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Showing 81 to 100 of 1898 Records
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2015 (12) TMI 1821 - ITAT MUMBAI
Penalty u/s 271AAA - present assessee covered u/s 132 OR 133A - HELD THAT:- There is no dispute on the fact that the assessee offered the disclosed income and paid taxes. That issue on quantum reached the finality. When comes to the penalty proceedings, the AO erroneously initiated the penalty proceedings u/s 271AAA of the Act when the present assessee is not covered u/s 132 of the Act. He is covered only u/s 133A of the Act. Section 271AAA is not relevant for initiating such proceedings legally. Further, on perusal of the order of the CIT (A), we find paras 6.1 to 6.3 are relevant in this regard.
CIT (A) has rightly adjudicated the issue as per the provisions of the Act and in accordance with law. Therefore, in our view, the decision taken by the CIT (A) is fair and reasonable and it does not call for any interference. Accordingly, grounds raised by the Revenue are dismissed.
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2015 (12) TMI 1820 - ITAT AMRITSAR
Penalty u/s 271B - violation of section 44AB - HELD THAT:- We find that the findings recorded by the learned CIT(A) are not correct as assessee has been demanding the release of documents from 12.08.2009 onwards, which were provided to the assessee only on 14.07.2010, therefore, the delay in getting accounts audited was beyond the control of assessee. We further find that the penalty for violation of section 44AB is not mandatory. See SS BANGA. [2005 (1) TMI 82 - PUNJAB AND HARYANA HIGH COURT]
In the present case, we find that the reason for late filing of audit report was beyond the control of assessee, and therefore, there is a reasonable cause and therefore, penalty was not imposable. - Decided in favour of assessee.
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2015 (12) TMI 1819 - ITAT HYDERABAD
Disallowance of provision for leave encashment payable to its employees claimed as deduction - HELD THAT:- In the light of the decision of the Hyderabad Bench of the Tribunal in the case of Suryavanshi Spinning Mills [2015 (9) TMI 1670 - ITAT HYDERABAD] we set aside the order of the CIT(A) on this issue and direct the Assessing Officer to reconsider the matter in the light of the directions of the Tribunal in para-3 thereof extracted hereinabove. This ground of the assessee is accordingly allowed for statistical purposes.
Disallowance referable to employees' share of Provident Fund and ESI paid beyond the due date under the respective statutes - HELD THAT:- As decided in VBC INDUSTRIES LTD. AND OTHERS VERSUS DY. COMMISSIONER OF INCOME-TAX, CIRCLE – 3 (3) , HYD. AND OTHERS [2015 (6) TMI 1 - ITAT HYDERABAD] we set aside the impugned order of the CIT(A) on this issue, and set aside the matter to the file of the Assessing Officer for reconsideration of the disallowance under S.43B, in the light of the above decision of the Tribunal in the case of VBC Industries, noted above, and with a direction that insofar as the payments made before the due date for the filing of the return u/s 139(1), no disallowance may be made under S.43B. AO is accordingly directed to verify the actual date of remittance of the employees' contribution to PF land ESI and redecide this issue accordingly after giving reasonable opportunity of hearing to the assessee. This ground of the assessee is also treated as allowed for statistical purposes.
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2015 (12) TMI 1818 - ITAT RAIPUR
Addition on account of unpaid Service Tax - unpaid statutory liability as prescribed u/s 43B - HELD THAT:- We are of the considered opinion that no interference is required in the decision given by the learned CIT (A). The issue of disallowance of unpaid statutory liability as prescribed u/s 43B of the IT ACT now stood resolved by several decisions. The impact of Circular No.372 dated 8th December, 1981 has also been considered.
As per the said circular it is specifically mentioned that several cases have come to the notice where tax payers did not discharge their liability in respect of excise duties or other taxes although claimed, the said liability as deduction on the ground that the accounts have been maintained on mercantile basis. The CBDT has observed that on one hand the tax payers have claimed the deduction merely on the basis of accrual of liability but on the other hand, disputed the liability and did not discharge the obligation of payment of the tax.
For some reasons or the other, the liability is disputed and not paid. This aspect has been considered by several Courts and came to the conclusion that in a situation when deduction has not been claimed and a separate account has been maintained, then disallowance u/s 43B of the IT Act should not be made. In the case of CIT Vs Noble & Hewitt (India) (P) Ltd. [2007 (9) TMI 238 - DELHI HIGH COURT] , the case of Chowringhee Sales Bureau P. Ltd. Vs CIT [1974 (6) TMI 5 - CALCUTTA HIGH COURT] has been distinguished and it was held that when the amount of tax has not been debited to profit & loss account as an expenditure nor claimed any deduction in respect of the said amount then, the question of disallowance u/s 43B of the IT Act does not arise. Respectfully, following this decision, we hereby hold that there was no fallacy in the view taken by the learned CIT (A). The same is hereby confirmed and ground No.1 of the appeal of the Revenue is, therefore, dismissed.
