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Income Tax - Case Laws
Showing 141 to 160 of 751 Records
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2018 (1) TMI 1490 - ITAT AHMEDABAD
Assessment u/s 153A - whether, while making assessment u/s.153A, the Revenue is entitled to interfere with the assessment concluded either u/s 143(1) or u/s 143(3) and not pending at the time of search in the absence of any incriminating material unearthed as a result of search? - HELD THAT:- Total absence of reference to any incriminating material which may have any bearing to impugned additions/disallowances. As a corollary, it is manifest that additions/disallowances have been made without reference to any specific incriminating material/document found as a result of search and seizure action under s.132 of the Act and is based on re-appreciation of facts unconnected to search.
Income-tax return for the relevant assessment years were filed prior to the search in the normal course suo motu incorporating the items of income/expenditure which are subject matter of considerations in the assessment framed u/s 153A. The returns for various assessment orders in question so filed in ordinary course were accepted under s.143(1) of the Act and/or assessed under s.143(3) and as such no assessment was eventually pending on the date of initiation of search which may get abated in consequence of search. Accordingly, various additions/disallowances made by the AO are clearly beyond the scope of authority vested under s.153A of the Act owing to absence of any incriminating material or evidence.
Thus in the absence of any incriminating material/evidence, no addition can be sustained under s.153A is no longer res integra in view of the decision of the Hon'ble Jurisdictional High Court in the case of Saumya Construction (P.) Ltd. [ 2016 (7) TMI 911 - GUJARAT HIGH COURT] and Devangi alias Roopa [2017 (2) TMI 724 - GUJARAT HIGH COURT] . Similar view was earlier taken by the Hon'ble Delhi High Court in the case of Kabul Chawla [2015 (9) TMI 80 - DELHI HIGH COURT] . Additions/disallowances made without any nexus to incriminating material found, if any, as a result of search operations are not sustainable in the eyes of law in section 153A of the proceedings. - Decided in favour of assessee.
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2018 (1) TMI 1489 - ITAT DELHI
Allowable business expenses u/s 37 - wholly and exclusively for the purpose of business - amount paid to ‘Lok Foundation’, an entity registered in Mauritius - agreement with Lok Foundation to help them identify certain investors and influence them to participate in Lok II - assessee provided services to the two overseas funds Lok I and Lok II and received advisory fees
Held that:- It is because the services provided by Lok Foundation that the increase in committed funds took place which consequently increased the assessee’s advisory fees from ₹ 4.7 crore in the preceding year to ₹ 9.21 crore in the current year, which is roughly 93%. As against this, the assessee paid only a sum of ₹ 2.88 crore to the Lok Foundation. When the assessee received a composite amount of advisory fee which covered not only the services rendered by it alone, but also by Lok Foundation, by no standard, the payment made for securing services of Lok Foundation can be considered as not incidental to business. But for such services, the assessee would not have earned the revenue of this magnitude. Since such payment is incidental to carrying on of business. We are satisfied that the ld. CIT(A) rightly appreciated the facts in deleting the addition. - Decided against revenue
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2018 (1) TMI 1487 - ITAT JAIPUR
Assessment u/s 153A - disallowances u/s 40(a)(ia) and 36(1)(va) - disallowance made by the AO without referring to any incriminating material found and seized during the course of search and seizure action - HELD THAT:- The scope and jurisdiction of the AO to reassess the total income of the assessee u/s 153A is limited only to the extent of the income disclosed by the incriminating material found and seized during the search and seizure action. AO has reassessed the income of the assessee by making the disallowance u/s 40(a)(ia) as well as u/s 36(1)(va) of the Act without making any reference to any incriminating material found. Therefore, the disallowance/addition made by the AO for these 3 assessment years completed u/s 153A is undisputedly not based on any incriminating material found or seized during the course of search and seizure action u/s 132 of the Act. Once, the Assessing Officer has completed the reassessment u/s 153A without any reference to the incriminating material found then, no addition cannot be made to the returned income of the assessee. See KABUL CHAWLA [2015 (9) TMI 80 - DELHI HIGH COURT] - Decided in favour of assessee.
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2018 (1) TMI 1481 - ITAT MUMBAI
Penalty u/s 271(1)(c) - penalty was initiated for filing inaccurate particulars of income whereas it was finally imposed for concealment of income - Non specification of charge - HELD THAT:- The undisputed facts are that the AO initiated penalty proceedings for furnishing inaccurate particulars of income whereas the penalty was finally imposed for concealment of income.
