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2021 (12) TMI 1293 - ITAT LUCKNOW
Rectification of mistake u/s 154 - disallowance u/s 43B - HELD THAT:- Auditors have specifically answered as “NO” to the question as to whether any Sales Tax/GST, Customs Duty, Excise Duty or any indirect tax has been passed through profit & loss account. In response to intimation u/s 143(1), the assessee submitted that GST payable was not routed through the profit & loss account and therefore, disallowance u/s 43B was not warranted but these contentions were not accepted. The assessee also filed application u/s 154 mentioning the facts of the case.
The application u/s 154 was also rejected and aggrieved by the intimation u/s 154, the assessee filed this appeal. I find that the documents placed on record prove that the GST outstanding declared in the balance sheet was not routed through the profit & loss account and therefore, the addition sustained by learned CIT(A) u/s 43B is not warranted. In the case of CIT vs. S. B. Foundry [1990 (4) TMI 43 - ALLAHABAD HIGH COURT] has dismissed the appeal of the Revenue wherein under similar circumstances the additions were made by the Assessing Officer and Appellant Assistant Commissioner had deleted the same which were confirmed by the Tribunal.
As decided in INDIA CARBON LIMITED VERSUS INSPECTING ASSISTANT COMMISSIONER OF INCOME-TAX AND ANOTHER [1992 (9) TMI 83 - GAUHATI HIGH COURT] in the instant case, the question was whether section 43B would apply and not the question whether or not the sales tax collected formed part of the business or trading receipts. What would be the effect of showing such sum as payable by way of tax on the liabilities side in the balance sheet without actually paying the same was a different question. The petition, was, therefore, allowed and the addition was quashed. - Decided in favour of assessee.
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2021 (12) TMI 1292 - ITAT SURAT
Deduction u/s 80IA - Deduction in respect of Land Fill project No.I by holding it as not a new undertaken - HELD THAT:- We are of the view that once, the assessee has fulfilled all the conditions as laid down in section 80IA(4) of the Act and was allowed deduction in the earlier assessment years in respect of land fill project No.I in AY 2002-03 that is in the initial year, therefore, deduction under section 80-IA in respect of the infrastructure facility should have been allowed to the assessee.
So far as the objection of the Ld. Sr DR for the revenue is concerned that the assessee has made agreement with GIDC only after the claim of the assessee was disallowed by A.O and at the time of establishment of Land fill Project –II, no new establishment came in to existence. The nature of work being done by both the project is identical, therefore, the claim of the assessee based on the backdate agreement cannot be considered. We find that the submissions of the Ld. DR for the revenue is based on the finding of Ld. CIT(A). The assessee has entered into a separate agreement dated 16th October 2012 with GIDC with effect from 12th March 2007 and commenced its Land Fill Project-II in FY 2006-2007 and claimed deduction under section 80-IA of the Act from AY 2008-09 since the said unit is a separate infrastructure facility. Thus, Land fill II is a distinct and separate undertaking from Landfill I. In the result, the assessee succeeds on this ground of appeal.
Land fill project No. I and land fill project-II are not separate undertaking for deduction under section 80IA(4) - As brought to our notice that the assessee has also entered into a separate agreement dated 16th October 2012 with GIDC with effect from 12thMarch 2007. The assessee had commenced its Land Fill Project-II in FY 2006-2007 and claimed deduction under section 80-IA of the Act from AY 2008-09 since the said unit is a separate infrastructure facility. These facts are not controverted by ld SR DR for the revenue. Moreover, the Land Fill Project-II is set up on the separate land allotted by GIDC in Bharuch District, which was allotted to the assessee and separate agreement was entered with GIDC on 16th October 2012 with effect from 12.03.2007. We find that in appeal for AY 2007-08, the Ld. CIT(A) held that both the unit of the assessee i.e. Land fill Project No. I & Land Fill Project-II are different and independent unit by way of process, method, machine and infrastructure.
