Advanced Search Options
Case Laws
Showing 361 to 380 of 516 Records
-
2000 (3) TMI 186
Issues Involved: 1. Computation of deduction u/s 80HHC. 2. Inclusion of additional sale price in business profits for deduction u/s 80HHC. 3. Inclusion of indirect exports in export turnover for deduction u/s 80HHC(3). 4. Consideration of sale of advance license and interest income for relief u/s 80-I. 5. Inclusion of processing charges in business profits for deduction u/s 80HHC. 6. Inclusion of additional sale price, vehicle hire charges, and storage charges in profits for relief u/s 80-I.
Summary:
1. Computation of Deduction u/s 80HHC: The main issue revolves around the computation of deduction u/s 80HHC for the assessment years 1994-95 and 1995-96. The assessee, engaged in processing and exporting marine products, claimed deductions for direct and indirect exports. The dispute arose over the inclusion of an additional price charged to the Export House as part of the turnover. The Assessing Officer excluded this additional price, treating it as commission, which was contested by the assessee.
2. Inclusion of Additional Sale Price in Business Profits for Deduction u/s 80HHC: The assessee argued that the additional sale price should be included in business profits for the purpose of deduction u/s 80HHC(1A). The Tribunal agreed, stating that the additional sale price is part of the sale consideration and not a commission. The Tribunal relied on the agreement and invoices, noting that the entire sale price was treated as turnover by the Sales-Tax Department. The Tribunal directed the Assessing Officer to allow the deduction by treating the additional sale price as part of the profits derived from the sale of goods to the Export House.
3. Inclusion of Indirect Exports in Export Turnover for Deduction u/s 80HHC(3): The assessee claimed that exports made through Export Houses should be included in the export turnover for computing relief under the proviso to section 80HHC(3). The Tribunal agreed, citing the ITAT Delhi Bench's decision in Eastern Leather Products (P.) Ltd. v. Dy. CIT, which emphasized the need for a liberal interpretation of tax statutes granting incentives. The Tribunal directed the Assessing Officer to re-work the relief by including exports through Export Houses in the export turnover.
4. Consideration of Sale of Advance License and Interest Income for Relief u/s 80-I: The Tribunal referred to the Supreme Court decision in CIT v. Sterling Foods, which held that income from the sale of advance licenses and interest income cannot be considered as profits derived from the industrial undertaking for the purpose of relief u/s 80-I. The Tribunal decided against the assessee, dismissing its cross-objection and allowing the Revenue's appeal on this issue.
5. Inclusion of Processing Charges in Business Profits for Deduction u/s 80HHC: The Tribunal upheld the CIT (Appeals) decision that processing charges received by the assessee should be treated as part of the profits of the business for the purpose of deduction u/s 80HHC. The Tribunal noted that the processing involved significant utilization of the assessee's resources, distinguishing it from receipts like brokerage or commission, which are excluded under Explanation (baa) to section 80HHC(4A).
6. Inclusion of Additional Sale Price, Vehicle Hire Charges, and Storage Charges in Profits for Relief u/s 80-I: The Tribunal held that the additional sale price, vehicle hire charges, and storage charges should be treated as profits derived by the industrial undertaking for the purpose of relief u/s 80-I. The Tribunal noted that these charges were part of the business profits and necessary for computing the relief under section 80-I.
Conclusion: The appeals and cross-objections were partly allowed, with the Tribunal directing the Assessing Officer to include the additional sale price in business profits for deduction u/s 80HHC and to re-work the relief under section 80HHC(3) by including indirect exports. The Tribunal also upheld the inclusion of processing charges, vehicle hire charges, and storage charges in business profits for relief u/s 80-I, while deciding against the assessee on the issue of sale of advance licenses and interest income.
