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Income Tax - Case Laws
Showing 61 to 80 of 803 Records
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2016 (8) TMI 1502
Penalty u/s 271(1)(c) - assessee earned commission in the range of 1.5% to 3.5% on various kinds of accommodation entries provided by it - HELD THAT:- As decided in MIHIR AGENCIES PVT. LTD., MUKESH CHOKSI VERSUS DCIT-CC-46, MUMBAI [2016 (7) TMI 1343 - ITAT MUMBAI] Tribunal has adopted a particular rate for estimating the income of the assessee for the year under consideration, we hold that the FAA was not justified in confirming the order passed by the AO u/s. 271(1)(c) of the Act. Therefore, reversing his order, we decide the effective ground of appeal in favour of the assessee.
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2016 (8) TMI 1501
Condonation of delay dismissed - appellant claimed that the delay was due to a wrong advice tendered by their authorized representative, the affidavit of the authorized representative was not filed - HELD THAT:- Tribunal failed to see that in applications for condonation of delay, reliance can be placed upon the affidavit of advocates for the parties. This is probably the reason why the assessee did not file the affidavit of the advocate. Therefore, we are of the considered view that the application for condonation of the delay was dismissed by the Tribunal, on a ground that it is not available. Hence, the order requires to be set aside.
Accordingly, the appeal is allowed, the order is set aside, the condone delay petition is allowed, and the Tribunal is directed to number the appeal and take up for disposal, in course of time.
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2016 (8) TMI 1500
Validity of Reopening of assessment - Reopening on the basis of the DVO’s report and valuation - valuation given by the DVO - HELD THAT:- It is settled proposition of law that the information of the DVO per se is not an information for the purpose of reopening of assessment under Section 147 of the Act. It is mandatory requirement that the Assessing Officer has to apply his mind to the information if any collected and must form the belief thereupon.
unless and until there is some other evidence to indicate that extra consideration had flown in the transaction of purchase of property, the DVO report cannot form the basis of any addition on the part of the revenue. In the case on hand apart from the DVO’s report there is no other evidence to indicate that the assessee has invested in the residential property during all these years as alleged in the DVO’s report. Therefore the same cannot be the basis of reopening of the assessment until and unless an independent corroborative material is available with the Assessing Officer to form the belief that the income assessable to tax being the investment made in the residential house during all these years has escaped assessment.
Unexplained investment in construction of residential house while framing the reassessment - HELD THAT:- It is clear from the reassessment order that instead of making addition under Section 69 of the Act being the reason for reopening of assessment, the Assessing Officer himself has changed his mind and made the addition only on account of unexplained credit in the capital account. Therefore the basis of reopening itself was not found to be correct reason making any addition of income or reassessment of income when the Assessing Officer has finally framed the reassessment order.
In the case of CIT Vs. Jet Airways (I) Ltd [2010 (4) TMI 431 - HIGH COURT OF BOMBAY] has held that the condition precedent to exercise on the jurisdiction under Section 147 is the forming of reason to believe by the AO that income chargeable to tax has escaped assessment and subsequently if the Assessing Officer found that as a matter of fact the same is not escaped assessment, it is not open to him independently to assess some other income.
Accordingly, the reassessment of these five years is also not sustainable when the Assessing Officer has not made any addition of income on account of unexplained investment but made some other addition. In view of the above discussion, the reassessment for the Assessment Years 2004-05 to 2008-09 is not sustainable.
LTCG on sale of gold - HELD THAT:- Assessee has shown the credit in his capital account of ₹ 1,80,000 as sale of gold and insurance of ₹ 51,244. The Assessing Officer made the addition by allowing only ₹ 10,000 as value of the gold as on the date of sale and consequently the balance amount of ₹ 1,70,000 was brought to tax which was claimed by the assessee as LTCG. It is apparent from the record that the Assessing Officer has not conducted a proper enquiry to find out actual market value of the gold and further whether the assessee has offered to tax the LTCG of ₹ 1,80,000. It is manifest from the assessment order that the Assessing Officer has made these additions purely on the basis of estimate and without conducting any enquiry about the actual amount realized by the assessee from these transactions. Accordingly in the facts and circumstances of the case, the matter is set aside to the record of the Assessing Officer for conducting a proper enquiry and giving an opportunity of being heard to the assessee and then decide the matter as per law.
