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Income Tax - Case Laws
Showing 221 to 240 of 785 Records
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2022 (11) TMI 1107 - ITAT KOLKATA
Validity of assessment framed by ITO - Assessment framed u/s 144 - as argued order has been passed in violation of instruction of CBDT by the ACIT, Circle-1(1), Jalpaiguri which is not a metro city and therefore the same may kindly be quashed - HELD THAT:- Undisputed facts are that the assessee is a non corporate assessee and has declared total income of Rs. 10.02,340/- during the year. We observe that the notice u/s 143(2) of the Act was issued by ITO, Ward-1(1), Jalpaiguri to the assesse whereas the assessment was framed by the Assistant Commissioner of Income Tax, circle-1(1), Jalpaiguri.
Instruction No. 1/2011 in the case of non-corporate assessee in non-metro cities, the ITR filed upto Rs. 15 lacs has to be assessed by ITO and therefore in the instant case the assessment is framed in violation of above instruction by the Board. The case of the assessee is squarely covered in the case of Hirak Sarkar [2021 (8) TMI 700 - ITAT KOLKATA] - Thus we quash the assessment order passed on the ground of lack of jurisdiction. Accordingly the appeal of the assessee is allowed.
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2022 (11) TMI 1106 - ITAT DELHI
TDS u/s 194I - CAM charges paid by the appellant company considering the common area maintenance charges as part of the rental activity covered u/s 194I and treated the appellant company as assessee in default within the meaning of section 201(1) for short deduction of TDS on CAM Charges - HELD THAT:- When the definition of “rent’ as Explanation of section 194-I is seen it is the ‘payment’ made for the “use’ of certain immovable properties like land or building (including factory building) or land appurtenant to a building ( including factory building) or movable properties like machinery or plant or equipment or furniture or fittings, is considered to be rent. Thus, what is important is the “use’ of these immovable properties or those things appurtenant or fittings with the building that is essential to make a payment fall in definition of rent for purpose of Explanation to Section 194-I.
The common area maintenance for which the CAM charges are paid are not for the “use’ of immovable or immovable properties included in the definition of rent above as the ‘rent’ becomes payable for getting exclusive interest of user of aforesaid properties. The word ‘use’ here would mean use exclusively by the lessee.
The rent as such is consideration for contract of tenancy or lease, where lessee gets beneficial interest of user of demised property to the exclusion of others, including the Landlord/lessor. The common areas have access to and can be used not only by co-tenants but the landlord/lessor too or even other visitors without any right of exclusion by the assessee. Any payment for it’s maintenance cannot be said to be consideration for any beneficial interest to exclusion of others.
Merely because a single agreement is executed between lessor and lessee creating liability on lessee for both rent and CAM charges does not discard the distinguishing nature of the two payments. As for the Rent and Eviction Laws the two may have no difference but under ‘the Act’, they are different head of expenditures of the lessee. The ‘rent’ is on account of ‘use’ of the property given into a exclusive possession of the lessee for the running of business but the CAM charges are for maintenance of the common areas, used or not used by the lessee.
There is no reason to distinguish between the nature of two payments made by the lessee to the lessor if lessor keeps rent to himself and the CAM charges are paid further by the lessor unless there is composite rent, inclusive of the CAM. Which is not the case, as admittedly they are paid under different clauses of the agreement and by separate invoices.
In Sunil Kumar Gupta [2016 (9) TMI 1198 - PUNJAB AND HARYANA HIGH COURT] the judgment of Hon’ble Punjab and Haryana High Court, relied by Ld. AO, Hon’ble High Court was considering the question about computing the annual value of the property and in those circumstances observed that the maintenance charges must be included as part of the rent for the purpose of computing the annual value of the property and the wide ambit of the term rent in Section 22 and 23 of the Act was discussed - In the case before us as for the purpose of deduction of tax at source the term rent has to be understood in terms of explanation to Section 194-I which as discussed above makes a distinction between rent for the use of the property by the lessee and expenses of CAM. The appeal of assessee is allowed.
