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Income Tax - Case Laws
Showing 41 to 60 of 758 Records
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2015 (8) TMI 1492
Disallowance of interest expenses - FAA assumed that assessee must have incurred 95% of this income as expenditure on interest and, therefore, only to that extent, interest expenditure is to be allowed - HELD THAT:- Assumption by FAA is not the requirement in law, the requirement is that expenditure must be laid down by the assessee wholly and exclusively for earning of income. The expression wholly refers to quantum of expenditure and exclusively refers to the object and purpose of expenditure.
Though these expressions are not used in section 57 but the overall meaning of section 57 is also to the same effect that, the expenditure ought to be incurred for earning income which is assessable under the head “income from other sources”. If the logic of CIT (Appeals) is accepted, then, in each and every case, expenditure would be allowed only, when there is resultant income. In other words, there cannot be any loss in any activity which results “income from other sources”.
All the details were before CIT(Appeals) but instead of pin pointing any concrete diversion of interest bearing funds CIT (Appeals) only assumed that some funds might have been used by the assessee for some other purposes. The department has been consistently accepting the claim in earlier years and in subsequent years. It appears that in the beginning, assessee has more income under the head “income from other sources” as than the interest expenditure, but in Assessment Year 2006-07, 2007-08 and 2009-10, the interest expenditure was more than income, in spite of that loss under the head “income from other source” was allowed by the ld. Assessing Officer in scrutiny assessment.
Thus considering the past history and stand of the revenue itself, we are of the view that AO has erred in making the disallowance. CIT (Appeals) also failed to appreciate that total expenditure is to be allowed which is incurred wholly and exclusively for earning income. It cannot be restricted in proportion of income. We allow the ground of appeal raised by assessee and consequently reject the ground raised by the revenue. The assessee is entitled to expenditure of ₹ 1,09,29,139/- claimed by him.
Addition of cost of improvement on account of long term capital gain - HELD THAT:- Assessee while offering capital gain on sale of a plot of land had claimed cost of improvement for ₹ 10,84, 275/-. The Assessing Officer rejected the additional cost to the extent of ₹ 6 lacs. On appeal, ld. Commissioner of Income Tax (Appeals) allowed the claim of assessee on the ground that payment was made through account payee cheque for the construction made. The detail of material and other evidence were produced on the record. Contrary to this finding of fact recorded by the Commissioner of Income Tax (Appeals), nothing was pointed out to us during the course of hearing, therefore, we do not find any merit in this ground of appeal. It is rejected.
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2015 (8) TMI 1491
Addition of expenditure towards interest - CIT-A allowed part deduction - revised return filed - In the original return, a loss was claimed which was reduced in the alleged revised return - HELD THAT:- There cannot be any loss in any activity which results “income from other sources”. All the details were before the CIT(Appeals) but instead of pin pointing any concrete diversion of interest bearing funds; ld. CIT (Appeals) only assumed that some funds might have been used by the assessee for some other purposes.
The department has been consistently accepting the claim in earlier years and in subsequent years. It appears that in the beginning, assessee has more income under the head “income from other sources” as than the interest expenditure, but in AY 2006-07, 2007-08 and 2009-10, the interest expenditure was more than income, in spite of that loss under the head “income from other source” was allowed by the AO in scrutiny assessment. Thus considering the past history and stand of the revenue itself, we are of the view AO has erred in making the disallowance. Ld. Commissioner of Income Tax (Appeals) also failed to appreciate that total expenditure is to be allowed which is incurred wholly and exclusively for earning income. It cannot be restricted in proportion of income. We allow the ground of appeal raised by assessee and consequently reject the ground raised by the revenue. The assessee is entitled to expenditure claimed by him.
