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Income Tax - Case Laws
Showing 21 to 40 of 660 Records
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2016 (11) TMI 1716
Bogus purchases - assessee had obtained bogus purchase bills from 14 parties which were stated to be hawala operators - assessee contended that he was engaged in extensive projects and in need of huge quantity of materials to speed up the work of the projects towards completion which made the assessee to make purchases from dealers who offered fine quality of material at rational rates along with early delivery of the goods and thus the assessee, in hasten, did not inquire much about the genuineness of the dealers and their background in respect of default with the sales tax / VAT department - HELD THAT:- The Tribunal, in all such cases, has invariably taken a stand that when GP/NP rates are comparable and sales figures are not disputed by the revenue then entire purchases do not deserve disallowance rather some ad hoc disallowance ranging from 5% to 12.5% has been found to be a reasonable estimation of profit element embedded in the bogus purchases particularly when material consumption factor do not show abnormal deviations. We also observe that CIT(A) has enhanced the amount of bogus purchases with respect to three more parties aggregating to Rs.1,58,00,987/- without confronting the same to the assessee.
We direct that assessee shall suffer disallowance with respect to bogus purchases to the extent of 10% of Rs.2,47,15,690/- as against full disallowance made by AO. The same comes to Rs.24,71,569/-. CIT(A) has enhanced bogus purchases with respect to three parties, two of which already figure in the list of AO. Therefore, no further additions shall be made against party at Serial No. 2&3 of the above table. Qua first party namely “M/s Ramex Trading Impex Pvt. Ltd.” for Rs.69,90,308/-, the matter is remitted back to the file of CIT(A) for fresh adjudication after providing suitable opportunity of being heard to the assessee. The assessee is directed to substantiate its claim before CIT(A) forthwith, failing which CIT(A) shall be at liberty to decided the issue on the basis of material available on record. The appeal of the assessee is thus partly allowed.
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2016 (11) TMI 1714
Rejection of books of accounts - applying GP rate of 35% as against 18.71% shown by the assessee - non-maintenance of item-wise detail of jewellery purchased and sold - adoption of Weighted Average Cost (WAC) method for valuation of stock was found incorrect and the FIFO method was found to be appropriate as a consequence, the stock of gold was found undervalued - HELD THAT:- On perusing the order of the I.T.A.T. in the case of M/s Sunny Jewellery House [2016 (5) TMI 1579 - ITAT CHANDIGARH], we find that the facts in that case were identical to that in the present case, where the books of accounts of the assessee, a jeweler, were rejected for identical reasons as stated in the assessee’s case being non-maintenance of item-wise detail of jewellery purchased and sold and stock of the same as also incorrect method of valuation of stock adopted being WAC as against FIFO adopted by the Assessing Officer. The Hon'ble I.T.A.T., in that case, after relying on the order of Jagdish Chand [2003 (6) TMI 441 - ITAT CHANDIGARH] had held that there was no infirmity in the order of the CIT (Appeals) in deleting the addition made. - Decided against revenue.
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2016 (11) TMI 1713
Interest income from the sister Concern - assessee had borrowed an amount from the Andhra Bank in the financial year 2010-11 on interest @18.25 p.a., out of which partial amount was advanced by the assessee to sister concern MDC @12% p.a - as per DR amount of interest paid to Andhra bank ought to have been capitalised to WIP as the amount was borrowed for working capital - HELD THAT:- Assessee has borrowed the said amount from Andhra Bank for the purpose of working capital facilities which is used for making advance of ₹ 8 crores to MDC and also for other purposes for meeting administrative expenses. It is stated that assessee has advanced the said amount to MDC for commercial expediency and placed reliance on the decision of the Hon’ble Supreme court in the case of SA Builders Limited [2006 (12) TMI 82 - SUPREME COURT]
The assessee is partner in MDC entitled for 50% share in profits and the said concern is also engaged in real estate and construction. The Revenue could not controvert the said contention of the assessee that the said amount was advanced keeping in view commercial expediency as stated above, thus keeping in view our above detailed reasoning, we are of the considered view that the addition made by the Assessing Officer by disallowing the interest expenses and adding the same to WIP is not sustainable keeping in view peculiar facts and circumstances of the case.
