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Income Tax - Case Laws
Showing 21 to 40 of 687 Records
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2017 (2) TMI 1511
Exemption u/s 11 - Registration u/s 12AA - amendment to sec 12A(2) - Retrospectivity - scope of amendment made in section 12A vide Finance (No.2) Act, 2014 the Income Tax Act - HELD THAT:- As decided in ST. JUDE'S CONVENT SCHOOL AND OTHERS [2016 (9) TMI 1382 - ITAT AMRITSAR] The first proviso to section 12A(2) of the Act is applicable retrospectively. Likewise, for the same reasoning, it is also held, regarding the second batch of appeals, that even the second proviso to Section 12A(2) is retrospective in nature and the completed assessments in these cases ought not to have been reopened only for non-registration for the relevant assessment years. - Decided in favour of assessee.
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2017 (2) TMI 1508
Disallowance u/s 14A r.w.s. 8D - HELD THAT:- Disallowance made by the AO is more than the exempted income claimed by the assessee. On a similar issue the ITAT Delhi Bench ‘D’ in the aforesaid referred to case of M/s Global Capital Ltd., New Delhi [2015 (11) TMI 1667 - ITAT DELHI] by following the earlier decision in the case of Indus Valley Investment & Finance (P) Ltd.[2015 (4) TMI 1171 - ITAT DELHI].
As relying on GLOBAL CAPITAL LTD. VERSUS ACIT, CIRCLE-12 (1) , NEW DELHI. [2015 (11) TMI 1667 - ITAT DELHI] direct the AO to make the disallowance to the extent of the income claimed by the assessee as exempt - Appeal filed by the assessee is partly allowed.
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2017 (2) TMI 1507
Penalty u/s.271D - assessee received cash loans from his two partnership firms - violation u/s 269SS - proof of bonafied belief - whether transactions between a firm and partner do not attract the rigor of 269SS and 269T? - HELD THAT:- Revenue fails to dispute all the stated decisions holding that Section 269SS is not attracted in transactions between a partnership firm and its partner not partaking the character of a loan and deposit in general law as held in another co-ordinate bench decision in ITO vs. Bharat kumar Dayaram Patel[2010 (10) TMI 1228 - ITAT AHMEDABAD]. We accordingly draw support therefrom and uphold the CIT(A)’s order under challenge deleting Section 271D penalty in question. - Decided against revenue.
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2017 (2) TMI 1504
Levying Dividend Distribution Tax (“DDT”) u/s 115-O - buy back of equity shares was treated as Distribution of Dividend under Section 2(22)(d) of the Act and consequently levy of Dividend Distribution Tax (‘DDT’) - Applicability of Section 115QA - amount remitted by the Appellant to its shareholders on account of buy-back of shares made in accordance with the provisions of section 77A of the Companies Act, 1956 - AO alleging that Appellant resorted to the use of colourable device to avoid payment of tax in India while distributing profits to its shareholders - HELD THAT:- There is no dispute that the holding company of the assessee based in Mauritius is holding more than 99.99% of the shares of the assessee. Therefore if any payment is made by the assessee to the holding company, the same would be treated and deemed as dividend in view of the provision of Section 2(22) of the Act however, in this case the payment in question has been made by the assessee to the holding company on account of buy back of shares. Therefore to the extent of the transaction of buy back of shares, the same cannot be classified as dividend as per the provisions of Section 2(22) when the exclusion clause (iv) of Section 2(22) has specifically excluded such a payment on purchase of its own shares from a shareholder in accordance with the provisions of Section 77A of the Companies Act from the definition of dividend.
After the insertion of Section 115QA, the purchase of its own shares by the company in accordance with the provisions of section 77A of the Companies Act shall be charged to DDT. Since this transaction in the case of the assessee is prior to 1.6.2013 therefore the said provision of Section 115QA is not applicable in the case of the assessee as it is explained by the CBDT vide Circular No.3/16.
CBDT has clarified that the consideration received on buy back of shares between the period 1.4.2000 to 31.5.2013 would be taxed as capital gain in the hands of the recipient in accordance with the provisions of Section 46A of the Act and no such amount shall be treated as dividend in view of the provisions of Section 2(22)(iv) - AO has accepted that the capital gain in the hand of the holding company is not chargeable to tax as per the provisions of Article 13(4) of Indo-Mauritius DTAA. Therefore on principle we are of the view that the transaction of buy back of shares prior to 1.6.2013 does not attract Section 115QA as well as Section 2(22) of the Act.
