|
Advanced Search Options
Income Tax - Case Laws
Showing 1 to 20 of 678 Records
-
2016 (2) TMI 1378 - KARNATAKA HIGH COURT
Addition of 1.6% of an expenditure u/s 37(1) - onus to prove the genuineness of expenditure - whether tribunal right in law in restricting the addition to 1.6% in respect of wages instead of 10.3% and 6.6% adopted by the assessing authority? - HELD THAT:- One of the vital basis for the decision of the Tribunal and when this Court has by the aforesaid Judgment in [2015 (7) TMI 536 - KARNATAKA HIGH COURT] has set aside the said order of the Tribunal and has remanded the matter wherein held that on careful perusal of the order passed by the Tribunal, we are of the opinion that the order of the Tribunal cannot be sustained inasmuch as the Tribunal has not applied its mind judiciously to the facts and circumstances of the case. In view of the same, interest of justice requires that the matter has to be re-dealt by the Income Tax Appellate Tribunal, Bangalore.
Thus we find that similar course deserves to be adopted even in the present matter.
-
2016 (2) TMI 1377 - ITAT DELHI
Determination of income - method of accounting adopted for revenue reorganization - Accounting of real estate transactions - AO applying the percentage completion method (PCM) and rejecting the project completion method accounting adopted by the assessee - whether Accounting Standard (AS-9) which sanctions the project completion method, was correctly applicable in the circumstances of the cases? - HELD THAT:- Hon’ble High Court [2015 (11) TMI 1283 - DELHI HIGH COURT] has upheld that conclusion of the ITAT [2012 (4) TMI 621 - ITAT DELHI] that the adoption of PCM is in establish method of accounting and without there being any rationale or new development in the fact and circumstances of the case as well as without bringing out any defect on record in the accounting procedure adopted by the assessee, the revenue could not have concluded that the project completion method was not appropriate for the assessee. Hence, order of Hon’ble High Court is also applicable in favour of the assessee to the present case pertaining to AY 2010-11 and accordingly sole ground of the revenue being devoid of merits is dismissed in the result appeal of the revenue is dismissed.
-
2016 (2) TMI 1375 - CHHATTISGARH HIGH COURT
Disallowance of deduction u/s 80IA r.w.s. 80IA(4)(iv) - power generated by the Respondent partly consumed and partly sold and the rate with regard to the latter - Appeal against MAHENDRA SPONGE AND POWER LTD. [2015 (6) TMI 1243 - ITAT RAIPUR] wherein held on this very fact that the said assessee was a manufacturer of Iron steel and captive power plant has supplied electricity to its manufacturer unit which was at higher rate than the power supplied to Chhattisgarh State Electricity Board and computation of the market value of the power is correct after considering it with the rate of power available in the open market namely the price charged by the Board.
HELD THAT:- We find that the issue has been decided in the case of M/S GODAWARI POWER & ISPAT LTD. [2013 (10) TMI 5 - CHHATTISGARH HIGH COURT] as held market value of the power supplied to the Steel-Division should be computed considering the rate of power to a consumer in the open market and it should not be compared with the rate of power when it is sold to a supplier as this is not the rate for which a consumer or the Steel- Division could have purchased power in the open market. The rate of power to a supplier is not the market rate to a consumer in the open market - AO committed an illegality in computing the market value by taking into account the rate charged to a supplier
Sitting in coordinate jurisdiction, there is no occasion for us to re-examine the matter and arrive at any other determination. The fact that a Special Leave Petition may have been preferred against the same and in which there is no interim order, does not persuade us to entertain this appeal.
