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Income Tax - Case Laws
Showing 61 to 80 of 947 Records
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2016 (7) TMI 1583
Rejection of books of accounts - net accretion method adopted by the AO for determining the total income - HELD THAT:- In the present case also, the Ld. CIT (A) following its earlier finding in the case of Shri. Hitesh S. Mehta for A.Y. [2013 (12) TMI 244 - ITAT MUMBAI] on the same issue, has rejected the books of account produced by the assessee. Since the identical issue has already been decided by the coordinate Bench, we respectfully following the finding of the coordinate bench direct the Ld. CIT(A) to compute the income of the assessee as per books of accounts. Ground no. 3 is accordingly allowed for statistical purpose.
Determination of the total income by considering net accretion to various assets - HELD THAT:- Since, we have directed the Ld. CIT(A) to compute the taxable income as per books of account of the assessee, we delete the additions contested.
Undisclosed investment - HELD THAT:- As we have directed the Ld CIT(A) to determine income on the basis of books of account. Since the AO has determined certain investments as “undisclosed investments” on the basis of material collected by him and since they were not compared with the books of accounts and the assessee was not provided with the opportunity to explain her case, we set aside this issue to the file of Ld. CIT(A) with the direction to cause compare the alleged undisclosed investments with the books of account. CIT (A) may get a remand report from AO in this regard. If any investment is found not recorded in the books of account, to seek explanation from the assessee and take appropriate decision after providing adequate opportunity to the assessee.
Disallowance of deduction on account of interest expenditure - HELD THAT:- Following the decision of Co-ordinate Bench we restore this ground of appeal back to the file of the AO with the direction to follow the direction of the Tribunal passed in SHRI HITESH S. MEHTA, [2013 (11) TMI 1650 - ITAT MUMBAI]
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2016 (7) TMI 1582
Addition of difference of profit between the value of bagasse transferred to and power transferred from subsidiary company - bagasse, a by-product arising in the manufacture of sugar, supplied by the assessee to its subsidiary company TEL in exchange for the power and steam received by the assessee from the subsidiary company - AO considered the market value of the bagassee supplied by the assessee to its subsidiary company and against the said value of bagassee, considered the value of power received by the assessee from the subsidiary company and arrived at the difference - HELD THAT:- As decided in assessee's own case [2013 (1) TMI 1007 - ITAT CHENNAI]we are inclined to decide the issue in favour of the assessee. This ground raised by the Revenue is dismissed.
Addition of sale of Molasses - Addition in respect of the sale of molasses by the assessee by comparing the price at which another company, Trichy Distilleries and Chemicals Limited has purchased the molasses - CIT(A) deleted the addition on the reason that the price depends upon quality or grade as well as on the demand and supply position. The AO has taken average rate of ₹ 1,680/- per MT, in respect of one customer - HELD THAT:- addition made by the AO cannot be sustained and we find no reason to interfere with the order of Ld.CIT(A). The price of the molasses is depending on the quality of the same. The prices are to be compared with same quality of molasses.The AO’s comparison of price is not proper. The Ld.CIT(A) considered the quality of molasses and various components included in it to arrive at a proper comparison. The Departmental Representative was not able to controvert the findings of CIT(A). Hence, the same is confirmed and this ground of Revenue is rejected.
Deemed dividend u/s.2(22)(e) - HELD THAT:- When there is a running account between the parties on account of business transactions and there is no obligation of repayment by the parties, which is in nature of trade advance, to give effect to commercial transaction does fall within the meaning of sec.2(22)(e) of the Act. Hence, in our opinion deletion of addition by the CIT(A) is justified and the order of Ld.CIT(A) is confirmed on this issue. This ground is rejected.
Addition made on account of export sales to Agrocorp - CIT-A deleted the addition - HELD THAT:- The details of document produced by the assessee before the authorities show that the assessee has properly accounted the export sales at ₹ 40.94 crores, which was duly reflected in the sales reported in the P & L A/c for the year ended on 31.03.2009. Further, the assessee has produced before the Ld.CIT(A), the party-wise and group-wise export of sale of Sugar to M/s.Agrocorp, which is at ₹ 40.94 crores. Ld.D.R is not able to controvert the findings of the Ld.CIT(A)’s recording in para 11.3 of CIT(A)’s order. Hence, when the books of accounts are duly audited and there is no adverse findings regarding the recording of the export sales and documents relating to the export show the same export figure, there is no question of doubting the same. Hence, we do not find any infirmity in the order of Ld.CIT(A) and the same is confirmed.