Payment on account of buy back made by the assessee to its holding company to the extent of the fair market price of the share of the assessee company - same would be treated as capital gain in the hand of the holding company as per the provisions of Section 46A and in view of the provisions of Indo-Mauritius DTAA the capital gains on account of sale of share is not chargeable to tax in India. The payment in the name of buy back of shares made by the assessee over and above the fair market price of the share of the assessee would not be treated as part of the purchase price because the transaction is between the two closely related parties and therefore the payment which is in excess of fair market price of the share of the assessee company would certainly fall in the ambit of Section 2(22)(e) of the Act. There is no dispute regarding the other condition of the holding company having a voting power of not less than 10% as it holds the shares of the assessee to the extent of 99.99%. In case the buy back price is not based on the real valuation and it is artificially inflated by the parties then it is certainly a device for transfer of the reserves and surplus to the holding company by avoiding the payment of tax and therefore it will be treated as a colourable device.
Buy back price paid by the assessee to its wholly owned holding company does not represent true fair market price of the share of the assessee then it is nothing but a dubious method of avoiding the tax in the garb of buy back. Thus if the buy back price paid to the holding company is unrealistic and highly inflated then to that extent the transaction of payment to the holding company has been given a colour of payment towards buy back. We find that neither the Assessing Officer nor the DRP has decided this issue of actual fair market price of the share of the assessee as on the date of buy back to ascertain whether the payment made by the assessee @ ₹ 2,85,108 per share is unrealistic and artificially inflated with the motive to avoid tax. Hence this issue of examination of the fair market price of the share vis-à-vis the buy back price of the assessee is set aside to the record of the Assessing Officer for adjudication as per law - Appeal of the assessee is partly allowed.
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2017 (2) TMI 1501
Disallowance of deduction u/s 36(1)(viii) - claim was based on the belief that the main object of the assessee is to promote Housing Finance Companies - as contented deduction u/s 36(1)(viii) is available to the assessee to the extent of amount not exceeding 20% of the profits derived from eligible business - whether refinancing activities can be considered as provision of long term finance for construction and purchase of houses in India for residential purposes or not? - HELD THAT:- As our answer to this is in negative because whenever govt the legislature wanted to include refinancing activities also eligible for deduction u/s 36(1)(viii) it has amended the provisions in the similar manner in which the amendment is made by Finance (2) of the Act of 2009. As the agricultural refinance activity was not eligible for deduction u/s 36(1)(viii) prior to Finance No. (2) Act, 1971 and the eligible business inserted was “industrial or agricultural development‟ by which agricultural refinance activities were made eligible for deduction. The amendment by Finance No. (2) Act of 2009 is also the similar amendment where the eligible business is included as “development of Housing in India” from “construction or purchase of houses in India”. Therefore, it is apparent that prior to this assessee was not eligible for deduction u/s 36(1)(viii) of the Act. in view of this Ground Nos. 1 and 2 of the appeal of the assessee which are against sustenance of disallowance u/s 36(1)(viii) of the Act are dismissed.
Nature of loss - Loss of the security transaction - disallowing the loss with respect to securities - money been lost by assessee in Shri Harshad Mehta scam - revenue or capital loss - HELD THAT:- In the present case the lower authorities have viewed it as loss arising on purchase of securities but in fact there is no information about whether the securities were at all purchases by the assessee or not. if the assessee has lost sum paid by it for purchase of security i.e. advance for security and the same has been lost then it would be business loss allowable in the year in which it is incurred. It is undoubtedly this money has been lost by assessee in Shri Harshad Mehta scam. This aspect is also required to be examined with respect to the provisions of National Housing Bank Act wherein section 14 of that act provides nature of business it can carry on.
It is necessary to examine whether the assessee has incurred loss on account of securities transactions entered transaction or it is a case of loss of advances given by the assessee for purchase of securities. If the transaction of securities are backed by physical possession of security notes or securities in Demat form then only it can be considered as loss on transaction in securities. If it is advance given by the assessee for the purchase of security and lost then it may be considered as business loss provided same is incurred during the course of the business of the assessee. If the same is incurred during the course of the business of the assessee then same shall be allowable as revenue loss in the year in which it is incurred.
