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Income Tax - Case Laws
Showing 41 to 60 of 748 Records
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2018 (1) TMI 1662
Stay of recovery of outstanding demand - Assessment order in the name of company amalgamated - HELD THAT:- We find that the department is seeking adjournment for hearing of the main appeals. As the balance of convenience is in favour of the assessee considering the fact that the Hon’ble High Court has given stay of recovery for the earlier years and also considering the fact that the assessment order was passed in the name of non-existing company, the assessment order itself may not survive depending upon the facts on record. We cannot pass on any order without hearing the main appeal. Therefore, we are inclined to grant temporary stay of the outstanding demands for both the years under consideration for a period of month from the date of this order.
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2018 (1) TMI 1660
Revision u/s 263 by CIT - Reopening of assessment u/s 147 - eligibility of deduction u/s 11(1)(d) of corpus donation - HELD THAT:- As the amount received by the assessee was voluntary in nature and the donors had specifically mentioned that their donations are towards infrastructure development. A copy of the specimen letters from the donors confirming their voluntary contribution and partaking the nature of corpus of the trust, is enclosed as book filed by the assessee. A copy of the receipt issued by the assessee is also enclosed as filed by the assessee.
The building fund is capital in nature and forming part of corpus of the trust. The words “Corpus Fund” are not defined in the Income-tax Act. Normally, “Corpus Fund” denotes a permanent fund separately accounted and capital in nature. Therefore, the receipt of voluntary contributions towards “infrastructure fund” is a voluntary contribution towards the corpus fund and is therefore exempted u/s 11(1)(d) in Chandraprabhu Jain v. ACIT [2016 (11) TMI 1041 - ITAT MUMBAI] had held that the building fund is forming part of the corpus fund eligible for deduction u/s 11(1)(d). Therefore, the initiation of the proceedings u/s 263 for disallowing the claim u/s 11(1)(d) of the corpus donation on the ground that it is not voluntary and not capital in nature is not in accordance with law and hence void - Decided in favour of assessee.
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2018 (1) TMI 1659
Addition u/s u/s 40(a)(i)and 40(a)(ia) - suo moto disallowance made by assessee - provision made towards payments - Assessee contending that the provisions made were in the nature of contingent liability as the identity of the recipients was not known and in the absence of income in the hands of the recipient, the question of tax deduction at source does not arise - whether the assessee can be held to be in default for non-compliance with the TDS provisions in the facts of present case? - HELD THAT:- As provisions are made at the end of the year in respect of which services were received and no TDS deduction was made. It is not the case of the assessee that the services were not rendered by the vendors. Therefore, it can be said that the liability had already crystallized and there exists an obligation to pay this amount and no uncertainty is involved in the transaction. Once services are received by the assessee, the payee or recipients of the payments are clearly identified and therefore the contention that the payees are not identifiable cannot be accepted.
Furthermore, the provisions of section 194A and 194 C which are applicable to the payments in question contains Explanation clarifying that any amount credited to any account called “payable account” or “suspense account” or by any other name in the books, the same shall constitute credit of income to the account of the payee and the provisions of TDS are applicable.
As in the present case, payees were identified and from the details of provisions made available before us, in the paper book, it is clear that it is not an ad hoc provision as the provisions contained odd figure also and it is also clear that the payees were clearly identified as the services were already received. Therefore, the ratio of the decision of this Tribunal in the case of M/s.TE Connectivity India Pvt. Ltd. [2016 (5) TMI 1222 - ITAT BANGALORE] is not applicable - in the result the appeal filed by the assessee is dismissed.
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2018 (1) TMI 1658
Addition being the notional interest and advance given to sister concern - assessee explained before the Assessing Officer that these are strategic investments made by it for the immediate working capital needs of the sister concern - HELD THAT:- As in case SA BUILDERS LTD. [2006 (12) TMI 82 - SUPREME COURT] held that when the borrowed funds were used for the business of sister concern, then the interest can be allowed as deduction even though the borrowed company has not used the loan amount for its business. The utilization of funds by the sister concern would tantamount to utilization of borrowed funds by the assessee. Therefore, the Apex Court found that there cannot be any disallowance. Moreover, in this case, the assessee claims that sufficient interest free funds were available with it. In those circumstances, this Tribunal is of the considered opinion that the disallowance is not justified. - Decided in favour of assessee.
