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2016 (8) TMI 1575 - ITAT KOLKATA
Rectification u/s 154 - credit for TDS - whether the credit for TDS was available for AY 2004-05 or 2005-06 was a debatable issue? - HELD THAT:- As submitted that even though the TDS amount in question was pertaining to the commission income accrued to the assessee in financial year 2003-04 relevant to assessment year 2004-05 as mentioned in the relevant TDS certificate, the said commission income was actually offered by the assessee in the year under consideration, i.e. AY 2005-06 on receipt basis and the assessee, therefore, was entitled to claim credit for the same in AY 2005-06.
In support of this contention, he has relied, inter alia, on the Third Member decision of Chandigarh Bench of this ITAT in the case of Shri Pardeep Kumar Dhir [2007 (4) TMI 294 - ITAT CHANDIGARH-B] - In the said case, the issue referred to Third member under section 255(4) was whether the credit for the tax deducted at source in the previous year is to be allowed in the assessment year relevant to the year in which deduction has been made or in the year in which the income is assessable to tax. It is thus clear that the similar issue as involved in the present case was referred to Third Member in the case of Shri Pardeep Kumar Dhir (supra) as there was a difference of opinion between the two Members of the Division Bench of the Tribunal on this issue and the fact that there was such a difference of opinion between the two Members of the Tribunal is sufficient to show that this issue was highly debatable on which two opinions were possible.
Therefore, find myself in agreement with the CIT(Appeals) that the rectification on such debatable issue as sought by the assessee by way of application for rectification was beyond the scope of section 154. The impugned order of the id. CIT(Appeals) on this issue is, therefore, upheld dismissing the appeal of the assessee.
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2016 (8) TMI 1574 - ITAT MUMBAI
Sale of carbon credits - whether sale of carbon credits is not derived from eligible business of generation of power? - whether carbon credits has direct nexus between activity of assessee and income generated for it? - HELD THAT:- As in case of DCIT vs. Kalpataru Power Transmission Ltd. [2016 (4) TMI 916 - ITAT AHMEDABAD] wherein assessee was engaged in business of power generation through biomass power generation unit. It received Carbon Emission Reduction Certificates (CERs) popularly known as ‘Carbon Credits’ for activity of using agricultural waste as fuel. Assessee received certain amount from transfer of carbon credit which was shown as capital receipt. Assessing Officer treated said receipt as business income and brought it to tax.
CIT(A) following the decision in case of My Home Power Ltd. [2012 (11) TMI 288 - ITAT HYDERABAD] held that the receipt on sale of carbon credits was a capital receipt and deleted the addition. On appeal, Tribunal observed that assessee was engaged in the business of power generation through biomass power generation unit. It received Carbon Emission Reduction Certificates (CERs) popularly known as ‘Carbon Credits’ for activity of using agricultural waste as fuel. Assessee received certain amount from transfer of carbon credit which was shown as capital receipt.
AO treated said receipt as business income and brought it to tax. Whether since carbon credit was not an offshoot of business but an offshoot of environmental concerns, amount received on transfer of carbon credit had no element of profit or gain and, thus, it could not be brought to tax. Ld. Authorized Representative fairly agree to restore the matter to be decided in its facts and circumstances. So, issue is restored to Assessing Officer with a direction to decide the same as per fact and law after providing due opportunity of being heard to assessee.
Additional depreciation for wind mills u/s. 32(1)(iia) - HELD THAT:- As in case of CIT vs. VTM Ltd. [2009 (9) TMI 35 - MADRAS HIGH COURT] examined the same issue and dismissed the revenue appeal seeking to disallow additional depreciation u/s.32(1)(iia) of the Act with respect of setting up a windmill by a manufacturer of textile goods. Thus, following the ratio of VMT Ltd.(supra) issue has been decided in favour of assessee with regard to addition depreciation u/s.32(1)(iia) of the Act. Hon’ble Supreme Court in case of CST vs. M.P. Electricity Board (1968 (11) TMI 85 - SUPREME COURT] held that the electricity generated by an assessee is an article or goods. The explanation to amendments (memorandum) as inserted by Finance Act, 2012 as relied upon by CIT(A) cannot be said to overrule and earlier decision of Hon’ble High Court.
An amendment that has prospective application cannot be said to retrospectively take away the rights of an assessee qua it’s explanatory notes. Where there is no ambiguity in the Section, there is no warrant for resort to external aids of interpretation namely the notes on clauses and the memorandum explaining its provisions. In the light of decision of VTM Ltd.(supra) with regard to claim of additional depreciation u/s.32(1)(iia) for setting up a windmill, wherein material being sole decision by Hon’ble High Court on the matter, we hold that additional depreciation should be allowed.