Addition on account of donation treating the same as personal expenditure - HELD THAT:- We are not in agreement with the view taken by the learned CIT (A) because he has simply generalised the issue although, the AO had made a specific observation that the assessee had not filed any evidence through which the deduction could be qualified. The onus was on the assessee to place on record such evidence to establish that the donation was not in the nature of personal expenditure but in the nature of business expenditure to be allowed under the provisions of the Act. We hereby reverse the finding of the learned CIT (A) and allow this ground of appeal of the Revenue.
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2015 (12) TMI 1817 - ITAT CHANDIGARH
Reopening of assessment u/s 147 - assessee has not filed any return of income for assessment year under appeal - HELD THAT:- Assessee filed return of income in assessment year 1999-2000 on 08.03.2000. Copy of the acknowledgement of filing of the return is filed at page 28 of the Paper Book. Since the Assessing Officer recorded incorrect and non-existing reasons for re-opening of the assessment, therefore, re-opening of the assessment would not be justified in the matter. We rely upon decision of Hon'ble Punjab & Haryana High Court in the case of Atlas Cycle Industries [1989 (4) TMI 48 - PUNJAB AND HARYANA HIGH COURT] - Decided in favour of assessee
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2015 (12) TMI 1816 - ITAT DELHI
Correct head of income - Profits realized on sale of shares - business income or capital gain - long term capital gain or short term capital gain - period of holding of the shares - HELD THAT:- Schedule L (on Investments) to the Balance Sheet enclosed along with return that long –term investments are stated at cost less permanent diminution in value of investments only. The Investments(Other than Trade) of ₹ 44.71 crores as on 31 March 2006 are detailed in Schedule F of the Balance Sheet. The aforesaid investments are made upon the decision made by Board of Directors and with clear intention to hold the aforesaid Capital Assets as investment. The intention of the assessee is therefore never to make profit from sales as in the case of trading activities. The intention is to have steady and substantial capital appreciation and earn dividends if any from such investment.
As regards, trading stock where the assessee intends to make profits, such stock has been disclosed in Schedule I of the Balance sheet showing a closing value of ₹ 30.85 crores on 31 March 2006. The accounting policy for trading of shares is disclosed in Schedule L of the Balance sheet which states that “closing stock of securities is valued at cost of market price which ever is lower.
Thus, the intention of the assessee is very much clear as to what stocks are to be treated as business stock and what to be treated as investment stock. The Policy and treatment of stock transaction are clearly reflected in the Balance sheet of the assessee.
We thus fully concur with the finding of the Learned CIT(Appeals) that the profit of ₹ 34,61,63,879 in respect of shares sold during the year (including gain of ₹ 29,05,58,750 realized on sale of shares of Dawar India Ltd. ) has been rightly treated by the assessee as long term capital gain and thus the Learned CIT(Appeals) has rightly held that the assessee is eligible for exemption under sec. 10(38) of the Act on the said long term capital gain. The First Appellate Order in this regard is thus upheld. The ground Nos. 1 and 2 are accordingly rejected.
It is also clear that 84% gains from capital gains were long term and only 15% was from short term investment.
It is always material that the intention of the assessee, which is to be seen while determining the nature of the transaction conducted by the assessee. On perusal of the holding period of the shares it is seen that the assessee transacted in 85 scripts had holding period of more than 400 days ( Dabur India holding was more than 6900 days), 29 scripts had holding period of more than 365 days (Appendix A). Besides, all the scripts sold were STT paid and all were delivery based.
Accrual of interest income - AO made addition on the basis of special auditor’s report that assessee had not shown interest income received from Dawar Foods Ltd. - HELD THAT:- The submission of the assessee remained that assessee had advanced an amount of ₹ 6 crores to Dawar Foods Ltd. initially at the interest rate of 10%, however, during the year on mutual consents the rate was reduced from 10% to 8.5%. The Assessing Officer had not accepted this explanation of the assessee but the Learned CIT(Appeals) has accepted the same with this finding that it is a settled principle of law that only real income is to be taxed. In this regard, he has followed the ratios laid down in the case of CIT vs. Shoorji Ballabdass & Co. [1962 (3) TMI 6 - SUPREME COURT] . We thus do not find reason to interfere with the First Appellate Order in this regard. The same is upheld. The ground No. 3 is accordingly rejected.