Addition being the contribution towards gratuity scheme - HELD THAT:- It is not clear from the orders of the authorities below whether the gratuity fund was created by the assessee itself or it was contributed to the LIC gratuity fund. In the absence of any details of the nature of fund to which the contribution is said to be made, this Tribunal is of the considered opinion that the claim of the assessee cannot be adjudicated. In case the assessee has contributed to the LIC gratuity fund or any other similar fund and the contribution paid by the assessee has gone out of the hands irrecoverably, then the claim of the assessee needs to be allowed. In case the fund, which is said to be paid by the assessee, still remains with the assessee, then it cannot be said that the fund was irrecoverably gone out of the hands of the assessee. For deciding this issue, the nature of fund to which the assessee made contribution towards gratuity scheme needs to be examined. In the absence of any details before this Tribunal, the issue of contribution to gratuity scheme is remitted back to the file of the Assessing Officer. The Assessing Officer shall re-examine the matter and bring on record the nature of the gratuity fund to which the contribution is said to be made and thereafter decide the issue in accordance with law, after giving a reasonable opportunity to the assessee.
TP adjustment on Deduction u/s 80-IA - counsel submitted that the profit of the eligible business shall be computed as if the power generated by captive power plant was transferred to manufacturing industry at the market value - HELD THAT:- On identical situation, the issue of deduction under Section 80-IA of the Act was elaborately considered by the Mumbai Bench of this Tribunal in M/s Reliance Industries Limited [2017 (4) TMI 1489 - ITAT MUMBAI] after elaborately considering the provisions of Electricity Act for the purpose of deduction under Section 80-IA of the Act, found that the price at which the Electricity Board sells the electricity to its consumer has to be taken as market price for the purpose of computing deduction under Section 80-IA - This Tribunal is unable to uphold the orders of the authorities below. Accordingly, the orders of the authorities below are set aside and the Assessing Officer is directed to adopt the arm's length price of electricity at 6.03 per unit.
Determination of purchase of power from subsidiary company located in Karnataka - HELD THAT:- The assessee purchased power from subsidiary company, namely, KPR Sugar Mills at Karnataka. The purchase of power is not in dispute. Had the assessee purchased power from State Electricity Board or Karnataka State Electricity Board, it would have paid the price fixed by the respective Electricity Board. Merely because the assessee purchased the power from subsidiary company that cannot be a reason to fix the cost of generation and also the purchase price. We have to determine the purchase price in an estimated market rate at which the assessee would have purchased the power from open market. When the Tamil Nadu Electricity Board sells power at ₹ 6.03 per unit, this Tribunal is of the considered opinion that the assessee could not have paid in the open market at ₹ 7 per unit. Therefore, even though the assessee claims ₹ 7/- per unit, this Tribunal is of the considered opinion that the assessee ought to have purchased the power at ₹ 6.03 per unit from TNEB. There is no justification in fixing the arm's length price at ₹ 3.59 per unit. In view of the above, and the reason stated in the earlier part of the order for deduction under Section 80-IA of the Act, the orders of the lower authorities are modified and the Assessing Officer is directed to fix the purchase price of power from subsidiary company, namely, KPR Sugar Mills Ltd. at ₹ 6.30 per unit.
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2018 (1) TMI 1652
Assessment u/s 153A - Unexplained cash credits u/s.68 - HELD THAT:- The assessee is engaged in the business of power generation. A search and seizure operation was conducted in the case of the assessee on 24th and 25th May, 2011. In pursuance to the same, notice u/s.153A of the Act was issued and impugned orders of assessments were passed. It is not in dispute that assessment for the assessment years 2006-07, 2007-08 and 2008-09 were completed prior to the date of search. In other words, the assessments for these assessment years were not abated.
In the present appeals the Revenue has challenged the deletion of addition in assessment year on account of share application u/s.68 of the Act and bogus purchase of husk.
We find that the above additions made by the AO in the impugned assessment years were not based on any incriminating material found during the course of the search.
Revenue could not show any incriminating material, which was found during the course of the search on the basis of which above additions could have been made. It is a settled position of law that in an assessment made in pursuance to search in respective assessment years for which assessment proceedings were not abated, additions cannot be made de hors the incriminating materials found during the course of search. We, therefore, do not find any merit in these appeals of the Revenue. Accordingly, the appeals of Revenue for the assessment years 2006-07, 2007-08 and 2008-09 are dismissed.
Bogus bill of husk - CIT(A) observed that in the assessment order the AO has not brought any incriminating material based on which the addition was made on account of bogus purchase of husk - No finding that the assessee has used coal in place of husk and obtained bogus bill of husk. No such material has been found during operation u/s 132 of the Act which even remotely suggests suppression of purchase of coal. CIT(A), therefore, observed that he was convinced that addition on account of inflated purchases has been made by the A.O on estimate basis in all the years without bringing any evidence on record in support of his contention. These findings of CIT(A) has not been rebutted by the Revenue by bringing any positive material on record. In absence of the same, we find no good reason to interfere with the findings of the CIT(A), which are confirmed and the grounds of appeal of the Revenue for assessment years 2009-10, 2010-11, 2011-12 and 2012-13 are dismissed.
