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Showing 61 to 80 of 1662 Records
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2016 (9) TMI 1608 - ITAT MUMBAI
Disallowance of "Mark to Market" loss on revaluation of forward exchange contracts which was outstanding as on the date of balance sheet, treating the same as notional loss - business to hedge against the forex loss - CIT(A) held it not notional loss and therefore allowable - assessee argued that more than 90% of the assessee’s business is deriving income from exports of diamonds and most of the purchases and sales were made in foreign currency - HELD THAT:- Considering the substantial foreign currency exposure and due to substantial fluctuation in foreign currency rates, the assessee entered into the forward contracts (FCs) with the Banks as integral part of the export import business with the aim to hedge and safeguard against the foreign exchange fluctuation of the US $ vis-à-vis the Indian currency, from time to time.
From the details filed by the assessee it is clear that there was huge volatility in exchange rate of US Dollar viz. Rupee from April 2008 to March 2009. US Dollar had registered an appreciation from ₹ 39.7650 to ₹ 51.9700 during the year as is evident from the yearly graph plotting the volatility filed before us. We find that the assessee has hedge the underlying exposure in foreign currency and as such, the forward contracts entered were for the purpose of the business to hedge against the forex loss.
Assessee has forex exposure on all limbs its business activities. The firm has not entered into the forward contracts with an intention to earn any gain due to fluctuation in foreign currency rate but it is necessary for it to enter into such forward contracts to hedge against foreign exchange rate fluctuation. This is an integral part of the business undertaken by the assessee and incidental to the export and import business. In the absence of such forward contracts, the firm may sustain huge losses.
It becomes essential for the firm to book such forward contracts as a prudent business practices. Further, we find that the assessee is engaged in the business of diamonds export and not in the business of foreign exchange. This is evident from the financial results of the firm. In view of the same, we are of the view that these contracts are nothing but an integral part of its export and import activities and the resultant hedging difference on their revaluation cannot be isolated artificially as notional loss. Hence, we confirm the order of CIT (A) and this issue of revenue’s appeal is dismissed.
Disallowance of additional claim of depreciation - AO disallowed the claim by observing that the assessee is not engaged in manufacturing or production of any article or thing - claim of the assessee is that the business of cutting and polishing of diamonds is manufacturing and production of an article or thing as required for claiming additional depreciation - HELD THAT:- Respectfully following the Coordinate Bench decision in the case of Flawless Diamond India Ltd. [2014 (9) TMI 261 - ITAT MUMBAI] we hold that cutting and polishing of diamonds amounts to manufacturing or production of article or thing as envisaged for the purpose of claiming additional depreciation u/s 32(1) (iia) of the Act. Hence, we confirm the order of the CIT (A) on this issue and dismiss the Revenue’s appeal.
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2016 (9) TMI 1607 - ALLAHABAD HIGH COURT
Addition on mere statement of Assessee given during search and seizure operation - estimating sales and taking out average gross profit of Assessee firm - HELD THAT:- Statement recorded on oath during the course of search and seizure by Authorized Officer may be used in evidence in any proceeding under Act, 1961. When something can be used as an evidence, meaning thereby, it is a relevant material to support a finding to be recorded in a particular manner.
The exposition of law is well established that an admission is the best evidence. It is however, always open to the person making admission to explain the same but whether explanation is credible or not would depend upon the material placed by such person who endeavour to explain his admission. Mere fact that an admission was explained, does not mean that admission will loose its nature of important piece of evidence. Competent authority who has to assess evidence, for valid reasons, can prefer to rely on admission and reject explanation.
As account books having not being found maintained in ordinary course of business and supporting material was also not maintained by Assessee, the alleged explanation of Assessee has rightly been rejected by Assessing Officer and Tribunal has also rightly affirmed the same.
In the present case, Assessing Officer has not made additions merely on such statement. It was looked into the explanation, account books and other material placed before it and then made addition of certain amount which is admittedly less than the amount of disclosure under Section 132(4) of Act, 1961. Tribunal has rightly affirmed the same. - Decided against assessee.
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2016 (9) TMI 1606 - ITAT BANGALORE
Disallowance of interest on account of the loan/advances to its three Directors - Whether direct nexus between the advances given to the Directors and the assessee's own fund developed ? - HELD THAT:- The contention raised by the revenue that own fund has been utilized for the purpose of fixed assets was not accepted by the Hon'ble High Court and it was held that if there are funds available both interest free and loan then the presumption would arise that the investment would be out of interest free fund generated or available with the company if the interest free fund was sufficient to meet the investment.