In our considered view the AO has to specifically point out one of the two limbs on which the penalty is proposed to be levied on the assessee so that the assessee can get full natural justice to respond to the charge for which it is penalised but in the present case this is not so and thus the AO himself was not clear as to which limb penalty was to be imposed. The case of the assessee also gets support from the decision of Samson Perinchery [2017 (1) TMI 1292 - BOMBAY HIGH COURT] wherein it has been held that the AO has to specify the charge on which penalty is being imposed failing which the penalty order cannot be sustained.
In the instant case also the AO initiated penalty on one limb but imposed penalty on the other which is wrong and therefore order of CIT(A) cannot be sustained. The case of the assessee is squarely covered by the said decision and we, respectfully following the same, set aside the order of CIT(A) and direct the AO to delete the penalty. - Decided in favour of assessee.
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2018 (1) TMI 1480 - ITAT MUMBAI
Payment of non compete fees - nature of expenses - revenue or capital expenditure - HELD THAT:- When the payment was made for elimination of competition but for non-compete for short period and the assessee have not derived any enduring benefit and no new asset was added the payment of non-compete fee was in the nature of restricting Anita Shirodkar and Arjun Sharma in exercising their skill and experience in the similar field, cannot be treated as capital expenditure. The decision relied by ld. DR for the Revenue in Taparia Tools Ltd. [2003 (1) TMI 83 - BOMBAY HIGH COURT] has been overruled by Hon’ble Supreme Court in Taparia Tools Ltd. vs. JCIT [2015 (3) TMI 853 - SUPREME COURT] and the decision of Madras Industrial Investment Corporation Ltd. v/s CIT [1997 (4) TMI 5 - SUPREME COURT] is not applicable on the facts of the present case as the said case relates to proportionate deduction spread over a period on discount of debenture.
Disallowance of license fees - AO disallowed holding it that expenditure is incurred for intangible asset and therefore, constitute a capital expenditure, the assessee itself capitalized the expenditure as an intangible asset in its books of account also confirmed by CIT-A - assessee argued that assessee paid license fees to leverage its strength and to expand business activities in Middle East market for incoming customer to India. The assessee paid the license fee for expanding its existing business in regions outside India - allowable business expenses u/s 37 - HELD THAT:- The Hon’ble Apex Court in case of CIT vs. IAEC (Pumps) Ltd.[1997 (4) TMI 14 - SUPREME COURT] held that license fee paid for use of patent and design was on revenue account. The fact of the said case was that under an agreement entered by assessee with a foreign company, the assessee was granted a license to use its patents and designs exclusively in India. The agreement was for duration of 10 years, with the parties having the option to extend or renew the agreement. The foreign company undertook not to surrender its patents without the consent of the assessee and to make available to the assessee any improvements, modifications and additions to designs. It had also undertaken to enable the assessee to defend any counterfeit by others - revenue expenditure incurred in a particular year is to be allowed in that year and the department cannot deny the same. It is only in case that assessee himself want to spread the expenditure over a period of ensuring year, it can be allowed to be spread over provided the principle of matching concept is satisfied. Thus, considering the above discussed factual and legal position, the expenditure incurred by assessee on a license fee is revenue expenditure - Decided in favour of assessee.
Deduction u/s 80HHD - Disallowance on account of Mis-utilization of Tourism Reserve with reference to section 80HHD(4) - AO disallowed holding that purchase of car and coaches are must be purchased for providing service to the Tourist - assessee argued that the assessee has utilized the amount of reserve created in earlier year for the purpose of purchases of coaches and car - HELD THAT:- These issues are against the assessee in assessee’s own case for AY 2001-02. DR not disputed the contention of the ld. AR of the assessee. Considering the submission of ld. AR of the assessee, the grounds of appeal no.3 and part of ground no.4(iii) to the extent of Mis-utilization of Tourism Reserve is dismissed.
Denial of deduction under section 80HHD in respect of interest income - HELD THAT:- In assessee’s own case for AY 2000-01 & 2001-02 the single issue was restored to the file of AO to decide the claim in accordance with the order of special bench in case of Amway India Enterprises vs. DCIT [2008 (2) TMI 454 - ITAT DELHI-C]. Thus, considering the decision of co-ordinate bench, both the part of this ground of appeal are restored back to the file of AO to decide the same.
