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2015 (4) TMI 1283 - SC ORDER
Learned Senior Counsel appearing on behalf of the Petitioners contended that even if the Impugned Order is to the effect that the New Act is applicable, it is Section 24(1) which will be attracted and not Section 24(2) of the Land Acquisition Act.
Issue notice.
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2015 (4) TMI 1282 - ITAT AHMEDABAD
Disallowance u/s. 40A(2)(b) - HELD THAT:- We find that while deleting the disallowance made by A.O, ld. CIT(A) has noted that identical disallowance made by the A.O in earlier years was deleted by CIT(A) and order of ld. CIT(A) was also confirmed by Hon’ble Tribunal [2010 (9) TMI 1204 - ITAT AHMEDABAD] . Before us, Revenue has not brought any material on record to controvert the findings of ld. CIT(A) nor has brought any distinguishing feature of the case for the year under consideration with that of earlier years. We therefore find no reason to interfere with the order of ld. CIT(A) and thus this ground of Revenue is dismissed.
Disallowance of claim u/s. 80IA - generation of power and income from steam - HELD THAT:- Various judicial pronouncement referred to by the appellant clearly holds that steam is a form of power and therefore, while considering the profit of the captive power plant, the value of the steam is to be considered.
Recent decision in D.C.W. Ltd V/s. A.C.I.T. MUM [2010 (1) TMI 939 - ITAT, MUMBAI] case has held that steam generated in the power plant is nothing but the bye-product and has got the direct connection with the Industrial undertaking and is therefore, to be considered for the purpose of working out the profit of Industrial undertaking wherei as referred to the unreported decision of Madras High Court in the case of C1T V/s, TANFAC Industries Ltd. Therein the Madras High Court has also held that while working out the profit of Captive power plant, the value of the steam generated and used in the manufacturing process in other unit is to be taken into account. The SLP from the said decision has been dismissed by the Hon'ble Apex Court. In view of this decision, the disallowance cannot be made on the alleged and the imaginary intention of the legislature. If there is any ambiguity in law then only other tools of interpretation such as Finance Minister's speech etc. are to be referred to. Thus allow the deduction u/s. 80IA as claimed by the appellant. As such this ground of appeal is allowed.
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2015 (4) TMI 1281 - ITAT DELHI
Nature of transaction - revenue or capital - foreign exchange fluctuation gain on reinstatement/ realization of ECB loans etc. and profit from export of computer software. - taking into account the prevailing exchange rate as on the end of accounting year is liable to tax or not - HELD THAT:- Whether the gain or loss should be brought to tax or allowed as deduction depends upon whether the foreign currency transactions were carried on account of capital or revenue items. If the foreign currency transactions are undertaken on capital account, the gain made out of such transaction is outside ambit of taxation, of course subject to the application of provisions of Section 43A of the Act. If the transactions undertaken are on account of revenue items, the gain is clearly taxable and so the loss also is clearly allowable. The assessee except making bald assertion that the transactions were undertaken on account of capital items no evidence was brought on record to establish that the foreign currency transactions were undertaken on capital items. AO also had failed to undertake this exercise.
The Hon’ble Supreme Court in the case of CIT Vs. Woodward Governor India Pvt. Ltd. reported in [2009 (4) TMI 4 - SUPREME COURT] had clearly held that the actual payment was not a condition precedent for making adjustment in respect of foreign currency transactions as the end of the closing year. We are therefore, unable to concur or agree with the view of the learned CIT(Appeals), that liability could arise only when the contract would have matured, as such a stand is totally divorced from the accounting principles and is in variance with the principle upheld by the Hon’ble Apex Court in the case Woodward Governor India (P.) Ltd. (Supra). It can also be seen that the decision in the case of Woodward Governor India (P.) Ltd. (Supra) has been rendered with regard to items in the revenue account and capital account.
We restore the matter to the file of AO with the direction that to re-do the assessment keeping in view the principles enunciated above after affording a reasonable opportunity of being heard to the assessee.
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2015 (4) TMI 1280 - ITAT HYDERABAD
Gain on sale of land - capital gain or business income - HELD THAT:- Assessee is an agriculturist and did not carry on any business. The land was purchased as agricultural land way back in 1979.
Agricultural operations were carried on for more than 20 years and the land was inherited by Assessee which is in the process of development.
