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Income Tax - Case Laws
Showing 381 to 400 of 506 Records
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2021 (11) TMI 314 - ITAT SURAT
Addition u/s 69C - Unexplained purchase of shares - HELD THAT:- CIT(A) has invoked provisions of section 145(3) of the Act. We note that assessing officer has not discussed any of these documents and evidences in the assessment order. AO has not made any adverse finding in any of these documents, even though all the details were furnished by the assessee before him. AO ought to have examined all these details and refuted/rejected them, with a cogent adverse findings and discernable line of reasoning, in order to arrive at a conclusion. On the contrary, the assessing officer has just brushed aside these evidences and documents, submitted by assessee, without even a word on why they are not acceptable. It is a well settled Law that when an assessee has all the possible evidence in support of its claim, they cannot be brushed aside based on surmises. Hence we are not inclined to accept the contention of the Assessing Officer in any manner and hence the addition so made, is deleted. Hence these two grounds of the assessee are allowed.
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2021 (11) TMI 313 - ITAT DELHI
Disallowance of deduction claimed u/s. 24(b) - interest incurred on outstanding purchase consideration to acquire the properties of real estate division of M/s. Ballarpur Industries Ltd. on its demerger - HELD THAT:- We find that the ld. CIT(A) has not solely adjudicated based on the earlier assessments but has also so considered the various judgments of Hon'ble High Court of Calcutta in the case of CIT Vs. R.P Goenka [1998 (3) TMI 106 - CALCUTTA HIGH COURT] and the judgment of Sunil Kumar Sharma [2002 (2) TMI 91 - PUNJAB AND HARYANA HIGH COURT] wherein it was held that unpaid price is to be treated as borrowed capital within the meaning of Section 24(b). Hence, on independent examination of the facts and the provisions of law, we hold that the interest paid by the assessee to BIL is an allowable deduction as it amounts to interest on the capital borrowed.
Disallowance u/s. 14A - AR argued that the disallowance cannot be more than the exempt income earned - HELD THAT:- Since, the proposition of law is clear by now that the disallowance cannot exceed the exempt income, the contention of the ld. AR is allowed.
Disallowance of expenses u/s.14A for computing the book profit u/s. 115JB - In accordance with the clause (f) of Explanation to Section 115JB, the disallowance under Section 14A of the Act is a notional disallowance and therefore, by taking recourse to Section 14A of the Act, the amount cannot be added back to book profit under clause (f) of Section 115JB of the Act. The AO is directed to re-compute the profits following the two directions given above.
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2021 (11) TMI 312 - ITAT HYDERABAD
Disallowance of long term capital loss - CIT(A) confirmed the disallowance made by the AO by holding that no sale deed has been produced either before the AO or before the undersigned that transfer of the property had indeed taken placed in the year under consideration - HELD THAT:- Even before us, the assessee failed to submit the sale deed, if any, issued by the authority to establish that the property had been transferred in the year under consideration. Mere considerations received and possession handed over without any documentary evidence for enjoyment of the property to the buyer is not sufficient, hence, the section 2(47)(vi) is also not applicable. As per the documents available, we find that the transaction was done in the financial year 2009-10 and till the date of hearing, the assessee is unable to rebut the finding of the assessing officer in regard to non-submission of the sale deed. As in the case of CIT Vs. Balbir Singh Maini [2017 (10) TMI 323 - SUPREME COURT] has settled the issue in respect of the transfer of the property where the registered sale deed has not been executed in favour of the prospective buyer.
We uphold the order of the CIT(A) in confirming the AO's action in disallowing the assessee's claim of long term capital loss - As it is clear from the order of AO that the assessee can offer income under the head “long term capital gain” in the year in which the land is duly transferred in all respects as per the above cited decision to the proposed buyer to which the assessing officer can decide the issue as per law in the respective year.
Disallowance u/s 14A rwr 8D(2)(iii) - HELD THAT:- We do not accept the contention of the assessee that no administrative/ managerial expenses incurred by the assessee for earning exempt income. Assessee earned dividend income which is exempt u/s 10(34)/10(35).
The findings given by the CIT(A) are not in accordance with rule 8D(2)(iii). The disallowance can be made under this rule only on 0.5% of the average value of investments which yield exempt income. The assessee has received dividend from the investments as quoted in the above table and the average value of these investments is ₹ 53,03,543/- and 0.5% of the average value comes to ₹ 26,518/-. Therefore, the disallowance is to be restricted to ₹ 26,518/- and assessee gets relied of ₹ 51006/-, hence, this ground of assessee is partly allowed.
