TaxTMI 
TaxTMI 
2018 (5) TMI 2191
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....r the Income Tax Act. ii) The Ld. CIT (A) has also erred in law and facts of the case while giving finding that the assessee case does not fall under section 201(1 A) and falls only under section 40(a)(ia) of the Income Tax Act. iii) The Ld. CIT (A) has also erred in law and facts while disregarding the case laws relied upon by the assessee and disallowing the expenditure of Rs. 1,98,615/- u/s 40a(ia) of the Income Tax Act. 2. Ground of Appeal No. 2 : Depreciation on leasehold improvement Rs. 79.59.039/- i) That the Ld. CIT (A) has erred in law and facts while confirming the addition of Rs. 79.59,039/- for depreciation which was debited by the assessee in the Profit and loss account under the Companies Act ignoring the depreciation chart filed by the assessee claiming depreciation of Rs. 26,25,414/- under Income Tax Act and ignoring the rectification orders u/s 154/143(3) dated 23.08.2013 passed by the Ld. A.O. ii) The Ld. CIT (A) has also erred in law and facts while upholding the findings of the Ld. A.O. that the assessee has not carried out any renovation within the meaning of explanation 1 to section 32(1) of the A....
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.... dated 03.09.2014 therefore, assessee is in appeal before us. 5. The additional ground raised before us as submitted that is purely legal in nature and does not require any fresh verification of facts. It is further stated that it goes to the root of the matter and challenges the basic taxability of the amount in question. Therefore, assessee submitted that it should be admitted. 6. The Id Departmental Representative vehemently objected and submitted that the additional ground may not be admitted. 7. We have carefully considered the rival contentions and find that in the additional ground the assessee has challenged the addition confirmed by the Id CIT (A) of the sum of Rs. 1 crore u/s 28(iv) of the Income Tax Act. The issue has been adjudicated by the Id CIT (A) vide para No. 4 of her order. It is not a new issue but it seems that assessee forgot to raise the above ground of appeal in the original appeal memo. In view of this, we admit the additional ground of appeal of the assessee. 8. Coming to the first ground of appeal regarding disallowance of management fees and license fees of Rs. 1968615/- for non deduction of tax, the brief facts shows that asse....
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....ncrease the rate of tax by the rate of surcharge thereon. Hence, the Ld. assessing officer disallowed the proportionate amount of expenditure to the amount of surcharge. The Ld.CIT (A) confirmed the above disallowance. Coordinate bench in case of s. k. Tekriwal has considered an issue that if the taxes deducted under one section and according to revenue it is required to be deducted under other section may be higher rate of tax is prescribed, and' the assessee was under a bona fide belief that tax is properly deducted then disallowance under section 40 (a) (ia) of the cannot be made. The provisions of section 40 (a) (ia) of Pari materia is similar to the provisions of section 40a (i) of the act. The coordinate bench held as under:- "In the present case before us the assessee has deducted tax u/s. 194C(2) of the Act being payments made to sub-contractors and it is not a case of non-deduction of tax or no deduction of tax as is the import of section 40a(ia) of the Act. But the revenue's contention is that the payments are in the nature of machinery hire charges falling under the head 'rent' and the previous provisions of section 1941 of the Act are applicable....
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....nature of payments falling under various TDS provisions, the assessee can be declared to be an assessee in default u/s. 201 of the Act and no disallowance can be made by invoking the provisions of section 40(a)(ia) of the Act. Accordingly, we confirm the order of CIT (A) allowing the claim of assessee and this issue of revenue's appeal is dismissed." The Hon'ble Calcutta High Court affirmed the above decision in ITA No. 183/2012 dated 3rd of December 2012. The Hon'ble high court affirmed that there is nothing in the provisions of section 40 (a) (ia) which provides for disallowance of the expenditure for short deduction of tax. We also do not find any such provision in section related to disallowance of deduction of expenditure made outside India or to a non-resident. In view of this respectfully following the decision of Hon'ble High Court we direct the Ld. assessing officer to delete the disallowance of above Rs 198615/- of expenses on account of management and license fees paid by the assessee. In the result ground No. 1 of the appeal is allowed. 13. 2nd ground of appeal relates to depreciation on improvement of lease hold assets of Rs. 7....