Disallowance under section 14A - assessee argued that during the year the assessee received dividend and interest on various investments and investments were made out of own funds and not from borrowed fund - HELD THAT:- Prior to assessment year 2008- 09, when rule 8D was not applicable, Assessing Officer had to enforce provisions of sub-section (1) of section 14A and for that purpose, Assessing Officer was duty bound to determine expenditure which had been incurred in relation to income which did not form part of total income under Act by adopting a reasonable basis. Thus, considering the fact of the present case and the fact that prior to AY 2008-09 the Superior Courts and the Tribunal had taken a consistent view that prior to insertion of Rule 8D, a reasonable disallowance is sufficient to meet the requirement of section 14A. Hence, we direct the AO to restrict the disallowance @ 2% of the exempt income for disallowance under section 14A, for the year under consideration.
Deduction u/s 80HHD - addition in respect of training fees - whether training fees are derived in the course of business of Tour & Travels of the assessee and ought to be considered for the purpose of deduction under section 80HHD? - CIT(A) held that training fees form part of business income and has been assessed by AO under the head “Profit & Gain from Business and Profession” and therefore, said income is eligible deduction under section 80HHD - HELD THAT:- Co-ordinate bench of Mumbai Tribunal in ACIT vs. Eastern International Hotels [2005 (11) TMI 180 - ITAT BOMBAY-I] held that where interest income received by assessee had been assessed under the head “Profit & Gain from Business and Profession” same cannot be treated as non-business income for the purpose of deduction under section 80HHD of the Act. The co-ordinate bench relied upon the decision of Alfa Lavel India Ltd.[2003 (9) TMI 43 - BOMBAY HIGH COURT] on contest of interpretation of section 80HHC holding that where the AO had assessed interest received by assessee as a part of business profit under the head “Profit & Gain from Business and Profession”, he cannot treat the said amount as “Income from Other Sources” so as to exclude it from the business profit. Thus, in view of the above factual and legal discussion, we do not find any illegality and infirmity in the order passed by ld. CIT(A).
Addition of retention money as written back claimed as deduction under section 80HHD - retention money is not derived from the business activity of the assessee - HELD THAT:- AO has assessed the said amount under the head “Profit & Gain from Business and Profession”. We have further noted that the co-ordinate bench of Mumbai Tribunal in ACIT vs. Eastern International Hotels (supra) held that where interest income received by assessee had been assessed under the head “Profit & Gain from Business and Profession” same cannot be treated as non-business income for the purpose of deduction under section 80HHD of the Act. The co-ordinate bench relied upon the decision of Alfa Lavel India Ltd. (supra) on contest of interpretation of section 80HHC holding that where the AO had assessed interest received by assessee as a part of business profit under the head “Profit & Gain from Business and Profession”, he cannot treat the said amount as “Income from Other Sources” so as to exclude it from the business profit. Thus, in view of the above factual and legal discussion, we do not find any illegality and infirmity in the order passed by ld. CIT(A).
Deduction under section 80HHD in respect of foreign exchange fluctuation - AO disallowed the deduction on gain from foreign exchange fluctuation holding that it does not emanate from the services provided by the assessee to foreign tourist - CIT(A) allowed the deduction holding that foreign exchange gain forms part and partial of foreign exchange sale proceed and cannot be excluded while computing deduction under section 80HHD - HELD THAT:- The Hon’ble Bombay High Court in case of CIT vs. Syntel Limited [2009 (12) TMI 689 - BOMBAY HIGH COURT] held that when assessee received sale consideration in dollars, which were to receive on date of sale. But on account of fluctuation in conversion rate, the assessee received more in term of Rupee. In Rachana Udyog (2010 (1) TMI 38 - BOMBAY HIGH COURT), held that exchange rate difference is allowable deduction under section 80IB of the Act which is directly related to the transaction involving the export of goods of eligible industrial undertaking.
