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Income Tax - Case Laws
Showing 181 to 200 of 747 Records
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2021 (10) TMI 1092 - ITAT CHANDIGARH
Undisclosed capital gain - during the course of search and seizure operation u/s 132 carried out on the residential premises of assessee’s brother, certain documents relating to the assessee were found - Capital gain returned by the assessee on sale of property jointly owned with his brother - HELD THAT:- Only documentary evidence available in the present case is the registered sale deed which records and confirms the sale consideration declared by the assessee of ₹ 68 lacs. No other evidence whatsoever contradicting the sale consideration mentioned in the registered sale deed has been found.
Also not denied that no investigation, with regard to the difference in the sale consideration as stated by Shri Surinder Singh Bindra and as recorded in the registered sale deed, was done by the AO. On the contrary, we find, he merely jumped on the oral statement of Shri Surinder Singh Bindra taking it to be a solemn truth merely because it was a statement recorded on oath, totally disregarding the registered documentary evidence being the sale deed.
A registered sale deed cannot be summarily dismissed as evidence when juxtaposed with the oral statement alone that too only of one of the parties to the transaction even when made on oath. The statement, to carry weight as evidence needs to be supported with other evidences. The statement at best raises a suspicion about the consideration exchanged in the transaction which should prompt further inquiries, but oral statement even if recorded on oath alone is not sufficient to contradict/displace a duly registered documentary evidence. We agree with the Ld.Counsel for the assessee that the conclusion of the AO that the excess consideration was received, was based on mere surmises and lacked being backed by any evidence documentary or otherwise of any sort.
Thus approach of the revenue authorities in treating the oral statement of the searched person as sacrosanct in total disregard to the registered documentary evidence available, is not in accordance with law and the addition made, therefore, by holding that the surplus consideration was received in the impugned transaction in the hands of the assessee is, therefore, directed to be deleted. Ground of appeal raised by the assessee allowed.
Addition applying GP rate to contract receipts of the assessee - HELD THAT:- In the present case it is not denied that the husband of the assessee, who was the person searched wherein documents relating to his wife, the assessee before us, were found, had himself stated to the authorities of having earned 8% to 9% profits on the receipts. Moreover, as rightly pointed out by the Ld.CIT(A), even Legislature has considered a net profit rate of 8% to be appropriate for contract receipts in the presumptive scheme of taxation. Therefore, we see no reason to interfere in the order of the Ld.CIT(A) restricting the net profit rate of 8% of the contract receipts.
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2021 (10) TMI 1091 - ITAT KOLKATA
Revision u/s 263 by CIT - AO did not properly examine the bills/vouchers/receipts relating to the investments made by the assessee in a new flat to claim deduction u/s 54F - HELD THAT:- As perusal of the impugned order of the CIT reveals that after thoroughly examining the details and evidences furnished by the assessee during the revision proceedings u/s 263 CIT could not point out much discrepancy except about some small payments on account of small improvements such as bath room door, balcony grill, geysers, painter etc. as against the total allowance claimed - in respect of the items mentioned by the CIT, the assessee himself had mentioned before the Assessing Officer that the receipts about the said items were not available.
The nature of the items and the small investments made in that respect, in our view, cannot be doubted as the assessee has duly furnished the details and evidences relating to the investments made and the same were duly examined by the Ld. CIT himself, however, the Ld. CIT could not point out any major discrepancy. In our view, CIT has wrongly exercised this revision jurisdiction u/s 263 in this case. In our view, no useful purposes will be served for re-assessment on this issue when the details etc. have already been examined by the the Ld. CIT and no error has been found in the order of the Assessing Officer. In view of this, the impugned order of the Ld. CIT is set aside and the order of the Assessing Officer is restored. The appeal of the assessee stands allowed.
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2021 (10) TMI 1064 - ITAT LUCKNOW
Assessment u/s 153A - addition u/s 68 - onus to prove - addition was confirmed based on the report of the DDIT (Inv.) Kolkata - incriminating material found in search or not? - summons u/s 131 to lenders issued - as argued by assessee AO made no sufficient efforts to produce its witnesses before the assessee for cross examination - Whether reliance on 'reports of investigation wing' etc. did not constitute 'material' relevant for the purpose of assessment in this case? - HELD THAT:- In the present cases also the opportunity to cross examination has not been given to the assessee - AO at the fag end of time barring dates, had issued the alleged notices u/s 131 of the Act, the fact of which is also not coming out from the records as in the order sheets, the AO has not mentioned about the fact of having issued notices u/s 131 - AO straight forward shifted the onus of producing witnesses to the assessee by observing that assessee were also responsible for producing the witnesses but it is not a valid argument for not giving opportunity to the assessee for cross examination as the Department is all powerful to make sure that these witnesses are present for the cross examination by the assessee. Under similar circumstances, the Hon'ble Delhi High Court in the case of Pr. CIT vs. Best Infrastructure (India) (P.) Ltd. [2017 (8) TMI 250 - DELHI HIGH COURT] has held that Revenue cannot shift the onus of producing its witnesses to the assessee.
