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Income Tax - Case Laws
Showing 21 to 40 of 748 Records
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2018 (1) TMI 1704
Disallowance of loss on foreign exchange forward contract loss - Whether the said loss was a notional loss and hence cannot be allowed? - HELD THAT:- It is an agreed position between the parties that the issue raised herein stands concluded against the Revenue and in favour of the Assessee by the decisions of this Court in CIT v/s. M/s. D. Chetan & Co. [2016 (10) TMI 629 - BOMBAY HIGH COURT] and CIT v/s. M/s. Chaitya[2017 (7) TMI 1439 - BOMBAY HIGH COURT]
No substantial question of law.
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2018 (1) TMI 1703
Disallowance of Service Tax u/s. 43B - service tax was paid after the due date of filling of return of income and added to the total income of the Appellant - HELD THAT:- Issue decided in favour of assessee as relying on case of Knight Frank (India) (P) Ltd.[2016 (8) TMI 1096 - BOMBAY HIGH COURT] as held that it is an admitted position before us that the respondent assessee had not claimed any deduction on account of the service tax payable in order to determine its taxable income. In the above view, there can be no occasion to invoke Section 43B of the Act. Appeal filed by the assessee stands allowed.
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2018 (1) TMI 1702
Accrual of income - Disallowance on account of derecognized interest - HELD THAT:- As regards accrual of interest on sticky loans, the Hon'ble Supreme Court in the case of State Bank of Travancore Vs. CIT [1986 (1) TMI 1 - SUPREME COURT] held that interest accruing on sticky loans is taxable to Income tax on accrual basis.
Accordingly, the NBFC, as in the present case, has to follow the directions of the CBDT and as per the decision of various courts, NBFC including banks follow the cash basis of accounting for interest on sticky loans until they are recovered or the loan itself is written off. There is consistency in following the accounting principles by the assessee and therefore, derecognition of interest on NPAs is not something barred by the Income tax law.
Thus we find no infirmity in the order of the ld. CIT(A) who has rightly deleted the addition so made by the Assessing Officer. Thus, the sole ground of appeal raised by the Revenue is dismissed.
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2018 (1) TMI 1701
Exemption u/s 10(23)(c)(iiiab) - AO held that since no amount has been received from the Government the institute cannot be held to be eligible for exemption under section 10(23)(c)(iiiab) - HELD THAT:- As it is not in dispute that the assessee fulfils the twin conditions of:
a) university or other educational institution existing solely for the educational purposes and not for purposes of profit, and
b) which is wholly or substantially financed by the government. as stipulated under section 10(23)(c)(iiiab).
Since the assessee is wholly funded and owned by the Govt., the finance are being audit by the CAG, Punjab and the receipts are paid into consolidated fund of the Govt. the assessee is eligible for exemption under section 10(23)(c)(iiiab). Hence we decline to interfere with the order of the Ld. CIT(A). The appeals of the Revenue are dismissed.
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2018 (1) TMI 1695
Levying penalty u/s.271(1)(b) - non-compliance of the 'notice u/s.142(1) - assessment orders in the present case have been framed u/s.143(3) r.w.s.153A - HELD THAT:- From the penalty order, we observe that the penalty has been imposed on account of non-compliance of the 'notice u/s.142(1) and assessment orders have been framed subsequently on 29.12.2014.
We are of the view that undisputedly, the assessee is having health issues and residing about 60 to 70 kms away from Surat. The all assessment orders have been framed in presence of assessee's representative u/s.143(3) r.w.s. 153A of the and merely because the assessee could not comply with the notice for single hearing due to bonafide reasons as noted above, the penalty u/s. 27(1)(b) cannot be imposed on the assessee for such bonafide default due the reasons beyond his control. Therefore, we reached to conclusion that the Assessing Officer was not right incorrectly confirmed by the ld. CIT(A) Hence, we direct the AO to delete the impugned penalty. Accordingly, the grounds of the assessee in all the appeals are allowed.
