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Showing 201 to 220 of 1244 Records
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2013 (7) TMI 1045
Issues Involved:
1. Disallowance of expenditure incurred on expansion of the Export Oriented Undertaking (EOU) as capital expenditure.
2. Disallowance of lease rent paid.
Summary:
Issue 1: Disallowance of Expenditure on EOU Expansion
The assessee appealed against the Dispute Resolution Panel (DRP) confirming the disallowance of Rs. 1,10,74,365/- incurred on the expansion of the EOU, treating it as capital expenditure. The assessee capitalized the expenditure in the books but claimed it as a deduction in the income tax return, arguing it was an expansion of the existing business. The Assessing Officer (AO) and DRP held that the expenditure was of enduring nature and thus capital expenditure, as the new unit was not in the same premises and considered a new setup.
The assessee relied on the Madras High Court decision in CIT vs Sakthi Sugars Ltd., where similar expenses were treated as revenue expenditure. The DRP's decision was contested on the grounds that the new unit, although separated by distance, was part of the same business under common management. The Tribunal noted that neither the AO nor the DRP detailed the nature of expenses, and the assessee did not provide specifics. The Tribunal remanded the matter to the AO to re-adjudicate in light of the Sakthi Sugars case, allowing the appeal for statistical purposes.
Issue 2: Disallowance of Lease Rent Paid
The assessee claimed Rs. 12,42,820/- as lease rent in the income tax return, while only Rs. 3,98,733/- was debited in the books. The AO disallowed the excess amount due to lack of explanation, and the DRP confirmed this. The assessee argued that the difference was due to the accounting treatment under AS-19, which should not affect the tax deduction as per CBDT Circular No. 2 of 2001.
The Tribunal held that if the lease agreement indicated the lessor retained ownership, the lease rent is deductible. If ownership transferred to the lessee, the cost should be capitalized, and only the interest portion deductible. Due to the absence of the lease agreement, the Tribunal remanded the issue to the AO for fresh adjudication, allowing the appeal for statistical purposes.
Conclusion:
The appeal was allowed for statistical purposes, with both issues remanded to the AO for re-adjudication based on detailed examination and relevant legal precedents.
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2013 (7) TMI 1044
Amendment introduced to Sections 2, 4, 9 and 17, as well as insertion of Sections 31-A, 31-B, 31-C, 37-A, 37-B to the Maharshi Mahesh Yogi Vedic Vishwavidyalaya Adhiniyam, 1995 (Act No.37 of 1995) - The amendment was by way of Amendment Act No.5 of 2000, hereinafter called the “Amendment Act” - Held that:- Amended Section 4(1) under Act 5 of 2000 inclusive of the introduction of proviso to the said Section is ultra-vires of the Constitution and the same is liable to be set aside.
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2013 (7) TMI 1043
Issues involved: Disallowance of bad debts u/s 36(2) and applicability of section 40(a)(ia) on VSAT and lease line charges.
Disallowed Bad Debts u/s 36(2):
The Revenue appealed against the CIT(A)'s order allowing deduction of bad debts u/s 36(2) amounting to Rs. 20,70,684. The AO disallowed the amount, arguing that as the assessee earned only brokerage income, the principal amount of clients could not be considered as bad debts. However, the CIT(A) relied on the ITAT Special Bench decision in the case of Shreyas Morkhia and allowed the deduction. The issue was further clarified by the Hon'ble Bombay High Court's decision in the assessee's own case for the assessment year 2006-07, where it upheld the ITAT's order based on the decision in the case of CIT vs. Shreyas S. Morakhia. Consequently, the Tribunal found no reason to interfere with the CIT(A)'s order and rejected the Revenue's ground.
Applicability of Section 40(a)(ia) on VSAT and Lease Line Charges:
The second issue revolved around the deletion of the addition of Rs. 10,08,586 by the CIT(A) concerning VSAT and lease line charges. The AO disallowed this amount under section 40(a)(ia) for non-compliance with TDS provisions. However, the CIT(A) referred to decisions by co-ordinate Benches and the Hon'ble Bombay High Court in the assessee's case for the assessment year 2006-07, where it was held that these charges did not constitute technical services. The CIT(A)'s decision was in line with the High Court's principles, and thus, the Tribunal dismissed the Revenue's ground. Consequently, the appeal of the Revenue was dismissed, and the order was pronounced on 10th July 2013.
