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Showing 61 to 80 of 1610 Records
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2016 (5) TMI 1557
Reopening of assessment u/s 147 - grant received by the assessee from the Central Government - whether assessee had disclosed truly and fully all material facts relating to the grant received by the assessee ? - CIT (A) was of the opinion that during the course of assessment proceedings AO had not considered whether expenditure could be considered as a capital outgo or not? - HELD THAT:- When the original assessments for both the impugned assessment years were passed, the AO had with him the reply given by the assessee during the course of assessment proceedings for A. Ys. 2003-04 as well as the order of the Tribunal in assessee’s own case for A. Y. 1995-96. Thus we cannot say that the AO was not aware of the claim of the assessee during the course of original assessment proceedings. Assessee had brought to the notice of the AO the Tribunal order wherein the observations clearly indicated that expenditure incurred from the grant was of capital nature. In such circumstances it cannot be said that assessee had failed to disclose fully and truly all material facts necessary for the assessment.
Revenue also has to bring in tangible materials which had helped it to come to a conclusion that income chargeable to tax had escaped assessment. Main reason cited by the AO for coming to a conclusion that income of the assessee had escaped assessment is that the assessee had misrepresented and not furnished details of revenue expenditure claimed in the profit and loss account. In our opinion this is far from truth since the AO in the original assessment order clearly mentioned that the books were produced and verified.We are of the opinion that conditions which were required to be satisfied for invoking Section 147 of the Act for the impugned assessment years were not satisfied. We therefore set aside the assessments for the impugned assessment years. Grounds 2 and 3 of the assessee are allowed.
MAT computation for Disallowance u/s.14A - HELD THAT:- We find this issue had come up before Hon’ble Delhi High Court in the case of CIT v. Goetze (India) Ltd2013 (12) TMI 607 - DELHI HIGH COURT] wherein their Lordship held that by virtue of Explanation (i)(f) to Section 115JB(2) of the Act, expenditure relatable to any income to which Section 10 apply was to be added back to book profit for MAT computation. - Decided against assessee.
Disallowance u/s.37 - treating the expenditure out of capital grants received from Central Government, as capital outgo, and in the alternative not giving it the benefit of Section 35(1)(iv) of the Act, for scientific research - HELD THAT:- As decided in own case [2016 (4) TMI 1406 - ITAT BANGALORE] allowed the alternative claim for allowance u/s.35(1)(iv) of the Act and remitted it back to the AO for verification and quantification.
Computation of MAT computation u/s 115JB - HELD THAT:- For the purpose of profits u/s.115JB of the Act, what can be added and what can be deleted are clearly set out in Explanation to Section 115JB(2) of the Act. Only if an amount falls in any of the Explanation can there be an adjustment to the book profit. There is no case for the Revenue that expenditure disallowed by the AO for the purpose of computing total income under the normal provisions of the Act fell within any of these clauses. CIT (A), in our opinion, had correctly appreciated the dictum laid down by the Hon’ble Apex Court in the case of Indo Rama Synthetics (I) Ltd 2011 (1) TMI 1 - SUPREME COURT] - AO had added back the expenditure relating to the research as capital in nature, but did not exclude the capital grants from the income, while computing MAT. We therefore do not find any reason to interfere with the order of CIT (A). Cross appeals of the Revenue for both the years stand dismissed.
Disallowance u/s 14A - HELD THAT:- As we have already mentioned investment of the assessee had substantially gone up and the dividend income of the assessee came to ₹ 123.5 lakhs. In such circumstances, we are of the opinion that the above decision relied on by the Ld AR would not further its case. In our opinion AO was justified in applying Rule 8D(2)(iii) . We do not find any reason to interfere with the same. Ground 2 stands dismissed.
Credit u/s.115JAA - HELD THAT:- Though the CIT (A) has mentioned this ground at para 6 of its order, we find that he had not adjudicated on the said issued. Since credit if available to the assessee u/s.115JAA of the Act, has to be given, we are remitting this issue back to the file of the AO for consideration. Ordered accordingly. In the result, ground 5 of the assessee stands allowed for statistical purpose.
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2016 (5) TMI 1556
Dishonor of Cheque - none of the complainant was present despite of service of notice - petitioner was not present due to mistake - HELD THAT:- It is not in dispute that the complaint was pending trial from the year 2013 and there is no material on record to suggest that there had earlier been any default on the part of complainant. Even when the matter was listed on 2.6.2015, petitioner, as per his version, could not appear as he had noted down a different date and in support of such contention, he has also annexed the copy of his case diary - Evidently, a very hyper technical and pedantic approach has been adopted by the learned court below by dismissing the complaint for default. The complainant was diligently pursuing his remedies and he has also given an explanation for his non appearance on the date fixed. Even otherwise there is no reason why the complainant would stop pursuing his case, after all it is a complaint involving dishonour of cheque. That apart, it is always in the interest of justice that the cases should be adjudicated on merits.
Similar issue came up before the Hon’ble Supreme Court in Mohd.Azeem Vs A.Venkatesh & another [2002 (8) TMI 883 - SUPREME COURT] and the Hon’ble Supreme Court has held that the complaint ought not to have been dismissed by the court on account of single default on the part of complainant.
