TaxTMI 
TaxTMI 
2016 (1) TMI 797
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.... estimating the annual letting value of property. 3. The learned CIT (A) has erred in law and on facts in sustaining the disallowance of overseas commission of Z 3,12,752/- made by the Assessing Officer u/s. 40(a)(ia) of the Act. 4. The learned CIT (A) has erred in law and on facts in concurring with the disallowance of Rs. 5,51,333/- made by the Assessing Officer u/s. 40(a)(ia) of the Act for want of details. The learned CIT (A) ought to have directed the Assessing Officer to verify and allow the claim if relevant details were produced before him in the proceedings to be conducted to give effect to the appellate order. 5. The learned CIT (A) has erred in law and on facts in agreeing with the disallowance of a sum of Rs. 8,78,599/- made by the Assessing Officer by treating repair expenditure as capital in nature for want of details. The learned CIT (A) ought to have directed the Assessing Officer to verify and allow the claim if relevant details were produced before him in the proceedings to be conducted to give effect to the appellate order. 6. The learned CIT (A) has erred in law and on facts in upholding the disallowance of expenditure of Rs. ....
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.... 01.01.2002 to Nov, 2006 1st Floor Flat No.4 3527.305 15 lakh Futura Polyester 5,00,000 16.01.2007 2nd Floor, Flat No. 5 3587.458 2 crores Centurion Bank 1,00,000 01.07.2004 The AO in view of such information, issued show cause notice to the assessee that, why in respect of similar properties rented to the Centurion Bank and Johnson & Johnson, the rent received was Rs. 20,000/- and Rs. 1 Lakh per month, while the property earlier occupied by Johnson & Johnson was given to Futura Polyester Ltd., @ Rs. 5 lakh per month. This shows that the market rate of the rent was much higher than the rent received. Further, the assessee had received deposits of Rs. 3.50 crores and Rs. 2 crores and if such deposits were not there, then these property would have fetched much higher rent. In response, assessee submitted a reply vide letter dated 15.12.2009, where the assessee had submitted the copies of agreement in respect of all the three companies and stated as under :- "We are enclosing copies of agreement with M/s Johnson & Johnson, Centurion Bank and Futura Polyester Ltd, for premises rented to them at Shangrila (Re....
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.... has been rented to Centurion Bank for rent of Rs. 1 lakh per month with a deposit of Rs. 2 crore. The market value of this flat is also estimated at Rs. 4,50,000/- per month. Considering the rent retched by flat rented to Futura Polyester and other factors. Thus, the ALV of Flat No. 5, at 4.5 lakh per month comes to Rs. 54 lakh as compared to Rs. 12 lakh declared by the assessee while the proportionate ALV of Flat No.5 for the period up to November, 2006 (for 8 month) comes to Rs. 36 lakh as compared to Rs. 1,60,000/- declared by assessee. Accordingly, for these two properties, the total ALV is enhanced by Rs. 76,40,000/- it may not be out of place to mention here that as per assessee's own submission, they have saved interest of Rs. 70-75 lakhs by using interest free deposits in the business clearly indicating that economic potential of the properties is certainly more than the rent received by assessee to the extent and thus, it indicates towards reasonableness of estimate of market value of rent of these two properties. The income from house property has been computed at Rs. 19,63,555/- in view of enhancement of ALV by Rs. 76,40,000/-, after allowing deduction....
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.... the said judgment of Hon'ble Bombay High Court we are of the opinion that the matter should be restored back to the file of the AO to determine the ALV as per the guidelines proposed and laid down by the jurisdictional High Court and after giving due opportunity to the assessee to explain its case. Accordingly, ground no. 2 is treated as partly allowed for statistical purposes. 10. In ground no. 3, the assessee has raised the disallowance of overseas commission of Rs. 3,12,752/- made by the AO u/s 40(a)(ia). 11. The assessee made provision of commission of Rs. 3,12,752/- which was account of payment of overseas commission. The disallowance u/s 40(a)(ia) has been made by the AO on the ground that, assessee has not been able to bring anything on record that the said amount is not taxable in the hands of the recipient. Before us, the Ld. Counsel submitted that, with regard to the payment of Rs. 1,34,12,878/-, the Ld. CIT(A) has remanded back the matter to the AO with a direction to verify the claims and allow the corresponding expenses. However, with regard to the amount of provision for commission, no proper finding has been given either by the AO or by the Ld. CIT(A), therefo....