-
2016 (2) TMI 1373 - ITAT LUCKNOW
Penalty u/s 271D - foundation of the penalty proceedings not in existence - whether no proceedings were initiated or pending in respect of the captioned assessment year, penalty proceedings u/s 271D or 271E can be initiated? - case of the assessee is that the original assessment order was passed by the Assessing Officer u/s 143(3) on 08/10/2009 and thereafter, learned CIT passed order u/s 263 of the Act as per which learned CIT set aside the said assessment order dated 08/10/2009 and directed the Assessing Officer to re do the assessment - Subsequently, the order of learned CIT u/s 263 of the Act was set aside by the Tribunal and therefore, now the surviving order is the original assessment order passed by the Assessing Officer u/s 143(3) on 08/10/2009
HELD THAT:- As per the penalty order passed u/s 271D on 27/11/2012, we find that the same is on the basis of fresh assessment order passed by the Assessing Officer u/s 144/263 on 28/12/2011, which does not survive because the order of learned CIT u/s 263 was set aside by the Tribunal and therefore, the consequential order of the Assessing Officer u/s 144/263 does not survive. It is also seen that the notice u/s 271D was issued on 11/05/2012 and 12/10/2012 and the order u/s 271D was passed on 27/11/2012.
As decided in Baldev Singh [2012 (2) TMI 650 - ITAT CHANDIGARH] there is no merit in initiation of penalty proceedings u/s 271D and 271E because no proceedings for the relevant year were pending at the relevant point of time. In the present case also, when proceedings were initiated u/s 271D on 01/05/2012, no proceedings were pending in respect of the present assessment year. In fact, the original assessment order was passed by the AO u/s 143(3) on 08/10/2009 and subsequent assessment year u/s 144/263 was also already passed on 28/12/2011 and this is admitted position that in course of original assessment proceedings completed on 08/10/2009, there was no whisper about initiation of proceedings u/s 271D of the Act.
In our considered opinion, under the facts of the present case, this Tribunal order rendered in the case of Baldev Singh (supra) and also in the case of Manohar Lal [2011 (1) TMI 538 - PUNJAB AND HARYANA HIGH COURT] are squarely applicable and hence, respectfully following these judgments, we hold that the penalty imposed by the AO in the present case is not valid because the initiation of penalty proceedings is not valid in the eyes of law. We, therefore, delete the penalty.Apeal of the assessee stands allowed.
-
2016 (2) TMI 1372 - ITAT MUMBAI
Validity of reopenIng of assessment - Notice after a period of four years - reasons to believe - HELD THAT:- We are of the opinion that if the AO wants to invoke the provisions of section 147 after a period of four years, he has to compulsorily elaborate that there was failure on part of the assessee to disclose truly and fully the relevant facts to decide the taxability of that particular year. The courts are of the view that not only the fact of failure of the assessee has to be mentioned it has to be explained as to how assessee had failed and his failure ended in under assessment/escapement of income.
Where the provisions of section 147 are being invoked after the period of four years from the end of the relevant assessment year, in addition to the AO having reason to believe that any income chargeable to tax had escaped assessment, it must also be established as a fact that such escapement of assessment had been occasioned by either the assessee failing to make a return under section 139 either, etc. , or by reason of failure on the part of the assessee to disclose fully and truly all material facts necessary for his assessment for that assessment year.
Undisputed facts of the present cases are that the assessee original assessment was completed u/s. 143(3) of the Act, that the AO had not mentioned, in the reasons recorded for reopening of the assessments, that because of the failure of the assessee to disclose the material facts truly and fully income had escaped assessment. As the basic and first pre-requisite for issuing the notice is not fulfilled, so, the assessment orders passed in pursuance of such notices have to held to be invalid. Considering the facts and circumstances of both the cases, we are of the opinion that the orders of the FAA does not suffer from any legal or factual infirmity. So, upholding his orders for both the years i. e. 1997-98 and 1998-99, we decide the effective ground of appeal against the AO.
Reopening of assessment - whether assessee was entitled for deduction of the whole lease rent ? - HELD THAT:- No new material had come in possession of the AO to disturb the completed assessment. He had changed his opinion about the treatment to be given rental income. In our opinion, in absence of some cogent material AO cannot initiate proceedings u/s. 147 of the Act. We also find that if the order of the FAA was to be implemented there would not be any escapement of income for any of the years. In both the years the depreciation and interest would be more than the rental income, if the transaction with regard to leased assets was to be treated financial transaction.
With regard to the argument that the AO had not formed any opinion, as he had not discussed anything in the assessment order, we would like to mention that in the matter of Prima Paper and Engineering Industry [2015 (2) TMI 803 - BOMBAY HIGH COURT] as well settled that the power to reopen an assessment is not a power of review and mere change of opinion would not justify reopening of an assessment. This would apply even when assessment sought to be reopened is within four years from the end of the assessment year.