Incinerator is not a separate undertaking eligible for deduction under section 80IA(4) - AO while passing the assessment order allowed deduction under section 80IA in respect of Land Fill I, Land Fill II and Incinerator project by treating the said undertakings as a composite undertaking. The ld CIT(A) held that Incinerator is a new infrastructure facility and hence eligible for deduction under section 80- IA(4) of the Act for 10 years from AY 2007-08. This finding of ld CIT(A) is not challenged by revenue before Tribunal, thus, it has attained finality. So far as finding of the ld CIT(A) with regard to Incinerator-II is concerned it was not a subject matter of appeal before ld. CIT(A) for the year under consideration, therefore, we are in agreement with the submissions of the learned Senior Counsel for the assessee that such finding given by the CIT(A) is totally incorrect and uncalled for while deciding the appeal for AY 2008-09.
Disallowance of post closer expense - disallowance of provisions of pit covering expenses - HELD THAT:- Considering the consistent decision of the Tribunal on similar set of fact on similar component of income, and following the principle of consistency, we direct the AO to follow the order of Tribunal in AY 2007-08 [2017 (2) TMI 1493 - ITAT AHMEDABAD] and allow / delete the disallowance of provisions of post closer expenses.
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2021 (12) TMI 1291 - ITAT SURAT
Addition u/s 68 - unexplained cash credit being the amount received from issuance of shares - HELD THAT:- AO examined this issue at length and noticed that the assessee had shown investment in shares in the name of M/s. Nakshatra Electricals and Engineers Pvt. Ltd. at ₹ 25 lakhs. On perusal of the return of income of M/s. Nakshatra Electricals and Engineers Pvt. Ltd., it was noticed that the said company had shown investment of ₹ 25 lakhs as on 31.03.2011 and 31.03.2012. But, in fact, the payment received only on 03.05.2011.
DR submits before the Bench that it is not certain whether share capital relates to assessment year 2011-12 or assessment year 2012-13? We find merit in the submissions of ld DR for the Revenue and therefore, we remit this issue back to the file of the assessing officer to examine the fact whether share capital was introduced in assessment year 2011-12 or in assessment year 2012-13, and after ascertain this basic facts the assessing officer should adjudicate the issue afresh in accordance with law. Therefore, statistical purposes, ground no.1 and 2 raised by the assessee are allowed.
Disallowance of interest on account of interest free loan to the sister-concern - assessee has accepted interest bearing funds from bank and have been utilized for giving interest free loans and advances to P G Glass Pvt. Ltd. Moreover, M/s P G Glass Pvt. Ltd. is a related party covered u/s 40A(2)(b) - HELD THAT:- As AR submits before the Bench that assessee-company has interest free own fund, out of that interest free advance have been given to assessee, therefore no disallowance should be made - As DR argues that interest free advance to the sister concern was given out of cash credit account bearing interest burden, therefore addition made by the assessing officer should be upheld. We find merit in the submissions of Revenue, therefore, we remit this issue back to the file of the assessing officer to examine whether interest free advance to the sister concern was given out of cash credit account bearing interest burden. Thus, ground no.3 raised by the assessee is allowed for statistical purposes.
Disallowance of expenditure on repairs - Revenue or capital expenditure - HELD THAT:- On perusal of the details available on record, learned CIT(A) observed that except for 2 items of expenditure being bills of Vijay engineering, Vadodara at ₹ 1,34,102/- and ₹ 1,69,298/-, other items pertained to so called road repairing. Looking to the quantum of expenditure, it emerges that the assessee had constructed the new roads in its business premises. Since, the construction of road has got enduring benefits, the cost incurred has to be capitalized. We note that ld CIT(A) allowed routine repair expenses to the tune of ₹ 1,34,102/- and ₹ 1,69,298/- respectively. Thus, ld CIT(A) has passed a reasoned and speaking order and we do not find any infirmity in the order of ld CIT(A). That being so, we decline to interfere in the order passed by ld CIT(A), therefore, we dismiss ground no. 4 raised by the assessee.
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2021 (12) TMI 1290 - ITAT BANGALORE
Assessment u/s 153C - Short Term Capital Gain - transfer within the meaning of section 2[47] - Assessee has relinquished his rights in the property - AO held that the assessee's right to transfer further in the property and earn out of it have been extinguished upon entering into of the agreement dated 21/02/2012 - HELD THAT:- Since extinguishment of right in the immovable property in the impugned property, the AO brought on the difference between purchase and sale price as short terms capital gain in the assessment year under consideration. The contention of the ld.DR is that the assessee having acquired the right in a property under an agreement with the owners and later relinquishment of his right in favour of new purchaser for the year under consideration by the assessee for relinquishing the right for the property would attract provisions of sec.45(1) of the Act, which arises to short term capital gain and as such the ld.CIT(A) order to be confirmed. But in the present case, vide an agreement dated 20/12/2012, the assessee has not received the possession of the property and the delivery of the possession of property will be given to the assessee only on payment of balance consideration of 3.5 crores out of 4.5 croers.
