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Income Tax - Case Laws
Showing 21 to 40 of 783 Records
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2017 (3) TMI 1903
Depreciation on FSI - CIT-A restricting the claim of depreciation on FSI to 10% as against that claimed by the assessee at 25% - HELD THAT:- As respectfully following the decision of the coordinate bench in assessee’s own case[2016 (10) TMI 490 - ITAT MUMBAI] and in order to maintain judicial consistency which is applicable mutatis mutandis in the case of the assesse, we also hold that assesse entitled to depreciation @ 10% on the whole of the consideration towards FSI. In the result, this ground of appeal is dismissed.
Depreciation on intangible assets - running business which. was acquired "slump sale basis" - HELD THAT:- We have considered the aforementioned order in assessee’s own case wherein we found similar ground raised in the aforementioned appeals and identical question involved in the present case has already been decided by the coordinate bench of ITAT Mumbai in assessee’s own case.
Disallowance u/s 40A(2) - claim of interest to the assessee - Addition on the account that Mr. Ajay Ajit Peter Kerker, Chairman of the assessee company was the Director of M/s Cox & Kind India Ltd during the relevant period - HELD THAT:- We have noticed that the Revenue has not placed on record any material or findings of the AO under the identical facts and circumstances that the rate of interest paid as claimed by the assessee is either excessive or unreasonable as laid out in section 40A(2)(b) of the Act, we therefore, respectfully follow the order of Coordinate bench of Hon’ble ITAT, Jaipur bench [2016 (7) TMI 1657 - ITAT JAIPUR] - Keeping in view the above facts and while considering the facts that the AO has not recorded any finding or collected any material to show that the interest paid by the assessee was in excess of the fair market rate of interest. In the circumstances of the present case, we are of the considered view that the claim of interest to the assessee be allowed and delete the disallowance u/s 40A(2).
Disallowance of proportionate of interest u/s. 36(1)(iii) - interest free loans advanced to various parties - HELD THAT:- We find that interest free funds available with the assessee were more than the interest free loans given by the assessee. Further, even the Assessing Officer has not proved any nexus between the borrowed funds and its utilization for providing interest free loans. Therefore, while following the judgment in the case of CIT V. Reliance Utilities and Power Ltd.. [2009 (1) TMI 4 - BOMBAY HIGH COURT] and considering the facts of the present case, we are of the considered view that the Assessing Officer was not right in making the proportionate disallowance of interest u/s 36(1)(iii) of the Income Tax Act. Accordingly, we delete the disallowance made by the Assessing Officer and allow this ground raised by the assessee.
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2017 (3) TMI 1902
Characterization of receipts - income from sale of Certified Emission Reductions (CERs) - capital receipts or Revenue receipts - Whether Tribunal has erred in law and in facts treating the income from sale of Certified Emission Reductions (CERs) as revenue receipt excisable to taxation instead of treating them as capital receipt? - as alleged taxing event had not taken place during the current year, the Tribunal ought not to have proceeded further to examine the taxability in a future year - HELD THAT:- We are of the opinion that as such the Tribunal has materially erred in proceeding further to examine the taxability of the income from sale of CERs in future year. It is not in dispute that so far as the year under consideration for which the appeal was before the learned Tribunal has confirmed the order passed by the learned CIT(A) deleting the addition by observing that no such income has been received by the assessee in the year under consideration as there was neither any sale nor transfer of the carbon receipts in favour of any foreign companies during the year under consideration. Therefore, as such the issue before the learned Tribunal was as such academic.
Therefore, keeping the said question open to be considered in accordance with law in the year in which the income is derived from sale of CERs, Tribunal ought to have disposed of the appeal. At this stage it is required to be noted that even the learned Tribunal has in the impugned order has specifically observed that the learned Tribunal is making observations on the aforesaid issue to show their understanding on the issue and that they have briefly touched the issue. In any case the learned Tribunal ought not to have decided the issue which as such was academic before it.
While quashing and setting aside the observations made by the learned Tribunal with respect to the income derived from carbon receipts and/or on sale of CERs, we hold the question in favour of the assessee and against the Revenue by keeping the said question open to be considered in accordance with law in the year in which the income from sale of CERs is received. Under the circumstances, we hereby set aside the observations made by the learned Tribunal with respect to the income from sale of CERs, made in the impugned judgment and order, however keeping the said question open to be considered in accordance with law and in the year in which the income from sale of CERs is accrued / received.
Disallowance u/s 14A - Appeal ADMITTED to consider the following substantial question of law.
“Whether ITAT has erred in reversing the order of CIT(A) and confirming the order of the AO to the extent of confirming disallowance under Rule 8D r.w.s. 14A?”