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2016 (8) TMI 1573 - ITAT DELHI
Addition on account of commission paid to directors by the assessee company - HELD THAT:- We have perused the records placed before us and orders referred and relied upon by the Ld. AR in assessee’s own case for assessment year 2005-06 and 2006-07. It is observed that the similar payment has been made to the same employee directors during those preceding years. The facts and circumstances being similar and identical to the year under consideration we respectfully following the decision of the coordinate bench of this tribunal in assessee’s own case for the previous assessment years hold that the payment of commission was justified and is allowable under section 36 (1) (iii) .
Addition made u/s 14 A read with Rule 8D on account of expenditure incurred for incurring dividend, being exempt income - HELD THAT:- It is undisputed facts that Rule 8D is not retrospective and therefore is applicable from assessment year 2008-09. We accordingly set aside this issue to the Ld. AO for calculating the disallowance under section 14 A of the act by applying the ratio laid down by the Hon’ble jurisdictional High Court in the case of M/s Maxopp Investment Ltd [2011 (11) TMI 267 - DELHI HIGH COURT]
Depreciation at the rate of 60% on addition of computer peripherals, printers, UPS etc - AO and CIT (A) allowed the depreciation @ 15% on the basis that the UPS is not an integral part of the computer as the computer can function without these peripherals - HELD THAT:- As decided in own case [2014 (7) TMI 1314 - ITAT DELHI] since the expenditure is with regard to the computer peripherals, printers, UPS which cannot be used stand alone, therefore, in view of the decision relied upon by the appellant, I agree that in the facts and circumstances of the appellant's case, he is entitled for depreciation @ 60%.
Allowability of foreign travel and conveyance expenses - AR submits that the details of the foreign travel expenses have been provided in the paper book which include the provision for dividend - HELD THAT:- We agree with the contentions of the Ld. AR that the provision for dividend has been added back in the computation. Therefore we are inclined to modify the directions issued by the Ld. CIT (A) that the Ld. AO may allow the same as an expenses.
TDS u/s 195 - No deduction of TDS on payment of external services and recruitment expenses - HELD THAT:- In the instant case the assessing officer has not discussed any factual aspect in respect of the payment made by the assessee to the non-resident. The Ld. AR has submitted before us the MOU dated 10/07/2006 entered into by the assessee with the non-resident. We accordingly remand the issue to the Ld. AO for verifying the details as submitted by the assessee before the Ld. CIT (A) and to examine the issue in the light of the decision by Hon’ble High Court in the case of CIT versus EON Technology Private Limited [2011 (11) TMI 20 - DELHI HIGH COURT] Accordingly this issue raised by the assessee stands allowed for statistical purposes.
Bad debt and advances reimbursed - bad debts being outstanding for more than a year and a recovery was remote - assessee claimed the said amount as bad debt under section 36 (1) (vii) - AO rejected assessee’s contentions as the companies were well-known group and there was no reason for the bad debts to become bad - HELD THAT:- During assessment proceedings the Ld. AO was well possessed with these details, to prove that the debts were written off. A similar issue arose before Hon’ble Supreme Court in the case of M/s Vijaya Bank versus CIT and Anr. [2010 (4) TMI 46 - SUPREME COURT] wherein the Hon’ble court has held that an assessee debits the amount of bad debts to the profit and loss account and credits the said account it would constitute a write-off of actual bad. In the light of the ratio laid down by Hon’ble Supreme Court in the case of M/s Vijaya bank Vs.CIT (supra) the claim of bad debts stands allowed.
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2016 (8) TMI 1572 - ITAT CHENNAI
TP Adjustment - whether the CUP method to be followed or TNMM to be followed to determine the ALP of assessee’s case? - HELD THAT:- As relying on Knorr Bremsc India Pvt Ltd. [2012 (11) TMI 165 - ITAT DELHI] in view of our findings on the questions of law in the assessee's appeal, it would be necessary for the authorities to consider this matter afresh in the light of those observations as well. It would be necessary upon remand for the authorities under the Act to consider whether the transactions ought to be separately benchmarked or whether the transactional net margin method ought to be adopted in respect of the same as well.
In the result, the appeals of the Revenue are allowed for statistical purposes.
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2016 (8) TMI 1571 - ITAT MUMBAI
Deduction u/s.10(38) for gains/loss on sale of investment - assessee company is engaged in the insurance business and that Computation of its Income from insurance business is to be governed as per special section 44 of the Income Tax Act r.w.Rule 5 contained in the First Schedule - HELD THAT:- It is pointed out that in Assessment Year 2004-05 the Tribunal [2013 (10) TMI 1130 - ITAT MUMBAI] followed its earlier decision [2012 (11) TMI 587 - ITAT MUMBAI] and allowed the claim of the assessee. Similarly, in Assessment Years 2005-06 and 2006- 07, the Tribunal has upheld its earlier decisions vide order. It has also been pointed out that in Assessment Year 2007-08 also, the Tribunal [2015 (2) TMI 1372 - ITAT MUMBAI] has decided the issue in favour of the assessee. Apart therefrom, the learned representative for the assessee pointed out that the view of the Tribunal is also in consonance with the clarification issued by CBDT vide Circular dated 21.02.2006, which has indeed been referred by the CIT(A) in the impugned order. - Decided in favour of assessee.
