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Income Tax - Case Laws
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2015 (9) TMI 1753
Correct head of income - gain on sale of shares - LTCG or Income from other sources - HELD THAT:- Looking to the facts and circumstances of the case, we find that the ld. CIT(A) has accepted that the long term capital gain on sale of shares of Hindustan Continentals limited as genuine long term capital gains as done through SEBI registered broker and De-mat account - dismiss the Departmental appeal on this ground.
Addition u/s 68 - assessee has made investment in the Lunkad group of companies providing entries of unsecured loan, share application money and investment in actual state of needy persons, who are beneficiaries and during the survey huge cash receipt and payments were found - HELD THAT:- We find that the CIT(A) in his order has deleted the addition on the ground that the I.T.A.T., Indore Bench has passed the order in the case of Narmada Extrusions Limited[2011 (12) TMI 702 - ITAT INDORE] and other family members of the Mittal Group and the assessee is also one of the beneficiaries of Mittal Group and in the appeal for assessment year 2003-04 and 2006-07, the Tribunal has decided the appeal and the Tribunal has analyzed all the documents. Thereafter, the matter was restored to the AO by the Tribunal and after that in set-aside proceedings, the ld. CIT(A) has accepted that these loans are genuine. Therefore, the ld. CIT(A) has deleted the addition on account of unsecured loans. In the result, the departmental appeal is dismissed.
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2015 (9) TMI 1752
Rectification of application u/s 154 - Set off the carried forward depreciation from earlier years - HELD THAT:- Assessee would be in a position to demonstrate before the AO in respect of the claim of depreciation. There is not dispute with regard to the fact. It has been held in case of CIT Vs. Virmani Industries Pvt. Ltd. [1995 (10) TMI 1 - SUPREME COURT] even if there is no activity being carried out by the assessee is a particular year, however, he would be entitled to set off the carried forward depreciation from earlier years.
Therefore, after considering the totality of the fact, we deem it proper to modify our order [2014 (6) TMI 1034 - ITAT AHMEDABAD] and restore the issue of claim of depreciation to the file of AO for decision afresh. We hereby modify our order accordingly.
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2015 (9) TMI 1751
Deduction u/s. 80P(2)(d) - interest on investments with the Co-operative bank - AO believed that interest income earned on the investments in any other Co-operative society is deductible but not from a Co-operative bank and the said income is also not allowable as deduction u/s. 80P(2)(a)(i) - HELD THAT:- CIT(A) correctly held since deduction u/s. 80P(2)(d) will be admissible only on the interest earned from Co-operative Societies irrespective of whether they are Co-operative banks or not, the AO is directed to verify the same and allow the deduction on interest earned from other Co-operative societies including Co-operative banks. The interest earned on investment with other banks will not be eligible for deduction u/s. 80P(2)(d). AO is directed accordingly. Appeal filed by the Revenue is dismissed.
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2015 (9) TMI 1750
Non-representation on the date of hearing - HELD THAT:- From the cumulative reading of the order sheets in the appeals it is seen that barring few occasions when the hearing was adjourned for want of time and twice on the request of the department the appeals have largely been adjourned on the request of the assessee. Accordingly in the afore-said peculiar facts and circumstances, it can be safely presumed that the assessee is not serious in pursuing the present appeals.The appeals of the assessee are dismissed in limine. Support is drawn from the order Multi Plan India (P) Ltd [1991 (5) TMI 120 - ITAT DELHI-D]and Estate of Late Tukojirao Holkar vs. CWT [1996 (3) TMI 92 - MADHYA PRADESH HIGH COURT]
Before parting it is appropriate to add that in case the assessee is able to show that there was a reasonable cause for non-representation on the date of hearing then the assessee if so advised would be at liberty to pray for a recall of this order and decisions on merits. The said order was pronounced on the date of hearing itself in the open Court. Appeals of the assessee are dismissed.
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2015 (9) TMI 1748
Revision u/s 263 - credit that was received and credited in the earlier year, cannot be added during the current year - HELD THAT:- We are of the considered opinion, that the submissions of the Ld. Sr. D.R. were upheld, for the reason that the addition in question, is not made u/s 68 of the Act. Thus the year of receipt of credit and entry into the books of accounts is of no consequence. No other argument has been advanced before us on this issue. Thus this ground of the assessee is dismissed.
