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Income Tax - Case Laws
Showing 1 to 20 of 173171 Records
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2025 (4) TMI 1632
Validity of reopening of assessment - allegation of violation of the provisions of section 50C of the Income Tax Act, 1961 and due to noncompliance, assessee also failed to explain the transaction - as decided by HC [2024 (1) TMI 1009 - BOMBAY HIGH COURT] As petitioner states, and rightly so, that provisions of Section 50C of the Act would apply only to a seller and not the assessee in this case, who is the buyer of the property. There is nothing in the notice to explain as to how, if the transaction amount is less than the stamp duty value, there can be escapement of any income particularly in the hands of a buyer. Sanction should have also applied his mind and satisfied himself that the order passed u/s148A(d) of the Act was being issued correctly by applying mind and cannot be a mechanical sanction.
HELD THAT:- There is a gross delay of 331 days in filing the Special Leave Petition which has not been satisfactorily explained by the petitioners.
Special Leave Petition is, accordingly, dismissed on the ground of delay. Pending applications, if any, shall also stand disposed of.
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2025 (4) TMI 1631
Enforceability of treaty - Necessary notification not issued by the Government for brining the treaty into force - Most Favoured Nation (MFN) - Indian treaties with countries that are members of the Organisation for Economic Cooperation and Development (‘OECD’) - as decided by HC [2023 (11) TMI 1373 - DELHI HIGH COURT] notification u/s 90(1) is necessary and a mandatory condition for a court, authority, or tribunal to give effect to a DTAA, or any protocol changing its terms or conditions, which has the effect of altering the existing provisions of law.
The fact that a stipulation in a DTAA or a Protocol with one nation, requires same treatment in respect to a matter covered by its terms, subsequent to its being entered into when another nation (which is member of a multilateral organization such as OECD), is given better treatment, does not automatically lead to integration of such term extending the same benefit in regard to a matter covered in the DTAA of the first nation, which entered into DTAA with India. In such event, the terms of the earlier DTAA require to be amended through a separate notification u/s 90. And benefit of a “same treatment” clause, based on entry of DTAA between India and another state which is member of OECD, the relevant date is entering into treaty with India, and not a later date, when, after entering into DTAA with India, such country becomes an OECD member, in terms of India’s practice.
HELD THAT:- We are not inclined to interfere with the impugned judgment and order passed by the High Court. Hence, the Special Leave Petitions are dismissed.
Pending application(s), if any, shall stand disposed of.
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2025 (4) TMI 1630
Validity of reopening of assessment u/s 147 - extracts of reasons for reopening are furnished and not the complete reasons recorded - petitioner's failure to file return of income within the stipulated time u/s 148 - Whether petitioner having not filed its return of income as per the notice u/s 148 today cannot raise a plea that based on the extracts of the reasons, the proceedings are bad-in-law?
HELD THAT:- Admittedly, the petitioner has not complied with the directions issued in case of GKN Driveshafts (India) Ltd. [2002 (11) TMI 7 - SUPREME COURT]. The petitioners did not file its return of income pursuant to the Section 148 of the Act within 30 days. The petitioner filed its return of income much after the receipt of notice under Section 142 (1) of the Act i.e. the petitioner filed its return of income on 4 December 2021. In our view, the petitioner today cannot be heard to submit that based on the extracts of reasons, the proceedings are bad-in-law.
The petitioner ought to have complied with the directions issued by the Supreme Court in the case of GKN Driveshafts (India) Ltd. (supra). Now that the return is filed which entitles the petitioner to reasons for reopening of the case.
Therefore in view of the above and in the interest of justice, we propose to pass the following order :-
(i) Respondent no.1 to furnish complete reasons recorded for reopening the assessment within one week from the date of uploading the present order.
(ii) The petitioner to file its objections to the aforesaid reasons furnished within a period of 2 weeks from the date of receipt of reasons recorded within a period of 2 weeks from the date of receipt of objections.
(iii) Respondent no.1 to decide the objections and pass a speaking order dealing with the objections of the petitioner raised above.
