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Income Tax - Case Laws
Showing 81 to 100 of 660 Records
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2016 (11) TMI 1627
Reopening of assessment u/s 147 - non deciding objections of the assessee against initiation of reassessment proceedings by passing a separate speaking order - HELD THAT:- AO has not passed any speaking order against the said objections so filed by assessee, which is a mandatory requirement as has been held by Hon'ble Apex Court in the case of M/s GKN Driveshafts (India) Ltd vs ITO [2002 (11) TMI 7 - Supreme Court] reopening order held void. - Decided in favour of assessee.
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2016 (11) TMI 1625
TP Adjustment - comparable selection - HELD THAT:- Motilal Oswal Investment Advisors Pvt. Ltd is primarily in the business of Merchant Banking and, therefore, is not functionally comparable with the business of the assessee being investment advisory to its AE.
IDFC - assessee is engaged in business of providing investment research and advisory services to Bain Mauritius, on a non-exclusive and non-binding basis, in connection with potential investment opportunities in India. IDFC rendered Portfolio Management services for hybrid infrastructure portfolio, agriculture opportunities portfolio and farm fork portfolio. IDFC is registered as portfolio manager with SEBI. Thus, IDFC is functionally different from the assessee which is engaged merely in non-binding investment advisory support services. Since, IDFC is functionally different, we direct the AO to exclude the IDFC from the list of comparables
CRA Online Limited operated in two strategic lines of business, i. e. knowledge Process Outsourcing and information Services and Technology Solutions, with a list of reputed global and domestic clients.
we direct the AO to exclude above mentioned three comparables from the final list. Effective ground of appeal is decided in favour of the assessee.
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2016 (11) TMI 1623
Disallowance of commission expenses - assessee argued that the assessee wanted to adduce the additional evidence in support of his claim, therefore, the assessee should be allowed to produce the evidence before the AO in the interest of justice - HELD THAT:- No doubt these documents were not produced before the AO as well as before the CIT(A). But these documents seems relevant to decide the matter of controversy and to achieve the target of justice, therefore, in view of the said circumstances we allowed the additional evidence and direct the AO to consider the claim of the assessee accordingly by giving an opportunity of being heard to the assessee in accordance with law. Accordingly, the finding of the CIT(A) on this issue has been ordered to be set aside and issue is directed to be restored to the file of AO to decide the matter a fresh in view of the above said observations and in accordance with law.- Appeal filed by the assessee allowed for statistical purpose.
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2016 (11) TMI 1621
Low tax effect - monetary limit - HELD THAT: - Delay condoned. Leave granted. Tag with Civil Appeal [2018 (8) TMI 1825 - SC ORDER] wherein held as a last opportunity, four weeks' time is granted to the learned counsel for the appellant(s)to file affidavit of valuation and deficit court fees, failing which the appeals shall stand dismissed for non-prosecution.
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2016 (11) TMI 1620
Mnatanability of appeal - low tax effect - HELD THAT:- On perusal of the Circular No. 21/2015 dated 10.12.2015 and the materials available on record, we could not see whether the impugned case falls under any of the exceptions contemplated in the said Circular. Circular makes it very clear that the revised monetary limits shall apply retrospectively to pending appeals also.
We find that the Circular is binding on the tax authorities. This position has been confirmed in the case of Commissioner of Customs vs Indian Oil Corporation Ltd [2004 (2) TMI 66 - SUPREME COURT] wherein examined the earlier decisions of the Apex Court with regard to binding nature of the Circulars and laid down that when a Circular issued by the Board remains in operation then the revenue is bound by it and cannot be allowed to plead that it is not valid or that it is contrary to the terms of the statute. Hence we hold that the appeal(s) of the revenue deserve to be dismissed in terms of low tax effect vide Circular No.21 / 2015 dated 10.12.2015
No proper Notice issued u/s. 143(2) served on the assessee - AO claimed to have issued notice u/s. 143(2) for fixing the date of hearing on 23-11-09 and argued that such notice was served on a person by name Sh. M. Sankar who is neither authorized nor concerned person to receive on behalf of assessee - HELD THAT:- AO recorded the issuance of notice u/s. 142(1) on 19-7-2010 for fixing the hearing on 02-08-2010 and thereafter, according to assessment order, probably, after 26-08-2010 another notice for initiation of penalty proceedings u/s. 271(1)(b)of the Act was issued.