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2015 (9) TMI 1747
Reopening of assessment u/s 147 - Gain on sale of shares - Long term capital gains OR income from other sources - HELD THAT:- Since the returns of income filed by the assessees have been processed u/s 143(1) only and since the assessing officer has reopened the assessments on the basis of report received from the Investigation wing of the department, we are of the view that the AO had proper reasons with him for reopening of assessments. Accordingly, we uphold the order of Ld CIT(A) on this issue.
Gain on sale of shares - CIT(A) has held that the proof of delivery of shares are not sufficient to prove genuineness of sales, when the purchases were found to be not genuine. We are unable to understand the said reasoning given by the Ld CIT(A). If the tax authorities require any other evidence, apart from the evidences furnished by the assessees, they could have asked the assessees to furnish the same. Instead, they have proceeded to assess the long term capital as income under the head income from other sources. In our view, the said action of the tax authorities is not justified. There should not be any dispute that the delivery of shares could not have been done without purchasing them.
Reply given by M/s Interconnected Stock Exchange India cannot be considered to be the sole criteria to suspect the claim of purchase of shares. Barring this, no material is brought on record to suspect the claim of the assessees that they have earned long term capital gains. Accordingly, we are of the view that the Ld CIT(A) was not justified in confirming the additions made by the AO - we direct the AO to accept the claim of impugned Long term capital gain.
Appeals filed by the assessees are partly allowed.
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2015 (9) TMI 1745
Claim of earlier years losses to be brought forward for set off - denial of claim as assessee had not claimed in its return of income - HELD THAT:- Income tax legislation is welfare legislation. Even in case of any doubt, the benefit has to accrue to the assessee. The assessee or the taxpayers contribute to the development of our economy and the Act helps to guide them and not to penalize them. In the present case, it is a fact on record that the assessee has filed its return of income in due time and whatever relief and rectification that were claimed by the assessee was a bonafide one. There was a technical fault because of which, the legal claim of the assessee should not be denied. The legal claim still remains good. Therefore, in our view, the order of the ld CIT(A) directing the AO to modify the order u/s.154 and allow proper relief to the assessee stands good and proper. Hence, we reject Ground No.1 of appeal filed by the revenue.
Violation of Rule 46A of ITAT Rules - As noted that in the appeal against the order u/s.154 of the Act before the ld CIT(A), no additional evidence was produced by the assessee. At the outset, the Bench has asked the ld D.R to demonstrate the violation of provisions of Rule 46A of I.T.Rules which was mentioned in the ground of appeal. Nothing specific was pointed out by him. In such situation, it is not justifiable to allege that there was any infringement of Rule 46A of I.T.Rules. Therefore, in our view, there was no violation of Rule 46A of I.T.Rules, as agitated by the revenue in Ground No.2. Hence, we dismiss this ground.
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2015 (9) TMI 1744
TP Adjustment - non considering assessee’s contentions - Denial of natural justice - as argued TPO as well as the DRP have not considered the elaborate contentions raised by the assessee before them and therefore, there is violation of principles of natural justice - HELD THAT:- We find that even during the relevant assessment year, the assessee had made elaborate submissions and both the TPO as well as the DRP have failed to consider the said objections objectively - we deem it fit and proper to remit this issue to the file of the A.O./TPO for reconsideration of the issue in accordance with law. A.O./TPO is directed to give fair opportunity of hearing to the assessee and also consider judicial precedents on the issue including the orders of the Tribunal in assessee’s own case while determining the ALP. Appeal of the assessee is treated as allowed for statistical purposes.
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2015 (9) TMI 1741
Dismissal of appeal on non appearance - HELD THAT:- Notice of hearing was sent to the assessee by registered post with acknowledgement due on 12/8/2015 fixing the case for hearing on 21/09/2015. Notice was served on the assessee on 14/8/2015 as evidenced by the acknowledgement card of the post office placed on record. When the case was called for hearing none appeared on behalf of the assessee and neither any adjournment petition was filed. This shows that the assessee is not serious in pursuing with this appeal, and therefore, by following the decision of the Hon’ble Delhi High Court in CIT Vs. Multiplan India Pvt. ltd. 1991 (5) TMI 120 - ITAT DELHI-D] we dismiss this appeal of the assessee in limine.
