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Income Tax - Case Laws
Showing 421 to 440 of 508 Records
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2021 (11) TMI 212 - ITAT CHANDIGARH
Validity of the assessment framed u/s 147 - Proof of service of notice - addition made on account of cash found deposited in the bank account of the assessee - HELD THAT:- Notice u/s 148 of the Act served by Speed Post was returned back unserved, there is no evidence of service of notice by affixture and the notice server had only carried a letter addressed to the assessee which he had refused to take and no notice u/s 148 of the Act was served by the notice server.
There was no valid service of notice u/s 148 of the Act in the present case. The finding of the Ld.CIT(A) that the notices served through Speed Post and affixture were at the address as per PAN Database and, therefore, tantamounted to valid service, is of no assistance to the Revenue since admittedly the PAN Database also contains the residential address of the assessee and no attempt at all was made by the Revenue to service the notice at the residential address when the notice could not be served at the office address. The facts on record demonstrate that there was no valid service of notice in the present case on the assessee even at the PAN Database available.
Notice u/s 148 of the Act being a jurisdictional notice essential for assuming jurisdiction to frame assessment u/s 147 of the Act, in the absence of service of the same, the assessment framed, we hold, is without jurisdiction and, hence void abinitio. - Decided in favour of assessee.
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2021 (11) TMI 211 - ITAT CHANDIGARH
Levy of penalty u/s 271(1)(c) - Proof of concealment/furnishing of inaccurate particulars - employers contribution to ESI/PF disallowable u/s 43 B - HELD THAT:- Addition stood disclosed in the tax audit report, interest on TDS & income tax refund, and ESI /Income Tax penalty all stood duly disclosed by the assessee. It is just that while certain disallowances/additions, i.e. ESI & PF and Interest on refund & TDS and difference in interest receipts reflected in Form 26AS and that returned, were inadvertently missed to have been made by the assessee who surrendered the same when it was made aware during scrutiny assessment, the rest being minor penalty of ESI and interest on late payment of TDS, income tax and service tax penalty were contested as being compensatory and hence allowable but were subsequently offered for taxation.
Considering the huge losses, the additions and disallowances inviting the levy of penalty amounting in all to ₹ 5,59,803/-, are too immaterial and coupled to it is the fact that a major portion of it relating to ESI/PF disallowed u/s 43B of the Act of ₹ 4,79,986/- had stood disclosed in the tax audit report as disallowable but was inadvertently left out while computing the income for the year. The same is clearly not liable to any penalty being squarely covered by the decision in the case of Price Waterhouse Coopers [2012 (9) TMI 775 - SUPREME COURT]The remaining additions/disallowances of ₹ 79,817/- are pathetically immaterial and can be safely said to have been bonafidely mistakenly not disallowed/added back to the income of the assessee as claimed by it.
We hold that no penalty u/s 271(1)(c) of the Act was leviable on account of additions made as listed above in our order and the order of the Ld.CIT(A), therefore, upholding levy of penalty is set aside - Decided in favour of assessee.
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2021 (11) TMI 210 - ITAT SURAT
Denying for registration u/s 12AA - scope of objects and genuineness of the charitable and public activities carried out towards the objects of the trust by the appellant trust - HELD THAT:- As documents filed alongwith appeal memo is not in consonance with Income Tax Tribunal Rule, 1963. The assessee-trust was required to file document with separate list of documents with a certificate, certifying that these documents were furnished before the lower authorities. However, we instead of going into such technicality find that assessee was filed application under section 12AA and furnished required details with the said application. The assessee-trust again in response to show cause notice dated 03.05.2017 filed its reply on 11.05.2017. The reply of assessee is duly acknowledged by Ld. PCIT(E) in its order. We find that the assessee instead of filing detail explanatory submission relied on various documents furnished alongwith original application.
PCIT(E) rejected the application of assessee by taking view that assessee-trust failed to file documentary evidence about the genuineness of activities in consonance with object. Considering the fact that the assessee-trust has furnished almost or requisite detail vide reply dated 11.05.2017, the Ld. PCIT(E) instead of referring all those documentary evidence rejected the application of the assessee-trust. Therefore, considering the facts and circumstances, we deem it appropriate to set aside the impugned order of Ld. PCIT(E) and restore the mater back to the file of Ld. PCIT(E) for considering the application afresh - Appeal of assessee is allowed for statistical purpose.
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2021 (11) TMI 209 - ITAT INDORE
Addition u/s 68 - Unexplained share application money received - No proof regarding agricultural activities given - CIT-A deleted the addition - HELD THAT:- Assessing Officer merely doubted the investment made by the share applicants for the reason that they did not submit any proof regarding agricultural activities done by them. It is therefore quite evident that the Assessing Officer himself accepted the identity of the share applicants and genuineness of the transactions as entered into with them.