The revenue is also not able to show that inventories are acquired out of borrowings and interest is to be capitalised keeping in view AS-16 issued by ICAI. The AS-2 issued by ICAI clearly stipulates that generally the interest shall not be added to the inventories as the same does not usually bring the inventories to the present location and condition The assessee has earned interest income from MDC f ₹ 3,37,40,072/- which is offered for taxation, while interest paid for Andhra Bank on OD is ₹ 1,59,27,795/- and hence there is net interest income which had been earned by the assessee. We have also noted a peculiar fact that advances received from customer by the assessee as at 31-03-2012 is ₹ 68.57 crores, while closing WIP is ₹ 45.04 crores, thus advances from customer received by the assessee are higher than closing WIP as at 31-03-2012. Thus, keeping in view our detailed discussions and reasoning as set out above, we donot find any infirmity in the appellate order of the learned CIT(A), which we confirm and refuse to interfere - Appeal of revenue dismissed.
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2016 (11) TMI 1711
Deduction u/s 80-IB - Difference between the amount claimed by the assessee u/s 80-IB of the Act and the deduction allowed by the AO - different method of apportionment of expenditure followed by the AO - HELD THAT:- There is merit in the submissions of the assessee, as the proposition canvassed by the assessee are supported by Judgments cited above and the facts narrated by him above.
AR has also pointed out that the assessee has been following the method for allocation of common selling and office expenses since long. Therefore the assessee under consideration has been following consistent basis for allocation of common selling expenses and head office expenses. The method adopted by the assessee has been confirmed by the ld. CIT(A) and also confirmed by the Jurisdictional ITAT Kolkata. The AO while making the assessment did not accept the basis for allocation of common selling and head office expenses adopted consistently by the assessee and he has not accepted the orders of the Kolkata Bench of Tribunal. Since the issue is squarely covered in favour of the assessee by the orders passed by the Kolkata Bench of the Tribunal in the preceding previous years, therefore we do not hesitate to confirm the order passed by the ld. CIT(A). Appeal of the revenue is dismissed.
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2016 (11) TMI 1710
Claim of exemption u/s 10(38) - capital gains arising from redemption of Deep Discount Bonds - Denial of exemption as capital assets was not in the nature of an equity share in a company or a unit of an equity orient fund subject to various other stipulations therein - whether the impugned redemption income is to be treated as capital gains or interest income from securities? - HELD THAT:- There is no dispute that assessee had acquired the Deep Discount Bonds in question way back on 11.01.1994. It has come on record that the CBDT Circular dated 15.02.2002 applicable from prospective effect only has directed the field authorities to treat such bonds redemption income as interest income. The CIT(A) relied upon the Board’s press note dated 20.03.2002 that the above circular would have prospective effect only.
We further notice that a co-ordinate bench decision in C. S. Goslla [2008 (7) TMI 1083 - ITAT MUMBAI] holds the very Deep Discount Bonds as capital assets. We thus find no force in Revenue’s argument that the impugned redemption income has been wrongly treated as capital gains in the lower appellate’s proceedings.
Assessee’s corresponding first argument seeking to assess his redemption income as interest income on mercantile basis also has not merit since the above Deep Discount Bonds have been declared in the original return as capital assets only. The assessee claimed redemption income therefrom as capital gains u/s.10(38) of the Act in his return filed. We thus find no reason to accept his first argument adopting a different stand at this stage without any tangible basis. The Revenue’s only argument fails.
Non cost indexation benefit qua the above Deep Discount Bonds whilst treating income therefrom as capital gains - We notice that the lower appellate authority has placed reliance on Section 48 third proviso stipulating that second proviso thereto regarding indexed cost of acquisition shall apply to long term capital gains arising from transfer of a long term capital asset being bond or debenture and so on. Ld. counsel fails to dispute the application of this proviso restricting the ambit and scope of the other proviso regarding indexation cost computation. This assessee’s argument also meets the same outcome.
Entitlement for assessment of his capital gains arising from redemption of Deep Discount Bonds at a flat rate of 10% u/s.112 - We find no reason to concur with the same as this proviso itself stipulates that where the tax payable in respect of any income arising from the transfer of a long term capital asset in the nature of listed security other than a unit or zero coupon bond exceeds 10% of the amount of capital gains before giving effect to provisions of second proviso to Section 48, then, such excess shall be ignored for the purpose of computing the tax payable by the assessee. It has already come on record that second proviso to Section 48 of the Act is itself not applicable as per third proviso discussed hereinabove. We thus observe that this assessee’s last argument also deserves to be declined since the above proviso to Section 112 applies before giving effect to the provisions of second proviso to Section 48 which admittedly is not the case here.
