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Income Tax - Case Laws
Showing 241 to 260 of 506 Records
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2021 (11) TMI 635 - KERALA HIGH COURT
MAT Computation of book profit u/s 115JB - Whether deduction u/s 80HHC is to be computed as per MAT provisions and not as per the normal provisions of the Income Tax Act, 1961? - HELD THAT:- Substantial question Nos.1 and 2 are covered in favour of the assessee by the reported judgments of the Apex Court in Ajanta Pharma Ltd. [2010 (9) TMI 8 - SUPREME COURT] - Hence the questions are answered by following the principle laid down in Ajanta Pharma in favour of the assessee and against the revenue.
Disputed central excise demand raised against the assessee - denial of writing back benefit to the assessee - Recompute the 'book profit' for the purpose of levy of tax u/s 115JB by reducing the entire provision written back from the net profit in terms of clause (i) of the Explanation in Section 115JB - HELD THAT:- The argument that the assessee gets double advantage by allowing it to write back the provision now is equally incorrect for the Tribunal has rightly found that proper working is not reflected in the respective assessment orders or the record cannot lead to the conclusion that AO has not considered the applicability of special provision as well. The assessment order, in our view, has the presumption of having been made in accordance with the requirements of law and obligations fastened on the A.O. It cannot now be gain said that the AO failed to discharge the statutory obligation while computing the income of assessee for the assessment years in which the provision towards disputed excise duty was made by the assessee.
The first and foremost objection of revenue on actual verification of provision made in respective assessment years is that the Tribunal presumed and pre-supposed that the contemperaneous effect would have been given in the books of accounts without material on record. The argument is contrary to the orders made by the AO in this behalf. The contention at the first blush though appears to be persuasive. With the help and assistance of learned counsel appearing for revenue and assessee, we have verified the assessment orders for the years 1997-98; 1998-99 and 1999-2000 and the assessment order in which the present appeal arises and we are of the view that the primary and first appellate authority have, as matter of fact, presumed a circumstance against assessee which is not in the control of assessee. We appreciate and accept the conclusion recorded by the Tribunal by taking note of the fact that the assessee was subjected to the slab rate of 30% for the assessment years 1997-1998 and 1998-1999 and computed the tax payable thereon under normal provisions. The denial of writing back benefit to the assessee in these assessment years are illegal and the finding recorded by the Tribunal is valid and correct in the circumstances of this case. Hence the reframed question is answered in favour of the assessee and against the revenue.
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2021 (11) TMI 634 - ITAT BANGALORE
Disallowance u/s 36(1)(va) and 43B - delayed employees’ contribution paid - scope of amendment to section 36(1)(va) and 43B - HELD THAT:- As the employees’ contribution paid before the due date of filing of the return u/s 139(1) of the I.T.Act is to be allowed as deduction u/s 43B - Therefore, the only issue to be decided in the instant case is whether the amendment to section 36(1)(va) and 43B by the Finance Act, 2021 is prospective or not. Since as categorically held that the amendment is prospective and not retrospective in operation, the learned Standing Counsel’s plea does not have any merit.
In the instant case, the assessment year being 2018- 2019, the amendment by Finance Act, 2021 to section 36(1)(va) and 43B of the I.T.Act does not have application. Therefore, the A.O. is directed to delete the disallowance of ₹ 3,23,886. - Decided in favour of assessee.
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2021 (11) TMI 633 - ITAT CHANDIGARH
Deduction u/s 80IC - Proof of "substantial expansion" - Whether the assessee is entitled to claim 100% deduction u/s. 80IC on the profits from the eligible undertaking during the period relevant to the assessment year under appeal ? - HELD THAT:- Hon'ble Supreme Court of India in M/S. AARHAM SOFTRONICS [2019 (2) TMI 1285 - SUPREME COURT] an unambiguous manner has held that the substantial expansion has been made within the meaning of section 80IC (8)(ix) of the Act after initial assessment year, the assessee is further entitled to claim deduction @ 100% of profits from eligible undertaking under section 80IC of the Act. The aforesaid ratio squarely applies to the facts, of the instant case. Hence, we hold that the assessee is eligible to claim deduction under section 80IC @ 100% after 'substantial expansion' during the assessment year under appeal. Appeal of the assessee is allowed.
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2021 (11) TMI 632 - ITAT DELHI
Exemption u/s 11 - rejecting the application u/s 12 A - whether appellant society doing charitable activities and fulfill the conditions laid down u/s 2 (15) of the act? - construction has been started of the Satsang Bhavan with corpus donations - assessee submitted that it does not own any land and building but has building under construction - HELD THAT:- Before the learned Commissioner assessee also produced the bank statement of the assessee with Oriental Bank of commerce from 8 May 2013 to 31/3/2017. It further provided the register of outdoor patients before him. From the above activities it is apparent that assessee is carrying on charitable activities as envisaged u/s 2 (15) of the act.
