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2016 (5) TMI 1518 - ITAT CHENNAI
Allowability of 60% depreciation on V-sat equipment - AO has restricted the claim of depreciation of 60% on V-sat equipments to 25% - HELD THAT:- An identical facts on similar issue, in the case of Anagram Capital Ltd. v. ACIT [2011 (2) TMI 1575 - ITAT AHMEDABAD] since the facts are identical as has been considered in the earlier year in which it was held that the VSAT equipments cannot be categorized as computer software, there is no material on record to dispute the findings of the authorities below. Nothing is brought to our notice on facts to distinguish the facts considered in earlier year as noted above. - Decided against assessee
Disallowance of ROC fees paid to Registrar of Companies for increasing the share capital - revenue expenditure or capital expenditure - HELD THAT:- As perused the order of the Hon’ble Supreme Court in the case of Punjab State Industrial Development Corporation Limited v. CIT [1996 (12) TMI 6 - SUPREME COURT] wherein, held that “the fee paid to the Registrar for expansion of the capital base of the company was directly related to capital expenditure incurred by the company and although incidentally that would certainly help in the business of the company and may also help in profit making, it still retains the character of capital expenditure since the expenditure was directly related to the expansion of capital base of the company and thus it was not an expense in the nature of revenue” - Decided in favour of revenue.
Disallowance of lease rentals - main argument of the AR is that the lease rental was crystallized during the assessment year 2005-06 and 2006-07 and the same was claimed in these years - ssessee is following mercantile system of accounting - HELD THAT:- The expenditure relating one assessment year cannot be claimed in another assessment year since each assessment year is an independent assessable unit. The assessee was following mercantile system of accounting and the expenses not recorded in relevant assessment year, the same cannot be allowed as deduction because remedy does not lie on the next assessment year. Considering the facts and circumstances of the case, we are of the opinion that it would be appropriate to remit the issue back to the Assessing Officer with regard to lease rentals paid to NELCO to allow rental accrued in the relevant assessment year only. AO shall exclude prior period of lease rentals while considering the same. With these observations, we set aside the order of the ld. CIT(A) and remit the matter back to the Assessing Officer to work out the allowable deduction in accordance with law. Thus, the ground raised by the Revenue is allowed for statistical purposes.
Lease transactions with HCL Comnet Ltd. - CIT(A) has observed that the advance payments were down payments towards lease rentals for both the assessment years - HELD THAT:- It is a fact that a mere down payment does not make the transaction a sale nor the amount can be treated as refundable deposit without any basis. Therefore, these expenditures should be considered as revenue expenditure. Further, the Assessing Officer has not given any finding to disallow the band width charges for 256 KBPS and lease rental charges paid to various franchisees as well as v-sat shifting charges. Though both the items are not provided in the books of accounts, but the assessee has made the claim in the computation of income statements, which is found to be in order in view of the judgement of CIT v. Pruthvi Brokers and Shareholders P. Ltd. [2012 (7) TMI 158 - BOMBAY HIGH COURT] . Therefore, the ld. CIT(A) has rightly held that both the charges would be treated as revenue items and eligible for deduction. Thus, we find no infirmity in the order passed by the ld. CIT(A) on this issue and accordingly, the ground raised by the Revenue is dismissed.
Allowability of depreciation on office equipments - at 15% or10% - HELD THAT:- CIT(A) was of the opinion that the claim of the assessee seems to be in order. He also observed that as per Appendix-I to Rule 5 of Income Tax Rules, 1962, Block III(i), the depreciation rate is 15% for office equipments. Depreciation rate of 10% is applicable for Furniture and Fittings falling in Block II to the above Appendix-I. Office equipments obviously and apparently falling under Block III are entitled to 15% depreciation rate. Accordingly, he directed the Assessing Officer to allow the depreciation @ 15% on Office Equipments. In view of the above findings of the ld. CIT(A), we find no reason to interfere with the order passed by the ld. CIT(A) on this issue. Thus, the ground raised by the Revenue is dismissed.
Allowability of depreciation on printers and scanners - assessee has claimed depreciation at 60% on printers and scanners under the head ‘Computers’ - AO has restricted the depreciation to 15% and the excess depreciation was added back to the total income of the assessee - HELD THAT:- We find that the Hon’ble Delhi High Court in the case of BSES Yamuna Powers Ltd. [2010 (8) TMI 58 - DELHI HIGH COURT] has held that computer accessories and peripherals such as printers, scanners and server etc. formed an internal part of the computer system and, in fact, the computer accessories and peripherals cannot be used without the computer. The Hon'ble High Court thus held that they are the part of the computer system and are entitled to depreciation at the higher rate of 60%. In view of the above, we find no infirmity in the order passed by the ld. CIT(A) and thus, the ground raised by the Revenue is dismissed.
Disallowance u/s 14A r.w.r. 8D - HELD THAT:- In the argument advanced by the assessee. However, we are of the opinion that the investments would definitely involve certain administrative and establishment cost since the decision to make investments, track investments, sale of such investments and follow-up of the receipt of income, sale proceeds etc have to be undertaken which entails definite costs. It is for this purposes that Rule 8D(2)(iii) provides that one half percent of the average value of the investments will be deemed to be expenditure incurred for the same. When the Act has specified a definite formula for working out the expenditure to be disallowed, the Assessing Officer should have disallowed ½ % of average value of the investments as per Rule 8D(2)(iii) as expenditure incurred for earning of exempt income. Accordingly, we set aside the order of the ld. CIT(A) on this issue and direct the Assessing Officer to disallow under Rule 8D(2)(iii) alone. Thus, the ground raised by the assessee is allowed for statistical purposes.
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2016 (5) TMI 1517 - ITAT JAIPUR
Capital gain on sale of agricultural land - date of transfer u/s 2(47)(v) - AO has alleged the transfer of the subject land took place only after conversion of the land use u/s 90-B of Land Revenue Act and therefore, the same is taxable as capital asset - HELD THAT:- An application is required to be made to the relevant authorities for land conversion where the appellant holding land for agricultural purposes intend to develop such land for housing, commercial, institutional, semi-commercial, industrial, cinema or petrol pump purposes or for the purposes of multiplex units, infrastructure projects or tourism projects or for such other community facilities or public utilities purposes as may be notified. Therefore, what need to be seen is whether the appellant has moved an application for land conversion as specified under section 90-B(3) of the land Revenue Act for the above specified purposes or not.
As per JDA order no. 52/2007 dated 29.5.2007 placed on record, it is stated that the appellant has moved an application under section 90-B(3) in respect of land bearing khasra Nos. 370 situated in village Vimalpura Tehsil Sanganer District Jaipur for converting the said land into farm houses. On perusal of the JDA’s order, it is stated therein that in the village area, constructing farm houses is permissible and there is no need for land conversion and accordingly, the appellant’s application for surrender of agricultural land was accepted by JDA u/s 90-B(6) whereby the land shall vest with JDA with effect from date of passing of such order. Similarly, there is another order of JDA bearing order no. 21/2007 dated 26.04.2007 in respect of land bearing khasra Nos. 371 situated in village Vimalpura Tehsil Sanganer District Jaipur for converting the said land into farm houses. The ld AR has submitted during the course of hearing that JDA has issued similar orders in respect of other parcels of lands whereby the appellant has applied for conversion of agricultural land into farm houses and it was ordered by JDA that there is no need for land conversion for farm houses. The Revenue has not brought any evidence to controvert the above orders of JDA.