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2013 (7) TMI 1042
Issues Involved:
1. Deletion of penalty levied u/s 271(1)(c) of the Income-tax Act.
2. Non-disclosure of income by the assessee in the return of income.
3. Non-disclosure of the true nature of income during assessment proceedings.
4. Assessing Officer's finding on the assessee's conduct and belief regarding taxability.
5. Reliance on the Supreme Court decision in CIT Vs. Reliance Petro Products Pvt. Ltd.
Summary:
Issue 1: Deletion of Penalty Levied u/s 271(1)(c)
The revenue challenged the order of CIT(A)-I, Pune, which deleted the penalty of Rs. 25,00,000/- levied u/s 271(1)(c) by the Assessing Officer (AO). The assessee, a tax resident of Netherlands, received income from Indian affiliates for C-ICT services and corporate services, which it claimed as non-taxable under the DTAA between India and Netherlands. The AO concluded that these services were technical in nature and taxable as fees for technical services (FTS) u/s 9(1)(vii) and Article 12 of the DTAA. The CIT(A) deleted the penalty, observing that the assessee had a bona fide belief in the non-taxability of the income, and there was no concealment or furnishing of inaccurate particulars.
Issue 2: Non-Disclosure of Income in the Return
The revenue argued that the assessee did not disclose the income in its return. The assessee contended that it had disclosed all relevant facts and adopted a technical position based on the DTAA and judicial precedents. The CIT(A) found that the assessee had made full disclosure in the notes to the return and had a bona fide belief in the non-taxability of the income.
Issue 3: Non-Disclosure of True Nature of Income During Assessment
The revenue claimed that the assessee did not disclose the true nature of income during assessment proceedings. The AO examined the agreements and concluded that the services were technical and taxable. The assessee argued that it had provided all necessary details and had a bona fide belief in its claim. The CIT(A) accepted the assessee's explanation and deleted the penalty.
Issue 4: Assessing Officer's Finding on Conduct and Belief
The AO found that the assessee's conduct indicated no bona fide belief in the non-taxability of the income. The CIT(A) disagreed, stating that the assessee had consistently claimed non-taxability in previous years and had provided detailed explanations. The CIT(A) held that the assessee's belief was bona fide and the penalty was not justified.
Issue 5: Reliance on Supreme Court Decision
The revenue argued that the CIT(A) erred in relying on the Supreme Court decision in CIT Vs. Reliance Petro Products Pvt. Ltd. The CIT(A) found that the assessee's case was covered by the principles laid down in the said decision, which held that making an incorrect claim in law does not amount to furnishing inaccurate particulars of income. The ITAT upheld the CIT(A)'s decision, stating that the issue was a matter of interpretation of law and treaty, and the assessee's claim was bona fide.
Conclusion:
The ITAT dismissed the revenue's appeal, upholding the CIT(A)'s order deleting the penalty. The ITAT also dismissed the assessee's cross-objection as infructuous. The judgment emphasized that mere rejection of a bona fide claim does not warrant penalty u/s 271(1)(c).
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2013 (7) TMI 1041
Issues Involved:
1. Duty and Penalty on Appellant No. 1
2. Penalty on Remaining Appellants
3. Quantum of Duty
4. Validity of Penalty Imposed
5. Role and Liability of Brokers
6. Role and Liability of Supplier EOUs and their Directors
Summary:
1. Duty and Penalty on Appellant No. 1:
The first appellant, a 100% Export Oriented Unit (EOU), procured PTY/PFY duty-free using CT-3 certificates, some of which were forged, and diverted the goods to the Bhiwandi market instead of using them in manufacturing. The tribunal upheld the duty liability on the first appellant, rejecting the argument that the duty should be imposed on the supplier EOUs due to forged re-warehousing certificates. The tribunal cited Notification No. 1/95-C.E. and Rule 196 of the Central Excise Rules, 1944, which hold the recipient liable for duty if the goods are not used for the stated purpose.
