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Income Tax - Case Laws
Showing 81 to 100 of 748 Records
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2018 (1) TMI 1586
Reopening of assessment u/s 147 - validity of reason to believe - claim of depreciation on computer accessories - as per CIT AO in the original assessment order considered the issues which were the subject matter of reassessment order under section 143 read with section 147 - HELD THAT:- There is no question posed by the Assessing Officer in the course of original proceedings as regards the eligibility of depreciation of computer accessories. The assessment order under section 143(3) also does not speak anything about depreciation claimed on computer accessories. There is nothing on record to suggest that there was examination by the Assessing Officer in the course of original assessment proceedings whether the asses see is entitled to depreciation on computer accessories at the rate of 60 per cent.
There was no conscious opinion formed by the Assessing Officer while completing the original assessment under section 143(3) of the Income-tax Act to allow the claim of depreciation on computer accessories at the rate of 60 per cent.
Since AO has not examined the issue, it cannot be stated that he had formed an opinion as regards the allowability of depreciation on computer accessories at the rate of 60 per cent. Since no opinion on the issue was formed by the Assessing Officer, the reopening of assessment cannot be stated to be a mere change of opinion. We uphold the reopening of assessment as valid. Commissioner of Income-tax (Appeals) is not justified in cancelling the reassessment.
Technical know-how expenditure and royalty termination fee, whether it is to be allowed as revenue expenditure or capital expenditure and whether disallowance can be subject matter of reassessment has to be necessarily examined by the Commissioner of Income-tax (Appeals).It is for the Commissioner of Income-tax (Appeals) to conclude whether the additions are warranted on these three issues. - Decided in favour of revenue.
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2018 (1) TMI 1585
Following orders of the higher appellate authorities to decide the issue, where such order not accepted by the Department - Issues decided relying on assessee's own case and identical issues were decided by the Tribunal in the case of ICICI Prudential’s case [2012 (11) TMI 13 - ITAT MUMBAI] - all grounds of appeal raised by the Revenue are covered in favour of the assessee - HELD THAT:- As decided in AGARWAL WAREHOUSING AND LEASING LTD. (NOW ADMANUM FINANCE LTD.) [2002 (7) TMI 86 - MADHYA PRADESH HIGH COURT] relying on KAMLAKSHI FINANCE CORPORATION case [1991 (9) TMI 72 - SUPREME COURT] principles of judicial discipline require that the orders of the higher appellate authorities should be followed unreservedly by the subordinate authorities. The mere fact that the order of the appellate authority is not ‘acceptable’ to the Department - in itself an objectionable phrase – and is the subject-matter of an appeal can furnish no ground for not following it unless its operation has been suspended by a competent court. If this healthy rule is not followed, the result will only be undue harassment to assessee and chaos in administration of tax laws.
Hon’ble Gujarat High Court in Sayaji Iron and Engineering Co. v. CIT [2001 (7) TMI 70 - GUJARAT HIGH COURT] reiterated that no Tribunal of fact has any right or jurisdiction to come to a conclusion entirely contrary to the one reached by another bench of the same Tribunal on the same facts, and if a bench of a Tribunal on identical facts is allowed to come to a conclusion directly opposed to the conclusion reached by another bench of the Tribunal on an earlier occasion, that will be destructive of the institutional integrity itself. We follow the decision of the Tribunal mentioned hereinbefore and dismiss all the grounds of appeal filed by the Revenue in its appeal.
CIT(A) directed the AO to assessee the total income of the assessee in accordance with the order of the ITAT in ICICI Prudential Life Insurance Co. Ltd. and then give effect to the provisions of section 72 of the Act in respect of carry forward of losses - HELD THAT:- As the above direction of the Ld. CIT(A) is based on facts and law, we uphold the same. Accordingly, we dismiss this ground of appeal.
Reduction of provision for fringe benefit tax/wealth tax - assessee pleaded that the AO while determining the income in the Shareholder’s Account(SHA), added back the amount being provision for fringe benefit tax/wealth tax - CIT(A) observed from the assessment order that no such amount has been added by the AO, while computing the total income of the assessee - HELD THAT:- Assessee is governed by provisions of section 44 r.w. Rule 2 of the Act and both Policyholders’ Account (‘PHA’) and SHA form part of life insurance business of the assessee. The assessee has offered its income including results in SHA while determining income as per section 44 r.w. Rule 2 of First Schedule to the Act. Thus, the provision made towards fringe benefit tax/wealth tax is an allowable expense while determining the assessee’s income from life insurance business. We direct the AO to allow ₹ 7,69,438/- as an allowable expense while determining income/(loss) in SHA.
