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Income Tax - Case Laws
Showing 1 to 20 of 7488 Records
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2023 (12) TMI 1308 - CHHATTISGARH HIGH COURT
Rectification u/s 154 - contribution towards the EPF and ESIC disallowed - Tribunal instead of deciding the case on merits has simply adjudicated the issue on the ground that the rectification application was not maintainable - HELD THAT:- After going through the order it appears that though the application was filed under the nomenclature of rectification but if certain amount on which the tax is imposed is not legally recoverable then it also touches upon the merit. Consequently, in order to advance the cause on merits about the issue, we set aside the order of the ITAT and remit back the same to the Income Tax Appellate Tribunal to adjudicate the same on merits.
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2023 (12) TMI 1307 - ITAT MUMBAI
Foreign tax credit u/s 90 - belated filling of Form No. 67, i.e. within the due date of filing of return of income prescribed under section 139(1) - claim made with revised return of income - HELD THAT:- As decided in Sonkashi Sinha [2022 (10) TMI 107 - ITAT MUMBAI] here it is not the case of violation of any of the provisions of the act but of the rule, which does not provide for any consequence, if not complied with. Therefore, we hold the assessee is eligible for foreign tax credit, as she has filed form number 67 before completion of the assessment, though not in accordance with rule 128 (9) of The Income-tax Rules, which provided that such form shall be filed on or before the due date of filing of the return of income.
Thus Appellant would be eligible to foreign tax credit where Form No. 67 is filed before the completion of assessment for the relevant assessment year.
Thus we remand the issue raised in present appeal relating to claim of foreign tax credit back to the file of Assessing Officer with the direction to grant foreign tax credit to the Appellant - Ground No. 1 raised by the Appellant is allowed for statistical purposes.
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2023 (12) TMI 1304 - ITAT DELHI
Validity of assessment proceedings u/s 153C - absence of a valid satisfaction note prior to initiation - HELD THAT:- There is no dispute the satisfaction note u/s 153C has been recorded by the AO. It is well settled law that the Assessing Officer need to make only one satisfaction note, if the AO is same for the 'person searched' and 'other person' u/s 153C of the Act. Thus, we find no merit in ground of the assessee, accordingly, dismissed.
Addition u/s 69 - documents were found from the premises of the searched person in search and seizure operation - validity of Dumb documents seized - assessee submitted that the addition has been made based on the dumb document and the said document does not bear date or signature - HELD THAT:- Papers found during the search are neither dated nor signed/stamped, there is no head note on the paper which could suggest the purpose for which it was created, the loose paper contained list of many other property transaction which were related neither to the assessee nor to Sh. Buti Singh (seller) which demonstrates that neither the assessee nor the seller was the author of the document. The loose paper did not belong to the assessee or to the seller, there is no description or comment explaining the hand written jottings-whether it represented a proposal for purchase or construction by the builder or payment between assessee and right seller, there is no date of receipt or payment mentioned against any figure, the content of the paper was incorrect as the total sales consideration did not match to the sales consideration as per the agreement. Further, the sales consideration as per the loose paper did not even match to the handwritten jottings which raise serious doubts on its validity and accuracy.
Thus, the above said loose paper was not speaking document and it is a dumb document which can be used as a basis for making the addition u/s 69 of the Act in the absence of any substantive enquiry to validate the content of the paper with any supportive and corroborative material and evidence.
The evidentiary value of loose paper which is unsigned, undated and unverified has been held to be highly questionable and has not been accepted by the Hon'ble Supreme Court and various High Courts. Thus in absence of any supportive and corroborative material and evidence, a loose paper found during search containing rough notings of proposals/offers could not be a basis for making addition u/s 69 of the Act. See SHRI SHARAD CHAUDHARY [2014 (8) TMI 309 - ITAT DELHI]
AO did not consider the need to summon the seller or the person searched, or to record the statement of the author/searched person/seller by giving an opportunity to assessee to cross examine the said person. The AO has not even made any enquiry about the value of the property purchased by the assessee. Thus we delete the addition made u/s 69.
Addition on account of audit objection and passing the order u/s 154 before the proceedings u/s 153C of the Act were completed - assessee submitted that the Ld. AO was wrong to make addition on account of audit objection and passing order u/s 154 of the Act, before the proceedings u/s 153C were completed and the rectification proceedings are limited to correction of mistake apparent from record only - HELD THAT:- The issue raised by the assessee in this Ground is not emanating from the impugned order of the Ld. CIT(A) which is under challenge before us, therefore, the Ground No. 3 is dismissed as devoid of merit.
