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2015 (4) TMI 665 - ITAT PUNE

2015 (4) TMI 665 - ITAT PUNE - TMI - Applicability of Section 50C of the Income Tax Act, 1961 on depreciable assets - Dis-allowance under section 14A - Adhoc disallowance of vehicle expenses & miscellaneous expenses - Adhoc disallowance to cover the leakage of revenue - Held that:- We have carefully considered the rival submissions. On this aspect, we find that the said plea has been raised by the assessee before us, and it was not raised before the lower authorities. We deem it fit and proper t .....

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ct.On this aspect, it was a common ground between the parties that the similar disallowance retained by the CIT(A) in assessment year 2004-05 was not challenged by the Department before the Tribunal and therefore the said decision had become final. The Ld. Representative also pointed out that even assessee had not challenged the decision of the CIT(A) before the Tribunal for assessment year 2004-05 in sustaining the disallowance of ₹ 75,000/-.In view of the aforesaid factual matrix, we dee .....

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ng before us, it was submitted by the Ld. Representative that in assessment years 2003-04 and 2004-05, the Tribunal in assessee’s own case vide ITA Nos.1005/PN/2007 and 88/PN/2008 respectively dated 30.06.2011 has setaside the issue back to the file of the Assessing Officer for fresh verification. Following the aforesaid precedent, which is not disputed by the Ld. Departmental Representative, on this aspect we restore the matter back to the file of the Assessing Officer to decide it afresh.

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fresh verification. Following the aforesaid precedent, which continues to hold the field and has not been disputed by the Ld. Departmental Representative, we set-aside the impugned order of the CIT(A) and restore the matter back to the file of the Assessing Officer who shall decide the issue afresh.

In Ground of Appeal No.5, issue raised by the assessee is with regard to a sum of ₹ 98,816/- which represented cost of club services disallowed by the lower authorities. On this aspe .....

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this aspect assessee succeeds.

In the last Ground of Appeal, assessee has challenged the action of the CIT(A) in confirming an ad-hoc disallowance of ₹ 3,17,240/- being 0.2% of staff welfare expenses, sales promotion, advertisement expenses and traveling expenses to cover the leakage of revenue.It is quite evident that the disallowance in question is made in an ad-hoc manner and is based on mere surmises and conjectures. We therefore setaside the order of the CIT(A) and direct .....

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nsolidated order for the sake of convenience and brevity. 2. The captioned cross-appeals are directed against the order of the Commissioner of Income Tax (Appeals)-V, Pune dated 17.09.2012 which, in turn, has arisen from an order dated 30.12.2008 passed by the Assessing Officer u/s 143(3) of the Income Tax Act, 1961 (in short the Act ). 3. In the appeal of the assessee, Grounds of Appeal raised read as under :- 1.1 The learned CIT(A) erred in confirming an addition of ₹ 1,56,03,500/- by ap .....

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of ₹ 1,56,03,500/- without appreciating that the fair market value of the asset sold was less than the stamp duty valuation and hence, there was no reason to make any addition u/s. 50C. 1.3 The learned CIT(A) failed to appreciate that - • The sale consideration received by the Appellant Company was the fair market value of the property as on the date of transfer and that no cash transaction was involved and the fair market value determined by the DVO was not correct. • The build .....

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wance to the extent of ₹ 75,000/- u/s. 14A of the Income Tax Act, 1961. 2.2 He erred in not appreciating that the investments (on which the dividend was received) were made out of owned funds of the company and that no portion of salary paid to staff and other expenses were incurred in relation to exempt dividend. 2.3 He erred in not following the decision of Mumbai High Court in the case of CIT v General Insurance Corporation of India (No.1) (2002) 254 ITR 203 (Mum.). 3. The learned CIT(A .....

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e was incurred wholly and exclusively for the purpose of the business of the assessee company. 5. The learned CIT(A) erred in confirming disallowance of cost of club services of ₹ 98,816/- u/s. 37(1) of the Income Tax Act, 1961. 6. The learned CIT(A) erred in confirming an adhoc disallowance of ₹ 3,17,240/- (being 0.2% of Workman & Staff Welfare Expenses, Sales Promotion Expenses, Advertisement Expenses and Travelling Expenses in all aggregating to ₹ 15,86,19,829/-) to cove .....