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2016 (8) TMI 1499
Deduction u/s 80IB(11A) denied - non satisfying the conditions laid down - as per revenue assessee, not being an integrated undertaking, is not entitled for the relief u/s 80IB(11A) AND transport and handling activities claimed by the assessee are merely incidental and not integrated to its main activity - HELD THAT:- We find that the assessee has filed detailed paper book containing AY 2005-06 order u/s 143(3) of the Act in which claim was allowed u/s 80IB(11A) - We further find that against Ld. CIT(A)’s order of AYs 2005-06, 2006-07, 2007-08, 2008-09 and 2009-10 in which CIT(A) allowed the claim u/s 80IB(11A) of the Act, the Department has not preferred any appeal meaning thereby that it has accepted the decision of Ld. CIT(A) in assessee favour - we are of the opinion that assessee is entitled for the claim allowed u/s 80IB(11A) and find no reason to interfere in the order of Ld. CIT(A). - Decided against revenue.
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2016 (8) TMI 1498
Disallowance of exemption of salary income claimed under Article 15(1) of DTAA between India and China - Assessee is non-resident Indian resident of China - HELD THAT:- In view of the specific condition under Article 23 of the India-China DTAA, the assessee is not eligible to claim relief under article 15(1) since the assessee is non-resident and as per Article 23 of DTAA between India and China allows exemption only to a resident Indian. Under the above facts and circumstances, the assessee is not eligible to claim exemption under section 5(2) of the Income Tax Act and accordingly, the ground raised by the assessee is dismissed.
Disallowance of rental income from house property - CIT(A) confirming the rental income of the property higher market value of the property during the said period - HELD THAT:- Considering the area, location, etc., the value of the property taken by the AO is more or less double for the Medavakkam property, the rental income worked out by the AO should be 50%, as has been rightly claimed by the assessee, which should be accepted. Admittedly, the assessee has not filed any documentary evidence before the Tribunal with regard to the claim of rental income. Moreover, the assessee has not raised such issue before the AO or before the ld. CIT(A). AO needs to verify the correctness of the claim of the assessee - remit the matter to the file of the AO to verify and decide the issue afresh after allowing an opportunity of hearing to the assessee. This ground of appeal of the assessee is allowed for statistical purpose - Appeal filed by the assessee partly allowed for statistical purposes.
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2016 (8) TMI 1497
Addition u/s 68 - accommodation entries in the garb of purchase and sale of jewellery - CIT-A deleted the addition and held that the existence of the jewellery was proved from the VDIS, 1997 declaration and the assessee has claimed the sale of the same jewellery, which got tallied with the purchase bills issued by the buyer and assessee has not provided any opportunity to the assessee to explain the material facts on which the Assessing Officer made the addition - HELD THAT:- A.O. could not point out any discrepancy in the evidences relied by the assessee nor bought out any credible evidence to contradict the contention of the assessee. Even if A.O. has some material to reject the assessee’s contention, he should provide an opportunity to the assessee to seek his explanation on such material. Such material does not carry any evidential value in the absence of opportunity to the assessee. Any assessment framed on the basis of such material does not stand in the eye of law - addition made in the assessment order cannot sustain as per law and accordingly the same is directed to be deleted - See SH. MOHAN LAL AGARWAL [2013 (1) TMI 570 - ALLAHABAD HIGH COURT] case - Decided in favour of assessee.
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2016 (8) TMI 1496
Deduction of the profit derived from industrial undertaking u/s 80IC - substantial expansion carried out by the assessee in the 6th year of the new industrial undertaking - Claim restricted to 25% - HELD THAT:- As relying on own case [2015 (6) TMI 725 - ITAT CHANDIGARH] we hold that the assessee before us is entitled to only 25% of deduction during the present year because the assessee has already availed the period of full deduction @ 100% in the earlier five years i.e. from assessment years 2004-05 to 2008-09. In this background, we find nothing wrong with the order of Ld. CIT(A) and we uphold the same. Accordingly, assessee”s appeal is dismissed.
