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Income Tax - Case Laws
Showing 201 to 220 of 506 Records
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2021 (11) TMI 741 - ITAT JODHPUR
Revision u/s 263 by CIT - Faulty computation of ALP - As per CIT assessment is erroneous as reference to TPO was not made - HELD THAT:- PCIT has failed to specify as to how and on what ground the assessment order is erroneous and/ or which part of the CBDT instructions were not adhered to by the AO. Merely not recording the satisfaction Ld AO on the records does not make the assessment order erroneous and prejudicial to the interest of revenue, as is decided in the various judicial pronouncement by various courts. We have also perused Instruction no 3/2016 and are of the opinion that it was not mandatory for the AO to make a reference to the TPO.
Even as per the order and the show cause notice u/s 263 which has been issued it is evident that the selection of the case was for complete scrutiny and the issues was not on transfer pricing parameters risk factors.The Instruction No. 3 of 2016 in para 3.3 states that where cases are selected for scrutiny on non transfer pricing risk parameters but also having international transactions or specified domestic transactions, shall be referred to TPO in specified circumstances
The said clause 3.3 of the Instruction specifies three situations and we find that none of the situation is applicable in the case of the assessee. The clause (a) states where there are international transactions or specified transactions or both and the taxpayer has not filed any report required to be submitted under section 92E. This is not a situation in the case of the assessee, and report was submitted and also during the assessment the same was submitted. The second situation where in previous assessments if any addition on account of transfer pricing adjustment of more than ten crores and addition being upheld in appellate proceedings is also not applicable in the case of the assessee, and this is not a case where search or seizure or survey operations had been carried out. In such a situation it cannot be said that the assessment is erroneous as reference to TPO was not made. See M/S AMIRA PURE FOODS PVT. LTD. VERSUS THE PR. C.I.T, CENTRAL GURGAON [2017 (12) TMI 189 - ITAT DELHI] - Decided in favour of assessee.
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2021 (11) TMI 740 - ITAT DELHI
Disallowance u/s 14A r.w.Rule 8D - Amount assessee had earned a dividend income - HELD THAT:- Hon’ble Delhi High Court in the case of Joint Investment P.Ltd. [2015 (3) TMI 155 - DELHI HIGH COURT] held that “by no stretch of imagination can Section 14A or Rule 8D be interpreted so as to mean that the entire tax exempt income is to be disallowed. The window for disallowance is indicated in Section 14A, and is only to the extent of disallowing expenditure; incurred by the assessee in relation to the tax exempt income. This proportion or portion of the tax exempt income surely cannot swallow the entire amount as has happened in this case.”
Respectfully following the ratio laid down by the Hon’ble Delhi High Court, we direct the Assessing Officer to restrict the disallowance to the extent of exempt income on dividend income earned by assessee as u/s 14A r.w.Rule 8D of Rules. Thus, grounds raised by the assessee in this appeal are partly allowed.
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2021 (11) TMI 739 - ITAT HYDERABAD
Capital gain computation - year of assessment - Year of transfer of asset u/s 2(47) - HELD THAT:- The joint development agreement was executed on 6.11.2013 and from the assessment order the AO has himself accepted that the transfer took place as per sec.2(47) rws 53A of the Transfer of Property Act which was taken place for the previous year ending only on 31.3.2014 relevant to AY 2014-15, therefore, the capital gain should be arising in the AY 2014-15 - Decided against revenue.
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2021 (11) TMI 713 - ORISSA HIGH COURT
Rejecting the method of accounting adopted by the Appellant-Assessee for the AYs - Assessee’s method of accounting for the immediate two succeeding AYs i.e. 1990-91 and 1991-92 was accepted - Assessee adopted the “completed contract method” - HELD THAT:- In the present case, with the Revenue having accepted the Assessee’s method of accounting for AYs 1990-91 and 1991-92, there is no reason for it to reject it for the earlier three AYs particularly considering that it is the same contract spread over the five AYs.
The impugned order of the ITAT on the above issue is unsustainable in law and is hereby set aside. The corresponding orders of the CIT (A) and the AO on the same issue are set aside as well. The question framed is answered in favour of the Assessee and against the Department by holding that the Department is not right in rejecting the accounting method followed by the Assessee for the AYs in question.
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2021 (11) TMI 712 - BOMBAY HIGH COURT
Reopening of assessment u/s 147 - reassessment proceeding after 4 years - whether no failure on the part of assessee to disclose all material facts when it is apparent from records that it was never disclosed as to how the interest received from GOI Tax Free Bonds in the hands of the Estate of EF Dinshaw, will also be tax free on distribution to assessee by virtue of the said immunity of the scheme? - HELD THAT:- ITAT has given a finding of fact that the computation of income for AY 2005-06 filed along with original income tax returns u/s 139(1) of the Act, personal balance-sheet and income and expenditure account filed along with returns u/s 139(1) of the Act contain entries relating to this amount received as interest on Tax Free Bonds.
AO had also raised a query in this regard and the Assessee has given proper explanation before the AO and after considering the explanation, the earlier assessment order was passed u/s 143(3) - ITAT has concluded and it is quite evident by considering the order passed by the AO and CIT(A) that there was no new material in the hands of the assessing authority or there was any lapse on the part of the Assessee to disclose material facts before the assessing authority.
