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Income Tax - Case Laws
Showing 1 to 20 of 687 Records
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2017 (2) TMI 1549
Validity of additions based on valuation report - Non rejection of books of account before referring to the D.V.O. u/s 142A - HELD THAT:- Question raised in these appeals Shri Udai Chand Chaurasia Shri Ram Road Lucknow [2017 (1) TMI 1832 - ALLAHABAD HIGH COURT] as relying on Sargam Cinema [2009 (10) TMI 569 - SC ORDER] wherein held matter could not refer to the Departmental Valuation Officer without the books of account being rejected. Decided in favour of assessee.
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2017 (2) TMI 1547
Depreciation on toll road - HELD THAT:- It is noted that since in the appeal filed against the original assessment order, Hon'ble High Court has held vide its judgement [2016 (4) TMI 1184 - BOMBAY HIGH COURT] that claim of depreciation is not allowable to the assessee, the same decision would be applicable upon the issue raised by the Revenue before us. Once Hon'ble High Court has taken a view that depreciation is not allowable, the issue before us stands covered against the assessee.
Cross objection - appellant prays that the entire cost incurred for construction of "Project Road" may be allowed as deduction treating the same as revenue expenditure while computing the total income - As noted that the claims raised before us are alternative to the main claim made by the assessee. Since the main claim of the assessee has been rejected, in all fairness, justice demands that assessee should be given an opportunity to make his alternative claim in accordance with law. Thus, taking into account the totality of facts and circumstances of the case, as have been brought before us, we find it appropriate to send these issues back to the file of the AO. The assessee shall be at liberty to raise all the legal and factual issue before the AO. The AO shall examine all the issues raised in the Cross Objection and decide them after taking into account all the submissions and evidences, as may be placed on record by the assessee. With these directions, the grounds raised in the Cross Objection are restored to the file of the AO for their appropriate adjudication and these may be treated as allowed, for statistical purposes.
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2017 (2) TMI 1542
Addition of unexplained investment towards purchase of plot - on money on the purchase of the vacant plot - as per assessee agreement made in respect of plot did not materialise - As per revenue cancellation agreement was found in post search operations and is fabricated document - HELD THAT:- The assessee is an individual. The assessee is in the business of colonization. The assessee purchases agricultural land from farmers and then the formalities of the Rajasthan Land Revenue Act and JDA Act is completed for conversion of land from agricultural to non agricultural use and further colony is planned and map is got approved from JDA. Subsequently, the plots of different size are sold to the customers and development work like construction of road, providing electric line water supply etc are done by the assessee as per the norms of JDA - The assessee filed regular return u/s 139(1).
The seller Shri Subhash Chand Bansal had given a statement on oath that he had received Rs. 65 lacs only. The agreement with construction was cancelled and the cancellation agreement was also seized during the search operation. The seller stated that there was no construction and no water and electric connection which is also established by Google earth Maps and photographs placed in the paper book.
There is no evidence of payment of any on money on the purchase of the vacant plot. No statement of assessee was recorded during search operation while she was present at the time of search. The cancellation agreement was found and seized during search operation itself. Therefore, its authenticity cannot be doubted when the Revenue had not been able to establish otherwise.
Therefore, looking all we find that the lower authorities have erred in confirming the addition of Rs 76.00 lacs on account of unexplained investment in purchase of Plot No. 281, 10B, Gopal Pura Bye Pass, Jaipur. Thus we do not concur with the findings of the ld. CIT(A). Hence ,the ground raised by the assessee are allowed.