A person claiming to be representing the assessee as partner appeared before the AO for the first time on 10-12-2010 in response to notice issued u/s. 271(1)(b) of the Act and it concluded that the service of notice u/sec 143(2) on 30-09-09 and issuance of notice thereafter u/sec 142(1) of the Act was not in the knowledge of the assessee and as rightly contended by the Ld.AR notice u/sec 143(2) of the Act was not properly served on the assessee. We also find that there is a gap of one year between issuance of notice u/s. 143(2) and appearance of partner representing Assessee before the AO. Therefore, the order sheets of assessment record as filed by the assessee by way of paper book suggests that the assessee was not appeared before the AO in response to notice issued u/s. 143(2) of the Act as it was not in the knowledge of Assessee. Therefore, we hold that the statutory notice issued u/s. 143(2) of the Act was not properly served on the assessee, which is mandatory as per section 143(2) of the Act.
The notice as prescribed under sub section (2) of Section 143 of the Act was not properly served on the assessee. Thus, the assessment order dt: 30-12-2010 made u/sec 144 of the Act and as confirmed by the CIT-A is held to be invalid and it is quashed. - Decided in favour of assessee.
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2016 (11) TMI 1619
Service of notice by an affixture - mode of service of notice - Curable defect u/s 292BB - validity of assessment - No notice u/s 143(2) issued and served upon the assessee within the stipulated period prescribed in the proviso - wrong assumption of jurisdiction by the AO under section 143(2) - provisions of section 282 of the Act dealing with provisions relating to the service of notice - HELD THAT:- There is nothing to suggest that the assessee was intentionally hiding from the authorities for the purpose of avoiding service or there was any other good reason to conclude that the notice could not be served in an ordinary way. The inaction or delay on the part of the Assessing Officer in issuing notice under section 143(2) of the Act cannot be a ground to straightway effect service by affixture. Thus, in the instant case, the ordinary process not having been exhausted or carried out by the Assessing Officer, he was not justified in directly resorting to service of notice by an affixture merely because he had issued the notice at the last minute i.e. on 29//11/2011 so as to avoid the limitation expiring on 30/11/2001. Under these circumstances, we find ample force in the plea of the assessee on the issue of wrong assumption of jurisdiction by the Assessing Officer by issuing the instant notice under section 143(2) of the Act.
Plea raised by the Revenue is that the assessee had appeared before the Assessing Officer on 10/12/2001 and that on that basis it is sought to be canvassed that, in any case, assessee was aware of the notice under section 143(2) of the Act having been served on 29/11/2001 - as per assessee it is wrong on the part of the Revenue to contend that assessee attended before the Assessing Officer on 10/12/2001 in response to the notice issued under section 143(2) of the Act dated 29/11/2001. We find the aforesaid plea of the assessee quite potent and is in fact supported by the material on record. The Ld. Representative for the assessee had referred to a communication dated 10/12/2001 addressed to the Assessing Officer, wherein it has been communicated that the notice was received on 10/12/2001 itself, which ostensibly is the notice dated 6/12/2001 addressed to the Director of the company. Therefore, the aforesaid plea of the Revenue is misplaced and is hereby rejected.
Curable defect u/s 292BB - section 292BB, in any case, does not come to the rescue of the Revenue in the present case because it has been introduced by Finance Act, 2008 w.e.f. 01/04/2008 and it would not apply in the instant case.
Thus the notice under section 143(2) has not been served within the time and the mode prescribed under the Act and as a consequence, the impugned assessment framed under section 143(3) of the Act is void ab-initio. Accordingly, the assessment order dated 10.11.2003 is liable to be quashed. - Decided in favour of assessee
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2016 (11) TMI 1617
Benefits of section 80P - Deduction u/s. 80P(2)(a)(i) - Unexplained cash credits u/s. 68 - Non granting of deduction u/s. 80P(2) - treating the unexplained credits as ‘income from other sources’ - HELD THAT:- Delay condoned. Leave granted.
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2016 (11) TMI 1616
Depreciation on assets put into use - assets have been claimed by the assessee as an application of income for charitable activities - HELD THAT:- Delay condoned. Leave granted.