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2016 (11) TMI 1709
Deduction u/s 54F - as observed that the assessee claimed that the entire sale consideration was deposited in the Nationalized Bank as well as in capital gain account however, no documentary evidence was submitted to the AO - as contended by the assessee that since the investment is made before the due date of filing of return under section 139(4) of the Act and also before the date of filing of return on 21.02.2013, the assessee is eligible for deduction u/s 54B & 54F even if he has not deposited the amount in capital gain account - HELD THAT:- The Coordinate Bench of the Tribunal while deciding the identical issue in the case of Nand Lal Sharma [2015 (6) TMI 482 - ITAT JAIPUR] as relying on ASHOK KAPASIAWALA VERSUS THE ITO WARD-7 (1) , SURAT [2015 (10) TMI 2045 - ITAT AHMEDABAD] ,ASHOK KAPASIAWALA VERSUS THE ITO WARD-7 (1) , SURAT [2015 (10) TMI 2045 - ITAT AHMEDABAD], SMT. VRINDA P. ISSAC [2012 (8) TMI 608 - KARNATAKA HIGH COURT] as decided in favour of assessee.
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2016 (11) TMI 1708
Reopening of assessment u/s 147 - addition of credit to the current account of the Assessee in the partnership firm - AO noticed that the partnership firm M/S.Salarpuria Soft Zone, of which the assessee company was a partner, had revalued its assets during the year ended with 31.3.2008 and transferred the Revaluation profit to its partners’ current account in their respective profit or loss sharing ratio - CIT-A deleted the addition by quashing reopening notice - HELD THAT:- On a careful perusal of the order of the learned CIT(Appeals), we do not find any legal infirmity or illegality in his order to interfere. Findings of the learned CIT(Appeals) are impeccable, and are in accordance with the law laid down by the Hon’ble Apex Court in Sanjeev Woolen Mills v. CIT, [2005 (11) TMI 26 - SUPREME COURT]. The ratio of decision in the case of M/s. Orchid Griha Nirman Pvt. Ltd. [2016 (11) TMI 247 - ITAT KOLKATA] is applicable to the facts of this case on all fours, inasmuch as the facts of both the cases emanate from the same transaction. We, therefore, while respectfully following the established judicial reasoning referred to above, hold that the facts of the case do not warrant any interference with the impugned order of the learned CIT(Appeals) on the aspect of proceedings under section 147 of the Act, and accordingly, uphold the same. Ground No 1 of the Revenue stands dismissed.
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2016 (11) TMI 1705
Assessment u/s 153C - proof of seized documents as belonging to assessee - HELD THAT:- From the material seized, though there was a reference to the name of the assessee-firm, equally there are names of other parties on the same documents. There is nothing to indicate that these documents were disclaimed by NKG in whose case search was conducted. The AO has not referred to any material to indicate that the assessee is the owner of those seized documents. Therefore, we hold that the AO was not justified in exercising jurisdiction u/s 153C of the Act. Hence, the assessments made pursuant to issue of notice u/s 153C are hereby cancelled.
Additional depreciation u/s. 32(1)(iia) - assessee as engaged in manufacturing or production of coal which is production activity - AO held that assessee is not engaged in any production / manufacturing activity and therefore the additional depreciation is not available for the deduction u/s 32(1)(iia) - whether the activity of extraction of coal amounts to the production? - CIT-A allowed deduction - HELD THAT:- As decided in GS. ATWAL AND CO. (GUA). [2001 (2) TMI 32 - CALCUTTA HIGH COURT] the point that the assessee is still not an industrial undertaking even though it might be engaged in production of coal is, in our opinion, also to be decided against the Revenue. Under the definition of an industrial undertaking given under s. 33B, Explanation mining activity would bring in the assessee within the definition of an industrial undertaking. But we need not import the definition of another section to the present one, although ordinarily the definition given in one section in an Act can be used for the purposes of another section unless the context indicates otherwise.
So far as the assessee is concerned, an undertaking it certainly is. We have found no facts from which we can opine that the assessee is not an industrial undertaking. Ordinarily speaking if a manufacturing activity or an article producing activity is carried on, an undertaking carrying on such activity is to be classed as an industrial one. It might be small scale or large scale, that does not matter much. Even if an undertaking is manufacturing or producing articles, but is still not to be classed as an industrial one for this, clear indications have to be given as to why this difference should be made in case of the undertaking in question, so that it stands out from the general category. - Decided against revenue.
