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Showing 41 to 60 of 2028 Records
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2018 (10) TMI 1992 - ITAT INDORE
Addition of Long term capital gain - Transfer of capital asset u/s 2(47) - relevant date of transfer - addition invoking the provisions of section 50C - valuation of the impugned property as per the stamp duty guideline for A.Y. 2007-08 - HELD THAT:- As joint property was owned by both the assessees who are husband and wife - we find that the assessee has been successful to demonstrate that there was a valid transfer of the impugned capital asset as per the provision of section 2(47) of the Act on 24.03.2007 as the assessee received total sale consideration through account payee cheque and possession was also given to the buyer and the assessee offered the capital gain from the impugned transfer in its income tax return for F.Y. 2007-08.
We, therefore, are of the considered view that both the lower authorities erred in applying the valuation of the impugned property as per the stamp duty guideline for A.Y. 2007-08, merely for the reason that sale deed was registered on 04.08.2007. No addition was therefore, called for by applying the value of property at Rs.1,23,00,000/-. We accordingly delete the addition each made in the hands of both the assessees and allow the ground raised in both the appeals.
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2018 (10) TMI 1991 - ITAT KOLKATA
TP Adjustment - transaction of payment of management services fees - HELD THAT:- As decided in own case [2016 (8) TMI 1433 - ITAT KOLKATA] study made by the assessee with regard to payment of management service fees which has been accepted by the revenue in the subsequent years, should be applied for the Asst Year 2008-09 also to put an end to this controversy. Hence in order to meet the ends of justice, we direct the ld TPO/ ld AO accordingly - Decided in favour of assessee.
Depreciation on intellectual property assets - HELD THAT:- As decided in own case [2016 (8) TMI 1433 - ITAT KOLKATA] main emphasis for disallowance is only on the point that the intellectual properties is not approved by any government or any competent authority. Nowhere the income tax act mandates the registration of the intellectual properties for the purpose of granting depreciation u/s 32 of the Act. Getting the intellectual properties registered is within the domain of the assessee and it only offers protection to the assessee from preventing other parties to use the same. The revenue cannot thrust the mandate of registration of the same and mere non-registration of the same does not make the transaction ingenuine or sham. Hence the version of the revenue that IP should be certified by the government authority and it does not fall within the assets specified in IT Rules is without any basis and not tenable. Decided in favour of assessee.
Disallowance of provision for stock obsolescence under normal provisions - HELD THAT:- As in assessee’s own case by its consolidated order [2017 (9) TMI 1648 - ITAT KOLKATA] as held that provision made for obsolete stocks in the sum of Rs 10,00,472/- is squarely allowable as deduction as a business loss under normal provisions of the Act.Decided in favour of assessee.
Disallowance of provision for warranty and allowability of actual warranty expenditure under normal provisions - HELD THAT:- As in assessee’s own case by its consolidated order [2017 (9) TMI 1648 - ITAT KOLKATA] held that entire provision for warranty would be squarely allowed as deduction in the year under appeal under the normal provisions of the Act.
Disallowance of provision for leave encashment - HELD THAT:- It is noted that the issue raised was decided by this Tribunal in assessee’s own case by its consolidated order [2016 (8) TMI 1433 - ITAT KOLKATA] as held that as assessee stated that the deduction on account of provision for leave encashment was made on the basis of the judgment of Hon'ble jurisdictional High Court in the case of Exide Industries Ltd [2007 (6) TMI 175 - CALCUTTA HIGH COURT] but he fairly conceded that subsequently Hon'ble Supreme Court has stayed this judgment of Hon'ble jurisdictional High Court [2009 (5) TMI 894 - SC ORDER] assessee fairly stated that let Hon'ble Supreme Court decide the issue and by that time the matter can be remitted back to the file of ld AO for fresh adjudication in terms of the decision of Hon'ble Supreme Court - Ground raised by the assessee is allowed for statistical purposes.
