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Income Tax - Case Laws
Showing 21 to 40 of 1010 Records
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2016 (5) TMI 1581 - ITAT KOLKATA
Disallowance on account of Truck hire charges - expenditure incurred by the assessee on payment of truck hire charges was not fully verifiable - CIT-A deleted the addition - HELD THAT:- No specific or material defects were pointed out by the Assessing Officer in the vouchers maintained by the assessee in support of his claim for truck hire charges except that the said vouchers were self-made vouchers and the truck hire charges were paid by the assessee in cash. Keeping in view the nature of the business of the assessee, there was nothing unusual in making the payment of truck hire charges in cash through self-made vouchers so as to doubt the genuineness of the expenditure incurred by the assessee on truck hire charges.
In the case of Ranjit Singh Prem Singh Ahuja [2015 (7) TMI 152 - ITAT PUNE] a similar issue had come up for consideration before the Pune Bench of this Tribunal and the disallowance of 2% of transport expenses made by the Assessing Officer by raising trivial objection was held to be not sustainable by the Tribunal on the ground that no material discrepancy whatsoever had been pointed out by the Assessing Officer in the books of account and other record maintained by the assessee in support of its claim for transport expenses.
Ad hoc disallowance made by the Assessing Officer out of truck hire charges was not sustainable and the ld. CIT(Appeals) is fully justified in deleting the same - Decided against revenue.
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2016 (5) TMI 1579 - ITAT CHANDIGARH
Rejection of books of accounts u/s 145 - Addition of difference in valuation of closing stock of 4548.679 gms of gold jewellery and another addition being the value of diamond jewellery except the value of stone studded therein - HELD THAT:- As relying on case of Jagdish Chand [2003 (6) TMI 441 - ITAT CHANDIGARH] considering consistency of method of valuations and judicial decision the rejection of Books of account and the valuation of jewellery by the A.O. is held as not correct and the addition made by the AO is unsustainable in law and on facts - thus stating that the facts of the present case are identical to the facts of that case CIT (Appeals) was right in deleting the addition. - Decided in favour of assessee.
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2016 (5) TMI 1578 - ITAT BANGALORE
Disallowance of excess depreciation on Automated Teller Machines (ATM) by reclassifying as plant and machinery - CIT-A reclassifying ATMs as plant and machinery and restricting the depreciation to 15% - HELD THAT:- We are of the view that ATM itself has its own identity and can be used independently, but once it is connected with the computer, further information sought by the customers can also be processed. Therefore, it cannot be said to be part of a computer or computer - ATM is not eligible for higher rate of depreciation which is to be allowed to a computer. Only those devices which do not have its own identity or cannot be used independently without connecting to the computer can only be called as part of the computer for claiming higher rate of depreciation.
Hon'ble jurisdictional High Court in the case of Diebold Systems Pvt. Ltd. [2005 (1) TMI 652 - KARNATAKA HIGH COURT] has categorically held that ATM is an electronic device, which allows bank’s customers to make cash withdrawals, and check their account balances at any time without the need of human teller and once it is connected to a computer, that performs the tasks requested by the person using ATMs. Therefore, we are of the considered view that that ATM is neither a computer nor a part of the computer and hence higher rate of depreciation cannot be allowed to it. We therefore find no infirmity in the order of CIT(Appeals) in this regard and we confirm the same.
Higher rate of depreciation at 60% on UPS - HELD THAT:- Following the case of CIT v. BSES Yamuna Powers Ltd. [2010 (8) TMI 58 - DELHI HIGH COURT] held that depreciation on UPS was to be allowed @ 60%.
Disallowance of depreciation on account of non-furnishing of invoices/bills for purchase of fixed assets - HELD THAT:- We find that during the course of assessment proceedings, the AO has asked the assessee to produce the bills/invoices with regard to purchase of fixed assets on which depreciation was claimed. Whatever bills were produced before the AO, AO has examined the same and allowed depreciation thereon, but on certain assets assessee could not produce the invoices/bills to prove the ownership thereof. It is settled position of law that if anyone makes any claim, the onus is upon him to place relevant evidence in support of his claim, and if he fails to do so, adverse view can be taken against him. In light of this proposition of law, we are of the view that the AO has rightly disallowed depreciation with respect to those assets for which invoices of purchases were not filed to prove the ownership. Accordingly, we find no infirmity in the order of the CIT(Appeals) and we confirm the same.