Benefit of charging of the gain u/s 111A - HELD THAT:- It is not the finding of the Assessing Officer or the Learned CIT(Appeals) that these shares were shown as stock in trade or the assessee was not correct in showing these shares as investment. We thus do not find infirmity in the claim of the assessee that the profit accrued on sale of these shares was short term capital gain and the assessee was eligible for claiming charging of the gain under the provisions laid down under sec. 111A of the Act. We thus while setting aside the orders of the authorities below in this regard direct the Assessing Officer to accept the claim of the assessee and allow the benefit of charging of the gain under sec. 111A of the Act.
Addition u/s 14A - HELD THAT:- Interest receipt is more than the interest payment in respect of financial activities and the Assessing Officer has also not disputed the reserves available with the assessee. We are thus of the view that the Learned CIT(Appeals) has rightly deleted the disallowance. The same is upheld.
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2015 (12) TMI 1815 - ITAT AHMEDABAD
Deduction u/s. 54 - substantive advances made for purchasing the house property in question to housing society/builder - capital gains for purchasing the residential house in question - HELD THAT:- There can hardly be any quarrel that this statutory provision envisages three basic conditions to be fulfilled by the claimant assessee. First one is that the new property can be purchased within a period of one year before executing the sale deed. Second one is that the same can be purchased within two years after the sale deed. Third and final condition stipulates construction of a new house within three years from the date of transfer.
It has come on record that the assessee has paid a gross sum of ₹ 1,15,00,000/- to the builder/housing society. This amount is almost equal to the gross sale price of ₹ 1,18,00,000/-. We repeat that conveyance deed in his favour is dated 31-03-2008. The builder thereafter applied for AUDA’s permission on 24-012-2008 which finally came on 15-12-2009 prescribing some construction regulations. We are of the view in these facts that the same has to be read applicable from the date of application. The same falls within three years of 11-05-2006. We are further of the view that the assessee has already advanced a sum much more than the impugned capital gains for purchasing the residential house in question.
A co-ordinate bench of the tribunal in SHRI HASMUKH N. GALA VERSUS ITO [2015 (8) TMI 1204 - ITAT MUMBAI] allows a similar claim of section 54 deduction in case involving substantive advances made for purchasing the house property in question by holding the same to mean as ‘purchase’ for the purpose of the impugned deduction - the assessee’s act of having made substantive payment of ₹ 1,15,00,000/- to housing society/builder followed by his getting the specified residential house constructed satisfies all the necessary conditions stipulated in section 54 - Decided in favour of assessee
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2015 (12) TMI 1814 - ITAT MUMBAI
Deduction u/s. 36(1)(viia) before setting of brought forward losses - Whether deduction is to allowed on total income and not on business income? - HELD THAT:- While computing the statutory deduction under Clause (viiia)of Sub-section 1 of Section 36 of the Income Tax Act, 1961, the total income would be the business income of the assessee before deducting the deduction under this Clause and deductions under Chapter 6A of the Income Tax Act, 1961. Therefore the brought forward losses would not be deducted while computing the total income for the purpose of Sec. 36(1)(viia). Since, the deduction is available only for computing the business income under this Clause, therefore the total income also refers the income of the assessee from profit and gain from a business and shall not include the income other than the business income
Interest u/s 244A - HELD THAT:- As decided in own case amount refunded by the Revenue has to be adjusted towards interest payable to the assessee and the balance, if any, shall be adjusted towards tax. On this principle there is no contrary decision placed before us, we therefore agree with the plea of the assessee and direct the Assessing Officer accordingly
Deduction for bad debts written off - HELD THAT:- As decided in own case [2015 (11) TMI 1058 - ITAT MUMBAI] Tribunal has allowed identical claim has followed the decision rendered by the Hon’ble Supreme Court in the case of Catholic Syrian Bank [2012 (2) TMI 262 - SUPREME COURT] and CIT Vs Karnataka Bank Ltd [2013 (2) TMI 40 - SC ORDER] . We also notice that the new Explanation 2, which covers both rural and non-rural advances, has been inserted u/s. 36(1)(vii) of the Act by the Finance Act, 2013 w.e.f. 1.4.2014 only and hence it cannot have retrospective effect, since it affects substantive rights of the assessee.
Loss on revaluation of trading derivatives - HELD THAT:- Issue decided in own case [2013 (1) TMI 992 - ITAT MUMBAI] as relying on UCO Bank [1999 (9) TMI 4 - SUPREME COURT]
Deduction u/s 80LA - assessee failed to file audit report with the return - HELD THAT:- As decided in own case [2015 (11) TMI 1058 - ITAT MUMBAI] followed the decision of the Hon’ble Delhi High Court in the case of CIT Vs Web Comerce India Pvt. Ltd. [2008 (12) TMI 13 - HIGH DELHI COURT] and held that since the assessee has filed the Audit report before finalization of assessment order, the Ld. CIT(A) was justified in directing the AO to allow the claim.