Exemption u/s 10(15) and 10(34/35) - CIT(A) allowed the plea of assessee by referring to the clarification issued by CBDT dated 21.02.2006 whereby it is clarified that exemption available to any other assessee under any of the clauses of Sec. 10 of the Act shall also be made available to a person carrying on non-life insurance business - HELD THAT:- As decision of Tribunal in the case of assessee for Assessment Year 2007-08 [2015 (2) TMI 1372 - ITAT MUMBAI] wherein similar issue has been decided in favour of the assessee following precedents in the case of ICICI Prudential Insurance Co. Ltd. [2012 (11) TMI 13 - ITAT MUMBAI] and New India Assurance Co. Ltd. [1967 (10) TMI 16 - BOMBAY HIGH COURT]
Disallowance of expenses incurred on performance linked incentive for employees, operating expenses like advertisement, legal and professional fees, courier charges, repairs and maintenance, etc. - According to the Assessing Officer, assessee was following mercantile system of accounting and since the impugned claim was merely a provision for expenses, the same was not allowable - AO also noticed that out of the aforesaid total expenditure, tax has not been deducted at source with respect to expenditure and, therefore, the said amount was also hit by Sec. 40(a)(ia) - HELD THAT:- We find that before the CIT(A), assessee pointed out that expenses representing items of communication expenses, employees remuneration & welfare benefits, interest and bank charges, printing & stationery and travel & conveyance expenses are not liable for deduction of tax at source except employee’s remuneration & welfare benefits, which have been duly subjected to deduction of tax at source. Additionally, it was pointed out that on the balance of expenditure assessee had deducted tax at source and paid by the due date, i.e., 31.5.2008. In this manner, assessee sought to point out that there was no justification for invoking Sec. 40(a)(ia) of the Act with respect to the entirety of expenditure of ₹ 39,71,60,000/-. In this context, we find that the CIT(A) has confirmed the disallowance with respect to Miscellaneous expenses and Rent, Rates & Taxes amounting to ₹ 6,27,01,000/-. We find that the said finding of CIT(A) is quite contrary to the plea of assessee that the requisite tax has been deducted and paid by 31.5.2008. At the time of hearing, the learned representative pointed out that the expenses which were required to be subjected to tax at source, the aforesaid plea of the assessee holds good and that even if the dates of deposit of TDS are required to be verified by the Assessing Officer, it may be so directed.
We find no reason to interfere with the decision of CIT(A) so far as it involves the deletion of the addition to the extent of ₹ 33,45,59,000/-. Insofar as the sustenance of disallowance of ₹ 6,27,01,000/- is concerned, we deem it fit and proper to direct the Assessing Officer to verify the plea of assessee that the corresponding tax deductible on such expenses have been deducted and paid by 31.5.2008, as contended by the assessee. For the limited purpose of verifying the aforesaid aspect, the matter is being remanded back to the file of Assessing Officer. The Assessing Officer shall examine the details put forth by assessee in this regard and thereafter re-determine the disallowance u/s 40(a)(ia) of the Act, if any, in the context of claim of expenses of ₹ 6,27,01,000/- as per law.
Disallowance u/s 14A - As per assessee, the disallowance envisaged u/s 14A of the Act is not applicable in the case of an assessee carrying on insurance business - HELD THAT:- It is also brought on record that the decision of Tribunal of Assessment Year 2004-05 [2013 (10) TMI 1130 - ITAT MUMBAI] has been further followed by the Tribunal in the case of assessee for Assessment Years 2005-06 and 2006-07 vide order dated .Subsequently, in Assessment Year 2007-08 also [2015 (2) TMI 1372 - ITAT MUMBAI] similar view has been affirmed by the Tribunal. Following the aforesaid precedents, we approve stand of the assessee that provisions of Sec. 14A of the Act are not applicable to an assessment made in terms of Sec. 44 of the Act read with First Schedule of the Act in relation to income of non-life insurance business. Thus, on this aspect, assessee succeeds.