Revenue does not dispute the fact that the issue with regard to which the reopening is sought to be done was the subject matter of discussion and deliberation before the AO during the original proceedings leading to the order - Also it is an undisputed position that the Assessing Officer did have occasion to apply his mind to the deduction claimed by the respondent-Assessee before allowing the same. The objection of the revenue that there was no opinion formed during the original assessment proceeding as the order did not deal with the same is unsustainable. The mere fact that the assessment order does not discuss the issue of deduction would not lead to the conclusion that the Assessing officer had made no opinion with regard to the issue.
Thus we are of the opinion that the re-opening was not based on valid reasons and there was no escapement of income for both the years. Assessee appeal allowed.
-
2016 (2) TMI 1371 - ITAT RAIPUR
Addition of low gross profit - survey conducted - as per revenue surrendered amount was nullified by claiming loss within the accounting period after the survey - correctness of gross profit disclosed by the assessee in the post survey accounting period - HELD THAT:- Even after the survey operation conducted u/s. 133A on 8.8.2007, no specific defect was referred by the AO pertaining to books of account of the assessee. There was no such allegation that there was suppression of sales or inflated purchases were accounted for in the books of account. Although there was an allegation of suppression of stock and excess cash were found but that was not made the basis of the impugned addition by the AO.
AO had proceeded to compare the trading results of pre survey and post survey period but contention before us is that the AO should have examined the profit of the entire financial year. That profit should have been compared with the profit disclosed and accepted in the immediately preceding year i.e. A.Y. 2007-08. This fact has also not been challenged by the Revenue side that addition in question was made without rejection of books of account.
On this issue, there are several decisions, wherein, it was consistently opined that there should be some defects to be pointed out by the revenue department so as to disturb the percentage of profit disclosed. In the absence of such discrepancy, the action of the AO remained un-substantiated. One more reason assigned by the ld CIT(A) before granting relief was that there was no uniform decrease in trading results of all the commodities. Rather in some of the commodities, the post survey profit rate was higher than the rate of profit already assessed in the past years. Therefore, we hereby confirm the findings of the ld CIT(A) and reject this ground of appeal taken by the revenue.
Disallowance of remuneration and interest paid to partners - As per the AO, the income surrendered was assessable u/s. 69C i.e. “income from other sources”, therefore, deduction claimed u/s.40(b) was not an admissible expenditure - CIT(A) deleted the addition - HELD THAT:- As we came to know that in a number of decisions, a consistent view has been taken that if the amount is surrendered pertaining to stock or business receipts, during the course of survey, then such surrender was nothing but income generated from the business activities of the assessee.
Few case laws cited are S.K. Srigiri & Bros [2007 (11) TMI 72 - KARNATAKA HIGH COURT], Jamnadas Muljibhai [2005 (1) TMI 366 - ITAT RAJKOT] and Deepa Agro Agencies [2005 (8) TMI 288 - ITAT BANGALORE-B] - thus we find no reason to interfere with the finding of ld CIT(A) and the same is hereby confirmed. This ground is accordingly rejected.
-
2016 (2) TMI 1367 - DELHI HIGH COURT
Treatment of amounts deposited as Tax Deducted at Source (TDS) - HELD THAT:- The Income Tax authorities shall consider and appropriately grant the relief which the applicant may be eligible and entitled to claim, having regard to the provisions of Section 89 for spread-over of the income tax liability (calculated on lump sum basis while deducting TDS).
If an application is made in that regard within three weeks from today, the respondent bank shall extend full cooperation and furnish all necessary calculations in this regard. The Income Tax authorities shall grant the relief to the extent permissible in accordance with law.
-
2016 (2) TMI 1365 - DELHI HIGH COURT
Inordinate delay of 1110 days in re-filing the appeal - HELD THAT:- The standard excuse that the department is putting forth in all such applications for condonation of delay in re-filing the appeal is the change of Standing Counsel for the Department and the failure by the earlier counsel to inform the Department about the appeal lying in defect.