Disallowance of certain payments after treating it to be penalty on account of infraction of law - HELD THAT:- As against certain disallowances, the nomenclatures was shown to be the penalties, but it is not clear whether penalties were paid on account of infraction of law. We are therefore of the view that the issue requires proper adjudication by the AO. We accordingly set aside the order of CIT(Appeals) in this regard and restore the matter to the file of AO with a direction to readjudicate the issue afresh, after affording opportunity of being heard to the assessee. If the AO finds that payments are compensatory in nature and not on account of infraction of law, no disallowance can be made. But if it is the penalty for infraction of law, disallowance is possible. Accordingly this ground is disposed of.
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2016 (5) TMI 1577 - ITAT AMRITSAR
Penalty u/s 271(1)(c) - Defective notice - specific default/charge of the assessee - assessee submitted that the AO imposed penalty in a mechanical manner without due application of mind - HELD THAT:- The penalty is not imposable u/s 271(1)(c) of the Act for year under consideration and is liable to be quashed on the ground that the AO has failed to apply his mind before initiating the penalty proceedings and, therefore, the proceedings initiated are bad in law. As such, CIT(A) was not justified in sustaining the penalty imposed by the AO. Accordingly, the order of the ld. CIT(A) is set aside and penalty levied by the AO is cancelled. Appeal of assessee allowed.
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2016 (5) TMI 1576 - ITAT AHMEDABAD
Benefit of doctrine of mutuality - receipts from guest fees, income from hire of rooms, hire charges in respect of club lawn is to be considered exempt by following principal of mutuality - HELD THAT:- We find that the ld.CIT(A), following the Tribunal’s order in assessee’s own case in earlier years[2013 (1) TMI 1031 - ITAT AHMEDABAD] and [1987 (10) TMI 21 - GUJARAT HIGH COURT] held that the assessee was entitled for the benefit on the basis of doctrine of mutuality.
Revenue has not brought any contrary binding decision in its support nor has placed any material on record to demonstrate that the decisions of the Tribunal in assessee’s own case for AY 200-07 has been set aside by Hon’ble Jurisdictional High Court [1987 (10) TMI 21 - GUJARAT HIGH COURT]. - no reason to interfere with the order of the ld.CIT(A) and thus the ground of Revenue is dismissed.
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2016 (5) TMI 1575 - ITAT KOLKATA
Unexplained cash credits - absence of any nexus between the corresponding sales and the amounts in question - HELD THAT:- On verification of the ledger accounts of M/s. Sahara Minerals and of M/s. V.K. Minerals CIT(Appeals) found that sales made to the said two parties were duly accounted for and offered by the assessee as its income and since the amounts in question treated to be unexplained cash credits by the Assessing Officer were claimed to be received against the said sales, the ld. CIT(Appeals) held that such addition under section 68 to the extent of corresponding sales already declared by the assessee as income would result in double addition.
As already noted by us, this position was accepted even by the Assessing Officer also in the remand report submitted to the ld. CIT(Appeals). The ld. CIT(Appeals) thus allowed a relief to the assessee to the extent of ₹ 2,67,09,704/- being the amount already offered as income by the assessee in the form of sales and restricted the addition of ₹ 4,68,02,738/- made by the Assessing Officer under section 68 to the extent of ₹ 2,93,00,034/-. Having regard to all the facts and circumstances of the case, we find no infirmity in the impugned order of the ld. CIT(Appeals) giving this relief to the assessee and upholding his impugned order on this issue, we dismiss the appeal filed by the Revenue.
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2016 (5) TMI 1574 - ITAT MUMBAI
Rectification of mistake u/s 154 - Disallowing additional depreciation u/s. 32(iia) - assets used for less than 180 days - AO issued a rectification notice u/ s. 154 disallowing additional depreciation claimed - HELD THAT:- Section 32(1)(iia) of the Act provides that additional depreciation @ 20% shall be allowed to the assessee on the actual cost of new plant and machinery, which has been acquired after 31.03.2005. The second proviso to section 32 restricts depreciation allowance at 50% if the asset is used for less than 180 days in a previous year. There is no mention in section 32(1)(iia) that the 20% additional depreciation is allowable in first year only. Provisions of section 32(1)(iia) and second proviso to section 32 should be read and construed reasonably, liberally and purposefully. If the acquired asset is used for less than 180 days in year one than the allowable additional depreciation is restricted to 50% in the first year and balance 50% additional depreciation is allowable in subsequent year. There is no restriction vis-avis the number of assessment years over which the additional depreciation is to be allowed.
The issue under consideration is also squarely covered by the order of coordinate bench in the case of SIL Investment Ltd [2012 (6) TMI 83 - ITAT DELHI] wherein it was held that additional depreciation, which was restricted in the year of purchase to the extent of 50% on the plea of machinery having been put to use for a period of less than 180 days, the balance of additional depreciation is required to be allowed in the succeeding year. In view of the above, we do not find any merit for disallowing assessee’s claim for depreciation.
