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Income Tax - Case Laws
Showing 201 to 220 of 787 Records
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2022 (11) TMI 1137 - DELHI HIGH COURT
Reopening of assessment u/s 147 - Accommodation entries received - HELD THAT:- The Petitioner has not brought on record any relevant or contemporaneous documents evidencing the said purchase, i.e. bank statement etc., placed on record in this petition. As regards the disclosure, if any, of the purchase of the shares, in its earlier ROI, it was clarified by the learned counsel for the Petitioner that since the shares were bought in the same financial year, it is only the transaction with respect to sale of shares which is reported in the ROI. Thus, it is only the sale of shares which is documented by the Assessee in its ROI.
SCN and impugned order states that the entity Mridul Securities is involved in providing accommodation entries and the Assessee is the beneficiary of the specified alleged transaction, in respect whereof, information has been received by the AO and the said transaction is not disputed by the Petitioner.
In light of the information which forms the basis of the initiation of the inquiry and in view of the fact the petitioner has not placed on record documents to establish genuineness of the transactions with Mridul Securities, we do not find any case for interfering in the writ proceedings. This Court finds that the Petitioner has not brought on record anything to suggest that the reassessment proceedings are being undertaken in an arbitrary manner.
With respect to the contention raised on the issue of limitation and the arguments of learned counsel for the Petitioner that the notice has been issued beyond limitation has already been rejected by this Court in Touchstone case [2022 (9) TMI 892 - DELHI HIGH COURT]
in the present case, the response of the Petitioner has been considered before passing the impugned order under Section 148A(d) of the Act by the AO. There is another curious fact that Anu Gupta, who is related to the present petitioner has also transacted for the identical shares in the same AY for the same account.
Supreme Court in Commissioner of Income Tax v. Chabildas and Anr. [2013 (8) TMI 458 - SUPREME COURT] has held that as the Act of 1961 provides an able machinery for assessment/reassessment of tax, the Assessee is not permitted to abandon with the machinery and invoke writ jurisdiction of the High Court under Article 226 of the Constitution of India.
This Court is of the view that the present case do not fall under the exceptional ground on which a writ jurisdiction of the High Court can be invoked.
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2022 (11) TMI 1136 - ITAT KOLKATA
Revision u/s 263 - penny stock transactions - short term capital loss alleging the same to be from purchase and sale of following six penny stock companies - as per CIT AO has not carried out any examination nor has conducted any enquiry relevant to the said transactions giving rise to the short term capital loss - AO examined the transactions or not? - HELD THAT:- Assessee’s case was selected for scrutiny for three reasons of which one was “Suspicious sale transaction in shares and exempt long terms capital gains shown in return (penny stock tab in ITS)”. Now referring to the notice issued 142(1) placed it is noticed that certain details were called for to which the assessee filed replies. Except for the reply given on 03/03/2017, wherein it is stated by the assessee that complete details of short term capital loss of shares scrip-wise as well as mutual fund and date-wise have been filed in the record and the assessee company has no dealing in any shares in short term capital gain or long term capital gain which are suspicious. Apart from this, there is no other detail filed by the assessee company. Also there is no enquiry specifically raised by the assessee company about the alleged penny stock companies nor there is any discussion in the body of the assessment order.
One of the reasons for selection of scrutiny was suspicious transaction of dealing in penny stock companies by the assessee. Various details are available on the income tax portal for the assistance of the Assessing Officer for examining the dubious and sham transactions. Neither any effort seems to have been made by the Assessing Officer to call for the relevant details of all these so called penny stock company which have been dealt in by the assessee company nor any financial details of these companies have been called for nor has any discussion been made. Had there been any information called for by the Assessing Officer in the note sheet, the same would have been made available on record and in the absence of the same, it is presumed that no enquiry was conducted by the AO on this issue.
If the assessee’s case is selected for scrutiny for specific reasons, then the Assessing Officer has to put in extra efforts and make deeper enquiry on such reasons and merely taking submission by the assessee will not serve the purpose AO miserably failed to carry out any enquiry specifically referring to the transactions of short term capital loss from sale of equity shares of alleged penny stock companies referred above and to this extent, we fail to find any merit in the contention of assessee.