The order passed by the learned court below is extremely harsh. Moreover, the learned court below has not at all considered as to whether personal attendance of the complainant was essential on the date for the progress of the case - appeal allowed - decided in favor of appellant.
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2016 (5) TMI 1555
Change of method of accounting - recognized method of accounting - validity of Project Completion Method followed by the assessee - HELD THAT:- The assessee, in this case, has followed project completion method which is one of the prescribed methods by the Institute of Chartered Accountants of India. Even in terms of the revised accounting standard which was applicable for most part of the work done by the assessee the income had been correctly declared as per project completion method in the year of completion. The assessee has followed project completion method which was one of the prescribed methods and the same method has been accepted by the department in the earlier years. Department, therefore, cannot reject the method and apply percentage completion method in a subsequent year.
Project Completion Method followed by the appellant is a recognized method of accounting prescribed by the ICAI which has been regularly followed by the assessee. The assessee being a real estate developer and not a construction contractor, Project Completion Method is the right method for determining the profits. The Project Completion Method being followed should not have been disturbed by the Assessing Officer as it was being regularly followed by the assessee in earlier years also and there is no cogent reason to change the method. We, accordingly, uphold the findings of the Ld. CIT(A) on this issue.
Deduction u/s 80IB (10) - Proportionate deduction - As per the Department, the claim u/s 80IB(10) was not allowable as no separate approval for the four projects viz. Vista A, B, D & E was taken and only a consolidated approval for the entire Vista Project was taken from the GDA containing seven projects (Vista A to F and one Commercial) - HELD THAT:- We concur with the finding of the Ld. CIT(A) that the assessee was eligible to get proportionate deduction u/s 80IB(10) of the Act in respect of flats sold during the year on fulfilling the prescribed conditions.
Requirement of a separate approval for each housing project - A Housing Project may comprise of both eligible as well as ineligible units. The deduction will be available and limited to the claim on eligible units irrespective of the fact that the entire project comprising of eligible and ineligible units has been approved by the authority by way of a single approval/composite approval. Section 80IB(10) refers to the approval of a housing project but does not prescribe a pre-condition that the deduction will be available in respect of only that unit or part of the project which has been separately approved by the local authority.
Hence, it is our considered view that a separate approval for each eligible unit or project is not the intention of the Act. The Hon’ble Madras High Court in the case of Viswas Promoters (P) Ltd. vs ACIT [2012 (11) TMI 1117 - MADRAS HIGH COURT] has held that the mere fact that one of the blocks have units exceeding built-up area of 1500 sq ft per se, would not result in nullifying the claim of the assessee for the entire project. Consequently, it was held, that assessee was entitled to the benefit of deduction u/s 80IB (10(c) of the Act in respect of each of the blocks. The Pune Bench of the ITAT has held in the case of Siddhivinayak Kohinoor Venture [2013 (10) TMI 1295 - ITAT PUNE] that construction of even one building with several residential projects of the prescribed size would constitute a housing project for the purpose of section 80IB(10) of the Act. The Pune Bench further held that each block in a particular project has to be taken as an independent building and hence is to be considered a housing project for the purpose of claiming deduction u/s 80IB(10).
Whether the projections open to sky are to be included or excluded in the calculation of the built-up area of a particulars residential unit? - We find that this issue is covered in favour of the assessee by the decision of the ITAT Pune Bench in the case of Naresh T. Wadhwani [2014 (11) TMI 689 - ITAT PUNE] In the proceedings before us, the Department could not point out any judgment/judicial precedent to the contrary. We accordingly hold that the balconies open to the sky are to be excluded from the calculation of the built-up area of a particular residential unit. We, therefore, direct that the assessee be allowed the claim of deduction u/s 80IB (10) in respect of flats which have been excluded from the benefit of deduction by including the balconies open to sky for the purpose of calculating the built-up area of the individual units.
Assessee challenging the measurements of the DVO in respect of flats at Sl. no. 1 & 4 of the chart - It is the assessee’s contention that the correct measurement is 988.79 sq ft whereas the DVO has calculated the build up area at 1029.28 sq. ft. It is also the assessee’s plea that it had not been afforded a proper opportunity to explain the discrepancy before the Ld. CIT (A). Hence in the interest of justice, we deem it proper to restore this limited issue of discrepancy in measurement, as claimed by the assessee, to the file of the Assessing Officer for fresh examination and adjudication thereon after giving due opportunity to the assessee to present its case. In the result, the appeal of the assessee is partly allowed.
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2016 (5) TMI 1554
Capital gain computation - adopting the value determined by the DVO - Rejecting sale value declared by the assessee. - HELD THAT:- The very fact that the Assessing Officer has called upon the assessee to raise his objections presuppose that the Assessing Officer is not bound by the DVO’s report and he has got a duty to redetermine the value, but the Assessing Officer chose to proceed as if he is bound by the DVO’s report, which speaks of itself. On the top of it, the learned Commissioner- (Appeals) was of the opinion that the ITAT. Chennai Bench has directed the Assessing Officer to adopt DVO’s report (even if it is wrong), overlooking the legal position that the DVO’s report cannot be treated as sacrosanct and it is amenable to adjustment, if the assessee is able to raise proper objections.