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2016 (8) TMI 1570 - MADRAS HIGH COURT
Payment of tax with interest - petitioner has admittedly paid the tax amount, and the balance amount is relating to interest only - Since the petitioner has shown taxable income and paid tax thereon, he is entitled to get the benefit of waiver - Application before the first respondent/Chief Commissioner of Income Tax, Tiruchirapalli till date has not yet been considered - HELD THAT:- Considering the fact that original assessment order was passed on 30.01.2015 and in compliance of the same, the petitioner has already paid the tax and moved an application on 06.04.2015, this Court, in the interest of justice of both parties, directs the Officer, who is given full charge of the Chief Commissioner to Income Tax, to consider the application filed by the petitioner, on 06.04.2015, on merits and in accordance with law, within a period of four months from the date of receipt of a copy of this order. Till then, the impugned order shall be kept in abeyance.
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2016 (8) TMI 1569 - ITAT CHENNAI
Exemption u/s 14A r.w.r. 8D - interest paid by the assessee on the borrowed funds - HELD THAT:- If there is any direct nexus with the borrowed funds then the interest paid by the assessee on the borrowed funds has to be disallowed in view of Rule 8D(2)(i) of the Act. If the expenditure/interest is not relatable to the income which was exempted from taxation, then disallowance has to be computed under sub-clause(2)(ii) of Rule 8D. It is also necessary to examine the details of the investment made from the first day of the financial year and the last day of the financial year as found in the Balance Sheet for the purpose of computing the aggregate expenditure under third limb of Rule 8D(2). These exercises were not done either by the Assessing Officer or the CIT(A).
The investment made in Shriram Transport Finance Company Ltd and Shriram City Union Finance Ltd. was claimed to be investment in the subsidiary companies. It is not known how Shriram Transport Finance Company Ltd and Shriram City Union Finance Ltd. are sister concerns of the assessee-company. Merely because some of the Directors are common in both the companies, that cannot be a reason to hold that the companies in which the assessee invested are subsidiary/holding companies.
Tribunal is of the considered opinion that the shareholding pattern of the assessee-company and the companies in which investments were made has to be examined to decide whether the investment was made by the assessee in the subsidiary/holding companies. These facts were not apparently examined by the lower authorities. Moreover, the availability of liquid funds with the assessee on the date of the investment also needs to be examined. Since these factual aspects are not examined by any of the lower authorities, this Tribunal is of the considered opinion that the matter needs to be reexamined. Accordingly, the orders of the lower authorities are set aside and the entire disallowance made by the Assessing Officer u/s 14A r.w. Rule 8D is remitted back to the file of the Assessing Officer.
TDS u/s 194C - Addition u/s 40(a)(ia) - Proof of recipient/deductee disclosing the receipt in the return of income and paid taxes thereon - HELD THAT:- Under the scheme of the Income-tax Act, 1961, the assessee has to deduct tax only at the time of payment or giving credit, therefore, the amount which was already paid or given credit and remains ‘payable’ is also subjected to disallowance u/s 40(a)(ia) of the Act. Therefore, we are unable to uphold the order of the CIT(A) on this issue. Accordingly, the order of the CIT(A) is set aside and that of the Assessing Officer is restored.
Now the ld. Counsel submits that the recipient/deductee admitted the income and paid the taxes. This fact is not verified by any of the lower authorities. This Tribunal is of the considered opinion that if the recipient/deductee disclosed the receipt in the return of income and paid taxes, there is no need for further disallowance. However, the matter needs to be verified by the Assessing Officer. Accordingly, the orders of the lower authorities are set aside and the issue of disallowance u/s 40(a)(ia) of the Act is remitted back to the file of the Assessing Officer. The Assessing Officer shall verify whether the deductee/recipient of the amounts disclosed the same in their return of income and paid the taxes. The Assessing Officer thereafter decide the same in accordance with law after giving a reasonable opportunity to the assessee.
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2016 (8) TMI 1568 - ITAT MUMBAI
Disallowance of Depreciation - documentary evidence in support of purchase of two trucks not given - Commissioner (Appeals), refused to take cognizance of the documentary evidences submitted before him, stating that the assessee has not filed any application under rule 46A of the I.T. Rule, 1963 - Whether CIT(A) erred in rejecting the claim when depreciation is specifically shown in final accounts of company whose accounts have been audited? - HELD THAT:- If the assessee had produced certain documentary evidence before the first appellate authority he should have considered the same instead of rejecting them purely on technical reasons. If the assessee had not complied strictly to the provisions of rule 46A, learned Commissioner (Appeals) could have pointed out the same to the assessee for enabling him to submit the additional evidences complying to the provision of rule 46A.
From the photocopy of the documentary evidence produced before us in the from of a paper book it appears, the purchase invoice of two trucks are in the name of assessee. Similarly, R.C. Book also bear the name of the assessee. Further, certificate issued by the financing company G.E. Capital indicates that the assessee has repaid the amount to the finance company and no dues against the assessee is outstanding. These documentary evidences prima–facie proves assessee’s ownership over the two trucks.