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2023 (12) TMI 1302 - ITAT HYDERABAD
Addition u/s 56(2)(viib) - FMV determination of the shares issued to the assessee - AO rejecting the DCF method adopted by the assessee - As per AO assessee could not substantiate the FMV adopted as per DCM method to the satisfaction of the AO - HELD THAT:- Once the assessee applied particular method of valuation, (in the present case DCF method), then it is the duty of the AO / CIT(A) to scrutinize the valuation report within the four corners or parameters laid down while making the valuation report under DCF method only. It is not permissible for the AO to reject the method opted by the assessee and apply a different method of valuation and the AO can definitely reject the valuation report but not the method. In case, the AO rejected the valuation report, then the AO has to carry out a fresh valuation report by applying the same valuation method and determine the fair market value of the unquoted shares.
Therefore, in our view, the AO was incorrect in concluding that the DCF method is “quite unrealistic and inapplicable” to the terms of the Income Tax Act. On the contrary, the DCF method is quite applicable and was required to be applied by the Assessing Officer to determine the FMV of the unquoted shares. Our above conclusion is based on the bare reading of the provisions reproduced hereinabove and also on account of the decision referred by the Tribunal in the case of Innoviti Payment Solutions Pvt. Ltd. [2019 (1) TMI 688 - ITAT BANGALORE] as held that AO can scrutinize the valuation report and the if the AO is not satisfied with the explanation of the assessee, he has to record the reasons and basis for not accepting the valuation report submitted by the assessee and only thereafter, he can go for own valuation or to obtain the fresh valuation report from an independent valuer and confront the same to the assessee. But the basis has to be DCF method and he cannot change the method of valuation which has been opted by the assessee.For scrutinizing the valuation report, the facts and data available on the date of valuation only has to be considered and actual result of future cannot be a basis to decide about reliability of the projections.The primary onus to prove the correctness of the valuation Report is on the assessee as he has special knowledge and he is privy to the facts of the company and only he has opted for this method.
Thus AO was incorrect in rejecting the DCF method adopted by the assessee.
Whether the valuation report based on which the valuation was arrived by the assessee was in accordance with law or not? - CIT(A) instead of examining the valuation report and the fair market value of the shares by applying the DCF method, had resorted to examining the functionality and working of the NAV method and thereafter, came to the conclusion that FMV has to be determined by the NAV method based on the CBDT Circular dt.12.07.2017 whereby it was envisaged that the value of the shares shall be determined by the Assessing Officer by taking into account the value of the intangible asset for the purpose of working of the net value.
This approach of the ld.CIT(A) was not in accordance with law. As we have held hereinabove that the option is not available to the Assessing Officer, then the exercise carried out by ld.CIT(A) became futile and of no consequence. Further, the determination of FMV on the basis of NAV by the Ld. CIT(A) was otherwise not sustainable and is bad in law as per Rule 11U(j), which defined valuation date and Rule 11U(b), which defined Balance Sheet. The conjoint reading of the above-mentioned Rules make it clear that the valuation of the asset as per the NAV method is required to be determined while making a valuation of the assets mentioned in the balance sheet.
In any case, the CBDT Circular dt.12.07.2016 cannot be made available and applied retrospectively to the facts of the case as the valuation report in the present case was prepared on 01.07.2016, i.e., one year prior to the issuance of the CBDT Circular. The valuation report is dated 01.07.2016. In that view, the NAV method adopted by the ld.CIT(A) is of no help to the assessee. In light of the above, the approach of the Assessing Officer as well as the ld.CIT(A) cannot be sustained.
Having held that both the approach of the AO as well as the ld.CIT(A) were incorrect, hence, we deem it appropriate to remand back the matter to the file of the Assessing Officer with a direction to determine the FMV after exercising the power conferred under the Act and after applying DCF method on the valuation date dt.01.07.2016 based on the balance sheet or any other material as available on that day, after granting due opportunity of hearing to the assessee. Accordingly, appeal of the Revenue is allowed for statistical purposes.
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2023 (12) TMI 1300 - ITAT BANGALORE
Accrual of income in India - Addition of receipts from sale of software & support services as Royalty income - HELD THAT:- Similar issue came for consideration before this Tribunal in assessee’s own case for the assessment year 2006-07 [2021 (11) TMI 1023 - ITAT BANGALORE] by virtue of Article 12(3) of the DTAA, royalties are payments of any kind received as a consideration for "the use of, or the right to use, any copyright "of a literary work includes a computer program or software. It was held that the regarding the expression "use of or the right to use", the position would be the same under explanation 2(v) of section 9(1)(vi) because there must be, under the licence granted or sales made, a transfer of any rights contained in sections 14(a) or 14(b) of the Copyright Act. Since the end-user only gets the right to use computer software under a non-exclusive licence, ensuring the owner continues to retain ownership under section 14(b) of the Copyright Act read with sub-section 14(a) (i)-(vii), payments for computer software sold/licenced on a CD/other physical media cannot be classed as a royalty.
