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Showing 121 to 140 of 1611 Records
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2016 (5) TMI 1498 - ITAT BANGALORE
TP Adjustment - comparable selection - functional similarity - application of turnover limit of ₹ 200 crores - HELD THAT:- Assessee engaged in providing software development services, design and support, primarily developing software and providing support to its principal.
Turnover of Tata Elxsi Ltd was ₹ 378.43 crores, that of Sasken Communication Technologies Ltd, came to ₹ 405.31 crores, that of Persistent Systems Ltd, was ₹ 519.69 crores, that of Zylog Systems Ltd was ₹ 734.9 crores, that of Mindtree Ltd (seg) was ₹ 793.22 crores, that of L & T Infotech Ltd, was ₹ 1,950.83 crores and that of Infosys Ltd, was ₹ 20,264 crores. Turnover of the assessee was only ₹ 22.72 crores. Obviously the volume of activity of the above mentioned companies were much higher to that of the assessee. It was more than ten times that of the assessee.
Even if we say that applying turnover limit of ₹ 200 crores may not be a wise and prudent one, the turnover of the comparables mentioned above would clearly show that these were much beyond that of the assessee taking them out of the reasonable realm of comparability. Just because the matter was not adjudicated by the CIT (A) may not be a reason for sending it back to him when the facts are clearly on record. There can be no dispute on the position of facts as mentioned above. In such a situation it would be fruitless exercise to remit the issue of application of turnover filter back to the CIT (A). We therefore direct exclusion of Tata Elxsi Ltd, Sasken Communication Technologies Ltd (seg), Persistent Systems Ltd, Zylog Systems Ltd, Mindtree Ltd (seg), L & T Infotech Ltd, and Infosys Ltd, from the list of comparables.
Bodhtree Consulting Ltd. cannot be regarded as a comparable. In this regards, the fact that the assessee had itself proposed this company as comparable, in our opinion, should not be the basis on which the said company should be retained as a comparable, when factually it is shown that the said company is a software product company and not a software development services company
CG-VAK can be considered as a good comparable as if all the employee costs are properly considered, then this company can pass the filter applied by the TPO for excluding it.
Working of operating margin of the comparables - HELD THAT:- Foreign exchange adjustment once allowed as operational in nature should also be considered while working out the operating margin of the comparables is acceptable - This is because comparability should be done based on equal footing and if foreign exchange gains / losses are considered as part of operational income / loss of the assessee, then such items of expenditure , are also to be considered as operational in nature in the case of comparables also. TPO is therefore directed to work out the margin of the comparables that are left in the list after considering foreign exchange gains / losses as operational in nature.
Working capital adjustment - HELD THAT:- Working capital adjustment has been made at (-) 5,12% . In such a situation, we cannot say that risk adjustment directed by the CIT (A) was incorrect. TPO having not restricted himself to a working capital adjustment of 1.71% as mentioned by him at para 3.7 of his order ought have considered assessee’s plea for a risk-adjustment, if found reasonable. In such circumstances, we find that direction given by the CIT (A) was justified and we do not find any reason to interfere. Ground of the Revenue stands dismissed.
Operating revenue computation - inclusion of Forex gain / loss incidental to the operating activity of the assessee - HELD THAT:- Just because it was not critical to the operating activity, we cannot say that these had to be excluded. This Tribunal in the case of Triology E Business Software India P. Ltd v. DCIT [2013 (1) TMI 672 - ITAT BANGALORE] had held that forex gains / loss are required to be added to the operating revenue relying on another coordinate bench decision in SAP Labs India (P) Ltd, [2010 (8) TMI 676 - ITAT, BANGALORE] . We therefore do not find any error in the directions given by the CIT (A) Decided against revenue
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2016 (5) TMI 1497 - SC ORDER
Business Auxiliary service or not - Buy and sell of Compressed Natural Gas (CNG) - HELD THAT:- Registry to process the matter for being listed before the Hon'ble Court as per rules.
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2016 (5) TMI 1496 - ITAT CHANDIGARH
Exemption u/s 11 - grant of registration u/s 12A denied - trust deed had not provided for a dissolution clause for use of net assets of the trust for its objects in case of dissolution - HELD THAT:- Referring to clause 14 of trust deed we see that the mandate of the said clause is to transfer the remaining assets and liabilities of the assessee to a similar trust at the time of dissolution. There is no intention of giving benefit to a specific person out of whatever remains in the hands of the assessee trust. Therefore, we see no reason for doubting the said clause.