No prejudice caused to the revenue, even if the short term capital loss is added back to the income of the assessee - No merit for the reason that carrying out the enquiry with relation to the transactions of short term capital loss will not end up only with regard to the said claim of AO during the course of examination of the sale consideration, purchases and sale, the parties who have sold such shares to the assessee may come across many other information which may be directly related to the assessee or may provide some credible information which the revenue authorities may use in case of other assessee’s which can further help in collecting tax from other assessee’s also. In our humble understanding, if the case is selected for scrutiny for specific reasons, then while framing the assessment order, AO needs to discuss those particular reasons and should summarize the details called with regard to the issue, the information provided by the assessee and its final finding as to whether any addition is required to be made or not.
In the instant case, there were three specific reasons for which the scrutiny was carried out but there is not a whisper by the AO in the assessment order about any of the issues even the one relating to suspicious transactions in penny stock companies.
We find merit in the order of the ld. Pr. CIT passed u/s 263 of the Act and dismiss all the grounds raised in this appeal of the assessee.
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2022 (11) TMI 1135 - ITAT SURAT
Penalty u/s 271(1)(c) - concealment of income or furnishing of inaccurate particulars of income - Disallowance of deduction u/s 80P - AO disallowed the interest by taking a view that as per provisions of Section 80P(2), the interest income earned from cooperative society is not eligible for deduction - HELD THAT:- We find that the AO while passing the assessment order, made disallowance of deduction under section 80P(2) and also added interest income earned from nationalised banks. Interest income earned from nationalised banks was not disclosed by the assessee in its return of income. Assessee could not substantiate the fact that the interest income was offered for taxation in the computation of income.
Thus, it was a clear case of concealment of particulars of income, thus, the penalty qua such interest income of Rs. 524,223/- is upheld. So far as the other addition/disallowance Assessee has disclosed such interest income in return of income and addition was made due to change of opinion. Thus, there was no concealment on the part of Assessing Officer in claiming such deduction. Thus, the penalty qua such addition is deleted. This appeal of assessee is partly allowed.
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2022 (11) TMI 1134 - ITAT RAIPUR
Reopening of assessment u/s 147 - reason to believe - change of opinion - Deduction of interest expenditure u/s. 57 - Deduction as claimed to have been borne exclusively for earning of interest income on the investment with a partnership firm in which the assessee as a partner was in receipt of interest income @12% - HELD THAT:- AO while framing the original assessment had found the assessee’s claim for deduction of interest expenditure u/s 57 in order, and had not drawn any adverse inferences as regards the same - On the basis of the aforesaid facts, of the considered view that reopening of the concluded assessment of the assessee which was earlier framed by the A.O u/s.143(3) on the basis of a change of opinion can by no means be held to be justified. The aforesaid view is fortified by the judgment in the case of CIT Vs. Kelvinator of India [2002 (4) TMI 37 - DELHI HIGH COURT]
We concur with the claim of the AR that the A.O had exceeded his jurisdiction and reopened the concluded assessment in the case of the assessee merely on the basis of “change of opinion” u/s.147 of the Act, which is not permissible in the eyes of law.
A.O had exceeded his jurisdiction and reopened the concluded assessment in the case of the assessee merely on the basis of “change of opinion” u/s.147 which is not permissible in the eyes of law. Thus, on the basis of my aforesaid observations quash the reassessment framed by the A.O vide order passed u/s.144 r.w.s. 147 for want of valid assumption of jurisdiction on his part. Appeal of the assessee is allowed.
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2022 (11) TMI 1133 - ITAT NAGPUR
Validity of section 148/147 proceedings - Addition u/s 41(1) cessation of liability by way of waiver of loan amount and short term capital gains - HELD THAT:- We find no merit in the Revenue’s instant arguments once there is no finding of fact at all; either recorded by the AO or CIT(A), that any of the assessee’s expenditure or liabilities claimed as revenue items in earlier assessment years, have undergone cessation or remission as the case may be, in the relevant previous year. We, thus, reject Revenue’s contentions both on validity of reopening as well as on merits so far as this first and foremost issue of section 41(1) addition is concerned.
The factual position would hardly be any different regarding the later issue of alleged short term capital gains addition wherein the CIT(A) has noted the AO’s section 154 computation itself has correctly started the computation of income from the computation of income as per order u/ s 154 - ACIT, Circle-2, has erroneously considered the amount of STCG as per original return while making computation in the order u/s 143(3) r.w.s.147. Therefore, the same is directed to be deleted.