2. Penalty on Remaining Appellants:
Penalties were imposed on the remaining nine appellants for their roles in the illegal diversion of goods. The tribunal upheld the penalties, noting the active involvement and knowledge of the appellants in the fraudulent activities. The tribunal dismissed the arguments that penalties could not be imposed under Chapter X of the Central Excise Rules, 1944, and that the show cause notice did not specify the sub-clause under which penalties were imposed.
3. Quantum of Duty:
The tribunal rejected the argument that the duty should be calculated as per the main part of Section 3(1) of the Central Excise Act, 1944, instead of the proviso. It held that the proviso to Section 3(1) was applicable as the goods were allowed to be sold in India, and the duty should be equal to the aggregate of the duties of customs on like goods if imported into India.
4. Validity of Penalty Imposed:
The tribunal dismissed the contention that penalties could not be imposed under Rule 209 when the show cause notice invoked Rule 173Q, noting that both rules are identically worded. It also rejected the argument that the penalty could not be imposed without specifying the sub-clause, stating that the violation was clearly covered under Clause (d) of Rule 209/173Q.
5. Role and Liability of Brokers:
The tribunal upheld the penalties on brokers (Appellant Nos. 4, 5, and 6), noting their active role in the diversion of goods, cash handling, and documentation. The tribunal agreed with the Commissioner's findings that the brokers were aware of the illegal diversion and played a crucial role in the scheme.
6. Role and Liability of Supplier EOUs and their Directors:
The tribunal upheld the penalties on supplier EOUs and their directors (Appellant Nos. 7, 8, and 9), noting their knowledge and active participation in the diversion of goods. The tribunal found that they were financially benefited by getting extra money over the normal price. For Appellant No. 10, the tribunal reduced the penalty to Rs. 50,000, considering the limited role and absence of evidence of additional benefit.
Conclusion:
The tribunal dismissed the appeals of Appellant Nos. 1 to 9, upholding the duty and penalties imposed. The penalty on Appellant No. 10 was reduced to Rs. 50,000. Miscellaneous applications and cross-objections were disposed of accordingly.
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2013 (7) TMI 1040
Issues involved: Condonation of delay u/s Section 14 of the Limitation Act in a Central Excise matter.
Summary:
The appeal was filed against the Tribunal's decision to dismiss it as time-barred. The appellant sought condonation of delay due to pursuing a writ petition earlier, but the Tribunal did not find this explanation sufficient. The High Court examined whether the Tribunal exercised its jurisdiction judiciously.
The High Court held that the question was not about condonation of delay but about the exclusion of time u/s Section 14 of the Limitation Act. It noted that the Central Excise Act does not expressly exclude the Limitation Act's applicability. However, it concluded that even if Section 14 of the Limitation Act applied, it would not be relevant in this case. Section 14 deals with excluding time when proceeding bona fide in a court without jurisdiction, which was not the case here.
Referring to a Supreme Court decision, the High Court stated that it did not provide a ratio on applying Section 14 of the Limitation Act to Central Excise matters. The decision was considered an order under Article 142 of the Constitution, not a legal precedent under Article 141. As no legal point was decided in that case, it was deemed inapplicable to the present situation.
Ultimately, the High Court dismissed the appeal, ruling that the provisions of Section 14 of the Limitation Act were not applicable in the Central Excise matter at hand.
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2013 (7) TMI 1039
Issues involved: Stay petition regarding penalty u/s 112(a) of the Customs Act, 1962 without proper notice and defense.