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2025 (4) TMI 1629
Reassessment order issued without generating a DIN, without documents attached to the assessment order and the notice were also issued in the hand-writing signature of the AO - HELD THAT:- Subsequently, the AO has cured the defect and the AO issued a digitally signed letter with computer generated DIN and letter number. There is no contention of the petitioner that the online service of orders-letter present has not been served upon the petitioner. It is, therefore, evident that on the same date, the defect was cured, therefore, all issues raised in this regard by the petitioner would liable to fail.
Whether revenue proceeding justified in relying upon the complaint and the statement of the complainant without giving an opportunity to the petitioner to cross-examine the complainant? - Not only the copy of complaint but even the documents showing transactions of the firm were made available to the petitioner. The impugned order is not based on any examination of the complainant. In fact, there is no recording of the statement of the complainant or any other witness. The impugned order of assessment is based upon the materials which came to the notice of the AO. After analysing the same, when the AO was of the view that despite supply of reason of proceedings and other relevant documents to the assessee as well as sufficient opportunity, the assessee has failed to prove and substantiate that how undisclosed sales amount have been accounted in the books of accounts for the assessment year 2017-18, he has passed the impugned order.
It is not for this Court sitting in its writ jurisdiction to analyse the kind of information and the documents which were in possession of the AO while passing the impugned order of assessment.
In result, we find no jurisdictional error in the impugned order. These writ applications are dismissed but with liberty to the petitioner to seek its statutory remedy in appeal, if so advised, before the competent/authority appropriate forum.
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2025 (4) TMI 1628
Validity of reassessment proceedings - period of limitation - excess deduction claimed by the assessee u/s 80IB - whether the date of claim of deduction u/s 80IA/IB would be proper or whether the assessments for the periods 2002-03, 2003-04 and 2004-05 required to be re-visited u/s 148?
HELD THAT:- As far as the first two assessment years are concerned, reassessment proceedings have been initiated beyond the period of four years from the end of the relevant assessment year, thus attracting the application of proviso to Section 147 of the Act which we will presently advert to.
For assessment year 2004-05, the re-opening is within the period of 4 years from the end of the relevant assessment year. Hence, as far as assessment years 2002-03 and 2003-04 are concerned, an additional condition that is cast upon the revenue is as set out under the proviso to Section 147 requiring that the Department should establish that the assessee has not made a full and true disclosure of all material aspects in its returns of income at the initial stage. It is only upon this burden being discharged that the Department would be in a position to avail the extended period of limitation from 4 to 6 years.
The income tax returns are full and complete, in that there is no omission of the material particulars in regard to deduction under Section 80IA/IB. In fact, the very trigger for these proceedings is a Certificate issued by the Chartered Accountant in respect of the years in question where the Chartered Accountant has, in column 8 in Form 10 CCB stated that the commencement of production of business was on 18.03.1998. In column 9 of Form10 CCB annexed to the return, the initial year of claim is shown to be 2000-01.
The assessee has explained that the date of commencement of production ought not to have been 18.03.1998, as that was the date on which the Licence to Work had been granted to operate the Rakholi factory. We find merit in the contention that it is only when the Licence to Work had been granted, would the assessee proceed to install machinery and thereafter commence manufacture. Hence the date of grant of Licence can never normally be the date of commencement of business. Hence, there is a clear error in the date set out in column 8 of Form 10 CCB where the date of commencement of production has been is shown to be the date on which the Licence to Work had been granted.
It is nobody’s case that the date stipulated in error was motivated. In fact, had it been the intention of the assessee to suppress information or to obtain a benefit that it was not eligible for, it would have ensured that there was no mismatch between the particulars in columns 8 and 9 of Form 10 CCB as the very next column, i.e., column 9 reveals the initial year of claim as 2000-01. Hence it is evident that the date 18.03.1998 in column 8 was only an error and nothing more.
The same error repeats itself as far as the Chinchpada unit is concerned, except that in column 8 in Form 10 CCB relating to Chinchpada unit, the date of commencement of production is shown as 07.06.1996 which is the date on which the Licence to Work had been granted. Column 9 for that unit reveals the initial year of claim as 1999- 2000. The same explanation as set out for the Rakholi unit has been furnished for the Chinchpada unit as well and the conclusions of the Court supra would apply equally as far as this unit too is concerned.