School is run by one family headed by father as Settler-cum-President and two sons as trustees - we find no relevance of the fact that the trust is being headed by the members of only one family. Even if a trust is run by only one family, there is no bar on such trust to be registered u/s 12A. At the time of granting registration what the CIT has to see is that the objects of the trust are charitable in nature and the activities of the same are genuine. The fact whether some benefit directly or indirectly is being diverted to one family, can be taken care of by the AO at the time of making the assessment and granting exemption under section 11 of the Act. Section 13 of the Act provides for refusing exemption under section 11 of the Act in such cases which the Assessing Officer can examine on yearly basis in every assessment year.
Trust is not registered under the new Haryana Registration & Regulation of Societies Registration Act, 2012 - we find ourselves in agreement with the arguments of the learned counsel for the assessee that the provisions of Haryana Registration & Regulation of Societies Registration Act, 2012 are applicable to the society only. The assessee is a trust formed under the Indian Trust 1882 and has been duly registered with Sub-Registrar, Bilaspur. There is no bar under the Income Tax Act to give registration under section 12A of the Act to a trust. There is no provision which says that only societies can be registered under section 12A of the Act. Therefore, we do not find this objection raised by the Commissioner of Income Tax being as per law.
Right to Education Act 2010 is not implemented by the school - the issue is covered by the order of the I.T.A.T., Chandigarh Bench in the case of Kids-R-Kids International Educational & Social Welfare Trust [2016 (3) TMI 1083 - ITAT CHANDIGARH] whereby it has been very categorically held that the issue of school complying with the provisions of the RTE Act is not a relevant consideration to be taken care of by the Commissioner of Income Tax at the time of registration under section 12A of the Act. - Decided in favour of assessee.
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2016 (5) TMI 1495 - ITAT MUMBAI
Penalty u/s 271(1)(c) - failure to comply with the notice issues under section 142(1) - HELD THAT:- It is not comprehensible to us as to how the assessee could have complied with the notice under section 142(1) of the Act and the questionnaire enclosed thereto by filing such voluminous data called for on 26 items, some in prescribed format etc. by 10.30 a.m. on 17.10.2013 when the said notice/questionnaire had been received by the assessee only on 17.10.2013.
It was impossible for the assessee to have complied with the requirements of filing the aforesaid details by 10.30 a.m. on 17.10.2013 required by the notice under section 142(1) of the Act, as there was no time available to the assessee to do so.
Inspite of this, the assessee vide letter dated 18.10.2013 has filed part details of purchases for A.Y. 2006-07 before the AO. In this factual matrix of the case, we are of the considered opinion that since compliance with the requirements of the notice under section 142(1) of the Act dated 11.10.2013/ questionnaire annexed thereto was not humanly possible, this constituted and established that the assessee had reasonable cause, as envisaged in section 273B r.w.s. 271(1)(b) of the Act for failure to comply with the requirements called for by the notice under section 142(1) dated 11.10.2013 and the questionnaire attached thereto. we delete the penalty levied on the assessee under section 271(1)(b) - Decided in favour of assessee.
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2016 (5) TMI 1494 - DELHI HIGH COURT
Exemption u/s 11 - Application of income outside the taxable territories - expenses incurred by the Respondent Assessee outside India on account of foreign travel as application of income as per the proviso to Section 11 (l) (c).
HELD THAT:- The ITAT examined the Articles of Associations of the Respondent Assessee and came to the conclusion that foreign travel expenses incurred by it cannot be termed as application of income outside the taxable territories of the Assessee. The Court does not find any legal infirmity in the view taken by the ITAT. No substantial question of law arises. The appeal is dismissed.
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2016 (5) TMI 1493 - SUPREME COURT
Whether the power of the State to acquire land for a public purpose has been used in the present case to facilitate transfer of title of the land of original owners to a private builder to advance the business interest of the said builder which is not legally permissible?