In the instant case, the assessee has relied upon various orders of the ITAT to indicate that the value determined should be based upon a sale instance which should be proximate to the date of actual sale. The assessee has also raised an objection with regard to the increase in sale instance rate by 2% per month, but even till date, Revenue could not point out as to what is the sanctity of that method being followed by the DVO.
We are of the view that the DVO completely failed in his duty to appropriately make the valuation. Even if sale instance rate is taken into consideration, the difference between the sale instance rate and the rate declared by the assessee is within the permissible limits, and therefore, in the light of the orders of the ITAT placed before us, the Assessing Officer has not made out a case for adopting the value determined by the DVO. In the circumstances, we delete the addition made by the Assessing Officer, accepting the sale value declared by the assessee.
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2016 (5) TMI 1553
Levy of penalty u/s 271(1)(c) - unexplained credit under section 68 - HELD THAT:- The assessee has not produced any materials to justify his stand that the penalty is not warranted in all these cases. The assessee has also not furnished the names and complete addresses of persons from whom he received the loans, the date of transaction and mode of payment, confirmation statements or any other relevant materials to establish the creditworthiness of the creditors.
In the absence of these details, it is not possible for the Revenue to make any enquiries of its own to find the genuineness of the transactions. In the case of unrecorded bonded loans, the assessee himself has conceded that this amount represents unaccounted income of the assessee. The assessee also could not explain the source of investment made towards unredeemed pawn items. For the assessment years 2006-07 & 2007-08 source of investment could also not be established. For the above mentioned we do not have any other options but to confirm the penalty levied on all these counts. Accordingly penalty levied on all these counts are hereby confirmed.
Levying penalty in regard to addition made on account of agricultural income, investment made in purchase of land to the extent and investment made in M/s.Ramdev Jewellery - AO has made addition only for the reason that the assessee’s wife did not declare any agricultural income in her return of income with respect to the adjacent agricultural land owned by her - The quantum of agricultural income declared by the assessee is also minimal and there is no substantial reason to disbelieve the claim of the assessee.
Revenue has also not brought any evidence to show that the assessee was not indulging in agricultural activities. Similarly, addition towards purchase of land to the extent of ₹ 2,08,000/- is made because the AO opined that the assessee had paid on-money. However, other than oral statements, no other materials or persons were examined to conclusively prove that the assessee had received on-money. Further, investment in Ramdev Jewellery for ₹ 50,000/- is a nominal amount and there can be a presumption that the assessee could possess such amount from his tax paid income. We hereby direct the AO to delete the penalty made on account of the incorrect claim of agricultural income for all the relevant assessment year, investment in purchase of land to the extent of ₹ 2,08,000/- and investment in Ramdev Jewellery for ₹ 50,000/- for the assessment year 2005-06. Appeals of the assessee are partly allowed.
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2016 (5) TMI 1552
Appeal heard ex-parte - non appearance by assessee on various occasions - continuous adjournments - HELD THAT:- None appeared on behalf of the assessee and again no request for adjournment was sought on behalf of the assessee. The appeal was once again adjourned to 18.05.2016 in the interest of justice. However, on 18.05.2016 none appeared on behalf of the assessee nor any adjournment was sought by the assessee. It appears that the assessee is not interested in pursuing the appeal. In the absence of any appearance by the assessee in person or through AR inspite of service of several notices for hearing, we proceed to dispose of the appeal ex-parte qua the assessee after considering the material available on record and hearing the respondent/Revenue on merits in terms of Rule 24 of the Income Tax (Appellate Tribunal) Rules, 1963.
When the captioned appeal was called for hearing on 18.05.2016, we find that the assessee has filed only appellate order under section 250 of the Act dated 25.11.2013 and has not even filed primary document i.e. assessment order along with the Memo of Appeal. In the absence of impugned assessment order, we are unable to decide the issue on merits. We similarly find that the grounds of appeal are argumentative and are not in conformity with Rule 8 of the Income Tax (Appellate Tribunal) Rules, 1963. The appeal of the assessee is therefore dismissed in limine.
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2016 (5) TMI 1551
Dishonor of Cheque - legally enforceable debt or not - rebuttal of presumption - Sections 138 and 139 of the N.I. Act - HELD THAT:- Reading of Sections 138 and 139 of the N.I. Act goes to show that out of the three ingredients comprising Section 138, a presumption is available in favour of holder of a cheque that the same had been issued for discharge of any debt or other liability under Section 139 of the N.I. Act. Section 139 of the N.I. Act does not give rise to a presumption with regard to existence of legally enforceable debt. A complainant has to discharge this burden of existence of a legally enforceable debt and if he fails to do so, merely because he is a holder of a cheque issued by the accused, conviction of the accused will not be warranted.