Necessary permission for conversion of land in to residential plots was sought by Assessee's mother and just because Assessee stepped into his mother's shoes, it cannot be considered that Assessee is in the business of purchasing and selling of plots, whereas, Assessee has only sold inherited land, therefore, intention to purchase for business was absent.
Though, it may not be entirely relevant but we cannot ignore the fact that the sale proceeds/capital gains were invested in approved bonds, (NABARD Bonds) and were not invested in any business.
Taxable as capital gains - Decided against the Revenue.
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2015 (4) TMI 1279 - KARNATAKA HIGH COURT
Deduction u/s 80IB - deduction denied as return of income was filed on 30.03.2011 and it was belated and not filed within the prescribed time limit namely, as prescribed under Section 80AC i.e., on or before 30.09.2009 - HELD THAT:- In view of this finding recorded in KAREEMSONS PVT. LIMITED VERSUS COMMISSIONER OF INCOME-TAX [1991 (8) TMI 28 - KARNATAKA HIGH COURT] petitioner is attempting to take an umbrage under it to contend that even in respect of Section 139 occurring elsewhere in the Income Tax Act it has to be held as imbedded with the provision of Section 139(4) also. While examining a provision under fiscal statute and that too exemption provision, the words found in that Section alone is to be looked into or examined and no other provision of the Act can be imported to be read along with said provision since Parliament has consciously omitted to include SubSection (4) of Section 139 of the Act by not inserting the said provision in Section 80AC, 10A or 10 B etc. In that view of the matter, this Court is of the considered view contention raised by Sri.S.Sriranga, learned counsel appearing for petitioner cannot be accepted and same stands rejected.
Condonation of delay in filing the claim - Non filing of return of income along with auditor’s report which ought to have accompanied such return of income, if filed either at a later stage or at any rate before framing of assessment proceedings it becomes a curable defect or return of income at the most such filing of return of income can be construed as an irregularity and not an illegality. In view of the same, contention of learned counsel for petitioner that return of income could not have been filed on or before 30.09.2009 cannot be accepted. Secondly, petitioner was in possession of statutory audit report as prescribed under Companies Act, since same had been obtained on 02.09.2009 itself and petitioner had also obtained tax audit report under Section 44AB on 30.09.2009. As such, only exercise which was required to be undertaken by the petitioner was to file return of income on 30.09.2009 and substantiate its claim during assessment proceedings by furnishing the report of the auditor in From No.10CCB. Having not adopted said course, petitioner cannot be heard to contend that filing of Form No.10CCB along with return of income being mandatory and as such, it had to await such report from the auditor and till then it could not file the return of income, cannot be accepted. Hence, second contention also stands rejected.
CBDT ought to have accepted the cause shown by petitioner for belatedly filing return of income and condoned the delay - As noticed hereinabove except auditor’s report in Form No.10CCB all other materials were available with petitioner to file the return of income. In fact building completion certificate which came to be issued by BBMP on 30.12.2008 was very much available with the petitioner as on 30.09.3009 (last date for filing return of income). As rightly observed by Board – CBDT, petitioner had nine (9) months time and yet it did not file return of income from the date of receipt of completion certificate i.e., 30.12.2008. In that view of the matter, finding recorded by Board at paragraph 7.1 and 7.2 of impugned order which is already extracted supra cannot be held as suffering from any illegality calling for interference at the hands of this Court.
That apart it requires to be noticed that law of limitation cannot be jettisoned on the ground of purported report ought to have been received by petitioner and as such, there has been delay in filing the return of income.
Thus petitioner had all the material available with it for filing of return of income except report of auditor in Form No.10CCB as on 30.09.2009 and nothing prevented the petitioner to file the return of income on that date. In the alternate, petitioner could have said filed said report on or before framing of assessment proceedings. In that view of the matter this Court is of the view that no infirmity can be found in the impugned order calling for interference at the hands of this Court. - Decided against assessee.
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2015 (4) TMI 1278 - ITAT MUMBAI
Additions made u/s. 68 - unexplained cash credit - HELD THAT:- In the facts of the case of Empire Builtech Pvt. Ltd. [2014 (2) TMI 135 - DELHI HIGH COURT] the summon issued were returned unserved with a remark “ no such company” even the Inspector went to the address and confirmed that no such company exist however in the case in hand, there is no evidence on record to show that physical verifications were done by the Officer. On the contrary, we find that there is no adverse inference drawn in respect of affidavit filed by the assessee in support of establishing the genuineness of the share capital.
