Trust can adjust its excess expenditure in earlier years against income of subsequent years:

Assessee adjusted its excess expenditure incurred in earlier years against income of the year under consideration. AO denied such an adjustment. On appeal, both the lower authorities directed AO to allow the adjustment of excess expenditure in earlier years against income of year under consideration. The said view was also upheld by the Hon’ble High Court. Revenue’s appeal was dismissed accordingly.

[CIT Vs. OSHWAL EDUCATION TRUST - TAX APPEAL NO.391 of 2012 - GHC]

Addition u/s 68 cannot be made in respect of Opening balance:

AO made an addition of Rs.10,09,000/- on account of unsecured loans. The Tribunal observes that out of the said sum, only a sum of Rs.50,000/- was received in the year under consideration and the balance was on account of opening balance. Hence, the addition was restricted to Rs.50,000/- by the Tribunal. The said view was also upheld by the Hon’ble High Court. Revenue’s appeal was dismissed accordingly.

[CIT Vs. JAGATKUMAR SATISHBHAI PATEL - TAX APPEAL NO.324 of 2012 - GHC)

MAT credit needs to be taken into consideration before calculating interest u/s 234B and the said amendment is retrospective in nature:

S.234B provides for interest for defaults in payment of advance tax. While calculating “Assessed tax” for the purpose of calculating interest u/s 234B, the amount of “MAT credit” allowed to be set off in accordance with the provisions of S.115JAA shall be reduced from the same. The said amendment was effective from 01/04/2007. AO was of the view that the said amendment was “Prospective” in nature and hence he didn’t consider the MAT credit while calculating interest u/s 234B. It was held by the Hon’ble High Court that the said amendment was for the purpose of removal of ambiguity and needs to be held as “Retrospective” in nature. Revenue’s appeal was dismissed accordingly.

[CCIT Vs. GUJARAT MITRA PVT. LTD. - TAX APPEAL NO.274 of 2012 - GHC]

No addition can be made u/s 41(1) unless Revenue establishes that such liability has seized even if assessee doesn’t furnish details, addresses and identity of the creditors:

AO made an addition u/s 41(1) since the assessee had not furnished details, addresses and identity of the creditors at the assessment stage. ITAT deleted the said addition after holding that onus is on the Revenue to establish that the liability has seized and the Revenue had failed to establish the same. On Revenue’s appeal, the Hon’ble High Court upheld the ITAT’s view and dismissed Revenue’s appeal.

[MUKESH PRINTS - TAX APPEAL NO.264 of 2012 - GHC]

No addition can be made u/s 69C as “Unexplained stock” by aggregating negative stock from time to time. Peak of such stock can only be added.

AO found that there was negative stock in assessee’s case from time to time. He took aggregate of such negative stock and made an addition of Rs.47,72,525/- u/s 69C as “Unexplained stock”. ITAT observed that the peak of the negative stock i.e. Rs.(-)2,10,452/- was much less than the amount of addition made by AO. Assessee dealt in several variety of items and hence, it was not possible for it to maintain details of stock. Assessee had produced all the books and vouchers before AO for verification. Even profit rate had improved as compared to earlier year. Considering such facts, ITAT restricted the addition to Rs.3,00,000/-. The said view was upheld by the Hon’ble High Court and Revenue’s appeal was dismissed.

[JHAVERI INDUSTRIES - TAX APPEAL NO.257 of 2012 - GHC]

Interest income earned from share application money can be set off against public issue expenditure:

Interest earned on Share application money parked in a separate account till allotment can be adjusted towards expenditure incurred for raising share capital.

[SHREE RAMA MULTI TECH LTD. - TAX APPEAL NO.235 of 2012 - GHC]

Disallowance made u/s 40(a)(ia) in respect of expenditure for the purpose of developing housing projects would qualify for deduction u/s 80IB(10):

AO made disallowance u/s 40(a)(ia) in respect of expenditure incurred by the assessee for the purpose of developing housing projects since the assessee had not deducted tax at source as per the requirements of the Act. Hon’ble High Court held that such disallowance would ultimately go to increase the assessee’s profit from the business of developing housing projects. Deduction u/s 80IB(10) was already allowed to the assessee by following the decision in the case of “CIT vs. Radhe Developers – 341 ITR 403 (Guj)”. Hence, profit computed after disallowance u/s 40(a)(ia) would qualify for deduction u/s 80IB(10). Revenue’s appeal was dismissed accordingly.

[ITO Vs. KEVAL CONSTRUCTION - TAX APPEAL NO.443 of 2012 – GHC]