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2022 (11) TMI 1105 - ITAT DELHI
Suppression of closing stock - AO is of the opinion that such non saleable area should have been assigned some valuation of its own and hence rejected the books of books of accounts u/s 145(3) - HELD THAT:- Approach of the CIT(A) is neither erroneous nor contrary to any of the provision of law. The ‘non saleable area’ are necessary requirements for a real estate projects, without such facilities/compositions the smooth operation cannot be conducted. As per the certificate of architect, tax audit reports details of stock the computation of income and the assessment order in the previous year prior to the year under consideration that the assessee has duly demonstrated the consistency in its accounting practice and its acceptance by the AO as well. CIT(A) has considered all the above facts and came to a just decision in deleting the addition which requires no interference at our hands. Accordingly, the Ground No. 1 of the Revenue is dismissed.
Disallowance u/s 37 - assessee had debited license renewal fee in its expenses which was disallowed by the A.O by working out the rightful license of the said area in respect of Iris Project - HELD THAT:- Assessee had merely claimed as its expense, while other half expense had been received as reimbursement from M/s Weldon Technologies Park Development. CIT(A) has also arrived to the conclusion to delve the addition by going through the breakup of direct expenses containing group Misc. work(OE) with copy of the ledger account license renewal fee along with the bank statement showing the credit reimbursement received.The said finding of the fact with cogent evidence and the decision made thereupon by the CIT(A) requires no interference and we are of the view that the order of the CIT(A) in deleting the above disallowance made u/s 37 by the A.O. requires no interference. Ground of the revenue is dismissed.
Scope of limited scrutiny - AO moved further to verify closing stocks of the assessee company along with other expense heads debited in the revenue account and ultimately made addition/disallowances which are not part of the reasons mentioned in the limited scrutiny - HELD THAT:- If a case is taken for limited scrutiny by the A.O., he cannot exceed the jurisdiction beyond the one which he has carved out himself in the notice issued for limited scrutiny. In the present case, AO has travelled beyond his jurisdiction and made addition on the issues which are not part of the reasons for limited scrutiny. Therefore, both the A.O. and Ld. CIT(A) has committed an error in making the addition/disallowance and sustaining the same which requires to be set aside. Accordingly, the Additional Ground mentioned in the C.O. filed by the assessee is allowed, the addition sustained by the Ld. CIT(A) is hereby deleted.
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2022 (11) TMI 1104 - ITAT DELHI
TP Adjustment - Foreign exchange fluctuation gain - treated as operating income while computing the operating profit margin - recourse to Safe Harbour Rules - HELD THAT:- As firstly Safe Harbour Rules can be applied only at the option of the assessee and not otherwise. In any case of the matter, in the facts of the present appeal, TPO has made adjustment without taking recourse to Safe Harbour Rules. That being the case, contention of CIT(DR) cannot be accepted.
Before us, assessee has furnished a working to demonstrate that, in case, foreign exchange fluctuation gain is treated as operating income, assessee’s margin would be 7.88%, which will come within the range of + 3% of average operating profit margin of comparables worked out at 9.91%. AO is directed to verify the working and delete the addition.
TP adjustment on account of delayed receivables from AE - assessee received remittances after expiry of credit period - re-characterizing the delay in receipt of receivables as unsecured loan, the AO computed interest by applying rate of 4.33% on the basis of 6 months LIBOR with a mark-up of 400 basis points - HELD THAT:- We agree with CIT (DR) that there may be instances where the AE is benefited due to delay in remitting the outstanding receivables, however, it depends upon the facts of each case. In the present case, admittedly, the assessee has very negligible interest liability. On perusal of materials placed before us, it is observed that the only borrowing made by the assessee is loan availed for purchasing vehicle. There is no dispute that the assessee had utilized the loan for the purpose of which it was availed and paying interest on that. Further, on perusal of the documents placed before us, it is observed that in the year under consideration, the assessee has paid interest of small amount - Thus, from the aforesaid facts it is clear that the assessee is more or less a debt free company, whereas, it has substantial reserve and surplus. Thus we hold that no adjustment on account of interest on outstanding receivables can be made in the facts of the present appeal. Accordingly, we delete the adjustment.
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2022 (11) TMI 1103 - ITAT PUNE
Exemption u/s. 11 - Exemption denied treating the assessee as AOP instead of charitable trust - CIT granted registration u/s. 12A - applicability of proviso to sub-section (2) of section 12A - HELD THAT:- Registration granted u/s. 12A of the Act in response to the application dated 19-02-2009, is not application to the year under consideration i.e. A.Y. 2008-09.