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2018 (1) TMI 1650
Appeal admitted on substantial question of law - Reopening of assessment - Assessment of trust - whether impugned order of the Tribunal is bad in law being perverse and violative of principles of natural justice as the impugned order (i) wrongly/erroneously records and considers vital facts of the case (ii) does not adjudicate/consider the main arguments/claim/submission of the Appellant (iii) does not consider and give findings on a single case law cited and relied upon by the Appellant (iv) relies on information without disclosing the same to the Appellant under the guise of confidential information and (v) relies on additional evidence relied by the Revenue and uses the same against the Appellant in violation of Rule 18 and Rule 29 of the Income Tax (Appellate Tribunal) Rules, 1963?
Whether in law and on the facts and circumstances of the case, reopening is bad in law as the Assessing Officer did not deal with the objections raised by the Appellant with respect to reopening of assessment?
Whether in law and on the facts and circumstances of the case, the Tribunal erred in confirming the addition without appreciating that (i) the Revenue did not supply any evidence to show that the entire balance in Ambrunova Trust was deposited in assessment year 2002-03 itself (ii) the source of information was not authentic and the documents supplied were not authenticated, and thus the entire addition was made on surmises and conjecture, presumptions and the onus cast on the Revenue was not discharged in the light of the law laid down by the Hon'ble Supreme Court in CWT Vs. Estate of Late HMM Vikramsinhji of Gondal2014 (5) TMI 286 - SUPREME COURT?
Whether in law and on the facts and circumstances of the case, income of discretionary trust can be taxed in the hands of the beneficiary only when the income of the trust is distributed and received by the beneficiary?
Whether in law and on the facts and circumstances of the case, as the alleged trust and trustees are non resident and the income of the trust if any at all, is received outside India the same cannot be taxed in India as per Section 5(2) read with Section 6(4) of the Act?
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2018 (1) TMI 1649
Disallowance on account of loss on foreign exchange fluctuation - nature of loss suffered - HELD THAT:- As relying on assessee's own case for assessment year 2008-09 present situation is that the revenue authorities have not examined the nature of loss suffered by the assessee and how a provision was made. Whether, it was a foreign derivative transaction or transaction in respect of forward exchange contract pertaining to hedge the loss in respect of carbon credit has not been clearly emerged from the facts of the case. We, therefore, deem it proper to restore this issue to the file of the AO so that he can make necessary enquiry and if it was a foreign exchange loss connected to the carbon credit then naturally the same should not be allowed - thus we restore this issue to the file of the Assessing Officer with the same direction as above. Hence, this ground of revenue is allowed for statistical purposes.
Deduction under section 80IA Computation - depreciation on common assets - 40% depreciation on common fixed assets be not reduced from eligible profit claimed u/s. 80IA of the Act - HELD THAT:- We find that similar addition was made by the Assessing officer in the assessment year 2008-09 and the CIT(A) has confirmed the same. On appeal by the assessee, the assessee did not press this ground before the Tribunal. Therefore, this addition was sustained. Since the facts of the present year is similar to that in the year 2008-09, we reverse the order of the CIT(A) and restore that of the Assessing officer. Hence, this ground of revenue is allowed.
Disallowance u/s 14A - Assessee’s counsel is making a plea that investments made by the assessee company in the present case were strategic investments - HELD THAT:- We set aside the order of the CIT(A) and remit the matter back to the file of the Assessing Officer, who shall examine the pattern of holdings in the group companies and decide the issue accordingly. This ground of the revenue is allowed for statistical purposes.
Deduction under the head “pooja & festival expenses” under the head Charity & Donation expenses - AO observed that these expenses are not relatable to business purposes of the assessee thus disallowed - HELD THAT:- We find that the CIT(A) after considering the CBDT circulars held that the expenses under the head charity, donation do not relates to business of the assessee whereas he has allowed deduction for the pooja and festivals. We see no reason to interfere with the order of the CIT(A), which is hereby confirmed.
Disallowance of share capital expenses - HELD THAT:- Assessee is listed with BSE, NSE and SEBI, and the expenses relate to annual custodian fees, listing fees, compliance certificate fees, printing of annual reports, charges publication of quarterly, half-yearly and annual results as per the requirements of SEBI and other misc professional fees relating to the work, which are recurring in nature. CIT(A) has deleted the addition after properly appreciating the facts of the case. Hence, we confirm his order and reject the ground of appeal of the revenue.