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2017 (2) TMI 1540
Enhancement by CIT(A) - addition under the deeming provisions of Section 50C - CIT(A) not only confirmed action of the AO but also directed the AO to make an addition in respect of cost of acquisition as there was variation in the figures of cost of acquisition as per record vis-a-vis the lease deed - HELD THAT:- A co-ordinate bench of this Tribunal in the case of M/s. Monga Metal Pvt. Ltd[2013 (8) TMI 1179 - ITAT LUCKNOW] has held that such an action of the AO i.e. of proposing enhancement without putting the assessee to specifically notice in this regard is unsustainable in law as provisions of section 251(2) categorically says that the Commissioner (Appeals) shall not enhance an assessment or a penalty or reduce the amount of refund unless the appellant has had a reasonable opportunity of showing cause against such enhancement or reduction. Therefore, it is incumbent upon the ld. CIT(A) for affording a reasonable opportunity of showing cause against enhancement to the assessee.
If he fails to afford an opportunity to the assessee, enhancement made by him is not sustainable in the eyes of law. In the light of these facts, enhancement made by the ld. CIT(A) is not sustainable as it was done without issuing a show cause against enhancement to the assessee. We, therefore, find no merit in the additions.
Whether the provisions of section 50C can be invoked in respect of the lease hold property? - As this issue is no longer res integra, there are several decisions of this Tribunal including the case of DCIT vs. Tejinder Singh [2012 (3) TMI 47 - ITAT, KOLKATA], Atul G. Puranik [2011 (5) TMI 576 - ITAT, MUMBAI] in support of the proposition. Hon’ble Delhi High Court in the case of CIT vs. Shri Kishan Das [2014 (2) TMI 897 - DELHI HIGH COURT] has approved this school of thought and inter alia observed strictly construed the letter of Section 50C to say that the conveyance has to be complete in respect of all entitlements to the property. In the present case, the Tribunal has upheld the valuation of the assessee. We notice that apart from the three Benches, decisions of which have been relied on, the Tribunal also considered the distinction made between Section 50C and 54D(1) which specifically provides that capital gains from, transfer by way of compulsory acquisition under any law of capital asset being land, building or any right in the land or building
Section 50C, on the other hand, talks of, transfer by assessee of a capital asset being land or building or both. The contrast in language, given that Section 50C is a specific provision, which seeks to enact a presumption is significant. The valuation of the concerned State agency or the government that the cost of the land is, in the circumstances, higher, is determinative. We notice that in the present case, there has been no such valuation. That apart, the Tribunal adopted an approach which, with respect, appears to be correct, in that it took note of the proportionate transfer of leasehold rights for 54 years. If the Revenue’s contentions were to be conceded, then in the given facts of case, if the leasehold rights for residual period of 3 or 4 years were to be valued at par with the cost of acquisition of the full tenure of the lease of 90 years, absurd and anomalous results would ensue.
Thus both the grievances of the assessee indeed deserve to be upheld. Neither the learned CIT(A) was justified in confirming the action of the Assessing Officer in treating the stamp duty valuation as consideration for transfer for the purpose of computing capital gain, nor was he justified in proposing enhancement of income regarding reduction in the cost of acquisition without putting assessee to notice in this respect. We, therefore, uphold the plea of the assessee.
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2017 (2) TMI 1538
Condonation of delay - ITA filed after 613 days and other after 707 days - Revenue aggrieved by the order of ITAT which allowed the assessee’s appeal, holding that the exercise of Section 263 not warranted - HELD THAT:- In both instances, the explanation for the delay is less then convincing; the Revenue states the heavy workload of appellant, which it unable to effectively manage as well as the lack of manpower. The other reason stated is the reorganization of its panel counsel. Both did not constitute “sufficient cause” to enable the Court to condone the delay. The applications and appeals are accordingly dismissed.
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2017 (2) TMI 1537
TP Adjustments - international transactions in respect of payment of trade mark fee - Selection of MAM - Transactional Net Margin Method (TNMM) OR Comparable Uncontrolled Price Method (CUPM) - HELD THAT:- The following question of law arises for consideration in these appeals:-
“Did the Income Tax Appellate Tribunal (‘ITAT’) fall into error while deleting the Transfer Pricing Adjustments regarding the international transactions in respect of payment of trade mark fee and in applying the Transactional Net Margin Method (TNMM) instead of Comparable Uncontrolled Price Method (CUPM)? ”
TP Adjustments - AMP Expenditure - This Court notices that AMP Expenditure was not subjected to adjustments although it was a part of the Transfer Pricing Exercise for all previous years.