This explanation does not impress the Court. It is not possible to accept that no one in the Department followed up on the filing of appeals and allowed a period of almost three years to elapse before the appeal could be re-filed. Department has a cell in the High Court which is under the supervision of a Deputy CIT. He ought to be keeping track of the filing of appeals and should be able to know if any appeal entrusted to the panel counsel for filing has not been listed even once before the Court for a long time.
The application for condonation of the delay of 1110 days in re-filing the appeal is dismissed.
-
2016 (2) TMI 1364 - ITAT BANGALORE
Depreciation on net working equipments used for audio/video conference and video streaming - @15% OR 60% - HELD THAT:- As decided in assessee own case [2014 (12) TMI 890 - ITAT BANGALORE] AO, instead of classifying the entire equipment as plant and machinery and not computer, is required to examine each item in detail as regards its functional dependency on the computer and its independent existence. The items which are functionally dependent on computers are definitely part of computer and the items with independent existence may not be computers but wherever it is found that the device is not used independent of the computer system and the purpose of audio visual conferencing and video streaming, the same shall be treated as computers and wherever it is used independently for any other purpose it shall be treated as plant and machinery. The AO, shall, thus allow depreciation at the rate of 60% on the equipment which could be classified as computer and at the rate of 15% on the equipment which could be classified as plant and machinery - Ground no.1 & 2 of the assessee are treated as allowed for statistical purposes.
Set off of brought forward depreciation of loss - claim denied despite being made in the return of income - HELD THAT:- We find that the claim of brought forward loss was not considered by the AO. The AO is directed to verify such claim and to give a set off of brought forward loss as allowed under law. Ground no.3 is allowed for statistical purposes.
TP Adjustment - treatment given by the lower authorities to the international transactions pertaining to payments made by it for administrative support services received by it from its associated enterprises - Lower authorities have considered the value of the benefit if any received by the assessee from its AE as nil due to failure of the assessee to produce evidence in this regard - Similar failures were there in the earlier years also - HELD THAT:- As per the learned DR, assessee ought to have brought all the evidence in support of its claim that it had received benefits from its AE, due to the services rendered before the DRP, in view of the Tribunal’s order for assessment year 2008-09. However, it is also possible that the order dated 19-09-2014 would have been received by the assessee only much later. There is a distinct probability that the assessee after receipt of the order of the Tribunal for assessment year 2008-09 [2014 (12) TMI 890 - ITAT BANGALORE] did not have sufficient time to gather and produce such details before the learned DRP for substantiating its case due to short interval. Due to this reason, we are of the opinion, that the benefit of doubt can be given to the assessee for the impugned assessment year also. We therefore, give similar directions as given in the earlier years.
-
2016 (2) TMI 1361 - ITAT CHENNAI
TDS u/s 194A - reversal of TDS deducted on submission of relevant Forms - As per revenue Form 15H was not filed at the time of either payment of interest or credit of interest - According to the ld. DR, there is no provision in the Income-tax Act, 1961 to refund the tax deducted by the deductor - assessee claims that it received Form 15H from the respective depositors and accordingly, the tax deducted was credited to the respective accounts by making a reversal entry - HELD THAT:- Before the due date for depositing of the funds the assessee has received Form 15H, therefore, there was a statutory obligation on the part of the assessee to forward the Form 15H to the respective Commissioners. At the best, it can be said that there was a delay on the part of the respective depositors in filing Form 15H.
When the recipients of the interest are not liable for taxation under the Income- tax Act, 1961 or they have filed the return of income and paid the taxes on the interest income, naturally, the assessee is not liable to pay the tax deducted u/s 201 of the Act. When the recipients have no liability to pay tax, the question of payment of interest does not arise for consideration.
As observed by the CIT(A), it has to be verified whether the recipients had paid the taxes if at all they are liable for taxation. It is also to be verified whether the recipients have any taxable income in the light of Form 15H filed before the assessee.
Accordingly, the orders of the lower authorities are modified and the AO is directed to examine whether the recipients have any taxable income or not. If they have taxable income it also needs to be verified whether they have paid taxes on the interest paid by the assessee and thereafter, the Assessing Officer shall decide the matter in the light of the observation made by this Tribunal in this order. Appeal of the assessee is partly allowed.
