1.   Ramesh Kumar & Co. Vs. ACIT, I.T.A. No. 2959 of 2014, Date of Pronouncement: 28.11.2014, ITAT - Mumbai

Whether Ld. AO was justified in proving purchases claimed by the assessee to be bogus on the basis that sales tax department had named some of the suppliers as hawala dealers, without making further investigation in respect of genuineness of the transactions?

Held_No

In the given case, Ld. AO had disallowed purchases u/s 69C of the Income tax act, 1961 by considering them as bogus on the basis of the information that the sales tax department had blacklisted these suppliers and had cancelled their TIN numbers. The assessee filed copies of bills substantiating the claim and further explained that all the payments were made through account payee cheque.

The Hon’ble tribunal allowed the appeal in favour of assessee stating that the above stated reason may be a good reason for making further investigation but the AO did not make any further investigation and merely completed the assessment on suspicion. As there is no evidence to show that the assessee had received cash back from the suppliers disallowance is unjustified.

(Please click here for judgment)

2.  ABC India Ltd. Vs. ACIT, I.T.A. No. 615 of 2014, Date of Pronouncement: 24.03.2015, Delhi High Court

Whether Ld. AO was justified in taking total investment for calculation of interest expenditure instead of investments attributable to exempt income as per rule 8D for disallowance u/s 14A of the income tax act, 1961?

Held_No

In the given case, Ld. AO had disallowed some portion of expenses claimed by applying section 14A of the act stating that the alleged portion of expenses were incurred in respect of income not attributable to tax. Further, while invoking rule 8D for calculation of expense to be disallowed, Ld. AO considered total investment made for calculation of average of investment at beginning & at the end. On the basis of provision of rule 8D, assessee contended that while calculating average investment, investment attributable to tax free income must be considered only.

The Hon’ble high court allowed the appeal in favour of assessee stating that while calculating average investment as per rule 8D, only those investments should be considered which were attributable to tax free income.

(Please click here for judgment)