AO did not make sufficient efforts to produce its witnesses before the assessee for cross examination therefore, such statements taken behind the back of the assessee and not confronted to the assessee do not have any evidentiary value and therefore, if we ignore such statements, taken behind the back of the assessee and not confronted to the assessee and take into account all other evidences filed by the assessee which are in favour of the assessee and wherein the Assessing Officer has also not found any discrepancy, the additions sustained by learned CIT(A) are liable to be deleted.
Additions have been made on the basis of statements of witness and the witnesses have not been cross examined by assessee. AO though in the assessment order has noted that summons u/s 131 of the Act were issued to the witnesses but no steps, as required by law, have been taken by the AO as the witnesses did not appear and the AO did not enforce their presence by taking further steps. Merely writing in the assessment order that notices u/s 131 has been issued, without recording any order in the order sheet regarding this fact nor having any evidence of service of such notices, does not serve the purpose of giving opportunity to the assessee of cross examination.
On merits also, we find that assessee had fulfilled its part of onus which is required to be fulfilled by the assessee as the identity of the lender companies is not in doubt, creditworthiness of the companies is not in doubt as these companies had sufficient funds to advance the loans which is apparent from the amount of share capital and the reserves they are carrying in their balance sheets. The year-wise amount of share capital, reserves and loans out of which these creditors had advanced loans to the assessee, has been tabulated in a chart, which, for the sake of completeness, has been made part of this order.
Creditworthiness of the lender companies is not in doubt. As regards the genuineness of the transactions, we find that loans were taken through banking channels and interest was also paid after deducting TDS and a part of loans were also returned back with interest even before the date of search and this proves that the transactions were genuine. The authorities, during the search on the assessees, did not find any incriminating material and any money trail to establish that cash had exchanged in lieu of transactions of loans received and repayments thereof. The assessments of these companies, wherein the interest paid by the assessee, has been accepted to be their income, also proves that the transactions were genuine. Therefore, all the three ingredients of section 68 are fulfilled and therefore, also the additions confirmed by learned CIT(A) cannot be sustained.n the present cases, other than the statements recorded by another officer (which we have already held to be of no evidentiary value) there is no material before the Assessing Officer to disapprove the evidences filed by assessee. - Decided in favour of assessee.
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2021 (10) TMI 1060 - CHHATTISGARH HIGH COURT
Filing of two proceedings challenging one order or proceeding - HELD THAT:- It is not in dispute that petitioner after passing of assessment order 16.06.21 (Annexure P-1) and issuance of demand notice dated 16.06.21 (Annexure P-2), petitioner has approached the Appellate Authority by way of filing an appeal under Section 246(A) of the Act. It is also not in dispute that the Appellate Authority has powers to set aside the assessment order if found to be contrary to mandatory provisions under the Act. Under Section 251 of the Act of 1961, the Appellate Authority is having all the powers to consider the grounds raised by the petitioner in appeal. See SATYA PAL ANAND VERSUS STATE OF M.P. AND ORS. [2016 (10) TMI 1142 - SUPREME COURT]
Provisions under Section 251 of the Act of 1961, grounds raised by petitioner and also considering aforementioned ruling of Hon'ble Supreme Court, the writ petition challenging the same order which is pending consideration before the Appellate Authority is not maintainable ad is liable to be dismissed, as such.Consequently, writ petition is dismissed as not maintainable.
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2021 (10) TMI 1059 - KARNATAKA HIGH COURT
Determining the income on mining activity - increase in expenditure of re-screening charges in the course of extraction of iron ore - HELD THAT:- As assessee vehemently argued that the authorities have failed to consider the invoices in a proper perspective, we are unable to subscribe to her submissions. It is well settled that the Tribunal being the last fact finding authority, the finding recorded by the Tribunal with respect to the quality of material i.e., iron ore purchased by the assessee has some relevance. The arguments now advanced by the learned counsel for the assessee would not touch upon any question of law much less the substantial questions of law to be decided by this Court. On the contrary, the submissions would relate to the factual aspect of the expenses incurred towards the extraction/re-screening charges of iron ore purchased in the assessment year in question.