-
2000 (3) TMI 184
Business Expenditure ... ... ... ... ..... letters and in the month of March, 1989, there is no letter. Thus, there are only 19 letters in between appellant firm and agent in only 8 months out 21 months of the accounting period 2 letters dt. 31st March, 1989, showing the meetings with Maruti Udyog Ltd. plus 3 bills raised by the agent on the basis of which the commission amounting to Rs. 6,85,681 was claimed which is not sufficient for such a huge claim although it is a fact that the assessee has entered into an agreement with M/s Saurav Marketing (P) Ltd. to look after its interest on its behalf with Maruti Udyog Ltd. We also find that some correspondence was not confronted to the assessee by the AO. We, therefore, are of the opinion that this matter should go back to the AO who will re-examine the issue after giving reasonable opportunity to the assessee in support of its claim and then decide the matter according to law. 11. In the result, the appeal filed by the Revenue is partly allowed for statistical purposes.
-
2000 (3) TMI 183
Registered Deed Not Executed ... ... ... ... ..... s on 1st Jan., 1976, it is crystal clear that transaction took place in the accounting period relevant to asst. yr. 1976-77. Tax on capital gain on any such transaction can be charged as per provisions of IT Act then existing. Since the property in question was not transferred through registered deed, it was outside the purview of the definition of transfer and hence no capital gains could be taxed in that assessment year. Amendment to s. 2(47) was brought on statute from 1st April, 1988. It is not from retrospective effect and hence the definition of transfer as introduced by this amendment would be effective from the transactions which took place only from 1st April, 1988. 5.1. Keeping in view the above facts and the case laws relied upon by the learned authorized representative, we are of the opinion that conclusions drawn by the CIT(A) are most reasonable and hence we decline to interfere on this account. 6. In the result, the appeal filed by the Revenue stands dismissed.
-
2000 (3) TMI 182
Issues Involved: 1. Whether netting between the interest income and the interest paid on borrowings is permissible when the interest income is considered under the head "income from other sources".
Summary:
Issue 1: Netting Between Interest Income and Interest Paid on Borrowings
The appeal was originally disposed of by the Tribunal on February 10, 1999. The revenue filed a miscellaneous application u/s 254(2) of the Income-tax Act, stating that the issue of netting between interest income and interest paid on borrowings, when the interest income is considered under the head "income from other sources," was not adjudicated. The Tribunal recalled its original order on this limited issue and both parties were heard.
The learned Senior Departmental Representative argued that u/s 57(iii) of the Act, only those expenditures laid out or expended wholly and exclusively for the purpose of making or earning such income are deductible from the interest income. He contrasted this with section 36(1)(iii) of the Act, which allows deduction of all interest paid in respect of capital borrowed for business or profession. He cited several judgments to support his contention, including Madhav Prasad Jatia v. CIT, Karnataka Forest Plantations Corpn. Ltd. v. CIT, and Tuticorin Alkali Chemicals & Fertilizers Ltd v. CIT.
The learned counsel for the assessee argued that netting should be allowed between the interest income and the interest paid on borrowed capital invested for earning interest income. He contended that the view in Tuticorin Alkali Chemicals & Fertilizers Ltd was reversed by the Apex Court in CIT V. Bokaro Steel Ltd. He distinguished the cases cited by the DR, stating that in those cases, the business had not commenced, unlike the present case where the business had commenced.
The Tribunal examined the relevant provisions and judicial pronouncements. It noted that u/s 36(1)(iii), interest paid on borrowed capital is deductible while computing income from business or profession, whereas u/s 57(iii), only expenditures wholly and exclusively for earning income from other sources are deductible. The Tribunal referred to the judgments in Madhav Prasad Jatia, Karnataka Forest Plantations Corpn. Ltd, and Amritaben R. Shah, which emphasized that deductions u/s 57 are allowable only if they fall within the clauses enumerated in that section.
The Tribunal also considered the judgment in Tuticorin Alkali Chemicals & Fertilizers Ltd, which held that interest earned on surplus funds is of revenue nature and taxable accordingly. It noted that the judgment in Bokaro Steel Ltd did not reverse the principle laid down in Tuticorin Alkali Chemicals & Fertilizers Ltd but dealt with capitalizing interest incurred before the commencement of production.
The Tribunal concluded that while computing income under the head "income from other sources" u/s 56, only deductions enumerated u/s 57 are allowed. The borrowed fund was not exclusively for earning interest income but for business purposes. Therefore, netting between the interest received and interest paid on borrowed funds is not permissible. The interest income of Rs. 32,101,74 earned on advances to the sister concern was correctly treated as income from other sources, and the assessee is not entitled to netting.