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2017 (3) TMI 1899
Allowing the loss in shares as business loss instead of capital loss - assessee had shown the shares as stock in trade and the AO u/s. 143(3) of the Act for AY 2008-09 has accepted it as stock in trade and, therefore, the assessee has shown the scrips in question as opening stock in trade as on 01.04.2008 - HELD THAT:- Since there is no change in facts from the earlier assessment year and when in the earlier year AO is permitting the treatment given by the assessee for the very same shares as stock-in-trade, then in the instant assessment year without change in the facts or law, the AO ought not to have treated the shares as investment and not as stock-in-trade.
The CBDT Circular No. 6 of 2016 on 29.02.2016 has noted the dispute which consistently arose in respect to treatment of trading of shares as business or investment in shares. From a perusal of para 3(a) of the said circular, we note that the CBDT has given clear direction that where the assessee has treated the listed shares and securities as stock-in-trade, irrespective of the period of holding, the income arising from transaction of such shares/securities would be treated as its business income.
The only condition expressed by the CBDT Circular is that once the assessee has taken a stand in an assessment year that he is trading in shares as business, or as investment, then he should not change, which means that the assessee should be consistent. We note that the assessee in AY 2008-09 has treated the said five scrips purchased as stock in trade which was accepted by the AO and the same was the opening stock for the instant assessment year i.e. as on 01.04.2008, therefore, as per the Circular of the CBDT, since the assessee has taken a stand that the shares are stock in trade then irrespective of the time of holding, the income arising from the transaction of such shares needs to be treated as business income. Therefore, the Ld. CIT(A) has rightly treated the same as business income and we do not find any infirmity in the order of the ld. CIT(A) and, therefore, we dismiss this ground of appeal of the revenue.
Interest income as business income in place of income from other sources as held by the AO - HELD THAT:- From the assessment order, we do not find any discussion by the AO on treating the interest income as income from other sources. During the appellate proceedings, it was brought to the knowledge of the CIT(A) that the assessee is also in the business of granting of loans and advances, therefore, the interest income has to be treated as income from business and not from the other sources.
All throughout the earlier years the interest income of the assessee was consistently being accepted by the AO as business income and that only in this year there was a somersault done on this issue and that too without confronting the assessee in case the AO had any reservation on this issue.
CIT(A) also took note of the fact that there is not even a single word or reason in the assessment order to depart from the consistent view followed by the department and to change the view to treat the interest income as income from other sources there should be some change in facts or law, which is admittedly absent in this case. When the fact remains that the assessee is into the business of granting loans and advances, certainly the interest income of the assessee would be business income and the Ld. DR was unable to controvert the said fact before us. Therefore, we do not find any infirmity in the order of Ld. CIT(A) and we dismiss this ground of appeal of the revenue.
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2017 (3) TMI 1896
Deduction u/s 80IA(4) - Claim denied as assessee was not engaged in development of new infrastructure project - whether merely increasing the thickness & widening of an existing road would not qualify as a new infrastructure project ? - HELD THAT:- We do not agree with the authorities below that it is merely work of the maintenance and repairs but in fact it is a work of bringing into existence new infrastructure facility which is in the nature of road. We, therefore, allow the ground taken by the assessee and hold that the assessee is entitled for deduction u/s 80IA(4) of the Act and direct the Assessing Officer to allow deduction to the assessee - As deduction u/s 80IA (4) is liable to be allowed and ground of appeal no. 1 raised by the appellant is allowed.
Disallowance of interest income earned by the appellant-company on account of fixed deposits created as Debt Service Reserve Account against the term loan taken for the purpose of business - HELD THAT:- Revenue has not placed any material on record to point out any distinguishing feature in the facts of the case under consideration and the facts in assessee’s own case for A.Y. 2006-07 nor placed any material on record to demonstrate that the decision of Tribunal in assessee’s own case for A.Y. 2006-07 [2013 (4) TMI 758 - ITAT PUNE] has been set aside by the Higher Judicial Authorities.
With respect to the interest income being eligible for deduction u/s 80IA(4), we find that Ld. CIT(A) has given a finding that the fixed deposit was an essential part for availing the loan whereby assessee was required to maintain Debt Services Reserve account and for that purpose it had to necessarily place fixed deposit and on such fixed deposits the assessee had earned interest. He therefore held it to be connected with the business of the assessee. CIT(A) thereafter relying on the various decisions cited therein has allowed the claim of the assessee. Before us, Revenue has not placed any material on record to demonstrate that as to how the decisions relied upon by Ld. CIT(A) would not applicable to the present facts of the assessee. Considering the totality of the aforesaid facts, we find no reason to interfere with the order of Ld. CIT(A) and thus the grounds of the Revenue are dismissed.