Applicability of proviso to sub-section (2) of section 12A - Admittedly the said proviso was introduced in Finance Act, 2014 w.e.f. F.Y. 2014-15 (A.Y. 2015-16). Since, the assessment year under consideration is A.Y. 2008- 09, the CIT(A) held the said proviso is not applicable on the facts on hand. Recording the separate finding on the same, but however, we agree with the findings of the CIT(A) which were reproduced here-in-above. Therefore, we do not find any infirmity in the order of CIT(A) regarding the non-applicability of proviso to sub-section (2) of section 12A of the Act.
Benefit of getting exemption u/s. 11 should be extended to the prior assessment years which are pending before the AO - CIT(A) answered the same by holding that no assessment for the year under consideration was pending before the AO as it was already completed on 28-12-2010. As discussed above that the CIT-IV, Pune granted registration in pursuance to the order of Tribunal on 26-03-2013 relevant to the assessment year i.e. A.Y. 2009-10, but not applicable to the year under consideration. Therefore, when there is no registration u/s. 12A of the Act for the year under consideration, the assessee is not entitled to claim benefit of exemption u/s. 11 of the Act. Therefore, find no infirmity in the order of CIT(A) in confirming the order of AO in denying the exemption u/s. 11 of the Act in the absence of registration u/s. 12A of the Act. Thus, the grounds raised by the assessee fails and are dismissed.
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2022 (11) TMI 1102 - ITAT DEHRADUN
Gain on sale of land - nature of land sold - capital asset u/s 2(14) - HELD THAT:- We find that before the lower authorities, the objection of the assessee was regarding the applicability of provisions of capital gain as the sale of land in question was claimed to be an agricultural land. Also seen from the records that the AO has not carried out any inquiry to verify the claim of the assessee that the land in question was not capital asset on the ground that the population of the town was less than ten thousand and also as per the Notification issued by Government of India, the land was beyond the municipal limit. These issues require examination at the end of the AO. It is evident from the records that the AO had not carried out any inquiry to verify the correctness of the contention that the land in question would not fall within the purview of capital asset.
We therefore, set aside the impugned order and restore the issue to the file of AO to decide it afresh. Needless to say that the AO would afford adequate opportunity to the assessee to prove his claim that the immovable properties that were sold by him during the year under consideration did not fall within the definition of capital asset as provided u/s 2(14) of the Act. Thus, grounds raised by the assessee are allowed for statistical purposes.
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2022 (11) TMI 1081 - ITAT KOLKATA
Unexplained Cash Credit u/s. 68 - difference in the balance of certain creditors and also for non compliance on the part of sundry creditors in reply to notice issued u/s. 133(6) - HELD THAT:- As the assessee provided complete details of sundry creditors along with the entries in the ledger account in order to show that various cheque return entries have been wrongly considered as purchases by ld.AO. We further find that the ld. CIT(A) after carefully examining the details filed by the assessee, deleted the addition.
The above finding of the ld. CIT(A) stands uncontroverted by the ld.DR. Therefore, under the given facts of the case we failed to find infirmity in the findings of the ld. CIT(A). Thus, ground no.1 raised by the revenue is dismissed.
Unexplained cash credit on account of sundry creditors balance - HELD THAT:- As alleged addition is mainly on account of balance of the parties pertaining to the earlier year and transfer of balance of the group concern and thus we find no justification for making this addition. No interference is thus called for in the finding of ld. CIT(A) Thus, ground no. 2 raised by the revenue is dismissed.
Addition u/s 69C of the Act for unexplained expenditure - difference in payments received by the vendor and the payments made by the assessee - CIT-A deleted the addition - HELD THAT:- CIT(A) after considering the merits of the case and facts indicated that the said difference was on account of cash payment made for purchase of husk, which was used by power and fuel and these cash entries have been duly acknowledged by the seller. The above findings fact by the ld. CIT(A) remains uncontroverted by the ld. DR, Therefore, we failed to find any infirmity in the findings of the ld. CIT(A). Ground no. 3 raised by the revenue is dismissed.