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2018 (1) TMI 1694
Rectification of mistake u/s 254 - AO is not empowered to re-compute the tax payable by the assessee as per clause (b) of section 143(1) - HELD THAT:- As rightly contended by the ld. D.R., the issue on which rectification was sought by the assessee in intimation issued by the Assessing Officer under section 143(1)(a) was beyond the scope of adjustment permissible under section 143(1)(a) and the application of the assessee filed under section 154 for such rectification was rightly rejected by the AO. Moreover, the said issue being highly debatable one at the relevant time was beyond the scope of rectification permissible under section 154. As a matter of fact, there was a mistake in the return of income filed by the assessee in computing the tax payable on the income returned and adjustment for the same, therefore, was made by the Assessing Officer as per clause (b) of section 143(1).
As rightly contended by the ld. D.R., all these aspects were duly taken into consideration by the Tribunal while dismissing the appeal of the assessee vide its order dated September 27, 2017 and there is no mistake much less a mistake apparent from record in the said order of the Tribunal. What the assessee is seeking by way of present Miscellaneous Application is nothing but a review of the decision taken by the Tribunal - Miscellaneous Application filed by the assessee is dismissed.
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2018 (1) TMI 1688
Income accrued in India - Nature of gain - gains arising to the Assessee on the transfer of Compulsorily Convertible Debentures (‘CCDs’) - capital gain or interest income - Whether taxable in India under Article 11 of DTAA between India and Mauritius? - HELD THAT:- Service is complete. Ld.counsel for the parties have not filed the statement of case within the statutory period. However, statement of case is not mandatory as per amended Supreme Court Rules,2013. Viewed thus, the matter shall be processed for listing before the Hon'ble Court as per rules.
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2018 (1) TMI 1685
TDS u/s 194A - Addition u/s.40(a)(ia) - assessee not deducted TDS in respect of payment to NBFCs - HELD THAT:- Contention of ld A.R. that the assessee is having certificate of C.A. issued in respect of TDS and demonstrated before us in paper book at page 1 to 4 explaining Form No.27A issued by the C.A. On this issue, ld D.R. submitted that this information was not available with the Assessing Officer. Considering the overall aspect of the fact that NBCSs have offered its income, the matter has to be verified by the Assessing officer. Accordingly, we remit this issue to the Assessing Officer to verify the claim of the assessee and pass order as per law.
Disallowance on truck running and transportation expenses - HELD THAT:- As assessee is maintaining books of account and having vouchers. Assessing Officer has not specified any particular voucher which is not verifiable and making adhoc disallowance. The Assessing Officer has not specified that the bills are not genuine. Assessing officer has not doubted the genuineness of the said vouchers but made the adhoc disallowance. Looking into the facts and circumstances of the case, we remit this issue to the file of the Assessing officer. The assessee is directed to submit all the details and the Assessing officer is directed to pass the order.
Adhoc disallowance which is 1/6th out of conveyance expenses, car expenses, office expenses and telephone expenses the findings of the CIT(A) is in order. Hence, we confirm the same
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2018 (1) TMI 1684
Addition towards unpaid service tax u/s 43B - HELD THAT:- As assessee has not claimed the amount as expenditure during the year. When no expenditure has been claimed, the question of disallowance u/s 43B of the Act, does not arise as held in the case of A.W. Figgis And Co. Ltd. [2002 (4) TMI 40 - CALCUTTA HIGH COURT] Thus, this addition is deleted.
Addition on account of unexplained sundry creditors u/s 68 - HELD THAT:- For first amount in dispute is liability payable to Shri Ananta Das, which is a carry forward balance from the earlier year. As the credit did not arise during the year, no addition u/s 68 of the Act, can be made in this year. Hence the same is deleted.
The other addition is of an amount being purchases on credit from M/s Calcutta Anodizing Works. Section 68 of the Act cannot be attracted when the fact of purchase is not in dispute and when the trading results have been accepted by the Assessing Officer. In the result, this addition is also deleted - Appeal of assessee allowed.