Thus the attempt made by the assessee to establish the lower grade of material purchased by the assessee required more extraction/rescreening charges was not supported by any material evidence. The same being considered extensively by the Tribunal, we do not find any ground to interfere with the factual findings recorded by the Tribunal. Hence, we dismiss the appeal answering the substantial questions of law, in favour of the revenue and against the assessee.
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2021 (10) TMI 1058 - KARNATAKA HIGH COURT
Jurisdiction of DCIT Bengaluru to issue notice u/s 153C - transfer of case u/s 127 - assessee’s case was transferred from ACIT, Circle – 6(1), Bengaluru to DCIT, Central Circle, Bengaluru on 20.07.2009, as per the order passed under Section 127(2) - HELD THAT:- As assessee’s case was transferred from ACIT, Circle – 6(1), Bengaluru to DCIT, Central Circle, Bengaluru on 20.07.2009, as per the order passed under Section 127(2) dated 20.07.2009; notices under Section 153C for the assessment years under consideration were issued by the DCIT, Central Circle, Bengaluru on 11.05.2009; date of transfer of files from ACIT is 19.08.2009. Thus, it is ex-facie apparent that the notices under Section 153C were issued prior to transfer of case and jurisdiction conferred on the DCIT. It is well settled by now that any order passed without jurisdiction is invalid.
As in the case of Principal Commissioner of Income Tax vs. Maruti Suzuki India Ltd.[2019 (7) TMI 1449 - SUPREME COURT] wherein, it has been held that the assessment order passed against the non-existent company is a substantive illegality and not a procedural violation of the nature adverted to Section 292B.
Thus, it is well established that the notice issued by the DCIT Circle 1(1), Bangalore, is without jurisdiction and as such, all further proceedings would render void ab initio. The arguments of the learned counsel for the revenue with respect to Sections 292B and 292BB do not merit any consideration. - Decided in favour of assessee.
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2021 (10) TMI 1057 - ITAT PUNE
Disallowance of deduction u/s.80IA - aggregate losses was more than the claim of deduction u/s.80IA(4) the AO disallowed the deduction - HELD THAT:- It is seen that the losses pertaining to the earlier years, referred to by the AO for setting off against the current year’s qualifying income from the eligible unit, relate to the years prior to the initial year. Obviously, such losses cannot be set off against the income from the wind mill on or after the initial year. Similar issue came up for consideration before the Tribunal in the case of the assessee for earlier years. Vide order dated 25-06-2019, the Tribunal in for the assessment years 2007-08, 2009-10, 2010-11 & 2011-12 [2019 (6) TMI 1644 - ITAT PUNE] has accepted the assessee’s claim. The ld. DR fairly accepted the position. In view of the foregoing discussion and respectfully following the precedent, we uphold the impugned order on this score.
Liability on account of revised wages - HELD THAT:- As seen that Central Govt. set up Wage Board for the working Journalists and other Newspaper employees. The Board submitted its report on 31-12-2010. The Central Govt. issued consequential notification on 11-11-2011 accepting the recommendations, which was challenged in the Courts of law and eventually got nod in a later year. In terms of the notification of the Central Govt., the assessee recomputed the amount of wages pertaining to the year under consideration and claimed deduction for the same by means of the revised return. The assessee is admittedly following the mercantile system of accounting. Since the amount of additional wages pursuant to the Central Govt. notifying the recommendations of the Wags Board pertaining to the year under consideration amounted to ₹ 6.26 crore, in our considered opinion, the same has to be allowed under the mercantile system of account followed by the assessee. The fact that the payment was made in subsequent years cannot mar the deductibility of the amount which pertains to and became payable during the year. We, therefore, uphold the impugned order deleting the liability on account of revised wages for the year under consideration .
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2021 (10) TMI 1056 - ITAT PUNE
Revision u/s 263 by CIT - Low net profit or loss shown from large gross receipts - HELD THAT:- As in the present case, we have examined in reference to the shortcomings in the assessment order as alleged by the Ld. Pr. Commissioner of Income Tax the assessee had demonstrated each and every aspect of such queries raised before the Assessing Officer.
DR also could not refute the fact that necessary documents were placed before the AO and he also could not bring on record any material/evidence to show that the Assessing Officer has not conducted any enquiry. Rather, we have observed that questions were asked and in response thereto, the assessee had given reply to each and every queries raised by the Department.
It is a settled position of law while assuming jurisdiction u/s.263 of the Act, the Ld. Pr. Commissioner of Income Tax should specifically state the reasons why the order of the Assessing Officer was erroneous in so far as prejudicial to the interest of the revenue by supporting factual evidences and reasoning which in this case is absent.