In the present case it is not available before us that assessee was engaged in business of trading of the securities for which money was paid to the state bank of India. As the assessee itself claims that it is managing two portfolios of securities: one as trader and another as investor then if the funds were given for purchase of securities which are to be held as stock in trade then it can be considered as allowable loss and if it is given for the purpose of purchase of securities to be held as investor it cannot be allowed as business loss - if the loss is held to be business loss then it can be allowed only in the year in which it is incurred. As the reason for the loss is Shri Harshad Mehta Scam it also needs to be examined whether the loss is allowable in the year it is detected or in the year in which it crystallized. All these issues needs to be examined afresh along with the year incurring of the loss - we set aside the whole issue to the file of ld Assessing Officer to reexamine the claim of allowability of the loss of the security transaction during the year. Appeal of the assessee is allowed with above direction.
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2017 (2) TMI 1500
Disallowance of claim of Section 80P - interest on Fixed Deposits with the Bank - assessee is a co-operative society which provides credit facilities to the farmers. The assessee earned interest on fixed deposits from SBI, Agriculture Development Bank, Station Road Branch, Bellary - AO denied the claim under Section 80P in view of the decision of the Hon'ble Supreme Court in the case of Totgars Co-operative Sales Society Ltd. [2010 (2) TMI 3 - SUPREME COURT] - HELD THAT:- Hon'ble Supreme Court in the case of Totgars Co-operative Sales Society Ltd. Vs. ITO [2010 (2) TMI 3 - SUPREME COURT] and held that when the society has surplus funds which were made fixed deposit in the bank to earn interest, the same is eligible for deduction under Section 80P of the Act.
When the amount which was deposited in the bank was not an amount due to members and it was not the liability of the society to the members then the interest earned from the deposits in the bank was held to be eligible for deduction under Section 80P (1) as well as 80P(2)(a)(i) of the Act. In the case on hand, the assessees are co-operative societies providing the credit facilities to its members. The Assessing Officer has noted that the assessee has earned interest on funds which are not required for the business deposited in the fixed deposit in the bank. - Decided in favour of assessee.
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2017 (2) TMI 1498
Deduction u/s 80IC - profits relating to outsourced process - sale of products got manufactured from others through job work - Manufacturing of SS Flats - assessee was in the business of manufacturing stainless steel flats - gross total income declared by the assessee for the year included profit and gains from its industrial undertaking at Kala Amb,Himachal Pradesh - HELD THAT:- After considering the facts of each case, the courts ruled that it is not essential for the assessee to carry out the entire manufacturing activity itself, for the purpose of claiming deduction on the profits earned thereon and even if a part of the activity is outsourced or for that matter even if the whole manufacturing activity is outsourced, but carried on under the supervision and control of the assessee, it would still tantamount to manufacturing being carried out by the assessee itself, making it eligible to claim deduction of profits earned thereon.
Entire manufacturing activity of SS flats was under the supervision and control of the assessee itself and took place either in its own premises or was outsourced as per its own specification - it can be said without any hesitation that it was the assessee who was indulging in the manufacturing of SS flats - it is not the case of the Revenue that the assessee was buying SS flats from an outside party and then selling it. Therefore, for the aforesaid reasons, we hold that the assessee undertook the manufacturing of SS flats and was entitled to claim deduction on entire profits earned from the same.
Assessee was only required to “manufacture” SS Flats to be eligible to claim deduction u/s 80IC,which since we have already held so above,the assessee was entitled to claim deduction of entire profits earned on the same u/s 80IC of the Act. For the said reason also we are not in agreement with the contention of the Ld. DR that the profits should be apportioned to different activities involved in manufacturing of a product and deduction u/s 80IC thereafter be restricted to profits on manufacturing carried out by the assessee only
While allowing deduction on part of the profits earned by the assessee, the Revenue admits that the assessee is involved in manufacturing activity. Also admittedly the assessee has been allowed deduction of entire profits in earlier years in identical set of facts. DR has not controverted this fact contended by assessee. Therefore also there is no reason to restrict the deduction to the extent of manufacturing activity carried out by the assessee in the impugned year.
DR applied the provisions of section 80 IA(10) - For the applicability of section 80IA(10) it has to be demonstrated that there was an arrangement between the two parties which resulted in the inflation of profits in the case of the assessee. In the absence of both the conditions specified under section 80IA(10) we hold that the said provision of has been incorrectly applied by the Ld. CIT(Appeals) to the facts of the case and the addition made by applying the same is therefore grossly incorrect.