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2018 (1) TMI 1683
Disallowance of interest on Non Performing Assets - additions on account of provision of interest on Non Performing Assets - disallowance of provisions against standard assets - HELD THAT:- We find that the Assessing Officer has disallowed the provisions which the assessee has made on standard assets and has also made addition on account of interest on Non Performing Assets which the assessee had not taken into account. We find that these issues are squarely covered in favour of the assessee by the orders of the Tribunal in the case of M/s Punjab Gramin Bank [2017 (3) TMI 1781 - ITAT AMRITSAR] and also in the case of Moga Central Cooperative Bank [2017 (10) TMI 1605 - ITAT AMRITSAR] - Decided in favour of assessee.
Provisions against the standard assets - HELD THAT:- Issue covered in favour of assessee by the order of the Hon'ble Tribunal in the case of Punjab Gramin Cooperative Bank [2017 (3) TMI 1781 - ITAT AMRITSAR].The deduction under section 36(1)(viia) of the Act is allowed only in respect of certain specific categories of assessee mentioned in the clause like banks, financial institutions, etc. who are in business of lending money. It is not allowed even to non-banking financial institutions since they are not included in this clause. It is seen that though section 36(1) (vii) states that deduction for provision is allowable in respect of provision for bad and doubtful debts, the computation of such deduction is made with reference to total income of the specified Banks based upon quantum of average advances. The deduction of the provisions is neither limited to the quantum of bad debts in the books nor is computed with reference to the quantum of standard assets. The deduction in this clause refers to allowable provisions of anticipated default on the loans and advances made in respect of total assets including standard assets and the claim of the assessee does not fall into the proviso to section 36(1) (viia) as the proviso deals with further deduction for provisions on bad and doubtful debts. The claim of the assessee is covered in the main provisions of section 36(1)(viia) of the Act. The Ld. CIT(A) has passed a very exhaustive and speaking order and we do not find any infirmity in the same. - Decided against revenue.
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2018 (1) TMI 1682
Addition u/s 68 - Addition based on rough papers - HELD THAT:- These are rough papers kept by employees for their personal reference. Therefore, there cannot be addition u/s.68 of the Income Tax Act. Assessee has explained the nature of transaction in these papers. The gross value of transactions in these papers were more than Rs.5.00 crores, Rs.17.00 crores and Rs.90 lakhs in Asstt.Years 2003-04, 2004-05 and 2005-06 respectively. The discrepancy in terms of percentage of gross value is 0.31%, 2.16% and 0.68% in Asstt.Years 2003-04, 2004-05 and 2005- 06. Thus, in two years discrepancy comes out after reconciliation was less than 1% of gross value. This was the result of time gap between the recording of entries and explanation sought. Some of the employees’ who have noted these entries must have left the job also. Thus, we find that the ld.CIT(A) has rightly appreciated controversy and rightly deleted the additions. We do not find any merit in the grounds of appeal raised by the Revenue.
Un-reconciled entries - HELD THAT:- Only element of profit involved in them is to be taxed. In Asstt.Year 2004-05, theld.CIT(A) has confirmed the addition of 42 lacs on an estimation basis. But even for estimation there should be some logic for working out the quantum. The ld.CIT(A) has taken the un-reconciled entries of Rs.38,77,759/- for estimation of profit. But this is the gross value of some transaction. Corresponding expenses were also there in those entries. Therefore, gross entries cannot be taken as income of the assessee. Therefore, we modify the direction of the ld.CIT(A). The ld.AO shall calculate the profit at the rate assessee has shown on the basis of regular books in these years and accepted by AO. In other words only element of profit is to be included in the taxable income out of the un-reconciled entries worked out by the ld.CIT(A) and not the gross receipt.
Addition under the heading “Disclosure made before the DDIT(Investigation)-2, Rajkot.” - CIT(A) has deleted addition in Asstt.Year 2005-06 which is discernible from details filed by the assessee in para-5 of this order. The assessee has impugned only retention of addition of Rs.3.00 lakhs by the ld.CIT(A) in this assessment year. She has pointed out that this Rs.3.00 lakhs is a gross income and only profit element of Rs.3.00 lakhs be added in her income. Revenue in the Asstt.Year 2005-06 has impugned deletion of Rs.51,33,219/- meaning thereby an amount of Rs.36,50,978/- retained by the ld.CIT(A) has not been challenged by the assessee in the Asstt.Year 2005-06. Thus, this amount has been added twice by the AO. It is also stand of the assessee that this amount was included in the peak balance for the Asstt.Year 2005-06. It cannot be assessed in the Asstt.Year 2003-04 also. The ld.CIT(A) has rightly deleted from the Asstt.Year 2003-04 and we do not find any merit in this ground of appeal. It is rejected.