As per the sec.2(47)(i), transfer in relation to capital asset includes sale and exchange are realized on the asset so as to relinquish the asset. The assessee shall be in a possession of impugned property but in the present case, the property which was said to be existed or relinquished was not in the possession of the assessee and both purchase and sale agreement were unregistered agreement and it cannot be said that the assessee was in a physical possession of the property so as to relinquish the same in favour of the assessee. Being so, we are of the opinion that sec.2(47)(i) cannot be complied. Accordingly, we allow the appeal of the assessee.
Chargeability of penalty u/s 271AAB - As decided in the case of Shri Suresh H. Kerudi [2019 (10) TMI 1175 - ITAT BANGALORE] we are of the view that the penalty in the case of assessee cannot be sustained as the assessee was not a person who was subjected to search u/s. 132 of the Act and consequently the provisions of section 271AAB could not be invoked in his case. - Decided in favour of assessee.
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2021 (12) TMI 1289 - ITAT BANGALORE
Employees’ contribution to PF and ESI which has been deposited beyond the due date prescribed under relevant Act and deposited within due date by filing the return on u/s 139(1) - DR contention is that as per sec.43B(b) of the Income-tax Act and explanatory notes to Finance Act 1983, that Employees’ Contribution was never intended to be covered by sec.43B - scope of amendment - HELD THAT:- We find no merit in the argument of the DR since the explanation as provided in Finance Act 2021 prescribes that the amendment in both sec.36(va) as well as 43B by inserting corresponding explanation that although impugned PF comes in the form of provision and the same is applicable from 1/4/2021 onwards only. In the present case we are concerned with the asst. year 2017-18 and the amended provision could not be applied retrospectively as it is only applicable w.e.f 1/4/2021. Being so no disallowance could be made by the AO in respect of PF/ESI paid within the due date of filing return of income. Though, it was beyond the date mentioned in the respective Act. - Decided in favour of assessee.
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2021 (12) TMI 1288 - ITAT SURAT
Deduction u/s 80P(2)(a)(i) - entitlement to deduction u/s 80P(2)(a)(i) on interest income - HELD THAT:- Assessee has not claimed deduction of interest from bank under section section 80P(2)(a)(i) of the Income Tax Act, therefore, no disallowance should be made. However, the assessing officer made disallowance under section section 80P(2)(a)(i) of the Income Tax Act, on account of interest other than co-operative bank.
As the assessee society had received interest other than from Co-op. Societies which was not claimed by the assessee but disallowed by the assessing officer. Therefore, we remit this issue back to the file of the assessing officer to examine whether assessee has claimed the deduction or not? If the assessing officer finds that assessee has not claimed deduction then in that situation the assessing officer should not make addition, hence, for statistical purposes, the additional ground raised by the assessee is treated to be allowed.
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2021 (12) TMI 1287 - ITAT SURAT
Rejection of books of accounts - addition to the extent of 1.00 % of Gross Profit - HELD THAT:- AR simply made is submission that addition restricted by the ld. CIT(A) is on higher side and concluded his submissions in a single sentence. We find that even before ld CIT(A), the assessee only submitted that in one of the comparable companies in Hari Om Agro Products Pvt. Ltd., the ld.CIT(A) restricted addition to the extent of 0.5% and in case of Jalaram Cultivation addition was restricted to 1% by the ld.CIT(A). We find that no documentary evidence was furnished before ld CIT(A). In our view the ld. CIT(A), in a very reasonable manner restricted the addition to 1.00 % of total sale/turnover of assessee.
Even now neither the copy of order in case of Hari Om Agro Products Pvt. Ltd. nor any other comparable company or the alleged audited accounts of the assessee is placed. At the addition cost of repetition, we may note that this appeal pending appeal for more than five years, the assessee failed to bring any evidence on record to substantiate their plea that their books result should be accepted. In view of the aforesaid discussion, we do not find any reason to interfere with the order of ld. CIT(A), which we affirm. In the result the ground No. 1 & 2 of the appeal is dismissed.