Excess depreciation claim - AO opined that the machine has been used in the year under consideration for less than 180 days - HELD THAT:- We find that the machine was put to use with effect from 02.10.2009 as evident from the Delivery Inspection Report, the Service Report of Volvo India Pvt. Ltd. and also from the report of Heavy earth moving machine. In the background of the above discussion and precedent we do not find any infirmity in the order of Ld. CIT(A) and according we uphold the same. This ground of Revenue is dismissed.
Addition on account of festival celebration expense - allowable business expenses or not? - assessee has claimed festival celebration expense on its completion of 50 years of existence - HELD THAT:- The assessee celebrated its Golden Jubilee in Maysore where all the stockholder of the assessee-company, such as principals, founders, suppliers, banners, employees were also invited - the Golden Jubilee festival was celebrated on the completion of its flagship Ravi Udyog it came into existence in 1972 to 1973 and the flagship company was the strategic partners of the assessee-company. The expenses were incurred wholly and exclusively for the purpose of business of assessee.
There is no denial that expenditure was incurred by the appellant. The AO has brought no evidence on record to show that any part of the expenditure under consideration was bogus or of capital nature or incurred for the purpose other than wholly and exclusively for the purposes of the business of the appellant. Under the circumstances no justification of disallowance made by the AO especially, when the expenditure was supported by bills and vouchers - Decided against revenue.
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2016 (11) TMI 1704
Non prosecution of appeal - HELD THAT:- When the matter was called up for hearing today, no one has appeared on behalf of the assessee. The assessee has not filed any adjournment application also. The notice of hearing sent to the assessee has not been returned unserved. The matter was earlier adjourned a couple of times at the request of the assessee. In these circumstances, it appears that the assessee is not interested in prosecuting his appeal. The appeal filed by the assessee is, therefore, liable to be dismissed, for non-prosecution.
The appeal filed by the assessee is dismissed for non-prosecution.
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2016 (11) TMI 1702
Nature of expenditure - whether the payments made were capital or revenue in nature? - assessee had urged that in the light of the National Telecom Policy 1999, the payments - made on quarterly basis were not capital- that is for depreciation under Section 32 but entitled to be treated as revenue expenditure - HELD THAT:- CIT (A) and ITAT accepted the assessee’s contention and directed that the expenditure should be treated as falling under revenue fee by relying upon Commissioner of Income Tax vs. Fascel Limited [2008 (12) TMI 743 - DELHI HIGH COURT]. There is also a subsequent judgment Commissioner of Income Tax vs. Bharti Hexacom Ltd [2013 (12) TMI 1115 - DELHI HIGH COURT] in which it was held that such payments are in fact revenue and cannot be treated as capital expenditure.
This court is of the opinion that having regard to Bharti Hexacom Ltd (supra), the question of law urged does not arise. No other substantial questions of law have been pleaded.
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2016 (11) TMI 1700
Revision u/s 263 by CIT - reason given in the show-cause notice as different for which revision powers are finally exercised - unexplained investment under section 69B - HELD THAT:- The issue raised by the ld. CIT in the notice issued u/s 263 of the Act was materially different with grounds on which the revision order was passed. It is thus clear that the ground taken in the show-cause notice that there was unexplained investment under section 69B - But upon taking into account the submission made by the assessee, the ld. CIT himself changed the stand. CIT instead of taking the decision on merits based on the show-cause notice has merely referred the matter to the Assessing Officer for verification of certain aspects. It is thus clear that there was a shift in the stand of the ld. CIT as to whether it was a case for revision on the ground of unexplained investment under section 69B of the Act or non-verification of certain aspects. The reason given in the show-cause notice is different for which revision powers are finally exercised in the impugned order.