In the judgment by Appellate Tribunal CESTAT AHMEDABAD, the appellant contended that penalty was imposed u/s 112(a) of the Customs Act, 1962 without proper notice and defense. The Tribunal noted that the show cause notice was not served on the appellant, and the order in original was not provided. It was observed that the appellant, a citizen of India, was not given the opportunity to reply to the show cause notice or defend the case before the authorities. The Tribunal emphasized that serving the notice and considering the reply are essential for imposing a penalty, highlighting a violation of principles of natural justice. The adjudicating authority was directed to serve all relied upon documents to the appellant for a fair opportunity to respond within a specified timeline. The Tribunal clarified that no opinion on the case's merits was given, leaving all issues open for the adjudicating authority to decide in the remand proceeding. The stay petition and appeal were disposed of through remand for further proceedings.
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2013 (7) TMI 1038
Issues Involved:
1. Initiation of reassessment u/s 148 based on alleged income from Reliance Petrochemicals Limited.
2. Challenge to reassessment by the assessee and the Revenue.
Issue 1: Initiation of reassessment u/s 148 based on alleged income from Reliance Petrochemicals Limited:
The appeal and cross objection arose from the Commissioner of Income-tax (Appeals) order for the assessment year 1999-2000. The assessee, a US-based company, did not file a return in India claiming its income was not taxable. The initiation of reassessment was based on a tax evasion petition indicating income earned from India by the assessee but not filed in India. The assessment was completed by the Assessing Officer, but no addition was made on the alleged income from Reliance Petrochemicals Limited. The correctness of the name "Reliance Petrochemicals Limited" mentioned in the reasons recorded was challenged, as it should have been "Reliance Petroleum Limited." The reassessment was challenged by the assessee in a cross objection, arguing that since no addition was made on the alleged income, the entire reassessment order should be quashed.
Issue 2: Challenge to reassessment by the assessee and the Revenue:
The Assessing Officer initiated reassessment proceedings based on the alleged income from Reliance Petrochemicals Limited, but no addition was made on that account. The Revenue argued that there was a tripartite agreement between the assessee and Bechtel France, linking the addition made by the Assessing Officer. However, the assessee contended that there was no such agreement relevant to the assessment year. The Tribunal observed that no addition was made on account of income from Reliance Petrochemicals Limited, and the Assessing Officer lacked jurisdiction to make further additions. Citing legal precedents, it was held that unless the addition forming the basis of the reasons for reassessment is made, the Assessing Officer cannot proceed with making any other additions. Consequently, the reassessment order was set aside, and the cross objection of the assessee was partly allowed while the Revenue's appeal was dismissed.
In conclusion, the Tribunal found that the Assessing Officer lacked jurisdiction to make further additions when no addition was made on the alleged income from Reliance Petrochemicals Limited. The legal issue of jurisdiction was decisive in setting aside the reassessment order, rendering the merits of the additions moot. The cross objection of the assessee was partly allowed, and the Revenue's appeal was dismissed.
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2013 (7) TMI 1037
Issues involved: Demand of tax along with interest and penalty for the period 2004-05 to 2007-08 related to belated payment of service tax, service tax not paid on various works, and failure to provide evidence for tax payments.
Summary:
Belated payment of service tax: The applicant had a demand of tax of &8377; 32,14,641/- for belated payment of service tax for the period from 07/08 to 12/08. It was noted that this amount had already been deposited.
Construction of roads for NPCIL: A demand of tax of &8377; 38,09,076/- was related to the construction of roads, primarily for Nuclear Power Corporation of India Ltd. The applicant claimed exemption under Notification No. 17/2005-S.T., which extended benefits for the construction of public roads.
Tax liability as a sub-contractor: For a demand of tax of &8377; 26,17,130/-, the applicant argued that the principal contractor had already paid the entire service tax. However, the adjudicating authority held the tax liability to be on the applicant. The applicant also disputed demands related to Cargo Handling Service and GTA Service, but failed to provide supporting evidence.
Failure to make out a prima facie case: After considering submissions from both sides, it was determined that the applicant failed to establish a prima facie case for the waiver of the entire amount of tax, penalty, and interest. The applicant was directed to deposit &8377; 25,00,000/- within eight weeks, with the balance adjudged dues being waived upon this deposit. Recovery of the remaining amount was stayed pending the appeal process. Compliance was to be reported by 20th September 2013.