Assessee claimed bad debts regarding receivables from C&F agents - HELD THAT:- On going through the financial statements, in the P&L account bad debts/advances/deposits written off of ₹ 4,28,33,731/-, which includes 90,01,443/-, which is the disputed amount. The ld. CIT (A) has rightly allowed this issue after relying on the judgement TRF. LTD. [2010 (2) TMI 211 - SUPREME COURT] we do not find any infirmity in the decision of CIT(A) in directing the AO to allow the claim of bad debts of ₹ 90,01,443/- and upholding the order of CIT(A) on this count, we dismiss the ground No. 02 raised by the revenue on this issue.
Addition deposits/advances written off by the assessee - HELD THAT:- To claim bad debts, the amounts must be treated as income but, the issue in dispute relates to advance/deposits which have never been considered as income of the assessee. Even if it is considered as expenditure u/s 37(1) of the Act, the expenditure must be crystalized during the impugned AY, but, the assessee failed to produce any documentary evidence to substantiate its claim that the parties to whom advances have been given as per pages 23 & 24 of the paper book that the parties were refused to pay back the advances. In support of our decision, we rely on the coordinate bench in the case of Elite International (P.) Ltd.[2017 (6) TMI 494 - ITAT MUMBAI] - The case law relied on by the assessee cited supra as well as relied on by the ld. CIT(A) are not applicable to the case of the assessee. In view of the above observations, we set aside the order of the CIT(A) and restore that of the AO on this issue.
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2021 (11) TMI 311 - ITAT DELHI
Disallowance on account of irrecoverable debts/advances written off during the year, on the ground that irrecoverability of the debts has not been proved - DR submitted that above company has been referred to the Insolvency & Bankruptcy Code, 2016. Nobody appeared on behalf of the assessee - HELD THAT:- On careful consideration it is found that the above company has been referred for initiation of corporate insolvency process in terms of Section 14 of the Insolvency & Bankruptcy Code, 2016. The National Company Law Tribunal, New Delhi has referred this company for insolvency proceedings. The present appeals are found to be filed by Shri Sunil Kumar Sharma in the capacity of Executive Vice Chairman of the appellant's company. The moment IRP is appointed, the board of the company is super-ceded. Therefore, these three appeals filed by the Executive Vice Chairman are not maintainable.
In view of this, we dismiss all the appeals filed by the assessee company with a liberty that as soon as the committee of creditors is being decided to pursue these matters then the IRP should file these appeals. If it is so decided, then we give liberty to the IRP either to make an application for recall of this common order by filing corrected Form No. 36 or to file the fresh appeals with the condonation of delay request. Accordingly, all the three appeals filed are dismissed.
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2021 (11) TMI 310 - ITAT JAIPUR
Appeal of the assessee dismissed by the ld. CIT(A) ex parte - As submitted assessee is not interested in pursuing his case, therefore, no opportunity should be given to the assessee and the appeal of the assessee may be dismissed with cos - HELD THAT:- On the dates neither the assessee appeared nor any adjournment application on behalf of assessee was filed. Even before the Tribunal, none has appeared on behalf of the assessee. It was the bounded duty of the parties i.e. assessee as well as the Department to appear before the Revenue authorities at all stages.
Since, this was the assessee's appeal, therefore it was all the more important for the assessee to appear before A.O. as well as before the Ld. CIT(A). However, the assessee had not acted with due diligence. Nevertheless, the principles of natural justice demand that the lis between the parties should be decided on merits after providing due opportunity of hearing to both the parties.
Accordingly, we decide to give one more opportunity of hearing to the assessee and remand the matter back to the record of the ld. CIT(A) for deciding the issue afresh on merits after giving an opportunity of hearing to the assessee subject to cost of ₹ 2,000/- to be paid by the assessee in the account of Prime Minister's National Relief Fund/Prime Minister's Care Fund within 30 days from the date of receipt of this order. The assessee is also directed to cooperate with the ld. CIT(A) in deciding the appeal on merits and without any sufficient reason, not to take further adjournments.
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2021 (11) TMI 309 - ITAT BANGALORE
Assessment of trust - Disallowance of carry forward of excess expenditure - HELD THAT:- The issue raised in no longer res integra. The Hon'ble jurisdictional High Court in the case of Pr. CIT (Exemption) v. Agastya International Foundation [2018 (8) TMI 1894 - KARNATAKA HIGH COURT] by following the earlier judgment of Ohio University Christ College [2018 (11) TMI 1055 - KARNATAKA HIGH COURT]held that income derived from trust property has to be computed on commercial principles and if commercial principles are applied, then adjustment of expenses incurred by the trust for charitable and religious purposes in the earlier years against the income earned by the trust in the subsequent year will have to be regarded as application of income of the trust to charitable and religious purposes in the subsequent year in which adjustment is made having regard to the benevolent provisions contained in section 11 of the Act and such adjustment will have to be excluded from the income of the trust under section 11(1)(a).
