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Income Tax - Case Laws
Showing 121 to 140 of 751 Records
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2018 (1) TMI 1524 - ITAT BANGALORE
Benefit of Section 80P(2) on the interest earned on the deposits made by it to other cooperative banks and societies - business income or income from other sources - HELD THAT:- Reasoning given by the Hon’ble jurisdictional High Court in the matter of Tumkur Merchants [2015 (2) TMI 995 - KARNATAKA HIGH COURT] are clearly applicable to the facts and circumstances of the case. In our view therefore the assessee is entitled to deduction u/s.80P(2)(a)(i) r.w.s. 80P(2)(d) of the Act. In view of the above, appeal of the assessee is allowed.
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2018 (1) TMI 1523 - ITAT PUNE
Legality of reference made to the DVO is u/s 55A - amendment made to Sec.55A(a) - HELD THAT:- When a specific provision under which the reference can be made to the Departmental Valuation Officer is available, there is no occasion for the Assessing Officer to invoke the general powers of enquiry.
We thus find that Hon'ble jurisdictional High Court has held that amendment to Proviso of Sec.55A(a) is applicable only w.e.f. 01.07.2012 and has no retrospective effect. Before us, Revenue has not placed any contrary binding decision in its support. We therefore relying on the aforesaid decision of Hon'ble Bombay High Court in the case of Puja Prints [2014 (1) TMI 764 - BOMBAY HIGH COURT ] are of the view that in the present case, AO was not justified in making a reference to the DVO. We therefore set aside the order of AO and thus the grounds of the assessee are allowed.
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2018 (1) TMI 1520 - ITAT MUMBAI
Disallowance towards set off of fictitious losses - Addition towards unexplained expenditure - survey proceedings u/s 133A - HELD THAT:- No spot verification u/s 131(1A) of the Act was carried out against the assessee and the addition was made merely on the basis general information. A search action u/s 132 of the Act was carried out in commodity market group of cases on 19/06/2007, wherein, as per the Revenue, some data pertaining to trade modification and client code changes of the brokers was collected.
Subsequently, survey proceedings u/s 133A of the Act was conducted on 25/03/2008 at the business premises of the assessee. The assessee offered additional income of ₹ 33,22,000/-. The whole case of the Revenue is that the assessee made huge client code modification resulting into loss of ₹ 2,88,55,000/-.
The case of the assessee is that all the transactions were made on recognized stock exchange, i.e. MCX, through authorized broker M/s Riddi Siddhi Bullions Ltd. and the assessee also furnished the code of contract note. CIT (Appeal) dully followed the decision of the Tribunal in the case of Income Tax Officer vs Pat Commodity Services Pvt. Ltd. [2015 (8) TMI 973 - ITAT MUMBAI] and Sambhava Investment Ltd. [2014 (1) TMI 84 - ITAT MUMBAI] and deleted the addition.
The revenue authorities ignored the reply to question no.9, wherein, the partner of the assessee denied of having made any request for any change in client code. The assessee also paid a margin money of ₹ 2.90 crores to RSBL which is evident from the statement of account of RSBL which has been adjusted against the losses of the assessee. Undisputedly, the transactions have done through recognized exchange and no evidence has been brought on record to defy the transaction by any denial from exchange authorities. Thus, we find no infirmity in the conclusion drawn by the Commissioner of Income Tax (Appeal). Identical is the situation for deleting the addition towards unexplained expenditure. Resultantly, the appeal of the Revenue is dismissed.
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2018 (1) TMI 1519 - ITAT PUNE
Admitting of the additional evidences by the CIT(A) in violation of Rule 46A - HELD THAT:- CIT(A) never admitted any additional evidences which requires remanding to the AO’s file. It is merely a letter evidencing the existence of books of accounts in the possession of the AO. When the books of accounts are undisputedly lying with the AO for months, the assessing officer cannot allege that the books of accounts were not furnished by the assessee on this issue of addition of ₹ 4,35,741/-, we find the Ld.CIT(A) granted relief on the basis of the binding judgment of jurisdictional Hon’ble High Court.
Similar is the case with other additions deleted by the CIT(A). From this point of view, the contravention of the provisions of section 46A of the I.T. Rules, 1962 is not raised on correct facts. Revenue could not demonstrate, atleast one crucial document which goes to the root of the matter admitted by the CIT(A) at the back of the AO and without calling for remand report, if any. Therefore, grounds raised by the Revenue in this appeal have no merit. Since the Revenue fail on this legal issue, all the said grounds raised by the revenue have to be dismissed.
Addition on account of Foreign Travel Expenses - CIT-A deleted the addition - CIT(A) gave part relief to the assessee - HELD THAT:- We find the reasoning given by the CIT(A) in his order is a well reasoned one. The amount of ₹ 10,000/- considered by the CIT(A) on account of hotel expenditure, as having sponsored by the insurance company needs no interference. It is also a fact that AO made the addition only on estimation basis.