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2022 (11) TMI 1080 - ITAT KOLKATA
Addition for unaccounted stock - difference in the stock - unaccounted sales - As submitted no difference in the stock and the alleged 914 bags were actually received during the period 09/11/2013 to 12/11/2013 - CIT(A) confirmed the addition mainly on the ground that if the assessee had necessary evidence, he ought to have appealed the action of the survey team which the assessee failed to do and has paid the penalty stating that he did so solely to buy peace of mind - HELD THAT:- Before both the lower authorities, the assessee failed to file any documentary evidence in support of the said 914 bags. CIT(A) confirmed the addition mainly on the ground that if the assessee had necessary evidence, he ought to have appealed the action of the survey team which the assessee failed to do and has paid the penalty stating that he did so solely to buy peace of mind. We find that there is actually shortage of stock because in the stock register, 2203 bags are appearing and as per the physical stock statement 1289 bags were found. So, there is actually shortage of stock of 914 bags and which was treated as unaccounted sales on which the Department of Trade & Taxes, Government of NCT of Delhi, has levied the tax/penalty. Now so far as the first contention of the assessee that there was no variation of stock and the total addition made by the Assessing Officer is liable to be deleted, the option left is to send the documents filed before us to the lower authorities for necessary examination/verification. When this was proposed to the ld. Counsel for the assessee, he preferred to rely on his alternate plea raised in Additional Ground No. 5. Thus, Ground Nos. 1 to 4 and additional Ground Nos. 1 to 4 are dismissed.
Gross profit element on such undisclosed sales should have been subjected to tax - As considering the judicial precedents wherein it has been held that in case of undisclosed/unaccounted sales, addition could be made only in respect of the profit element. We find that the in the case of CIT vs. Hariram Bhambani [2015 (2) TMI 907 - BOMBAY HIGH COURT] considering similar case, where survey was conducted u/s 133A of the Act and unaccounted sales were found and thereafter accepted in the statement recorded.
We find that the same are squarely applicable in the facts of the instant case and the assessee having disclosed the gross profit rate of 17.20%, we are inclined to hold that the addition should be sustained only to the extent of ₹17,26,108/-, which is 17.20% of the alleged sum. We, therefore, allow the additional ground no. 5 raised by the assessee and sustain the addition to ₹17,26,108/-. The assessee gets relief of ₹83,09,401/-.
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2022 (11) TMI 1079 - ITAT CHENNAI
Long term capital gain - sale of land - Legal owner of asset/property - claim of proportionate share of 2/3rd - assessee along with his grandmother has executed power of attorney(POA) in favour of one Shri S. Ramaswamy, the agent in respect of the property - proportionate deduction on account of expenses incurred for removal of encroachment, eviction, illegal squatters etc. - HELD THAT:- PoA and sale deed both are executed on the same day by assessee as well as the GPA Shri S. Ramaswamy on 19.02.2015. It means the PoA holder has no legal right or interest in the property and entire consideration belongs to assessee or other co-owner. Even otherwise, Shri S. Ramaswamy has not accounted for this consideration in his return of income or no capital gain is declared either short term or long term by Shri S. Ramaswamy, the PoA holder in his return of income.
CIT(A) and the AO has rightly concluded that receipt of 93% of sale consideration i.e., 6,93,50,000/-i.e., sale of land without any encumbrance on the date when GPA was executed including GPA of Rs.7,43,50,000/- clearly proves that the assessee has no intention of declaring the capital gain in his return of income. Hence, we are of the view that the authorities below have rightly concluded that the entire capital gain is to be assessed in the hands of the assessee to the extent of his share and hence, we confirm the order of the lower authorities and dismiss this issue of assessee’s appeal.
Disallowance of eviction expenses - assessee now before us made submission that the entire details are available with him as regards to eviction payments and eviction expenses which the assessee could not produce before the CIT(A) and hence, he requested that to that extent, the matter can be restored back to the file of the AO because the same were partly produced before the AO just before the completion of assessment - HELD THAT:- After hearing both the sides on this issue, now we are of the view that the assessee is entitled for this claim but assessee has to prove this claim and file evidence. Hence, we restore this issue back to the file of the AO for fresh adjudication after verifying the evidences. This issue of assessee’s appeal is set aside and allowed for statistical purposes.
