Search Results For: ITAT Delhi


Subodh Gupta (HUF) vs. Pr CIT (ITAT Delhi)

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DATE: January 5, 2018 (Date of pronouncement)
DATE: January 20, 2018 (Date of publication)
AY: 2013-14
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CITATION:
S. 56(2)(vii) Taxability of gifts as income: Meaning of the term "relative" in the context of a Hindu Undivided Family (HUF), and whether if the donor is the mother of the Karta of the HUF, a gift by the mother to the HUF is a gift from a "relative" so as to avoid attracting tax liability explained. All judgements on the subject considered

As per explanation (d) in the definition of “property”, several types of assets are listed including shares and securities. It is not denied that assessee is an HUF, during the year it has received from mother of the Kaka of the assessee HUF a gift of 75,000 shares of a private limited company. Therefore, apparently the provisions of section 56 (2) applies in the case of the assessee. However, proviso to the above section provides that the above clause shall not apply to any sum of money or any property received from any “relative”. Therefore, if such sum or property is received from a “relative” it will not be chargeable to tax under that section. The explanation (e) defines “relatives” in case of a Hindu undivided family as any member thereof. Therefore, if the above assessee, HUF, receives any sum from any member of the HUF then such sum or property received by the HUF assessee will not be chargeable to tax. Therefore, the simple issue that arises to be examined that whether Mrs. Sneh Gupta is a member of the assessee HUF. If she is, then the gift of share is not chargeable to tax in the hands of assessee as income

Vidyadayani Shiksha Samiti vs. CIT (ITAT Delhi)

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DATE: December 14, 2017 (Date of pronouncement)
DATE: January 13, 2018 (Date of publication)
AY: -
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CITATION:
S. 12A: CIT is not justified in rejecting registration on the ground that the non-production of books and vouchers means that the genuineness of the charitable activities cannot be verified. The CIT is entitled only to examine the objects of the trust at the stage of registration and not the books of account

While dealing with the application for registration the CIT has to examine whether the application is made in accordance with s. 12A r/w r. 17A and whether Form No.10A has been properly filled up. He may also examine whether objects of the trust are charitable or not. Sec. 12AA nowhere provides that CIT while considering the application for registration is also required to examine whether the income derived by the trust is being spent for charitable purposes or the trust is earning profit. The language employed by the legislature in s. 12AA only requires that activities of the trust or institution must be genuine which should be in consonance with the object of the trust. At this stage, the CIT is not required to examine the application of income

Aditya Chemicals Ltd vs. ITO (ITAT Delhi)

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DATE: November 21, 2017 (Date of pronouncement)
DATE: January 11, 2018 (Date of publication)
AY: 1997-98
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CITATION:
S. 271(1)(c) Penalty: The law in Maharaj Garage (Bom) that it is not necessary for the penalty notice to frame a specific charge cannot be followed in the context of whether the notice should specify 'concealment' vs. 'inaccurate particulars' because the judgement does not consider SSA’s Emerald Meadows (SC) and is contrary to Samson Perinchery (Bom)

Judgment of Hon’ble Bombay High Court (Nagpur Bench) in the case of Maharaj Garage & Co. Income Tax Reference No.21 of 2008 has not considered the judgment of Hon’ble Supreme Court in the case of CIT vs. SSA’s Emerald Meadows (supra). Further as discussed above, Hon’ble Bombay High Court has itself in the case of CIT vs. Shri Samson Perinchery (supra) has followed the view taken by Hon’ble Supreme Court in the case of CIT vs. M/s SSA’s Emerald Meadows and CIT vs. Ashok Pai (supra)

Halcrow Consulting India Pvt. Ltd vs. DCIT (ITAT Delhi)

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DATE: October 31, 2017 (Date of pronouncement)
DATE: January 11, 2018 (Date of publication)
AY: 2010-11
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CITATION:
S. 271(1)(c) Penalty: Under Explanation 7 to s. 271(1)(c), the onus on the assessee is only to show that the ALP is computed in accordance with the scheme of s. 92 C in good faith and due diligence. The fact that the TPO changes the method of computation of ALP does not mean it is a fit case for imposition of penalty if there is no dishonesty is found in the conduct of the assessee