Disallowance of interest expenditure - AO made addition as the amount which was paid by the assessee as interest on his borrowed loans - HELD THAT:- CIT(A) noted since the assessee has only shown total income of ₹ 3,20,000/-, the CIT(A) was of the opinion that only ₹ 2,00,000/- should be considered as working capital and accordingly, computed the interest paid on borrowings at ₹ 13,89,872/- on pro-rata basis which works out to ₹ 1,60,560/-. Thus, ₹ 1,19,818/- is upheld.
We find the conclusion given by the CIT(A) after taking into cognizance the capital account and balance sheet of the assessee is fair and reasonable and does not call for any interference. As such, we do not find any violation of provisions of section 46A of the Income Tax Rules, 1962. Ground No.3 raised by the revenue is therefore dismissed.
Undisclosed investment in properties - HELD THAT:- The property in question was purchased prior to the period of search and the AO made the addition on presumption basis. CIT(A) has appreciated the issue in the right perspective and deleted the addition. Thus, on merits, we find the order of CIT(A) is fair and reasonable
Regarding the additional evidence addition made by the Ld. AO. is unjustified and the Ld. CIT (A) is justified in deleting the said addition. Since, the purchase deed was produced before the Ld. AO. during the course of assessment proceedings, the question of calling for the remand report simply does not arise. Further I am enclosing herewith the copy of submission filed with the Ld. AO. wherein it is clearly stated that the Purchase deed of the said land was submitted in the paper book.
Foreign Travel expenses disallowed - AO disallowed the said expenses incurred by the assessee in connection with his travel to Singapore and Mauritius for want of details and the source of funds - HELD THAT:- As discussed in AY 2006-07 while dealing with similar addition, the sponsor Hero Motors had clearly mentioned that tickets have to be borne by the dealer. The appellant also denied of travelling of their sons to Mauritius and Singapore but did not furnish copy of their passport to support the claim. In the circumstances, the fact of travelling to Singapore and Mauritius has been brought by the AO on the record and for want of further details, he was left with no other option but to estimate the expenditure. However, AO had failed to give credit to the amount of ₹ 79,000/- debited the capital account of the appellant. Therefore, addition to the extent of ₹ 79,000/- is deleted and balance addition of ₹ 1,73,000/- is upheld. Grounds raised by the appellant is partly allowed
Accrual of income - addition of “interest income” on account of undisclosed income from FDR - HELD THAT:- Proper opportunity could not be granted to the appellant, and the AO without examining the computation of total income filed by the appellant along with the return of income filed on 08-08-2008 had assumed that interest on FDR kept with the UCO Bank was not offered to tax. As examined the computation of total income and it is seen that appellant has offered interest of ₹ 5,807/- as interest on FDR with the UCO Bank. Therefore, estimated addition of ₹ 6,000/- made on this ground stands deleted
Disallowance of interest expenditure - HELD THAT:- CIT(A) correctly held that the disallowance of interest is uncalled for considering the assessee’s own funds and the jurisdictional High Court judgment in the case of RELIANCE UTILITIES & POWER LTD. [2009 (1) TMI 4 - BOMBAY HIGH COURT]
Estimation of net profit @6% - HELD THAT:- Having considered the fact that AO was in possession of the books and there was no material with the AO to disturb the concluded assessment. CIT(A) also examined the letter received from the AO that the assessee produced books of account before him. Further, relying on the judgment of Hon’ble Bombay High Court in the case of Murli Agro Products, [2010 (10) TMI 1052 - BOMBAY HIGH COURT] . CIT(A) deleted the entire addition. We have already dealt with the same issue while dealing with the issue of violation of Rule 46A of the I.T. Rules, 1962 - Considering reasoned finding of the CIT(A) on this issue, we uphold the order of CIT(A). As such, revenue has no reason for making addition
Addition on account of income from other sources (being 50% of the disclosed agricultural income) - Assessment u/s 153A - HELD THAT:- AO made the addition on estimation basis and there was no incriminating material gathered during the course of search. Therefore, we find the order of CIT(A) in deleting the addition is reasonable. Thus, we uphold the order of CIT(A) and the ground No.4 raised by the revenue is dismissed.