CIT(A), in his order, states that the Appellant has failed to disclose fully and truly as to how the interest income is not exempt in the hands of the investor and as to how the exemption of interest has been granted by the legislature in the hands of transferee, i.e., the Respondent. According to CIT(A), Respondent has not placed any authority to establish the exemption of interest credited by Respondent in his books of accounts on such interest being earned on the corresponding Government of India Bonds. Therefore, we do not find anything wrong in the conclusion arrived at by the ITAT that there was no lapse on the part of the Assessee to disclose material facts.
ITAT has not committed any perversity of applied incorrect principles to the given facts and when the facts and circumstances are properly analysed and correct test is applied to decide the issue at hand, then, we do not think that questions as pressed raise any substantial questions of law.
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2021 (11) TMI 711 - BOMBAY HIGH COURT
Revision u/s 263 by CIT - claim of capital gain on transfer of land - HELD THAT:- When it is not disputed that the land concerned would not fall under the definition of capital asset, the question of any capital gains arising also will not arise - We also find that the ITAT has come to a factual finding that the AO has raised queries with regard to the claim of capital gain on transfer of land, Respondent vide its reply dated 31/01/2014 furnished the details in respect of distance of agricultural land from municipal limits, record of population as per last census and the AO after considering the reply of Respondent, accepted the claim of Respondent.
ITAT has given a finding that the claim of capital gain was accepted by AO after necessary inquiry and the order under Section 143(3) of the Act was passed. It is true that the AO has not passed any written detailed order while accepting the explanation of capital gains of Respondent but the fact is AO had raised queries and Respondent has given detailed reply means the AO has passed this order after making necessary inquiries.
We agree with the view of the ITAT that the order of the AO cannot be branded as erroneous merely because the order does not contain the details which Principal Commissioner feels should have been included. Principal Commissioner cannot decide how elaborate an order of the AO should be. Where the AO, during the scrutiny assessment proceedings, has raised a query which was answered by the Assessee to the satisfaction of the AO but the same was not reflected in the AO by him, the Commissioner cannot conclude that no proper inquiry with respect to the issue was made by the AO and enable him to assume jurisdiction under Section 263.
ITAT has not committed any perversity or applied incorrect principles to the given facts and when the facts and circumstances are properly analysed and correct test is applied to decide the issue at hand, then, we do not think that questions as pressed raise any substantial questions of law.
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2021 (11) TMI 710 - BOMBAY HIGH COURT
Reopening of assessment u/s 147 - notice issued without approval of competent authority - HELD THAT:- There was non-application of mind while granting the approval. Moreover, in the order dated 21/09/2021 passed by Respondent dealing with the objections filed by Petitioner, the stand of the AO is not what Mr. Suresh Kumar stated in Court today. In the objection dated 17/09/2021, Petitioner has brought to the notice of the AO that notice issued u/s 148 dated 25/06/2019 was illegal and was issued without approval of competent authority and approval dated 26/06/2019 was an afterthought to cover up the action of the learned Deputy CIT. In the order dated 21/09/2021 rejecting this objection, the AO does not deny that the approval was dated 26/06/2019 whereas the notice was dated 25/06/2019 but simply states that the reason of escapement of income was sent for approval to Additional CIT on 14/06/2019 much before the notice under Section 148 was issued.
Petitioner’s submission that the notice dated 25/06/2019 issued u/s 148 of the Act was illegal since there was no prior approval as required under Section 151(2) of the Act has to be accepted.
Notice itself has to be quashed and set aside. In such a case, the consequential orders also have to be set aside. Therefore, prayers (a) and (a1) which read as under, are granted.
“(a) a writ in the nature of mandamus, prohibition, certiorari, or any other appropriate writ, direction or order quashing the notice dated 25.06.2019 issued by the Respondent No.1 under section 148 and consequent proceedings initiated pursuant thereto under section 147 of the Act;
(a1) issue a writ of Certiorari or any other appropriate writ, direction, or order thereby quashing and setting aside the impugned order dated 21.09.2021 (Exhibit G) and impugned assessment order dated 28.09.2021 (Exhibit N) passed by the Respondents.”
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2021 (11) TMI 709 - ITAT INDORE
Revision u/s 263 by CIT-A - allowability of mark-to-market loss on forward contracts - HELD THAT:- AO scrutinized the expenses debited to the Profit and Loss account for the subject year in detail and cannot have said to missed mark-to-market loss on forward contracts which is apparent in the other expenses note of Financial statements. This clearly shows that the documents and submissions/ details filed were duly verified and considered by the Ld. AO while passing the Assessment order. AO duly examined the issue and with due application of mind, the ld. AO did not invoke any disallowance on account of mark-to-market on forward contracts. This view is supported by the order of Jurisdictional bench of ITAT in the case of Vidisha Tractors [1995 (5) TMI 73 - ITAT INDORE]
Assessee co. meets all the requirements viz. it has been consistently following the mercantile system of accounting, it has been consistently recognising the mark to market gains/losses as per the accounting standards and it has been giving the same treatment to mark to market gains as given to mark to market losses i.e. the mark to market gains credited to the Profit and Loss Account are duly offered to tax, then the Ld. AO was justified in allowing the mark to market loss of ₹ 30,31,69,199 on forward contracts. We find that the identical issue of mark to market loss on forward contracts (that are not entered for trading/speculation purposes) has also been held to be an allowable deduction by the ratio laid down in the case of HEG Limited [2018 (10) TMI 59 - ITAT INDORE]
AO’s order is not erroneous and prejudicial to the interest of revenue since mark to market loss incurred by Company on revaluation of forward contracts is an allowable deduction as the loss claimed by the assessee co. was in accordance with a recognized method of accounting, the loss claimed by the assessee co. was not a notional/contingent loss, but is an actual loss and the mark-to-market loss on forward contracts has not been treated as a contingent liability in the audited financial statements. Thus, the mark-to-market loss on forward contracts cannot be said as contingent in nature. Therefore, the Ld. PCIT has erred in invoking powers under section 263 of the Act. Accordingly, we set aside the order of the ld. PCIT holding it invalid and restore the order of the Assessing Officer. Consequently, grounds raised in the appeal of the assessee for the assessment year 2014-15 stand allowed.