Addition of of long term capital gain - cost of improvement claimed - HELD THAT:- As gone through the record carefully. Section 48 of the income tax act, 1961 provides that income chargeable under the head ‘capital gains, shall be computed by deducting from the full value of consideration received or accrued as a result of the transfer of the capital asset, the amounts namely (a) expenditure incurred wholly and exclusively in connection with such transfer (b) the cost of acquisition of the asset and the cost of any improvement thereof. The assessee while offering capital gain on sale of a plot of land had claimed cost of improvement for ₹ 10,84, 275/-. AO rejected the additional cost to the extent of ₹ 6 lacs. On appeal, ld. Commissioner of Income Tax (Appeals) allowed the claim of assessee on the ground that payment was made through account payee cheque for the construction made. The detail of material and other evidence were produced on the record.
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2015 (8) TMI 1488
Scrutiny under CASS - addition based on the confession made by assessee - addition of sum introduced as capital of the partners of the firm - A.O. also disallowed interest - CIT(A)-II, Agra who dismissed the appeal in limine by holding that no appeal is maintainable since the Assessment Order was passed on the confession of the assessee - HELD THAT:- In the assessment order status of the assessee was mentioned as individual whereas the ld. Counsel for the assessee contended that the status of the assessee is a firm. We also find that the additions were made purely based on the confession made by assessee without investigating to the facts of the case. Therefore ends of justice would be met if the case is restored back to the file of AO for denovo assessment, after affording due opportunity of being heard to the assessee. - Appeal filed by the assessee is allowed for statistical purposes.
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2015 (8) TMI 1487
Addition of bogus sundry creditors u/s 41 - setting off of the same amount in AY 2001-02 - HELD THAT:- The provision of Sec. 41(1) comes into operation where the assessee has incurred a trading liability and trading liability has been allowed as a deduction in any earlier year, and something has, later on, being recovered in respect of such liability or such liability has either been remitted or has seized to exist.
Hon'ble jurisdictional High Court in the case of CIT v S.K. Reference Ltd [1994 (1) TMI 278 - CALCUTTA HIGH COURT] has held that where the liability to pay commission on sugarcane was later allowed as deduction pursuant to State Government’s Ordinance which was later enacted into Act, provision for such liability cannot be taxed by invoking the provision of Sec. 41(1) of the Act on the mere ground that amount allowed was returned back to profit and loss account, unless such liability was remitted or seized to exists.
In the present case, the liability very much in existence in on account of sundry credit and this is trading liability and once it is not seize to exist, or remitted, the mere non-existence of the parties cannot be added as an ‘income’ of the assessee. Accordingly, this appeal of assessee is allowed on merits.
Set off of sundry creditors and carried forward from earlier year, as the appeal for AY 2000-01 has already been allowed in favour of assessee, this will not be treated as ‘income’ for AY 2001-02. Hence, these two appeals of assessee are allowed.
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2015 (8) TMI 1485
Penalty levied u/s 271(1)(c) - deemed dividend addition u/s 2(22)(e) - as alleged true particulars of income were not furnished by the assessee in its return - CIT-A deleted the addition - HELD THAT:- It is the case of the assessee that he was under a bonafide impression that since it(partnership firm-m/s Quixotic Healthcare)was not a shareholder in M/s Preet Remedies Pvt. Ltd,the advance given by M/s Preet Remedies Pvt. Ltd, could not be treated as deemed dividend in its hands u/s 2(22)(e) of the Act..This belief was based on decisions of the ITAT in the case of ACIT vs V. Bhaumik Colour (P) ltd [2008 (11) TMI 273 - ITAT BOMBAY-E] .In our view this submission offered by the assesse had considerable force since there were also decisions by the Delhi High Court in the case of CIT Vs. Ankitech P. Ltd. [2011 (5) TMI 325 - DELHI HIGH COURT] and CIT Vs. Hotel Hilltop, [2008 (3) TMI 310 - RAJASTHAN HIGH COURT] which held that to bring to tax any amount as deemed dividend as per the provisions of section 2(22)(e) ,it is essential that the recipient of the amount must be a shareholder of the company. Moreover the AO has not stated as to why the ratio promulgated in the case referred to by the assessee would not apply to the him. We are therefore satisfied that the assesses explanation in regard to taxability of this amount in its hands is probable and true.