Exclusion of receipts passed onto other hoteliers and receipts being unrealized tour receipts for computing deduction under section 80HHD - HELD THAT:- By following the decision of Lotus Trans Travels [2010 (12) TMI 126 - DELHI HIGH COURT] wherein it was held that for the amounts, the assessee has issued certificate in Form 10CCAC cannot be treated as a receipt for the purpose of total business and accordingly directed the AO to exclude the receipt of ₹ 31,30,99,313/- passed on by the assessee to other hotel and travel agent. For second/other receipt of ₹ 66,39,877/- it was held that the said amount of foreign currency realized after 30.09.2009 have not entered the numerator i.e. receipt earned by assessee from rendering service to foreign tourist which would not enter the denominator in the formula and directed the AO to exclude the same. We have noted that finding of ld. CIT(A) in accordance with Explanation 1 to sub-section (2), sub-section (2) and sub-section (3) of section 80HHD. No contrary material is brought to our notice to take any contrary view
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2018 (1) TMI 1479 - ITAT AHMEDABAD
Deduction u/s 80IA(4) - developed, operated and was to transfer the project in agreement with the constitutional body - company has entered into an agreement with GSRDC - transfer the project in agreement with the constitutional body i.e. an agency as defined under section 2(e) of the Gujarat Infrastructure Development Act - Held that:- As decided in assessee's own case [2017 (10) TMI 1314 - ITAT AHMEDABAD] assessee has developed, operated and was to transfer the project in agreement with the constitutional body i.e. an agency as defined under section 2(e) of the Gujarat Infrastructure Development Act, 1999 under the Gujarat Development Act and also in direct and explicit agreement and approval of Gujarat government which has given land and allowed to collect toll fee.
Assessee company fulfills the conditions as required under section 80IA(4) including Section 80IA(4)(i)(b) and has developed, operated and was to transfer the infrastructure facility and therefore, is eligible for the deduction claimed under the section. GSRDC is an extended arms of the Gujarat State and is entitle to eligible for deduction - Decided against revenue
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2018 (1) TMI 1478 - DELHI HIGH COURT
The following question of law arises for consideration:-
“(1) Did the Income Tax Appellate Tribunal (ITAT) fall into error in quashing the assessment on the ground that it was not based upon a notice under Section 153C of the Income Tax Act, 1961?”
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2018 (1) TMI 1473 - ITAT CHENNAI
Transfer pricing adjustment - ALP determination - international transactions - expenses incurred by the assessee towards advertisement and sales promotion expenses as helping the promotion of "Renault" brand in India - HELD THAT:- Just because assessee mentioned that marketing expenditure incurred by it helped promotion of Renault brand in India, it cannot be presumed that such expenditure resulted in any ‘’international transaction.
Expenditure was incurred by the assessee, to create market share for its Cars and marginal benefits derived by its principal abroad, as an off shoot cannot in our opinion convert it to a international transaction. See MARUTI SUZUKI INDIA LTD. VERSUS COMMISSIONER OF INCOME TAX [2015 (12) TMI 634 - DELHI HIGH COURT] - Decided in favour of assessee.
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2018 (1) TMI 1471 - ITAT CHANDIGARH
Deduction u/s 80IC - substantial expansion during the assessment year - claim of deduction @ 100% - HELD THAT:- A perusal of the order of the AO reveals that he has not disputed that the assessee unit has carried out substantial expansion as provided under clause (b) of sub section (2) read with clause (ix) of sub section (7) of section 80IC. Almost similar view has also been taken by in the case of ‘M/s Stovekraft India vs. Commissioner of Income Tax’ [2017 (12) TMI 69 - HIMACHAL PRADESH HIGH COURT].
We, therefore, do not find any justification at this stage to give the AO a second innings to re-examine undisputed facts.
The impugned order of the CIT(A) is set aside and the AO is directed to grant to the assessee deduction at the rate of hundred percent of its eligible profits - Decided in favour of assessee.
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2018 (1) TMI 1470 - DELHI HIGH COURT
The following questions of law arise:-
(1) Did ITAT fell into error in its findings with respect to existence of a fixed place Permanent Establishment (PE) of the assessee in India?
(2) Did ITAT fell into error in concluding that assessee/appellant’s separately independent agent PE, was located in India?
(3) Whether on the facts and the circumstances of the case and the law, the ITAT was justified in attributing as high as 35% of the profits to the alleged marketing activities and thereafter, attributing 75% of such 35% profits to the alleged PE of the Appellant in India?
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2018 (1) TMI 1461 - ITAT MUMBAI
Addition u/s 14A r.w.r. 8D - HELD THAT:- As decided in case of Vireet Investment (P) Ltd. [2017 (6) TMI 1124 - ITAT DELHI] as held that for computing average value of investment, for the purpose of disallowance u/s. 14A r. w. Rule 8D only those investments could be considered which would yield exempt income. - Decided in favour of assessee.