As pointed out by learned Senior Counsel, the use of the word ‘true’ in the proviso to Section 147 is a charge upon the assessee to have intended to provide false information at the first instance. Hence the use of the word ‘true’, as understood in common parlance would carry with it the requirement that the department must establish animus or the intention to suppress material, to the assessee’s advantage. The Court agrees that there is no intention to suppress information to obtain a benefit to which it was disentitled. On the other hand, the information supplied has been erroneous, to its disadvantage. At best, it may be said that the assessee has been remiss. However, this, by itself, would not establish falsity of the material particulars provided at the initial stage.
A perusal of the orders indicates detailed reference to the discussions that were had qua the officer and the assessee. In conclusion, the officer has carefully and consciously recorded that as far as deduction under Chapter VI A is concerned, in the order of assessment for assessment year 2000-01, the year of claim for Rakholi unit was the first year and for the Chinchpada unit was the second year.
The law requires the assessing officer to specifically record in each assessment year, the year for which the claim of the assessee u/s 80IA/IB was being considered. It is in compliance of this, that the assessing officer has been careful and conscious enough to set out the year of claim in the assessment order itself.
It is also relevant that those assessment orders, for the previous years, i.e., 2000-01 and 2001-02, remain undisturbed even at this point of time. We, hence, find that the action of the Assessing Officer to have cherry-picked the assessments for assessment years 2002-03, 2003-04 and 2004-05 alone to disturb the sequence of claim as being wholly misconceived and without any basis whatsoever.
Thus, as far as the first two years are concerned, the assessing officer has availed the benefit of larger limitation of 6 years which he is not entitled to, since there has been no untrue or incomplete disclosure by the assessee at the first instance.
As far as assessment year 2004-05 is concerned, we find that the grant of deduction is based on the records. There is absolutely no material available to indicate that the original order of assessment is liable to be re-opened.
In Kelvinator India Ltd [2010 (1) TMI 11 - SUPREME COURT] which is a matter relating to reassessment within 4 years, the Supreme Court has categorically emphasised the difference between proceedings for re-assessment and proceeding for review holding that the department officer has the power only to re-assess and not review on the same facts. Writ appeal dismissed.
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2025 (4) TMI 1627
Addition u/s 40(a)(ia) - payments made without deduction of TDS - when the amount is “payable” - HELD THAT:- The Hon’ble Apex Court in Palam Gas Service [2017 (5) TMI 242 - SUPREME COURT] has interpreted the issue namely the word ‘payable’ in Section 40 (a) (i-a) which would mean only when the amount is payable and not when it is actually paid. Grammatically, it may be accepted that the two words i.e. “payable” and “paid”, denote different meanings
The sole consideration taken by the forum is the judgment passed by in CIT Vs. Vector Shipping Services (P) Ltd [2013 (7) TMI 622 - ALLAHABAD HIGH COURT] which has been over-ruled by the Hon’ble Apex Court in the case of Palam Gas Service (supra), holding therein that the Allahabad High Court has not laid down good law; meaning thereby the error has been rectified by the Hon’ble Apex Court, said to be committed by the Allahabad High Court, by laying down the correct law. Therefore, applying the law laid down by the Hon’ble Apex Court in the case of Directorate of Revenue Intelligence vs. Raj Kumar Arora & Ors. [2025 (4) TMI 1179 - SUPREME COURT] will have retrospective application.
This Court, taking into consideration the fact the forum has passed the impugned order solely taking into consideration the judgment passed in the case of CIT Vs. Vector Shipping Services (P) Ltd. (supra) which has been over-ruled holding the same to be not good in law by the Hon’ble Apex Court, as such it is not rendered to be in existence, as such the impugned order requires interference.
Oder passed by the Income Tax Appellate Tribunal, Circuit Bench, Ranchi [2016 (3) TMI 1489 - ITAT RANCHI] requires interference. The matter is remitted before the forum, i.e. Income Tax Appellate Tribunal, Circuit Bench, Ranchi for fresh adjudication of the issue, taking into consideration the observation made by this Court.