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2022 (11) TMI 1078 - ITAT DELHI
Refund of the tax deducted at source (TDS) - income earned on the fixed deposits - mismatch between the return of income and Form 26AS - as submitted by the assessee that since the interest income has arisen in the assessment year under dispute, the assesees are entitled to claim refund of the TDS amount - HELD THAT:- As assessees have entered into concession agreements with FCI for construction, operation and maintenance of Silo Complex. In terms of the concession agreements, the assessees are required to furnish bank guarantees for which the concerned banks have kept securities by way of fixed deposits. Thus, it cannot be denied that the fixed deposits kept with banks are in connection with the business activity of the assessee. That being the factual position emerging on record, the interest income earned has a direct nexus with the business activity of the assessee. In that view of the matter, the interest income earned by the assessee has to be treated as income from business and can be set off against the cost of construction.
There is no doubt that the interest income pertained to the impugned assessment year and the concerned banks have deducted tax at source while crediting the interest income to the account of the assessee. The only reason on which the departmental authorities have rejected to grant refund of the TDS amount is, the interest income has been adjusted against the construction expenses. This, as unacceptable. In case of CIT vs. Jaypee DSC Ventures Ltd [2011 (3) TMI 309 - DELHI HIGH COURT] while considering identical nature of dispute has held that the interest income earned on fixed deposits kept as security for performance guarantee is taxable as business income and can be set off against project expenses.
AO directed to refund the TDS amount to the assessees. Appeals are allowed.
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2022 (11) TMI 1065 - KERALA HIGH COURT
Application for condonation of delay u/s 119(2)(b) - condonation of delay in filing returns and claiming refund - case of the petitioner that the delay in filing the return for the Assessment Year 2010-11 was on account of the fact that the petitioner was suffering from certain ailments and was hospitalized in connection with treatment for a period about four months - HELD THAT:- 1st respondent completely misdirected himself in law while holding that Ext.P5 application of the petitioner for condonation of delay ought to be rejected as it was filed beyond the period specified in the Circular of the Board - It cannot be disputed and it is clear from a reading of the provisions of Section 119(2)(b) that the delay to be condoned is the delay in making 'the application' for refund. 'The application for refund', in this case is the return which was not processed as it was filed beyond the time specified in Section 139 - Therefore, the delay to be condoned was not to be considered with reference to the date on which the application u/s 119(2)(b) was filed, but with reference to the date on which the 'application for refund' (here in this case the return of income) was filed.
Section 119(2)(b) does not impose any limitation for the purposes of filing an application for condonation of delay. Therefore, it was completely wrong on the part of the 1st respondent to treat the date of filing of application for condonation of delay as the relevant date for the purpose of considering whether it was filed within 6 years or not. The application for refund, by filing return of income, was admittedly made on 13.7.2012. Delay in filing ought to be with reference to the last date for filing of return of income for the year 2010-11, till 13.7.2012. In this view of the matter, it is not necessary to consider the decisions cited at the bar by the learned counsel for the petitioner.
This writ petition is allowed and Ext.P6 is quashed. Ext.P5 application will stand restored to the file of the 1st respondent who will consider the matter afresh, and decide whether the delay from 31.3.2012 (the last date on which return could have been filed for Assessment Year 2010-11) till 13.7.2012 (date of filing of return by the petitioner) can be condoned in exercise of the power conferred u/s 119 (2)(b) of the Act. This shall be done within a period of one month from the date of receipt of a certified copy of this judgment.
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2022 (11) TMI 1064 - KERALA HIGH COURT
Maintainability of appeal on low tax effect - cascading effect of circulars - HELD THAT:- The value in the appeal is less than the limit prescribed by CBDT Circular. The Supreme Court in the judgment reported in S.C.Naregal v Commissioner of Income Tax [2019 (10) TMI 1535 - SUPREME COURT] has considered the effect of CBDT Circular and dismissed the appeal coming within the purport of CBDT Circular. The valuation of the subject appeal since is less than the limit stipulated by CBDT Circular, the judgment of Apex Court in S.C.Naregal (supra) is applicable to the appeal.