Appellant has moved an application for land conversion under section 90-B of land Revenue Act for conversion of agricultural land into farm houses and as per the orders of the JDA, constructing farm houses is permissible on agriculture land and there is no need for land conversion. Given that there is no conversion of agriculture land as confirmed by JDA, being the appropriate authority under land Revenue Act, what has been transferred by the appellant continues to be the agriculture land.
Undisputedly, the said agricultural land in question is lying in an area beyond 8 Kms. of the municipal limits. Once it is held that the agriculture land has been transferred which is lying in an area beyond 8 Kms. of the municipal limits, it is of no consequence from tax point of view whether the date of transfer should be the date of agreement to sell i.e, 02.04.2007 or the registration of the sale deeds of various parcels of land done on 28.04.2007 and on subsequent dates falling within the same financial year, as the agriculture land will fall outside the definition of capital asset under Sec. 2(14)(iii) of the Act and we are not inclined to examine the same and other related grounds raised by the Revenue as the same have become infructious.
Impugned agricultural land, not being a capital asset under Sec. 2(14)(iii) of the Act, provisions of section 45 of the Act are not attracted in the instant case and hence, the sale consideration on transfer of agriculture land cannot be brought to tax. - Decided against revenue
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2016 (5) TMI 1516 - ITAT DELHI
Addition on account of TPO adjustments - Comparable selection - additional evidence filed by assessee - HELD THAT:- After going through the decision in the case of Hughes Systique [2013 (8) TMI 812 - ITAT DELHI] we are of the opinion that it would be in the interest of justice to admit the additional evidence filed by assessee in the form of affidavit because this affidavit has come in possession of assessee after the proceedings were over for both the assessment years in question. We, therefore, set aside the order of ld. CIT(A) for AY 2005-06 and restore the matter to the file of ld. AO/TPO to decide the ALP of the commission paid by assessee after taking into consideration the affidavit of Ernst Huber, Director of Taratec SA. Accordingly, department’s appeal for AY 2005-06 stands allowed for statistical purposes.
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2016 (5) TMI 1515 - ITAT AMRITSAR
Addition u/s 40A(3) - assessee had made payments in cash - HELD THAT:- AO has presumed that only sold quantity of land was purchased during the year under consideration. There is nothing on record with the Authorities Below to arrive at this conclusion. In view of the above facts and circumstances we do not find that action of learned CIT(A) in confirming the disallowance made by AO u/s 40A(3) of the Act, can be upheld as there is no evidence of purchase of land by assessee and also there is no evidence that assessee had made payments to the owners of land as has already been established by the fact that owners had received payments form actual buyers only and therefore, there can not be any question of disallowance u/s 40A(3). Therefore, we hold that on merits and facts of the case no disallowance was warranted u/s 40A(3).
Even otherwise, if it is assumed that assessee must have first purchased the land and had made payments in cash even then the disallowance u/s 40A(3) cannot be made in view of the judgment in the case of Sh. Gurdas Garg [2015 (8) TMI 569 - PUNJAB & HARYANA HIGH COURT]
Where the identity of the persons who has received payment in cash is established and genuineness of transactions is established, no disallowance can be made under the provisions of section 40A(3). In the present case even if it is assumed that assessee had first purchased the land and had made the payments to sellers of land the identity of sellers of land is established as is evident from the copy of agreement to sell impounded during survey and also the identity of assessee is established who is deemed to have purchased the land and therefore, also the facts and circumstances of the present case read with judgment of Hon’ble Punjab & Haryana High Court in the case of Sh. Gurdas Garg suggest that no disallowance could have been made in the present case. In view of the above we allow ground Nos.3 to 6 of the appeal of the assessee.
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2016 (5) TMI 1514 - DELHI HIGH COURT
Loss on account of fall in value of the investment held as stock in trade - ITAT deleted the addition - HELD THAT:- The Court is not persuaded to concur with the view expressed in ING VYSYA Bank Ltd. [2013 (6) TMI 43 - KARNATAKA HIGH COURT] which appears to have been decided in the peculiar facts of that case. The Court prefers to adopt the reasoning in the decision in Karnataka Bank Ltd. [2013 (7) TMI 656 - KARNATAKA HIGH COURT] and HDFC Bank Ltd. [2014 (7) TMI 724 - BOMBAY HIGH COURT] . The Court accordingly declines to frame a question on this issue.
Deduction claimed under Section 36(1)(vii) - ITAT allowed the Assessee to raise an additional ground AND remanded the said issue to the AO for a fresh determination - HELD THAT:- Having perused the impugned order, the Court finds that the ITAT accepted the plea of the Assessee that all the relevant facts in this regard were already on record. Only a pure legal ground was being urged on that basis. In the circumstances, the Court declines to frame a question on this issue as well.
Addition on account of excess claim of depreciation on the LAN/WAN equipments - Assessee claimed depreciation @ 60% by treating them as computer peripherals whereas the AO granted depreciation @ 15% by treating them as plant and machinery - HELD THAT:- As urged that the said equipments were not essential for the working of computers in the Assessee's organization and, therefore, could not be treated as computer peripherals. The Court is unable to agree with the above submission. Where the Assessee uses a network of computers for its business purposes, the LAN/WAN equipment is an essential art of the computer system. The ITAT's view to the above effect cannot be said to be perverse. In the circumstances, the Court declines to frame a question on this issue as well.
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2016 (5) TMI 1513 - ITAT DELHI
Deemed dividend u/s 2(22)(e) - HELD THAT: It is important that unless advances it is not gratuitous to its shareholder but it is to protect the business interest of the company, it falls out of the purview of taxation u/s 2(22) (e) of the act. It is not a current account but advances in the nature of loan which assessee enjoys, simply on account to being a share holder exceeding specific percentage, then only, the provisions the section 2(2)(e) of the act comes into play.
The above view further gets support from the decision of CIT Vs. Creative Dying and Printing Pvt. Ltd [2009 (9) TMI 43 - DELHI HIGH COURT] . No other contrary decisions were brought to our notice by the ld DR. In view of the above finding we reverse the finding of the ld CIT(A) in confirming the addition as deemed dividend u/s 2(22)(e)
We also clarify that in the present appeal the accumulated profit are to the tune of only ₹ 1123551/- and the total alleged advances given to the appellant is ₹ 2377000/- and ₹ 15,00,0008/- are on account of security deposit and therefore ₹ 877000/- are the entries of mutual current account transactions, which are also not deemed dividend in view of above judicial precedents and hence, total addition confirmed of ₹ 11,23,551/- by the ld CIT(A) is deleted - Appeal of the assessee is allowed.
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2016 (5) TMI 1512 - ITAT MUMBAI
Taxability of profits arising on sale of investment - HELD THAT:- Tribunal considered the amendments brought in Rule 5 by Finance Act, 1988 w.e.f. 1.4.1989 and also subsequent amendment brought w.e.f. 1.4.2011 by Finance Act 2009. The Tribunal noticed that the Finance Act 1988 omitted the provision relating to exemption of the profits earned on sale of investments by general insurance companies and the same was brought to tax again w.e.f. 1.4.2011. Accordingly the Tribunal held that the gain on sale of investments cannot be assessed to tax in AY 2004-05. Since the facts prevailing in the year under consideration are identical, by following the order passed by the Tribunal for AY 2004-05, we hold that the profit on sale of investment cannot be taxed. Accordingly we set aside the order passed by Ld CIT(A) on this issue and direct the AO to delete the addition.