We are of the view that the assessee company satisfactorily discharged the primary onus as cast upon it under section 68 by establishing the identity and creditworthiness of the share applicants and genuineness of the transactions as entered into with them and therefore, addition made by the Assessing Officer on account of share application money received from remaining share applicants was neither legal nor proper and was rightly deleted by the Ld CIT(A). The action of the Ld CIT(A) is therefore, confirmed.- Decided in favour of assessee.
Disallowance of interest - addition made as assessee has not charged interest on loan and advance but paid interest to others - proof of sufficiency of own funds - HELD THAT:- CIT(A) was justified in deleting the addition because the interest bearing funds in possession of the assessee company were higher than the amount as advanced by it and most of the advances were carried forwards from the erstwhile firm where no interest bearing funds were used. See SA BUILDERS LTD. VERSUS COMMISSIONER OF INCOME-TAX [2006 (12) TMI 82 - SUPREME COURT], RELIANCE UTILITIES & POWER LTD. [2009 (1) TMI 4 - BOMBAY HIGH COURT] and HERO CYCLES (P.) LTD. [2015 (11) TMI 1314 - SUPREME COURT] - Decided in favour of assessee.
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2021 (11) TMI 208 - ITAT MUMBAI
Assessment u/s 153A - Whether any incriminating material found during the course of search? - statements recorded u/s.132(4) whether constitute incriminating material or not ? - HELD THAT:- DR could not produce any material to suggest that the assessment made u/s.153A for the year under consideration and the consequent additions were based on any seized material revealing undisclosed income of the assessee. He has simply relied upon the orders of the lower authorities and contended that the findings unearthed during the course of search constitute incriminating material for justifying the assessment u/s.153A of the Act. We are unable to appreciate the above argument since there is nothing even apparent to prove anything incriminating against the assessee except for statements of third parties alone.
We find merit in the contention of the Ld. Counsel that transactions duly recorded in the regular books of account do not constitute incriminating material. In the instant case, the advance and loan obtained from Gulmohar Towers Pvt. Ltd. & M/s.Rowland Trexim Pvt. Ltd. respectively have been duly recorded in the books of account based on which return of income was filed and the same can by no stretch of imagination be construed as incriminating material found during the course of search. In this regard, support is drawn to the decision of the Hon’ble Delhi High Court in the case of CIT v. RRJ Securities Ltd.[2015 (11) TMI 19 - DELHI HIGH COURT]
We once again reiterate that the scope and ambit of section 153A of the Act is to restrict to only incriminating material in case of unabated years. Since the assessment for the year under consideration is an unabated one which is undisputed and that we find no existence of any such incriminating material which is the pre-requisite to make assessment u/s.153A of the Act, the consequent additions made by the Revenue are without jurisdiction and will not survive - Decided against revenue.
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2021 (11) TMI 148 - KARNATAKA HIGH COURT
Reopening of assessment u/s 147 - notice u/s 142(1) came to be issued in the name of deceased person - Whether notice issued to the deceased assessee on 28.03.2018 within the time prescribed could save the reassessment order passed in the name of the legal representatives who are the petitioners herein? - HELD THAT:- In the present case while the notice at its inception to Kurkal Gopal Shetty who is dead is invalid insofar as any claim by the department as against the dead assessee should be only by issuance of notice to the legal representatives in terms of Section 159(2)(b) and except this procedure, there can be no other procedure envisaged. This would flow from the premise that any act which is required to be done in a particular manner must be done in that manner or not at all which is a settled legal proposition.
In the present case, it also ought to be noted that though notice was issued to the dead assessee, the contention that as there is no abatement, and proceedings must be permitted to be continued against the legal representatives, is an argument that is liable to be rejected as the question of continuation of proceedings of an assessment against the legal representatives is only in the scenario as contemplated under Section 159(2)(a) i.e., where the assessee is alive at the initiation of proceedings and has subsequently died. In the case on hand, the assessee having died on 11.11.2014, claims or proceedings, if any against the deceased assessee ought to be under Section 159(2)(b). As Section 159 does not permit of any ambiguity, any elasticity to the time period fixed under Section 149 and the manner of initiation of proceedings against the deceased assessee as provided under Section 159(2)(b) is impermissible.
Assessment proceedings initiated against Kurkal Gopal Shetty under Section 148 is sought to be continued and concluded as against the legal representatives not by way of any fresh notice to the legal representatives under Section 148 but by way of notice to furnish return under Section 142 which again relates to a subsequent stage of reassessment proceedings. The judgment in the case of Alamelu Veerappan [2018 (6) TMI 760 - MADRAS HIGH COURT] provides that notice issued to the legal representatives beyond the period of limitation prescribed is without jurisdiction and unenforceable in law. The judgment in the case of Rajendra Kumar Sehgal [2018 (12) TMI 697 - DELHI HIGH COURT] is also on the same lines.