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2022 (11) TMI 1132 - ITAT RAJKOT
Deduction u/s 80P - profit from the business as regards non-members was not admissible u/s 80P(2)(b) - statement recorded u/s 131 from a Mantri of the assessee co-operative society, wherein as clearly admitted the milk was procured from its members as well as non-members - statement is not recorded from any third party - assessee is also not produced any details about the purchase of milk from non-members - HELD THAT:- Clause b of Section 80P(2) talks about a Co-operative Society to be a primary society engaged in supplying of milk and other goods raised or grown by its members to, a federal co-operative society engaged in the same business or a Government or local authority or a Government company. Thus, the provision clearly prescribes about the procurement of the goods from the Members of the society and not from the non- Members.
As submitted by the D.R. the statement recorded from Shri Karsanbhai S. Bharwad who is the Mantri of the assessee cooperative society and not a third person. Therefore, the case laws relied by the assessee is clearly distinguishable and not applicable to the present facts of the case. The grounds of appeal raised by the assessee are devoid of any merits and against the provisions of Section 80P(2)(b). Therefore, the finding of the lower authorities does not require any interference and appeal filed by the assessee is hereby dismissed.
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2022 (11) TMI 1131 - ITAT DELHI
Addition of compensation in the shape of annuity treating it as interest/reward - exemption income arising equities payment to land owners whose land has been acquired - Rehabilitation and Resettlement Award for affected families by Collector - Right to fair compensation and transparency in land acquisition, rehabilitation and resettlement - As submitted that the annuity scheme under which the assessee received the money is part of the compensation against the land acquired and is exempt u/s 10(37) - HELD THAT:- As it becomes obvious with preparation of Rehabilitation And Resettlement Scheme u/s 16 of R&R Act is the foundation upon which after necessary enquiries the land acquisition award is passed by the Collector u/s 23 of R&R Act. Then sub-clause (b) of Section 23 specifically provides that rehabilitation and resettlement award as determined u/s 31 is part of the land acquisition award passed by the Collector u/s 23. Rehabilitation and resettlement award u/s 31 sub-clause (j) specifically refers to the particulars of annuity provided to the land owners. The Second Schedule to the R&R Act relevant to Section 31(1), 38(1) and 105(3) of the R7 r Act, provides elements of R&R Entitlements and at item no 4 there is choice of annuity or employement and the Schedule also fixes the minimum royalty to be paid.
Section 51 of R&R provides for establishment of land acquisition, rehabilitation and resettlement authority for disposal of the disputes arising out of acquisition, compensation, rehabilitation and resettlement. Section 69 provides that in determination of amount of compensation to be awarded for land acquired including the rehabilitation and resettlement entitlement, the authority shall take into consideration whether the Collector has followed the parameters set out u/s 26 of section 30.
The form of award is mentioned in section 70 of the R&R Act which refers to section 28. Thus, the award for the purpose of R&R Act not only includes the market value of the land but also rehabilitation and resettlement entitlements allowed to the land holders arising out the social impact assessment and study of the prospective acquisition of the land. Therefore, for the purpose of the section 96 of the R&R Act, not only a monetary compensation of the land and interest upon it but the quantifiable monetary benefits arising out of rehabilitation and resettlement entitlements of the land owners, shall be part of the Award under the R&R Act and no income tax can be levied on such payments.
The findings of the ld Tax Authorities below are held to be erroneous as they have failed to examine the issue in correct context to the law arising out of R&R Act. Grounds are decided in favour of the assessee.
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2022 (11) TMI 1130 - ITAT AHMEDABAD
Revision u/s 263 by CIT - Assessee claim of transaction pertaining to the shares and the resultant gain/profit/loss is not verifiable - HELD THAT:- The gain or loss is attributed/allocated to different clients who had made trade in equity through the assessee with the main broker of Bombay. Thus non speculative loss as well as speculative profit were allocated and belonging to different clients/customers. The assessee has no right to have profit or loss on this equity trading account for the year under consideration.
AO vide notice requested the assessee to furnish the source of investment with proper evidences. In the absence of any evidence why the same should not be added as the total income of the assessee as unexplained investment u/s. 69 and also requested to submit all the details mentioned in the trading statement provided by the assessee.
The assessee responded stating that the total payments to the main broker was of Rs. 1,76,83,099/-. In the same account there is total receipt of Rs. 1,20,75,801/-. Thus the net payment was of Rs. 56,07,298/- for which the assessee was sending confirmatory contra accounts duly signed by the clients, their full address and Pan Number details and further the summery list shown clients name address Pan Number Aadhar Card Copy etc.
As seen from the revision order that the Ld. PCIT after perusal of the material available on record and found that the issues pointed out in the show cause needs verification. PCIT held that the assessee’s claim with regard to the transaction pertaining to the shares and the resultant gain/profit/loss is not verifiable. During the course of original assessment proceedings, the assessee failed to furnish the said details and evidences. That’s why the assessee himself offered 8% of difference amount of bank credits and debits as presumptive income and entire amount was required to be treated as unexplained income and added to the total income of the assessee.