Unrecorded advance receipt on account of sale of property to Shri Ashok Vijaykumar Kotecha (M/s. Chaudhari Motors) - addition deleted by the CIT(A) admitting additional evidence - HELD THAT:- No iota of fault in the reasoning given by the CIT(A) deleting the addition of ₹ 1 crore. While deleting the addition, CIT(A) has considered all aspects; (1) Saudi pawtis dated 11-10- 2010 and 14-10-2010 (2) cancellation document (3) statement given by the assessee u/s.132(4) (4) confirmation of Shri Anil Kotecha cancelling the original transaction in response to the show cause notice issued by the AO. All these documents clearly suggest that the amount of ₹ 1 crore was returned back to Shri Anil Kotecha. Regarding the revenue’s allegation that the CIT(A) admitted certain additional evidences, we find that no specific document was specified by the Ld. DR for the Revenue before us which constitutes additional evidence. Regarding Sauda Pawti and the deed of cancellation, we find they exist in the files of the AO. Therefore, there is no violation of Rule 46A of the Income Tax Rules, 1962 in this regard
Addition of short term capital gains - CIT-A deleted the addition - HELD THAT:- As find from the discussion of the CIT(A) reveal that ₹ 68,46,000/- is not the value as per the records of stamp duty authorities. The value of ₹ 68,46,000/- is the figure as per the registered valuer which is created for loan purpose and hence, it has no sanctity under the provisions of section 50C of the Act. It is the finding of CIT(A) that there is no evidence to demonstrate that the assessee received higher consideration than that of ₹ 29,63,800/-. On the facts of this case, we are of the opinion that addition of ₹ 38,82,200/- is unwarranted. Ground No.3 raised by the revenue is accordingly dismissed.
Addition on account of interest of purchase of land - addition deleted by the CIT(A) - HELD THAT:- It is evident that the loan is actually squared up by 01-04-2010 relevant to A.Y. 2011-12. No interest is accrued in principle due to the said squaring up of the loan. Notwithstanding the same, assessee has a strong capital base to the tune of ₹ 1.09 crores and the presumption laid down by the jurisdictional High Court in the case of Reliance Utilities and Power Ltd. [2009 (1) TMI 4 - BOMBAY HIGH COURT] that no funds are utilized for payments towards investment in the land. Considering the above discussion given by the CIT(A) while deleting the addition, we find the order of CIT(A) is a well reasoned one and therefore, it does not call for any interference.
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2018 (1) TMI 1518 - ITAT CHENNAI
Stay of demand - recovery proceedings - HELD THAT:- Considering the fact that the demand is for all the seven years put together nearly ₹ 200.00 Crs. against which the assessee had paid only ₹ 15.00 Crs, the assessee is granted an installment scheme of ₹ 7.00 Crs. per month representing an installment of ₹ 1.00 Cr. for each of the assessment years in respect of the appeals which the Stay Petitions have been filed.
The first installment is to be paid on or before 16.01.2018 and the subsequent installments to be paid on or before 15th of every succeeding month. The appeals of the assessee have been filed on 08.01.2018 and consequently, Registry is directed to post the appeals of the assessee on 19.03.2018. No notice to be issued to the parties as the order has been pronounced in the open court. Stay Petitions filed by the assessee are partly allowed.
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2018 (1) TMI 1517 - ITAT CHANDIGARH
Assessment u/s 153A - unexplained cash credits with respect to share capital as per the provisions of section 56(2)(viia) and on account of shares purchased by the assessee of a company for consideration less than the fair value of the share - HELD THAT:- We do not find any merit in the present appeal filed by the Revenue. The facts vis-à-vis both the appeal that search action was carried out on the assessee on 4.10.2012 and at the time of search action no assessment or reassessment proceedings were pending is undisputed. It is also not disputed that no incriminating documents or record or any other evidence was found or seized during the course of search proceedings which resulted in any addition in the case of the assessee. CIT(Appeals) has rightly deleted the addition made following various judicial pronouncements in this regard. Thus no incriminating material was found during search action and hence addition made was not justified - See MEETA GUTGUTIA PROP. M/S. FERNS ‘N’ PETALS [2017 (5) TMI 1224 - DELHI HIGH COURT] - Decided in favour of assessee.
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2018 (1) TMI 1516 - RAJASTHAN HIGH COURT
Reopening of assessment - ITAT justification in treating the proceedings initiated u/S.147 r/w Sec.148 as ab-initio void - HELD THAT:- Tribunal while considering the matter has rightly relied upon the decision of this Court in CIT v. Ram Singh [2008 (5) TMI 200 - RAJASTHAN HIGH COURT]. The addition which was made was beyond the scope of Section 147 r/w Section 148 of the Income Tax Act. Therefore, the view taken by the Tribunal is required to be affirmed.
Issue is answered in favour of the assessee and against the department.
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2018 (1) TMI 1514 - ITAT PUNE
Deduction u/s. 54B - absence of sufficient documentary evidence indicating that the agricultural land was used for agricultural purpose by the assessee or his parents, in the two years immediately preceding the date of transfer of asset - HELD THAT:- A perusal of observation made by Commissioner of Income Tax (Appeal) with regard to ‘pictographic representation’ of land indicate that reference was made to the said site plan to indicate that the different Survey Nos. are contiguous pieces of land. This fact is evident from the site map which is at page 121 of the paper book. DR has not controverted that the said site plan at page 121 of the paper book was furnished before the Assessing Officer. Thus, objection raised by the Department alleging violation of Rule 46A is without any substance.