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....tmental representative vehemently supported the orders of the lower authorities and submitted that when the assessee could not show that what kind of capital expenditure the assessee is incurred then the depreciation thereon cannot be allowed. He specifically referred to para No. 4.2 of the order of the Ld. assessing officer wherein it has been stated that the expenditure incurred by the assessee did not fall within the meaning of building furniture and fittings. 16. We have carefully considered the rival contention and perused the orders of the lower authorities. In fact after the order u/s 154 of the act passed by the Ld. assessing officer the exact amount of depreciation disallowed by the Ld. AO does not remain Rs. 7959039 but only Rs. 2625414. The above depreciation has been claimed by the assessee on account of various capitalisation made by the assessee being in the nature of improvement made to the leasehold assets. The respective details of those expenditure are available at page No. 23 - 27 of the paper book. For assessment year 2009 - 10 the total amount of expenditure incurred by the assessee is Rs. 193,31,630 and for assessment year 2010 - 11....
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....sessee. 17. Ground No. 3 of the appeal of the assessee is pertaining to addition made by the Ld. assessing officer under section 28(iv) of the income tax act on account of cessation of ability of Rs. one crore loan received from SSP Cypus. The assessee has received a loan of Rs. One crore during the assessment year from SSP catering Cyprus Ltd through normal banking channel. However the outstanding liability at the end of the assessment year under reference was only Rs. 89.19 Lacs which is appearing in the balance sheet under the head unsecured loan. The difference in the amount of loan and the amount outstanding at the end of the year was on account of exchange fluctuation. During the assessment proceedings the assessee explained the fact to the Ld. assessing officer that the loan of Euro 147275 is payable to the above company and the assessee has also applied to Reserve Bank Of India for the approval which is pending as on date. It was stated that the said loan would be paid to the above company on receipt of approval from Reserve Bank Of India. However the learned assessing officer made the addition of Rs. one crore under section 28 (iv) of The Income....
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....orts the order of the Ld. assessing officer' that same is chargeable to tax under section 28 (iv) of the act. He submitted that the assessee has received a value of benefit arising from the business of exercises of the profession and therefore same is chargeable to tax as business income of the assessee. 20. We have carefully considered the rival contentions and also the orders of the lower authorities. The fact remains here that the assessee has received a loan of Rs. one crore from one entity from Cyprus. The above amount of loan was received by an agreement dated 14th of July 2009. At the purpose of the loan was for the expansion of the business of the assessee in payment of various security deposits, incurring capital expenditure in respect of the designing and development of the food court at the domestic Security hold area of terminal 3 of Indira Gandhi International airport licensed to the assessee as a select bidder. The principal amount of loan was Euro 147275.41 and interest was payable on that loan Euro Libor +2.5%. To support the above loan the assessee the above party and the liability of this loan is neither ceased nor written back to the profit and loss a....
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....ing to the provisions of section 28 (iv) if the assessee receives any benefit perquisite then the value of such benefit whether convertible into money or not is chargeable to tax as business income under section 28 if it arises from the business or exercise of profession. A plain reading of section 28(iv) would reveal that the income which has been set out in the clauses shall be chargeable to income tax under the head 'profits and gains of business or profession'. Clause (iv) deals with the value of any benefit or perquisite, whether convertible into money or not, arising from business or the exercise of a profession. The Hon Delhi High Court, in Logitronics (P.) Ltd. v. CIT [2011] 333 ITR 386/197 Taxman 394/9 taxmann.com 302 and Rollatainers Ltd. v. CIT [2011] 339 ITR 54/15 taxmann.com 111 (Delhi), followed the decision of Hon Madras High Court in Iskraemeco Regent Ltd. and expounded the law that if a loan had been taken for acquiring a capital asset, waiver thereof would not amount to any income exigible to tax. If the loan is taken for trading purposes and was also treated as such from the beginning in the books of account, the waiver thereof may result in the income, m....