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2016 (11) TMI 1615
Benefit of deduction u/s 80P(2) - assessee is a primary agricultural credit society - HELD THAT:- In the instant case, the assessee is a primary agricultural credit society registered under the Kerala Cooperative Societies Act, 1969. The certificate, which has been issued by the Registrar of Cooperative Societies, to the above effect, is placed on record.
CHIRAKKAL SERVICE CO-OPERATIVE BANK LTD. VERSUS THE COMMISSIONER OF INCOME TAX [2016 (4) TMI 826 - KERALA HIGH COURT] held that primary agricultural credit societies registered under the Kerala Cooperative Societies Act, 1969 are entitled to the benefit of deduction u/s 80P(2)(i)(a) of the Act. Since there is a certificate issued by the Registrar of Cooperative Societies stating that the assessee is a primary agricultural credit society, we hold that the assessee is entitled to the benefit of deduction u/s 80P(2)(a).
Granting deduction u/s 80P(2) for the addition made u/s 68 - HELD THAT:- We notice that the Assessing Officer while making the addition u/s 68 of the Act had brought the same to tax under the head ‘income from business’. Once the same is brought to tax as ‘income from business’, the said income is entitled to the benefit of deduction u/s 80P(2)(i)(a) of the Act . See THE KARAD MERCHANT SAH. CREDIT [2011 (2) TMI 1543 - ITAT PUNE] and BULDANA URBAN CO-OPERATIVE CREDIT SOCIETY LTD. [2013 (12) TMI 237 - ITAT NAGPUR]
The CBDT, in the recent circular no.37/2016 dated 2nd Nov 2016 has considered higher deduction u/s 80P on the enhanced profit as a result of disallowance of expenditure. The CBDT had clarified that, as a result of expenditure disallowance, there is a enhanced profit and the same is brought to tax as business income, deduction under Chapter VI-A need to be allowed on the enhanced profit. Thus we hold that the CIT(A) is justified in granting benefit of deduction u/s 80P(2)(i)(a) of the Act, as regard to addition u/s 68
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2016 (11) TMI 1614
Deduction u/s 80P(2)(a)(i) - assessee is a primary agricultural credit societies registered under the Kerala Cooperative Societies Act, 1969 - HELD THAT:- In the instant case, the assessee is a primary agricultural credit society registered under the Kerala Cooperative Societies Act, 1969. The certificate, which has been issued by the Registrar of Cooperative Societies, to the above effect, is placed on record. The Hon’ble jurisdictional High Court in assessee own case and other batch of cases had held that primary agricultural credit societies registered under the Kerala Cooperative Societies Act, 1969 are entitled to the benefit of deduction u/s 80P(2)(i)(a) of the Act. Since there is a certificate issued by the Registrar of Cooperative Societies stating that the assessee is a primary agricultural credit society, we hold that the assessee is entitled to the benefit of deduction u/s 80P(2)(a) of the I T Act.
Ad-hoc disallowance of 5% out of the total interest paid by the assessee on the deposits received from its members - AO while making the ad-hoc disallowance of interest paid had brought the same to tax under the head “income from business” - HELD THAT:- AO while making the ad-hoc disallowance of interest paid had brought the same to tax under the head “income from business”. Once the same is brought to tax as ‘income from business’, the said income is entitled to the benefit of deduction u/s 80P(2)(i)(a) of the Act.
The CBDT, in the recent circular no.37/2016 dated 2nd Nov 2016 has considered higher deduction u/s 80P on the enhanced profit as a result of disallowance of expenditure. The CBDT had clarified that, as a result of expenditure disallowance, there is a enhanced profit and the same is brought to tax as business income, deduction under Chapter VI-A need to be allowed on the enhanced profit. We hold that the CIT(A) is justified in granting benefit of deduction u/s 80P(2)(i)(a) as regard to interest that was disallowed. Accordingly, ground is rejected.
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2016 (11) TMI 1612
Revision u/s 263 by CIT - Revision of orders prejudicial to revenue - allowability of payment on revision of pay scales as prior period expenses u/s 37 - unabsorbed overhead on capital works under “Miscellaneous Expenses” - CIT decided these two claims on merits - AO had no option in light of direction of CIT - HELD THAT:- AO, decided the matter in accordance with the directions of the CIT as he was indeed bound to. CIT, therefore, decided these two claims on merits. Even the other issues were decided by the CIT on merits. However, they are not relevant for the reasons already stated.
