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Income Tax - Case Laws
Showing 21 to 40 of 758 Records
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2015 (8) TMI 1537
Revision u/s 263 by CIT - delayed contribution of employees contribution to P.F. - HELD THAT:- As contributions are not deposited as prescribed under the P.F. Act., but the payments are made before the due date of furnishing the return under section 139(1) as required by law under section 43B. Therefore, we are of the opinion that the case on hand is squarely covered by the decision of Essae Teraoka P. Ltd. [2014 (3) TMI 386 - KARNATAKA HIGH COURT] and also case of Imerys Ceramics (India) P. Ltd [2012 (7) TMI 699 - ITAT, HYDERABAD]Respectfully following the above decisions, we are of the opinion that the assessment order is not erroneous and prejudicial to the interests of the Revenue in so far as allowing of deduction of employees contribution to P.F. is concerned. Accordingly, we set aside the order passed by the Pr. CIT-II under section 263 and restore that of the Assessing Officer. Appeal of the assessee is allowed.
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2015 (8) TMI 1536
Enhancement by Ld. CIT(A) - no notice required u/s 251(2) was given by the Ld. CIT(A) to the assessee for enhancement - HELD THAT:- We find force in the submission of Ld. DR of the Revenue that in the present case, there is no enhancement by Ld. CIT(A) in respect of disallowance of interest and salaries paid to partners because the same was not allowed by the AO also and therefore, there was no requirement to issue notice u/s 251(2) of the Act by Ld. CIT(A). Therefore, Ground No.1 (a) of the assessee.
Allowability of deduction in respect of interest and salary paid by the assessee firm to its partners - HELD THAT:- As in the assessment order, it is observed by the AO that no bills/vouchers and books of account or any other supporting vouchers have been produced before him and therefore, he had no option but to estimate the income to the best of his judgment. He has invoked the provision of Section 144 of the Act although not specifically stated in the assessment order. As per sub section (5) of section 184, where there is on the part of firm any such failure as mentioned in section 144, the firm shall be assessed without allowing deduction of any payment of interest and salary etc. to any partner of the firm in computing the income chargeable under the head business income. Hence, in the facts of the present case, Section 184(5) of the Act is applicable and as a consequence, deduction on account of interest and salary payment to partners is not allowable. Hence, on this issue, we do not find any reason to interfere in the order of the Ld. CIT(A). Accordingly, Ground No. 1 and 2 are rejected.
Fresh capital introduced by the new partners who have joined the firm in the present case - HELD THAT:- CIT(A) also confirmed these additions on this basis that during the assessment proceedings or appellate proceedings, the assessee did not furnish their addresses PAN or their confirmation. In view of these facts that acknowledgement of filing income tax return/intimation in respect of four new partners out of six new partners is available in paper book, we feel it proper that this matter should go back to the file of the AO for fresh decision.
Credit of TDS - HELD THAT:- There is no mention in the assessment order for allowing lesser amount of credit for TDS. Hence, we feel that on this issue also, the matter should go back to the file of the AO for fresh decision.
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2015 (8) TMI 1534
Disallowance being the contribution made to employees’ superannuation fund - whether the contribution made by the assessee is allowable u/s 37? - HELD THAT:- In the case before the Madras High Court, Kattabomman Transport Corporation paid to the Government in order to enable the Government to credit the amount so paid to the Provident Fund Account of the Government employees who were at the point of time working in the Transport Corporation. The Government, after receipt of the amount from the Transport Corporation, credited to the Provident Fund Account of the concerned employees.
In those circumstances, the Madras High Court found that the payment is not in any way affected by sec. 36 of the Act. The payment so made is deductible under sec. 37 of the Act, being part of the business expenditure. In this case also, by virtue of operation of section 20 of Tamilnadu Maritime Board Act, the erstwhile Government employees of Tamilnadu Port Department became the employees of Tamilnadu Maritime Board. The Government clarified in the letter dated 21.11.1996 that the employees so allotted to the Tamilnadu Maritime Board will have the same tenure, remuneration, rights and privileges - if the claim could not be allowed u/s 36 of the Act, the same has to be allowed u/s 37.
Payment made by the assessee to the extent has to be treated as business expenditure in the hands of the assessee in view of the judgment of the Madras High Court in Kattabomman Transport Corporation Ltd.[1998 (9) TMI 2 - MADRAS HIGH COURT] - AO is directed to allow the claim of the assessee u/s 37. Appeal of the assessee stands allowed.