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2025 (4) TMI 1626
Income deemed to accrue or arise in India - treatment of “commission income” and the amounts received by the Assessee as “subscription fee” - AO held that the commission income and the subscription fee received by the Assessee from entities in India were required to be construed as fees for technical services [FTS] and were chargeable to tax under the Act and passed the draft assessment orders - HELD THAT:- For any receipt to fall within the expression ‘fees for technical services’, it is necessary that the same be received as consideration for rendering services which are of technical nature. The expression “rendering of managerial, technical or consultancy services” must necessarily be construed in a narrow sense where such specialized services are rendered by the service provider as may be required by the service recipient. Ordinarily, the same would require human intervention. Mere access to technical database or technical literature would not constitute provision of technical services. The sale of technical texts, information or research material collated by extensive research would not constitute rendering technical services within the scope of Section 9 (1) (vii) of the Act.
In the facts of the present case, the subscription fee collected by the Assessee from various third parties is for subscription to e-magazines and content which is standardized and not specifically collected or generated for any particular entity. Thus, clearly, the subscription fee would not partake the character of a ‘fee for technical service’ within the meaning of Explanation 2 to Section 9 (1) (vii) of the Act.
It is not necessary to examine the provisions of DTAA. The same would be necessary only if the subscription fee was chargeable to tax under the normal provisions of the Act. No substantial question of law arises for consideration.
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2025 (4) TMI 1625
Validity of notices issued in light of the limitation period prescribed u/s 153(3) - Transfer pricing adjustments - HELD THAT:- As the order of the Tribunal had come to be passed after 01 April 2019, and consequently the prescription of 09 months as appearing in the principal part of sub-section (3) would have to be read as 12. When 12 months are computed from the order of 21 October 2020, it is ex facie evident that the jurisdiction and authority inhering the respondents to frame an order of assessment pursuant to a direction framed by the Tribunal would have undoubtedly come to an end on 21 October 2021 and no longer exists today.
We, consequently, allow the instant writ petition and render a declaration that any assessment that may be now proposed for AY 2010-11 would be clearly time barred and contrary to the mandate of Section 153(3) of the Act. As a consequence to the above, the notices of 06 March 2023 and 19 March 2023 are hereby quashed and set aside.
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2025 (4) TMI 1624
Estimation of income - bogus purchases - addition in respect of alleged bogus purchases based on material and statements which were admittedly not provided to the appellant for rebuttal and cross examination - HELD THAT:- After considering the decision in case of Pankaj K. Chaudhary [2023 (3) TMI 1402 - GUJARAT HIGH COURT] Tax Appeals filed by the revenue were dismissed as the question of addition of purchases made by the AO was restricted by the Tribunal to 6% was already confirmed by this Court.
Tax Appeal are also stand answered as the assessee being aggrieved by the very same order has preferred this appeal raising the questions of law.
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2025 (4) TMI 1623
Levy of penalty u/s 271(1)(c) - Disallowance of 25% of the purchase alleged of bogus and made addition after rejecting books of account u/s 145(3) - CIT(A) confirmed penalty levy.
As decided by AM - It is clear from the order of the CIT(A) that he has allowed the penalty appeal of the assessee for the assessment year 2007- 08 on the same set of facts whereas for assessment years 2008-09 and 2009-10 though the facts being same should have been allowed. The doctrine of binding precedent has the merit of promoting a certainty and consistency in judicial decisions, and enables an organic development of the law, besides providing assurance to the individual as to the consequence of transactions forming part of his daily affairs. And, therefore, the need for a clear and consistent enunciation of legal principles should be followed we find out that the ld. CIT(A) has not given any reasons as to why he has not followed his own order in the case of same assessee in spite of the fact that the issues and analogy in both the appeals are the same.
Hence, we do not concur with the findings of the CIT(A) as both the issues are fully covered by the decision of ITAT Jaipur Bench (supra) as narrated in the order of the CIT(A) and the same has been followed by him while determining the appeal of the assessee for assessment year 2007-08. The records reveal that the purchase made by the assessee alleged to have been considered as bogus and thereby the profit was estimated and confirmed in the hands of the assessee. That claim itself is not considered fully not correct and thereby the profit was added.