The assessee may, if so advised, file an application before this Tribunal for restoration of its appeal and hearing on merits by showing reasonable cause for not appearing before the Tribunal on the date of hearing. Appeal of the assessee is dismissed in limine.
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2015 (9) TMI 1740
Criminal prosecution u/s 276C - Wilful attempt to evade tax, etc. - As alleged that though the assessee was having sufficient resources to make payment of demand, the assessee has not paid and attempted to evade payment of tax - HELD THAT:- Continuing the criminal prosecution of the petitioner/assessee will be subjecting the assessee to needless harassment in view of the facts and circumstances noted hereunder - In the instant case, the complaint is that an additional demand was raised on 27-01-2006. It is admitted that the assessee has paid the same on 17-11-2006 and due to oversight, he again paid the said amount on 25-06-2007. Proof thereof is produced. It is not disputed.
In that view of the matter, all further proceedings are liable to be quashed.
In the result, the Criminal Petition is allowed quashing all further proceedings on the file of the Special Judge for Economic Offences at Hyderabad against the petitioner/accused.
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2015 (9) TMI 1736
Exemption u/s 11 - club is not a charitable organization within the meaning of section 2(15) - CIT-A held that assessee is a Charitable Institution and its income has to be computed u/s 11 to 13 -Whether assessee performs a charitable purposes within the meaning of section 2(15) ? - HELD THAT:- Issue is covered by the decision of Hon’ble Jurisdictional High Court in the assessee’s own case [2012 (4) TMI 214 - BOMBAY HIGH COURT]. Further the co-ordinate bench of Tribunal has also followed the said decision in order to decide an identical issue in favour of the assessee in assessment years 2007-08, 2009-10 [2015 (3) TMI 1419 - ITAT MUMBAI] 2008-09 [2014 (11) TMI 379 - ITAT MUMBAI]. We also notice that it is not the case of the AO that the assessee is hit by the proviso to sec. 2(15) of the Act. Hence, we do not find any infirmity in the order of ld. CIT(A) with regard to the first issue.
Claim of the assessee for set off and carry forward of deficit of earlier years - CIT(A) has followed the decision rendered by the Hon’ble Jurisdictional High Court in the case of CIT Vs. Institute of Banking Personnel Selection [2003 (7) TMI 52 - BOMBAY HIGH COURT]. Hence, we do not find any reason to interfere with the order passed by the ld. CIT(A) on this issue also.
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2015 (9) TMI 1734
Deduction u/s 80P(2) (a) (i) - whether the assessee - Society is to be treated as a ‘primary co-operative bank’? - Whether the benefit of deduction u/s 80P (2) (a) (i) could be denied to the assessee on the footing that Though the appellant was said to be a Co-operative Society, it was in fact a co-operative bank, within the meaning as assigned to such bank under Part V of the BR Act? - whether Tribunal was correct in holding that the provision of sub-section (4) of Section 80P are applicable only to co- operative Banks and not to credit Co-operative Societies, which are engaged in business of banking, including providing credit facilities to their members? - HELD THAT:- We are in respectful agreement with the general view taken as to the interpretation of the relevant provisions of law, by the co-ordinate bench of this court, in the above and several other judgments adopting the same view. However, it is to be noticed that there is a seriously disputed question of fact which the Authorities under the IT Act have taken upon themselves to interpret in the face of the BR Act prescribing that in the event of a dispute as to the primary object or principal business of any co-operative society referred to in clauses (cciv), (ccv) and (ccvi) of Section 56 of the BR Act, a determination thereof by the Reserve Bank shall be final, would require the dispute to be resolved by the Reserve Bank of India, before the authorities could term the assessee as a co-operative bank, for purposes of Section 80 P of the IT Act. Any opinion expressed therefore is tentative and is not final. The view expressed by this court, however, as to the assessee being a co-operative society and not a co-operative bank in terms of Section 80P (4) shall hold the field and shall bind the authorities unless held otherwise by the Reserve Bank of India. See M/S. BANGALORE COMMERCIAL TRANSPORT CREDIT CO-OPERATIVE SOCIETY LIMITED [2014 (6) TMI 913 - KARNATAKA HIGH COURT]- Decided in favour of assessee.