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2021 (12) TMI 1286 - ITAT KOLKATA
Revision u/s 263 by CIT - addition of share premium - addition u/s 68 - CIT in second assessment/re-assessment order proposed to exercise his revisional jurisdiction - second round before the AO for de novo re-assessment, the second AO as per the direction of the First Ld. Pr. CIT conducted the reassessment proceeding - HELD THAT:- Second AO has conducted enquiry on the specific subject matter i.e. share capital and premium collected by the assessee-company (CASS items). Therefore, the finding of Second Pr. CIT that the Second AO has not conducted enquiry is incorrect and is flowing from suspicion only. And as discussed, the allegation/fault pointed out by the Second Ld. Pr. CIT that the Second AO failed to collect total facts also cannot be accepted for the simple reason that Ld. Pr. CIT has not spelt out in the impugned order what he meant by total facts or in the alternative when the assessee has discharged its onus, as required by the law in force in this AY 2012-13, then the Ld. Pr. CIT ought to have called for which ever additional documents/materials or issued summons or issued notices and collected those facts which according to Second Ld. Pr. CIT, the AO omitted to collect and then demonstrated that those actions/documents which he collected in that process gave result to a different finding of fact which will turn upside down the claim of the assessee and thus able to show that the actions/omission of AO in conducting the investigation was erroneous, which unfortunately is not the case before us.
Second Pr. CIT has not carried out any such exercise or even spelled out in his impugned order, which all documents the second AO failed to collect for considering the total facts; and even if we presume he has conducted such an exercise, then he has not been able to bring out any adverse factual finding to upset the view of Second AO. So we find no merit in the vague allegation of second Pr. CIT that the second AO has not collected the full facts necessary to decide the issue of share capital & premium.
Second Ld. Pr. CIT – 4 by passing the second revisional order dated 15.03.2019 has substituted the First Pr. CIT’s order passed u/s. 263 of the Act dated 28.03.2016 with his own order which he cannot do since the second assessment order/re-assessment of the Second AO dated 08.06.2016 was pursuant to the first revisional order of the First Ld. Pr. CIT and on the very same subject matter which inter alia was the issue flagged by CASS, which exercise since having been complied by the AO, brings into operation the doctrine of merger the subject matter i.e. share capital & premium collected by assessee company. Resultantly the second Ld. Pr.CIT, again cannot rake-up the same subject matter without the second Ld. Pr.CIT in the second revisional order spells out where the error happened to second AO as an investigator or adjudicator, which exercise the Second Ld. Pr.CIT has not done, so the second Ld. Pr. CIT cannot be permitted to again ask the AO to start the investigation in the way he thinks it proper on the very same subject on which merger has taken place by virtue of the order of First Ld. Pr. CIT. And if this practice is allowed, then there will be no end to the assessment proceedings meaning no finality to assessment proceedings and that is exactly why the Parliament in its wisdom has brought in safe-guards, restrictions & conditions precedent to be satisfied strictly before assumption of revisional jurisdiction.
We find that the Second Ld. Pr. CIT without satisfying the condition precedent u/s 263 of the Act has invoked the revisional jurisdiction (second time), so all his actions are ab initio void.
Pr. CIT has made a bald statement that the AO’s assessment order attracts Explanation 2(c) u/s. 263 of the Act. However, he failed to spell out in his impugned order how the action of AO while framing the assessment order is not in accordance to any order, direction or instruction issued by the Board under section 119 of the Act. So, the deeming fiction as envisaged in Explanation (2) u/s. 263 of the Act cannot be used to interfere with the order of AO. This action of Ld. Pr. CIT is bad for non-application of mind. - Decided in favour of assessee.