Held that:- There is no reason whatsoever to disagree with the finding recorded by the High Court that present case is a gross abuse of law on account of unholy nexus of the concerned authorities and the builder to enable the builder to profiteer. The land could either be taken by State for a compelling public purpose or returned to the land owners and not to the builder - There could be no objection to acquisition of land for a compelling public purpose nor to regulated development of colonies, but entertaining an application for releasing of land in favour of the builder who comes into picture after acquisition notification and release of land to such builder tantamounts to acquisition for a private purpose. It amounts to transfer of resources of poor for the benefit of the rich. It amounts to permitting profiteering at the cost of livelihood and existence of a farmer. This is against the philosophy of the Constitution and in violation of guaranteed fundamental rights of equality and right to property and to life. What cannot be done directly cannot be done indirectly also.
The policy is applicable only to release of such land from acquisition as is owned/ purchased by the developers before the issue of notification under Section 4 of the Land Acquisition Act, 1894. This condition was required to be strictly complied with and no person other than original owners prior to acquisition could directly or indirectly avail of the said policy. Even a bona fide error could not justify a patent illegality. In the present case, it is undisputed case of the builder itself that it did not have even an inch of land before the notification in question.
It is well settled that use of power for a purpose different from the one for which power is conferred is colourable exercise of power. Statutory and public power is trust and the authority on whom such power is conferred is accountable for its exercise.
There is no ground to interfere with the finding recorded by the High Court that there was an abuse of power in releasing the land in favor of the builder. Once it is found that action of the State and the builder resulting in transfer of land from land owners to the builder was without any authority of law and by colourable exercise of power, none of the contentions raised by the builder could accepted.
Notifications dated 11th April, 2002, 8th April, 2003 and awards dated 6th April, 2005 are upheld. The land covered thereby vests in HUDA free from all encumbrances. HUDA may forthwith take possession thereof - All release orders in favour of the builder in respect of land covered by the Award in exercise of powers under Section 48 are quashed.
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2016 (5) TMI 1492 - ITAT DELHI
Exemption claimed u/s 54 - new house is purchased from borrowed funds - diversification of sources of the funds for purchase of new house - out of sale proceeds of old assets only ₹ 6 lacs was invested in the new asset and remaining ₹ 19 lacs was arranged as loan from ICICI Bank and therefore exemption u/s 54 to be restricted to ₹ 6 lacs and remaining were charged to tax as long term capital gain - HELD THAT:- Respectfully following the decision of CIT V Dr Parsicha [2009 (10) TMI 898 - BOMBAY HIGH COURT] as approved that sources of funds are irrelevant for claiming exemption u/s 54 of the act. If a new house is purchased from borrowed funds even then the deduction u/s 54 of the act is allowable
We also hold that despite assessee has borrowed funds from ICICI bank for purchase of new House property , she is entitled to deduction u/s 54 of the income tax act on capital gain of ₹ 1268494/-. - Decided in favour of assessee.
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2016 (5) TMI 1491 - ITAT MUMBAI
TP adjustment - comparable selection - emphasis on product comparability - HELD THAT:- It would have been better if the TPO had dealt the issue raised by the DRP rather than challenging the jurisdiction of the DRP. It is a fact that the two comparable companies were not dealing in the same product as that of the assessee. Therefore, they were at par with the other four comparables. In the TNMM what is to be seen is functional comparability and not the product comparability. If the TPO wanted to emphasis on product comparability, then he should not have accepted the remaining two comparables. Considering the above, we are of the opinion that the order of the DRP does not suffer from any infirmity. First effective Ground (GOA 1 & 2) is decided against the AO.
Allowance of claim of bad debts - HELD THAT:- Assessee had written off ₹ 39,056/- only in the books of account during the year under consideration, whereas an amount of 12.40 lakhs was written back. It appears that the TPO without understanding the difference between the writing back of balance and writing off the balance had made the adjustment. The balance written back was offered for taxation by the assessee. Therefore, we fail to understand that how the TPO proposed the adjustment. DRP had rightly deleted the addition but we are surprised to notice that in such a straight case the department has decided to file an appeal. It shows lack of judicial discretion on part of the officers who have recommended/approved the appeal. Such frivolous appeal not only waste the time of the Tribunal, but also increase the burden of the DRs unnecessarily. In our opinion, there is no need to interfere with the order of DRP. So confirming its order we decide second effective ground against revenue.
Working capital adjustment - HELD THAT:- As far as the request of the assessee to consider ₹ 39,056/- as working capital adjustment, we would like to state that same could be granted as it has already suffered taxation.