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2021 (11) TMI 708 - ITAT RAIPUR
Assessment u/s 153A - Addition u/s 68 - HELD THAT:- As the amount so received for proposed share subscription from the group co. i.e. EFPL was also repaid in the subsequent assessment years and thus amount kept in custody temporarily in a fiduciary capacity could not have been added in the hands of assessee by resorting to Section 68 - A reference was made to the judicial precedents, namely, CIT vs. Karaj Singh [2011 (3) TMI 951 - PUNJAB AND HARYANA HIGH COURT]); Smt. Panna Devi Chowdhary [1994 (3) TMI 80 - BOMBAY HIGH COURT] & many more decisions for the proposition that the factum of repayment transgresses all other considerations and the question of bonafides of receipts of share application money fades into insignificance where the amount so received stands repaid and returned.
The facts in the instance are speaking for itself. We are fully convinced with the process of reasoning and the objective analysis by the CIT(A) and conclusion derived therefrom. We do not intend to repeat each and every observations. The action of CIT(A) is in consonance with the binding precedents of Jurisdictional High Court. Hence, we see no reason to depart from the rationale of the decision of the CIT(A) on reversal of additions under s.68 of the Act pertaining to A.Y. 2012-13 in question.
Addition on account of low yield declared - HELD THAT:- AO has made discussions on mathematical calculations pertaining rolling material division, the additions have been made towards low yield in SMS Division.
CIT(A) observed that assessee has furnished explanation on all the documents seized during the course of search and the explanation of the assessee were test checked with reference to seized material, books of accounts, bills/invoices and other evidences and found to be satisfactory. It was further noted that the AO has not pointed out any infirmity in the explanation of the Assessee.
CIT(A) in our mind has analysed the factual matrix threadbare. Without repeating all the observations of the CIT(A), we find ourselves in complete agreement with the conclusion drawn by the CIT(A) - CIT(A) has objectively analyzed the factual situation and found complete absence of any adverse material against the assessee which can support the allegation of the AO towards unaccounted production presumed on the basis of alleged low yield declared by the assessee. On facts, the CIT(A) has found that the yield declared by the assessee is neither low nor the book results could be impeached by some tangible material to indulge in rejection of books of accounts. We see no discernible error whatsoever in the process of reasoning adopted by the CIT(A) while reversing the totally untenable action of the AO based on extraneous considerations.
It is also pertinent here to note that identical issue cropped in the case of a group co. ( Mahamaya Steel Industries Ltd.) in the same search and engaged in the same business. The standard yield of 89% adopted in that case was set aside by the CIT(A) and book results were accepted in the identical factual matrix. The Revenue challenged the reversal of additions on account of lower yield.
Co-ordinate bench in DCIT vs. Mahamaya Steel Industries Ltd. [2019 (11) TMI 922 - ITAT RAIPUR] in strikingly similar factual matrix involving same issue and arising from same search, endorsed the order of CIT(A) in relation to AY 2009-10-2013 and struck down the additions made by AO. Hence, the issue, in any case, is not res integra any more in the light of decision of the co-ordinate bench. Whatever way we see, case of the revenue has little merit and thus unsustainable. We, thus, decline to interfere with the order of the CIT(A) on this score.
Additions on account of excess stock of finished goods/ raw material stated to be discovered during the search - HELD THAT:- CIT(A) took cognizance of certificate from registered valuer furnished by the assessee to support its stance. We notice that the CIT(A) has adjudicated the issue in favour of the assessee after recording tell-tale facts, such as, DRV having admitted that no scientific or mechanical equipment was used by him for the purposes of valuation; no physical verification was carried out at all etc.. The whole quantification is made on a wrong foundation of length of channels etc. After having analyzed the facts and circumstances of the case, the CIT(A) has objectively concluded that addition to the total income on account of unexplained investment towards excess stock on account of structures and channels is without any sound basis is patently unjustified. We find that the CIT(A) has arrived at his findings with very logical analysis in sync with factual matrix. Such finding of fact does not call for any interference for any reason.