Addition made on account of interest on MSMED under book profit - HELD THAT:- As decided by this Tribunal in assessee’s own case by its consolidated order [2017 (9) TMI 1648 - ITAT KOLKATA] as held that provision for interest payable to suppliers registered under MSMED Act, 2006 is only an ascertained liability and need not be added back to the book profits computed u/s 115JB.Ground raised by the assessee is allowed.
Addition made on account of provision for warranty and deduction of actual warranty expenditure under book profit - HELD THAT:- As decided by this Tribunal in assessee’s own case by its consolidated order [2017 (9) TMI 1648 - ITAT KOLKATA] held that provision for warranty would be allowed as deduction under normal provisions of the Act as well as while computing book profits u/s 115JB of the Act. Accordingly, the Grounds raised by the assessee allowed.
Provision for stock obsolescence under book profit - AO had disallowed the same on the ground that it is an unascertained liability and accordingly to be added back while computing book profits u/s 115JB - HELD THAT:- As in assessee’s own case by its consolidated order [2017 (9) TMI 1648 - ITAT KOLKATA] wherein AR fairly conceded for the addition u/s 115JB of the Act.Ground raised by the assessee is dismissed.
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2018 (10) TMI 1990 - SUPREME COURT
Seeking grant of bail - contravention to the first principles of criminal law jurisprudence - offences punishable under Sections 376(2)(f) and 376(2)(i) of the Indian Penal Code, 1860 and also offences under Sections 4, 5(c)(f)(m), 6, 8, 9(c)(f)(m) and 10 of the Protection of Children from Sexual Offences Act, 2012 - HELD THAT:- The High Court ordering the tests is not only in contravention to the first principles of criminal law jurisprudence but also violates statutory requirements. While adjudicating a bail application, Section 439 of the Code of Criminal Procedure, 1973 is the guiding principle wherein Court takes into consideration, inter alia, the gravity of the crime, the character of the evidence, position and status of the accused with reference to the victim and witnesses, the likelihood of the accused fleeing from justice and repeating the offence, the possibility of his tampering with the witnesses and obstructing the course of justice and such other grounds.
In the instant case, by ordering the abovementioned tests and venturing into the reports of the same with meticulous details, the High Court has converted the adjudication of a bail matter to that of a minitrial indeed. This assumption of function of a trial court by the High Court is deprecated.
Taking note of the violation of settled principles of criminal law jurisprudence and statutory prescriptions vis-à-vis conversion of adjudication of bail application to a minitrial and disclosure of identity of the “victim” by the High Court, we disapprove the manner in which the High Court has adjudicated the bail application and accordingly, quash the order passed by the High Court - the impugned order passed by the High Court is set aside - appeal allowed.
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2018 (10) TMI 1989 - ITAT MUMBAI
Levy of penalty u/s. 272A(1)(c) - no compliance by the assessee to file details in response to summons u/s 131 issued by the AO - assessee failed to file the specific details like ‘Consent Waiver Form’ - whether non-signing of said Consent Waiver Form constitutes a default so as to attract penalty u/s 272A(1)(c)? - whether there was any default on the part of the assessee to comply with the requirements of summons u/s 131 of the Act so as to justify imposition of penalty in terms of Sec. 272A(1)(c)? - HELD THAT:- As in the instant case, it is not the case of the Assessing Officer that the said Consent Waiver Form was in possession of the assessee. A bare reading of the summons show that a proforma of Consent Waiver Form was enclosed requiring the assessee to sign it, notarise it and thereafter submit it back. Therefore, it cannot be said that there was any default on the part of the assessee to submit a document which was already in his possession, as is the wont of the provision contained in clause (c) of Sec. 131(1) of the Act.
