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Income Tax - Case Laws
Showing 61 to 80 of 645 Records
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2016 (10) TMI 1302 - ITAT KOLKATA
Penalty u/s 271(1)(c) - Defective notice - Addition u/s. 68 on account of unexplained cash credit - HELD THAT:- Notice u/s.274 r.w.s.271 of the Income Tax Act issued by the AO. It is a printed form with so many clauses. This notice does not specifically point out as to whether there is any concealment of particulars of income or furnishing any inaccurate particulars of such income but across the printed line, there is a big tick mark.
The show cause notice u/s. 274 of the Act is defective as it does not spell out the grounds on which the penalty is sought to be imposed. Following the decision of M/S MANJUNATHA COTTON AND GINNING FACTORY & OTHS., M/S. V.S. LAD & SONS, [2013 (7) TMI 620 - KARNATAKA HIGH COURT] we hold that the order imposing penalty has to be held as invalid and consequently penalty imposed is cancelled. - Decided in favour of assessee.
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2016 (10) TMI 1301 - ITAT COCHIN
Benefit of deduction u/s 80P - return of income was not furnished within the time limit prescribed u/s 139 - Assessee is primary agricultural credit society, registered under the Kerala Cooperative Societies Act, 1969 - HELD THAT:- Belated filing of return of income by the assessee does not disentitle it from the benefit of deduction u/s 80P(2) of the Act. Further, the assessee, in the instant case, is a primary agricultural credit society registered under the Kerala Cooperative Societies Act, 1969. The certificate has been issued by the Registrar of Cooperative Societies to the above said effect and the same is on record.
The Hon’ble High Court, in assessee’s own case and [2014 (11) TMI 843 - ITAT COCHIN] had held that primary agricultural credit society, registered under the Kerala Cooperative Societies Act, 1969, is entitled to the benefit of deduction u/s 80P(2). Since there is a certificate issued by the Registrar of Cooperative Societies, stating that the assessee is a primary agricultural credit society, I hold that the assessee is entitled to the benefit of deduction u/s 80P(2) - Decided in favour of assessee.
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2016 (10) TMI 1299 - ITAT BANGALORE
Penalty u/s 221 - failure on the part of the assessee to remit the TDS in time - HELD THAT:- Levy made under section 221 is in accordance with law and hence the Department’s ground is sustained in this regard
Non-payment of TDS in time is a serious violation of the Trust reposed by the Government on the deductor. Such an action causes serious problems to the payees as they were not getting credit for the tax paid by them by way of TDS. In fact the AO records that the Department received complaint from the assessee for not issuing TDS certificates despite repeated request. The delay in remittances are in the range of four months to fifteen months.
As in Relience industries Ltd v CIT & others [2015 (7) TMI 812 - BOMBAY HIGH COURT] held that “the obligation to deduct and pay tax upon the assessee is unconditional under the Act. It is the responsibility of the assessee to deduct taxes and to pay to the Revenue within the period provided under the Act. Financial stringency would not justify deducting tax from the amount paid to the payee and not paying it to the Revenue. Otherwise, it would amount to using somebody else's money for the purposes of one's business. In such circumstances, the question of financial stringency, to our mind, hardly gives rise to a good and sufficient reason for not depositing tax which was an amount otherwise payable to the payee or on behalf of the payee to the Revenue.”