With reference to excess stock on account of billets and slab cuttings and sponge iron, the CIT(A) has observed that the dispute revolves around the rate adopted by the AO and there is no dispute regarding the total quantity. It was noticed by the CIT(A) that the assessee has offered the income for taxation based on average rate for billets / slab cutting/ sponge iron as against uniform rate adopted by AO. The basis of rate adopted by AO was not assigned. Thus, having regard to the declarations already made by the assessee and in the absence of any definite basis in the action of AO, no further additions were found sustainable in the absence of any evidence of adversial nature. In summation, we see no error in the process of reasoning adopted by the CIT(A) and conclusion thereon. The revenue could not rebut the factual findings of the CIT(A). The order of the CIT(A) is self-explanatory and does not require any reiteration. We thus decline to interfere.
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2021 (11) TMI 707 - ITAT RAIPUR
Validity of proceedings u/s.153A - addition u/s 68 - HELD THAT:- As the credit for share application money was accepted in the regular assessment under 143(3) prior to search after making enquiries. The subscriber co. namely Antariksh Commerce Pvt. Ltd. and Escort Finvest Pvt. Ltd. were found to be group cos. The assessments of the subscriber companies carried out under S. 143(3) / 143(3) r.w.s. 147 were noted. It was further noted the same AO in the case of other group concern accepted the creditworthiness of these cos. for subscription of Pref. share capital. The adverse inference drawn by the AO was found to be unsubstantiated and in the realm of suspicion, surmises and conjectures. On legal position, the CIT(A) has referred to large number of judicial pronouncements. Without reiterating the different facets analyzed by the CIT(A), Complete force in his view.
After detailed examination, the CIT(A) eventually set aside the additions made by the AO under s. 68 in the unabated search assessment without any iota of incriminating material to support the allegation of accommodation entries. We completely endorse his action on merits without demur. The objection of the Revenue is found to be unsubstantiated and dehors the tell-tale evidences and hence not sustainable.
Additions on low yield - Whether incriminating material were found in the course of search operations showing any unaccounted production or unaccounted sales resulting from alleged low yield on production shown in the books? - HELD THAT:- CIT(A) observed that assessee has furnished explanation on all the documents seized during the course of search and the explanation of the assessee were test checked with reference to seized material, books of accounts, bills/invoices and other evidences and found to be satisfactory. It was further noted that the AO has not pointed out any infirmity in the explanation of the Assessee.
CIT(A) in our mind has analysed the factual matrix threadbare. Without repeating all the observations of the CIT(A), we find ourselves in complete agreement with the conclusion drawn by the CIT(A). CIT(A) has objectively analyzed the factual situation and found complete absence of any adverse material against the assessee which can support the allegation of the AO towards unaccounted production presumed on the basis of alleged low yield declared by the assessee. On facts, the CIT(A) has found that the yield declared by the assessee is neither low nor the book results could be impeached by some tangible material to indulge in rejection of books of accounts. We see no error whatsoever in the process of reasoning adopted by the CIT(A) while reversing the totally untenable action of the AO. We, thus, decline to interfere with the order of the CIT(A) on this score.
Addition of excess stock of finished goods/ raw material stated to be discovered during the search - HELD THAT:- CIT(A) took cognizance of certificate from registered valuer furnished by the assessee showing the density of broken coal which was found to be at par with what has been used by the assessee. We notice that the CIT(A) has adjudicated the issue in favour of the assessee after recording tell-tale facts, such as, DRV having admitted that no scientific or mechanical equipment was used by him for the purposes of valuation; no physical verification was carried out at all etc.. After having analyzed the facts and circumstances of the case, the CIT(A) has objectively concluded that addition to the total income on account of unexplained investment towards excess stock on account of coal is without any sound basis is patently unjustified. We find that the CIT(A) has arrived at his findings with very logical analysis in sync with factual matrix. Such finding of fact does not call for any interference for any reason.
With reference to excess stock on account of iron ore or fines, the CIT(A) has observed that the dispute revolves around the rate adopted by the AO and there is no dispute regarding the total quantity - As noticed by the CIT(A) that the assessee has offered the income for taxation based on actual sales realization as iron ore fines are not purchased by the assessee. The sales register of the assessee was examined and the method was found satisfactory. Thus, having regard to the declarations already made by the assessee, no further additions were found sustainable in the absence of any evidence of adversial nature. In summation, we see no error in the conclusion drawn by the CIT(A) both on account of stock of coal and iron ore, in the absence of any concrete rebuttal thereof. We thus decline to interfere.
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2021 (11) TMI 706 - ITAT RAIPUR
Revision u/s 263 by CIT-A - Jurisdiction of AO - invalid notice u/s 143(2) - valid jurisdiction available whatsoever with the AO, Kolkata in the instant case -Transfer of case u/s 127 - HELD THAT:- Assessee has taken a plea that where the assessment order has been framed on the basis of an invalid notice u/s 143(2) of the Act, the very premise of the assessment framed is without any legal basis - assessment order in itself is illegal and bad in law owing to substantial defect of lack of jurisdiction. The action of the PCIT to revise such illegal order is a complete non-starter and is wholly unsustainable in law.
We notice a few facts. An order under Section 127(2)(a) dated 13.09.2013 was passed by the CIT, Kolkata II, Kolkata whereby the jurisdiction over the assessee was transferred from the ITO, Ward (4)(2), Kolkata to ACIT, Central Circle, Raipur. It was further noted at the bottom of the aforesaid transfer order that the order shall take immediate effect. Hence, in view of the aforesaid transfer order, the AO at Kolkata was ousted of its jurisdiction and consequently had no locus over the assessee from the date of aforesaid transfer order.