The scheme of Explanation 7 to section 271(1)(c) of the Act makes it clear that the onus on the assessee is only to show that the ALP was computed by the assessee in accordance with the scheme of section 92 C of the Act in good faith and due diligence. It is not in dispute here that the ALP was computed in accordance with the scheme of section 92C inasmuch as Cost Plus Method was used. The TPO only substituted Cost Plus Method with TNMM and also computed the ALP of intra group services by taking the ALP as nil by applying the CUP Method. Whatever may be the merits in the action of the TPO changing the method of computation of ALP, the same cannot be a fit case for imposition of penalty inasmuch as it cannot be said that the ALP had not been computed by the assessee under the scheme of section 92C

ACIT vs. TRN Energy Pvt. Ltd (ITAT Delhi)

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DATE: January 1, 2018 (Date of pronouncement)
DATE: January 9, 2018 (Date of publication)
AY: 2012-13
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CITATION:
S. 68 Bogus share capital: Share application money cannot be treated as unexplained credit if the AO does not make any investigation on the documentary evidences filed by the assessee or ask for the production of the investors for examination u/s 131 or if adverse material is found during search to prove that share application money is bogus or an arranged affair of the assessee

The A.O. however, did not make any further enquiry on the documents filed by the assessee-company. The A.O. thus, failed to conduct any enquiry and scrutiny of the documents at assessment stage and merely suspected the transaction between the Investor Company and assessee-company because the Investor Company was from Kolkata. The A.O. thus, did not perform his duties at the assessment stage so as to make addition against the assessee-company. No cash was found deposited in the account of the Investor. Therefore, the totality of the facts and circumstances clearly prove that assessee-company discharged initial onus to prove identity of the Investor Company, its creditworthiness and genuineness of the transaction in the matter

DCIT vs. Caparo Engineering India P. Ltd (ITAT Delhi)

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DATE: September 22, 2017 (Date of pronouncement)
DATE: December 30, 2017 (Date of publication)
AY: 2009-10
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CITATION:
S. 32(1)(ii) Depreciation on non-compete fee: The AO should consider whether the verdict in Sharp Business System 211 TM 576 (Del) that non-compete rights are not intangible assets for depreciation can apply to a case where there is no joint venture between the person paying the non-competition fee and the recipient and both parties are outsiders. Law laid down in Nat Steel Equipments vs. CCE AIR 1988 SC 631 on the meaning of the term "similar" to be considered

The Assessing Officer shall redecide this issue afresh after comparing the facts in the case of the assessee with the case of Delhi High Court in Sharp Business Systems (supra) in accordance with law and give clear finding how the case of assessee is covered or not covered by the decision of Delhi High Court in the case of Sharp Business Systems. We may point out that in the case of the assessee there was no joint venture between the person paying the non competition fee and the person receiving the non competition fee. Both the parties were entirely outsiders and the time of the continuity of the agreement was also 10 years not 07 years. We also direct the Assessing Officer that while considering the decision of Delhi High Court he should also consider the decision of Hon’ble Supreme Court in the case of Nat Steel Equipments vs. Collector of Central Excise reported in AIR 1988 SC 631 as in our opinion this decision will also have bearing in the case of the assessee

Amira Pure Foods Pvt. Ltd vs. Pr CIT (ITAT Delhi)

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DATE: November 29, 2017 (Date of pronouncement)
DATE: December 4, 2017 (Date of publication)
AY: 2014-15
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CITATION:
S. 263 Revision: Explanation 2 to s. 263 inserted w.e.f. 01.06.2015 does not override the law as interpreted by the various High Courts whereby it is held that the CIT cannot treat the AO's order as being erroneous and prejudicial to the interest of revenue without conducting an enquiry and recording a finding. If the Explanation is interpreted otherwise, the CIT will be empowered to find fault with each and every assessment order and also to force the AO to conduct enquiries in the manner preferred by the CIT, thus prejudicing the mind of the AO, This will lead to unending litigation and no finality in the legal proceedings which cannot be the intention of the legislature in inserting the Explanation

The ld PCIT has not referred to Explanation 2 of section 263 of the Act which has been inserted with effect from 01.06.2015 however we agree with the finding of the coordinate bench in the case of Narayan Tatu Rane v. Income Tax Officer [(2016) 70 taxmann.com 227], wherein it has been held that Explanation cannot said to have overridden the law as interpreted by the various High Courts, where the High Courts have held that before reaching a conclusion that the order of the AO is erroneous and prejudicial to the interest of revenue, the Commissioner himself has to undertake some enquiry to establish that the assessment order is erroneous and prejudicial to the interest of revenue