In so far as objection raised by the Revenue that assessee in his return of income has not disclosed agricultural income, it has been contented that agricultural produce from the land was mainly used for self consumption and as the income from sale of agricultural produce was less than ₹ 5000/-, therefore, the same was not reflected in the return of income. A perusal of 7/12 extract shows that during financial year 2009- 10, out of total land admeasuring 7H 44R, only 40R was under cultivation and in financial year 2010-11, only 1H 80R was cultivated. The assessee had cultivated groundnut and brinjal on the land. The assessee is having 1/4th share in total undivided land. We find merit in the submission of assessee. The income from agricultural activities may not be substantial so as to be considered for the rate purpose under the provision of the Act. The Hon'ble Bombay High Court in the case of CIT Vs. Smt. Debbie Alemao [2010 (9) TMI 560 - Bombay High Court] has held that if an agricultural operation does not result in generation of surplus, it cannot be a ground to say that the land was not used for the agricultural purpose.
Thus, in view of the above, we do not find any infirmity in the order of Commissioner of Income Tax (Appeal) and accordingly, the same is upheld and appeal of Revenue is dismissed being devoid of any merit.
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2018 (1) TMI 1512 - ITAT MUMBAI
Disallowance u/s.14A read with Rule 8D(2)(iii) - non recording of reasons by AO - HELD THAT:- We find that the AO has not recorded its satisfaction by giving specific reasons as to the correctness of the claim of the assessee having regard to the accounts of the assessee.
AO has not recorded its satisfaction by giving specific reasons as to the correctness of the claim of the assessee, therefore, we set aside the order of Ld. CIT(A) and remit the matter back to the file of AO with a direction to verify regarding the claim of assessee that no expenses were incurred for earning the exempt income, having regard to the accounts of the assessee. The AO shall also verify any other claim if so raised by the assessee, and thereafter pass afresh order of assessment. - Appeal of assessee allowed for statistical purposes.
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2018 (1) TMI 1511 - ITAT AHMEDABAD
Exemption u/s 11 denied - assessment ex-parte u/s. 144 - denial of exemption as no evidence has been provided by the assessee to substantiate the claim for the purpose of trust - HELD THAT:- Assessee had made its first submission before the ld. CIT(A) along with paper books. The ld. CIT(A) has called a remand report from the assessing officer and after considering the remand report and submission of the assessee stated that it has rightly been held by the assessing officer in the assessment order as well as in the remand report that the case of the assessee is squarely covered by the proviso to section 2 sub-section 15 of the act.
In the case of Ahmedabad Urban Development Authority [2017 (5) TMI 1468 - GUJARAT HIGH COURT] the assessee society was constituted under Gujarat Town Planning and Urban Development Act, 1976 to undertake preparation and execution of town planning scheme and to execute works in connection with supply of water, disposal of sewerage and provision of other services and amenities and held it could be said to be providing general public utility services within meaning of section 2(15) and thus its claim of exemption of income under section 11 was to be allowed. Similarly, the case of GIDC [2017 (7) TMI 811 - GUJARAT HIGH COURT] was also decided by the Hon’ble Gujarat High Court in favour of the assessee.
Above exercise required thorough examination of primary level record material and activities performed by the assessee - We are of the view that restoring this case to the Ld. CIT(A) instead of assessing officer will increase the litigation work at multistage level first at the level of CIT(A) then again in the form of remand report at the level of assessing office - we restore the impugned issue to the file of the assessing officer for deciding afresh as directed above after affording adequate opportunities to the assessee. Appeal of the assessee is allowed for statistical purposes.
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2018 (1) TMI 1509 - ITAT DELHI
Revision u/s 263 - addition u/s 68 - reassessment orders passed by the AO wherein AO as failed to examine the share application money received from the foreign entity and has only verified the identity of the said entity but has failed to verify the creditworthiness of such investor and also the genuineness of the transaction - HELD THAT:- We are unable to appreciate such kind of remote link especially when the AO under the law was required to see the nature and source of the credit which had come from a Swiss company and not to examine the source of money advanced by M/s. Tenoch Holding Ltd to Swiss company.
Going beyond as to how the M/s. Tenoch Holding Company has received the money and what is the source of M/s. Tenoch Holding Ltd. is definitely not the requirement of the law unless any contrary material is found. Otherwise there would be no end to roving and fishing inquiry. Thus, the contention raised by CIT-DR about the background of the persons who were holding Tenoch Holding Ltd. through their companies will not make much difference in the law in so far as to further examine the source of share application money/share capital brought by non-resident entity.
Here in this case the PCIT has completely ignored the factum of report received from Swiss Tax Authorities, which perhaps clinches the entire issue in favour of the assessee and has not even laid down the parameters as to what should have been the inquiry made by the AO after receiving such a report. Accordingly, the reassessment orders passed by the AO for the impugned assessment years cannot be reckoned as erroneous in so far as it is prejudicial to the interest of revenue.