AO at Kolkata was fully aware of this fact, as can be seen from his action, in respect of assessment year 2014-15. As pointed out on behalf of assessee, the proceedings under Section 143(2) were dropped by AO, Kolkata for AY 2014-15 when he was apprised of the fact of transfer of jurisdiction. The facts, in the instant case, are thus speaking for itself. It is not in dispute that the AO, Kolkata at the relevant time of issuance of notice u/s 143(2) dated 09.08.2018 completely lacked jurisdiction over assessee to do so.
The issuance of notice u/s 143(2) is governed by statutorily prescribed procedures. On a combined reading of Sections 120(1), 120 (2), 124(1), Rule 12E of the IT Rules, 1962 and transfer order passed by CIT under Section 127 of the Act, we have no hesitation to hold that there was no valid jurisdiction available whatsoever with the Assessing Officer, Kolkata in the instant case. The notice issued under Section 143(2) of the Act by such officer is thus wholly without jurisdiction and thus a non-est notice.
The assessment has been admittedly framed based on such non-est notice without taking any corrective step in this direction. Assessing Officer at Raipur has not issued any separate notice u/s 143(2) to assume power to assess the income of the assessee. He has merely continued his action based on a non-est notice issued by the AO of a different jurisdiction. The assessment order passed on the basis of an invalid and non-est notice thus cannot be countenanced in law. Consequently, the revisional action under Section 263 is not permissible in law in parity with the decision of the co-ordinate Bench of the Tribunal in Supersonic Technologies (P) Ltd [2018 (12) TMI 912 - ITAT DELHI]
In the legal ground of lack of jurisdiction raised on behalf of the assessee. The impugned revisional order is thus required to be quashed on this ground alone. Hence we do not consider it expedient to go into the aspect of the merit of issues raised in the show-cause notice arising from an invalid and non-est order.The revisional order under Section 263 is thus quashed and set aside. Appeal of the assessee is allowed.
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2021 (11) TMI 705 - ITAT MUMBAI
Disallowance u/s 14A in respect of expenditure attributable to earning exempt income - whether or not the A.O had validly assumed jurisdiction for dislodging the disallowance that was on a suo-motto basis offered by the assessee u/s 14A and therein substituting the same by that as was computed by him by triggering the mechanism provided in Rule 8D? - HELD THAT:- AO had though observed that he was not satisfied with the correctness of the claim of the assessee that no expenditure was incurred in relation to the income which did not form part of its total income, however, he except for making general observations in context of the expenditure claimed by the assessee, viz. general administrative expenses, legal fees, employee salary, general expenses etc. had before rejecting the disallowance that was offered by the assessee on a suo-motto deemed basis, failed to give a clear finding with reference to the assessee’s accounts as to how the other expenditure that were claimed by the assessee in respect of its non-exempt income was related to its exempt income.
Failure on the part of the A.O to record his satisfaction that having regard to the accounts of the assessee, as placed before him, it was not possible to generate the requisite satisfaction with regard to the correctness of the claim of the assessee, therein, divests him of the jurisdiction for dislodging the claim of the assessee and substituting the same by an amount arrived at by triggering the mechanism provided in Rule 8D. Accordingly, backed by our aforesaid observations, we are unable to persuade ourselves to subscribe to the view taken by the CIT(A) who had upheld the disallowance made by the A.O u/s 14A of the Act. We, thus, set-aside the order of the CIT(A) and vacate the additional disallowance made by the A.O u/s 14A .
Education cess as not allowable as a deduction u/s 40(a)(ii) - HELD THAT:- As relying on SESA GOA LIMITED [2020 (3) TMI 347 - BOMBAY HIGH COURT]“Education Cess” is not disallowable as a deduction u/s 40(a)(ii) of the Act. We, thus, direct the A.O that the “education cess” paid by the assessee during the year be allowed as a deduction under Sec. 40(a)(ii).
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2021 (11) TMI 704 - ITAT CHANDIGARH
Addition made on account of unaccounted professional receipts - assessee had filed an application before the Hon'ble Income Tax Settlement Commission (ITSC) for the preceding years - AO found that the professional receipts were not fully recorded in the final accounts of the assessee and the difference between the extrapolated receipts and that shown in the books as added to the income of the assessee - addition on basis accepted by the ITSC in the preceding and succeeding years - sole grievance of the Revenue before us is that the principle of res-judicata did not apply to income tax proceedings and, therefore, there was no reason to follow the order of the Hon'ble ITSC while calculating the undisclosed income on account of unaccounted receipts of the impugned year - HELD THAT:- We do not find any reason to interfere in the order of the Ld.CIT(A) who has ,we hold, rightly calculated the unaccounted receipts in the impugned year following the basis accepted by the ITSC in the preceding and succeeding years.
CIT(A) has noted that the assessee had submitted its calculation to the ITSC of unaccounted receipts basis documents found relating to A.Y. 2014-15 since they represented unaccounted receipts for 10 months. The percentage so worked out was applied to the rest of the years irrespective of the fact that documents relating to the whole of the said years was impounded or not.
ITSC found the said declaration of the assessee, as correct and in order for all the years and in fact found it to be more than the figures as worked out by the Department. Settlement Commission has also accepted the assessee’s claim of expenses @ 29% of the receipts for all the years. The Department, it has been stated at bar, has accepted the order of the ITSC estimating unaccounted receipts for the preceding and succeeding years .