Thus, we get support of the decision of the apex court in the case of Reliance Petroproducts Private Limited. [2010 (3) TMI 80 - SUPREME COURT] wherein already seen the meaning of the word "particulars" in the earlier part of this judgment. Reading the words in conjunction, they must mean the details supplied in the Return, which are not accurate, not exact or correct, not according to truth or erroneous. We must hasten to add here that in this case, there is no finding that any details supplied by the assessee in its Return were found to be incorrect or erroneous or false. Such not being the case, there would be no question of inviting the penalty under section 271(1)(c) of the Act. A mere making of the claim, which is not sustainable in law, by itself, will not amount to furnishing inaccurate particulars regarding the income of the assessee. Such claim made in the Return cannot amount to the inaccurate particulars.
Thus, appeals of the assessee relating to levy of penalty u/s 271(1)(c) of the Act are allowed.
As decided by JM - The undisputed fact was that the additions were made on account of bogus purchases and ultimately, the Tribunal restricted the quantum addition at 12.5% of the bogus purchases.
Therefore, it was held that there was no merit in the contention of the ld. Counsel that the profit had been estimated and the penalty had been levied on estimated profit.
Therein, facts on record showed that there were bogus purchases and only the profit element had been added which meant that the assessee had concealed the income to this extent in the garb of purchases which turned out to be bogus. Therefore, considering the facts of the case in totality, it was held that there was no hesitation in confirming the penalty so levied u/s 271(1)(c) of the Act. The appeal filed by the assessee was accordingly dismissed.
Returning to present appeals, once, the abovesaid penalty order as regards previous assessment year 2007-2008, based on similar facts was set aside, while dealing with the appeals challenging 2 penalty orders pertaining to the subsequent assessment years i.e. 2008-09 and 2009-10, Learned CIT(A) should have maintained consistency and set aside the penalty, especially when it was also not a case of 100% bogus purchases. The impugned orders passed by Learned CIT(A) deserve to be set aside.
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2025 (4) TMI 1622
Penalty levied u/s.270A - Foreign Tax credit denied for non filing Form 67 within the due date of filing of return - HELD THAT:- Cojoint reading of sub-section (2) & (9) of section 270A leads to the inference that if the income is assessed greater than the income reported in the return of income or determined in the return processed u/s 143(1)(a) and the addition in the total income of the assessee is due to the reason of misrepresenting or suppressing of facts, failure to record the investment in the books of account, unsubstantiated claim of expenditure disallowed, recording false entries in the books of account, failure to record any receipt in the books of account having bearing on the total income and failure to report any international transaction or specified domestic transactions.
In the case in hand, though the AO has not enhanced the total income of the assessee while passing the assessment order, but the tax liability of the assessee was increased due to the reason that the claim of credit of foreign tax was denied by the AO due to the reason of delay in filing Form-67. Thus, it is clear from the facts that the case of the assessee does not fall in the category of misreporting of income as envisaged in sub-section (2) and (9) of section 270A - Decided against revenue.
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2025 (4) TMI 1621
Levying penalty u/s 271(1)(c) - Estimation of income - bogus purchases - As alleged invalid penalty order in which the limb of levy of penalty u/s 271(1)(c) not mentioned - addition made on estimation basis - HELD THAT:- As decided in Subhash Trading Co. [1995 (11) TMI 37 - GUJARAT HIGH COURT] and Whitelene Chemicals [2013 (8) TMI 144 - GUJARAT HIGH COURT] and Krishi Tyre Retreading & Rubber Industries [2014 (2) TMI 21 - RAJASTHAN HIGH COURT] have held that penalty u/s 271(1)(c) of the Act could not be levied where addition was on estimated basis. The Co-ordinate Bench in cases of Yogendra Raj U Sanghvi [2023 (10) TMI 1395 - ITAT SURAT] Deepak Banwarilal Agarwal [2024 (2) TMI 1386 - ITAT SURAT] have also held that no penalty is leviable on estimated addition.