As in a situation in which the revision order is passed on the ground other than the grounds for which revision proceedings are initiated, the same cannot be sustainable in law. That apart, in the impugned order we have also noticed that the learned Commissioner has not faulted the explanation given by the assessee and has merely remitted the matter to the file of Assessing Officer for verification of factual elements embedded in explanation as given by the assessee. This approach is also not sustainable in law in view of the law laid down by the Hon'ble Bombay High Court in the case of CIT -vs.- Gabriel India Limited [1993 (4) TMI 55 - BOMBAY HIGH COURT]
In the present case, proceedings were not initiated on the grounds that adequate enquiries were not carried out. The Commissioner has not alleged in the show cause notice that adequate enquiries were not carried out, and again, it is elementary that no person can be condemned unheard, and therefore, the assessee not having been heard on the question whether or not adequate enquiries were carried out, learned Commissioner could not have subjected the assessment order to revision proceedings on the ground that adequate enquiries were not carried out. Secondly, there is nothing on record to provoke an enquiry, which has not been carried out in the instant case. Learned Commissioner has not pointed out any reason as to why the Assessing Officer should have made further enquiry, which was apparently left out. In view of this discussion and entirety of the case, we uphold the grievance of the assessee and quash the impugned revision order. AO has conducted the enquiry about the addition of the fixed assets as appearing from the notice issued under section 142(1)
Commissioner of income tax can exercise his jurisdiction u/s 263 of the Act only in cases where no enquiry is made by the Assessing Officer. In the instant case, it is admitted by the Income Tax Department that the Assessing Officer had made some enquiries though according to them it was not a proper enquiry. In view of the above facts that some enquiry was made is sufficient to debar the authorities from exercising the powers u/s 263 of the Act. The Tribunal was accordingly justified in setting aside the order passed u/s 263 of the Act. - Decided in favour of assessee.
Disallowance u/s 14A r.w.r.8D - In the instant case the AO has taken the possible view for making the disallowance under section 14A of the Act. Thus in our considered view the AO has taken a possible view and therefore the order of the AO cannot be held erroneous & prejudicial to the interest of Revenue. Accordingly the ground raised by the assessee is allowed.
Addition of trade discount on the ground that the assessee claim for trade discount was not in order - From the submission of the ld. AR we find that details of the trade discount were duly furnished to the AO at the time of assessment under section 143(3) of the Act. The details of such discount is placed - From the facts we find that the ld. CIT has changed its stand as initiated in the notice and at the time of passing the order under section 263 of the Act. In similar facts & circumstances we have already held in Para 8(a) of this order that the order of the AO is not erroneous and prejudicial to the interest of Revenue. Following the same we reverse the order of ld. CIT and the ground raised by the assessee is allowed.
Excess depreciation claimed - We do not agree with the view of the ld. CIT as there is change in his stand with regard to the notice and in the revision order. In similar facts & circumstances we have already held in Para 8(a) of this order that the order of the AO is not erroneous and prejudicial to the interest of Revenue. Following the same we reverse the order of ld. CIT and the ground raised by the assessee is allowed. The assessee gets the relief, accordingly - Assessee appeal allowed.
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2016 (11) TMI 1699
Correct head of income - income earned on share transactions - profit from capital gain or business income - HELD THAT:- DR has not brought any material to demonstrate that the facts are not identical to the case decided by the Tribunal for the AY 2007-2008. Therefore, we are of the opinion, the decision of the CIT (A) to rely on the said Tribunal's decision (supra) for the AY 2007-08 is fair and reasonable and it does not call for any interference. Accordingly, grounds raised by the Revenue are dismissed.
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2016 (11) TMI 1697
Unabsorbed depreciation set off against the long term capital gain - HELD THAT:- By placing reliance on the judgment of the Gujarat High Court in General Motors P Ltd. [2012 (8) TMI 714 - GUJARAT HIGH COURT], this Tribunal in the assessee’s own case for the assessment year 2007-08 [2014 (1) TMI 1908 - ITAT CHENNAI] allowed the claim of the assessee. The only contention of the department representative is that the decision of the Mumbai Special Bench of this Tribunal is against the assessee.
This Tribunal is of the considered opinion that the judgment of the Gujarat High Court has to be preferred rather than the decision of the Mumbai Special Bench of this Tribunal. Therefore, the CIT(A) has rightly placed his reliance on the judgment of the Gujarat High Court in General Motors P Ltd. (supra) rather than the decision of Mumbai Special Bench of this Tribunal in Times Guarantee Ltd. (supra). - Decided against revenue.