ITSC, accordingly, passed its order on the issue adopting and accepting the best possible method of estimating the unaccounted income, based on the documents found during survey revealing the unaccounted receipts. The same set of documents pertaining to the impugned year, form the basis of addition made in the impugned year. The facts and circumstances leading to the addition of unaccounted receipts in the impugned year therefore, we agree with the Ld.CIT(A), are identical to the years before the ITSC. The Revenue admittedly has accepted the basis adopted by the ITSC. There is no reason therefore why a different basis needs to be adopted for estimating unaccounted receipts for the impugned year.
Addition made by the AO on account of receipts on which commission was paid by the assessee - during the survey, documents were impounded which contained details of payments made to doctors as commission - CIT(A) deleted the addition holding that the issue of addition on account of unaccounted receipts had already been made on the basis of impounded papers and same addition on the issue of unaccounted receipts by adopting a different method only tantamounted to double addition - HELD THAT:- .It is not disputed that the addition on account of unaccounted receipts already stands made on the basis of cash receipts recorded in daily cash registers which were impounded during survey. The addition now being made of the same by estimation on the basis of documents revealing commission paid to doctors ,is as rightly stated by the Ld.CIT(A), nothing but adopting a different method for calculating the same, unless it is clearly and specifically demonstrated otherwise, which, we find, is not the case before us. Even the Settlement Commission we find, has, on identical issue, taken the same view of this being double addition in the preceding and succeeding year in the case of the assessee, which order has been accepted by the Revenue. We see no reason therefore to interfere in the order of the Ld.CIT(A) deleting the addition.
Addition of difference in receipts under the head ‘ESIC’ - CIT-A deleted the adition - HELD THAT:- Revenue has not pointed to us any infirmity in the data as summarized by the Ld.CIT(A).The conclusion therefore drawn from the same by the Ld.CIT(A) that the two documents contained overlapping data is evident since A-16 document contained ESIC data for the period April 12 to Feb 13 while document A-20 contained ESIC data for the period April12 to mARCH13 ,the data relating to April 12 to Feb 13 therefore overlapping .The entire data relates to Baddi except for a meager amount of ₹ 5198 which relates to Ramdarbar. The Ld.CIT(A), by adopting a conservative approach, has taken the greater of the overlapping figures and found the same as duly reflected in the books of the assessee, thus holding that no addition is called for on the basis of these two documents. We do not find any merit in the plea of the Revenue that the two documents were different since the facts as we have noted above do not demonstrate anything to arrive at this finding and the difference referred to by the Revenue relating to an entry related to Ramdarbar is too inconsequential to adversely effect the otherwise logical inference that the two documents contained overlapping data - We uphold the order of the Ld.CIT(A) deleting the addition made on account of unaccounted ESIC receipts - Decided against revenue.
Unaccounted receipts as per documents showing income received from “KUC” read as Kidney and Uro Centre a known hospital in Chandigarh sector-46 - CIT(A) deleted the same finding merit in the contention of the assessee that all receipts as reflected in the said documents stood duly accounted for in its books and further considering the order of the ITSC on identical issue in the preceding and succeeding year - HELD THAT:- We find that the assessee had demonstrated from its books of accounts that all the amounts noted in the documents stood recorded in her books. CIT(A) confronted the same to the AO who was unable to point any infirmity. Even before us the Revenue has been unable bring any material before us to controvert the aforesaid contention of the assessee. In view of the same, we hold, that there is no infirmity in the order of the CIT(A) holding no addition being called for on this account. Moreover we find that before the ITSC also the assessee had contended that the department had not been able to prove any cash receipts by the assessee outside its books from KUC and to give quietus to the issue had surrendered a sum of ₹ 6,00,000/- in three years, which was accepted as such by the ITSC. - CIT(A) has rightly deleted the addition made of unaccounted receipts from KUC.
Unaccounted receipts from Mukut Hospital made on the basis of documents found in search - CIT-A deleted the addition - HELD THAT:- CIT-A deleted the addition after examining and finding merit in the assessee’s contention that all amounts reflected in the documents stood accounted for in the books of the assessee. He also noted that the ITSC had accepted assessee’s lumpsum surrender on this account of ₹ 6lacs made in three years to buy quietus to the issue on being pointed out that the department had been unable to point out cash receipts outside the books on this account in the years before the ITSC. The Revenue has brought nothing before us to controvert the factual contention of the assessee that all amounts recorded in the documents stood disclosed in the books of the assessee.
As considering the order of the ITSC on similar issue in the preceding and succeeding ears wherein also the department was unable to point out any cash receipts outside the books on this account, we see no reason to interfere in the order of the Ld.CIT(A) deleting the addition made. - Decided in favour of assessee.
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2021 (11) TMI 703 - ITAT HYDERABAD
Disallowance u/s 14A - proof of no exempt income - HELD THAT:- On going through the financial statements of the assessee, we find that the assessment had mad investments and interest was debited to P&L Account, but, suo-moto, the assessee has not disallowed any expenditure u/s 14A of the Act. Further, it was observed that there is no exempt income received by the assessee during the impugned AY - disallowance made by the AO u/s 14A r.w.r. 8D is not correct. It is a settled law that if there is no exempt income, no disallowance can be made as there are Catena of judgements of Hon’ble Tribunal that if there is no exempt income, no disallowance can be made u/s 14A of the Act. Therefore, we uphold the order of CIT(A) in deleting the disallowance made u/s 14A rwr 8D of the Act. Thus, the ground raised by the revenue on this issue is dismissed.