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2015 (8) TMI 1530
Bogus Payment of commission - HELD THAT:- As observed that the assessee has failed to discharge its burden cast upon it with regard to payment of commission as a genuine payment. Therefore, the order passed by the ld. CIT(A) was confirmed and the appeal filed by the assessee was dismissed. Further, the assessee has not pointed out any apparent mistake in the order passed by the Tribunal. Accordingly, the miscellaneous petition filed by the assessee stands dismissed.
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2015 (8) TMI 1519
Suppressed production - unaccounted sales - erratic consumption of electricity - goods clandestinely removed - GP rate determination - HELD THAT:- We find identical issue had come up before the Tribunal in the case of Bhagyalaxmi Steel Alloys Pvt. Ltd. Vs. Addl.CIT [2015 (11) TMI 14 - ITAT PUNE] where both of us are parties. We find the Tribunal considering the arguments advanced by both the sides deleted the addition made on account of erratic consumption of electricity and the alleged investment in the purchase for effecting such unaccounted sales. The appeal filed by the Revenue challenging the application of GP rate and allowance of expenses are also dismissed by the Tribunal.
Thus we hold that no addition can be made on account of erratic consumption of electricity and there is no alleged investment in the purchase for effecting such sales which goods have been clandestinely removed. In view of our deleting the addition in the hands of the assessee, the grounds of appeal raised by the Revenue, i.e. against application of GP rate and allowance of expenses are also dismissed. However, the AO is directed to include additional income in the hands of the assessee on account of clandestine removal of goods without payment of excise duty as admitted by the assessee before the DGCEI, Aurangabad. - Decided against revenue.
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2015 (8) TMI 1517
Levy of penalty u/s 271(1)(c) - Failure to prove opening capital - The assessee has offered this income during the course of assessment proceedings to buy mental peace and non-imposition of penalty. The assessee was given sufficient opportunity to explain the opening capital. Assessee has voluntarily admitted the income of undisclosed sources. - HELD THAT:- As per the provisions 2 to Explanation 1(B) now the entire onus is on the assessee to not only offer an explanation but also to substantiate it and to prove that the presumption was bona fide. At the same time the presumption so raised by the Explanation 1 is rebuttable. The effect is that unless and until rebuts the presumption, he would be liable to penalty u/s 271(1)(c) of the Income-tax Act, 1961. It is now established law that presumption would not stand rebutted merely by furnishing any general or fantastic or fanciful or unreasonable explanation by the assessee, the explanation should be based on cogent and relevant material and should be accepted to the authorities.
We find from the explanation of the assessee that the assessee has tried to explain the facts, but the assessee could not prove this amount before the AO. WE find that similar issue had come up before the Hon'ble A.P. High Court in the case of Chennupatti Tyres & Rubber Products [2014 (11) TMI 510 - ANDHRA PRADESH HIGH COURT], wherein the penalty was deleted.
The Hon'ble Andhra Pradesh High Court has discussed the decision of Mak Data Mak Data Private Limited vs. CIT, [2013 (11) TMI 14 - SUPREME COURT] and after considering the decision of Mak Data, deleted the penalty.
Penalty deleted - Decided in favor of assessee.
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2015 (8) TMI 1516
Disallowance u/s 14A read with Rule 8D - Suo moto disallowance made by assessee of PMS expenses - HELD THAT:- There is no dispute before me regarding Rule 8D(2)(ii). CIT(A), however while adjudicating the issue has held that the credit of PMS expenditure has been given under Rule 8D(2)(i) by the AO. His finding to this effect has already been quoted earlier in this order. In principle he has accepted the proposition of the assessee that credit of PMS expenses suomoto disallowed by the assessee should be given to him out of the disallowance computed under Rule 8D. It is a fact that for making investments, continuing with Portfolio Management, selecting portfolio manager and deciding about the amount of investments and period of investments involve decision making process at managerial level and therefore involve administrative costs. These all a part of overhead expenses which an assessee ought to incur for earning tax free income. A part of these activities are being taken care of by the Portfolio Manager, who take their fee inturn. In such circumstances, it cannot be denied that these are the expenses which have been perceived while drafting clause (iii) of Rule 8D. In such circumstances, the part of the expenses being in the nature of PMS expenses, which the assessee itself has disallowed, it is pertinent to give credit of the same to the assessee under the same clause.
Credit of suomoto disallowance made by assessee on account of PMS expenditure incurred by it is to be allowed to it. AO is directed to reduce the amount of PMS expenses from the disallowance computed by him under Rule 8D(2)(iii).
