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Income Tax - Case Laws
Showing 41 to 60 of 783 Records
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2017 (3) TMI 1870
Nature of expenses - expenses paid by the assessee as NPV to enable the assessee to carry on its mining business - whether or not the payment of NPV made by the assessee to carry on its mining activities on forest land is allowable as revenue expenditure? - HELD THAT:- As rightly pointed out that the assessee by making payment of NPV got no fresh right to mining but the said payment was made to overcome restriction or obstruction or disability that had arisen in continuing of the mining business. Merely because it was one-time payment, it could not be considered as capital in nature. Besides, the said issue is covered by assessee`s own case in [2014 (1) TMI 1515 - ITAT KOLKATA] wherein the Tribunal treated the said expenditure as revenue in nature.
Therefore, we hold that ld. CIT(Appeals) has rightly held that the above expenditure paid by the assessee as NPV to enable the assessee to carry on its mining business is revenue in nature, which is allowable as business expenditure under section 37(1) - Decided against revenue.
Delayed payment of employee`s contribution to PF - As per revenue CIT (A) erred in relying on the provisions of section 43B (b) of the I.T.Act, whereas the present issue is involved with Section 36(1) (va) read with 2 (24) (x) - HELD THAT:- We are of the view that there is merit in the submissions of ld. AR for the assessee, as the proposition canvassed by ld. AR for the assessee are supported by the facts narrated by him above. Ld. AR for the assessee has rightly pointed out that as per Tax audit report column No.16(b) Annexure-B, which clarified that employees` contribution to PF ₹ 2,30,271/- for January 2011 was paid on 23.02.2011, that is, next Month. Therefore, the assessee did not commit and default in depositing the PF contribution even as per section 36(1) (va) r.w.s 2(24) (x) of the I.T.Act. Considering the factual position, we do not find any infirmity in the order passed by the ld CIT(A). Therefore, we confirm the order passed by ld.CIT(A). - Decided against revenue.
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2017 (3) TMI 1869
Levy of fee u/s. 234E - appellant has filed TDS statement u/s. 200(3) beyond the prescribed due date - whether the late filing fee of TDS return u/s.234-E can be levied prior to 01/06/2015? - HELD THAT:- As decided in PERFECT CROPSCIENCE PVT. LTD. VERSUS DY. COMMISSIONER OF INCOME-TAX [2016 (1) TMI 1271 - ITAT AHMEDABAD] issue is whether such a levy could be effected in the course of intimation under section 200A. The answer is clearly in negative. No other provision enabling a demand in respect of this levy has been pointed out to us and it is thus an admitted position that in the absence of the enabling provision under section 200A, no such levy could be effected. As intimation under section 200A, raising a demand or directing a refund to the tax deductor, can only be passed within one year from the end of the financial year within which the related TDS statement is filed, and as the related TDS statement was filed on 19th February 2014, such a levy could only have been made at best within 31st March 2015. That time has already elapsed and the defect is thus not curable even at this stage. In view of these discussions, as also bearing in mind entirety of the case, the impugned levy of fees under section 234 E is unsustainable in law. We, therefore, uphold the grievance of the assessee and delete the impugned levy of fee under section 234E.
When the above judicial precedent was brought to the notice of the ld. Departmental Representative, he did not have much to say except to place his reliance on the orders of the authorities below. He fairly did not dispute that the provisions accepting levy of late filing fees under section 234E have indeed been brought to the statute w.e.f. 1st June, 2015 and the impugned order was passed much before that date.
In view of the above discussions and bearing in mind entirety of the case, we hereby delete the levy of late filing fees under section 234E of the Act by way of impugned intimation issued - Decided in favour of assessee.