The question of law framed i.e. the payment of trade mark fee and whether it needs to be subjected to adjustments, would cover the issue for the year in question given that AMP Expenditure did not result in any adjustments in respect of the same transactions for all previous years. The other questions of law, therefore, do not arise.
List for hearing on 18.04.2017.
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2017 (2) TMI 1536
Disallowance u/s 14A - AO computed the disallowance in both the years u/r. 8D(2)(iii) of the I.T. Rules at 0.5% of average value of investment - CIT(A) took the view that investments made by the assessee are in the form of strategic investments and accordingly directed AO to compute the disallowance at 5% of the fixed/semi variable expenditure incurred by the assessee - HELD THAT:- As counsel submitted that AO had made identical disallowance in A.Y. 2009-10 also, which was reduced to 5% of the fixed/semi variable expenses by the order passed by the learned CIT(A). Revenue took the matter to the Tribunal and the Tribunal [2014 (11) TMI 1274 - ITAT MUMBAI] has confirmed the order passed by the learned CIT(A) and accordingly dismissed the appeal filed by the Revenue.
AR submitted that the learned CIT(A) has followed its own order passed in A.Y. 2009-10 in the years under consideration also. DR did not controvert the factual aspects presented by learned AR
In view of consistent with the view taken by the coordinate Bench of the Tribunal in A.Y. 2009-10, we confirm the order passed by the learned CIT(A) in the years under consideration also.
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2017 (2) TMI 1535
Accrual of income - Arbitration receipts - assessee has shown arbitration receipts in his books of accounts under the head “Current liabilities” and has not credited the same in the profit/loss account - As per AO arbitration receipts cannot be treated as liability till the order of Supreme Court is received against the assessee and the same receipts was accordingly treated as income of the assessee and brought to tax - HELD THAT:- Where the challenge to the arbitral award ends in favour of the assessee, the Revenue would be entitled to bring the same to tax. Conversely, where the challenge to the arbitral award ends against the assessee, the State of Rajasthan would be entitled to encash the bank guarantee and recover the amount paid to the assessee.
As in the instant case, the amount received by the assessee cannot be regarded as income which has accrued unless and until the proceedings relating to arbitral award attains finality. Besides that, even from well-established accounting principles and accrual system of accounting as followed by the assessee, where the probability of receipts in favour of the assessee is contingent on final outcome of Court’s proceedings, such contingent receipts have rightly been shown as liability and not reflected as taxable receipts in the profit/loss account.
Similar issue was involved in AY 2004-05 wherein as held such interim arbitration receipts pending final outcome as not taxable - Decided against revenue.
Accrued interest on FDRs not declared as income by the assessee - assessee has not shown the interest accrual on FDRs made for giving bank guarantee in his return of income for the year under consideration - AO computed interest @ 7% and brought the same to tax in addition to arbitration receipts - CIT-A deleted the addition - HELD THAT:- CIT(A) has given a finding that the assessee has shown net interest in his profit/loss account which comprises of gross interest received including interest on FDRs and interest paid to Bank. The said finding has not been controverted before us. No infirmity in the order of ld CIT(A) in deleting the addition.
Decided against revenue.
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2017 (2) TMI 1534
Exemption u/s 11/12 - Receipt in the nature of Fee from Professional/ Technical Services/ Contractual receipts and, therefore, commercial in nature - donation had been given to the assessee to promote the objects of the NASSCOM and not for any charity - As per AO activities were clearly in the nature of trade and commerce and rendering services in relation to trade/ commerce/ business more particularly because assessee had charged service tax on the amount so received by it - As per assessee it was setup with the predominant objective to improve national capabilities by promoting data protection, develop security and privacy codes and standards and encourage implementation of the same - HELD THAT:- Activities undertaken by assessee are in the field of cyber security for increasing level of security and privacy of IT and BPO service providers in public life to ensure that India is secure destination.