The terms of the licence in the present case does not grant any proprietory interest on the licencee and there is no parting of any copy right in favour of the licencee. It is non-exclusive non-tranferrable licence merely enabling the use of the copy righted product and does not create any interest in copy right and therefore the payment for such licence would not be in the nature of royalty as defined in DTAA. We therefore hold that the sum in question cannot be brought to tax as royalty.
Recharacterizing the maintenance & support services income as fee for technical services - HELD THAT:- As discussed earlier, similar issue came for consideration before this Tribunal in assessee’s own case in assessment year 2006-07[2021 (11) TMI 1023 - ITAT BANGALORE] on the question whether the sums in question can be taxed as FTS, we agree with the submissions made by the learned counsel for the Assessee set out in paragraph-18 & 19 of this order and hold that the sums in question cannot be brought to tax as FTS.
Assessee appeal allowed.
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2023 (12) TMI 1299 - ITAT MUMBAI
TP Adjustment - Corporate guarantee fee - HELD THAT:- Corporate guarantee given by the assessee on behalf of its AE for availing loan facility is for the purpose of reducing the interest rate charged by the banks and while determining the ALP of the said transaction the same has to be considered on the perspective of the benefit received by the AE as per the interest saving approach by reason of the corporate guarantee given by the assessee and to compare the same as to what would be the interest rate charged by the bank for the loan availed by the AEs if the corporate guarantee is not given by the assessee for availing the said loan
Reliance placed on the decision of Everest Kento Cylinders [2015 (5) TMI 395 - BOMBAY HIGH COURT] cannot be the basis for holding the corporate guarantee commission to be 0.5% which was held to be an appropriate rate by the Hon'ble High Court in case of that assessee and for that particular year under consideration. It is evident that 0.5% cannot be a standard rate for charging corporate guarantee commission and the same has to be determined in each case and for each year based on the credit rating of AE, comparable loan transactions where guarantees are issued and non guaranteed loans by working out interest saving and then sharing it between transacting parties.
We, therefore, direct the ld. A.O./TPO to determine the ALP on corporate guarantee commission on the basis of the interest saving approach of the said transaction. The assessee is also directed to bench mark the said transaction where it has already been held to be an international transaction and on the basis of which the ld. A.O./TPO has to determine the ALP of the corporate guarantee commission as per the provisions of section 92CA of the Act which makes it compulsory to benchmark the international transactions every year - We, therefore, remand this issue back to the ld. A.O. Assesee ground allowed for statistical purpose.
Disallowance u/s. 14A r.w.r. 8D - assessee contended that the investments made in the subsidiary companies are strategic investments which should not be considered for computing the disallowance under Rule 8D(2)(iii) - HELD THAT:- We deem it fit to direct the ld. A.O. to restrict the disallowance to the extent of investment which has yielded in earning of the exempt income and not those investments where the assessee has not earned any exempt income for the purpose of computing the disallowance u/s. 14A read with Rule 8D. See Vireet Investments Pvt. Ltd. [2017 (6) TMI 1124 - ITAT DELHI] - We, therefore, remand this issue back to the file of the ld. A.O. for recomputing the disallowance u/s. 14A read with Rule 8D to the extent of the investments made by the assessee which has resulted in earning of the exempt income.
Nature of income - Interest income on temporary deposits - A.O. observed that the assessee has availed external commercial borrowings (ECB) and temporary surplus of such borrowings were deposited in bank fixed deposit out of which the assessee has earned an interest was netted of against the interest expenses which was capitalized - AO taxing the said interest income as income from other source u/s. 56 - HELD THAT:- We do not find any observation by the lower authorities as to how the borrowed fund and the surplus amount parked in the fixed deposits are not ‘inextricably linked’ to the setting up of the new unit by the assessee. In the absence of such observation and by placing reliance on the decision cited by the assessee we hold that the interest income out of the fixed deposits which is made from the ECB has to be capitalized as capital receipt and not revenue receipt.
As decided in Indian Oil Panipat Power Consortium [2009 (2) TMI 32 - DELHI HIGH COURT] funds infused in the assessee by the joint venture partner were inextricably linked with the setting up of the plant, the interest earned by the assessee could not be treated as income from other sources. In the result we answer the question as framed in favour of the assessee.
Additional depreciation u/s. 32(1)(ii) - additional depreciation for plant and machinery which was purchased and put to use for less than 180 days during the financial year - AO held additional depreciation is to be restricted as per the second proviso to section 32(1)(ii) which restricts the claim of additional depreciation to ½ the amount otherwise allowable and in the absence of the explicit provision, the balance 50% of the additional deprecation would lapse - explicit provision applies 50% of the said claim was introduced by Finance Act, 2015 which is w.e.f. 01.01.2016 vide third proviso to sub section (1) of section 32 and since the said provision is applicable prospectively, the assessee’s claim of additional deprecation was disallowed by the ld. A.O - HELD THAT:- As this issue has been squarely covered by the decision of the Hon'ble Jurisdictional High Court in the case of CIT vs. Rashtriya Chemicals and Fertilizers Ltd. (2021 (10) TMI 1269 - BOMBAY HIGH COURT] wherein it was held that the 3rd proviso to clause (ii) of sub section (1) of section 32 of the Act being clarificatory in nature would apply to previous years also.