Conclusion: The issue was decided against the assessee, and netting between the interest received and interest paid on borrowed funds was not allowed.
-
2000 (3) TMI 181
... ... ... ... ..... e with regard to the registration of the firm and asked the assessee to produce the partners for the first time through its notice dated 10-5-1991 which was sent during the course of regular assessment for obtaining certain other information for framing the assessment. 10. Keeping in view the totality of the facts and circumstances of the case in the light of the relevant provisions of law, we are of the considered opinion that the Assessing Officer has not adopted correct procedure for examining the application for registration of the assessee. However, by virtue of sub-section (6) of sections 185 of the Act, once the firm is deemed to have been registered, the Assessing Officer has no jurisdiction to examine the genuineness of the firm. This aspect was not examined by the CIT(A). We, therefore, set aside the order of the CIT(A) and direct the Assessing Officer to register the firm. Accordingly, this appeal of the assessee is allowed. 11. In the result the appeal is allowed.
-
2000 (3) TMI 180
Issues Involved: 1. Legality of the addition of Rs. 9,98,000 as unexplained investment in the construction of self-occupied residential property. 2. Jurisdiction and authority of the Assessing Officer (AO) to complete the block assessment. 3. Validity of the reference made by the Deputy Director of Income-tax (Investigation) (DDIT) to the Valuation Cell. 4. Determination of the cost of construction and the objections raised by the assessee.
Summary:
1. Legality of the Addition of Rs. 9,98,000: The assessee contested the addition of Rs. 9,98,000 as unexplained investment in the construction of residential property. The AO made this addition based on a valuation report which estimated the cost of construction at Rs. 21,63,727, significantly higher than the declared cost of Rs. 9,46,920. The AO allowed a 10% deduction for self-supervision, reducing the cost to Rs. 19.48 lakhs and added the difference of Rs. 9.98 lakhs as undisclosed income. The Tribunal partially accepted the assessee's objections, allowing an additional 10% deduction for rate variation, reducing the cost of construction to Rs. 17,31,600.
2. Jurisdiction and Authority of the AO: The Tribunal upheld the AO's jurisdiction to determine the undisclosed income for the block period based on evidence found during the search. The Tribunal noted that the provisions of Chapter XIV-B of the Income-tax Act, 1961, which deals with search assessments, allow the AO to compute the undisclosed income based on evidence gathered during the search, including statements recorded u/s 132(4).
3. Validity of the Reference to the Valuation Cell: The Tribunal rejected the assessee's contention that the DDIT had no authority to refer the property to the Valuation Cell. It was held that the DDIT, as the authorized officer, had the power u/s 132(2) and 131(1A) to requisition the services of the Valuation Officer. The Tribunal also noted that the reference was necessary to ascertain the correct cost of construction, which had a direct bearing on the determination of undisclosed income.
4. Determination of the Cost of Construction: The Tribunal found that the AO had considered the objections raised by the assessee regarding the valuation report and had allowed a 10% deduction for self-supervision. The Tribunal further allowed an additional 10% deduction for rate variation, reducing the cost of construction to Rs. 17,31,600. The Tribunal held that the AO was justified in relying on the valuation report to determine the undisclosed income, as the assessee had not maintained complete details of the cost of construction.
Conclusion: The appeal was partly allowed, with the Tribunal reducing the cost of construction from Rs. 21,63,727 to Rs. 17,31,600, resulting in a partial relief to the assessee. The Tribunal upheld the AO's jurisdiction and the validity of the reference to the Valuation Cell, while allowing additional deductions for rate variation and self-supervision.