The other circumstance that is required to be noticed is that the legal representatives in the present case were not issued with any notice regarding proceedings under Section 148 and it is only under Section 142 notice was issued to the legal representatives which fact is also taken note of while refusing to reserve liberty to the authority by remanding the matter to the Assessing Authority to initiate proceedings. It must also be noted that exercise of power under Article 226 is not made out in the present case as granting of any relief would be contrary to the statutory period available to initiate proceedings against the legal representatives in terms of Section 159(2)(b) read with Section 149(1)(b) as discussed above.
The position of law regarding invalidity of the notice vitiating the proceedings pursuant thereto being settled as noticed from the judgment in the case of Kurban Hussain [1971 (9) TMI 9 - SUPREME COURT] and in light of the discussions made above and in the absence of any notice under Section 148 in terms of Section 149(1)(b) of the Act, the assessment order passed in the names of the petitioners enclosed at Annexure-E for the assessment year 2011-12 passed under Section 144 read with Section 147 of the Act is set aside. - Decided in favour of assessee.
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2021 (11) TMI 147 - ITAT DELHI
Penalty u/s 271(1)(c) - Defective notice - non specification of charge - HELD THAT:- From the notice produced by the Ld. AR during the hearing, it can be seen that the Assessing Officer was not sure under which limb of provisions of Section 271 of the Income Tax Act, 1961, the assessee is liable for penalty. Besides that the Assessment Order also did not specify the charge as to whether there is concealment of income or furnishing of inaccurate particulars of income in assessee’s case. Thus, there is no particular limb mentioned in the notice issued under Section 271(1)(c) r.w.s. 274 of the Act. This issue is squarely covered by the decision of the Hon’ble Supreme Court in case of M/s SSA’ Emerald Meadow. [2016 (8) TMI 1145 - SC ORDER]
Since in the instant case the inappropriate words in the penalty notice has not been struck off and the notice does not specify as to under which limb of the provisions, the penalty u/s 271(1)(c) has been initiated, therefore, we are of the considered opinion that the penalty levied u/s 271(1)(c) is not sustainable and has to be deleted. - Decided in favour of assessee.
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2021 (11) TMI 146 - ITAT BANGALORE
Disallowance of depreciation on goodwill - whether the payment made over and above the net asset value, while acquiring a business concern, shall constitute good will or not? - HELD THAT:- As discussed in the preceding paragraph about the observation made by Chennai bench in the above said case in respect of the decision rendered in the case of Toyo Engineering India P Ltd [2012 (7) TMI 686 - ITAT, MUMBAI] i.e., the assets acquired by the above said assessee predominantly consisted of huge land and building. In the instant case, we notice that no land/building has been purchased and hence the facts prevailing in the Toyo Engineering India Pvt. Ltd were different from the facts of the present case. Accordingly, we are of the view that the decision rendered in the case of Toyo Engineering India Pvt. Ltd. will not apply to the facts of the present case. Accordingly, following the decision rendered by Hon’ble Delhi High Court in the case of Truine Energy Services Pvt. Ltd. [2015 (11) TMI 1218 - DELHI HIGH COURT], we hold that the amount paid in excess of the net asset value for acquiring a business concern shall constitute goodwill.
Applicability of proviso to sec.32 (1) - It is not the case of the revenue that this transaction is between two related parties. Hence this purchase would not fall under the categories of succession, amalgamation and demerger. We have noticed that the tax authorities have observed that the spirit of the above said provisions should be applied to the present case. We are unable to agree. It is well settled proposition of law that the Income tax provisions should be construed strictly. Hence the scope of the above said proviso cannot be extended to the transaction of purchases between two unrelated parties.
Eligibility of the assessee to claim depreciation on Goodwill cannot be decided unless the above said factual aspects are clarified. We have held, following the decision rendered in Truine Energy Services Pvt. Ltd. [2015 (11) TMI 1218 - DELHI HIGH COURT], that the excess amount paid over and above the net asset value on acquiring a business concern shall constitute goodwill. However, the said legal principle can be applied only if the facts relating to the case are clear. We have noticed that the facts are not clear in the instant case. Accordingly, in the interest of natural justice, we are of the view that the assessee should be provided with an opportunity to present the relevant facts. Accordingly, we set aside the order passed by Ld. CIT(A) on this issue and restore the same to the file of the A.O. for examining afresh in the light of observations made (supra). After considering the information and explanations furnished by the assessee and also after affording adequate opportunity of being heard, the A.O. may take appropriate decision in accordance with law.
