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Income Tax - Case Laws
Showing 21 to 40 of 643 Records
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2015 (4) TMI 1329
Special audit u/s 142 (2A) - Eligible reason for coming to the conclusion that it was necessary in the interest of revenue to direct special audit - HELD THAT:- If cause is shown then there must be some reasons in the order directing special audit which may disclose application of mind to the explanation furnished. Reasons must be disclosed as to why it is appropriate in the facts of the case to direct special audit in exercise of power under Section 142 (2A) of the Income Tax Act.
The conclusion drawn by us hereinabove is supported by a Division Bench judgment of the High Court in the case of A.T.S. Infrastructures Ltd. [2013 (6) TMI 276 - ALLAHABAD HIGH COURT]. Reasons are hard beats of the order and in absence of reasons the order become life less. We have examined the order impugned and we found that it is not supported by cogent reasons that have been non consideration of the explanation submitted by the assessee.
For the said reasons only the order impugned passed by the Assistant Commissioner along with approval order of the Commissioner dated 29th December, 2008 cannot be legally sustained and are hereby quashed.
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2015 (4) TMI 1325
Deduction u/s 80IB(10) - Disallowance of claim as assessee was acting as a contractor for the owner of the plots of land, on the ground that, the sale deed for land was executed in favour of the purchaser of the plots, and purchaser of the plots have entered into construction contract for construction of units - HELD THAT:- Tribunal in the case of Narayan Reality Ltd. [2014 (5) TMI 221 - ITAT AHMEDABAD] wherein the Tribunal has held that no disallowance can be made for deduction under section 80IB(10) by treating the assessee as a contractor and not developer.
We, therefore, following the above decision of the Tribunal, set aside the order of the CIT(A) and delete the disallowance of claim of deduction under section 80IB(10) of the Act. Thus, this ground of appeal of the assessee is allowed.
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2015 (4) TMI 1324
TP Adjustment - Comparable selection - assessee had sought inclusion of the two companies as comparables before the CIT(A) of Ace Software Exports Ltd.and Cressanda Solutions Ltd. - HELD THAT:- The annual report of these two companies were also furnished by the assessee before the CIT(Appeals). A write up giving business description of the above two comparable companies which was filed by the Assessee before CIT(A).
In the impugned order of the CIT(Appeals), the above submissions were not considered by the CIT(Appeals) at all. We are therefore of the view that it would be just and appropriate to direct the TPO/AO to consider the comparability of these two companies.
Higher rate of depreciation of comparable companies - the limited request of assessee is to allow proper adjustments on account of rates of depreciation adopted by the comparable companies - HELD THAT:- In our view, the request of the assessee is proper and deserves to be accepted in the light of the decision of the Pune Bench cited by the ld. counsel for the assessee supra. We accordingly direct the TPO to allow appropriate adjustments while working out the margins of the assessee as well as comparable cases.
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2015 (4) TMI 1323
Revision u/s 263 by CIT - CIT directed the AO to withdraw deduction allowed u/s 80IB - CIT held that because of non filing of audit report the assessee was not entitled to claim the deduction,that the AO had not considered the issue of non filing of report - order of the AO was erroneous and prejudicial to revenue - HELD THAT:- As basic issue as to how the order of the AO was erroneous and prejudicial to revenue has not been discussed by the CIT.It is also a fact,as stated earlier,that the issue of 80IB deduction was agitated by the assessee before the FAA.In these circumstances the CIT should not have issued notice 263 - CIT had totally ignored the fact that the AO had in earlier nine years allowed the claim made by the assessee.It is true that the rule of res judicata is not applicable to the income tax proceedings.
Rule of consistency demands that without bringing distinguishing fact of the year under appeal with the facts of earlier years an opposite stand to the stand of earlier years should not be taken.The only difference noted is that in the year under appeal the assessee had not filed Audit Report before the A)O.But,the report was made available to the CIT and for disallowing the claim allowed in the earlier years he should have pin pointed the reasons for refusing it as to how same was different from the reports of earlier years.
An issue deliberated upon by the FAA,partially or fully,is out of preview of proceedings to be initiated u/s.263 of the Act.In our opinion,the order of the CIT fails on touchstone of the merger doctrine and therefore is not valid.We hold that the assessees are required to file audit reports,but filing it before the CIT would not disentitle it from claiming the deduction.The purpose behind filing the report is that no fictitious claim is made and the activities of the assessees are certified by a professional. Deductions, including 80IB of the Act are considered to be benevolent provisions - Considering the purpose behind the legislation the Hon’ble Courts have held that if the report is submitted at the time of active consideration of the claim it has to be taken as sufficient compliance of the provisions of the Act. - Decided in favour of assessee.