-
2000 (3) TMI 179
... ... ... ... ..... he CIT(A) has admitted the additional evidence without giving the opportunity to the Assessing Officer by violating the rule 46A of the Income-tax Rules. To give effect of the majority decision we restore the matter back to the file of the CIT(A) to decide both following issues a fresh after providing an opportunity to the Assessing Officer as well as to the assessee (i) Disallowance of Rs.2,66,682 made on account of purchase of green leaves (ii) Addition of Rs.60,000 on account of interest and bank charges. 3. About the third ground of appeal filed by the Department it may be mentioned that the CIT(A) has deleted the addition of Rs.75,479 pertaining to provident fund. Both the Members have dismissed the ground raised by the Department and upheld the deletion made by the CIT(A). So, in this regard the earlier order of the Tribunal stand without any modification. 4. In the result, the appeal filed by the Department is partly allowed for statistical purposes as discussed above.
-
2000 (3) TMI 178
Issues Involved: 1. Jurisdiction u/s 263 of the Income-tax Act. 2. Disallowance of deduction for advance excise duty paid. 3. Exclusion of 90% of interest income for deduction u/s 80HHC. 4. Exclusion of interest income for deductions u/s 80HH and 80-I. 5. Validity of the order passed by CIT u/s 263.
Summary:
1. Jurisdiction u/s 263 of the Income-tax Act: The Commissioner of Income-tax (CIT) initiated proceedings u/s 263, alleging that the assessment order dated 12-3-1998 was erroneous and prejudicial to the interest of revenue. The Tribunal upheld the CIT's jurisdiction to initiate proceedings u/s 263, stating that the facts of the case warranted the application of section 263 and that the Assessing Officer (AO) had allowed deductions without proper reasoning.
2. Disallowance of deduction for advance excise duty paid: The CIT directed the AO to disallow the deduction of Rs. 78,80,125 representing advance excise duty paid and reflected under the head "loans & advances". The Tribunal, however, found that the excise duty paid was credited in the Modvat account as per the Government Scheme and was shown under the head 'Loans & Advances'. The Tribunal held that the payment was made within time and was allowable under section 43B. The Tribunal followed the decision in the case of Modipon Ltd., where similar facts were considered, and the deduction was allowed.
3. Exclusion of 90% of interest income for deduction u/s 80HHC: The CIT directed the exclusion of 90% of the interest income of Rs. 1,02,44,000 for computing deduction u/s 80HHC. The Tribunal noted that the interest income was inextricably linked with the business activities, as the assessee's business was seasonal, and surplus funds were invested for short periods. The Tribunal held that the interest income should be considered as business income and allowed the deduction under section 80HHC, distinguishing the facts from the case of Tuticorin Alkali Chemicals & Fertilizers Ltd.
4. Exclusion of interest income for deductions u/s 80HH and 80-I: The CIT directed the exclusion of interest income while computing deductions u/s 80HH and 80-I, arguing that the interest income was not derived from the industrial undertaking. The Tribunal, however, held that the interest income was inextricably linked with the business activities and should be treated as business income. Consequently, the Tribunal allowed the deductions under sections 80HH and 80-I, following the reasoning applied for section 80HHC.
5. Validity of the order passed by CIT u/s 263: The Tribunal found that the CIT had exceeded his jurisdiction by deciding the issues on merit and directing the AO to modify the assessment order accordingly. The Tribunal decided to dispose of the appeal on merit, holding that the CIT's order was erroneous and prejudicial to the interest of the revenue.
Conclusion: The Tribunal allowed the appeal of the assessee in part, holding that the deductions for advance excise duty paid and interest income were allowable under sections 43B, 80HHC, 80HH, and 80-I. The Tribunal canceled the directions given by the CIT for modifying the AO's order.
-
2000 (3) TMI 177
Computation Of Undisclosed Income ... ... ... ... ..... ember, 1997 whereas the assessment itself was completed on13th Dec, 1997. It was thus contended by the learned counsel that the AO had included in the undisclosed income of the block period, the amounts of deposits in the bank accounts of the assessee which were very much explainable. But the assessee could not explain due to paucity of time. The learned Departmental Representative fairly conceded that the assessee should be given an other opportunity to explain the entries of deposits in these bank accounts. 13. We have heard both the sides. It is obvious that the AO completed the assessment within a short period from the date of issue of questionnaire to the assessee. It would be in the interest of justice if the order of the AO on this issue is set aside. We, therefore, restore this issue to the file of AO with direction to decide it afresh, after affording opportunity of being heard to the assessee. 14. In the result, the appeal is partly allowed for statistical purposes.