Admittedly, these are only photocopy submitted by the assessee. Therefore, to prove the authenticity of documentary evidences submitted before the Departmental Authorities, it is essential for the assessee to produce the original purchase invoice, R.C. book, insurance document, etc., for verification to conclusively establish its ownership over the two trucks. For enabling the assessee to do so, we restore the matter back to the file of the Assessing Officer for production of the original purchase invoice, R.C. book, insurance documents, etc., which could prove assessee’s ownership over the two trucks. If on verification assessee’s claim is found to be correct, the Assessing Officer must allow depreciation to the assessee for the two trucks. Assessee’s appeal is allowed for statistical purpose
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2016 (8) TMI 1567 - BOMBAY HIGH COURT
Maintainability of appeal low tax effect - HELD THAT:- As none of the appeals have a tax effect of ₹ 20,00,000/- or more, Ms. Kanani, learned Counsel appearing for the Revenue does not press any of the Appeals.
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2016 (8) TMI 1566 - BOMBAY HIGH COURT
Suit for claiming amount alongwith interest from the date of the suit till payment - allegation is that defendant committed a breach of an understanding with the original plaintiff thereby causing loss to the plaintiff to the extent of the amount claimed - Whether the plaintiff proves that the right of defendant No. 1 in the insurance policy, under which the security given by the plaintiff to defendant No. 1 were insured with the New India Assurance Company Limited, stood vested and/or subrogated in favour of the original plaintiff and the amounts payable, if any, under the insurance policy by the Insurance Company is payable to the original plaintiff? - HELD THAT:- When parties agree to a set of things then merely marking on the document "without prejudice" would be of no consequence. However, if the material indicates that the negotiations are still in progress and there is no finality on what was contained in the document marked "without prejudice", then the document marked "without prejudice" cannot be considered without the consent of both the parties." - the meaning of without prejudice is if the terms proposed in the letter are not accepted, the position of the writer of the letter does not get prejudiced or if the terms are accepted, the complete contract is established. This means that when the plaintiff wrote letter dated 16.4.2003 and later, he wanted to safeguard his position. The defendant, from the correspondence at Exh. P-7 to P-12, does not appear to have accepted the proposal of the plaintiff and therefore, in my view, there is no binding agreement between the plaintiff and the defendant that the defendant will prosecute the suit against the insurance company. The answer to issue No. 1 therefore, is in the negative.
Whether the defendant No. 1 proves that one time settlement entered into between the original plaintiff and defendant No. 1 was comprehensive and no amount is due or payable by defendant No. 1 to the plaintiff? - HELD THAT:- The counsel for the plaintiff agreed that the OTS with the defendant was a comprehensive settlement and the agreement to continue to sue insurance company as alleged by the plaintiff came up only after the one time settlement was entered into. In view thereof and considering the correspondence which are part of Exhibit P-6, Exhibit P-7 and Exhibit P-12, the answer to issue, should be in the affirmative.
Whether the plaintiff proves that, the plaintiff is entitled to a decree in the sum of ₹ 6,55,70,725.95 together with interest thereon at 15% per annum from the date of filing of the suit until payment and/or realization? - HELD THAT:- The issue is also answered in the negative.
The suit is dismissed.
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2016 (8) TMI 1565 - ITAT PUNE
Revision u/s 263 by CIT - Validity of assessment framed u/s 143(3) r.w.s. 147/148 - As per CIT AO failed to conduct proper enquiries/verifications/examinations in respect of trading results declared in exclusion to extraordinary income declared by way of write back of certain credits - HELD THAT:- A combined reading of Section 263 and Section 147 would clearly suggest that revisionary powers under S. 263 cannot be read in a manner to expand the scope of section 147 of the Act. S. 263 read in the context of reassessment proceedings cannot be exercised unless there is a cause available on objective facts to demonstrate that detailed probe or enquiries were warranted to encompass escapement of other possible income in a given set of facts. Consequently, the alleged inaction of the AO on the issue of correctness of trading results in reassessment proceedings is not fatal or erroneous for the purposes of section 263 of the Act. Hence, the reassessment order passed within the four corner of its authority cannot be dubbed as erroneous per se and is thus is not susceptible to review contemplated under S. 263 of the Act.
Lack of enquiry on unconnected issues in a reassessment proceeding - We notice that the Commissioner has merely entertained strong suspicion on the bona-fide of trading results owing to huge losses and observed that in the absence of income reported on account of credit towards write back of certain amounts under section 41(1), the assessee has declared trading losses on a substantial turnover which ought not to have been accepted without embarking upon a detailed enquiry. The show-cause action of the Commissioner under section 263 seeking to upset the reassessment order is thus clearly actuated in the realm of such suspicion.