-
2016 (2) TMI 1359 - ITAT KOLKATA
Unexplained cash credit u/s 68 - Unexplained cash credit - HELD THAT:- It was a case of advances received by the assessee in cash from his dealers and the same having been adjusted against the sale subsequently made to the said dealers, there was no reason to apply the theory of preponderance of probabilities, especially when there was nothing brought on record to doubt the explanation offered by the assessee.
There was also no inquiry made by the AO with the concerned dealers to establish that what was stated by the assessee is not correct. On the other hand, at least two dealers were produced by the assessee for verification before the AO and they admitted of having been given the cash advances to the assessee.
Having regard to all these facts of this case, advances except the advance received by the assessee on 30.03.2009 having been already adjusted against the sales made by the assessee to the concerned Dealers and the sales so made having been duly accounted for by the assessee, the corresponding advances could not be added to the total income of the assessee u/s 68 treating the same as unexplained.
As regards the advance claimed to be received by the assessee we however, find that the assessee has failed to explain the same in terms of section 68 and the addition made by the AO and confirmed by the CIT(A) to this extent is liable to be sustained. Appeal of the assessee is partly allowed.
-
2016 (2) TMI 1356 - ITAT MUMBAI
Disallowance being fees paid under Portfolio Management Scheme(PMS) as not deductible expenditure u/s 48(1) against Short Term Capital Gain (STCG) computed by the Appellant during the year under consideration - HELD THAT:- It is noticed that this is issue recurring from the earlier assessment years. It is further observed that the Tribunal while deciding the issue in assessee’s own case for the assessment year 2008–09 in the order referred to above, followed its earlier order in assessee’s own case for the assessment year 2006–07 and held that PMS expenditure is not allowable while computing income from short term capital gain. Respectfully following the consistent view of the Tribunal in assessee’s own case, we decide the issue against the assessee by dismissing ground raised.
Disallowance of depreciation and society charges - HELD THAT:- It is observed, while deciding similar issue in assessee’s own case [2015 (9) TMI 1104 - ITAT MUMBAI] claim of the assessee was denied by the authorities below in the absence of the particulars of the person having not been provided by the assessee. In all fairness we are of the view that the matter needs to be looked into by the AO, in order to verify claims of the assessee. Following the principles of natural justice we may it fit deem to the restore this issue back to the file of the AO to verify the names of the employees to whom the premises have been allotted and in whose hands the perk has been offered. Reasonable opportunity of hearing shall be afforded to the assessee. The ground of appeal no. 4 raised by the assessee is thus allowed for statistical purposes.
As there is no material difference in facts, respectfully following the aforesaid view of the Tribunal, we restore the matter back to the file of the Assessing Officer with similar direction. This ground is allowed for statistical purposes.
Ad–hoc disallowance being 5% of various expenses - HELD THAT:- On a perusal of the order of the Tribunal assessment year 2008–09 [2015 (9) TMI 1104 - ITAT MUMBAI] it is noticed that while deciding the issue of ad–hoc disallowance of 5% out of various expenses, the Tribunal did not interfere in the matter and upheld the disallowance. Following the order of the Tribunal, we uphold the disallowance by dismissing the ground raised by the assessee.
-
2016 (2) TMI 1353 - ITAT AHMEDABAD
Nature of expenses - addition of business development expenses - revenue or capital expenditure - HELD THAT:- We find that the issue relating to business development expenses to be treated as business expenditure and not capital expenditure, has been dealt and decided by the Co-ordinate Bench [2010 (11) TMI 1128 - ITAT AHMEDABAD] - Decided against revenue.
Addition of depreciation claimed on plant and machinery given to Rajasthan State Electricity Board (in short RSEB) under sale and lease back transaction - HELD THAT:- After considering the facts of the case and material on record, we find that the issue involved in this ground is that the assessee company bought certain assets from RSEB in previous years and the same were leased back to RSEB. The assessee has been showing income from lease from RSEB and also claiming depreciation on the assets leased to RSEB. This fact that depreciation has not been claimed by RSEB and only claimed by assessee is not controverted by the Revenue. Further on perusal of the records, we find that the co-ordinate bench in assessee’s own case has decided similar issue [2010 (11) TMI 1128 - ITAT AHMEDABAD] confirm the order of the CIT (A) in vacating the disallowance of depreciation on sale and lease back transactions and dismiss the grounds of appeal of the revenue for all the years under consideration.