As decided in Mun Gems [2024 (1) TMI 209 - ITAT MUMBAI] where AO treated entire purchase as bogus based on findings of Investigation Wing and levied penalty u/s 271(1)(c), since payment of purchase had been made through account payee cheques and there was corresponding sales, ad hoc GP rate applied on alleged bogus purchases to factor in suppression of alleged gross profit could not be basis of levying penalty for furnishing of inaccurate particulars of income or concealing particulars of income. Since the facts are similar, following the above decisions, the AO is directed to delete the penalty levied u/s 271(1)(c) of the Act. Assessee appeal allowed.
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2025 (4) TMI 1620
Charging the tax on the trust at the rate ordinarily applicable to total income of association of persons or maximum original rate - Liability to exemption u/s 164 - assessee has submitted there are only three beneficiaries of the said trust created by late Sakuntalla Balvantrai
HELD THAT:- The brief facts of the case are that the assessee trust is a ‘trust at will’, which was created by late Smt. Sakuntalla Balvantrai, for the benefit of her daughter and children of her daughter. The only income of the trust is the interest income which is distributed to the beneficiaries.
AO is directed to charge the tax on the trust at the rate ordinarily applicable to total income of association of persons and not at the maximum original rate. Appeal of the assessee is treated as allowed.
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2025 (4) TMI 1619
Disallowance of deduction u/s. 80P - disallowance of provision on account of prize money distributed to the members and disallowance of bad debts - CIT(A) in appeal held that the assessee was entitled to deduction u/s. 80P, however, upheld the action of the AO in making disallowance for provision for prize money and bad debts - HELD THAT:- A perusal of the impugned order of the CIT(A) would reveal that the CIT(A) has already decided the issue of deduction u/s. 80P of the Income Tax Act in favour of the assessee. Once the assessee is held to be entitled to deduction u/s. 80P of the Income Tax Act, the income of the assessee will be exempt from taxation @ 100%. Even if, the ld. CIT(A) has upheld the order of the A.O. relating to the disallowance of provision of prize money and bad debts, the result would be that it will increase the income of the assessee, which otherwise, is eligible for deduction u/s. 80P of the Act.
Under the circumstances, the assessee is not left with any grievance/cause of action to file the present appeal. The said appeal is therefore dismissed. However, subject to the observation that any increase in income of assessee on account of aforesaid disallowance will not affect the claim of the assessee to claim deduction u/s. 80P of the Income Tax Act. Appeal of the assessee stands dismissed.
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2025 (4) TMI 1618
Validity of reopening of assessment without serving any notice - HELD THAT:- The Revenue could not prove that there was service of notice u/s 148 of the Act before completion of the reassessment u/s 144 r.w.s. 148 of the Act. As a matter of fact the Assessing Officer in the remand proceedings admitted that notice issued u/s 148/142(1) of the Act had returned by the authorities and therefore it can be safely concluded that there was never been any service of notice to the Assessee. Thus, the reassessment made u/s 144 r.w.s. 148 of the Act is hereby quashed. Decided in favour of assessee.
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2025 (4) TMI 1617
TDS u/s 194C - Disallowance u/s 40(a)(ia) - non-deduction of TDS on the foods supply bills - HELD THAT:- When the matter carried before DRP, DRP hold that the impugned transaction with the catering service provider was covered u/s 194C of the Act and hence, assessee was liable to deduct the TDS. But at the same time on the alternative plea of the assessee that the other party has paid the tax the assessee should not be treated as an assessee in default and therefore, the matter was set aside to the file of the AO. AO has not discussed that issue and directly taken a view that since the assessee has not recorded purchase and debited the said as expenses and therefore, he ordered for disallowance.
Before us on this issue ld. AR invited our attention to the invoice which are of the nature supply of foods packets and not of the catering service. Had been a case of catering service the provision of section 194C shall apply but in this case this being the case of supply of foods and the same being subjected to GST the same shall not be considered as contract and therefore, the provision of section 194C shall not apply on those transaction entered into by the assessee in the case of M/s. Ganesh Lal Yadav-HUF. Considering that aspect of the matter ground no. 1 raised by the assessee is allowed.