Addition u/s.14A r.w.Rules 8D - main plea of the ld.A.R is that investment is a sister concern and associated companies and interest pertained to borrowings used for earning exempt income from the investments to be considered - HELD THAT:- Interest on borrowing which are made for specific purpose of business cannot be considered for the purpose of Rule 8D of the Income Tax Rules. Further, investments in sister concerns or subsidiaries with which the assessee is having business transactions, that investments cannot be considered for the purpose of applicability of Rule-8D. See Sun TV Networks [2016 (2) TMI 928 - ITAT CHENNAI]
AO has to consider the assessee’s own fund i.e. capital and reserves as available for investment which yields exempted income and thereafter he shall apply the Formula in Rule 8D and also exclude investments in subsidiaries as held by the above order of Co-ordinate Bench. With this observation, we remit the issue to the file of AO for fresh consideration. Hence, this ground is allowed for statistical purposes.
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2016 (7) TMI 1581
Exemption u/s 11 - Charitable purpose u/s 2(15) - Income from property held for charitable or religious purposes - whether the provisions of Section 11(4A) were attracted to the assessee’s case - whether by rendering specific services to members and non-members for a fee, a trade, professional or similar association can be said to be carrying on a business activity? - HELD THAT:- It is not in dispute that the issues raised in these appeals stand covered in favour of the Assessee for the earlier Assessment Years [2012 (11) TMI 429 - DELHI HIGH COURT] as held it not proper to characterise the activities of the chamber as activities amounting to a business in the generally understood sense of the word, the most important feature of business being profit motive. It has not been suggested by the income tax authorities that the activities carried out by the assessee chamber were propelled by any profit motive.
In such circumstances, it is proper to view the activities as driven by a charitable motive in the sense in which a charitable purpose is defined in Section 2(15). In this view of the matter, the provisions of Section 11(4A) are not attracted to the present case and a remand to the AO for finding out whether the activities were incidental to the objectives of the trust and separate books of accounts were maintained for such business was unnecessary - Decided in favour of the assessee.
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2016 (7) TMI 1580
Undisclosed income of the block period u/s 158BB - Hawala transaction in the sale of Neptha - HELD THAT:- CIT(A) while considering the addition on account of sale of Neptha observed that the addition to the income of assessee on account of sale of Neptha has been made on the basis of statement of Naresh B. Vora, the document impounded from his business premises and some other factor. Not a single word has been written specifically what evidence was collected during the course of search, the details gathered during the block assessment proceeding. AO has nowhere referred that any statement of assessee was recorded. Neptha is a buy product crude oil which is sold by the PSU for the license holder, who is actual user i.e. manufacturer of petro chemicals for which explosive license is mandatory. During the entire proceeding u/s 132, no incriminating material was found or seized which may show or prove that assessee was quote holder of Neptha or that he owned a factory having manufacturing of petro chemicals, the statement of assessee was recorded on 22.01.2001 exactly six days before the date of assessment order. The assessee was not confronted with the alleged material and the statement of Shri Naresh B. Vora which has been used against him, not a single question was asked about the sale of Neptha or his relationship with Ahmadabad and Baroda parties. After analyzing the fact and the alleged corroborative evidence a basic question here arises as whether the addition of income of the assessee can be made on the basis of the above referred material. CIT(A) find its answer in No. No illegality or infirmity in the order of CIT(A) in deleting the addition on account of sale of Neptha, thus, this ground of appeal raised by Revenue is dismissed.
Addition on account of sale of delivery orders - HELD THAT:- Mr. Vora informed that Sunil Thakkar had obtained chemicals in the name of Galaxy Petrochem and sold it in the market. The assessee has totally denied his involvement and argued that no paper were found at the premises of the assessee nor were found during the survey of premises of Naresh Vora. Ld. CIT(A) while considering this ground concluded that the addition cannot be sustained u/s. 158BC in absence of independent, primary evidence found and seized during search operation. The name appearing on the backside of two bills “Sunil Bhai” is not proved and AO has not given any reasoning as to how he arrived at the conclusion that the signature were of the assessee. Thus, we are in agreement with the finding of Ld. CIT(A). This ground of appeal raised by Revenue is also dismissed.