Disallowance u/s 14A r.w.r. 8D - proportionate disallowance of interest expenditure u/s 14A - HELD THAT:- As per provisions of section 14A of the Act the duty is cast upon the Assessing Officer to determine the amount of expenditure incurred in relation to such income which does not form part of the total income under this Act.
We find that average investments of the assessee are approximately 40% of the total share capital and reserve & surplus, addition in the reserve and surplus is arising mainly due to the exempted income earned by the assessee in previous years as well as during Asst. Years 2005-06 to 2007-08 which gives a holistic view that the company’s main business activities of sale of newspapers and printing material is not giving considerable profits to the company and its overall revenue from the main business activity is also going at the same pace without any major increase in revenue and the major contributory to the profits of the company is from profit from sale of investments and also from going through the assessment orders and details of capital gains we find that a considerable amount of purchase and sale activities of equity shares and mutual funds have been undertaken by the assessee.
Also there has been a considerable movements of funds from bank account of the assessee and these funds are being used for the working capital as well as funds for the purpose of investments. There is no separate bank account maintained by the assessee to show that tax free funds have only been used for the purpose of investment and for this reason proportionate disallowance was made by the Assessing Officer which was corrected by by ld. CIT(A).
Therefore, applying the ratio of the decision taken by the coordinate bench in assessee’s own case upholding the decision of ld. CIT(A) and looking to the facts of the present case as discussed above we are of the opinion that there is no reason to interfere with the order of ld. CIT(A). Accordingly, these grounds of appeals of Revenue are dismissed.
-
2016 (2) TMI 1351 - ITAT HYDERABAD
Security Deposit of expenditure on development - expenditure the assessee incurred towards "Neighbourhood Apartments" - HELD THAT:- Commissioner had not referred to any material brought on record in support of the contention that refund of security deposit of Rs.13 crores by M/s. Fortune Constructions has nothing to do with the expenditure incurred on the project, which is abandoned in favour of M/s. Fortune Constructions Ltd. CIT(A) had not discussed the circumstances under which the project was abandoned in favour of the said company.
CIT(A) also failed to examine whether the refund of deposit of Rs.13 crores had anything to do with the expenditure incurred. Without discussing any material, he simply accepted the written submissions filed by the respondent-assessee before him, which amounts to total non-application of mind, and therefore, fails to fulfil the requirements of a reasoned/speaking order. We are of the considered opinion that interests of justice would be met, if the matter is restored to the file of the CIT(A) for de novo disposal of the appeal in accordance with law.
-
2016 (2) TMI 1347 - ITAT COCHIN
Validity of assessment u/s. 153A r.w.s. 143(3) - failure on the part of the AO to issue notice as per provisions contained in section 143(2) - HELD THAT:- Admittedly in the present case, a valid notice u/s. 153A was issued to the assessee. The ratio laid down in the case of ACIT vs. Hotel Blue Moon [2010 (2) TMI 1 - SUPREME COURT] relied upon by the assessee is not applicable to the facts of the present case as the issue raised therein was pertaining to the issuance of notice u/s. 143(2) of the Act in the case of block assessment u/s. 158BC of the Act and not u/s. 153A of the Act. U/s. 158BC, there is a specific requirement of issuance of notice u/s. 143(2) of the Act which is not the case u/s. 153A of the Act.
An identical issue came up before case of Smt. Sumanlata Bansal vs. ACIT [2015 (5) TMI 1031 - ITAT MUMBAI] held that question raised for consideration is answered that non-issuance of notice under sub-section (2) of section of the Act is not mandatory. As a consequence, the second question is also answered against the assesse. Assessment proceedings u/s. 153A cannot be held as null and void, for non-issuance of notice u/s. 143(2) of the Act, as this provision is not attracted to proceedings u/s. 153A of the Act - Decided in favour of revenue.