Nature of receipt - TUF subsidy received from Central Government under Technology Upgradation Fund Scheme (TUF) - Revenue or capital receipt - HELD THAT:- The assessee himself had offered the taxation for the said subsidy and the AO had assessed the same accordingly. It is not the case that the AO at the time of assessing income of the assessee had proceeded in violation of any statutory provision. If subsequently in a case law, the coordinate bench of the Tribunal has given a finding that such receipt is a capital receipt that cannot be form the basis to reopen/readjudicate the issue which has already attained finality. The assessee has neither agitated this issue on merits during the assessment proceedings nor by way of appeal before the CIT(A). Even the same cannot be considered as a mistake apparent on record u/s.154 proceedings, as the AO had assessed the income as offered by the assessee and while doing so he had not directly violated any statutory provision of the Act. Hence, it cannot be said to be any mistake apparent on record with regard to nature of TUF subsidy.
Merely because subsequently a coordinate bench of the Tribunal has taken some view with regard to nature of TUF subsidy in case of some other assessee that itself cannot be said to be sufficient ground to readjudicate or to reconsider the already concluded assessment. If such a course would be allowed to be adopted, then, it may give rise to a number of claims for readjudication of several already concluded cases and such course will be against the principle of finality of proceedings at one stage and would violate the object and purpose of the Indian Limitation Act, 1963. In view of this, we do not find that treatment of TUF subsidy offered by assessee and accepted by the AO as revenue receipt, under the facts and circumstances of this case, was a mistake apparent on record.
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2016 (5) TMI 1571 - ITAT DELHI
Penalty u/s 271(1) - Search and seizure operation - Jewellery found in search - unexplained investment in jewellery - HELD THAT:- Addition sustained was an estimated one. It is well settled that if the addition is sustained on estimate basis it cannot be said that the assessee concealed the income or furnished inaccurate particulars of income in respect of the estimated addition. Therefore, the penalty was not leviable u/s 271(1)(c) - in the present case, the AO himself accepted the gold jewellery in which the diamond were studded to the extent of 700 gms out of the 793.600 gms jewellery found during the course of search and the ld. CIT(A) accepted the remaining jewellery of 93.600 gms against which the department had not preferred any appeal.
When the gold jewellery in which the diamonds were studded has been accepted by the department as the jewellery received at the time of marriage or other occasion, then, it cannot be said that the diamond studded in the said jewellery were out of the undisclosed income of the assessee. It is well settled that the assessment proceedings and the penalty are two different and distinct proceedings and that the addition made in the assessment may be relevant but not a conclusive proof of concealment of income or furnishing of inaccurate particulars of income. Therefore the impugned order passed by the ld. CIT(A) is set aside and the penalty sustained u/s 271(1)(c) of the Act is deleted.- Decided in favour of assessee.
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2016 (5) TMI 1570 - ITAT DELHI
Validity of assessment u/s 144 - assessee taken a ground that AO erred in passing the ex parte order without giving any sufficient opportunity to the assessee and wherein no notice u/s 144 or any show cause notice was served to the assessee before making such a huge addition - HELD THAT:- We find that ld. CIT(A) has confirmed all the additions except allowing deduction u/s 80C, relying on the remand report of AO. However, ld. counsel submits that facts needs to be remarshalled as assessee did not get sufficient opportunity to plead his case. Considering the entirety of facts, after going through the order of ld. CIT(A), in order to impart substantial justice to assessee, we restore the matter to the file of AO to pass the assessment order de novo, after providing reasonable opportunity of being heard. We order accordingly.
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2016 (5) TMI 1569 - ITAT KOLKATA
Revision u/s 263 by CIT - AO while completing the assessment proceeding did not make enquiries which he ought to have made - HELD THAT:- It is clear from the submissions and material available on record with regard to the sundry income credited in the profit and loss account the AO made the required inquiries. Though there is no specific reference by the AO on this aspect, yet the fact remains that the AO got the details of the sundry income and in the absence of any adverse observations in the order of AO it is to be presumed that he was satisfied that the income in question had nexus with the business of the assessee and therefore had to be recorded as income from business.
There cannot also be any dispute with regard to the fact that the income from sale of scrap, foreign exchange fluctuation gain are inextricably linked to the profession income and have to be regarded as income from profession.
With regard to the payment of service charges to Price Waterhouse Coopers again the required details were filed by the assessee and AO had raised specific queries on these charges. As pointed out by the learned counsel for the assessee similar charges had been allowed as deduction in the past. There was no reason for the AO to doubt the nexus of these expenses with the business of the assessee.