Therefore invoking Explanation 2(a) of Section 263(1) PCIT set aside the assessment order passed by the Assessing Officer as erroneous and prejudicial to the interest of revenue. PCIT pointed out the issues mentioned in the show cause notice needs verification but it is seen from the Paper Book that all the details were filed by the assessee before the AO during the assessment proceedings and after detailed enquiry and verification of records, the assessing officer completed the assessment order.
PCIT has not demonstrated in his order how the order passed by the AO as erroneous order. The Assessing Officer has adopted one of the courses permissible in law, if it has resulted in loss of revenue, the same cannot be treated as an erroneous order which requires revision u/s. 263 - Therefore in our considered view, the invocation of Revision proceedings u/s. 263 itself unjustifiable, against the provisions of law and therefore, the same is hereby quashed. Appeal of assessee allowed.
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2022 (11) TMI 1129 - ITAT KOLKATA
Scope of limited scrutiny - Conversion of Partenrship into LLP - Securities premium reserve which stood transferred by the erstwhile company to the assessee-LLP upon conversion as a taxable profit - whether the said addition could have been made in a limited scrutiny, which has been selected by a notice u/s 143(2) for examination of investment in unlisted equities, low income and high loans/advances/investments and low income and high investments without converting the same into unlimited scrutiny - HELD THAT:- A.R relied on the decision wherein issue decided in favour of assessee - As in the subsequent decision in the case of ITO Vs. M/S Godhuli Dealcom LLP [2022 (6) TMI 1276 - ITAT KOLKATA] the coordinate bench has taken a view which is against the assessee but in that decision the earlier decision as cited above was neither noticed nor referred. Under the present facts we are guided by the decision of the coordinate bench in the case of M/S Royal Calcutta Turf Club Vs DCIT [2017 (11) TMI 1200 - ITAT KOLKATA] wherein it has been held that where there are two conflicting decisions, then in that scenario the earlier has to be followed as in the latter decision the earlier one was neither noticed nor referred. Even the ratio laid down by the Hon’ble Supreme Court in the case of Vegetable Products Ltd. [1973 (1) TMI 1 - SUPREME COURT] is applicable in this case. Decided in favour of assessee.
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2022 (11) TMI 1128 - ITAT KOLKATA
Revision us 263 by CIT - claim of depreciation which includes foreign exchange loss on long term foreign currency loan capitalized in respect of additions made towards plant and machinery - HELD THAT:- We note that AO has called for all the details by issuing notice u/s. 142 (1) (reproduced above) to which assessee had made detailed submissions explaining its case. Even before the CIT, assessee has submitted in detail, explaining about the difference in treatment of the foreign exchange fluctuation loss of long term foreign currency loss in the books of accounts and in the computation of income under the Act, as narrated above. We have perused the treatment of forex loss as per the books of account which has been added to the cost of fixed assets and also the treatment of the forex loss as per the provisions of section 43A of the Act, based on actual repayment of loan which has been added to the cost of fixed assets.
From the above factual matrix of the issue raised by the PCIT, we find that he has not applied his mind to arrive at a consideration which is erroneous in so far as prejudicial to the interest of the revenue, for passing the impugned order u/s 263 - We observe that in the course of proceedings u/s 263 before the PCIT, assessee had furnished the relevant details and explained the issues raised through the show cause notice by the PCIT, supporting its contentions by corroborative documentary evidences. It is well settled law that for invoking the provisions of section 263 both the conditions that the order must be erroneous and prejudicial to the interest of revenue needs to be satisfied. This ratio stands laid down by various Hon'ble Courts.
When the AO adopted one of the courses permissible in law and it has resulted in loss to the revenue, or where two views are possible and the AO has taken one view with which the CIT does not agree, it cannot be treated as an erroneous order prejudicial to the interest of the revenue unless the view taken by the AO is unsustainable in law.
We find that the issue in the present case is purely on facts which are verifiable from the records of the assessee. Examination and verification of the audited financial statements i.e. Balance Sheet and Profit & Loss account of the assessee, perusal of provisions of section 43A of the Act and order of coordinate bench of ITAT Kolkata in assessee’s own case reveals the correct state of its affairs in respect of the issue raised in the impugned revisionary proceedings for which both, ld. PCIT and the CIT, DR could not bring any material on record to controvert the verifiable factual position.