Coming to the objections of the learned CIT – E we find that assessee has given a detailed explanation with respect to the land and building which is owned by the trustee and on which satsang Bhavan is constructed. Further the contractor’s account was also produced which shows that the initially some amount was given for the construction activity however the contractor returned the sum and later on the trust carried on the construction activities by looking at alternatives. The amount was received from the contractor through account payee cheques and same were also given earlier to him through account payee cheques. Therefore we do not find any merit in the finding of the learned CIT –E that the transaction with Mr Surinder Sukhija prevents assessee from getting registration u/s 12 AA
The justification given by the assessee for holding the car and using it for the activities of the trust is also justifies the use of claiming of the depreciation as well as payment of insurance. In fact the level of activities being carried out by the trust justifies the use of car. Further the learned CIT E held that the credits in bank account as well as the receipt as per receipt and payment account for financial year 2016 – 17 does not match, however, there is no difference between the receipts which are required to be shown in the receipt and payment account.
Assessee has also shown the bank account to the learned CIT – E, who could not find out or give any instances where the receipts are not accounted in the receipt and payment account but are credited in the bank account. The carrying on of the activities of satsang along with Jan Sewa Samiti has also been properly explained by the assessee that it carries on these activities along with these other organizations. Further the government of Haryana has give grant to the assessee trust for carrying on its medical activities for purchasing an ambulance. Appellant trust is also showing considerable amount of fees from the patient’s and also applies substantial amount for medical relief , relief to poverty, gaushala and religious activities. All these activities falls under the gamut of provisions of Section 2 (15) of the act. The learned CIT E without any evidence and on irrelevant considerations has denied the registration to the trust u/s 12 AA.
Object of Section 12AA of the Act, is to examine the genuineness of the objects of the Trust, but not the income of the Trust whether applied for charitable or religious purposes. Off course trust needs to show that the activities are genuine I and in accordance with the objects. This is demonstrated by the applicant appellant exhaustively . The stage for application of income is yet to arrive i.e. when such Trust or Institution files its return. Therefore, we find present case arising out of the question of registration of the Trust and not of assessment. All these factual aspects can also be verified during the course of assessment proceedings when the assessee claims benefit of Section 11 – 13 of the income tax act after registration. In view of the above facts, we direct the learned CIT –E to grant registration to the assessee u/s 12 AA of the act, as it is carrying on charitable activities as envisaged u/s 2 (15) of the act and none of the activities carried out by the assessee are not genuine, in fact they are in accordance with the trust deed and in consonance with the provisions of The Income Tax Act. - Decided in favour of assessee.
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2021 (11) TMI 631 - ITAT DELHI
Penalty u/s 271(1)(c) - Mandation of specification of charge - HELD THAT:- Merely because the claim preferred by the assessee was not acceptable to the learned Assessing Officer, the assessee cannot be visited with the proceedings under section 271(1)(c) of the Act, unless and until the twin requirements under section 271(1)(c) of the Act are satisfied. We therefore, while accepting the plea of the assessee hold that the penalty cannot be sustained. We accordingly direct the assessing officer to delete the same.
Non specification of charge - Neither in the assessment order nor the notice issued under section 274 of the Act, there is any reference to either the concealment of income or the furnishing of inaccurate particulars thereof. See MANJUNATHA COTTON AND GINNING FACTORY, MANJUNATH GINNING AND PRESSING, VEERABHADRAPPA SANGAPPA AND CO., V.S. LAD AND SONS, G.M. EXPORT [2013 (7) TMI 620 - KARNATAKA HIGH COURT]
It is clear that for the AO to assume jurisdiction u/s 271(1)(c), proper notice is necessary and the defect in notice u/s 274 of the Act vitiates the assumption of jurisdiction by the learned Assessing Officer to levy any penalty. In this case, facts stated supra, clearly establish that the notice issued under section 274 read with 271 of the Act is defective and, therefore, we find it difficult to hold that the learned AO rightly assumed jurisdiction to pass the order levying the penalty. Viewing from any angle, we do not find any justification to sustain the penalty, and as a consequence thereof, we direct the learned Assessing Officer to delete the penalty in question. - Decided in favour of assessee.
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2021 (11) TMI 630 - ITAT SURAT
Revision u/s. 263 by CIT - assessment order passed u/s. 143(3) r.w.s. 153C - proof of "no enquiry" or "lack of inquiry" - HELD THAT:- We find the there is no dispute that the AO while passing the assessment order accepted the claims of the assessee in non-speaking order. It is not the case of ld. PCIT that the AO is not allowed to accepted the return of income in non-speaking order. AO while passing the assessment order recorded that "the Authorized representative of the assessee vide various order sheet entries have furnished the relevant details and information called for. After affording ample and adequate opportunities of being heard to the assessee, assessment proceedings have been completed on the basis of the submissions and details collected and in consequence upon the conclusion of proceeding and hearing of evidences, assessment is made by this order".