Disallowance of interest paid u/s 201(1A) - assessee had paid interest u/s 201(1A) for the delay in payment of TDS - assessee claimed the same as deduction. The AO disallowed the above said claim and the Ld CIT(A) also confirmed the same - HELD THAT:- Identical issue has been considered by Delhi bench of Tribunal in the case of New Modern Bazaar [2021 (4) TMI 395 - ITAT DELHI] and it was decided against the assessee
Disallowance of interest on bank overdraft u/s 40(a)(ia) - HELD THAT:- Admittedly, the interest paid on bank loans is not liable to TDS deduction and hence disallowance u/s 40(a)(ia) is not called for. However, we notice that the Ld CIT(A) has confirmed the disallowance only for want of evidence. Accordingly, in the interest of natural justice, we are of the view that the assessee should be provided with an opportunity to produce evidences in support of its claim. Accordingly, we set aside the order passed by Ld CIT(A) on this issue and restore the same to the file of AO for examining it with the evidences that may be furnished by the assessee. After hearing the assessee, the AO may take appropriate decision in accordance with law.
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2021 (11) TMI 145 - ITAT MUMBAI
Addition u/s 68 - addition on account of unsecured loan - HELD THAT:- As decided in assessee's own case [2021 (7) TMI 1120 - ITAT MUMBAI] AO has never disputed these factual aspects. Therefore, once the assessee has discharged its initial burden by filing necessary evidences in order to prove identity, genuineness of transactions and creditworthiness of the parties, then there is no reason for AO to suspect the transactions between the parties only on the ground that the person who gave unsecured loan had admitted in his statement u/s 132(4) of the Act that these transactions are accommodation entries, more particularly when the person who gave the statement retracted his statement by filing affidavit.
AO failed to carry out further enquiries in light of evidences gathered during the course of search and survey to establish the fact that in fact these transactions are non-genuine, but merely relied upon the statement of Shri Bhanwarlal Jain to make additions u/s 68 of the Act No doubt, the AO is having every right to suspect the transactions but, that by itself would not give rise an occasion for the AO to make additions u/s 68 of the Act, when the evidences filed by the assessee clearly proves the facts that these transactions were genuine transactions which are undertaken under normal commercial business circumstances. Therefore, we are of the considered view that the AO was erred in making additions towards unsecured loan taken from companies controlled and managed u/s 68 - Decided in favour of assessee.
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2021 (11) TMI 144 - ITAT AHMEDABAD
Residence in India - Residential status - Status of the assessee as “Resident” of India - calculation of days of stay in India - inclusion of date of arrival in counting the days of stay in India - HELD THAT:- As already held by different benches that while counting days of stay in India for considering the status of “Resident” the days of arrival has to be excluded, the Ld. CIT(A) while counting days of stay in India purportedly counted the date of arrival of the assessee in India without giving any cogent reason thereon which in our considered opinion having no basis.
No reason to deviate from the ratio laid down in case of MANOJ KUMAR REDDY [2009 (4) TMI 551 - ITAT BANGALORE] and relying upon the identical facts in the case in hand we exclude the date of arrival in counting the days of stay in India in the case of the assessee.
The assessee stayed in India during the year under consideration for less than 182 days and finally cannot be considered as the resident of India in the year under consideration. In that view of the matter the impugned assessment made against the assessee considering him as the resident of India is not sustainable in the eye of law and thus deleted. - Decided in favour of assessee.
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2021 (11) TMI 143 - ITAT CHANDIGARH
Exchange Fluctuation gain on the GDR - Nature of receipt - revenue or capital gain - real income theory - HELD THAT:- Even if the assesse had treated one receipt as an income and in real situation the said receipt was not an income, it was the duty of the A.O. being a quasi judicial authority to tax the real income and not what had been offered by the assessee.
Whether the exchange rate fluctuation gain was a revenue receipt or the capital receipt in the hands of the assessee? - Assessee company issued the GDRs with the objectives to finance ongoing expansion of capital investment, it was a onetime activity and it was not the intention of the assessee to park the money abroad solely with the aim of gaining out of such funds and it was also not the intention of the assessee to keep money in foreign banks and that its liquidity position was bad as alleged by the A.O. In the present case, we have earlier mentioned in the former part of this order that no documentary evidence was placed on record by the Department which substantiate that the assessee company was facing any liquidity crunch during the period under consideration.
As assessee raised money through GDR’s and issued the equity share capital which was treated to be a share capital, therefore the gains on account of foreign exchange fluctuation on such share capital collected in foreign exchange was only the capital receipt - A.O. had not disputed the fact that the money was raised by the assessee by way of GDRs against capital equity therefore the exchange gain which had arisen on account of holding the GDR proceeds, was capital in nature and not liable to tax - Decided in favour of assessee.