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2015 (9) TMI 1732
Reopening of assessment u/s 147 - Unexplained share capital - HELD THAT:- Reopening of the assessment, it is to be noted that AO in the reasons has mentioned a sum from 9 parties. Wherein the amount in the case of Kuberco Sales Pvt. Ltd and M/s Shriniwas Leasing & Finance has been mentioned twice - the assessee has not received any share capital from M/s VR Traders and M/s Shriniwas Leasing & Finance. Therefore the correct amount from five parties. This factual aspect has been confirmed by the CIT(A) and the same was not denied by the DR.
This shows non-application of mind by AO at the time of reopening of the assessment and hence reopening is bad in law. Thus, the Navodaya Case will not be applicable in the present case as the assessee has given the substantial evidence during the course of original assessment along with confirmation to the AO. The same was ignored by the AO. Hence, on this issue the Ground No. 1 of the Revenue is dismissed.
CIT(A) upheld the contention of the assessee that assessee has not received any share capital from M/s VR Traders and M/s Shriniwas Leasing & Finance. It also held that the amount in the case of Kuberco Sales Pvt. Ltd. And M/s Shriniwas Leasing & Finance has been mentioned twice. Accordingly the CIT(A) held that the disputed amount of the share capital on the basis of which addition has been made by the AO comes - CIT(A) after examination of the evidences and the various judgments further held that assessee has discharged its onus and AO has not brought any material to discredit the evidences submitted by the assessee. Hence CIT(A) rightly deleted the addition made on merit. - Decided against revenue.
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2015 (9) TMI 1731
Disallowance claim of financial loss under the schedule “repair and maintenance expenses” - HELD THAT:- Revenue strongly reiterates its grounds and assails the above extracted findings by pleading that details of evidence had not been filed in the course of assessment. We notice that the CIT(A)’s findings under challenge duly take into account details of loss as in schedule 33 to notes on accounts with all necessary particulars of irregularities in question, division-wise break-up, work orders, bills involved, items selected for verification and actual work carried out. It has come on record that this assessee is already subjected to C & AG audit. Needless to say, the CIT(A) has already concluded that in case there is any amount recovered in future from the concerned contractor, it shall be treated as assessee’s income in the year of receipt. The Revenue fails to file any evidence to the contrary for rebutting the above stated factual findings. We do not see any reason to interfere in the lower appellate findings. This Revenue’s ground is rejected.
Disallowance of extra ordinary items being losses due to cyclone, flood and fire etc made for want of supportive evidence - sole ground for rejecting the claim in question to lack of evidence - HELD THAT:- The lower appellate order mentions very clearly that the assessee had duly filed a letter dated 15-12-2012 comprising of all necessary details; division-wise on expenses towards flood related damages. The Revenue does not produce on record copy of the above stated letter so as to dispel the above said specific findings. The CIT(A) further relies on an identical order dealing with the very claim. The same has also gone unrebutted in course of hearing before us. We decide this ground as well against the Revenue
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2015 (9) TMI 1729
Addition u/s 68 - Unexplained cash credits - HELD THAT:- We agree with the contention of DR that in view of the peculiar facts of the assessee’s case the decision in the case of Orissa Corporation (P) Ltd (1986 (3) TMI 3 - SUPREME COURT] may not be applicable and recording of the statement of the creditor is essential so as to ascertain whose money was actually deposited in the bank account of the creditor, whether it was unaccounted cash of the assessee or it was the cash in hand of the creditor. Therefore, we set aside the orders of the authorities below and restore the matter back to the file of the AO - We direct the assessee to produce all the 11 creditors before the AO. AO will record their statements and will also consider the explanation/evidences as may be furnished by them and thereafter readjudicate the issue in accordance with law.
Addition of cash credit - Allowance/disallowance of interest would be consequential to the acceptance or otherwise of the cash credit. We, therefore, set aside the orders of the authorities below on this point also and restore the matter back to the file of the Assessing Officer to be re-adjudicated along with the issue of addition for cash credit.
Addition of 20% disallowance out of telephone expenditure - HELD THAT:- Assessee is a partnership firm. The personal use of telephone by the partners cannot be ruled out. However, we deem it proper to reduce the disallowance to ⅙ (one sixth) as against 20% made by the Assessing Officer.