From the evidence on record, it is clear that the complainant came to know the accused/respondent only from the year 2002. It is not in dispute that a sum of ₹ 2,00,000/- in cheque was paid on or about 3(three) months from the date of execution of the Exhibit -1 agreement. Neither in the notice nor in the complaint, the complainant referred to the payment of such amount by the respondent. The appellant had not taken a plea that prior to execution of Exhibit-1 agreement, there had been other previous transactions - Law is well settled that in an appeal against acquittal, the appellate Court has the power to reappraise the evidence on record to come to its own conclusion. While doing so, it has an obligation to consider each and every matter on record having a bearing on the questions of fact and the reasons assigned by the court below in support of the order of acquittal. If two views are reasonably possible on the basis of the evidence on record, the view which is favourable to the accused must be preferred. If the view taken by the trial court while acquitting the accused is a possible and reasonable view, the High Court ought not to interfere with such an order of acquittal only because of the fact that it is possible to take a contrary view.
Appeal dismissed.
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2016 (5) TMI 1550
Violation of Fundamental Human Rights - rights of differently abled persons - petitioner was forcefully made to de-board the flight for her physical disability - It is submitted by the Petitioner that the Union of India (Respondent No. 1) has an obligation to ensure that its citizens are not subject to such arbitrary and humiliating discrimination - HELD THAT:- The irresistible conclusion is that Jeeja Ghosh was not given appropriate, fair and caring treatment which she required with due sensitivity, and the decision to de-board her, in the given circumstances, was uncalled for. More than that, the manner in which she was treated while de-boarding from the aircraft, depicts total lack of sensitivity on the part of the officials of the airlines. The manner in which she was dealt with proves the assertion of Shapiro as correct and justified that 'non-disabled do not understand disabled ones'.
It is not in dispute that the Pilot as well as the Crew members of the airlines are supposed to ensure the safety of all the passengers and a decision can be taken to de-board a particular passenger in the larger interest and safety of other co-passengers. The question is, whether such a situation existed when Jeeja Ghosh was de-boarded? Whether this decision was taken by the airlines after taking due deliberations and with medical advise? Unfortunately, the answer is a big 'NO'. Jeeja Ghosh is a disabled person who suffers from cerebral palsy. But her condition was not such which required any assistive devices or aids. She had demanded assistance regarding her baggage at the time of security check-in, from the check-in counter. For boarding of the aircraft, she came of her own. This was noticed not only by the persons at the check-in counter but also by security personnel who frisked her and the attendant who assisted her in carrying her baggage up to the aircraft. Even if we assume that there was some blood or froth that was noticed to be oozing out from the sides of her mouth when she was seated in the aircraft (though vehemently denied by her), nobody even cared to interact with her and asked her the reason for the same. No doctor was summoned to examine her condition. Abruptly and without any justification, decision was taken to de-board her without ascertaining as to whether her condition was such which prevented her from flying. This clearly amounts to violation of Rule 133A of Rules, 1937 and the CAR, 2008 guidelines.
In international human rights law, equality is founded upon two complementary principles: non-discrimination and reasonable differentiation. The principle of non-discrimination seeks to ensure that all persons can equally enjoy and exercise all their rights and freedoms. Discrimination occurs due to arbitrary denial of opportunities for equal participation. For example, when public facilities and services are set on standards out of the reach of persons with disabilities, it leads to exclusion and denial of rights. Equality not only implies preventing discrimination (example, the protection of individuals against unfavourable treatment by introducing anti-discrimination laws), but goes beyond in remedying discrimination against groups suffering systematic discrimination in society. In concrete terms, it means embracing the notion of positive rights, affirmative action and reasonable accommodation.
Jeeja Ghosh herself is a living example who has, notwithstanding her disability, achieved so much in life by her sheer determination to overcome her disability and become a responsible and valuable citizen of this country. A little care, a little sensitivity and a little positive attitude on the part of the officials of the airlines would not have resulted in the trauma, pain and suffering that Jeeja Ghosh had to undergo. This has resulted in violation of her human dignity and, thus, her fundamental right, though by a private enterprise (Respondent No. 3) - Respondent No. 3 acted in a callous manner, and in the process violated Rules, 1937 and CAR, 2008 guidelines resulting in mental and physical suffering experienced by Jeeja Ghosh and also unreasonable discrimination against her, we award a sum of ₹ 10,00,000 as damages to be payable to her by Respondent No. 3 within a period of two months from today.
Petition allowed.
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2016 (5) TMI 1549
Capital asset being trademark - Treatment of asset transferred viz. “Trade Mark” as short term capital gains and disallowing the claim u/s.54F - Trust v/s settlement - difference between Gift and Settlement and the Explanation-1(i)(b) to Sec.2(42A) r.w.s.49(1)(ii) - HELD THAT:- There are striking differences between a settlement and a gift. Under no circumstances can a settlement be equated to a gift. The appellant’s contention of importing the definition of gift from the Gift Tax Act, 1958, which is no longer in existence, is not a valid proposition.