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2016 (11) TMI 1696
Disallowance u/s 14A r.w.r. 8D - sufficiency of own funds - suo moto disallowance - ITAT deleted the addition - satisfactory explanation - HELD THAT:- Considering the fact that while making the addition made by the Assessing Officer under Section 14A of the Income Tax Act read with Rule 8D of the Income Tax Rules, 1962, the Assessing Officer did not record as to how the expenditure as claimed by the assessee was not satisfactory, and considering the fact that the assessee had sufficient interest free fund, out of which the concerned investment had been made, it cannot be said that the learned Tribunal has committed any error in deleting the addition made by the Assessing Officer made under Section 14A r.w.r. 8D of the Income Tax Rules, 1962. Under the circumstances and considering the direct decision of the Division Bench of this Court in the case of India Gelatine and Chemicals Limited .[2015 (11) TMI 392 - GUJARAT HIGH COURT]
No substantial question of law arise in the present appeal.
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2016 (11) TMI 1695
Bogus purchases - Addition u/s 69C - HELD THAT:- Considering the law declared by the Supreme Court in the case of Vijay Proteins Ltd. [2015 (4) TMI 1146 - SC ORDER] whereby the Supreme Court has dismissed the SLP and confirmed the order passed by the Gujarat High Court [2008 (3) TMI 323 - GUJARAT HIGH COURT] and other decisions of the High Court of Gujarat in the case of Sanjay Oilcake Industries Vs. Commissioner of Income Tax [2008 (3) TMI 323 - GUJARAT HIGH COURT] and N.K. Industries Ltd. Vs. Dy. C.I.T., [2016 (6) TMI 1139 - GUJARAT HIGH COURT] the parties are bound by the principle of law pronounced in the aforesaid three judgments.
We remit back the case to the Assessing Officer for deciding afresh on the factual matrix. The authority will accept the law but the transaction whether it is genuine or not will be verified by the Assessing Officer on the basis of the aforesaid three judgments.
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2016 (11) TMI 1693
Deduction u/s 80IA(4) - profit from infrastructure development and their operation and maintenance activities - assessee-company is engaged in the business of development of various infrastructure facilities relating to water and sewage treatment and its operation and maintenance - HELD THAT:- As decided in own case [2013 (4) TMI 969 - ITAT AHMEDABAD] relying on decision of Hon’ble Bombay High Court in the case of ABG Heavy Industries [2010 (2) TMI 108 - BOMBAY HIGH COURT] as directly applicable on the assessee, wherein it was opined that the said assessee entered into a contract for supply, installation, testing, commissioning and maintenance of container handling cranes at JNPT for a term of 10 years whereafter the same would vest in the letter, is entitled for deduction u/s.80IA(4). This decision of the Hon’ble Court is directly applicable on the facts of the case.
Thus as Respected Coordinate Bench has already granted the deduction claimed by the assessee, therefore for the years under consideration the assessee is entitled for the deduction u/s.80IA(4) - Decided in favour of assessee.
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2016 (11) TMI 1687
Income from house property - allowability of Maintenance charges against lease income - allowability of impugned charges/taxes from lease income which has been disallowed by revenue primarily on the ground that the assessee has offered income only against one property - HELD THAT:- When Income is calculated under the head House Property, then besides statutory deduction of 30% u/s 24, an assessee is entitled only for deduction with respect to taxes levied by any local authority. Therefore, society maintenance charges levied by the Society which is not a local authority are not at all allowable to the assessee. Therefore, we held so and accordingly, maintenance charges of four flats are not allowable under the head ‘Income from House Property’.
As assessee has contended that Godown has been used by assessee for business purposes and therefore, we restore this matter to file of AO for limited purpose of verifying assessee’s claim that the godown was used for business purpose during impugned AY or not and if so, allow the deduction for municipal taxes under the head ‘Business Income’. So far as regarding, municipal taxes for four properties are concerned, a combined perusal of Statement of Total Income for AY 2006-07 & 2005-06 strengthens the claim the assessee that lease income has been offered on receipt basis as per TDS certificates to avoid mismatch of TDS credit. Therefore, we held that municipal taxes relating to four properties are allowable under the head ‘Income from House Property. The appeal of the assessee against Ground Nos. 1 to 3 is partly allowed.
Disallowance u/s 43B - We find that assessee had filed return of income for AY 2006-07 on 06/11/2006 whereas the 43B claim of the assessee for AY 2005-06 has been disallowed by AO vide order dated 05/12/2007 and affirmed by CIT(A) order dated 25/03/2009. Therefore, there was no occasion with the assessee to claim the same in statement of total income. Therefore, this matter is also restored to AO for limited purpose of verifying the 43B payment made by the assessee and allow the same to the extent of ₹ 7,70,986/-, if the same has not been allowed in AY 2005-06 consequent to Tribunal’s order. The ground nos. 3 to 6 of the assessee is allowed for statistical purposes.