Disallowance of proportionate interest expenditure for the respective assessment years - HELD THAT:- We do not find any error in the order of the ld.CIT(A) because interest expenditure could be disallowed if interest bearing funds were used by the assessee for the purpose of granting loan without charging interest. The assessee has demonstrated that she has more interest free funds during the year than the interest free advance, and therefore there could not be any attribution of interest expenditure on such interest free loans. These grounds of appeal are rejected in all these assessment years.
Estimated disallowance of expenses of out of vehicle expenses, telephone and travelling expenses at 20% by the AO which were restricted by the ld.CIT(A) at 10% of total expenses - HELD THAT:- We find that the AO has estimated impugned expenditures for disallowance at 20% for want of necessary supporting materials. However, the ld.CIT(A) after considering the size of business and quantum of transactions carried out by the assessee restricted disallowance to 10% of the total expenses, which we find to be reasonable and justifiable. Therefore, we are not inclined to disturb the order of the ld.CIT(A) on this issue. It is confirmed. The ground taken by both the sides in appeals/cross-objection are rejected.
Disallowance of bad debts - AO has disallowed the claim of the assessee on the ground that the assessee failed to demonstrate the efforts made by her for recovery of the outstanding amount - HELD THAT:- CIT(A) has deleted the disallowance by following judgment of the Hon’ble Supreme Court in the case of TRF Ltd. [2010 (2) TMI 211 - SUPREME COURT] According to the ld.CIT(A) after 1.4.1989 the assessee was not supposed to bring demonstrative evidence on record to show that debts have actually become bad. It is sufficient if these amounts have been written off in its accounts. After considering the finding of the ld.CIT(A) we do not find any merit in this ground of appeal. It is rejected.
Addition of low household withdrawal - HELD THAT:- It is quite difficult to determine household expenditure of any individual. It is a very subjective area. The AO must have considered his local knowledge about the assessee and their status of living in the society. The assessee has been carrying out voluminous business in ticket booking. She has earned commission of crores of rupees. Looking into their background, it appears that they must have living a good life and the AO must have considered that aspect while estimating the household expenses. Two Revenue authorities have exercised their discretion in estimating household expenditure. Therefore, without there being anything on record that such opinion was formed by the Revenue authorities for extraneous reasons, we do not wish to replace those opinions by a third-one, which is also based on estimation. We do not find any merit in these grounds of appeal.
Disallowance in respect of discount u/s.40(a)(ia) - tickets which were to be booked in the name of the assessee were to be sold to the agents at discounted price. The alleged travel agents made payment of concessional price and assumed role of customer of the assessee. The AO treated such travel agents as agents of the assessee and observed that the discounted rate on which tickets were sold to the customers is to be construed as commission paid - HELD THAT:- There is no agency between the assessee and the alleged travel agents. Agency has been assumed by the AO with the help of section 194H of the Income Tax Act, 1961. The AO was of the opinion that since the assessee has parted with her volume of commission amongst travel agents, then it should be construed that those agents were acting on behalf of the assessee while booking international air-tickets.
In the light of the above interpretation of section 194H if the facts of the present case are looked into then it would reveal that the assessee has just given a trade discount out of commission earned by her from the airlines. She has not appointed any travel agents for acting on her behalf. Thus, there was no relationship of principal and agent. We further find that almost in an identical condition, ITAT Mumbai Bench [2010 (9) TMI 536 - ITAT, MUMBAI] has considered this issue and observed that intermediaries were booking tickets from the assessee and intermediaries were not working as agents of the assessee for doing the assessee's business rather the intermediaries were bringing the business to the assessee as recorded by AO and the assessee was passing out some handling charges. Thus, the assessee was, in fact, giving some discount to the intermediaries for getting business. It was not a transaction between the principal and agent but it was as transaction between the principal and principal.