A perusal of show cause notice under section 263 dated 10.03.2021, clearly demonstrate that the ld. PCIT identified all the issues which were the subject matter of the notice under section 142(1) and the questionnaire attached thereto, were issued by the assessing officer. The ld. PCIT in his show cause notice (SCN) under section 263 has accepted that the AO made detailed questionnaire dated 03.12.2018. And on perusal record and details/evidences available on record, the PCIT noted that AO has not made further inquiry.
PCIT has not made a case that there was "no enquiry" or "lack of inquiry" rather recorded that the AO called detailed inquiry. PCIT has not specified that what kind of further inquiry was required, when the income disclosed in IDS was duly accepted by higher authority. We find that declaration made in IDS-16, was never questioned by Board or other superior authority of the revenue. In our view it is the discretion of the AO, having regards to the facts of the case and the material placed before him in response to the various show cause notices, to take a conscious decision if any further inquiry is required or not. Furthermore, we find that the assessment order was duly approved by the ld. JCIT. There in not finding of ld. PCIT that the approval granted by the JCIT is not proper or non-application of proper procedure and practice of the revenue.
In the case in hand the AO has made required inquiry and came to a possible conclusion in allowing the claims to the assessee. We also find that on the issues of validity of discloser in IDS, the ld. PCIT has not specified that while making declaration, the assessee made any misrepresentation of any facts. Once the IDS in all cases were accepted by ld. PCIT, the AO or the Range head no authority to relook or power to revoke or to examine its validity. PCIT while directing the AO has not himself revoked the IDS nor directed to refund the payment of tax to the assessee - IDS the assessee has paid more tax to the revenue then the rate of normal tax, so there is no loss of revenue.
AO while passing the assessment order has made inquiry and took reasonable, plausible and legally sustainable view. The Hon'ble Delhi High Court in CIT Vs. Kelvinator of India Ltd. . [2002 (4) TMI 37 - DELHI HIGH COURT] held that if the AO has adopted one of the course permissible in law, which resulted in loss of revenue or where two view is possible and the AO has taken one view with which the CIT does not agree, it cannot be treated as erroneous order prejudicial to the interest of revenue unless view taken by the AO is not sustainable in law. At the cost of repetition, we may note that the ld. PCIT neither in his show cause notice nor in ultimate/final order has held that the order passed by the AO is unsustainable in law. - Decided in favour of assessee.
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2021 (11) TMI 629 - ITAT DELHI
Revision u/s 263 by CIT - Disallowance u/s 14A - HELD THAT:- Hon'ble Delhi High Court in the case of M/s. Holcim India P. Ltd [2014 (9) TMI 434 - DELHI HIGH COURT] held that no disallowance can be made u/s.14A if there is no exempt income in the relevant year.
PCIT has not disputed the fact that the assessee has not earned any exempt income. Hence, in view of the judicial pronouncement, we hereby hold that the order the AO is not prejudicial to the interest of the revenue. Hence, we hereby hold that the order passed by the ld. PCIT u/s. 263 is legally not sustainable. Decided in favour of assessee.
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2021 (11) TMI 628 - ITAT MUMBAI
Valuation of investments held as stock in trade - whether the loss of in account of valuation of stock can indeed be allowed as a deduction in computation of business income? - HELD THAT:- Right from Hon'ble Supreme Court's landmark judgment in the case of Chainrup Sampatram [1953 (10) TMI 2 - SUPREME COURT] the law is very well settled, duly recognizing the principle of conservatism embedded in the accountancy practices, that if there is any anticipated loss, whether crystallized or not the same is to be allowed as the deduction while anticipated profits are not be taken in to account for this purpose.
Whether the loss is crystallized or not as long as it can be reasonably anticipated, on the basis of the situation as it prevails at the year end, which is what is reflected by the fall in value of stock indicates, the same is taken in account for computation of business loss. In the case of United Commercial Bank [1999 (9) TMI 4 - SUPREME COURT] Hon'ble Supreme Court has taken notes of this foundational legal position and held that loss on all in value of investments which are held as stock and trade by the bank constitute and admissible deduction.
The the action of the Assessing Officer, which has been upheld by the learned CIT(A) in a very mechanical manner without application of mind, cannot meet our judicial approval. We reverse the stand of the authorities below, and direct the Assessing Officer to delete the impugned disallowance - Decided in favour of assessee.