Also see case of CIT (Exemption) v. Subros Educational Society [2018 (4) TMI 1622 - SC ORDER]. In view of the above judicial pronouncements, we hold that the CIT(A) is justified in allowing carry forward excess expenditure. Therefore, we uphold the CIT(A)'s order as correct and in accordance with law. - Decided in favour of assessee.
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2021 (11) TMI 308 - ITAT JAIPUR
Reopening of assessment u/s 147 - Assumption of jurisdiction by AO u/s 147 - Eligibility of reasons to believe - reliance on extracts of certain uncorroborated excel sheets found in search - As per assessee reopening has been done solely on the basis of information received from DCIT, Central Circle-03, Jaipur and there is no independent application of mind by the Assessing Officer - Addition of cash loans - HELD THAT:- As manifest from the reasons so recorded by the AO that he has basically relied upon the information received from the DCIT Central Circle -3, Jaipur and enquiries conducted by the Investigation wing. Further, given that the original assessment has been completed u/s 143(3) and more than four years have elapsed from the end of the impugned assessment and proviso to section 147 applies, with a view to satisfy the additional condition that there should be failure or omission on the part of the assessee in disclosing full and true material facts, he has considered the assessee’s assessment records and thereafter, has concluded that there was no necessity to make further inquiries as the information available on record is self-sufficient.
Assessing officer has merely relied upon extracts of certain uncorroborated excel sheets, found during the course of search in case of Ramesh Manihar Group. Such excel-sheets do not point out to the fact of assessee having given loans, in cash, to different persons through Ramesh Manihar Group. Nothing concrete is discernible from these excel sheets. AO has failed to corroborate the excel sheets with independent evidences. Unless such corroborative evidences were brought on record, the present additions are not justified. Nowhere in the excelsheets found during the course of search in case of Ramesh Manihar Group and relied upon by the AO, it could be established that “PCK” as mentioned in those documents stand for the assessee only.
No trail of documents or corroborative evidences could be established in this regard. The extracts of the excel sheets on which reliance had been placed were found from the computers of employees of Shri Ramesh Manihar. Those employees were never examined independently by the AO to find out whether “PCK” as mentioned in such excel sheets represent assessee only. There is no positive confirmation or concrete evidence available with the AO, in the form of acceptance by the parties alleged to have received loans that they have actually received loans, in cash, which was provided by the assessee through Ramesh Manihar Group.
CIT(A) has rightly held that relying upon the statement and not providing cross examination to find out any involvement of the person affected by such statement is a gross violation of principles of natural justice which renders such reliance a nullity and if such statement is discarded, there remain no evidence to hold that the appellant has given any such advance to the tune of ₹ 25 crores. Merely extracts of excel sheet do not provide any evidence of the allegation made by the AO against the assessee. Thus, mere fact that there were certain entries found from record of third party is not sufficient to make addition on the ground that assessee had made unexplained investments.
CIT(A) has rightly held that though cognizance may be taken in respect of entries by third-party in the assessment of other person so as to initiate inquiry for assessment, yet when there is no finding that such entries are in fact pertaining to such third person only which should be emanating from the entries itself or from the person who has recorded such entry, no cognizance can be taken so as to fasten tax liability on such third person.
There is no basis for making the addition in the hands of the assessee made on account of cash loans and consequent interest charged thereon and for the reasons cited supra, we affirm the findings of the ld CIT(A) deleting the said additions.Appeal of assessee allowed.
Carry forward of long term capital loss - HELD THAT:- In the order passed u/s 147 read with section 143(3), it is an admitted fact that the issue of capital gains didn’t arise for consideration during the course of reassessment proceedings and there is no finding which has been recorded by the Assessing Officer disputing the figures as reported by the assessee in his return of income under the head “long term capital gains”. We therefore find that it is a clear mistake on the part of the Assessing Officer while computing the total income wherein the Long Term Capital Gains amounting to ₹ 50,05,578/- has been inadvertently brought to tax in the hands of the assessee. The Assessing Officer is hereby directed to delete the said amount of ₹ 50,05,578/- and the ground of appeal taken by the assessee is allowed. In the result, appeal of the assessee is allowed.
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2021 (11) TMI 307 - ITAT BANGALORE
Denial of exemption u/s 11 - treatment of assessee as AO - proof of profit motive - CIT(A) held that assessee has lost its charitable character and the income has been rightly taxed in the status of an AOP as per law - Whether the activities carried on by the assessee are commercial in nature with the motive to earn profits? - as argued assessee has been created with the object of general public utility which is a charitable object within the meaning of Section 2(15), and is eligible for exemption under section 11 - whether, the activity of construction and sale of immovable property constitutes "business"? - HELD THAT:- Assessee undertakes projects/schemes on behalf of the State government and also through private negotiations.