As noted earlier, indulging in roving enquiry u/s 147 on unconnected issues is a case of overreaching of powers which is not permissible in law. AO in his quasi judicial capacity has accepted the trading results. A mere different perception of Commissioner founded upon suspicion on the issue is not sufficient to legitimize jurisdiction under section 263. It would be farfetched to presume that the purported substantial turnover per se would necessarily give rise to presumption of profits thereon. The allegation of reassessment order being erroneous by the Commissioner is purely founded upon suspicion and surmises on losses declared. The exercise of revisionary power based on such suspicion is in our view not permissible in law.
Certain figures of income as an amount written back does not tally with corresponding breakup submitted in the course of assessment proceedings - The income declared by the assessee for the impugned assessment year 2008-09 is higher than the income given in the assessment year 2007-08 as an amount written back under section 41(1) of the Act. Apparently, no prejudice has thus caused to the interest of Revenue by declaring higher income compared to what was provided in the course of assessment in the earlier year. The condition precedent for exercise of powers under S. 263 is thus sorely missing. Hence, we fail to visualize any rationale in this Ground set out by the Commissioner for invoking revisionary powers.
A higher remission by a unilateral act to the prejudice of the Assessee can not be ordinarily forced. Therefore, this ground for invoking section 263 is also not sustainable in law - Decided in favour of assessee.
AO has not verified the write off amount during the course of assessment proceedings - A.Y. 2009-10 - Hon’ble Supreme Court in the case of T.R.F. Ltd. [2010 (2) TMI 211 - SUPREME COURT] has held that the assessee need not prove the debts to be irrecoverable under section 36(1)(vii) of the Act. It is sufficient if the debts incidental to business are written off for the purpose of making claims. In the light of the aforesaid decision of the Hon’ble Supreme Court in the case of T.R.F. Ltd. vs. CIT (supra), it was not unreasonable for the Assessing Officer to accept the debts written off. Further, the Commissioner has not brought on record any good reason to hold to the contrary. In this view of the matter, we do not see any error committed by the Assessing Officer in admitting amounts write off towards bad debts and grant deduction of the same with similar amounts written back. In the light of aforesaid discussion, the action of the Commissioner under section 263 is outside the bounds of law and thus cannot be sustained. In consequence, the order passed u/s 263 for the assessment year 2009-10 dated 28.03.2014 requires to be set aside and quashed.
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2016 (8) TMI 1564 - SUPREME COURT
Dishonor of Cheque - cross-examination of witnesses - applicability of principle of magnanimity - recording of statements of the accused persons Under Section 313 Code of Criminal Procedure - seeking recall of the witnesses Under Section 311 read with Section 231(2) Code of Criminal Procedure - HELD THAT:- The grounds urged before the trial court fundamentally pertain to illness of the counsel who was engaged on behalf of the defence and his inability to put questions with regard to weapons mentioned in the FIR and the weapons that are referred to in the evidence of the witnesses. That apart, it has been urged that certain suggestions could not be given. The marrow of the grounds relates to the illness of the counsel. It needs to be stated that the learned trial Judge who had the occasion to observe the conduct of the witnesses and the proceedings in the trial, has clearly held that recalling of the witnesses were not necessary for just decision of the case.
The High Court, as we notice, has referred to certain authorities and distinguished the decision in Shiv Kumar Yadav [2015 (9) TMI 1702 - SUPREME COURT] and Fatehsinh Mohansinh Chauhan [2006 (8) TMI 684 - SUPREME COURT]. The High Court has opined that the court has to be magnanimous in permitting mistakes to be rectified, more so, when the prosecution was permitted to lead additional evidences by invoking the provisions Under Section 311 Code of Criminal Procedure. The High Court has also noticed that the accused persons are in prison and, therefore, it should be justified to allow the recall of witnesses.
Recall of some witnesses by the prosecution at one point of time, can never be ground to entertain a petition by the defence though no acceptable ground is made out. It is not an arithmetical distribution. This kind of reasoning can be dangerous. In the case at hand, the prosecution had examined all the witnesses. The statements of all the accused persons, that is 148 in number, had been recorded Under Section 313 Code of Criminal Procedure. The defence had examined 15 witnesses. The foundation for recall, as is evincible from the applications filed, does not even remotely make out a case that such recalling is necessary for just decision of the case or to arrive at the truth. The singular ground which prominently comes to surface is that the earlier counsel who was engaged by the defence had not put some questions and failed to put some questions and give certain suggestions. It has come on record that number of lawyers were engaged by the defence - There may be an occasion when such a ground may weigh with the court, but definitely the instant case does not arouse the judicial conscience within the established norms of Section 311 Code of Criminal Procedure for exercise of such jurisdiction. It is noticeable that the High Court has been persuaded by the submission that recalling of witnesses and their cross-examination would not take much time and that apart, the cross-examination could be restricted to certain aspects.