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2017 (3) TMI 1868
Exemption u/s 11 - grant of registration u/s.12AA of the Act and application in form No.10G u/s.80G(5)(VI) rejected - proof of Charitable activity u/s 2(15) - HELD THAT:- There is merit in the submissions of the assessee, as the proposition canvassed by assessee are supported by the facts narrated in the context of the provisions of Section 2(15) of the I.T.Act. Section 2(15) of the Act clearly defines the charitable purpose which, includes medical relief and in order to obtain the object of medical relief the assessee trust is running poly-clinic, pathology, x-ray and medical services. We are of the view that the trust activities are within the framework of Section 2(15) of the I.T.Act, 1961. Therefore, we cancel the order passed by the CIT(E) u/s.12AA and u/s.80G(5)(VI) of the I.T Act . - Decided in favour of assessee.
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2017 (3) TMI 1866
Assessment u/s 153C - Whether mandatory requirement of the recording of the satisfaction note for the exercise of the power under Section 153C has not been complied with? - HELD THAT:- Circular issued by the CBDT No.24/2015 dated 31.12.15 when applied to the present case, shows that the mandatory requirement of the recording of the satisfaction note for the exercise of the power u/s 153C has not been complied with either at the time of the institution of the proceedings against the searched person under Section 153A or in the course of the assessment proceedings u/s 153A in the case of the searched person or immediately after the assessment proceedings were completed under Section 153A of the searched person.
Though it has been submitted that, the Assessing Officer of both the searched person and the assessee are the same, still in view of the circular issued by the CBDT as requisite satisfaction has not been recorded, respectfully following the decision in the case of Pepsi Foods Pvt. Ltd. [2014 (8) TMI 425 - DELHI HIGH COURT] as also following the principles laid down in the case of Arihant Aluminium Corporation [2016 (5) TMI 791 - KARNATAKA HIGH COURT] and the circular issued by the CBDT in Circular No. 24/2015 dated 31.12.2015, the notices issued on the assessee under Section 153C and consequently assessments completed under Section 143(3) read with section 153C stands annulled. In the circumstances appeals filed by the assessee stands allowed and the appeals filed by the revenue stands dismissed.
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2017 (3) TMI 1864
Deduction u/s. 80IB(10) - Denial of deduction as size of the housing unit is exceeding 1,500 sq.ft., the limit specified under the provisions of section 80IB(10) - HELD THAT:- In the case in hand it is undisputed that the AO has pointed out to the assessee that the area of the flats in the projects are exceeding 1,500 sq.ft. and therefore the assessee’s claim is not allowable upon which the assessee had withdrawn his claim by filing a revised return. Since the revised return was filed within the period of limitation and it was a valid return of income therefore, the Assessing Officer has framed the assessment on the basis of revised return.
AO has not proceeded further to verify and counter the claim of the assessee on the issue of built up area of dwelling units. This issue is not a pure legal issue but it involves the question of facts to be verified and then only the legal provisions are to be applied. There is no quarrel on the legal provisions that as per section 80IB(14)(a) the common area of the projects are to be excluded for the purpose of considering the built up area.
The actual built up area is required to be measured and verified. The assessee himself has accepted the objections of the AO during the assessment proceedings. Therefore this claim of the assessee raised before the CIT(A) as well as this tribunal cannot be accepted. As regards the assessment year 2007-08 is concerned it is noted that the AO has not given any finding on this issue and therefore it is not a case that the AO has carried out any exercise of measuring the built up area of the flats in question. - Decided against assessee.
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2017 (3) TMI 1862
Unexplained jewellery - chargeability to tax of jewellery seized during the course of search u/s 132 - As explained by the assessee to be an old jewellery acquired and held prior to seven years preceding the date of search through various modes such as streedhan to wife at the time of marriage , gift to the assessee at the time of marriage in 1986, acquisition of the jewellery since marriage in 1986 over a period of time for which bills were not retained, gifts to wife and the assessee since 1986 by relatives, gift to son on his birth and also during several birthdays over the years - AO is contending that since the assessee could not produce bills for the said jewellery and the same was not declared to Revenue by the assessee in past as no wealth tax returns were filed or otherwise it was also not declared as no statement of affairs was ever filed, the same being an unexplained jewellery is liable to be taxed u/s 69B - HELD THAT:- The assessee is a qualified Chartered Accountant being Executive Director (Commercial) of the listed company, Ispat Industries Limited which is flagship company of the Ispat Group of companies. The assessee belonged to Hindu Marwari family. The Marwari community in India is a respected community most of whom are successfully engaged in various spectrum of businesses . The assessee has not filed any wealth tax returns with the Revenue despite having taxable wealth which is undisputed. It is also admitted position that no statement of affairs had also been filed by the assessee before the authorities below prior to the date of search on 30-11-2010.
