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Income Tax - Case Laws
Showing 161 to 180 of 678 Records
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2016 (2) TMI 1100 - DELHI HIGH COURT
TPA - addition to the arm’s length price of its international transaction pertaining to the import of edible oil from the Assessee’s associated enterprise by using the Comparable Uncontrolled Price (‘CUP’) method - Held that:- As noticed by the ITAT in the impugned order, the ground on which the AO rejected the CUP method adopted by the Assessee was that “the price charged or paid” was on the basis of a broker quote, though based on the prices prevailing in the market, and was not a price charged or paid because it did not reflect the price of an actual transaction.
As noted by the ITAT, Rule 10 D (3) (c) of the Income Tax Rules, 1962 envisages that the TPO should take into consideration price publications including stock exchange and commodity market quotations. Therefore, such published data available from stock or commodity exchanges could form the basis of the prices in both uncontrolled and controlled transactions.
Nothing to hold that the above reasoning by the ITAT is perverse and suffers from any legal infirmity
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2016 (2) TMI 1098 - ITAT CHANDIGARH
Grant of deductions under section 40A(3) - Held that:- In the present case, detailed submissions with corroborative evidences were filed before the lower authorities including that of the AO as well as the learned CIT (Appeals). The elaborate submissions were made to prove that the expenses incurred in cash were genuine which were paid to the seller for purchase of land and there were practical expediency because of which the payments have to be made in cash. This is an undisputed fact. The payee has given an affidavit which was filed before the Assessing Officer as well whereby he affirmed the fact that he does not have any bank account. These facts have not been conroverted by AO nor the learned CIT (Appeals) and the party was identifiable. He was of the view that the assessee is required to prove that due to exceptional and unavoidable circumstances as provided under the Rules, the payments were made in cash. Therefore, it is not a case of the Department that the payments so made in cash were not genuine. The reasons given by the assessee at every stage have not been disbelieved.
The payments cannot be disallowed under section 40A(3) of the Act. The addition is deleted. - Decided in favour of assessee.
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2016 (2) TMI 1097 - ITAT CHANDIGARH
Registration under section 12AA denied - Held that:- In the present case, we observe that the registration under section 12AA of the Act has been denied to the assessee only on some extraneous grounds, which have no bearing on granting of registration. Nowhere in his order the CIT(Exemption) has made any adverse remarks as to the objects of the trust being not charitable or the activities of the Trust being not genuine. We have perused the aims and objects of the Trust as laid down in its Trust deed. We see that all the aims and objects of the assessee trust are charitable in nature and no adverse remarks as to the genuineness of any of these activities have been made by the CIT(E). In view of the above, we hold that the objects of the trust are charitable in nature and activities are genuine. Therefore, the CIT(Exemption) in directed to grant registration under section 12AA of the Act to the assessee trust.
Denial of approval u/s 80G - Held that:- The only remarks made by the CIT(Exemption) are with regard to which he cannot do while considering the approval for section 80G. These are the matters to be consider by the Assessing Officer at the time of granting exemption under section 11 of the Act. In view of the above, we directed the CIT(E) to grant assessee the approval under section 80G of the Act.
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2016 (2) TMI 1096 - ITAT AMRITSAR
Addition on account of sundry creditors - Held that:- AO had erred in on the one hand accepting the trading results of the assessee, and at the same time rejecting his books of account. The ld. CIT(A) went wrong in failing to appreciate that such a course of action is impermissible in law. The books of account need to be either accepted, or rejected in totality. And once the trading results of the assessee were accepted, there remained no scope for the AO to make any addition of sundry creditors.
Further, even if, for the sake of argument, the aforesaid action of the AO is treated as valid, the one and only course left available to the AO after rejecting the books of the assessee was to proceed u/s 144 of the Income Tax Act and to make best judgment assessment. Per contra, he made addition of sundry creditors, holding that the assessee had not been able to substantiate the existence of the sundry creditors as claimed and thus, they could not be accepted. The ld. CIT(A) was incorrect in sustaining this addition made against the law by the AO.
Thus, looked at from any angle, the ld. CIT(A) has fallen into error in sustaining the unsustainable addition made by the AO. The grievance of the assessee in this regard is, therefore, justified. It is accepted. The orders of the ld. CIT(A) on this issue are reversed. - Decided in favour of assessee.