As seen that the Karnataka High Court in Rittal India Pvt., Ltd.,(2015 (1) TMI 1248 - KARNATAKA HIGH COURT] even without the aid of the statutory amendment held that remaining 50% unclaimed depreciation would be available to the Assessee in the succeeding Assessment Year. Now the legislation has amended the provision by adding a proviso which, specifically recognizes the said right. The Madras High Court in Shri T. P. Textiles Pvt. Ltd., (2017 (3) TMI 739 - MADRAS HIGH COURT] ruled that such proviso being clarificatory in nature, would apply to pending cases, covering past period also.
Thus we hold that the assessee is entitled to the additional depreciation claimed u/s. 32(1)(ii) of the Act and, therefore, find no infirmity in the order of the ld. CIT(A). Ground no. 1 raised by the Revenue is dismissed.
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2023 (12) TMI 1298 - ITAT KOLKATA
Registration u/s 80G - Application rejected as mistake in mentioning the proper Clause - Assessment of trust - HELD THAT:- All the facts were before ld. CIT (Exemption) when the assessee for the first time applied for the final approval u/s 80G of the Act. Merely, because the assessee out of inadvertence had mentioned another Clause, the same was not an illegality but rather the same was a rectifiable mistake. The facts were on the record that the assessee before the amendment was already approved as a charitable institution u/s 12A as well as 80G of the Act. The assessee duly applied for provisional registration in view of the amended provisions. The same was also granted to the assessee.
The next course for the assessee was to apply for the final registration u/s 80G of the Act which was also duly complied by the assessee within the time limit prescribed for the same. However, due to the mistake in mentioning the proper Clause, the assessee was told to withdraw the application and file a fresh application. The assessee filed the fresh application without any delay. However, ld. CIT (Exemption) completely ignored the events which occurred from the date of filing of the application for final approval and leading to the filing of the fresh application because of the technical mistakes. In fact, instead of getting the application withdrawn, ld. CIT (Exemption) was supposed to give opportunity to the assessee to rectify the mistake i.e. the mentioning of the appropriate Clause. Ld. CIT (Exemption) even could have suo-moto passed an order treating the said application under the relevant ‘Clause-iii’ of Section 80G(5) of the Act.
Thus delay in filing the fresh application is, hereby, condoned. It is directed that the application of the assessee for final registration may be treated as filed within the time limit prescribed and the time consumed by the assessee in filing the revised application will not be taken into consideration. The matter is accordingly restored to the file of ld. CIT (Exemption) with a direction that ld. CIT (Exemption) will pass an order on merits irrespective of the delay occurred in filing the fresh application for final approval u/s 80G(5)
Application for final registration was to be filed within six months from the commencement of its activities and therefore, the application of the assessee for final registration was time barred - We note that the issue has already been discussed and adjudicated by the Coordinate Bench of the Tribunal in the case of West Bengal Welfare Society vs. CIT(Exemption), Kolkata [2023 (9) TMI 1422 - ITAT KOLKATA] wherein, it has been held that the assessee, who has been granted provisional registration, is eligible to apply for final registration irrespective of the fact that the assessee had already commenced its activity even prior to the date of grant of provisional approval.
Thus matter is restored the file of the CIT(E) for decision afresh - Appeal filed by the assessee is treated as allowed for statistical purposes.
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2023 (12) TMI 1297 - ITAT MUMBAI
Validity of the order passed u/s. 92CA(3) - period of limitation - TPO will have to pass an order in time before 60 days prior to the date on which the period of limitation referred to in section 153 of the Act expires - HELD THAT:- Though in section 92CA(3A) of the Act it states that the ld. TPO has to pass the order before 60 days of the limitation period mentioned in section 153 which though seems to be only directory and not mandatory but various courts have held that the time limit prescribed for passing of the order by the ld. TPO is mandatory which has to be adhered to strictly while passing the TP order. In the present case, the order of the TPO should have been passed on or before 31.10.2019 and the impugned order dated 01.11.2019 is beyond the time limit stipulated u/s. 92CA(3A) r.w.s. 153 of the Act. Appeal filed by the assessee is allowed.
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2023 (12) TMI 1295 - ITAT AHMEDABAD
Entitlement of claim of exemption u/s 11 - not filing of Form No.10 and / or 10B within due date as prescribed under the Act - procedural or mandatory lapses - assessee filed revised return of income with the higher claim of deduction under Section 11(2) - HELD THAT:- As in the instant facts, it is not a case where the assessee had not filed Form 10 in the original return of income, before the due date prescribed of filing return of income. It is only a case where the assessee observed that a certain error had crept in the original return of income, wherein the quantum of deduction claimed under Section 11(2) of the Act required correction and accordingly, the assessee filed revised return of income with the higher claim of deduction under Section 11(2) of the Act.