Potential of cyber threats is increasingly recognized for their impact on the lives of individuals, as attacks are increasingly targeting critical infrastructure like, utilities, transport, oil and energy and hence the ability to disturb social harmony and interactions, urge to cause unrecoverable damages to businesses and ability to harm national security posture. Admittedly, the assessee is imparting very valuable services in this regard and training officials of police, banking, and other personnel in technical field. The grants received by assessee are mainly from Government.
One of the major objections of Assessing Officer was that assessee was imparting services to NOSSCOM. This objection is devoid of any merit because it is the predominant object of assessee which is to be examined for deciding whether the assessee was carrying on charitable activities or not. The assessee was registered u/s 25 of the Companies Act which clearly shows that it could not carry on any activities for profit purposes. It is well settled law that while carrying on pre-dominant objects, if the assessee is earning some incidental surplus that will not prejudice the assessee’s claim of being charitable in nature - Appeal of the Department is dismissed.
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2017 (2) TMI 1532
Addition on account of purchases made in contravention of provisions of Section 40A(3) - assessee had purchased in cash gold and silver - assessee has filed his return u/s 44AF - HELD THAT:- From perusal of records, it transpires that the issue under consideration has already been decided by the Coordinate Bench of the ITAT in assessee’s own case [2016 (4) TMI 1440 - ITAT JAIPUR],[2016 (10) TMI 1373 - ITAT JAIPUR] for the assessment years 2006-07 and 2007-08 wherein respectfully following the decision of ITAT Ahemdabad Bench in the case of Gopalsingh R Rajpurohit [2004 (7) TMI 271 - ITAT AHMEDABAD] hold that once the assessee has filed his return u/s 44AF, no further disallowance can be made u/s 40A(3). It is noteworthy that in this case no trading irregularity was found and addition has been sustained only on technical issue of Section 40A(3) of the Act. The presumptive system of tax u/s 44AF starts with nonobstante clause and overrides other provisions. In view thereof, there is no justification in making the addition which is deleted. Since the addition is deleted on merits, there is no need to go into alternative ground. Thus the appeal of the assessee is allowed.
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2017 (2) TMI 1528
Reopening of assessment u/s 147 - notice after expiry of four years from the end of the relevant assessment years - HELD THAT:- As per section 147, if the AO has reason to believe that any income chargeable to tax has escaped assessment he may assess or re-assess such income and also any other income chargeable to tax which has escaped assessment and which comes to his notice subsequently in the course of the proceedings provided that where an assessment under sub section (3) of section 143 or section 147 has been made for the relevant assessment year, no action shall be taken u/s 147 after expiry of four years from the end of the relevant assessment years unless any income chargeable to tax has escaped assessment for such assessment year by reason of the failure on the part of the assessee to make a return u/s 139 or in response to notice issued u/s 142 (1) or section 148 or to disclose fully and truly all material facts necessary for his assessment for the assessment year.
We noticed that in the present case the AO has not pointed out any failure on the part of the assessee in making disclosure fully and truly all material facts necessary for the assessment, which is a condition precedent for exercising jurisdiction u/s 147 of the Act.
From the contents of the reasons recorded aforesaid it cannot be inferred that there was any failure on the part of the assessee in disclosing full and true material facts necessary for his assessment for the assessment year under consideration. Hence, we find merit in the contention of the assessee that since there is no failure on the part of the assessee in disclosing all material facts fully and truly, the reopening is bad in law. We, therefore, hold that the action of reopening in this case is not in accordance with the expressed provisions of the Act.