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2021 (12) TMI 1285 - ITAT NAGPUR
Penalty levied u/s 271(1)(c) - Defective notice - non specification of charge - HELD THAT:- AO has neither mentioned in the assessment order nor in his Penalty notice as to whether the penalty is initiated for concealment of income or for furnishing inaccurate particulars of income. He has also not mentioned in the order that the penalty is initiated under explanation 5 of section 271(1)(c) of the Act. We find that the only words used in the Assessment order are, “It is found that the assessee has shown additional income of ₹ 24,00,000/- in the computation of income filed with the return, hence proceedings for penalty under section 271(1)(c) of the Act are to be initiated”. Further, the Final Show-cause notice issued on 29/12/2016 alongwith the Assessment order clearly mentions the words “Whereas in the course of proceedings before me for A.Y.2014-15, it appears that you have concealed the particulars of your income or furnished inaccurate particulars of such income”, and the AO has not stricken off the not applicable words
We find that the AO has sent one printed form, wherein the specific finding of the AO as to whether he is initiating penalty for concealment of income or for furnishing inaccurate particulars of income is not mentioned. Further, the AO has also not mentioned that he intends to levy penalty under explanation 5 of Section 271(1)(c) and hence the said penalty U/s. 271(1)(c) is not justified and is directed to be deleted. Therefore, we direct to the delete the same. - Decided in favour of assessee.
Penalty levied u/s 271AAB - Undisclosed income - HELD THAT:- Assessee has been able to explain the source of the alleged ‘undisclosed income’ may be relevant for final imposition of the penalty, however, for initiation of the penalty proceedings, the provisions of section 271AAB are self contained and are not dependent upon commencement or finalization of the assessment proceedings. It is further pertinent to note here it is not mandatory for the AO to invoke provisions of section 271AAB of the Act in each every case of levy of penalty pursuant to search action. Assessee has neither made any surrender of any undisclosed income during the search action nor the penalty has been initiated on the basis of undisclosed income found during such search action. In view of the above factual position, the impugned order of the AO imposing the penalty on the assessee under section 271AAB of the Act does not pass the mandate of the provisions of section 271AAB of the Act, therefore, the same being bad in law is hereby quashed and we direct to delete the penalty levied U/s. 271AAB - Decided in favour of assessee.
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2021 (12) TMI 1284 - ITAT KOLKATA
Addition u/s 56(2)(viib) - difference between the fair market value (FMV) of the shares and the value actually received - HELD THAT:- FMV of the shares as on 15/07/2013 should have been determined on the basis of balance sheet drawn up on 31/03/2012 instead of 31/03/2013 cannot be accepted not being either fair or proper. Moreover, the definition of 'balance sheet' given in Clause (b) of Rule 11U for the purpose of sub-rule (2) of Rule 11UA contemplates the balance sheet of the company as drawn up on the valuation date which has been audited by the auditor of the company clearly suggests or indicates that the balance sheet referred to therein need not be available on the date of valuation simply because the balance sheet as drawn up on the valuation date and audited by the auditor of the company cannot be practically available as on the date of valuation itself.
We are, therefore, of the considered view that the balance sheet drawn up as on 31/03/2013 was rightly taken by the Assessing Officer as well as the ld. CIT(A) for the determination of the FMV of the shares sold by the assessee on 15/07/2013 as per Clause (b) of Rule 11U for the purpose of sub-rule (2) of Rule 11UA being the balance sheet drawn up immediately preceding the valuation date. In that view of the matter, we uphold the impugned order of the ld. CIT(A) on this issue and dismiss this appeal of the assessee.
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2021 (12) TMI 1283 - ITAT KOLKATA
Penalty u/s. 271AAB - commodity profit as falling in the ken of the 'undisclosed income' - HELD THAT:- We note that when the search took place on 13.12.2012 in the assessee's premises, the commodity trading which is itself is speculative transaction has been found to be recorded in the 'other document' (seized & marked as SA/1) even though not in the books of account of the assessee, which has been retrieved from the assessee's premises and the assessee during search declared u/s. 132(4) ₹ 45.50 lakhs (₹ 45,100/- from commodity trading profit and miscellaneous income of ₹ 4,40,000/-) and filed return of income pursuant to notice u/s. 153A of the Act which includes the total amount of ₹ 63,50,320/- has been declared and the same has been accepted in toto by the AO.
We note that since the penalty u/s. 271AAB of the Act is levied on the amount of ₹ 45,50,000/- and since the same has been found at the time of search and which has been found recorded in the 'other document' marked by the search team as SA/1, we are of the considered opinion that for the purpose of 271AAB of the Act, this amount from SA/1 cannot be termed as 'undisclosed income' as per the definition given under Section 271AAB of the Act (supra) and therefore penalty u/s. 271AAB of the Act cannot be levied in this case. - Decided in favour of assessee.