Explanation of the assessee that he had no intention to either conceal or furnish inaccurate particulars of income is quite probable and true in the state of law set out. The assessee has ,therefore, discharged his onus of proof under Explanation 1 to section 271(1)(c) of the Act and shown that there was no willful or gross neglect on his part in returning the correct income. We are also satisfied that the assessee had disclosed all relevant particulars relating to his income and there was neither any concealment of income nor furnishing of inaccurate particulars of income. Addition made applying deeming provisions would not disclose it to be a case of filing inaccurate particulars of income.
In any case ,without prejudice to what has been stated above, the displacement of presumption raised against the assessee by the Expl. 1 to section 271(1)(c) amounts to concealing particulars of income. AO in the present case has levied penalty for furnishing inaccurate particulars of income . The AO therefore is apparently satisfied that the Expl 1 to section 271(1)(c) is not attracted in the assesses case for the levy of penalty.
Hon’ble Supreme court in CIT Vs. Reliance Petroproducts Pvt. Ltd. [2010 (3) TMI 80 - SUPREME COURT] has held that disallowance of the claim in the assessment proceedings could not be the sole basis for levying of penalty under Section 271(1)(c) of the Act. - Decided in favour of assessee.
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2015 (8) TMI 1484
Amount disclosed by the assessee during the course of survey as eligible for grant of deduction under section 80IB(10) - HELD THAT:- As decided in M/S. SHREE PADMAVATI DEVELOPERS [2012 (9) TMI 977 - ITAT AHMEDABAD] that manufacturing and sale of Board paper and craft paper happened to be the only source of income of the assessee, therefore the amount disclosed consequence upon the search partakes the character of business income and eligible for the deduction u/s.80IB/80IA of the I.T.Act. In the present case, the assessee has admitted that the impugned amount was part of the sale consideration received in cash at the time of booking of flats and, therefore, the amount had direct and proximate connection with the normal business of construction activity, hence eligible for the deduction u/s.80IB(10)
Also as decided in M/S. SHETH DEVELOPERS (P) LTD. [2012 (8) TMI 159 - BOMBAY HIGH COURT] no question of application of section 68, 69 and 69A, 69B and 69C of the said Act arises as the same has not been invoked by the Department. It is an admitted position between the parties as reflected even in the order the Assessing officer that undisclosed income was in fact received by the respondent in the course of carrying out its business activities as a builder. The same was returned by the respondent as income arising from profits and gains of business or profession and the same was accepted by the department unlike in the matter of Fakir Mohmad Haji Hasan [2000 (8) TMI 44 - GUJARAT HIGH COURT]
We are of the opinion that the issue in dispute is squarely covered in favour of the assessee by the above decision. The ld.First Appellate Authority has rightly considered the amount disclosed by the assessee during the course of survey as eligible for grant of deduction under section 80IB(10) of the Income Tax Act. Accordingly, this ground of appeal of the Revenue is dismissed.
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2015 (8) TMI 1483
Deduction u/s 80IB(10)(a) - whether issuance of completion certificate, after the cut off date by the Local Authority but, mentioning the date of completion of project before the cut off date, fulfil the condition specified in clause (a) of Section 80IB (10) read with Explanation (ii) thereunder - HELD THAT:- In the leading case [2015 (10) TMI 2384 - MADHYA PRADESH HIGH COURT] and connected cases decided today by a separate Judgment holding that if housing project approved on or after 1st April, 2004, the assessee can avail of the benefit provided completion certificate issued by the Local Authority is within four years from the end of the financial year in which the concerned housing project was approved by the Local Authority. If this condition is not fulfilled, the assessee who maintains work in progress accounting method and has claimed deduction under Section 80IB(10)(a) must suffer the consequence of disallowance or withdrawal of the benefit claimed by him on that count.
These appeals are allowed by setting aside the impugned judgment of the Tribunal with regard to the deduction claimed by the assessee u/s 80IB(10)(a) and instead the decision of the AO to disallow the said deduction is upheld.