AO has not followed the law laid down by the Hon’ble Supreme Court in GKN Driveshaft India Ltd. [2002 (11) TMI 7 - SUPREME COURT] the reassessment order cannot be passed without passing speaking order on objection filed by the assessee - We notice that the assessee after receiving copy of reasons recorded filed return of income as well as objection of initiation of reassessment proceeding vide letter dated 25.04.2013. But the AO without passing any speaking order on objection filed by the assessee, proceeded further and passed order u/s 143 (3) r.w.s. 147 of the Act. So it is apparent that the AO has not followed the law laid down by the Hon’ble Supreme Court in the aforesaid case.
Subjective satisfaction of the AO to the effect that any taxable income has escape assessment - In Indian and Eastern Newspaper Society [1979 (8) TMI 1 - SUPREME COURT] the Hon’ble Supreme Court has held that audit objection cannot be the basis for reopening of assessment. In view of the facts and circumstances of the case and the law laid down by the Hon’ble Supreme Court and various High Courts, it can be concluded that in the present case the AO has exercised the jurisdiction u/s 147 without his own satisfaction, which is the condition precedent for initiating proceeding u/s 147 if the Act.
We agree with the Ld. Counsel for the assessee that the proceedings u/s 148 cannot be initiated to review the earlier opinion. It is well settled law that when deduction u/s 80 IB (10) was allowed in original assessment after considering all the facts the same cannot be withdrawn by invoking section 147 of the Act. In this case, the AO had allowed the deduction in question in original assessment after considering all the facts and details submitted by the assessee.
Fees paid to Chitnis Vaithy & Co is concerned we notice that the assessee vide letter 18.03.2014 submitted the certificate dated 18.01.2001 issued by the said company TDS Ledger Account, Bank Payment voucher etc. to prove that the said company had provided solicitor for the project of the assessee company, it cannot be said that no tax has been deducted at source.
As regards payment made to M. R. Patil Consulting Engineering Ltd. there is merit in the assessee’s contention of the Ld. counsel that expenditure is allowable in the current year as the assessee has been following the project completion method and since it was allowed in the earlier year the AO cannot change his stand by exercising powers u/s 147 of the Act. As per the settled law assessment cannot be reopened only because of change of the opinion.
Thus we hold that the reassessment proceedings u/s 147 initiated in this case is bad in law. - Decided in favour of assessee.
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2017 (2) TMI 1526
Rejection of books of accounts - NP Profit estimation - A.O. estimated net profit of 7% on gross receipts net of all deductions including depreciation - HELD THAT:- Though, the assessee has maintained katcha books of accounts, which does not give true and correct profit of the business as the assessee has not accounted certain receipts from return trips.
A.O. opined that trading result disclosed by the assessee are not amenable for verification going by the fact that the assessee did not produce regular books of accounts duly supported by documentary evidence such as bills/vouchers for different items of expenditure such as diesel, driver betas, loading & unloading charges and particularly other expenses which contributes major part of the total expenditure for the assessment year under review. A.O. further influenced from the statement of the managing partner deposed an oath at the time of recording sworn deposition dated 5.2.2010 to the effect that the freight receipts others than Raasi Cements are not reflected in the books of accounts. Therefore, we are of the view that the A.O. was right in rejection of books of accounts and estimation of net profit.
NP estimation - We find that the coordinate bench of this Tribunal in the case of ITO Vs. Sri Gundapaneni Nageswara Rao [2014 (5) TMI 344 - ITAT HYDERABAD] under similar set of facts, has directed the A.O. to estimate net profit of 3% net of all deductions including depreciation. Though, there are divergent views from the appellate authorities, the view which is more beneficial to the assessee has to be adopted in view of the Supreme Court, decision in the case of CIT vs. Vegetable Products Limited [1973 (1) TMI 1 - SUPREME COURT]
Therefore, we are of the considered view that since, the assessee has not proved the ownership of assets to claim the depreciation we deem it appropriate to direct the A.O. to estimate net profit of 3% on gross receipts net of all deductions including depreciation. Accordingly, we direct the A.O. to estimate net profit of 3% on gross contract receipts net of all deductions for all the assessment years 2006-07 to 2009-10. Revenue appeal is partly allowed.