Addition u/s 40(a) (ia) - non-deduction of TDS on business promotion expense to promote business and rewards to employees to achieve work targets - HELD THAT:- Ratnagiri Impex Private Limited [2015 (1) TMI 354 - ITAT BANGALORE] held the facilities/amenities made available by the petitioner No. 1 hotel to its customers do not constitute 'work' within the meaning of section 194C of the Act. Consequently, the Circular No. 681, dated 8-3-1994 to the extent it holds that the services made available by a hotel to its customers are covered u/s 194C of the Act must be held to be bad in law. Thus petition is allowed by quashing the Circular No. 681, dated 8-3-1994 to the extent it holds that section 194C of the Income-tax Act applies to payments by the customers to the petitioner No. 1 hotel for availing the facilities/amenities made available by the petitioners. Decided in favour of assesee.
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2025 (4) TMI 1616
Nature of receipt - Compensation in lieu of the ‘right to sue’ awarded by way of damage suit by order of the Hon’ble High Court - revenue of capital receipt - HELD THAT:- As relying on Shri Virendra Bhavanji Gala [2023 (9) TMI 746 - ITAT MUMBAI]] and Vijay Flexi Containers [1989 (9) TMI 16 - BOMBAY HIGH COURT] amount of compensation received is capital receipt is upheld and consequently, the grounds raised by the Revenue are dismissed.
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2025 (4) TMI 1615
Addition u/s 69A - cash receipts as inflated to explain the cash deposits post-demonetization -HELD THAT:- It is not in dispute that the AO has accepted the books of account filed by the assessee. The turnover of the assessee was Rs. 31 crores, and during the demonetization period, cash sales amounting to Rs. 2,53,99,000/- were recorded. AO based on certain calculations, concluded that there was inflation of sales to the extent of Rs. 1.40 crores and proceeded to make an addition on the assumption that cash deposits were made out of demonetized currency.
There is no material on record to show that the sales were inflated or that the deposits were made out of unaccounted cash. It is noted that the assessee’s cash book, stock register, and VAT records were duly produced and verified, and no discrepancies were pointed out therein. It is also noted that the festive season of Diwali, which generates higher sales, coincided with the demonetization period, unlike the preceding year when the timing differed. Therefore, a mere comparison with previous years' figures without considering the seasonal impact is not sufficient to draw an adverse inference.
Further, the cash on hand as per the books prior to the demonetization period was verifiable and matched with the records filed, and no adverse findings have been recorded by the lower authorities on this aspect. In such circumstances, when the turnover, stock records, and cash flow are duly explained and supported by evidence, and no purchaser has been disbelieved, the addition made on mere assumptions and conjectures is not sustainable. Decided in favour of assessee.
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2025 (4) TMI 1614
Addition u/s 69A - cash found during search operations - search and seizure operation under Section 132 was carried out at the residential premises of the assessee - Disclosures made before the Hon'ble Income Tax Settlement Commission (ITSC) - HELD THAT:- The search operations were conducted simultaneously across group cases, and GTIPL had filed a petition before the Hon’ble Settlement Commission admitting undisclosed income, which allegedly included the cash in question.
The record shows that the Hon'ble Settlement Commission duly considered the cash flow statement, the balance sheet, and other relevant documents before passing the settlement order. It is evident that the amount was duly accounted for by GTIPL in its financial statements placed before the Settlement Commission, and no objection was raised by the Revenue in this regard.
Once the Revenue has accepted the ownership of the cash in the hands of GTIPL before the Settlement Commission, it is impermissible for the Revenue to take a contradictory stand in the present proceedings and allege that the said cash belonged to the assessee. It is a well-settled principle that the Revenue must maintain consistency in its approach and cannot adopt contradictory stands in different proceedings.
Under the provisions of Section 245D settlement reached before the Hon'ble Settlement Commission is final and binding and cannot be reopened or challenged in any other proceedings. Therefore, once the amount of Rs. 7,00,000/- has been considered as part of the undisclosed income of GTIPL in the settlement proceedings, the same cannot be taxed again in the hands of the assessee.Decided in favour of assessee.