Disallowance of car expenses - 10% of car expenses incurred by the assessee in each of the years on account of interest on loan, repair and maintenance and depreciation - use of car for personal purposes - Held that:- Here, the assessee has not been able to controvert the findings of the Taxing Authorities. No log book has been produced at any stage so as to prove that the car had been used exclusively for the business purposes of the assessee and not at all for his personal purposes. The assessee has not even raised any alternative ground that the disallowance for either of the years is excessive. The grievance of the assessee in this regard for both the years is rejected. The disallowances of ₹ 36,034/- for AY 2008-09 and ₹ 31,406/- for AY 2009-10, as confirmed by the ld. CIT(A), are upheld.
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2016 (2) TMI 1095 - ITAT HYDERABAD
Reopening of assessment - Held that:- What the AO is now seeking to tax the amount is on the basis of change of opinion and it is not permissible, as the AO has accepted the same and completed the assessment in terms of Section 143(3). Moreover, as already stated earlier, the reopening is after 4 years and there is no failure on the part of the assessee to make full disclosure. On the same material furnished by assessee, the reopening was done, which cannot be sustained.
There is neither any discussion about the submissions made by assessee nor about the satisfaction recorded by the AO nor about the objections raised by assessee in the re-assessment proceedings on jurisdiction. In fact, Ld. CIT(A) did not even comment about the veracity of reopening of the assessment. As seen from the later part of the order, he did not even examine whether the AO made addition or disallowed expenditure. AO brought an amount of ₹ 15,77,330/- to tax as an addition under the head income from other sources, even after accepting that an amount of ₹ 1,50,300/- pertains to a firm. Without even understanding whether the amount was an addition to the income returned or disallowance of the expenditure claimed, the Ld. CIT(A) confirms the ‘disallowance’ made by the AO. This shows not only the non-application of mind by the CIT(A), but also total ignorance of facts and law on the matter under consideration. In our opinion it is the CIT(A) who took hyper technical view and not assessee.- Decided in favour of assessee.
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2016 (2) TMI 1094 - ITAT DELHI
Applicability of the provisions of section 151 - reopening of assessment - notice issued without obtaining the prior sanction of the authority mentioned - Held that:- As gone through the letter dated 25.03.2011 which states “approval for the issue of notice u/s 148 – reg.”. This letter subsequently talks of according of the approval and further issue of the notice u/s 148. Section 151, in my opinion, does not talk of approval of the action of the AO but requires satisfaction of the Joint Commissioner on the reasons recorded by the AO that it is a fit case for the issue of such notice. There is difference in the word ‘satisfaction’ and ‘approval’. Approval can be subsequent to the occurrence of the events while the satisfaction, as per the provisions of section 151, has to be prior to the issue of the notice. Satisfaction represents a decision based on the material on record.
As noted what the Addl. Commissioner of Income-tax has approved the issuing of the notice u/s 148. He has not given any finding that on the basis of the reasons recorded by the AO, he is satisfied that it is a fit case for the issue of the notice u/s 148 of the Act. What he has done, he has approved the proforma sent by the AO. This approval has also been received by the AO on 29.08.2011 i.e. after the issue of the notice u/s 148 dated 28.03.2011. This does not meet the requirement of the provisions of section 151 (2) and, therefore, quash the notice issued u/s 148 (2) as this was issued merely in a mechanical manner without applying the mind by the Addl. Commissioner to the reasons recorded by the AO.
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2016 (2) TMI 1093 - ITAT CHANDIGARH
Addition u/s 36(1)(iii) - Held that:- From the perusal of the ledger account of M/s J.V. Steel Traders, it is quite clear that it is a regular supplier of the assessee since 1.4.2005. The purchases were being made and payments were given in regular course of business. Even the advance given during the year is an advance against purchases. It is also not in dispute that of M/s J.V. Steel Traders is not related to the assessee. The observations of the CIT (Appeals) that the item sold by of M/s J.V. Steel Traders is not a unique item is not relevant to the issue in question. It is the prudence of businessman how to run his business, the department cannot dictate its terms as how to deal with the parties.