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2016 (5) TMI 1490 - ITAT PUNE
Disallowance of commission expenses paid against sale of plot - bonafides of the commission payment - credibility of expenditure - exorbitant amount commission - absence of proof of service provided in sale of land - HELD THAT:- There is no corroboration for involvement of the middlemen in the deal except the MOU which is found to be illusory and lacks in material features. The buyer has also not vouched the deal. Payment of such astounding sum to a person having as little understanding of the subject as possible neither accords with any business practice nor is corroborated by any direct or circumstantial evidences.
It only militates against any logic. Which are those other parties who were contacted or what other efforts were carried out prior to and in the course of deal are not borne out from records. It is difficult to believe the credibility of expenditure stated to be incurred by the Assessee on the face of such sordid facts. Thus, viewed from any perspective, the propriety of payment of staggering amount of ₹ 90 lacs purportedly made against obtaining services for sale of property based on some symbolic MOU deserves to discredited.
The genuineness of the expenditure incurred is not at all proved. The initial examination of Shri B.S. Agarwal clearly shows that Shri B.S. Agarwal did not play any role in the land deal. Thus, payment of exorbitant amount of ₹ 90,00,000/- towards commission on some mundane MOU without exhibition of services is an utter improbability and does not stand to any reason.
The assessee has not discharged initial burden of proof which squarely lies upon him to reasonably establish receipt of services. The receipt by payee can be for variety of reasons both gratuitous and non-gratuitous.
The payment of taxes paid by the recipient though a mitigating factor, by itself will not render the corresponding expenses as sacrosanct. The assessee is under obligation to discharge the burden to reasonably prove the bonafides of expenses claimed. The Hon'ble Supreme Court in the case of CIT v. Durga Prasad More [1971 (8) TMI 17 - SUPREME COURT] has held that the taxing authorities are not required to put on blinkers while looking at the documents produced before them. They are entitled to look into the surrounding circumstances to find out the reality of the recitals made in the documents. - Decided against assessee.
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2016 (5) TMI 1489 - ITAT MUMBAI
Reopening of assessment - addition on account of personal drawings and interest expenses - HELD THAT:- As decided in assessee's own case Bench restricted the addition to 50% of the addition sustained by the CIT(A).
Addition on account of interest expense - HELD THAT:- An identical issue has been considered by the coordinate Bench in assessee's own case thus we restore this issue to the file of the Ld. CIT(A) for fresh adjudication after giving reasonable opportunity of being heard to the assessee. Accordingly, this ground of appeal is treated as allowed for statistical purpose.
Interest u/s 234A, 234B and 243C is consequential - we allow the appeal of the revenue for statistical purpose and direct the AO to re-compute the interest liability after reducing the amount of tax deductible at source and decide as per the provisions of law.
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2016 (5) TMI 1488 - ITAT DELHI
Disallowance of loss on forfeiture of earnest money(forfeiture of shop) - in-genuine transaction - Held that:- AO has elaborately quoted the relevant portion of the agreement of the assessee with the other company. There was nothing on record to show that the transaction was not a genuine transaction. Merely by saying that the transaction is not genuine cannot result in a just and proper transaction in the eyes of law being held as not a genuine transaction.
When the parties agreed to certain terms and conditions in a contract, the same are binding on the parties and it is not for the A.O. to say otherwise. One has to look into the aspect that under certain circumstances, if the parties cannot fulfill the terms of the agreement, the agreement provides certain mechanism to save the party who will suffer from the monetary loss. The genuineness of the agreement cannot be doubted by the AO by simply giving one general statement to that effect. AO has to make out through the terms and conditions of the contract between the parties and the circumstantial evidences that the agreement was deliberately not fulfilled by any of the parties. There was nothing to show on record to that effect in this particular case. All these aspect was taken into account by CIT (A), therefore, the CIT (A) has rightly given a finding in favour of the assessee
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2016 (5) TMI 1487 - ITAT PUNE
Disallowance of deduction u/s. 80IB(11A) - Held that:- Remit the file back to the Assessing Officer to consider the claim of the assessee. The assessee would be eligible to claim deduction u/s. 80IB(11A) on the share of income from the business of warehousing, transportation and handling of foodgrains of the units (warehouses) which have started operating on or after 01-04-2001.