Share application money received from the holding foreign entity, the documents as mentioned above are sufficient to hold that transaction is genuine, and in the present case also all these documents have been placed on record at some stage or the other and therefore, on merits also the additions u/s.68 is not called for.
Finding of the learned PCIT with regard to the share application money received from other Indian partner, M/s. Bitcorp India Pvt. Ltd., first of all, we find that this issue was neither there in the “reasons recorded” by the Assessing Officer as the information which was received for reopening of the assessment completed u/s.143(3) was only with regard to the examination of the fund received from the foreign investor, M/s. Bycell Holdings AG in terms of Section 68; nor any ‘reason to believe’ has been entertained by AO during the course of assessment proceedings based on any tangible material coming on record. Once the case was reopened u/s 147 only to examine the source of share application money/share capital of the non-resident entity and without there being any tangible material on record that the share application money received from M/s. Bitcorp India Pvt. Ltd. is not genuine, the Assessing Officer under the law was not required to conduct any roving and fishing inquiry within the scope of re-assessment proceedings which is circumscribed or limited only to the issues raised and ‘reason to believe’ entertained in the ‘reasons recorded’; or in the terms of Explanation-3 to Section 147, i.e., on the issue which comes to the notice of AO during the course of re-assessment proceedings.
Once this issue is neither flowing from the initiation of reassessment proceedings u/s.147, i.e., “reasons recorded” nor arising from the reassessment order, then without there being any adverse material on record and without issuing any show cause notice to the assessee on this point, learned PCIT cannot set aside this issue on the ground that no inquiry qua that party/ investor has been conducted by the AO.
In all these years, the assessments were completed u/s. 143(3) and prior to the initiation of re-assessment proceedings all these transaction have been examined and the same has been duly accepted. While reopening such assessments u/s.147, AO should have credible information and tangible material coming to his possession to entertain reason to believe that the share application money received from M/s. Bitcorp India Pvt. Ltd. during the assessment year 2006-07 to 2008-09 was not genuine. Once there is no such material, then the finality attained in terms of orders passed u/s. 143(3) accepting the said share application money can neither be raised nor can be disturbed. Thus, on this score also, we hold that learned PCIT was not justified either in law or on facts in setting aside the issue of share application money received from M/s. Bitcorp India Pvt. Ltd. for carrying out any further inquiry or pass any fresh assessment order as it is beyond the scope of Section 263. - Decided in favour of assessee.
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2018 (1) TMI 1508 - ITAT CHANDIGARH
Deduction u/s 80P(2)(d) computation - Applicability of the provisions of section 14A r.w.r. 8D for the purpose of determining the quantum of expenses relatable to earning of interest and dividend income which are eligible for deduction u/s 80P(2)(d) - HELD THAT:- As in the case of the assessee in assessment year 2012-13 [2017 (10) TMI 1463 - ITAT CHANDIGARH] wherein the contention of assessee that the provisions of section 14A r.w.r. 8D could not be applied for the purpose of computing the expenses relatable to earning of interest and dividend income was dismissed by the I.T.A.T. following the decision of the Hon'ble jurisdictional High Court in the case of Punjab State Cooperative Milk Producers Federation Ltd. vs Commissioner of Income Tax & Anr. [2011 (3) TMI 615 - PUNJAB AND HARYANA HIGH COURT] on identical issue.
Respectfully following the same, we uphold the applicability of the provisions of section 14A r.w.r. 8D for the purpose of determining the quantum of expenses relatable to earning of interest and dividend income which are eligible for deduction u/s 80P(2)(d) and which have to be reduced from the said incomes while determining the quantum on which deduction u/s 80P(2)(d) is available to the assessee. The contention raised by the assessee in this regard is, therefore, dismissed.
Addition u/s 14A - The decision of the I.T.A.T. in assessee’s case for assessment year 2012-13 will squarely apply in the present case also, following which we hold that no disallowance of interest is to be made in the fact situation of availability of enough own interest free funds of the assessee. But since the fact needs to be verified in the present case, we restore the matter to the Assessing Officer to verify the availability of interest free own funds of the assessee for the purpose of making investments which have earned dividend and interest during the impugned year and further direct that the issue thereafter be decided in accordance with law.
We further uphold the order of the CIT(Appeals) restricting the calculation of disallowance u/s 14A only on investments which have earned interest and dividend income during the year.
Claim of deduction u/s 80P(2)(e) on account of rental income - HELD THAT:- As in assessee’s own case in assessment year 2009-10 had after accepting this fact held that though the assessee is not entitled to deduction on account of income earned from storage of goods, it is entitled to the same on account of hiring charges by letting out its godown to outsiders.