It is none of the department’s concern as to when the advance has to be given to supplier and when not. There is no need for the learned CIT (Appeals) to ask the assessee the evidence to prove the ‘other reasons’ for giving advances. There may be thousands of reasons for giving such advances, which the assessee is not obliged to answer to the department, it in his business acumen according to which he takes these business decisions. It is not in dispute that M/s J.V. Steel Traders is a regular supplier and advances have been given during the regular course of business. Regular debit and credit entries are appearing in the ledger account. The purchases were made in the earlier as well as subsequent years. These reasons are enough to prove that advance was made out of commercial expediency. - Decided in favour of assessee.
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2016 (2) TMI 1092 - ITAT AGRA
Addition on account of deposit in Saving Bank account - Held that:- CIT(A) without giving any cogent reasons rejected the explanation of the assessee without any justification. CIT(A) rejected the explanation of the assessee because the statement of all the above four persons were unrealistic. This itself is no ground to disbelieve the statement of the purchasers because the AO has not brought any evidence on record against the statement of four purchasers to prove the case of the revenue. It is well settled law that the Income tax authorities shall have to consider the evidence and material on record by applying the test of human probabilities and after considering the surrounding circumstances. See case of Durga Prasad More [1971 (8) TMI 17 - SUPREME Court] and Sumati Dayal [1995 (3) TMI 3 - SUPREME Court]. Thus we are of the view that the authorities below without any justification have made the addition against the assessee. The explanation of the assessee is acceptable and as such no addition is called for in the matter. We accordingly set aside the orders of the authorities below and delete the addition - Decided in favour of assessee.
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2016 (2) TMI 1091 - ITAT AGRA
Rejecting application for the registration u/s 12AA - genuineness of donation and unsecured loans - Held that:- The genuineness of loans taken and the donation received are matters to be examined during the assessment proceedings after grant of registration and necessary action relating to the same can be taken during the assessment proceeding for which there are specific provision of law in this regard. It must be remembered that the purpose of granting registration under section 12AA of the Income Tax Act is only to ensure that the assessee society has been formed for the purpose of carrying out charitable activity and is also actually carrying out the same so as to make it eligible to claim exemption under section 11 of the Act. As long as the said objects of an assessee society are found to be charitable and genuine and as long as the assessee society is carrying out the said objectives genuinely the registration under section 12AA cannot be denied.
In the present case we find that the assessee society came into existence on 05/08/2010, for setting up educational institutes and other charitable purpose and acquired land for setting up a Nursery School on 31/07/2013. On 21/07/2014 it paid fees for approval of its construction plan on the impugned land, to the concerned authority. It is evident therefore that the assessee society was in the process of setting up educational institution and as held by the jurisdictional High Court, in such circumstances it could not be denied registration u/s 12AA for not carrying out any charitable activity. - Decided in favour of assessee.
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2016 (2) TMI 1090 - ITAT AGRA
Refusing the registration to the appellant society u/s 12AA - Held that:- One of the main object of the assessee society was carrying educational activities which is clearly a charitable activity as defined u/s 2(15). Further in pursuance of its main object the assessee was conducting the activity of imparting education in the two institutes established by it being Royal College of Education & Research Centre & Pearl Valley School. We find that these documents were there before the Ld. CIT who found no infirmity in the same. Therefore it can be safely concluded that the activities of the assessee society were charitable and were being genuinely carried out by it. 13. In view of the same, we hold that Ld. CIT could not have refused registration under section 12AA to the assessee society. The recommendation of the ACIT who had conducted the enquiry in this regard also confirm the fact that the assessee was eligible for grant of registration under section 12AA. The ACIT had very clearly stated that the assessee society fulfilled all the conditions required for registration under section 12AA.
Further the inspector deputed to conduct enquiry about the activity being carried out by the assessee society also clearly stated that the activity were in the nature of imparting education. Thus we hold that the assessee society is entitled to Registration u/s 12AA - Decided in favour of assessee.
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2016 (2) TMI 1089 - ITAT AGRA
Computation of capital gain with the aid of section 50C - Held that:- We are of the view that since the valuation of the property for the purpose of computation of capital gain is dependent upon the valuation adopted by ADM (Finance), Agra whose decision is under challenge before the Hon’ble Allahabad High Court. Therefore, the assessee and the ld. DR are justified in contending that such valuation could be adopted by the AO as per final decision of Hon’ble Allahabad High Court. The ld. CIT(A) also in the case of firm, M/s. Setwell Associates directed that ultimately, the value would be finally determined by the Hon’ble Allahabad High Court. Therefore, the capital gains in the hands of the partners including the assessee, can be computed on the sale consideration determined by the Stamp Valuation Authority subject to decision of Hon’ble Allahabad High Court. In principle, the applicability of provision of section 50C of the Act, in the facts and circumstances of the case, has not been disputed and such findings of the authorities below to that extent are confirmed.