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2016 (11) TMI 1686
Addition u/s 40(a)(ia) - disallowance of interest expenses - technical error in furnishing the declaration in Form 15G/15H wherein certain columns of the Forms were not filled-up by the payee - HELD THAT:- Genuineness of the deposit received and the payment of interest on the same for the relevant assessment years has never been doubted by the income tax authorities. The declaration has been furnished by the persons who are in receipt of the interest stating that their income is below the threshold limit for taxation and no tax need to be deducted. The disallowance made for the relevant assessment year is for the reasons that there is a technical error in furnishing the declaration in Form 15G/15H wherein certain columns of the Forms were not filled-up by the payee.
The mistakes found in the declaration are of technical nature and the assessee could have got it corrected, had he been given an opportunity, instead of taking to the extreme step of adding back the entire interest payment. AO and the CIT(A) instead of giving an opportunity to the assessee to correct the Form 15G/15H had straight away invoked the provisions of section 40(a)(ia) of the Act and disallowed the interest expenditure. Non furnishing of statement to CIT as mentioned in Rule 29C(5) only entails the assessee for penalty u/s 272A(2) of the Act and not for a automatic disallowance of interest expenditure by invoking the provision of section 40(a)(ia).
Non filling up of the column in Form 15G/15H by the payee’s are only technical default, which could have been corrected had the assessee been given an opportunity. The assessee should be given an opportunity to correct the technical error with regard to the defaults that is containing in Forms 15G/15H. Therefore, the matter is remitted to the Assessing Officer. The assessee shall produce the corrected Form 15G/15H for the relevant period from the payee and shall submit the same to the Assessing Officer. If the corrected forms in 15G/15H are submitted, there shall be no disallowance of interest expenditure. Appeal filed by the assessee is allowed for statistical purpose.
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2016 (11) TMI 1685
Unexplained cash deposits u/s 68 - whether the cash deposited was coming out of the cash available with the assessee being a NRI, which was kept by him for last two years? - HELD THAT:- It was not brought on record why he has withdrawn so much of money and what made the assessee to keep such huge money in hand. But, on record, submitted by the assessee, we find that he had sufficient money. Even the AO could not bring any proof that the assessee has in fact utilized or applied the cash withdrawn two years back, except making a remark that there is no possibility of keeping such amount by the assessee being a NRI. He has not brought on record, why he cannot keep so much of cash in hand and no contrary findings were given by him against the submissions of assessee. AO has made the addition merely on conjectures/surmises/suspicion and no proper reasons were given why he cannot keep the cash in hand except the remark of being an NRI.
In our view, the Hon’ble Supreme Court in the case of Dhakeswari Cotton Mills Ltd. [1954 (10) TMI 12 - SUPREME COURT] has held that the AO cannot complete the assessment purely on guess and without any reference to evidence or any material at all. Also in the case of Umacharan Shaw & Brothers [1959 (5) TMI 11 - SUPREME COURT] has held that AO cannot complete the assessment merely on suspicion which cannot take the place of proof in these matters.
Thus we hold that the AO made the assessment merely on suspicion and without bringing any cogent material on record to establish that assessee cannot keep the cash in his hand being a NRI. Accordingly, we uphold the order of the CIT(A) in deleting the addition - Decided against revenue.
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2016 (11) TMI 1683
Estimation of income - bogus purchases - CIT-A restricted the addition @12.5% - HELD THAT:- Revenue’s plea is entirely misconceived since the said co-ordinate bench merely admitted assessee’s additional evidence to direct the CIT(A) for afresh adjudication of the issue. The lower appellate authority has duly considered the same in its order to agree with the Assessing Officer’s findings in principle that the assessee has not been able to prove genuineness of its grey cloth purchases. It thereafter is of the opinion that it is not the entire purchases but only the gross profit element therein has to be added @12.5% of the amount in question.
DR fails to dispute the fact that assessee’s sales/exports of the grey cloth already stand accepted. Nor does it file before us any material to conclude that the above percentage of the addition is in any way unreasonable. We thus find no reason to interfere with the lower appellate order restricting the impugned bogus purchases addition in peculiar facts of the case. It is made clear that the above percentage shall not be treated as a precedent in any preceding or succeeding assessment year in assessee’s cases. Decided against revenue.
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