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2021 (12) TMI 1282 - ITAT KOLKATA
Disallowance of employees' contribution made to the respective funds of the Government under PF & ESI Act - assessee has not remitted the employees' contribution on the due date as prescribed by the PF & ESI Act, thus the contribution made belatedly cannot be allowed - Scope of amendment - HELD THAT:- Respectfully following the decision of M/s. Lumino Industries [2021 (11) TMI 926 - ITAT KOLKATA] we are inclined to allow the appeals of the assessee and direct the A.O to delete the addition and hold that the Amendment brought in Finance Act 2021 w.e.f. 01.04.2021 by inserting an Explanation to section 36(1)(va) and section 43B of the Act is prospective in nature in nature and would apply from AY 2021-22 onwards and therefore, the amendment is not applicable to these assessment years (AYs 2014-15, 2017-18 & 2019-20) under consideration.- Decided in favour of assessee.
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2021 (12) TMI 1281 - ITAT DELHI
Correct head of income - rental income from letting out building space along with inbuilt infrastructure and other amenities - income from other sources or income from house property - HELD THAT:- On careful analysis of the facts and circumstances, we find that the issue is squarely covered in favour of the assessee by the decision of the coordinate bench in assessee”s own case for Assessment Year 2011-12, [2021 (6) TMI 538 - ITAT DELHI] wherein, on identical facts and circumstances, issue has been decided by coordinate bench and it held that income earned by the assessee form letting out of the building space and other amenities is chargeable to tax under the head “income from other sources”.
Thus we decide ground in favour of the assessee holding that such composite rental income is chargeable to tax in the hands of the assessee under the head “Income from other sources”. - Decided against revenue.
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2021 (12) TMI 1267 - ITAT DEHRADUN
Depreciation on demerger - AO has disallowed depreciation on the ground that the assessee had received assets free of cost from the Government of UP - AO noticed that the assessee took over the assets on transferred from UPJVNL but for the liability side did not take over the loans transferred in full form UPJVNL - AO had concluded that the assessee had only taken over the assets for which the liabilities were not ascertained till date - HELD THAT:- We have gone through the entire contents and the history of the assessee. In this case, the assets have been transferred from Uttar Pradesh Government (UPJVNL) to Uttaranchal Government (UJVNL). There is no claim of the depreciation twice by both the Governments. The demerger led to division of assets in a fixed ratio and the same was duly accounted for both the entities as per the written down value (WDV) as on that date. The depreciation on de-merger cannot be a forgone benefit owing to de-merger, which is the result of state reorganization. Hence, we decline to interfere with the reasoned order of the Ld. CIT (A). - Decided against revenue.
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2021 (12) TMI 1262 - DELHI HIGH COURT
Refund claim - Adjustment of amount against outstanding demand - stay on recovery of outstanding tax demand subject to fulfillment of appropriate conditions - HELD THAT:- Refunds have been adjusted against the outstanding tax demand by the Authority without following the procedure prescribed under Section 245 of the Act, inasmuch as no notice or opportunity of pre-decisional hearing had been provided to the Petitioner prior to such adjustment of refund in excess of 20%, this Court is of the opinion that the Petitioner is entitled to refund of adjustments made in excess of 20% of the disputed tax demands. (See: Glaxo Smith Kline Asia Pvt. Ltd. vs. The Commissioner of Income Tax & Ors.,[2007 (1) TMI 113 - DELHI HIGH COURT] and The Oriental Insurance Co. Ltd. vs. Deputy Commissioner of Income Tax & Anr. [2014 (10) TMI 746 - DELHI HIGH COURT]
This Court directs the Respondents to verify the facts stated in the writ petition and if they find them to be true and correct then refund the amount adjusted in excess of 20% of the disputed tax demands for the Assessment Year 2016-17 to the Petitioner within six weeks.