Thus we hold that resorting to revisionary jurisdiction u/s.263 of the Act by the Ld. Pr. Commissioner of Income Tax in this case is not valid in law and hence, we quash the impugned order of the Ld. Pr. Commissioner of Income Tax. - Assessee appeal allowed.
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2021 (10) TMI 1055 - ITAT DELHI
Benefit of exemption u/s. 11 & 12 - Scope of charitable purpose as defined in Section 2(15) - regular receipt of money from the sale of paintings - AO observed that the assessee is renting out galleries to the artists for displaying their work and has thus concluded that the assessee is engaged in a business activity and held to be in violation of the statutory remit in view of the amendment in section 2(15) of the Act by Finance Act, 2009 - HELD THAT:- As relying on India Trade Promotion Organization vs. DIT (Exemption) & Others [2015 (1) TMI 928 - DELHI HIGH COURT], India International Centre [2015 (5) TMI 515 - ITAT DELHI] AND ALL INDIA FOOTBALL FEDERATION [2015 (10) TMI 2162 - ITAT DELHI] if some incidental activities are carried out by a charitable organization whose dominant and prime objective is not a profit motive, the organization cannot be deemed to be pursuing non charitable objects and hence be considered to be existing for non-charitable purposes - the constitutional validity of proviso to Section 2(15) of the Act, had held that mere receipt of fee or charge will not mean that the assessee is involved in any trade, commerce or business.
Accordingly considering the legal position as found settled with respect to interpretation of proviso of Section 2(15) of the Act in the case of India Trade Promotion Organisation vs. DGIT (Exemption) (supra) the coordinate bench held that the benefit of exemption u/s. 11 & 12 of the Act could not be denied. We find that similar view has been followed right from 2009-10 assessment year till date. Thus we hold that the appeals filed by the Revenue have to be dismissed in view of the consistent orders available on record qua the issue ordered accordingly.
Lack of opportunity as pleaded by the assessee - Without commenting upon the correctness, of the conclusions drawn addressing the procedural shortcoming only, we deem it to appropriate to set aside the orders of the Ld. First Appellate Authority to this extent and restore the issue back to the file of the CIT(A) with a direction to give a specific opportunity to the assessee to make its submission before the passing of the order. No doubt technically the resultant addition may not be capable of being described as an enhancement, however, the fact remains that when the administrative authorities proceed to pass an order adverse to a party then due notice of this fact necessarily in all fairness needs to be given to the assessee. In the facts of the present case, it is evident that the assessee was not heard. The law is well settled that it cannot be inferred/presumed that the assessee even if given an opportunity would have nothing further to state on facts or law. The principles of natural justice mandate that a reasonable and effective opportunity of being heard needs to be granted specifically where an administrative authority proceeds to take an adverse view. Accordingly, in the interests of justice, it is deemed appropriate to set aside the impugned order back to the file of the Ld. CIT(A) with a direction to pass a speaking order.
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2021 (10) TMI 1054 - ITAT MUMBAI
TDS u/s 192 - Demand u/s 201(1)/201(1A) - withholding of tax on LFC paid to employees - assessee submitted that LFC was paid to the employees for the shortest route by the entitled class to the destination in India - HELD THAT:- As decided in own case [2021 (2) TMI 28 - ITAT MUMBAI] taxability of these amounts in the hands of the employees concerned, because that aspect of the matter is not really relevant as on now. We leave it at that for the time being. The coordinate bench decisions deal with only the issue of taxability of leave travel facility under section 10(5) and not with the broader question about the nature of tax deduction at source liability under section 192, as also the issue about bonafides of the stand of the assessee employer. These decisions, therefore, do not come in the way of our present decision.
Once we hold, as we do in this case, that estimation of income, in the hands of the employees under the head' income from salaries', by the employer was bonafide and reasonable, the very foundation of impugned demands raised under section 201 r.w.s 192 ceases to hold good in law. We must, therefore, vacate these demands.
Bearing in mind entirety of the case, we cancel the impugned demands under section 201 r.w.s. 192 as unsustainable in law. - Decided in favour of assessee.
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2021 (10) TMI 1053 - ITAT MUMBAI
Denial of deduction claimed u/s 10A in respect of income derived from training activity - HELD THAT:- As the Tribunal in the preceding assessment year has allowed assessee’s claim of deduction under section 10A of the Act in respect of the income derived from training activity. It is relevant to observe, aforesaid decision of the provision has been upheld by the Hon’ble jurisdictional High Court [2014 (3) TMI 1162 - BOMBAY HIGH COURT]while dismissing revenue’s appeal. [2014 (3) TMI 1162 - BOMBAY HIGH COURT] Facts being identical, respectfully following the decision of the co-ordinate Bench and the Hon’ble jurisdictional High Court in assessee’s own case, as referred to above, we direct the AO to allow assessee’s claim of deduction under section 10A of the Act by including it both in the total turnover as well as export turnover. This ground is allowed.