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2018 (1) TMI 1575
Bad Debts written off u/s.36(1)(vii) - AO disallowed the assessee's claim as he was of the view that it was only a prudential write off since the individual accounts were not squared off - CIT (Appeals) rejected the assessee's contentions that the said bad debts are written off by debit in the profit and loss account under the head ‘Bad Debts Written Off Account’ under the code 163301, as he was of the view that unless the individual debts are squared off, the entries in the books of account cannot be accepted as reliable - HELD THAT:- The facts on record indicate that the assessee bank has debited the bad debts written off to the account ‘Bad Debts Written Off Account’ (GL Code 163301) which is part of the profit and loss account and has reduced the write off from Gross Advances in the Balance Sheet. The authorities below disallowed the write off on the ground that the individual accounts are not squared off at the branch level. We find that this issue of write off has been settled by the Hon'ble Apex Court in the assessee's own case [2010 (4) TMI 46 - SUPREME COURT] we hold that the assessee bank is eligible to claim and be allowed write off of the bad debts u/s.36(1)(vii) and we therefore reverse and delete the disallowance made by the Assessing Officer in this regard. Consequently, Ground No.2 of the assessee's appeal is allowed.
Disallowance of claim u/s.36(1)(viia) - AO was of the view that it is only the incremental advances that has to be considered for computing the ‘AAA’ [Aggregate Rural Advances] and consequently allowed the deduction partly - HELD THAT:- We find that the issue is settled in favour of the assessee by the aforesaid decision of the co-ordinate bench of this Tribunal in the case of Canara Bank [2017 (11) TMI 1425 - ITAT BANGALORE] and in view thereof we hold that the computation of the AAA made by the Assessing Officer is incorrect.
AR submitted that the assessee is not disputing the classification of rural branches made by the Assessing Officer and accepts the AAA as at 31.3.2010 at ₹ 2020,71,42,322 as arrived at by the Assessing Officer at page 42 of the order of assessment and in this context pleaded that the matter need not be remanded back to the Assessing Officer. In view of the aforesaid submissions of the learned Authorised Representative of the assessee, we hold that the assessee is entitled to deduction by considering the AAA at ₹ 2020,71,42,322 as worked out by Assessing Officer at page 42 of his order and direct the Assessing Officer to rework the deduction under Section 36(1)(viia) of the Act accordingly. Consequently, the Ground No.4 of assessee's appeal is allowed for statistical purposes.
Disallowance of claim of deduction u/s.36(1)(viii) - assessee bank challenges the action of the authorities below in disallowing the deduction claimed u/s.36(1)(viii) of the Act to the extent of ₹ 51,00,00,000 out of ₹ 76 Crores - HELD THAT:- We find that this issue was considered and held in favour of the assessee and against revenue by a co-ordinate bench of this Tribunal in the case of Corporation Bank [2015 (3) TMI 1360 - ITAT BANGALORE] to hold that a reserve created in subsequent years, however, before finalization of grant of deduction, is required to be considered while allowing assessee’s claim of deduction made under s. 36(1)(viii) - We hold that reserve created even in subsequent / succeeding years; however before the finalization of grant of deduction under Section 36(1)(viii) of the Act i.e. as per date of order of assessment is required to be considered while allowing the assessee's claim for deduction under Section 36(1)(viii) of the Act. The Assessing Officer is directed to examine and allow the assessee's claim accordingly.
Depreciation on HTM Securities - HELD THAT:- We find that this issue has been considered and held in favour of assessee and against Revenue refering to its own decision [2013 (10) TMI 1030 - KARNATAKA HIGH COURT]
Disallowance u/s.14A r.w. Rule 8D - HELD THAT:- As decided in own case [2015 (7) TMI 86 - ITAT BANGALORE] there is no expenditure incurred directly by the bank for earning any tax free income. Since the expenditure would have been incurred by the bank even without the earning of tax free income, no part of the expenditure can be related to earning the tax free income and no disallowance can be made u/s.14A.
Applicability of Sec. 115JB of the Act to Banking Companies - HELD THAT:- Decided in the assessee's own case for Assessment Year 2008-09 [2015 (7) TMI 86 - ITAT BANGALORE] that the provisions of Section 115JB of the Act are not applicable to Banking companies.