MAT - Disallowance of expenditure relatable to exempt income for working out book profit u/s. 115JB - HELD THAT:- We find that in the case of Vireet Investment (P) Ltd. (supra), identical issue has been decided against the revenue and in favour of the assessee in assessee’s own case for AY. 2010-11 [2017 (9) TMI 655 - ITAT MUMBAI]. Considering the above, we decide last Ground of appeal against the revenue
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2018 (1) TMI 1454 - ITAT KOLKATA
Addition u/s 41 - Addition on account of non-genuineness of the creditors - genuineness of sundry creditors was not established as the assessee failed to furnish the addresses of creditors - HELD THAT:- In the instant case, there is no ambiguity that the assessee has not written off the sundry creditors pertaining to the television division though the same was shut down long time ago. But the balance of sundry creditors is very much reflecting in the books of the assessee. These sundry creditors were brought forward from the earlier years which imply that these were accepted in the earlier years. Thus non-furnishing of address of such sundry creditors cannot be the reason for invoking the provision of section 41(1) of the Act. Hence, the ground of appeal filed by the Revenue is dismissed.
Addition on account of undisclosed income - Difference in interest income shown by assessee and interest income as disclosed in form 26AS - HELD THAT:- A detailed reconciliation statement was filed by the assessee before the Ld. CIT(A) on the basis of which the relief was given. But the same does not amount to additional evidence in view of the order of Mumbai Tribunal in the case of Swift Freight India Limited [2015 (1) TMI 738 - ITAT MUMBAI]. Thus we hold that no additional document was filed before the Ld. CIT(A). The Ld. DR has not brought anything on record contrary to the finding of the Ld. CIT(A). Thus, we hold that no additional document was admitted by the Ld. CIT(A) in contravention to the provision of the Rule 46A of the Income Tax Rules. Hence, we respectfully following the consistent view of the Tribunal decline to interfere with the order passed by the Ld. CIT(A) on this account and accordingly the ground take by Revenue is regretted.
Addition on account of undisclosed rental income - assessee has not accounted for the income of TDS deducted by the parties - HELD THAT:- We note that the addresses of both the parties namely Nokia India Pvt. Ltd. and Nokia Siemens Network Pvt. Ltd. were available before the AO at the time of assessment but the AO has not exercised power given u/s 133(6) and 131 of the Act to verify whether any income has accrued to the assessee or not. The affidavit furnished by the assessee before the ld. CIT(A) does not amount to additional evidence in view of the order of Mumbai Tribunal in the case of Swift Freight India Limited [2015 (1) TMI 738 - ITAT MUMBAI]. Thus, we hold that no additional document was filed before the Ld. CIT(A). Thus, in view of the above, we do not find any infirmity in the order of Ld. CIT(A). Hence, the ground of appeal raised by the Revenue is dismissed.
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2018 (1) TMI 1453 - DELHI HIGH COURT
TP Adjustment - selection of comparable - HELD THAT:- As far as the Revenue’s grievance with respect to the exclusion of two comparables i.e. Tata Elxsi Limited and Thirdware Solutions, is concerned, the Court is of the opinion that so far as these two comparables are concerned, the findings with respect to functional similarity of these entities vis-a-vis the assessee are borne out from the record.
Inclusion of SIP Technologies and Export Limited as a comparable is concerned, the approach adopted by the ITAT – of ignoring the low margin, is in consonance with this Court’s judgment. However, with respect to the exclusion of two other comparables, the Court is of the opinion that a question of law arise.
Treatment of forex gain/loss - HELD THAT:- This Court has ruled against the Revenue holding that the forex gain/loss cannot be treated as a part of income and made the subject matter of adjustment, in the cases of Principal Commissioner of Income Tax v. Cashedge India Pvt. Ltd.[2016 (5) TMI 1348 - DELHI HIGH COURT] as well as Principal Commissioner of Income Tax v. B.C. Management Services Pvt. Limited [2017 (12) TMI 255 - DELHI HIGH COURT]
Appeal Admitted on:-
(1) Did the ITAT fall into error in excluding the Tata Consultancy Services Limited (TCS) and Infosys Technologies Limited from the list of comparables having regard to the previous decisions of this Court?”
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2018 (1) TMI 1448 - ITAT HYDERABAD
TDS u/s 195 - Assessee-in-default by levying a tax u/s 201(1) & 201(1A) - payment to a Non- Resident, but had not deducted tax at source before making the payment - HELD THAT:- The assessee has made the payment to the non-residents only. In such circumstances, the assessee is required to deduct the tax at source u/s 195 before making the payment. The assessee has clearly failed to do so and therefore, the AO has initiated the proceedings u/s 201(1) of the Act by issuance of a notice dated 19.6.2013.