What AO seeks to do in the present case is to compel the assessee to execute a document, as rightly put by the learned representative for the assessee before us, and not a case where a document already in possession of the assessee is being asked to be produced - We find that the instant default is not of the type understood by a conjoint reading of clause (c) of Sec. 131(1) of the Act with clause (c) of Sec. 272A(1) of the Act. No merit in the levy of penalty u/s 272A(1)(c) of the Act, which is hereby ordered to be deleted. Decided in favour of assessee.
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2018 (10) TMI 1988 - ITAT DELHI
Assessment of appellant on a protective basis - AOP - Assessee had filed its income tax return offering the revenue received by it from this contract under section 44BB - HELD THAT:- There is no dispute on facts that there is no order against the assessee to challenge in the appeal. However, it is brought to our notice by the Ld. AR that the issue is no longer res integra, and the question whether or not the consortium Agreement dated 04/05/03 between Slumberger Asia Services Ltd and Transocean Offshore Deep water Drilling Pvt. Ltd., constitutes an AOP has been considered by the coordinate Bench of this Tribunal[2018 (3) TMI 1599 - ITAT NEW DELHI] for A. Y. 2008-09 and was answered in the negative ie., in favour of the assessee. Further it is submitted that following the same, in assessee’s own case [2018 (5) TMI 2139 - ITAT DELHI] a coordinate Bench of this Tribunal on identical grounds as are raised in these appeals, accepted the contentions of the assessee and allowed the appeals of the assessee.
Tribunal has been taking a consistent review that the Consortium agreement between the assessee and Transocean Offshore Deepwater Drilling Private Limited do not constitute an AOP and the Transocean Offshore Deepwater Drilling Inc being consortium member has rightly offered to tax the receipts under section 44BB in the return of income.
On the face of this consistent view taken by the Tribunal over a period of time, there’s no reason for us now to take a different view since no change of circumstances to affect the applicability of this consistent view for the years under consideration in these two appeals. No material is produced before us by revenue to take a different view and the one that was taken in the earlier years. In the circumstances where of the considered opinion that a view that was taken consistently in assessee’s own case file their earlier years shall not slightly be disturbed. We therefore while respectfully following the decisions of the coordinate bench is of this tribunal in assessee’s own case, allow the grounds of appeal in these two appeals also.
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2018 (10) TMI 1987 - ITAT MUMBAI
Assessment u/s 153C - addition of unexplained cash expenditure made on account of the assessee's land purchases - impugned documents found from the possession of third person - Whether no assessment or re-assessment proceedings in relation to this year were pending as on the date of the search u/s.132? - HELD THAT:- As decided by HC in the group concerns [2017 (7) TMI 141 - BOMBAY HIGH COURT] jurisdiction and vesting in the Assessing Officer could have been exercised and the satisfaction in that regard was enough, are not matters which can be decided in the further appellate jurisdiction of this Court. It is not possible for us to reappraise and reappreciate the factual findings. The finding that Section 153C was not attracted and its invocation was bad in law is not based just on an interpretation of Section 153C but after holding that the ingredients of the same were not satisfied in the present case. That is an exercise carried out by the Tribunal as a last fact finding authority. Therefore, the finding is a mixed one. There is no substantial question of law arising from such an order and which alternatively considers the merits of the case as well.
As a result of the above conclusion, we cannot agree with the learned Additional Solicitor General that we can pass a different order and entertain these Appeals for the current year of the search, namely, the Assessment Year 2009-10.
That was based on the argument that the action under Section 153C for this year is an incorrect conclusion. All the earlier orders in these Appeals having being noted by us, we have no hesitation in concluding that despite sufficient opportunity being given to the Revenue, it has not been able to satisfy this Court that a different view can be taken.