Deduction u/ s 36(1)(viia) to the extent of provision made in books for bad and doubtful debts instead of the eligible amount as per the said section - HELD THAT:- As assessee placed the decision of the Tribunal Ahmedabad Bench in the case of DCIT Vs Sarvodaya Sahakari Bank Ltd. [2014 (5) TMI 1182 - ITAT AHMEDABAD] . It is the say of the Ld. Counsel that this issue need to be decided afresh in the light of the findings of the Tribunal Ahmedabad Bench. We find force in the contention of the Ld. Counsel. We accordingly set aside the issue to the file of the AO. The AO is directed to decide the issue afresh
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2015 (12) TMI 1813 - ITAT KOLKATA
Penalty u/s 271(1)(c) - assessment proceedings u/s 153A - treat the LTCG declared by the Assessee as “Income from other sources” - HELD THAT:- It is not disputed before us that income returned by the assessee in the return of income u/s 139(1) of the Act, the return filed u/s 153A of the Act and the income brought to tax in the order of assessment u/s 153A of the Act are one and the same. In such circumstances we are of the view that no penalty can be imposed on the assessee. If at all the revenue wants to impose penalty in the present case, then, it has to take recourse to Explanation 5A to section 271(1)(c).
As rightly contended by the learned counsel for the assessee, Explanation 5A would be attracted only in the case where there is difference in the income returned u/s 139(1) of the Act and the income ultimately brought to tax in the order of assessment u/s 153A of the Act. We, therefore, are of the view that the penalty could not have been imposed in this case.
We also are of the view that in the light of the admitted fact that no incriminating material was found in the course of search the impugned addition could not have been made in the proceedings u/s 153A.
The law is well settled that assessment proceedings and penalty proceedings are two independent proceedings and that the assessee in penalty proceedings is entitled to show that the very addition for which penalty is sought to be imposed ought not to have been made in the assessment proceedings. We, therefore, are of the view that even on this ground penalty imposed on the assessee deserves to be cancelled. - Decided in favour of assessee.
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2015 (12) TMI 1812 - KARNATAKA HIGH COURT
TDS provisions of section 194A(3)(v) - application to all co-operative societies including co-operative society engaged in the business of banking? - HELD THAT:- It is brought to the notice of this Court by the learned counsel appearing for the Assessee that vide Circular No.19/2015 in F.No.142/14/2015-TPL, the Ministry of Finance, Government of India, has clarified as under:
“42.5 In view of this, the provisions of the section 194A(3)(v) of the Income-tax Act have been amended so as to expressly provide that the exemption provided from deduction of tax from payment of interest to members by a co-operative society under section 194A(3)(v) of the Income-tax Act shall not apply to the payment of interest on time deposits by the co-operative banks to its members. As this amendment is effective from the prospective date of 1st June, 2015, the co-operative bank shall be required to deduct tax from the payment of interest on time deposits of its members, on or after the 1st June, 2015. Hence, a cooperative bank was not required to deduct tax from the payment of interest on time deposits of its members paid or credited before 1st June, 2015.”
Consequently, the finding of the Tribunal that the Cooperative banks were required to deduct tax at source is unsustainable. Accordingly, this appeal filed by the revenue stands dismissed.
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2015 (12) TMI 1811 - ITAT DELHI
TP adjustment - actual margin earned by AE - MAM - application of TNMM - HELD THAT:- We take note that as per the chart placed on record AE has charged revenue of ₹ 26.63 crores from the customer, whereas value of ALP as determined by the TPO considering the adjustment in the case of appellant and M/s Interra Information Technologies India (P) Ltd. is ₹ 31.21 crores. Thus total value of ALP exceeds the revenue charged by AE from customer. Moreover it is also noticed that AE has incurred loss of ₹ 4.34 crores and there is no margin retained at the end of AE on value of international transactions.
Adjustment in no case can exceed the amount received by the AE from third party. However since the details of AE available on record are only upto 31.3.2007 and not upto 31.3.2008, we restore the matter to the file of the AO since the learned counsel has during the course of hearing stated that appellant company will cooperate and provide all documents to find out the revenue earned by the AE upto 31.3.2008 including production of books of accounts.
Accordingly AO is directed to verify the actual margin earned by AE and make an addition, if any considering the principle stated above. The appellant company is directed to produce the entire accounts of AE for verification of its income. Needless to state fair and proper opportunity will be provided by TPO/AO to the appellant company. Ground No. 2.9 is therefore allowed for statistical purposes.