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2015 (8) TMI 1513
Short deduction of tds - TDS u/s 194C or 194I - payments made for hiring of JCB, Porkland, breaking and bucket machines etc. - CIT-A deleted the addition by holding hiring of the machines as works contract AND held that the assessee has rightly deducted tax at source u/s. 194C on the payments made - HELD THAT:- We find that the facts in the present case are similar to the issue decided by the Co-ordinate Bench in the case of Bharat Forge Ltd. Vs. Addl. CIT [2013 (11) TMI 1263 - ITAT PUNE]
We are of the considered view that the assessee has rightly deducted tax at source on the payments made for hiring of JCB, Porkland etc. u/s. 194C. The payments made for hiring machines are in nature of works contract and not ‘rent’ as defined in Explanation to section 194I - No infirmity in the findings of the Commissioner of Income Tax (Appeals). - Decided in favour of assessee.
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2015 (8) TMI 1512
Dismissal of appeal for non prosecution - HELD THAT:- These appeals were fixed for hearing before the Bench on 04.08.2015. At the time of hearing, none appeared on behalf of the assessee. The notices of hearing were issued by Registered AD on 23.07.2015, but there was no compliance on behalf of the assessee. Even no application seeking adjournment was filed. The laws aid those who are vigilant, not those who sleep upon their rights. This principle is embodied in well known dictum "VIGILANTIBUS ET NON DORMIENTIBUS JURA SUBVENIUN”.
Under these circumstances, assessee is not interested in prosecuting the appeals. As such hold that these appeals are liable to be dismissed for non prosecution.
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2015 (8) TMI 1511
Disallowance of expenses @ 20 % and G.P rate - Estimation of income - Difference in VAT account and cash discount - HELD THAT:- On certain issues, relief to some extent could have been granted to the assessee namely reduction of disallowance of expenses @ 20 % and G.P rate could have warranted an interference on facts. It is also seen that the assessee has also not helped its case by placing the relevant facts and submissions on record.
Since on a reading of the issues under challenge and how they have been canvassed before the CIT(A and considering the same have been more or less upheld even where a partial relief on facts on record could have been granted it leads to the conclusion that the order passed has been passed with the mindset that the claims necessarily had to be rejected.
The fact that the representation on the part of the assessee was also not complete and proper has already been taken note of as the evidences upon which reliance could have been placed and were evidences which the assessee ought to have in its possession has never been brought on record is also coming out from the orders. In view of these peculiar facts and circumstances considering the overall factual background in the interests of substantial justice the impugned order is set aside.
The issue is restored back to the file of the CIT(A granting liberty to the assessee to file fresh evidences, if any, in support of its claim. CIT(A), thereafter shall pass a speaking order in accordance with law. Needless to say that it is hoped that the opportunity so provided is not abused by the assessee and a proper compliance is made before the CIT(A). Appeal of the assessee is allowed for statistical purposes.
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2015 (8) TMI 1510
Addition on protective basis - amount was recovered from the common residence of the assessee and the locker in the joint name of the assessee and his wife - cash belonged to the assessee and was rightly added in the hands of the assessee on substantive basis - HELD THAT:- The assessee had not operated the said bank locker after 16th February, 2003 and till the date of search therefore, the cash found during the course of search in the said bank locker belonged to Smt. Vineeta Singh and not to the assessee.
CIT(A) was not justified in treating the cash of ₹ 5,20,000/- ( ₹ 2,20,000/- + ₹ 3,00,000/-) found during the course of search in the hands of the assessee particularly when his wife claimed that the said cash belonged to her. Accordingly, we delete the addition of ₹ 4,60,000/- which was directed by the ld. CIT(A) to be made in the hands of the assessee on substantive basis.
Another addition on account of amount found from locker no. 294 Syndicate Bank in the name of Smt. Vineeta Singh jointly with her domestic servant, the ld. CIT(A) although stated at page no. 40 of the impugned order that this cash of ₹ 16,33,000/- would be treated as belonging to Smt. Vineeta Singh as the assessee Shri Tribhuvan Singh is not party, however, inadvertently it has been mentioned that the addition to that extent can be made in the name of the assessee on substantive basis.
Addition can be made in the hands of the assessee on substantive basis is wrong particularly when the ld. CIT(A) himself accepted that the locker no. 294 Syndicate Bank was in the name of Smt. Vineeta Singh wife of the assessee jointly with her domestic servant and the assessee Shri Tribhuvan Singh was not party to that and the cash of ₹ 16,33000/- would be treated as belonging to Smt. Vineeta Singh.
The observation of the ld. CIT(A) that this amount should be treated in the hands of the assessee was wrong. Accordingly, we direct the AO to delete this addition also from the hands of the assessee. - Decided in favour of assessee.