Disallowance of deduction u/s. 80IA(4) - assessee has set up Inland Container Depot (ICD) and Container Freight Station (CFS) for handling bonded warehousing facilities on leasehold land of SIDCO - Held that:- The Hon'ble Madras High Court in the case of Commissioner of Income Tax Vs. A.L. Logistics (P.) Ltd. [2015 (1) TMI 401 - MADRAS HIGH COURT] has held that CFS is part of Inland port and therefore, is an infrastructure facility as defined in Explanation to section 80IA(4)(i) of the Act. In view of the various decisions discussed above and the facts of the instant case we accept ground no. 2 raised in the appeal of the assessee for assessment year 2009-10. Thus, we hold that the assessee is eligible to claim deduction u/s. 80IA(4) in respect of the ICD/CFS set up by the assessee.
Addition in respect of payment made by the assessee to the Maharashtra State Warehousing Corporation Karmachari Welfare Fund - Addition u/s 40A(a) - Held that:- In Vinay Narayan Vajpayee [1980 (1) TMI 204 - SUPREME COURT] held that the contribution made by the assessee towards Karamchari Welfare Fund falls within the expression ‘as required by or under any other law” for the purpose of section 40A(a) of the Act. We do not find any error in the findings of Commissioner of Income Tax (Appeals) on this issue. Neither, the ld. DR has been able to controvert the said findings nor the ld. DR has placed on record any judgment contrary to the view taken by the Co-ordinate Bench of the Tribunal. Hence, the ground raised in the appeal of Department are dismissed being devoid of any merit.
Addition on account of “understatement of warehousing charges” - addition on the basis of remarks made in the Audit report - Held that:- A perusal of the impugned findings by Commissioner of Income Tax (Appeals) shows that the assessee has furnished explanation in respect of alleged understatement of warehousing charges. The assessee has purportedly offered the amount of insurance claim for tax in the year of receipt. In support of his submissions the assessee has furnished computation statements for assessment years 2007-08, 2008-09 and 2009-10. The Commissioner of Income Tax (Appeals) has deleted the addition after considering the same. We do not see any infirmity in the action of Commissioner of Income Tax (Appeals) in deleting the addition. Once the assessee has offered the amount to tax in the year of receipt of claim, the same amount cannot be taxed twice.
Addition of fixed deposit closing balance differences - whether or not the assessee has offered the differences as its income for the respective assessment years - Held that:- A perusal of the impugned order shows that the Commissioner of Income Tax (Appeals) has rejected the claim of the assessee and sustained the addition made by the Assessing Officer. Since, the claim of the assessee in respect of aforesaid ground has been rejected by the Commissioner of Income Tax (Appeals) there should be no grouse for the Revenue against the said findings of the Commissioner of Income Tax (Appeals).
Addition of understatement of income resulting from overstatement of “other liability” under the heads fire at Kalamboli warehouse and fire at Kopargaon warehouse - Held that:- DR has not been able to show from records that the findings of Commissioner of Income Tax (Appeals) on this issue are erroneous. The assessee has received insurance claim on account of loss of capital asset, therefore, there is no infirmity in treating the claim amount as capital receipt. The ld. DR has not been able to controvert the finding of Commissioner of Income Tax (Appeals) on this issue. The findings of Commissioner of Income Tax (Appeals) are upheld
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2016 (5) TMI 1486 - ITAT PUNE
Disallowance of claim of deduction under section 80P(2)(a)(i) on interest income received from the banks - assessee was a co-operative society engaged in providing credit facilities to its members - Held that:- For the year under consideration, the assessee had received interest income on the deposits with the banks other than co-operative societies or co-operative banks, which admittedly was received on the surplus available with the assessee, which was deposited in the said banks.
As relying on ITO Vs. M/s. Kundalika Nagari Sahakari Patsanstha Maryadit & Another [2016 (2) TMI 879 - ITAT PUNE] The assessee is entitled to claim the aforesaid deduction. However, no such deduction is available on the interest arising on MSEB deposits - decided partly in favour of assessee.
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2016 (5) TMI 1485 - ITAT PUNE
Claim of pro-rata deduction u/s.80IB(10) - non-completion of the few buildings - Held that:- We find the assessee in the instant case is an individual and engaged in the activity of Promoters and Builders in the name and fashion of “Harshad Constructions”. During the impugned assessment year the assessee has constructed a housing project at Ashok Nagar, Handewadi Road, Hadapsar, Pune. The commencement certificate for this project was received by the assessee on 14-02-2007 which was subsequently revised on various dates.