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2021 (11) TMI 627 - ITAT MUMBAI
Classification of capital gain - LTCG or STCG - Non consider the cost of acquisition/indexed cost of acquisition of the property in question while computing the capital gain - HELD THAT:- Admittedly, there can be no second thought on the fact that the assessee had consistently adopted a lackadaisical approach and had neither complied with the directions of the AO nor appeared before the CIT(A). The conduct of the assessee was no better, and as observed by us hereinabove he had failed to participate in the course of the appellate proceedings before us. Be that as it may, we find substance in the claim of the assessee that as the CIT(A) had not only declined his request for adjournment, but had also not considered the submissions which were filed by him along with Form No. 35 on the e-portal of the Department, therefore, he was not afforded sufficient opportunity of being heard.
We find that it is the claim of the assessee that the CIT(A) had not only wrongly classified the sale transaction as STCG, as against the LTCG, but had also erred in not directing the AO to consider the cost of acquisition/indexed cost of acquisition of the property in question while computing the capital gain. In the backdrop of the aforesaid facts, we though deprecate the conduct of the assessee who had throughout been non-cooperative, but cannot remain oblivious of the fact that there are certain infirmities arising from the order of the CIT(A) as regards the mode and manner of quantification of the income resulting from the sale of the property in question.
We, thus, in all fairness are of the considered view that the matter requires to be re-visited by the AO, who is directed to re-adjudicate the issue after affording an opportunity of being heard to the assessee.AO shall in the course of the de novo assessment proceedings allow an opportunity of being heard to the assessee who shall remain at liberty to substantiate his claim on the basis of supporting documentary evidence/material - Appeal filed by the assessee is allowed for statistical purposes.
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2021 (11) TMI 626 - ITAT MUMBAI
Validity of reopening of assessment u/s 147 - whether corrigendum passed by the assessing officer is bad in law and beyond period of limitation? - HELD THAT:- After considering the corrigendum passed by the assessing officer we notice that there is no material change as far as conclusion of the assessment order. AR relied in the case of Lionbridge Technologies Ltd [2018 (12) TMI 764 - BOMBAY HIGH COURT] to submit that corrigendum issued beyond time to pass the assessment order is bad in law. We notice that in the above case the issue was the final assessment order was passed without issuing draft assessment order. Subsequently the corrigendum was passed to rectify the above mistake. In the above case, the issue of jurisdiction is involved and the Courts have held that in the case of issues involving jurisdiction, they interpreted the law literally and strictly. Whereas in the given case, the assessing officer has merely rectified the apparent mistake in his order which has no impact on the conclusion of the assessment order. Therefore, we do not see any reason to entertain the claim of the assessee. Accordingly, these grounds are dismissed.
Mistake in the reasons recorded to reopen the assessment - We notice that the reasons were communicated to the assessee and the assessee also understood and participated in the assessment proceedings. Once again the assessing officer has made the typographical error in the concluding para of the notice. It does not change any material outcome, as long as it communicates the reasons for reopening the assessment, mere typographical error without having any material impact on the assessment, these can be considered as simple mistakes and rectifiable.
Addition merely on the basis of statement of third parties and rejecting the appellant's request to provide opportunity of cross examination of said parties - HELD THAT:- It is requirement of the principles of natural justice to give a proper opportunity to the assessee for cross examination before making any addition or completing the assessment. In the given case we notice that assessee was consistently requesting the assessing officer for the opportunity. But the assessing officer only insisted upon the assessee to bring the parties before him.
Assessee has expressed inability to bring the parties before the assessing officer considering the fact that the assessee is too small to make such request to the officers of SHPL. It is fact on record the contentions of the assessee is right that she cannot compel the SHPL officials to appear before the AO. From the record it is clear that assessing officer has made the addition without giving a proper opportunity for cross examination. The Courts have held that completing the proceedings without giving proper opportunity for cross examination to the other party is against the principles of natural justice and accordingly it is bad in law. In turn, the AO can issue show cause notice to SHPL officials and make them appear. In that process, he could have given opportunity to the assessee for cross-examination.
We are in agreement with the submissions of the Ld. AR and by relying on the ratios of Hon’ble Supreme Court in the case of Andaman Timber Industries [2015 (10) TMI 442 - SUPREME COURT] we are inclined to conclude that the assessment order passed by the assessing officer is bad in law.
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2021 (11) TMI 625 - ITAT AHMEDABAD
Unsecured loan taken - Addition u/s. 68 - HELD THAT:- AO as made the addition of unsecured loan obtained by the assessee on the basis of general observation that unsecured loan was nothing but assessee's own fund which were circulated. The finding of the AO was not supported with the relevant material and evidences, AO had also failed to controvert the supporting documents and relevant materials and the copies of bank statement of the lender and the assessee demonstrating that transaction of loan were routed through bank account and same were repaid during the year under consideration. AO has neither made any investigation and verification from the lender nor brought any relevant material on record to prove that the unsecured loan was not genuine. Therefore, we are not inclined with the decision of ld. CIT(A). Accordingly, the appeal of the assessee on this ground is allowed.