With regard to the payment of policy premium to cover the risk of damages owing to professional negligence it cannot be disputed that the same was in relation to the business of the assessee. It is no doubt true that the AO while completing the assessment did not make any specific inquiries with regard to this item of expenditure, the fact, however, remains that these expenses have direct nexus with the business of the assessee and had to be recorded as expenses wholly and exclusively incurred for the purpose of the business of the assessee.
Besides the above as rightly pointed out by the learned counsel for the assessee the CIT has not set out as to why this item of expenditure need to be investigated and as to what type of inquiry ought to have conducted by the AO. A mere observation that no proper details have been obtained, cannot be sufficient to come to a conclusion that the AO did not make proper and adequate inquiries which he ought to have made in the given facts and circumstances of this case.
In the conclusion we are of the view that none of the reasons set out by the CIT for invoking the jurisdiction u/s 263 of the Act are sustainable. The impugned order of the CIT-A has to be quashed for the reason that order of the AO sought to be revised in the impugned order was neither erroneous nor prejudicial to the interest of the revenue for the reason of any law of inquiry that the AO ought to have made in the given facts and circumstances of the case. We accordingly quash the order u/s 263 of the Act and allow the appeal of the assessee.
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2016 (5) TMI 1567 - ITAT DELHI
Benefit of exemption u/s 11 & 12 - whether activities of the trust were not within the purview of section 2(15) - As per revenue assessee society’s main source of receipts is from Hostel/Canteen activities and booking of Auditorium and Conference Hall which are of commercial nature - CIT(A) where relying upon the order of the ITAT for 2009-10 A.Y. and taking note of the fact that there was a similar denial in 2010-11 A.Y. also on identical fact which issue also stood concluded in favour of the assessee - HELD THAT:- We have seen the material available on record and in the light of the submissions advanced by the parties and on consideration of the above finding, we find that the conclusion drawn by the CIT(A) relying upon the order of the ITAT cannot be faulted with. It is seen that in 2009-10 A.Y. more or less on identical facts, the AO had proceeded on an Inspector’s report and therein also relying upon the information in Form 26AS as in the year under consideration he relying on the transactions made with non-member concluded that the trust was running as a commercial activity. This similarity of fact in the earlier year would be evident from order of the ITAT as held it would not be possible to ascertain the amount of canteen collection from those persons who were not stayed in the hostel. In any case it is bound to be very negligible and within permissible limits of section 2(15) of the Income Tax Act.
It can be seen from the documents submitted that the trust serves buffet meals during the program / workshop conducted by Members Organizations and/or during own program and workshop but not for any other purposes. This can be reviewed form the related documents enclosed herewith for your kind perusal i.e. Bills of buffets served during workshop and seminars.
We also like to submit that for the booking of the facilities (Buffet, Auditorium, Conference Hall etc.) of the Trust, officials of the trust designated for the said purposes (at the rank of Manager) are only authorized. Hence, as regard the remarks made by our Canteen staff they had merely given the information in regard to tariff rate both for vegetarian and non vegetarian buffets arrangement. There is nothing wrong in what has been stated by them and no where they had committed that it will be served also for the purposes other than the objectives of the activities for which it was intended. They had merely answered a query. Therefore, it would be inappropriate to conclude that what they had stated involve commercial activities.
Thus identical claim of the Revenue has been considered by the ITAT. No change in fact or circumstance has either been referred to by the Ld. Sr. DR nor has been brought out in the assessment order. In the absence of any infirmity having been pointed out, we find no good reason to deviate from the view taken. Holding the conclusion of the CIT(A) in relying thereon justified on facts and law the departmental ground is dismissed.
Depreciation claim - As relying on Indraprastha Cancer Society [2014 (11) TMI 733 - DELHI HIGH COURT] in computing the income of a charitable institution/trust, depreciation of assets owned by the trust/institution is a necessary deduction on commercial principles. The Gujarat High Court, after referring to the judgements of the Karnataka, Maharashtra and Madhya Pradesh High Courts cited above, also came to the same conclusion and held that the amount of depreciation debited to the accounts of the charitable institution has to be deducted to arrive at the income available for application to charitable and religious purposes. Revenue appeal dismissed.
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2016 (5) TMI 1566 - ITAT HYDERABAD
TDS u/s 194A - Disallowance u/s 40(a)(ia) - Interest paid to various government and Institutional Depositors - Forms 15G/15H are not submitted to the Jurisdictional Commissioner and no evidences were produced to prove whether such forms have been obtained - HELD THAT:- Considering the basic exemption limits, category of the customers are farmers and assessee had collected above 75% of the forms and also percentage of forms not submitted compared to total interest disbursal is 2.26% and percentage of interest paid on above ₹ 10,000 is 24.63%, we are of the view that the assessee has complied with the provisions of section 197A. Assessee also submitted that it has placed a system of collecting the forms from rural branches to HO and submitting the same at the time of assessment.