Assessee’s plea cannot be accepted as good and sufficient reason for not depositing tax within time - levy made by the AO at the rate of 5% per month on the defaulted TDS is unreasonable. We consider that levy of penalty u/s.221 @ 10% on the unpaid TDS at ₹ 2,05,55,731/- would meet the ends of justice. Hence the AO is directed to restrict the levy to ₹ 20,55,573/- in the place of ₹ 77,95,155/-. - Decided partly in favour of revenue
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2016 (10) TMI 1298 - ITAT PUNE
Unexplained expenditure u/s 69C - unexplained expenditure of payment of kickbacks - assessee's name appears in the list mentioned in the Volcker Committee Report as a result of Independent Enquiry Committee (IEC) appointed by the United Nations Security Council to investigate the administration and management of Oil-for-Food Programme in Iraq - onus of proving such expenditure is actually incurred - HELD THAT:- Observations of VCR cannot be the basis for invoking the provisions of section 69C especially in the facts of the present case, where majority of the contracts were prior to the period mentioned in VCR. Secondly, the assessee already had subsisting contract with KME under which in respect of all exports to various others countries including Iraq commission was paid @ upto 12.5%, wherein the said agent had to provide after sales service also. No extra commission was paid in respect of exports to Iraq. The assessee has time and again stressed that the payments were made through normal banking channel through authorized foreign exchange dealers and not through the banks which are listed in the VCR. Accordingly, we hold that there is no merit in application of provisions of section 69C of the Act in the present facts of the case and accordingly, we direct the Assessing Officer to delete the addition made on account of unexplained expenditure
Disallowance u/s 37(1) - payments as ASSF and ITF were in the nature of kickbacks - HELD THAT:- Assessee claims to have made payments to Al Azhar and KME in assessment year 2002-03 and where the assessee has failed to establish whether any services have been rendered by the said concerns and in view of the documents, evidences referred to by us with regard to these transactions, where admittedly, the amount was paid for service charges, the same are hit by Explanation to section 37(1) of the Act. With regard to Alia, the payments are made against transportation services. The assessee has filed the copies of invoices which are CIF, Baghdad and where it was its duty of assessee to deliver the goods at Baghdad, the remuneration paid to Alia @ 10% of the value of contract, which finds clear mention in VCR is payment by way of kickbacks to the IG and is covered by Explanation to section 37(1) of the Act and the same is not allowable as deduction to the assessee. This is a case where the persons were aware that the payments as ASSF and ITF were in the nature of kickbacks and were thus, willing parties to the illegal gratification and hence, are thus, hit by Explanation to section 37(1) of the Act. Since the assessee has failed to establish its case of KME has given its services in the absence of any distribution agreement, the payment made to KME is disallowed under section 37(1) of the Act. In this regard, we refer to the findings of CIT(A) in assessment years 2002-03 and 2003-04 and do not reproduce the same for the sake of brevity. Another aspect to be kept in mind is that the name of present assessee finds place in Table 7 and 8 of VCR and Table 7 refers actual expenditure and not projected expenditure. The plea of the assessee that the payment has made through normal banking channels does not help the case of assessee in view of discussion made in the paras above regarding the discrepancy in different communications.
Commission paid to Indian concern for liaison work was not allowed since the assessee failed to discharge its onus to establish that the said person had rendered any services to the assessee - Onus was upon the assessee to establish that the said persons had rendered services which necessitated the payment of commission to the said concern. Further, VCR in this regard reported that the persons making supplies to Iraq were indulging in payment of kickbacks stands established against the assessee and applying the said ratio, we uphold the disallowance made in the case of assessee relating to assessment years 2002-03 and 2003-04.
Eligibility to claim deduction under section 80IA allowed.
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2016 (10) TMI 1297 - ITAT AHMEDABAD
Disallowance of Freight expenses u/s. 40(a)(ia) - Scope of Amendment in section 40(a)(ia) - Tax not deposited before the end of the accounting year - HELD THAT:- Amendment in section 40(a)(ia) by Finance Act, 2010 has retrospective effect, meaning thereby, if the expenditure was incurred by the assessee in any month during the previous year and TDS was deducted, but such TDS was deposited after expiry of accounting year, but before due date of filing of the return, then disallowance under section 40(a)(ia) would not be made. DR was unable to controvert this contention of the ld.counsel for the assessee.
On due consideration of the facts and circumstances, we are of the view that as far as ground no.1 in all these three appeals are concerned, they are devoid of any merit, because, the assessee has deducted TDS on these amounts and TDS was deposited before the due date of filing of the return. AO has made disallowance on the ground that TDS was not deposited before the end of the accounting year i.e. before 31.3.2005. Therefore, ground no.1 in all three years is rejected.