As per the original plan passed by the Municipal authorities, there are three buildings, viz., A, B and C. The assessee has submitted the completion certificate only for Buildings B and C but did not furnish the completion certification for Building A on the ground that the same was not constructed. Since the plan was sanctioned for Buildings A, B and C and the assessee has completed only Buildings B and C and Building A was never constructed in appeal the Ld.CIT(A) following various decisions allowed the claim of pro-rata deduction in respect of Buildings B and C which were completed.
No infirmity in the order of the CIT(A) granting pro-rata deduction to the assessee in respect of Buildings B and C which were completed. We find the Pune Bench of the Tribunal in the case of M/s. Kumar Company [2016 (2) TMI 231 - ITAT PUNE] while deciding identical issue had allowed the claim of pro-rata deduction wherein held AO cannot reject the claim of deduction u/s.80IB(10) of the entire project for non-completion of the few buildings. We therefore set aside the order of Ld.CIT(A) and direct the AO to allow pro-rata deduction claimed u/s.80IB(10) - Decided in favour of assessee.
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2016 (5) TMI 1484 - DELHI HIGH COURT
Correct head of income - sale of land - business income or capital gain - Held that:- A small portion of the land was sold and the loss therefrom was declared as a capital loss and was not set off against any other income. The ITAT held that a mere fact that a development agreement was entered into by the Assessee with Vatika Ltd. would not change the nature and character of the land since in terms of the agreement it was the developer who would undertake the work of development upon being paid a fee by the Assessee. It was also observed that although the main object of the Assessee may be to carry on the business of real estate, that would not prevent the Assessee from holding the land in question as a capital asset. Therefore the income generated through the sale of land would be chargeable to tax under the head capital gains and not as business income. - No substantial question of law
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2016 (5) TMI 1483 - ITAT DELHI
Maintainability of appeal - tax effect - monetary limit - Held that:- We find that the CBDT vide the aforesaid Circular dated 10.12.2015 has revised the monetary limit to ₹ 10 lakh for filing the appeal by the department before Income Tax Appellate Tribunal. Para 3 of the aforesaid Circular has been made applicable vide para 10 retrospectively. Considering the settled legal precedent that the Board’s instructions or directions issued to the Income Tax Authorities u/s 268A of the Income Tax Act, 1961 are binding on the authorities, we dismiss the departmental appeal considering the material available on record. In view of the same, relying upon the aforesaid circular, the departmental appeal is dismissed
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2016 (5) TMI 1482 - ITAT INDORE
Rejection of books of accounts - GP estimation - unaccounted sales - Held that:- The assessee is dealing in precious metal like gold and silver and the rates are verifiable and available in open to every customer from MCX gold reports or Sarafa Publications. Thus, the customers who purchase goods from the assessee were well aware about the prevailing market price of these metals at the relevant time. Most of the purchases are from reputed dealers. Very few documents pertaining to the assessment year 2011-12 were seized which suggest that the assessee indulged in trading which was not recorded in the books of accounts. For recorded purchases, the assessee was maintaining day to day stock register with quantities and purchase vouchers. The payments were also made through banking channels. Therefore, the learned CIT(A)’s action in enhancing the turnover by 17.5% for all the years is unjustified. There was seizure of documents which suggest unaccounted sales for the assessment year 2011-12 and with a view to plug the loopholes, we are of the view that the enhancement in turnover by 5% on the sales recorded in the books of accounts shall be reasonable for the assessment year 2011-12
The gross profit estimated on unrecorded sales cannot be applied to the recorded sales as the margin of tax also remains with the seller of unaccounted sales while in the recorded sales the prices are increased by VAT which reduces the margin of profit by the similar amount. The cumulative effect of increase in turnover and increase in gold price must have reduced the gross profit for the assessment years 2010-11 and 2011-12 - we are of the view that on unrecorded sales estimated, the profit has to be worked out at the rate of 1.25%. Considering all these aspects we sustain the gross profit rate of 1.25% on the enhanced turnover of gold bullion for the assessment years 2010-11 and 2011-12 and on the recorded turnover disclosed in the books of accounts, we direct to apply gross profit rate of 0.25%.