Addition on protective basis on the statement of Naresh Vora - HELD THAT:- AO made the addition merely on the statement of Naresh Vora dated 09.02.2001. Ld. CIT(A) while considering the contention of assessee concluded that the addition made by AO is not as per the provision of law. Except the statement of Naresh Vora, no other document seized during the search has been referred by AO for making the addition and deleted the addition. We have noticed that Mr. Vora has not alleged anywhere that assessee was working on behalf of Atlas, Avani or Ankini. With these observations, we do not find any illegality or infirmity in the order of ld. CIT(A), thus this ground of appeal of Revenue is also failed.
Addition on account of Foreign Tour Expenses - HELD THAT:- The assessment order is silent about the evidence which may prove that assessee spend ₹ 2,00,000/- on foreign trip in AY-1998-99 and/or the said money was unaccounted income of the assessee. In fact, during the assessment proceeding, the assessee filed some details about the foreign travel/trip, on the basis of which the addition has been made and the same was deleted by the Ld. CIT(A). DR for revenue failed to disclose that there was any material to make any addition. Since there was no material in respect of unaccounted income for foreign travel during the search proceeding, hence, the same was deleted by Ld. CIT(A). With this observation, we do not find any infirmity in the order of CIT(A). Hence, this ground of appeal is also dismissed.
Addition on account of Household Expenses - addition was made on the basis of one Gandhi Dairy in the premises of Sunil Chemicals - HELD THAT:- The Dairy is not in handwriting of the assessee or any of his family member, the said Dairy was of the Accountant and was written by the Accountant. The assessee has no concern with the said Dairy. The additions were made on conjecture and surmises. As per law for block assessment period, the estimated addition cannot be made. Ld. CIT(A) while considering this ground concluded that during the course of search and seizure action, no incriminating document or evidence was found that may prove the withdrawals made by assessee or his family members were inadequate to run the Household. AO has not mentioned that the total withdrawal made by members of the assessee’s family, whereas the assessee had strongly emphasized the point. AO has not done this exercise otherwise he would not have reached to the conclusion that Household Expenditure incurred by family was sufficient and deleted the addition. The finding of CIT(A) deleting the addition are quite reasonable - Decided against revenue.
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2016 (7) TMI 1578
Assessment of trust - determination of income for the purpose of application of income for charitable purpose method of accounting followed by the assessee - HELD THAT:- As decided in own case [2010 (1) TMI 1276 - ITAT VISAKHAPATNAM]assessee is following Cash System of accounting for determination of income for the purpose of application of income for charitable purpose. Therefore, we direct the A.O. to compute the income as per the method of accounting followed by the assessee.
Denial of exemption u/s. 11 - violation of the provisions of section 13(1)(c) & 13(2)(g) r.w.s. 13(2) - addition towards refund of excess amount - HELD THAT:- As decided in own case [2015 (5) TMI 1210 - ITAT VISAKHAPATNAM] Excess amount refunded to M/s. South India Corporation Ltd. does not amount to diversion of funds as defined u/s. 13(2)(g) of the Act. The assessee has refunded excess amount collected from the party by way of anonymous decision of the Board of Directors of the Trust further supported by proof of payment. Therefore, we are of the view that the A.O. was not correct in holding that the assessee has violated the provisions of section 13(1)(c) & 13(2)(g) r.w.s 13(3) of the Act. Hence, we direct the A.O. to allow the exemption as claimed by the assessee and delete the additions made towards refund of excess amount to M/s. South India Corporation Ltd.
Addition towards accrued interest - A.O. observed that the assessee itself has offered interest as per the TDS certificate - HELD THAT:- We find force in the arguments of the assessee for the reason that the assessee is consistently following cash system of accounting for the purpose of determination of income. However, though assessee claims that it is following cash system of accounting for the purpose of determination of income, the assessee itself admitted that it has offered interest income based on TDS certificate. There is a contradictory statement from the assessee as regards the method of accounting followed for the purpose of determination of income and treatment of interest accrued on fixed deposits for the purpose of tax. Though, in principle, we accept the contention of the assessee that it is following cash system of accounting, in view of the claim made by the assessee that it has offered interest on accrual basis, we deem it appropriate to remit the issue back to the file of the A.O. and direct the A.O. to examine the issue afresh in the light of the above discussions.
Penalty u/s 271(1) - refund of excess amount made - HELD THAT:- Since, the quantum addition on which penalty levied was deleted, the penalty levied u/s. 271(1)(c) of the Act cannot sustain. Even otherwise, the question whether the refund of excess amount made to M/s. South India Corporation Ltd. is an expenditure incurred for the purpose of the Trust or the said payment is a diversion of funds to the interested persons which violates the provisions of section 13(1)(c) r.w.s. 13(3) of the Act, is a legal issue and could involve difference of opinion.