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2015 (12) TMI 1810 - ALLAHABAD HIGH COURT
Reopening of assessment u/s 147 - reopening after four years - HELD THAT:- Department has issued a notice dated 10.9.2015 under Section 148 of the Act proposing to re-assess the income for the assessment year 2011-12. The reasons to believe proposes that the petitioner has failed to disclose truly and fully all material facts which are necessary for making the assessment for the relevant assessment year. The petitioner has challenged the present reassessment proceeding contending that all the necessary material had been disclosed while filing the return for the assessment year 2011- 12.
The proviso to Section 147 indicates that if reassessment proceedings are reopened after the expiry of four years, it is essential that an assertion is required to be made that the assessee has failed to disclose fully and truly all the material facts necessary for the assessment for that assessment year.
Prima facie, in the instant case, we find that all necessary material was disclosed by the petitioner when a return was filed on 13.12.2013 which was considered in the original assessment order.
Another question which arises for consideration is, whether the notice issued under Section 148 of the Act is justifiable after the assessment under Section 143(3) of the Act made by the assessing officer is quashed.
We accordingly direct Sri Ashok Kumar, the learned counsel for the Income Tax Department along with Sri Shubham Agarwal and Sri Ashok Mehta, the learned senior counsel to file a counter affidavit by 10.1.2016. Sri P. Chidambaram, the learned senior counsel along with Abhinav Mehrotra, Advocate for the petitioner will file a rejoinder affidavit within a week thereafter.
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2015 (12) TMI 1809 - BOMBAY HIGH COURT
TPA - Comparable selection - HELD THAT:- Merely stating that the issue of comparable is factual in nature and cannot be applied as a matter of general principle would not be sufficient to distinguish the reliance placed by the Appellant on the Tribunal's decision in M/s. Frost & Sullivan [2012 (4) TMI 120 - ITAT MUMBAI] . When according to the Tribunal, the facts are different in the case relied upon, it should be pointed out in the impugned order and not ignored on the basis of generality. The facts as demonstrated by the Appellant is that both in case of M/s. Frost & Sullivan (supra) and that of the Appellant, prima facie, appear to be identical.
Tribunal in the impugned order ought to have considered the decision of the Tribunal in the case of M/s. Frost & Sullivan (supra) in some greater detail pointing out the distinctions before coming to the conclusion that the same cannot be applied in the case of the Appellant.
Tribunal on consideration of the facts pointed out by the Appellant could most certainly for reasons to be recorded yet come to conclusion that the decision in case of M/s. Frost & Sullivan (supra) is not applicable to the present facts. Before coming to the conclusion, the contention of the Appellant must be dealt with so as to ensure that the assessee concerned does not leave the portals of the Tribunal with a feeling that he has received unfair treatment, inasmuch as his submission of being covered by the decision of Coordinate Bench of the Tribunal was not considered.
The substantial question of law as formulated is answered in the affirmative i.e. in favour of the Appellant-Assessee and against the Respondent-Revenue only to the extent of the issue of transfer pricing.
We set aside the order of the Tribunal to the extent it disposes of the Revenue's appeal with regard to the issue of transfer pricing and restore the issue of transfer pricing to the Tribunal for fresh disposal in accordance with law by a reasoned order. Needless to state that the Tribunal would consider the applicability of the decision of the Tribunal dated 24th February, 2012 rendered in the case of M/s. Frost & Sullivan (supra) to the fact of the present case.
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2015 (12) TMI 1808 - KARNATAKA HIGH COURT
Prayer for impleadment - guarantee extended by the applicant had stood dissolved under the 'act of novation' - HELD THAT:- Undaunted by order of rejection passed by the Division Bench dismissing the application for being impleaded, yet again applicant has filed present application and learned counsel for applicant has tried to buttress his arguments contending that in view of liberty given by Division Bench while disposing of OSA 33/2013 connected with OSA 44/2013 on 25.02.2015 such liberty would enable the applicant to file present application, requires to be considered with utmost circumspection for the reasons already indicated herein above inasmuch as liberty granted by Division Bench would not even remotely suggest that applicant would be entitled to reagitate the claim for being impleaded in the present proceedings.
The present application deserves to be dismissed with exemplary costs.
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2015 (12) TMI 1807 - ITAT MUMBAI
TP Adjustment - comparable selection - HELD THAT:- The undisputed facts on record are that the aforesaid company was having RPT transactions which appear to be well above the accepted limits. Requisite documents evidencing these facts are already held on record. But, these facts were not examined by the lower authorities.
In view of the judgments relied upon by the Ld. Counsel, we find that since this issue goes to the root of the matter, the assessee should be given opportunity to raise a legal plea even at this stage before the Tribunal. In all fairness and to meet ends of justice, we find it appropriate to send this issue back to the file of AO/TPO for a fresh decision with respect to the said company.