Assessee also submitted that in the subsequent assessments, it was properly submitted the forms to Assessing Officer. Considering the above submissions, in our view, assessee is not at default and also as held in the case of Kumar Enterprises [2014 (5) TMI 426 - ITAT HYDERABAD] and CIT Vs. Valibhai Khanbhai Mankad [2012 (12) TMI 413 - GUJARAT HIGH COURT] that once the assessee obtained Form 15I from the sub-contractors whose contents are not disputed or whose genuineness is not doubted, then, the assessee is not liable to deduct tax from the payment made to sub-contractor. Once, assessee is not liable to deduct tax disallowance u/s 40(a)(ia) cannot be made. The assessee’s breach of the requirement to furnish details to the income tax authority in the prescribed form within the prescribed time may attract other consequences but cannot result in a section 40(a)(ia) disallowances. Hence, addition made on this count is deleted. - Decided in favour of assessee.
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2016 (5) TMI 1564 - ITAT COCHIN
Interest income of DRDO and ISRO from two departments of Government of India added by AO in the income of the appellant company - CIT-A deleted the addition - addition made by the AO be deleted and justice be rendered to the appellant - HELD THAT:- The above ground is vague and does not have any specific prayer for adjudication. Hence, these appeals filed by the assessee are dismissed with liberty to file fresh appeal or file a Miscellaneous Petition with revised grounds of appeal. It is ordered accordingly.
The three appeals filed by the assessee are dismissed.
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2016 (5) TMI 1562 - ITAT INDORE
Penalty u/s 271(1)(b) - assessee has not made proper compliance with the statutory notices - non maintaining books of accounts - assessee submitted that the Assessing Officer wanted the assessee to produce the books of accounts for computing the total income but for maintenance of books of accounts by an individual or any person not having the income from profession as specified in sub-section (1) of section 44AA or carrying on business or profession having income - HELD THAT:- No penalty can be imposed on the person or the assessee, as the case may be, for failure referred to in the above section if he proves that there was reasonable cause for such failure. Now in the instant case, the assessee has complied with all the notices and he has raised a legal objection that the assessee is not required to maintain books of accounts and if at all he is required to maintain the books of accounts that too for six years. Moreover, the assessee has filed detailed affidavit and also demanded the reasons recorded for reopening the assessment order. Therefore, this contention of the assessee can be said to be a reasonable cause for noncompliance with the notices issued by the Assessing Officer.
As assessee has filed the reply and raised the legal objection. The legal objection is tenable or not is not a question before me but in my opinion, the assessee has complied with the notices issued under subsection (1) of section 142 of the Act and moreover the assessee has also raised the legal objection that the assessee is not required to maintain the books of accounts as the assessee is not carrying on any profession or business.
As assessee has a reasonable cause for not complying with the notices. Moreover, the Assessing Officer has also stated that proper compliance is not made but the assessee has complied with the notices. Therefore, as per section 273 of the Act, the assessee has a reasonable cause for non-compliance with the notices to the satisfaction of the Assessing Officer - Decided in favour of assessee.
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2016 (5) TMI 1560 - DELHI HIGH COURT
Exemption u/s 11 and 12 - Whether Respondent National Accreditation Board For Testing and Calibration Laboratories is entitled to exemption? - HELD THAT:- The positive findings of the ITAT on facts is that the Assessee is not engaged in trade, commerce and business and its dominant and prime objective is charitable in nature in accordance with Section 2(15) of the I.T. Act, 1961. The Court also notes that the Respondent is part of the central government. The Court is unable to be persuaded to hold that the findings of the ITAT are perverse. No substantial question of law arises.
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2016 (5) TMI 1559 - ITAT JAIPUR
Disallowance of prior period expense - AO considering that these expenses related to prior period and the same are not deductible expenditure while computing the profits of the business of current year - CIT (A), who allowed the claim of the assessee - HELD THAT:- We find that the issue of prior period expenses has earlier decided by the ld. CIT (A) in assessee’s own case for the A.Ys. 2007-08 to A.Y. 2009-10 [2015 (7) TMI 1386 - ITAT JAIPUR] whereby the disallowance was deleted by the ld. CIT(A) and no appeal against the same was preferred by the revenue. Considering that the issue involved in the years under consideration is same and also in view of the judicial precedents, we find no infirmity in the order of ld. CIT (A) and the same is confirmed. The ground of the revenue for all the three assessment years is dismissed.