Facts being identical, respectfully following the decision of the co-ordinate Bench and the Hon’ble jurisdictional High Court in assessee’s own case, as referred to above, we direct the AO to allow assessee’s claim of deduction under section 10A of the Act by including it both in the total turnover as well as export turnover. This ground is allowed.
Deduction claimed under section 10A of the Act in respect of interest income - assessee had earned interest income on bank deposits, bonds, loans to employees, loans to subsidiary etc - HELD THAT:- Undisputedly, out of the total interest income earned, the assessee has apportioned an amount of ₹ 12,37,49,444/- to the 10A units. It is the stand of the assessee that the interest income on which deduction under section 10A of the Act was claimed was because of temporary parking of surplus funds available to the 10A units out of the export proceeds. Thus, it is closely related to the activity of the 10A units.
A reading of section 10A of the Act would show that profits and gains derived by an undertaking from export of articles or things or computer software would be eligible for deduction. Whereas, in the decisions relied upon by the Departmental Authorities, the dispute related to claim of deduction under chapter VI-A of the Act - in principle we accept assessee’s contention that interest earned from temporary parking of surplus funds in bank deposits, bonds as well as loans to employees and subsidiary would qualify for deduction under section 10A of the Act. However, the quantification and attribution of such interest to the 10A units has to be examined by the AO. The assessee is directed to furnish necessary evidence in this regard to establish its claim of deduction under section 10A of the Act on the amount of ₹ 12,37,49,444/-. This ground is allowed subject to factual verification.
Transfer pricing adjustment made because of interest charged on delayed receivables - delay in remittance by overseas subsidiaries, the assessee has submitted that such delay was because of delay in remittance by the end customers to the overseas subsidiaries - HELD THAT:- As assessee had furnished reconciliation statement, bank statement of subsidiaries and some other evidences. Notably, learned Commissioner (Appeals), in fact has appreciated assessee’s contention that there could be delay/considerable time gap in remittance of receivables by the overseas subsidiaries and the third party distributors, as the AEs are not the end customers, whereas, the third party distributors are themselves the customers. He has also appreciated the fact that some of the subsidiaries in USA and Netherland are incurring losses. Thus, when the AEs themselves are not the end customers and their remittance to the assessee, in turn, depends upon the remittances by the end customers, it cannot be said that the AEs have benefitted because of delay in remitting the receivables.
As before the TPO the assessee had furnished certain evidences including the bank statements of subsidiaries and reconciliation statement reconciling the time gap in amounts receivable from subsidiaries and from third parties. These evidences furnished by the assessee, certainly, support assessee’s claim that the delay in receivables was purely because of the delay in receipt from end customers. In fact, learned Commissioner (Appeals) has also appreciated this fact. Thus, after taking into consideration the entire factual we are of the view that the adjustment made on account of delayed receivables has to be deleted.
Transfer pricing adjustment on account of customization fee - CIT-A deleted the addition - HELD THAT:- As relying on assessee's own case [2010 (8) TMI 750 - ITAT MUMBAI] though the subsidiaries are not directly involved in the customization work of the software but at the same time they are only authorized to collect the customization work in the market and other independent distributors are not doing said work. It is also seen that some of the independent distributors are paid higher commission then the subsidiaries without doing any job for collection of customization work. Moreover, the Learned D.R. could not controvert the findings of the Learned CIT (A) before us.
TP adjustment made towards granting fee on loan extended by the assessee to the AE - HELD THAT:- As rightly observed by learned Commissioner (Appeals), question of providing a corporate guarantee will arise in a situation where the borrower has obtained debt from third party lender. In the facts of the present case, the assessee itself has advanced the loans to the AEs and has charged interest at the appropriate rate of LIBOR + certain basis points. No material has been brought on record by the TPO to demonstrate that the rate of interest charged by the assessee on the loans advanced is not at the appropriate rate prevailing in the countries, where the AEs are located. Therefore, in the aforesaid factual position, when the assessee has charged interest on the loans advance, there is no question of additionally charging guarantee commission for provision of corporate guarantee. - Decided in favour of assessee.
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2021 (10) TMI 1052 - ITAT SURAT
Addition u/s 68 - Unsecured loan entries facilitated - discharge of primary onus - identify &, creditworthiness of lender and genuineness of transactions and discharge of primary onus or not? - addition based on information received from DCIT,Circle-2(4) Ahmedabad - HELD THAT:- No independent finding was given by Ld. CIT(A) except holding that mere filing of confirmation, bank statement, copy of return of income is not sufficient to prove the genuineness of transaction and creditworthiness of lenders.