Assessee was a man of means having substantial income declared to Revenue in last 7 years. The assessee has also filed copy of income tax return of the wife of the assesssee for assessment year 2009-10 ( which included income till her death on 26-112008 in Mumbai terror attack on Oberoi Hotel as thereafter , income is included in the hands of the assessee being a legal heirs of wife of the assessee as stated in ITR) wherein returned income was 16,14,540/- . The assessee being legal heir of wife after her death on 26-11-2008, the jewellery owned and possessed by wife at the time of her death on 26-11-2008 is also to be considered in the hands of the assessee being a legal heir of wife. The instant assessment year under appeal is assessment year 2011-12. The assessee was married in 1986 and has one son also. The assessee has one HUF also.
Jewellery of value of ₹ 42,00,656/- weighing 1644.76 gms which is sought to be explained to have been acquired by the assessee and his wife for the period from the marriage of the assessee in 1986 till seven years preceding the date of search is not substantial keeping in view habitual pattern of the assessee, culture, traditions , customs, financial and social background of the assessee
There was a seized ledger extracts which showed jewellery as on 31-03-2004 of ₹ 18.51 lacs owned by assessee wife and assessee’s HUF , market value of which jewellery as on the date of search comes to more than ₹ 50 lacs which has also to be considered while estimating unexplained jewellery in the hands of the assessee. This contentions of the assessee could not be controverted by Revenue/learned CIT-DR. Thus, no addition is warranted in the hands of the assessee in the instant case as we hold that jewellery to the extent of ₹ 42,00,656/- as was seized by the Revenue being found from locker of the assessee based on which additions have been made by the AO stood fully explained keeping in view factual matrix of the case, social and financial background of the assessee, culture, traditions and customs to which the assessee belonged. Thus, the addition made by the A.O. as sustained by the ld. CIT(A) is hereby ordered to be deleted. - Decided in favour of assessee.
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2017 (3) TMI 1861
Disallowance u/s 43B or u/s 36(1)(va) - PF deposited beyond the time prescribed - Scope of section 43B of the Act - amount has been deposited on or before the due date of filing of return - HELD THAT:- As decided in Jaipur Vidyut Nigam Ltd.[2014 (5) TMI 222 - RAJASTHAN HIGH COURT] it is an admitted fact that the entire amount was deposited by the respondent-assessee at least on or before the due date of filing of the returns under Section 139 of the I.T. Act and being a concurrent finding of fact by the respective authorities that if the amount has been deposited on or before the due date of filing the return under Section 139 and admittedly it was deposited on or before the due date then the amount cannot be disallowed under Section 43B of the I.T. Act or under Section 36(1)(va) of the Act - Appeal dismissed.
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2017 (3) TMI 1860
Validity of reopening of assessment u/s 147 - assumption of jurisdiction by the AO for reassessment - Validity of approval/sanction of the Addl. DIT - HELD THAT:- As rightly contended, in “United Electrical" [2002 (10) TMI 86 - DELHI HIGH COURT] it has been held that the Commissioner (herein Addl. DIT) is required to apply his mind to the proposal put to him for approval in the light of the material relied on by the AO; that the said power cannot be exercised casually and in a routine manner. In that case, as in the present one, the Addl. Commissioner had stated: “Yes it is a fit case for issue of notice u/s 148”. The reassessment proceedings were held to be invalid.
Thus the assumption of jurisdiction for reassessment is bad in law - Decided in favour of assessee.