Allowable business expenses - Addition of contribution made by the assessee to rehabilitation fund by not treating the same as business related expenditure - assessee has made contribution towards rehabilitation fund to milk unions - CIT (A) allowed the appeal of the assessee by directing the AO to delete the disallowance - HELD THAT:- We find that for the years under consideration, RCDF Rehabilitation and Development Fund was created as a separate trust on 26.03.2008 and was duly registered under section 12AA w.e.f. 02.05.2008 and the actual contribution made to the fund is directly connected with the business of the assessee which has resulted into benefit. Similar contribution made in A.Y. 2012-13 has been allowed by the AO. Recently, the coordinate Bench of the Tribunal in the case of Jaipur Zila Dugdh Utpadak Sahakari Sangh Ltd [2015 (7) TMI 1386 - ITAT JAIPUR] has remanded the matter to the departmental authorities to decide the matter afresh -we find no infirmity in the order of ld. CIT (A), the same is confirmed. The ground of the revenue for both the years is dismissed.
Addition made for depositing the employee’s contribution to PF and ESI beyond the prescribed time limit - whether employee’s contribution to PF and ESI are governed by provisions of sec. 43B and not by sec. 36(1)(va) read with section 2(24)(x) of the IT Act? - HELD THAT:- There is no dispute as to the fact that assessee has deposited the PF before filing of the return. The various High Courts including the Rajasthan High Court has held that if the employees contribution to PF is deposited before the due date of filing of the return, the same is allowable. See CIT vs. State Bank of Bikaner & Jaipur [2014 (5) TMI 222 - RAJASTHAN HIGH COURT] , Jaipur Vidyut Vitran Nigam Ltd. [2014 (1) TMI 1085 - RAJASTHAN HIGH COURT] and Udaipur Dugdh Utpadak Sahakari Sangh [2014 (8) TMI 677 - RAJASTHAN HIGH COURT] - Decided in favour of assessee.
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2016 (5) TMI 1557 - ITAT BANGALORE
Reopening of assessment u/s 147 - grant received by the assessee from the Central Government - whether assessee had disclosed truly and fully all material facts relating to the grant received by the assessee ? - CIT (A) was of the opinion that during the course of assessment proceedings AO had not considered whether expenditure could be considered as a capital outgo or not? - HELD THAT:- When the original assessments for both the impugned assessment years were passed, the AO had with him the reply given by the assessee during the course of assessment proceedings for A. Ys. 2003-04 as well as the order of the Tribunal in assessee’s own case for A. Y. 1995-96. Thus we cannot say that the AO was not aware of the claim of the assessee during the course of original assessment proceedings. Assessee had brought to the notice of the AO the Tribunal order wherein the observations clearly indicated that expenditure incurred from the grant was of capital nature. In such circumstances it cannot be said that assessee had failed to disclose fully and truly all material facts necessary for the assessment.
Revenue also has to bring in tangible materials which had helped it to come to a conclusion that income chargeable to tax had escaped assessment. Main reason cited by the AO for coming to a conclusion that income of the assessee had escaped assessment is that the assessee had misrepresented and not furnished details of revenue expenditure claimed in the profit and loss account. In our opinion this is far from truth since the AO in the original assessment order clearly mentioned that the books were produced and verified.We are of the opinion that conditions which were required to be satisfied for invoking Section 147 of the Act for the impugned assessment years were not satisfied. We therefore set aside the assessments for the impugned assessment years. Grounds 2 and 3 of the assessee are allowed.
MAT computation for Disallowance u/s.14A - HELD THAT:- We find this issue had come up before Hon’ble Delhi High Court in the case of CIT v. Goetze (India) Ltd2013 (12) TMI 607 - DELHI HIGH COURT] wherein their Lordship held that by virtue of Explanation (i)(f) to Section 115JB(2) of the Act, expenditure relatable to any income to which Section 10 apply was to be added back to book profit for MAT computation. - Decided against assessee.
Disallowance u/s.37 - treating the expenditure out of capital grants received from Central Government, as capital outgo, and in the alternative not giving it the benefit of Section 35(1)(iv) of the Act, for scientific research - HELD THAT:- As decided in own case [2016 (4) TMI 1406 - ITAT BANGALORE] allowed the alternative claim for allowance u/s.35(1)(iv) of the Act and remitted it back to the AO for verification and quantification.