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2013 (7) TMI 1036
Adoption of annual letting value (ALV) of assessee property - Held that:- The assessee is entitled to value property at NIL during the year u/s. 23(1)(c). Therefore, Assessing Officer is directed to accept the ALV at NIL and work out the loss under the head “House Property” accordingly.
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2013 (7) TMI 1035
Issues Involved:
1. Inclusion of royalties/licence fees in the assessable value of imported beta/digibeta tapes.
2. Invocation of the extended period of time for confirmation of customs duty.
3. Imposition of penalties on the appellant and its Managing Director.
Summary:
1. Inclusion of Royalties/Licence Fees in Assessable Value:
The appellant, M/s. Star Entertainment Pvt. Ltd. (SEPL), imported recorded media containing feature films/programs and declared only the cost of the media, excluding royalties/licence fees paid to overseas suppliers. The department argued that royalties and licence fees should be included in the customs value u/s 9(1)(c) of Customs Valuation Rules, 1988, and Rule 10(1)(c) of Customs Valuation Rules, 2007, as these fees were paid as a condition of sale. The Tribunal upheld this view, stating that the payments were a condition precedent for the supply of goods and thus includable in the transaction value. The Tribunal relied on precedents such as *State Bank of India vs. CC, Bombay* and *Living Media India Ltd.* to support its decision.
2. Invocation of Extended Period for Confirmation of Customs Duty:
The appellant claimed that there was no suppression of facts as the value declared was based on the courier agency's declaration. However, the Tribunal found that the appellant knowingly declared only the media cost, excluding the royalties/licence fees, which constituted suppression of facts. The Tribunal held that the extended period for confirmation of duty demand was rightly invoked, referencing the *Associated Cement Companies Ltd.* case, which emphasized the necessity of declaring the full transaction value.
3. Imposition of Penalties:
The Tribunal upheld the penalty on SEPL u/s 114A of the Customs Act, 1962, for suppressing the value of goods with intent to evade customs duty. However, it set aside the penalty on the Managing Director, Mr. Jiten Hemdev, due to the penalty already imposed on the firm. The Tribunal also upheld the confiscation of the digibeta tape containing the film "Bluebird" with an option for redemption on payment of a fine.
Difference of Opinion:
There was a difference of opinion between the Members on whether the royalties/licence fees should be included in the assessable value and whether the extended period for confirmation of customs duty was applicable. The matter was referred to the President for a decision.
Conclusion:
The Tribunal concluded that the royalties and licence fees paid were includable in the assessable value of the imported tapes, and the extended period for confirmation of duty demand was applicable due to suppression of facts by the appellant. The penalties on SEPL were upheld, while the penalty on the Managing Director was set aside.
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2013 (7) TMI 1034
Reopening of assessment - allocation of R&D expenses - Held that:- We are of the opinion that the ground on which reopening is sought, is essentially in respect of allocation of R&D expenses and the details furnished in the reasons recorded essentially are concerning allocating between SPI and SPS [Sikkim] and it is apparent from the record that SPS was not even in existence during the year under question.
When on R&D expenses of the Company issue has been scrutinized extensively during the year under question, we are unhesitatingly of the opinion that this ground is nothing but an attempt to review its own decision and therefore, the same must fail on the jurisdictional ground alone. Not only the Assessing Officer has under scrutiny assessment dealt with the same in the previous years as well as in the year under question extensively, but, the same was also carried to CIT [A] which had finalized the said issue of allocation of R&D expenses by re-allocating 12.5% of all R&D expenditure as relating to formulations during the year under question, as detailed hereinabove while dealing with the same. And therefore, without going into the larger issue of as to whether a particular angle, if is missed out in a question determined on scrutiny in a regular assessment, whether reopening on such left out angle is permissible or not, as far as this ground is concerned, in wake of the reasonings given in the records of reasoning; particularly emphasizing on SPS which never existed and when all other angles otherwise are examined sufficiently and elaborately, this appears to be an attempt pure and simple to review its own order alongwith other materials found in relation to the first issue. Therefore, the notice for re-opening on this count shall need to fail.