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2015 (8) TMI 1509
Addition u/s 68 - unexplained cash credits - HELD THAT:- As concurrently held by both the CIT(A) as well as ITAT that the creditors in question were having running accounts with the Assessee and that the balance belonged to the earlier years. There was no fresh credit during the year in question. The Court finds no substantial question of law arises in the above facts as far as this issue is concerned.
Addition on account of notional interest on interest free loans/advances - HELD THAT:- ITAT has rightly observed that there is no provision for taxing notional income as explained by the Supreme Court in Excel Industries [2013 (10) TMI 324 - SUPREME COURT].
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2015 (8) TMI 1507
Eligibility of deduction u/s.10A - as per revenue assessee simply providing legal services to its clients and not doing any type of business mentioned in Section 10A - CIT-A allowed deduction - HELD THAT:- As decided in own case services rendered by the assessee falls under the definition of computer software and it was eligible for deduction u/s.10A of the Act. Nothing was brought by the Department to warrant a different view for the present assessment year. Assessee was carrying on the same business. We are therefore not inclined to interfere with the order of the CIT (A). - Decided against revenue.
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2015 (8) TMI 1506
TP Adjustment - Upward adjustment due to brand promotion expense attributable to the assessee's holding company - main grouse of the Revenue is that the appellant company being the user of the Holding Company's brand name and logo indirectly benefits the Holding Company. The appellant company instead of promoting its own brand has been promoting the brand logo of the Holding company - Whether Bright-Line-Test (BLT) is the only method to be adopted to arrive at the value of brand development expense receivable by the assessee company from its Holding Company with respect to the promotion of brand of the assessee's Holding Company? - HELD THAT:- As decided in LG. ELECTRONICS INDIA P. LTD. VERSUS ASSISTANT COMMISSIONER OF INCOME-TAX [2013 (6) TMI 217 - ITAT DELHI] we hereby direct the Ld. Assessing Officer to delete the ad hoc addition of 196 on sales which is treated as brand development fee by following the decision of the Tribunal cited supra. The aforesaid decisions of the Tribunal has also held that Bright Line Test would be the best method for determining developer of the intangible property, which the Ld. A.R. claimed that such test was made on the assessee by DRP; however no additions were made because on the computation of the same it was found not warranted. The same was also not controverted by the Ld. D.R. Therefore, we hereby restrain ourselves from remitting back the matter for the computation of bright line test. Thus, this issue is decided in favour of the assessee.
Addition on account of advertisement and sales promotion expenses which ought to have been receivable from the assessee's holding company u/s. 92B - TPO had held that the assessee had incurred advertisement expenses on behalf of the parent company and therefore, considered the same as international transaction invoking the section 92B - HELD THAT:- We hereby accept the concept of Bright Line Test (BUT) as held by our predecessors with respect to the concept of Bright Line Test for distinguishing between the routine and non-routine expenditure incurred on advertisement and brand promotion wherein advertisement and marketing promotion expenses to the extent incurred by uncontrolled comparable distributors is to be regarded within the "Bright Line Limit" of the routine expenses and the advertisement and market promotion expenses incurred by the distributors beyond such "Bright Line Unit" constituted non-routine expenditure resulting in creation of economic ownership in the form of marketing intangibles which belong to the owner of the brand. However, in this case even after computing the ALP by following the Bright Line Test the Ld. TPO has deleted the addition - Decided against assessee.
Disallowance being royalty paid by the assessee to its Holding Company - appellant company had entered into technical know-how agreement with its Holding Company for all the models of the cars manufactured by it - HELD THAT:- TPO has herself accepted the high-tech technology passed on to the assessee company by its Holding Company and also after detailed study of 35 licenses arrived at a conclusion that the royalty payment of 4.7% is prevalent in the automotive sector. Therefore from these circumstances, we do not find it appropriate on the part of the Revenue to make addition on account of ALP of royalty payment. Therefore, we hereby delete the addition made by the Ld. TPO following the directions of Ld. Members of the DRP.
Disallowance of depreciation on capital subsidy - HELD THAT:- We are of the opinion that the matter requires a categorical finding as to how the cash received as subsidy from SIPCOT has been utilized by the company in order to address merits of the case. Therefore, we hereby remit the issue back to the file of Ld. DRP in order to examine the complete facts.
Disallowance u/s. 14A - HELD THAT:- Details of investment made were not brought before us. But as pointed out by the assessee Rule 8D was introduced by the Income-tax Fifth Amendment Rules, 2008 with effect from 24.03.2008. Therefore, it would not be applicable to the case of the assessee for the assessment year 2007-08. Moreover under such circumstances, various judicial authorities have held that 296 to 5% of the dividend earned may be disallowed in order to justify the provisions of Section 14A of the Act. However, in the present case before us, the Ld. A.R. has claimed that the assessee had not received any dividend during the year, which has not been rebutted by the Ld. D.R. Therefore, we hereby hold that disallowance of Section 14A is not warranted.