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2021 (11) TMI 142 - ITAT MUMBAI
Estimation of business profits of sale of land - profits from construction activities - Conversion of land into stock-in-trade - recognized method of accounting - HELD THAT:- Assessee converted its land into stock-in-trade and thus computed the capital gains as provided in Sec. 45(2) of the Act. The land stood converted into stock-in-trade and the assessee constructed premises / buildings on this land. During the year, the assessee entered into agreement for sale of these premises. For the purpose of revenue recognition, the assessee followed percentage completion of method of accounting. Since project was completed to the extent of 11% during the year as certified by the Architect, the assessee recognized projected revenues to that extent in its books of accounts. The said method was recognized method of accounting as per Accounting Standards issued by ICAI and this method was consistently followed in subsequent years to recognize the revenue. This method was accepted in earlier years also. Therefore, Ld. AO, in our considered opinion, was not justified in rejecting the methodology adopted by the assessee and estimating the business profits on sale of land as well as profits from construction activities separately since the land merged into the stock-in-trade and the premises including the undivided share in the land was sold to various buyers during the year.
The perusal of chart placed before us would show that finally, the project has been completed in AY 2010-11 and revenue has been recognized from AYs 2005-06 to 2010-11 based on percentage of completion method of accounting. Therefore, finding no infirmity in the impugned order on this issue, we dismiss ground no.1 of revenue’s appeal.
LTCG on conversion of land into stock-in-trade - computation of LTCG on conversion of land into stock-in-trade - FMV as on 01/04/1981 as well as FMV on 24/12/2003 i.e. the date of conversion - HELD THAT:- Viewed from any angle, the substitution of FMV as on 01/04/1981 by Ld.AO cannot be held to be in accordance with law. Therefore, finding no infirmity in the impugned order, in this respect, we dismiss ground no.2 of revenue’s appeal.
Disallowance of Professional fees - HELD THAT:- We find that the assessee has furnished name of payees, nature of expenses and the amount paid to each of them - No defect has been pointed out in these details. The expenses are in the nature of certification work, management consultancy, fees for appearance before Tax Authorities, company secretarial work and these expenses are incurred for business purposes of the assessee. Therefore, no fault could be found in the impugned order deleting the estimated disallowance as made by Ld.AO.
Deferred revenue expenditure u/s 35DDA - assessee disallowed VRS expenses amortized in books for ₹ 1143.92 Lacs but claimed VRS expenses of ₹ 1866.34 Lacs u/s 35DDA - HELD THAT:- Provisions of Sec.35DDA entitle the assessee to amortize the expenses incurred on voluntary retirement scheme and allow 1/5th of such expenditure starting from the year in which the expenditure has been incurred by the assessee. The perusal of computation of income would show that VRS expenditure has been incurred by the assessee during FYs 2000-01 to 2003-04 and the same are claimed as per the mandate of Sec.35DDA. The same has been claimed to the extent of 1/5th of expenditure incurred in earlier years. The deduction of the same has been allowed to the assessee in past assessments. Therefore, there could be no occasion to disallow the same in this year. Hence, the disallowance of ₹ 1866.34 Lacs has rightly been deleted in the impugned order.
So far as the balance expenditure of ₹ 558.65 Lacs is concerned, the perusal of above table would show that majority of these payments are in the nature of wages, ex-gratia payment, leave encashment, gratuity, VRS expenses etc. paid by the assessee. Upon perusal of the same, it could be seen that these are normal business liability of the assessee paid during normal conduct of the business. Therefore, these are incurred wholly and exclusively for the purpose of business and thus qualify for deduction u/s 37(1). This being so, we confirm the stand of Ld. CIT(A) in deleting the same.
Computation of Capital Losses - HELD THAT:- As rightly observed by Ld. CIT(A), merely on the basis of intention, a valid claim made within the four corner of the Act, could not be disallowed unless established to the contrary. AO has not conducted any independent enquiry to prove that the above mentioned claims of capital losses were not bona-fide or lacked credentials. Concurring with the same, we would hold that the allegations of Ld. AO and conclusion drawn there-from has no legs to stand.
We also concur that the statutory provisions do not empower Ld. AO to substitute actual consideration received by the assessee with hypothetical sale consideration. The consideration which never accrued or which was never received by the assessee could not be brought to tax as capital gains or business income - similar allegations were leveled by Ld. AO in assessment order for AY 2004-05 and few of these allegations have merely been reproduced in the assessment of this year. However, all such allegations as well as disallowances as made in AY 2004-05 stood settled in assessee’s favor by the cited decision of Tribunal for AY 2004-05. We find no reason to deviate from the same.
Disallowance of various expenses - disallowance of various expenses, viz. Power and Fuel, Deferred Revenue Expenses, Rent, rates and taxes, Miscellaneous Expenses - CIT-A restricted addition to 25% as against ad-hoc disallowance made by the AO of 75% - HELD THAT:- As rightly observed by Ld. CIT(A), merely on the basis of intention, a valid claim made within the four corner of the Act, could not be disallowed unless established to the contrary. The Ld. AO has not conducted any independent enquiry to prove that the above mentioned claims of capital losses were not bona-fide or lacked credentials. Concurring with the same, we would hold that the allegations of Ld. AO and conclusion drawn there-from has no legs to stand.