The exercise of power Under Section 311 Code of Criminal Procedure can be sought to be invoked either by the prosecution or by the accused persons or by the Court itself. The High Court has been moved by the ground that the accused persons are in the custody and the concept of speedy trial is not nullified and no prejudice is caused, and, therefore, the principle of magnanimity should apply - The cry of the collective may not be uttered in decibels which is physically audible in the court premises, but the Court has to remain sensitive to such silent cries and the agonies, for the society seeks justice. Therefore, a balance has to be struck.
Appeal allowed - decided in favor of appellant.
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2016 (8) TMI 1563 - ITAT AHMEDABAD
Addition as unexplained capital - assessee(s) contends that both these parties were alleged to be paper-company of M/s. M.D. Patel Group. This information was revealed by survey action on one Shri Pankaj Danawala and M/s. M.D. Patel Group A statement at bar is made by the assessee Shri Hemant Jadia, Advocate to the effect that M/s. M.D. Patel Group has owned up the transactions, investments and income from all the front companies, including these two assessee - HELD THAT:- As statement at bar is made by Shri Hemant Jadia, Advocate of Gujarat High Court and some of the orders of the Bombay High Court are on the record in respect of purported litigation between M/s. M.D. Patel Group and Union of India. The facts about Settlement Commission owning up of the income by the kingpin M/s. M.D. Patel Group etc. are not on the record. In view thereof these appeals are set aside and restored back to the file of the Assessing Officer to call the assessee to demonstrate that the subject matter raised in these appeals is covered by the alleged settlement petition of M/s. M.D. Patel Group and the result thereof. It is made clear that the AO will verify necessary records and the assessees will fully co-operate in this matter. In case of non-cooperation by the assessees, the ld. AO will be at liberty to take appropriate view in accordance with law. Accordingly, both the appeals are allowed for statistical purposes.
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2016 (8) TMI 1562 - SC ORDER
Goodwill arising on succession - capital balance accounted as goodwill - capital gain computation - transfer u/s 2(47) - interpretation of Section 47 (xiv) - AO found that the goodwill was never created in the books of the proprietary concern and therefore it never became an asset of the sole proprietary concern which was taken over on such succession also confirmed by CIT-A and ITAT - HC said we do not think that the Tribunal's view and in the backdrop of the peculiar facts can be termed as perverse or vitiated by any error of law apparent on the face of the record - HELD THAT:- Application for exemption from filing certified copy of the impugned order is allowed.
We do not find any legal and valid ground for interference. The Special Leave Petition is dismissed.
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2016 (8) TMI 1561 - ITAT MUMBAI
Amortization/depreciation on Goodwill - Goodwill consequent to a scheme of amalgamation - As per revenue goodwill is depreciable u/s 32 only if any consideration is paid for its acquisition and the assessee has not earmarked any specific amount towards such goodwill at the time of amalgamation - CIT-A Allowed claim - plea of the Revenue is that in the present case assessee has not paid any consideration for acquisition of goodwill at the time of amalgamation and, therefore, the claim of depreciation has been wrongly allowed - HELD THAT:- Quite clearly, in terms of scheme of amalgamation, the assets and liabilities of GIL stood transferred to the assessee. Further, the deficit in the value of assets over the value of liabilities of GIL taken over after adjusting the aggregate value of the equity shares issued to the members of GIL, was treated as goodwill in the books of the assessee-company. In view of the authoritative pronouncement of the Hon'ble Supreme Court in the case of Smifs Securities Ltd. [2012 (8) TMI 713 - SUPREME COURT], it cannot be denied that ‘goodwill’ is an asset qualifying for depreciation u/s 32(1)(ii) .
The plea of the Revenue that no amount has been paid for its acquisition does not defeat the claim of depreciation allowed by CIT(A). Notably, ‘goodwill’ has arisen in the present case consequent to a scheme of amalgamation approved by the Hon'ble High Court and so was the situation in the case of Smifs Securities Ltd. (supra) also. Thus we affirm the ultimate direction of the CIT(A) to allow depreciation on goodwill as per the Income Tax Rules, 1962 by working out the figure of WDV of goodwill for the year under consideration. - Decided against revenue.