A.O. disallowed the amount because he had denied the benefit of exemption u/s. 11 of the Act. The Hon'ble Supreme Court in the case of CIT v. Reliance Petro Products Ltd. [2010 (3) TMI 19 - SUPREME COURT]clearly held that disallowance of expenditure does not amount to concealment of particulars of income or furnishing inaccurate particulars of income which leads to levy of penalty u/s. 271(1)(c) of the Act. Therefore, considering the facts and circumstances of this case, we direct the A.O. to delete the penalty levied u/s. 271(1)(c) of the Act. - Decided in favour of assessee.
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2016 (7) TMI 1577
Assessment of trust - Accumulation of income u/s. 11(2) of the Act by filing Form No. 10 - assessee is following Cash System of accounting for the purpose of determination of income to be applied for charitable purpose u/s. 11 - A.O. was of the opinion that though assessee filed Form No. 10 along with revised return in response to notice u/s. 148, failed to file Form No. 10 along with original return of income, therefore, the assessee is not eligible for benefit of accumulation of income - HELD THAT:- If the Form No. 10 is not filed before completion of assessment, would mean that the assessment order will have to be reopened for the purpose of computation of income available for accumulation. Therefore, any form filed before the completion of assessment has to be accepted. In the present case on hand, we find that the assessee has filed Form No. 10 before completion of assessment. Therefore, we are of the opinion that the A.O. is not correct in rejecting the Form No. 10 and denying the benefit of accumulation of income u/s. 11(2) of the Act. Hence, we direct the A.O. to re-compute the income after allowing benefit of accumulation u/s. 11(2) of the Act.
Method of accounting followed by the assessee - HELD THAT:- Considering the facts and circumstances of this case and also respectfully following the Co-ordinate Bench decision in assessee’s own case [2010 (1) TMI 1276 - ITAT VISAKHAPATNAM], we are of the view that the assessee is following Cash System of accounting for determination of income for the purpose of application of income for charitable purpose. Therefore, we direct the A.O. to compute the income as per the method of accounting followed by the assessee.
Denial of exemption u/s. 11 - AO was of the opinion that the activities carried out by the assessee are not in the nature of charitable activity as defined u/s. 2(15) as merely engaged in the business of providing organized labour to two of its Settlors Association - HELD THAT:- As decided in own case [2010 (1) TMI 1276 - ITAT VISAKHAPATNAM] registration of a Trust u/s 12A of the Income-tax Act of 1961 once done is a fait accompli and the Assessing Officer cannot thereafter probe into the objects of the Trust - we are of the view that activities carried out by the assessee are in the nature of charitable activities as defined u/s. 2(15) of the Act. Therefore, we direct the AO to allow the exemption u/s. 11 as claimed by the assessee.
Violation of Section 11(2)/(5) r.w.s. 13(1)(c) of the Act towards loans to two of its Settlers Association - AO held that the assessee has diverted its funds to other associations without charging any interest, therefore, opined that there is a violation of Section 13(1)(c) and hence not eligible for exemption u/s. 11 - HELD THAT:- In assessee’s own case[2010 (1) TMI 1276 - ITAT VISAKHAPATNAM] authors of the assessee trust are two trade associations and as stated earlier there cannot be any personal interest so far as the trade associations are concerned. The impugned loans have not been given to the trustees but only to the trade associations. Though the trustees fall in the category of specified persons u/s 13(3), the trade associations in which they are office bearers cannot be treated as a concern in which they are substantial interested. Hence the question whether the provisions of section 13(1)(c) shall apply to the assessee in respect of the impugned advances or not is a debatable issue. Be that as it may, in any case, on merits, we have seen that the impugned advances have been made with adequate security and adequate interest and they have been collected subsequently. Hence we do not find any reason to suspect the adequacy of security or interest in terms of section 13(2)(a)
Disallowance of depreciation on Fixed Assets - AO computed income under the normal provisions of the Act by adopting the excess of income over expenditure as per the Income and Expenditure A/c - HELD THAT:- We find force in the arguments of the assessee for the reason that the assessee is following Cash System of accounting. The assessee has claimed cost of total assets purchased as application of income. We further noticed that the assessee has not claimed depreciation on Fixed Assets as application of income. Therefore, the AO was not correct in disallowing the depreciation. Hence, we direct the AO to delete the additions made towards depreciation.