The Tribunal was, therefore, bound to consider the case on merits as well. We have come to the conclusion that the decision of the Tribunal on merits must be upheld. In view thereof, it was open to the Tribunal and it certainly is open to us to proceed on the basis that the proceedings under section 263 were valid. Once we proceed even on a demurer that the proceedings under section 263 are valid, we are entitled, indeed bound to consider the issues on merits.
Allowability of payment on revision of pay scales as prior period expenses u/s 37 - when the liability to pay the arrears arose? - whether the liability to pay the entire arrears arose in the assessment year in question, namely, 2009-10 or whether the liability arose to the extent of 40% in the AY 2009-10 and to the extent of 60% in the following AY 2010-11? - HELD THAT:- Tribunal rightly held that the entire liability was incurred in the assessment year in question; had been estimated with reasonable certainty and that it was not a contingent liability. The assessee was, however, liable to discharge a part of that liability at a future date. What is relevant is when the assessee’s decision that the amount was payable was taken. The provision for the payment of the salary including arrears was not a contingent liability. It arose on account of the sixth pay commission which was approved by the Haryana Government and adopted by the assessee. We are in agreement with this finding of the Tribunal.
The liability, in the case before us, arose in the assessment year 2009-10. Sixty percent of it was liable to be discharged in the next assessment year. It is, undoubtedly, estimated with more than just reasonable certainty. The liability was, therefore, not a contingent one but one in praesenti. A part of it was to be discharged at a future date. The judgment supports the assessee’s case. - Decided in favour of assessee.
Allowability of Misc. expenses - assessee has charged the administrative expenses incurred on construction staff at 14% to capital work and repair and maintenance as per accounting policy. The system was adopted from the PWD. The remaining expenses were charged to revenue expenditure as unabsorbed overhead on capital works under miscellaneous expenses in the profit and loss account - HELD THAT:- This was the first time that the Department had not accepted the assessee’s case. The Tribunal found on facts that the CIT (Appeals) had not pointed out any defect in the assessee’s accounting policy. This was disclosed in the return. It was not contended that the assessee had not disclosed the true and proper income. Thus, a substantial question of law in this regard does not arise. This question is, therefore, also answered against the Department/Revenue and in favour of the assessee.
Perversity of Tribunal order - grossly overlooked the material evidence/information on record - HELD THAT:- It is apparent that the order of the Tribunal does not suffer from any perversity. Even on issue No.3, the Tribunal has taken a possible view. This question is, therefore, also answered in favour of the assessee
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2016 (11) TMI 1611
Following question of law arises for consideration:-
“Did the Income Tax Appellate Tribunal (ITAT) fell into error in interfering with Commissioner of Income Tax (Appeals) [CIT (A)] findings with respect to the contentions made under Section 263 A of the Income Tax Act, 1961, in the circumstances of the case ”
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2016 (11) TMI 1609
Levy of penalty u/s. 271AAA - due date of filing Return of income u/s. 139(1) has already expired before the search - HELD THAT:- The search u/s. 132 was conducted on 26.08.2008 and the due date of filing the Return of income of assessee is 31.07.2008 and the assessee has filed the Return of income on 17.10.2008, which is after the due date of Return of Income u/s. 139(1) and in compliance to the provisions of section 271AAA. The specified the previous year applicability for the year ended is 31.03.2008 and the present assessment year being assessment year 2008-09, and the due date u/s. 139(1) being 31.07.2008 and whereas search u/s. 132 took place on 26.08.2008 and the due date of filing Return of income u/s. 139(1) has already expired before the search.
Hence, the penalty cannot be initiated. CIT(A) does not have the power to give directions to levy penalty u/s. 271AAA on undisclosed income. Since, the orders of the Assessing Officer on penalty merged with the appellate authority, we are of the opinion that order of CIT(A) cannot be sustained and in the interest of justice, we dismiss the order of CIT(A) and allow the grounds of the assessee.