We are of the view that the judgment in the case of CIT Vs. Reliance Utilities & Power Ltd. [2009 (1) TMI 4 - BOMBAY HIGH COURT] is applicable in the facts of the present case. Accordingly, following the judgment of Hon'ble Bombay High Court (supra), addition made by the Assessing Officer in question is deleted. Appeal of the assessee is allowed.
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2016 (9) TMI 1605 - ITAT MUMBAI
Disallowance u/s 40(a) (ia) - non-deduction of TDS on the expenses of purchase price of computer software - HELD THAT:- The amount paid by the assessee to the supplier for supply of the computer software was neither the price of CD/DVD alone or the computer software alone nor the price of license. It was a combination of all, unless the license was permitting the end user to copy and download the software, CD/DVD, cannot be used by the individual and further relied upon the Explanation 5, inserted vide Finance Act, 2012 in section 9(1)(vi) - CIT(A) further hold that the payment for the license to use the computer software programme constitute royalty for the purpose of the Act - assessee not substantiated as to how the facts of his case are similar to the facts of cases, on which he relied. AO not discussed in its order the contention raised by assessee during the assessment. Similarly the ld CIT(A) has also not discussed in its order, the contents of various clause contained in the buyers agreements of various dates relied by assessee - we restore this ground of appeal to the file of AO to consider all the documents and various decisions of the High Courts and Tribunal and pass speaking order - this ground of appeal is allowed for statistical purpose.
Disallowance of difference of loss on non Export Oriented Unit - apportionment of expenditure incurred on account of salaries, bonus, allowance, contribution to Provided Fund and other funds for welfare of the employees - expenses are common expenses for both non-export oriented unit and export oriented unit as no allocation is for both the units provided by the assessee - HELD THAT:- We have seen that the assessee has furnished the copy of Circular for section 10B deduction in Form No. 56G along with his submission dated 11.01.2011 and further the details submission dated 13.12.2011. Neither the AO nor the CIT(A) discussed all the contention raised in both the letters as well as on the certification u/s 10(b). Moreover, one of the units of the assessee is EOU and the assessee is entitled for deduction u/s 10B. The assessee is entitled for 100% deduction in respect of business derived by him from 100% export oriented undertakings, thus the apportionment of Non-EOU is not in accordance with law, thus we restore this ground of appeal to the file of AO to give the fresh finding after considering the written submission of assessee filed before the Ld CIT(A) and pass appropriate order in accordance with law.
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2016 (9) TMI 1604 - ITAT AMRITSAR
Revision u/s 263 by CIT - AO did not make any disallowance out of deduction under section 80-IC of the Act on proportionate basis - HELD THAT:- We find that the AO during assessment proceedings has duly called for information for job work done from outside and assessee had filed complete details as is apparent from PB-4, 8 & 11 and therefore, the AO did not make any disallowance out of deduction under section 80-IC of the Act on proportionate basis, as he must be in the knowledge that in earlier years similar issue had been decided in favour of the assessee, by the Amritsar Bench of the Tribunal [2011 (6) TMI 865 - ITAT AMRITSAR]
CIT has nowhere held the order to be erroneous or prejudicial to the interests of the Revenue. - Decided in favour of assessee.
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2016 (9) TMI 1603 - ITAT VISAKHAPATNAM
Disallowance of the provision of liquidated damages - AO disallowed this amount by holding that the liability to pay liquidated damages arises only on completion of contract and hence, the same cannot be regarded as crystallized liability in the interregnum periods before the contracts are actually completed or fulfilled - HELD THAT:- We find that the Ld. CIT(A) by following the assessee’s own case [2010 (7) TMI 1201 - ITAT VISAKHAPATNAM] directed the A.O. to delete the addition. We find that the Ld. CIT(A) by considering the entire facts and circumstances of the case and also by following the assessee’s own case directed the A.O. to delete the addition. We find no infirmity in the order passed by the CIT(A). This ground of appeal raised by the revenue is dismissed.
In the result, the appeal filed by the revenue is dismissed.