Disallowance of expenditure in respect of bogus sub-contracts - AO observed that a survey u/s 133A was conducted by the ADIT, Unit – I, in which certain bogus sub-contract expenses came to light - HELD THAT:- CIT(A) accepted that the payments made by way of cheques and the TDS made on the payments made to sub-contractors. However, the CIT(A) has not examined the genuineness of the works undertaken by the sub-contractors and he did not examine any other related documents for substantiating sub-contract works done by the sub-contractors. Merely considering that the TDS was deducted on the payments made to sub-contractors is not sufficient reason to delete the addition. We also find that the CIT(A) brushed aside the objections raised by the AO in his order. Therefore, keeping in view the findings recorded by the AO and in the interest of justice, we remit this issue back to the file of the AO with a direction to examine the additional evidences filed by the assessee before the CIT(A) and decide the issue in accordance with law after providing reasonable opportunity of being heard to the assessee in the matter. Thus, this ground is treated as allowed for statistical purposes.
Addition towards excess debit - AO observed that the total purchases on which TCS made is less that the purchase of liquor debited in the P&L Account and excess which was added back to the total income - CIT-A delete the addition - HELD THAT:- While deleting the addition made by the AO, the categorical finding of the CIT(A) is that The AO was not justified in not considering the Form 26AS of the appellant company wherein the purchase of liquor by the appellant from A.P. Beverages Corporation Limited (APBCL) is evident. Therefore, we do not find any reason to interfere with the order of the CIT(A) and upholding the same, we dismiss the ground raised by the revenue on this issue.
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2021 (11) TMI 702 - ITAT AHMEDABAD
Scope of Deposit Credit Guarantee Corporation of India Act [DICGCI] - Overriding title on income in favour of DICGCI - accrual of income - Assessee is a cooperative bank and under liquidation - assessee has received the amount of interest income net of expenses in the year under consideration post liquidation - liability of the appellant assessee for repayment to the depositors and DICGC from the recovery made by it from the borrowers against the interest received from the fixed deposit, which has accrued on the amount recovered pending the payment to the depositors. - HELD THAT:- As decided in The Visnagar Nagrik Shahakari Bank Ltd. & Ors. [2015 (7) TMI 1390 - GUJARAT HIGH COURT]whatever amount will be received by the assessee has to be paid firstly to DICGCI after making necessary provision for expenses in relation to liquidation and declaration of dividend. Thus, there remains no ambiguity to the fact that the assessee has no right in the impugned amount of interest income as the same has been diverted to DICGCI as discussed above. Accordingly, the amount of interest though received by the assessee but does not belong to it.
The amount of interest in dispute is not an income of the assessee and therefore the same cannot be made subject matter of tax in the hands of the assessee - Decided in favour of assessee.
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2021 (11) TMI 701 - ITAT MUMBAI
Disallowance by relying on CBDT Circular No. 5/2012 r.w explanation 1 to Sec. 37(1) - scope of regulations issued by Medical Counsel of India - claim of marketing & promotional activity under the selling and distribution expenses u/sec. 37(1) - HELD THAT:- We find that the facts of the present case are similar and identical to the above decision in respect of sales promotional expenses claimed in the profit and loss account. The Hon’ble Tribunal in the ARISTO PHARMACEUTICALS P LTD. [2019 (7) TMI 862 - ITAT MUMBAI] has considered the provisions of law, facts and circumstances, CBDT circular, MCI guidelines and granted the relief to the assessee. Accordingly, we follow the judicial precedence and set aside the order of the CIT(A) to the extent of disallowance of sale promotion expenses incurred by way of gifts, freebies, travel allowance and monetary grants and direct the Assessing Officer to delete the addition and allow the ground of the appeal of assessee.
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2021 (11) TMI 700 - ITAT CUTTACK
Addition u/s 68 unexplained cash credit - profit/income of the assessee from sale of paddy - HELD THAT:- Section 68 of the Act is attracted (a) when the assessee fails to prove the genuineness of the transaction that has entered into his book of accounts; (b) when there is no satisfactory explanation provided on the part of the assessee to the AO with respect to the amount credited into the accounts; & (c) when there are documentary evidences required to support the validity of the amount credited but there are no such documents furnished by the assessee.
The assessee has provided the confirmation letter of the purchaser of paddy M/s. Rameswar Agro Industries Pvt. Ltd., alongwith its ledger account to support that the purchaser had purchased paddy and paid the amount. It is not in dispute that the assessee has not maintained any books of account and whatever credit entries are found by the AO, it was from the bank accounts of the assessee in which deposits were made at different point of time. Even passbook issued by the bank cannot be termed to be the books of account of the assessee in the case of Bhai Chand N. Gandhi [1982 (2) TMI 28 - BOMBAY HIGH COURT] - Therefore, provisions of section 68 of the Act cannot be invoked on various deposits/credit found recorded in the bank account of the assessee in absence of books of the assessee maintained for that previous year.