The assessee shall put forth all requisite material before the AO/ TPO in support of its claim, for which proper opportunity should be provided. With these directions, we send this issue back to the file of the AO/TPO. Thus, additional ground is treated to be allowed for statistical purposes.
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2015 (12) TMI 1806 - ITAT KOLKATA
TDS u/s 195 - addition u/s 40(a)(i) - payments made towards professional charges, consultancy charges and amounts paid on behalf of other units in respect of services rendered only outside India - retrospectivity of act - HELD THAT:- The payments made towards professional charges, consultancy charges and amounts paid on behalf of other units in respect of services rendered only outside India and were not utilized in India, are not chargeable to tax in India in terms of s. 195(1) of the Act and hence, there is no obligation that could be cast on the assessee to deduct tax at source.
Even otherwise, the payments are governed by the provisions of art. 14 of DTAA which would prevail over the other provisions of the Act, wherein the said payments are liable to be taxed only abroad and not in India. A retrospective amendment in statute does change the tax liability in respect of an income, with retrospective effect, but it cannot change the tax withholding liability with retrospective effect.- Decided in favour of assessee.
Disallowance of expenses incurred towards overseas office maintenance, sales promotion, sales office expenses, aircraft maintenance expenses and others - HELD THAT:- major expenditure has been incurred in respect of cost of spare parts for maintenance of aircrafts, import of articles such as mineral water, raw meat, liquor etc., expenditure incurred for obtaining fitness certificate after every hours of flying as per international aviation rules, import of spare parts from abroad, promotion and marketing expenses abroad, charges, sales promotion expenses towards redemption of points under Oberoi Top programme, participation fee of IN ASIA MILES programme, expenses for media coverage of the programme, cost of space and stand for ITB Berlin in Germany, charges for stand and space booked for Arabia Travel Market in Dubai, charges for stand decoration for IBTM Exhibition at Geneva, cost of space and stand for WTM in London, entire expenses incurred in foreign sales offices in London, New York, Sydney, Singapore and Dammam on various dates throughout the year etc. From the details furnished, we also see that the entire foreign sales office receipts and expenses and statement of assets and liabilities were duly subjected to an independent audit by a chartered accountant in order to give comfort level to the assessee herein for adoption of those figures in the consolidated financial statements of the assessee.
We find lot of force in the arguments of AR that no disallowance on this count was made in the earlier years and also in subsequent years by the Revenue. Hence, we hold that the principle of consistency should be followed by the Revenue. Reliance in this regard is placed on the decision of the Hon'ble apex Court in the case of Radhasoami Satsang v. CIT [1991 (11) TMI 2 - SUPREME COURT] . From the details furnished, we are completely satisfied that the entire expenditures are incurred wholly and exclusively for the purpose of business of the assessee and accordingly, direct the learned AO to grant deduction for the whole amount as deduction.
Disallowance u/s 80HHC - export of food and beverages to out bound flights of foreign airlines, the payments for which were received in convertible foreign exchange - HELD THAT:- We hold that the assessee is entitled for deduction under s. 80HHC of the Act in respect of export of food and beverages to outbound flights of International Airlines and for the proceeds received thereon in convertible foreign exchange and hold that the assessee had complied with the provisions of s. 80HHC of the Act in this regard. Accordingly, the ground raised by the assessee is allowed.
Disallowance of 50 per cent of aggregate expenditure incurred on running and maintenance of aircraft - HELD THAT:- We hold that no addition need to be made on an estimated basis towards running and maintenance of aircrafts. Accordingly, the ground raised by the assessee are allowed
Disallowance of interest on borrowed capital to the extent of interest-free advances made to Associated Enterprises - HELD THAT:- Interest-free advances were made by the assessee to various parties during the course of its business and are strategic investments - that the borrowed funds were not diverted for non-business purposes as sufficient own funds were available with the assessee to make interest-free advances to its group concerns.
When borrowed funds and own funds were inextricably mixed in the same bank account and if the own funds are more than the amounts advanced interest-free to sister concerns, then the presumption could be drawn in favour of the assessee that those advances were made only out of own funds of the assessee - from the aforesaid facts available on record, the assessee had advanced monies to various concerns during the course of its business to further strengthen its business interests with the said parties and as a measure of commercial expediency. In applying the test of commercial expediency whether the expenditure was excessively laid down for the purpose of business, reasonableness of the expenditure is to be judged from the point of view of a businessman and not that of the Revenue.