Disallowance of income tax - assessee has claimed income tax payments as application of income for charitable purpose - AO disallowed income tax and added back to total income of the assessee - Contention of the assessee that income tax is allowable as a deduction while computing income in the case of trust claiming exemption u/s. 11 - HELD THAT:- We find force in the arguments of the assessee for the reason that income of any trust or society claiming exemption u/s. 11 has to be computed under normal commercial principles. Income tax payable is necessarily an out go from the income of the trust. Therefore, once there is out go towards income tax payment, it has to be allowed as a deduction towards income available for application of income for charitable purpose as held in Trustee of V.H.E.H. the Nizams Supplemental Trust [1978 (2) TMI 7 - ANDHRA PRADESH HIGH COURT] The CIT(A) after considering the relevant submissions rightly allowed the claim of the assessee.
Disallowance of un-paid liability u/s. 43B - contention of the assessee that it is following Cash System of accounting for the purpose of determination of income u/s. 11 of the Act and hence not considered any liability on accrual basis while computing the income - HELD THAT:- We find force in the arguments of the assessee for the reason that the assessee is following Cash System of accounting, accordingly, net cash surplus for the year is considered as income available for application of income as per the receipts and payments accounts. The assessee has considered only actual payments made towards liability referred to in sec. 43B for the purpose of application of income. Therefore, the AO was not correct in making additions towards unpaid liability by following the Mercantile System of accounting. The CIT(A) after considering relevant submissions of the assessee, allowed the claim of the assessee.
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2016 (7) TMI 1574
MAT credit - tax credit u/s 115JAA is to be given, whether after levying surcharge and education cess on the tax calculated as per the normal provision or before - whether adjustment on account of MAT credit is to be made against the tax determined under the normal provisions of the Income Tax Act, before levying surcharge and cess or otherwise? - HELD THAT:- MAT credit does not include surcharge and cess, which fact we find, has not been controverted by the Revenue. Therefore, following the proposition laid down by the co-ordinate Bench in the above noted cases, also the decision of Vacment India Ltd. [2014 (10) TMI 787 - ALLAHABAD HIGH COURT] we hold that the adjustment of MAT credit under section 115JAA is to be made from the tax determined as payable before including surcharge and cess thereon.
Direct the AO to allow the MAT credit against the tax liability payable before surcharge and education cess.
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2016 (7) TMI 1573
TP Adjustment - adjustment in respect of International transactions of the assessee with its AE in providing fees for software development and related services - comparable selection - HELD THAT:- Assessee is engaged in providing software development services and related services to its AE. The assessee used TNMM to Bench mark the international transactions and arrived at margin of 14.5%, thus companies functionally dissimilar with that of assessee need to be deselected from final list.
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2016 (7) TMI 1572
Disallowance for provision for bad & doubtful debts - deduction u/s 36(1)(viia) to be restricted to actual provision made in the books - AO disallowed the deduction as claimed by assessee over and above the provision created in assessee’s books of account and added to the total income of the assessee - HELD THAT:- Assessee fairly acceded that the issue is already covered in favour of Revenue. The relevant extract of the case STATE BANK OF PATIALA vs. COMMISSIONER OF INCOME TAX & ANR [2004 (5) TMI 12 - PUNJAB AND HARYANA HIGH COURT] as held for making of a provision for bad and doubtful debts equal to the amount mentioned in s. 36(1)(viia) is a must for claiming such deduction. In the present case, the assessee has not made any provision in the books of account for the assessment year under consideration - Assessee claiming deduction for bad debt under unamended s. 36(1)(viia) but after amendment enhancing the deduction in the return by making up the shortfall in the provision in the balance sheet of subsequent year, the claim to the extent of enhancement is not allowable - Decided against assessee.
Disallowance invoking the Rule 8D(2)(iii) of section 14A - HELD THAT:- In the instant case since the assessee is a dealer in share, therefore the rigorous provision u/s 14A r.w.s 8D of the IT Rule shall not be applied with respect to share held by way of stock-in-trade. In this connection, whether assessee is a dealer in share or not we are placing our reliance in the case of UNITED COMMERCIAL BANK [1999 (9) TMI 4 - SUPREME COURT] respectfully where it has been held that the assessee is dealer in shares.
Thus holding the bank as dealer in shares/ securities and consequently no disallowance is warranted on the shares/securities held as stock in trade. Accordingly we reverse the orders of Authorities Below and allow the ground raised by assessee.
Disallowance of provision of leave encashment u/s. 43B - HELD THAT:- Provision for leave encashment that this issue is pending before Hon’ble Supreme Court in the case of Exide Industries Ltd. Vs. Union of India [2007 (6) TMI 175 - CALCUTTA HIGH COURT] and fairly conceded that subsequently Hon'ble Supreme Court has stayed this judgment of Hon'ble jurisdictional High Court.