CIT(A) has not given any finding as to what more evidence was required to file if any other evidence was required from the assessee. In our view the assessee has discharged the primary onus in showing the identity, creditworthiness and genuineness of such transaction. We further find that similar addition of the same amount was made in the hand of facilitator Dhirajlal Sanghvi [2019 (10) TMI 1369 - ITAT AHMEDABAD]
As in view the decision of Hon'ble ITAT Ahmedabad Bench in case of facilitated Dhirajlal V Sanghvi (supra), wherein it was held that he had acted as facilitator in providing the funds to the investors and from this purpose he had made noting of funds which were remitted by third party and received by another third party. Hence, we are of view that once the assessee has discharged the primary onus, the Assessing Officer without brining any adverse evidence was not justified in making addition under section 68 of the Act. This ground of assessee’s appeal raised by assessee is allowed.
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2021 (10) TMI 1051 - ITAT CHENNAI
Exemption u/s.11 - Charitable activity u/s 2(15) - assessee is a registered entity u/s 25 of The Companies Act, 1956 and holds valid registration u/s 12AA since the year 2005 and hitherto allowed exemption u/s 11 / 12 as applicable to a charitable trust - AO denied the same in this year by holding that the assessee collected maintenance charges, track rent and earned income from other sources which would be in the nature of commercial receipts and therefore, the activities were hit by proviso to Sec. 2(15) - HELD THAT:- As in INDIA TRADE PROMOTION ORGANIZATION VERSUS DIRECTOR GENERAL OF INCOME TAX (EXEMPTIONS) & OTHERS [2015 (1) TMI 928 - DELHI HIGH COURT] if the institution is not driven primarily by a desire or motive to earn profits, but to do charity through the advancement of an object of general public utility, it would be an institution established for charitable purposes. It was also observed that merely because a fee or some other consideration is collected or received by the assessee, it would not lose its character of having been established for a charitable purpose. The dominant activity of the assessee was to be examined. If it was not business, trade or commerce then any such incidental or ancillary activity would also not fall within the categories of business, trade or commerce.
Hon’ble Allahabad High Court in CIT V/s Lucknow Development Authority [2013 (9) TMI 570 - ALLAHABAD HIGH COURT] has held that where a trust is carrying on its activities for the fulfillment of its aims and objectives which are of charitable in nature with no motive to earn profit and in the process, earns some profit, the same would not be hit by proviso to Section 2(15).
Thus, it is fairly settled legal position that it is the pre-dominant objective which would be relevant to examine the applicability of proviso to Sec.2(15). The Ld. CIT(A) after examining the primary objects of the assessee as well as the purpose for which it was established, came to a conclusion that the primary objective was charitable in nature and collection of fees was not to earn profit. Therefore, the assessee did not cease to be charitable in character so as to render it ineligible to claim benefits u/s 11 and 12. We concur with these findings of Ld. CIT(A) and consequently, dismiss the revenue’s appeals for all the years.
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2021 (10) TMI 1050 - ITAT SURAT
Nature of land sold - gain on sale of land - agricultural land or capital asset - distance between the Municipal limit and agriculture land - why the agricultural land should not be treated as capital asset within the meaning of section 2(14)? - AO treated the agricultural land as capital asset by taking view that aerial distance of land is less than 8 kms from Municipal Limit of Surat - whether CIT (A) was justified in allowing the appeal of the assessee as not appreciated that even the word road distance does not constitute the distance followed by the traffic Rules? - HELD THAT:- We find that CBDT in Circular No.17/2015 while accepting the decision of Hon’ble Bombay High Court in Smt. Maltibai R Kadu [2015 (4) TMI 227 - BOMBAY HIGH COURT] held that measurement of aerial distance is to be applied prospectively, therefore, considering the facts and circumstances of the case, particularly the finding of ld.CIT(A) that distance of land measured road is more than 8 kms, therefore, we affirm the order of ld.CIT(A). No contrary decision is brought to our notice to take other view. In the result the grounds of appeal raised by the revenue are dismissed.
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2021 (10) TMI 1049 - ITAT SURAT
Estimation of income - Bogus Purchase u/s 69C - HELD THAT:- The assessee has shown Gross Profit @ 6.3% and Net Profit @ 4.69%, which is in line in the business of diamonds. We find that the impugned purchases are less than 10% of the total transactions of the assessee.