A close perusal of the submissions made by the assessee during the course of the assessment proceedings show that the transactions have been made in cheque duly reflected in the bank statements and we find that no adverse inferences have been drawn in this respect nor we find that any verification from the bank have been made by the AO for making the impugned addition.
The entire addition have been made only on the basis of admission of the Director during the course of search proceedings. Admission was made on 9.9.2010 and retracted by the Director on the very next day i.e. 10.9.2010. Further, the addition is based on the surmises that assessee was taking bogus purchase bills and the cash was reintroduced in the form of share capital. However, there is no demonstrative evidence brought on record which could justify the additions made by the AO.
We set aside the order of the Ld. CIT(A) and direct the AO to delete the additions made u/s. 68 - Decided in favour of assessee
Bogus purchases through accommodation bills - whether assessee’s case falls in the first category or second category? - HELD THAT:- n all probability the assessee’s case falls in the first category i.e. goods have been purchased from one party and bills have been taken from another party and there is physical movement of goods - there is no adverse inference in so far as sales are concerned. If the assessee had not purchased goods, then how it has effected the sales - because the assessee is trading in pharmaceutical products which have batch Nos. embedded on it and it cannot be sold without performing the formalities of FDA and other relevant laws relating to the pharmaceutical business.
One thing is clear that assessee was actually purchasing goods and selling them. We have also gone through the audited statement of accounts. We find that the trading results are quantified and so also the closing stock. No adverse inferences have been drawn in these respect. The additions have been made purely on presumptions and surmises and the statement of third party i.e. M/s. Globe Pharma and others who may be providing accommodation bills but the trading account of the present assessee do not show anything which could suggest that the purchases are bogus as there is no adverse inferences in so far as sales are concerned. Without purchases there cannot be any sales. Considering all these facts in totality, we do not find any merit in respect of the additions made on account of alleged bogus purchases which are based merely on the statements backed by no cogent/demonstrative material evidences on record. - Decided in favour of assessee
Alleged 2% commission on account of getting accommodation bills - HELD THAT:- Since we have categorically held that the additions on account of bogus purchases cannot be sustained on the facts of the present case and accordingly we have deleted the same, there remains no reason why the addition on account of alleged 2% commission should be sustained. We, therefore direct the AO to delete the addition made on account of alleged 2% commission in entirety
Addition @5% of alleged cash discount which the assessee might have earned on making cash payment on account of purchases - HELD THAT:- Since the AO presumed that the assessee is making purchases on down payment, the assessee must have earned 5% discount on cash purchases. This entire presumption of facts in itself show that the entire addition has been made on conjectures/assumption. There is no demonstrative material evidence on record to show that the assessee has been made cash purchases and has earned cash discount. We, therefore, direct the AO to delete the additions made on this account from all the assessment years under this appeal.
Addition on account of alleged peak cash credit for A.Y. 2010-11 - HELD THAT:- Elsewhere, we have categorically held that there is no demonstrative evidence to justify the additions made on account of bogus purchases/accommodation bills. We, therefore do not find any reason for upholding this addition. We, therefore direct the AO to delete the addition on this account.
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2015 (4) TMI 1277 - ITAT JAIPUR
Unexplained cash deposit in the bank u/s 68 - burden to prove - HELD THAT:- Primary burden to prove the cash deposited in the bank account is on the assessee, which has not been discharged fully. She has allowed time to produce the purchaser to explain the transactions whether they have paid the amount to the assessee or not with evidence.
Hence sufficient time has been provided by the AO at the time of remand report even the assessee could not produce the purchaser to verify the transaction. The case laws relied upon by the Assessing Officer are squarely applicable on the assessee. The case law referred by the ld. AR is on Section 69 of the Act i.e. unexplained investment - we set aside the order of the CIT(A) to the Assessing Officer to give one more chance to the assessee to explain the source of cash deposited as the burden lies on her. Accordingly, we set aside the order of the CIT(A) to the ld Assessing Officer. Assessee’s appeal is allowed for statistical purposes only.
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2015 (4) TMI 1276 - ITAT ALLAHABAD
Levy of penalty u/s 271(1)(b) - non furnishing of the documents - assessments proceedings were completed meaningfully under provision of section 143(3) - HELD THAT:- Penalties levied u/s 271(1)(b) r.w.s. 142(1) for non furnishing of the documents, are not sustainable, when relevant assessments were completed meaningfully after due process of scrutiny under the provision of section 153C r.w.s 143(3)/144 of the Act. Considering the same, we find the present case the assessments were computes after scrutiny. Therefore, we find that these are not fit cases for levy of penalty u/s 271(1)(b) of the Act. Accordingly ground raised by all these appeals are allowed. See Akhil Bhartiya Prathmik Shikshak Sangh Bhawan Trust Vs. Assistant Director of Income [2007 (8) TMI 386 - ITAT DELHI-G] - Decided in favour of assessee.