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2017 (3) TMI 1859
Validity of reopening of assessment u/s 147 - eligibility of reasons to believe - addition on account of unexplained investment in the subscribed & paid up share capital u/s 69 - mandation to discharge of initial onus - HELD THAT:- Assessee company, being a private limited company which has received the amount towards the share subscription again from two other private limited companies has failed to discharge the initial onus placed on it. Mere fact that the money has been received through banking channel is not sufficient enough to discharge the burden. The confirmations, on the letterheads of the assessee company without specifying any date of confirmation, identification by way name and designation of the person signing those confirmations on behalf of the investee companies, have been filed during the appellate proceedings, however the letters issued by the Assessing officer to these two investee companies have been returned undelivered and even the new addresses submitted are incomplete which raises a serious question mark on the confirmations so filed as the same is not wholesome, credible and verifiable.
The creditworthiness and genuineness of the transaction is therefore not proved by showing merely issue and receipt of demand drafts when circumstances requires that there should be some more evidence of positive nature to show that the subscribers have made genuine investment.
AO clearly harbours doubts about the legitimacy of share subscription in the books of the assessee company and has gone about issuing letters seeking confirmation and calling for the personal attendance of the directors of the investee companies. Whilst it does appear that at the time of assessment proceedings, the assessee’s premises were locked due to some Court proceedings and the assessee couldn’t submit appropriate documentation, however the assessee was given sufficient opportunity during the appellate proceedings by the ld CIT(A) and by the AO during the remand proceedings, genuine doubts as to the identity, creditworthiness and genuineness of transaction continue to persist in the minds of the Assessing officer.
The explanation about the nature and source of such sum found credited in its books of accounts has not been found satisfactory and the initial burden on the assessee cannot be said to be have been discharged in the instant case - Decided against assessee.
Adhoc additions made by the Assessing officer - assessee has shown an increase in subscribed & paid up capital, Addition of Vanaspati Ghee, accrued/earned on FDR loans, bills/vouchers of expenses have not been produced for verification and increase in unsecured loans from others - HELD THAT:- CIT(A) has given a finding that the assessee company has produced the books of accounts during the course of remand proceedings but the ld. AO has not verified the contents of the books of account and no specific defects had been pointed out by the AO in his remand report on all the additions. It is also noted that adhoc additions have been made by the Assessing officer (except for an amount in respect of unsecured loans) which cannot be sustained in the eye of law. In light of the same, we hereby direct the deletion of all these additions made by the AO in respect of additional issues no. 2 to 4 - Decided in favour of assessee.
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2017 (3) TMI 1858
Disallowance u/s 14A - assessee argued no exempted income was earned during the relevant assessment year - HELD THAT:-undisputedly the assessee does not have any exempted income, therefore disallowance u/s 14A of the Act cannot be made. We have also examined the judgment of CHEMINVEST LIMITED [2015 (9) TMI 238 - DELHI HIGH COURT] have categorically held that where the assessee had not earned any taxable income in the relevant assessment year in question, then the corresponding expenditure could not be worked out for disallowance. Thus, no disallowance u/s. 14A of the Act can be made in the year in which no exempt income had been earned or received by the assessee - Appeal of assessee is allowed.
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2017 (3) TMI 1855
Extension of the stay originally granted - HELD THAT:- The Hon’ble Delhi High Court in Pepsi Foods Pvt. Ltd [2015 (5) TMI 655 - DELHI HIGH COURT] has held that the third proviso to section 254(2A) is constitutionally invalid. The net effect of this judgment is that if the appeal could not be disposed of by the Tribunal for no fault of the assessee, then the power vests with the Tribunal to extend the stay beyond the aggregate period of 365 days.
On merits, it is indisputably found that the terms of stay originally granted have been duly complied with. The appeal could not be finally heard for one reason or the other, but, for no fault of the assessee. Considering the entirety of the facts and circumstances of the instant case, we are inclined to grant extension of stay for a further period of six months from today or till the disposal of the appeal, whichever is earlier. Stay application allowed.