-
2000 (3) TMI 176
Issues Involved: 1. Limitation for completion of block assessment. 2. Additions on account of cash credit and squared up accounts. 3. Addition on account of sarson business for the assessment year 1992-93. 4. Addition based on the Neelgagan Pad found and seized during search and seizure operation. 5. Addition relating to investment in the construction of building at Prathapur.
Summary:
1. Limitation for Completion of Block Assessment: The assessee contended that the block assessment order dated 26th Dec, 1997 was barred by limitation, arguing that the search conducted on 11th Sept., 1995 should set the deadline for completion of the block assessment as 30th Sept., 1996, u/s 158BE(1). The Departmental Representative argued that the case fell u/s 158BD, making the time-limit for completion one year from the end of the month in which the notice was served (14th Dec, 1996). The Tribunal held that since the search was conducted on an individual and the block assessment was accepted under s. 158BC, the appellant could only be covered under s. 158BD, making the assessment within the limitation period as per s. 158BE(2).
2. Additions on Account of Cash Credit and Squared Up Accounts: The AO added amounts to the undisclosed income of the assessee based on cash credits shown in the books during different years of the block period. The assessee argued that these credits were included in regular books, audited, and accepted by the Department in previous assessments. The Tribunal agreed with the assessee, stating that the AO stepped out of jurisdiction by doubting the genuineness of the cash credits without any material found during the search establishing undisclosed income. Consequently, these amounts were excluded from the undisclosed income.
3. Addition on Account of Sarson Business for the Assessment Year 1992-93: The AO added Rs. 4,65,244 as undisclosed income based on unrecorded purchases and sales of sarson in the ledger. The assessee contended that the transactions were commission-based and not directly recorded in the ledger. The Tribunal found that the AO did not follow natural justice principles by not confronting the assessee with the Inspector's report. The issue was set aside to the AO for fresh decision after giving the assessee an opportunity to be heard.
4. Addition Based on the Neelgagan Pad Found and Seized During Search and Seizure Operation: The AO treated sums based on entries in the Neelgagan Pad as undisclosed income. The assessee denied ownership of these papers and claimed inadequate opportunity to explain them. The Tribunal noted that the AO did not provide a basis for treating the amounts as undisclosed income and did not confront the assessee with the proposed addition. The issue was set aside to the AO for fresh decision after providing the assessee an opportunity to be heard.
5. Addition Relating to Investment in the Construction of Building at Prathapur: The AO added Rs. 9,17,509 based on a valuation report, doubting the disclosed investment in the building. The assessee argued that the disclosed investments were accepted in regular assessments and no material found during the search indicated undisclosed investments. The Tribunal held that without any material found during the search, the AO was not justified in referring the matter to the DVO and making the addition. The addition was not warranted.
Conclusion: The appeal was partly allowed, with several additions made by the AO being excluded or set aside for fresh consideration.
-
2000 (3) TMI 175
Charitable Or Religious Trust, Words And Phrases ... ... ... ... ..... ty and not to earn profit, it would not lose its character of a charitable purpose merely because some profit arises from the activity. 5.13 Inthe present case, we find that the trust was constituted with the object of perpetuating the memorial of Pt. Peare Lal Sharma. The object was to be attained by providing a hall, a library, a dispensary, public workers room and such other amenities as may be desirable and feasible. To attain that objective the building was constructed. The mere fact that part of that was let out to Mool Chand Sharbati Devi Hospital Trust will not change the character of the trust. 5.14 We have taken into consideration the entire conspect of facts. In our opinion, the assessee can be construed to be a public charitable trust. As such, it is entitled to get the benefit of section 11 subject to the fulfilment of other conditions contained in the section. Accordingly, we uphold the impugned order. 6. Inthe result the appeals of the Revenue, stand dismissed.