Disallowance on account of Social Welfare expenses which have not been incurred wholly and exclusively for the purpose of business - CIT-A allowed the deduction - HELD THAT:- CIT(A) has referred to the amendment made in Finance Act (No.2) 2014 w.e.f. 1.4.2015 in Section 37, wherein, it is declared that for the purposes of sub-section(1) any expenditure incurred by an assessee on the activities relating to corporate social responsibility referred to in section 135 of the Companies Act, 2013 shall not be deemed to be an expenditure incurred by the assessee for the purposes of the business or profession. CIT(A) has held that there was no such embargo for the preceding years - CIT(A) held that the disallowance cannot be sustained. In the instant case, it is submitted that CSR expenses are incurred for the welfare of local community and thereby improve corporate image of the companies incurring such expenditure. We are of the considered opinion that the CIT(A) has rightly considered the decision and deleted the addition made.
Disallowance u/s.40A(3) - CIT-A has allowed the deduction which are below the prescribed limit u/s.40A(3) - HELD THAT:- Before us, no plausible explanation was submitted by the ld D.R. to controvert the above findings of the CIT(A). Hence, we uphold the order of the CIT(A) and dismiss the ground of appeal of the revenue.
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2018 (1) TMI 1648
TDS u/s 195 - non-deduction of taxes on payment to NR entities - payment for acquiring access/user rights of software - transfer / sale of software - Royalty payment - distinction between a transaction involving the 'transfer of copyrighted article' and 'transfer of rights in a copyright' - exclusive right to do or authorise the doing of the acts - Diversified views- whether decision of non jurisdictional High Court is not binding on Mumbai ITAT? - HELD THAT:- We find ourselves in agreement with the submission of the ld. Counsel of the assessee that there is no Hon’ble Bombay High Court decision on this issue. In such circumstances, the co-ordinate bench of this tribunal in National Stock Exchange of India Ltd. [2017 (5) TMI 916 - ITAT MUMBAI] has considered identical issue find that admittedly there is no direct jurisdictional High Court decision on the subject. However there is a direct Hon’ble Delhi High Court decision which is in favour of the assessee. As against this there are decisions of Hon’ble Karnataka High Court which are in favour of revenue. In this regard we note that Hon’ble Apex Court in the case of vegetable products 88 ITR 192 [1973 (1) TMI 1 - SUPREME COURT] had held that if two constructions are possible one in favour of the assessee should be adopted. Accordingly respectfully following the precedent we follow the Hon’ble Delhi High Court decision. Accordingly we set aside the order of authority below. We hold that the transfer / sale of software in this case is not taxable as royalty. Hence the assessee was not liable to deduct tax at source u/s 195 of the Incometax Act, before remitting the money to the US supplier. - Decided in favour of assessee.
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2018 (1) TMI 1647
Disallowance u/s 40(a)(ia) - whether the second proviso to section 40(a)(ia) takes effect from 01.04.2013 is applicable to the assessee or not ? - HELD THAT:- After considering the decision in the case of Star Investments Pvt. Ltd [2016 (6) TMI 1428 - ITAT CHENNAI], this tribunal in the assessee’s own case in [2017 (6) TMI 1354 - ITAT CHENNAI] Revenue’s appeal is dismissed.
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2018 (1) TMI 1646
Disallowance of deduction claimed u/s 80IB(10) in respect of housing project - AO has disallowed assessee’s claim of deduction alleging violation of conditions of clause–(f) of section 80IB(10) which provides that more than one residential unit in a housing project cannot be sold to a person / individual - whether for violation of the conditions of clause–(f) of section 80IB(10) of the Act in respect of two flats, assessee’s claim of deduction in respect of entire housing project can be disallowed? - HELD THAT:- Undisputedly, except violation of conditions of clause–(f) of section 80IB(10) of the Act in respect of two flats, all other conditions of section 80IB(10) of the Act are fulfilled in respect of the housing project which is evident from the fact that there is no other allegation made by the AO.
In our view, for violation of conditions of clause–(f) of section 80IB(10) of the Act in respect of two flats, the deduction for the entire housing project or in respect of other flats which otherwise are complying to the conditions of section 80IB(10) cannot be disallowed. The disallowance, if any, has to be restricted to the flats which violate the conditions of section 80IB(10). The Hon'ble Jurisdictional High Court in CIT v/s Bramha Associates [2011 (2) TMI 373 - BOMBAY HIGH COURT] has held that deduction under section 80IB(10) can be allowed on proportionate basis in respect of flats which fulfilled the conditions of section 80IB(10).