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2016 (9) TMI 1602 - DELHI HIGH COURT
Principles of natural justice - appointment of Chartered Accountants by the IFCI - report of the Chartered Accountants prepared without giving an opportunity of hearing to the respondents - HELD THAT:- In the opinion of this Court, as the gist of the Chartered Accountants’ report prima facie discloses serious allegations of diversion and rotation of funds of a large amount, the matter needs to be investigated - Consequently, the Serious Fraud Investigation Officer (SFIO) is directed to investigate the prima facie allegations which have been referred to in the gist of the report. Needless to state, the SFIO will give an opportunity of hearing to the respondents as well as the petitioner before submitting its report and suggesting the future course of action.
Learned counsel for the petitioner-IFCI is directed to forward a copy of this order along with the entire paper book to SFIO. The SFIO is directed to submit its report before the next date of hearing - List on 16th February, 2017.
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2016 (9) TMI 1601 - SUPREME COURT
Applicability of the 1997 Amendment to Section 28 of the Contract Act, 1872 - Section 28 applies in its original form or whether it applies after amendment in 1997? - HELD THAT:- What emerges on a reading of the Law Commission Report together with the Statement of Objects and Reasons for the Amendment is that the Amendment does not purport to be either declaratory or clarificatory. It seeks to bring about a substantive change in the law by stating, for the first time, that even where an agreement extinguishes the rights or discharges the liability of any party to an agreement, so as to restrict such party from enforcing his rights on the expiry of a specified period, such agreement would become void to that extent. The Amendment therefore seeks to set aside the distinction made in the case law up to date between agreements which limit the time within which remedies can be availed and agreements which do away with the right altogether in so limiting the time. These are obviously substantive changes in the law which are remedial in nature and cannot have retrospective effect.
It may only be noticed, in passing, that Parliament has to a large extent redressed any grievance that may arise qua bank guarantees in particular, by adding an exception (iii) by an amendment made to Section 28 in 2012 with effect from 18.1.2013. Since we are not directly concerned with this amendment, suffice it to say that stipulations like the present would pass muster after 2013 if the specified period is not less than one year from the date of occurring or non-occurring of a specified event for extinguishment or discharge of a party from liability.
Appeal dismissed.
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2016 (9) TMI 1600 - ITAT CHENNAI
Nature of expenses - logo charges - revenue or capital expenditure - HELD THAT:- As decided in own case [2012 (10) TMI 1001 - ITAT CHENNAI] title of the ‘logo’ in question has not passed over to the assessee. Further, there is no acquisition of assets or part of any capital asset. Usage of logo by the assessee is only for displaying it on the product manufactured i.e. rubber contraceptives. That too, for a limited period as provided in the agreement in lieu of payment @ 2% of the gross sales. When we apply the tenor of the case law above cited to the facts of the instant case, we hold the instant ‘logo’ charges are also revenue expenditure within the meaning of Sec.37 of the Act in the nature of wholly and exclusively for the purpose of assessee’s business.
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2016 (9) TMI 1599 - SUPREME COURT
Investigation Under Section 156(3) of the Code of Criminal Procedure in relation to public servant in the absence of valid sanction - applicability of ANIL KUMAR & ORS. VERSUS M.K AIYAPPA & ANR. [2013 (10) TMI 1428 - SUPREME COURT] and MANHARIBHAI MULJIBHAI KAKADIA & ANR. VERSUS SHAILESHBHAI MOHANBHAI PATEL & ORS. [2012 (10) TMI 979 - SUPREME COURT] - transfer of the post by way of promotion or otherwise to another post - protection Under Section 19(1) of the P.C. Act - HELD THAT:- When a complaint is received, the Court records preliminary evidence of the complainant on the basis of which it satisfies itself as to whether sufficient evidence is placed on record which may prima facie constitute such offence. Likewise, Police report is filed Under Section 173(2) of the Code of Criminal Procedure on the completion of investigation and on perusal thereof, the Magistrate satisfies himself about the facts which constitute such offence. Similar is the position in the third contingency. On this basis, the High Court has opined that since prior sanction is required only at the time of taking cognizance which stage comes much after the investigation is ordered Under Section 156(3) of Code of Criminal Procedure at the stage of giving direction to investigate into the complaint, such a sanction is not required.