Disallowance computed u/s 14A - income of the assessee is computed as per the provisions of sec. 44 of the Act read with Rule 5 of First schedule of the Income tax Act - HELD THAT:- No disallowance u/s 14A can be made in the hands of the assessee, since it is covered by the special provision of computation of income u/s 44 of the Act. Consistent with the view taken in the above said years, we also hold that no disallowance u/s 14A can be made in this year also.
Amortisation of premium paid on purchase of investments - HELD THAT:- As in the assessee’s own case relating to AY 2004- 05 and 2006-0 decided the same in favour of the assessee by following the decision rendered by the co-ordinate bench of Tribunal in the case of Tata AIG General Insurance Company Ltd [2010 (10) TMI 764 - ITAT, MUMBAI].
Addition made u/s 69B - AO noticed that the actual value of shares held by the Custodian of the Assessee has exceeded the book value - HELD THAT:- The explanation of the assessee was that it had sold the shares, but the buyer has failed to take delivery of the same and hence the difference between the book quantity and the physical quantity has arisen. The same was not acceptable to both the tax authorities. The Tribunal has considered an identical issue in AY 2006-07 and held that the provisions of sec. 69B shall not apply to such kind of situations. Following the same, we set aside the order of Ld CIT(A) passed on this issue and direct the AO to delete this addition.
Rejection of claim for deduction u/s 35DDA - Year of assessment - as in the books of account, the said provision was reversed on the first day of next year and a fresh provision was made again on the last date of the year - HELD THAT:- Since the assessee has failed to furnish the details of computation of income pertaining to AY 2004-05 and 2005-06, we are unable to decide this issue. However, we have noticed that the assessee itself has disallowed the provision amount of ₹ 5.94 crores in AY 2003-04, meaning thereby, the assessee has intended to omit the entries passed in this regard. The assessee must have excluded the amount of ₹ 5.94 crores credited to Profit and Loss account and also disallowed the provision of ₹ 5.67 crores made on 31.3.2004, while computing the income for AY 2004-05. If the assessee has so disallowed the provision of ₹ 5.67 crores made on 31.3.2004, then the reversal of the above said amount made on 1.4.2004 should not be taxed in AY 2005-06. However, this fact requires verification. Upon verification, if it is found that the provision of ₹ 5.67 crores reversed on 1.4.2004 was not excluded while computing the income for AY 2005-06, then we direct the AO to exclude the same. Since all these facts require verification, we set the order passed by Ld CIT(A) on this issue and restore the same to the file of the AO with the direction to examine this issue
Computation of Book profit u/s 115JB - HELD THAT:- As decided in assessee's own case relating to AY 2004-05 and 2006-07 the provisions of sec. 115JB shall not be applicable to the assessee.
Non-granting of credit for foreign taxes paid - HELD THAT:- A careful perusal of the provisions of sec. 91 would show that the said section does not provide that the tax should have been paid in the foreign country only in the year the credit was claimed. Further, the income tax is computed on the total income and hence there is merit in the contentions of the assessee that the credit should be given in the year in which the concerned income is offered to tax in India. Accordingly, we set aside the order of Ld CIT(A) on this issue and direct the AO to match the tax paid in the foreign country with the income offered by the assessee and accordingly give credit of the same in accordance with the provisions of the Act.
Addition of interest charged u/s 234C - HELD THAT:- A.R fairly admitted that this issue is decided against the assessee in the earlier years. Accordingly we confirm the order passed by Ld CIT(A) on this issue.
Reversal of Provision for impairment loss on investments - HELD THAT:- Since the gain on sale of investments has been held to be not taxable, the corrolary is that the loss or the provision made for loss shall also not be deductible
Disallowance of exgratia payment - assessee took the plea that the provisions of sec. 43B shall govern this claim - HELD THAT:- We have noticed that this issue has already been restored to the file of the AO by Ld CIT(A) to examine the claim for deduction u/s 43B of the Act, i.e., the original reasons for making this disallowance appears to have been accepted by the assessee, since it has not raised any ground thereon. Hence, we do not find any infirmity in his order.
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2016 (5) TMI 1511 - BOMBAY HIGH COURT
Pre-arrest bail - offences punishable under Sections 120(B) and 420 of the Indian Penal Code and under Sections 3, 5 and 6 of Prize Chits and Money Circulation Schemes (Banning) Act, 1978 and Section 3 of Maharashtra Protection of Interest of Depositors (In Financial Establishments Act) - HELD THAT:- On considering parameters of section 438 of the Code of Criminal Procedure, I am not inclined to protect the accused. It won't be out of place to mention that such circulation is required to be stopped. It is necessary for the prosecution to take injunctive steps against this business activity which is prima facie, illegal. Though by stopping this business, a large group of people may get financially affected, however, it will save larger groups of people from becoming prey of this activity.
The Anticipatory Bail Applications are rejected.
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2016 (5) TMI 1510 - ITAT PUNE
Exemption u/s 80G - assessee is a Public Charitable Trust registered under the Bombay public Trust Act, 1950 and the Societies Registration Act, 1860 - assessee trust has incurred expenditure on its objects which is less than 85% of the total receipts and that the trust is charging fees for workshops and for laboratory activities - HELD THAT:- As perused the order the Ld. CIT denying grant of exemption u/s. 80G and the paper book filed on behalf of the assessee. We have also considered the various decisions cited before us. We find the assessee trust is granted registration u/s.12A vide Certificate No. 12AA(1)/2014-15-503 dated 20-05-2014 by the CIT-I, Nashik. We find the Ld.CIT vide his order dated 22-05-2014 rejected the claim of exemption u/s.80G of the Act on the ground that the assessee trust has incurred expenditure on its objects which is less than 85% of the total receipts and that the trust is charging fees for workshops and for laboratory activities.
From the various decisions filed by the the assessee we find exemption u/s.80G cannot be denied merely on the ground that the assessee trust has incurred expenditure on its objects which is less than 85% of the total gross receipts.
We find the in the case of N.N. Desai Charitable Trust Vs. CIT [1999 (5) TMI 11 - GUJARAT HIGH COURT] has held that while granting exemption u/s.80G the authority granting approval cannot act as assessing authority. The enquiry should be confined to finding out if institution satisfies prescribed conditions or not. Actual assessment of institution would not affect claim for special deduction u/s.80G.
CIT in our opinion is not justified in denying exemption u/s.80G on the ground that the assessee trust has incurred expenditure on its objects which is less than 85% of the total gross receipts and that the assessee Trust is charging fees for workshop and laboratory activities. We hold that the CIT is not justified in denying exemption u/s.80G. We accordingly set aside his order and direct him to grant exemption u/s.80G to the assessee Trust. - Decided in favour of assessee.