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2016 (11) TMI 1607
Disallowance of expenses u/s 40(a)(i)/40(a)(ia) - disallow payments when TDS was not done and subsequently become taxable on account of a retrospective legislation - HELD THAT:- CIT(A) followed the decision of this Tribunal in M/s WS Atkins India Pvt. Ltd, supra, which referred the decisions of Hyderabad Bench of the Tribunal in Infotech Enterprises Ltd [2014 (1) TMI 1363 - ITAT HYDERABAD] wherein it has been held that section 40(a)(ia) would not apply to disallow payments when TDS was not done and subsequent ly become taxable on ac count of a retrospective legislation. It has also referred to the decisions of the Delhi & Mumbai Tribunal in SMS Demag Pvt Ltd [2018 (1) TMI 184 - ITAT DELHI] & Sonic Biochem Extractions Pvt. Ltd. [2013 (9) TMI 193 - ITAT MUMBAI]. We uphold the decision of the CIT(A) and dismiss the grounds raised by the Revenue.
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2016 (11) TMI 1605
TPO - Comparable selection - inward Technologies Ltd. has been wrongly excluded from the list of comparable, therefore, the same should included in the list of comparables - AR prayed for excluding from the list of comparables Tata Technologies Ltd. having operating margin of 31.18% on the ground of high profit making company - Held that:- There is no dispute in respect of settled position that the consistent loss making company has to be excluded from the list of comparables. A company is said to be consistent loss making when the company has incurred losses in the three consecutive financial years including the financial year in which the international transactions have been made. In the instant case Financial Year 2009-10 is relevant to the assessment year under appeal. Thus, the financial years to be considered for determining whether the company is consistent loss making are financial years 2007-08, 2008-09 and 2009-10. A perusal of the profit and loss account of Onward Technologies Ltd. placed on record shows that the said company has suffered losses in financial years 2007-08, 2008-09 and 2009-10.
Thus, it is evident from the perusal of the financial results of Onward Technologies Ltd. that Onward Technologies Ltd. is consistent loss making company, therefore, the said company cannot be considered as a good comparable.
Exclusion of Tata Technologies Ltd., the ld. AR has not substantiated as to how the said company has abnormal profits. We do not find any merit in the appeal of the assessee and the same is dismissed.
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2016 (11) TMI 1604
Disallowance of deduction u/s 80IA - assessee has not employed more than 10 employees - Held that:- Material evidence available on record shows that Shri. Sowrirajan was working in the factory in the day time and since he is staying in the premises of the assessee, he was also shown as chowkidar. This Tribunal is of the considered opinion that an individual cannot be forced to work for more than eight hours in a day and if the assessee compels Shri. Sowrirajan to work in the day time in the factory and as a chowkidar in the night, it would be contrary to the provisions of labour welfare legislation. Therefore, the explanation of the assessee is contrary to the existing statutory provisions. Tribunal is of the considered opinion that Shri. Sowrirajan stay in the factory premises in the night cannot be considered as employment in the manufacturing process.
Coming to the consultant so long as the consultant is not shown as an employee of the assessee in its pay role, he cannot be considered as an employee participating in the manufacturing process. The assessee may consult several consultants for several purposes including legal and technical aspect. It is not known, what are the functions the consultant performed in the manufacturing process of the assessee. Unless and until, it is established that the consultant has performed a role in the manufacturing of diesel generator, this Tribunal is of the considered opinion that such a consultant cannot be considered as an employee participating in the manufacturing process of the assessee - Decided against assessee.
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2016 (11) TMI 1603
Entitlement to the benefit of deduction u/s. 80P(2)(a)(i) - AO held that the assessee is engaged in the business of banking and in view of section 80P(4), since the assessee is not a Primary Agricultural Credit Society or a Primary Co-operative Agricultural and Rural Development Bank, it is not entitled to deduction - Held that:- The Hon’ble High Court of Kerala has categorically held in assessee’s own case for the assessment year 2007-08 [2016 (5) TMI 1164 - KERALA HIGH COURT] that the assessee is not a primary agricultural credit society and it is a co-operative bank. The Hon’ble High Court further held that the assessee is not entitled to deduction u/s. 80P(2) of the Act, in view of introduction of section 80P(4) of the Act with effect from 01/04/2007. Thus order of the CIT(A) in denying the benefit of deduction u/s. 80P(2) of the Act is correct - Decided against assessee.