The Respondent complainant filed a criminal revision petition there against Under Section 397 read with Section 401 Code of Criminal Procedure before the High Court. The Appellants then made an application seeking their impleadment as Respondents in the revision proceedings so that they could be heard in the matter. On 05.08.2005, the High Court dismissed that application. Against that order, appeal was heard by special leave. This Court set aside the order of the High Court permitting the Appellants to be impleaded in the revision proceedings. The Court took note of the provisions of Code of Criminal Procedure i.e. Section 202, which does not permit an accused person to intervene in the course of inquiry by the Magistrate. However, it was held that even while directing inquiry, the Magistrate applies his judicial mind on the complaint and, therefore, it would amount to taking cognizance of the matter - an order directing further investigation Under Section 156(3) of the Code of Criminal Procedure cannot be passed in the absence of valid sanction.
In Manharibhai Muljibhai Kakadia, the facts were that the Respondent filed before the CJM a criminal complaint alleging that the Appellant had, by doing the acts stated, committed the offences punishable Under Sections 420, 467, 468, 471 and 120-B Indian Penal Code. The CJM, in exercise of his power Under Section 202 Code of Criminal Procedure by his order dated 18.06.2004 directed an enquiry to be made by a police inspector. The Court took note of the provisions of Code of Criminal Procedure i.e. Section 202, which does not permit an accused person to intervene in the course of inquiry by the Magistrate. However, it was held that even while directing inquiry, the Magistrate applies his judicial mind on the complaint and, therefore, it would amount to taking cognizance of the matter - Second judgment in the case of Anil Kumar is directly on the point. In that case, identical question had fallen for consideration viz. whether sanction Under Section 19 of the P.C. Act is a pre-condition for ordering investigation against a public servant Under Section 156(3) of Code of Criminal Procedure even at pre-cognizance stage? Answering the question in the affirmative, the Court held that A court, therefore, is precluded from entertaining a complaint or taking notice of it or exercising jurisdiction if it is in respect of a public servant who is accused of an offence alleged to have been committed during discharge of his official duty.'
Whether the public servant not being in the same post, when the offence was allegedly committed, though continuing as a public servant, loses the protection Under Section 19(1) of the P.C. Act? - HELD THAT:- Where the public servant had abused the office which he held in the check period but had ceased to hold "that office" or was holding a different office, then a sanction would not be necessary. Where the alleged misconduct is in some different capacity than the one which is held at the time of taking cognizance, there will be no necessity to take the sanction - Insofar as argument of the Appellants that there is no specific averment in the complaint for having committed the alleged act by them is concerned, we are unable to agree with this argument. As already pointed out, allegations against these two Appellants are that after conducting spot inspection by accused No. 1 on 17.01.2003, first Appellant (accused No. 3) who was working as Tehsildar had recommended it on same day and thereafter second Appellant (accused No. 6) who was working as Assistant Commissioner had given an endorsement on the very next day to the effect that property is not the subject matter of acquisition. On this basis, it is alleged that these officials have abused their official position.
Appeal dismissed.
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2016 (9) TMI 1598 - ITAT HYDERABAD
Assessment u/s 153A - search proceedings - evaluation of value of building - AO had referred the valuation of building to the DVO - HELD THAT:- As assessee was searched and during search operation, no incriminating material was found. Subsequent to search, AO initiated the proceedings u/s 153A. During the assessment proceedings, he noticed that the assessee has constructed building along with other persons. To evaluate the value of the building, he referred to the Valuation Officer and the same was adopted to complete the assessment u/s 143(3) r.w.s. 153A .
The assessment proceedings are subsequent to the search proceedings. In the search, there was no incriminating material found and the same was not disputed by the AO. Since, there is no incriminating material found, the addition cannot be made other than what was found in the search. AO can substantiate the material found and cannot bring anything in the assessment.
As we are aware, block assessment is a special assessment, the material found in the search alone can be assessed or it can be substantiated based on the material found in the search. In case, no material found, the block assessment itself bad in law. No doubt, AO can refer to the DVO to complete the pending assessment. But in the given case, there is no adverse material to substantiate the assessment, therefore, there is no room for the AO to refer something which is not found during the search. Hence, in our view, the addition made was not proper and needs to be annulled. Accordingly, findings of the CIT(A) is upheld and ground raised by the revenue is rejected.