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2016 (5) TMI 1509 - SUPREME COURT
Possession of disputed property - right of class IInd heir in the property - HELD THAT:- In the instant case, as per concurrent findings of all the courts, Defendant No. 3 has failed to prove the factum of her adoption by deceased Yashoda in the year 1959. There was no corresponding document of adoption and other documentary evidence showing that Defendant No. 3 had ever been adopted by the deceased Yashoda. True it is that in some of the revenue entries the name of Defendant No. 3 has been shown as person in possession, but not in the capacity of adopted daughter. Yashoda was admittedly the owner of the property. The Plaintiff has based his case to recover possession on the strength of the sale deed executed by Buchamma in his favour.
It is settled law that denial for want of knowledge is no denial at all. The execution of the sale deed was not specifically denied in the written statement. Once the execution of the sale deed was not disputed it was not necessary to examine Buchamma to prove it. The provisions contained in Order 8 Rule 5 require pleadings to be answered specifically in written statement.
It is also settled law that passing of consideration under a sale deed cannot be questioned by third party. Defendant No. 3 has not been able to establish her case that she is an adopted daughter of the deceased Yashoda and thus, she being the third party, could not have questioned the execution of the sale deed by Buchamma on the ground of passing of consideration.
The property on the death of Yashoda had been passed on to Buchamma being class IInd heir, as such she had the right to sell the property to Plaintiff. Even if Buchamma had not placed Plaintiff in possession of property on strength of his title conferred by way of sale deed in question he had right to recover possession. The first appellate Court was thus right in decreeing the suit. The High Court has erred in allowing appeal - appeal allowed.
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2016 (5) TMI 1508 - DELHI HIGH COURT
Preparing the rosters for re-assigning the bench matters to the Members beyond 29th April, 2016 “till the joining of new President CESTAT or until further orders, for smooth functioning of the tribunal - Sections 129(1) and 129C(6) of the Customs Act, 1962, Section 35D of the Excise Act read with Rule 3 and 4 of the CESTAT (Procedure) Rules, 1982 - HELD THAT:- While the Court appreciates the necessity for taking the above step, at the same time, the Court is concerned that since more than two months now no President of the CESTAT has been appointed. In the meanwhile, even the post of the Vice President has fallen vacant. The impugned order can at best be treated as temporary arrangement for a certain period and cannot continue indefinitely.
Consequently, with a view to ensure that there is no unnecessary delay in the filling up of the posts of the President and Vice President of the CESTAT, which as is known, has a large pendency of matters, the Court issues notice in this Petition limited to the above aspect. The Central Government will keep the Court apprised, by way of affidavit, by the next date of hearing as to the steps taken to fill up the posts of President and Vice President of the CESTAT. It is made clear that no interim direction is being issued and the matters will proceed as per the roster prepared by the Member (Judicial) of the CESTAT in the meanwhile.
List on 30th May, 2016.
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2016 (5) TMI 1507 - ITAT MUMBAI
Declaration u/s 158A(1) - confirming rental income from M/s. Choradia Fashions Pvt. Ltd., in respect of Shiv Sagar Estate particularly when that income was taxed in the hands of Shri J M Shah as the property was already transferred by the assessee to him on 1st Jan. 2005 in pursuance of permission of the appropriate authority under section 269UL(3) of the Act dated 4th March 1995 - Identical question of law is pending before the Hon’ble High Court - HELD THAT:- In view of the admission of substantial question of law on the issue in hand, by the Hon’ble High Court we allow the declaration of the assessee filed u/s. 158A(1) and direct that whatever will be the decision from the Hon’ble Jurisdictional High Court will be binding upon the respective parties. However, since the issue has been decided against the assessee, for the time being (till the outcome from the Hon’ble High Court) the issue is decided against the assessee.
Disallowance of interest on customs duty - whether the interest on delayed payment is allowable expenditure or not? - HELD THAT:- On the issue of interest for delayed payments reference may be made to Triveni Engineering Works Ltd. vs. CIT [1983 (10) TMI 49 - ALLAHABAD HIGH COURT] ; CIT vs. Laxmidevi Sugar Mills Pvt. Ltd. [1999 (3) TMI 41 - ALLAHABAD HIGH COURT] ; Raj Narayan Agarwal vs. CIT [2002 (8) TMI 59 - DELHI HIGH COURT] ; CIT vs. Delhi Automobiles [2004 (5) TMI 16 - DELHI HIGH COURT] wherein interest paid on delay in paying sales tax was held to be deductible. Admittedly, there are contrary decisions also wherein it was held that interest on delayed payments is not an allowable deduction. There are contrary decisions also wherein it was held that interest on delayed payments is not an allowable deduction.
If this issue is analyzed with respect to section 43B of the Act, the scope and effect of the amendment made in the first proviso to section 43B, by the Finance (No.2) Act 1998, have been elaborated in departmental Circular No. 772 dated 23rd December 1998, wherein certain expenses were held to be allowable only on actual payment. There is no dispute, in the present appeal that interest was paid by the assessee. It is different matter that the assessee carried the matter in appeal before the Hon’ble High Court or before the Hon’ble Apex Court and contested a legal battle, though failed, but fact remains that the customs duty as well as interest on delayed payments was made by the assessee. Demand was raised by the department on 18.09.2006 therefore liability arose in the present assessment year. Thus, the deduction has to be allowed either u/s. 37 or u/s. 43B of the Act. Therefore, this ground of the assessee is allowed.
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2016 (5) TMI 1506 - ITAT AMRITSAR
Non disclosure of discount on purchases from 25% to 40% - free distribution of books - AO held that assessee was not declaring true profits and therefore on the basis of discount allowed by suppliers he calculated the margin of assessee and made additions accordingly - HELD THAT:- In the present case, in the case of Revenue’s appeals the Revenue is aggrieved with the deletion made by learned CIT(A) on account of deduction for free distribution of books. However, we find that learned CIT(A) had allowed relief on account of free distribution of books after getting remand report from Assessing Officer and in earlier years we had already dismissed the appeals filed by Revenue on similar grounds and therefore, the appeals filed by Revenue in the present years are also dismissed.
Calculation of taxable income - In the absence of any quantitative details, it is presumed that out of goods valuing at ₹ 99609039/-, the assessee has sold 75.60% of goods on which he got discount and 24.40% of goods on which he did not get any discount. Apeals filed by assessee are partly allowed.
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2016 (5) TMI 1505 - SECURITIES APPELLATE TRIBUNAL, MUMBAI
Application for renewal of registration as Merchant Banker ("MB") denied - Order passed by the Respondent - SEBI, declaring that Almondz Global Securities Limited ("Appellant") is not a "Fit and Proper Person" as defined under Schedule II of the SEBI (Intermediaries) Regulations, 2008 ("Intermediaries Regulation") - HELD THAT:- SEBI's aim in imposing punishments upon companies should be to make companies law-compliant so as to ensure that the interests of the securities market are secured. SEBI should not view punishments from a perspective of thinning the herd, rather it should help in fostering a healthy environment where intermediaries act cautiously and responsibly under the overall supervision of the market regulator. The punishment should not only be reasonable but must fit the violation or breach of law for which the entity is sought to be penalized. It is true that neither can a straitjacket formula be prescribed nor can a general pattern of reasonableness be laid down to be invariably applied in all cases.