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2015 (8) TMI 1480
Reopening of assessment u/s 148 - whether the reason given in the assessment order for the assessment year 2001-2002 could constitute to be a valid reason for reopening, even when the said order itself has been set aside on 20.03.2005 by the Tribunal, which was seven months prior to the issuance of the notice u/s 148? - HELD THAT:- No reasonable person can form an opinion to reopen an already concluded assessment on the basis of an assessment order of a subsequent year, which has already been set aside by the Tribunal and attained finality.
In the present case, as the assessment order for the year 2001-02 had itself been set-aside by the Tribunal much prior to the issuance of notice under Section 148, which was issued on the basis of the assessment order for the year 2001-02, in our considered opinion, there existed no reason for issuance of the notice under Section 148. The reopening of assessment for the assessment years 1999-2000 and 2000-2001 in the case of assessee, cannot be justified in law. Question No.1 is thus answered in favour of the assessee and against the Revenue.
Rejection of books of accounts - calculation of agricultural income as had been done in the case of N.G. Pai, by the same AO for the same assessment year, which was calculated at the yield of 14 Quintal per acre and the price of arecanut at ₹ 10,000/- per quintal, in which case the income of the assessee would be over ₹ 25 lacs, which is much higher than claimed by him - HELD THAT:- The Tribunal has, without giving any cogent reason, set aside the order of the Appellate Commissioner and restored the order of the AO, even though the Tribunal has noticed that the agricultural income for a closer assessment year 2001-02 was ₹ 20,41,000/- which has been affirmed by it, yet the same has not been taken to be a material basis for arriving at an income of the assessee for the assessment year in question i.e., 2003-04, where the assessee had disclosed his agricultural income of ₹ 21,93,569/- which was merely ₹ 1.5 lacs more than the income accepted two years earlier in 2001-02.
In view of the aforesaid, we are of the opinion that the Tribunal was not right in reversing the finding of the Appellate Commissioner, and restoring the estimation of income by the AO. In the facts and circumstances of the case, the second substantial question of law as framed in these appeals is also answered in favour of the assessee and against the Revenue.
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2015 (8) TMI 1478
Suppression of sale consideration of the immovable property - Commissioner (Appeals) justification in arriving at the conclusion regarding the sale consideration without waiting for DVO’s report - HELD THAT:- AO’s order was not sustainable and the learned CIT has rightly deleted the addition based upon the Assessing Officer’s uncorroborated local enquiry”. By no stretch of imagination, it can be argued that the learned CIT(A) should have taken into account the DVO’s report which was received four days after the passing of the learned CIT(A)’s order.
It is settled law that nobody can be asked to do the impossible - there in no infirmity in the order of the learned CIT(A). Before parting, we may state that the sale consideration has been valued by the stamp valuing authority. De– hors any cogent material on record that there has been any transaction of “on–money”, the same cannot be tinkered with. For this purpose, the Hon’ble Supreme Court in K.P. Varghese v/s ITO [1981 (9) TMI 1 - SUPREME COURT] is relevant. Accordingly, we affirm the orders of the learned CIT(A).
Revision u/s 263 - Rectification u/s 154 as value by the DVO in the report received after the order of the learned CIT’s order was sought to be substituted - HELD THAT:- The order of the learned CIT(A) has merged with the order and application by the Assessing Officer. Section 263 provides the power to the Commissioner to exercise his jurisdiction under section 263, on the orders of the Assessing Officer and not where the order of the Assessing Officer has merged with the order of the learned CIT(A). The learned CIT, in his wisdom has rejected the Assessing Officer’s application under section 154. No appeal against the rejection has been preferred by the Revenue. Now, the Revenue has sought to revise the Assessing Officer’s order under section 263, which has already merged with the order of the learned CIT(A). This is not at all legally permissible.