Contribution to Pension Fund and Gratuity Fund - Assessing Officer had allowed the deduction only to the extent of the amount debited to the profit and loss account and disallowed the rest and the CIT (Appeals) deleted the disallowance - HELD THAT:- We find that the above decision of the ITAT, Hyderabad Bench in the case of Andhra Bank [2014 (7) TMI 904 - ITAT HYDERABAD] is squarely applicable to the facts of the case on hand. In this factual and legal matrix of the case as discussed above, we find no cause for interference with the finding of the learned CIT (Appeals) on this issue
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2018 (1) TMI 1574
Undisclosed income - bogus liability - HELD THAT:- Factum of advance of ₹ 1,00,00,000/- given to M/s Gulmohar Landcons (P) Ltd. and also the receipt of the amounts back by the assessee have not been examined clearly either by the Assessing Officer or by the Ld. CIT(A). AO has made an addition of ₹ 78,00,000/- on account of asset and liabilities statement filed by the assessee and based on the statement of the Shri. Darshan Singh whereas the amount advanced was ₹ 1,00,00,000/-as per the statement of Shri. Darshan Singh. Hence this issue is being sent back to the file of Assessing Officer with a direction to examine the issue afresh. Appeal of the assessee is allowed for statistical purposes.
Admission of additional evidences under Rule 46A - CIT-A deleting the addition on account of bogus liability - HELD THAT:- CIT(A) has given justification in para 3.2 of the order the reasons for accepting the additional evidences. The additional evidences were accepted as the assessee could not contact Shri. Yashpal Aggarwal during the assessment proceedings and a remand report was also called from the Assessing Officer who in turn examined the details submitted before the Ld. CIT(A) and found no adverse material contrary to the submissions made and hence the Ld. CIT(A) deleted the addition. Since the Assessing Officer has duly examined the copy of the ledger account and the confirmations and not brought any material rebutting the contention of the assessee, the decision of the Ld. CIT(A) deleting the addition is hereby confirmed.
Unexplained cash credit - Advances in cash - CIT(A) held that if the Department had any doubt, it could have enquired into the source of payment made of ₹ 31,00,000/- by the assessee, which has not been done - HELD THAT:- After going through the material available on the record since the amount of ₹ 31,00,000/- has been received back by the assessee and the sources have been fully explained and confirmed by the payee, supported by the agreements we decline to interfere with the order of the Ld. CIT(A).
Transaction between the M/s. Hash Builders Pvt. Ltd. and the assessee - HELD THAT:- There was no dispute regarding the advances received, the sources were never in question. At the most the Assessing Officer could have estimated commission income on account of transactions done through the assessee for the acquisition of properties for the companies for which he is working. Instead, the Assessing Officer has treated the entire advances as income of the assessee which cannot be accepted and without any legal or factual basis. Hence we refrain from interfering with the order of the Ld. CIT(A) in deleting the addition.
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2018 (1) TMI 1573
Disallowance u/s 14A - assessee has made the suo moto disallowance - HELD THAT:- In Godrej and Boyce Mfg. Company Ltd. [2010 (8) TMI 77 - BOMBAY HIGH COURT] the Hon’ble Bombay High Court has held that the provisions of rule 8D are not retrospective in nature and shall apply w.e.f. A.Y. 2008-09. Hence, in the light of the aforesaid decisions and in view of the fact that the suo moto disallowance made by the assessee was allowed by the department in the year 2004-05, we are of the considered view that the suo moto disallowance made by the AO in the assessment year under consideration, which is 10% of the exempt dividend income is reasonable. We therefore, set aside the order of the Ld. CIT (A) and direct the AO to delete the disallowance confirmed by the Ld. CIT (A) and accept the suo moto disallowance made by the assessee u/s 14A of the Act. We accordingly allow the sole ground of appeal of the assessee.
Disallowance of interest on advances to subsidiary and group company - AO pointed out that the advance given to the subsidiary companies as sister concern cannot be treated as incurred for the purpose of the business of the assessee - HELD THAT:- During the assessment year under consideration, the assessee advanced ₹ 4,79,630/- to Taida Trading and Industries Ltd. and ₹ 18,42,036/- to KTC Hotels Ltd. Since, this issue has been dealt with by the coordinate Bench in assessee’s own case for the A.Ys. 2003-04 and 2004-05, we respectfully following the decision of the coordinate Bench partly allow this ground of appeal and set aside the impugned order passed by the Ld. CIT (A) in respect of advance given to M/s Taida Trading and Industries Ltd. and uphold the order deleting the disallowance made by AO in respect of advance given to M/s KTC Hotels Ltd. AO is directed to compute the disallowance of interest in terms of the said order.
Disallowance of interest on share application money pending allotment - HELD THAT:- As decided in own case [2014 (4) TMI 1097 - ITAT MUMBAI] there being no diversion of interest bearing funds for non-business purpose as alleged by the A.O., there was no justification in making any disallowance on account of interest paid on the borrowed funds. It was noted by the Tribunal that the share application money was finally returned to the assessee with interest @ 19% and the interest so received was duly offered by the assessee in the relevant year. A similar view has been taken by the Tribunal in the subsequent years. i.e. assessment years 1996-97 to 2002-03. As the issue involved in the year under consideration as well as all the material facts relevant thereto are similar to the earlier years, we respectfully follow the orders of the Tribunal for the said years and uphold the impugned order of the ld. CIT (A) giving relief to the assessee on this .