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2004. The Assessing Officer noted that the value adopted by the Stamp Valuation Authority for the purposes of payment of stamp duty in respect of the deed executed on 23.12.2004 was ₹ 5,06,03,500/-, which was more than the actual consideration received by the assessee. Therefore, he show-caused the assessee as to why the value so considered by the Stamp Valuation Authority be not considered as full value of consideration for the purposes of computing capital gain on sale of the property on .....

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tion of the property to the Departmental Valuation Officer (DVO), who has determined the Fair Market Value of the property at ₹ 6,56,24,654/-. Ostensibly, the Fair Market Value determined by the DVO was higher than the value adopted by the Stamp Valuation Authority and therefore in terms of sub-section (3) of section 50C of the Act, the value adopted by the Stamp Valuation Authority for the purposes of payment of stamp duty is to be taken as the full value of the consideration received or .....

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l gains is computed in terms of section 50 of the Act and therefore, in such situations, the deeming provisions contained in section 50C of the Act were not applicable. Though the Ld. Representative has raised the aforesaid argument but he fairly conceded that this aspect of the matter has been adjudicated by the Special Bench of the Tribunal in the case of ITO vs. United Marine Academy (2011) 130 ITD 113 (Mum) (SB) against the stand of the assessee. Thus, following the decision of the Special B .....

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deration of ₹ 3,50,00,000/- was also finalized. In this context, reference has been made to the copy of the MOU dated 20.04.2004 filed in the Paper Book at pages 1 to 10. The Ld. Representative pointed out that at the time of entering of the MOU on 20.04.2004 not only the final consideration was agreed upon but advance was also received which has been duly noted in the final Deed of Apartment executed on 23.12.2004. He, therefore, submitted that if at all the provisions of section 50C are .....

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ch in the present case is 23.12.2004. 9. We have carefully considered the rival submissions. On this aspect, we find that the said plea has been raised by the assessee before us, and it was not raised before the lower authorities. We deem it fit and proper to remand this aspect back to the file of the Assessing Officer, who shall examine the same in accordance with law. Needless to say, the Assessing Officer shall allow the assessee an opportunity of being heard before passing an order afresh on .....

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of the Act and disallowed 10% of the total exempt income, i.e. ₹ 20,41,929/- as an estimated expenditure incurred for earning such exempt income. Accordingly, the Assessing Officer disallowed a sum of ₹ 20,41,929/- on this aspect. The CIT(A) noted that in the past year s, in assessee s own case only an ad-hoc disallowance of ₹ 75,000/- was retained on this count and following the precedent, the CIT(A) retained the disallowance u/s 14A of the Act to the extent of ₹ 75,000 .....

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re the Tribunal and therefore the said decision had become final. The Ld. Representative also pointed out that even assessee had not challenged the decision of the CIT(A) before the Tribunal for assessment year 2004-05 in sustaining the disallowance of ₹ 75,000/-. It was therefore submitted by the rival parties that the matter be decided in the light of the aforesaid precedent. 12. In view of the aforesaid factual matrix, we deem it fit and proper to affirm the order of the CIT(A) on this .....

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an ad-hoc disallowance of ₹ 5,96,000/- on the ground that the expenses were not incurred wholly or exclusively for the purposes of business. The CIT(A) has deleted a sum of ₹ 2,96,000/- and retained a disallowance of ₹ 3,00,000/- on an ad-hoc basis. In coming to such conclusion, the CIT(A) followed the order of his predecessor in the assessee s own case for the assessment year 2004-05. At the time of hearing before us, it was submitted by the Ld. Representative that in assessme .....

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011 (supra). Thus, on this aspect, assessee succeeds for statistical purposes. 14. By way of Ground of Appeal No.4, assessee has challenged the order of the CIT(A) in confirming an ad-hoc disallowance of ₹ 10,57,860/- made out of miscellaneous expenses. In this context, relevant facts are that during the assessment proceedings, assessee was found to have incurred various expenses like sales promotion expenses, conference expenses, advertisement expenses, etc. which was grouped under the he .....

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ssue came before the Tribunal in assessee s own case for assessment years 2003-04 and 2004-05 wherein the Tribunal vide its order dated 30.06.2011 (supra) has set-aside the matter back to the file of the Assessing Officer for fresh verification. Following the aforesaid precedent, which continues to hold the field and has not been disputed by the Ld. Departmental Representative, we set-aside the impugned order of the CIT(A) and restore the matter back to the file of the Assessing Officer who shal .....

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