Computation of MAT computation u/s 115JB - HELD THAT:- For the purpose of profits u/s.115JB of the Act, what can be added and what can be deleted are clearly set out in Explanation to Section 115JB(2) of the Act. Only if an amount falls in any of the Explanation can there be an adjustment to the book profit. There is no case for the Revenue that expenditure disallowed by the AO for the purpose of computing total income under the normal provisions of the Act fell within any of these clauses. CIT (A), in our opinion, had correctly appreciated the dictum laid down by the Hon’ble Apex Court in the case of Indo Rama Synthetics (I) Ltd 2011 (1) TMI 1 - SUPREME COURT] - AO had added back the expenditure relating to the research as capital in nature, but did not exclude the capital grants from the income, while computing MAT. We therefore do not find any reason to interfere with the order of CIT (A). Cross appeals of the Revenue for both the years stand dismissed.
Disallowance u/s 14A - HELD THAT:- As we have already mentioned investment of the assessee had substantially gone up and the dividend income of the assessee came to ₹ 123.5 lakhs. In such circumstances, we are of the opinion that the above decision relied on by the Ld AR would not further its case. In our opinion AO was justified in applying Rule 8D(2)(iii) . We do not find any reason to interfere with the same. Ground 2 stands dismissed.
Credit u/s.115JAA - HELD THAT:- Though the CIT (A) has mentioned this ground at para 6 of its order, we find that he had not adjudicated on the said issued. Since credit if available to the assessee u/s.115JAA of the Act, has to be given, we are remitting this issue back to the file of the AO for consideration. Ordered accordingly. In the result, ground 5 of the assessee stands allowed for statistical purpose.
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2016 (5) TMI 1555 - ITAT DELHI
Change of method of accounting - recognized method of accounting - validity of Project Completion Method followed by the assessee - HELD THAT:- The assessee, in this case, has followed project completion method which is one of the prescribed methods by the Institute of Chartered Accountants of India. Even in terms of the revised accounting standard which was applicable for most part of the work done by the assessee the income had been correctly declared as per project completion method in the year of completion. The assessee has followed project completion method which was one of the prescribed methods and the same method has been accepted by the department in the earlier years. Department, therefore, cannot reject the method and apply percentage completion method in a subsequent year.
Project Completion Method followed by the appellant is a recognized method of accounting prescribed by the ICAI which has been regularly followed by the assessee. The assessee being a real estate developer and not a construction contractor, Project Completion Method is the right method for determining the profits. The Project Completion Method being followed should not have been disturbed by the Assessing Officer as it was being regularly followed by the assessee in earlier years also and there is no cogent reason to change the method. We, accordingly, uphold the findings of the Ld. CIT(A) on this issue.
Deduction u/s 80IB (10) - Proportionate deduction - As per the Department, the claim u/s 80IB(10) was not allowable as no separate approval for the four projects viz. Vista A, B, D & E was taken and only a consolidated approval for the entire Vista Project was taken from the GDA containing seven projects (Vista A to F and one Commercial) - HELD THAT:- We concur with the finding of the Ld. CIT(A) that the assessee was eligible to get proportionate deduction u/s 80IB(10) of the Act in respect of flats sold during the year on fulfilling the prescribed conditions.
Requirement of a separate approval for each housing project - A Housing Project may comprise of both eligible as well as ineligible units. The deduction will be available and limited to the claim on eligible units irrespective of the fact that the entire project comprising of eligible and ineligible units has been approved by the authority by way of a single approval/composite approval. Section 80IB(10) refers to the approval of a housing project but does not prescribe a pre-condition that the deduction will be available in respect of only that unit or part of the project which has been separately approved by the local authority.
Hence, it is our considered view that a separate approval for each eligible unit or project is not the intention of the Act. The Hon’ble Madras High Court in the case of Viswas Promoters (P) Ltd. vs ACIT [2012 (11) TMI 1117 - MADRAS HIGH COURT] has held that the mere fact that one of the blocks have units exceeding built-up area of 1500 sq ft per se, would not result in nullifying the claim of the assessee for the entire project. Consequently, it was held, that assessee was entitled to the benefit of deduction u/s 80IB (10(c) of the Act in respect of each of the blocks. The Pune Bench of the ITAT has held in the case of Siddhivinayak Kohinoor Venture [2013 (10) TMI 1295 - ITAT PUNE] that construction of even one building with several residential projects of the prescribed size would constitute a housing project for the purpose of section 80IB(10) of the Act. The Pune Bench further held that each block in a particular project has to be taken as an independent building and hence is to be considered a housing project for the purpose of claiming deduction u/s 80IB(10).