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2016 (8) TMI 1560 - ITAT BANGALORE
Capital gain - FMV determination - JDA - value of the sale consideration of the land as on the date of Joint Development Agreement (‘JDA’) - whether transfer of the land under JDA constitutes transfer as per the provisions of Section 2(47)(v) r.ws. 53A of the Transfer of Property Act? - CIT-A held that the deemed consideration of the land should be adopted as fair market value of the built up area to be received by the assessee as on the date of JDA and based on the Govt. records - HELD THAT:- Identical issue decided in SMT. SAROJINI M KUSHE [2016 (4) TMI 1326 - ITAT BANGALORE] as decided that because at the time of signing JDA the capital gain has to be computed only on the guidance value of the land. Even otherwise, if any capital gains to be accrued in future in favour of assessee after receiving the possession of the property. Certainly that would also be subject to capital gains. Therefore, in our final conclusion valuation of the capital gain should be appropriate to adopt the FMV/asset as deemed consideration, but not cost of the construction. - Decided against revenue.
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2016 (8) TMI 1559 - KERALA HIGH COURT
Release from preventive detention - breach of the constitutional guarantees - detention has not been served on the detenu - HELD THAT:- Where declaration of law has been made by the Supreme Court of India it is the law of the land in terms of Article 141 of the Constitution of India. Therefore, the very many principles which apply on terms of the judgments of the Supreme Court are to govern the effectuation of the protective covenant available to the detenu under the preventive detention laws in terms of Sub-Article 5 of Article 22 of the Constitution of India.
It is the law laid down by the Apex Court that representation received but not disposed before the case is referred to the COFEPOSA Advisory Board has necessarily to be placed before the Advisory Board and cannot be independently disposed of by the detaining authority during the pendency of the matter with the Advisory Board - the continued detention of the person covered by Ext. P1 order becomes impermissible on the basis of the provisions of the Constitution and the laws. Resultantly, Ext. P1 is hereby declared as null and void.
Petition allowed.
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2016 (8) TMI 1558 - ITAT MUMBAI
Levy of penalty u/s 271E and 271D - violation of the provisions of section 269SS and 269T for accepting and repaying loan in cash from Shri Abhijit A Sheth, Director of the company - whether no satisfaction has been recorded by the AO? - HELD THAT:- Hon'ble Apex Court in the case of CIT vs. Jai Laxmi Rice Mills [2015 (11) TMI 1453 - SUPREME COURT] dealing with the levy of penalty under section 271D of the Act, has held that if there is no satisfaction recorded in the order of assessment regarding initiation of penalty proceedings under section 271D of the Act, then no penalty thereunder could be levied.
Admittedly, by both AO in the penalty orders and learned CIT(A) in the impugned orders, no satisfaction for initiation of penalty proceedings under sections 271D and 271E of the Act has been recorded in the orders of assessment. In this factual matrix of the case and respectfully following the decision in the case of Jai Laxmi Rice Mills (supra), we hold that since admittedly no satisfaction has been recorded for initiating penalty proceedings under sections 271D and 271E of the Act in the case on hand in the order of assessment for A.Y. 2000-01, therefore no penalty thereunder could be levied. In this view of the matter we cancel the penalty levied under sections 271D and 271E of the Act for A.Y. 2000-01 - Decided in favour of assessee.
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2016 (8) TMI 1557 - ITAT AMRITSAR
Exemption u/s 11 - refusal to grant registration u/s 12AA - HELD THAT:- We find that the trust was created vide trust deed dated 26 Sep. 2014 and the objects of the trust deed of the society are charitable in nature. At the time of granting registration to an assessee the learned CIT (Exemption) has to only examine the objects for which the society has been registered.
The provisions of section 12AA regarding registration are very clear which clearly states that at the time of registration the Commissioner has to satisfy himself about the objects of Trust, and genuineness of its activities.
We find that in the next year the learned CIT(Exemption) on the basis of same trust deed has allowed registration to the assessee, therefore, refusal to grant registration in the present year is not justified - we direct the CIT(Exemption) to grant registration to the assessee u/s 12AA of the Act.
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2016 (8) TMI 1556 - ITAT KOLKATA
Penalty u/s. 271(1)(c) - Defective notice u/s 274 - assessee argued that AO had merely ticked the portion of concealment of income or furnishing of inaccurate particulars of income without making specific charge on the assessee to respond - HELD THAT:- A the show cause notice u/s. 274 of the Act is defective as it does not spell out the grounds on which the penalty is sought to be imposed. Following the decision of MANJUNATHA COTTON AND GINNING FACTORY, MANJUNATH GINNING AND PRESSING, VEERABHADRAPPA SANGAPPA AND CO., V.S. LAD AND SONS, G.M. EXPORT [2013 (7) TMI 620 - KARNATAKA HIGH COURT] which has been followed in the aforesaid tribunal decisions, we hold that the order imposing penalty in the assessment year 2007-08 have to be held as invalid and consequently penalty imposed is cancelled.
For the reasons given above, we hold that levy of penalty in the present case cannot be sustained. We therefore cancel the orders imposing penalty on the Assessee and allow the appeal by the Assessee
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