TDS on the payments made to truck owners for hiring the trucks - Revenue authorities have assumed existence of either contractor-ship between the assessee and other truck owners, whose trucks were hired by the assessee for transport. There is no evidence on record. The assessee has ever entered into any contract or created any subcontract-ship with any of the truck owners.
Assessee could be fastened with the obligations to deduct TDS, if it has entered into a contract with truck owners. The assessee has only availed services of the contractor for transporting the goods from point “A” to “B”. All risk and reward for transporting the goods remain with the assessee. Therefore, the ld.Revenue authorities have failed to appreciate that relationship of contractor and contractee was not existed between the assessee and the alleged truck owners. On this reason, amongst other, we are of the view that the orders of the CIT(A) are not deserve to be interfered with, though by way of different reasons. e assessee cannot be held in default for non-deducting the TDS on the payments made to truck owners for hiring the trucks.
Section 40(a)(ia) was not applicable to the Asstt.Year 2005-06. Similarly, we have held that there is no contractor-contractee relationship exists between the assessee and the truck owners, therefore, no TDS is required to be deducted
Expenditure under the head car expenses and depreciation - CIT(A) confirmed the disallowance at the rate of 1/5th of this expenses - HELD THAT:- As agreed that decision of the Hon’ble Gujarat High Court in the case of Sayaji Iron & Engg. Co. [2001 (7) TMI 70 - GUJARAT HIGH COURT] is not applicable to the case of the assessee, as the assessee is a registered and firm and not a company. Since assessee failed to submit complete details, therefore, adhoc disallowance is made. We do not find any merit in this ground of appeal. It is rejected.
Disallowance in respect of bad debts - HELD THAT:- Revenue authorities have failed to appreciate the facts and circumstances. The explanation of the assessee was that it was given as advance to the staff for business purpose, i.e. it was to be incurred for hiring trucks. The ld.AO has considered as if it was given to the staff for their personal needs. The AO has considered it as advance to the staff. He has totally changed the meaning of the explanation of the assessee, and even if it is an advance to the staff during the course of employment and staff does not return it, then how it could be allowed as business loss, is not understandable. Similarly, the ld.CIT(A) has observed that the assessee failed to bring any evidence to demonstrate the fact that how it was incurred in day-to-day business activity. The assessee has submitted audited accounts and ledger accounts demonstrating the fact that the amount was given to the staff. What other evidence can be submitted ? Therefore, in our opinion, the ld.Revenue authorities have not appreciated the fact in right perspective. We allow this ground of appeal and delete disallowance.
Disallowance at the rate of 10% of the total expenses out of telephone and vehicle expenses, 20% on car expenses and depreciation on car and 15% on travelling expenses confirmed
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2016 (10) TMI 1296 - BOMBAY HIGH COURT
TP Adjustment - comparable selection - grievance of the Revenue is that the Respondent Assessee had itself relied upon M/s. Megasoft Ltd., M/s. Software Technology Group International Ltd. and M/s. Transworld Infotech Ltd. as comparable for the Respondent Assessee's operations for the financial year 2005-06 - HELD THAT:- The requirement under Rule 10B(4) of the Income Tax Rules are clear in as much as it obliges that the data to be used for comparability analysis should be contemporaneous with the time when international transactions are entered into by the tested parties. In view of the clear mandate of the law, no question of estoppal can arise. Moreover, the provisions of Rule 10B(4) of the Act, being self evident, the question as proposed, does not give rise to any substantial question of law. Thus, not entertained.
Transfer Pricing Officer was referring to a financial year other than the subject financial year. Consequently, it could not be read as a comparable. Thus, the question as proposed does not give rise to any substantial question of law. Thus, not entertained.