CIT(A) was not justified in considering the combined sales of gold and silver bullion because there was not a single incriminating document or any evidence found on the basis of which the Assessing Officer could reject the book results of purchase/sale of silver bullion. No addition can be made on estimations and on hypothetical grounds with regard to sale of silver bullion. We are also of the view that not only the enhancement made by the CIT(A) in silver bullion account by 17.5% but the application of GP rate of 1.25% applied by the learned CIT(A) is not justified. We, therefore, delete the additions made in silver bullion account for the assessment years 2010-11 and 2011-12.
Addition on account of unaccounted investment - Held that:- We are of the view that the assessee has made payment in advance through RTGs and submitted a bill issued by Riddhi Siddhi Bullion. The seller has also confirmed the transaction. The copy of bill of exchange obtained from the seller on account of import of goods was also produced. Since it was an imported material and the bar numbers were inscribed on the seized bars which tallied with the purchase bills, we find no merit in sustaining such addition. We, therefore, direct to delete the same.
Unexplained purchases - Held that:- We find that the assessee has filed confirmation from the seller, the original bills were produced, the purchases are entered in the regular books of accounts and stock register. The payments for these purchases were made through banking channels that too in advance, which are verifiable from the books of accounts as well as from the bank statements. The assessee has submitted necessary documents and evidence in the paper book. Keeping all these facts in view, we find no merit in sustaining the addition. Hence, we delete the same.
Addition u/s 68 - identity, creditworthiness and genuineness of the transaction - Held that:- We find from the bank statement of M/s Pramila Investment & Finance Limited that there was bank balance of ₹ 32.5 lacs on the last date of the financial year i.e. on 31.3.2009. The interest was paid after deducting TDS. These facts are sufficient to establish that the assessee was able to be discharge the obligation casted upon him u/s 68 of the Act by establishing the identity, creditworthiness and genuineness of the transaction. In this view of the matter, we have no alternate but to delete the addition.
Addition of unexplained cash credit u/s 68 - amount received as partners’ contribution -Held that:- Sum was invested by the assessee in the firm, M.P. Real Estate & Developers in earlier years and in this year this amount was received as partners’ contribution by that firm. Hence, the addition u/s 68 could not be sustained and it was merely refund of partners’ contribution repaid through cheque. We have no alternate but to delete the addition.
Addition of undisclosed income - receipt for non-performance of the agreement - addition made on account of arbitration award - Held that:- We find that the so called award was not complete as one of the arbitrators did not sign arbitration award. We further find that the addition has been made only on the basis of presumption that the assessee might have received the amount as per the award but no positive evidence has been brought on record to suggest that such amount was received by the assessee in terms of the agreement/award. It is also a fact that the assessee received ₹ 51 lacs as advance through banking channel which was returned back to the intending buyer. The assessee continued to show this plot of land in the fixed assets in his balance sheet. It is also a fact that Indore Development Authority declared scheme no. 131 on this land. Therefore, the above agreement could not be materialized and as such the land could not be transferred. It was informed that this land is even today under the scheme and not transferable. All the three arbitrators filed affidavits which contain the entire details with the assertion that no damages were paid by the assessee because of non-performance of the agreement due to forcemajeure - addition to be deleted.
Addition u/s 68 - Held that:- As decided in Shri Barkha Synthetics Limited vs. CIT [2005 (8) TMI 67 - RAJASTHAN HIGH COURT] if the transactions are made through banking channels and once the existence of the persons is shown, the assessee company cannot be held responsible to prove whether that person himself has invested the said money or some other person had made investment. The burden then shifts on the revenue to establish that such investment has come from the assessee itself. In the absence of such finding, addition cannot be made u/s 68 in the hands the assessee.
Addition based on loose papers - addition on unaccounted entries - Held that;- It is a matter of general knowledge that trading in MCX is being done for short duration of a week’s time and in most of the cases they are intra-day transactions which are normally settled by payment/receipt of difference. When such trading is done on behalf of others, brokerage income is earned. Therefore, it would be unrealistic approach to consider entire trading transactions as unrecorded income. The approach of the CIT(A) to consider credit balance appearing in the name of MCX as undisclosed income even after deducting profit earned and recorded in the books cannot be sustained. While carrying out transactions in any commodity exchange like MCX, nominal margin money is required. Therefore, it would be fair and proper to estimate further additional profit over and above disclosed by the assessee. We, accordingly direct to estimate net profit @ 5% on undisclosed income on ₹ 6,50,10,406/- appearing in the trial balance in the name of MCX. This ground of appeal is therefore, partly allowed in favour of assessee.