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2017 (3) TMI 1894
Revision u/s 263 - Credit for tax deducted at source for the purposes of section 199 - Revenue has primarily relied on the findings of the Commissioner of Income Tax and stated that ld CIT has rightly exercised the jurisdiction u/s 263 and also submitted that as per section 199 read with Rule 37BA (3)(i), the TDS claimed by the assessee should not be allowed, that is, only those TDS should be allowed which pertain to the income declared by the assessee for the assessment year under consideration - HELD THAT:- We are of the view that there is merit in the submissions of ld DR for the Revenue, as his propositions are supported by the provisions of section 199 of the I.T. Act, read with Rule 37BA (3) of the Income Tax Rules,1962 - as per Rule 37BA(3) (i) the Credit for tax deducted at source(TDS) and paid to the Central Government, shall be given for the assessment year for which such income is assessable. The TDS pertains to advances should not be claimed by the assessee or may be claimed by the assessee in the assessment year in which said advances get converted into income.
Considering the factual position explained above, we are of the view that order passed by the ld CIT U/s 263 does not contain any infirmity and accordingly, we confirm the order passed by the ld CIT u/s 263 of the Act - Decided against assessee.
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2017 (3) TMI 1892
Nature of land sold - agricultural land or capital asset - distance of agricultural land from the nearby municipality - Addition of amount received from sale of agricultural land under the head “capital gain” - On the basis of information obtained from MMRDA, the Assessing Officer concluded that the assessee’s claim that the agricultural land cannot be treated as capital asset under section 2(14)(iii) is not acceptable - whether the distance between the agricultural land sold by the assessee is within the prescribed limit of 8 kms. of municipal limit as provided under section 2(14)(iii)? - HELD THAT:- Distance measured by the competent authority is by the method of shortest road distance. On a reading of section 2(14)(iii) of the Act, we have noted that the distance as per sub–clause (b) is to be measured aerially. However, such amendment brought to the statute is effective from 1st April 2014. By way of further clarification, the CBDT has issued Circular no.17 of 2015 dated 6th October 2015, wherein, it has been clarified that the measurement of the distance aerially is to be applied from the assessment year 2014–15 and not to the prior assessment years.
Thus keeping in view the letter dated 2nd February 2016 of the competent authority and the CBDT circular referred to above, prima–facie it appears that the agricultural land situated at Village Vardoli may not be coming within the definition of capital asset in terms of section 2(14)(iii) of the Act. Therefore, the assessee’s claim of exemption, at least, in respect of the agricultural land situated at Village Vardoli appears to be valid. However, since the certificate issued by the competent authority specifying the distance have not been examined keeping in view the CBDT circular referred to above, we are inclined to set aside the impugned order of the learned Commissioner (Appeals) and restore the matter back to the file of the AO to verify assessee’s claim on the basis of the certificate issued by the competent authority as well as CBDT Circular no.17 of 2015. We must observe, the Assessing Officer should afford reasonable opportunity of being heard to the assessee and pass a speaking order dealing with the objections / submissions of the assessee on the issue. Assessee’s appeal allowed for statistical purposes.
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2017 (3) TMI 1888
TDS u/s 195 - Disallowing software purchased by way of imports 40(a)(i) on account of non deduction of TDS - Whether payments made for software purchased by the assessee amounted to “royalty’ as envisaged in Explanation 3 to section 9(1)(vi)? - CIT-A deleted the addition - HELD THAT:- Perusal of the agreement suggests that neither there was any transfer of copyright nor the vendor has given any permission for commercial exploitation of the copyright of the software. No source codes etc have been supplied by the vendor to the assessee. There is no permission given to the assessee to make any modification or re-engineering of the software, which was supplied for the limited purpose of internal use of the assessee. Ownership with regard to title and interest in the licensed software is retained by the supplier.
It is noted that in the case of Shinhan Bank vs DDIT [2016 (7) TMI 1432 - ITAT MUMBAI] similar situations arose before the Mumbai bench of the Tribunal wherein the AO had disallowed the deductions claimed by the assessee on account of payment made for purchase of software u/s 40(a)(i) for non deduction of tax at source u/s 195 by the said assessee. Hon’ble Bench examined latest legal position in this regard and held that impugned payments were not liable to the taxed as ‘royalty’ in the hands of payees (i.e. suppliers) and therefore, no tax was required to be deducted at source and thus no disallowance could have been made u/s 40(a)(i).
Identical situation came up in the case of CIT vs Vinzas Solutions India (P) ltd [2017 (1) TMI 1102 - MADRAS HIGH COURT] wherein the department invoked provisions of section 40(a)(i) by treating the amount of purchase of software as ‘royalty’ under Explanations 4 and 5 of section 9(1)(vi) of the Act and the assessee in the said case was a dealer engaged in buying and selling of software products in the open market. It was contended on behalf of the assessee before the Hon’ble High Court that the transaction in question was one of purchase and sale of product and nothing more.