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2015 (4) TMI 1322
Deduction u/s 80IB - manufacture or producing an article or thing - whether workers supplied by the contractor are also to be treated as workers employed by the assessee? - since the actual number of workers employed in the manufacturing process exceeded ten in number, the Tribunal was justified in holding that the condition of Section 80IB(2)(iv) have been fulfilled - HELD THAT:- SLP dismissed.
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2015 (4) TMI 1321
Depreciation on intangible assets - 25% depreciation on Non-compete fee - CIT-A allowed the appeal of the assessee - HELD THAT:- Similar issue was considered in the case of Pentasoft Technologies Ltd [2013 (11) TMI 1057 - MADRAS HIGH COURT] wherein it was held that assets like trademark, patents and other rights are similar in nature are intangible assets, which in terms of section 32(1) (ii) of the Act would be a capital assets entitled to depreciation. In view of the order of the jurisdictional High Court, we are inclined to confirm the order of the Commissioner of Income Tax (Appeals). - Decided against revenue.
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2015 (4) TMI 1319
Exemption under Section 10B - Exclusion of scrap sales from the total turnover - HELD THAT:- AO has taken the scrap sales as part of the total turnover. However, the same was not taken as an export turnover. This Tribunal has held that the total turnover and the export turnover shall be of the same figure. Therefore, once the scrap sales were not formed part of the total turnover, the same cannot form part of the export turnover also. Therefore, we do not find any infirmity in the order of the CIT(A).
In the result, the appeal of the Revenue stands dismissed.
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2015 (4) TMI 1318
Disallowance u/s.36(1) (ii) being commission paid to the Managing Director of the assessee company - HELD THAT:- As decided in TRUE VALUE HOMES (INDIA) PVT. LTD. [2013 (3) TMI 858 - ITAT CHENNAI] CIT(Appeals) concluded that section 36(1)(ii) is not applicable to the payment made by the assessee to its managing director. CIT(Appeals) further, relying on the decision of Gestener Duplicators(P) Ltd. [1978 (12) TMI 1 - SUPREME COURT] held that the commission paid to Shri Ravichandran, the managing director of the assessee-company, is part of the salary. The only thing is that the commission has been paid on the basis of the turnover; but still the payment was in the nature of salary for services rendered by Shri Ravichandran.
CIT(Appeals) also held that there is no force in the argument of the AO that no marketing efforts are necessary to sell the flats constructed by the assessee, as the assessee-company enjoys a very famous brand-name. CIT(Appeals) concluded that this finding is without any basis. As observed that even famous companies having valuable brand-names have to incur huge expenditure for marketing and there is no reason to hold that the assessee would get business without any marketing efforts.
Disallowance made by the AO was not justified and accordingly deleted the addition - Decided in favour of assessee.
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2015 (4) TMI 1316
Valuation of motor cars - HELD THAT:- As decided in own case we find that the Assessing Officer had valued the motor cars as per Rule 14(2)(a)(i) of Schedule-III of the Wealth Tax Act, 1957. That the Schedule-III of the Wealth Tax Act provides the rules for the valuation of the assets. The Assessing Officer has valued the assets as per rules prescribed under the Act for the valuation of assets. In view of the above, we find no merit in ground No.1, 1.1 & 1.2 of the assessee’s appeal. The same are rejected.
Non-allowance of deduction for the debt owed by the assessee in respect of taxable assets - AO did not accept the assessee’s claim on the ground that the assessee has not been able to prove that the debt was Incurred in relation to the motor cars - HELD THAT:- The assessee has referred to the balance sheet of the assessee as on the valuation date from which it is evident that the share capital and reserves and surplus taken together is ₹ 45.88 crores while the accumulative loss was ₹ 85.73 crores. Therefore, all the assets of the assessee company have been acquired out of the loan funds only. When the assessee has no funds of its own, then, in our opinion, the Assessing Officer was not justified in denying the deduction under Section 2(m) to the assessee
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2015 (4) TMI 1311
Disallowance of interest u/s 36(1)(iii) - HELD THAT:- As relying on own case [2013 (11) TMI 1599 - ITAT AHMEDABAD] While considering the claim u/s. 36(1)(iii) what is to be required to judge is whether the amount is borrowed for the purpose of business or not. Since the amount has been borrowed in earlier years as well as during the year at a stipulated rate of interest and which has been still utilized for the purpose of business, the interest rate could not have been re-negotiated for earlier year. Therefore, rate of interest, paid by the assessee is quite reasonable having regard to the fair market value of such services. Therefore, the CIT(A) was incorrect in restricting the interest payable to the extent of 15% or 14% which is supported by various decisions mentioned in the order in preceding paras. Since the interest rate paid by the assessee is reasonable, the order of the CIT(A) is reversed and addition is deleted. Thus, assessee’s appeals are allowed and Revenue’s appeals are dismissed on this ground.