Whether the capital asset is a Long Term Capital Asset or a Short Term Capital Asset under the Income Tax Act? - In our opinion the artificial distinction made by the lower authorities with reference to the Gift and Settlement is not appropriate and we are of the opinion that for the purpose of Sec.49(1)(ii), there is no difference between the gift and settlement and in the present case, the settlement made by Mrs.Malathy Rangaswami & Mr.T.T.Ashok in favour of Mrs.Maya Varadarajan to be considered as Gift in terms of Sec.49(1)(ii) of the Act and accordingly, Explanation-1(i)(b) to Sec.2(42A) to be applied so as to compute the holding period of the asset after considering the holding period of the said capital asset by previous owner i.e. SETTLOR. In the present case, the date from which “SETTLOR” holding the title over the Registered Trade Mark “PREETT” is not available on record and we are not in a position to give a finding whether transfer of this Trade Mark by the present assessee would give rise to short/long term capital gains. Hence, this issue is remitted to the file of AO to determine the period of holding of this impugned capital asset and decide the issue afresh.
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2016 (5) TMI 1548
Disallowance on account of depreciation claimed on road/ on road construction while treating it as a building - HELD THAT:- As decided in ow case [2014 (9) TMI 163 - ITAT JAIPUR] allowed the depreciation @ 10% on expenditure incurred on road by considering the amendment made in item number building in depreciation schedule in favour of the assessee.
Claim of depreciation on EDP equipments - @ 60% as claimed by the assessee as against the rate of 15% allowed by the AO - HELD THAT:- As decided in own case by holding that the computer peripherals are eligible for the depreciation at the rates applicable to the computer system and following the decision of the Delhi Bench of the Tribunal allow this ground with the directions that the depreciation @ 60% be allowed. Decided against revenue.
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2016 (5) TMI 1547
Penalty u/s 271AAA - disclosure of undisclosed income earned during the financial year 2009-10 during the course of search and post-search proceedings on the basis of the seized material found during the course of search - CIT-A deleted the penalty - HELD THAT:- After going through the order passed by the learned Commissioner of Income-tax (Appeals) on the issue in dispute as well as the orders of the Tribunal relied upon by the learned Commissioner of Income-tax (Appeals) while deleting the penalty in dispute, we are of the view that the learned first appellate authority has passed a well reasoned order which does not need any interference on our part. Therefore, respectfully following the precedents of the Income-tax Appellate Tribunal as mentioned in the learned Commissioner of Income-tax (Appeals)'s order, we uphold the order of the learned Commissioner of Income-tax (Appeals) wherein the learned Commissioner of Income-tax (Appeals) has deleted the penalty in dispute and accordingly, we dismiss the appeal of the Revenue.
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2016 (5) TMI 1546
Disallowance u/s 14A r.w.r. 8D - HELD THAT:- Considering assessee's own case [2015 (6) TMI 412 - ITAT MUMBAI] and assertions made by the ld. respective counsel, if kept in juxtaposition and analyzed, we find that considering the totality of circumstances and the facts, the expenses equal to 4% of the exempt income, earned by the assessee, was held to be reasonable disallowance, therefore, following the aforesaid decision of the Tribunal, the ld. Assessing Officer is directed to follow the aforesaid order, therefore, this ground is partly allowed.
Addition of value of closing stock u/s 145A on account of cenvat credit in respect of goods other than capital goods - HELD THAT:- Considering assessee's own case [2015 (6) TMI 412 - ITAT MUMBAI] since the assessee has followed the guidance note issued by the ICAI, it would be in a position to demonstrate the above said fact before the AO, i.e., the assessee could establish that there was no change in the income under both the methods by furnishing necessary workings. Accordingly, we are of the view that the assessee should be given one more opportunity to demonstrate this fact.
If the assessee fails to furnish the workings discussed above, in our view, the AO should consider the alternative contention of the assessee, viz., to adjust the opening stock with the correct amount that was actually adjusted in the closing stock of immediately preceding year. We have already noticed that the there was contradiction in the stand of DRP. If the service tax is considered to the tax incurred in bringing the goods to the present location and condition, then the same is required to be adjusted both in the opening stock and closing stock. Otherwise, the same should not be adjusted in both the items.
Addition u/s 40(a)(ia) - short deduction of TDS - HELD THAT:- We find that this issue has been examined by the Mumbai Bench of the Tribunal [2011 (7) TMI 956 - ITAT MUMBAI], wherein, it was held that the provisions of section 40(a)(ia) can be invoked only in the event of non-deduction of tax at source but not lessor deduction of tax at source. Identical view was taken by Hon’ble Kolkata High Court in the case of S.K. Tekriwal [2012 (12) TMI 873 - CALCUTTA HIGH COURT] In the absence of any contrary decision brought to our notice, we allow this ground of the assessee.
Granting credit for tax deducted at source as against claimed in the revised return and thereby short credit and charging interest u/s 234 - counsel contended that there is calculation mistake, therefore, the Assessing Officer may be directed to verify the claim of the assessee - HELD THAT:- DR had no objection to the request of the assessee. Thus, considering the totality of facts and the assertions from both sides, we direct the ld. Assessing Officer to examine the claim of the assessee and after providing due opportunity of being heard decide in accordance with law, consequently, both these grounds are allowed for statistical purposes.