We also concur that the statutory provisions do not empower Ld. AO to substitute actual consideration received by the assessee with hypothetical sale consideration. The consideration which never accrued or which was never received by the assessee could not be brought to tax as capital gains or business income.
It could further be seen that similar allegations were leveled by Ld. AO in assessment order for AY 2004-05 and few of these allegations have merely been reproduced in the assessment of this year. However, all such allegations as well as disallowances as made in AY 2004-05 stood settled in assessee’s favor by the cited decision of Tribunal for AY 2004-05. We find no reason to deviate from the same.
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2021 (11) TMI 141 - ITAT BANGALORE
Allowability of business expenditure - Disallowance of amount expended towards Corporate Social Responsibility - HELD THAT:- Assessee has incurred the expenditure at the behest of the Deputy Commissioner, Bellary which was necessary to be incurred for the purposes of business, in public interest. Respectfully following the aforesaid view, we direct the Ld.AO to delete the disallowance.Decided against revenue.
Disallowance of deduction by Central Empower Committee (CEC) towards Reclamation and Rehabilitation expenses - HELD THAT:- As relying on M/S VEERABHADRAPPA SANGAPPA & CO. [2020 (12) TMI 1145 - ITAT BANGALORE] we direct the Ld.AO to allow the same as business expenditure for year under consideration.Decided against revenue.
Disallowance of the legal fees incurred by assessee to protect and defend the claim made against the assessee by third parties - HELD THAT:- As relying on SHRI B. KUMARA GOWDA AND VICE-VERSA [2014 (8) TMI 1112 - ITAT BANGALORE]assessee concerned was resisting a suit for protecting its business and not with a view get a new lease. Hon'ble Apex Court in the case of Sree Meenakshi Mill Ltd., has clearly held that taxability of expenditure must depend on the purpose of the legal proceeding, in relation to the business and cannot be computed by the final outcome of the proceedings. We are therefore, of the opinion that the CIT(A) was justified in holding that legal expenses incurred by assessee for litigation deserves to be deleted. - Decided against revenue.
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2021 (11) TMI 140 - ITAT PUNE
Disallowance of expenditure u/s. 40(a)(i) of the Act on Employees Secondment charges and Reimbursement of expenses - HELD THAT:- Obsolescence in the inventory was qua the value of stock as on 31-03-2013 and the assessee incorporated the effect of such reduction in the value of inventory by giving an appropriate note as an "extraordinary event". The reduction has the effect of representing the condition of stock existing as on 31-03-2013 at its realizable value.
It is a case of the existing condition of diminution in the value of inventory as on 31-03-2013. As the exercise of valuing the obsolescence in stock took place after close of the year but before the signing of the balance sheet on 28.5.2013, the assessee depicted it as an extraordinary item by way of a note to accounts and reduced the value of closing stock accordingly - the obsolescence affects the value of inventory as on 31-03-2013, the same was required to be taken into consideration for reflecting true and fair state of affairs of the company as on the balance sheet date - direction of the DRP that the loss should be written off in the F.Y. 2013-14 on the raison d'etre that it was quantified after 31-03-2013, cannot be countenanced. The relevant factor to be considered is the date with reference to which the value of stock is determined and not the date when the exercise of such value determination is carried out. Had it been a case of the assessee valuing its inventory on any date after 31-03-2013 but giving effect in the balance sheet as on 31.3.2013, that would have warranted addition. we are confronted with a situation in which depletion has taken place with reference to the value of inventory on 31-03-2013. We, therefore, hold that the AO was not justified in making addition - Decided in favour of assessee.
TP Adjustment - Addition of Corporate Guarantee - HELD THAT:- As the assessee own case [2021 (3) TMI 1162 - ITAT PUNE]Tribunal determined the Arm's Length fee from furnishing of the corporate guarantee at 0.5% as further increased by any expenditure actually incurred by the assessee in furnishing the guarantee. The ld. DR was fair enough to concede the position in this regard. Having regard to the rival but common submissions and respectfully following the order of the Tribunal for the immediately succeeding assessment year, we set aside the impugned order on this score and remit the matter to the file of AO/TPO for recomputing the ALP of the transaction. In doing so, he will first ascertain the amount of expenditure actually incurred by the assessee in furnishing the five corporate guarantees and thereafter add 0.5% as the service fee for furnishing the guarantee. Needless to say, the assessee will be allowed a reasonable opportunity of hearing in this regard.