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2025 (4) TMI 1613
Additional depreciation u/s 32(1)(iia) on computers used for the production of software - assessee explained that it was in the business of development embedded software, which amounts to the production of an article or thing, and that the computers used for software production qualify as plant and machinery, thus making them eligible for additional depreciation - AO held that computer software is not an article or thing - HELD THAT:- We note that issue on hand is covered in favour of the assessee by the order of coordinate bench of this Tribunal in the own case of the assessee for A.Y. 2012-13 [2024 (12) TMI 1561 - ITAT BANGALORE] wherein held that the assessee is engaged in the production of an article or thing (software), the computers used in the production of such software can be treated as plant and machinery under the provisions of Section 32(1)(iia) of the Act. Therefore, the claim for additional depreciation on the computers used in the production of software is in line with the provisions of the Act. Decided in favour of assessee.
Disallowance of the claim of investment allowances u/s 32AC - AO denied claim as being the assessee not engaged in the business of manufacture or production of any article or thing AND being the computer or computer software not included in the definition of “New Assets” as per the provision of section 32AC(4)(iii) of the Act - HELD THAT:- As far as, the view of the revenue authority that the assessee is not engaged in the business of manufacture or production of any article or thing is concerned, we note that issue is settled in favor of the assessee while deciding the dispute regarding the claim of additional depreciation u/s 32(1)(iia) of the Act. The precondition to claim the additional depreciation u/s 32(1)(iia) of the Act and investment allowances u/s 32AC of the Act same i.e. assessee should be engaged in the business of manufacture or production of any article or thing. Hence, following the finding given by us in respect of ground raised in connection to additional deprecation we hold that the assessee is engaged in the business of “manufacture or production of any article or thing”.
Whether computer or computer software not included in the definition of “New Assets” as per the provision of section 32AC(4)(iii)? - What is excluded from the term “new asset” is office appliance which may include computer and computer. In other words, computer or computer software installed as office appliances are excluded and not the computer installed for the purpose of the production of article or things. Hence, the computer installed by the assessee for the purpose of development of software activity which is held by us production of article or things shall be available for investment allowances under the provision of section 32AC of the Act whereas no allowance shall be allowed on the computer installed for administrative purposes.
We find that there was no detail available on record suggesting that how many computers were installed/ used in the activity of development of computer software. Therefore, we find necessary to set aside the issue to the file of the AO to adjudicate the issue afresh in the light of the above stated discussion. The assessee shall provide the detailed of the computers installed in the activity of software development. AO after verification shall allow the claim of the assessee if the new computers were installed for the purpose business of the development and not for the purpose of administration or as office appliance. Hence, the ground of appeal of the assessee is hereby partly allowed for statistical purposes.
Disallowance u/s 14A - assessee earned exempt income and made a suo-moto disallowance of expenses - HELD THAT:- We note that that the issue of disallowance under section 14A of the Act is covered in favour of the assessee by the order of this Tribunal in the own case of the assessee for A.Y. 2010-11 [2022 (2) TMI 1503 - ITAT BANGALORE] as held AO has not expressly mentioned any dissatisfaction in the suomoto disallowance computed by assessee we hold that the disallowance computed by the assessee is appropriate.
Disallowance of claim of deduction of state tax paid in USA - assessee claimed that the impugned tax is prior charges on the income, and the impugned payment was claimed as an expenditure in the return of income - AO disallowed the same by holding the taxes paid in foreign territory can be claimed under section 90/91 of the Act following the procedure and condition provided therein and not as a deduction - HELD THAT:- If the assessee is not eligible for the benefit of the provisions specified under section 90/91 of the Act, then the assessee is eligible for deduction representing the amount of tax paid in the foreign country. Accordingly, respectfully following the order of Bank of India [2021 (3) TMI 343 - ITAT MUMBAI], we set aside the order of the learned CIT-A and direct the AO to delete the addition made by him. Hence, the ground of appeal of the assessee, is hereby allowed.
Not granting the credit of MAT as per section 115JAA - HELD THAT:- As we note that the issue of MAT credit was raised first time before us. The lower authorities did not get the opportunity to apply their mind. Therefore, in the interest of justice and fair play, we set aside the issue to the file of the AO. AO is directed to allow MAT credit, if any, as per law. The assessee is directed to furnish the necessary details. Henc the ground of appeal of the assessee is allowed for statistical purposes.
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