We set aside the orders of the authorities below and restore the issue to the file of AO with direction to re-compute the capital gain in the hands of the assessee as per sale valuation determined by the Stamp Valuation Authority as per directions of the Hon’ble Allahabad High Court. The AO shall recompute the capital gain by following the judgment of Hon’ble Allahabad High Court in this regard, as is submitted by the ld. Counsel for the assessee.
We clarify that the re-computation of income on account of capital gain shall be made by the AO u/s. 153(3)(iii) of the IT Act as per final amount determined by the Hon’ble Allahabad High Court of sale value of property under consideration as per Stamp Valuation, as would be decided in the case of buyer.
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2016 (2) TMI 1088 - ITAT AGRA
Addition on account of sundry creditors - Held that:- Assessee has submitted the details of sundry creditors in the paper book at page 1 to show that in assessment year 2008-09, sundry creditors were of ₹ 90.28 lacs which is reduced to ₹ 29.34 lacs in the assessment year 2009-10 and in assessment year 2010-11, the sundry creditors are of ₹ 32,73,524/-. He has, therefore, submitted that sundry creditors have reduced from assessment year 2008-09 and this fact has not been examined by the AO. Therefore, the entire addition is wholly unjustified. The ld. DR also contended that this fact can be examined at the stage of AO. In view of the above, we set aside the orders of the authorities below and restore this issue to the file of AO with direction to re-decide this issue.
Addition of purchase of fixed asset u/s. 68 - Held that:- The assessee produced annexure to the audited accounts in respect of the above additions made to the fixed assets on which depreciation has been claimed. The audited account shows that the assessee made addition of ₹ 25,29,893/- to the fixed assets. It would, therefore, show that these purchases have been shown in the books of account and have specifically shown in the audited accounts. Therefore, the nature and source of the same have been explained by the assessee and as such could not be treated as unexplained investment made in the purchase of fixed assets. Therefore, no addition could be made u/s. 68. May be, for nonproduction of bills for assets purchased, the AO could have disallowed the depreciation but such an issue is not relevant to the addition made u/s. 68
Disallowance of provision of expenditure made, salary and wages, purchase and other Misc. expenses - Held that:- Instead of making huge additions on account of disallowance, out of various expenses under the four heads as above, it would be reasonable and appropriate to make addition of ₹ 10,00,000/- in all to the income of the assessee to meet out the ends of justice and objections of the authorities below. In view of the above discussion, we modify the orders of the authorities below and instead of making addition on account of disallowance of various expenses in a sum of ₹ 29,60,560/-, ₹ 40,92,568/-, ₹ 29,72,852/- and ₹ 6,17,389/-, the authorities below shall restrict the addition to ₹ 10,00,000/- in all in respect of these additions. We accordingly, set aside the orders of the authorities below and restrict the addition to ₹ 10,00,000/- only under the disallowance of above expenditure under four heads. This ground of appeal of the assessee is partly allowed.
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2016 (2) TMI 1087 - ITAT CHANDIGARH
Addition of interest on enhanced compensation - Held that:- The undisputed facts are that the assessee has received during the year enhanced compensation on compulsory acquisition of land and interest on such enhanced compensation. This is also undisputed that the interest is received by the assessee under section 28 of the Land Acquisition Act. The Assessing Officer also does not have any quarrel to exempt the principal amount of enhanced compensation under section 10(37) of the Act. The only issue remaining is the taxability of interest on enhanced compensation received by the assessee under section 28 of the Land Acquisition Act.
Interest received under section 28 of the Land Acquisition Act is a part of the compensation itself. The compensation being exempt under section 10(37) is not disputed by any of the lower authorities in the present case. In view of the above, we direct the Assessing Officer to delete the addition made on account of interest on enhanced compensation
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2016 (2) TMI 1086 - ITAT INDORE
Imposition of penalty u/s 271(1)(b)- non complying with the notice u/s 143(2) - Held that:- The assessee failed to comply with the notices u/s 143(2) dated 07.10.2014, thereafter, the notices u/s 142(1) of the Act dated 21.10.2011, 09.11.2011 & 21.11.2011 and the AO has also issued the notice u/s 142(2A) of the Act dated 28.12.2011. The assessee did not comply to the notices, but the assessee has requested the AO to keep the penalty proceedings in abeyance till the decision of the ld. CIT(A), but the AO has imposed the penalty.