Expenditure on replacement of carpets - HELD THAT:- This issue in favour of the assessee in the assessee’s own case for the A.Y. 1992-93 - Apart from the decision of the coordinate Bench the Ld. counsel for the assessee relied upon the decision of the Hon’ble Rajasthan High Court rendered in CIT vs. Lake Place Hotels and Motel Pvt. Ltd. [2002 (4) TMI 29 - RAJASTHAN HIGH COURT] . Since, this issue has already been decided in favour of the assessee, we respectfully following the decision of the coordinate Bench uphold the findings of the Ld. CIT (A) and dismiss this ground of appeal of the revenue.
Expenditure incurred on replacement of linen as revenue expenditure and the expenditure not giving enduring benefits to the assessee.
Adjustment on account of difference on rates of foreign exchange on deposit placed with Wholly Owned Subsidiary (WOS) i.e. Taj International Hongkong Ltd. (TIHK) - HELD THAT:- As decided in own case as per the classification made in AS-11, monetary items mainly include amounts held on current account, such as, cash receivables, payables etc. while non-monetary items include amounts held on capital account, such as, fixed assets, investment in shares etc.
In the present case, the shareholders deposit represented the amount held by the assessee on capital account inasmuch as it was convertible into equity shares within a period of 10 years and if not so converted, it was liable to be refunded to the assessee company only after a period of 10 years. In our opinion, the said amount thus was in the nature of non-monetary item which was required to be reported/recognized at the exchange rate prevailing on the date of relevant transaction even as per AS-11 as rightly held by the learned CIT (Appeals). We, therefore, find no infirmity in the impugned orders of the learned CIT (Appeals) deleting the additions made by the AO on this issue.
Addition being adjustment on account of interest charged on loan given by the assessee to its associate enterprise M/s Taj International Hongkong Ltd - HELD THAT:- This issue has already been decided in favour of the assessee in the assessee’s own case for the A.Y. 2003-04 and 2004-05 aforesaid by the ITAT holding that the LIBOR is acceptable arm’s length interest rate, we respectfully following the decision of the coordinate Bench decide this issue in favour of the assessee and dismiss this ground of appeal of the revenue.
Non charging guarantee fees from AEs by providing letter of comfort to the Bank for the loan granted to the AE - HELD THAT:- Since the assessee has not bond itself for repaying the loans in the event of default by the AEs, the issue is covered by the law laid down by the Hon’ble Karnataka High Court in the case of United Braveries Holdings Ltd. [2011 (8) TMI 1331 - KARNATAKA HIGH COURT] . Moreover, the Chennai Bench of the ITAT in TVS Logistics Services Ltd [2016 (6) TMI 558 - ITAT CHENNAI] has held that the letter of comfort is outside the ambit of international transaction. Hence, following the decisions of the Hon’ble Karnataka High Court and the Chennai Tribunal, we hold that the letter of comfort issued by the assessee in this case is outside the ambit of international transaction. We, therefore, dismiss this ground of appeal of the revenue.
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2018 (1) TMI 1572
Disallowance of deduction u/s.54(2) - not depositing the residue sale proceeds in capital gain scheme account within the stipulated period u/s.139(1) - whether the unutilised amount of capital gains which was not appropriated towards construction of new house property before the due date for filing of the return of income as envisaged u/s 139(1) or which was not deposited in the notified Capital Gains Account Scheme before the due date for filing of the return of income as envisaged u/s 139 (1) ? - HELD THAT:- We find this issue squarely covered by the decision of the Chennai Bench of the Tribunal in [2016 (9) TMI 1563 - ITAT CHENNAI] wherein on the identical situation it was held that such small technical breach will not disentitle the assessee the benefit of Section 54.
Further the Ld.CIT(A) has also followed the decisions of various higher Judiciary wherein the issued is held in favour of the assessee in similar circumstances. Therefore we do not find it necessary to interfere with the order of the Ld.CIT(A) on this issue. - Decided against revenue
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2018 (1) TMI 1571
Reopening of the assessment u/s. 147 - making the claim u/s. 80IA - HELD THAT:- It is not the case where the assessee had misled the AO in any manner while making the claim u/s. 80IA of the Act. All the statutory requirements as per law for claiming deduction like tax audit report, etc. were filed before the AO and the AO had applied his mind and then had granted the deduction u/s. 80IA of the Act. The action of the AO to reopen an assessment completed earlier u/s. 143(3) of the Act without any tangible material ought not to have been done. We note that the AO has done the reopening and consequent reassessment on the basis of the very same material which was before the earlier AO. So, the AO on the same material on which the predecessor of AO has taken a plausible view during the original assessment, has ventured in the reassessment to take a different view, which action is akin to review of his own order which power AO does not enjoy.