Disallowance u/s 14A r.w.r. 8D - assessee applied provisions of Rule 8D and has not considered any interest disallowance holding that no interest expenditure is related to exempt income earned by the assessee - HELD THAT:- It is the duty of the revenue to establish nexus of the funds that assessee has used the interest bearing funds for the purposes of earning exempt income to make any disallowance u/s 14A with respect to interest expenditure. As AO has not established the nexus about investment of interest bearing funds in exempt income generating apparatus, no disallowance u/s 14A rwr 8D can be made on account of interest expenses. Reverse the finding of the ld CIT (A) in confirming the disallowance on account of interest expenses u/s 14 r.w.r. 8D of the Income tax Rules.
Regarding the issue of other expenses we confirm the finding of the ld CIT (A) in confirming disallowance - out of total disallowance on account of interest expenses stands deleted andon account of other expenditure is confirmed. In the result ground of the appeal is partly allowed..
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2016 (8) TMI 1494
Alternate claim of the assessee for granting the benefit of section 10A - CIT-A not allowing the alternate claim of deduction under section 10A when he was of the view that the assessee is not eligible for deduction under section 10B - HELD THAT:- We find merit in the contention of the learned Authorized Representative. On the earlier occasion, this Bench of the Tribunal had upheld the order of the learned Commissioner of Income Tax (Appeals) who had allowed the alternate claim of the assessee for granting deduction under section 10A of the Act when it was found that the assessee is not eligible for the benefit of deduction under section 10B of the Act.
As relying on VALIANT COMMUNICATIONS LTD. [2013 (1) TMI 734 - DELHI HIGH COURT] and M/S. DATA SOFTWARE RESEARCH COMPANY (P) LTD. [2015 (9) TMI 1282 - ITAT CHENNAI] we hereby remit the matter back to the file of the learned Assessing Officer for considering the alternate claim of the assessee for granting the benefit of section 10A of the Act, if the assessee is found to be eligible for such claim under section 10A of the Act. - Decided in favour of assessee for statistical purposes
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2016 (8) TMI 1493
Disallowance genuine business expenditure in the form of director’s salary - allowability of salary paid to the Director - HELD THAT:- Since we have already concluded that the expenditure incurred by way of salary payments is allowable expenditure u/s 37(1) of the Act, we do not find any necessity to adjudicate the said additional Ground.
Conclude by holding that the material and evidence on record clearly suggests that services were rendered by Shri Faraz G. Joshi as Director of the assessee-company and that the salary paid to him cannot be disallowed. Therefore, we set-aside the order of CIT(A) and direct the Assessing Officer to delete the addition. Thus, the assessee succeeds on this aspect.
Assessment u/s 153A - HELD THAT:- A perusal of the assessment order as well as the order of CIT(A) reveals that the pleas of assessee have not been appreciated in its proper perspective. Notably, CIT(A) in para 4.3 of his order has reproduced the submission of the assessee which was to the effect that such action of Assessing Officer was untenable in the impugned proceedings carried out u/s 143(3) r.w.s. 153A of the Act. The assessee has supported the said plea on the strength of an order passed by the Commissioner u/s 263 of the Act, which was required to be given effect to by the Assessing Officer by amending the original assessment framed u/s 143(3) of the Act. We find that the aforesaid plea of assessee has been completely disregarded and action of the Assessing Officer has been upheld. After considering the factual matrix brought out by the assessee, we find that the impugned action of Assessing Officer is unsustainable in the eyes of law and is hereby set-aside. Thus, assessee succeeds in this Ground.