Assessee has not fully substantiated purchases, the Revenue Authorities are not entitled to make addition @ 100% of the transaction rather to tax the income component in the said transaction - Lower Authorities has not discarded the documentary evidence furnished by assessee. The Lower Authorities basically relied upon the report of Investigation Wing. Therefore, considering the peculiarity of the facts and circumstances of the case, we are of view that to avoid the possibility of revenue leakage, the disallowance of token amount of ₹ 20,000/- will meet the end of justice.
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2021 (10) TMI 1048 - ITAT SURAT
Rectification of mistake - disallowance of interest expenses for want of non-deduction of tax at source while making payment of interest - HELD THAT:- As gone through the order dated 10.12.2020 order passed by the AO while giving effect to the order of Tribunal vide his order dated 12.04.2021 and the subsequent order passed u/s 154 of the Act, withdrawing the relief is granted to the assessee in terms of order of tribunal.
AO initially while following the direction of Tribunal, verified the fact and granted relief to the assessee. However, the relief granted to the assessee was withdrawn by AO on the same day in order passed u/s 154. We find that the AO passed the subsequent order without giving opportunity of hearing - we find that the ld.AR of the assessee failed to point out any mistake apparent in the order dated 10.12.2020. Therefore, the application filed by the assessee under section 254(2) of the act is dismissed - Miscellaneous Application filed by the assessee is dismissed.
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2021 (10) TMI 1047 - ITAT SURAT
Non addition of additional grounds of appeal in revised return - Deduction u/s 36(1)(viia) - additional claim was not accepted by the AO on the ground that he is not empowered to accept additional claim in absence of revised return - HELD THAT:- AO is not entitled to entertain fresh claim, however, these restriction is not applicable on the first appellate authority or on the Tribunal. We find that before the AO assessee claimed that due to calculation mistake the assessee claimed deduction u/s 36(1)(viia) however, they are entitled @7.5% of interest earned on the advances on rural loan. In our view it was not a fresh claim.
AO should have examined the fact instead of rejecting the claim by raising legal objection. To avoid any further objection by the lower authority, we admit the additional claim of the assessee and restore the issue back to the file of AO to examine the facts as to how much interest earned by the assessee on rural advances and allow relief to the assessee in accordance with law. Ground of appeal raised by the assessee is allowed for statistical purpose.
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2021 (10) TMI 1046 - ITAT MUMBAI
Estimation of income - Bogus purchases - disallowance at 10% of disputed purchases made during the year - assessee is one of the beneficiaries of various dealers who provide only accommodation entries without any delivery of goods based on the information received from Sales Tax Department, Mumbai - HELD THAT:- Taking the totality of the facts and circumstances into consideration we are of the view that ends of justice would be met if the disallowance is sustained at 6% of the alleged bogus purchases considering the fact that even the Assessing Officer in his remand report did not dispute the records in respect of purchases, consumption, sales as well as the stock reconciliation etc., furnished by the assessee - we direct the AO to restrict the disallowance to 6% of the alleged bogus purchases. Ground raised by the assessee on this issue is partly allowed.
Deduction u/s. 35(2AB) - assessee company has incurred expenditure on research and development activities and has claimed additional deduction u/s. 35(2AB) - application for approval in form 3CK was made after the close of the Financial Year - HELD THAT:- Merely because approval is received in the subsequent year, the deduction u/s 35(2AB) could not be denied to the assessee - denial of deduction u/s. 35(2AB) of the Act on the ground that the application for approval in form 3CK was made after the close of the Financial Year is also unsustainable. See BANCO PRODUCTS (INDIA) LTD.[2018 (7) TMI 1559 - GUJARAT HIGH COURT] - we have no hesitation in holding that the deduction u/s.35(2AB) as claimed by the assessee is to be allowed. Hence, the deduction u/s 35(2AB) as claimed by the assessee is allowed.
Disallowance u/s 14A r.w.r. 8D - CIT-A deleted the addition - HELD THAT:- It is the finding of the Ld.CIT(A) that the financial statements of the assessee shows that it had sufficient own funds to make the investments on equities. The Ld.CIT(A) following the decision of the Hon'ble Jurisdictional High Court in the case of Reliance Utilities and Power Ltd. [2009 (1) TMI 4 - BOMBAY HIGH COURT] and HDFC BANK LTD. [2014 (8) TMI 119 - BOMBAY HIGH COURT] held that there is no case for disallowance of any interest under Rule 8D(2)(ii) of I.T. Rules. We do not find any infirmity in the order of the Ld.CIT(A) in deleting the interest disallowance. The order of the Ld.CIT(A) is affirmed on this issue. The ground raised by the revenue is rejected.