Respectfully following judgment of the Hon’ble Gujarat High Court [2002 (6) TMI 32 - GUJARAT HIGH COURT] and order of the ITAT, Mumbai Bench we are of the view that disallowance made by the AO and confirmed by the ld.CIT(A) with help of section 40(a)(ia) of the Act on account of non-deduction of TDS deserves to be deleted. We accordingly delete the disallowance. This ground of appeal is allowed.
Disallowance of proportionate interest expenditure - HELD THAT:- We have already held that the assessee was able to demonstrate that if she has more interest free funds than the advance then on notional basis interest cannot be computed for disallowance. We do not find any error in the order of the ld.CIT(A). This ground is rejected.
Addition u/s 69C - HELD THAT:- We are of the view that entries in the books of third person could not be given weightage over and above entries in the books of the assessee. The AO ought to have collected more evidence for establishing that the alleged payment was made. He has not recorded statement of the creditors showing that they have received such payment. Therefore, the ld.CIT(A) has rightly deleted the addition, and this ground is also rejected.
TDS credit - HELD THAT:- CIT(A) has recorded a finding of fact that the assessee has duly credited commission receipts on which TDS deducted by the payer and she has claimed the credit of the TDS. Considering the finding of the ld.CIT(A), we do not find any merit in this ground. It is rejected
Penalty u/s 271(1)(c) - HELD THAT:- The income of the assessee has been determined on an estimate basis. By way of present order, we have changed that estimation. We have held that un-reconciled entries be considered only for working out element of profit involved in it. Gross receipt cannot be added. Similarly, we have observed that profit is to be estimated in these assessment years according to the rate of profit disclosed by the assessee on the basis of regular books of accounts. Thus, there cannot be any element of concealment of income. The assessee has explained papers found during the course of survey. As observed in the quantum appeals, discrepancy in explaining these papers was ultimately determined at 2.6% of the gross value of the transaction considered by the AO on the basis of entries in these papers. In other words, the gross value of the transaction was Rs.17.92 crores worked out by the AO in the Asstt.Year 2004-05 and unreconciled entries were of only Rs.38,77,759/-. It was explained by the assessee that some of the employees must have left job and it was quite difficult to keep track of all entries noted by the employees. In this situation, the ld.CIT(A) has rightly deleted penalty. We do not find any error in both the orders of the ld.CIT(A). They are upheld and both appeals of the Revenue are dismissed.
Unexplained advances and probable interest thereon - HELD THAT:- CIT(A) has rightly appreciated facts and circumstances leading to addition made by the AO. The ld.CIT(A) has observed that Smt. Mansihaben Mashru, during the assessment proceedings has admitted and owned up the amount found in the papers impounded during the survey. She accordingly offered the same for taxation on the basis of peak value. Even otherwise also, there is no material with the Revenue to prove that the money was in fact belonging to the assessee and to suggest that any unrecorded advance was made to Smt.Mansihaben Mashru by the assessee. Therefore, we do not find any error in finding of the ld.CIT(A) on this issue, this ground is accordingly dismissed.
Unexplained investment in shares - HELD THAT:- CIT(A) has considered material facts on record and observed that impugned investment was recorded in the books of accounts and that sufficient funds is available with the assessee for making the investment. Though the assessee had submitted books of accounts during the assessment proceedings, the same was not considered at the end of the AO. Therefore, there is no merit in this ground of appeal of the Revenue. It is dismissed.
Low household withdraw - HELD THAT:- On considering orders of the Revenue authorities, we do not find any justification to take a different view than the one taken by the Revenue authorities on this issue. Looking to the quantum and size of the business carried out by the assessee and life their style both the authorities estimated low household withdrawals. There is nothing on record to show that estimation based on some opinion made by both the authorities below is unjustified, and therefore, we do not wish to replace the estimation of the Revenue authorities with a third estimation. We do not find any merit in this ground.