It has been held by various Courts that the requirement of filing Form 10 / 10B is merely directory in nature and failure to furnish Form 10 / 10B before due-date prescribed u/s 139(1) of the Act cannot be so fatal so as to deny they very claim of exemption u/s 11(2) of the Act especially when Form 10 / 10B was available on record when the intimation was passed by CPC u/s 143(1) of the Act - Decided in favour of assessee.
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2023 (12) TMI 1292 - ITAT DELHI
Revision u/s 263 against reassessment order passed u/s 147 - taxability of capital gain arising out of the sale of the said land - as per CIT AO has accepted the source of cash deposit but did not investigate the nature of land alleged to be sold as agricultural land - assessee stated that AO could not have gone beyond the reasons recorded for reopening the assessment -
HELD THAT:- On a perusal of the notice PCIT himself has referred to the sale deed relating to sale of agricultural land. This very document was examined by the AO as mentioned in his assessment order when he was examining the source of cash deposited in the Savings Bank account.
These facts go on to show that specific queries were raised to which specific reply was filed. Therefore, it cannot be said that the AO did not make any enquiry. Moreover, assessment was reopened with specific reasons for reopening and those specific reasons have been duly examined by the AO before completing assessment.
In our considered opinion, for exercise of power u/s 263 of the Act, it is mandatory that the order passed by the Assessing Officer should be erroneous and prejudicial to the interest of the Revenue. A perusal of the assessment order shows that the returned income was accepted by the AO and no addition was made for reasons recorded at the time of issue of notice u/s 148 of the Act.
This is an undisputed fact that the issues which prompted the AO to reopen the assessment were duly considered and reply of the assessee was accepted and no addition was made. This fact has also not been disturbed by the PCIT in his order u/s 263 of the Act.
In our considered opinion, the AO could not have made the addition on the issues raised by the PCIT in his order as no addition was made on account of reasons recorded for reopening the assessment.
No hesitation in setting aside the order of the PCIT and restore that of the Assessing Officer - Decided against revenue.
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2023 (12) TMI 1291 - ITAT RAJKOT
Revision u/s 263 - Limited scrutiny case of assessee - correct head of income - income from the lease rent ought to have been charged under the head “other sources” instead of “business income” - PCIT holding assessment framed u/s 143(3) as erroneous in so far prejudicial to the interest of revenue - PCIT was of the view that such lease rent income should have been charged to tax under the head “other sources” and therefore other expenses such as remuneration/salary to the partner and other expenses of general in nature should not have been allowed as deduction
HELD THAT:- Case of the assessee was selected for limited scrutiny - On perusal of the notice, the case was selected for scrutiny “whether deduction claim on account of depreciation is admissible” so, it was a case of limited scrutiny and there was no option for the AO to verify anything other than the issue for which the case was selected for limited scrutiny.
Ast here was no possibility for the AO to inquire whether the income shown by the assessee was to be assessed under the head “business income” or “other sources” unless the limited scrutiny is converted to regular scrutiny. Accordingly, we hold that the PCIT cannot exercise his power u/s 263 of the Act, to verify those items which were not subject matter of the scrutiny.
As the contention of the Ld. Counsel that the limited scrutiny was not converted into regular scrutiny was also not controverted by the Ld. DR appearing on behalf of the revenue and that in the earlier AY, the income of the assessee was accepted as income under the head “business and profession” was not controverted by the Ld. DR. In view of the above, we hold that the revisional order passed by the Ld. PCIT is not sustainable. Decided in favour of assessee.
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2023 (12) TMI 1285 - ITAT COCHIN
Assessment u/s 153A - Addition u/s 69 for unexplained investments in land - addition made being in respect of entry appearing in the assessee’s accounts - HELD THAT:- The assessee stating that no incriminating material was found during search is without basis on facts. Notice u/s. 153A r/w s. 153C in case of a person other than the persons searched, as the assessee in the instant case, can only be on the basis of a satisfaction recorded as to the books of account or documents or assets seized or requisitioned have a bearing on the determination of the total income of another person.
That is, the jurisdiction to frame an assessment u/s. 153A r/ws. 153C, can, as the law always stood and explained, is only on the basis of such material, i.e., incriminating in nature. This jurisdiction has not been assailed at any stage, including before us, i.e., the second round before the Tribunal.
The challenge to the satisfaction note, on the basis of which the assumption of jurisdiction could be questioned, is conspicuous by its absence, even as Sri. Mathew, the ld. counsel for the assessee, was specifically queried in its respect during hearing. It is the assessments in case of the person searched, that the Hon’ble Apex Court has in Abhishar Buildwell (2023 (4) TMI 1056 - SUPREME COURT) reading down the provision held as obtaining only on the strength of incriminating material, which was always the case for an assessment u/s. 153A r/w s. 153C, i.e., in case of a person other than the person searched. In other words, the said decision impacts only an assessment u/s. 153A, i.e., in the case of the person searched, and reliance thereon is misplaced qua a s. 153C, which obtains in the instant case.
