Search Results For: ITAT Delhi


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DATE: December 18, 2015 (Date of pronouncement)
DATE: December 26, 2015 (Date of publication)
AY: 2007-08
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CITATION:
S. 10A: Even undisclosed income surrendered by assessee is eligible for s. 10A exemption if dept does not show that the assessee has any other source

The decision of the Hon’ble Madras High Court in the case of CIT Vs S. Khader Khan Son (2008) 300 ITR 157 is of no help to the assessee because the assessee agreed during the course of survey for the addition only when discrepancies in the loose papers were found. The assessee surrendered Rs.11 lakhs to cover up the irregularities of the business and short coming found during the course of survey. The said surrender was related to the regular business of the assessee and it is not brought on record that the assessee earned the said income from any other source. Therefore, the deduction u/s 10A of the Act was allowable to the assessee being 100% Export Oriented Unit established in SEZ on this income also. In view of the above we uphold the addition made by the AO and sustained by the CIT(A), however, the AO is directed to allow the deduction u/s 10A of the Act

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DATE: September 1, 2015 (Date of pronouncement)
DATE: November 26, 2015 (Date of publication)
AY: 2009-10
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S. 14A/ Rule 8D: The AO must give reasons before rejecting the assessee's claim. He must establish nexus between the expenditure & the exempt income. The disallowance cannot exceed the exempt income

The AO has neither recorded his satisfaction nor given reasons as to how the claim of expenditure in relation to tax free income has not been correctly made by the assessee as envisaged under section 14A(2). The AO has mechanically invoked Rule 8D. The AO has not established any nexus between the investments made and the expenditure incurred under the head interest expenditure and administrative expenses, before disregarding the disallowance suo moto made by the assessee. disallowance u/s.14A cannot exceed the amount of exempt income

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DATE: October 21, 2015 (Date of pronouncement)
DATE: November 20, 2015 (Date of publication)
AY: 2008-09
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S. 271B: The requirement in s. 44AB that the the tax audit report has to be obtained "before" the specified date has to be interpreted to mean "on or before" the specified date. So, even if the audit report is obtained "on" the specified date, there is no default

The term “before” specified date in section 44AB means “on or before” the specified date. Therefore, though audit report is signed on 30th September 2008 and the requirement of law is to be construed as tax audit report required to be obtained on or before 30th September 2008. Hence, the assessee has obtained tax audit report in time and there is no default u/s 271B. In Prem Chand Nathmal Kothari vs. Kishanlal Bachharaj Vyas & Ors dated 5th April 1975 reported in AIR 1976 Bombay 82 the Bombay High Court, relying on the Chambers Dictionary, held that word ‘before’ means ‘previous to the expiration of’. Therefore, before 30th September, 2008 means before the end of 30th September 2008

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DATE: October 28, 2015 (Date of pronouncement)
DATE: November 20, 2015 (Date of publication)
AY: 2006-07
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CITATION:
S. 147: Reopening solely on the basis of information received from another AO that the assessee has booked bogus bills but without independent application of mind to the information renders the reopening void

At the time of recording of the reasons the Assessing Officer apparently was not having any idea about the nature of the transactions entered into by the assessee. In the reasons recorded there is no mention about the nature of the transactions. As per provision of section 147 the reasons to believe has to be that of the Assessing Officer and further there have to be application of mind by the Assessing Officer. The Assessing Officer was also not aware of the nature of the accommodation entries. In the reasons recorded he has simply mentioned the names of the party and the amount and nowhere has stated the nature of such entry. This also shows that the Assessing Officer has made no effort to look into the return of the assessee which was available with him

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DATE: October 16, 2015 (Date of pronouncement)
DATE: October 21, 2015 (Date of publication)
AY: 2001-02, 2002-03
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CITATION:
S. 37(1): If a claim of damages and interest thereon is disputed by the assessee in the court of law, deduction cannot be allowed for the interest claimed on such damages

Once a person has not voluntarily accepted a contractual obligation and further there subsists no legal obligation to pay qua such contractual claim at a particular time, it cannot be said that the person incurred any liability to pay at that point of time so as to make him eligible for deduction on that count. Notwithstanding the fact that obligation relates to an earlier year, the liability to pay arises only in the later year, when a final enforceable obligation to pay is settled against that person. In our considered opinion, there is no qualitative difference between the two situations, viz., first, in which no enforceable liability to pay is created in the first instance, and second, in which though the enforceable liability was initially created but the same stands wiped out by the stay on the operation of such enforceable liability. In both the situations, claimant remains without any legal right to recover the amount and equally the opposite party without any legal obligation to pay the same