Thus we find that it was rightly held by Ld. CIT(A) that TDS was not required to be deducted in this case. Therefore, disallowance made by AO by invoking provisions of section 40(a)(i) has been rightly deleted by Ld. CIT(A). No interference is called for in his order and therefore, the same is upheld. - Decided against revenue.
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2017 (3) TMI 1887
Levying penalty u/s 271(1)(c) - assessee has concealed its income and has furnished inaccurate particulars thereof - AO estimated the profit at the flat rate of 8% and determined the assessment - HELD THAT:- We find, there is no dispute on the fact that the additions made by the AO certainly involves estimations. It is a settled legal proposition in such matters the penalty u/s 271(1)(c) of the Act is not excisable in respect of the ad-hoc additions involving estimations. Accordingly, we are of the considered opinion that this is not a fit case for levy of penalty. Accordingly we order. Thus, grounds raised by the assessee are allowed.
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2017 (3) TMI 1885
Penalty levied u/s 271(1)(c) - additions were confirmed in the quantum appeal - bogus purchases - HELD THAT:- As the expenses or the credits which were shown by the creditors cannot be proved, therefore, no substantial tax is paid. Therefore, in that view of the matter, on the basis of the observations made in Aiyub Umarji Patel [2013 (2) TMI 738 - GUJARAT HIGH COURT] and Oasis Hospitalities (P) Ltd. [2011 (1) TMI 194 - DELHI HIGH COURT] in our view, the issue is required to be answered in favour of the assessee and against the department.
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2017 (3) TMI 1884
Addition under the head paid up capital of 117 companies - search u/s. 132(1) - block assessment - AO has added the entire paid up capital of the 117 companies of the assessment order for the block period on the ground that the assessee could not state the exact paid up capital nor could he explain the source of the capital in the said companies to his satisfaction - CIT-A deleted the addition - HELD THAT:- We concur with the view of the Ld. CIT(A) for deleting the addition made on this account because all the companies are separate legal entities and have been assessed separately and that the accounts of these companies are statutorily audited and moreover they have disclosed their paid up capital in their respective Balance Sheets every year and, therefore, cannot be termed as undisclosed income.
Without bringing any evidence to show that the companies which are legal entities and assessed to tax every ear, have not disclosed the paid up capital or less paid up capital, the amount of paid up capital which have been disclosed in its balance sheet every year, ought not to have been fastened in the hands of the assessee. AO failed to bring on record that the entire amount of paid up capital as shown by the companies originated from the assessee’s coffers and without making any enquiry from the said companies as to their respective paid up capitals and who were the share holders and without bringing any evidence on record to suggest that the paid up capital of those companies were funded only by the assessee, the AO ought not to have made the addition without any basis the addition made cannot be sustained. Therefore, we do not find any infirmity in the order passed by the Ld. CIT(A) and the same is hereby upheld. This ground of appeal of revenue is dismissed.
Addition under the head income from undisclosed source - HELD THAT:- As the credit entries in the books were related to AY 1995-96 to 1996-97, which have been assessed in the regular assessment, so assessee cannot be taxed again during the block assessment as held by Hon’ble jurisdictional High Court in Caltradeco Steel Sales (P) Ltd. [1999 (8) TMI 18 - CALCUTTA HIGH COURT] - DR at the time of hearing before us could not point out any infirmity in the order passed by the ld. CIT(A) so as to warrant our interference and, therefore, we are inclined to uphold the order of the Ld. CIT(A) and dismiss this ground of appeal of the revenue.
Unexplained deposits - loose sheets of the blank cheques signed by the account holders found that the assessee had been indulging in name lending business - HELD THAT:- The cash deposited in the proprietary concern does not belong to the assessee but belongs to the beneficiaries listed as annexure – II to the assessment order. Therefore, the addition made by the AO is not on the basis of evidence or material to even remotely suggest that cash deposited in bank account belongs to assessee and the impugned addition is totally contradictory to the findings recorded at various places in the assessment order and the Ld. CIT(A) erred in not appreciating the aforesaid findings of the AO and has simply relied on a portion of the statement recorded which has been subsequently retracted by the assessee, cannot be the basis of confirmation of addition which has no legs to stand and, therefore, we are inclined to delete the addition.