No consistency in the orders passed by SEBI in terms of the punishment imposed upon Merchant Bankers for their misconduct. The punishments range from just a warning or token punishment for a day to the imposition of a fine of ₹ 1 crore. Further, in cases where there are repeated offences, registration has been denied. However, in the facts of the present case, since the fault of the Appellant is limited in as much as the Appellant has relied upon the Statutory Auditor's reports and the statements issued by the two Issuer Companies, instead of looking into the banks statement, by no stretch of the imagination can it be said that the Appellant is not a fit and proper person for carrying on business as a Merchant Banker.
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2016 (5) TMI 1504 - ITAT CHANDIGARH
Expenses incurred on repair and maintenance of building and tubewell - capital expenditure OR revenue expenditure - HELD THAT:- Whether a particular repair is really needed or not or what amount to be spent, the matter is to be decided by the assessee as it is the prerogative of the assessee to take appropriate repair at appropriate time. The repairs may be major repairs, spending considerable amount of money, which amount would not take away character of repair. In our opinion, the quantum of expenditure cannot be the deciding factor as to whether the expenditure is capital or revenue in nature. There is no material on record that the assessee has created any new asset so that they could be of a lasting or enduring benefit to the enterprise in issue.
CIT (Appeals) has observed that an amount spent on repairs of cabin - as observed that the assessee must have got changed everything in the cabin, which amounts to replacement of the old cabin and expenditure has to be treated as capital in nature. The findings of the learned CIT (Appeals) are based on presumptions and assumptions. He has not given any cogent reason in this regard. Thus, considering the entire facts and circumstances of the present case, we are of the view that the authorities below have not correctly appreciated the facts of the present case and also settled legal position. Accordingly, we set aside the findings of the authorities below on this issue and allow the ground raised by the assessee. Accordingly, we direct the AO to allow the entire expenditure claimed by the assessee under the head repairs and maintenance of the building (old shed), tubewell and cabin. We also direct the Assessing Officer to withdraw the amount of depreciation, if any, allowed to the assessee on the amount spent on repair of tubewell.
Addition u/s 14A - HELD THAT:- Assessee had invested a sum of ₹ 10,87,172/- in the shares of various companies. The contention of the assessee is that the investments in shares had been made out of the capital and outstanding reserves of the company and that no separate amount had been borrowed for making the said investments. The assessee further claimed that no substantial expenditure was incurred for earning dividend income. Revenue Authorities have not given any finding that the assessee had earned any exempt income in this year. AO has not recorded any satisfaction to the effect that the interest bearing funds have been used to earn tax free income. There is no finding that the interest bearing funds were used for making the investments in the shares. Thus, in view of the judgment of the Hon'ble Jurisdictional in the case of Kapsons Associates [2015 (8) TMI 1277 - PUNJAB AND HARYANA HIGH COURT] we direct the Assessing Officer to delete the addition of ₹ 76,075/- made under section 14A of the Act. This ground of appeal raised by the assessee is allowed.
Disallowance u/s 36(1)(iii) - HELD THAT:- The proviso to section 36(1)(iii) of the Act provides that where any amount of interest was paid in respect of capital borrowed for acquisition of assets, then such interest which is relatable to the period beginning from the date on which capital was borrowed for acquisition of asset till the date on which asset was put to use, shall not be allowed as a deduction. In the instant case, the assessee had not borrowed any capital for the purposes of investments in capital assets for extension of exiting business. It is also not the case of the Revenue that the assessee had diverted the funds borrowed on interest for the purpose of advancing the same to the aforesaid company. It is evident from the record that there were sufficient free funds and reserves available with the assessee to advance the money to the aforesaid company. Recently, the Hon'ble Supreme Court in the case of Hero Cycles P. Ltd. Vs. CIT [2015 (11) TMI 1314 - SUPREME COURT] held that no disallowance of interest under section 36(1)(iii) can be made if the advances are out of own funds. In this view of the matter also, the disallowance made by the Assessing Officer and confirmed by the learned CIT (Appeals) is uncalled for. This ground of appeal raised by the assessee is allowed.
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2016 (5) TMI 1503 - ITAT INDORE
Addition u/s 69/69B - unexplained investment - Assessee has taken a plea that even such investment was made by the assessee on behalf of his various investors by receiving funds either directly from the investors themselves or from various persons as borrowing on behalf of the investors - HELD THAT:- At various places AO himself has given clear finding that the assessee had borrowed funds from Shri Manish Kedia, Shri Sushil Golecha, Shri Rohit Sethi, etc. Therefore, once the borrowing of the funds by the assessee is admitted by the revenue itself, its availability for making investment by the assessee in various assets cannot be ruled out.
The assessee as contended that in the BS-8 diary, the receipt of funds by the assessee from various persons have clearly been reflected and the authenticity of such diary was duly accepted in so many words by the AO himself, in the body of the assessment order itself, therefore, following the principle of complete reliance on one document, due weightage deserves to be given to the sources of funds mentioned in such diary. - for verifying the claim of the assessee as regard to the sources of aforesaid ₹ 1,33,37,500/-, we restore the matter to the file of the AO with a specific direction that he would correlate the investment of ₹ 1,33,37,500/- with the funds shown to have been received by the assessee from various persons, either as borrowing or as custodian, as per the diary BS-8. If the sources of such investments are not found correlated, the addition to that extent, subject to maximum of ₹ 1,33,37,500/- shall be maintained in respect of unexplained investment in land at Bhaurasla. Accordingly, the grounds of appeal of the assessee 1(a) and 1(b) are partly allowed and ground No.6 of the Revenue is dismissed.
Addition based on loose sheets found in search - HELD THAT:- The various documentary evidences furnished by assessee have not been contravend by the CIT DR. The remaining sum of ₹ 62,41,650/- was paid by the assessee in cash to Shri Mohan Chugh for which, no corroborative evidence was found available with the assessee. The assessee had paid only a sum of ₹ 11,00,000/- to Shri Kamal Kumar. We find that out of sum of ₹ 18,42,50,000/- shown to have been paid to Shri Mohan Chugh at page No.25 of LPS-A/3, a sum of ₹ 8,00,00,000/- and ₹ 2,62,50,000/- were respectively purported to have been given in the form of plot in Dubai and flats in the projects. For such purported payments in kind, no case of unexplained investment can be made against the assessee.
The assessee had paid only a sum of ₹ 7,80,00,000/-, in form of cash/ cheque, out of which a sum of ₹ 2,30,00,000/- was paid through explained sources i.e. through cheques of the companies and the remaining ₹ 5,50,00,000/- was paid in form of cash. Again out of ₹ 5,50,00,000/- a sum of ₹ 4,87,58,350/- was made out of the on-money received against booking of flats in the project Phoenix Green for which separate additions have already been made by the AO in the hands of M/s. Phoenix Leisure & Lifestyle Pvt. Ltd. For remaining ₹ 62,41,650/- paid to Shri Mohan Chugh, the assessee has no concrete evidence or explanation. Finally, the assessee could be said to have made unexplained investment to the extent of ₹ 73,41,650/- only [i.e. ₹ 11,00,000 + ₹ 62,41,650] equally in two assessment years and to this extent only, addition is sustained. The remaining addition so made by the AO and confirmed by the CIT(A) is deleted.