The ratio laid down in the aforesaid decisions, though, are in the context of clause–(c) of section 80IB(10) of the Act, however, they will apply to the facts of the present case as there is not much difference in the object for which section 80IB(10) was introduced, even after introduction of clause–(e) and (f) to section 80IB(10) by Finance Act, 2009. Therefore, applying the ratio laid down in the decisions cited before us, we hold that the assessee will be entitled to deduction under section 80IB(10) of the Act proportionately in respect of flats which fulfilled all the conditions of section 80IB(10).
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2018 (1) TMI 1645
Disallowance of interest relating to the diversion of funds for non-business purposes - HELD THAT:- As submission of the assessee’s counsel that the issue may be restored to the file of the AO and the same will be in tune with the decision of the Tribunal in the case of M/s. Bafna Builders and Land Developers [2017 (12) TMI 1519 - ITAT PUNE] where Ground as already remanded to the file of the AO for fresh adjudication as per the discussion given in Para 17 of the said order of the Tribunal (supra). In the remand proceedings, AO was directed to grant reasonable opportunity to the assessee.
Disallowance of interest u/s.14A r.w. Rule 8D of the I.T. Rules - HELD THAT:- As assessee submitted that the assessee has excess funds which were invested in the shares which yielded dividend income and the interest claimed by the assessee is nothing to do with the investments made by him in the exempt income yielding investments. For examining the claim of the assessee as well as applying the correct law on this issue, Ld. Counsel desires that the matter should be restored to the file of the AO allowed.
Addition u/s.69B - HELD THAT:- As supplying the copy of the document to the assessee is her legitimate right before any addition is made in her hands relying on the said document. AO is directed to supply the same and also cross examination if any before making any addition in her case and in the remand proceedings. Accordingly, as requested, the issue is restored to the file of the AO for fresh adjudication. AO is directed to grant reasonable opportunity of being to the assessee in accordance with law. Accordingly, Ground No.3 raised by the assessee is allowed for statistical purposes.
Capital gain computation - addition u/s.50C - HELD THAT:- We direct the AO to examine all the aspects of the issue and decide the requirement of making addition in the hands of the assessee u/s.50C of the Act. AO shall grant reasonable opportunity of being heard to the assessee in connection with the set principles of natural justice. Accordingly, Ground No. 4 and the additional grounds raised in his chart.
Addition u/s 28(iv) - HELD THAT:- This is a case where the assessee purchased commercial premises for a lesser consideration qua the fair market value of the same. Originally, the AO taxed the differential cost u/s.28(iv) of the Act in the hands of the firm who sold the commercial premises to the assessee. Assessee has 60% shareholder in the said firm by name M/s. Bafna Builders and Land Developers. It is the finding of the CIT(A) that the assessee got the benefit to the tune of ₹ 2,44,62,169/-. It is the finding of the Tribunal as well as the CIT(A) that the said amount is not taxable in the hands of the firm.
CIT(A) have given the above direction, which in our view is consequential comment of the CIT(A) Even if the said direction is absent in the said paragraph, the authorities below would anyway initiate the consequential proceedings. From that point of view, we are of the view that the direction given by the CIT(A) does not warrant any amendment.
50% disallowance on vehicle expenses, Drivers’ salary and depreciation addition restricted roughly 15% of the total expenses.
Bogus expenses on tea/coffee/cold drinks - Addition on account of boxes, i.e. the packing material - HELD THAT:- AO could neither bring any corroborative evidence that the assessee has made bogus payments nor prove the expenses to be untrue. Therefore, we uphold the decision of the CIT(A) on this issue.
Disallowance on account of Kavi Sammelan Expenses - HELD THAT:- Order of CIT(A) holding the expenses as income expenses and consequently deleting the expenses incurred by the assessee on Haysa Kavi Sammelan does not warrant any interference from our side. Accordingly, Ground No.3 raised by the Revenue is dismissed.
Addition u/s.40A(2)(b) - amount was claimed as payment of salary and bonus to the employees - The same constitutes an extra amount paid in this year qua the last year’s claim - HELD THAT:- We find the AO is duty bound to prove the salary and bonus paid to the employees as unreasonable. CIT(A) has rightly held that the addition made the AO is only on estimate basis and without discharging the onus. In this view of the matter, the decision of the CIT(A) needs to be approved and in favour of the assessee. Accordingly Ground No.5 raised by the revenue is dismissed.