Mis-declaration of PFAD as Acid Oil which has resulted in inflation of purchases - HELD THAT:- The relevant discussion in the order of Assessing Officer as well as the CIT(A) clearly shows that the only basis for the impugned addition is the findings of DRI. There is no independent finding of the Assessing Officer on the basis of any material to say that assessee has inflated its purchases by declaring the import of PFAD as that of Acid Oil. In fact, the order of CESTAT dated 4.12.2014 (supra), whose copy has been placed on record, upholds the contention of assessee that it has imported Acid Oil and not PFAD. Quite clearly, since the basis on which the addition made by the Assessing Officer itself does not remain, the addition is directed to be deleted. Therefore, on this aspect also assessee succeeds.
Levy of penalty u/s 271(1)(c) - HELD THAT:- Levy of penalty is unjustified. It would also not be out of place to mention here that once on the same issue the Assessing Officer did not initiate penalty at the time of making the disallowance in the course of original assessment proceedings u/s 143(3) of the Act, then without there being any material found in the course of search, repetition of the same disallowance in the proceedings u/s 143(3) r.w.s. 153A of the Act would not justify levy of penalty u/s 271(1)(c) - Thus, on this aspect also we find no reason to uphold the penalty levied u/s 271(1)(c) - we set-aside the order of CIT(A) and direct the AO to delete the penalty imposed u/s 271(1)(c) of the Act. Accordingly, appeal of the assessee is allowed.
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2016 (8) TMI 1492
Penalty levied u/s. 271(1)(c) - Addition of unsecured loan which was not disclosed in the original return - HELD THAT:- The notice in the present case, does not reflect as to whether the present notice for initiation of penalty has been issued for concealment of income or furnishing of inaccurate particulars of income and hence the very basis for levy of penalty u/s 271(1)(c) of the Act is held to be invalid. We, therefore, respectfully following the decision of the Hon'ble Karnataka High Court in the case of M/s. Manjunatha Cotton & Ginning Factory [2013 (7) TMI 620 - KARNATAKA HIGH COURT] to hold that the notice issued u/s 274 r.w.s. 271(1)(c) of the Act dated 30.12.2009 for A.Y 2004-05 initiating the penalty proceedings u/s 271(1)(c) of the Act in the case in hand is invalid and consequently, the penalty proceedings are also invalid - Decided in favour of assessee.
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2016 (8) TMI 1491
Transfer of the proceedings from Mumbai to Hyderabad - Validity of order u/s 127 - transfer of case - HELD THAT:- If we feel that the reasons for transfer of the case have been informed to the petitioner in more detail at the time of the present proceedings and therefore, looking at the peculiar facts of the case, it would be open to the petitioner to make a representation against the transfer of the proceedings from Mumbai to Hyderabad.
If such a representation is made to the Commissioner of Income Tax, Mumbai, within two weeks from today, it shall be considered objectively and shall be decided within two weeks from the date of receipt of such a representation.
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2016 (8) TMI 1490
Grant of exemption u/s. 11 denied - assessee runs a pharmacy store in the hospital for profit and earned profit from pharmacy store and not covered in the charitable activity - CIT(A) reversed the addition by the AO holding that the running of pharmacy was not a business activity of the assessee as the same was as per the objectives of the trust - HELD THAT:- The pharmacy store is an integral part of any hospital and can not be treated as business activity. Had the assessee operated a pharmacy store without running a hospital , then the activity would have been classified differently.
Issue decided in favour of assessee in HIRANANDANI FOUNDATION VERSUS ASST. DIRECTOR OF INCOME TAX, EXEMPTION 2 (1) , MUMBAI. [2016 (7) TMI 260 - ITAT MUMBAI] as held pharmacy shop is an integral part of the hospital business and the same is not hit adversely by the conditions specified in the provisions of section 11(4A) of the Act. Therefore, so long as the transactions of such pharmacy which ancillary/ incidental for the business of a hospital and objects of the trust, the conditions relating to maintenance of separate books of accounts are met within the meaning of section 11(4A) of the Act. Accordingly, grounds raised by the assessee are allowed
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2016 (8) TMI 1488
Addition on account of suppressed income due to client code modifications - HELD THAT:- Issue decided in favour of assessee as relying on in the case of Kunvarji Finance Pvt.Ltd [2015 (4) TMI 539 - ITAT AHMEDABAD] transactions at the Commodities Exchanges have been duly accounted in the books of account maintained by the concerned parties. Such profits/loss has been duly accounted whenever the transactions have been closed. Thus, whatever profits have been generated or accounting of actual trade, have been offered and brought to the charge of tax in the cases of concerned assessees." These findings of fact recorded by the ld. CIT(A) has not been controverted by the Revenue at the time of hearing before us. When the transaction has been duly accounted for and the profit/loss has accrued to the concerned parties in whose names transactions have been closed, there cannot be any basis or justification for considering those profit/loss in the case of the assessee on the basis of mere presumption or suspicion. It is not the case of the Revenue that such alleged profit has actually been received by the assessee. In view of the totality of the above facts, we do not find any justification to interfere with the order of the CIT(A) in this regard and the same is sustained - Decided against revenue.