Disallowance u/s.14A - HELD THAT:- As relying on own case [2013 (11) TMI 1599 - ITAT AHMEDABAD] Tribunal has decided the issue in favour of assessee by placing reliance on the order of Co-ordinate Bench in case of Chudgar Ranchodlal Jethalal [2015 (4) TMI 437 - ITAT AHMEDABAD] for the proposition that disallowance u/s. 14A r.w. Rule 8D though is mandatory from A.Y. 2008-09 under no circumstances, should exceed quantum of exempt income.
In view of above, Assessing Officer is directed to restrict the disallowance u/s. 14A r.w. Rule 8D should not exceed quantum of exempt income. As far as disallowance of administrative expenses is concerned, in absence of details of investments made during the year, number of transactions in those investments etc, this issue needs to be re-looked by Assessing Officer. So, in the interest of justice, we restore this issue to him with direction to decide in view of above discussion and in accordance with law after providing due opportunity of hearing to the assessee.
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2015 (4) TMI 1310
Computation of deduction u/s 10A - HELD THAT:- Regarding bank interest respectfully following the earlier decision of the Tribunal we hold that AO should grant netting benefit to the assessee as per decision of Hon’ble Supreme Court in the case of ACG Associated Capsules Pvt. Ltd [2012 (2) TMI 101 - SUPREME COURT]
Disallowance of job work charges - We direct the AO to redo the assessment by considering only the net receipt in respect of job work. The expenditure in this respect has to be worked out on the basis of either man hours put in the job work in comparison to the own manufacturing activity or on the basis of output ratio in the own manufacturing activity and job work. The assessee is directed to produce relevant details for allocation of the expenditure regarding job work activity. If it is not possible to work out the allowable expenditure on the above said basis then the AO should work out on some reasonable basis.
Disallowance on account of exchange difference - we find that the assessee is having two kinds of loan one is short term loan against export bills which is clear from the schedule of the balance sheet and other is term loan. Even in the schedule 4, the assessee has shown secured loan in foreign currency which is term loan and further the working capital loan under the category of pecking credit, post shipment foreign currency account. As far as the working capital loan is concerned the exchange gain on such loan should be allowed as business income and so far as the exchange gain on secured term loan which is not for working capital the same cannot be treated as business income for the purpose of section 10A. Accordingly we direct the AO to verify the exact details of the foreign exchange gain in respect of two kinds of loan and then allow the claim of the assessee with respect to the working capital loan
TP Adjustment - addition being interest calculated @ 18% on credit period to AE beyond 180 days on certain export invoices - whether Under transfer pricing regulation, export outstanding is not a transaction with AE and hence no addition is to be made? - HELD THAT:- To some extent there is a force in the contention of Ld. AR that if the assessee has to make payment of imports to same party then, receiving delayed export realization cannot be said to be bearing interest as assessee is already owing much more amount to its AE on account of import payments. Therefore, in the interest of justice, we consider it just and proper to restore this issue to the file of AO to examine and verify the facts and if on the dates when the impugned interest is computed in respect of export realization, the assessee is already having obligation to pay to its AE the amount regarding import made by it then, to that extent interest cannot be added as TP adjustment. We therefore, restore this matter to the file of AO with a direction to re-adjudicate this issue as per directions given above. For statistical purposes this ground is treated to be allowed.
Applicability of MAT provisions - HELD THAT:- This issue is covered in favour of the assessee by the decision of Genesys International Corporation Ltd. [2012 (12) TMI 491 - ITAT MUMBAI] wherein it has been held that a unit located in SEZ is covered buy sub-s.(6) of s. 115JB irrespective of the fact that such unit is claiming deduction under s. 10A and, therefore, the book profit of the SEZ unit could not be included while computing book profit under s. 115JB for assessment year 2008-09, despite the fact that clause (f) of Expln. 1 to s. 115JB(2) has been amended to apply the provisions of MAT to units which are entitled to deduction under section 10A.
Following the aforementioned decision similar view was also taken by G. Jewelcraft Ltd. [2014 (11) TMI 980 - ITAT MUMBAI] It is seen that Ld. CIT(A) has followed aforementioned decision of Tribunal in the case of Genesis International (supra). Respectfully, following the decision of Co-ordinate Bench we decline to interfere in the relief granted by Ld. CIT(A) and the appeal filed by the Revenue is dismissed.
