Recent Case laws

Income Tax - 2009 - TMI - 34333 - HC , Appeal against remand order - No doubt, where material is enough, the appellate Court should normally determine the issue on merits, even if such issue has not been dealt with by the original authority. However, power of remand can be exercised when as a result of finding of the appellate authority, re-determination of issue becomes necessary. In the present case, on facts, the Tribunal held that it was necessary to have re-determination of assessment for the reasons mentioned in the impugned order. We are unable to hold that the reasons mentioned by the Tribunal for rejecting the conclusion for re-determination of issues are perverse.

Income Tax - 2009 - TMI - 34332 - HC (interesting case)Expenditure incurred for payment of commission to taxi drivers, guides and other commission agents - The assessee carries on the business of departmental stores in which various handicrafts items, carpets etc. are sold to tourists. For the Assessment Year in question i.e. 2005-2006, the assessee claimed expenditure towards commission paid to the taxi drivers, guides and other commission agent to the tune of Rs.11,45,47,937/-. The Assessing Officer allowed Rs.1,21,55,213/- as expenditure out of the aforesaid amount claimed by the assessee. The assessee declared a total income of only 1.43 crores on a turnover of Rs.55,45,91,631/-. The declared gross profit rate was 54.15% and the net profit rate was only 1.93% - CIT(A) allowed expenditure at 14% - ITAT increased it to 16% - Assessee claimed at 18-20% - ITAT order maintained.

Income Tax - 2009 - TMI - 34331 - HC Co-operative Bank – Deduction u/s 80P – Unexplained Income - The assessee invested certain sums, out of the surplus funds available out of the working capital including voluntary reserves, in various government securities and with the banks. Such investments are integral part of normal banking activities and, therefore, the assessee claimed deduction in respect of such income under Section 80P(2)(a)(i) of the Income Tax Act, 1961 – held that interest and dividend income derived out of investment are entitled to deduction - The assessing officer added Rs.2,86,260/- as unexplained cash credit under Section 68 of the said Act. - Such liability in suspense account was shown by the assessee in the normal course of its business as the amount could not be properly identified - the amount could not be treated as unexplained cash credit inasmuch as in the daily business of the banking transactions there are number of entries, which could not be properly tallied due to various mistakes, and, therefore, was shown in the suspense account

Income Tax - 2009 - TMI - 34330 - HC Rectification of mistake - ITAT held that depreciation allowed earlier cannot be withdrawn by revoking the provisions of Section 154 – held that - Only argument raised is that the asset itself did not exist and thus, the claim of the assessee was bogus. This submission cannot be accepted. There is nothing to substantiate this argument. Regular assessment had been done under Section 143(3) of the Act and depreciation was held to be admissible. It has been held that the assessee purchased the asset and leased out the same in the course of its business. Rectification was permissible only if there was error apparent on the face of the record and not something which could be established by long drawn process of reasoning – revenue appeal dismissed.

Income Tax - 2009 - TMI - 34329 - HC Charge of tax at low rate applicable to industrial company - assessee claimed itself to be an industrial company for claiming lesser rate of tax. The Assessing Officer rejected the said claim. The CIT(A) upheld the plea of the assessee - the assessee must itself be engaged in manufacturing activity of the nature specified in the definition and mere holding of shares of an industrial company, was not enough to declare an investment company to be an `industrial company'. Disposed off in favor of revenue.

Income Tax - 2009 - TMI - 34328 - HC Deduction under Section 80-M - gross dividends and without deducting the amount of interest and other expenses - The assessee claimed deduction under section 80-M of the Act on the gross dividend but the Assessing Officer did not accept the claim. It was held that the amount of interest paid by the assessee was required to be reduced from the gross dividend income while working out relief under section 80-M of the Act. This view was affirmed by CIT(A) but the Tribunal reversed the said view – held that – ITAT order is not cored and reversed.