Tested party is not functionally comparable to M/. Ultra Marine & Pigments Ltd. as it is engaged in rendering Engineering and Technical Services while the Respondent Assessee is engaged in routine customer support services. Thus, the two services are not comparable. The bench marking for the purposes of arriving at Arms Length Price (ALP) has necessarily to be done with companies functionally similar. Once the functional profile is different, then the resources to be used and the profits earned would inherently be different. The Revenue is not able to point out why this finding on facts by the Tribunal is perverse. Accordingly, this question also does not give rise to any substantial question of law
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2016 (10) TMI 1294 - ITAT MUMBAI
Disallowance u/s 14A r.w.r. 8D - HELD THAT:- There is consistent view that in case there is no exempt income claimed by the assessee in the return of income, no disallowance can be made by the Revenue. Accordingly, in the present case, we confirm the order of the CIT (A) deleting the disallowance of expenses. Resultantly, this appeal of the Revenue stands dismissed.
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2016 (10) TMI 1293 - ITAT DELHI
Non-representation on the date of hearing by assessee - notice was sent to the assessee many times at the address indicated in Column No.10 in the memo of appeal, despite this the assessee remained unrepresented and notice came back unserved saying house is empty - HELD THAT:- On absence of any representation on the part of the assessee, it can be safely presumed that the assessee is not serious in pursuing the present appeal. The appeal of the assessee in view thereof is dismissed in limine. Support is drawn from the order of the Tribunals in Commissioner of Income-Tax vs. 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, it would be at liberty if so advised to pray for a recall of this order.
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2016 (10) TMI 1287 - ITAT CHENNAI
Depreciation to assessee trust - assessee is not engaged in any business - HELD THAT:- Depreciation on the asset in which the cost was already allowed as application of income under Section 11 of the Income Tax Act was considered by this Tribunal elaborately in the case of The Music Academy Madras [2016 (5) TMI 165 - ITAT CHENNAI] . This Tribunal found that Section 32 of the Income Tax Act is applicable only in respect of business of the assessee. Since admittedly the assessee is not engaged in any business and claiming itself carrying on the charitable activity, this Tribunal found that the assessee is not entitled for depreciation.
Conflict between the commercial principle or customary practice in computing income and the provisions of Section 32 were not brought to the notice of the Courts / Tribunal. Appeals of the assessee stand dismissed.
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2016 (10) TMI 1286 - ITAT BANGALORE
Deduction u/s 10A - direction of Hon’ble DRP to TPO/AO to reduce the telecommunication expenditure and the travelling expenditure incurred in connection with delivery of the software from both export turnover as well as total turnover - HELD THAT:- As decided in the case of Tata Elxsi [2011 (8) TMI 782 - KARNATAKA HIGH COURT] once item is included in the export turnover, it should also be included in the total turnover.
Exclude the travelling expenditure and telephone expenses incurred in connection with the software products from both export turnover as well as total turnover. This direction is in consonance with the law laid down by the Hon’ble Jurisdictional High Court in the case of CIT Vs. Tata Elxsi Ltd. [Supra] and therefore we do not find any reason to interfere with the findings of the learned CIT. Accordingly, we dismiss the grounds of appeal filed by the revenue.
Advances received from AEs as a part of payables for the purpose of computing the working capital adjustment - HELD THAT:- There is no dispute that the adjustment for working capital be granted. But the only issue is whether the advance received from AE should be considered as trade payable and be considered for working capital adjustment. The advance received from AE par takes the character of trade payables which is to be adjusted against the future invoice. As a result of receipt of this advance money the necessity for borrowings from outside is reduced to that extent thereby reducing the cost of the borrowings. Thus it has a direct bearing on the profitability of the concern. Therefore the trade payable should be considered while computing the working capital adjustment. Thus the grounds of appeal filed by the revenue are dismissed.
TP Adjustment - comparable selection - HELD THAT:- The assessee-company is engaged in providing software development services only to its AEs. Being a captive service centre providing contact services to its AEs, assumes less than normal risks and all the significant business and entrepreneurial risks are borne by the overseas affiliates , thus companies functionally dissimilar with that of assessee need to be deselected from final list.