The order of the Assessing Officer has merged with that of the learned CIT(A). Provisions of section 263, do not mandate the Commissioner to revise such an order. Under these circumstances, we hold that the assumption of jurisdiction by the learned CIT was not legally permissible, hence, the same is liable to be quashed. We further note that the said DVO’s report has been mentioned by the learned CIT himself as based upon sale instances in nearby cases. We fail to understand as to why in such circumstances, the sale instance as per stamp registration authority of the assessee itself can be treated as sham de–hors any evidence on record regarding on–money transaction. This is against the exposition of the Hon’ble Supreme Court in K.P. Varghese (supra). In our considered opinion, tinkering with the sale amount duly reflected and registered by the registration authority is not proper and justified under section 263 in this case - Decided in favour of assessee
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2015 (8) TMI 1476
Addition u/s 40(a)(ia) - TDS u/s 194H - HELD THAT:- JDS APPARELS PRIVATE LIMITED [2014 (11) TMI 732 - DELHI HIGH COURT] payment of commission to banks with regard to the processing of credit card transactions was not liable to be considered as a ‘commission’ within the meaning of section 194H.
The bank does not act as an agent of the assessee while processing the credit card payments and a charge collected by the bank for such service does not amount to ‘commission’ within the meaning of section 194H.
In view of the aforesaid Judgment of Hon’ble Delhi High Court in the case of JDS Apparels P. Ltd. (supra), we hereby affirm the conclusion of the CIT(A) to the effect that the impugned disallowance made by the AO by invoking section 40(a)(ia) is unsustainable. Thus, Revenue fails on this Ground also. - Decided against revenue.
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2015 (8) TMI 1475
Dismissal of appeal of the assessee in limine - non appearance by the assessee - HELD THAT:- At the time of hearing fixed today i.e. on 30/07/2015 none appeared on behalf of the assessee nor any adjournment application is filed. Last notice has been sent fixing the date of hearing on 30-7-2015 to the assessee by registered post (as per evidence on record – RG 277543750 IN) on 26-6-2015 which has been returned by the postal authorities with remarks “left”. The assessee has not intimated correct/changed address to the Tribunal. Under these circumstances, we have no option but to dismiss the appeal as the conduct of assessee shows that the assessee is not interested in pursuing with its appeal. We dismiss the appeal of the assessee in limine . See Estate of Late Tukojirao Holkar vs. CWT [1996 (3) TMI 92 - MADHYA PRADESH HIGH COURT]. - Appeal of the Assessee is dismissed.
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2015 (8) TMI 1474
Unaccounted income - AO treated the amount received from Niraj Jain / Pooja Expo Inc. as unaccounted income of the assessee - HELD THAT:- Addition has been made without bringing any evidence on record. Also find that the CIT(A) passed exparte order on the date of hearing itself without given sufficient opportunity of being heard, which is contrary to the principle of natural justice.
Therefore, in the interest of natural justice, remit back the issue in dispute to the file of the AO with the directions to decide the same afresh, under the law, after considering all the relevant evidences, after giving full opportunity to the assessee of being heard. Assessee is also directed to furnish all the evidences before the AO to substantiate his case.- Appeals filed by the assessee stands allowed for statistical purposes.
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2015 (8) TMI 1473
TP adjustment - “Management fee” paid to parent company at Korea - Arm’s Length Price (ALP) adopting CUP method - nature of work involved - HELD THAT:- Entire matter has to be remitted back to the file of Ld. TPO for denovo consideration because both the assessee as well as the Revenue has not examined the issue with respect to the correct factual matrix. “Management services” and “Technical services” false under different field and the nature of work involved both these services are different.
When the assessee has made payments to its parent company it has to establish and justify the nature of payment and the nature of service received for the purpose of determining Arms length price in Transfer pricing matters. The onus is on the assessee to substantiate its claim.