Disallowance on interest u/s. 36(1)(iii) - AO has compared the payment of interest @ 12%/15% on the unsecured loan obtained by the assessee with the interest amount received by the assessee @ 8% on FDR made with the HDFC bank - HELD THAT:- Earning of interest on surplus fund maintained in FDR cannot be compared with the unsecured loan obtained by the assessee because both are of different nature as the interest on fixed deposit is specified by the bank in the form of automatic switched off fixed deposit account whenever surplus fund was available in current year, the same was transferred to fix deposit account otherwise the current account did not fetch any interest. On the other hand, the definite amount of interest paid on unsecured loan used to be on higher side compared to the interest charged on secured loan, therefore, we do not find any justification in the decision of ld. CIT(A) in sustaining the disallowance of interest payment made by the Assessing Officer. Therefore, this ground of appeal of the assessee is also allowed.
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2021 (11) TMI 588 - MADRAS HIGH COURT
Disallowance of estimated expenses - assessee's case was that, it did not incur any collection charges and the amounts were invested out of circulating capital - CIT(A) directed the Assessing Officer to restrict the disallowance to 2% only on tax free bond, which in the opinion of the CIT(A), was a reasonable disallowance also confirmed by ITAT - HELD THAT:- Though the assessee specifically took a stand that they did not incur any expense to get the tax free income and assessee Bank has got more interest free funds for investing in the tax free income, the CIT(A) did not examine the said aspect, but merely directed the Assessing Officer to restrict the disallowance in this regard to 2% only on tax free bonds, finding the same to be reasonable. Had the CIT(A) adjudicated the correctness of the stand taken by the assessee and rendered a finding, the Tribunal could have tested the correctness of the same. Further, there has been development in law. We do not propose to deny the benefit of the assessee to place reliance on those decisions and put forth their submissions and for such purpose alone, we are inclined to remand the matter back to the Tribunal for fresh consideration. The substantial question of law No.1 is left open for fresh consideration by the Tribunal.
Disallowance of software expenses as being relatable to capital filed - HELD THAT:- This issue has been squarely covered by the decision of the Division Bench of this Court in the case of Commissioner of Income Tax v. Southern Railways Ltd [2006 (1) TMI 64 - MADRAS HIGH COURT] wherein, the question was answered in favour of the assessee, which was also taken note of in the case of Commissioner of Income Tax, Trichy v. The Lakshmi Vilas Bank Ltd. [2018 (9) TMI 1094 - MADRAS HIGH COURT]. Thus, the substantial question of law No.2 is answered in favour of the appellant/assessee.
Disallowing the payment made to Registrar of Companies for increasing the authorised capital - HELD THAT:- Tribunal followed the decision of the Hon'ble Supreme Court in the case of Punjab State Industrial Development Corporation Ltd. v. Commissioner of Income Tax [1996 (12) TMI 6 - SUPREME COURT]. We find no error in the said decision of the Tribunal. Hence, the 3rd substantial question of law is answered against the appellant/assessee.
Disallowance being arrears of wages on account of upward pay decision as per MOU signed on 11.03.1999 - HELD THAT:- The said question is covered by the decision of the Division Bench of this Court in the case of Commissioner of Income Tax, Chennai-I v. M/s.Kasturi and Sons Ltd. [2018 (9) TMI 1411 - MADRAS HIGH COURT] was answered in favour of the assessee. Following the same, the substantial question of law No.4 is answered in favour of the appellant/assessee.
Disallowance being ex-gratia paid to employees - HELD THAT:- Issue decided in favour of the assessee in the assessee's own case in Commissioner of Income Tax, Chennai v. The Karur Vysya Bank Ltd., Karur [2015 (5) TMI 72 - ITAT CHENNAI] Following the same, the 5th substantial question of law is answered in favour of the appellant/assessee.
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2021 (11) TMI 587 - MADRAS HIGH COURT
Validity of reopening of assessment u/s 147 - whether the assessee was liable to deduct Tax at Source in respect of the Computer Software which was dealt with by them, procured from a Non-Resident and sold in the Indian Market? - HELD THAT:- Since the Tribunal has upheld the validity of the reopening proceedings, we have to necessarily decide this case against the Revenue and in favour of the assessee, or else, the reopening proceedings may continue to remain valid, though the basis for reopening was held to be unsustainable, as the question of law has been answered in favour of the assessee in the case of Engineering Analysis Centre of Excellence Private Limited [2021 (3) TMI 138 - SUPREME COURT]
Therefore, for such reasons, this Tax Case Appeal is allowed and the reopening is held to be unsustainable in law in the light of the decision rendered by the Hon'ble Supreme Court in the case of Engineering Analysis Centre of Excellence Private Limited
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2021 (11) TMI 585 - ITAT DELHI
Income accrued in India - attribution of profit - PE in India - HELD THAT:- Considering the facts emanating from the orders of the first appellate authority, we are of the considered opinion that they are not at all distinguishable on the facts of Assessment Years 1997-98 and 1998-99 and since on those facts the Special Bench of this Tribunal has decided the appeal in favour of the assessee, which order has been upheld by the Hon'ble High Court of Delhi [2011 (12) TMI 91 - DELHI HIGH COURT] we are of the considered view that the property in goods have been passed outside India alongwith risks and reward.