Manufacturing of SS Flats was carried out by the assessee and thus it was entitled to claim deduction of entire profits earned on the same u/s 80IC
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2017 (2) TMI 1497
Capital gain in the hand of members of society - real owner - agreement with a developer for development of said property entered -whether transfer of lease hold was not covered by provisions of section 50C - HELD THAT:- The developer had made payments to the Society as well as to the members and they had offered the amounts, received by them, for taxation. In our opinion, once the members had shown the income received by them in their hands there can - not be any justification for taxing the same in the hands of society. No double taxation and no double deduction is one of the well recognised and fundamental principles of taxation. In our opinion, signing of agreement by the members or society cannot be base for taxing of income. As per the scheme of the Act, income received by any person or income accrued to him has to be taxed. In the case under consideration, income was received by the members and they had offered the same for taxation.
We also hold that Society was only the lessee and what was transferred to the developer was development rights not land or building - No authority is required to hold that terms ‘land or building’ ‘or both’ do not include development rights and that in the case before there was transfer of such rights only. In light of the above discussion and respectfully, following in the case of Raj Ratan CHS [2011 (2) TMI 96 - ITAT MUMBAI] we hold that FAA was not justified in taxing the sum in the hands of the assessee, as same was the income of the members of the society. GOA. 2 is decided in favour of the assessee.
Addition of receipt towards corpus fund - FAA held that payment by the developer to the society could not be treated as payment towards corpus of the society, that the AO had rightly held that the disputed amount was to be assessed as income from other sources - AR argued that the assessee had received only during the year, that the CIT(A) had wrongly assessed the income under the head income from other sources - HELD THAT:- We find that the FAA had held that ₹ 3. 50 crores only were to be taxed during the year under consideration, that the income was to be taxed under the head income from other sources. It is a fact that society had not given possession of land to the developer during the year under consideration. In our opinion, the money received by the assessee during the year i. e. ₹ 3. 50 crores was to be assessed under the head capital gains, as claimed by the assessee. Fourth Ground is decided in favour of the assessee.
Payment to MHADA treated as income of the assessee - HELD THAT:- There is a difference between an amount which a person is obliged to apply out of his income and an amount which by the nature of the obligation cannot be said to be a part of the income of the assessee. Where by the obligation income is diverted before it reaches the assessee, it is deductible; but where the income is required to be applied to discharge an obligation after such income reaches the assessee, the same consequence, in law, does not follow. It is the first kind of payment which can truly be excused and not the second. The second payment is merely an obligation to pay another a portion of one's own income, which has been received and is since applied. We are of the opinion that disputed amount falls in first category. In the case before us, the obligation income was diverted before it reached the assessee. Besides, the payment is not in doubt and it is also a fact that same was made in connection with the development of the property. So, as a corollary, it has to be allowed as an allowable expenditure. - Decided in favour of assessee.
Benefit of deduction u/s 80P(2)(d) and 80P(2)(c)(ii) - AO had invoked the provisions of Sec. 80P (2) (f)and denied the society the benefits claimed by it - HELD THAT:- The sub sections of 80P deal with different claims and operate in different fields. The provisions of one sub section cannot be imported to another sub section. It is a fact that the Registrar of Co-op. Hsg. Society had not cancelled the registration of the Housing Society on the alleged violation of principle of mutuality or bye laws. In these circumstances, in our opinion the FAA has rightly held that deduction claimed by the assessee under sub-sections (d) and (c)(ii) cannot be denied the assessee. Upholding his order, we dismiss the ground raised by the AO.
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2017 (2) TMI 1496
Condonation of delay in filing of the appeal - HELD THAT:- Assessee is a habitual defaulter as she has not filed the appeal in time either before the CIT(Appeals) or before the Tribunal. The appeal before the CIT(Appeals) was late by 564 days which was not duly explained. Having realized that she has filed the appeal late before the CIT(Appeals), she did not make any effort to file the appeal before the Tribunal in time. No fresh evidence is filed with regard to non-filing of appeal by the ld. Authorized Representative.
If the Authorised Representative has not discharged his duties in time, it amounts to professional misconduct, for which the assessee ought to have lodged a complaint before the Competent Authority in order to justify his act. But, nothing was done. Therefore, the story propounded by the assessee cannot be believed. Since the assessee is a habitual defaulter, she deserves no concession by the authorities.We are therefore of the view that it is a fit case where the condonation of delay in filing of the appeal can be denied. - Appeal of assessee dismissed.