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2016 (8) TMI 1486
Penalty u/s 271(1)(c) - professional fee paid to Shri S.K. Gupta - HELD THAT:- As decided by Tribunal that the Assessing Officer was not justified in making the disallowance of profession fee paid to Shri S.K. Gupta and the Ld. Commissioner of Income Tax (Appeal) in confirming the same. In view of this factual matrix, since the addition on the basis of which penalty was levied is no more surviving, therefore, penalty has to be deleted. Our view find support from the decision in K.C. Builders vs ACIT (2004 (1) TMI 7 - SUPREME COURT) and CIT vs S.P. Viz, (1988 (10) TMI 24 - PATNA HIGH COURT). Even otherwise, when the quantum addition is deleted, there remains no basis at all for levying the penalty for concealment or furnishing inaccurate particulars. The penalty cannot stand on its legs, thus, the appeal of the Revenue is dismissed. The stand of the Ld. Commissioner of Income Tax (Appeal) is affirmed. Appeal of the Revenue is dismissed.
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2016 (8) TMI 1484
Addition u/s 68 - assessee failure to discharge its onus to establish identity, genuineness and creditworthiness of companies - HELD THAT:- After receiving report from the Investigation Wing, Kolkata dated 18.03.2013, Assessing Officer has drawn his own conclusion which was not based on any facts and figures as Assessing Officer has not mentioned anything in the order on what basis the conclusion was arrived on and what were the facts and materials available with him. Therefore, the addition made by him u/s.68 of the Act on account of share application money received without considering the various facts brought to the knowledge of Assessing Officer, which is not justified.
Assessee has already proved the identity of the share applicant by furnishing their PAN, copy of IT return filed for asst. year 2010-11.Regarding the genuineness of the transaction, assessee has already filed the copy of the bank account of these three share applicants from which the share application money was paid and the copy of account of the assessee in which the said amount was deposited, which was received by RTGS.
Regarding credit-worthiness of the party, it has been proved from the bank account of these three companies that they had the funds to make payment for share application money and copy of resolution passed in the meeting of their Board of Directors.
Regarding source of the source, Assessing Officer has already made enquiries through the DDI (Investigation), Kolkata and collected all the materials required which proved the source of the source, though as per settled legal position on this issue, assessee need not to prove the source of the source.
Assessing Officer has not brought any cogent material or evidence on record to indicate that the shareholders were benamidars or fictitious persons or that any part of the share capital represent company’s own income from undisclosed sources. Accordingly, no addition can be made u/s.68 of the Act. In view of above reasoned factual finding of CIT(A) needs no interference from our side - Decided in favour of assessee.
Disallowance of 80% of the expenses claimed as interest repayment by treating same as pre-operative expenses of capital nature - HELD THAT:- These expenses were neither of personal nature, nor of capital nature or of pre-operative nature. These were all of revenue nature which were incurred for the purpose of carrying on the business and therefore, same are obviously allowable as revenue expenses during the year. Assessing Officer has neither given any finding as to why any part of these expenses were to be disallowed, nor he has issued any show cause notice why he intends to disallow part of these expenses.
In view of above, CIT(A) was justified in granting relief to the assessee as discussed above. We are not inclined to interfere with the finding of CIT(A) on this issue. Same is upheld.