No doubt the contract in question was signed in India and the acceptance test had to be performed in India would not justify the findings of the ld. CIT(A) in light of the judgment of the Hon'ble Andhra Pradesh High Court in the case of Additional CIT Vs. Skoda Export [1986 (10) TMI 9 - ANDHRA PRADESH HIGH COURT] The ratio laid down by the Hon'ble Supreme Court in the case of Ishibkawajima-Harima Heavy Industries Ltd [2007 (1) TMI 91 - SUPREME COURT] squarely apply on the facts of the case wherein the Hon'ble Supreme Court has held that the fact that the contract was signed in India is of no material consequence since all the activities in connection with off shore supplies were carried outside India. We are therefore, of the view that the decision in the case of Ishibkawajima-Harima Heavy Industries Ltd [supra] covers the issue as to whether any part of the profit arising from supply of equipment by the assessee is chargeable to tax.
We do not find any merits in the findings of the ld. CIT(A) in respect of addition sustained by him. We are of the considered view that the appellant has no business connection in India in respect of supply of GSM System by the appellant to cellular operators in India and further, there is no PE in any form in India in the captioned Assessment Years and therefore, the question of attribution of profit does not arise at all.
DR has placed strong reliance on the decision of this Tribunal in the case of Huawei Technologies Co. [2020 (12) TMI 857 - ITAT DELHI] and others for Assessment Years 2009-10 to 2016-17. However, we are of the considered view that the facts of the case in hand are clearly distinguishable from the facts of that case in as much as in that case wherein at Article 6.3 it has been mentioned “Risk of loss of goods shall pass from seller to owner upon acceptance of the goods.” Whereas the facts of the case in hand show that risk and reward pass over at the Port of Sweden at the time of delivery of goods.
Charging of interest u/s 234B - HELD THAT:- This issue is now no more res integra in light of the judgment of the Hon'ble Supreme Court in the case of Mitsubishi Corporation [2021 (9) TMI 875 - SUPREME COURT] as held that prior to Assessment Year 2013-14, interest cannot be charged u/s 234B of the Act.We, accordingly, direct the Assessing Officer to charge interest as per provisions of law keeping in mind the ratio laid down by the Hon'ble Supreme Court in the case of Mitsubhishi Corporation [supra].
TDS u/s 195 - payment in respect of supply of software was in nature of business income and cannot be characterized as Royalty either under the Income Tax Act or under the Indo-Sweden DTAA - HELD THAT:- This issue in now no more res integra by the judgment of the Hon'ble Supreme Court in the case of Enginering Analysis Centre of Excellence Pvt Ltd [2021 (3) TMI 138 - SUPREME COURT] The amounts paid by resident Indian end-users/distributors to non-resident computer software manufacturers/suppliers, as consideration for the resale/use of the computer software through EULAs/distribution agreements, is not the payment of royalty for the use of copyright in the computer software, and that the same does not give rise to any income taxable in India, as a result of which the persons referred to in section 195 of the Income Tax Act were not liable to deduct any TDS under section 195 of the Income Tax Act. The answer to this question will apply to all four categories of cases enumerated by us in paragraph 4 of this judgment. - Decided against revenue.
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2021 (11) TMI 578 - BOMBAY HIGH COURT
Deduction u/s 36 (1) (vii) - ITAT allowing pure loan as Bad debt - respondent could not be said to be in the business of banking or money lending and therefore the principle amount of deposit/advances to MCCL could not be claimed as deduction u/s 36 (1) (vii) on account of condition placed in condition 36 (2) - whether amount written off consisted of capital loan and interest in an integral manner and thus condition prescribed in Section 36(2) got fulfilled? - HELD THAT:- Advances of deposit is to be understood as having been done in the ordinary course of business. Therefore, one of the condition required under Section 36 (2) (i) of the Act, i.e., bad debts or part thereof taken into account in computing income of the assessee for an earlier Assessment Year before such debt or part thereof is written off is satisfied.
Tribunal 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 question as pressed raises any substantial question of law. The appeal is devoid of merits and it is dismissed with no order as to costs.