The contention that section 201(1) proceedings have been initiated only because the vendors have not paid the tax also is incorrect as in the case of the vendors, notices u/s 148 were issued on 14.2.2014 i.e. after initiation of the proceedings u/s 201(1) of the Act in the case of the assessee on 19.06.2013. Further, it is noticed that the order u/s 201(1) is dated 27.1.2016 i.e. after introduction of the proviso to section 201(1) of the Act, wherein it has been provided that an assessee shall not be treated as ‘an assessee in default’ if the recipient has filed the return of income and has offered the receipt to tax. Therefore, we are of the opinion that the AO’s recitals about the non-filing of the return and non-offering of the income by the vendors is only to demonstrate that the income of the vendors has escaped assessment.
The second objection the assessee is that Article 26 of Indo-US DTAA is applicable - As regards Article 26 of Indo-US DTAA, we find that it is against discrimination of non-residents vis-à-vis the residents of the contracting States under similar circumstances. The underlying principle of Article 26 is that the non-resident shall not be treated less favourably than the residents of the contracting state and the requirements connected with taxation shall not be more burdensome than they are for residents. But in the case before us, there is no discrimination against the NRI’s. We are dealing with the liability of the assessee to deduct TDS and not about the liability of the non-residents.
The income in the hands of the NRI’s is taxable under the head capital gains and the provisions of section 195 are attracted also because they are non-residents.
As rightly argued by the assessee, the assessee is required to make the TDS from credit or payments made by it and not on what the vendors are deemed to have received from the sale of their property. Therefore, as far as the liability of the assessee is concerned, we have no hesitation to hold that it shall only be on the actual consideration credited or paid by the assessee, whichever is earlier. Further, as seen from the assessment order, the assessee has already paid taxes on the LTCG accruing to the vendors on the actual payment made by him. Therefore, we are of the opinion that the assessee cannot be treated as an “assessee in default” u/s 201(1) of the Act, but is only liable for interest u/s 201(1A) of the Act till the date of payment of taxes by him.
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2018 (1) TMI 1447 - ITAT LUCKNOW
Addition on account of milling gain - HELD THAT:- AO being a quasi judicial authority ought to have recorded specific reason for making any addition in the hands of the assessee.
The first appellate authority, whose powers are co-terminus with that of the Assessing Officer, could have deliberated upon the rights and liabilities of the assessee on the very fact that assessee could not attend the hearing because he was medically unwell and relevant evidence was also placed which was not considered by the CIT(A). We find that this addition is being made by the Department without any enquiry being conducted or without there being any material on record and, therefore, we are of the considered view that the addition made by the AO and confirmed by the CIT(A) is without any basis and liable to be deleted - delete the addition made on account of milling gain.
Machinery repairing expenses debited under the head “machinery repairing expenses” - AO on examination of bills and vouchers relating to expenses, noticed that some of the expenses were not supported with verifiable vouchers and were in cash. - HELD THAT:- On a perusal of the written submission and the case record, we find that the business of the assessee is trading in food grains and producing Maida which is supplied to various biscuit manufacturers. It is common in factory set up that certain repairs and maintenance work are conducted for which vouching is not always possible. These expenses relate to the fundamentals of the assessee’s business and just because they were not vouched, there cannot be any addition. The practical aspects involved in relation to the type of business of the assessee, who is also a tax payer, should be taken into consideration by the Department and taking these facts in totality, we are of the considered view that such ad hoc addition without any basis cannot be sustained and hence liable to be deleted. Accordingly, the addition on account of machinery repairing expenses is deleted. - Decided in favour of assessee.
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2018 (1) TMI 1446 - ITAT AGRA
Reopening of assessment - bogus entry of gift given by Sh. Gupta to the assessee - eligibility of reasons to believe - HELD THAT:- A perusal of the reasons recorded by the AO shows that the allegation as per the reasons to believe escapement of income is bogus purchase/sale of shares, while the impugned addition has been made with respect to gift, which shows that the A.O. had no specific information. Hence, as rightly contended, the reasons recorded are vague and farfetched.
Assessee categorically submitted that he had not entered into any transaction of purchase/sale of shares. No new adverse information has been brought on record which could suggest any justification for satisfaction to initiate proceedings u/s 147/148, in spite of specific request of the appellant vide letter dt. 24.11.2010. In the proceedings u/s 147, the burden is on the A.O. to prove income escaping assessment as it is the belief of the A.O. for income escaping assessment which can trigger such proceedings.
