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III. Direct Tax Case laws:
1. Fine Line Construction P. Ltd. Vs. ACIT, ITA No. 4907/Del/2012, Date of Decision: 26.07.2013, ITAT - Delhi
Section 271(1) (c ) of the Income Tax Act, 1961
Whether
penalty u/s 271(1) (c ) of the Act can be levied on the ground that
there was no concealment of income and income was assessed on estimation
basis.
Held: No
The assessee
company is engaged in the business of construction work. The Assessing
Officer applied provisions of section 145 of the Act and computed the
total income at 5% of turnover and levied penalty u/s 271(1) (c) of the
Act. According to circumstances of the case, the Hon’ble High Court
relied on the decision pronounced in case of CIT vs. Vatika Construction P.Ltd. ITA 1246/2010
in which it was held that the Assessing Officer did not have the
benefit of material, and therefore could not have, only on the basis of
the assessee’s offer to be taxed at 8% on gross receipts, have concluded
that it had provided inaccurate particulars in its returns. The course
of action suggested by the Assessing Officer was in fact accepted by the
assessee, as reasonable. In these circumstances, the imposition of
penalty was not justified.
(Please click here for judgment)
2. DCIT
Vs. M/s Ashok Kumar Amit Kumar & Shipra Estates (P) Ltd., ITA No.
3247/Del/2012, Date of Decision: 27.08.2013, ITAT - Delhi
Section 28 & 2(22)(e) of Income Tax Act, 1956
Whether mere debit balance in partner’s capital A/c leads to addition on notional basis?
Issue 1
According to
the circumstances of the case, debit balances was more than credit
balances in the partner’s capital a/c. So, the revenue contended that
the assessee has forwarded an interest free loan to the partner. So, the
AO has calculated interest on the amount of net debit balance on
notional basis and had made additions accordingly. The Hon’ble ITAT held
in favour of the assessee that there is no provision in law for taxing
of any income on notional basis. Further, no provision was there in the
partnership deed regarding interest on capital.
Issue 2
As the partner
had overdrawn the capital, the AO contended that amount overdrawn was
in nature of advances and same was considered as deemed dividend u/s
2(22)(e) of the Act. The Hon’ble ITAT held in favour of assessee that
deemed dividend arises in case of company and not in case of a
partnership firm and the assessee is a partnership firm.
In the present
case, the firm has given interest free loan to the respective partners
leaving their capital balance in negative, thereby diverting the funds
of the firms or utilizing the same in their hands.
(Please click here for judgment)
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