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2017 (2) TMI 1523
Capital gain - Scope and legislative intent of Section 2(47)(ii), (v) and (vi) - JDA entered - essential ingredients for applicability of Section 53A of 1882 Act - Meaning to be assigned to the term “possession” - transfer of land by members of a Cooperative Society by signing an irremovable Power of Attorney in the name of the Developer and also by signing a Joint Development Agreement (JDA) would constitute ‘transfer’ within the meaning of section 2(47)(ii) - taxable capital gains arises from the transaction entered by the assessee - HELD THAT:- As decided in C.S. ATWAL case [2015 (7) TMI 878 - PUNJAB & HARYANA HIGH COURT] parties had agreed for pro-rata transfer of land.No possession had been given by the transferor to the transferee of the entire land in part performance of JDA so as to fall within the domain of Section 53A of 1882 Act.
The possession delivered, if at all, was as a licencee for the development of the property and not in the capacity of a transferee. Further Section 53A of 1882 Act, by incorporation, stood embodied in section 2(47)(v) of the Act and all the essential ingredients of Section 53A of 1882 Act were required to be fulfilled. In the absence of registration of JDA dated 25.02.2007 having been executed after 24.09.2001, the agreement does not fall under Section 53A of 1882 Act and consequently Section 2(47)(v) of the Act does not apply.
The issue of exigibility to capital gains tax having been decided in favour of the assessee, the question of exemption under Section 54F of the Act would not survive any longer and has been rendered academic.The Tribunal and the authorities below were not right in holding the assessee-appellant to be liable to capital gains tax in respect of remaining land for which no consideration had been received and which stood cancelled and incapable of performance at present due to various orders passed by the Supreme Court and the High Court in PILs.
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2017 (2) TMI 1522
Revision u/s 263 - Distinction between “lack of enquiry and inadequate enquiry” - Unexplained deposits in the bank accounts - HELD THAT:- We find that assessee had submitted copy of bank accounts and had also requested Assessing Officer to verify from the banks statements that the money deposited in banks were paid to agents and if the work was not done, the same was returned.
In view of the above facts and circumstance, we find that AO during assessment proceedings had duly verified the entries in the banks statement and therefore had arrived at the conclusion that the deposits represented business transactions and had taken a plausible view and therefore the provisions of section 263 were not applicable.
Provisions of section 263 cannot be invoked to correct each and every type of mistake or error committed by the Assessing Officer. It is only when an order is erroneous that the section will be attracted. Before invoking provisions of section 263 of the Act one has to keep in mind the distinction between “lack of enquiry and inadequate enquiry”. If there was any enquiry, even thought inadequate it would not in itself empower CIT to invoke provisions of section 263 of the Act merely because he had different opinion in the matter. It is only in cases of lack of enquiry that such a course of action would be available to CIT.
Cross objections filed by revenue u/s 253(4) - We find that the AO or assessee on receipt of notice that an appeal against the order of Deputy Commissioner (Appeal) or Commissioner (Appeal) has been preferred by either party and then the other party can file the cross objections. In the present case, the order passed by the CIT u/s 263 has not been passed by Deputy Commissioner (Appeal) or the Commissioner (Appeal) and rather it has been passed by Principal Commissioner and therefore the provisions relating to cross objections as contained in section 253(4) are not applicable and hence, the cross objections filed by revenue are not maintainable.
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2017 (2) TMI 1517
Addition on account of arrears of gratuity and the arrears of leave encashment received from the State Government after retirement - assessee was an employee of the Chaudhary Charan Singh Haryana Agricultural University, Hisar and retired and after retirement, the assessee received arrears of gratuity and claimed the same as exempt u/s 10(10) - Assessee also received a sum on account of arrears of leave encashment which was claimed as exempt u/s 10(10AA)(i) - HELD THAT:- As decided in DHARAM JEET DAHIYA VERSUS INCOME TAX OFFICER, WARD-1, HISAR [2017 (6) TMI 165 - ITAT DELHI] AR submitted that there is not much difference in the language of section 10(10)(i) and 10(10AA)(i) and the view taken in respect of arrears of gratuity u/s 10(10) should be followed for arrears of leave encashment u/s 10(10AA). DR supported this proposition.