We have not opined on the second part, i.e., whether or not the assessee is engaged in the business of money lending or banking since we have confirmed that respondent is entitled to deduction on bad debts in view of first part of Section 36 (2) (i) of the Act.
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2021 (11) TMI 577 - KARNATAKA HIGH COURT
TDS u/s 194A - TDS Laibility in respect of hypothetical interest income arising on fixed deposits with the respondents 3 to 5 banks during the pendency of 6th respondent (CBI) attachment/freeze order on these banks - HELD THAT:- As it is not in dispute that FD’s lying with the respondent Nos.3 to 5/Banks have been frozen/attached pursuant to an order dated 11.09.2009 passed by the CBI and the said proceedings initiated against the petitioner are still pending adjudication.
Tax deduction at source is permissible only if the income is credited to the account of the petitioner ; in the instant case, in view of the freezing/attachment of the said FDs of the petitioner, it cannot be said that the petitioner is receiving income by way of interest from the said FDs for the present and entitlement or otherwise of the petitioner qua the said FDs or interest will have to be decided only after conclusion of the proceedings initiated by the CBI against the petitioner. In otherwords, for the present, the interest on the FDs which is credited to the account of the petitioner is not income for the petitioner so as to attract the TDS under Section 194A of the IT Act, so as to enable deduction of TDS on the interest accruing on the FDs.
Entitlement of interest accruing on the FDs to the petitioner would be dependant on the result of the pending Court/CBI proceedings and consequently, till conclusion of the said Court proceedings, the interest accruing on the FD cannot be construed or treated as income for the purpose of deduction of TDS under Section 194A - the necessary directions in this regard are to be issued against the respondent Nos.3 to 5; it is needless to state that the directions to be issued to the respondent Nos.3 to 5-Bank not to deduct TDS on the interest on the FDs, cannot be treated as absolving petitioner of its liability to pay tax on the interest accruing on the FD if the petitioner becomes entitled to the same after conclusion of the Court proceedings.
ORDER:- The respondent Nos.3 to 5/Banks are directed not to deduct the TDS in respect of the interest arising/accruing on FDs of the petitioner lying with the respondent Nos.3 to 5/Banks till conclusion of the proceedings initiated by the 6th respondent-CBI against the petitioner.
As however made clear that the alleged liability of the petitioner, if any, to pay taxes in respect of the interest accruing on the said FDs shall arise after conclusion of the said proceedings. The present order passed will not affect any TDS already deducted by the respondent Nos.3 to 5/Banks prior to interim order dated 09.09.2019 passed by this Court.
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2021 (11) TMI 576 - KERALA HIGH COURT
Exemption u/s 10(26B) - claim for exemption was rejected by firstly by noting that the assessee is not a Corporation constituted/established under an Act of the Centre, State or Provincial Act, but a Company formed under the Companies Act AND assessee never claimed the status under Section 10(26B) of the Act in any of the previous assessment years - Whether the Tribunal is right in granting exemption to the assessee under Section 10(26B)? - HELD THAT:- The incorporation of assessee under the Companies Act gives the assessee the status of a body corporate and the objects, indisputably, of the assessee are promoting the interests of the members of the Scheduled Castes or the Scheduled Tribes or backward classes or of any two or all of them of Lakshadweep Union Territory. The argument of learned Senior Counsel that Corporation established by Provincial Act does not fit into the literal or plain reading of Section 10(26B). The argument that the Corporation is established by the Centre/State by an enactment is unavailable from the expression used in Section 10(26B) of the Act.
This Court is construing Section 10(26B), both by keeping in mind the golden rule of construction and also Noscitur a Sociis, and the inescapable conclusion is that the assessee though incorporated under the Companies Act falls within the ambit of exemption envisaged by Section 10(26B) and is entitled to benefit of exemption.
Centre/State Governments, as the case may be, bring into existence what is known as Government Companies. All these companies are not immediately entitled to be bracketed within the ambit of Section 10(26B) because the existence of that Company is relatable to the primary aim of promoting the interests of the members of the Scheduled Castes or the Scheduled Tribes or backward classes or of any two or all of them. The assessee is a body viz., incorporated under the Companies Act and formed to achieve or promote the interests of the members of the Scheduled Castes or the Scheduled Tribes or backward classes or of any two or all of them, receives full financial assistance from the Government, hence is entitled to exemption. We are in agreement with the reasoning and the conclusion recorded by the Tribunal and for the above reasons as well, substantial question no.1 is answered in favour of the assessee and against the Revenue/
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2021 (11) TMI 575 - KERALA HIGH COURT
Levy of penalty u/s 271 (1) (c) on "estimated income” by the assessing authority - HELD THAT:- Section 271(1)(c) deals with levy of penalty in case where any person has concealed the particulars of his income or furnished inaccurate particulars of such income resulting in evasion of tax - what is the penalty payable - whether on total tax assessed or on the tax evaded by the assessee. The Tribunal treated the penalty amount - The plain meaning of the section leads to the conclusion that the criteria for determination of penalty is the tax sought to be evaded but not the total tax payable by the assessee. As already noticed from the computation statement in Annexure-A the total tax payable by the assessee - The difference of tax is lesser than that which was found to have been evaded by the assessee - the penalty shall be quantified or qualified by such figures. For the said purpose, we are persuaded not to remit the matter to any of the authorities.