CIT(Appeals) has further examined the details of the rental income earned by the assessee and after verifying the same found to be correct. No infirmity in the above observations and findings of the CIT(Appeals) have been pointed out to us by the Ld. DR. We hold that CIT(A) has rightly allowed the assessee’s claim of deduction u/s 80P(2)(e) on account of rental income earned
Disallowance of interest expenses - loan taken for the purpose of construction of godowns - HELD THAT:- The assessee had demonstrated and bifurcated the user of loans and, therefore, the Ld.CIT(Appeals), we hold, was right in holding that the interest pertaining to only those loans which were taken for the purpose of construction of godowns needed to be capitalized as per the provisions of section 36(1)(iii) of the Act. Even otherwise, the Ld. DR has not controverted this finding of the Ld.CIT(Appeals) that the loans taken by the assessee were duly bifurcated. In view of the same, we see no reason to interfere with the order of the Ld.CIT(Appeals) and uphold the same in restricting the disallowance of interest expenses by capitalized the same to the extent of ₹ 3,15,81,084/-. The ground of appeal No.3 raised by the Revenue is, therefore, dismissed in above terms.
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2018 (1) TMI 1507 - ITAT ALLAHABAD
Revision u/s 263 - non application of 50C by assessee - assessment is framed on the basis of the revised return filed - A.O. did not take into account original return of income - As per CIT non disclosing correct valuation on account of long term capital gains as applicability of section 50C ignored - HELD THAT:- There was an Agreement to Sale between Assessee-HUF and Shri Shanti Bhushan in September, 1966, whereby, the purchaser agreed to purchase the property for ₹ 1 lakh and paid earnest money of ₹ 5000 through cheque. It is, therefore, established on record that the purchaser has entered into an Agreement to Sale to purchase the property for a sum of ₹ 1 lakh in September, 1966 but due to litigation in Civil Court, the Sale Deed was executed later on 29.11.2010.
Therefore case of Sanjeev Lal [2014 (7) TMI 99 - SUPREME COURT] clearly applicable to the facts and circumstances of the case and the Date of Agreement to Sale to be taken as Date of Transfer of Original Asset. On peculiar facts of the case, the sale deed dated 29.11.2010 as per provisions of Law for calculating long term capital gains shall have to be considered as executed on September 1966. Thus, the provisions of Section 50C of the I.T. Act which were not applicable in that year could not be invoked against the assessee.
It is well settled Law that two conditions need to be satisfied for invoking powers under section 263 by the Commissioner which are (1) the Order of the A.O. sought to be revised is erroneous and (2) it is prejudicial to the interests of the Revenue. At the same time this provision cannot be invoked to correct each and every type of mistake or error committed by the A.O. The order of the A.O. cannot be termed prejudicial simply because A.O. adopted one of the course permissible in Law and it has resulted in loss of Revenue or where two views are possible and A.O. has taken one view with which the Commissioner did not agree. Where two views are possible and A.O. has taken one view and the Commissioner does not agree with the view taken by the A.O, the assessment order cannot be treated as an order erroneous or prejudicial to the interests of the Revenue.
Section 50C would not be applicable to the facts and circumstances of the case. In assessment year under appeal, because the date of Sale Deed shall have to be reckoned on the date of Agreement to Sale i.e., September, 1966, therefore, the view of the A.O. is sustainable in Law and if the Ld. CIT does not agree with him, such order could not be treated as erroneous and prejudicial to the interests of the Revenue. On minor issue, assessee filed reply but no order have been passed by the Pr. CIT. It is a case where A.O. made enquiry into the matter by calling explanation of assessee and was satisfied with the claim of assessee. Therefore CIT should not have exercise jurisdiction under section 263. We, therefore, of the view that the order of CIT is not sustainable in Law - Decided in favour of assessee.
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2018 (1) TMI 1506 - ITAT MUMBAI
Reopening of assessment u/s 147 - non disposal of appellant’s objections by the AO - HELD THAT:- AO formed a belief that income has escaped assessment upon receipt of information from DDIT(Inv) Mumbai and Sales Tax Deptt. Govt of Mahahrashtra and thereafter the re-assessment was framed vide order dated 29.12.2010 u/s 143(3) r.w.s. 148 without having disposed off the objections filed by the assessee against the reasons recorded on the basis of which the re-assessment proceedings were initiated and notice u/s 148 was issued.
The perusal of the assessment order reveals that though the assessee vide letter dated 15.12.2010 filed before the AO various objections but there is no mention of these objections being disposed before the framing of the re-assessment order. DR could not place any evidence to controvert the argument of non disposal of the objections filed by the assessee. In our opinion, the objections filed by the assessee during the reassessment proceedings has to be disposed off failing which the reassessment order so passed by the AO is nullity. See M/S. BAYER MATERIAL SCIENCE PVT LTD VERSUS THE DEPUTY COMMISSIONER OF INCOME TAX-10 (3) AND OTHERS [2016 (3) TMI 179 - BOMBAY HIGH COURT] - Decided in favour of assessee.