The assessee is merely trying to take advantage of the said decision, clearly inapplicable in the facts of it’s case. No books of account were found maintained during search or even produced during assessment proceedings. In fact, in the absence of the returns filed, as indeed accounts, the entire material found during the search is liable to be regarded as incriminating.
In concluding whether the income would or would not have disclosed, reliance, it explained, is to be placed on the surrounding facts and circumstances of the case.
The only manner for disclosing income, it went on to explain, on the part of the assessee, is filing a return as stipulated in the Act. The non-filing of the return by the assessee was thus regarded by it as a fair inference as to the satisfaction of the condition that the income would not have been disclosed.
Applicability of section 68 or 69 is, again, contrived and, in any case, of no consequence, even as clarified by the courts, as in Namdev Arora[2016 (8) TMI 219 - PUNJAB AND HARYANA HIGH COURT] as and when this issue came up before them. No books of account were found during the search, nor indeed presented during the original assessment proceedings. That produced in the set aside proceedings in 2013 incorporating the investment in properties, documents in respect of which were found during the search, is, thus, only aruse so as to bring the additions in their respect in assessment under, as against section 69, under section 68, so as to be able to contend, on that basis, that the investment is recorded in the books. In the absence of any explanation as to the source thereof, the basis of the addition continues to be the unexplained nature and the source of the investment.
Interest u/s. 234A(1) r.w.s 234A(4) up to the date of assessment in the set aside proceedings, i.e., 31.07.2014, is equally without merit. In absence of furnishing any return of income up to the date of assessment on 28.12.2010, the same is the date of regular assessment, up to which therefore the interest u/s. 234A(1), which is for the delayed filing of return of income, is to extend. This interest is to be on the tax as finally assessed, i.e., as per the assessment dated 31.7.2014 (as may be further modified in appeal, which would therefore only be subsequent to), but that would not operate to extend the date up to which the interest is to be charged. The Revenue’s reliance on Mahesh Investment [2020 (10) TMI 428 - KARNATAKA HIGH COURT] is misplaced.
Assessee’s appeals are partly allowed.
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2023 (12) TMI 1267 - HIMACHAL PRADESH HIGH COURT
Deduction u/s 80IB(10) - As original return was filed by the assessee beyond the period prescribed u/s 139(1) of the Act. Hence, deduction u/s 80IB(10) could not be allowed to it in view of bar imposed u/s 80 AC - ITAT allowing certain deductions to the assessee under Section 80IB(10) even though its return of income for assessment year 2006-2007 was filed beyond the period prescribed under Section 139(1) of the Act and the deductions were claimed only in the revised return furnished later - HELD THAT:- As decided in Prakash Nath Khanna and another [2004 (2) TMI 3 - SUPREME COURT] Court cannot read anything into a statutory provision which is plain and unambiguous - A statute is an edict of the Legislature. The language employed in the statute is determinative factor of legislative intent. Provisions of Section 276-CC are in clear terms. There is no scope of uncertainty. The interpretation sought to be put on Section 276-CC to the effect that a return filed under Section 139(4) would meet requirement of filing a return under Section 139(1), cannot be accepted. The time within which a return is to be furnished is indicated in Section 139(1) and not in 139(4). That being so, even if a return is filed in terms of Section 139(4), that would not dilute the infraction in not furnishing the return ‘in due time’ as prescribed under Section 139(1). Otherwise, the use of words ‘in due time’ would lose their relevance and it cannot be said that the said expression was used without any purpose.
Therefore, a return of income filed under Section 139(4) cannot be said to be meeting the requirements of Section 139(1) in context of Section 80AC of the Act, which specifically insists upon filing of return by the due date prescribed under Section 139(1) for availing the admissible deductions.
In the instant case, the assessee is a statutory organization created by the State for providing & develop housing infrastructure. It took up a defence of late audit for belated filing of its return of income. The veracity of ground so put forth for late filing of return has not been disputed by the appellant. The assessee deals with public money, the State exchequer.
Commissioner of Income Tax and the Income Tax Appellate Tribunal have concurrently held on facts after undertaking a lengthy & pain staking exercise that the assessee was actually entitled to deductions under Section 80IB(10) of the Act. The specific amount of deduction admissible to it has also been computed. The ground put forth by the assessee for not filing the return of income within the time provided under Section 139(1) having been accepted on facts by the appellant, we in the given facts are inclined to hold, in this case, that the assessee had a reasonable & bonafide cause for not filing the return of income within the time permitted under Section 139(1).