As both the sides are consensus ad idem on the position that the view taken in the context of section 10(10) as applicable to leave gratuity be followed here in the context of section 10(10AA) in the context of leave encashment, we are desisting from independently examining the later provision. In view of the fact that held the assessee to be entitled to exemption u/s 10(10)(i) in respect of arrears of gratuity, following the same, extend the benefit of exemption u/s 10(10AA)(i) in respect of arrears of leave encashment. - Decided in favour of assessee.
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2017 (2) TMI 1516
Estimation of GP - estimation of income as per section 145(3) - HELD THAT:- CIT(A) has erred in observing that section 145(3) could not be applied in this case, because, AO could not examine records as these accounts were not produced before him. In our opinion section 145(3) contemplates that the AO can resort to estimate the income, if he is unable to deduce true result from the accounts or other details. Strictly, books were not produced before the AO, and it was not rejection of books as such, but impliedly it is estimation of income as per section 145(3) of the Act.
CIT(A) has not considered any of these aspects, viz. why there is a decline in GP, why assessee does not want to scrutinise its books of accounts from the AO. Therefore, considering all these aspects, we are of the view that the order of the CIT(A) is not sustainable. Total addition cannot be deleted. As observed in the foregoing paragraphs that income even after rejection of books can be estimated on some guess work. It is to be estimated keeping in view surrounding facts and circumstances. In the present case, the assessee herself has shown GP at 4.21% in the immediately preceding year.
AO ought to have adopted GP nearby this figure and not at 20%. The assessee in her submission before the ld.CIT(A) has expressed the rate of at 4.25%. Thus, taking into consideration written submissions filed by the assessee before the ld.CIT(A) and other material, we deem it appropriate that ends of justice would be met, if the gross profit is being calculated at the rate of 5.5% (five point five percent) of the total turnover. With the above observation, order of the ld.CIT(A) is set aside and the AO is directed to recalculate the addition by applying GP at 5.5% (five point five percent) of the total turnover. The appeal of the Revenue is partly allowed for statistical purpose.
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2017 (2) TMI 1515
Penalty u/s 271C - treated the appellant as defaulter u/s.194A/201(1) - HELD THAT:- Issue decided in favour of assessee as interest is awarded by the court for loss suffered on account of deprivation of property or paid for breach of contract by means of damages or were not paid in respect of any debt incurred or money borrowed, shall not attract the provisions of Section 2(28A) read with Section 194A(1). See SAHIB CHITS (DELHI) (PVT.) LTD. [2009 (7) TMI 75 - DELHI HIGH COURT], CHIRANJI LAL MULTANI MAL RAI BAHADUR PVT. LIMITED [1988 (12) TMI 62 - PUNJAB AND HARYANA HIGH COURT]
Also in case of New India Assurance Co. Ltd [2016 (9) TMI 451 - GUJARAT HIGH COURT] insurance company was not justified in deducting tax at source while depositing the compensation in favour of the claimants. It therefore, cannot avoid liability of depositing such amount with the Claims Tribunal. The Claims Tribunal had committed no error in insisting on the insurance company in making good the shortfall - Decided in favour of assessee.