We note that the AO had the knowledge of the assessee taking over the proprietary concern on 01.04.2002 i.e. running business of M/s. Anupam Bricks and Concrete Industries a proprietorship firm of Shri Budhmal Baid, Managing Director of the company in lieu of which the company had issued shares at a premium and the fact that by this process, the assessee acquired the assets including a Hot Mix plant. This fact was in the knowledge of the AO as well as he has considered this fact elaborately as reproduced above in his original assessment order, therefore, right or wrong, the decision taken by him cannot be revisited or reviewed by the AO invoking Sec. 147 of the Act because the AO does not have the power to review his own order. Relying upon the decision in the case of Kelvinator of India Ltd. [2010 (1) TMI 11 - SUPREME COURT] we do not find any legal infirmity in the order passed by the Ld. CIT(A) and hence, the same is hereby upheld. Appeal of revenue is dismissed.
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2018 (1) TMI 1570
Exemption u/s 11 - assessee runs a pharmacy store in the hospital for profit and earned profit from pharmacy store and not covered in the charitable activity - HELD THAT:- As decided in assessee’s favor by first appellate authority for AY 2010-11 & 2011-12. This Tribunal for AY 2010-11 [2016 (8) TMI 1490 - ITAT MUMBAI ] after considering the judgment of Baun Foundation Trust Vs CCIT [2012 (4) TMI 172 - BOMBAY HIGH COURT] & Hiranandani Foundation Vs. ADIT [2016 (7) TMI 260 - ITAT MUMBAI] upheld the stand of Ld. CIT(A). The revenue is unable to bring any contrary facts on record and distinguish the facts of earlier years with that of impugned AY. Therefore, in view of the binding judicial precedent in the shape of the order of co-ordinate bench of the Tribunal, taking same stand, we dismiss revenue’s appeal.
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2018 (1) TMI 1567
Assessment u/s 153C - information collected by the A.O. without any basis of incriminating material - HELD THAT:- During the appeal hearing, the D.R. did not place any evidence with regard to the incriminating material found in the premises of the searched person relating to the assessee. Now it is settled issue that for initiating the proceedings u/s 153C it is incumbent upon the A.O. to have the incriminating material evidencing the undisclosed income. In the assessee’s case no such evidence was found during the course of search in the group cases.
As per the provisions of section 153C it is mandatory to have the satisfaction of the A.O. that money, bullion, jewellery or other valuable article or thing or any books of accounts, documents seized or requisitioned pertains to or relates to the assessee, which means that unless there is an incriminating material belonging to the assessee is found, the action u/s 153C of the Act is not permissible. In the assessee’s case there was no incriminating material found and seized from the premises of the group cases. We hold that the notice issued u/s 153C is not sustainable and accordingly quashed. This view is upheld by the Hon’ble Supreme Court in the case of CIT Vs. Sinhagad Technical Education Society (2017 (8) TMI 1298 - SUPREME COURT). Respectfully following the judgement of the Hon’ble Supreme Court, we hold that the notice issued u/s 153C is unsustainable and accordingly quashed. Appeal filed by the assessee is allowed
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2018 (1) TMI 1566
TP Adjustment - Selection of comparable - whether Government companies can be taken as comparables or not ? - HELD THAT:- As decided in own case [2017 (5) TMI 971 - ITAT MUMBAI] Government companies cannot be taken as comparables.
No addition since adjustment would fall within tolerance range of 5% - From the submissions made by learned AR, we noticed that the adjudication of other grounds would be academic in nature, since according to learned AR even if those grounds are decided in favour of the Revenue, the same would not result in any addition. In view of the same, without deliberating on those grounds, we decide them in favour of the Revenue.
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2018 (1) TMI 1564
TP adjustment in respect of “interest on loans to AEs” and on account of “corporate guarantee” - CIT-A deleted the addition - HELD THAT:- As decided in own case [2017 (12) TMI 1745 - ITAT AHMEDABAD] impugned CIT(A)’s order, he has merely followed his order for the assessment year 2008-09 which has not been challenged, on this point, by the Revenue authorities. Learned Departmental Representative does not dispute this fact.