Activity of assessee was to construct housing projects on land provided by State Government or acquired by it and sell it to people belonging to different income groups. Thus, the assessee has consistently earned substantial profit in this activity. Therefore, the activity has been carried on with profit motive in the same manner in which a private builder would conduct his business. It can’t be said that such activities are incidental to the main object of the trust.
The activity of construction and sale of immovable property cannot be the object but only a mean to achieve the object of development of area in accordance with the plan. Therefore, while the object in a given case may be a charitable purpose, not involving profit, the activities undertaken by assessee in pursuance of the object, attained the colour of business.
Each individual receipt from disposal of the property cannot be said to be income of the assessee available for charitable purpose because expenditure has to be incurred and has been incurred in acquiring land and construction thereon - only the surplus from this activity can be said to be the income derived from property held under trust. There is yet another angle, namely, that some meaning has to be placed on the content of sub-section (4A) of section 11 and especially on the words "unless the business is incidental to attainment of the objective of the trust". The legislature postulates that a charitable institution may have to carry on incidental business for attainment of objective. If the argument of the Ld.AR is that, there is no profit motive in so far as the development authority is concerned and, therefore, there is no question of carrying on any business, then no meaning can be placed on the contents of this provision.
As mentioned earlier that the assessee has carried on systematic activities in a regular manner for construction of Building as per plan, which have led to profit, and such activity is not incidental to the main object of town planning, therefore, it is clear that the assessee has carried on a business which is not incidental to attainment of objects of the authority. Subsection (4A) provides that no deduction shall be allowed under subsections (1), (2), (3) or (3A) from such profit. However, the incidence of taxation is lifted provided that-(i) the business is incidental to the attainment of the objective, and (ii) separate books of account are maintained in respect of such business. It is not the case of assessee that assessee maintained separate books of accounts as per section 11(4A). Being so, assessee can’t be granted exemption under sec. 11 of the Act for both the assessment years. Grounds raised by assessee stands allowed for statistical purposes.
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2021 (11) TMI 306 - ITAT MUMBAI
Claim of modification in salary income during the assessment proceedings - Assessee changing income and reducing income offered in the return of income without filing the Revised return of income - assessee has inadvertently included the higher income in the return of income filed and withholding tax - HELD THAT:- Contentions of the Ld.AR that that the assessee should not be made to pay the tax on higher salary but only actual salary has to be taxed - mistake on the part of the employee is not a wanton act but due to oversight the correct income could not be considered in the return of income filed.
We found the submissions of the Ld.AR are realistic. The assessee should not be deprived of his legitimate claim and tax has to be levied on the income actually generated. We considering the overall facts, circumstances and judicial decisions are inclined to grant one more opportunity to the assessee to substantiate the claim. Accordingly, the disputed issue is restored to the file of the AO for limited purpose and the A.O shall examine and pass the order. We allow the grounds of appeal of the assessee for statistical purpose.
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2021 (11) TMI 305 - ITAT MUMBAI
Understatement in the value of a flat sold - Addition u/s 43CA - assessee urged a preliminary ground that th provisions of section 43CA having introduced into the statute by Finance Act, 2013 w.e.f. 01-04-2014, would not be applicable to the transaction relating to the sale of a flat which was concluded upon registration on 23-04-2013, i.e. much before section 43CA came into effect - HELD THAT:- CIT-A doubted the genuineness of expenditure claimed,he has not made any direct disallowance of expenditure - allegation that some flats were sold at higher rate is vague and general in nature without bringing on record cogent material to demonstrate whether these flats sold by the assessee were identical in nature to Flat No.2. Moreo er, no enquiry has been conducted with the buyer of the flat to ascertain whether any on-money was paid by him for purchasing the flat.
Without making any enquiry or bringing material on record to establish the fact that the assessee has received any amount over and above the declared sale consideration, no addition could have been made when it is accepted that section 43CA meant for such deemed addition, is not applicable to the subject transaction. Once CIT (Appeals) concluded that section 43CA was not applicable to the subject transaction, there is no reason for him to sutain the addition on different reasoning - no hesitation in deleting the addition - Ground raised by assessee allowed.