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2016 (9) TMI 1597 - ITAT HYDERABAD
Disallowance of royalty payment on export sales - assessee company paid royalty on export sales to one of its Associated Enterprise (“A.E."). the Gulf Oil International Mauritius (Inc.) (GOIL), as per agreement dated 01.08.2003 and the supplemental agreement dated 10.11.2003 - HELD THAT:- We find that this issue had arisen in the earlier assessment years and for the A.Y. 2006-07 [2014 (1) TMI 1899 - ITAT HYDERABAD] this is not a disallowance under section 37(1) but an adjustment made under Transfer Pricing Provisions where arms length price is to be determined, whether the agreement is approved or not. Keeping that in mind, we are of the opinion that the decision relied on by the learned Counsel, does not apply to the facts of the case. As decided earlier, the restriction on the royalty amount is limited to ₹ 44,24,184/-.
Addition made on the ground that the said amount is paid to foreign concerns without making TDS - DRP has disposed of the objections of the assessee by observing that similar issue was there in the proceedings before the DRP for the Asst.Year 2010-11 and the learned DRP has favourably inclined with the arguments of the tax payer and directed the Assessing Officer to verify assessee's claim as to whether the amount was actually paid on behalf of Gulf Oil International Lubricants Pvt. Ltd. and allow assessee's claim accordingly - HELD THAT:- DRP has not applied its mind to the contentions of the assessee. Therefore, in the interest of justice, we deem it fit and proper to remit the issue to the file of the Assessing Officer with a direction to verify the assessee’s claim. Thus, grounds of appeal No.3 and 4 are treated as allowed for statistical purposes.
Correct figure taken by the Assessing Officer towards carry forward of short term capital loss as against the correct amount of loss carried forward - HELD THAT:- We deem it fit and proper to remand this issue to the file of the Assessing Officer with a direction to give consequential effect in computation of the brought forward short term capital loss, pursuant to the loss arrived at in the earlier assessment years consequent to remand by the ITAT.
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2016 (9) TMI 1596 - SUPREME COURT
Validity of order issuing process or summons - residence beyond the local jurisdiction - Section 397 of the Code of Criminal Procedure, 1973 - HELD THAT:- The Accused Appellants in the present appeals have and maintain residence beyond the local jurisdiction of the learned trial Court. Under the provisions of Section 202(1) Code of Criminal Procedure it was, therefore, mandatory for the learned Magistrate to hold an inquiry either by himself or direct an investigation by the Police prior to the issuance of process. Admittedly, the same had not been done. If the aforesaid mandatory provisions of Section 202(1) Code of Criminal Procedure had not been followed, the learned trial Court would not have the jurisdiction to issue process/summons as has been done.
Appeal allowed.
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2016 (9) TMI 1595 - SUPREME COURT
Maintainability of appeal - availability of remedy of criminal revision - Under Section 397 Code of Criminal Procedure - HELD THAT:- Any attempt to explain the law further as regards the issue relating to inherent power of High Court Under Section 482 Code of Criminal Procedure is unwarranted. We would simply reiterate that Section 482 begins with a non-obstante Clause to state: "Nothing in this Code shall be deemed to limit or affect the inherent powers of the High Court to make such orders as may be necessary to give effect to any order under this Code, or to prevent abuse of the process of any Court or otherwise to secure the ends of justice." A fortiori, there can be no total ban on the exercise of such wholesome jurisdiction where, in the words of Krishna Iyer, J. "abuse of the process of the Court or other extraordinary situation excites the court's jurisdiction. The limitation is self-restraint, nothing more." We venture to add a further reason in support. Since Section 397 Code of Criminal Procedure is attracted against all orders other than interlocutory, a contrary view would limit the availability of inherent powers Under Section 482 Code of Criminal Procedure only to petty interlocutory orders! A situation wholly unwarranted and undesirable.
The matters are remitted back to the High Court for fresh hearing of the petitions Under Section 482 of the Code of Criminal Procedure - Appeal allowed by way of remand.