By a combined reading of the reported decisions and the order of the Supreme Court we are of the view that the appeal could be dismissed as coming within the monetary limit prescribed in Circular No.3/2018, subject to the observations made in [2018 (10) TMI 1977 - SC ORDER]
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2022 (11) TMI 1063 - KERALA HIGH COURT
Levy of interest under sub-section (1A) of Section 201 - delayed remittance of TDS deducted from compensation paid to persons from whom land was acquired for the purposes of establishing the Government Medical College at Manjeri - amounts were deducted in the month of January 2014 and the amounts were to be paid over to the Income Tax Department on or before 07.02.2014 - HELD THAT:- It is clear from a reading of Section 201 that the liability to deduct tax arises only when it is required to be deducted under the provisions of the Act. Where there is no liability to deduct TDS, the mere fact that TDS was so deducted and paid to the Income Tax Department belatedly, cannot give rise to a claim for interest under sub-section (1A) of Section 201.
We feel that this can be the only reasonable interpretation that can be placed under the provisions of Section 201, as interest under sub-section (1A) of Section 201 is obviously to compensate the Government / Income Tax Department for the delay in payment of taxes, which are rightfully due to the Government.
It is clear from Ext.P1 that the delay in remitting the amounts deducted as TDS arose only on account of the fact that the Officer in question was deputed for election duty for the period from January 2014 to May 2014 in connection with the Lok Sabha Election of 2014. Cumulatively, these facts compel me to hold that the levy of interest under sub-section (1A) of Section 201 was wholly unwarranted in the facts and circumstances of this case. The contention that the Income Tax Department had to pay interest on refund amount from a date prior to the date on which the Department received amounts is untenable. The Department was under no obligation to pay interest from a date prior to the date on which it actually received the amounts of TDS. The writ petition is, therefore, allowed.
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2022 (11) TMI 1062 - ITAT SURAT
Credit of TDS carried over - TDS being carried forward is claimed in current financial year and adjusted against the tax liability for the year under consideration - Whether TDS was deducted in assessment year 2015-16 towards advance money received and no credit was taken as property was sold in AY 2016-17? - HELD THAT:- As in the financial year 2014-15 advance received against which TDS has been deducted and same was reflected in Form 26AS but same consideration was not received, hence, advance was not taken as income and TDS against that advance was not claimed. The assessee has carried forward to next financial year. In the next financial year 2015-16, relevant to AY.2016-17, full consideration was received and income was offered to tax and TDS was claimed. Therefore, we are of the view that these facts are to be examined by AO.
We direct the AO to examine the case of assessee and if he finds that in financial year 2015-16, if the assessee has received full consideration and income was offered to tax and the TDS which was not previously claimed in the financial year 2014-15, has been claimed by the assessee in financial year 2015-16, then TDS credit should be allowed to the assessee. Therefore, we remit the issue back to the file of AO with a direction to examine the facts as narrated by us above and if the same is found as correct the Assessing officer should allow the benefit of TDS in accordance with law. The assessee is directed to co-operate in assessment proceeding, as and when called by AO, he should file the relevant details and documents to prove his claim. This ground of assessee’s appeal is allowed for statistical purposes in above terms.
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2022 (11) TMI 1061 - ITAT PUNE
Addition u/s 68 - Bogus LTCG - claim for exemption of capital gains u/s 10(38) - HELD THAT:- The appellant deliberately withheld the information from the AO as well as the ld. CIT(A) which is within exclusive knowledge of appellant to establish the genuineness of transactions of purchase of shares of that company. It is nothing but a fraud played by the appellant against the AO as well as the ld. CIT(A) who are quasi judicial authorities employed for execution of the provisions of the Income Tax Act. Therefore, the principle of fraud can be squarely applied to the facts of the present case and principles of natural justice have no application.
Applying the said doctrine, we have no hesitation to hold that the transaction of purchase and sale of shares of SRK Industries under consideration before us is void ab-initio, this is nothing but sham, make believe and colourful device adopted with excellent paper work with intention bringing the undisclosed income into books of account. Accordingly, we confirm the orders of the Assessing Officer as well as the ld. CIT(A) and find no merits in the appeal preferred by the assessee before us. Appeal filed by the assessee stands dismissed.