Accordingly, on the issues raised by the PCIT in the revisionary proceedings, no action u/s 263 is justifiable which in our considered view cannot be sustained under the facts and circumstances of the present case and judicial precedents dealt herein above. We, therefore, quash the impugned order u/s 263 of the Act and allow the grounds raised by the assessee.
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2022 (11) TMI 1127 - ITAT BANGALORE
Claim of deduction u/s 40(b) from undisclosed income surrendered - Salary / Remunaration of partners - Additional income declared during the course of survey - HELD THAT:- It is clear that the rate itself stated by the A.O. during the course of survey is in respect of valuation report obtained by the prospective buyers and not from the assessee. Therefore, for all practical purposes, same is likely to be inflated for obtaining loans from financial institution and could not be construed to be price of the units accruing to the assessee.
As further to be noticed that the survey u/s. 133A was conducted on 22.12.2015 and the assessment year under consideration, i.e., A.Y. 2016-2017, was not complete. The manner of computation by the assessee in arriving at the additional income of Rs. 2 crore as per the sworn statement demonstrate that it is directly relatable to the construction of flats, and hence, deem to accrue as part of the consideration of sale of flats and thus the income is to be treated as income from business of the assessee.
The surrendered income disclosed by the assessee are part of the business activities and as mentioned earlier no other activities were carried on by the assessee, nor has the Revenue brought on record any contrary material for the aforesaid conclusion. Revenue has not found any money during the course of survey. Further, the tax rate specified u/s. 115BBE for assessment year 2016-2017 is at 30% (same as the normal rate) and the partners of the assessee after considering the remuneration have discharged tax liability more or less at the same rate of 30%. Thus, we are of the view that there is no loss to the revenue.
It is clear that the partners have paid average tax at 30%.The observation of the A.O. that the impugned assessment order that "individual partners have set off their various expenses against remuneration so received. Thus, the straightway 30% tax liability on Rs. 1.2 crore in the hand of assessee firm has been shifted and minimized by splitting the same remuneration to the partner" is factually incorrect.
Allowability of remuneration in the hands of the partners - There is no dispute as regards the entitlement of the remuneration by the partners, since the A.O. had allowed the remuneration as per section 40(b)(v) of the I.T. Act to the extent of Rs. 11,54,770. The dispute is with regard to whether the assessee is entitled to remuneration as per section 40(b)(v) on the additional income offered. Since we have already held that the additional income offered by the assessee is to be considered as business income, as a natural corollary, the remuneration u/s. 40(b)(v) has to be computed considering the entire business income declared by the assessee. Thus additional income offered as part of the business income, the assessee would be entitled to deduction as per the provisions of section 40(b)(v).
Disallowance of ad hoc basis, a sum being 20% of the URD purchases - HELD THAT:- Undisputedly, the URD purchases are only 2% of the total purchases. Considering the nature of the assessee's business, i.e., the construction of flats and commercial buildings, undoubtedly, the assessee has to make purchases, such as jelly, stones and bricks etc. We are of the view that the ad hoc disallowance at the rate of 20% of the URD purchases is highly excessive. The assessee itself before the first appellate authority stated that the disallowance at 20% is excessive and should be reduced to 10% of the URD purchases. Accordingly, we limit the disallowance of URD purchases to 10% of Rs. 16,59,344. Hence, we sustain an addition of Rs. 1,65,934 and delete the balance.
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2022 (11) TMI 1126 - ITAT MUMBAI
Validity of order u/s 143 (1) - Disallowance of late payment of provident fund and employees scheme insurance u/s 36 (1) (va) which are not paid before the due date prescribed Under the respective act - HELD THAT:- Now the issue squarely covered against the assessee by the decision of the Honourable Supreme Court in case of Checkmate Services (P.) Ltd. [2022 (10) TMI 617 - SUPREME COURT]
The decisions relied upon by the learned authorized representative of coordinate bench in Kalpesh Synthetics Pvt Ltd [2022 (5) TMI 461 - ITAT MUMBAI] and host of other decisions are no longer valid as the claim of the reduction of the assessee becomes an error apparent from the return of income filed and therefore correctly adjusted u/s 143 (1) of the act. Appeal filed by the assessee is dismissed
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2022 (11) TMI 1117 - JHARKHAND HIGH COURT
Reopening of assessment u/s 147 - Reasons to believe - whether the AO was having any reason to believe that the Assessee had escaped assessment? - HELD THAT:- As in the case Sheetal Dushyant Chaturvedi [2021 (9) TMI 833 - SC ORDER] appeal filed by the department was dismissed against the order of High Court who held that where reasons supplied by Assessing Officer for reopening Assessee assessment only referred to a need to verify documents and reasons supplied by assessing officer did not show that income has escaped assessment.
