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M/s Ganapathy & Co., Bangalore Versus The Commissioner, Income Tax Bangalore

2016 (1) TMI 675 - SUPREME COURT

Disallowance of service charges paid under Section 40A(2) - ITAT deleted the addition - HC confirmed disallowance [2007 (7) TMI 639 - KARNATAKA HIGH COURT] - Held that:- A reading of the order of the ITAT in favour of the assessee which has been reversed by the High Court would indicate that the learned ITAT did not address itself to a very fundamental issue that had arisen before it, namely, effect of the failure of the assessee to produce evidence in support of the services claimed to have bee .....

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see to adduce proof of such service having been rendered during the period under assessment. There is no dispute on the issue that the assessee did not, in fact, offer any proof of the service rendered during the Assessment Year in question. In such circumstances, the High Court was perfectly justified in reversing the eventual conclusion of the learned ITAT on the basis that the findings and conclusions recorded in the course of the assessment proceedings of the previous year cannot foreclose t .....

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ansaction and was a calculated device to avoid tax liability.- Decided against assessee

Disallowance of donation to Aparna Ashram - Held that:- Assessee had failed to furnish any proof of service rendered by UTC in the course of the relevant Assessment Year i.e. 1984-1985. Alternatively, the High Court construed certain facts as, for example, compliance of the conditions subject to which registration was granted to the Aparna Ashram under Section 35(2A) of the Act to be of significanc .....

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Appeal No.1964 OF 2008 - Dated:- 18-1-2016 - Ranjan Gogoi And RANJAN GOGOI, JJ ORDER RANJAN GOGOI, J. 1. The High Court of Karnataka by the impugned order dated 3rd July, 2007 had answered the questions referred to it for its opinion under Section 256(2) of the Income Tax Act, 1961 (as it then existed) against the assessee and in favour of the revenue. Aggrieved, the assessee has filed this appeal upon grant of leave under Article 136 of the Constitution of India. 2. At the outset, the questions .....

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as allowable? iii. Whether on the facts and in the circumstances of the case, the Tribunal was justified in allowing the assessee's claim for deduction under Section 35(2A) in respect of donation to Aparna Ashram? 3. The necessary discussions can best be unfolded by taking up each of the claims of deduction made by the assessee which were decided against the assessee by the High Court by the order under challenge. 4. Disallowance of Service charges For the Assessment Year in question i.e. 19 .....

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ri had a sizeable holding in each of the two firms. The Assessing Officer also had regard to the fact, while disallowing the said claim, that the assessee had failed to provide proof of service rendered by UTC in the period covered by the Assessment Year in question. He also took note of the advice of a Chartered Accountant contained in a Note which was found in the course of a search proceeding. The said Note contained an advise to the assessee to include service charges to UTC as one of the me .....

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t in the course of said earlier assessment proceeding the legal effect of the advice tendered by the Chartered Accountant to reduce the incidence of Income Tax was found to be permissible in law. The High Court reversed the said conclusion of the ITAT which has been challenged by the assessee in the present appeal. A reading of the order of the ITAT in favour of the assessee which has been reversed by the High Court would indicate that the learned ITAT did not address itself to a very fundamenta .....

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g the Assessment Year in question and service charges had been paid for such service rendered, naturally, it was incumbent on the part of the assessee to adduce proof of such service having been rendered during the period under assessment. There is no dispute on the issue that the assessee did not, in fact, offer any proof of the service rendered during the Assessment Year in question. In such circumstances, the High Court was perfectly justified in reversing the eventual conclusion of the learn .....

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but relief had been afforded by the learned ITAT. The learned ITAT while allowing the deduction appears to have taken into account the view recorded in another proceeding by the ITAT itself in the case of a sister concern [ITA No.3717/Mds/1987]. The relief granted in the case of the sister concern in ITA No.3717/Mds/1987 was on identical facts and, therefore, perhaps, ITAT did not think it proper to depart from the view already taken in the said case of the sister concern. However, the High Cour .....

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es in which the investment was made and loss claimed, we can find no fault in the view taken by the High Court that the entire transaction was a sham transaction and was a calculated device to avoid tax liability. 6. Disallowance of donation to Aparna Ashram: Disallowance of donation made to Aparna Ashram by the assessee was refused by the Primary and First Appellate Authority on the ground that the necessary certificate showing that the donee (Aparna Ashram) had complied with the conditions sub .....

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assessee and also that all Authorities have consistently held that if and when such certificate is produced the consequential benefit can be afforded to the assessee. In the aforesaid circumstances, we do not see how the view taken by the High Court that the assessee was not entitled to the benefit of donation made to Aparna Ashram can be faulted. 7. An issue on which there could be little dispute on law, nevertheless, needs to be dealt with in view of the elaborate arguments advanced on behalf .....

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reappreciation and reappraisal of the evidence on record. The aforesaid position in law has been consistently laid down by this Court in several of its pronouncements out of which, illustratively, reference may be made to Karnani Properties Ltd. Vs. Commissioner of Income-Tax, West Bengal [82 ITR 547], Rameshwar Prasad Bagla vs. Commissioner of Income-Tax, U.P. [87 ITR 421], Commissioner of Income-Tax, Bombay City vs. Greaves Cotton and Co. Ltd. [68 ITR 200] and K. Ravindranathan Nair vs. Commis .....

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igh Court. 9. Having reiterated the above position in law we do not see how the same can be said to have been transgressed by the impugned order of the High Court. Each relevant fact considered by the High Court to answer the questions referred to it on the claim(s) of deduction raised by the appellant - assesee are acknowledged, admitted and undisputed facts. No fresh determination of facts found by the Tribunal have been made by the High Court. What, however, the High Court did was to take int .....

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