-
2000 (3) TMI 174
Deductions, Exporters ... ... ... ... ..... iic), which are incentives granted by the Government, to arrive at the profits of business so also the receipts by way of brokerage, commission, interest, rent, charges or any other receipt of a similar nature. It is to be noted that these receipts had no element of turnover in the strict sense and, therefore, they are to be excluded. The receipts which had a direct bearing with the export cannot be excluded while applying section 80AB. As we have already held, this is more clear from the wording in section 80HHC, that the deductions are to be computed subject to the provisions of this section whereas in sections like 80HH, 80HHB, 80-I, 80-J and 80JJ, the deductions are to be computed in accordance with the provisions of this Act . In the light of the above, the provisions of law and the decisions relied on by both parties, we arc of the view that the appeal by the assessee is liable to be allowed. We do accordingly. 30. In the result, the appeals by the assessee are allowed.
-
2000 (3) TMI 173
... ... ... ... ..... of the Income-tax Rules. Salary for this purpose includes basic pay, D.A. (if terms of contract or employment so provide) and commission. The ld. D.R., on the other hand, relied on the orders of the authorities below. 18. We have considered, the submissions of the parties. Appendix 2 of rule 17(iii) deals with the determination of value for free electricity as per which salary includes basic pay, D.A. (if terms of contract or employment so provide) and commission., Therefore, the contention of the ld. Counsel for the assessee is quite correct. The Assessing Officer is directed to recompute the perquisite value on the basis of Appendix 2 and restrict addition to the extent mentioned herein. This ground is partly allowed. 19. In the result, the appeals in the cases of S/Shri Rajinder Gupta for the assessment year 1992-93, Nohar Chand Gupta, Varinder Gupta and Smt. Madhu Gupta are allowed but the appeal in the case of Rajinder Gupta for assessment year 1996-97 is partly allowed.
-
2000 (3) TMI 172
Words And Phrases ... ... ... ... ..... held that Government Distilleries squarely came under the Explanation to section 206C and it was obligatory on the part of Government Distilleries being sellers to collect income-tax from the buyers at the rates specified in sub-section (1) of section 206C. The said decision also lends support to the view that the definition of buyer as given in clause (a) of the Explanation would cover a person obtaining goods of the nature of alcoholic liquor from the Government or its agencies and not a person who only obtains a licence to trade in alcoholic liquor and correspondingly the seller would be the Government or its agencies or any other person who directly sells the liquor to the buyer in an auction or by any other mode. 12. In the final analysis, we quash the orders passed by the respondents under section 206C(6) of the Income-tax Act, 1961. 13. In the result, the appeals are allowed. The registry is directed to issue the orders dasti to the ld. D.R. and the assessees Counsel.
-
2000 (3) TMI 171
Penalty, For Concealment Of Income ... ... ... ... ..... ued earlier by him to concealed income worked out on the basis of enhanced income. We feel that this basic flaw in imposition of penalty would vitiate the entire penalty order. The decisions of Allahabad High Court in Shadiram Balmukand s case and Dwarka Prasad Subhash Chandra s case support the contention of ld. counsel in this behalf. We feel that even on merits the explanation furnished by the assessee, though not accepted while imposing penalty, has not been found to be false. As mentioned above, addition on account of unaccounted sales is based on estimation w.r.t. extra expenditure claimed and in case of addition made on account of discrepancies in certain accounts even the Tribunal has accepted a part of explanation furnished and have reduced the said addition substantially. Thus on facts and circumstances of the case, we feel that the penalty has been rightly deleted by CIT(A) and we see no reason to interfere with his order. 5. In the result, the appeal is dismissed.
-
2000 (3) TMI 170
Issues Involved: 1. Confirmation of prima facie adjustment by the AO u/s 143(1)(a) regarding disallowance of provisions for doubtful debts and wealth-tax while computing book profit u/s 115JA. 2. Denial of credit for income-tax deducted at source amounting to Rs. 12,07,079.