-
2016 (2) TMI 1346 - SC ORDER
Assesment u/s 153A - Completed Assessment - Whether additions made to the income of the Assessee for the AYs were not sustainable because no incriminating material concerning such additions were found during the course of search and further no assessments for such years were pending on the date of search?
SLP tagged with the case of MGF AUTOMOBILES LTD [2016 (7) TMI 1448 - SC ORDER]
-
2016 (2) TMI 1344 - MADRAS HIGH COURT
Depreciation on a sale and lease back transaction relating to wind electric generators - Claim denied where the assessee itself is not the owner of the land on which the generators have been installed, and hence cannot be treated as owner of the windmills - HELD THAT:- As assessee is in the business of hire purchase finance, leasing and allied activities and it is a non-banking finance company. The owner of the land on which the windmills were erected and installed wanted to set up a wind power generation unit. The owner approached the respondent/assessee for finance.
There are two options available to a finance company under such circumstances. One option is to allow the borrower to purchase the machinery and install it in his own land and pay the cost of the machinery on condition that the amount financed for the purchase of the machinery is repaid together with interest in equal monthly instalments.The second option available to a financier is to buy the plant and machinery in their own name and lease it out to the borrower.
If the first option is exercised, the land owner gets title to the plant and machinery and the interest component of the equated monthly instalments is treated as revenue income for the financier. But the owner will claim depreciation on the machinery. If the second option is exercised, the financier claims depreciation, but treats the lease rentals as revenue income and pays tax.
Therefore, in either of the two options the borrower and financier are placed on different sides of the same table. In such circumstances, the question of the revenue losing something does not arise.
As rightly pointed out by the Commissioner of Income Tax (Appeals), the question of ownership of the land has nothing to do with the claim for depreciation. Depreciation is claimed in respect of the plant and machinery installed on the land.
Unfortunately, the Assessing Officer was misguided by the fact that the Electricity Authority granted permission only to the land owner to run the windmills. It is not the case of the Department or the respondent herein that the respondent was in the business of generating power through windmills. There is no restriction by the Electricity Board that unless the applicant for the generation of wind power also owns the plant and machinery he would not be entitled to a license.
Assessing Officer as well as the Tribunal misdirected themselves to the actual issue on hand, without realizing what is the income either from the land owner or from the financier depending each side of the table as per the terms of the financing agreement. The Revenue cannot claim revenue from both. Therefore, the question of law is answered against the Revenue.
-
2016 (2) TMI 1343 - ITAT AMRITSAR
Addition u/s 69B - difference in value of stock as per bank statement and as per the balance sheet furnished to the Department - Difference in figures of closing stock submitted to the Bank and balance sheet - HELD THAT:- We find that the above issue is squarely covered against the Revenue and in favour of the assessee by the consolidated order in the case of Dy. Commr. of Income Tax, Circle-1, Bathinda vs. Ishar Infrastructure Developer (P) Ltd; Bathinda [2015 (6) TMI 766 - ITAT AMRITSAR] as held addition on account of difference furnished to the bank as per books of account u/s 69B of the Act can not be sustained. - Decided in favour of assessee.
-
2016 (2) TMI 1341 - SC ORDER
TDS u.s 194A in respect of the interest paid to the owners of the land acquired - payment of interest for belated payment of compensation for the land acquired - deduction of the payment of interest at source under section 194-A by the Land Acquisition Collector - HELD THAT:- While issuing notice in these appeals, the following order was passed on February 22, 2010 [2010 (2) TMI 1303 - SC ORDER]- "Issue notice as to why the matters should not be remitted - In the impugned order, no reasons have been given by the High Court. Hence, matters need to be sent back. This is prima facie opinion."
In view of the said position reflected in the aforesaid order, Learned Counsel for the Respondent was confronted therewith. He submitted that he has no objection if the matters are remitted to the High Court for fresh consideration.
The impugned orders passed by the High Court are, accordingly, set aside and all these cases are remitted back to the High Court for deciding the issue afresh by giving detailed reasons after hearing the counsel for the parties.