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2018 (1) TMI 1643
Special audit u/s 142 (2A) - petitioner has fairly stated that they would not be objecting the special audit, but are concerned about the terms of reference - HELD THAT:- We take the statement made by the counsel for the petitioner and the respondents on record and hope and trust that the Special Auditor would abide by the provisions of Section 142(2A) as explained and elucidated by several judgements of the Supreme Court and the Delhi High Court.
During the course of hearing, an issue had arisen with reference to verification of purchase of shares of amalgamating company and premium paid by the shareholders - petitioner has expressed apprehension that the Special Auditor may re-open old and settled issues which are not subject matter of the current assessment years - respondents on instructions states that the Special Auditor would be dealing with the audit and accounts confined to the assessment years in question or earlier years as permissible under law, i.e., the Income Tax Act and Rules.
We clarify that the special audit would be in accordance with the terms of reference, which are mentioned in the affidavit filed by the respondents on 16th September, 2017. Special Auditor will keep in mind the order passed today and on earlier dates. In terms of the statement made by the counsel for the parties, the writ petition is disposed of with the aforesaid observations.
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2018 (1) TMI 1637
Existence of Permanent Establishment/Business connection in India - Taxability of business Income earned in India, by company incorporated outside India - whether reinsurance business has been specifically excluded from constituting a PE in India under the treaty - DTAA between India and Switzerland - HELD THAT:- As decided in own case [2015 (4) TMI 905 - ITAT MUMBAI] assessee does not have any business connection in India in the light of Explanation-2 to Section 9(1) of the Act. The assessee does not have PE in India. The facts on record show that there is neither Service PE nor Agency PE in the form of SESIPL. Considering the facts in totality in the light of the relevant provisions of the law and DTAA and the judicial decisions referred to herein above, we have no hesitation in setting aside the assessment order and accordingly we direct the AO not to treat the income of the assessee as taxable under the Act. - Decided against revenue.
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2018 (1) TMI 1635
Rectification of mistake u/s 254 - Exemption u/s 11 - assessee has not exercised any option u/s. 11(1) - HELD THAT:- We find that this Tribunal in the aforesaid order has passed an elaborate and well reasoned order. The issue in that case was chargeability of income in the hands of the assessee which the assessee has claimed that the same had not accrued to the assessee.
As merit the assessee that the tribunal should have recorded that there was such an implied exercise of option by the assessee - tribunal has properly appreciated the concerned section and the entire facts and circumstances. The tribunal had clearly noted that the assessee has sold the property - The assessee had not offered the same for taxation. When confronted in this regard, the assessee came up with an addendum to the agreement by which the sale was registered. This addendum was an unregistered document and totally self-serving document by way of which the assessee intended to defer the accrual of the income. All along assessee and the Counsel had been pleading that the said income had not accrued. Authorities below had to refer in the case of Sumati Dayal [1995 (3) TMI 3 - SUPREME COURT] to reject this contention of the assessee. Hence, it is clear that the assessee was found to have entered into an activity which was colorable in nature.
As observed that the assessee has not followed the relevant mandate of law. The reference of amended section as pointed out by the assessee does not point out any error whatsoever, as there is no material difference. Hence, in our considered opinion, there is no mistake apparent from the record liable for rectification u/s. 254(2). In our considered opinion, what the assessee is seeking is re-appreciation of the facts which is not mandated under the provisions of section 254(2). Assessee’s miscellaneous petition dismissed.
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2018 (1) TMI 1634
Assessment order passed against the dead person - HELD THAT:- Assessment order in both the assessment year, against the dead person (deceased assessee) which is void ab initio. Hence, we accepted the contention of assessee that both the assessment orders are invalid. As we have accepted the legal contention the assessee and allowed both the appeals of the assessee.
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2018 (1) TMI 1631
Disallowance u/s 14A r.w.r. 8D - HELD THAT:- It is by now settled legal position that disallowance under section 14A of the Act cannot exceed the related exempt income, and that in a case in which the assessee does not have earned any tax exempt income in the particular year, the disallowance under section 14A of the Act cannot be made either - Respectfully following the above legal position and having noted that the assessee did not have any tax exempt income during the relevant previous year, we uphold the grievance of the assessee and delete the impugned disallowance.
Disallowance of entertainment exemption tax - whether it was a revenue receipts by observing that the exemptions was availed by the assessee after the commencement of commercial operations of the multiplexes? - HELD THAT:- We see no reasons to take any other view of the matter than the view so taken by the co-ordinate bench in assessee’s own case for the immediately preceding assessment year. Respectfully following the same, we confirm the action of the ld. CIT(A) who direct the A.O. to treat the amount as a capital receipt who had merely followed the stand in the assessment year 2010-11. Grievance of the Assessing Officer is accordingly rejected.