In the light of the above factual position, it is clear that once the Revenue authorities accept the stand of the CIT(A) on an issue and allow it to reach finality in one assessment year, it cannot be open to them to challenge the same in the subsequent assessment year. As noted by Hon’ble Supreme Court, in the case of CIT vs. Radhasoami Satsang 1991 (11) TMI 2 - SUPREME COURT, while “strictly speaking, res judicata does not apply to income tax proceedings”, “where a fundamental aspect permeating through the different assessment years has been found as a fact one way or the other and parties have allowed that position to be sustained by not challenging the order, it would not at all be appropriate to allow the position to be changed in a subsequent year - Thus the deletion of the TP adjustment on account of interest on loan is upheld.
TP adjustment on account of corporate guarantee for working capital and Corporate guarantee for financing and other arrangements - HELD THAT:- Assessee extending corporate guarantees to its AEs, particularly on the facts and in the circumstances of this case and when the assessee has done so in the course of its stewardship activities for its subsidiaries, does not constitute an international transaction, and, as such, no ALP adjustment can be made in respect of the same. Accordingly, entire ALP adjustment stands deleted. As for the quantum of this adjustment, which is mainly the subject matter of grievance raised in revenue’s appeal, once the entire ALP adjustment stands deleted, that aspect of the matter is wholly academic and does not call for any adjudication by us.
Deletion of the positive adjustment u/s. 14A while determining book profit u/s. 115JB confirmed. See ALEMBIC LIMITED [2017 (1) TMI 513 - GUJARAT HIGH COURT]
Late payment of employees’ contribution to Provident Fund and ESI - HELD THAT:- This issue is no more res integra as it has been decided by the Hon’ble Jurisdictional High Court of Gujarat in favour of the Revenue and against the assessee in the case of GSRTC [2014 (1) TMI 502 - GUJARAT HIGH COURT]
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2018 (1) TMI 1563
Denial of credit for advance tax deposited and tax deducted at source (TDS) - HELD THAT:- SLP dismissed.
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2018 (1) TMI 1560
Capital gain computation - Value of sale consideration by the value adopted by Stamp Valuation Authority - entitlement for indexation cost - HELD THAT:- The assessee was asked to produce the sale-deed for land shown in fixed asset for the purpose of computing capital gain. The assessee not provided copy of sale-deed for sale of land and factory building at Taloja or any other evidence, the AO made the addition of ₹ 5 Crore in the income of assessee on estimate basis. CIT(A) after considering the contention of assessee observed that the profit of sale of land shall be taken as LTCG and the assessee shall be entitled for indexation cost and directed the AO to adopt the value adopted by Stamp Valuation Authority and verified the fact regarding the period of lease. Before us, the assessee has neither filed any documentary evidence nor explained the fact. Thus, we do not find any illegality or infirmity in the order passed by ld. CIT(A). Hence, ground no.1 of the appeal is dismissed.
Disallowance of bad-debt - HELD THAT:- No details of debts were provided by the assessee, thus claimed was disallowed. The ld. CIT(A) also observed while confirming the action of the AO, that no details of bad-debt was made available nor any prima facie justification was given. Even before us, the assessee has neither given any explanation nor filed any detailed about the bad-debts. None come forward on behalf of assessee to explain the fact about the bad-debt and the treatment given in the books of account. Thus, we do not find any illegality or infirmity in the order passed by ld. CIT(A). Thus, ground no.2 of the appeal is also dismissed.
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2018 (1) TMI 1558
Deduction u/s 80IA - Tribunal held that the Head Office expenses cannot be allocated to profits derived from 100% export oriented units falling under Section 80IA - HELD THAT:- For the reasons as indicated in our order in [2018 (1) TMI 900 - BOMBAY HIGH COURT] and [2018 (1) TMI 1557 - BOMBAY HIGH COURT ] in respect of the same Respondent-Assessee for the assessment year 2002-03 and 2003-04, the question as proposed does not give rise to any substantial question of law. Thus, not entertained.
Claim of depreciation on 'goodwill' - HELD THAT:- Issue herein was also raised by the Revenue in [2018 (1) TMI 900 - BOMBAY HIGH COURT] in respect of the same Respondent-Assessee relating assessment year 2002-03. We have by an order passed today not entertained the Income Tax Appeal on this issue / question. Accordingly, for the reasons mentioned in our order passed today this question does not give rise to any substantial question of law. Thus, not entertained.
Disallowance u/s 14A being 0.5% of the average nonstrategic investments -TDS provisions applicability for the provisions made at the year end - amount claimed as provision for leave encashment in view of Section 43B(f) of the Act? - Appeal is admitted on the substantial questions of law at Nos. 1, 2 and 3 hereinabove.
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2018 (1) TMI 1557
Deduction u/s 10B -Tribunal held that Head Office expenses cannot be allocated to profits derived from 100% export oriented units falling u/s 10B - HELD THAT:- Issue stands concluded in favour of the Respondent Assessee and against the Appellant Revenue. This in view of the decision of this Court passed today on an identical question in Income Tax Appeal [2018 (1) TMI 900 - BOMBAY HIGH COURT] in respect of the same Respondent Assessee relating to assessment year 2002-03.