Addition u/s 14A r.w.Rule 8D - HELD THAT:- As decided in M/s. Daga Global Chemicals Pvt. Ltd [ 2015 (1) TMI 1204 - ITAT MUMBAI] any disallowance can be made that can be restricted to the exempt income claimed by assessee, so, disallowance u/s.14A r.w. Rule 8D is restricted to that extent. Assessing Officer is directed accordingly.
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2016 (8) TMI 1483
Suppressed sale consideration in respect of flat sold by the assessee at a lower rate that the other flats in the same building - addition as assessee failed to justify before the Assessing Officer as to why the aforesaid flats were sold at a lower price - sale price was below the price declared by the State Government of Maharashtra or below the market price. HELD THAT:- It is not a case of transaction between related parties. Assessee also informed the Assessing Officer that unit no. 302 sold at a value which was substantially higher than the market rate computed by the state Government of Maharashtra, hence, only reason why flat no. 101 commanded higher price compared to other flats was that the said unit had locational advantage of entire floor suitable for a car show room compared to unit no. 302. In the light of the above facts, CIT(A) observed that there was no case made out by Assessing Officer that the sale price was below the price declared by the State Government of Maharashtra or below the market price.
Assessing Officer had simply applied the differential in rates for booking of unit no. 101 and 302A for arriving at the actual booking rate for unit no.302. The addition made by Assessing Officer was therefore simply on the basis of difference in the rate in booking of unit no.101. CIT(A) relied on the decision of Mumbai ITAT in case of Nelkamal Realtors & erectors India (P) Ltd. (2013 (8) TMI 557 - ITAT MUMBAI) and held that Assessing Officer has not controverted the explanation furnished by assessee during course of assessment proceedings to explain the reasons for charging lower price in respect of unit no.302 sold vis-à-vis rate/price for unit no.101. In view of above, CIT(A) rightly deleted the addition - Decided against revenue.
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2016 (8) TMI 1482
Reopening of assessment u/s 147 - reason to believe - reopening after four years - HELD THAT:- Facts show that the assessee has disclosed all material facts at relevant places during original assessment proceedings u/s 143(3) of the Act. The AO himself asked for specific questions and full details were supplied by the assessee. AO examined these documents and framed the assessment only after proper application of mind. There was no failure on the part of the assessee to fully and truly disclose all the material facts. Thus, reassessment is being sought by the AO on mere change of opinion and apparently on the basis of Audit Memo, which is not permissible. No new tangible material has come to the knowledge of the AO so as to justify the reopening. See M/S. KELVINATOR OF INDIA LIMITED [2010 (1) TMI 11 - SUPREME COURT]
Hon’ble apex Court in the case of CIT vs. Foramer France [2003 (1) TMI 101 - SC ORDER] has clearly laid down the principle that where there is no failure on the part of the assessee to disclose material facts, the reassessment proceedings after the expiry of four years is not possible in view of the provisions of Sec. 147 - Decided in favour of assessee.
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2016 (8) TMI 1481
Levy of penalty u/s 271(1)(c) - Higher rate of depreciation on truck - @ 30% or 50% - assessee filed a revised chart of depreciation in which he calculated depreciation @ 30% on old trucks purchased from NBI Finance - assessee had finally claimed total depreciation of ₹ 7,03,22,480/- after rectifying the mistake and unabsorbed depreciation was carried forward to the tune of ₹ 3,20,81,299/- only - HELD THAT:- It emerges from the records that the assessee claimed depreciation on the newly acquired trucks @ 50% as there was a provision in the Schedule that new commercial vehicle acquired between the periods 01-01-2009 till 30-09-2009, depreciation shall be available @ 50%. However, these trucks were newly acquired by the assessee but they were not new. Therefore, the claim of depreciation was revised by the assessee during the assessment proceedings.