-
2016 (2) TMI 1340 - ITAT CHENNAI
TP Adjustment - ALP determination - whether rate approved by the RBI prior to 1994 and cannot be considered for the purpose of Arms Length Price? - HELD THAT:- Commissioner of Income Tax (Appeals) has directed the Assessing Officer to calculate royalty at Arms Length Price @0.75% rejecting the determination by TPO. The ld. Authorised Representative explained the provisions and conditions of agreements and approval of the RBI - We on perusal of the documentary evidence filed by the Authorised Representative and also judicial decisions approving the royalty payments which the RBI prescribed, found the approval of Government of India and RBI was in 1994 and as per the terms royalty rate is calculated. The assessee company substantiated their grounds with financial statements and comparable statements. We perused the RBI letter and follow the decision in the case of Owens Corining Industries (India) Ltd . [2014 (10) TMI 651 - ITAT HYDERABAD] where it has been held that RBI approval of the royalty rates paid by assessee itself implies that the payments were at Arm’s Length. So considering the apparent facts and circumstances the ld. Commissioner of Income Tax (Appeals) has examined the issue and verified the statements and material filed and viz a viz explanations of the assessee. We, therefore are not inclined to interfere with the order of the CIT(A) on this ground. Accordingly, this ground of the Revenue is dismissed.
Price variation of Arms Length Price transaction is at higher and volatile - HELD THAT:- Revenue has not brought any evidence to show that price variation is on higher side and impact on the Arms Length Price. Though ld. Authorised Representative justified his arguments with the submissions and judicial decisions. Considering the summary of module and agreements entered by the assessee company with Associated Enterprise, we find the order of Commissioner of Income Tax (Appeals) is in order and we do not interfere with the findings and uphold the findings of the Commissioner of Income Tax (Appeals) and direct the Assessing Officer to delete the addition. This ground of the Revenue is dismissed.
TDS u/s 195 - addition on account of foreign sales commission as assessee failed to deduct TDS - HELD THAT:- As perused the material on record and judicial decisions and Double Taxation Avoidance Agreements. The assessee has paid foreign commission to outside foreign agencies who do not have business establishment in India and liable for taxation in their respective countries. We rely on the Coordinate Bench decision in the case of ACIT vs. Euro Leder Fashions Ltd [2016 (1) TMI 75 - ITAT CHENNAI] as held assessee has not established the facts on record that the non-resident has rendered services at abroad and there is no business connection in India by producing relevant records, viz., either agreement entered into by the assessee with them or correspondence took between the parties. Without examining these details, we are not in a position to decide the nature of services rendered by the non-resident agent. Therefore, it is appropriate to remit the entire issue back to the file of the AO with direction to the assessee to prove that it was sales commission towards procurement of orders from abroad. Accordingly, the entire issue is remitted back to the file of the AO for fresh consideration and the AO is directed to make necessary enquiry regarding the nature of services rendered by the non-resident agent and the payments made there of - we remit the issue to the file of Assessing Officer for verification and examination and the appeal of the Revenue is partly allowed for statistical purpose.
Lab analysis fees paid to non residents of US, UK and Germany - HELD THAT:- Since the services rendered outside India and payments made outside Country and does not attract TDS provisions. Alternatively u/sec.9(1)(vii) fees for technical services, the lab analysis fees will not fall into category of technical fees and also there is no permanent establishment in India to charge such income to tax. The ld. Authorised Representative demonstrated the DTAA clauses with USA, UK and Germany and such payments are outside the purview and not chargeable as per provisions of DTAA. On the other hand, the ld. Departmental Representative relied on the findings of the Commissioner of Income Tax (Appeals) that the know how was available and there was site inspection and reference was made in Audit Report on verification of training programme. We after considering the matrix of facts, judicial decisions and Audit report observed in assessment order which indicates the services are rendered in India and report was obtained in India. Therefore, we remit the issue to the Assessing Officer for limited purpose to verify the working system of Audited and consultancy work or inspection was carried by the Auditors on lab analysis and we set aside the order of the Commissioner of Income Tax (Appeals) and direct the Assessing Officer to consider the issue and pass the order after providing adequate opportunity of hearing before passing the order on merits. In the result, the appeal of the assessee is partly allowed for statistical purpose.
........
|