Receipt of on-money if excess funds are available with the company - HELD THAT:- It is a settled law that if a transaction is considered to be genuine in the hands of the payer then it also deserves to be accepted in the hands of the payee as well. So, the receipt of payment of ₹ 5,00,00,000/- by the assessee from M/s. Phoenix Devcons Pvt. Ltd. and its subsequent utilization towards payment of on-money for purchase of land at Bhopal cannot be brushed aside abruptly. The assessee while rendering the account to M/s. Phoenix Devcons Pvt. Ltd. had shown the purpose of retention of sum of ₹ 5,00,00,000/- for making some investment in properties in Dubai through his one other company namely M/s. Phoenix Leisure & Lifestyle Pvt. Ltd. but due to non-approval of the necessary government permissions, the same could not be made and eventually such funds were utilized by the assessee for making investment in purchase of land at Bhopal.
Even from perusal of assessee’s BS-8 diary, it may be found that the assessee had made payment for purchase of land in Bhopal but no single evidence can be found as regard to making of any investment by the assessee in any property in Dubai. In our country any remittance, out of India, other than through banking channel is an offence and it is not the case of the Revenue that any Enforcement Agency has taken any action against the assessee on allegation of any Hawala transaction. There cannot be two views for the preposition that the funds of ₹ 5,00,00,000/- were very well available with the assessee for making investment in Bhopal land. Thus, there cannot be said to be any infirmity in the CIT(A)’s action in granting set-off of a sum of ₹ 4,93,73,000/- to the assessee against the investment in Bhopal Land.
In respect of addition of ₹ 2,86,00,000/-, it is the contention of the assessee that a sum of Rs. ₹ 1,00,00,000/- was directly paid by one company named and titled as M/s. MoneyCare Finance & Leasing Pvt. Ltd. to the sellers of the land. In support of the above assertion, assessee has filed a copy of audited financial statements as of 31-03- 2008 of the above named company as PB-198. In such balance sheet, two advances of ₹ 87,50,000/- and of ₹ 12,50,000/- have been shown respectively by such company in the name of Shri Irshad Ali Khan and Shri Iqbal Siddiqui. A copy of such financial statements were also filed by the assessee before the CIT(A) but for the technical reason of not filing an application for admission of such additional evidence under Rule 46A of the I.T. Rules, 1962 the learned CIT(A) has not admitted such financial statements.We are of the view that this evidence goes to the root of the matter, therefore, we admit such financial statements and restore this issue of receipt of ₹ 1 crore back to the file of the AO to decide the matter afresh after verifying the financial statements of the company Money Care Finance & Leasing Co. Thus, the issue is allowed for statistical purposes.
Sum paid by the assessee to the sellers of the Bhopal land, from time to time, by procuring funds from Shri Nitish Doshi and others - HELD THAT:- veracity and authenticity of the transactions recorded in such BS-8 have been relied upon by the Revenue for making various additions in the assessee’s case and therefore, the assertion of the assessee as regard to receipt of funds from Shri N. Doshi and others gets self established from such BS-8. In view of the above facts and circumstances, we find that the AO has not verified this transaction in light of the transaction recorded in diary BS-8, therefore, on the issue of ₹ 1,70,00,000/-, we restore the matter back to the file of the AO with direction to verify the various notings made in BS-8 diary and other loose papers which suggest receipts of certain funds by the assessee from investors and others. For the remaining sum of ₹ 16,00,000/- paid by the assessee for purchase of Bhopal land through its company, the AO is directed to verify the balance-sheet of the assessee’s such co. namely Phoenix Leisure & Life Style and decide the issue afresh. In the result, the departmental ground no.4 is dismissed and ground no. 3(a) and 3(b) of the assessee are allowed for statistical purposes.
Unexplained deposits of cash on different dates in bank accounts - HELD THAT:- We find from the order of the CIT(A) that assessee tried to prove the source of deposit from current year income as disclosed by the assessee as per return u/s 153A of the Act. The CIT(A) has held that the assessee did not prove the source of cash deposit, therefore, assessee did not prove the source of investor money, therefore, this contention of the assessee was rejected by the CIT(A). We hereby modify the direction of the CIT(A) to the extent that the assessee should be given full credit for cash withdrawn by him from his saving bank accounts for explaining the sources of cash deposits made in such accounts. Thus, the grounds of the assessee are partly allowed and that of the Revenue are dismissed.
Unexplained investment in the hands of the assessee either under s. 69 or 69B - CIT(A) has held that the document was found from the third party but assessee is director of the said company and as per the submission, ₹ 2 crores were received from Money Care Finance Leasing Ltd. and ₹ 25 lacs from Smt. Roshni Doshi - HELD THAT:- CIT(A) has treated 2 crores as explained deposit, we find that before the CIT(A), the assessee could be able to explain the genuineness of deposit of ₹ 2 crores made by M/s. Money Care Leasing and Finance P. Ltd. by producing all the necessary documentary evidences. We also find that the CIT(A) has directed the AO to inform the concerned AO in respect of introduction of ₹ 2 crores for necessary action. Therefore, on the issue of ₹ 2 crores, our interference is not required. In respect of ₹ 25 lacs, the assessee did not produce any evidence but assessee has taken the contention that in respect of this ₹ 25 lacs, CIT(A) has already made enhancement in the hands of M/s. Phoenix Devcon P. Ltd., therefore, addition cannot be made in the hands of the assessee. We reverse the finding of the CIT(A) and restore this issue to the file of the AO to verity whether ₹ 25 lacs given by Smt. Roshni Doshi to Phoenix Devcon P. Ltd. has been assessed or satisfactorily explained in the hands of the company i.e. Phoenix Devcon P. Ltd. The AO is directed to verify accordingly.
Unaccounted receipts of the assessee - HELD THAT:- Undisputed fact that a sum of ₹ 1 crore was received by the assessee from its co. through account payee cheque drawn on HDFC Bank. Assessee has submitted the copy of the account of the assessee in the books of the company. As per the ledger account after debiting the account of assessee with the aforesaid payment of ₹ 1 crore, the closing debit balance as on 31.3.2008 in the name of the assessee is getting appeared which fully tallied with amount shown under head “directors advance” in the audited balance sheet of Phoenix Devcon P. Ltd. which is on page 195 of the paper book. It is the contention of the assessee that once the assessee received this amount from the company as advnace, it is capital receipt only, therefore, in our opinion, this requires verification at the end of the Assessing Officer. AO is directed to verify the payment of ₹ 1 crore by the company to the assessee through account payee cheque on HDFC Bank. The Assessing Officer should also verify that whether or not the payment is shown under the head “director advance” in the books of Phoenix Devcon P. Ltd. The AO is directed to verify the claim of the assessee as per law
Denial of natural justice - appeal against the action of the CIT(A) in deciding the appeal against the principles of natural justice, without affording any opportunity to the AO or remanding it back in violation of the departmental instruction - HELD THAT:- We find that in the instant case, the notice was issued to the concerned AO. AO did not remain present before ld. CIT(A) during assessment proceedings. The CIT(A)has called for the remand report and AO has not made any compliance. The ld. CIT(A) has directed to make the further inquiry which ld. CIT(A) has no powers but looking into the facts and circumstances of the case, we feel it appropriate to direct the AO to make further inquiry as per the directions given elsewhere in this order which powers are well within the jurisdiction of the Tribunal. Therefore, in our opinion, the departmental ground is deserved to be dismissed and hence, it is dismissed.