AO has given several notices under various sections, but the penalty has been levied only for the assessment u/s 153A read with Section 143(3) of the Act and it was completed on 13.8.2012. As find that during the assessment proceedings, the penalty cannot be imposed for each default, but the penalty can be imposed only for the first default. Therefore, in these cases if the assessee failed to comply with the notices, the remedy with the AO was to frame “best judgement assessment” u/s 144 and not to impose penalty u/s 271(1)(b) again and again. Therefore, we modify the order of AO and CIT(A) and restrict the penalty for the first default of the assessee in not complying with the notice u/s 143(2). - Decided partly in favour of assessee.
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2016 (2) TMI 1085 - ITAT CHENNAI
Disallowance u/s.14A r.w.r.8D while computing book profit u/s.115JB - MAT computation - Held that:- Invoking provisions of the section 14A r.w.r.8D of the Rules was already adjudicated by us in assessee’s appeal [2015 (8) TMI 1037 - ITAT CHENNAI] and disallowed made u/s.14A r.w.r.8D cannot be added while computing book profit u/s.115JB of the Act that the disallowance is only disallowance for the purpose of computing the taxable income in the normal course. There is no provision in the Act to add this kind of disallowances while computing the book profit u/s.115JB of the Act and it cannot change the book profit on this count. Therefore, even if there is an addition in view of provision u/s.14A r.w.r.8D, that cannot be added back to compute the book profit u/s.115JB of the Act. Accordingly, this ground of the assessee to be considered as allowed.
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2016 (2) TMI 1084 - ITAT DELHI
Addition on administrative charges on ‘Andrews Ganj Project’ executed by the assessee for the Ministry of Urban Development, Government of India - Held that:- During the year under consideration, the assessee has executed work of ₹ 10.50 crores in respect of ‘Andew Ganj project’, but there are no specific findings of authorities below that the work executed was related to community centre or towards residential project. If the work executed is not in respect of Community Centre, then addition cannot be sustained following the judgment of the Hon’ble High Court in the case of assessee itself [2014 (11) TMI 17 - DELHI HIGH COURT]. In the interest of natural justice, we feel appropriate to restore the matter to the file of the ld Assessing officer for verification of the fact as to whether the work executed during the year on the ‘Andew Ganj project’ included any work towards Community Centre and if the answer is negative, no addition is warranted on the issue in dispute. Thus, we allow this ground of appeal for statistical purpose.
Disallowance of prior period expenditure - Held that:- We restore the matter to the file of the Assessing Officer and direct the assessee to furnish complete details of prior period expenses and explain the crystallization of the expenses in the year under consideration. The Assessing Officer is directed to examine the issue afresh.
Disallowance of depreciation on estimated increase in cost of properties on account of stamp duty - Held that:- In the facts of the case the actual cost of the properties acquired on the basis of agreements can’t include the stamp duty or registration charges estimated at the rate of ten percent as same have not been expended or laid out during the year, accordingly, no depreciation on estimated stamp duty or registration charges can be allowed. In case of properties acquired on agreement, the assessee has treated its transfer as completed and the cost till the transfer of property is the actual cost for the purpose of block of assets. If the assessee incurs any cost subsequent to the completion of transfer of property, whether it is for stamp duty or registration charges, it will be an addition to the asset when actually incurred. The stamp duty and registration charges are levied according to the rates prevalent at time of registration, and when that event will happen is not certain in the case of the assessee and thus claiming depreciation on the basis of prior estimate of cost to the asset is not justified. We uphold the disallowance of claim of the depreciation on estimated stamp duty or registration.
Disallowance of financial charges written off claimed in the computation of income - Held that:- onsistent with the view taken for assessment year 2002-03 [2014 (1) TMI 188 - ITAT DELHI] we restore the matter to the file of Assessing Officer for fresh adjudication in accordance with law. In the result, this ground of appeal is allowed for statistical purposes.