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2015 (4) TMI 1275 - ITAT JAIPUR
Revision u/s 263 - Deduction u/s 54F filled in revised return - AO's order except a reference about a letter of revised computation there is no discussion or observation about the merits of allow ability of the claim u/s 54F qua acquisition of house property - HELD THAT:- It is a settled law that income tax assessment shall be fair and reasonable; the valid claim which are due to the assessee should be allowed to it.
In Goetz case [2006 (3) TMI 75 - SUPREME COURT] , the claim of the assessee was refused to be entertained by the AO as no revised return was filed. Hon'ble Supreme Court held that the AO may refuse to entertain the claim in the absence of revised return.
The appellate authorities i.e. ITAT can entertain the same as they have the vested power provided by the statute. Various CBDT circulars and other judicial precedents also enjoin a duty on the AO to consider lawful claims of the assessee though they may not have been claimed in the return.
The legal position which emerges from the above is to the extent that AO may refuse to entertain the claim by way of revised return. However, if this claim is valid then there is no bar on his power to allow any claim in terms of above judgments and CBDT circulars . In this case what we find is that the AO has allowed the claim without commenting on the merits of the claim of the assessee and there is no observation in this behalf and what facts were filed along with return of income.
AO should have made proper observation about the validity of the claim and eligibility of the assessee which is totally missing. Thus we are inclined to hold that the AO’s order is erroneous and prejudicial to the interest of the Revenue.
CIT looking at the lack of inquiries, instead of disallowing the claim outright should have set aside the erroneous issue back to the file of the AO to properly conduct inquiries and decide the merits of the claim. Consequently, we uphold the order of the ld. CIT but we modify the order by a direction of setting aside the issue to the file of the AO to decide it afresh after conducting proper inquiries in accordance with law by providing reasonable opportunity of being heard to the assessee. Thus the appeal of the assessee is partly allowed.
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2015 (4) TMI 1274 - ITAT ALLAHABAD
Allowability of deduction u/s 80IB(7)(a) - income earned out of “saloon” business activity of the assessee - HELD THAT:- The core activity of the hotel business include a hiring of rooms, halls, restaurant, bar etc. integral or core activity of the hotel business the saloon section also would have started along with hotel prior to the March, 2001. There are no facts on the records regarding the profile of the customers to the said saloon activities. It is not the case of the assessee that the users of the saloon are only the inmates of the hotel and the same is not open to the outsiders. In that case, where the saloon is not closed for the outsiders, the ‘saloon’ cannot be said to be the integral part of the hotel activity.
The same should be considered on indifferent business activity. We have also analyzed if the saloon activities i.e. hair dressing, hair dying, trading of the Lakme products this saloon by way of franchisee agreement are akin to the restaurant and bar sections of the said hotel business. In our opinion, the hair dressing/dying etc being related to cosmetics, shall not be equated to the food and drinking sections. These are necessities of the hotel business unlike saloon section which is merely desirable to hotel business. From this point of view also, the saloon section cannot be described having close nexus to the hotel activities. Therefore, the receipts from the ‘saloon’ section are not ‘derived from’ the hotel business.
Regarding learned counsel’s argument relating to relying on the cited orders of the Tribunal, we find the same is misplaced. It is not the case that the AO denied deduction in respect of the eligible hotel receipts of the assessee. What is denied only in respect of a source of income i.e. saloon activity. Therefore, cited judgments by the assessee’s counsel are misplaced. Thus, relevant arguments of the Ld. Counsel are dismissed.
Therefore, we are of the considered opinion that for above reasons also, the order of the Ld. CIT (A) fair and reasonable and it does not call for any interference. There is no issue raised before us by the assessee about the jurisdiction, qua the provisions of section 154 of the Act. Therefore, we are desist from entering into relevant debate - Decided against assessee.