There is also a distinction between loose papers found from the possession of assessee and similar documents found from a third person. In the present case, impugned documents were not found from the possession of the assessee but was found from the possession of a third person - Mere mention of the names of the villages where the companies may have purchased lands would not give any basis to assume/presume/surmise that the name of the companies are mentioned in the impugned documents. The very foundation of Sec. 153C has been shaken by not fulfilling the condition precedent/or the issue of notice. It is the say of the Ld PR that in the present case there is no need for recording of the satisfaction. If this plea of the DR is accepted then the legislative intent of inserting sec. 153C in the Act would get defeated because the AO will get unstoppable powers to reopen assessments for 6 year in the case of the ' Other Person ' without recording any basis satisfaction for his action. Therefore this plea of the Id DR cannot be accepted. - Decided in favour of assessee.
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2018 (10) TMI 1986 - DELHI HIGH COURT
Constitutional Validity of notification of 15.06.2018 issued by the Government of NCT of Delhi through its Department of Trade and Taxes - alleged cancellation of registration certification of selling dealer - “C‟ Form issued is not denied - HELD THAT:- The petitioner’s grievance is covered by the decision of this Court in M/S. M.K. WOOD INDIA PVT. LTD., M/S. MAHABIR PRASAD AND SONS, M/S. SHARDA TIMBERS VERSUS COMMISSIONER OF DELHI VALUE ADDED TAX, & ORS. [2018 (7) TMI 2299 - DELHI HIGH COURT] where the cancellation of registration was restored.
The Revenue does not dispute the above position as well as the fact that the petitioner is entitled to relief in terms of M/s. M.K. Wood India - the impugned notification is hereby quashed.
Petition allowed.
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2018 (10) TMI 1985 - CESTAT MUMBAI
Invocation of extended period of limitation - whether furniture cannot be considered as handicraft so as to avail exemption Notification 76/06? - HELD THAT:- The issue on limitation was considered by the Tribunal in the assessee’s own case for different period in the case of [2019 (4) TMI 1460 - CESTAT KOLKATA]. By taking note of the fact that the Commissioner of Central excise Kolkata vide his different order for different period has dropped the demand falling outside the normal period of limitation and such order of the Commissioner stands accepted by the Revenue, the Tribunal also granted relief on the limitation aspect in their case reported as Interscape.
Inasmuch as the appellants have already been held to be entertaining a bonafide belief in their other matters involving different period, we are not inclined to take a different view in the present case Accordingly, by holding the demand as barred by limitation - appeal allowed.
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2018 (10) TMI 1984 - ITAT CHANDIGARH
Revision u/s 263 - interest income representing 50% of the enhanced compensation - whether interest received on enhanced compensation was held to be in the nature of compensation and not interest which is taxable under the head income from other sources under section 56? - HELD THAT:- As decided in Satbir & Others Vs. ITO [2018 (7) TMI 1163 - ITAT CHANDIGARH] core issue of taxing of interest received on enhanced compensation stands adjudicatedin accordance with the decisions of case of Ghanshyam HUF [2009 (7) TMI 12 - SUPREME COURT] and treated as part of compensation exempt from tax, we hereby hold that the order passed by the Assessing Officer cannot be held to be erroneous so far as it is prejudicial to the interests of revenue. The order passed by the Ld. PCIT under section 263 is therefore quashed. Appeal of assessee allowed.
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2018 (10) TMI 1983 - ITAT MUMBAI
Levy of addition fee under section 234E - delay in filing TDS returns - intimation u/s 200A of the Act was made to the assessees on processing TDS returns filed by them - conflicting decisions on the issue in hand - HELD THAT:- Chandigarh Bench of the Tribunal in the case of Sonalac Paints & Coating Ltd. [2018 (6) TMI 303 - ITAT CHANDIGARH] held that the fees levied in all the present cases u/s 234E prior to 01.06.2015 in the intimations made u/s 200A was without authority of law and the same is, therefore, directed to be deleted - it also considered the decisions of M/s Khanna Watches Ltd. [2015 (10) TMI 2541 - ITAT CHANDIGARH], Sibia Healthcare Pvt. Ltd. [2015 (6) TMI 437 - ITAT AMRITSAR], Fatheraj Singhvi & ors. Vs Union of India & Ors. [2016 (9) TMI 964 - KARNATAKA HIGH COURT],CIT Vs Poddar Cement Pvt. Ltd. [1997 (5) TMI 2 - SUPREME COURT] and CIT Vs Vegetable Products Ltd. [1973 (1) TMI 1 - SUPREME COURT] - The Hon'ble Apex Court in Vegetable Products held that when two views are possible, the view which favours the assessee may be adopted.