Addition u/s. 68 - whether AO has not established that the assessee has borrowed such loans on Hundi and no Hundi, either live or discharged, was found and seized from any business premises of the group? - HELD THAT:- Provisions of s. 68 cannot be invoked. Even otherwise, The AO himself at various places in the body of the assessment order has firmly stated that the assessee had borrowed funds from various persons and, therefore, having given such finding of genuineness of the borrowing there does not remain any scope for the AO to make any addition in the assessee’s hands by regarding the same as his undisclosed income. For such proposition, we rely on the decision of Hon’ble ITAT Jodhpur Bench in the case of Sunil Rathi Alias Jitendra Rathi vs. ACIT [2007 (9) TMI 314 - ITAT JODHPUR] holding that receipt of a loan cannot be regarded as an income of an assessee. In view of above discussion, we dismiss this issue of the departmental appeal.
Unexplained cash deposits in the Citibank Account - HELD THAT:- We find that the assessee has received cash from various investors who were willing to make investment in the certain property around the Indore through assessee. We find that the assessee has also received ₹ 5 lacs from Shri Manish Kediya. The assessee has not given any evidence before the AO and ld. CIT(A) for establishing the nexus of cash deposits of ₹ 5,00,000/- with City Bank out of funds received from Shri Manish Kediya. The assessee is directed to give the evidence before the AO and AO is directed to verify the claim of ₹ 5,00,000/- with reference to BS-8 diary and documents seized during course of search. Rest of the addition is confirmed
Unexplained cash deposit in the bank of Rajasthan - HELD THAT:- Restore the matter to the file of the Assessing Officer with a specific direction that the full credit should be given to the assessee in respect of cash withdrawals made by him, from time to time, from his saving bank accounts in which cash deposits were found made by the Assessing Officer, as the Revenue Authorities could not establish that cash withdrawn by the assessee was utilized by the assessee for some other purposes and it was not available with him for making subject cash deposits. As regards availability of cash out of income of ₹ 30,00,000/- shown by the assessee in his return of income, for the assessment year under appeal, we find substance in the arguments of ld. Counsel of the assessee that tax on such income was paid by the assessee in subsequent years and not during the relevant year. Considering the fact that the assessee might have spent a sum of ₹ 5,00,000/- towards his household expenses, credit for remaining ₹ 25 lacs also deserves to be given to the assessee for explaining sources of cash deposits. Thus, the Assessing Officer is directed to verify the claim of the assessee
Addition under the head Dubai Hawala - CIT-A deleted the addition observing that the AO could not adduce any evidence other than the papers seized - HELD THAT:- As during the course of search, a loose paper inventorised was seized. CIT(A) has held that these documents are dumb documents. These documents do not contain any date or period. These documents also do not contain details that whether these are of nature of receipt or payment. AO has not made any inquiry after loose paper found. The AO has held that some companies like, M/s. Neel I Ltd. and M/s. CS Developers has made investment in their property. We find that ld. CIT(A) has held that the AO has not made any inquiry whether the assessee has made investment in the Dubai property or in M/s. Neel 1 Ltd. or CS Developers who have allegedly made investment in the property. The ld. CIT(A) has further held that if alleged Dubai hawala is made by the assessee, no action has been taken by the other govt. agencies as Enforcement Director, Fema Authorities. CIT(A) has also given the direction to the AO that if the E.D. or Fema Authorities or any authorities regulating the remittance of money from India gives any conclusive finding as regard making of hawala transaction by the assessee then the AO would be free to take action against the assessee in accordance with the provisions of law. We find that when ld. CIT(A) has given the specific direction and the Department is not bringing any evidence that assessee has made any investment in the property, no addition can be made on the basis of simple documents found from the possession of the assessee. CIT(A) is justified in his action for giving the direction and deleting the addition
Addition on account of real estate trading in Dubai - HELD THAT:- AO has not brought any evidence to show that assessee is connected with Wealthcare Investment Ltd. The assessee, during the course of search, has categorically denied that he and his wife has any business connection in Dubai. The AO has not made any inquiry that assessee had any interest in Wealthcare Investment Ltd. Therefore, we are of the view that no addition can be made without bringing the evidence on record. Moreover, the assessee is assessed to tax in India and he has not shown any income from outside India. Therefore, we are of the view that unless and until, the Department brings the concrete evidence that assessee has any interest in Wealthcare Investment Ltd., no addition can be made in the hands of the assessee. In the result, the departmental appeal on this issue is dismissed.
Ad-hoc basis on account of alleged profit on sale of Bhopal Land - HELD THAT:- there might have taken place some transaction of receipt of on-money on sales of the land and since, it was only the assessee, who had paid the on-money at the time of the purchase of the land, as a natural corollary, the presumption has to be made that such on-money was received by the assessee only. Undisputedly, in the instant case, through the estimation of the AO as regard to the sales consideration of ₹ 1000 lacs is not based upon any material, but taking note of escalation of property prices. Even we find that the appellant has not given any basis for determining the sale price at ₹ 110.50 lacs only. In view of the same, as the assessee has actively participated and made the payment of sale consideration of ₹ 851.58 lacs in the purchase of Bhopal Land. In view of the same and also on the basis of reasons assigned by A.O. given in para-7.13.1 to 7.14 of the order for such estimation for determining the profit out of sale of Bhopal Land is correct and justified. Accordingly the addition so made by A.O. is held to be justified and correct. Accordingly the addition so made by the A.O. is confirmed. The appeal of the assessee on this issue is dismissed.
Unexplained payment allegedly made by the assessee to Shri Chirag Shah - HELD THAT:- As the details enumerated by A.O. clearly evident that payment of ₹ 50,00,000/- was made by assessee, which was duly vouched as detailed by A.O. in the order, hence by no circumstances such duly acknowledged vouchers can be held to be wrong. In view of the same, we consider it proper and appropriate to hold that the addition made by AO of ₹ 50,00,000/- is completely justified and correct. Accordingly the addition so made by A.O. is confirmed. However, we are in agreement with the direction of the ld. CIT(A) that the assessee has already offered additional income of ₹ 1,45,00,000/- as per return filed u/s 153A of the Act, hence, we direct the A.O. to give telescopic credit of such additional income offered against the aforesaid addition
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2016 (5) TMI 1502 - ITAT AMRITSAR
Addition u/s 40A - cash payments for the purchase of immovable properties (held as stock-in-trade) exceeding limits - HELD THAT:- Respectfully following the order of the Hon’ble High Court in the assessee’s own case for the assessment year 2009-10 [2015 (8) TMI 569 - PUNJAB & HARYANA HIGH COURT] the addition is deleted as held Tribunal has not disbelieved the transactions or the genuineness thereof. Nor has it disbelieved the fact of payments having been made. More important, the reasons furnished by the appellant for having made the cash payments, which we have already adverted to, have not been disbelieved. In our view, assuming these reasons to be correct, they clearly make out a case of business expediency.
The order of the ld. CIT(A) is set aside and the grounds raised by the assessee are accepted.