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2021 (12) TMI 1261 - TELANGANA HIGH COURT
Assessment u/s 153C - non issue of notice u/s 142 - notices under Sections 142(1) and 143(3), were in all probability sent to the earlier e-mail address of the petitioner, which had become defunct - violation of the principles of natural justice, as he was not served with the requisite statutory notices, leading to passing of the assessment order - HELD THAT:- Though respondent No.1 has stated that he had sent the notice under Section 142(1) of the Act, firstly on 30.08.2021, and thereafter on 17.09.2021 with corrigendum on 27.09.2021, nothing has been stated regarding service of notice. All that is stated is that the assessee did not respond to any of the notices. If this is read in conjunction with the averments made in paragraph No.4 of the counter affidavit filed by the respondents, it becomes evident that the notices were sent by the respondent to the earlier e-mail address of the petitioner, which has now become defunct.
Petitioner has now a new e-mail account being ‘Raghu.palle331@gmail.com’, which was duly informed to the Income Tax Department on 15.08.2019.
That being the position, we are of the view that petitioner was not heard before passing the impugned order of assessment. There is thus violation of the principles of natural justice.
The impugned assessment order should be set aside with a direction to respondent No.1 to pass fresh assessment order for the assessment year 2019-20 in accordance with law,
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2021 (12) TMI 1260 - ITAT DELHI
Benefit of carry forward losses - assessee has filed its return of income beyond the stipulated due of 30.09.2013 - HELD THAT:- It is an undisputed fact that assessee had filed the return of income for A.Y. 2013-14 on 22.11.2013 whereas as per Explanation 2(a) to Section 139, the last date for filing the return of income was 30.09.2013. It is also an undisputed fact that assessee had filed Form 3CEB. The perusal of Form 3CEB placed in the paper book reveals that it has been certified by the Chartered Accountant on 30.11.2013 and further as per the aforesaid form, the value of international transactions or specified domestic transactions is reported at Rs. Nil.
Return of income has been filed by assessee on 22.11.2013 meaning thereby that the Form 3CEB has been obtained after the filing of return of income - the perusal of the Form 3CEB also reveals that there is no mention of the amount received on capital account nor does it state any reason for not reporting the receipt amount on capital account in the Form 3CEB. Considering the totality of the aforesaid facts, we find that the CIT(A) was fully justified in holding that since assessee has filed its return of income beyond the stipulated due of 30.09.2013, the assessee was not eligible to claim the carry forward of the losses. We thus find no infirmity in the order of CIT(A) and therefore we uphold the order of CIT(A). Thus the grounds of assessee are dismissed.
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2021 (12) TMI 1259 - ITAT PUNE
Exemption u/s. 80P(2)(a)(i) in respect of interest on fixed deposits with Bank of Baroda - AO denied the exemption of interest treating it under the head ‘income from other sources’ not as ‘income from business' - CIT(A) upheld the contention that the said interest income should be assessed as ‘income from business’, however he denied the claim of exemption u/s. 80P(2)(a)(i) on the ground that the assessee lends money to nominal members - AO as well as the CIT(A) were of the opinion that the interest earned from third parties or non-members does not quality for exemption u/s.80P - HELD THAT:- It is an admitted position that the interest so earned should be taxed as ‘income from other sources’ There is a cleavage of judicial opinion among several High Courts on the issue of eligibility of this kind of income for exemption u/s. 80P(2)(a)(i) of the Act. The Hon’ble Punjab & Haryana High Court in the case of CIT vs. Punjab State Cooperative Federation of Housing Building Societies Ltd. [2016 (12) TMI 560 - PUNJAB AND HARYANA HIGH COURT] took a view that the income arising on the surplus invested in short term deposits and securities cannot be attributed to the activities of the society and, therefore, not eligible for exemption u/s.80P(2)(a)(i) of the Act. However, the Hon’ble Karnataka High Court in the case of Tumkur Merchants Souharda Credit Cooperative Ltd. [2015 (2) TMI 995 - KARNATAKA HIGH COURT]took a view that such interest income is attributable to the activities of the society and, therefore, eligible for exemption u/s.80P(2)(a)(i)
The Coordinate Bench of Pune Benches in the case of M/s. Ratnatray Gramin Bigar Sheti Sah. Pat Sanstha Maryadit [2018 (12) TMI 1926 - ITAT PUNE] has taken view in favour of the assessee following the judgment of Hon’ble Karnataka High Court in the case of Tumkur Merchants Souharda Credit Cooperative Ltd. (supra). Respectfully following the decision of the Coordinate Bench, we hold that the interest income earned on the investment of surplus money with banks is also eligible for exemption u/s.80P(2)(a)(i) of the Act. Thus, the grounds of appeal No. 1 & 2 stands allowed.