In the aforesaid case, the Bench concluded that the fees levied under section 234E, prior to 01st June 2015, in the intimations made under section 200A of the Act was without authority of law and therefore, deserves to be deleted. Following the aforesaid cases, the appeals of the assessee are allowed.
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2018 (10) TMI 1982 - ITAT DELHI
TP Adjustment - determining the arm's length adjustment to the Assessee's international transactions from Associated Enterprises ("AEs") - payment of intra group services/management fee - HELD THAT:- When we examine the reasons given by ld. TPO for declining the contentions of the taxpayer for rendering such services by the AE and taking benefit therefrom by the taxpayer in the light of the fact that its intra-group charges are merely 1.39% of the total turnover which has been increased five times within last five years and the taxpayer is a subsidiary of Donaldson Company Inc., USA, its AE, and is into manufacturing and marketing of air filtration systems, etc., without these services 5 times increase is not possible. Moreover, all the services are being rendered as per agreement of 2004 and since then facts have not been changed. Merely because of the fact that the payment on account of management fee / intra-group services is increasing every year, the case of the taxpayer cannot be falsified as it is to be seen in the light of the fact that if payment of services has been increasing the turnover has also been increasing.
It is the case of the taxpayer that payment has been made for beneficial services as per OECD Guidelines of 2010 to cater the specific needs of the taxpayer necessary for business of the taxpayer in India. Moreover, had these services been availed of by the taxpayer from a third party, it would have entailed more cost.
Revenue Officer cannot decide while sitting on the armchair of a businessman to decide as to what services are required. So far as question of deriving the benefit of such services is concerned, benefit may always not be the result of any business decision. But, in the instant case, the taxpayer has explained the benefits derived from rendering of services by the AE.
When it is not in dispute that the business model of the taxpayer has not undergone any change since 2004 and payment of intra-group services have been formed to be at arm’s length by the Revenue by passing detailed order by the TPO for AYs 2008-009, 2009-10, 2011-12 and 2012-13, available at pages 129 to 136 of Case Law Paper book, no reason whatsoever has been given by the ld. TPO to depart from the rule of consistency. No doubt, principle of res judicata is not attracted to the income-tax matter but when the business model has not undergone any change and facts and circumstances are identical “rule of consistency” is required to be maintained as has been held by Hon’ble Apex Court in Radhasoami Satsang payment of intra group services/management fee
When we examined TP order payment of intra-group charges respectively have been held to be arm’s length as per TP analysis conducted by the taxpayer. So, it cannot be held that since payment of intra-group services is increasing day by day, it leads to profit shifting.
We are of the considered view that issue at hand is required to be remitted back to the TPO/AO to decide afresh in the light of the observation made herein before and in view of the order passed by ld. TPO in preceding and succeeding years. Appeal filed by the taxpayer is allowed for statistical purposes.
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2018 (10) TMI 1981 - ITAT DELHI
TP Adjustment - adoption of appropriate method for determining the ALP of international transactions - assessee had adopted CPM method as the most appropriate method for determination of PLI by GP/OC - HELD THAT:- We observe that the business model of the assessee is same as in the preceding and succeeding years. The facts are unchanged. It is clear from the Paper book submitted by the assessee that for the assessment year 2010- 11 and 2013-14, the cost plus method has been accepted by the Revenue in the same facts of the case of the assessee. This has not been controverted by the ld. DR. We, therefore, find that rule of consistency should have been adopted by the authorities below as held in the case of Racold Thermo Ltd. [2015 (10) TMI 1747 - ITAT PUNE]
The decision rendered in Fritidsresor Tours and Travels India P. Ltd [2015 (11) TMI 1884 - ITAT DELHI] is also applicable to the present case, as in that case, the assessee was engaged in the same line of business and CPM has been accepted by the Co-ordinate Bench of Tribunal, as most appropriate method, as reproduced above. Respectfully following the above decisions, we allow the appeal of the assessee.