Disallowance u/s 14A - Held that:- The recording of the said finding is a clear manifestation that the ld Assessing Officer was dissatisfied with the correctness of the claim of the assessee. We restore the matter to the file of the Assessing Officer for adjudication with the direction to decide the issue in view of the judgement of Jurisdictional High Court in the case of Maxopp Investment Ltd. and Ors. Vs. Commissioner of Income Tax (2011 (11) TMI 267 - Delhi High Court). Accordingly, this ground of appeal is allowed for statistical purposes.
Disallowance of revenue de-recognition of the interest corresponding to bad and doubtful debts called as non-performing assets (NPAs) - Held that:- We uphold the finding of the ld CIT(A) that the assessee is entitled to deduction as per Rule 6EB of the IT Rules only, but we have seen that the computation was not provided by the assessee during assessment , the ld Assessing Officer computed the disallowance on estimate basis only, thus , we restore the matter to the ld Assessing officer to compute the deduction strictly as per Rule 6EB of IT Rules and allow the deduction accordingly. The ground of the assessee is allowed for statistical purpose only.
Addition being the income on account of wrong appropriation - Held that:- Entire exercise of adjustment of recovery against the interest income or principal debt is a revenue neutral exercise. In view of above we uphold that in the case of the assessee no addition can be sustained towards appropriation of recovery from defaulting accounts. Accordingly, the ground of the assessee is allowed.
Addition on account of change in the method of accounting in booking of expenditure related to forward contract - Held that:- In the year under consideration, the assessee changed the method of charging of expenditure due to incorrect understanding of the guidelines of the ICAI, and in view of subsequent clarification , again in subsequent year, the assessee resorted to the old practice of spreading of expenses over the period of contract. The income has to be accrued as per the provisions of the Income-tax Act and there was no change of provisions in this regard for the year under consideration, and thus the action of the assessee in reducing the income by ₹ 1.25 crores was not justified. In our opinion, the ld CIT(A) has rightly sustained the disallowance
Non considering the mistakes or omissions in the revised return of income filed by the assessee - Held that:- In the case of the assessee the facts whether the change in income or expenditure was on account of change in method of accounting or otherwise is not clear from the facts brought on record by the lower authorities, and thus, we feel it appropriate to restore the matter back to the file of the ld Assessing Officer and decide the issue in accordance to the law. The ground of the appeal is accordingly allowed for statistical purpose.
Disallowance of interest payable to the Government by treating the same as notional expenses - Held that:- Assessee is entitled to deduct the interest in computing the income
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2016 (2) TMI 1083 - DELHI HIGH COURT
Transfer pricing adjustment - Held that:- As it is seen that in the impugned order, the ITAT has remanded the issue to the Transfer Pricing Officer. It is pointed out that as far as AY 2009-10 is concerned in the Assessee's own case declined to interfere with the remand order passed by the ITAT. Consequently, the Court declines to frame any question as far as this issue is concerned.
Disallowance under Section 14A - Revenue submits that the decision of this Court in CIT v. Holcim India (P) Ltd. [2014 (9) TMI 434 - DELHI HIGH COURT] may require reconsideration by a larger Bench particularly in light of Circular No. 5/2014 of the Central Board of Direct Taxes dated 11th February 2014 - Held that:- The Court is not persuaded to accept the above plea of the learned counsel for the Revenue. In any event, the circular of CBDT cannot possibly override a binding decision of the Court. Consequently, the Court declines to frame any question as far as the above issue is concerned.
Following question is framed for determination:
“Whether ITAT was correct in deleting the disallowance of ₹ 70,37,18,502 made by the AO under Section 40(a)(i) of the Act on account of non-deduction of TDS?”
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2016 (2) TMI 1082 - ITAT KOLKATA
Revision u/s 263 - contribution to settlement guarantee fund - Held that:- In the instant case, there was nothing on record that would enable the Learned CIT on his examination to come to a conclusion that the Learned AO had allowed an illegitimate claim towards ‘Contribution to SGF’ and the accounting treatment done by the assessee with regard to the same. It is not in dispute that the assessee had duly credited the profit and loss account by the same figure of ₹ 5,76,07,622/- and had only tried to eliminate the said income attributable to the Fund by debiting the same in its profit and loss account and therefore it becomes revenue neutral.