There cannot be any re-assessment for a reason to suspect and re-assessment is only to be done if the AO has reasons to believe that the Assessee has escaped assessment. Without going into the other argument of the petitioner and merits of the case; the instant appeal requires to be dismissed on the sole ground that the Assessing Officer was not having any reason to believe for initiating re-assessment which is clear from the recorded reason to believe itself.
Tribunal has not committed any error in applying the judgment passed in the case of Dinesh Kurmar Sah [2018 (5) TMI 1176 - GUJARAT HIGH COURT].Consequently, the question of law framed in this case is answered against the department.
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2022 (11) TMI 1116 - ITAT KOLKATA
Unexplained cash credit u/s 68 - unexplained expenditure towards registration fee and stamp duty u/s 69C - On source of huge investment the submission filed by the assessee was not found satisfactory and the assessing officer made the addition - HELD THAT:- We find that the source of the said investment in property is loan taken from ICICI Bank and the same is verifiable from paper book page showing an offer letter issued by ICICI Bank sanctioning loan - Further the repayment schedule and shows the property value - Various other documents including loan confirmation certificate and deed of conveyance are sufficient enough to prove that the source of investment in property is loan taken from ICICI Bank and, therefore, on merits also the addition made by the assessing officer u/s 68 and u/s 69C of the Act do not stand. We, therefore, fail to find any infirmity in the order of the ld. CIT(A) and thus Ground Nos. 1, 2 & 3 of the revenue are dismissed.
Violation of Rule 46A of the Rules - HELD THAT:- It is not discernible from the records nor referred to by the ld. D/R as to what were the documents filed by the assessee before the assessing officer and what new documents were filed before the ld. CIT(A) and without being able to lay our hands on these specific documents, we fail to find any merit in this ground raised by the revenue. Also the facts of the case as discernible from the records and the paper book filed by the assessee, there is sufficient force in the contention of the assessee explaining the source of investment in property and since the factual aspects have been examined by us, we fail to find any merit in this ground of the revenue and hence dismiss the same.
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2022 (11) TMI 1115 - ITAT PUNE
Deduction u/s 54 - assessee is not eligible for the impugned deduction since she had purchased the house property in issue which falls beyond the prescribed time of one year before her sale deed - HELD THAT:- A perusal of the assessee’s undisputed purchase agreement re-investment document dated 14.12.2011 makes it clear that only 10% of the total purchase price had to be paid by the said date followed by a detailed payment schedule of 10% and 4% each on 11 various occasions, 5% on completion of brick work thereof and 4% each on four occasions and the remaining 5% at the time of occupation of the house property; respectively. There was a further stipulation in the agreement therein that possession had to be given to the purchaser/assessee only after she had complied with the foregoing detailed payment schedule.
The assessee’s bank statement which prima-facie suggests that the specified payment schedule had very well travelled beyond clinching date of 26.02.2013 i.e. one year before the sale deed executed by her on 27.02.2013 - Thus lower authorities have erred in law and on facts in disallowing the assessee’s section 54 deduction claim - Decided in favour of assessee.
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2022 (11) TMI 1114 - ITAT MUMBAI
Reopening of assessment u/s 147 - penny stock Purchases - assessee has taken accommodation entry of LTCG by selling shares of “Naresh Manakchand Jain” at the Stock Exchange and proceeds from sale of such shares was booked as long term capital gain - HELD THAT:- First of all, the Assessee has not undertaken any transaction of purchase sale and shares of Naresh Manakchand Jain nor has declared any long term capital gain. The Assessee had undertaken transaction in the script of Nyssa Corporation Ltd. in which it has incurred loss of Rs.7,36,47,328/- and has shown sale of Rs. 1,19,60,611/- as against the purchase value of Rs. 8,55,63939/-. As stated above, the Assessee has neither set-off this net long term capital loss against any income during the year nor has adjusted this loss to be carry forwarded to subsequent years. There was no tax benefit as such to the Assessee from this transaction as has been falsely tried to be implicated by the AO. Thus, there is no co-relation between the material discussed in the reasons recorded and the material on record as well as the addition made in the assessment order.