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....entire expenditure should be treated as revenue expenditure being current repairs. In support assessee had furnished all the relevant details and bills and none of these expenditures have gone to create any capital asset of enduring nature. All the expenditure incurred was purely for repairs as per the details and submission made before the CIT(A) as incorporated in para 5.2 of the appellate order. The expenditure which has been confirmed by the CIT(A) is on account of construction of a boundary wall however the construction cost of boundary wall was only Rs. 1,63,048/- and that also cannot be held to be capital expenditure but only repairs, because old wall was to be replaced. 18. On the other hand, Ld. DR strongly relied upon the order of the CIT(A). 19. After considering the relevant submissions and on perusal of the impugned order, we find that no specific finding with regard to the expenditure aggregating to Rs. 8,78,595/- has been given by the CIT(A) when the cost of construction of boundary wall itself was only Rs. 1,63,048/-, which was the basis for the disallowance by the Ld. CIT(A). Hence, in the interest of justice, we feel that this matter should also be restored ....
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....DSIR) did not accept the claim of the assessee and approval was granted w.e.f. 03.02.2007 only although assessee had applied for the approval from the beginning of the year. (ii) The activity prior to 03.02.2007 was not approved by DSIR hence only proportionate allowance was eligible. (iii) The assessee failed to furnish copy of Form No. 3CL as required under rule 6(7A) of the I.T. Rule thereby contravened the conditions laid down under sub section 3 of section 35 of the I.T. Act. 2(i) On the facts and in the circumstances of the case and in law, the ld. CIT(A) erred in holding that provisions of section 145(3) is not attracted in the case of the assessee without appreciating that information in respect of excess / shortage in stock in physical verification of the goods, the scrap generated were not recorded in the books. 2(ii) On the facts and in the circumstances of the case and in law, the ld. CIT(A) failed to appreciate that the books of accounts of the assessee were incorrect, incomplete and not in consonance with the accounting standard as notified under sub section 2 of section 145 of the I.T. Act". 25. Brief facts qua the issue raised ....
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....ITAT in the case of Claris Lifesciences which has been confirmed by the Hon'ble Gujarat High Court. 29. We have heard rival contentions and perused the relevant finding given in the impugned orders. It is an undisputed fact that the expenditure incurred by the assessee was otherwise eligible for deduction u/s 35(2AB) except for the fact that approval from the Prescribed Authority had given from 3rd February, 2007 to 31st March 2009. From the perusal of the section 35(2AB)(i), it is evident that the expenditure on Scientific Research on In-house R&D facilities is allowable as deduction if it has been approved by the Prescribed Authority. Thus, if the entire expenditure incurred by the assessee on development of facility has been approved then the said expenditure to be allowed for the purpose of weighted deduction. The approval here in this case was granted during the previous year relevant to the assessment year, thus the assessee was entitled to claim weighted deduction in respect of the entire expenditure incurred under section 35AB of the Act. Nowhere it has been provided under the section that R&D facility is to be approved from a particular date and then only it would be al....
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.... with and scrutinized by CIT(A) from pages 16 to 17 of the appellate order. The Ld. CIT(A) after considering the observations and objections of the AO and submission of the assessee, recorded a detailed finding that assessee's books of accounts are liable to be accepted and cannot be rejected. The relevant observation and finding of the CIT(A) in this regard reads as under :- "I have considered the assessment order and the submissions of the Appellant. Looking into the reasons forwarded by the Assessing Officer, the Appellant's offence, the governing principles of section 145, principles of accounting and the specific facts of the Appellant's case, I do not agree with the Assessing Officer that the deficiencies and inadequacies pointed out by him call for rejection of the books of account. To this end, in the first place, on the Assessing Officer's observation on the exclusive method of CENVAT and VAT followed by the Appellant. I find that there were valid and practical reasons for not being able to correlate every item of the stock with the corresponding CENVAT and VAT credit available. As I note, the Appellant's products are numerous and accordingly, item to item correla....
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....ing of scrap, which in itself, without detection of anything specific, cannot make the accounts incorrect and incomplete so as to attract provisions of section 145. In this respect, the decision of the Hon'ble ITAT, Mumbai in the case of Protescap India Pvt Ltd vs Add. CIT in ITA No. 6385/Mum/2009 relied upon by the Appellant bears mention. This decision would indicate that accounting of scrap value on its realization has judicial sanction and accordingly, it cannot be taken as an inadequacy, which can call for rejection of books of account. The comparison of Appellant's profit with SKF and FAG also cannot attract rejection of the books. In the first place, the profit shown by the Appellant is better than that shown by SKF. Further, the Appellant's profile, status and volume of business is not comparable with that of FAG and accordingly, the comparison is incompatible. Although the Assessing Officer has brought out his own issues on this comparison, the fact remains that when seen against the totality of accounts such comparison thus, does not render the correctness and completeness of the books faulty. Books of account cannot be rejected on the basis of difference in perspective. ....