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2018 (1) TMI 1504 - MADHYA PRADESH HIGH COURT
Best judgment assessment - NP determination - estimation of profit - as per ITAT CIT (A) was justified in directing the Assessing Officer to recompute the profits by increasing the same @ 1% as against 2% applied by the Assessing Officer - HELD THAT:- On due consideration of the arguments of the learned counsel for the parties, so also the law laid down by the Supreme Court in the case of State of Orissa v. Maharaja Shri B.P. Singh Deo [1969 (12) TMI 2 - SUPREME COURT] and a Division Bench of this Court in the case of Karan Singh v. Commissioner of Wealth Tax [1980 (2) TMI 24 - MADHYA PRADESH HIGH COURT] we are of the view that the order passed by the learned Appellate Tribunal is based on "best judgment assessment". The power to levy assessment on the basis of best judgment is not an arbitrary power; it is an assessment on the basis of best judgment. Therefore, the Tribunal was not in error in confirming the decision of the Commissioner of Income Tax (Appeal).
No case to interfere with impugned order passed by the learned Appellate Tribunal, as prayed for, is made out; nor any substantial question of law is arising in this appeal.
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2018 (1) TMI 1503 - ITAT KOLKATA
Allowability of claim of loss on sale of lands - HELD THAT:- The assessee, by just paying a token amount of ₹ 7 Lakhs/- to certain mediators, who are said to be a group of people who acquire land from agricultural land owners for selling the same to big customers and entering into an agreement of sale with just one of the group members, cannot be said to have acquired all the rights in the said land of 6.41 Acres for ₹ 7,05,37,500/-, at Tauru, District Gurgaon, Haryana.
At best the assessee could have acquired certain rights against the intermediaries/brokers/land pooling agents. There is no purchase of land. Such agreements cannot form part of "stock-in-trade" of the assessee. These arguments at best give rise to certain claims for recovering of money.
When the agreement was said to have been entered into on 24/03/2009, its time period was only up to 31/03/2009. Only ₹ 1 Lakh was taken as advance from M/s. A One Agerco Pvt. Ltd., New Delhi. When the Bench expressed its surprise, as to how the CIT(A), allowed the claim of the assessee on these facts and circumstances, assessee submitted that the entire amount has been paid to the vendors of the land by the assessee. This submission of the ld. A/R, is contrary to the recording of fact by the Assessing Officer at page 4 of his order, where he states that "the assessee has not made the said payments as specified in the said agreement of sale." Similarly, there is no proof of M/s. A One Agerco Pvt. Ltd. fulfilling its obligation under the agreements. All these documents in our view are self-serving documents.
This is neither a purchase nor a sale of land. The finding of AO has force. A plain examination of the documents take us to a conclusion that this is a false and bogus claim. CIT(A) has in a slipshod manner allowed such huge claim of the assessee. In any event, as there is contradiction in the facts of the case, as has been presented by assessee and that recorded by the AO, we set aside this issue to the file of the CIT(A), with a direction to verify whether the assessee company had made payments to the tune of ₹ 7,05,37,500/-, to the group of brokers for acquisition of land. CIT(A), is also directed to verify whether M/s. A One Agerco Pvt. Ltd. had paid the entire money to the assessee and acquired the land in question. As the ld. CIT(A) failed to examine the applicability of Section 40A(3) of the Act. we direct him to do so.
Allowability of payment of non-compete fees - HELD THAT:- The amount was not received by M/s. Mittal Corporation Ltd., under the head legal and professional service and hence the statement of the ld. A/R, to that effect, has no bearing on the claim of the assessee. As the assessee has paid the amount to M/s. Mittal Corporation Ltd. and as the amount received was offered to tax by M/s. Mittal Corporation Ltd., the revenue should have no grievance in this regard. In the result, this ground of the revenue is dismissed.
Disallowance of expenses claimed at 10 per cent in the place of 1/3rd, disallowed by the AO - HELD THAT:- These are ad-hoc disallowances. As the D/R, did not controvert the finding of the CIT(A) we find no reason to interfere in this issue of percentage of ad-hoc disallowance of administrative expenditure. In the result, this ground of the revenue is dismissed.
Allowability of expenditure claimed towards leveling and fencing - AO disallowed the claim as the assessee did not furnish supporting documents for the expenditure claimed - HELD THAT:- CIT(A) has not controverted the finding of the AO that the assessee has not produced the supporting documents of having incurred expenditure towards leveling and fencing. Mere production of a ledger account and payments by way of cheques does not suffice in this case. As the assessee has not produced necessary evidence, we uphold the order of the AO and reverse the finding of the CIT(A). In the result, this ground of the revenue is allowed.