Claim for exemption of interest earned on the securities held with RBI - We allow these grounds in favour of the assessee and direct the AO to exempt the interest earned on securities held with RBI under the provisions of section 80P(2)(a)(i) of the Act
Denial of exemption u/s.80P(2)(a)(i) - whether the nominal members are also the members of the Cooperative societies or not? - HELD THAT:- The term “members” is not defined in the Income Tax Act, 1961. Under the provisions of Maharashtra Cooperative Societies Act, 1960, the term “members” include nominal members and extraordinary members and in the circumstances, we hold that the CIT(A) was not justified in denying the exemption u/s.80P(2)(a)(i) of the Act. This ground is also allowed.
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2021 (12) TMI 1258 - ITAT DELHI
Reopening of assessment u/s 147 - addition on account doubtful debt while computing the book profits u/s 115JB - rectification proceedings u/s 154 initated - HELD THAT:- We find that during the original assessment proceedings, vide query letter dated 20.10.2015 at Point No. 23, the Assessing Officer raised a specific query asking the assessee to furnish a detailed note on book profit as per section 115JB of the Act and vide query No. 24, details in respect of exempt income earned, alongwith details of expenses incurred for earning such income and quantify the disallowance u/s 14A r.w.r 8D of the Rules was asked by the AO.
Issuing notice u/s 148 of the Act, the Assessing Officer had already initiated rectification proceedings u/s 154 of the Act and the assessee had furnished detailed reply as mentioned elsewhere. We find that no rectification order has been framed by the Assessing Officer u/s 154 of the Act and yet, for the same reasons, reassessment proceedings were initiated.
Once rectification proceedings have been initiated, then for identical reasons, reassessment proceedings cannot be initiated unless the rectification proceedings culminate into an order, duly framed as per the provisions of law - there is no evidence brought on record by the Revenue that the proceedings initiated u/s 154 of the Act are concluded or communication to that effect has been sent to the assessee. Therefore, under these circumstances, it cannot be said that the assessment proceedings were completed as the order passed u/s 154 is also an order which can be subjected to appeal and revision and as the proceedings have not been completed on record, it cannot be said that income has escaped assessment.
Similar view has been taken by the co-ordinate bench at Mumbai in the case of Jet Speed Audio Pvt Ltd [2012 (8) TMI 332 - ITAT, MUMBAI] and Yasmin Texturing Pvt Ltd I [2012 (5) TMI 724 - ITAT MUMBAI] - Considering the totality of the facts as mentioned elsewhere, notice u/s 148 of the Act is bad in law and deserves to be quashed.- Decided in favour of assessee.
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2021 (12) TMI 1257 - ITAT MUMBAI
Penalty levied u/s 271B - assessee not got her accounts audited u/s 44AB - HELD THAT:- We do not find any discussion on the aspect of provisions of section 273B of the Act which provides that no penalty shall be imposed if the assessee proves that there was a reasonable cause for the failure to comply with the law. In the present case, we find that the profit & loss account of the assessee submitted before us does not have any gross receipts, turnover. The cost of the project is shown as work-in-progress.
The assessee follows project completion method. Therefore, the claim of the assessee was that she was under a bonafide belief that provisions of section 44AB of the Act does not apply and hence, no audit under section 44AB of the Act was got done. We find that this is a reasonable cause which has resulted into failure of the assessee to comply with the law - we find that penalty under section 271B of the Act cannot be levied for the reason that there was a failure on the part of the assessee to obtain tax audit report because of a bonafide belief that there is no turnover, gross receipts, etc. The revenue could not show that the belief of the assessee was malafide.
We find that in the present case, the assessee has shown the cost of the project as work-in-progress. Therefore, whenever the assessing officer would like to examine the income earned by the assessee, naturally, he will have to examine the composition of total work in progress also. He would be entitled to further considering the allowability or disallowability of expenses included in work in progress for the reason that the assessee would be claiming deduction of the same in the year in which project is complete. In view of this, we reverse the orders of the lower authorities and direct the learned assessing officer to delete the penalty levied under section 271B - Decided in favour of assessee.
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