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2016 (5) TMI 1545
Deduction u/s 80P in respect of interest received from the schedule bank - HELD THAT:- As relying on QUEPEM URBAN CO-OPERATIVE CREDIT SOCIETY LTD. [2015 (6) TMI 573 - BOMBAY HIGH COURT] where assessee-cooperative society could not be regarded as “Cooperative Bank‟ on, mere fact that an insignificant proposition of revenue was coming from non-members, and thus, was entitled for deduction under section 80P(2)(a)(i) - Decided against revenue.
Deduction of interest and dividend received from cooperative bank u/s 80P(2)(d) - Assessee that the disputed amounts from the alleged banks are not investment but is a current account and the finding of the ld. Commissioner of Income Tax (Appeals) for Assessment Year 2012-13 and also in the absence of any contrary decision more specifically from the Revenue side, the assessee being a cooperative society, therefore, providing credit facilities to its members is an allowable deduction u/s 80P(2) of the Act. However, in terms of section 80P, the meaning of the words “cooperative Bank” has to be the meaning assign to it in chapter –V of the Banking Regulation Act, 1949. A cooperative bank is defined in section 5(cci) of the Banking Regulation Act to mean a state cooperative bank, a central cooperative band and a primary cooperative bank. Admittedly, the assessee is neither a state cooperative bank nor central cooperative bank but a cooperative society.
So far as the contention of the Revenue that the assessee deals with non-members is concerned, we are of the view that section 80P(1) restrict the benefit of deduction of income of cooperative society to the extent it is earned by providing credit facilities to its members, therefore, to the extent of income earned is attributable to the dealings with non-members are concerned, the benefit of section 80P will not be available, thus, while giving effect to the order, the authorities would restrict the benefit of deduction u/s 80P only to the extent that the same is earned by the appellant in carrying on its business of providing credit facilities to its members. With this rider, the appeal of the assessee is allowed.
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2016 (5) TMI 1544
Money Laundering - proceeds of crime - Gambling with the aid of mobile phone - cricket betting - Jurisdiction - power of police officers as well as the officers of the Enforcement Directorate to assist the authorities defined under section 48 and appointed under section 49(1) of the PMLA - HELD THAT:- Money laundering has been defined under Section 2(p) and 2(u) and Section 3. The proceeds of crime as per Section 2(u) pertain to any property derived, obtained directly or indirectly, as a result of criminal activity by any person relating to a scheduled offence or the value of such property. The scheduled offences have been defined under Section 2(y) and admittedly, Sections 419, 420, 467, 471 are part of the scheduled offences as described under part A of the schedule.
Under the existing provisions in Section 45 of the Act, every offence is cognizable. If an offence is cognizable, then any police officer in India can arrest an offender without warrant. At the same time, under Section 19 of the Act, only a Director or a Deputy Director or an Assistant Director or any other officer authorised, may arrest an offender. Clearly, there was a conflict between these two provisions. Under Section 45(1)(b) of the Act, the Special Court shall not take cognizance of any offence punishable under Section 4 except upon a complaint made in writing by the Director or any other officer authorised by the Central Government. So, what would happen to an arrest made by any police officer in the case of a cognizable offence? Which is the court that will try the offence? Clearly, there were inconsistencies in these provisions.
We have now enabled only the Director or an officer authorised by him to investigate offences. Of course, we would, by rule, set up a threshold; and, below that threshold, we would allow State police officers also to take action - The second anomaly that we found was that the expression "investigation officer" and the word "investigation" occur in a number of sections but they were not defined in the Act. Consequently, one has to go to the definition in the Criminal Procedure Code and that Code provides only "investigation by a police officer or by an officer authorised by a Magistrate". So, clearly, there was a lacuna in not enabling the Director or the Assistant Director under this Act to investigate offences. That has been cured now.
Whether the offence under the PMLA is cognizable and non-bailable? - HELD THAT:- By Prevention of Money Laundering (Amendment) Act, 2005 (20 of 2005) subclause (a) of the Money Laundering Act, 2002 (15 of 2003) stands deleted. The said sub-clause (a) provided that "every offence punishable under this Act shall be cognizable." Sub-section (1A) introduced by the Prevention of Money Laundering (Amendment) Act of 2005 provides that "notwithstanding anything contained in the Code of Criminal Procedure, 1973 (2 of 1974) or any other provision of this Act, no police officer shall investigate into an offence under this Act, unless specifically authorised, by the Central Government by a general or special order, and, subject to such conditions as may be prescribed - There are no words in the body of the section to declare the offences under the Act to be non-bailable. Since the Act has created new offences, it was necessary that there ought to have been a specific provision in that respect. However, the marginal note to the section reads as "offences to be cognizable and non-bailable". It is true that at one time the judicial view was that the marginal notes are not part of statute for they are not inserted by the Parliament, nor under the authority of the Parliament. But this view no longer holds good in India.