Disallowance of fictitious liability - HELD THAT:- CIT(A) who deleted the addition on the ground that rough papers found from the premises of wife of the assessee were mere notebooks and diaries and not books of accounts of the assessee. Besides, he observed that wife of the assessee has owned up the noting in the rough diary and taxed accordingly. The ld.CIT(A) has also observed that there is no documents or material evidence with the Revenue to link flow of unrecorded transactions with the assessee. Since there is no contrary material brought before us by the Revenue to convince us to take a different view, we do not find any merit in this ground of appeal. It is dismissed.
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2018 (1) TMI 1678
Addition of advance received for supply of goods as bogus trading liability - HELD THAT:- Advance was shown as liability received by the assessee from M/s. Aditya Renewable Resources. On perusal of account of the party in the books of the assessee, it was found that ₹ 27,49,796/- has been accumulated by receiving four cheques has been considered and the invoice was raised in the financial year 2009-2010 relevant to assessment year 2010-2011. To substantiate, ld A.R. submitted the paper book disclosing copy of invoice and the calculation of the stock with documents. We are of the considered view that the assessee should be provided an opportunity to explain the details alongwith statements filed before us and the Assessing Officer has to verify whether the assessee has raised sales bills in the assessment year 2010-2011 and pass the order on merits. The Assessing Officer is directed to afford proper opportunity of hearing to the assessee before adjudicating the issue afresh.
Addition as suppressed sales - HELD THAT:- Addition being suppressed sales is also restored to the file of the Assessing officer with the same direction as give above. This issue is also allowed for statistical purposes
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2018 (1) TMI 1677
Violation of the ESOP option provided by the assessee to its employees - AO disallowed the loss claimed on the ground that it was not a crystallised liability of the assessee - HELD THAT:- CIT (A) and the ITAT by concurrent findings followed the judgment of the Madras High Court in Madras High Court in CIT v. P.V.P. Ventures Ltd. [2012 (7) TMI 696 - MADRAS HIGH COURT] as well as the decision of this Court in CIT v Oswal Agro Mills Ltd. [2015 (11) TMI 301 - DELHI HIGH COURT] and held that issue of debentures or obtaining loans are to be considered as revenue expenditure and consequently the cost of ESOP should be debited to the profit & loss account of the assessee.
These decisions were later applied in CIT v. Lemon Tree Hotels Ltd. [2015 (11) TMI 404 - DELHI HIGH COURT] In the circumstances, the view of the ITAT is reasonable and justified. No question of law arises. The appeal is, therefore, dismissed.
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2018 (1) TMI 1676
Validity of reopening of assessment u/s 147 - mandation of reasons for re opening - Tribunal setting aside the assessment on the ground of non-provision of the reasons for reopening assessment - HELD THAT:- It is an undisputed position before us that the reasons for re opening were not provided to the Respondent-Assessee in spite of the same being sought by. The impugned order of the Tribunal allowed the Respondent-Assessee's appeal by following the decision of this Court in CIT v/s. Videsh Sanchanr Nigam Ltd.. [2011 (7) TMI 715 - BOMBAY HIGH COURT]
Revenue very fairly states that the issue raised by the Revenue stands concluded against the Revenue and in favour of the Respondent-Assessee by the decisions of this Court in Videsh Sanchar Nigam (supra) as well as in CIT v/s. Trend Electronics [2015 (9) TMI 1119 - BOMBAY HIGH COURT] - No substantial question of law
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2018 (1) TMI 1672
Addition on account of typing error in the Audit Report 3CD when compared with the audited profit & loss account - HELD THAT:- As analyzed facts & circumstances of the case we find that on a perusal of the paper book filed by the assessee, especially the statement of profit & loss account, the profit before tax is ₹ 1,13,41,172.87 and correspondingly the clarification letter filed by the Chartered Accountant of the assessee clearly states that the figure mentioned in column 40(C) of 3CD Audit Report has to be read as ₹ 1,13,41,173/- instead of ₹ 1,77,94,019/-, which was inadvertently mentioned.
Even before the Assessing Officer, the same was explained vide letter dated 13/1/2017 as is appearing at page 7 of the paper book filed before us in response to notice dated 25/11/2016. In this view of the matter, we are of the considered view that there was an inadvertent mistake committed by the Auditor of the assessee by wrongly mentioning the figure in column 40(C) of 3CD Audit Report as ₹ 1,13,41,173/- instead of ₹ 1,77,94,019/-, therefore, any addition in the hands of the assessee due to some typing error is not legally permissible. With these findings, we direct the deletion of addition made in the hands of the assessee. Accordingly, grounds of appeal taken by the assessee are allowed.