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2018 (1) TMI 1502 - ITAT COCHIN
Addition u/s 68 - assessee borrowed sum from Shri Subair Khan, NRI, brother of Mr. Nizar Ahmed - as submitted that the said amount was paid by Shri Subir Khan towards booking 1000 sq. ft. space in the building called “Killi Towers” under construction at that time - HELD THAT:- The details of repayment of loan was not filed before the lower authorities and they had no occasion to examine the details. Further, the assessee has taken two different stand, one before the CIT(A) and another before the Assessing Officer. Hence it is appropriate to remit the issue back to the file of the Assessing Officer to examine the same afresh in accordance with law. Accordingly, we remit the issue to the file of the Assessing Officer for his fresh consideration and decide the same after giving opportunity of hearing to the assessee. Thus the appeal filed by the assessee is partly allowed for statistical purposes.
Unexplained capital contribution by the partners - addition u/s 68 - search operation u/s. 132 - survey u/s. 133A at the office of the assessee’s auditor - CIT(A) deleted the same by observing that the balance sheet and income and expenditure filed subsequent to the survey cannot be relied upon and no addition could be made on account of capital contribution brought in by the partners - HELD THAT:- The balance sheet filed subsequent to the survey needs to be verified which has not been verified either by the Assessing Officer or by the CIT(A). Hence, in the interest of justice, we remit the disputed issue to the file of the Assessing Officer for fresh consideration and decide the issue in accordance with law after giving reasonable opportunity of hearing to the assessee.
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2018 (1) TMI 1500 - ITAT MUMBAI
Assessment u/s 153A - addition to income - proof of incriminating material found - HELD THAT:- The reference to the statement of employees, etc. collected at the time of search, which has been referred to in the stated Grounds of appeal before us, has already been considered by our co-ordinate Bench in its order [2017 (6) TMI 585 - ITAT MUMBAI] and it has been held that the same does not justify the inclusion of impugned addition in an assessment made u/s 153A r.w.s. 143(3) of the Act having regard to the judgment in the case of All Cargo Global Logistics Ltd. [2015 (5) TMI 656 - BOMBAY HIGH COURT] In view of the similarity of facts, in the instant case also, we hereby affirm the order of the CIT(A), which is in line with the ratio laid down by the Hon'ble Bombay High Court in the case of All Cargo Global Logistics Ltd. (supra). - Decided against revenue
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2018 (1) TMI 1497 - ITAT MUMBAI
Addition u/s 14A r.w.r. 8D - expenses relatable to exempt income - HELD THAT:- We are of the view that the AO has not recorded any satisfaction while disbelieving the claim of the assessee regarding expenses relatable to exempt income.
Once this is not been done, no disallowance can be made, in view of the proposition of law settled by Hon’ble Bombay High Court in the case of Godrej & Boyce Mfg. Co. Ltd. [2010 (8) TMI 77 - BOMBAY HIGH COURT] . In view of the above, we reverse the orders of the lower authorities and allow the claim of the assessee.
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2018 (1) TMI 1494 - ITAT CHANDIGARH
Deduction u/s 80IC - benefit of substantial expansion for deduction u/s 80IC - HELD THAT:- As gone through the order of the Hon’ble Himachal Pradesh High Court in the case of Stovecraft [2017 (12) TMI 69 - HIMACHAL PRADESH HIGH COURT] .
Admittedly in all the above appeals the assessee was a new undertaking having commenced operations after 07-01-2003 and had already claimed deduction u/s 80IC @100% of its profits for a period of five years.
In the impugned Years, the assessee had claimed deduction @100% of its profits since it had undertaken substantial expansion of its eligible unit which was denied following the order of the ITAT in the case of Hycron Electronics [2015 (6) TMI 725 - ITAT CHANDIGARH] . The Hon’ble High Court we find has set aside the order of the ITAT in the case of Hycron Electronics [2015 (6) TMI 725 - ITAT CHANDIGARH] ruling that the new undertakings set up after 07-01-2003 are entitled to deduction @100% of the profits on carrying out substantial expansion.
In view of the above order of the Hon’ble Himachal Pradesh High Court, we set aside the order of the CIT(A) and direct the AO to grant the assessee deduction of hundred percent of its eligible profits, as per the ruling of the jurisdictional High Court in this regard in the case of ‘M/s Stovekraft India vs. Commissioner of Income Tax’ [2017 (12) TMI 69 - HIMACHAL PRADESH HIGH COURT] . The grounds raised by the assessee in this regard are therefore allowed
Disallowance pertaining to interest and bad debts - increasing the business profits of the assessee - HELD THAT:- In the earlier part of our order that the assessee is entitled to claim deduction of its profits @ 100% in the impugned year. Consequently the additions so made are entitled to deduction u/s 80IC of the Act, as accepted by the Department also vide the CBDT Circular reproduced above, resulting in no addition to the taxable income of the assessee - we direct that the addition made on account of interest and bad debts be deleted.
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