Disallowance of expenditure towards 100 cars given to Police Department - Whether assessee had justified the action as fulfilment of obligation towards "Corporate Social Responsibility"? - difference of opinion between the Hon'ble the Accountant Member and the Judicial Member - HELD THAT:- The Hon'ble Vice President, sitting as the Third Member has agreed with the Hon'ble Judicial Member and has held that the expenditure incurred by the assessee was not incidental to carrying on the business and there is no commercial expediency in incurring this expenditure and therefore, the view of the learned Judicial Member is upheld. Therefore by the majority view, this ground raised by the assessee is dismissed.
Addition on account of export incentives accrued to the assessee on target plus scheme and focus market scheme - HELD THAT:- The export incentive towards target plus scheme is bestowed as a reward in order to encourage the accelerating growth in exports. The incentive on target plus scheme is also nothing but an entitlement for a duty credit based on incremental exports which should be substantially higher than the general annual export target that is fixed. The incentive on focus market scheme is to offset high freight cost and other externalities to select international market with a view to enhance India's export competitiveness in these countries. It is pertinent to note that the assessee will be entitled to such benefit only after verification of the claim of the assessee by the relevant Govt. authorities and issuance of the license by such Government authorities - As relying on EXCEL INDUSTRIES LTD. AND MAFATLAL INDUSTRIES P. LTD. [2013 (10) TMI 324 - SUPREME COURT] notional income computed by the assessee cannot be treated as taxable income of the assessee during the relevant to assessment year, however the same shall be taxed in the previous year in which the assessee has received the licenses and derived such income. Thus, this issue is also decided in favour of the assessee.
Disallowance of additional depreciation in respect of assets used in regional offices - as argued stating that as per provisions of Section 32(1)(iia) of the Act, the assessee will be entitled to the claim of additional depreciation since the assessee is engaged in the business of manufacture of production of any article or thing - HELD THAT:- The assessee is entitled to additional depreciation if it has satisfied the condition that it is engaged in the business of manufacture or production of any article or thing. There is no condition stipulated in the Act that additional depreciation shall be allowed only if the asset is deployed in the factory of the assessee and not the office of the assessee. Therefore, we accept the argument of the Ld. A.R. and reject the observations of the Revenue on this regard and accordingly direct the Ld. Assessing Officer to allow the claim of additional depreciation if the other conditions of the Act remains satisfied.
Non granting the credit for the tax deducted at source - HELD THAT:- In the interest of justice we remit this matter back to the file of the Ld. Assessing Officer for examining the relevant documents furnished by the assessee and pass appropriate speaking order as per merits and law after giving opportunity to the assessee of being heard. We further make it clear that the assessee is at liberty to produce before the Revenue any relevant documents supporting its claim.
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2015 (8) TMI 1505
Assessment u/s 153C - HELD THAT:- The assessee’s claim that no incriminating documents were found during the course of search and the proceedings u/s 153C of the Act are not factually correct. There are certain documents seized during the search which reflect certain receipts which are not reflecting in the books of accounts. Since there were incriminating documents which were seized during the search operation, the CIT(A) was justified in sustaining the issue of notice issued u/s 153C of the Act as legal and valid.
Addition on account of receipts of bank OCR (owners contribution receipt) - HELD THAT:- Issue needs verification at the level of the Assessing Officer wherein the cross-verification from the bank with regard to margin money is required to be established. The requirement of certification with respect to disbursement of loan needs verification. The investigation from the purchasers is necessary to know the correct facts. Considering all these aspects, we remand this issue to the file of the Assessing Officer for verification and then decide the issue.
Deduction u/s 80IB(10) - Approval of housing project - HELD THAT:- The assessee got the project sanctioned. The assessee got approved housing project on 17.6.2004 in its own name as colonizer. The project was completed in F.Y. 2007-08, as per the sanctioned plan from Municipal Corporation, Bhopal. None of the residential units was sanctioned for more than 1500 sq.ft. The assessee completed the project in the stipulated period of four years as per the approved plans. The assessee has developed and completed the infra-structure, approach road, water line sewerage line and electrification work as per the norms laid down by 28.1.2008. The possession letter was also issued to the customers on the completion of the residential units in all respect. These possession letters were signed by all the customers. The purchasers got permanent electricity connection from M.P. Electricity Board as customer. The permanent electricity connections are given only on the completion of the houses/flats. The persons who have purchased these units have paid property taxes to the Municipal Corporation, Bhopal. All these evidences show that the assessee has constructed and developed the project and completed well within time provided u/s 80IB(10
Visakhapatnam Bench of the ITAT in the case of M/s Vishnu Builders vs. ACIT [2011 (11) TMI 638 - ITAT VISAKHAPATNAM] observed that completion certificate was not filed before the Assessing Officer and the proof of municipal tax assessment of various flat owners establishing that the housing project was completed before September, 2008 was filed. Since there was no practice of issuing the project completion certificate, therefore, it was held that it was not a condition precedent of filing the completion certificate for allowing deduction u/s 80IB(10).
