"25 February 2011" Archive

Expenses Disallowed under section 40A(3) and 40A(3A) of Income Tax Act 1961

Section 40A(3) of Income Tax Act 1961 provides for disallowance of expenses in respect of which a payment or aggregate of payments made to a person in a day, otherwise than by an account payee cheque drawn on bank or account payee bank draft, exceeds Rs 20000 and Section 40A(3A) provides for the payment in excess of Rs 20000 in a day made...

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Posted Under: Income Tax |

Once estimation of income is made, further disallowances u/s. 40(a)(ia) are not warranted

Teja Constructions Vs. ACIT (ITAT Hyderabad)

Where income of the assessee having been determined by resorting to estimation, there is no scope for any further disallowance either in terms of section 40(a)(ia)/40A(3) or otherwise....

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After acquisition and vesting of all rights of a land in State, mere speculative right to receive compensation/enhanced compensation is not and cannot possibly be treated as an asset under section 2(ea) of the Wealth-tax Act

CWT Vs. Parminder Singh (Punjab & Haryana High Court)

As soon as the land of the assessee is requisitioned and stood vested in the State, he does not remain its owner and the mere inchoate right to receive the enhanced compensation cannot possibly be treated as assets and included in his wealth subsequently....

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Penalty proceedings – Whenever an addition/disallowance is made, initial burden is upon assessee to prove that it is not his concealed income or he has not furnished inaccurate particulars of such income

ITO Vs. Heaven Distillery Pvt. Ltd. (ITAT Mumbai)

When an explanation is offered, the onus stands shifted on to the Revenue whereby it has to be shown that the explanation offered by the assessee is false or assessee has not been able to substantiate his explanation and failed to prove that such explanation is bona fide and all the facts relating to the same and material to the computati...

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Second hand machinery purchased for use as spare parts for existing old machineries has to be considered as an allowable expenditure on revenue side

r. Aswath N. Rao Vs. ACIT (Karnataka High Court)

When an assessee purchases the spare parts for the existing machineries, same cannot be treated as capital expenditure and it has to be treated as revenue expenditure since these spare parts are purchased for the maintenance of the existing equipments....

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Service of maintenance and repair should be under a Maintenance or Repair Contract/Agreement to attract levy of service tax prior to 16-6-2005

Neo Structo Construction Ltd. Vs. CCE (CESTAT Ahemdabad)

Where there was no separate maintenance/repair contract between the parties, the Commissioner had rightly held that in the absence of any maintenance & repair contract, the demand based on rate or value contract work was not sustainable....

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When assessee is engaged in business of buying and selling shares, profit or loss on such shares would be profit and loss of such business unless assessee establishes that shares in question were bought as a long term investment

Ankita Deposits and Advances Pvt. Ltd. Vs. CIT (Himachal Pradesh High Court)

In a case where a company is dealing in the sale and purchase of shares, prima-facie the profits derived from the sale and purchase of shares would be treated to be business income of the assessee since the assessee is a trader in shares, that does not mean that a trading firm cannot make long term investment in shares and income from sal...

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TPO can compute ALP after giving assessee opportunity to produce evidence in support of ALP computed by him

Maruti Suzuki India Ltd. Vs. Addl. CIT Transfer Pricing Officer (Delhi High Court)

In case the TPO/AO proposes to make adjustments to the income of the assessee by revising the arm’s length price computed by him, he needs to give a notice to the assessee, conveying the grounds on which the adjustment is proposed to be made, followed by an opportunity to reply to that notice and produce evidence to controvert the groun...

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Assessment of rental income- For purpose of assessment under head “profit and gains of business or profession”, it shall be necessary that property acquired and used is for commercial purpose under business activity

CIT Vs. Goel Builders (Allahabad High Court)

Where the investment made by the assessee while constructing the commercial complex seems to be a business investment, the rental income earned from the building as a natural consequence shall be business income....

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Assessee not entitled to depreciation on a plant which is not in operation since its capitalization

Sponge Iron India Ltd. Vs. DCIT (ITAT Hyderabad)

Even after introduction of concept of block assets, identity of the individual assets are not lost and the Assessing Officer can restrict the depreciation having regard to the usage of a plant....

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