Employee’s stock option plan as an allowable expenditure u/s.37(1) - HELD THAT:- The Hon’ble High Court of Madras in the case of PVP Ventures Ltd [2012 (7) TMI 696 - MADRAS HIGH COURT] has allowed such claim as business expenditure and the Hon’ble High Court of Delhi in the case of Lemon Tree Hotels Ltd. [2015 (11) TMI 404 - DELHI HIGH COURT] has followed the decision of the Hon’ble High Court of Madras held that cost of ESOP could be debited in Profit and Loss account of the assessee. Respectfully following the aforementioned decisions, we direct the A.O to allow the claim of deduction on account of remuneration to ESOP - Decided against revenue.
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2018 (1) TMI 1629
Disallowance u/s 14A r.w.r. 8D - As argued assessee has reserves and surplus far in excess of the investment made in the year during the relevant assessment year - HELD THAT:- As decided in own case [2017 (8) TMI 1449 - RAJASTHAN HIGH COURT] we do not find any mention of the reasons which had prevailed upon the Assessing Officer, while dealing with the Assessment Year 2002- 2003, to hold that the claims of the Assessee that no expenditure was incurred to earn the dividend income cannot be accepted and why the orders of the Tribunal for the earlier Assessment Years were not acceptable to the AO, particularly, in the absence of any new fact or change of circumstances.
Neither any basis has been disclosed establishing a reasonable nexus between the expenditure disallowed and the dividend income received. That any part of the borrowings of the Assessee had been diverted to earn tax free income despite the availability of surplus or interest free funds available remains unproved by any material whatsoever. While it is true that the principle of res judicata would not apply to assessment proceedings under the Act, the need for consistency and certainty and existence of strong and compelling reasons for a departure from a settled position has to be spelt out which conspicuously is absent in the present case. - Decided in favour of the assessee
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2018 (1) TMI 1626
Disallowance u/s 14A r.w,r. 8D - assessee could not establish one-on-one nexus between the own fund/ non-interest bearing fund with investments either during the assessment proceedings or at the appellate stage - CIT-A deleted the addition - HELD THAT:- After evaluating the orders passed by ld. CIT(A), we are in agreement with this proposition that when both borrowed and own funds are available and the own funds and interest free loan exceeds investment, the presumption can very well be made that investments have been made from interest free funds and not from borrowed funds
From the facts as well as documents placed on record, we noticed that the assessee had made huge investment as per profit and loss account and necessarily expenses must have been incurred towards undertaking these transaction / activities.
Thus , in order to maintain consistency and judicial discipline , end of justice will be met in the instant case if further disallowance of expenditure u/s 14A is kept at an additional amount of ₹ 5,00,000/- towards administrative/misc. expenses to be added to the income of the assessee . This is in view of the non recording of proper satisfaction by the authorities below as to the incorrectness of the claim of the assessee’s claim and also this disallowance u/s 14A so upheld by us is in consonance with the decision of Hon’ble Supreme Court in the case of Godrej and Boyce Manufacturing Company Ltd. v. DCIT [2017 (5) TMI 403 - SUPREME COURT]. We order accordingly.
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2018 (1) TMI 1625
Accrual of income - Interest accrued on NPAs - HELD THAT:- As decided in own [2016 (7) TMI 1605 - ITAT PUNE] no addition is warranted on account of interest accrued on NPAs. Accordingly, we uphold the order of CIT(A) in deleting the addition made on account of interest accrued on NPAs. The grounds of appeal raised by the Revenue are thus, dismissed.
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2018 (1) TMI 1623
Validity of the assessment proceedings u/s. 153A - HELD THAT:- As examined the orders of the lower authorities and we find that for AY 2012-13 return was filed on 27.09.2012 and for AY 2013-14 on 20.09.2013. Before concluding the assessment proceedings, the assessee was searched on 07.12.2012. As per provisions of section 153A of the Act, wherever assessment u/s. 153A is required to be framed consequent to the search, pending assessment shall abate and assessment is to be framed u/s 153A r.w.s. 143(3) of the Act. Under these circumstances, we find no infirmity in issuance of notice u/s. 153A of the Act. We therefore reject this ground of assessee raised in this regard.