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2015 (8) TMI 1500
Eligible deduction u/s.10B - whether expenditure incurred in foreign exchange towards telecommunication expenditure and travel expenditure deducted from export turnover should also be deducted from total turnover for arriving at the eligible deduction ? - HELD THAT:- Issue is squarely covered by the decision of the Tribunal in the assessee’s own case [2011 (10) TMI 619 - ITAT CHENNAI] and case of ITO Vs. Sak soft Ltd. [2009 (3) TMI 243 - ITAT MADRAS-D] wherein it was held that such expenditure ought to be excluded both from export turnover as well as from the total turnover. Also see M/S. ALLSEC TECHNOLOGIES LTD. [2015 (9) TMI 219 - ITAT CHENNAI].
Loss on account of conversion of the amount outstanding in EEFC account in foreign currency to Indian currency - CIT held that the loss from EEFC account should be set off against the other business income or any other income of the assessee - HELD THAT:- No infirmity in the order of the Ld. CIT (A). Any loss incurred by the assessee has to be allowed to be set off against the same business income or against the other business income or any other income as per the provisions of the Act - Tribunal on the earlier occasion in the assessee’s own case has only decided the issue of granting deduction U/s.10B of the Act with respect to the gain derived from EEFC account which does not have direct nexus with the profits earned out of export by holding that such gains should be excluded for the purpose of deduction U/s.10B. This is only for the limited purpose of granting deduction U/s.10B - as per the provisions of the Act, any gain or loss incurred by the 10-B unit of the assessee, though not eligible for deduction while computing the income of the assessee, such gains or losses have to be considered in accordance with the normal provisions of the Act.
Direction of AO to re-compute the deduction U/s.10B of the Act for the earlier years - CIT (A) directing the AO to re-compute the profit of the business eligible for deduction U/s.10B for the earlier years by not increasing the profit due to disallowance U/s.40(a)(ia) - HELD THAT:- AO for the earlier years have incorrectly granted deduction U/s.10B of the Act i.e., even for the increase in profits due to disallowance U/s.40(a)(ia) - While granting deduction U/s.10B of the Act, the disallowance made U/s.40(a)(ia) cannot be taken into consideration for the purpose of granting the benefit of deduction because Section-10B is a provision with fiction and Section.40(a)(ia) is also a provision with fiction and a provision with fiction cannot be super imposed on another provision with fiction - CIT (A) has rightly directed the Ld. Assessing Officer to re-compute the deduction U/s.10B of the Act for the earlier years, however, subject to the period of limitation provided under the Act.
Invoking the provisions of Section-14A - AO observed in his order that the management recharge expenses and software expenses were also expenses related to earning of exempt income U/s.10B of the Act and therefore, cannot be allowed against the taxable income in view of the provisions of section 14A - CIT (A) directed AO to re-compute the income of the assessee for the earlier assessment years 2002-03 to 2005-06 - HELD THAT:- As assessee contented that CIT (A) had exceeded his jurisdiction by directing AO to re-comptue the deduction U/s.10B for the earlier assessment years other than the year under appeal, since we have already held in the earlier grounds that the Ld. CIT (A) has powers under the provisions of the Act to direct the Ld. Assessing Officer to modify the assessment of the earlier years based on the findings in the subsequent assessment year under appeal before the Ld. CIT (A), this ground is also accordingly disposed off.
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2015 (8) TMI 1497
Revision u/s 263 - understatement in the value of closing stock because the appellant has not debited the value of excise duty to Profit & Loss Account at the time of accounting purchases - assessment order being erroneous and prejudicial to the interest of the Revenue or not? - HELD THAT:- The assessee has stated before the ld.Pr.CIT which is not rebutted by the Revenue that there is no understatement in the value of closing stock because the appellant has not debited the value of excise duty to Profit & Loss Account at the time of accounting purchases and the excise duty component has been accounted and recognized separately in the financial statements as current assets for the year under consideration. There is another aspect of the matter also, the contention of the assessee is that MODVAT Scheme provides for instant credit of the input only on the raw-material consumed. The credit has a direct linkage with the consumption of the raw-material. It is obtained on the date when the raw material is purchased. Hence, it is clear that whether one applies the net method or the gross method the gross profit remains the same.