We hold that CIT had not brought any new material on record to deviate from the stand taken by the revenue in the earlier years commencing from 1998 onwards on the impugned issue ; we hold that the Learned CIT had not stated in his show cause notice or in his order as to how the order passed by the Learned AO is erroneous and legally unsustainable ; we hold that the amount debited by the assessee in its profit and loss account towards ‘Contribution to SGF’ is not in the nature of ‘provision’ as alleged in the impugned order passed u/s 263 of the Act. Hence the order passed by the Learned AO is neither erroneous nor prejudicial to the interest of the revenue. Hence the revisionary jurisdiction u/s 263 of the Act is not warranted in such a case. - Decided in favour of assessee.
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2016 (2) TMI 1081 - ITAT CHANDIGARH
Addition u/s 14A - Held that:- If there are interest free funds available a presumption would arise that investment would be out of the interest free funds generated or available with the company if the interest free funds were sufficient to meet the investment.Therefore, in such circumstances, no disallowance under section 14A of the Act on account of interest can be made. - Decided in favour of assessee.
Disallowance being the difference of interest charged from Hero Motors Ltd. @ 6% and interest rate of 7.75% - Held that:- Revenue cannot justifiably claim to put itself in the armchair of a businessman or in the position of the board of directors and assume the said role to decide how much is a reasonable expenditure having regard to the circumstances of the case. It was further held that no businessman can be compelled to maximise its profits. And that the Income Tax Authorities must put themselves in the shoes of the assessee and see how a prudent businessman would work. The authorities must look at the matter from their own view point but that of a prudent businessman. Even the Hon'ble Supreme Court in assessee’s own case [2015 (11) TMI 1314 - SUPREME COURT OF INDIA] had held that applying the said ratio to the facts of the case that no such notional addition on account of lesser rate of interest charged can be made by the assessee. In view of this, the Assessing Officer is directed to delete the addition made by him.
Capitalization of interest on the assets appearing under the head ‘capital work-in-progress by adopting the interest @ 7.75% - Held that:- No loan had been raised by the assessee company for the purchase of furnace or for the construction of building. The said finding of the CIT (Appeals) had not been controverted by the learned D.R. for the Revenue. Further the total investment made by the assessee during the year on capital work-in-progress was more as against the net profit of the assessee for the year. See DCIT Vs. Samrat Forgings Ltd. [2012 (5) TMI 760 - ITAT CHANDIGARH ] In view of the above said facts and circumstances, we find no merit in the disallowance made by the Assessing Officer.
Addition under section 36(1)(iii) - Held that:- It is an undisputed fact that the assessee was making constant sale and purchases from these two concerns and amounts of money coming and going were on account of regular business of the assessee. During the course of business if some amount remains at the debit of the other company, the Assessing Officer cannot just presume it to be in the nature of loans and advances. Here also, the observations of the Delhi High Court in the case of Dalmia Cement Ltd. (2001 (9) TMI 48 - DELHI High Court ) is pertinent, whereby it was held that it is not the prerogative of the Department to dictate the terms of the business and Revenue cannot impose its view on the businessman when to give any money and when to receive it back. The transactions are going on with the sister concerns on regular business. Steps are being made and even if some amount remains at the debit, the Assessing Officer cannot consider the same as loan and cannot make addition under section 36(1)(iii) of the Act on the same.
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2016 (2) TMI 1079 - ITAT AHMEDABAD
Penalty imposed u/s. 272A(2)(k) - late filing of TDS returns - reasons for delay - Held that:- The tax was deducted and deposited on receipt of payment and TDS returns were filed after deposit of taxes. Section 200(3) of the Income-tax Act provided that any person deducting any sum shall after paying the tax deducted to the credit of Central Government shall prepare statements for such period as may be prescribed and deliver to the prescribed income-tax authority. Provision of Section 272A(2)(k) of the Act provides for imposition of penalty for failure to deliver copy of statement within time specified in subsection (3) of Section 200 of ₹ 100/- for every day. These sections also clearly lay down that the filing of quarterly statements is consequential to payment of taxes. The delayed payment of taxes itself is the reasonable cause for late filing of quarterly statement and hence the assessee is not exigible to the levy of penalty.
When the assessee is paid the tax with interest and the TDS statements are already filed though belatedly, there is no loss to the Revenue, as held by Hon’ble Gujarat High Court in the case of Harsiddh Construction Pvt Ltd vs. CIT, (1999 (12) TMI 30 - GUJARAT High Court ). - Decided in favour of assessee.
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