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2016 (10) TMI 1285 - GUJARAT HIGH COURT
Reopening of assessment u/s 147 - disallowance of depreciation - amount of deduction related to the entire previous year at the specified rates however, the assessee company had come into existence only with effect from 30.08.2003 and therefore,proportionately the deduction for the period prior to 30.08.2003 which comes to ₹ 32.39 Lakhs (round off) had to be disallowed - HELD THAT:- AO in the original order of assessment dated 28.12.2007 had after scrutinizing the return allowed depreciation of ₹ 89.92 Lakhs. Thus, this issue was accepted by the Assessing Officer during the original assessment proceedings, may be without specific queries and recording of reasons for accepting the full claim. Nevertheless, in view of the full disclosure by the assessee and the declaration made in the return itself, it cannot be said that the assessee had failed to disclose true and full material facts.
Claim towards subscription charges made - period for the expenditure was for 12 months, 11 months out of which pertained to subsequent year. Accordingly such expenditure could not have been claimed during the year under consideration in its entirety. Proportionately, therefore expenditure of ₹ 32,083/= had to be disallowed - HELD THAT:- In this respect, the assessee had in the return itself claimed such sum of ₹ 35,000/= by pointing out that the same was towards subscription charges for the period between 01.03.2004 to 28.02.2005. Here also thus, there was full disclosure on part of the assessee. If the assessing officer was of the opinion that a part of the claim did not fall within the relevant period; during the original assessment, he could have disallowed the same. Not having done so, reopening beyond a period of four years would not be permissible.
One – Deviyani Tex Chem had issued a debit note towards interest on late payment by the assessee company - These charges did not pertain to relevant period and therefore could not have been claimed in the present assessment year - HELD THAT:- The assessee had pointed out that alongwith the return of income, the assessee did produce a debit note. It was from this very note that the assessing officer was drawing an inference that the claim of expenditure which did not pertain to the year under consideration was made and there was clearly no failure on part of the assessee to disclose true and full facts.
Interest expenses did not fall during the year under consideration and was therefore, not allowable - HELD THAT:- In this case also, the assessee had not only shown full figures in the account, such issue was also examined by the assessing officer during the original assessment. Thus can be seen from the letter dated 05.01.2007 written by the assessing officer to the assessee under which he called for multiple details - not only had the assessee disclosed full facts, the claim was also examined by the assessing officer during the original assessment and he made no disallowances in the order of assessment. The fact that he did not assign any reason for the same would be of no consequence.
Legal and license fees charges - It pertains to an amount which the assessee had paid to the Director General of Foreign Trade by way of penalty - HELD THAT:- In response to such a query, the assessee had submitted ledger extract of legal and license fees which contained the details of payment of ₹ 1.10 Lakhs towards penalty for the license. Thus, the claim was processed by the assessing officer during the original assessment. Reopening of the assessment would not be permissible even with the aid of the explanation to Section 147 of the Act. The impugned notice is therefore set aside. The petition is allowed and disposed of.
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2016 (10) TMI 1284 - ITAT DELHI
Capital gain from the transfer of agriculture land - Fair market value as on 01/04/1981 of the agricultural land - land transferred by the assessee and his father (each having half share) to M/s. Soma New Towns Private Limited - Revenue has objected to the additional evidences admitted by CIT(Appeals) in respect of fair market value of the land in question as on 01/04/1981 - HELD THAT:- From the facts of the case, we find that the assessee was not granted sufficient opportunity of hearing by the AO for producing evidence in support of fair market value, which is evident from the assessment order and, therefore, in our opinion, the action of the CIT (Appeals) of admitting the additional evidence is in interest of justice and in accordance to the law. Thus, ground No. 2 of the appeal is dismissed.
Fair market value as on 01/04/1981 of the agricultural land - We find that the Tehsildar has not provided any basis for taking four times of the stamp duty value as the fair market value of the land in question. Thus, the fair market value of ₹ 10,45,000/- as on 01/04/1981 stated by the Tehsildar is not based on value adopted by his office for the purpose of stamp duty valuation. The valuation of the Tehsildar is based on guesswork and not based on the sound evidences or Rules, which could justify the market value as four times the value adopted for stamp duty purposes. In such circumstances, in our opinion the directions given by the learned Commissioner of Income-tax (Appeals) to the Assessing Officer to adopt the fair market value of the agricultural land transferred as on 01/04/1981 at ₹ 10, 45,000/- is not justified. '
We feel it appropriate to restore the matter to the file of the Assessing Officer with the direction to make a reference to the valuation officer in terms of section 55A of the Act for ascertaining the fair market value of the land transferred by the assessee and then compute the capital gain in accordance with law.