Assessment order is not erroneous. Moreover, it is undisputed fact that the Assessing Officer raised a specific query and reached to a conclusion that method adopted by the assessee has not caused any prejudicial to the Revenue since there is no understatement of closing stock. This conclusion of AO is not absurd or erroneous. Therefore, the exercise of Jurisdiction u/s.263 of the Act by ld.Pr.CIT fails.
In the case of Malabar Industrial Co.Ltd. vs. CIT [2000 (2) TMI 10 - SUPREME COURT] has held that the CIT has to be satisfied of twin conditions, namely, (i) the order of the AO sought to be revised is erroneous; and (ii) it is prejudicial to the interests of the Revenue. If one of them is absent, if the order of the ITO is erroneous but is not prejudicial to the Revenue or if it is not erroneous but is prejudicial to the Revenue, recourse cannot be had to s.263(1).
It is not pointed out by the ld.Pr.CIT as to what prejudice has caused to the Revenue. In the absence of specific finding by the ld.Pr.CIT, we cannot confirm his order revising the assessment order. Therefore, in our considered view twin conditions as laid down in Section 263 of the Act, i.e. order being erroneous so far it is prejudicial to the interest of Revenue are not satisfied - unable to sustain the findings of ld.Pr.CIT, same are hereby quashed. Therefore, the impugned order is set aside and quashed. Thus, grounds raised in the appeal are allowed.
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2015 (8) TMI 1496
Disallowance of expenditure by way of claims settled - HELD THAT:- Respectfully following the orders of the Co-ordinate Bench in assessee’s own case [ 2013 (9) TMI 633 - ITAT, MUMBAI] the disallowance made by the AO is deleted. These grounds are accordingly allowed.
Disallowance made u/s. 14A - HELD THAT:- Respectfully following the decision of the Co-ordinate Bench [2013 (9) TMI 633 - ITAT, MUMBAI] we hold accordingly and direct the AO to follow the findings/directions of the Tribunal given for A.Yrs 2000-01, 2001-02 and 2003-03. Ground No. 3.1 and 3.2 with all sub-grounds are accordingly allowed.
Disallowance of Legal and Profession Charges, disallowance of repairs and maintenance charges and disallowance of Repairs and Maintenance - Plant & Machinery - HELD THAT:- A perusal of the order of the First Appellate Authority show that the Ld. CIT(A) has called for a remand report from the AO. However, we find that the First Appellate Authority has decided these issues without waiting for the remand report. In our considered opinion and in the interest of justice and fair play, these issues need to be reconsidered at the assessment stage. We, therefore set aside these grounds to the file of the AO. The AO is directed to decide these issues afresh after giving a reasonable and fair opportunity of being heard to the assessee. Accordingly, ground No. 6, 8 and 11 are treated as allowed for statistical purpose.
Deduction u/s. 80HHC - confirmed the disallowance.
Deduction u/s. 80HHC relating to DEPB credits - HELD THAT:- In assessee’s own case in A.Y. 2003-04 the Tribunal following the order of the Hon’ble High Court of Gujarat in the case of Avani Exports Vs CIT [2012 (7) TMI 190 - GUJARAT HIGH COURT] has restored this issue to the file of the AO for denovo assessment on this claim of the assessee u/s. 80HHC of the Act. Respectfully following this finding of the Tribunal, we set aside this issue to the file of the AO to be decided afresh in the light of the findings given in A.Y. 2003-04. Accordingly, this ground is treated as allowed for statistical purpose.
Claim of deduction u/s. 80HHC - HELD THAT:- We set aside this issue to the file of the AO to be decided as per the directions of the Tribunal in A.Y. 2003-04 in the light of the decision of the Hon’ble Supreme Court in the case of Topman Exports Vs CIT [2012 (2) TMI 100 - SUPREME COURT] - This ground is allowed for statistical purpose.
Claim of deduction u/s. 80HHC - AO ought to have excluded from total costs - Direct costs attributable to exports and domestic sales of manufactured goods - HELD THAT:- Respectfully following the findings of the Tribunal in own case we decide this grievance in favour of the assessee. claim of deduction u/s. 80HHC which is without prejudice to assessee’s claim that unrealized export sale proceeds not excludible from trading export turnover.