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2016 (9) TMI 1594 - ITAT MUMBAI
Addition u/s 14A - Disallowance of finance expenses and other expenses on investment in shares out of business income - as argued the appellant had surplus interest free funds available for investment in shares and hence no finance expenses and other expenses is attributable towards investment in shares - A.O. rejected the contentions of the assessee as the assessee is not able to establish a direct link with the interest free funds or own funds available with the assessee with the investments made and therefore the usage of interest bearing borrowed fund in making investment in shares, income from which does not form part of the total income, cannot be ruled out - HELD THAT:- As gone through the orders of authorities below. There is no finding of fact recorded in the orders of authorities below that assessee has its own surplus funds available in this year which are sufficient to make the investment - an unsigned chart has been submitted by the ld. Counsel for the assessee before the Tribunal whereby it is submitted that there is share capital of an amount of ₹ 60,48,00,000/- and reserves and surplus amounting to ₹ 2,09,36,78,634/-as at 31-03-2009 against which investments in shares stood at ₹ 1,28,67,27,471/- as at 31-03-2009. In the same unsigned chart it is also reflected an amount of ₹ 34,92,98,780/- under the head profits earned during the year as per P&L A/c, while dividend received stood at ₹ 8,47,63,455/- . - no audited financial statements are submitted by the assessee . We , however, agree with the proposition and contentions of the assessee that presumption will apply that the assessee has made investment in shares out of its own surplus funds unless contrary is brought on record keeping in view the decision of Reliance Utilities and Power Ltd., [2009 (1) TMI 4 - BOMBAY HIGH COURT] and HDFC bank Limited [2016 (3) TMI 755 - BOMBAY HIGH COURT]
Hence keeping in view the factual matrix of the case as set out above, the disallowance of interest made by the A.O. under Section 14A of the Act read with Rule 8D(2)(ii) of Income Tax Rules, 1962 is not sustainable and ordered to be deleted subject to limited verification by the AO about the correctness of figures of net owned funds which includes share capital + reserves and surpluses- accumulated losses , as well as investments in shares etc made by the assessee which are capable of yielding exempt income as contended by the assessee before us through unsigned chart.
Disallowance made u/s 14A read with Rule 8D(2)(iii) on disallowance @ 0.5% of average value of investment - matter with respect to disallowance of administrative and indirect expenses u/s 14A of the Act read with Rule 8D(2)(iii) of Income Tax Rules, 1962 needed to be set aside and restored to the file of the A.O. for de-novo computation of the disallowance of administrative and indirect expenses having regard to the accounts of the assessee as contemplated u/s 14A(2) of Income Tax Rules, 1962.
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2016 (9) TMI 1593 - SC ORDER
Validity of report submitted by the Uttar Pradesh Lok Ayukt and also to revaluate the 21 sugar mills, which have been sold, afresh by an independent agency for the purpose of proceeding with disinvestment - HELD THAT:- Issue notice, returnable within six weeks.
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2016 (9) TMI 1592 - ITAT CHENNAI
Transfer pricing adjustment - data management services - TPO did not exclude two comparables viz. M/s Cosmic Global Ltd and M/s E4E Healthcare Business Services Pvt. Ltd. from the list of comparables - HELD THAT:- DRP had not adjudicated the correctness of the claim of the assessee solely for a reason that these companies were part of the list of the TP study of the assessment. By virtue of the decision of Special Bench in the case of Quartz Systems(P) Ltd [2011 (5) TMI 508 - PUNJAB AND HARYANA HIGH COURT], we are of the opinion that assessee can seek exclusion of a company though it appeared in the list of comparables if it could show before the authorities below that it was functionally different from it.
In the case of CIT vs Quartz Systems (P) Ltd [2011 (5) TMI 508 - PUNJAB AND HARYANA HIGH COURT] had upheld the decision of the Special Bench cited supra for the single reason that the comparability of the companies for which exclusions were sought, were remitted to the lower authorities by the Tribunal. Accordingly, here also we are of the opinion that whether M/s Cosmic Global Ltd and M/s E4E Healthcare Business Services Pvt. Ltd. could be considered as good comparables have to be looked afresh by the Assessing Officer/TPO. We, therefore, set aside the orders of the authorities below and remit the issue regarding the comparability of M/s Cosmic Global Ltd and M/s E4E Healthcare Business Services Pvt. Ltd. back to the file of the Assessing Officer/TPO for consideration afresh in accordance with law. Assessee is free to raise all its objections against inclusion of the above companies before the Assessing Officer/TPO and these have to be considered by the Assessing Officer/TPO while passing the orders.
Computation of the PLI of the comparable companies selected was not properly done - Profit level indicator considering the margins prior to depreciation would give better results in the comparable analysis and benchmarking of the transactions of the assessee in the given facts and circumstances. We direct the Assessing Officer/TPO to rework the PLI of the comparables after excluding the depreciation cost and benchmark the PLI of the assessee also excluding the depreciation cost. Ordered accordingly. Ground of the assessee are allowed for statistical purposes.