Eligibility for exemption u/s 54B - HELD THAT:- We find from the plain language of section 54B of the Act that benefit under section would be allowed when the capital gain arising on transfer of land used for agricultural purposes, is invested in the purchase of new agricultural land within two years from the date of the agricultural land transferred. Thus, the thrust is on the utilization of the money received on sale of the agricultural land leading to capital gain towards purchase of new agricultural land.
Sale consideration on transfer of the asset was received by the assessee on 24/10/ 2008 and investment in the new agricultural land was made on 13/10/2008 and 23/10/2008, which is prior to the receipt of sale consideration and, therefore, the money received on account of capital gains has not been utilized towards purchase of new asset - Assessee has not fulfilled the conditions for availing the benefit under section 54B of the Act. In our opinion, the order of the learned Commissioner of Income-tax (Appeals) on the issue in dispute is well reasoned and no interference on our part is required. Accordingly, the ground of the appeal is dismissed.
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2016 (10) TMI 1283 - ITAT BANGALORE
TP Adjustment - comparable selection - non-granting of adjustment on account of lower capacity utilization and working capital adjustment - capacity utilization adjustment - HELD THAT:- For exclusion of Electronica Machine tools Ltd., and Kulkarni Power Tools Ltd., assessee pointed out the annual reports of these two companies on the issue regarding these two companies raised by way of filing additional grounds.
Regarding inclusion of two companies i.e M/s Guindy Machine Tools Ltd., and M/s United Drilling Tools Ltd., It has been submitted before us that these companies were rejected because unavailability of data, but since the data of these two companies are now available in the annual report of these two companies, these two companies should be considered as good comparables. We are of the considered opinion that the issue regarding inclusion of these two companies should go back to the file of the TPO/ AO for fresh decision.
Adjustment on account of lower capacity utilization and working capital adjustment - HELD THAT:- It is seen that the Tribunal has given a detailed guidelines as to how to make or grant capacity utilization adjustment. Hence, we feel it proper that this matter also should go back to the file of the AO/TPO for granting capacity utilization adjustment as per the guidelines given by the Tribunal in the case of DCIT Vs Class India Pvt.Ltd. [2015 (8) TMI 1490 - ITAT DELHI] . It is ordered accordingly.
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2016 (10) TMI 1282 - ITAT NAGPUR
Claim of deduction u/s 80IB - assessee has not filed the return within the due date specified u/s 139(1) - HELD THAT:- In the present case the assessee had filed the return after the due date on 21-02-2008. The small distinction referred by the assessee that the audit reports were filed within time on 31-10-2007 cannot lead to in-application of Hon’ble Calcutta High Court decision M/S SHELCON PROPERTIES (P) LTD [2015 (3) TMI 579 - CALCUTTA HIGH COURT] in this case. Hence the undisputed fact remains that the assessee has not filed the return within the due date specified u/s 139(1) and hence the provisions of section 80AC comes into play and the assessee shall not be allowed deduction u/s 80IB.
Disallowance of interest - Non deduction of TDS - Deduction u/s 40(a)(ia) - CIT(Appeals) in this case has upheld the AO’s action only on the ground that since TDS has not been deducted u/s 40(a)(ia) the amount of expenditure cannot be allowed - HELD THAT:- It is settled law from Hon’ble Apex Court in the case of Vegetable Products [1973 (1) TMI 1 - SUPREME COURT] that when two constructions are possible, the one in favour of the assessee should be applied. Accordingly in view of the above precedent, it is of the considered opinion that the assessee deserves benefit if the payees of the interest have filed their returns and paid taxes thereon. Since this aspect need factual verification, remit this issue to the file of the AO to consider the issue afresh in accordance with the Hon’ble Delhi High Court decision ANSAL LAND MARK TOWNSHIP (P) LTD. [2015 (9) TMI 79 - DELHI HIGH COURT] - Appeal filed by the assessee stands partly allowed for statistical purposes.