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2015 (9) TMI 1727
Denial of exemption u/s 11 - whether activities of appellant would quality to be charitable activity as under sec 2(15)? - HC held the factual correctness of which is undisputed, we can only endorse the view taken by the statutory authorities that in view of the proviso to Section 2(15), the activities of the assessee do not qualify to be charitable purpose as defined therein - AO was justified in disallowing the exemption claimed and assessing to tax the income of the assessee and the appellate authorities were justified in confirming the same - HELD THAT:- Heard the learned counsel for the petitioner and perused the relevant material.
We do not find any legal and valid ground for interference. The special leave petitions are dismissed.
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2015 (9) TMI 1726
Assessment in the name of company amalgamated - Amalgamation of two companies - Assessment to be made on which entity ? - HELD THAT:- In view of the order passed [2015 (7) TMI 1400 - DELHI HIGH COURT] these appeals are dismissed.
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2015 (9) TMI 1725
Unexplained jewellery - search and seizure operation - assessee was not being able to reconcile item-wise jewellery which were found at the time of search vis-à-vis the wealth tax and purchases made during the financial year by assessee - HELD THAT:- We are in agreement with the findings of Ld. CIT(A) that items of jewellery are often subjected to remaking on account of changing fashion and designs. In Indian society, the yellow metal and diamond has assumed lot of significance for ladies which is a status symbol and they buy it or convert the jewellery as per the prevailing fashion. There has no gainsaying that fashion keeps on changing and, accordingly, the jewellery is re-modeled from time to time according to the prevailing fashion. Under the facts and circumstances, comparison with the items of jewellery found at the time of search with wealth tax return, which were filed much earlier was putting an onerous task on assessee to prove something impossible, and assessee cannot be as bed to prove something which is beyond its control. We, accordingly, confirm the order of Ld. CIT(A) and this issue of Revenue’s appeals are dismissed.
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2015 (9) TMI 1723
Revision u/s 263 - Claim of exemption u/s.80-IB(11A) for Conversion charges AND Income from mango Trade - HELD THAT:- The company is eligible for exemption u/s 801B(11a) of the IT Act for the profit on contract conversion and profit on mango purchased and Sold without physical delivery to contract conversion customers. The above activity is involved processing, preservation and packing of fruits.
On perusing the letter, we find that it is not acknowledged by the Revenue for having received the letter and at the same time there is no dated mentioned in the letter. However, since the Ld.CIT has passed a cryptic order without any reasoning, we are of the considered view that the matter requires to be remitted back to the file of the Ld.CIT in order to pass a reasoned order after giving opportunity to the assessee of being heard. He shall also look into the detailed letter filed by the assessee before us which is supposed to have been filed before the Ld. CIT (A) on the earlier occasion while deciding the issue. Appeal of assessee is allowed for statistical purposes.
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2015 (9) TMI 1720
Revision u/s 263 by CIT - period of limitation - disallowance of interest u/s 36(1)(iii) - application of gross profit rate of 24.57% on the turnover of the assessee after rejecting the books of account of the assessee under section 145(3) - HELD THAT:- It is not in dispute that the original assessment order in this case was passed on 26/12/2008 and the same dealt with application of gross profit rate of 24.57% on the turnover of the assessee after rejecting the books of account of the assessee under section 145(3). It is also not in dispute that reassessment proceedings were initiated for making disallowance of interest under section 36(1)(iii) - also not in dispute that the proceeding under section 263 were initiated for applying the GP rate of 24.57%, on a turnover shown in the audited balance sheet filed to the bank as against the GP rate applied by the AO on a turnover shown in the audited balance sheet filed alongwith return of income.
It is evident from the above that the error related to application of G.P. rate and had crept in the order passed u/s 143(3) on 26/12/2008.The order passed u/s 147 had nothing to do with this issue. Therefore the order u/s 143(3) would subsist and would not merge with the order u/s 147.
The limitation for the passing of order under section 263 was to be taken into consideration from the date of passing of order u/s 143(3) i.e. 26/12/2008. The limitation in the present case therefore expired on 31/03/2011. The impugned order under section 263 having been passed on 22/03/2013 it is well beyond the period of limitation. In view of the same we hold that the impugned order is barred by limitation. Accordingly the order of the Ld. CIT u/s 263 is vacated. - Decided in favour of assessee.
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