After adjustment there was carry forward unabsorbed depreciation of ₹ 3,20,81,299/-. Similar claim of depreciation was disallowed in the assessment years 2011-12 but no penalty u/s 271(1)© of the Act was initiated. As per assessment order dated 6-11-2015 relating to assessment year 2013-14, the carry forward unabsorbed depreciation was more than ₹ 14.00 crores. The assessee has declared Short term capital gain on the sale of these trucks in the assessment year 2013-14 and capital gain has been calculated by taking depreciation @ 30%. All these facts suggest that there was an inadvertent mistake on the part of the assessee for claiming depreciation and same was rectified as soon as it was noticed. Direct to delete the penalty levied u/s 271(1)(C) - Decided in favour of assessee.
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2016 (8) TMI 1478
Disallowance of expenditure incurred for Pooja function expenses - HELD THAT:- As decided in own case Tribunal allowed the temple inauguration expenses except disallowance of ₹ 3.00 lac out of lavish traveling expenses of ₹ 3.8 lacs on travelling and food. The present year expenditure seems to be normal day to day expenses on pooja for running the temple in the vicinity of the plant. Accordingly, after considering the rival submissions, facts of the issue as stated above, and Tribunal’s decision referred above, this ground is allowed in favour of the assessee. The addition so sustained by CIT(A) is deleted
Disallowance of Consultancy Charges for services - HELD THAT:- Similar ground was allowed by Hon’ble ITAT in assessee’s own case for AY 1995-96, 1996-97, 1997-98
Disallowances of expenses on account of non-complete fees as business expenditure - HELD THAT:- Under the similar facts the Hon’ble Madras High Court in case of Carborandum vs. JCIT [2012 (10) TMI 178 - MADRAS HIGH COURT] as held that the “payment of non compete fees for fruitful exercise of business is a commercial decision and hence should be treated as a revenue expenditure”. Further in the case of CIT vs. Eicher Ltd. [2008 (3) TMI 15 - HIGH COURT OF DELHI] it has been held “payment of non compete fees has not resulted in acquisition of capital asset. But merely eliminated competition for a while and restrictive covenant was neither permanent nor ephemeral. Hence, the advantage was not of an enduring nature.” - Decided in favour of assessee
Non-exclusion of Interest u/s 244A received during the year - HELD THAT:- In terest received on the revenue issued by the department is taxable in the year of receipt an in the present case the assessee has received the interest income during the previous year relevant to assessment year 1998-99 and even of taxable of interest cannot be postponed in the dies of finality of the proceedings. It was rightly held by AO as well as CIT(A) that interest received on the refund u/s 244(A) is treated as income received during the year and taxed accordingly. Hence, we see no reasons to interfere or deviate from the findings recorded and orders passed by the CIT(A) and hence this ground of appeal raised by assessee stands dismissed and the orders passed by CIT(A) are upheld. Therefore, we dismiss the appeal of the assessee
Disallowance of proportionate amount of premium on leasehold land - HELD THAT:- We have noticed that the assessee has acquired various lands on lease and had paid lease premium in advance for acquiring such land on lease. AO held that the expenditure incurred on leasehold right in the land has resulted in advantage having enduring benefit. Therefore, the same was treated as Capital Expenditure. After considering the case we are also of the considered view that the premium paid for acquiring leasehold rights as capital expenditure and in this respect this view is verified by the decision of the Special Bench of Hon’ble Mumbai ITAT in the case of JCIT Vs. Mukund Ltd. [2007 (2) TMI 358 - ITAT MUMBAI] . Therefore, considering the afore mentioned facts, this ground raised by assessee is dismissed.
Assessing interest income, income from Bill Discounting & Truck Hire Charges under the head “Income from Other Sources” - HELD THAT:- AR argued that CIT(A) has also erroneously upheld the order passed by AO. Ld. AR argued that the Hon’ble ITAT Mumbai Bench in assesse’s own case for A.Y. 1995- 96, 1996-97, 1997-98 as set aside the issue to the file of the AO for fresh decision and to verify the nexus between the earnings.
Therefore the issue with regard to truck hire charges are set aside to the file of the AO for fresh decision and the issue of interest income and bill discounting are also set aside to the file of the AO to verify the nexus between the earnings from money deployed our of unutilized funds and interest on borrowed funds. Further the AO is also directed to reduce the actual expenditure incurred and tax only the net income under the head of ‘Income from Other Sources’.