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2015 (4) TMI 1309
Condonation of delay in filling appeal before the CIT(A) - Levy of penalty u/s 272A(2)(k) - failure of the assessee in furnishing the e-statements to the TDS Officer - substantial delay in furnishing the e-statements to the TDS Officers - reasons given by the assessee for the said delay includes lack of knowledge about the internet, lack of internet infrastructure, and amended provisions which are come into force by Finance (No.2) Act 2004, lack of man power in the Government offices etc - HELD THAT:- We find the Ld. CIT(A) did not condone the delay in filing the appeals before him despite the known and familiar problems troubling the citizens in general and the present assessee in particular. The problems are plenty that relates to infrastructure, man power, priority of duties of the staff. Further, we find that the assessee has duly deducted the tax and credited the same to the Government Account in time. It is also noticed this is the first default by the assessee in these matters. Considering the factual matrix specific to the assessee, we are of the opinion, that as the first time default, we should direct the Ld. CIT(A) condone the delay and adjudicate the issue on merits after granting an opportunity of being heard to the assessee. Accordingly, all the issue raised in the appeals are set aside t the file of the Ld. CIT(A). - Appeal of Assessee is allowed for statistical purposes.
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2015 (4) TMI 1308
Levy of penalty u/s 272A(2)(k) - where assessee deducted income tax paid to contractors and the TDS so collected deposited in the account of Central Government in time? - default of the assessee is the late filing of quarterly returns electronically and the same is due to ignorance of technical knowledge, lack of interest infrastructure support at Ghazipur - It is the prayer of the assessee this is the first time default and seeks lenient approach and delayed the penalty levied by the AO and confirmed by the Ld. CIT(A) - HELD THAT:- On hearing, the Ld. DR for the revenue, we find that there is no dispute on the facts that it is the first time default and, otherwise the assessee is regular in furnishing the statements in the subsequent assessment years. This is known truth that there are infrastructural problems relating to Internet, man power etc. Electricity is not continuous available in the said locations.
We are of the opinion this is not a fit case levy of penalty in these two appeals. Accordingly, ground raised by the assessee in all these appeals are allowed.
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2015 (4) TMI 1306
Addition u/s 68 - genuineness of the transactions alleged to have been the basis for the credits claimed had not been proved - Admission of additional evidence - HELD THAT:- It is an established matter of record that in appellate proceedings before the CIT (A), the assessee had produced copies of the balance sheets, profit and loss statements and bank accounts pertaining to the concerned parties, i.e., M/s Alter Investments Pvt. Ltd.& M/s Illac Investments Pvt. Ltd. This was in addition to the extracts of its own ledger records to say that there was regularity in the transaction between those parties and consequently all these credits were through normal banking transactions. In these circumstances, we are of the opinion that the
CIT (A) could not have proceeded to adjudicate on the rights of the parties and return the findings that he did on the basis of the materials which existed. Whilst, the assessee may be within its rights in saying that additions under Section 68 were not sustainable, at least, the CIT (A) should have enquired into the materials placed on the record and should have duly considered them. In the light of the above findings, the impugned order of the ITAT and CIT (A) are set aside. Additional documents produced by the assessee are directed to be taken on the record and duly considered.
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2015 (4) TMI 1304
Penalty u/s 271(1)(c) - addition made on account of estimation of GP rate - Rejection of books of accounts - Amount treated as income in respect of which particulars have been concealed - HELD THAT:- As seen that out of total turnover of 31.22 crores, the export sales is at 31.20 crores. Thus, the major sales is by way of export only. In the quantum proceedings, the assessee has filed the entire quantitative details of purchases, in which no discrepancy has been found and entire purchases stood verified.
Also evident from the fact that the assessee has claimed rebate under the Central Excise, therefore, the said purchases have been verified by the excise department also. There is no discrepancy either in the quantity or in the value of sales made by the assessee - Addition has been made on the ground that there is steep fall in the gross profit rate as compared to the earlier years.
The assessee’s case was that, same was due to decrease in sales realization due to devaluation of foreign exchange along with increased in cost of production. The assessee’s explanation regarding fall in foreign exchange has been not been accepted completely on the ground that the average fall of US $ was not much. This cannot be reason for rejecting the assessee’s books and estimating the gross profit unless no discrepancy has been found either in the quantity in value of purchase and sales. Thus, mere estimation of gross profit at 10% which has been further reduced to 7%, cannot be the basis for levy of penalty for furnishing of inaccurate particulars - Decided against revenue.