From the details available in the record, we have heard the counsel on the quantum of penalty, it has been stated that penalty of 100% works out to ₹ 5,62,918/-. As noted at the beginning of our discussion, the questions of law involve consideration of Section 271(1)(c) of the Act and the error of fact in appreciating what is the actual tax sought to be evaded by the assessee. The discussion is concluded by holding that the penalty is determined on the amount of tax sought to be evaded, by the concealment of income etc.., but not on the total tax chargeable on the assessee. - Decided in favour of assessee.
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2021 (11) TMI 574 - MADRAS HIGH COURT
Validity of assessment - violation of the principles of natural justice as the assessee did not have adequate opportunity to explain to the Assessing Officer voluminous documents, which were presented by the assessee at the time of assessment - HELD THAT:- Admittedly, the Income Tax Act is a Code by itself and it provides for hierarchy of remedies. The contention both before the learned Single Judge as well as before us is that the assessee did not have adequate opportunity to explain the voluminous documents. On the other hand, the Assessing Officer would submit that adequate opportunity was granted and the assessee represented by their authorized representative was heard.
Whether appreciation of the documents was done or not and whether there was sufficient opportunity granted to the assessee or not are all issues, which can be canvassed before the First Appellate Authority and we find that there is no valid reason for the assessee to bypass a statutory appeal remedy. Therefore, we are not inclined to interfere with the impugned order before us.
The above writ appeal is dismissed. The liberty granted to the assessee by the learned Single Judge in paragraph 24 of the order impugned is sustained.
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2021 (11) TMI 573 - KARNATAKA HIGH COURT
Attachment orders - Fixed deposit attached by passing provisional order of attachment invoking Section 281-B(1) - HELD THAT:- Having regard to the fact that the provisional attachment order of a property of a taxable person including the bank account of such person is draconian in nature and the conditions which are prescribed by the statute for the valid exercise of power must be strictly fulfilled, the exercise of power for order of provisional attachment must necessarily be preceded by formation of an opinion by the authorities that it is necessary to do so for the purpose of protecting the interest of Government revenue.
Before the order of provisional attachment, the Commissioner must form an opinion on the basis of the tangible material available for attachment that the assessee is not likely to fulfill the demand payment of tax and it is therefore necessary to do so for the purpose of protecting the interest of the Government revenue. In addition to the aforesaid mandatory requirements, before passing the provisional attachment order, it is also incumbent upon the authorities to come to a conclusion based on the tangible material that without attaching the provisional attachment, it is not possible in the facts of the given case to protect the revenue and that the provisional attachment order is completely warranted for the purpose of protecting the Government revenue.
Applying the principles laid down in Radha Krishan’s case [2021 (4) TMI 837 - SUPREME COURT] to the facts of the instant case, a perusal of the impugned provisional attachment order will clearly indicate that except for merely stating that since there is a likelihood of huge tax payments to be raised on completion of assessment and that for the purpose of protecting the revenue, it is necessary to provisionally attach the fixed deposit of the petitioners, the other mandatory requirements and pre-condition as laid down by the Apex Court have neither been complied with nor fulfilled or followed prior to passing the impugned order.
It is apparent that the impugned provisional attachment orders at Annexures-D, D1, D2 and D3 do not satisfy the legal requirements as laid down in Radha Krishan’s case [2021 (4) TMI 837 - SUPREME COURT] and consequently, in view of the fact that the impugned provisional orders are cryptic, unreasoned, non-speaking and laconic, the same deserve to be quashed.
In so far as the apprehension of the respondents that in the event huge tax payments are to be raised as against the petitioners-assessee, the assessee may not make payment of the same causing loss to the revenue is concerned, in the light of the undisputed fact that the proceedings under Section 153-A of the said Act of 1961 have already been initiated coupled with the fact that Section 281 of the said Act of 1961, contemplates that any alienation of any property belonging to the petitioners would be null and void, in addition to the specific assertion made by the petitioner that they own and possess immovable property to the tune of more than ₹ 300 crores, the said apprehension of the respondents is clearly unfounded and without any basis and consequently the said apprehension of the respondents cannot be accepted.
Order: - The petition is allowed. The impugned orders dated 26.03.2021 at Annexures-D, D1, D2 and D3 passed by respondent No.1 are hereby quashed.
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