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2018 (10) TMI 1980 - ITAT CHENNAI
Computation of LTCG - invoking the provisions of the section 50C - DVO had made an addition on account of time gap, between 01.08.2007 to 31.05.2008, a increase in land rate on Rs. 5601/- Sq.ft. @ 11% per annum and consequently for 10 months increased the value by Rs. 514/- per Sq.ft. - HELD THAT:- A perusal of provisions of the section 55A(b)(i) of the Act clearly shows that variation of 15% is permitted in respect of valuation as disclosed by the assessee and as valued by the DVO. Here, the difference between the sale consideration as disclosed by the assessee and as arrived at by the DVO is only Rs. 7,14,110/-, which is less than 10%, clearly no addition is liable to be made and the long term capital gains is to be computed by applying the value as disclosed by the assessee. Consequently, the addition as made by the ld. AO and confirmed by the Ld.CIT(A), stands deleted.
We are not going into estimating the net value of land under the pretext of probable increase in land value on account of time gap between guideline value date and the transaction date as the addition made by the ld. Assessing Officer and sustained by the Ld.CIT(A), is being deleted on account of variation which is less than 10% in view of the provisions of the section 55A(b)(i) of the Act. Appeal of assessee allowed.
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2018 (10) TMI 1979 - ITAT KOLKATA
Bogus LTCG - purchase and sale of the shares - AO based on a general report and modus operandi adopted and concluded that the assessee has claimed bogus long term capital gain - HELD THAT:- As in a number of cases this bench of the Tribunal has consistently held that decision in all such cases should be based on evidence and not on generalisation, human probabilities, suspicion, conjectures and surmises. We have in all cases deleted such additions.
As there is no surviving order of SEBI against the assessee or the company, the script of which was purchased and sold by the assessee. When there is no surviving adverse order of SEBI, disputing the claim of the assessee, the judgment in RAKHI TRADING PRIVATE LTD. [2018 (2) TMI 580 - SUPREME COURT] cannot be applied to the facts of this case.
In view of the above discussion the addition in question is deleted and the appeal of the assessee is allowed.
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2018 (10) TMI 1978 - DELHI HIGH COURT
Seeking stay of the order dated 5th September, 2018 passed by the National Company Law Tribunal, Principal Bench, New Delhi - Constitutional Validity of Regulation 36A of the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016 - HELD THAT:- There shall be stay of the order dated 5th September, 2018 passed by the National Company Law Tribunal, Principal Bench, New Delhi to the extent it declares Regulation 36A of the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016 as ultra vires, shall remain stayed.
Issue notice to the respondents returnable on 16th January, 2019.
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2018 (10) TMI 1977 - SC ORDER
Maintainability of appeal before Supreme court - Low tax effect - HELD THAT:- In these appeals, the tax effect is less than Rs. 1 Crore and are covered by Circular No. 3/2018 dated 11.07.2018 of the Central Board of Direct Taxes.
These appeals are, accordingly, dismissed. However, it shall be open to the Income-Tax Department to seek review in any of these matters, if it is pointed out that the tax effect is more than Rs. 1 Crore.
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2018 (10) TMI 1976 - CESTAT AHMEDABAD
Seeking permission to withdraw the appeal - threshold monetary limit as involved in Government’s litigation policy under instruction F. No. 390/Misc/116/2017-JC dated 11.07.2018 - HELD THAT:- All the appeals are dismissed as withdrawn.