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2015 (4) TMI 1302
Reopening of assessment - Unexplained cash - non disposal of objections raised by the assessee against the issuance of notice u/s 148 - HELD THAT:- In the instant case, it is not in dispute that the assessee filed his objections against the issuance of notice u/s 148 of the Act vide his letter dated 11.11.2009 which was received by the office of the Assessing Officer on 16.11.2009. AO passed the impugned re-assessment order on 20.11.2009, disposing off the objections to re-assessment proceedings of the assessee in the order itself.
Thus, these facts show that the objections raised by the assessee against the issuance of notice u/s 148 of the Act were not disposed off by the AO by passing a speaking order thereon and allowing reasonable time to the assessee after communicating the fate of the objections before proceeding with the re-assessment.
As relying on General Motors India P. Ltd. [2012 (8) TMI 714 - GUJARAT HIGH COURT] we are of the considered view that the impugned order of re-assessment passed by the Assessing Officer without disposing off the objections raised by the assessee against the issuance of notice u/s 148 by a separate order is liable to be quashed. We order accordingly. Thus, this ground of appeal of the Revenue is dismissed.
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2015 (4) TMI 1300
Stay petition - Requirement of depositing ₹ 50 crores as a condition for the stay - HELD THAT:- Application afresh and pass an order with regard to the condition for stay. To enable the Tribunal to do so, the impugned order is set aside. The stay application is restored and the same be listed before the Tribunal in the first instance on 01.05.2015. We make it clear that the revenue shall be permitted to make its stand clear with regard to the demand that is outstanding and they shall be entitled to raise their objections to oppose the grant of stay. WP allowed.
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2015 (4) TMI 1296
Disallowance of Mark to Market loss in trading of derivates - HELD THAT:- Respectfully following the decision of the Tribunal in the case of Edelweiss Capital Ltd. [2012 (10) TMI 223 - ITAT, MUMBAI] which view has further been followed by another co-ordinate Bench of this Tribunal in the case of Shri Ramesh Kumar Damani vs. The Addl. CIT. [2010 (11) TMI 851 - ITAT MUMBAI], it can be safely held that it is not only the actual stock but derivatives can also be held as stock in trade and the principle "cost or market price whichever is lower" has been rightly followed by the assessee in valuing the derivatives and further when the derivates are held as stock in trade then whatever rules apply to the stock in trade will have to apply to their valuation also.
While anticipated loss is taken into account while valuation of closing stock, anticipated profit in the shape of appreciated value of the closing stock is not brought into account, as not prudent trader would care to show increased profits before actual realization. Respectfully following the law laid down by the authorities as mentioned above, we hold that the assessee has rightly claimed mark- to-market loss which is liable to be allowed. The learned CIT(A) has rightly allowed the claim of the assessee, his order is hereby upheld. - Decided in favour of assessee.
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2015 (4) TMI 1293
Netting off interest received u/s 244A - Interest received on refund of taxes u/s 244A - taxable income as against an amount offered by the assessee which was after netting of the interest paid to the Department u/S 220(2) and 234B - HELD THAT:- As decided in case of Bank of America NT and SA [2014 (12) TMI 551 - BOMBAY HIGH COURT] The Assessee sought to set off the interest paid against the interest received and offered the net interest received to tax - in the case of the Assessee simply because the exercise carried out by it does not result in loss of revenue and there could not be any prohibition for the same, allowed it - assessee claimed that this was business expenditure and this should have been allowed - the Tribunal in permitting this exercise not violated any of the provisions of the Income Tax Act, 1961 - the Tribunal has followed the similar exercise in the case of very Assessee on the prior occasion as well – thus, as such no substantial question of law. - Decided in favour of the assessee
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2015 (4) TMI 1288
Exemption u/s 11 - DIT(E) not allowing registration u/s 12AA on ground that the assessee is not carrying on genuine activity of charitable nature and assessee’s activity will be benefited to members and not public at large - HELD THAT:- As noted by the Director of Income Tax (Exemptions), Ahmedabad, the object of the assessee was to encourage, protect, promote interest of manufacturers of the icecream and frozen dessert and to promote expansion of market for icecream and frozen dessert and to promote and improve quality and variety of ice-cream and frozen dessert and to take all such steps as may be considered expedient for that purpose including provision of legal, technical and other professional advice and assistance.
The object of the assessee was of general public utility and hence charitable in nature. Therefore, the following the decision of the Hon’ble Gujarat High Court in the case of Gujarat State Plastic Manufacturers’ Association [1998 (7) TMI 715 - GUJARAT HIGH COURT] we set aside the order of the Director of Incometax (Exemptions), Ahmedabad and direct him to grant registration to the assessee under section 12AA of the Act. Thus, this ground of the appeal of the assessee is allowed.
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