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2021 (11) TMI 264 - ITAT MUMBAI
Penalty u/s 271B - non-furnishing of Tax Audit Report - HELD THAT:- It is the claim of the assessee that it had not only got his accounts audited as per mandate of law u/s 44AB of the Act, but had also duly uploaded the audit report in Form No. 3CB and Form No. 3CD a/w his return of income that was filed on 17.09.2011 - there appears to be some substance in the explanation of the assessee as regards his failure to participate in the course of the proceedings before the lower authorities. Be that as it may, we are of the considered view that in the totality of the facts involved in the present case before us the matter requires to be revisited by the A.O for verifying the aforesaid claim of the assessee i.e he had duly got his accounts audited u/s 44AB of the Act and had uploaded the tax audit reports in Form No. 3CB and Form No. 3CD, dated 05.08.2011 a/w his return of income that was filed on 17.09.2011.
In case, if the claim of the assessee is found to be in order, then, the penalty imposed by the A.O u/s 271B would stand vacated. We, thus, in terms of our aforesaid observations set-aside the matter to the file of the A.O for the limited purpose of giving effect to our aforesaid observations. Needless to say, the A.O shall in the course of the set-aside proceedings afford a reasonable opportunity of being heard to the assessee. Appeal filed by the assessee is allowed for statistical purposes.
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2021 (11) TMI 263 - ITAT DELHI
Disallowance of deduction u/s 80IC - rule of consistency - Whether CIT(A) was correct in deleting the addition made by the AO on account of disallowance of deduction u/s 80IC of the I.T. Act on the basis of deduction allowed in earlier years as per the directions of the Hon’ble ITAT on a single issue ignoring other issues which were also attributable to the said disallowance? - HELD THAT:- As it appears that the claim of deduction has been denied from A.Ys 2007-08 to 2010-11 and pursuant to the directions of the Tribunal, the Assessing Officer allowed the claim of deduction.
Since the Assessing Officer had allowed the deduction pursuant to the directions of this Tribunal from A.Ys 2007-08 to 2010-11, the ld. CIT(A) allowed the claim of deduction following the earlier orders. In our considered opinion, if the deduction has been allowed in earlier years on the same set of facts and on similar claim the Assessing Officer cannot take a fresh view. We, therefore, do not find any error or infirmity in the findings of the ld. CIT(A). - Decided against revenue.
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2021 (11) TMI 262 - ITAT SURAT
Rejection of books of accounts u/s.145 - Addition on account of low gross profit - HELD THAT:- There is no doubt that assessee Gross Profit was estimated @10.31% in A.Y. 2010-11 to 2012-13. For the year under consideration, the assessee has declared Gross Profit @8.38%. The assessee claimed that in the immediately preceding year the Gross Profit percentage was Nil and the profit of assessee increase substantially and it should be accepted as it is - Gross Profit of the assessee has been consistently adjudged being estimated @10.31% in preceding years.
There cannot be any consistent Gross Profit for several years. And on perusal of comparative chart of gross profit, we find that business of assessee in terms of turnover has increased from ₹ 14.64 crore in A.Y. 2012-13 to ₹ 19.87 crore in the year under consideration. The assessee claimed that incidental cost and cost of raw material is increased. We find that the assessee raised the similar plea before the AO - AO has not countered such fact. Considering the fact and circumstances of the case that turnover of the assessee is increased, the estimation of 10% Gross Profit will meet the possibility of Revenue leakage and would meet the end of justice, therefore, we direct the AO to estimate the Gross Profit @10%.
Penalty u/s 271(1)(c) - HELD THAT:- There is no dispute that AO while passing the assessment order under section 143(3) on 16.02.2015, made addition by rejecting books of accounts and thereby made addition on estimation basis by estimating Gross Profit @10.31%. The AO levied penalty on the said estimated additions. We find that similar penalty were levied in earlier years i.e. 2009-10, 2010-11 and 2011-12. The same was deleted by the ld.CIT(A) and on further appeal before the Tribunal, the order of ld.CIT(A) was upheld. - Decided against revenue.
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2021 (11) TMI 261 - ITAT JAIPUR
Revision u/s 263 by CIT - Fair market value of the shares and receipts of consideration on issue of shares over and above the fair market value invoking applicability of section 56(2)(viib) - HELD THAT:- The assessee obtained and submitted a report from a merchant banker who is equally qualified to issue such valuation report under Rule 11UA(2) and who has determined the fair market value of the shares at ₹ 219.50 per shares which is still higher the value at which the shares were issued by the assessee company. Thus, even where the report of the merchant banker is considered, the provisions of section 56(2)(viib) continues to remain inapplicable
There is no adverse finding recorded by the ld PCIT and no dispute which has been raised regarding the discounted cash flow method of valuation and the methodology adopted in both the valuation reports. Though there is a variation in valuation so determined in two reports on account of certain underlying assumption regarding illiquidity ratio, as highlighted by the ld A/R, there can always be a different of opinion among the technical experts, but the necessary corollary thereof doesn’t necessarily mean than the valuation so determined doesn’t stand on sound foundation in terms of data and methodology and the fair market value and issue of shares is not supported by the valuation report.