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2016 (10) TMI 1281 - GUJARAT HIGH COURT
Expenditure spread over a number of year - year of assessment - Tribunal held that the entire expenditure is not allowable in Asst. Year 200809 only but is required to be spread over a number of years - HELD THAT:- This question is covered by judgement of this Court in case of this very assessee in [2013 (10) TMI 1367 - GUJARAT HIGH COURT ] held that once the expenditure is held to be in revenue in nature incurred wholly and exclusively for the purpose of business, it can be allowed in its entirety in the year in which it is incurred. - Decided in favour of assessee.
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2016 (10) TMI 1280 - ITAT CHENNAI
Disallowance of deduction u/s 80P(4) - assessee is registered as a Cooperative Society under the Tamil Nadu Cooperative Societies Act, 1983 - HELD THAT:- As decided in M/S. VEERAKERALAM PRIMARY AGRICULTURAL CO-OPERATIVE CREDIT SOCIETY [2016 (7) TMI 922 - MADRAS HIGH COURT] the primary agricultural credit societies, registered as such under the KCS Act and classified so under that Act, including the appellants, are entitled to such exemption.
Disallowance of provision made for bad debts - AO made disallowance of the provision made for bad debts on the ground that it was not written off in the accounts - HELD THAT:- From the above provisions of section 36(1)(vii) of the Act, it is very clear that the bad debt is allowable only if it is written off as irrecoverable in the books of the assessee. Therefore, the disallowance made by the Assessing Officer was rightly confirmed by the ld. CIT(A) and we find no reason to interfere with the above findings of the ld. CIT(A). Thus, the ground raised by the assessee is dismissed
Reopening of assessment u/s 147 - HELD THAT:- CIT(A) has not adjudicated this legal issue of reopening of assessment and proceeded to decide the disallowance made under section 80P(4) of the Act. Under these facts and circumstances, we set aside the order passed by the CIT(A) and remit the matter back to the file of the ld. CIT(A) to decide the legal issue after giving sufficient opportunities of hearing to the assessee.
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2016 (10) TMI 1279 - ITAT DELHI
Reopening of assessment u/s 147 - addition u/s 68 - eligibility of reasons to believe - HELD THAT:- AO has not even mentioned the letter number and date of the letter of Director of Income-tax (Investigation), which constituted the information on the basis of which, he reopened the assessment. Assessing Officer has not mentioned name of persons who gave statement that the assessee was engaged in providing accommodation entry
Assessing Officer has not verified that the assessee had already filed return of income for the year under consideration and was not sure of the amount of income escaped and thus he has not even mentioned amount of income escaped , which is evident from the sentence in the reasons recorded that escaped income on account of accommodation entry was likely to exceed ₹ 1 lakh . He not even mentioned the nature of income escaped i.e loans or share application money or share capital etc.
AO has not applied his mind to the information and he has recorded the reasons in a mechanical manner, which are vague and non-specific. It is settled law that the action of reopening has to be judged only on the basis of the reasons recorded and no extraneous material can be supplemented to see the validity of the reopening. AO has to apply his mind to the material to conclude that he has reason to believe that income of the assessee escaped assessment and unless the basic jurisdictional requirement is not satisfied, a post-mortem exercise of analysing material produced subsequent to the reopening will not rescue an inherently defective reopening orders from invalidity. - Decided in favour of assessee.
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2016 (10) TMI 1278 - ITAT JAIPUR
Disallowance u/s 14A - AO non recording satisfaction with regard to the incorrectness of claim of the assessee having regard to the accounts of the assessee - HELD THAT:- As decided in own case even though the AO has made the disallowance by relying on the provisions of section 14A but he did not comply with the conditions as stipulated in section 14A(2). He has not recorded any satisfaction with regard to the incorrectness of claim of the assessee having regard to the accounts of the assessee having no such evidence or material brought to my notice by the D/R which may show that the AO has given a finding on the basis of accounts maintained by the assessee that he is not satisfied with the claim of the assessee.