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2015 (4) TMI 1273 - ITAT BANGALORE
TDS u/s 195 - royalty payment - expenditure on imported software - India- USA DTAA or India- Singapore DTAA - HELD THAT:- The issue before the Hon’ble jurisdictional High Court in case of M/s Wipro Ltd [2010 (8) TMI 1053 - KARNATAKA HIGH COURT] was regarding allowability of expenditure of imported software whether capital in nature or revenue. There was no issue before the Hon’ble High Court whether the said expenditure was in the nature of royalty and only a passing reference was made by the Hon’ble High Court that the Commissioner rightly pointed out that it is not a royalty. In any case, when the prior decision in case of CIT Vs M/s Synopsis International Ltd [2013 (2) TMI 448 - KARNATAKA HIGH COURT] and in the latest decision in the case of M/s Samsung Electronics Co. Ltd. [2011 (10) TMI 195 - KARNATAKA HIGH COURT] on the issue of payment being royalty then the contention raised by the learned AR is devoid of any merits. The Tribunal in case of M/s Synopsis International Ltd. (Supra) for the assessment year : 2006-07, has decided an identical issue against the assessee
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2015 (4) TMI 1272 - ITAT CHANDIGARH
Deemed dividend u/s 2(22) (e) - HELD THAT:- CIT(Appeals), on going through the Agreement to Sell in question specifically found that part of the amount is stated as advance and that assessee is 1/3rd owner of the property in question. However, in the Agreement to Sell, assessee claimed to be owner of the property in question. In the Agreement to Sell, it is stated that assessee shall receive the balance amount at the time of execution and registration of the Sale Deed. However, till date, no Sale Deed is executed by assessee in favour of the assessee. Therefore, there is no question of making further payment to the assessee as advanced against the property in question. The other co-owner have never entered into any Agreement to Sell with the company. There was a difference in the property number also as noted by the CIT(Appeals). CIT(Appeals) was justified in holding that assessee's contention is after-thought and the entire transaction relate to sham transaction. The factual discrepancies have not been explained during the course of arguments before us as well. CIT(Appeals) was, therefore, justified in deciding the issue against the assessee.
No merit in the appeal of the assessee on these grounds. Ground Nos. 2 and 3 of the appeal of the assessee are dismissed.
Addition of mobile expenses, car depreciation for personal purposes - AO without pointing out as to which of the expenses were used for personal purposes, made disallowance of 1/5th of the expenditure on this issue - HELD THAT:- CIT(Appeals) confirmed the addition and dismissed this ground of appeal of the assessee. Assessee submitted that it is adhoc addition without pointing out any defect in the books of account of the assessee and in the alternate contention, submitted that addition is excessive in nature.
Considering the explanation of the assessee and findings of the authorities below, we are of the view it is adhoc addition in nature. However, considering assessee's status to be individual, personal use of these facilities i.e. mobile charges and car depreciation could be used for personal purposes, we modify the orders of authorities below and direct that 1/10th disallowance may be made out of this addition. In the result, this ground is partly allowed.
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2015 (4) TMI 1271 - ITAT JAIPUR
Wealth tax assessment - properties not liable to be included in the computation of the wealth of the assessee - HELD THAT:- The Coordinate Bench in THE ACWT, CIRCLE-2, ALWAR VERSUS SHRI NIRANJAN LAL DATA, [2012 (3) TMI 638 - ITAT JAIPUR] had considered all these properties in dispute for the purposes of wealth tax purposes and had held that all the six properties are not to be included in the wealth of the assessee by giving a detailed reasoning against each property.
In this order when facts and circumstances are identical, properties are same for wealth tax purposes and Coordinate Bench had decided this issue for many years in favour of assessee and even revenue has been filing appeals repeatedly before us. Therefore, we dismiss the appeal of revenue on the basis of finding given by the Coordinate Bench in order above.
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2015 (4) TMI 1269 - BOMBAY HIGH COURT
Deduction u/s 80HHC - ITAT referring the issue to the file of A.O., to exclude 90% of “net” interest income excess of interest received or paid provided there is direct nexus between interest earned and paid after establishing the fact that all the interest income except the interest on income tax is forming part of the profits of the business and not income from other sources - HELD THAT:- Substantial questions of law stands covered by the Judgment of the Apex Court in the case of ACG Associated Capsules Pvt. Ltd. v/s. The Commissioner of Income Tax [ 2012 (2) TMI 101 - Supreme Court] in favour of the Respondent-Assessee and against the Revenue.