Summary of Judgment:
Issue 1: Prima Facie Adjustment u/s 143(1)(a) - The assessee, a domestic company engaged in manufacturing and sale of steel wires and ropes, filed a return showing a loss but disclosed book profit for the purpose of s. 115JA. - The AO processed the return u/s 143(1)(a) and added back Rs. 1,56,00,000 (provision for doubtful debts and advances) and Rs. 1,25,000 (provision for wealth-tax) to the net profit for computing book profit, resulting in a higher tax liability. - The assessee appealed, arguing that these provisions should not be disallowed as they do not fall under the adjustments specified in the Explanation to s. 115JA(2). - The CIT(A) upheld the AO's adjustments, but the Tribunal disagreed, stating that: - Provision for doubtful debts does not fall under cl. (c) of the Explanation to s. 115JA(2) as it pertains to diminution in value of assets, not liabilities. - Provision for wealth-tax cannot be equated with income-tax and thus does not fall under cl. (a) of the Explanation. - The Tribunal concluded that the sums of Rs. 1,56,00,000 and Rs. 1,25,000 should not be added back to the net profit for computing book profit u/s 115JA.
Issue 2: Credit for Income-Tax Deducted at Source - The assessee contended that the AO failed to grant credit for income-tax deducted at source amounting to Rs. 12,07,079. - The CIT(A) did not address this ground in their order. - The Tribunal restored this issue to the CIT(A) for reconsideration after providing the assessee an opportunity for a hearing.
Conclusion: - The appeal of the assessee was allowed, with the Tribunal ruling that the provisions for doubtful debts and wealth-tax should not be added back to the net profit for computing book profit u/s 115JA. - The issue regarding the credit for income-tax deducted at source was remanded back to the CIT(A) for further consideration.
-
2000 (3) TMI 169
Commissioner, Powers Of ... ... ... ... ..... egarding the levy of interest under section 215, however, we find that the order of the second CIT(A) upholds the levy of interest under that section in principle. However, the working of the tax will undergo change as a result of this order being passed by us. The Assessing Officer should consider the question of levying/non-levying interest under section 215 in accordance with his finding regarding discrepancy between the assessed tax and the advance-tax paid as per the provisions of section 215. 17. Ground No. 4 agitates against the order of the CIT(A) (third) deleting the interest charged under section 220(2). We order that the matter relating to charging interest under section 220(2) should be considered on the basis that the issue is consequential to the calculation of tax to be done as a result of our present order. The Assessing Officer is directed to take action accordingly. 18. In the result, the departmental appeal is partially allowed to the abovementioned extent.
-
2000 (3) TMI 168
Issues Involved: 1. Whether the receipt of Rs. 175 lakhs by the assessee was a capital receipt or a revenue receipt. 2. Whether the receipt was casual and non-recurring in nature and thus taxable u/s 10(3) of the Income-tax Act.
Issue 1: Nature of Receipt (Capital vs. Revenue) The Department contended that the receipt of Rs. 175 lakhs by the assessee should be treated as revenue receipt and taxable under section 10(3) of the I.T. Act. The Assessing Officer (AO) considered this amount as consideration for arranging the transfer of control of W.I.E.L. to U.B.L., deeming it a casual and non-recurring receipt. The AO cited the judgment of Allahabad High Court in CIT v. Gulab Chand [1991] 192 ITR 495 and the Supreme Court's decision in CIT v. B. C Srinivasa Setty [1981] 128 ITR 294 to support his stance that a capital receipt without a cost of acquisition should be treated as casual and non-recurring.
Issue 2: Applicability of Section 10(3) The CIT(A) disagreed with the AO, holding that the Rs. 175 lakhs received by the assessee was a capital receipt for entering into a restrictive covenant, and not income under section 2(24) of the Act. The CIT(A) relied on various case laws, including Gillanders Arbuthnot & Co. Ltd v. CIT [1962] 46 ITR 847 and CIT v. Rao Raja Kalyan Singh [1974] 97 ITR 690, to establish that compensation for agreeing to refrain from competitive business is a capital receipt. The CIT(A) also referenced Circular No. 158 dated 27-12-1974, which clarified that casual and non-recurring receipts are liable to income-tax only if they can be characterized as income.
Tribunal's Decision: The Tribunal upheld the CIT(A)'s decision, stating that the Rs. 175 lakhs received by the assessee was a capital receipt for agreeing to a restrictive covenant and not casual or non-recurring in nature. The Tribunal emphasized that the receipt arose from a negotiated agreement and was not unforeseen or accidental. The Tribunal cited the case of M.N. Karani v. Asstt. CIT [1998] 64 ITD 119 (Mum.) and K.S.S. Mani v. ITO [1995] 54 ITD 76 (Mad.), where similar receipts were treated as capital receipts. The Tribunal concluded that the receipt was outside the purview of the definition of income and thus not taxable under section 10(3).