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2017 (2) TMI 1514
Income deemed to accrue or arise in India - Taxability of amount received - PE in India - HELD THAT:- Questions urged in this appeal are covered by the decision of this Court for the previous assessment years, titled as National Petroleum Construction Company Vs. Director of Income Tax (International Taxation)[2016 (2) TMI 47 - DELHI HIGH COURT]
Applicability of Section 234B relates to the Revenue’s contentions that interest was payable in respect of non-payment of advance tax - HELD THAT:- ITAT relied upon the judgment of this Court in Director of Income Tax (International Transactions) v. G.E. Packaged Power [2015 (1) TMI 1168 - DELHI HIGH COURT] where the Court held that the primary liability of deducting the tax for the period concerned is that of the payer. In the facts of the present case, the appellant was the payee and not the payer who could not, therefore, be passing the liability under the terms of the Act.In view of the fact that the ITAT followed the judgment of this Court, no substantial question of law arises
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2017 (2) TMI 1513
Rejection of books of accounts - gross profit estimation - no item wise information on stock of jewellery given - As per DR GP rate of 30% applied by the AO was correct since it was based on GP ratio shown by comparable cases - HELD THAT:- As gone through the order of Vivek Jain Prop. Vijay Jewellers [2016 (11) TMI 1714 - ITAT CHANDIGARH] wherein I.T.A.T. held that in view of the nature of business carried out by the assessee and the trading of items as per customer’s preference the FIFO method could not be applied as suggested by the Assessing Officer. The Hon'ble I.T.A.T., therefore, held that the rejection of books of account was incorrect and addition made on account of estimation of gross profit was, therefore, set aside.
In the present case, we find that the basis for rejection of books is similar to that in the case of Vivek Jain Prop. Vijay Jewellers (supra) being that item-wise information of stock of jewellery had not been furnished by the assessee.
Merely because item-wise details were not maintained, it could not be said that the books did not disclose true result of the assessee. The Ld. CIT (Appeals), we find, correctly held that no specific defect has been pointed out by the Assessing Officer by bringing on record any adverse material. Further, undisputedly, the books of account of the assessee were duly audited and there is no finding to the effect that the assessee had inflated the cost of raw material or cost of processing or that he had made sales outside the books or that the sale price were suppressed. The assumption of the Assessing Officer was clearly therefore sans documentary proof. The Ld. CIT (Appeals) has also given finding of fact that the gross profit rate shown by the assessee is progressive having increased from 12.48% in the preceding year to 14.30% in the year under consideration. In view of the same, we agree with the Ld. CIT (Appeals) that there is no reason at all to reject the books of account of the assessee and estimate the gross profit. - Decided against revenue.
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2017 (2) TMI 1512
Income derived from ‘income from business’ or ‘income from other sources’ - allowing only 2% of the expenditure on adhoc basis - HELD THAT:- It is a fact that the assessee had not carried out any Segment I business activity i.e. incubation of new entities during the year under appeal. It had only carried out Segment II business activities during the year under appeal. The various streams of income derived from Segment II business activities were stated elsewhere hereinabove in this order. This fact was lost sight by the lower authorities and the findings given by the appellate forums in earlier years were simply copy pasted while disposing off the appeal for the year under appeal.
We hold that the allowability of various expenses claimed by the assessee in its profit and loss account should have to be adjudicated based on the findings to be given with regard to the various streams of income in the form of shared services / infrastructure services etc by the lower authorities and the head of income thereon.
AO would have to go through all the relevant agreements entered into by the assessee and give a finding as to whether the same would fall within the objects of the assessee trust so as to fall within the ambit of business income of the assessee. In case if the same is to be construed as income from other sources, even then the allowability of the various expenses would have to be considered in the light of the provisions of section 57(iii) of the Act. We agree with the arguments of the ld AR that the findings given in the earlier years with regard to incubation of new entities does not apply to the facts during the year under appeal.
We hold that the lower authorities had not adjudicated the various streams of income in the correct perspective for the year under appeal. Accordingly, we deem it fit and appropriate, in the interest of justice and fair play, to set aside the entire assessment to the file of the ld AO for denovo adjudication, in accordance with law. Needless to mention that the assessee be given reasonable opportunity of being heard. Accordingly the grounds raised by the assessee are allowed for statistical purposes.
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