Claim of deduction u/s. 80HHC - claim of the assessee that in computing the total turnover following item should have been excluded as Sales tax and Excise duty - HELD THAT:- Issue decided in favour of assessee as relying on its own case.
Claim of deduction u/s. 80HHC - claim of the assessee that in computing profits of the business under Explanation (baa) 90% of net receipts and no gross receipts by way of commission earned and interest earned ought to be reduced - HELD THAT:- As decided in own case [2013 (9) TMI 633 - ITAT, MUMBAI] in the light of the decision of the Hon’ble Supreme Court in the case of ACG Associated Capsules Pvt. Ltd. Vs CIT [2012 (2) TMI 101 - SUPREME COURT] we decide this claim of deduction in favour of the assessee
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2015 (8) TMI 1494
Revision u/s 263 - whether the seized documents show that some illegal gratification has been given to the assessee from Mukesh Sharma? - HELD THAT:- Tribunal has already examined the same papers in case of Shri Narottam Mishra. Therefore, this Tribunal cannot take a different view. Therefore, this matter is covered in favour of the assessee. It is well settled that if the same inquiry by the Assessing Officer in all original proceedings even if it inadequate that cannot flout the Commissioner with jurisdiction u/s 263 merely because he can form another opinion.
We are of the view that the assessee was served with details in specific questionnaire u/s 141 of the Income-tax Act, 1961. The assessee has also given the detailed submission regarding the admissibility of diary and AO has made the enquiry from the Executive Engineer. Various bank accounts were examined in detail. No investigation or unexplained entry was found by the Assessing Officer. Details of movable and immovable properties were called for by the Assessing Officer. Nothing adverse or unexplained was found.
The guidance was found from Jt. Commissioner of Income Tax u/s 144A was duly received and kept on record. The AO has during the course of assessment proceedings made a detailed enquiry of this loose slips/ dumb loose slips found with Mukesh Sharma. All these evidences have been classified in the form of table and primary evidence and evidence has been apprised as per Income-tax Act, 1961. The AO has made the assessment as per the CBDT guidelines and as per the CBDT guidelines, in the first stage, the AO acquainted with the appraisal report and seized material and took up the case for assessment and thereafter, the AO has made the detailed enquiry and after filing the return, the AO had accepted, prima facie, acceptable evidence and he has made a proper enquiry and after making the enquiry the AO has also called for his report u/s 144A of the Act and after getting the report of 144A, the AO has come to the conclusion that the assessee has not received any money. Whatever the documents are on the record are dumb document and on the basis of these documents, no addition can be made.
Commissioner has directed to collect the original file from Indore Commissioner and Bhopal Commissioner, which do not suggest anything. We found that if the AO had initially any suspicion as to primary evidence, he could have himself corrected it by taking time to conduct the enquiry into this matter. After enquiry, he arrived at the conclusion that suspicion of unaccounted gratification received by the assessee by the piece of evidence found during the course of search were not adequate and sufficient to make addition. We are of the view that ld. Commissioner is not justified in his action and his case is duly covered by the decision of CIT vs. Ashish Rajpal, [2009 (5) TMI 18 - DELHI HIGH COURT] wherein it is held that if during the course of assessment proceedings, if the enquiry has been made by the Assessing Officer and if the sufficient enquiry is made, then it cannot be terms as prejudicial to the interests of revenue. Appeal of the assessee is allowed.
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2015 (8) TMI 1493
Disallowance being payment of commission which was duly supported by evidences - HELD THAT:- The strength of sales order is clearly done by the sales team who are moving in the market. These salesmen are the persons who try to arrange orders for the products of the principle. AO has called the director of the company only to record his statement by giving him notice u/s 131. It is quite possible that the company has various types of activities and working as commission agent is also a part and such companies work for many types of clients.
Quite possible a director might not be aware of names and details of all the clients of the company. The AO should have enquired through the sales man of the commission agent or through the buyers of the products of the assessee in order to verify the actual commission given to M/s.Wide Angle Packaging System (P)Ltd for doing the sales on behalf of the assessee against commission. The assessee has paid commission by account payee cheque. Due TDS paid, identity of the commission agent is verifiable which are sufficient evidence on record to prove the genuineness of the transaction and creditworthiness and identity of the so called commission agent. The entire commission is allowable. This ground of appeal is allowed.
Disallowance made by AO from 15% to 10% out of various revenue expenses - HELD THAT:- Looking into the nature of the expenses in which there is always a possibility to inflate the expenditure as well as expenses to some extent incurred for personal purposes also. CIT(A) has also restricted the disallowance from 15% to 10% in the interest of justice and as such find no infirmity in the order of the CIT(A). Thus this ground of appeal is dismissed.
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