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2021 (11) TMI 139 - ITAT HYDERABAD
Disallowance of miscellaneous expenditure - nature of expenditure location and scale of operations - CIT-A sustaining half (50%) of the ad hoc disallowance of 25% made in respect of miscellaneous expenditure - HELD THAT:- When both the parties have failed to justify their respective stands in entirety, we deem it appropriate that a lumpsum estimated disallowance of 8% only than that in issue @25% would be just and proper. We order accordingly. The assessee succeeds in part in its instant identical former substantive ground in all these years involving varying sums subject to a rider that it shall not be treated as a precedent in any other case. Necessary computation shall follow as per law.
Nature of expenditure - Expenditure on rail tracks and conveyor belt systems - revenue or capital expenditure - HELD THAT:- Assessee's case records as well as photographs of the corresponding rail tracks and conveyor belt systems and submits that both the lower authorities have erred in law and on facts in treating the assessee's revenue expenditure items as capital in nature despite the fact that the same were meant to be kept abandoned at sites for the use of the owner of the business only than that incurred for deriving enduring benefits in its own hands. We are also taken to the necessary factual position emanating from the relevant photographs.
DR fails to dispute that the foregoing clinching facts have nowhere been considered either in the course of assessment as well as in the CIT(A)'s detailed discussion extracted in preceding paragraphs. We therefore deem it appropriate to restore the assessee's instant latter identical issue in all the four instant appeals back to the Assessing Officer for his afresh factual verification as per law within three effective opportunities of hearing subject to the condition that it shall be the burden of the taxpayer only to place on record all the relevant facts; at its own risk and responsibility.
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2021 (11) TMI 138 - ITAT KOLKATA
Deduction of educational Cess (including Secondary & Higher Education Cess) - Admission of additional ground -.DR opposing the additional ground of appeal of the assessee contended that the assessee has not claimed deduction of Cess before the AO and therefore, should not be allowed - HELD THAT:- Hon'ble Bombay High Court in the case of M/s. Sesa Goa Ltd. [2020 (3) TMI 347 - BOMBAY HIGH COURT].and Chambal Fertilizers & Chemicals Ltd. [2018 (10) TMI 589 - RAJASTHAN HIGH COURT] have held that educational Cess is an allowable expense. Thus we allow this additional ground of appeal and direct the AO to allow deduction of educational Cess (including Secondary & Higher Education Cess) in the revised computation of income.
Addition of provision made for leave encashment in the current assessment year on the basis of actuarial valuation - HELD THAT:- Hon'ble Supreme Court has decided this issue against the assessee in the case of UOI Vs. Exide Industries Ltd .[2020 (4) TMI 792 - SUPREME COURT].we are inclined to uphold the order of the Ld. CIT(A) and dismiss this ground of appeal of the assessee.
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2021 (11) TMI 137 - ITAT KOLKATA
Addition u/s 68 - Unexplained loan received from 11 parties - HELD THAT:- As assessee has old running accounts with the aforesaid parties - alleged report of the inspector in respect of the three parties was never confronted to the assessee. The assessee was never asked to produce any other information by the Ld. AO before arriving at the conclusions. The statement recorded of some persons/parties relied on by the Ld. AO was never confronted to the assessee. Even the alleged statements recorded in some other cases were allegedly recorded in the year 2014, whereas, the assessee had taken loan in the FY 2015-16 from the said parties, hence, the alleged statement relied upon by the Ld. AO was prior to the said loan transactions - persons on whose statement has been relied upon by the Ld. AO were neither operating nor controlling the said concerns at the time of the transactions done by the assessee. The Ld. Counsel in this respect has also relied upon the balance sheets and submitted that the creditors had sufficient net worth to advance loans to the assessee - CIT(A) considering the entire facts and circumstances of the case has rightly deleted the addition so made by the ld. AO. Having gone through the impugned order of the ld. CIT(A) and considering the submissions of the ld. Counsel of the assessee, which the ld. DR could not rebut, we do not find any justification to interfere in the order of the ld. CIT(A) on this issue, the same is accordingly upheld. This ground of revenue’s appeal is dismissed.
Delayed payment of interest on service tax and TDS holding the same as penal in nature - CIT-A deleted the addition - HELD THAT:- We find that the ld. CIT(A) has relied upon the decision of the Hon’ble Apex Court in the case of Lachmandas Mathura [1997 (12) TMI 16 - SUPREME COURT] and further on the decision of Tribunal in the case of DCIT vs. Narayani Ispat Pvt. Ltd [2017 (10) TMI 67 - ITAT KOLKATA] wherein it has been held that the delayed payment of interest on service tax was compensatory in nature and the same was an allowable deduction. The Ld. DR could not point out any infirmity in the above observations of the ld. CIT(A). The order of the ld. CIT(A) on this issue is accordingly upheld. This ground of revenue’ s appeal is dismissed.