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2015 (4) TMI 1268 - MADRAS HIGH COURT
Condonation of delay of 81 days in filing appeal - Jurisdiction - power of appellate Assistant Commissioner to condone delay beyond 60 days - section 47(1) of the Puducherry Value Added Tax Act, 2007 - HELD THAT:- Accepting the sufficient cause for delay supported with medical certificate, this court is inclined to set aside the impugned order and accordingly the same is set aside and remitted back to the appellate authority for deciding the appeal on merits after hearing the petitioner.
Petition disposed off.
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2015 (4) TMI 1267 - BOMBAY HIGH COURT
Release of Reward Money - Representation of the Government - It is the contention of the petitioner that, in accordance with the Scheme framed by the State Government, that the petitioner was entitled to an amount of ₹ 9,02,50,000/- as a reward on the basis of the huge recovery of taxes made by the Government on the basis of the information given by the petitioner - HELD THAT:- If the citizens who acting on the representation made by the Government, give some valuable information and upon receipt of such information the tax recoveries are made and subsequently, the citizens are made to run from pillar to post for getting such reward, citizens would lose faith in the system and would not come forward to give the information. We have further observed that this would result in a loss to the Public Exchequer.
Though in the present case, Mr. Sonpal submits that entire recovery is not on account of the information given by the petitioner, but has fairly admitted that part of the recovery is on the basis of the information given by the petitioner - If that be so, the Respondent-Authorities can very well determine as to what percentage of the total recovery is attributable to the information received from the petitioner. If that determination is made, a determination as to how much amount the petitioner is entitled to in accordance with the Scheme framed by the Government can be easily made.
Stand over to 21st July, 2015.
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2015 (4) TMI 1266 - ITAT DELHI
Non prosecution of appeal - appeal adjourned many times as none was present on behalf of the assessee - HELD THAT:- It can be safely presumed that the assessee is not serious in pursuing the present appeal. Accordingly the only alternative left is to dismiss the appeal of the assessee in limine. Support is drawn from the order of the Tribunals in Commissioner of Income- Tax vs. Multi Plan India (P) Ltd. [1991 (5) TMI 120 - ITAT DELHI-D] and Estate of Late Tukojirao Holkar vs. CWT [1996 (3) TMI 92 - MADHYA PRADESH HIGH COURT]
It is appropriate to add that in case the assessee is able to show that there was a reasonable cause for non-representation on the date of hearing then it may if so advised pray for a recall of this order and decisions on merits. The said order was pronounced on the date of hearing itself in the open Court.
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2015 (4) TMI 1265 - ITAT CHENNAI
Validity of reopening of assessment - reopening was made after the end of the four years from the assessment orders - HELD THAT:- There is no allegation by the Assessing Officer that there is any failure on the part of the assessee to disclose all material facts for the purpose of assessment. The assessee having furnished all material facts for the purpose of assessment, even if an assessee erroneously placed higher deduction, in respect of issues raised by the Assessing Officer in his reasons recorded, it will not be a case of failure to disclose fully and truly all material facts and the notice u/s.148 issued to the assessee beyond the period of 4 years from the end of the relevant assessment year is liable to invalid, the same to be annulled.
Our view is fortified by the judgment of Fenner (India) Ltd. v. ITO [1998 (11) TMI 66 - MADRAS HIGH COURT] wherein it was held that to initiate any proceedings u/s.147 of the Act, after the expiry of four years from the end of the assessment year, the Assessing Officer must necessarily record not only his reasonable belief that income has escaped assessment but also the default or failure committed by the assessee, which was not done by the Assessing Officer. - Decided in favour of assessee
Original assessment was completed u/s.143(3) - reopening of assessment - HELD THAT:- Assessing Officer has not pointed out any new material, which came into possession after completing the assessment u/s.143(3). In our opinion, after 1st April, 1989, the Assessing Officer has the power to reopen the assessment u/s.147, if the Assessing Officer has reason to believe that income has escaped assessment and if there is no tangible material to come to the conclusion that there is escapement of income; “mere change of opinion” cannot be a reason to reopen the assessment, as held by the Supreme Court in the case of CIT vs. Kelvinator India Ltd. [2010 (1) TMI 11 - SUPREME COURT] . In these cases, issues are already considered by the Assessing Officer in his original assessments u/s.143(3). Being so, he cannot relook the same records so as to make additions, which amounts to double taxation. - Decided in favour of assessee
Revision u/s 263 - disallowance of depreciation on securities - AO added back and disallowed the same. Similarly, the Assessing Officer disallowed a sum in the net appreciation of the value of AFS and HFT categories - HELD THAT:- the issue dealt with by the Commissioner of Income-tax was actually examined by the Assessing Officer, which was resulted in excess tax than required. The same is evidenced by the consequential order passed by the Assessing Officer dated 27.3.2014 and there was no addition whatsoever in the order of the Assessing Officer. In our humble opinion, the twin conditions stipulated in sec.263; i.e. an assessment order should be erroneous and prejudicial to the interests of the Revenue, are not complied with. Being so, the order passed by the Commissioner of Income-tax under sec.263 of the Act is devoid of merit. Accordingly, the same is annulled and the appeal of the assessee is allowed.