From reading the Act as a whole it is manifestly clear that the Prevention of Money Laundering Act being a special statute the procedure for dealing with the offences are regulated by the provisions contained in the said Act. Section 44(1b) clearly provides that cognizance for the offence punishable under the Act shall be taken only upon a complaint made by an authority authorized in that behalf under the Act. Further Section 45 of the Act put restrictions in the release of the persons on bail unless conditions mentioned therein are fulfilled. It further provides that special Court shall not take cognizance of any offence under Section 4 except on a complaint made by the Director or any Officer authorized by the Central Government or the State Government. Subsection (1-A) of Section 45 specifically provides that notwithstanding the provisions contained in the Code of Criminal Procedure, no police officer shall investigate into an offence under the Act unless specifically authorized by the Central Government by a general or special order The provisions of the Act has been given overriding effect upon any other law and further categorically mentioned that any provision of Code of Criminal Procedure which are inconsistent with the provision of this Act which deals with attachment, confiscation investigation and prosecution etc. shall not apply. There is no provision in the Act which is a special statute for filing of police report. It could file a complaint only after completion of investigation by the authorized authority, which shall be the basis of taking cognizance - the word 'investigation' as defined in Section 2(na) has been inserted by virtue of Amendment Act, 20 of 2005. According to the definition the word 'investigation' includes all the proceedings under the Act conducted by the Director or by an authority authorized by the Central Government under the Act for the collection of evidence.
It is concluded that none of the fundamental rights, or any legal rights of any of the applicants could be said to have been infringed in any manner. So far as the issue as regards the admissibility and evidentiary value of the statement recorded under section 50 of the PMLA is concerned, the same would be looked into by the Trial Court. I have reached to the conclusion that the procedure which has been adopted for the purpose of proceeding against the applicants under the PMLA has not deprived any of the applicants of their personal liberty as embodied under Article 21 of the Constitution of India.
Petition dismissed.
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2016 (5) TMI 1543
Characterization of income - income from share trading transaction - short term capital gain or business income - HELD THAT:- We find that this issue has not been examined in depth by AO that whether at the time of purchase of shares of SGLPP assessee has borrowed funds specifically to buy the shares, which could have been verified from the bank account of the assessee and secondly whether assessee has maintained separate demat account to demarcate that at the time he bought the shares, his intention was to hold them as investment and to earn capital gain (short term/ long term) therefrom.
These are very relevant in this case because assessee’s main business is of share trading and short term capital gain of ₹ 78.93 lacs has been earned which becomes further relevant because the total net profit in the audited profit and loss account is shown at 1.09 crores which is inclusive of the short term capital gain of ₹ 78.93 lacs which means that substantial turnover is of business but the substantial profit portion is coming from short term capital gain
When we look up to the assessment order, we observe that ld. Assessing Officer has not dealt with the issue relating to interest expenditure nor has he co-related specifically the borrowings of funds with the impugned purchase transaction for buying of equity shares of SGLPP
We are of the view that the order of ld. Assessing Officer is cryptic to the extent that proper verification of books of account was not made before making observation that the assessee is deemed to have taken borrowed funds for entering into the transactions of purchase/sales of shares shown in the short term capital gain and further ld. Assessing Officer has also not gone through the books of account to see as to whether assessee has maintained separate demat account which can prove the very intention of the assessee at the time of purchase of shares that they are intended to be held as investment and surplus or deficient, if any, arising in future will be shown as capital gain. - Appeal allowed for statistical purposes.
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2016 (5) TMI 1542
Accrual of income - Trading addition in the case of assessee on the same receipts as shown by JV partner - alternate statutory remedy for deletion of same income as provided by the law u/s 264 - HELD THAT:- JV members are caught in a peculiar position as in case of M/s. KIEL for the assessment year 2008-09, the time limit for filing revised return u/s 139(5) had already been expired on 31.03.2010 whereas assessment in case of assessee joint venture was completed on 29.12.2010 thus M/s. KIEL could not file the revised return of income. Thus the income from contract activity awarded by the Railway Vikas Nigam Ltd. has already been taxed in case of M/s. KIEL and its further taxation in hands of the assessee unambiguously tantamount to taxing the same income twice which is impermissible and against the principle of equity and justice and well settled principle of avoiding unjust enrichment of state.
JV constituent having taken over all the responsibilities regarding execution of the work including administrative and financial support etc., department also has not disputed the facts of Kiran Infra”s being lead partner. In these circumstances it cannot be assumed that department taxed the income in wrong hand.
The concept of accrual of income is considered in the case of E. D. Sassoon & Co. Vs CIT[1954 (5) TMI 2 - SUPREME COURT] wherein it was held that what was sought to be taxed must be income. As per the harmonious reading of JV agreement, respective obligation, the project income was accruable to said Kiran Infra. Since the income was already taxed in the hands of Kiran Infra there is no occasion to hold that it accrued to the assessee so as to tax it again. Thus the action of the AO to tax the assessee on the income already taxed in the hands of M/s Kiran Infra tantamount to double addition which is not permissible in law.