This onus has not been discharged by the AO herein, rendering the initiation of the reassessment proceedings void. - Decided in favour of assessee.
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2018 (1) TMI 1440 - BOMBAY HIGH COURT
Reopening of assessment - non-granting an opportunity of personal hearing to the Petitioner - scope of alternative remedy - Held that:- We note that the proceedings under Section 148 of the Act have not culminated in any order being passed. Admittedly, the Revenue has withdrawn the reopening notice. Prima facie we see no confusion on the part of the Petitioner, as prior to passing of the impugned order, a Show Cause Notice was issued to the Petitioner and it was responded to. In any case the Petitioner's case that the reopening notice resulted in some misunderstanding is also an issue which could be agitated before Appellate Authority under the Act.
Therefore, in view of efficacious alternative remedy being available under the Act, we see no reason to exercise our extra ordinary jurisdiction under Article 226 of the Constitution of India to entertain this Petition.
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2018 (1) TMI 1438 - DELHI HIGH COURT
Validity of assessment order in the name of the amalgamating company - assessment framed in the name of the non-existent company - procedural defect - successor-in-interest - Held that:- Tribunal had ruled that the assessment made, in the name of Suzuki Power Train India Limited, was a nullity since the entity was no longer in existence and was subjected to an approved scheme for amalgamation; the transferee company was amalgamated with Maruti Suzuki India Limited. This Court notices that for A.Y. 2011-12, on the same facts, the assessment was held to be invalid – a decision, that was ultimately upheld by this Court in the Pr. Commissioner of Income Tax-6, New Delhi vs. Maruti Suzuki India Limited (Successor of Suzuki Powertrain India Limited - 2017 (9) TMI 387 - DELHI HIGH COURT.
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2018 (1) TMI 1436 - ITAT INDORE
Addition of suppressed sales made by the AO - Held that:- Even though the assessee had disclosed 1.7% net profit against the total sales of ₹ 71.99 lakhs, in view of the facts and circumstances of the case and the detailed finding of Ld. CIT(A) which goes un-rebutted at the end of both the parties, we find merit in the finding of Ld. CIT(A) estimating net profit @ of 8% on the Bhoomiyaji Land & Finance 9 sales of ₹ 1 crore which takes care of suppressed portion of sales unearthed by the Ld. AO on the basis of his investigation and estimating of higher profit earned on the suppressed sales. We therefore, in the given facts and circumstances of the case find no reason to interfere in the finding of the Ld. CIT(A) deleting the addition of ₹ 1,00,19,593/- in sustaining the addition at ₹ 6,29,657/-.
Unproved creditors - advance receipts for plot booking - Genuineness of the transactions - Held that:- In the case of assessee for A.Y. 2005-06 [2011 (3) TMI 1771 - ITAT INDORE] decided in favour of the assessee on the issue of advance receipts for plot booking by holding that the booking amounts were not purely in the nature of cash credit for which the assessee was required to prove the creditworthiness of the persons who books the plot with him. CIT(A) examined the issue in detail by verifying respective registry placed on records and details mentioned in the registry duly tallied with the payments shown by the assessee. Genuineness of the transactions stands proved with the copies of registries and the amounts refunded through banking channels. We, therefore, respectfully following the decision of coordinate bench in assessee’s own case for A.Y. 2005-06, detailed finding of CIT(A) which goes uncontroverted by the Revenue as well as in the given facts and circumstances of the case and the documents placed before the lower authorities, find no reason to interfere in the finding of Ld. CIT(A), deleting the addition.
Addition on account of alleged extra cash found during the course of survey u/s 133A - Held that:- As during the course of survey proceedings inventory of cash found at the business premises was made and cash of ₹ 814340/- was found. ₹ 11198/- was cash in hand in the books of assessee as on 15.03.2007. The partner of the assessee firm could not explain the excess cash found at ₹ 803142/- in light of these facts the contention of the assessee as well as the Ld. Counsel before the lower authorities and before us that no cash was found during the course of survey is not accepted. We therefore, uphold the view taken by the ld. CIT(A) and confirm the addition of ₹ 803142/-. Ground No.1 of assessee’s appeal is dismissed.