Conclusion: The appeal filed by the Department was dismissed, and the CIT(A)'s order deleting the addition of Rs. 175 lakhs was upheld.
-
2000 (3) TMI 167
Issues Involved: 1. Disallowance of premium on redemption of debentures. 2. Disallowance of entertainment expenditure. 3. Disallowance of contribution to Indoxco Club under s. 40A(9). 4. Deduction of amount transferred to debenture redemption reserve while computing "book profit" u/s 115J.
Summary:
1. Disallowance of Premium on Redemption of Debentures: The assessee disputed the confirmation of disallowance by CIT(A) of Rs. 6,60,000 on account of premium on redemption of debentures. The Tribunal found that the issue was covered by the decision of the Supreme Court in Madras Industrial Investment Corpn. Ltd. vs. CIT and the Calcutta High Court in National Engineering Industries Ltd. vs. CIT. It was held that the extra premium should be spread over all the years between the date of issue and redemption, and the amount relevant to the accounting year is deductible u/s 37. The Tribunal reversed the order of CIT(A) and decided in favor of the assessee.
2. Disallowance of Entertainment Expenditure: The assessee contested the disallowance of Rs. 5,000 under s. 37(2)(i) on account of entertainment expenditure. The Tribunal held that the minimum entertainment expenditure of Rs. 5,000 is allowable under s. 37(2)(i) irrespective of whether the computed income is a loss or profit. The Tribunal reversed the order of CIT(A) and decided in favor of the assessee.
3. Disallowance of Contribution to Indoxco Club under s. 40A(9): The assessee challenged the disallowance of Rs. 4,57,000 representing contribution to Indoxco Club, etc. under s. 40A(9). The Tribunal observed that the contribution was a reimbursement of expenses for sports and recreational activities of employees, not for setting up or forming a fund, trust, company, etc. The Tribunal referred to the decision of the Tribunal in Dy. CIT vs. A.P.E. Belliss India Ltd., which supported the view that such expenses are not covered under s. 40A(9). The Tribunal deleted the disallowance and reversed the order of CIT(A).
4. Deduction of Amount Transferred to Debenture Redemption Reserve while Computing "Book Profit" u/s 115J: The assessee raised additional grounds regarding the deduction of Rs. 50,00,000 transferred to the debenture redemption reserve while computing "book profit" u/s 115J. The Tribunal admitted the additional grounds, citing the Supreme Court's decision in National Thermal Power Co. Ltd. vs. CIT, which allows raising new grounds before the Tribunal if they involve a question of law based on existing facts. The Tribunal agreed with the assessee that the debenture redemption reserve is not a reserve within the meaning of cl. (b) or an unascertained liability within the meaning of cl. (c) of the Explanation to s. 115J. The Tribunal held that the amount transferred to the debenture redemption reserve should be allowed as a deduction while computing "book profit" u/s 115J. The additional grounds were decided in favor of the assessee.
Result: The appeal is allowed in part.
-
2000 (3) TMI 166
... ... ... ... ..... eal against the order of the Assistant Collector and the same was pending before the Collector, Central Excise and was yet to be finalised. The Tribunal held that in such a situation, the liability could not be said to have ceased as cessation of liability for the purpose of section 41(1) of the Act meant irrevocable cessation so that there is no possibility of the liability being revived in future. If there is such a possibility of reviving the same, the issue is not complete and provision of section 41(1) are not attracted. Therefore, the Assessing Officer had no jurisdiction to invoke the provision of section 41(1) and to levy tax on the aforesaid refund amount. The Tribunal, accordingly, deleted the addition made by the Assessing Officer. 10. In view of the above facts and the reasons mentioned in the foregoing paragraphs, we hold that the order of the Ld. Commissioner (Appeals) is legal and the same is upheld. 11. In the result, the appeal of the department is dismissed.
............
|