Disallowance of business promotion expenses claimed u/s. 37 - expenditure was incurred on Doctors not allowable as deduction under the provisions of section 37(1) - AO has observed that the details of business promotion expenses incurred by the assessee on various Doctors is not available - AO further took a note of CBDT Circular No.5/12 dated 01.08.2012 wherein it was clarified that u/s. 37 of the Act such type of expenditure which are prohibited by law cannot be allowed - HELD THAT:- Assessee has furnished the details of persons to whom the stunts were sold and the AO has collected the evidences only from few persons. The contention of the assessee that sometime discounts were given in the invoice itself were also not properly appreciated or examined by the AO. When certain hospitals have categorically stated that there are two types of patients and one type of patient cashless treatment is to be given by the hospital in that case the hospital purchase the stunts from the assessee company and wherever the cashless treatment is not given, the patient is required to purchase the stunts.
The stunt would be directly sold to the patient and the corresponding entries with regard to sale of the stunt is not recorded in the books of accounts of the hospital and the hospital representatives collect the discount by the company agreed upon given by the company. These aspects need to be examined by the AO. In the light of these facts, we are of the considered view that the issue was not been properly examined by the lower authorities and they have disallowed the claim of the assessee by making superficial observation. Therefore, in the interest of justice, we set aside the order of the CIT(A) in this regard and direct the AO to readjudicate the issue after making necessary enquiry and verification. If the assessee succeeds in establishing that most of the time the discount was given in the invoice itself, the same may be allowed without making a further necessary enquiry.
Disallowance of bad debts written off - As observed that assessee has not established that amount has gone bad inspite of all efforts taken by him - HELD THAT:- Nothing has been established by the Revenue that condition stipulated under section 36(2) was not fulfilled with respect to any of the debts which were written off by the assessee during the previous year. Under these circumstances, we are of the view that disallowance made by the Revenue authorities is incorrect as the assessee is only required to write off the bad debts and is not required to establish that it has become really bad. Accordingly, we set aside the order of the CIT(A) and direct the AO to allow the claim of bad debt raised by the assessee.
Unaccounted cash during the course of search - assessee is before us with the submission that assessee has explained the source of availability of cash but it was not appreciated by the AO - Cash payment by patient’s made to hospital by some insurance companies - HELD THAT:- or the first type of patient who made cash payments whenever any stunt is deployed in the patient, the assessee company directly sells and places the stunts to patient and patient directly make the payment to the company. Company representatives comes every fortnight or monthly and collect the payment. This explanation was never examined or enquired by the AO. It was further contended that the reply given actually confirms that there were cash collections out of sales and in so far as PGIMER is concerned, it was contended that money was collected on 06.12.2012. Though the hospital has denied the payment made in November 1012 but the same payment was made to the assessee. Since the sufficient evidence was placed on record, AO should have examined and enquired into the genuineness of these statements before making any addition. In the light of specific stand taken by the assessee, we are of the view that explanation furnished by the assessee should have been examined by the lower authorities before making addition of the cash found during the course of search. Since addition was made without making necessary enquiry, we set aside the order of the CIT(A) and restore the matter to the AO to re-examine the availability of cash during the course of search after making a necessary enquiry in the light of the explanations furnished by the assessee
Cash deposit in the bank account - AO noted cash of ₹ 10 lakh was deposited in the bank account but no corresponding entry was found in the cash book - HELD THAT:- We find that assessee has contended before the AO that it was on account of inadvertent mistake, the corresponding entry of deposit of cash was not made on 02.08.2011 in the cash book but it was done on 29.08.2011 though there was no deposit of cash in the bank. But these explanations of the assessee was not examined by the AO nor by the CIT(A). In the light of these facts, we are of the view that since the issue was not properly examined by the lower authorities, matter should be sent back to the AO to readjudicate the issue in the light of assessee’s contentions. Accordingly, we set aside the order of the CIT(A) and restore the matter to his file to readjudicate the issue afresh after affording opportunity of being heard to the assessee in the light of assessee’s contentions.
Undisclosed cash sales - assessee is before us with the submission that assessee’s representatives have collected the cash from Hissar hospital and same was entered in books on 24.03.2011 and as regards the cash collected from PGIMER the same was recorded in books on 14.04.2011. It was recorded in the books as communicated by the representatives, however, the cash remained in his possession at Delhi and he sent mail to Bangalore Office of handing over the cash to Mukesh Yadav at Delhi - HELD THAT:- We find that this explanation of the assessee was not examined by the AO by making the necessary enquiry from the concerned parties. Therefore, we are of the view that the matter should be sent back to the AO for readjudication. Accordingly, we set aside the matter to the AO for readjudication of the issue in the light of assessee’s contentions after affording opportunity of being heard to the assessee.
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