Addition confirmed u/s 68 on account of unexplained cash credit - Held that:- Letters were issued u/s 133(6) of the Act, by the AO on the address provided by the assessee as in turn provided by the prospective buyers. Coordinate bench, Indore in the case of assessee for A.Y. 2005-06(supra) also held in the favour of assessee that if address given by the prospective buyers were not correct or they have not responded in proper manner to the AO then the assessee could not be penalized for their action. Genuineness of the transactions stands proved with the copies of registries. Assessee has been unable to prove source of cash credit of ₹ 35,37,500/- even up to the stage of appellate proceedings before first appellate authority and nor any substantial evidence has been placed before us.
Disallowance of refund of advance money and cancellation charges paid by the assessee to its customers - Held that:- From perusal of the records we find that the forfeiture of the amount was as per the agreement and in the independent enquiry conducted by the AO during the remand proceedings the customers have confirmed to have received back the amount. Further the assessee recognizes the sale on the date of registry of sale deed and the amount received as advance on account of plot booking is being capitalized and shown as liability in the balance sheet till the date of sale. During the year under appeal the assessee has returned the advance to difference customers and reduced the liability to that extent. The view taken by the CIT(A) deleting the addition of ₹ 39,71,000/- being the repayment of advance of plot booking received by the assessee in earlier years and the same has been duly proved by the assessee with documentary evidences.
Cancellation charges allowability - extra payment over and above the advance for plot booking - Held that:- We are unable to support the contentions of the Ld. Counsel, because the assessee has paid extra payment over and above the advance for plot booking. There is no clause in the agreement about payment of extra amount. The plot booking has been cancelled after substantial time gap of 2 to 3 years. As there was no clause in the agreement for payment of cancellation charges, by debiting the extra amount of plot booking charges in trading account the assessee has increased the purchase cost reduced the gross profit. We, therefore, agree with the view taken by the Ld. CIT(A) that as the assessee has capitalized the amount of advance and recognized sales on the date of registry for sale deed the amount paid over and above the advance amount should be in the nature of capital expenditure and not Revenue expenditure.
Disallowance u/s 80IB(10) - Held that:- The assessee executed 127 sale deeds and to sale the plots it had to incur the expenses at various stages. Out of the 127 sale deeds, 28 pertained to the Gaurav Nagar Extension for which the assessee is eligible for deduction u/s 80IB(10). We therefore, find substance in the finding of Ld. CIT(A) adopting 25% of total expenses for ‘Gaurav Nagar Extension’ project because 28 sale deeds were of Gaurav Nagar Extension out of the total 127 sale deeds. The Ld. CIT(A) has given detailed working for each expenses in his findings in para 4.1 of his appellate order and accordingly sustained the disallowance at ₹ 5,25,614/-.
Disallowance on account of plot booking cancellation - Held that:- We find that this issue of plot booking cancellation came up in the appeal for A.Y. 2008-09 also. The assessee has furnished the party wise list of plot cancelled and the same forms part of appellate order of Ld. CIT(A). These details have been examined by the first appellate authority. The Ld. counsel for the assessee has been unable to controvert the finding of Ld. CIT(A). It is not disputed that assessee has furnished the list of plots to the AO for examination and is also offered the revenue from sale of these plots for taxation. In backdrop of these facts we uphold the finding of Ld. CIT(A) deleting the addition.
TDS liability on on account of supervision charges and towards electrification work and system development - addition u/s 40(a)(ia) - Held that:- This fact is not in dispute that M/s. MPPKVV Co. Ltd. is a State Government undertaking and Ld. CIT(A) deleted the disallowance for the very reasons that the amount was paid to State Government undertaking. The Ld. DR could not controvert this finding of Ld. CIT(A). We therefore confirm the finding of Ld. CIT(A) that no disallowance was called for as payment was made to the electricity company for various charges and tax was not required to be deducted and therefore, no disallowance was called for u/s 40(a)(ia)
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2018 (1) TMI 1433 - ITAT LUCKNOW
Penalty u/s 271(1)(b) - non comply with the notices issued u/s 142(1) - Held that:- We find that assessee during the assessment proceedings did not comply with the notices issued u/s 142(1) on various dates which learned CIT(A) and Assessing Officer have noted in their order and therefore, the authorities below have imposed penalty u/s 271(1)(b) of the Act.
However, we find that finally the assessee did appear before the assessment proceedings and assessment was completed u/s 143(3) and thereafter, the matter travelled upto Tribunal, which allowed the appeal of the assessee for statistical purposes. Therefore, we do not see any reason to uphold the order of CIT(A). We reverse the same and allow the appeal filed by the assessee.
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