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2017 (2) TMI 1494
Penalty u/s 271D - addition invoking the provisions of section 269SS on alleged acceptance of cash deposits - CIT (Appeals) who deleted the penalty levied by holding that the assessee had not accepted any loan or deposit and, therefore, provisions of section 269SS of the Act were not applicable - HELD THAT:- The ratio laid down by the Hon'ble Apex Court in the case of Jai Laxmi Rice Mills [2015 (11) TMI 1453 - SUPREME COURT] squarely applies and with the annulling of the initial assessment order passed in the case of the assessee by the I.T.A.T., the penalty initiated therein u/s 271D also did not survive. Further in the absence of any further satisfaction for levy of penalty the said order levying penalty u/s 271D could not have been passed - Decided against revenue.
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2017 (2) TMI 1493
Deduction u/s.80IA - two projects i.e. land filling and incinerator amounted to a composite project for treatment of solid waste meaning thereby that the same were not to be treated as separate projects so as to be independently considered for the purpose of granting Section 80IA deduction - HELD THAT:- It emerges that the assessee has amply demonstrated during the course of lower proceedings that two projects in question are in fact separate ones. We afforded amply opportunity to learned Departmental Representative to rebut all the above extracted evidence / pleadings to the effect that the two projects i.e. land filling and incinerator one are very much separate. The Revenue fails to quote any material against the same. We accordingly find no reason to interfere with the CIT(A)’s conclusion under challenge. This former substantive ground thus fails.
Addition collection by the assessee in the nature of non refundable receipts treated income in the course of assessment and deleted in lower appeallate proceeding - whether the assessee’s advance receipts from its customers in the nature of non refundable receipts are to be treated as income in entirety pertaining to relevant assessment year or not? - HELD THAT:- We find that hon’ble jurisdictional high court’s decision in Unique Mercantile Services Pvt. Ltd. [2015 (1) TMI 525 - GUJARAT HIGH COURT] decides a similar question pertaining to membership fee spreading over to a time span of more than one assessment year to be taxable on prorata basis. We adopt the same reasoning herein as well and direct the Assessing Officer to assess the above stated non refundable receipts by adopting similar proportionate computation formula. This Revenue’s ground is accordingly accepted for statistical purposes.
Excluding interest income and one time membership fee for incinerator plan for the purpose of computing Section 80IA deduction - HELD THAT:- It emerges that the assessee’s interest income in question arises from fixed deposits maintain with bank in order to comply with Gujarat Pollution Control Boards, norms, terms and conditions since it has to upkeep the site in question for a period of 30years of closure date - Both the learned representatives very much agree that a co-ordinate bench in assessees’ cases itself for assessment years 2002-03 to 2004-05 has already reversed similar exclusion thereby treating identical interest income as eligible profits for the purpose of Section 80IA deduction. We quote the very reasoning herein as well assessee’s former limb of the impugned disallowance pertaining to interest income.
One time membership fee for incinerator plant - There can hardly be any dispute that the assessee charges the above fee for its enrolments of members for the incinerator plant in question. We observe in these facts that the said fee is very much liable to be treated as business profits as accepted in assessee’s books as profit and gain of business and profession which have nowhere been rejected in course of the lower proceedings. We accordingly accept assessee’s arguments against this latter exclusion as well.
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2017 (2) TMI 1491
Characterization of income - Entertainment tax receipt - revenue receipt OR capital receipt - HELD THAT:- We find that the claim of subsidy at various Multiplexes from Serial No. 1 to 9 above have been accepted as capital receipt in earlier years. This has not been disputed by any of the lower authorities. The only dispute relates to the subsidy received from the Government of Rajasthan . It is also not in dispute that in pursuance of the terms of scheme introduced by the Government of Rajasthan to encourage construction of new cinema halls, assessee was running a cinema hall. It is also not in dispute that the assessee could receive the subsidy only after the fulfillment of the mandatory conditions. These facts have not been controverted by any of the lower authorities. Thus we direct the A.O. to treat the amount as a capital receipt.
Disallowance u/s 14A r.w.r. 8D - HELD THAT:- It is not in dispute that the assessee has not received any exempt income during the year under consideration. The disallowance has been made on finding of the fact that the assessee has made certain investments out of borrowed funds. In our considered opinion, since the assessee has not earned any exempt income, no disallowance u/s. 14A read with Rule 8D is called for. Our view is also fortified by the decision of the Hon’ble High Court of Gujarat in the case of Corrtech Energy Ltd. [2014 (3) TMI 856 - GUJARAT HIGH COURT]held “that the Tribunal had recorded the finding of fact that the assessee did not make any claim for exemption of any income from payment of tax. Hence, no disallowance could be made u/s. 14A.
