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No disallowance for non-deduction of TDS on reimbursement of Expenses

July 4, 2012 4903 Views 0 comment Print

Mitra Logistic Pvt. Ltd. V. ITO – There is no dispute about the fundamental posit ion that as long as the payments are for reimbursements, and not expenditure, the tax deduct ion obligations do not come into play and accordingly, disallowance u/s. 40(a)(i ) cannot be made either. In support of this proposition, our attention is invited to a coordinate bench decision in the case of Satyendra Jhunjhunwalla –vs. – ITO (ITA No. 1988/Kol. /2009; order dated 11.11.2011). He, however, fairly submits that as this aspect of the matter, i.e. payment being in the nature of reimbursement , has not been examined by the authorities below, the matter can be restored to the file of the Assessing Officer for fresh adjudication in the light of the above principle.

Sec. 115JB – Interest capitalised cannot be added to book profit

July 3, 2012 1574 Views 0 comment Print

The Assessing Officer is not competent to make addition to the book profit for amount of interest, as the net profit had already been computed as per provisions of the Companies Act. The said amount does not fall under section 115JB(2) and Explanation 1 thereunder. Therefore, the appeal of the revenue on the said issue was liable to be dismissed.

Assessee not entitled to deduction u/s. 54EC while computing book profit u/s. 115JB

July 3, 2012 1104 Views 0 comment Print

Assessee contended that it is entitled to the benefit of exemption under section 54EC of the Act even while computing book profit chargeable to tax under section 115JB of the Act. The Bench, while passing the order, followed the decision of the Hon’ble Kerala High Court to hold that the assessee is not entitled to deduction under section 54EC of the Act while computing the book profit under section 115JB of the Act.

Admitting additional evidence without calling for remand report violates Rule 46A

July 3, 2012 1928 Views 0 comment Print

We find that certain fresh documents have been produced before CIT(A) and CIT(A) without calling for remand report or confronting such material to the Assessing Officer has passed the impugned order in a very precise manner to delete the impugned addition which is not justified. So, action of the CIT(A) is not only violative of Rule 46A of the I.T. Rules, but also against the natural justice because sufficient and cogent reasons have not been given in this case.

Full value of consideration cannot be replaced by FMV if it exceeds stamp duty value

July 3, 2012 4952 Views 0 comment Print

Having regard to the nature of the asset, if the AO is of the opinion, that valuation of the capital asset is required, but such reference can be made only to ascertain the fair market value, therefore, the applicability of section 55A(b)(ii) is also limited one. We have read section 50C alongwith these connected sections and then arrived at a conclusion that the AO is empowered to refer for valuation of a capital asset under specific circumstances as prescribed under this section provision of section 50C where he has found that the consideration received is less than the stamp duty.

S. 2(47)(v) Possession need not necessarily be sole & exclusive

July 2, 2012 3455 Views 0 comment Print

Owners have entered into an agreement for development of the property and certain rights were assigned to the developer who in turn had made the substantial payment and consequently entered into the property and thereafter if the transferee has taken any steps in relation to construction of the flats, then it is to be considered as transfer u/s. 2(47)(v) of the I.T. Act.

Addition u/s. 68 cannot be made merely because of customers incomplete address

July 2, 2012 4710 Views 0 comment Print

Amounts in the accounts maintained by the assessee are deposits of the customers and/or not under the control of the assessee, and therefore, provisions of section 68 are not applicable to the bank.

Remuneration to Professional taxable as salary if he is governed by same rules as employees of the payer

July 2, 2012 3950 Views 0 comment Print

A careful perusal of the appointment order issued to the doctors shows that a fixed monthly amount was paid by the assessee as remuneration and it is in no way concerned with the fees received from the patients treated by them. The appointment letter was issued to the concerned doctor on the basis of his application. The doctors are governed by the service rules of the assessee.

Penalty cannot be levied on the basis of deeming provision

July 1, 2012 3606 Views 0 comment Print

Chimanlal Manilal Patel Vs. ACIT The AO has not disputed the consideration received by the assessee. The addition has been made on the basis of deeming provisions of section 50C. The assessee has furnished all the facts of sale, documents! material before the AO. The AO has not doubted the genuineness of the documents/details furnished by the assessee. Only because the assessee agreed to the additions because of the deeming provisions it cannot be construed to be filing of inaccurate particulars on the part of the assessee. The assessee agreed to addition on the basis of valuation made by the stamp valuation authority cannot be a conclusive proof that the sale consideration as per the sale agreement is seemed to be incorrect and wrong. In view of these facts we are of the considered view that penalty cannot be levied on the basis of deeming provision.

S. 147 Reopening Void If Reasons Supplied After Reassessment Order

July 1, 2012 8654 Views 0 comment Print

Tata International Ltd vs. DCIT – It is an undisputed fact that the reasons actually recorded by the Assessing Officer were not furnished to the assessee till 14.06.20012 despite repeated requests and demands and therefore, the gist of reasons as furnished vide letter dated 28th June 2007 cannot be treated as reasons actually recorded by the Assessing Officer as per section 148 (2) and as mandated by the Hon’ble Supreme Court in case of GKN Driveshafts (India) Ltd (supra). Thus, the Assessing Officer has failed to furnish the reasons recorded for reopening of the assessment within the reasonable time and rather prior to the completion of assessment, than the reassessment order passed without supply of reasons as recorded for reopening of the assessment, is invalid and cannot sustain.

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