We agree with the contention advanced by the ld A/R that even where there is a technical breach in terms of obtaining and submitting the valuation report from an associate member of ICAI as against fellow member of ICAI; and even taking into consideration report of the merchant banker, the position will remain the same and the provisions of section 56(2)(viib) continues to remain inapplicable and thus, the order passed by the Assessing officer cannot be held as prejudicial to the interest of Revenue which is an essential condition for invocation of jurisdiction u/s 263 - Decided in favour of assessee.
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2021 (11) TMI 260 - ITAT DELHI
TP Adjustment - adjustment with respect to power transferred by the assessee from eligible unit to non eligible unit - internal CUP v/s external CUP - Claim of the assessee is that price at which assessee has purchased power from SEB is internal cup and therefore these prices are to be preferred over any external cup price i.e. average price of IEX and the price at which it has purchased power in Rajasthan - HELD THAT:- There is no dispute about the applicability of internal cup prices with respect to transaction of sale of power from eligible unit to non eligible unit with respect to UP. This is so for the reason that in UP region assessee sales power to SEBs and therefore it is an internal cup accepted by the learned DRP also. However in Kota, Rajasthan, assessee purchases power but it does not sell the power and in that circumstances it cannot be said to be an internal cup applied by the assessee. Therefore we are in agreement with the learned dispute resolution panel that for the purpose of benchmarking of power transferred from eligible unit to non eligible unit assessee can only claim internal cup when it also sales power to SEB. Here it purchases power from SEB therefore it cannot be used as an internal cup but is rightly held by the learned dispute resolution panel to be an external cup.
Whether the learned that TPO has correctly adopted IEX rates for the purpose of benchmarking the transaction of sale of power by Kota eligible unit to non eligible unit? - whether the Indian energy exchange rates are proper external cup or not? - HELD THAT:- Much sanctity is attached to the rates adopted by SEBs. TPO has failed to show the reason of such a wide disparity between the rates of Indian energy exchange which is a spot exchange compared with the rates at which the energy is actually consumed in that geographical region. This does not mean that the quoted price cannot be used for the comparability analysis in cup method. But if the prices are so divergent and the difference between the two external cup becomes irreconcilable, the external cup price which is more reliable should be used. Therefore, in our view, IEX rates for these reasons cannot be said to be an external cup available for invoking the provisions of first proviso to Section 92C (2) of the act.
As in case of the assessee for assessment year 2015 – 16 , external corporate of purchase price of power from SEB is used as a comparable discarding the Indian energy exchange rate by the learned CIT – A, and the same order has not been challenged before the higher forum, it becomes final. This shows that in the subsequent year the learned transfer pricing officer/assessing officer has accepted the methodology of benchmarking the transaction of transfer of power in Rajasthan from eligible unit to non eligible unit at the purchase price of power from SEB.
No infirmity in the benchmarking analysis of the assessee wherein the assessee has considered rate of ₹ 6.30 per kilowatt against the rate of power purchase paid by the assessee to Jaipur Vidyiut Vitran Nigam Limited at the rate of ₹ 8.35 per kilowatt, using the external cup for comparability. Accordingly, the ground number 2 of the appeal of the assessee is allowed and the transfer pricing adjustment is deleted.
Determining the arm’s-length price of steam at rupees nil - HELD THAT:- Revenue authorities erred in holding that the steam does not have any cost and therefore steam transferred by assessee’s eligible units to non eligible units at cost, which is determined by Cost accountants and Other professional, has the Arms length price of Rs Nil instead of cost of ₹ 103745275/- . Therefore we allow ground number 3 of the appeal and direct the learned transfer-pricing officer to delete the addition of ₹ 1,035,745,275 which was made determining the arm’s-length price of transfer of steam from eligible unit to non-eligible unit by considering the cost of production of the steam at Rs. Nil.
Disallowance u/s 14 A - HELD THAT:- Assessee has interest free funds available which are 12.82 times higher than the amount of investments. Thus Where assessee had its surplus fund against which investment was made, no question of making any disallowance of expenditure in respect of interest expenses under section 14A arose - See Principal CIT v. Sintex Industries Ltd. [2018 (3) TMI 1448 - SC ORDER]. Further for working out the portion of administrative expenditure, assessee has applied the factor of 0.5 % on the amount f investments which has yielded tax-free income during the year. We find that this stand of assessee is also in consonance with the decision of Honourable Delhi High court in ACB India limited [2018 (3) TMI 1448 - SC ORDER]. In view of this we direct the ld AO to retain the disallowance offered by assessee as disallowance u/s 14 A of the Act only to the extent of Rs. ₹ 6,399,219/– which is offered by the assessee itself and delete the balance. Accordingly Ground no 4 of the appeal is allowed.