Just because the operating cost incurred by the assessee company is less than the operating cost of the comparable companies, the claim of expenses incurred towards payment made to its parent company on an adhoc basis cannot be justified. In modern management and technical field there are sufficient ways and measures to measure the services rendered by one entity to other entity - the assessee is bound to produce satisfactory evidence before the Revenue to establish its stand. In fact in this instance case the entire confusion has arisen because the assessee company has not submitted the evidence for the service rendered by the parent company to the assessee company against which the payments are made to the parent company by the assessee company. With these observations we remit the matter back to the file of TPO for fresh considerations - Appeal of assessee is allowed for statistical purposes
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2015 (8) TMI 1472
Penalty u/s 271(1)(c) - no positive income - Assessee contended that as the net result of the case of the assessee is a loss, no penalty u/s 271(1)(c) is imposable - proof of bonafide mistake - claim of carry forward losses - findings as to the concealment of income or furnishing of inaccurate particulars - AO relying on the decision of CIT Vs. Gold Coin Health Food Pvt. Ltd.[2008 (8) TMI 5 - SUPREME COURT] held that even it the returned income as well as assessed income are loss, still penalty u/s 271(1)(c) is leviable - CIT(A) allowed the appeal of the assessee by deleting the penalty
HELD THAT:- This is a case where excess claim of carry forward losses was made by the assessee, which was disallowed by the A.O., since it was not as per law. The assessee did not challenge the said order of the A.O. and accepted the said assessment.
It is not a case of concealment of income as the AO himself has picked up all facts and figures from the return of income and the details filed by the assessee. It is not also a case of furnishing of inaccurate particulars, as the assessee has disclosed all particulars rightly before the AO. It is a case where a excess claim was made by the assessee in its return.
Every disallowance or addition made by AO could not be the sole basis for levying penalty u/s 271(1)(c). Assessee has pleaded bonafide, which gets strengthened by the fact that the particulars of brought forward loss were declared to revenue and as per AO, assessee could claim business losses of only eight years and assessee was dependent on legal advice only. The explanation offered by the assessee was therefore bonafide. It is a clear case of claim made by committing a bonafide mistake.
The claim of carry forward losses is on account of an inadvertent & bonafide error and not intending to conceal income or to furnish inaccurate particulars of income. As this is a case of addition on account of excess claim made by the assessee, penalty could not be levied under section 271 (1)(c) - Case of RELIANCE PETROPRODUCTS PVT. LTD. [2010 (3) TMI 80 - SUPREME COURT] to be followed - Decided in favour of assessee.
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2015 (8) TMI 1471
"Mark to Market" loss - valuation of forward exchange contracts on the closing date of accounting year is not a notional loss as allowable - notional loss on account of valuation of foreign exchange forward contracts - HELD THAT:- Mark-to-Market gain or loss is held as allowable business gain or loss as the case may be. In the instant case, loss arising on re-valuation of forward contract agreements on 31st March, 2009. Thus, the CIT (A)'s order on this issue, for both the assessment years under consideration, is fair and reasonable and it does not call for any interference. Accordingly, Grounds raised by the Revenue in both the appeals are dismissed.
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2015 (8) TMI 1470
Corrigendum to correct the inadvertent typographical error - HELD THAT:- In the cause title, it has been inadvertently mentioned as Vijay Sahakari Bank Ltd. instead of Vidya Sahakari Bank Ltd., Therefore, the cause tile may be read as ‘Vidya Sahakari Bank Ltd’. instead of ‘Vijay Sahakari Bank Ltd’.
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2015 (8) TMI 1466
Correct head of income - rental income from Operating Family Entertainment Center cum Mall and Maintenance Charges - "Income from House Property " OR "Profit and Gains from Business or Profession" - Held that:- As decided in assessee’s own case [2014 (7) TMI 1171 - ITAT MUMBAI] giving space with services and facilities of varied and wide nature would definitely constitute a business and the relationship between the parties in such case is distinguished from that merely of a landlord and tenant relationship. We therefore find no infirmity in the impugned orders of the CIT(A) treating the operational income received by the assessee companies from running of Malls in the form of rent and service charges as their business income and upholding the same on this issue, we dismiss these appeals filed by the Revenue. - decided in favour of assessee.