Assessee fairly stated that let Hon'ble Supreme Court decide the issue and by that time the matter can be remitted back to the file of AO for fresh adjudication in term of the decision of Hon'ble Supreme Court. On this, Ld. CIT DR has not objected to the same. Accordingly, we set aside this issue to the file of the AO to await the decision of Hon'ble Supreme Court and decide the issue accordingly. This issue of assessee’s appeals is remitted back to the file of AO and allowed for statistical purposes.
MAT applicability u/s 115JB to company established under the Companies Act, 1956 - HELD THAT:- in view of the legislative change brought about by the introduction of Explanation 3 in section 115JB of the Act by the Finance Act, 2012 , the assessee's contention in fact stands more fortified. The Explanation 3 to section 115JB makes it evidently clear that section 115JB is applicable only to entities registered and recognized to be companies under the Companies Act, 1956. Since the assessee is not a company within the meaning of Companies Act, 1956, section 211(2) and proviso thereon is not applicable and therefore consequently we hold that the provisions of section 115JB of the Act are also not applicable.
Direction to AO for re-computation of the set off and carry forward of unabsorbed business loss and depreciation brought forward from the earlier years - AO to recompute the set off and carry forward of unabsorbed business loss and depreciation brought forward from the earlier years after giving effect to this appeal.
Assessment disallowed on the ground that no revised return was filed - HELD THAT:- Assessee is very much entitled make a legal claim without filing the revised return of income. We uphold the order of Ld. CIT(A) and this ground of Revenue’s appeal is dismissed.
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2016 (7) TMI 1571
Subsidy from Central Government on account of ‘interest refund’ - Revenue or capital receipt - Whether subsidy was granted towards reducing interest burden of the assessee and received after the commencement of business? - HELD THAT:- In order to sustain competitiveness in the domestic as well as international markets and overall long-term viability of the industry, the concerned Ministry adopted the TUFS scheme envisaging Technology Upgradation of the Industry. Hence, the subsidy received in this regard falls into capital field.
we find that the assessee received interest as refund from Central Government, as per the scheme formulated to encourage additional investments in order to become competitive and cost effective and to provide financial support for capital outlay for expansion and modernisation and by following order of M/S GLOSTER JUTE MILLS LTD [ 2014 (7) TMI 172 - ITAT KOLKATA] held that the subsidy received for modernising assessee’s existing infrastructure is capital in nature - we dismiss the ground no-1 raised by the Revenue.
Allowance of unabsorbed depreciation and business of 100% EOU Unit (100% exemption u/s10B) against the taxable income of the assessee from other unit - HELD THAT:- In the present case, the Coordinate Bench observed that the similar issues have been decided in favour of assessee by this Tribunal in earlier years and no order as such brought to our notice that the Hon’ble Jurisdictional High Court has reversed the order of the Tribunal. In view of the same, we find no merit in the order of CIT(Appeals) and accordingly, ground no-2 raised by the Revenue is dismissed.
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2016 (7) TMI 1570
Unexplained expenditure - addition u/s 68 - addition on protective basis - HELD THAT:- Issues under consideration have not been decided by the AO in a proper manner and facts have not been appreciated in a judicious manner. We find that the confirmations have not been verified by the lower authorities. We further find that the ld. CIT(A) has passed the order without providing the assessee due opportunity of being heard.
On the basis of foregoing discussion and careful perusal of the operative part of the CIT(A)’s conclusion, it is amply clear that the ld. CIT(A) has decided the issue in haste by passing a cryptic order which is not sustainable. We further note that the ld. CIT(A) has also not properly considered the submissions and facts of the case and simply followed the AO’s conclusion and dismissed the appeals of the assessee. We further note that the CIT(A) too has not given due opportunity of being heard to the assessee.DR has supported the order of the CIT(A). However, he raised no serious objection if the appeal is restored to the file of AO for fresh adjudication of first appeal - restore the grounds of appeal raised by the assessee in all the three appeals to the file of the AO for fresh adjudication - Appeals of the assessee stand allowed for statistical purposes.