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2016 (9) TMI 1591 - ITAT DELHI
Reopening of assessment u/s 147 - validity of reasons to believe - non independent application of mind by AO - HELD THAT:- After going through the reasons recorded by the AO - HELD THAT:- AO has not applied his mind so as to come to an independent conclusion that he has reason to believe that income has escaped during the year - Reasons are vague and are not based on any tangible material as well as are not acceptable in the eyes of law.
AO has mechanically issued notice u/s. 148 of the Act, on the basis of information allegedly received by him from the Directorate of Income Tax (Investigation), New Delhi. Thus the reopening in the case of the assessee for the asstt. Year in dispute is bad in law and deserves to be quashed. - Decided in favour of assessee.
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2016 (9) TMI 1590 - CALCUTTA HIGH COURT
Benami transaction - battle between a divorced couple - wife filed Title Suit - fiduciary relationship - Whether the Learned Trial Courts below committed substantial error of law in arriving at the finding of Benami ignoring the point that the husband could not take the plea of Benami in the written statement in view of the statutory bar contained in Section 4(2) of the Benami Transaction (Prohibition) Act, 1988 - whether the plaintiff was acting as (sic) fiduciary capacity in relation to the purchase of the property in question? - HELD THAT:- When the property was purchased in the name of this plaintiff/appellant in the year 1979 there was no cloud in the marital relationship between the parties.
As already said that evidence is galore that the entire consideration money came from either the defendant personally or from his private limited companies. It is immaterial whether the defendant violated the provisions of the companies act or whether such money was reimbursed to the company. It is true that after purchasing the property the parties shifted to the suit flat and the defendant is still residing there.
The marriage between the parties was dissolved on 26.09.1984 that is roughly after six years of the execution of those deeds and the suit was filed on 2nd of July, 1987 that is after a gap of 2 year 9 months of the divorce. Thus, when a fat amount (as per money value of 1978-79) was given to the wife for the purchase of the suit flat this court is satisfied that the husband had good faith on his wife and that the relationship at that point of time was 'fiduciary' one. The plaintiff/appellant was like a 'trustee' vis-à-vis her husband, if he is treated as 'trust'. The cumulative effect of the circumstances noted above, when seen in the light of the substantial amount paid by the defendant/husband that puts the plaintiff/appellant in 'fiduciary capacity' vis-à-vis her husband. Such being the case the transaction is completely saved from the mischief of Section 4 of the Act by reason of the same falling under Sub-Section 3(b) of Section 4. Thus, reiterate that the plea of banami as raised by the respondent/defendant was not, therefore, barred by the said Act of 1988.
It is true that in the written statement the claim was not made by the defendant that the wife was in a fiduciary relationship with her husband and on that score the learned Advocate on behalf of the appellant submitted that this ground cannot be taken up by this court. I am sorry to say that this being one legal question it is immaterial whether it was urged in the pleading. Thus, the argument of Mr. Chatterjee on this point is not convincing to this court and answered in the negative.
Thus, both the substantial question of law as framed is answered accordingly. Thus, in view of the discussions so long made, this court is satisfied that there is no merit in second appeal and the second appeal is dismissed accordingly.
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2016 (9) TMI 1589 - ITAT AHMEDABAD
Estimation of income - bogus purchases - CIT-A confirmed the addition to the extent of 25% - HELD THAT:- In different trade items, there may be different rate of profit. Whenever any profit is being estimated, the element of guesswork would always be involved. In the case Simit P. Sheth [2013 (10) TMI 1028 - GUJARAT HIGH COURT]on an analysis of the material, Tribunal drew an inference that in the trade of steel profit at the rate of 12.5% may be reasonable profit when the assessee has procured material from different sources and bills from different sources.
This formation of opinion was not disturbed by the Hon’ble High Court. Therefore, we find force in the contentions of the ld.counsel for the assessee that this decision is a guiding factor for estimating element of profit involved in the activity of the assessee. We allow the appeal of the assessee partly, and modify the order of the ld.CIT(A). Additions confirmed by the ld.CIT(A) at the rate of 25% of the total bogus purchases is restricted to 12.50% - Decided partly in favour of assessee.
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