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2017 (3) TMI 1854
Disallowing interest expenditure - as argued lower authorities have passed the orders without properly appreciating the fact and that they further erred in grossly ignoring various submissions, explanations and information submitted by the appellant from time to time which ought to have been considered before passing the impugned order - HELD THAT:- In case the assessee has given a concession, based on mistaken assumption of facts of law, such a concession cannot come in the way of assessee’s statutory right for assessment of income in accordance with the law.
Therefore, the matter should be remitted to the file of the Assessing Officer for adjudication on merits in accordance with the law, by way of a speaking order and after giving yet another opportunity of hearing - As this issue regarding disallowance of interest is being remitted to the file of the Assessing Officer anyway, I also deem it appropriate to remit the matter regarding disallowance of business expenses to the file of the Assessing Officer as well, for fresh adjudication. The matter regarding both the above disallowances thus stands restored to the file of the Assessing Officer.
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2017 (3) TMI 1850
Deduction u/s 10B - deduction of expenses incurred in foreign exchange towards insurance, travelling and communication expenses - HELD THAT:- The provisions of sub-section (3) of section 10B make it mandatory that in order to invoke the beneficial provisions of section 10B, sale proceeds of an article or thing or computer software should be received in or brought into India by the assessee in convertible foreign exchange within six months from the end of the previous year or such other period as may be permitted by the Reserve Bank of India. On plain reading of the provisions, it is clear that the benefit cannot be given to an undertaking in case no foreign exchange is received or brought into India on account of exports made by it. Reference to foreign exchange policy i.e. Exim is not required when the provisions of the Act are plain and unambiguous. The grounds of appeal filed by the assessee in this regard are dismissed.
As regards portion of the expenses incurred in foreign exchange towards insurance, travelling and communication is concerned, in the case of CIT vs. Tata Elxsi [2011 (8) TMI 782 - KARNATAKA HIGH COURT] held that the same is required to be reduced from export turnover as well as total turnover. We direct that expenses incurred in foreign exchange towards insurance, travelling and communication are to be reduced both from export turnover as well as total turnover. Therefore, the grounds of appeal filed by the assessee in this regard are allowed.
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2017 (3) TMI 1847
Reopening of assessment u/s 147 - CIT-A sustaining the notional rental income determined by the Assessing Officer - HELD THAT:- Admittedly, in this case, the return filed by the assessee was processed under section 143(1) of the Act on 29.03.2010. Subsequently, the case of the assessee was selected for scrutiny and assessment was completed under section 143(3) of the Act on 20.12.2010. Thereafter, the assessment passed under section 143(3) of the Act was reopened by issue of notice under section 148 of the Act. It is a fact that there was any search or survey in assessee’s case and the Department found any tangible material to form a opinion as there was escapement of income and the assessment was reopened under section 147 of the Act even within four years. The assessee has furnished all particulars at the time of filing of return of income and after examining the details, the return filed by the assessee was processed under section 143(1) of the Act, which is subjected to 143(3) scrutiny assessment and the assessment under section 143(3) of the Act was completed.
Thus we of the considered opinion that the Assessing Officer has not validly initiated the proceedings under section 147 of the Act and therefore, the assessment order passed under section 143(3) r.w.s. 147 of the Act on 24.03.2014 is quashed. Once the reassessment order passed by the Assessing Officer is quashed, there is no need to adjudicate the issue on merits. Thus, the appeal filed by the assessee is allowed in pro tanto
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2017 (3) TMI 1844
Reopening of assessment u/s 147 - excess deposit in his bank account which has escaped assessment - addition of agriculture income - HELD THAT:- AO noted that assessee made excess deposit in his bank account which has escaped assessment, therefore, assessee has not fully and truly disclosed all material facts necessary for assessment in assessment year under appeal. Assessing Officer, however, did not make any addition of excess cash deposit in the impugned re-assessment order. The assessee also produced sufficient evidence on record to prove that Assessing Officer has taken the lesser bank deposit because ₹ 10 lacs deposit have not been considered by the Assessing Officer in the bank account of the assessee. Ultimately, Assessing Officer was satisfied with the explanation of the assessee of bank deposits, therefore, no addition is made. The reasons recorded by the Assessing Officer were, therefore, wholly incorrect and did not lead to anywhere if there is any escapement of income.