Head Office expenses allocation to deduction claimed un/S 80IA and 80IB when these units are managed/controlled by the Head Office - HELD THAT:- Tribunal has allowed the Appeal of the Respondent – Assessee by following the order of its coordinate bench in respect for assessment year 2002-03 by applying its rationale to disallow the allocation of head office expenses to profits derived from 100 percent export oriented units falling under Section 10B of the Act. The same reasoning was extended to hold that the head office expenses cannot be allocated out of profits derived from units claiming deduction under Section 80IA and 80IB of the Act.
Revenue is unable to show why the adoption of the reasoning to disallow allocation of profits of Section 10 B units to head office expenses cannot be extended to profits of Section 80 IA and 80 IB units.
Appeal of the Revenue from the order of the Tribunal for assessment year 2002-03 to this Court [2018 (1) TMI 900 - BOMBAY HIGH COURT] against the same Respondent Assessee on the issue of allowing head office expenses to profits derived under Section 10B of the Act was disallowed today by a separate order in Income Tax Appeal No.311 of 2005. In the absence of the Revenue's not being allowed to show why the same logic would not extend to units claiming deduction under Section 80IA and 80IB of the Act, we are following the same.
Claim of depreciation on 'goodwill', when the assessee had not claimed it in the return of income - HELD THAT:- Issue herein was also raised by the Revenue in [2018 (1) TMI 900 - BOMBAY HIGH COURT] in respect of the same RespondentAssessee relating assessment year 2002-03. We have by an order passed today not entertained the Income Tax Appeal on this issue / question. Accordingly, for the reasons mentioned in our order passed today this question does not give rise to any substantial question of law. Thus, not entertained.
Appeal admitted on question 1 - Whether on the facts and circumstances of the case and in law, the Tribunal was right in allowing the provision for leave salary when the Hon'ble Supreme Court decisions relied on by Tribunal were delivered before the introduction of Section 43B(f) and the judgment of the Calcutta High Court has been stayed by the Apex Court?
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2018 (1) TMI 1555
TPA - Loss on cancellation/roll over of Forward Foreign Exchange Contract (FFEC) - HELD THAT:- We find that the FAA had rejected the additional evidences produced by the assessee before him, that the assessee had submitted the Bloomberg data for five years, that the TPO in the AY.2009-10 accepted the five years data of Bloomberg and made no adjustment. In these circumstances, we are of the opinion that matter should be restored back to the file of TPO/AO for fresh adjudication to consider additional evidences filed by assessee before the FAA. He is directed to afford a reasonable opportunity to the assessee. Effective Ground of the appeal raised by the assessee is allowed in part.
Income arising from forward exchange contract is assessable as capital gain - See CITIBANK OVERSEAS INVESTMENT CORPN., MUMBAI [2013 (1) TMI 997 - ITAT MUMBAI]
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2018 (1) TMI 1554
TCS @ 1% on sale of alleged scrap - assessee in default within the meaning of Section 206C - A.O. found that the assessee has not submitted proof of filing of Form 27C nor it has obtained the same from the buyers of scrap - HELD THAT:- There is no dispute that the assessee is engaged in the business of trading of scraps obtained from Ship Breaking Yard. In our considered opinion, provisions of Section 206C do not apply in case of scrap generated in the course of ship breaking activity. Items generated out of ship breaking activity might be commercially known as “scrap” since such items are not waste and scrap. Since such items are re-useable. Once such items sold cannot be termed as “scrap” would make the provisions of Section 206C of the Act in applicable.
The items sold by the assessee do not fit into the category of scrap as explained in the case of Priya Blue Industries (P.) Ltd. [2015 (11) TMI 1216 - GUJARAT HIGH COURT]. Therefore, in our considered opinion, the assessee cannot be treated as an assessee in default and on the impugned sales cannot be treated as sale of scrap thereby making the assessee out of the purview of Section 206C of the Act.
Insofar as the submissions of Form 27C is concerned, the Hon’ble High Court of Gujarat in the case of Siyaram Metal Udyog (P.) Ltd. [2016 (7) TMI 68 - GUJARAT HIGH COURT] has held that “No time limit is provided in section 206C(1A) to make a declaration in Form 27C collected from buyers; mere minor delay in furnishing Form 27C would not make assessee liable for non-collection of TCS”.
We do not find any merit in the impugned demand raised by the A.O. - Decided in favour of assessee.