Unrecorded transaction - Held that:- CIT(A) has deleted this addition on the basis that “since addition of gross profit of ₹ 14.14 crore is already made in this year taking into consideration, the various unrecorded transaction, hence no separate addition is called for, for the entries recorded on page 108-109 of LPS-5. Hence additions of ₹ 20,27,500/-, ₹ 2,34,64,852/- & ₹ 20,22,954/- made on the basis of notings on these pages is deleted”. We have also decided the issue of estimating the gross profit and the turnover of the assessee in earlier part of this order. We, therefore, following our above order, direct the Assessing Officer to work out the gross profit as per our above direction.
Telescoping benefit - Held that:- Telescoping benefit should be given for explaining any subsequent investment or cash credit which could not be explained to full satisfaction. In case any addition is still sustained by applying the GP Rate, it was definitely available for investment in the books. This is an assessment of the undisclosed income which is taxed as earned outside the books of accounts, has to be considered for the investment and for the entries in the loose papers. The learned counsel for the assessee, therefore, correctly prayed that telescopic benefit be given to assessee.
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2016 (5) TMI 1481 - ITAT DELHI
Income accrued in India - non-taxability of the receipts of DeGolyer and MacNaughton, USA - P.E. in India - India-USA DTAA - fees for technical services - Held that:- It is not in dispute that the services in question were rendered outside India. The payment in question cannot be construed as fees for technical services under India-USA DTAA, as no technical knowledge, skill, know how etc. was made available to the assessee. See DIT vs. Guy Carpenter & Co. Ltd. [2012 (5) TMI 31 - DELHI HIGH COURT]
The amount paid by ONGC to the NRC can be brought to tax only under article 7 of the Indo-USA DTAA as business profit, provided the NRC has a Permanent Establishment (PE) in India and the profit in question is attributable to such PE. Admittedly NRC does not have PE in India. Under these circumstances the receipt of the non resident cannot brought to tax in India under the Indo-USA DTAA. Hence this ground of the assessee has to be allowed. The amount deposited by the assessee on the sums payable to DeGolyer and MacNaughton, USA should be refunded. - Decided in favour of assessee
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2016 (5) TMI 1480 - ITAT CHENNAI
'MAT' credit u/s 115JAA - AO restricted MAT credit to the extent of tax portion of earlier years and not allowed surcharge and educational cess - Held that:- In the current assessment year, the assessee company liable to pay income tax based on the normal computation of income, in such circumstances the assessee is eligible for MAT credit carried forwarded from earlier assessment years u/s.115JA of the Act. Under the provisions of Sec. 115JB tax components deemed to have included surcharge and educational cess. This view was considered by the Apex Court in the case of CIT vs. K. Srinivasan [1971 (11) TMI 2 - SUPREME COURT] were words "income-tax" in the Finance Act of 1964 in sub-sec(2)(a) and sub-se(2)(b) of Sec. 2 would include surcharge and additional surcharge.
We respectfully following the Co-ordinate Bench decision on MAT tax credit u/s.115JAA of the Act and allow the grounds in favour of the assessee.
Admission of fresh claim of deduction towards gratuity paid as same was not claimed in the original return of income - Held that:- AR to substantiate the genuiness of payment supported the grounds with copies of form no.16 issued by the assessee company as employer to employees and the breakup was reflected in the profit and loss account for the year ending 31.03.2011 under the schedules of personal expenses. The assessee filed extract of ICICI Bank statement in support of gratuity payments. Prime facie it is a clear case of mistake in not claiming deduction by the assessee company. Considering the provisions of law, subject to verification by the AO and we rely on the Apex Court decision CIT vs. Shelly Products and Another [2003 (5) TMI 4 - SUPREME COURT] - Considering the apparent facts, factual evidence, claim of deduction and decision of Apex Court, we remit the disputed issue to the file of Assessing Officer to verify and examine the genuiness of the claim and allow deduction and Assessing Officer shall provide adequate opportunity of being heard to assessee before passing the order - Appeal of the assessee is allowed for statistical purpose.
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2016 (5) TMI 1479 - SC ORDER
Repayment of loan by trust - to be treated as application of income as disallowed “because the loan was never taken as income at the time of receipt” - Held that:- Delay condoned. Leave granted.
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