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2016 (7) TMI 1568
Nature of expenses - annual payment being franchise fees paid to BCCI to participate in the Indian Premier League (IPL) - Revenue or capital expenditure - HELD THAT:- As relying on M/S DECCAN CHARGERS SPORTING VENTURES LTD. (AMALGAMATED WITH DECCAN CHRONICLE HOLDINGS LTD) [2015 (12) TMI 1279 - ITAT HYDERABAD] we do not find any merit for treating the assessee’s claim as capital expenditure, which is essentially revenue in nature. Accordingly we set aside the order of lower authorities and direct the AO to allow assessee’s claim of revenue expenditure. As we have already decided ground no.1 in assessee’s favour by holding that annual payment of ₹ 447.60 crores being franchise fees paid to BCCI to participate in IPL was revenue in nature, therefore, allowable during the year under consideration, we are not going to assessee’s alternate claim of allowing depreciation on the entire value of intangible rights, which is also supported by the decision of co-ordinate bench in case of India Cements Limited, India Cements Limited [2016 (1) TMI 1028 - ITAT CHENNAI]
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2016 (7) TMI 1567
Disallowance u/s 14A r.w.r. 8D(2)(iii) - investments made by assessee were of strategic nature as these were not made with the purpose of earning any dividend on the investments but were prompted by strategic considerations in order to gain control over these subsidiaries/sister concern and thus should not be considered for the purpose of calculating the disallowance u/s 8D(2)(iii) - HELD THAT:- Assessee has made investments in the subsidiary companies to the tune of ₹ 16.61 crores which in our opinion should not be considered for the purpose of working out the disallowance under section 14A read with rule 8D (2)(iii). Respectfully following the ratio of INTERGLOBE ENTERPRISES LTD. [2014 (4) TMI 269 - ITAT DELHI] set aside the order of CIT(A) and direct the AO to verify the strategic investment and recalculate the disallowance accordingly by not considering the investments made in subsidiary companies/sister concern. - Appeal of the assessee stands allowed for statistical purposes.
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2016 (7) TMI 1566
Addition on account of set off of loss claimed in transactions of shares F&O - HELD THAT:- In view of the submissions of the learned DR wherein he has agreed that the loss from shares and futures was covered by section 43(5)(d) of the Act and was not speculation loss and hence, an allowable deduction against the business income, we find no good reason to interfere with the order of the learned CIT(A) which is confirmed. Therefore, the ground of appeal of the revenue is dismissed.
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2016 (7) TMI 1565
TP Adjustment - Comparable selection - ITAT rejected three comparables Aptico Limited, Global, Procurement Consultants Limited and TSR Darashaw Limited as they were functionally dissimilar - HELD THAT:- Heard Revenue, and having perused Rule 10B(3)(ii) of the Income Tax Rules, 1962 read with Section 92 C of the Income Tax Act 1961 the Court is not persuaded to hold that the first issue urged gives rise to a substantial question of law requiring examination by the Court.
Scope of the powers of the ITAT while hearing an appeal - point now urged by the Revenue is that if three of the nine comparables are to be excluded, then the ITAT ought to suo motu have required the TP adjustment exercise to be undertaken afresh by the TPO since the TP adjustment based on six comparables that were to some extent functionally dissimilar to the Assessee could not have reflected the correct picture as far as the determination of ALP was concerned - HELD THAT:- Admittedly, during the AY in question there was no provision in the Act permitting the Revenue to appeal against the inclusion or exclusion of a comparable by the TPO. which is affirmed by the DRP. While the Assessee had a remedy by filing an objection before the ITAT, the Revenue could not during the relevant AY, do so. It has been urged on the strength of the decision of this Court in Commission of Income Tax v. Jansampark Advertising and Marketing Limited [2015 (3) TMI 410 - DELHI HIGH COURT] that in such circumstances it is incumbent upon the ITAT to exercise suo motu powers and in the interest of justice direct the exercise of TP adjustment to be undertaken afresh.
The Court is unable to agree with the above submissions. As rightly pointed out by the ITAT, the statutory scheme at the relevant time did not envisage permitting the Revenue to prefer an objection in the circumstances pointed out hereinabove. The circumstances under which certain observations were made by this Court in Jansampark (supra) concerned an inquiry to be undertaken in proceedings initiated under Section 147/148 of the Act in order to find out the genuineness of the creditors, their credit worthiness etc.
There is no comparison with the facts on hand. The Finance Act, 2016 has is done away with the above provision of the Act that permitted the Revenue to file objections against the order of DRP.
In the present case we are concerned with AY is 2010-11 when there was no such provision permitting the filing of cross objection by the Department. It was introduced by the Finance Act, 2012 and again removed under the Finance Act, 2016. Clearly, there is legislative policy governing the insertion of the said provision in Finance Act, 2012 and its deletion in Finance Act, 2016. This Court is not inclined to frame a question on the above issue urged by the Revenue.