Deduction of amortization of value of stock options to employees - HELD THAT:- As relying on First Appellate Authority derive support from the findings of the Special Bench of the Tribunal in the case of Biocon Ltd [2013 (8) TMI 629 - ITAT BANGALORE]amount being remuneration to employees by way of Employees' Stock Option Plan debited to profit and loss account is an allowable expenditure u/s 37(1).
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2017 (2) TMI 1484
Revision u/s 263 - disallowance of royalty and technical fees - AO disallowed 25% of the expenditure as capital expenditure - HELD THAT:- On this disallowance we do not agree with the order of ld CIT to hold that 75% of amount of expenditure allowed by the AO is erroneous and prejudicial to the interest of the revenue. Furthermore, the ld CIT has set aside the issue to the file of Assessing Officer to carry out the full enquiries in the matter. It is also contrary to the principal laid down by the Hon'ble Delhi High Court in CIT Vs. Jyoti Foundation [2001 (11) TMI 48 - GUJARAT HIGH COURT] and DG Housing [2012 (3) TMI 227 - DELHI HIGH COURT]. It can also be not said that there is lack of enquiry on the aspect of allowability of expenditure. The ld Assessing Officer himself raised the query with respect to the allowability of the above expenditure is revenue expenditure, considered the reply of the assessee, thereafter has reached at a conclusion that 25% of the expenditure is capital in nature. Therefore the Ld. assessing officer has examined the expenditure with reference to capital expenditure versus revenue expenditure and its allowability vis a vis quantum also. Therefore, it cannot be said that the view taken by the AO is erroneous. Furthermore, ld CIT has failed to establish what is the error committed by the Assessing Officer. He has merely stated that in the order of the ld Hon'ble High Court in Southern Switchgear [1983 (3) TMI 18 - MADRAS HIGH COURT] there are two other decisions of Hon'ble High Court were referred where 50% and 100% of the expenditure were held to be capital in nature. Therefore, it is clearly discernible that ld CIT is just questioning the estimate made by the Assessing Officer. Therefore, we are not inclined to uphold the order of ld CIT u/s 263 of the Act on this count.
Disallowance of 25% model fee holding it as capital in nature - HELD THAT:- The issue of allowability of the model fee has also been examined by the Hon’ble high court in case of the assessee wherein it has been held to be revenue in nature and fully liable to the assessee.
During the course of assessment proceedings the Ld. assessing officer has raised the adequate queries on this point which was also replied by the assessee therefore we are not inclined to hold that it is also a case of Lack of Inquiry.
Therefore for similar reasons given by us on the issue of royalty and technical guidance fees for this ground also we are not inclined to uphold the order of the Ld. CIT holding that the order of the Ld. Assessing officer is erroneous and prejudicial to the interest of revenue.
TDS u/s 195 on export commission - HELD THAT:- AO has made due enquiry in applicability of withholding tax on export commission and when the claim of the assessee is also supported by 2 circulars we do not find any infirmity in the order of the Ld. assessing officer in allowing the export commission to a foreign party when no services have been rendered in India. It is also not the case of the Ld. CIT that income of the agent is chargeable to tax in India when the recipient is resident of Japan.
CIT has incorrectly assumed jurisdiction on this issue. Further, the issue has already been decided in favour of the assessee by the coordinate bench in assessment year 2006 – 07 and 2007 – 08 allowing the claim of the assessee of export commission; therefore it cannot be said that the view taken by the Learned assessee officer was erroneous in allowing the claim of the assessee of the export commission.
CIT has also not referred to any of the judicial precedents where the export commission has been held to be royalty or fees for technical services none has been brought to our notice by the learned CIT during the course of hearing - Thus not possible to hold that the order of the Ld. assessing officer was erroneous. Therefore we quash the order of the Ld. CIT in assuming jurisdiction under section 263 of the income tax act with respect to allowance of export commission.
Double disallowance of depreciation - HELD THAT:- Claim is allowed is related to the assessee in the consequential order dated 26/10/2009 passed under section 143 (3) read with section 263 of the income tax act therefore it is unfair for Ld. CIT to assume jurisdiction under section 263 of the income tax act.