The petition U/s 264 was filed by M/s Kiran Infra on 04.03.2011 before CIT-II, Jaipur to avoid the hardship proposed by the department in taxing the assessee again. The approach of the department is incomprehensible as on one hand it accepted the assessment in the hands of Kiran Infra, then it desired to tax assessee as a logical consequence Kiran Infra approached under a statutory provision of law to revise the order u/s 264. Sec. 264 being a statutory remedy is to be exercised with judicious approach. If the CIT rejects the petition it also implies that department accepts the assessment in the hands of Kiran Infra.
Assessee’s predicament is discernible since the petition U/s 264 had been rejected, time to file the revised return had already expired on 31.03.2010 and the income stood taxed in the hands of M/s Kiran Infra Engineering Ltd. This left the assessee in a precarious situation of denying the legal remedy; consequently the impugned appeal became necessary. The department cannot insist on unjust enrichment by taxing twice the same income in the pretext of some technicalities. No infirmity in the order of ld. CIT(A) in deleting the assessment and impugned additions in the hands of the assessee. The order of ld. CIT(A) is upheld and revenue grounds are rejected.
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2016 (5) TMI 1541
TP Adjustment - selection of certain comparables - functionality dissimilarity - HELD THAT:- Assessee is engaged in global financial services in the investment advisory activities, broker dealer activities and computer based quantitative management. The assessee provides software development services to its AE. Therefore, the assessee is purely a captive service provider. The assessee has been recognised as 100% EOU registered under the Software Technology Park of India (STPI) Scheme, thus companies functionally dissimilar with that of assessee need to be deselected.
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2016 (5) TMI 1540
Disallowance u/s 14A r.w.r. 8D - mandation of recording satisfaction - HELD THAT:- As we come to ‘satisfaction’ aspect as mandated under section 14A(2) r.w. Rule 8D of the Income Tax Rules there is no dispute that the Assessing Officer in his assessment order does not record the same so as to dispute assessee’s books of accounts recording no expenditure incurred for exempt income.
CIT(A) upholds Assessing Officer’s findings by observing that such a satisfaction need not be explicitly mentioned in assessment order as it can be deduced from the order itself. We find it to be not in tune with the specific provision in the act under section 14A(2). The legislature in its wisdom specifically envisages Assessing Officer’s satisfaction before invoking expenditure disallowance that an assessee’s books are not correct so far as they do not record any expenditure. We quote this statutory provision as well as the above stated case law that there has to be an explicit satisfaction and an Assessing Officer cannot simply brush aside the relevant books of accounts. Any violation thereof, in our considered opinion, would violate the legislative intent as well the legislation itself.
CIT(A)’s reasoning goes contrary to section 14A(2) as interpreted by various high courts hereinabove. The impugned administrative expenditure disallowance made by both the lower authorities under Rule 8D(iii) is accordingly deleted. Assessee’s appeal is allowed.
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2016 (5) TMI 1539
Disallowance u/s 14A - assessee has argued that no administrative expenses were incurred to earn the exempt income therefore no expenses are required to be deducted in view of the provision u/s. 14A - 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 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. In the result the appeals of the assessee are allowed.
Depreciation on plant and machinery as transferred from the holding company to subsidiary company -provisions of explanation 6 to sub-section (1) of section 43 - WDV in the books or in the block of assets of the transferor company shall be considered as the actual cost in the hand of the transferee company in respect of such assets - HELD THAT:- 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. [2011 (7) TMI 1371 - BOMBAY HIGH COURT]. 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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2016 (5) TMI 1538
Double taxation in respect of Duty Free Import Authorization Scheme - HELD THAT:- We find from record that the claim of double taxation was not made before the AO. Even before the ld.CIT(A) it appears that the assessee-company had not filed any evidence in support of double taxation in respect of export incentive. However, this claim was made for the first time before the CIT(A). In our considered opinion, this ground of appeal does not emanate from the assessment order.
Appeal filed by the assessee-company the claim for double taxation was only in respect of ₹ 3,13,72,097/-. This should have been allowed only as additional ground as it does not emanate from the assessment order. This additional ground was apparently admitted by the CIT(A) without calling for remand report. Since the issue was restored to the file of the AO to adjudicate this issue in accordance with law, revenue is not aggrieved by this direction.
Addition on account of bad debts written off - AO had not allowed the claim by holding that the claim does not fall within the ambit of provisions of sec.36(1)(vii) read with sec.36(2) as the amounts were written off without permission of the Reserve Bank of India as required under the provisions of the Foreign Exchange Regulations Act and accordingly he brought the amount to tax - HELD THAT:- From the facts emanating from the assessment order it is clear that the amounts written off represent the claim made by the assessee-company by raising debit notes against its customers to meet the extra input cost on account of adverse foreign exchange variation. Admittedly these amounts were offered to tax in the earlier assessment year and the claims were not accepted by the respective customers, hence, reversed. Going by the facts as marshaled by the assessee-company during the assessment proceedings, income to the extent of such additional claim made by the assessee-company had not accrued.
In the instant case, if the income had not accrued, as claimed by the assessee-company in the respective years, remedy is available to the assessee-company under other provisions of the Act to seek relief but deduction cannot be allowed as bad debts and to this extent, the decision of the CIT(A) is reversed. The addition made by AO is upheld.
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