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2018 (10) TMI 1975 - MADRAS HIGH COURT
Dishonor of Cheque - insufficiency of funds - cheque was issued as a security or not - rebuttal of presumption - Section 138 and 139 of the Negotiable Instruments Act - HELD THAT:- This Court is of the view that the same is a disputed question of fact and cannot be decided in a quash application. Similarly, whether the cheque amount exceeds the debt amount is also a disputed question of fact and can be decided only during trial.
It is for the complainant-bank to establish the ingredients of the offences under Section 138 of the Negotiable Instruments Act and only thereafter the burden under Section 139 of the Negotiable Instruments Act will fall upon the accused. In this case, there is no admission by the complainant-bank that the cheque amount exceeds the debt amount - In S. Krishnamurthy Vs Chellammal [2015 (3) TMI 1386 - SUPREME COURT], the Hon'ble Supreme Court has very clearly held that while dealing with an application in Criminal Procedure Code, disputed questions of fact cannot be gone into. Hence, this petition is closed with liberty to the petitioner to raise all the points before the Trial Court.
G.R.Surana/3 rd petitioner is directed to appear before the Trial Court within a period of two weeks from the date of receipt of a copy of this order and file an application under Section 436 Cr.P.C for bail - petition closed.
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2018 (10) TMI 1974 - ITAT MUMBAI
Validity of issuance of notice u/s 148 - basic conditions enshrined in section 147 are not complied with - HELD THAT:- Even in the reasons recorded by the Ld. Assessing Officer, neither he recorded any satisfaction nor made any allegations to the effect that there was a failure on the part of the assessee to disclose the material facts fully and truly. Thus, it can be concluded that so far as Assessment Year 2007-08 and 2008-09 are concerned, the reassessment proceedings are beyond four years (as admitted by Ld. Sr. Standing Counsel also), therefore, merely on the basis of change of opinion, reassessment is not permissible.
Since, we have held the reassessment proceeding under section 148 to be invalid, there is no need to go into the merits, still and we deem it appropriate to examine the issues in hand on merits also.
Penalty u/s 271(1)(c) - Defective notice u/s 274 - Whether the proceedings are initiated on the ground of concealment of income or on account of furnishing of inaccurate particulars is valid and legal? - HELD THAT:- Satisfaction need not be recorded in a particular manner but from a reading of the assessment order as a whole such satisfaction should be clearly discernible. Therefore, the reliance by the Ld. Departmental Representative on the decision of Mak Data Pvt. Ltd. [2013 (11) TMI 14 - SUPREME COURT] in our opinion is misplaced and not applicable to the facts of the present case. This view of ours finds support from the decision of Kolkata Bench of the Tribunal in the case of Suvaprasanna Bhataacharya [2015 (12) TMI 43 - ITAT KOLKATA] for A.Y. 2006-07. In this view of the matter, we are of the considered opinion that since it is not clear from the notice u/s. 274 the reasons for levying of penalty as to whether it is for concealment of income or for furnishing of inaccurate particulars of income, therefore, the notice itself is bad in law and invalid. Therefore, the penalty order passed subsequently on the basis of such invalid notice also has to be held as bad in law. We accordingly cancel the penalty levied by the AO .
In the instant cases before us the Assessing Officer had not made up his mind as to the specific charge to which the assessee was to be penalized. In the premises, as has been held in the rulings discussed hereinabove, the levy of penalty u/s. 271(1)(c) of the Act was not justified. Accordingly on this legal ground we delete the penalty in all the years under consideration.