Computing the profit on sale of securities at the time of sale - assessee contended that the claim is revenue in nature and being allowable it was not added back. But the Assessing Officer has rejected - HELD THAT:- In our opinion, this issue is squarely covered in favour of the assessee by the judgment of the Supreme Court in the case of UCO Bank [1999 (9) TMI 4 - SUPREME COURT] and KARUR VYSYA BANK LTD. [2004 (7) TMI 52 - MADRAS HIGH COURT] the securities are held by the assessee bank as stock in trade of the business and the profit and/or loss on sale of securities have been regularly accounted as revenue income and revenue loss in the books of accounts of the assessee. The profit or loss on sale of securities is treated as revenue in nature since the securities are held as stock in trade in the case of the assessee bank.
Disallowance of expenditure incurred on earning of exempted income by invoking the provisions under sec.14A - HELD THAT:- 2% of the exempt income to be disallowed. This ground of appeal is partly allowed.
Disallowance of broken period interest - HELD THAT:- The income from interest on securities is to be assessed only on due/receipt basis and not on mercantile basis as adopted by the Assessing Officer . See KARUR VYSYA BANK LTD. [2009 (7) TMI 1210 - MADRAS HIGH COURT] and CITY UNION BANK LIMITED. [2007 (2) TMI 187 - MADRAS HIGH COURT]
Disallowance of fees paid to SEBI - HELD THAT:- As decided in assessee’s own case for the assessment years 1991-92, 1995-96 and 1996-97 Commissioner(Appeals) has deleted this disallowance and that the same has become final inasmuch as the department has not preferred any appeal on this decision of the Commissioner(Appeals).
Addition made on account of payment of filing fees to Registrar of Companies to increase the authorized capital - HELD THAT:- Similar issue came up for consideration before the Tribunal, Mumbai Bench ‘B’ in the case of Navi Mumbai SEZ (P.) Ltd. vs. ACIT [2015 (3) TMI 314 - ITAT MUMBAI] , wherein it was held that where the assessee incurred certain expenditure for increase in share capital, the entire incremental share capital was used for the purpose of trading stock, then expenditure in question was to be allowed as revenue expenditure and the judgment of the Supreme Court in the case of Brooke Bond India Ltd. vs. CIT [1997 (2) TMI 11 - SUPREME COURT] has no application as in that case, it was increased capital base. Respectfully following the order of the Tribunal, Mumbai Bench ‘B’ cited supra, we are inclined to decide the issue in favour of the assessee
Disallowance of advertisement and publicity expenses - HELD THAT:- In this case, the expenditure was incurred by the assessee wholly and exclusively for the purpose of carrying on the business and it is to be allowed. Accordingly, we confirm the order of the Commissioner of Income-tax(Appeals) and reject this ground.
Addition made on account of excess bonus provision debited in profit and loss account relating to earlier years - HELD THAT:- In our opinion, the assessee claimed bonus every year in respective assessment years and the amount transferred has already been suffered tax in respective assessment years. Being so, the Commissioner of Income-tax(Appeals) is justified in deleting the addition made by the Assessing Officer. This ground is rejected.
Addition made on account of payment of architect fee for interior decoration - HELD THAT:- This ground is not emanating from the order of the Commissioner of Income-tax(Appeals) and the ld. DR was not able to show in which paragraph the Commissioner of Income-tax(Appeals) has dealt with this issue. Since the issue is not arising out of the order of the Commissioner of Income-tax(Appeals), this ground is rejected.
Claim of deduction fully u/s.36(1)(vii) - HELD THAT:- This issue is squarely covered in favour of the assessee by the judgment of the Supreme Court in the case of Catholic Syrian Bank [2012 (2) TMI 262 - SUPREME COURT] wherein held that schedule commercial banks would continue to get the full benefit of the write off of irrecoverable debts u/s.36(1)(vii) in addition to the benefit of deduction for the provision made for bad and doubtful debts u/s.36(1)(viia . Respectfully following the aforesaid judgment of the Supreme Court, we decide this issue in favour of the assessee. Accordingly, this ground is dismissed in both these appeals.