Addition made to the income of the assessee Under the head capital gains by invoking the provisions of Section 50 C - HELD THAT:- Provision of section 50C (2) provides that where the assessee claims before the ld AO that stamp duty value exceeds the fair market value, then the Ld AO is duty bound to refer the matter to the DVO for determining fair market value of that property. This fact is also noted by the ld DRP but upheld the action of the ld AO for the reason that assessee objected to adoption of stamp duty value as deemed consideration at a very late stage , so ld AO did not have enough time to refer the matter to DVO. Assessee also disputed that the stamp duty valuation is of the commercial properties where as the assessee has purchased agricultural land only. Therefore even otherwise the stamp duty rates of the property should be determined on the basis of it being agricultural land. Assessee in terms of provision of section 50C (2) of the Act has objected against adoption of stamp duty rates as well as characteristics of the land before the ld AO, we set aside the whole issues back to the file of the ld AO with direction to the ld AO to refer mater to the district valuation officer to determine fair market value of the property and assessee is also direct to raise all the issue before ld AO as well as DVO about the real character of the property whether it is an agricultural land or otherwise.
Addition u/s 115JB of the income tax act which was disallowed u/s 14 A - HELD THAT:- We find that this issue is squarely covered in favour of the assessee by the decision of special bench in case of ACIT V Vireet Investments [P] Ltd [2017 (6) TMI 1124 - ITAT DELHI] where in it has been held that the computation under clause (f) of Explanation 1 to section 115JB(2), is to be made without resorting to the computation as contemplated under section 14A, read with rule 8D of the Income-tax Rules, 1962. Therefore action of ld AO of imputing disallowance u/s 14 A of the act as addition as per clause [f] of explanation [1] to section 115 JB is not proper - Even otherwise the assessee has already made adjustment as the above clause of explanation [1] of section 115 JB of the act of ₹ 66.92 lakhs. Thus it is directed to be deleted.
Deduction of Education cess u/s 37 (1) - HELD THAT:- We find that this issue is squarely covered in favour of the assessee by the decision of Honourable Bombay high court in case of Sesa Goa Limited. [2020 (3) TMI 347 - BOMBAY HIGH COURT] and Honourable Rajasthan High court in case of Chambal fertilizers Limited [2018 (10) TMI 589 - RAJASTHAN HIGH COURT]. Therefore respectfully following the same, we direct the ld AO to allow assessee the deduction of cess u/s 37 (1) of the act. Accordingly, additional ground of appeal is allowed.
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2021 (11) TMI 259 - ITAT KOLKATA
Revision u/s 263 by CIT - Reopening of assessment u/s 147 initiated - eligibility of reason to believe - unexplained investments transactions-HELD THAT:- As established that during re-assessment proceedings u/s. 147 of the Act, the Ld. AO had done detailed enquiry and the assessee had duly explained that separate portfolios for trading and investments were maintained by the assessee. The transactions were carried out in separate D-mat accounts and shares were received in the separate d-mat account. Therefore, there was no question of any manipulation. After duly verifying the explanations of the assessee, the Ld. AO accepted/assessed the assessee's returned income. However, subsequently on the proposal of the Ld. AO, the Ld. PCIT, without applying his mind to the above factual position, exercised his revision jurisdiction u/s. 263 of the Act. The Ld. PCIT has not pointed out any discrepancy/error in the reply/explanation so submitted by the assessee during the reassessment proceedings, which was part of the assessment records.
PCIT has resorted to the revision proceedings u/s. 263 of the Act in a mechanical manner on the basis of the proposal of the Ld. AO. It has not been pointed out as to what error has been committed by the Ld. AO in accepting the explanation/evidences so furnished by the assessee in the process of verifying the nature of transactions. Even the CBDT's Circular cited by the Ld. PCIT in his order, in fact, comes to the support the assessee. As the assessee has duly explained that separate portfolios were maintained and trading and investments transactions were carried out in a separate d-mat accounts from the very beginning and that there was no bar for the assessee to carry out both the trading and investment activities.
The impugned order passed u/s.263 of the Act by the Ld. PCIT, in this case, is, therefore, not sustainable and the same is accordingly quashed. - Decided in favour of assessee.
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2021 (11) TMI 258 - ITAT AHMEDABAD
Revision u/s 263 by CIT - Reopening of assessment u/s 147 initiated by AO - escapement of capital gain arising from sale of an industrial plot - HELD THAT:- AO did not make any addition on the issue for which the assessment was reopened - meaning thereby the reassessment proceedings become final. The learned Commissioner cannot explore any other issue under Section 263 which even cannot be explored by the Assessing Officer in reassessment proceedings; because, on the original point on which assessment was reopened, no addition was made. The jurisdiction of the learned Commissioner is confined to the issues on which an assessment is reopened and examined by the AO.