Additional depreciation on the computers - HELD THAT:- The query was raised during the course of the assessment proceedings which was replied on 01/12/2006 explaining the fulfillment of conditional for claim of additional depreciation with risk back to various assets. As claimed by the assessee that this issue has been decided in favour of the assessee by dispute resolution panel in its own case for assessment year 2006 – 07 therefore it cannot be said that the claim allowed by the ld. assessing officer is erroneous at all. In view of this we cannot sustain the order of Ld. CIT in assuming jurisdiction under section 263 of the income tax act, as it cannot be said that the order of the Ld. assessing officer in allowing additional depreciation on computers is erroneous as well as prejudicial to the interest of the revenue. - Assessee appeal allowed.
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2017 (2) TMI 1483
Disallowance on account of loss from stock market activity claimed as ‘set off’ against the profit from money market activity - whether the transactions carried out by the assessee of trading of money market securities was speculative or non-speculative in nature? - HELD THAT:- As demonstrated with the help of various evidences in the paper book in the form of contract notes and other documents to show that no deliveries were exchanged and only ‘difference’ amount was settled. Our attention was drawn on the ledger account containing details of trading of money market transactions showing that in all the cases only ‘difference’ amount of sale or purchase of money market securities has been credited or debited in the assessee’s a/c by the broker. These evidences have not been controverted by the Ld. Special Counsel of the Revenue. Thus, the admitted facts brought on record are that no deliveries were exchanged for carrying out money market transactions by the assessee. It is noted that in the identical circumstances ITAT in the case of Group companies of the assessee namely M/s. Growmore Leasing Investment [2015 (3) TMI 1342 - ITAT MUMBAI] held that such transactions would be speculated transactions.
Loss/profit from shares market transactions can very well be set off/adjusted against loss/profit of money market transactions. This issue has already been decided in favour of the assessee by the Tribunal in the case of group company of the assessee namely M/s. Growmore Leasing Investment (supra) as discussed above also. No distinction has been pointed out on facts or legal position by the Ld. Special Counsel of the Revenue, therefore we find that the claim of the assessee is allowable. Therefore disallowance made by the AO is directed to be deleted. Thus, ground no.2 is allowed.
Addition towards maintenance of accounts - disallowance was made by the lower authorities on the ground that the assessee was not able to prove rendering of service with regard to payment claimed to be made to one ABCD Group which refers to ‘Account Backlog Clearance Department’ - HELD THAT:- It is noted that the assessee has claimed that payment was made to the said ABCD group for clearing of backlog of accounting work. But, neither the assessee was able to show that payment was made nor the assessee was able to show anything to prove rendering of services by the payee. Thus, it could be substantiated by the assessee that this amount was incurred for the business purpose of the assessee; if at all this amount was genuinely paid. Therefore, in absence of proper substantiation, this claim is found to be not allowable. Therefore, we decline to interfere in the order passed by the lower authorities on this issue. This ground is rejected.
Depreciation on the computer - addition on the ground that user of the computers could not be proved by the assessee during the year before us - HELD THAT:- Appellant had placed order for computer system on 31.3.90 for which advance payment was made and the delivery of the System was affected on 31.3.90. In view of the above, there is no reason to reject the claim for depreciation on the computer. We agree with the Ld. CIT(A) in the order given in the first round that there was no reason to deny claim of depreciation on the computer. After taking into account overall facts and circumstances of the case, we agree with the observation and views given by the Ld. CIT(A) in the first round and therefore, delete the disallowance made by the AO in this regard.
Deduction on account of interest payable to the brokerage firms - HELD THAT:- As relying on own case [2015 (3) TMI 1342 - ITAT MUMBAI] we send this issue back to the file of Ld. CIT(A) for fresh adjudication after giving adequate opportunity of being heard to the assessee. Ld. CIT(A) shall follow the directions as have been given in the aforesaid order. This ground may be treated as allowed for statistical purposes.
Levy for interest u/s 234A, 234B, 234C - HELD THAT:- We find force in the prayer made by the Ld. counsel and accordingly hold that levy of interest is consequential u/s 234A, 234B and 234C; but restore this issue back to the file of the AO for computing the interest after giving credit of amount of TDS and AO shall follow the directions as have been given by the Tribunal in the case of group company namely M/s. Harsh Estates Pvt. Ltd. [2014 (10) TMI 925 - ITAT MUMBAI]. Thus, these grounds are sent back to the file of the AO with the same directions as given above and may be treated as allowed for statistical purposes.