Even the AO has not recorded the satisfaction as regards to the claim of the assessee. He is bound to compute the disallowance in accordance with such method as may be prescribed. It is the rule 8D which has been notified with effect from 24.03.2008. The assessment year involved is the assessment year 2009-10. No whisper whatsoever by the AO or by the ld. D/R that the AO has computed the disallowance by applying Rule 8D. It is a case where no disallowance can be made. - Decided in favour of assessee.
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2016 (10) TMI 1277 - ITAT HYDERABAD
Transfer Pricing adjustment - Comparable selection - HELD THAT:- Assessee company is engaged in developing software i.e. it is engaged in rendering designing, development and modification services relating to semi conductors for semi-conductor based products and also providing marketing support and financial and administrative support services to its AEs, thus companies functionally dissimilar with that of assessee need to be deselected from final list.
Infosys Ltd, Kals Info Systems,Tata Elxsi Ltd,Thirdware Solutions Ltd, Bodhtree Consulting Ltd, Persistent Systems Ltd ,Thinksoft Global Services Ltd, Comp U-Learn Tech India Ltd to be rejected accordingly.
Computation of deduction u/s 10A - HELD THAT:- Exclude telecommunication charges both from export turnover as well as the total turnover for computation of deduction u/s 10A of the Act. We find that this issue is covered in favour of the assessee by the decision Tata Elxsi Ltd [2011 (8) TMI 782 - KARNATAKA HIGH COURT].
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2016 (10) TMI 1276 - ITAT INDORE
Unexplained investment u/s 69 - HELD THAT:- The assessee has filed confirmation only on 08.12.2009, which are stereo type letters without PAN thereon. None of creditors is assessed to tax. Details of date money advanced and returned back is not filed nor any interest is charged thereon. It is pertinent to note that these advances were not returned back even after lapse of 4 years. The amount claimed to have been received from 14 creditors is below ₹ 20,000/- which has been intentionally done to escape from receiving the amount by cheques. Even the mode of receiving of amount from Shri Kailash Chand Jain (father) and Smt. Pushpa Jain (mother) ₹ 50,000/- each is also in cash. The onus cast upon the assessee to prove identity, credit worthiness and genuineness of transactions has not been discharged.
Thus, these three ingredients of section 68 of the Act are remained unsatisfied. Further the decision in the case of CIT vs. P. Mohanakala [2007 (5) TMI 192 - SUPREME COURT] and Sumati Dayal vs. CIT [1995 (3) TMI 3 - SUPREME COURT] relied on by the CIT (A) also support the view of lower authorities. In view of these circumstances, the finding of lower authorities are upheld for the addition of and the balance addition is deleted. This grounds of appeal of allowed is therefore, partly allowed.
Unexplained investment u/s. 69 in purchase agreement - HELD THAT:- Shri Santosh Kumar Lalwani had agreed to purchased 1/3rd of land for ₹ 43,27,400/- and paid ₹ 8 lakhs as advance for the same which means that the total value of the said land must be three times of ₹ 43 lakh meaning there by around ₹ 120-130 lakhs. Therefore, in the same way , Shri Vijay Jain, is very likely might have paid 1/5th of as advance as Bayana at ₹ 120/5=24 lakhs or ₹ 20 lakhs ). Since the assessee has failed to produce the agreement for purchase of land with Shri Devidas & others, therefore, we are of the considered view that the lower authorities have justified in making addition of ₹ 20 lakhs on this account. AO has not only made addition based on the statement but also having regards to entire circumstances of the case.
The circumstantial evidence and surrounding circumstances make the view of the AO as correct. We also find mentioned that the purchaser (executors) of said agreement have a written agreement of purchase of said land or executor. We find that in the said agreement, it has been clearly mentioned that the assessee has an agreement by which they have authorised to sell the land and get registered the same in name of prospective buyers. In view of these circumstances, we uphold the finding of lower authorities.
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