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2015 (8) TMI 1465
Levy of penalty u/s. 271(l)(c) - furnishing inaccurate particulars of income - treating the loss on foreign exchange fluctuation - Held that:- We find that there was difference of opinion between the AO and the assessee about treating the loss on foreign exchange fluctuation, that the assessee had furnished all the details about the claim made by it and had stated that after the repossession of the ship the transaction had become part of the working capital. Thus, all the details of about the claim were available on file. In our opinion, confirmation of an addition by higher judicial forum do not lead to automatic imposition of penalty u/s.271(1)(c)of the Act
Penalty notice the assessee had filed an explanation and we are of the opinion that it was a plausible explanation.
If any information is suppressed by the assessee and but for the attentiveness of the AO, it would have escaped taxation, the assessee has to be dealt with sternly, but not in a case where the assessee has filed an explanation that is prima facie reasonable.
In the case under consideration the reply filed by it was neither fanciful nor totally unacceptable. We find that in the case of Reliance Petro Products P. Ltd.(2010 (3) TMI 80 - SUPREME COURT) the Hon’ble Supreme Court has held that merely because an assessee raises a claim which is eventually disallowed, that does not mean that the ingredients of clause (c) of section 271(1) of the Act are satisfied or fulfilled so as to justify imposition of a penalty. - Decided in favour of the assessee.
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2015 (8) TMI 1464
Entitlement for deduction on account of Keyman insurance policy taken on the life of two partners - allowable deduction u/s.37(1) - Held that:- This issue has been settled by the Hon’ble jurisdictional High Court in CIT vs B.N. Exports (2010 (3) TMI 186 - BOMBAY HIGH COURT) by holding that, for claiming business expenditure u/s 10(10D) read with section 37 of the Act, insurance premium on Keyman insurance policy to ensure life of a partner and effect of Circular No.762 (supra), is an allowable deduction. The object and purpose of Keyman insurance policy is to protect the business against a financial setback which may occur as a result of premature death, to the business or professional organization and further a Keyman Insurance Policy is obtained on the life of a Keyman including partner to safeguard the firm against disruption of business. - Decided in favour of assessee
Disallowance of interest should be made u/s 14A with reference to net interest only - Held that:- the assessee duly explained its version with the help of the documentary evidence. It is noted that while computing the disallowance u/s 14A read with Rule-8D of the Rules, the Assessing Officer considered the payments to partners. The term ‘interest’ has been defined u/s 2(28A) which means, interest payable in respect of any money borrowed or debt incurred (including a deposit, claim or other similar right or obligation) and includes any service fee or other charge in respect of moneys borrowed or debt incurred or in respect of any credit facility which has not been utilized. The capital contributed by the partner is neither money borrowed nor debt incurred by the assessee, thus, we find no infirmity in the conclusion drawn by the ld. Commissioner of Income Tax (Appeals), resultantly. - Decided against revenue
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2015 (8) TMI 1463
Addition u/s 68 - Addition being the commission payment estimated by the AO - Held that:- Documents and confirmation letter filed by the share applicant company would show that the identity and credit worthiness of the transactions stand proved. Since the impugned sum of ₹ 10.00 lakhs was received through banking channels, the genuineness of the transactions also stand proved. Thus as noticed the assessee has discharged the initial burden of proof placed upon it.
CIT(A) has examined the copy of income tax returns, which may not throw light about the credit worthiness. Further the copy of bank statement also shows that there are continuous transactions of deposits and withdrawals. Hence, in my view, the observations made by the CIT(A) that there were heavy deposits before issuing the cheque of ₹ 10.00 lakhs to the assessee company also appear to be misplaced one. Hence, in my view, the Ld CIT(A) has confirmed the impugned addition without properly appreciating facts.
Unable to agree with the conclusions reached by CIT(A) in view of the foregoing discussions. Accordingly, set aside the order of CIT(A) on the issue of ₹ 10.00 lakhs and direct the assessing officer to delete the same. Consequently, the addition of ₹ 10,000/- relating to estimated commission income is also directed to be deleted. - Decided in favour of assessee
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