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2018 (1) TMI 1671
Addition u/s 37(1) - gifts/freebies to Doctors and Medical Practitioners - expenses claimed by the assessee under the head ‘Sales Promotion Expenses’ and under the head ‘Other Selling Expenses’ - disallowance on the ground that the same were with regard to providing gifts/freebies to Doctors and Medical Practitioners and the same was against the Medical Council Act, 1956 in view of the amendment made to the Indian Medical Council (Professional Conduct, Etiquette and Ethics) Regulations, 2002 - whether the Medical Council Act, 1956 apply to the assessee? - scope of amendment - HELD THAT:- The receiving of the gifts/freebies by Professionals is against public policy as also against the law in so far as the amendment by the Medical Council Act, 1956 to the Indian Medical Council (Professional Conduct, Etiquette and Ethics) Regulations, 2002, once receiving of such gifts have been held to be unethical obviously the corollary to this would also be unethical, being giving of such gifts or doing such acts to induce such Doctors and Medical Professionals to violate the Medical Council Act, 1956. Consequently, we are of the view that the expenditure incurred by the assessee which has resulted in the violation of the amendment to the Indian Medical Council (Professional Conduct, Etiquette and Ethics) Regulations, 2002 under the Medical Council Act, 1956, is not an allowable expenditure and hit by the explanation to Sec.37(1) of the Act.
Coming to the issue as to whether the same is operative prospectively or retrospectively or as to whether the said amendment is clarificatory in nature. A perusal of the said amendment notification dated 10.12.2009 under Clause-1(ii) specifies that it shall come into force from the date of their publication in the Official Gazette. The said amendment came to be published in the Official Gazette on 14.12.2009.
Consequently, the said amendment cannot be treated as operating retrospectively nor can it be treated as clarificatory in nature, clearly the said amendment is prospective in nature and operative from 14.12.2009.
CIT(A) has granted the assessee the benefit of the expenditure till 14.12.2009 and has restricted the disallowance by invoking the explanation to Sec.37(1) of the Act for the period from 14.12.2009. This being so, we find no error in the findings of the Ld.CIT(A) which calls for any interference.
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2018 (1) TMI 1670
Deduction u/s 80P - interest income earned on staff advances - HELD THAT:- It is not disputed that assessee was given deduction u/s.80P(2)(a)(i) of the Act on interest earned by it from its business of providing credit facility to its members. Such deduction was denied only on the interest received by the assessee on advances given to employees and interest earned on the deposits in savings bank account. In so far as interest earned from employees are concerned, contention of the assessee is that this was to be construed as a part of its main business activity of providing credit facility to its members. Certificate of registration of the assessee issued by the office of the Central Registrar of Cooperative Societies, which is available on record, clearly indicate that it is a Multi State Co-operative Society. It is obviously not a society engaged in the business of banking.
As noted by the Hon'ble Apex Court in the case of The Citizen Co- operative Society Ltd [2017 (8) TMI 536 - SUPREME COURT] there are two classes of businesses mentioned in the above clause. First class is those Co-operative societies carrying on business of banking and second class is Co-operative societies providing credit facilities to its members. Assessee falls in the second class. While holding that liberal interpretation has to be given for Sec.80P(2)(a)(i) of the Act, since said Section was enacted for encouraging its Co-operative Sector, their lordships took a view that interest earned by a Co-operative Societies providing credit facilities to its Associate Members would not be eligible for deduction u/s. 80P(2)(a)(i) of the Act. If interest earned from credits provided to Associate Members is not eligible for claiming the benefit of Section 80P(2)(a) (i) of the Act, it will nigh be impossible to give such benefit to interest earned on advances given to staff.
Considering the view taken by Hon'ble Apex Court on the extent of applicability Sec. 80P(2)(a)(i) of the Act, on a Co-operative Society providing credit facilities to its members, the decision of Jaipur Bench of the Tribunal in the case of Jalwar Sahkari Bhoomi Vikas Bank Ltd . [2015 (3) TMI 1411 - ITAT JAIPUR] relied on by the ld. Authorised Representative, in our opinion pales into insignificance.