Advancing loans to the beneficiary companies - assessee had made a statement before the authorities below during the course of search which has definitely got evidentiary value - HELD THAT:- We note that the AO himself has clearly made a finding that the assessee is not a man of means and he has also accepted the fact that he is only in the name lending and providing accommodation entry for a small commission. The illustration given by the AO is based on the material seized from the search and the modus operandi has been clearly spelled out by the AO, that is the basis on which the AO went ahead to add the income on protective basis and took steps to tax the beneficiaries listed out at Annexure-II to the assessment order. It has been brought to our notice that in the case of the beneficiary, that is M/s Trinetra Commerce & Trade Pvt. Ltd., the addition on substantive basis was upheld by the Hon’ble Calcutta high Court in [2016 (10) TMI 974 - CALCUTTA HIGH COURT]. So, therefore, the addition based on statement alone which has been recorded when he was mentally disturbed cannot be sustained. In the light of the facts and circumstances of the case, the AO’s order relying only on the statement of the assessee to fasten the liability on the assessee is unsustainable and, therefore, we are inclined to delete the addition made on this ground.
Assessee has returned huge income pursuant to the notice u/s. 158BC - addition on protective basis - HELD THAT:- we note that the AO himself finds that the assessee is a man of no means and was of the considered opinion that crores of rupees cannot belong to the assessee. Therefore, in the peculiar facts and circumstances of the case, merely became the assessee returned ₹ 7.10 cr. as income in a disturbed mental condition cannot be the bed-rock on which the assessment of income of the assessee can be made. In the peculiar facts and circumstances of the case, we set aside the addition of ₹ 7.10 cr. and in the interest of justice, this issue is restored back to the file of the AO to examine the seized material and then recompute the income of the assessee for the block period. The AO shall correlate the material seized based on which the AO shall arrive at the correct taxable income of the assessee for the block period.
Appeal of the assessee is partly allowed for statistical purposes.
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2017 (3) TMI 1882
Revision u/s 263 by CIT - period of limitation - addition on account of receipt of share capital - Reopening of assessment u/s 147 initiated - HELD THAT:- It is relevant to mention that we have disposed of more than 500 cases involving same issue through certain orders with the main order having been passed in a group of cases led by Subhlakshmi Vanijya Pvt. Ltd. [2015 (8) TMI 174 - ITAT KOLKATA] as held the notices u/s 263 were properly served through affixture or otherwise. Further the law does not require the service of notice u/s 263 strictly as per the terms of section 282 of the Act. The only requirement enshrined in the provision is to give an opportunity of hearing to the assessee, which has been complied with in all such cases.
Limitation period for passing order is to be counted from the date of passing the order u/s 147 read with sec. 143(3) and not the date of Intimation issued u/s 143(1) of the Act, which is not an order for the purposes of section 263. In all the cases, the orders have been passed within the time limit.
CIT having jurisdiction over the AO who passed order u/s 147 read with section 143(3), has the territorial jurisdiction to pass the order u/s 263 and not other CIT.Addition in the hands of a company can be made u/s 68 in its first year of incorporation.
After amalgamation, no order can be passed u/s 263 in the name of the amalgamating company. But, where the intention of the assessee is to defraud the Revenue by either filing returns, after amalgamation, in the old name or otherwise, then the order passed in the old name is valid.
Order passed u/s 263 on a non-working day does not become invalid, when the proceedings involving the participation of the assessee were completed on an earlier working day.
Order u/s 263 cannot be declared as a nullity for the notice having not been signed by the CIT, when opportunity of hearing was otherwise given by the CIT.
Refusal by the Revenue to accept the written submissions of the assessee sent after the conclusion of hearing cannot render the order void ab initio. At any rate, it is an irregularity. Search proceedings do not debar the CIT from revising order u/s passed u/s 147 of the Act. - Decided against assessee.
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2017 (3) TMI 1881
Reopening of assessment u/s 147 - Addition towards capital gains u/s 45(3) - profit accrued to assessee company on transfer/contribution of capital by way of contribution in the form of its share of ‘land asset’ to the ‘partnership firm’ - HELD THAT:- As rightly pointed out that even assuming that income accrued and arose in the hands of the firm consequent to revaluation of the assets by the firm, the income that might accrue in the hands of the partner would be in the nature of “share income from the firm”. In terms of Sec.10(2A) of the Act, partner’s share in the total income of the firm is not to be included in the total income of the partner. Therefore, looked at from any angle, the AO could not on the basis of the reasons recorded formed belief that income chargeable to tax in the hands of the Assessee has escaped assessment. Considering the factual position, we are of the view that ld CIT (A) has rightly deleted the addition therefore we confirm the order of ld CIT (A). - Decided in favour of assessee.