Disallowance of contribution made to unrecognized Superannuation Fund - Held that:- We notice that for the assessment year 2009-10 the assessee has accepted the CIT(A)’s order and no further appeal was preferred to the Tribunal. The assessee’s contention that to the extent of withdrawals made by the employees from unrecognized provident fund should be allowed as deduction u/s. 37 of the I.T. Act was never raised before any of the authorities below. Hence, this plea of the assessee is rejected.
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2016 (11) TMI 1602
Exemption under Section 54F - expenditure purportedly incurred by the assessee on renovating the new asset, after its purchase by the assessee, to make it habitable - whether be included in the cost of the new asset? - Held that:- Tribunal has allowed the respondentassessee's appeal by following the decisions of its Coordinate Benches at Mumbai in Saleem Fazuebhoi v/s. DCIT [2006 (6) TMI 139 - ITAT BOMBAY-G] to hold that the expenditure incurred on making the house habitable should be considered as an investment in purchase of a house, subject to the condition that the payment was made during the specified period under Section 54F of the Act. The Revenue has accepted the above two decisions of the Tribunal. This for the reason that it has not been able to show that any appeal has been filed from the two aforesaid decisions of the Coordinate Benches of the Tribunal. The impugned order has merely been followed by the impugned order of the Tribunal.
Improvement cost inclusion in the cost of the new asset while working out the exemption under Section 54F - Held that:- The impugned order of the Tribunal records “we have considered the rival submissions as well as the relevant material on record. There is no dispute that the assessee has incurred an expenditure of ₹ 58.26 lakhs on the improvement of the flat purchased by the assessee to make in a habitable condition.” The aforesaid statement recorded by the Tribunal has to be accepted in the absence of the same being rectified by it. It therefore follows that before the Tribunal the Revenue did not urge that the expenditure of ₹ 58.26 lakhs had not been in fact incurred to improve the flat so as to make it in habitable condition. No substantial question of law.
Appeal admitted on the substantial questions of law at question nos. (1) and (4).
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2016 (11) TMI 1601
Earning on sale of shares of Talent Infoway Ltd - change of head of income - disputes under the head of income from other sources - Held that:- The option of the assessee in matters of the claim relating to the profits / gains on sale of shares based on the entries in the books of accounts, assumes significance.
The Officers are prevented from changing the head of income for taxing the said gains arbitrarily and without having contrary evidence against the assessee. The said Circular No. 6/2016 enlists certain conditions and the Revenue Authorities are required to examine the said Circular (supra) closely and adjudicate this issue after grating a reasonable opportunity of being heard to the assessee. For this purpose, we remand this matter to the file of the AO.
Prima facie, we find, the contents of para 3(a) and other paragraphs of the said Board Circular do not permit the Revenue Authorities to change the head of income from "business income" to "the capital gains" or vice versa, unless the conditions specified in para 4 of the said Circular (supra) ie bogus claims or sham transactions / questionable transactions are involved. The Revenue Authorities are required to honour the books of account and the entries therein pertaining to the shares - Appeal of the assessee is allowed for statistical purposes.
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2016 (11) TMI 1600
Expenses incurred on Information Technology by the Head office on and charged to the Indian Branch - assessee was deductible u/s 37(1) without any restrictions contained in Section 44C? - Held that:- The grievance being that the expenditure incurred on Information Technology to the extent of ₹ 14.99 crores cannot be disallowed u/s 40A(i) for failure to deduct tax at source. It is clear that the the Revenue was not aggrieved by the order of the CIT(A) allowing deduction under Section 37(1) and also with the direction of the CIT(A) that the aforesaid payment would not be allowed as a deduction under Section 44C, therefore in the above view it is not open for the Revenue to urge this issue before us when the same was not urged before the Tribunal leading to the impugned order of the Tribunal. Question no.1 as formulated does not give rise to any substantial question of law
National loss arising from revaluation of unmatured forward exchange contract - Allowable deduction - no accrual as the forward contract was not settled and without appreciating the true nature of the transaction - Held that:- Issue stands covered in favour of the assessee and against the Revenue by the decision of this Court in Commissioner of Income Tax v/s. Bank of India reported in [1995 (11) TMI 78 - BOMBAY HIGH COURT].
Appeal admitted on the substantial questions of law at question nos. (2), (3) and (5).
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