If the Assessment has been completed u/s 143(3) after detail scrutiny and enquiry on a particular issue, then re-opening u/s 147 on same very issue cannot be made without any tangible material coming on record having live link nexus with the income escaping assessment. The entire substratum and premise of the AO was wrong and the material and information as discussed in the reasons recorded have no link with assessee and has nothing to do with the any transaction undertaken by the Assessee. This shows complete lack of application of mind by the AO.
There is not even whisper in the reasons recorded about dealing in shares of Nyssa Corporation Ltd. or the Assessee had taken any accommodation entry on this script. AO is referring to altogether different script which has not been under taken by the Assessee at all. Now, with the clarification by the DR from the records, it is seen that there are no other reasons recorded and AO has wrongly assumed Jurisdiction on a wrong assumption of facts. Accordingly, the aforesaid observation and finding of the CIT (A) is correct and the same is affirmed and we hold that the reasons recorded by the AO are not in accordance with the law and therefore the entire proceedings u/s has rightly been quashed by the Ld. CIT (A). - Revenue Appeal is dismissed.
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2022 (11) TMI 1113 - ITAT CHENNAI
Addition in respect of royalty payment - assessee company has made royalty payme on the basis of agreement which permits the assessee exclusive right to manufacture and sale of products in India using a licensed technology - AO disallowed 25% of royalty payment on the ground that said royalty has been paid towards technical information provided by the foreign company in respect of manufacturing methods of products and license granted to the assessee to manufacture and sell the products is in nature of capital expenditure, which gives enduring benefit to the assessee - HELD THAT:- We are of the considered view that there is no error in reasons given by the ld. CIT(A) to delete addition made towards disallowance of royalty payment and thus, we are inclined to uphold the findings of the ld. CIT(A) and reject ground taken by the Revenue for both assessment years.
Excess depreciation claimed on UPS - @ 60% OR 15% - AO has disallowed excess depreciation claimed on UPS @ 60% on the ground that the UPS and printers are in the nature of office equipment which are eligible for depreciation @ 15% and cannot be treated as computer and computer software to claim higher depreciation of 60% - HELD THAT:- We find that the issue of depreciation on UPS and printer as part of computer and computer software is decided in the case of M/s. Brakes India Limited vs DCIT [2017 (4) TMI 511 - MADRAS HIGH COURT] where it has been held that UPS and printer are integral part of computer and computer software and are eligible for higher depreciation of 60%, but not normal depreciation of 15% as applicable to office equipment. CIT(A) by following the decision of Hon’ble Madras High Court in the above case has rightly deleted additions made towards excess depreciation claimed on UPS and thus, we are inclined to uphold the findings of the Ld. CIT(A) and reject ground taken by the Revenue for the assessment year 2011-12.
Disallowance of expenditure in relation to exempt income u/s. 14A r.w.r. 8D - HELD THAT:- Hon’ble Jurisdictional High Court of Madras in the case of M/s. Redington India Ltd. [2017 (1) TMI 318 - MADRAS HIGH COURT] has considered an identical issue and held that when there is no exempt income in relevant assessment year, there cannot be a disallowance of expenditure u/s. 14A in relation to any assumed income. In this case, the counsel for the assessee stated that for both the assessment years, the assessee has not earned any exempt income and the same has been accepted by the ld. DR present for the Revenue.There is no error in the reasons given by the Ld. CIT(A) to delete additions made towards disallowance of expenditure u/s. 14A r.w.r. 8D because in both assessment years the assessee did not earned any dividend income which was exempt income u/s. 10(34) of the Act and thus, we are inclined to uphold the findings of the CIT(A) and reject the ground taken by the Revenue for both the assessment years.
Appeals filed by the Revenue are dismissed.
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2022 (11) TMI 1112 - ITAT BANGALORE
Unexplained cash Deposits in bank account - availability of cash as a source for deposit into the bank account - HELD THAT:- If the deposit of money in the bank account is preceded by withdrawal of money from the very same bank account, then the source of funds is prima facie demonstrated or explained by the Assessee. In the case of S.R.Ventakaratnam [1980 (8) TMI 73 - KARNATAKA HIGH COURT] has held that once the Assessee discloses the source as having come from the withdrawals made on a given date from a given bank, it was not open to the revenue to examine as to what the Assessee did with that money and cannot chose to disbelieve the plea of the Assessee merely on the surmise that it would not be probable for the Assessee to keep the money unutilized.