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2017 (3) TMI 1880
Short deduction of TDS and interest on short deduction - assessee has deducted TDS @ 10% on deposits instead @20% due to clerical mistake - HELD THAT:- As decided in M/S. HINDUSTAN COCA COLA BEVERAGE PVT. LTD VERSUS COMMISSIONER OF INCOME TAX [2007 (8) TMI 12 - SUPREME COURT] when the tax has been paid by the deductee-assessee, the tax could not be recovered once again from the assessee. It is the claim of the assessee society that the deductee has paid the taxes , hence, the assessee is not liable to be for demand on account of short deduction of TDS. However, this claim is not fully verified by the lower authorities. Therefore, in the interest of justice and fair play, this issue is restored back to the file of AO with the direction that the AO shall verify whether the short deduction on account of low rate of TDS has been paid by the payee / deductee/ recipient and they have shown the receipt in the their return of income. If that be so , no demand on account of short deduction can be claimed from the assessee.
All these facts require verification at the end of AO. The assessee is also directed to cooperate with the AO and must produce all the relevant evidences before the AO. The AO is further directed to verify the same and decide the matter afresh keeping in mind the decision of Hon'ble Supreme Court cited supra and CBDT Circular F. No. 275/201/95-IT(B) dtd. 29.01.1997. Accordingly, all the grounds of appeal are allowed for statistical purposes.
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2017 (3) TMI 1879
Reopening of assessment u/s 147 - whether the credit to the current account of the Assessee in the partnership firm M/S. Salarpuria Soft Zone of a sum gives raise to any income chargeable to tax? - HELD THAT:- Reopening the assessment u/s 147/148 was without any tangible material therefore the said reopening of the assessment u/s 147/148 was bad in law, as rightly held in M/S. ORCHID GRIHA NIRMAN PVT. LTD. [2016 (11) TMI 247 - ITAT KOLKATA].
As rightly pointed out that even assuming that income accrued and arose in the hands of the firm consequent to revaluation of the assets by the firm, the income that might accrue in the hands of the partner would be in the nature of “share income from the firm”. In terms of Sec.10(2A) of the Act, partner’s share in the total income of the firm is not to be included in the total income of the partner. Therefore, looked at from any angle, the AO could not on the basis of the reasons recorded formed belief that income chargeable to tax in the hands of the Assessee has escaped assessment. Considering the factual position, we are of the view that ld CIT (A) has rightly deleted the addition therefore we confirm the order of ld CIT (A).- Decided against revenue.
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2017 (3) TMI 1878
Exemption u/s 54F - Refusal to issue No Objection Certificate for enabling the petitioner / assessee to withdraw amount from Capital Gains Accounts - HELD THAT:- Admittedly, there are eight accounts with the maturity value as tabulated above.
It is also not in dispute that the tax liability under dispute would cover the total amount in deposit, in respect of three account numbers in serial Nos. 3, 4 and 7 of the above referred accounts. Considering the fact that the petitioner has come forward with a request only in respect of other five accounts and willing to go before the respondent for considering the matter afresh in respect of those three accounts
The interest of the Revenue will not be prejudiced in any manner, if the respondent is directed to issue "No Objection Certificate" in respect of remaining five the petitioner is protecting the interest of the Revenue by not getting the "No Objection Certificate", for the present, in respect of the other three Accounts are concerned pending a decision to be made afresh by the respondent, after hearing the petitioner.
WP allowed in part.
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2017 (3) TMI 1876
Exemption u/s 11 - rejecting the grant of registration u/s. 12AA as original trust deed was not produced and dissolution clause was not found in the copy of said deed - power to exercise in granting registration for a religious or charitable institution - Charitable object u/s 2(15) - HELD THAT:- As relying on Case of TARA EDUCATIONAL AND CHARITABLE TRUST VERSUS DIRECTOR OF INCOME TAX (EXEMPTIONS) [2014 (7) TMI 869 - ITAT MUMBAI] we set aside the impugned order of the CIT(E) in rejecting the grant of registration - Decided in favour of assessee.
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2017 (3) TMI 1875
Addition on account of suppressed sales calculated @ 30% of the disclosed receipts - HELD THAT:- We find that if a net profit ratio of the gross on money is estimated by the AO is taken then it will meet the end of justice to both sides. Various Benches of the Tribunal had taken the net profit rate between 5 to 12%.
Keeping in view of the ratios applied by various Benches of the Tribunals, we are of the view that if 8% net profit of the estimated on money is taken into consideration then it will meet the end of justice. Accordingly, we direct the AO to take 8% of the net profit of the gross on money estimated by him.
Addition treating the expense on account of project as not genuine - HELD THAT:- We do not find any infirmity in the findings of the ld CIT(A) for the reason that no evidence whatsoever has been filed in support of the claim of expenses. Therefore, we confirm the order of the ld CIT(A) in this respect.