Addition u/s 68 - assessee has borrowed money by way of loan - case of the assessee was re-opened upon receiving the and other three appeals information from DGIT(Inv), Mumbai that the assessee was one of the beneficiary of the said accommodation entries provided by Mr. Bhanwarlal Jain and group - HELD THAT:- The assessee had established the identity of the creditors. The assessee had also shown, in accordance with the burden, which rested on him, under section 106 of the Evidence Act, that the said amounts had been received by him by way of cheques from the creditors which was not in dispute. Once the assessee had established these, the assessee must be taken to have proved that the creditor had the creditworthiness to advance the loans. Thereafter, the burden had shifted and other three appeals to the Assessing Office to prove the contrary. The failure on the part of the creditors to show that their Sub-creditors had creditworthiness to advance the said loan amounts to the assessee, could not, under the law be treated as the income by the appellant from undisclosed sources merely on the failure of the sub-creditors to prove their creditworthiness from undisclosed sources of the assessee himself, when there was neither direct nor circumstantial evidence on record that the said loan amounts actually belonged to, or where owned by, the assessee. The Assessing Officer failed to show that the amounts, which had come to the hands of the creditors from the hands of the sub-creditors, had actually been received by the sub-creditors from the assessee. Therefore, the Assessing Officer could not have treated the said amounts as income derived by the assessee from undisclosed sources - As in the case of Accommodation entry - without giving an opportunity of cross examination merely on the basis of oral statement additions cannot be made u/s. 68.
Estimation of income - Addition of bogus purchases - HELD THAT:- Assessing Officer as well as the Commissioner of Income-tax (Appeals) have disallowed the deduction of Rs. 1.33 crores on account of purchases merely on the basis of suspicion because the sellers and the canvassing agents have not been produced before them. We find that the order of the Tribunal is well a reasoned order taking into account all the facts before concluding that the purchases of Rs. 1.33 crores was not bogus. No fault can be found with the order dated April 30, 2010, of the Tribunal." Thus, considering the facts available on record, we find force in the argument of the Ld. counsel for the assessee. The crux of the arguments is that the profit margin earned by the assessee is somewhere between 0.26% to 0.30% as the purchases and sales are genuine, thus, the addition may be restricted to 0.30%. Though, we find force in the argument of the ld. counsel for the assessee as the same is based upon the facts, still to plug the leakage of Revenue and to safeguard the interest of the Revenue, we deem it appropriate to restrict the profit margin at the rate of 3% against 12.5% sustained by the Ld. Commissioner of Income Tax (Appeal), thus, the impugned ground is partly allowed.
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2018 (10) TMI 1973 - ITAT CHENNAI
Accrual of income - Recognition of income - Choice of assessment year - AO who had treated the subscription fees received in advance during the relevant assessment year as the income of the relevant assessment year - HELD THAT:- As per the provisions of the Act, there is no concept with respect to deferred expenditure. Therefore the entire expenditure incurred for earning revenue for the relevant assessment year and the revenue spilled over to the succeeding assessment year is allowable as deduction for the relevant assessment year when the expenditure incurred in the relevant assessment cannot be apportioned towards the income earned in the subsequent assessment year.
At this juncture we are reminded of the various decisions of the Higher Judiciary wherein it was held that expenditure incurred towards advertisement is allowable as deduction in the relevant assessment year though certain benefit arising out of the same can be attributable to subsequent years. As per Mercantile System of Accounting, only the accrued income for the relevant assessment year can be treated as the income for the relevant assessment year. In the case of the assessee, there is no dispute that the amount received by the assessee pertains to the services to be rendered in the immediate succeeding assessment year.
Hence the assessee has rightly recognized its revenue in the succeeding assessment year. Therefore the addition made by the Ld.AO which is further sustained by the Ld.CIT(A) by treating the fees received in advance for the succeeding assessment year as the income of the assessee for the relevant assessment year is erroneous. Hence we hereby set aside the order of the Ld.CIT(A) and direct the Ld.AO to delete the addition made by him
Further it is pertinent to mention that the facts in the case of the assessee are not identical to the facts of the cases relied by the Ld.Revenue Authorities. Appeal of the assessee is allowed.
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