Whether the projections open to sky are to be included or excluded in the calculation of the built-up area of a particulars residential unit? - We find that this issue is covered in favour of the assessee by the decision of the ITAT Pune Bench in the case of Naresh T. Wadhwani [2014 (11) TMI 689 - ITAT PUNE] In the proceedings before us, the Department could not point out any judgment/judicial precedent to the contrary. We accordingly hold that the balconies open to the sky are to be excluded from the calculation of the built-up area of a particular residential unit. We, therefore, direct that the assessee be allowed the claim of deduction u/s 80IB (10) in respect of flats which have been excluded from the benefit of deduction by including the balconies open to sky for the purpose of calculating the built-up area of the individual units.
Assessee challenging the measurements of the DVO in respect of flats at Sl. no. 1 & 4 of the chart - It is the assessee’s contention that the correct measurement is 988.79 sq ft whereas the DVO has calculated the build up area at 1029.28 sq. ft. It is also the assessee’s plea that it had not been afforded a proper opportunity to explain the discrepancy before the Ld. CIT (A). Hence in the interest of justice, we deem it proper to restore this limited issue of discrepancy in measurement, as claimed by the assessee, to the file of the Assessing Officer for fresh examination and adjudication thereon after giving due opportunity to the assessee to present its case. In the result, the appeal of the assessee is partly allowed.
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2016 (5) TMI 1554 - ITAT HYDERABAD
Capital gain computation - adopting the value determined by the DVO - Rejecting sale value declared by the assessee. - HELD THAT:- The very fact that the Assessing Officer has called upon the assessee to raise his objections presuppose that the Assessing Officer is not bound by the DVO’s report and he has got a duty to redetermine the value, but the Assessing Officer chose to proceed as if he is bound by the DVO’s report, which speaks of itself. On the top of it, the learned Commissioner- (Appeals) was of the opinion that the ITAT. Chennai Bench has directed the Assessing Officer to adopt DVO’s report (even if it is wrong), overlooking the legal position that the DVO’s report cannot be treated as sacrosanct and it is amenable to adjustment, if the assessee is able to raise proper objections.
In the instant case, the assessee has relied upon various orders of the ITAT to indicate that the value determined should be based upon a sale instance which should be proximate to the date of actual sale. The assessee has also raised an objection with regard to the increase in sale instance rate by 2% per month, but even till date, Revenue could not point out as to what is the sanctity of that method being followed by the DVO.
We are of the view that the DVO completely failed in his duty to appropriately make the valuation. Even if sale instance rate is taken into consideration, the difference between the sale instance rate and the rate declared by the assessee is within the permissible limits, and therefore, in the light of the orders of the ITAT placed before us, the Assessing Officer has not made out a case for adopting the value determined by the DVO. In the circumstances, we delete the addition made by the Assessing Officer, accepting the sale value declared by the assessee.
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2016 (5) TMI 1553 - ITAT CHENNAI
Levy of penalty u/s 271(1)(c) - unexplained credit under section 68 - HELD THAT:- The assessee has not produced any materials to justify his stand that the penalty is not warranted in all these cases. The assessee has also not furnished the names and complete addresses of persons from whom he received the loans, the date of transaction and mode of payment, confirmation statements or any other relevant materials to establish the creditworthiness of the creditors.
In the absence of these details, it is not possible for the Revenue to make any enquiries of its own to find the genuineness of the transactions. In the case of unrecorded bonded loans, the assessee himself has conceded that this amount represents unaccounted income of the assessee. The assessee also could not explain the source of investment made towards unredeemed pawn items. For the assessment years 2006-07 & 2007-08 source of investment could also not be established. For the above mentioned we do not have any other options but to confirm the penalty levied on all these counts. Accordingly penalty levied on all these counts are hereby confirmed.
Levying penalty in regard to addition made on account of agricultural income, investment made in purchase of land to the extent and investment made in M/s.Ramdev Jewellery - AO has made addition only for the reason that the assessee’s wife did not declare any agricultural income in her return of income with respect to the adjacent agricultural land owned by her - The quantum of agricultural income declared by the assessee is also minimal and there is no substantial reason to disbelieve the claim of the assessee.
Revenue has also not brought any evidence to show that the assessee was not indulging in agricultural activities. Similarly, addition towards purchase of land to the extent of ₹ 2,08,000/- is made because the AO opined that the assessee had paid on-money. However, other than oral statements, no other materials or persons were examined to conclusively prove that the assessee had received on-money. Further, investment in Ramdev Jewellery for ₹ 50,000/- is a nominal amount and there can be a presumption that the assessee could possess such amount from his tax paid income. We hereby direct the AO to delete the penalty made on account of the incorrect claim of agricultural income for all the relevant assessment year, investment in purchase of land to the extent of ₹ 2,08,000/- and investment in Ramdev Jewellery for ₹ 50,000/- for the assessment year 2005-06. Appeals of the assessee are partly allowed.
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