AO also not recorded any fact in the reasons if agriculture income escaped assessment. Assessing Officer called for the details of agriculture income at original assessment stage and asked for all the evidences in support of declaration of agriculture income - The assessee produced sufficient evidence and material before AO at original assessment stage in support of earning of agriculture income.
Therefore, there is no failure on the part of the assessee to disclose fully and truly all material facts necessary for his assessment with regard to computation of agriculture income. The Assessing Officer in the reasons for reopening of the assessment has nowhere recorded if assessee has not fully and truly disclosed all material facts for declaring agriculture income. The record, on the other hand, would reveal that assessee disclosed fully and truly all material facts of earning of agriculture income at the original assessment stage. Therefore, all the facts of earning of agriculture income supported by evidences were within the knowledge of Revenue Department/Assessing Officer at the time of making the original assessment.
The assessee has, thus, disclosed all the material facts of earning of agriculture income at the original assessment stage. No further material is supposed to have been disclosed by the assessee for earning of agriculture income - Therefore, on mere change of opinion, subsequent Assessing Officer is not competent to initiate proceedings under section 148 - Decided in favour of assessee.
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2017 (3) TMI 1839
Assessment u/s 153C - whether any satisfaction was recorded u/s 153A of the Act in the case of the person searched in order to initiate proceedings u/s 153C of the Act in the case of the assessee? - HELD THAT:- Even though the AO of the person searched and the assessee before us is the same, the requirement of law is that the satisfaction has to be recorded before initiating proceedings u/s 153C of the Act. Therefore, the Additional Grounds of appeal being legal grounds and the facts are already on record, we deem it proper to admit the grounds. Since the AO has reported that the satisfaction has not been recorded as required under the law, we are inclined to allow the additional ground and hold that the assessment u/s 153C is not sustainable. - Decided in favour of assessee.
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2017 (3) TMI 1838
TDS u/s 194A - interest paid to non banking financial company - non deduction of TDS - Revenue has claimed that as per the definition of interest provided under the act u/s 2 (28A), the amount qualifies as interest and was thus liable for deduction of tax at source, which having not been deducted - HELD THAT:- Counsel himself has stated that for the intervening period, when the amount was advanced by MMFSL to Mahindra and Mahindra Ltd. on behalf of the assessee and the amount was actually paid by the assessee to MM FSL on sale of the vehicles, the said charges were recovered by MMFSL from the assessee.
Clearly these charges were recovered for the credit facility which was given by MMFSL to the assessee by way of making payment on account of the vehicles billed to the assessee by Mahindra and Mahindra Ltd on behalf of the assessee till the assessee sold the vehicles ,collected the amounts due on them and paid them to MMFSL. Assessee has not been able to demonstrate before us to how the same was not a fee or charge in respect of credit facility availed by it from MMFSL. In view of the same the amount paid to MMFSL, we hold, was in nature of interest as defined under section 2 (28A) of the Act, which clearly states that interest includes any service, fee or other charge in respect of monies borrowed or debt incurred or in respect of any credit facility which has not been utilised.
The assessee having not deducted tax at source on the same has contravened the provisions of section 194A of the Act and therefore the expenditure did not qualify for deduction as per the provisions of section 40(a)(ia) of the Act. We have therefore no hesitation in upholding the order of the Ld. CIT(Appeals) and confirming the disallowance made of interest expenditure on which no tax was deducted at source under section 194A .
