facts and circumstances, has arrived at the conclusion about the head of income under which the income needed to be assessed. From the facts, we find that assessee had classified the shares in its balance sheet as investment. The holding period for a number of scripts exceeds 365 days. The shares were not purchased but were contributed by partners as their part of capital. In view of the above facts and circumstances, we do not find any infirmity in the order of Ld. CIT(A) and therefore, appeal filed by Revenue is dismissed.
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2015 (3) TMI 1309
Disallowance of notional interest on advances/share application money on the ground that the said advance was for acquiring shares - Held that:- Authorized Representative for the assessee has raised a new plea that factually, there was no nexus between the borrowed funds and the advances made to the said parties. In support thereof, the assessee has furnished by way of additional evidence the bank statement showing working of bank account on the relevant dates of advances. The said evidences filed by the assessee are by way of additional evidence. However, since the additional evidence goes to the root of the issue, we admit the same and restore the issue back to the file of CIT(A) to adjudicate the issue after verifying the documents furnished by the assessee by way of additional evidences. We remit the issue back to the file of CIT(A), who shall decide the issue after affording reasonable opportunity of hearing to the assessee. The grounds of appeal raised by the assessee are thus, allowed for statistical purposes.
Addition of Creditors - Held that:- The assessee had also furnished confirmations from the said parties and has also furnished the Ledger accounts of the previous years, which reflect business transactions with the said parties. However, the said ground of appeal was not pressed before the CIT(A) and hence, the same was dismissed as not pressed. The plea of the learned Authorized Representative for the assessee before us was that by some confusion, the said ground of appeal was not pressed before the CIT(A).However, creditors were genuine and verifiable. With regard to some of creditors, the assessee explained that payments were made in the subsequent years, for which the bank certificates have been furnished by way of additional evidences. In respect of the other creditors, it was pointed out that the addition is not warranted since the credit balance is the opening balance as on 01.04.2008 and no transaction has been transacted during the year. However, no such plea was raised before the authorities below. Thus we deem it fit to restore the issue to the file of CIT(A) and direct the CIT(A) to adjudicate the same after verifying the contention of the assessee and to decide the issue in accordance with the law, after affording reasonable opportunity of hearing to the assessee. The additional ground of appeal raised by the assessee is thus, allowed for statistical purposes.
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2015 (3) TMI 1307
Deemed rental income - Increasing the rents of protected tenants - Held that:- Assessing Officer had committed an error in considering the amount of money deposited, in court, by Bank of Punjab in the subsequent assessment years as rent due to the assessee instead of compensation/occupation charges, which is directed by the court to be paid by party (in this case Bank of Punjab) against whom eviction order had been passed, which is in direct contradiction of the Assessing Officer's own finding in Page-2 of the Assessment Order, wherein the Assessing Officer has admitted that in July,2003, Bank of Punjab was directed to pay compensation of ₹ 1,42,000/- per month by Delhi High Court.
This amount (deposited by Bank of Punjab) which the Assessing Officer treats as rental income is in reality compensation for wrongful possession which was deposited only in the subsequent assessment years by Bank of Punjab, and was received by the assessee only in A.Y.2007-2008, and A.Y.2008-09. There is wrong presumption by the Assessing Officer that Bank of Punjab and not Hem Kunt Chemicals was the assessee’s tenant without appreciating that as per Sec. 16(a) and (b) of the Delhi Rent Act no tenant without the previous consent in writing of the land lord has the right to sublet or assign the premises occupied by him. Once eviction orders are passed the relationship of land lord/tenant comes to an end. Thereafter, the land lord can be awarded only compensation by the Court till possession is handed back to the land lord by the tenant. Thus, there was a gross error in the assessment order in increasing the rents of all the Appellant's remaining 39 protected tenants (being ₹ 23,769/- per Month paid to the Appellant by its lawful/ protected tenants) by 19000% i.e. to ₹ 50, 72,233/ - Per Month because these lawful tenants are 'protected tenants' who enjoy protection under the Delhi Rent Control Act,1958. Sec 6A of the Delhi Rent Act 1958 has restricted the power of land lords (i.e. the appellant herein) to increase rents beyond 10% and that too only after every 3 years.
Section 105 and 107 of the transfer of Transfer of Property Act does not confer any right on any Civil Court to fix the rent of any premises, which is a matter between the Lessor and the Lessee subject to provisions of the Rent Act. The Appellant is expressly barred from receiving any consideration for creation of a sub-tenant or the tenants as per see 16(4) of the Delhi Rent Act. - Decided against revenue
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2015 (3) TMI 1306
Addition of difference in stock statement furnished to bank and the one shown in the books of accounts - Held that:- As decided in CIT-IV, Hyderabad vs. M/s. Sri Taraka Jewellers [2013 (7) TMI 1091 - ANDHRA PRADESH HIGH COURT] there cannot be an addition of difference in stock statement furnished to bank and the one shown in the books of accounts.
As during survey, nothing is found or brought on record to show that on physical verification, the stock found was in excess of the stock recorded in the books of account. It was explained by the assessee that the stock statement furnished to the bank was on estimate basis but the stock shown in the assessment proceedings was based on actual physical verification. As such, there was no reason to reject the books of account of the assessee and no addition is called for solely on account of the difference in value of the stock submitted to the bank and the value of the stock shown in the accounts presented for assessment - Decided against revenue.
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