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2021 (10) TMI 1045 - ITAT VISAKHAPATNAM
Revision u/s 263 by CIT - Delayed employees contributions to the Provident Fund (PF) - addition u/sec. 2(24)(x) - Deposits on or before due date of filing of return u/sec. 139(1) - HELD THAT:- An order cannot be termed as erroneous unless it is not in accordance with law. If assessing officer makes assessment in accordance with law, the same cannot be branded as erroneous by the commissioner. The Commissioner is not empowered to substitute his view to the view already taken by the AO in accordance with law or judgements of the higher Courts.
In the instant case the AO in view of the decisions of the Hon’ble High Courts, had taken the plausible and favourable view to the Assessee, while considering the expenses qua employees contribution to the provident fund deposited on or before due date of filing of return u/sec. 139(1) of the Act, and hence the assessment order can not be termed as erroneous and prejudicial to the interest of the revenue. Consequently the directions of the ld. Pr.CIT to the AO to make the addition u/sec. 2(24)(x) of the Act to the income already assessed in the assessment order dated 31/08/2017 and to pass the consequential order accordingly, cannot survive.
Assessee during the course of argument also raised an issue that Assessee’s return of income was selected for scrutiny under CASS but for limited purposes i.e. other deductions and other expenses claimed in the profit & loss account (as reflected in notice u/sec. 143(2) of the Act, dated 27/07/2016). The Assessee’s contention is that once the case is selected for limited scrutiny and not covering the issue other than involved for the limited purposes as specified in the notice, then the revenue authorities are not entitled to travel beyond the parameters except while following the due procedure prescribed as per law and instructions issued by the CBDT instructions No.20/2015, dated 29/12/2015 and 05/2016, dated 14/07/2016 etc., but not otherwise. The Assessee also relied upon the order passed by the coordinate bench of the tribunal in the case of M/s. Suraj Diamond Dealers Pvt. Ltd. [2019 (12) TMI 26 - ITAT MUMBAI].
As perused the other expenses and deductions debited in the profit & loss account and the expenditure incurred and specified in the profit & loss account for the year under consideration. The contention of the Assessee prima-facie seems to be correct, however as we are inclined to quash the impugned order on merit and therefore not travelling to this issue in detail, as the exercise would become academic only.
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2021 (10) TMI 1044 - ITAT VISAKHAPATNAM
Deduction u/sec. 54B - Capital gain on transfer of land used for agricultural purposes not to be charged in certain cases - determination of distance of land - whether land in question falls beyond 8 km. from the local municipality? - conclusion of the Ld. Commissioner with regard to applicability of section 2(14)(iii)(b) is that the said section got amended w.e.f. 01/04/2014 where the distance is measured aerially, therefore, the amended provision is not applicable to A.Y. 2008-09 - HELD THAT:- If we consider the conclusion of the ld. Commissioner to the effect that provisions of section 2(14)(iii)(b) which got amended w.e.f. 01/04/2014 will not be applicable to A.Y. 2008-09 qua the case of the Assessee, then in principle the provisions prior to shall be applicable, whereby in 1994 the Central Government has notified the areas within the limits of Visakhapatnam municipality and as per that notification, the Assessee’s land in question is undoubtedly falls beyond 8 km. from municipal limits and thereafter no notification has been issued by the Central Government. Meaning thereby, the notification of 1994 still construed as in existence.
Even otherwise, the coordinate bench of the tribunal in the case of Jasti Vayunandana Rao [2010 (10) TMI 1082 - ITAT VISAKHAPATNAM] dealt with the exactly similar issue related to the A.Y. 2008-09 itself, of the same village i.e. Kapuluppada village, Bheemunipatnam Mandal of Vizag, where the land in question before the Co-ordinate Bench and the land sold by the Assessee is situated. The co-ordinate bench of the tribunal thoroughly examined the issue and came to a conclusion that undisputedly the impugned land was initially situated beyond 8km. from the municipal limit of Visakhapatnam Municipal Corporation, but later on, on incorporation of Greater Visakhapatnam Municipal Corporation, it falls within 8 km. from the Visakhapatnam limits, but no notification as required u/sec. 2(14) was issued in the official gazette by the Central Government to bring the land within the purview of section 2(14)(iii)(b). The Central Government is required to issue notification in the official gazette and without notification land falls within 8 km. from the local limits of any municipality would not declare to be an agricultural land.
Thus we do not have any hesitation to set aside the order passed by the ld. Commissioner and to delete the addition as income of the previous year as per section 54B(1)(i) as held by the AO and sustained by the Ld. Commissioner. Consequently, the addition stands deleted - Decided in favour of assessee.
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