Harish Narinder Salve vs. ACIT (ITAT Delhi)

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DATE: September 21, 2017 (Date of pronouncement)
DATE: September 29, 2017 (Date of publication)
AY: 2010-11
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CITATION:
S. 271(1)(c) penalty: The quantum of returned income (Rs. 34.94 crore) and tax paid (Rs.10.85 crore) vis-a-vis the addition/ disallowance (Rs. 13 lakh) indicates whether there was a mala fide intention to conceal. Deferral of depreciation allowance does not result in concealment of income or furnishing of furnishing of any inaccurate particulars. No penalty can be levied for a sheer accounting error of debiting loss incurred on sale of a fixed asset to the P&L A/c instead of reducing the sale consideration from the WDV of the block

The claim for depreciation only gets deferred to subsequent Years by claiming it for half year. In our view the deferral of depreciation allowance does not result into any concealment of income or furnishing of furnishing of any inaccurate particulars. However, it was a sheer accounting error in debiting loss incurred on sale of a fixed asset to profit and loss account instead of reducing the sale consideration from wdv of the block under block concept of depreciation. There was a sheer accounting error in debiting loss incurred on sale of a fixed asset to profit & loss account instead of reducing the sale consideration from wdv of the block under block concept of depreciation. There was a separate line item indicated loss on fixed asset of RS.1,69,429/- in the Income & Expenditure Account which was omitted to be added back in the computation. The error went un-noticed by the tax auditor as well as the same was overlooked while certifying the Income & Expenditure Account 12 and by the tax consultant while preparing the computation of income. Hence, there was no intention to avoid payment of taxes

Divya Creation vs. ACIT (ITAT Delhi)

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DATE: September 14, 2017 (Date of pronouncement)
DATE: September 25, 2017 (Date of publication)
AY: 2010-11
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CITATION:
S. 195 TDS: Entire law explained on whether payment of commission to non-resident agents for services rendered outside India is liable to tax in India u/s 5(2)(b) and 9(1)(i) on the ground that the "source" of the payment is in India and that the insertion of the Explanation to s. 9(2) with retrospective effect by the Finance Act 2010 makes such payments taxable

The Hon’ble Allahabad High Court in the case of CIT vs. Model Exims reported in 363 ITR 66 has held that failure to deduct tax at source from payment to non-resident agents, who has their own offices in foreign country, cannot be disallowed, since the agreement for procuring orders did not involve any managerial services. It was held that the Explanation to section 9(2) is not applicable. It was further held that the situation contemplated or clarified in the Explanation added by the Finance Act, 2010 was not applicable to the case of the assessee as the agents appointed by the assessee had their offices situated in the foreign country and that they did not provide any managerial services to the assessee. Section 9(1)(vii) deal with technical services and has to be read in that context. The agreement of procuring orders would not involve any managerial services. The agreement did not show the applicability or requirement of any technical expertise as functioning as selling agent, designer or any other technical services

New Delhi Television Ltd vs. ACIT (ITAT Delhi)

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DATE: July 14, 2017 (Date of pronouncement)
DATE: July 20, 2017 (Date of publication)
AY: 2009-10
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CITATION:
S. 69A: NDTV indulged in a clear cut case of "abuse of organization form/ legal form and without reasonable business purpose” and therefore, no fault can be found with the order of the AO in charging to tax Rs. 642 crores by re-characterizing the conditions according to its economic substance and imposing the tax on the actual controlling Indian entity. There is no doubt that the transaction used principally as a devise for the distribution/ diversion of sum to the Indian entity. The beneficial owner of the money is the assessee

It is a clear out case of “abuse of organization form/ legal form and without reasonable business purpose and therefore, no fault can be found with the order of the Id Assessing Officer/ Id DRP in charging to tax Rs. 642 crores by re-characterizing the conditions according to its economic substance and imposing the tax on the actual controlling Indian entity. In the present case we do not have any doubt that the transaction used principally as a devise for the distribution/ diversion of sum to the Indian entity on review of all the facts circumstances surrounding the present transaction. In the present case, the beneficial Owner of the money is the assessee. This money trail stares so glaringly on the various complex structures created by the assessee that without proving any substance one cannot reach to any other conclusion but to the conclusion that series of the transaction entered into by the assess were to transfer Rs. 642 crores from the investor-company or the owner of the investor company to the assessee

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