Availability of such deduction on interest earned from deposits with savings bank account - Except for stating that the bank account on which it had earned interest was maintained with Schedule bank to enable it to carry out day to-day business, nothing has been brought on record by the assessee to show how such bank account was used for its business. What I notice is that interest was earned was savings bank account and saving bank accounts are not generally used for regular business activity.
Assessee was also unable to demonstrate that what was parked by it in its saving bank account was only temporary surplus. Coming to the decision of Bangalore Bench of the Tribunal in the case of M/s. KPTC & HESCOM Employees Co-Op Credit Society Ltd. [2015 (10) TMI 941 - ITAT BANGALORE] strongly relied on by the ld. Authorised Representative, money which was deposited was surplus remaining with the concerned assesses since there were no takers for loans. Against this, as mentioned be me nothing was brought on record by the assessee to show that deposits in the savings bank were money meant for lending remaining surplus because there were no takers. No reason to interfere with the order of the ld. Commissioner of Income Tax (Appeals) on both the issues raised by the assessee
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2018 (1) TMI 1669
Addition u/s 14A r.w.r. 8D - Tribunal justification in reading the word “net” in the expression, “expenditure by way of interest”, used in Rule 8D, while calculating disallowance in respect of exempt income even when there is no ambiguity in the expressions used in Rule 8D or in Section 14A - HELD THAT:- It is an agreed position between the parties that the issue raised herein stands concluded against the Revenue by the decision of this Court in CIT v/s. Jubiliant Enterprises Pvt. Ltd [2017 (2) TMI 1219 - BOMBAY HIGH COURT] - No substantial question of law.
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2018 (1) TMI 1667
Deduction u/s. 80IA - deduction in respect of the Captive Power Plant established by it - HELD THAT:- In earlier years on the basis of such valuation, deduction u/s.80IA (4)(iv) of the Act were allowed from A.Y. 06-07. In our considered opinion, assessee is therefore on the principle of consistency, eligible for such deduction. Further as required assessee filed a certificate inform 10CCB from a charted accountant for claim and therefore the reasonableness and valuation of steam is certified through that certificate is eligible deduction
Also gone through the assessment order in details in that there is a finding of the AO in Page No.9 Para ii, wherein she has stated that 80IA(4) is an allowable deduction on steam and there is no dispute on it, steam has already been held to be power within the meaning of Section 80IA(4) of the Act. When on one hand AO herself is accepting that steam is eligible for deduction and on the other hand she is disallowing the deduction, it itself is contradictory, when once the AO is of the opinion that deduction is available on steam then no disallowance should have been made only on assumptions basis. The assessee has submitted several decisions in support of its contention and same are stated therein, the steam was transferred at a higher price. Further assessee has submitted engineer certificate at Page No.10 of Paper Book in which also the cost of generation of steam can be considered in the range of ₹ 1.16/- to 1.24/- per kg of steam. Further the saving in cost due to Captive production also cannot be ruled out which has been elaborated discussed by the ld. CIT(A).
Relying on various decision in support of the claim made by the assessee and acceptance by the AO that steam is a form of power and eligible for deduction and for the basis of deduction relying on the engineers certificate as well different case laws held. CIT(A) has rightly deleted the addition and profit margin kept by the assessee in Captive consumption is fair and reasonable - Decided against revenue.
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2018 (1) TMI 1666
Entitlement for deduction u/s 80IA(4) - whether activities undertaken by the assessee do not fall within clause (d) of the Explanation to Section 80IA(4) defining the term infrastructure facilities? - HELD THAT:- Appeal from the order of the Tribunal for the assessment year 200809 to this Court was dismissed in Commissioner of IncomeTax Vs. Continental Warehousing Corporation (Nhava Sheva) Ltd.[2015 (5) TMI 656 - BOMBAY HIGH COURT]
In view of the above, the question as framed does not give rise to any substantial question of law. Thus, this Appeal is not entertained.
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