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2017 (3) TMI 1873
Deduction u/s 80IB - Interest accrued on Fixed Deposits as income from business - assessee claimed deduction u/s. 80IB(10) of the Act towards the accrued interest on fixed deposits filed in the revised computation of income showing the said interest income as its business income - HELD THAT:- Admittedly, the assessee shown the said income as income from other sources in the original return. We find that the AO has allowed deduction under similar circumstances u/s.143(3) for the AY 2006-07 based on interest income. AR argued that only business Funds were utilised for making deposits, which fetched interest income. We find force in the submissions of the assessee that the net profit as per revenue account the assessee shown under the different heads i.e. income from house property, income from other sources and income from business. Financial statements are prepared after completing all the legal requirements. But, from the operational point of view all the income were disclosed under whatever sources are the integral parts of assessee’s business.
As relying on TIRUPATI WOOLLEN MILLS LIMITED [1991 (1) TMI 34 - CALCUTTA HIGH COURT] we hold that the interest earned on fixed deposits made out from accumulated profits and reserves is the income, which derived from assessee’s business activity. Therefore, the assessee is eligible to claim deduction u/s. 80IB(10) of the Act. Therefore, we find no infirmity in the order of the CIT-A and it is justified. - Decided against revenue.
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2017 (3) TMI 1872
Penalty u/s 271(1)(c) - addition on account of undisclosed long term capital gains - AO found that assessee had not shown long term capital gain according to provision of section 50C - HELD THAT:- On the analysis of the provisions of section 50C, we observed that section 50C is a deeming provision to tax the difference as capital gain where the consideration received as a result of transfer of capital assets, being land or building or both if less than the value adopted by the stamp valuation authority. It is only on account of deeming provisions of section 50C, the AO has made the addition after considering the valuation report of the valuation officer u/s 50C(2) of the act and determined the long term capital gain.
The fact remains that the actual amount received was offered for taxation. It is only on the basis of the deemed consideration that the proceedings under Section 271(1)(c) of the act has been started. The revenue has failed to produce any iota of evidence that the assessee actually received one paise more than the amount shown to have been received by him. We observed that in terms of deeming provisions of section 50C, higher sales consideration of property determined by the DVO did not by itself amount to furnishing inaccurate particulars of income so as to levy penalty under section 271(1)(c) of the act
The revenue has also not shown as to how the assessee could be held to have actually received this amount which is in excess of the amount of mentioned in the sale deed . It has also not been shown as to whether any corresponding addition has been made in the hands of the buyer. We further notice that the addition was made totally by invoking the provision contained in section 50C of the act, therefore, penalty cannot be imposed on the income determined on the basis of deeming provision of section 50C as this solitary does not lead to concealment of income or furnishing of inaccurate particulars of income - Decided in favour of assessee.
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2017 (3) TMI 1871
Depreciation on Plant & Machinery - depreciation claimed by the assessee on the basis of letter of approval - HELD THAT:- Since required certificate has been provided by the assessee which has been examined by the Ld. CIT(A), and only thereafter relief has been provided by him in line with earlier years’ orders which have been confirmed by the Tribunal. Ld. DR could not point out anything incorrect or wrong in the factual finding of the Ld. CIT(A). Under these circumstances, we do not find any justification to interfere in the order of the Ld. CIT(A) on this issue. Thus, ground 1 raised by the Revenue is hereby dismissed.
Claim made u/s.32(2AB) - assessee had furnished only a certificate received from the Chartered Accountant and certain correspondence with Ministry of Science and Technology to claim the weighted deduction u/s 35(2AB). He was of the opinion that the assessee has not fulfilled the necessary conditions laid down in clause (i) to (v) of the above section and since no evidences were brought before him to show that the assessee had entered into an agreement with the prescribed authority - HELD THAT:- During the course of hearing before us, Ld. Counsel stated that this issue is covered in favour of the assessee by the decisions of the Tribunal for earlier years. Though in the earlier years, this issue was sent back to the file of the AO for the limited purpose of verification of order of approval in form 3CM, but in the year under appeal, the said approval in form 3CM was filed before the lower authorities, and Ld.CIT(A) had granted relief after verifying the same. Therefore, no purpose would be served in sending the matter back to the file of lower authorities especially when nothing wrong has been pointed out in the findings of Ld. CIT(A).
DR did not make any serious objection to the proposition. Under these circumstances, we find that the relief has been granted by the Ld. CIT(A) after verifying the requisite approval in proper form. Nothing wrong or contradictory has been brought before us by the Ld. DR. Thus, we do not find any need or justification to interfere in the order of the Ld. CIT(A). Therefore, the order of the Ld. CIT(A) is upheld. Thus, ground of the Revenue is dismissed.