We are in agreement with the view of the learned ITAT that once in the given facts, the assessee has been held entitled to claim the specifically computed deductions, then it should not be burdened with taxes which it is otherwise not liable to pay under law.
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2023 (12) TMI 1266 - KERALA HIGH COURT
Penalty for under-reporting and misreporting of income u/s 270A - application u/s 270AA seeking immunity from imposition of penalty - HELD THAT:- On a perusal of sub-Section (9) of Section 270A it is seen that if there has been misrepresentation or suppression of facts by the assessee, then the application seeking immunity from imposition/payment of penalty under Section 270AA of the Act shall not be maintainable.
The assessing authority while examining the application u/s 270AA cannot sit in appeal against its own assessment order to record a different finding than what was recorded in the assessment order. The assessing officer cannot examine the correctness or otherwise of the assessment order while examining the application u/s 270AA of the Act seeking immunity from imposition/payment of penalty, etc.
If there is a specific finding recorded in the assessment order that the assessee had underreported the income by misrepresenting the facts in the return of its income, then the application u/s 270AA of the Act would not be maintainable, in view of the express bar under Section 270A of the Act.
We do not find that the impugned order rejecting the application of the petitioner under Section 270AA of the Act suffers from any illegality on facts or law. Therefore, the present writ petition is hereby dismissed. Pending interlocutory application, if any, in the writ petition stands dismissed.
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2023 (12) TMI 1265 - MADRAS HIGH COURT
Penalty u/s 271(1)(c) - revised returns were not valid returns u/s 139(5) and that, such returns were not voluntarily filed rather the same were filed only after detection of concealment of income during the course of the survey conducted in the hospital - as argued appellant filed revised returns admitting additional income after payment of tax in relation thereto - CIT(A) deleted the penalty - ITAT restored the penalty - as submitted that before issuance of show cause notices, the appellant had filed the returns voluntarily showing additional income and there is no concealment or escapement of income to tax and hence, penalty u/s 271(1)(c) inflicted on the appellant, is erroneous and not sustainable in law - AO held that revised return was not a valid return under section 139(5) and accordingly, levied penalty under section 27(1)(c)
HELD THAT:- This court is of the opinion that this is a case of deliberate omission in the first return and further, the second return filed by the appellant is not a voluntary one, as rightly held by the ITAT.
Therefore, this court does not find any reason to interfere with the order passed by the ITAT. Accordingly, all these Tax Case Appeals are dismissed and the substantial questions of law are answered against the appellant and in favour of the revenue.
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2023 (12) TMI 1264 - MADRAS HIGH COURT
Validity of reopening of assessment - Period of limitation - procedure u/s 148A - HELD THAT:- In the present case, it is stated that a copy of the notice was sent thorough e-mail on 01.04.2021. Merely because the notice was made ready on 31.03.2021, it cannot be construed that the said notice was issued on 31.03.2021 itself. But the date of dispatch and the notice was issued by e-mail as well as by post is only on 01.04.2021. However, without considering these facts, the AO passed the Assessment Order on 23.03.2022.
Therefore, based upon the notice issued u/s 148 on 31.03.2021, the impugned assessment order came to be passed by the respondents, which, in the opinion of this Court it was passed without any authority and the same is barred by limitation and hence the same is liable to be set aside. However, considering the submissions made on behalf of the respondents and in the interest of revenue, without directing the respondents to venture upon issuing fresh notices u/s 148A, in the interest of revenue, this Court feels that the impugned notice under Section 148 of the Act issued to the petitioner, shall be deemed to have been issued u/s 148A of the Act as amended by Finance Act, 2021 and in the light of the law laid down in the case of Union of India and Others Vs. Ashish Agarwal [2022 (5) TMI 240 - SUPREME COURT]
Accordingly, while setting aside the impugned assessment order, this Court directs the Assessment Officer to provide necessary documents to the petitioner within 30 days from the date of request made by him so that he can file his reply within two weeks from the date of receipt of the relevant documents.
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2023 (12) TMI 1263 - ITAT DELHI
Power of CIT(A) to dismiss the appeal in limine ex-parte - violation of principles of natural justice, on the alleged ground that the appellant was not inclined to prosecute the appeal - TP adjustment - difference in arm's length price of the international transaction of availing testing services entered into by the appellant with the associated enterprises - CIT (A) noted that despite notices, nobody has attended, so he summarily referred to the TPO’s order and dismissed the assessee’s appeal - assessee submitted that assessee has sought adjournment before ld. CIT (A) who has ignored the same and passed the order dismissing the assessee’s appeal for non-prosecution.
HELD THAT:- Upon careful consideration, we find that section 251 does not give any power to the ld. CIT (A) dismissing the appeal for non-prosecution. Hence, in the interest of justice, we remit the issue to the file of ld. CIT (A). Ld. CIT(A) shall pass a speaking order on merits after giving the assessee adequate opportunity of being heard.