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DATE: September 7, 2015 (Date of pronouncement)
DATE: October 9, 2015 (Date of publication)
AY: 2006-07
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S. 271(1)(c): The deeming provision of Explanation 1 to s. 271(1)(c) applies only to a case of "concealment of income" and not to a case of "furnishing inaccurate particulars of income"

There are two different charges i.e. concealment of particulars of income or furnishing of inaccurate particulars of income. The penalty can be imposed only for a specific charge. Furnishing inaccurate particulars of income means, when the assessee has not disclosed the particulars correctly or the particulars disclosed by the assessee are found to be incorrect whereas, concealment of particulars of income means, when the assessee has concealed the income and has not shown the income in its return or in its books of accounts. Explanation 1 is a deeming provision and is applicable when an amount is added or disallowed in computation of total income which is deemed to represent the income in respect of which particulars have been concealed. Explanation 1 cannot be applied in a case where the assessee furnishes inaccurate particulars of income

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DATE: September 28, 2015 (Date of pronouncement)
DATE: October 9, 2015 (Date of publication)
AY: 2009-10
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S. 48: In computing "capital gains" the AO is not entitled to substitute the "market value" for the actual "consideration" received by the assessee. He also cannot disregard the valuation report without cogent material

It is settled position of law that in the case of sale, the Assessing Officer has no power to replace the value of the consideration agreed between the parties. A report of a valuer is an important piece of evidence and the same cannot be discarded without there being any cogent material on record showing that the report of the valuer is not correct

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DATE: July 21, 2015 (Date of pronouncement)
DATE: September 1, 2015 (Date of publication)
AY: 2008-09
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CITATION:
S. 271(1)(c): Offering interest on maturity on Bonds as “long-term capital gains” instead of as “income from other sources” is a mere change in the head of income and a case of bona fide mistake which does not attract penalty

The interest of all the three years was offered to tax in the year of maturity and not year-wise. This is just change in the head of income under which the income is offered to tax. The taxation of the receipt is changed to the head of income ‘other sources’ from the head of income ‘capital gain’. The explanation filed by the assessee is bona fide. This is a case of a bona fide mistake on part of the assessee

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DATE: August 19, 2015 (Date of pronouncement)
DATE: August 27, 2015 (Date of publication)
AY: 2008-09
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CITATION:
Transfer Pricing: Circumstances in which the Profit Split Method (PSM) has to be preferred over the TNMM for determining the ALP and method of allocation of profits between the assessee and the AE under the PSM explained

The Profit Split Method (PSM) first identifies the profit to be split for the associated enterprise from the controlled transactions in which the AEs are engaged. It then splits these profits between the AEs on an economically valid basis that approximates the division of the profit that would have been anticipated and reflected in an agreement, transaction or a residual profit intended to represent the profit that cannot readily be assigned to one of the parties. The contribution of each enterprise is based upon a functional analysis and valued to the extent possible by any available reliable standard market data. The functional analysis is an analysis of the functions performed (taking into account assets used and risk assumed) by each enterprise

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DATE: August 20, 2015 (Date of pronouncement)
DATE: August 27, 2015 (Date of publication)
AY: 2007-08, 2008-09
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CITATION:
Transfer Pricing: Transactions of providing support services to “Sogo shosha” entities cannot be characterized as trading transaction for purposes of comparison and determining ALP and the cost of sales cannot be included

The activities of purchase and sale i.e. trading involves risk and finance whereas in the activity of support services i.e. intending transactions the assessee has neither to incur any financial obligation nor carries any significant risk. The nature of two activities is absolutely different. The activities of trading i.e. purchase and sale are highly insignificant as compared to activity of support service which constitutes the core business activities of the assessee. The TPO and DRP are wrong in applying the trading margins ignoring the facts of the case that the assessee being a service provider the trading margins cannot be applied. Further, the TPO DRP have gone wrong in including the cost of sales in OP/TC ignoring the fact the value of the sale under no circumstances effects the activities of the assessee company, a service provider. For support services the correct method is the TNMM and the assessee has computed the same on the basis of OP/TC. The OECD guidelines also supports this contention that in TP study business transactions cannot be recharacterized. The support service or intending provided by the assessee company is nothing but a trading facilitation both in form and substance