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2021 (11) TMI 136 - ITAT DELHI
Taxability of interest received on enhanced compensation paid by the State of Uttar Pradesh for compulsorily acquiring of the agricultural land of the assessee - interest on the enhanced compensation paid by the NOIDA on which TDS u/s.194A has been duly deducted - AO allowed 50% of the interest received on the enhanced compensation and taxed an amount - whether the interest on enhanced compensation partake the character of compensation or interest? - HELD THAT:- As decided in case of Inderjit Singh Sodhi (HUF) [2020 (6) TMI 697 - ITAT DELHI] interest received by the assessee during the impugned year on the compulsory acquisition of its land u/s 28 of the Land Acquisition Act, is in the nature of compensation and not interest which is taxable under the head income from other sources u/s 56 of the Act as held by the authorities below. The compensation being exempt u/s 10(37) of the Act is not disputed. In view of the same the order passed by the CIT(Appeals) upholding the addition made by the AO on account of interest on enhanced compensation is, not sustainable.
Further the issue under consideration regarding the taxability of interest on enhanced compensation is a debatable issue and do not constitute a mistake apparent on record. In view of the limited and restricted powers of rectification u/s 154 or u/s 254 as the case may be, it cannot be said that any mistake apparent on record had occurred in the order of the Tribunal. In view of the above discussion, these appeals of the assessee are hereby allowed.
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2021 (11) TMI 135 - ITAT KOLKATA
Penalty u/s 271(1)(c) - non specific mention in the show-cause notice issued u/s 274 - whether the assessee is guilty of having "furnished inaccurate particulars of income" or of having "concealed particulars of such income", the initiation of penalty proceedings itself was bad in law - HELD THAT:- Whether the assessee is guilty of having "furnished inaccurate particulars of income" or of having "concealed particulars of such income", the initiation of penalty proceedings itself was bad in law and the penalty order passed in pursuance thereof is liable to be quashed being invalid. He has invited our attention to the relevant penalty notice to point out that the irrelevant portion, viz. "furnished inaccurate particulars of income" or "concealed particulars of such income" was not struck off by the AO. It is observed that the Coordinate Bench of this Tribunal in the case of Suvaprasanna Bhattacharya [2015 (12) TMI 43 - ITAT KOLKATA] had an occasion to consider a similar issue in the identical fact situation and the order passed by the AO imposing penalty u/s 271(1)(c) was held to be invalid by the Tribunal relying on the decision of the Hon'ble Karnataka High Court in the case of CIT & Another -vs.-Manjunatha Cotton & Ginning Factory [2013 (7) TMI 620 - KARNATAKA HIGH COURT] In our opinion, the decision of the Coordinate Bench of this Tribunal rendered in the case of Suvaprasanna Bhattacharya [2015 (12) TMI 43 - ITAT KOLKATA] by relying on the decision of the Hon'ble Karnataka High Court in the case of CIT & Another -vs.-Manjunatha Cotton & Ginning Factory [2013 (7) TMI 620 - KARNATAKA HIGH COURT] is squarely applicable in the present case.- Decided in favour of assessee.
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2021 (11) TMI 134 - ITAT RAIPUR
Assessment u/s 153A - Addition u/s 68 - Unexplained receipt of share application/share capital - HELD THAT:- Additions/disallowances made by the AO are clearly beyond the scope of authority vested under s.153A of the Act without discharging the burden to show presence of any incriminating material or evidence deduced as a result of search in so far as completed assessments are concerned. Additions made in assessments framed under s.153A of the Act in respect of captioned assessee pertaining to AYs. 2006-07 & 2009-10 are thus required to be struck down on this score itself. However, the assessments/re- assessments pending on the date of search i.e. AY 2010-11 & AY 2011-12 in question which stood abated by operation of law will continue to be governed by ordinary powers of assessment under s.153A of the Act in accordance with law.
Addition u/s 68 - The money has been taken from a group co. of a very sound financial standing, which was also returned without subscription. In contrast, the AO has failed to bring any positive evidence against the assessee for assailing the bonafides of share application money received from a sister concern holding a very high net worth.
A reference was also made to PCIT vs. Himachal Fibers Ltd [2018 (8) TMI 873 - SC ORDER] to submit that where the identity of share applicant was fully revealed and the AO did not conduct any enquiry thereon, he was not justified in resting his conclusions on surmises. It is thus the case of assessee that the Revenue is neither justified on facts nor on the touchstone of law to embark upon the impugned additions under s.68.
After a detailed and objective scrutiny of factual & legal position, the CIT(A) has set aside and reversed the additions carried out without showing any iota of incriminating material to support the allegation of accommodation entries in the abated as well as unabated search assessments. The share application money was found to be returned. The action of CIT(A) is in consonance with the binding precedent 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. 2006-07; 2009-10; 2010-11 & 2011-12 in question. Decided in favour of assessee.
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