Disallowance of advertisement and publicity expenses under section 40(a)(ia) on account of non-deduction of tax at source on the same - HELD THAT:- The fact that the payment was made on account of purchase of XYLO kits is not disputed. Merely because the bill date and date of making payment is different or for the reason that the figure mentioned in the bill and the amount of actual payment made do not tally the contention of the assessee cannot be rejected. Nor can it be said that the assessee has failed to substantiate its claim. There is nothing untoward or unusual in making payments after the bills are raised or for that matter payments made not tallying actually with the amount raised in the bills. The fact remains that the assessee had make payments on account of purchase of XYLO kits, which has remained unrebutted before us. On account of this fact are we find merit in the contention of assessee that the payment made did not qualify as advertisement and publicity expenses and therefore there was no need to deduct tax at source on the same . In view of the same the disallowance made under section 40 (a) (ia) on account of payment made.
As for the payments made to M/s Sample enterprises and M/s Ad Vintage Communication it is not disputed that the payment credited at one time into the account of the above parties exceeded ₹ 20,000/-. The assessee was therefore clearly liable for deduction of tax at source under section 194C - Expenses incurred on account of the same are liable to be disallowed under section 40(a)(ia) - Decided partly in favour of assessee.
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2017 (3) TMI 1836
Deduction u/s. 80IA - Claim made only in the revised return by the assessee - HELD THAT:- The assessee had filed the original return of income on 29.11.2006 which was before the due date specified u/s. 139(1) of the Act i.e. 30.11.2006. Thereafter, the assessee had filed revised return on 28.03.2008 wherein it claimed deduction u/s. 80IA of the Act. Since the assessee had filed its return of income before the due date specified u/s. 139(1) of the Act for the relevant year, the question of denying the benefit u/s. 80IA of the Act does not arise.
We find that the Ld. CIT(A) had made the very same observation after interpreting the section 80AC of the Act [similar to proviso to sec. 10A(1A)] i.e. claim of section 80IA shall be allowed if return is furnished before the due date of filing the return and held that the assessee is squarely entitled for deduction u/s. 80IA of the Act as all the conditions therein were duly fulfilled by the assessee. DR did not refute any of the findings of the Ld. CIT(A) by producing any cogent material or contrary evidence and the submissions made by the Ld. AR before us - No infirmity in the order of the Ld. CIT(A) and the same is hereby upheld. Appeal of revenue is dismissed.
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2017 (3) TMI 1835
Disallowance of the provision for warranty - HELD THAT:- It is pertinent to note that in this case the assessee has acquired this business from IBM and for the first year after acquisition i.e. for the Assessment Year 2006-07, the claim of the assessee for provision of warranty was based on the historical data of IBM. Thus in view of the above facts and circumstances of the case as well as by following the decision of this Tribunal in assessee's own case [2016 (5) TMI 1524 - ITAT BANGALORE] we decide this issue in favour of the assessee and allow the claim of the assessee on account of provision for warranty which was found to be based on scientific basis and method.
Transfer Pricing Adjustment - disallowance of marketing support service charges paid by the assessee to IBM - HELD THAT:- We note that an identical issue has been considered by this Tribunal in assessee's own case for the Assessment Year 2006-07 and again for the Assessment Year 2008-09 [2016 (5) TMI 1524 - ITAT BANGALORE] - It is pertinent to note that the market support service charges are paid under the same agreement as for the Assessment Yea₹ 2006-07 & 2008-09. Therefore following the decision of this Tribunal for the earlier Assessment Year as well as in the subsequent Assessment Year we decide this issue in favour of the assessee and allow the claim of the assessee.
Disallowance of superannuation fund - fund was not approved by the competent authority - CIT (Appeals) has confirmed the disallowance made by the Assessing Officer on the reason that though the approval was given on 13.7.2017 w.e.f. 13.03.2007 however the payment was made on 7.4.2007 when the assessee was yet to get the approval - HELD THAT:- From finding of the CIT (Appeals) it is clear that the approval was given to the fund on 13.07.2007 with retrospective effect from 13.3.2007. Therefore the approval to the assessee was given and effective before the end of the financial year relevant to the assessment year under consideration. The assessee paid the amount to the credit of the Govt. on 7.4.2007 which is well within the limit as prescribed under Section 43B of the Act. Therefore once the assessee has paid the amount in the fund before the time period prescribed under Section 43B and the fund was approved w.e.f. 13.3.2007 then there is no plausible reason to reject the claim of deduction on this account. Accordingly, in the facts and circumstances of the case where the assessee has complied with all the requisite conditions, we allow the claim of the assessee and consequently the orders of the authorities below are set aside.