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2018 (1) TMI 1552
Revision u/s 263 - MAT Computation - higher depreciation on the Energy Saving Equipments as well as pollution control equipments - HELD THAT:- Addition on account of excess stock found during the course of survey proceedings in the normal computation of income. However, the tax was charged on the book profit u/s 115JB of the Act computed and therefore, even if the claim of higher/additional depreciation is disallowed there will be no effect on the tax liability as the AO has computed the total income as per the provisions of Section 115JB and charged MAT on the same.
Therefore, we find that the claim of higher depreciation on the Energy Saving Equipments as well as pollution control equipments is not going to effect the Revenue when the income of the assessee was assessed u/s 115JB and MAT was charged. Even if the claim was disallowed if the higher depreciation claim was disallowed the tax liability under MAT was still higher than the normal computation. It is settled proposition of law the Commissioner can invoked the provision of Section 263 only when the twin conditions being the order of the AO is erroneous as well as prejudicial to the interest of the Revenue are satisfied. In the case in hand for the sake of argument even if the order of the AO is considered as erroneous but the same is not prejudicial to the interest of the Revenue so far as the claim of higher depreciation is concerned as the income of the assessee would be computed u/s 115JB and the tax liability under MAT is still more than the normal computation of income.
DR has fairly admitted this fact that even after disallowance of the claim of higher depreciation the tax liability under MAT would be higher than the normal computation. Further, this issue of higher/additional depreciation is not recurring in nature and limited to the year under consideration. We set aside the impugned order passed u/s 263 - Decided in favour of assessee.
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2018 (1) TMI 1551
Validity of assessment order u/s 153C - fulfillment of requirement of Section 153C before issuance of notice - assessee contended that satisfaction note is not in accordance with the satisfaction as contemplate u/s 153C - Held that:- The A.O has not mentioned that the agreement reflects that there was any unaccounted transaction or unaccounted payments/receipts the business activities of the assessee in-fact was confirmed by the said agreement and all the documents were before the Assessing Officer during the regular assessment proceedings. Thus, there was no incriminating material or document found in respect of Section 153C proceedings.
The Ld. DR’s contentions that it is an established practice of the Income Tax Department that not everything found at the time of search and cease. Only such material is seized which is prima facie incriminating in nature. The Revenue cannot simply rely on their departmental Endeavour practice, they have to strictly follow the statute while conducting the search adhering to Section 153C. If the practice is supported by law/statute then it can be allowed but if the material which is relevant to the assessee’s escapement of income has not been seized then merely on the surmises or conjectures that cannot be called as incriminating material which was properly demonstrated by the assessee during his regular assessment.
Order of CIT(A) holding the order as void ab-initio is correct - Decided against the revenue.
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2018 (1) TMI 1550
TP Adjustment - non conformity with the provisions of section 144C - assessee pointed out that in the present case, the final order of assessment does not incorporate the directions of the DRP and was a verbatim repetition of the draft order of assessment - HELD THAT:- AO, as per law, was required to pass the final order of assessment dated 17/1/2014 for asst. year 2009-10 u/s 143(3) r.w.s 144C of the Act in conformity with the directions issued by the DRP u/s 144C(5) of the Act, which are binding on him as per section 144C(10) thereof and within the time prescribed u/s 144C(13) of the Act. We find that instead of passing the final order of assessment as required by law, the AO passed the impugned final order of assessment dated 17/1/2014 u/s 143(3) r.w.s 92CA of the Act; which, as contended by the id AR, is identical to the draft order of assessment passed on 14/3/2013 by only incorporating this TPO's proposals and , thereby evidently giving the DRP's mandatory directions issued u/s 144C(5) of the Act a complete go-by.
It is factually established that the AO in the final order of assessment dated 17/1/2014 has not given effect to or carried out the binding directions of the DRP as required u/s 144C(10) within the time specified u/s 144C(13) of the Act; which is a clear violation of the binding provisions of sec. 144C(10) and (13) of the Act. Therefore, in our considered opinion, the conduct of the AO/TPO in passing the impugned final order of assessment dated 17/1/2014 is a clear case of defiance and disregard to the binding directions of the higher authorities, i.e, the DRP in the case on hand. In fact, in the impugned order dated 17/1/2014 there is not even a single reference to the DRP's directions issued us/ 144C(5) of the Act vide order dated 30/12/2013.
Impugned final order of assessment for asst. year 2008-09 passed u/s 143(3) r.w.s 92CA of the Act by the AO, in violation of the express mandatory provisions of sec. 144C(10) and (13) of the Act by not passing the impugned order in pursuance of and in conformity with the binding directions of the DRP issued u/s 144C(5) of the Act, within the time specified for this purpose, has rendered the said impugned final order of assessment unsustainable in law - Decided in favour of assessee
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