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2013 (7) TMI 1033
Issues involved:
The issues involved in this judgment include the treatment of service tax as part of trading receipts u/s 145A for Assessment Year 2007-08, and the addition of liabilities under section 41(1) for both Assessment Years 2007-08 and 2008-09.
Assessment Year 2007-08:
The Appellant challenged the inclusion of service tax as part of trading receipts u/s 145A. The AO enhanced the trading profit by a specific amount and added it to the income of the assessee. The CIT(A) upheld the AO's decision, stating that service tax should be included as per section 145A, regardless of the sector. The ITAT, however, referred to decisions by the Hon'ble Delhi High Court and Chennai Bench, ruling that service providers acting as agents of the government are not liable to claim deductions for service tax. Consequently, the ITAT directed the AO to delete the addition u/s 145A and u/s 43B, as the liability did not arise on the last day of the accounting period.
The second issue pertained to the addition of a specific amount u/s 41(1) of the Act. The AO added the difference in liabilities due to certain parties to the income of the assessee under section 41(1). The CIT(A) confirmed this addition, citing discrepancies in the liabilities as booked by the assessee and other parties. The ITAT, however, noted that the AO did not allow cross-examination of the parties concerned, leading to a violation of natural justice. Consequently, the ITAT restored the issue to the AO for re-examination.
Assessment Year 2008-09:
The grounds raised in this appeal were identical to those in the assessment year 2007-08. Following the decision taken for the previous year, the ITAT directed the AO to delete the addition for Assessment Year 2008-09 as well.
In conclusion, the ITAT partly allowed the appeal for Assessment Year 2007-08 and allowed the appeal for Assessment Year 2008-09.
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2013 (7) TMI 1032
Issues Involved:
1. Disallowance of expenditure claimed towards payment of commission to agents.
Summary:
Disallowance of Expenditure Claimed Towards Payment of Commission to Agents:
The appeal by the assessee, a partnership firm engaged in trading minerals, contested the disallowance of commission payments made to agents. The Assessing Officer (AO) scrutinized the commission payments and required the assessee to provide details of services rendered, clients arranged, agreements, correspondence, and the basis of commission payments. The assessee failed to produce these documents, leading the AO to summon the partner u/s 131 of the Act. The AO inferred from the partner's statement that there were no written agreements or correspondence, and the assessee could not identify customers introduced by the agents or specify sales tonnage related to each agent. The AO also recorded statements from the commission agents, who could not provide definitive lists of customers or sales quantities and claimed inconsistent services.
The AO concluded that the payments were not laid out wholly and exclusively for business purposes, disallowing the commission payments and adding them to the returned income. The CIT(A) upheld the AO's decision, noting the absence of documentary evidence and inconsistencies in the agents' statements. The CIT(A) found that the assessee's claim of collective customer introduction was illogical and that the agents could not substantiate their services.
The assessee argued that commission payments were essential for entering the market, were made through banking channels after TDS, and were confirmed by the agents. The assessee cited trade practices and previous judicial decisions to support their claim. However, the CIT(A) dismissed these arguments, emphasizing the lack of evidence and the implausibility of the agents' claims.
The ITAT, after reviewing submissions and evidence, agreed with the lower authorities. It noted the absence of agreements, correspondence, and credible evidence of services rendered by the agents. The ITAT referenced similar cases where disallowance of commission payments was upheld due to lack of evidence. Consequently, the ITAT upheld the disallowance of commission payments, dismissing the appeal.
Order:
The appeal of the assessee is dismissed. Order pronounced in the open court on 15th July, 2013.
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2013 (7) TMI 1031
Issues:
1. Addition of household expenses
2. Addition of unexplained cash and jewellery
Addition of Household Expenses:
The appeal was filed by the Revenue against the order of the CIT(A) for A.Y. 2008-09. The AO estimated household expenses at Rs. 1,20,000 and made an addition of Rs. 1,08,000. The CIT(A) deleted the addition citing the need for cogent material to support such estimates. The ITAT found that similar additions had been deleted in previous cases, maintaining consistency. Therefore, the addition of Rs. 1,08,000 was rightly deleted by the CIT(A).