Disallowance of depreciation on addition to fixed assets - HELD THAT:- Entire additions together with the income-tax depreciation figures were duly subjected to certification by the tax auditor in the tax audit report and the AO had indeed granted income-tax depreciation for other assets except ₹ 7,84,550 being depreciation on buildings and computers. We find that this action of the learned AO is not appreciated and it is also stated in the grounds that the assessee had submitted the bills before the learned AO. No hesitation to delete this addition made in the sum of ₹ 7,84,550 towards depreciation on buildings and computers and accordingly, the ground raised by the assessee is allowed.
Disallowance of notional foreign exchange loss on foreign currency loan - HELD THAT:- As decided in assessee's own case [2015 (10) TMI 2022 - ITAT KOLKATA] addition to be deleted.
Disallowance of General Charges - HELD THAT:- Assessee had submitted before the learned CIT(A) that the amounts debited in head office represents amounts paid to different associations like Hotel Association of India, World Economic Forum, membership fees and annual subscription for various Stock Exchanges. These are expenses incurred wholly and exclusively for the purpose of business of the assessee. We also find that this disallowance is not made by the learned AO for the asst. yr. 2002-03 (i.e. the earlier year) and in asst. yr. 2005-06 (in subsequent year). Moreover, there is absolutely no basis for making the disallowance at the rate of 25 per cent of total general charges by the learned AO. Accordingly, we find no infirmity in the order of the learned CIT(A) and hence, the ground No. 9 raised by the Revenue is dismissed.
Disallowance of Prior Period Expenses - HELD THAT:- We are aware at this juncture that any claim could be made only by filing a valid return as has been held by the Hon'ble apex Court in the case of Goetze India Ltd. [2006 (3) TMI 75 - SUPREME COURT] . But the same judgment states in the last para that the said finding is not applicable to appellate authorities more especially to Tribunals. Hence, respectfully following the judgment of the Hon'ble apex Court (supra) and in view of the fact that the said expenditure of ₹ 1,00,000 is genuinely incurred by the assessee for the purpose of its business, we hold that the action of the learned CIT(A) does not require any interference in this regard.
Disallowance on account of legal expenses on ad hoc basis - HELD THAT:- It is not clear that whether the entire details of legal expenses were filed before the lower authorities for their verification. Hence, we deem it fit and appropriate, in the interest of justice and fairplay, to set aside this issue to the file of the learned AO to decide this issue afresh in accordance with law. The assessee is directed to submit all these details before the learned AO and such other evidences and documents as may be required in support of its contentions. Hence, the ground raised by the assessee is allowed for statistical purposes.
Disallowance u/s14A towards proportionate management expenses - HELD THAT:- It is not in dispute that the assessee had derived taxable income as well as tax free income and incurred expenditure for deriving both the incomes and hence, disallowance is definitely warranted in terms of s. 14A which is brought in the statute book with retrospective effect from 1st April, 1962. The disallowance had to be made only on an estimated basis with regard to the expenditure incurred for the purpose of earning tax free income. We direct the learned AO to disallow 1 per cent of exempt income under this issue
Disallowance on account of specific general charges - HELD THAT:- We direct the learned AO to restrict the disallowance as not relatable to the business of the assessee. Hence, the ground raised by the assessee is partly allowed.
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2015 (12) TMI 1805 - ITAT CHANDIGARH
Unexplained investment in purchase of land - HELD THAT:- The assessee has produced copies of Sale Deeds in respect of the transactions carried out through these agreement to sell and the sale deeds have been executed between the sellers and one Mr. Deepak Chauhan, Veena Jindal, Vijay Jain etc. and all the payments are made through cheques. Therefore, the copies of sale deed would disclose that assessee was not a party to any of the transactions otherwise the sale deed of 50% as alleged by Revenue Department should be executed in the name of the assessee as well.
The assessee also filed copies of the jamabandi of the property in question which shows that after the sale of properties in question, mutation have been made in the name of purchasers and the name of the assessee did not contain in any the jamabandi. This fact would also strengthen the case of the assessee that assessee was not party to any of the agreement in question and did not make any investment.
Case of AO had been that assessee made investments in these properties having half shares of investment i.e. 50% of the entire transaction. 50% transaction was considered as undisclosed investment in the case of M/s Basera Realtors P.Ltd. and their Directors.
AO passed the orders in the case of the company and later on, the orders in the case of the company have been set aside by the CIT u/s 263 and AO was directed to consider entire investments/passing of the consideration for purchase of the properties in the hands of M/s Basera Realtors P.Ltd.. M/s Basera Realtors P.Ltd. filed appeal before ITAT Chandigarh against the order under section 263 of the Act and their appeals have been dismissed.