The assessee submitted confirmation from the purchaser of paddy before the authorities below and this was the best possible evidence under his command to establish that the impugned amount was actually sale proceeds of paddy, which was purchased from open market/farmers and sold the same without maintaining any books of account to M/s. Rameswar Agro Industries Pvt. Ltd. Even as a man of ordinary prudent, one cannot disagree with the contention of the assessee that even if he is a director in the purchase company i.e. M/s. Rameswar Agro Industries Pvt. Ltd., he cannot be refrained from making sale of paddy to the company in which he is a director.
Cautious about the provisions of section 40A(2) & (3) of the Act, wherein, the department has right to examine the expenses and payments made to related parties by the related parties but it is not the allegation of the AO in the present case.
We not in agreement with the contention of Ld. DR that if sale has not been shown by the assessee in the return of income, then entire amount has to be taxed in the hands of the assessee as his income because if purchase and sale, both transactions have been undertaken without maintaining books of account then only profit element received by the assessee inclusive of sale proceeds can be taxed as income of the assessee because the assessee has to be given credit of the amount incurred for purchase of goods which was sold by him against receipt of sale consideration. A.R. relied on the decision of case of CIT vs. P. Sathyanarayan P. Rathi, [2013 (6) TMI 257 - GUJARAT HIGH COURT] wherein, it has been held that only the profit element and not the entire amount of the purchases can be added to the income of the assessee.
We deem it just and proper and reasonable to cover all possible leakage of revenue, to tax only profit element embedded in the sale proceeds received and deposited by the assessee in the bank account. In view of facts stated above, thus direct the AO to tax 10% of the total impugned amount as profit/income of the assessee from sale of paddy and to delete the remaining amount. Appeal of the assessee is partly allowed
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2021 (11) TMI 686 - CALCUTTA HIGH COURT
Additional depreciation @20% under Section 32(1)(iia) - assessee which generates electricity from thermal power is entitled for additional depreciation OR not? - HELD THAT:- In the State of Andhra Pradesh vs. National Thermal Power Corporation [2002 (4) TMI 694 - SUPREME COURT] held that electric energy can be transmitted, transferred, delivered, stored, possessed etc. in the same state as movable property. The Hon’ble Supreme Court followed its earlier decision in Commissioner of Sales Tax, Madhya Pradesh, Indore vs. Madhya Pradesh Electricity Board, Jabalpur [1968 (11) TMI 85 - SUPREME COURT]. Therefore, the revenue cannot dispute the fact that the electricity needs to be construed as a movable property as it being capable of being transmitted and transferred etc.
Whether the respondent/assessee would be entitled to additional depreciation under Section 32(1)(iia)? - We are guided by the decision of this Court in the case of Commissioner of Income Tax, Kolkata-I vs. Ankit Metal and Power Limited [2015 (8) TMI 566 - CALCUTTA HIGH COURT] as followed the decision of Hi-tech Arai Limited [2009 (9) TMI 60 - MADRAS HIGH COURT] and CIT vs. VTM Ltd. [2009 (9) TMI 35 - MADRAS HIGH COURT] and held that the assessee therein which was also engaged in the activity of manufacturing of power is entitled for additional depreciation under Section 32(1)(iia) of the Act. To the same effect, there are several other decisions of other High Courts and the latest being in the case of PCIT, New Delhi vs. NTPC SAIL Power Co.(P.) Ltd. . [2019 (3) TMI 207 - DELHI HIGH COURT]
We hold that the respondent/assessee is entitled for additional depreciation under Section 32(1)(iia) - Decided in favour of assessee.
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2021 (11) TMI 685 - ORISSA HIGH COURT
Nature of receipt - Interest derived from Short Term Deposit Receipts - revenue or capital receipt - HELD THAT:- In the present case, the facts are akin to the decision in Karnal Co-operative Sugar Mills Ltd.[1999 (4) TMI 7 - SC ORDER]. Factually it is seen that the interest earned on the STDR was towards reducing the cost of the capital assets and therefore should not have been treated as revenue receipt in the hands of the Assessee.
Consequently, the question framed is answered in affirmative, i.e. in favour of the Assessee and against the Department. In other words, it is held, in the facts and circumstances of the case, that the interest earned from STDRs made by the Appellant to enable to open LoC for procuring plant and machineries is incidental to such acquisition and should be treated as receipt of a capital nature and not taxed as income.
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2021 (11) TMI 684 - DELHI HIGH COURT
Benefit of exemption u/s 11 - Whether Tribunal erred in treating the assessee as a charitable institution, even when the activities of the assessee fell under the last limb of Section 2(15)? - HELD THAT:- The assessee/society is running a printing press and publishing a newspaper. The profit so generated is used for charitable purposes and apparently there is no profit motive in the activities of the assessee. As such it cannot be said that the assessee is involved in any trade, commerce or business. Consequently, the mischief of Proviso to Section 2(15) of the Act is not attracted.
The assessee/society is charitable in nature as the profit, if any, made by the assessee/society is being ploughed back for charitable activities. Further, the appellant itself has granted the assessee registration under Section 12A, recognition under Section 10(23C)(vi) and Exemption under Section 80G of the Act.
This Court is in agreement with the findings of the CIT(A) and ITAT that the assessee/society does not carry on any business, trade or commerce with the intent of earning and distributing profit. Appeal dismissed.
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