Addition of Unexplained Cash and Jewellery:
The AO made additions totaling Rs. 30,35,537 due to unexplained cash and jewellery found during a search operation. The CIT(A) reduced the addition to Rs. 20,02,140 after considering explanations provided by the appellant regarding the jewellery. The ITAT noted discrepancies in the A.O.'s approach and directed the CIT(A) to re-decide the issue after considering all relevant facts and reconciliations. The appeal of the Revenue was partly allowed for statistical purposes.
Conclusion:
The ITAT upheld the deletion of the addition of household expenses by the CIT(A) and directed a re-decision on the addition of unexplained cash and jewellery, highlighting the need for a thorough examination of all relevant facts and explanations provided by the appellant.
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2013 (7) TMI 1030
The Revenue filed an appeal against a penalty reduction in Order-in-Appeal No. 54 to 55/2007(Ahd-I). The Tribunal set aside the impugned order and allowed the appeal filed by the assessee, holding in favor of the assessee. The Revenue's appeal was rejected as nothing survived after the Tribunal's decision in favor of the assessee.
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2013 (7) TMI 1029
Issues involved: Appeal against penalty imposed u/s 271D of the Income Tax Act for receiving cash loans beyond prescribed limit u/s 269SS.
Summary:
The appeal was filed against the penalty imposed by the Commissioner of Income-tax (Appeals) upholding a penalty of Rs. 2,50,000 imposed by the Assessing Officer u/s 271D of the Act for the assessment year 2005-2006. The assessee received cash loans of Rs. 1,00,000 and Rs. 1,50,000 on 30.11.2004, which led to the penalty imposition due to a violation of section 269SS. The contention was that the loans were taken to make a payment for purchase of TDRs, crucial for the business. The cheque issued for the payment would not have been cleared without the cash loans. The CIT(A) upheld the penalty despite the explanation provided by the assessee.
Upon review, it was noted that receiving loans in cash beyond the prescribed limit u/s 269SS warrants penalty u/s 271D, unless there is a reasonable cause as per section 273B. In this case, the cash loans were crucial for meeting a business exigency, as they were used to make a payment that would have caused significant loss to the business if not cleared. The loans were received before the cheque for the payment was encashed, indicating a reasonable cause for accepting the cash loans. Therefore, the penalty imposed u/s 271D was overturned, and the deletion of penalty was ordered.
In conclusion, the appeal was allowed, and the penalty imposed u/s 271D was deleted based on the reasonable cause for accepting the cash loans. The order was pronounced on 31st July 2013.
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2013 (7) TMI 1028
Deemed dividend u/s 2(22)(e) - Held that:- As in the case of CIT vs. Parle Plastics Limited (2010 (9) TMI 726 - BOMBAY HIGH COURT) wherein it has been held that only that amount of loans and advances, which is actually received by assessee share holder from company during relevant assessment year, would fall within inclusive sub-clause(e) of definition of ‘dividend’ appearing in section 2(22)(e); opening words ‘any payment’ occurring in sub-clause (e) of section 2(22) contemplates actual payment made by company to assessee for being reacted as a dividend in computing income of assessee. The opening balance or loan taken in earlier year is not loan received by the assessee during the relevant previous year and could, therefore, be not treated as amount of loan or advance received by the assessee during the relevant previous year. Such amount, therefore, could not be included as deemed dividend under clause (e) of section 2(22) of the Act. In the case under consideration, since the loan amount is not issued during the year, therefore, we find that the CIT(A) has rightly deleted the addition.
Addition on account of house hold expenses - Held that:- AO purely made estimated addition without bringing any material against the assessee for estimating household expenses. The contention of the ld. Counsel for the assessee that in other cases similar additions have been deleted, has not been rebutted through any material on record. In the absence of any material on record in favour of the revenue, we do not find any justification in making addition.