Disallowance u/s.36(1)(iii) - since the assessee failed to discharge the onus and did not satisfactorily demonstrate that only interest free funds were advanced as loans to sister concern, the AO disallowed proportionate interest @12% on the interest free loans advanced - HELD THAT:- Issue decided in favour of assessee on detailed submissions were made by the assessee wherein it was inter-alia submitted that the assessee had sufficient funds to give these loans and in any case, these amounts were given for the purpose of business of the assessee.
Nature of expenditure - addition on computer software - AO had found that the assessee had purchased MS Window and held that being a new software,the expenditure was to be capitalised - allowed depreciation of ₹ 9000/-(@30%) by making addition - HELD THAT:- Software packages like MS Window 2008 were utility packages,that they were for regular business use, that such programmes help the assessee to carry-out the business more efficiently and did not enhance the value of profit making apparatus.Finally,deleting the addition made by the AO he held that the expenditure incurred by the assessee for purchasing software should be treated as revenue expenditure. Before us, the DR stated that the matter could be decided on merits. The AR relied upon the judgment of Asahi India Safety Glass Ltd. [2011 (11) TMI 2 - DELHI HIGH COURT] - We find that the issue stands covered by the above order of the Hon’ble Delhi High Court.
Insurance claim - HELD THAT:- We find that there was fire in the factory premises of Avinash Drugs Ltd. in AY 2005-06, that it made a claim before insurance company with regard to damage caused by fire, that during the AY.2009-10 Avinash Drugs Ltd. merged with the assessee,that it received insurance claim about damage to Plant &Machinery and its vehicle.As the money received by the assessee was against the capital asset, therefore, same has to be treated in the nature of capital receipt.In our opinion, assessee had rightly reduced the said sum while computing the income for the year under consideration. As there is no legal or factual infirmity in the order of the FAA,so confirming the same, we dismiss last Ground of appeal,raised by the AO.
Disallowance u/s 14A r.w.r.8D - HELD THAT:- We direct the AO to delete the disallowance on account of interest and follow the direction of the Tribunal with regard to other disallowance.(0.5% disallwoance).First Ground of appeal is decided in favour of the assessee,in part.
Disallowance of foreign exchange fluctuation - HELD THAT:- We find that the assessee had availed foreign currency term loan from SBI and a loan by way of ECB,that it had claimed the loss arising on account of fluctuation in foreign exchange borrowings as revenue expenditure, that the FAA,while confirming the order of the AO,held that the loss claimed by the assessee was not revenue loss,but was capital loss.The issue of revenue/capital loss has been subject of extensive litigation.
It is a fact that the loan from the SBI and the ECB was availed by the assessee for purchasing capital assets and the loss arising out of the fluctuation in foreign exchange was not relatable to circulating capital or stock in trade of the assessee.It is not the case of the assessee that borrowed amount for the purpose of import of capital goods was utilised for other purposes or that the loan amount had undergone a change and had assumed a new character.It was a plain and simple transaction of purchasing the capital goods,so any loss related with it has to be considered as capital loss.It is also found that the AO had allowed depreciation on the assets - In the case before us,the FAA has not held that the liability was contigent.He has given a categorical finding of fact of purchase of machinery i.e.capital asset. - Decided against assessee.
Disallowance of additional depreciation u/s.32(1)(iia) - HELD THAT:- We find that the issue stands covered in favour of the assessee by the judgment delivered by the Hon’ble Karnataka High Court in the case of Rittal India Pvt.Ltd.[2015 (1) TMI 1248 - KARNATAKA HIGH COURT] as held Additional depreciation allowable under section 32(1)(iia) of the Income-tax Act, 1961is a one-time benefit to encourage industrialisation and the relevant provisions have to be construed reasonably and purposively. The additional depreciation is allowed in the year of purchase and if in the year of purchase the assessee is eligible only for 50 per cent. depreciation, the balance 50 per cent. can be carried forward for the subsequent year.
Disallowance u/s.40a(ia) - Prior period expenses - HELD THAT:- We find that the AO or the FAA has not doubted the genuineness of incurring of expenditure, that the assessee had on its own disallowed the expenses in question in AY.2010-11,that taxes were deducted and paid before the due date i.e.the due date of filing of return of income as per the provisions of section 139(1)of the Act.Considering the peculiar circumstances and facts of the case,we direct the AO the allow the expenditure during the year under appeal. GOA-7 is decided in favour of the assessee.
Wrong entry passed by Amarjyot Chemicals Limited (ACL) - HELD THAT:- Before us,the AR stated that the assessee had not made any claim for credit, that the AO should be directed to verify the claim. The DR left the issue to the discretion of the Bench. After considering the available material,we are of the opinion that matter should be restored back to the file of AO for further verification.He is directed to afford a reasonable opportunity to the assessee and decide the issue afresh.Ground No.8 is decided in favour of the assessee,in part.
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