Income Tax Update of the week:
In case of set off of business losses the expression “any“ business clearly includes all businesses, without making any distinction between speculation and non-speculation business, and, therefore, going by the plain language of the statutory provision losses in a business, other than in speculation business, can be set off against profits of speculation business as also non speculation business - Tri
In case of cancellation of registration granted to a Charitable Trust u/s 12A where The CIT by his own motion added one more condition in section 12AA (3) that the object of the assessee, Agra Development Authority is not charitable as per amended provisions of section 2(15) for which the CIT is not empowered to add such own condition in the statute - Tri
Entertainment tax subsidy and where there was no obligation on assessee to utilize it for any specific purpose will not be hit by Explanation 10 to Sec. 43(1) - Tri
In case of depreciation u/s 32 for a going concern business plant ready for used but not used in actual due to unavailability of raw-material. In such a case depreciation will be allowed - HC
TDS u/s 194J for sales, servicing and managing a workshop for maintenance of vehicle. The dealer has not rendered technical services as contemplated u/s 194J to the assessee for which the assessee paid a particular amount to the dealer and non-deduction of tax at sources on such payments does not attracts disallowance u/s 40(a) (ia) - Tri
Selling of trees which were grown spontaneously for which there is no cost of acquisition. It has to be treated as capital in nature and since there is no cost of acquisition, it is not liable for taxation. - Tri
Assessing Officer has every right to look into the genuineness of expenses claimed by the assessee and in the absence of non production or inadequate documentary evidence in support of expenses claimed can disallow a part of expenses after recording finding of facts. - Tri
Application of percentage completion method for computation of profit real-estate business where a ratio of the basic cost (total) to the other (total) costs (for the entire project) be worked out, which percentage would then be applied for each year, including the current year, in proportion to the other cost for that year. - Tri
Penalty proceedings u/s 271(1)(c) accepting or rejecting the assessee's claim is based on appreciation of those evidences, forming part of the assessee's explanation, and for which reference is made to a series of decisions by the apex court, as follows - Tri
Disallowance u/s 40(a)(ia) for provision for Auditor's remuneration. The stand of the assessee that the concerned payees were not identifiable at the time of making the provision is required to be verified keeping in view that the auditors generally are appointed in the relevant financial year itself. - Tri
Penalty u/s 271(1)(c) in dispute has been imposed is purely on estimation basis and the Assessing Officer has not brought any material on record to establish any mala fide intention of the assessee to evade tax. There shall be no penalty in such case - Tri
The language of Section 14A r.w.r. 8D itself provides the mandate inasmuch as it prescribes or authorizes a disallowance only qua investment, income from which is not taxable, so that in limiting the amount worked out with reference to the total investment; the same also yielding taxable income - Tri
Special Audit of the Trust under section 142(2A) of the Income Tax Act, 1961 where AO has properly exercised its jurisdiction to order a special audit after obtaining the approval of the Chief Commissioner for the same. - HC
Addition u/s. 40A(2)(b) of the Income Tax Act purely on the ground that the assessee has increased remuneration to its Directors not allowed - Tri
Assessment orders server after expiry of period of limitation. In the given case assessment orders in these cases though made on December 31, 2009, those were served on the assessee on May 10, 2010, i.e., after 130 days from the date of order. Hence, assessments are barred by limitation and non est and ineffective - Tri
Assessee firm is holding less than 10 percent of shareholding, irrespective of the fact that the shareholding of the firm to whom advance had been made and the partners of the said firm have shareholding more than 10 percent of the said concern, which had advanced the amount. Hence no Deemed dividend u/s 2(22)(e)- Tri
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