The other issues can only be entertained if addition is being made on the issue for which the assessment was reopened. We can make it very clear that if the Assessing Officer has made any addition on account of Long Term Capital Gain earned by the assessee for transfer of industrial plot, then other points could also be examined. Similarly, learned Commissioner could also be found out a fault of the Assessing Officer qua the issue of transfer of industrial plot. If that aspect was considered by the learned Commissioner as erroneous and prejudicial to the interest of the Revenue; thereafter other aspects on the issue of share transactions would also be examined; but in the absence of any addition on the first point, no other issue can be entertained, even under revisional jurisdiction under Section 263 of the Act. We, therefore, allow this appeal and quash the impugned order passed under Section 263 of the Act. - Decided in favour of assessee.
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2021 (11) TMI 257 - ITAT AHMEDABAD
Reopening of assessment u/s 147 - addition of unexplained cash deposits in the AXIS Bank - as argued no addition remained on the issue for which assessment was reopened - difference between sale consideration taken by the assessee for computing long term capital gain vis-à-vis deemed sale consideration under section 50C of the Act calculated on the basis of amount on which stamp duty was paid - HELD THAT:- Unanimous approach of all the Hon'ble High Courts i.e. Hon'ble Bombay High Courts, Delhi High Court and jurisdictional High Court in construing the provision of section 147 is that expression "assess or reassess such income and also any other income chargeable to tax which has escaped assessment and which comes to his notice subsequently" has been used in section 147. The words "and also" employed in the section would contemplate that any such other issues come to the notice of the AO would be examined if an addition on the issue for which assessment has been reopened are made. In case no additions are made, then any other such issue will not be examined. In the present case, the ld. CIT(A) has deleted the addition for which assessment was reopened; meaning thereby, an addition on account of unexplained cash deposits in the AXIS Bank cannot be examined and cannot be added by the AO. Therefore, putting reliance upon the judgment of Hon'ble jurisdictional High Court in the case of Mohmed Juned Dadani [2013 (2) TMI 292 - GUJARAT HIGH COURT] we delete the addition made by the AO.
Penalty u/ 271(1)(c) - We have deleted the impugned addition, and therefore, no addition exists in the hands of the assessee so as to attract vigour of penal provision under section 271(1)(c) - Assessee appeal allowed.
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2021 (11) TMI 256 - ITAT AHMEDABAD
Ad-hoc disallowance being 25% of certain outstanding creditors - HELD THAT:- It was not supposed to maintain the books of accounts and other details. If it was not having those details, how these sundry creditors appearing in the books of accounts of the assessee become bogus? It is an irregularity, if any, at the end of the manpower supplier. The existence of the party is not in dispute. Where is the necessity to take work in this year? It can be an outstanding sundry creditor from the earlier years out of which partly paid in this year.
We failed to appreciate the logic given by the learned First Appellate Authority. One of the observations made by learned CIT(A) is that a credit entry of ₹ 3,00,000/- was shown in the bank statement of M/s. Globe Trade followed by transferring the same amount back to the assessee. But this aspect has not been further elaborated by reproducing the bank statement and why the learned CIT(A) has not issued a notice for enhancement of disallowance. Because, in that case, the whole amount should be considered as bogus and not 25% of that. To our mind, both the authorities have not appreciated the facts in right perspective and, therefore, no disallowance is called for. We, therefore, delete the disallowance and allow the appeal of the assessee.
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2021 (11) TMI 255 - ITAT AHMEDABAD
Disallowance u/s 43B - custom duty expenditure not claimed as expenses in the year of actual payment as appellant was entitled to receive special benefits as per Custom & Excise Rules but said special benefits were not received hence expenses were claimed as revenue expenditure in year under consideration - HELD THAT:- As assessee has paid custom duty which was allowable deduction of the assessee under Section 43B of the Act in the year of payment itself. However, the assessee was expecting certain special benefits as per Custom and Excise Rules; therefore, the assessee did not claim it in that year. Ultimately, those benefits were not given to the assessee and, in this year, he has written off the alleged customs duty receivable in the accounts and claimed it as revenue expenditure in the profit and loss account. We find that the learned First Appellate Authority has rightly adjudicated this issue after putting reliance upon the decision of the ITAT in the case of ACIT Vs. Rangoli Industries Pvt. Limited [2013 (1) TMI 968 - ITAT AHMEDABAD] and no interference is called for.
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