AO in pursuance to the order passed under section 263 again had taken the assessment proceedings in the case of M/s Basera Realtors P.Ltd., copy of the assessment order is filed at page 133 of the Paper Book in which again, same facts have been considered and Assessing Officer did not accept contention of the company that 50% of the shares belong to Shri Harinder Singh, assessee because M/s Basera Realtors P.Ltd. has not submitted any evidence of 50% shares of assessee for the purpose of making the addition. AO, therefore, made entire addition of undisclosed investment in the case of M/s Basera Realtors P.Ltd. Thus, Revenue Department has taken a very clear and specific stand on the identical facts that the entire undisclosed investment in property through these agreements in question relate to M/s Basera Realtors P.Ltd. therefore, no addition could be made in the hands of the present assessee otherwise, it would also amount to double addition.
Considering all, we are of the view authorities below are not justified in making and confirming the addition on account of undisclosed investment in purchase of the land in question through these agreements. The orders of authorities below are accordingly, set aside and addition is deleted in assessment year 2006-07.
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2015 (12) TMI 1804 - CALCUTTA HIGH COURT
Offer of Bid - HELD THAT:- The Official Liquidator will continue the advertisements on his website and invite offers for sale of the properties.
The bid of the sole offerer is rejected - Let this matter appear six weeks hence.
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2015 (12) TMI 1803 - ITAT MUMBAI
Disallowance u/s. 14A r.w. Rule 8D - exempt income earned by the assessee is by way of single dividend warrant - HELD THAT:- There is no dispute that the only exempt income earned by the assessee is by way of single dividend warrant. As gone through the computation of estimation of expenses made by the assessee. We find that computation at ₹ 917/- is quite reasonable. AO has simply rubbished this computation made by the assessee without assigning any specific reason or fallacy in the computation. Addition made by the AO is unwarranted, we, accordingly, direct the AO to delete the addition - Decided in favour of assessee
Short term capital gain computation - Additions made u/s. 50C - DVOs report acceptance at its face value - property is an undeveloped property connected with a kaccha road with a slaughter house in the vicinity - HELD THAT:- Assessee’s Valuation Officer has reported the rate for Plot No. 14/1 at ₹ 272/-per Sq. mtr and for Plot No. 177 at ₹ 261/- per Sq. mtr. The same has been taken by the DVO at ₹ 623/- and ₹ 722/- per Sq. mtr respectively. A perusal of both the Valuation Report shows that none of the report is based on comparable cases being sale deeds in or near the impugned properties. Thus, there is no sale incidence to support the value taken by the respective valuation authorities.
No doubt, the DVOs report is based on the circle rate but then the stamp duty is also assessed on the circle rate. So the DVOs report cannot be accepted at its face value. As mentioned elsewhere, the valuation report furnished by the assessee is also devoid of any sample sale in or around impugned property, therefore the value taken by the Valuation Officer also cannot be accepted.
To put an end to the litigation, the value for plot No. 14/1 taken by the DVO at ₹ 623/- is to be reduced by 40%, the value now should be adopted is ₹ 374/-. Similarly, the value adopted for Plot No. 177 at ₹ 722/- is to be reduced by 35%, the value now should be adopted is ₹ 470/-. AO is accordingly directed to consider these two values and recompute the Short term capital gains as per the provisions of the law.
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2015 (12) TMI 1802 - ITAT MUMBAI
Addition made on protective basis - amounts deposited in the joint bank account with Ms Chandbibi Zaidi - assessee is a student studying outside India, with no independent source of income - Held that:- As considered the remand report in the cases of assessee as well as Ms Chandbibi Zaidi and also the other material placed before us during the course of hearing. We find that the CIT(A) has decided the appeals of assessee for three assessment years i.e. 2005-06 to 2007-08 by common order and the appeal of the assessee for the assessment year 2007-08 has already been decided by the Tribunal in favour of the assessee by dismissing the appeal of the Revenue.
We find that the issue before us and in the decision of Tribunal for AY 2007-08 are identical and nothing contrary to the findings of the Tribunal or CIT(A) has been placed by the ld. DR to deviate from the finding of the ld. CIT(A) or the Tribunal.
The remand report in the case of Ms Chamndbibi Zaidi has also been considered by the Ld. CIT(A) while deciding the issue in favour of the assessee. On perusal of the remand report, we find that the AO had made verification of all the amounts for which the additions were made by him in the assessment order, and nothing wrong has been reported by the AO in his remand report. It was alleged by the AO in the assessment order that the impugned amounts for which the addition had been made in the hands of the assessee, actually belonged to Ms. Chandbibi Zaidi. Thus, as per the AO’s own assertion, these amounts did not belong to the assessee. Thus, no addition deserves to be made in the hands of the assessee, in any case. - Decided against revenue
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