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2016 (7) TMI 1564
Disallowance of Prior Period expenditure - HELD THAT:- As decided in ADANI ENTERPRISES LTD. [2016 (7) TMI 1250 - GUJARAT HIGH COURT] expenditure of ₹ 67.88lacs is a fraction of the total income of the assessee company declared at ₹ 105.88 crores. Further, even the Revenue does not dispute that the company would be taxed at the same rate in the present assessment year or during earlier year. It is also not disputed that prior period income was declared by the assessee during the current year which is also accepted by the Revenue. No question of law therefore, arises
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2016 (7) TMI 1563
Deduction u/s 80HHC - Tribunal holding that turnover of all independent businesses are to be clubbed and thereby rejecting the assessee's contention that turnover of only export business is required to be taken into consideration - HELD THAT:- In view of the various decisions of the hon'ble Supreme Court and the Explanation to the sections, the interpretation put forward by the Tribunal is required to be accepted. See K. RAVINDRANATHAN NAIR [2007 (11) TMI 10 - SUPREME COURT] and JOSE THOMAS. [ 2001 (11) TMI 73 - KERALA HIGH COURT ] - Consequently, the issue raised in this appeal is answered in favour of the Department and against the assessee.
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2016 (7) TMI 1561
Exemption u/s 11 - whether the assessee trust is entitled to the claim of depreciation on capital assets, expenditure in respect of which has already been claimed by the assessee as application of income - HELD THAT:- Hon’ble Bombay High Court in the case of “CIT vs. Institute of Banking Personnel Selection” [2003 (7) TMI 52 - BOMBAY HIGH COURT] has held that a trust can claim deprecation on assets, even if, cost of assets has been fully allowed as application of income under section 11 of the Act in past years and that there is no question of double deduction in allowing the depreciation in respect of assets acquired and used by the trust.
Assessment t of trust - Assessee trust entitlement to claim the carry forward and set off of deficit of earlier years on account of excess expenditure/application of income - in the case of “DIT(E) vs. Najam Baug Trust” [2015 (1) TMI 1438 - BOMBAY HIGH COURT ] has, while relying upon the decision in the case of “Institute of Banking Personnel Selection” (supra) has held that the assessee is entitled to claim carry forward losses/deficit on account of excess expenditure/application of income in earlier years. We further find that the Tribunal has also discussed in the own case of assessee, the effect of the amendment brought vide Finance (No.2) Act, 2014 in section 11(6) of the Act wherein it has been provided that depreciation will not be allowed while computing application of income w.e.f. April 1, 2015. The Tribunal while relying upon the decision of the Hon’ble Delhi High Court in the case of “Indra Prasstha Cancer Society” [2014 (11) TMI 733 - DELHI HIGH COURT] that the amended provisions are applicable w.e.f. the assessment year 2015-16 and the same will not have any applicability for the assessment years prior to A.Y. 2015-16. The Ld. D.R. has also fairly admitted that both the issues are squarely covered in favour of the assessee
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2016 (7) TMI 1559
Revision u/s 263 - by order passed u/s 127 CIT transferred the cases to the present Assessing Officer who completed the assessment on 30th March, 2014, as they were getting barred by limitation at the returned income filed by the assessee without making any enquiry - AO may have made enquiry in these cases but due to paucity of time the present AO did not have time to look into the voluminous material and form opinion before making the assessment - HELD THAT:- In short time from 29.03.2014 to 30.03.2014, it was practically impossible for the Assessing Officer to have examined the returns of the assessee vis- vis the details and particulars filed in support of the returns and form an opinion and frame a detailed assessment order on the issues in the returns of income. Therefore, we have no hesitation in accepting the arguments of the ld. Departmental Representative and upholding the present orders passed u/s 263 of the Income-tax Act, 1961, by the Commissioner of Income-tax. Thus, the grounds of appeal in all the appeals under consideration are dismissed. - Decided against assessee.
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2016 (7) TMI 1558
Depreciation on goodwill being intangible assets - HELD THAT:- After considering the relevant records, orders of authorities below, we find that the similar issue has been decided by the FAA for the assessment year 2008-09 in favour of the assessee holding that the assessee was entitled to depreciation on goodwill by following the decision of Apex Court in the case of Smifs Securities Ltd [2012 (8) TMI 713 - SUPREME COURT] . - Decided against revenue.
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