The decision of the Hon’ble Karnataka High Court supports the plea of the assessee. It is seen that the cash deposits in the bank account are preceded by withdrawal from the very same bank account. The ratio laid down in the aforesaid judgment will apply to the facts of the present case. If the revenue wants to disbelieve the plea of the Assessee then it must show that the previous withdrawal of cash would not have been available with the Assessee on the date of deposit of cash in the bank account. AO and CIT(A) have proceeded purely on assumption and surmises that cash withdrawn was not available to the Assessee on completely extraneous factors. In our view, the Assessee has satisfactorily explained the source of funds out of which deposit of cash was made in the bank account. I therefore delete the addition made in this regard. Consequently, the appeal of the Assessee is allowed.
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2022 (11) TMI 1111 - ITAT KOLKATA
Revision u/s 263 - LTCG or business income - two portfolios of investment - difference between “investment” and “trading” in accordance with CBDT Circular No. 06/2016 since the transactions in shares and derivatives shown in different DMAT accounts were settled through single bill - HELD THAT:- Admittedly, it is a fact on record that assessee has maintained two separate and distinct DMAT accounts for his two portfolios of investment and trading in shares for past several years. Also, assessee has transacted in the two portfolios in distinct manner from the respective DMAT accounts and has accordingly maintained his books of account based on which respective income has been reported in the return of income.
As demonstrated evidently that there is no change in the material facts and circumstances as well as the applicable law in the year under consideration when compared with the preceding years, more particularly four assessment years from 2011-12 to 2014-15 wherein in the reassessment proceedings u/s. 147 the returned income has been accepted as the assessed income without any reclassification of income. In assessee’s own case for the same four assessment years had quashed the order passed u/s. 263 on the same issue raised by the CIT in respect of reclassification of income from capital gains to business income. Reclassification of capital gains into profit and gains of business done by the department. We do not find any reason to interfere with the findings given by the CIT(A) and, therefore, uphold his order. Accordingly, grounds taken by the revenue are dismissed.
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2022 (11) TMI 1110 - ITAT KOLKATA
Revision u/s 263 by CIT - deduction u/s. 80G for the donations made by the assessee to nine different charitable trusts - HELD THAT:- The requisite documents desired by the CIT in the revisionary proceeding for justifying the claim of deduction made by the assessee u/s. 80G in the form of donation receipts and approvals issued by the department to the donees u/s. 80G(5)(vi) are on record. Validity of approval granted to the three trusts out of four as noted by CIT in his show cause notice is covered by the circular issued by CBDT vide circular no. 7/2010 referred above. In respect of one other trust, certificate of approval has been issued for perpetuity, unless otherwise withdrawn. All these details in respect of donations made by the assessee are duly reported in the return form and the AO has called for necessary details and has examined the veracity of claim of deduction made by the assessee.
Deduction of tax at source on the commission paid by the assessee to two of its managing/whole time directors which is directed to be disallowed u/s. 40(a)(ia) - Counsel has evidently demonstrated that the said payment forms part of the salary of the two directors which has been subjected to TDS u/s. 192 - We also note that issue relating to compliance of section 197 of the Companies Act, 2013 though not formed part of the show cause notice issued by the Pr. CIT, has been evidently demonstrated to be complied with, by the assessee as noted above. All the evidence in respect of TDS done on the amount of commission paid to the two directors and as reported in Form 16 as well as in quarterly TDS statement filed by the assessee, are on record which factually demonstrates that commission paid has been subjected to required TDS which is contrary to the observations made by the Pr. CIT.
Double claim of depreciation by the assessee on the fixed assets of its SEZ unit at Falta - Assessee has factually demonstrated that no such double claim much less the original claim of depreciation has been made by the assessee in computing the eligible profits of the SEZ unit for making a claim of deduction u/s. 10A of the Act. Details of this computation have already been noted above. Also important to note that the monetary eligible limit for the assessee for claiming deduction u/s. 10A was of Rs.23.57 Cr. but against this, it had restricted the deduction of Rs.7.50 Cr. only, owing to its planned capital expenditure in future. We note that all these working details were furnished in the course of assessment proceedings filed with e-portal and were also placed before the Pr. CIT in the revisionary proceeding.
We find that the three issues in the present case are purely on facts which are verifiable from the records of the assessee. Examination and verification of the same as placed in the paper book also reveals the correct state of its affairs in respect of the issues raised in the impugned revisionary proceedings for which both, ld. PCIT and the ld. CIT, DR could not bring any material on record to controvert the verifiable factual position.
Accordingly, on the three issues raised by the PCIT in the revisionary proceedings, no action u/s 263 of the Act is justifiable - Decided in favour of assessee.
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