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2013 (7) TMI 1027
Issues Involved:
1. Obligation to deduct tax at source on Leave Travel Concession (LTC).
2. Obligation to deduct tax at source on Medical Reimbursement.
3. Obligation to deduct tax at source on expenditure incurred on meal vouchers.
Summary:
Issue 1: Obligation to deduct tax at source on Leave Travel Concession (LTC)
The Assessing Officer (AO) considered the assessee company as an "assessee in default" u/s 201(1) for not deducting tax on LTC payments. The CIT (A) cancelled the demands and interest charged u/s 201(1) and 201(1A), stating that the employer deducted tax wherever the benefit was not backed by bills or exceeded the allowable amount under the I.T. Act. The Tribunal upheld this view, noting that the AO did not dispute the fulfillment of conditions for exemption u/s 10(5) and that the employer's estimate of taxable salary was bona fide.
Issue 2: Obligation to deduct tax at source on Medical Reimbursement
The AO also considered the assessee in default for not deducting tax on medical reimbursements. The CIT (A) found that the reimbursements fit within the exemption provided u/s 17(2) and that no instance was brought forth where the benefit was disbursed without TDS if not backed by actual expenditure. The Tribunal agreed, stating that the employer's actions were in line with the provisions of the I.T. Act and that the AO's interpretation was too narrow and technical.
Issue 3: Obligation to deduct tax at source on expenditure incurred on meal vouchers
For the assessment year 2010-11, the AO raised a demand for non-deduction of tax on meal vouchers. The CIT (A) held that the meal vouchers issued were within the rates as per I.T. Rules, non-transferable, and valid for food products, with no misuse recorded. The Tribunal supported this view, referencing a similar case (Cadila Healthcare Ltd), and concluded that the disbursement of meal coupons did not attract TDS u/s 192.
Conclusion:
The Tribunal dismissed the Revenue's appeals, affirming the CIT (A)'s order that the assessee was not an "assessee in default" for non-deduction of tax on LTC, Medical Reimbursement, and meal vouchers, as the employer's estimates and actions were in compliance with the I.T. Act.
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2013 (7) TMI 1026
Issues Involved:
1. Obligation to deduct tax at source on Leave Travel Allowance (LTA).
2. Obligation to deduct tax at source on Medical Reimbursement.
Summary:
1. Obligation to Deduct Tax at Source on Leave Travel Allowance (LTA):
The Assessing Officer (AO) considered the assessee company as an "assessee in default" u/s 201(1) for not deducting tax on LTA payments. The AO argued that LTA should be taxable if paid irrespective of the employee's intention to travel. The CIT (A) canceled the demand, stating that no disbursement without bills was treated as non-taxable and that the employer made good any shortfall in TDS by the end of the financial year as per section 192(3). The Tribunal upheld the CIT (A)'s view, noting that the employer's estimate was bona fide and consistent with section 192(3), and that the AO's interpretation was narrow and technical.
2. Obligation to Deduct Tax at Source on Medical Reimbursement:
The AO also considered the assessee as an "assessee in default" u/s 201(1) for not deducting tax on medical reimbursements. The CIT (A) canceled the demand, emphasizing that the medical reimbursement up to Rs. 15,000 per employee per annum is exempt u/s 17(2) proviso, and that the employer had clarified that TDS liability is not denied where disbursements are not backed by bills. The Tribunal agreed with the CIT (A), highlighting that the employer's estimate was bona fide and in line with section 192(3), and that the AO's interpretation was narrow and technical.
Tribunal's Decision:
The Tribunal dismissed the Revenue's appeals, affirming the CIT (A)'s order and ruling that the employer's actions were in compliance with the law. The Tribunal referenced its previous decision in ITA Nos.1390 & 1391/Bang/2012, which dealt with similar issues, and reiterated that the employer's bona fide estimate of taxable salary, including exemptions for LTA and medical reimbursement, was lawful and justified. The Tribunal also noted that the primary liability to pay tax remains with the employee, and in cases of honest differences of opinion, the employer should not be penalized. The appeals were dismissed, and the CIT (A)'s order was upheld as correct and in accordance with the law.
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