Appeal of the assessee is allowed for statistical purposes.
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2023 (12) TMI 1262 - ITAT DELHI
Revision u/s 263 by CIT - failure of the AO to send the case to the TPO - assessee’s claim was that there was Specified Domestic Transactions and the payments were made covered u/s 40(A)(2)(b) and for which both the parties are paying similar rate of taxation and no Revenue has been affected - HELD THAT:- We are of the considered view that Instruction No.3/2016 dated 10.03.2016 of CBDT providing for guidelines/implementation of transfer pricing provisions specifically provides that if a case is selected for scrutiny on the basis of transfer pricing risk parameters in respect of International Transactions or Specified Domestic Transactions or both the case has to be referred to TPO by the AO after obtaining the approval of the jurisdictional PCIT or CIT. The failure of Ld. AO to comply with these directions in relevant AY 2014-15 and following them in next AY 2015-16 makes it apparent that Ld. AO has not followed directions of Circular this years without mentioning any reasons for not referring the matter to TPO and that makes the order erroneous and prejudicial to the interest of Revenue irrespective of the fact that the transaction may have resulted into no loss to Revenue for the reason that both the parties were paying tax at similar rate as that is not a justification in TP issue examination by TPO.
For remaining grounds for finding the assessment order to be erroneous and prejudicial to the interest of Revenue, we find that assessee had made submissions to Ld. PCIT that the issue was examined by the Ld. AO by raising queries to which assessee had responded by letters dated 29.04.2016, 11.07.2016, 11.08.2016 and 17.08.2016.
The order of Ld. PCIT makes it apparent that he has taken note of these submissions of the assessee as made before Ld. AO and as available on the assessment record, but found that enquiry was not detailed without indicating by his own efforts as to where Ld. AO failed to follow the mandate of the Act in accepting the pleas. No separate and reasoning of his own are stated to establish his findings that how the submissions were not otherwise sustainable under the law to hold that assessment order was erroneous and prejudicial to the interest of Revenue.
Thus, we are not inclined to interfere in the order of Ld. PCIT with regard to directions of AO to refer the matter to TPO but on other counts the order is not sustainable. Appeal of assessee is allowed partly.
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2023 (12) TMI 1261 - ITAT KOLKATA
Capital gain - Joint Development agreement (JDA) - Transfer / sale of land u/s 2(47)(v) or not? - AO on the basis of said joint development agreement computed the short-term capital gain by taking the value as per stamp valuation authority as deemed sale consideration - HELD THAT:- Mere execution of joint development agreement with the builder would not result in any transfer of land by the assessee as contemplated by the provisions of section 2(47)(v) of the Act as the assessee has not allowed the possession of the plot to be taken away by the builder in part performance of a contract . It is just an agreement for carrying out construction on the plot after obtaining requisite permissions from the Government authorities and then after completion of the project, certain area has to be allotted to the assessee.
We find merit in the contention of assessee that the said execution of land development agreement cannot be a sale of land in favour of the builder within the meaning of section 2(47)(v) as only construction was allowed to be done by the builders after obtaining necessary approvals from competent authorities and, therefore, the capital gain has wrongly been computed and charged to tax.
No construction has been carried out on the said land due to legal hurdles. Capital gain cannot be assessed on the basis of joint development agreement executed by the assessee during the year as no possession was given to the builder in part performance of the contract but it is only permission to carry out construction on the plot. Considering all appeal of assessee allowed.
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2023 (12) TMI 1260 - ITAT KOLKATA
Reopening of assessment u/s 147 - bogus LTCG - reopening was done on the basis of information received from the Investigation Wing that the assessee has earned long-term capital gain from transfer of shares of Quest Financial Service Limited, which is a penny stock company and the said gain has been claimed as exempt u/s 10(38) - HELD THAT:- The reasons were recorded without application of mind and in a very casual and mechanical manner.
AO in the first second para stated that the assessee has taken bogus long-term capital gain through penny stocks. Besides we also note that the ld. AO has stated sometimes in the said reasons recorded “his/her”. We find merit in the contentions of the A.R. that the reasons have to be read as they are recorded and there has to be an independent application of mind by the AO and a objective satisfaction has to be recorded whereas the AO acted on the borrowed satisfaction which is a clear-cut non-application of mind by the AO.
The case of the assessee finds support from the decision of Hindustan Lever Limited –vs.- R.B. Wadkar, Asst. CIT [2004 (2) TMI 41 - BOMBAY HIGH COURT] wherein it has been held that the reasons have to be read as they are recorded and it cannot be substituted. The Hon’ble Court has held that there has to be satisfaction of AO for reopening of the assessment and reopening cannot be made for borrowed satisfaction in a mechanical manner.
Thus we quash the reopening of assessment and direct the ld. AO to delete the addition. The appeal of the assessee is allowed on legal issue.
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