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2017 (2) TMI 1482
MAT credit available u/s 115JAA of tax paid along with surcharge and education cess - Surcharge and education cess as part of the income-tax - HELD THAT:- As noted from the above working that first of all tax amount has been computed on the total income of the assessee. Thereafter surcharge and education cess has been worked out upon the tax liability. Then, from the gross amount so arrived at, the amount of credit available u/s 115JB on account of income-tax, surcharge and education cess (all combined together) have been deducted and accordingly, net tax payable after setting off credit available u/s 115JB has been worked out. In our view, this is the correct method of computing tax liability as well as credit available u/s 115JAA. Accordingly, we direct the AO to verify the facts as have been given in the aforesaid working and compute the tax liability accordingly and allow the necessary relief to the assessee
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2017 (2) TMI 1481
Estimation of income - bogus purchases - CIT(A) applying estimated net profit @ 12.5%. on the above transactions - HELD THAT:- As assessee fairly agreed that a reasonable estimate of profit should be estimated in view of the fact that neither manufacturing of moulds nor sale of moulds is under dispute. According to us, assessee had made purchase but from grey market. We find that the similar finding were given by the CIT(A) that assessee might have purchased extra profit on account of saving of sales tax and other tax. Even by purchasing from grey market, assessee might have save some profits and profit of the assessee has depicted in the above chart which is minimum at the rate of 3.90% and maximum of 9.85%. We are of the view that a reasonable estimate on profit rate at 10% will suffice the issue. Accordingly, we direct the AO to estimate the profit rate @ 10% on the above purchases and appeal of the assessee is partly allowed and that of the Revenue is dismissed.
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2017 (2) TMI 1480
Levy of penalty u/s 271(1)(c) - addition being confirmed in quantum proceedings before the Tribunal - addition of certain amount is not a ground to impose penalty on the assessee - HELD THAT:- SLP dismissed.
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2017 (2) TMI 1479
Exemption u/s 11 - application for registration under Section 12AA rejected - HELD THAT:- There is no dispute with regard to the fact that the Ld. CIT has rejected the application on the basis that no activity has been carried out, therefore, genuineness of the same cannot be commented upon. We therefore, following the judgement rendered in the case of CIT vs Vijay Vargiya Vani Charitable Trust [2015 (2) TMI 671 - RAJASTHAN HIGH COURT] set aside of the order the Ld. CIT and restore this application for registration under Section 12AA for decision afresh, to the file of Ld. CIT(E). Grounds raised in the appeal is allowed for statistical purposes.
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2017 (2) TMI 1475
Revision u/s 263 - scope and powers under Section 263 of CIT - No enquiries during the course of the assessment proceedings. In the present case the tribunal found as a fact that the “Principle of Mutuality” - HELD THAT:- The tribunal has examined this aspect in [2016 (6) TMI 370 - ITAT DELHI]. The tribunal has also examine case of SHIMLA VERSUS M/S GREENWORLD CORPORATION AND M/S THE GREEN WORLD CORPORATION VERSUS ITO, PARWANOO & ANR. [2009 (5) TMI 14 - SUPREME COURT] with regard to the scope and powers under Section 263 of the said Act.
Also order would be erroneous only when the assessing officer makes no enquiries during the course of the assessment proceedings. In the present case the tribunal found as a fact that the “Principle of Mutuality” had been examined threadbare by the assessing officer itself and therefore it was not a case where the Commissioner could have exercised jurisdiction under Section 263 of the said Act. In these circumstances, we do not feel that there is any substantial question of law which arises for the consideration, of this Court. The appeal is dismissed.
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2017 (2) TMI 1474
Disallowance u/s 14A r.w.r. 8D - assessee has earned dividend income - HELD THAT:- As decided in [2016 (11) TMI 1681 - ITAT MUMBAI] as claimed by the assessee that no borrowed funds were utilized for earning the exempt income by the assessee and further the dividend were directly credited in the bank account of the assessee and no expenditure was claimed. What it may be, we find that the assessee only received dividend income, therefore, there is no question of disallowance by invoking section 14A r.w. Rule 8D under the facts available on record.
Also explained by assessee that on identical fact in earlier years, no disallowance was made. In the present assessment year also, no borrowed funds were invested by the assessee for making investment in shares or for earning dividend income.Disallowance u/s 14A r. w. Rule 8D cannot exceed the exempt income. In view of this fact, we find merit in the claim of the assessee. The appeal of the assessee is therefore, allowed.
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