Transfer Pricing Adjustment - MAM - DRP accepted the objections of the assessee regarding the CUP as MAM instead of TNMM adopted by the TPO - HELD THAT:- Cause of action to file the appeal arises only after passing order framing assessment is passed in pursuant to the directions of the DRP. If the final order is not against or prejudicial to the interest of revenue then the revenue would have no grievance against the final order as well as the directions of the DRP. Even otherwise, the interest of revenue depends upon the demand raised by the Assessing Officer as per the final order to frame the assessment in pursuant to the directions of the DRP. Thus once the TPO/A.O. has not passed the final order in pursuant to the directions of the DRP, the revenue has no cause of action and consequently has no right to file the appeal against such order as well as directions of the DRP. When the directions of DRP is binding then the TPO/A.O. is bound to give the effect to the directions of DRP irrespective of the fact whether the same are acceptable or not to the department. The remedy against the directions is available to the department to file the appeal but only when a final order is passed in pursuant to the directions of the DRP. This conduct of the TPO/A.O. is otherwise a clear defiance and disregard to the binding directions of the higher authorities.
As regards the contention of the learned Departmental Representative that the DRP did not understood the order of the Tribunal in correct prospective, we are of the view that even if the directions of the DRP are not acceptable to the department and may be contrary to the precedent, the remedy is only to challenge the same in the appeal and not to refuse to give effect the same.
DRP has taken an independent view and not merely followed the decision of this Tribunal. The reference of the decision of this Tribunal has been made only to fortify the finding of the DRP. We further note that the Tribunal in assessee's own case for the Assessment Yea₹ 2007-08 & 2008-09 while dealing with an identical issue [2016 (5) TMI 1524 - ITAT BANGALORE] - we delete the addition made by the TPO/A.O. on account of transfer pricing adjustment.
Warranty provision as well as leave encashment while computing the book profit under Section 115JB - HELD THAT:- As regards the adjustment on account of warranty provision while computing the book profit under Section 115JB of the Act, in view of our finding on the issue of allowability of warranty provision the same cannot be treated as uncertain liability/provision. As regards the provision for leave encashment though the said claim was not allowable in view of the provision of Section 43B however in view of the decision of Hon'ble Supreme Court in the case of BEML [2000 (8) TMI 4 - SUPREME COURT] this is a certain liability though payable in future we further note that the Tribunal in assessee's own case for the Assessment Year 2011-12 we decide this ground in favour of the assessee and delete the addition made by the Assessing Officer on account of these two amounts while computing the book profit.
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2017 (3) TMI 1833
Nature of expenditure - Payment made by way of compensation by the assessee as per the direction of the Apex Court for mining lease to the Forest Department - revenue expenditure or a capital expenditure - HELD THAT:- Tribunal in the impugned order has relied upon its earlier decision in case of M/s.Ramgad Minerals and Mining Pvt.Ltd.,and the very decision of the Tribunal was carried before this Court in [2012 (1) TMI 313 - KARNATAKA HIGH COURT] and this Court has dismissed the appeal of the Revenue and it has been further stated that SLP was preferred against the aforesaid decision of this Court in case of Ramgad supra and the said SLP has also been dismissed.
We may record that in view of aforesaid decision as such, no substantial questions of law would arise for consideration. But even if it is to be examined, in view of the aforesaid decision that the decision of the Tribunal has been not interfered with by this Court and SLP is dismissed, the question has to be answered against the Revenue and in favour of Assessee.
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