Addition made towards payment of arrears though it was ascertained liability - HELD THAT:- The assessee is following mercantile system of accounting and accounting system of recognition of expenditure on accrual basis is accepted method of accounting. Hence, the Commissioner of Incometax( Appeals) is justified in deleting the addition. This ground is rejected.
Addition on account of amortization charges, though it was a capital expenditure - HELD THAT:- . In our opinion, this issue is covered in favour of the assessee by the decision of the Jurisdictional High Court in the case of City Union Bank Ltd. [2007 (2) TMI 187 - MADRAS HIGH COURT] wherein it was held that the investments are made in accordance with the requirements of the Act, wherein the market price charged from the value shown in the opening balance and at the end of the year, the same could be allowed as depreciation. Accordingly, we decide this issue in favour of the assessee and this ground is rejected.
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2015 (4) TMI 1264 - BOMBAY HIGH COURT
Provision for Expenses - TDS u/s 194C/J - Disallowance u/s 40(a)(i) - short / non deduction of tax - HELD THAT:- Appeal deserves to be admitted on the following substantial question of law :
“(A) Whether on the facts and in the circumstances of the case and in law, the Hon'ble Tribunal is justified in accepting the assessee's contention that the amount covered by 'Provision for Expenses' were not credited to the account of any of the payee but was credited to 'Provision for Expenses' and therefore TDS provisions were not applicable without appreciating the provisions of sub-section (2) of section 194C, Explanation (iv) to section 194H and Explanation (ii) to section 194I ?
(B) Whether on the facts and in the circumstances of the case and in law, in the context of 'Provisions for expenses', the Hon'ble Tribunal has erred in deleting the short / non deduction of tax by holding that in view of disallowances u/s 40(a)(i) / 40(a)(ia), no demand can be raised u/s 201(1) r.w.s. 194C / 194J of the Act?”
TDS u/s 194C - Purchase of traded goods, purchase of packing material and clinical trials - stand of the Revenue was that these are all works contract and there is a requirement of deduction of tax at source u/s 194C - HELD THAT:- The Pharma company provides the formulation and specifications. The third party then manufactures the product or goods and affixes thereon the trademark of the assessee. The raw materials for manufacturing these products are procured not by the assessee or supplied by the assessee but independently by the third party. The property in the goods does not pass on to the assessee till delivery. This is termed as an agreement on principal to principal basis. That is why this is termed as a contract of sale. We do not see how this situation and in the case of Glenmark [2010 (3) TMI 289 - BOMBAY HIGH COURT] is inapplicable to the present assessee.
Merely because the patent is not in any way dealt with and or rights therein are retained by the assessee does not make any difference. The formulations and specifications are provided for manufacture of the goods and which are eventually sold to the assessee. In these circumstances, we do not see that the transactions partake the character of works contract in any manner. Therefore, the issue or question is covered by Commissioner of Income Tax vs. Glenmark.
Transaction was of sale and the assessee was not required to deduct tax at source on payments. (BDA Ltd. vs. Income Tax Officer (TDS) [2004 (3) TMI 11 - BOMBAY HIGH COURT] - Appeal cannot be entertained on Questions (C) and (D)
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2015 (4) TMI 1263 - MADRAS HIGH COURT
Rectification petition u/s 254 - AO rejected the claim of refund, as the return was filed belatedly, but advised the assessee to file a petition under Section 119(2)(b) for condonation of delay and to seek refund - CIT(A) dismissed the appeal holding that the order passed by the AO is not under Section 237 - Tribunal allowed the appeal filed by the assessee holding that the communication from the AO amounted to an order under Section 237 - HELD THAT:- Tribunal, on merits, had come to the conclusion that the order passed by the Assessing Officer is one within the provisions of Section 237 of the Income Tax Act. When the Tribunal had arrived at such a finding, it is not open to the Revenue to file a Miscellaneous Petition challenging the said finding in the guise of rectification of the order. The Revenue has a remedy of appeal as against the findings of the Tribunal. Without resorting to such a remedy, the Revenue has filed the Miscellaneous Petition.
In the light of the above, we see no reason to interfere with the order of the Tribunal. - Decided against revenue
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