Non allowance of exclusion of the profits of Himachal unit as per the books in computing the Book Profit u/s 115JA - HELD THAT:- This issue is covered in favour of the assessee by the decision of the Tribunal in case of Tushako Pump Ltd. [2005 (1) TMI 586 - ITAT MUMBAI] in which it has been held that for the purpose of computing book profit under section 115JA, the profit of industrial undertaking eligible for deduction under section 80IA must be computed as per the books of accounts and not as per the provision of the Act. Respectfully following the said decision we held that the profit of the Himachal unit computed as per the books and after making adjustments as permissible under section 115JA will only be excluded while computing the book profit
Non-exclusion of profit on sale of investment in computing Book Profit u/s 115JA - HELD THAT:- Provision of Sec.115JA specifies the items to be added back and to be deducted. In the said section there is no provision of deduction of capital profit in computing book profit. Thus, following the provisions of the act, the ground is decided against the appellant.
Interest u/s 234C - HELD THAT:- After perusal of all the facts of the case laws we are of the considering view that the interest is u/s 234C to be levied as interest income therefore we direct the AO to recalculate the interest as per the return income. This ground of appeal is allowed in terms of above direction.
Withdrawal of claim of deduction u/s 80-IA in respect of unit engaged in the business of generation of power under the normal computation - HELD THAT:- The assessee could not be denied the benefit of amended provision once it fulfill the conditions stipulated in the relevant provision and therefore in view of section 80IA (2) the assesse is entitled to view the option of claiming deduction u/s 80IA on generation of power for assessment year 1999-2000 onwards. However the issue on merits needs to be considered by the AO, accordingly we set aside this issue to the file of the AO.
Disallowances of Foreign Exchange Loss - HELD THAT:- Since the assessee has submitted that the additional grounds raised in view of amendment in Finance Act, 1999 and as per amended provisions of section 80IA, the assessee has the option of claiming deduction for a period of ten consecutive assessment years out of fifteen years beginning from the year in which the undertaking begins to generate power in respect of the units set up on or after 01.04.1993.
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2016 (8) TMI 1477
Addition u/s 68 - accommodation entries receipt - HELD THAT:- CIT(Appeals) has passed an elaborate and well reasoned order. The AO has clearly brought on record the assessee’s transactions which are nothing but accommodation entries through Hawala operators. This has been done with a motive to convert the unaccounted money into white funds.
The assessee has not at all been able to adduce cogent evidences in this regard. There is no economic or financial justification for the sale price of these shares. The so called purchaser of these shares has not been identified despite efforts of the AO. The broker company through which shares were sold did not respond to queries in this regard. Hence the fantastic sale price realisation is not at all humanly probably, as there is no economic or financial basis, that a share of little known company would jump from ₹ 5/- to 485/-, In these circumstances, no infirmity in the orders of the authorities below. Accordingly affirm the same and decide the issue against the assessee.
Deduction u/s 54F - HELD THAT:- AO observed that on perusal of the sale deed it was found that the assessee has made payment of ₹ 4,30,001/- on the date of Agreement i.e. 22.05.2002 which is before the sale of the shares and the final payment is made on 25.10.2002, which is after 2 ½ months of sale proceeds received. The assessee deposited the alleged sale price of the shares in his regular account for earning income therefrom and not deposited the same in the Specific Account for the Capital Gains and utilised the same for other purposes. Thus there is no proof with the assessee to show that the same amount of sale proceeds were utilised for the purchase of house property. On this ground also, the assessee’s claim cannot be allowed.
The appellant has grossly failed to substantiate his claim for grant of deduction u/s 54F of the Act. The appellant has not filed any sort of document in support of his claim for investment in a residential house. The appellant has also failed to substantiate the transaction of purchase and sale of the shares without any documentary evidences. therefore, decline to interfere with the order of the AO. This ground is dismissed accordingly, both on merits and legality.
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