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2016 (5) TMI 1501 - ITAT AHMEDABAD
Addition on receiving on-money - cash payment received from CCCPL - unaccounted investment for the purchase of land - taxability in the hands of individual assessee or company HELD THAT:- Addition has been made on the allegation that the assessee-group has received ₹ 15.07 crores as discussed above as on-money from sale of land in question from CCPL. As discussed above, in the case of Dr. Keyur Parikh and others [2013 (11) TMI 1242 - ITAT AHMEDABAD] it has been held by the ITAT that there was no evidence in possession of Revenue to hold that the assessee made unexplained investments towards the purchase of land in question.
Nothing contrary was brought to our knowledge on behalf of the Revenue. Since the assessee is a recipient in respect of the same property and it has been held by ITAT that in case of purchaser no unexplained investment has been made in respect of said property as discussed above. So, the addition on receiving on-money in question in the hands of the assesseegroup are not justified unless there is evidence on the issue in favour of revenue which is missing in this case. Moreover, revenue authorities ignored the fact that one of common directors of assessee companies, namely –Mr. Shekhar Patel had categorically denied having received cash amount on the sale of land in question. Revenue has ignored the same which is not justified. Assessees have not been provided cross examination of person who is alleged to have made payment of cash of ₹ 15.07 crores. to the assessees which is again not justified. Taking all the facts and circumstances of the case, the addition made by the Revenue in all these groups alleged to be received from CCPL does not survive and same is directed to be deleted. This take care of main issue of on money in land deal in cases of all these assessees of this group.
Disallowance of compensation paid - According to CIT(A) the assessee companies have not discharged the onus of proving the credit amount under the guise of compensation to Frontline Financial Services Ltd. - HELD THAT:- Disallowance in question has been made mainly on account of denial by Tushar Shah as discussed above. The facts remain that main focus of revenue is on statement of Tushar Shah before ADIT (investigation). Irrespective of peculiar background of case assessees had right to cross examine Tushar Shah whose statement recorded by concern ADIT (investigation) has been mainly relied by revenue while making disallowance in question denial. Denial of opportunity of cross examination of said Tushar Shah is violation of principle of natural justice which is not justified. Taking all facts and circumstances into consideration, we set aside this issue to CIT(A) with direction to decide the issue as per fact and law after providing due opportunity of hearing to both parties including cross examination of said Turshar Shah of FFSL by assessees as discussed above. Thus the second issue in all these appeals is allowed for statistical purposes.
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2016 (5) TMI 1500 - ITAT MUMBAI
TDS u/s 194C OR 194J - payment made by the assessee on account of data storage charges, processing charges, call centre operation and business services - default u/s 201(1) - DR argued that that since these services involved special managerial skills to carry out the work in specialised manner - HELD THAT:- CIT(A) after having examined and perused agreements with the service providers and after going into the various services provided reached a conclusion that the outsourced services do not require any kind of technical and professional expertise and are just simple and repetitive nature of work such as document storage, documents delivery and collection services and documents management services. CIT(A) examined the contract with Writer Information Management Services and found that very basic services were contracted and rendered by the said party involving no special technical skill or professional qualification.
On the basis of the rival arguments and perusal of the various records as placed before us we find that the work assigned to the service provider was not a technical or professional work which required special skills but simple, basic and repetitive nature of work and we are inclined to opine that the order of CIT(A) is correct and deserved to be upheld. We dismiss the ground no 1 raised by the revenue by upholding the order of FAA on this point.
Event management expenses attract the provisions of section 194C or 194J - HELD THAT:- As is seen from the nature of services availed, we do not find any sort of professional or technical or consultancy but rather routine services which are provided by the travel agents in the normal course of business which were purely of contractual nature. It can be seen from nature of reimbursement for the services availed that these are in the nature of simple contractual case where only the provisions of 194C could be applied to deduct and deposit TDS and not 194J which deals with the deduction and deposit of TDS in case of technical, professional and consultancy services. Looking to the facts in the light of provisions of section 194C vis a vis 194J we find that the order of FAA is correct and needs to be upheld. Accordingly we dismiss the ground as raised by the revenue.
Applicability of TDS provisions u/s 194D on Service Tax element in respect of ‘insurance commission' - HELD THAT:- TDS is required to be deducted and paid to the Govt Treasury on the income payable only which means that certainly the service tax component on the commission is not liable to TDS as the same is not an income of the assessee. The provisions of section 194D and 194I have to be seen in the light of the two circulars no 4/2008 dated 28.04.2008 and circular no 1/2014 [F.No. 275/59/2012-IT(B)] dated 13.1.2014. In circulars no. 4/2008 dated 28.04.2008 CBDT has clarified that TDS is not required to be deducted on service tax on rent u/s 194I.
Similarly in circular no 1/2014[F.No. 275/59/2012-IT(B)] dated 13.1.2014 the CBDT has clarified that TDS is required to be deducted on the amount paid/payable under an agreement/contract between the payer and the payee without including the service tax amount.
In the case of CIT(TDS) V Rajasthan Urban Infrastructure [2013 (8) TMI 12 - RAJASTHAN HIGH COURT] has held that service tax is not subject to deduction of tax at source and the circular no 1/2014[F.No. 275/59/2012-IT(B)] dated 13.1.2014 has been brought by the CBDT after the above decision of the high court and also referred to in para no 2 of the circular. After considering the facts of the case before us in the light of circulars as referred to above and decision of the Rajasthan High Court and also the relevant provisions of the Finance Act which provides for ―Reverse Charge Mechanism‖, we are of the opinion that the order of CIT(A) is correct and does not suffer from any infirmities and we,therefore, uphold the same. In result, the appeal of the revenue is dismissed.
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2016 (5) TMI 1499 - ITAT MUMBAI
Disallowance u/s 14A - expenses incurred to earn the exempt income - HELD THAT:- The balance sheet of both the years are on the file as annexure -1 and 2 which speaks that the assessee was having sufficient surplus amount in comparison to the investment made in mutual fund to earn the exempt income. Therefore, the said circumstances and in view of the above mentioned law settled in case of Bombay Commissioner of Income Tax Vs. Reliance Utilities and Power Ltd. [2009 (1) TMI 4 - BOMBAY HIGH COURT] . We are of the view that the claim of the assessee is required to be examined a fresh in accordance with law. Therefore the finding of the learned CIT(A) on this account has been ordered to be set aside and learned Assessing Officer is hereby directed to decided the matter afresh in accordance with law. This issue is decided in favour of the Assessee against the Revenue
Depreciation on capital asset transferred by a holding company to its subsidiary company - exemption under section 47(iv) applicability of provisions of explanation 6 to sub-section (1) of section 43 - plant and machinery is transferred from the holding company to subsidiary company - HELD THAT:- It is clear that the finding of the CIT(A) is based upon the observations made in Essar Oil Limited Vs. Deputy Commissioner of Income Tax, Special Range [2007 (1) TMI 278 - ITAT MUMBAI] wherein held that A.O. is directed to take the cost of acquisition of such assets as have been acquired at the cost at which they have been acquired means the actual consideration paid by the assessee company and accordingly allow the depreciation claimed by the assessee.
Considering the facts of the case before us we agree that the case of the assessee is duly covered by the case of Essar Oil Ltd. (Supra). Therefore, we do not find any infirmity and illegality in the finding given by the learned CIT(A), hence we dismissed the appeal filed by the revenue.
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