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2022 (11) TMI 1060 - ITAT GAUHATI
Revision u/s 263 by PCIT - second round the assessee during the course of appellate proceedings before the ld. CIT(A)- Additional ground admitted by the ld. CIT(A) - assessment framed u/s. 153C/263/143(3) - CIT(A) raised the additional ground challenging the exercising of the jurisdiction by the ld. AO u/s. 153C of the Act for initiating the proceedings without prior recording a ‘satisfaction note’, which was a pre-condition to invoke the jurisdiction u/s. 153C - HELD THAT:- We find that in the case of Peerless General Finance & Investment Co. Ltd. [2007 (12) TMI 309 - ITAT KOLKATA] this Tribunal has held that jurisdictional issue, which is relating to validity of assessment order can be raised in the second round of litigation even if the same was not raised in the first round of proceeding - Also see case of Inventors Industrial Corporation Ltd [1991 (4) TMI 70 - BOMBAY HIGH COURT]
We find force in the submissions of the ld. Counsel for the assessee and fail to find any merit in the grounds raised by the revenue that the ld. CIT(A) erred in admitting and adjudicating the legal ground challenging the validity of proceeding carried out u/s. 153C of the Act.
CIT(A) has quashed the assessment order u/s. 153C of the Act on the ground that the ld. AO failed to record the satisfaction note - The pre-condition for carrying out proceedings u/s. 153C is that if the ld. AO of the ‘searched person’ and the ld.AO of the ‘other person’ in whose name incriminating material is found are different, then firstly ‘satisfaction note’ is prepared by the ld. AO of the ‘searched person’ mentioning the details of search material not belonging to the ‘searched person’ but belonging to the ‘other person’. Such satisfaction note along with seized material is passed over to the ld. AO of ‘other person’. Thereafter, the ld.AO of the ‘other person’ is again required to prepare the ‘satisfaction note’ stating that such seized material belongs to ‘other person’, who is under his jurisdiction. In the instant case before initiation of proceeding u/s. 153C of the Act the ld. AO has not prepared the satisfaction note. This fact has been admitted by the revenue authorities before us also.
Circular No. 24/2015 dt. 31-12-2015 issued by the Central Board of Direct Taxes (CBDT) which has been issued after following the judgment of the Hon’ble Supreme Court in the case of M/s. Calcutta Knitwears (supra) [2014 (4) TMI 33 - SUPREME COURT] and also considering the consistent view taken by various Hon’ble Courts, we find that the ld. CIT(A) has rightly applied the ratio laid down by the Hon’ble Apex Court as well as CBDT Circular No. 24 of 2015 dated 31-12-2015 to hold that proceeding u/s. 153C r.w.s 143(3) are void and ab initio. Since the same was carried out without recording satisfaction by the ld. AO, no interference is called for in the findings of the ld. CIT(A). Thus, all the grounds raised by the revenue in both the appeals are dismissed.
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2022 (11) TMI 1059 - ITAT MUMBAI
Estimation of income - Bogus purchases - HELD THAT:- Respectfully following the judicial precedent in the assessee’s own case [2019 (8) TMI 1846 - ITAT MUMBAI] we direct the Assessing Officer to restrict the addition to 6% of the bogus purchases. Accordingly, ground No. 2 raised in the assessee’s appeal is partly allowed.
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2022 (11) TMI 1058 - ITAT MUMBAI
TP adjustment on account of guarantee commission - DR objected to the application of 0.5% for benchmarking the transaction of corporate guarantee fees - HELD THAT:- We find that the coordinate bench of the Tribunal in assessee’s own case in 63 Moon Technologies Ltd (formerly Financial Technologies India Ltd) [2021 (12) TMI 989 - ITAT MUMBAI] for assessment years 2009–10 and 2010–11, while deciding similar issue directed the corporate guarantee fee be computed at 0.5%.
Disallowance made on account of interest on payment of Zero Coupon Convertible Bonds - HELD THAT:- We find that the coordinate bench of the Tribunal in assessee’s own case for assessment years 2009–10 it is clear that the amount of debenture redemption premium is accrued and liable to be deducted. Hence, in the background of aforesaid discussion and precedents, we set aside the orders of the authorities below, and decide the issue in favour of the assessee.
Disallowance u/s 14A - necessity of recording satisfaction - HELD THAT:- The satisfaction as required to be recorded under the provisions of section 14A of the Act is not limited to merely disagreeing with the submission of the assessee and requires that the AO should also provide the basis for reaching such conclusion, after having regard to the accounts of the assessee. However, it is evident from the record that in the present case the AO merely disagreed with the suo moto disallowance offered by the assessee u/s 14A and straightaway computed the impugned disallowance by applying the provisions of Rule 8D. Thus, respectfully following the order passed by the coordinate bench of the Tribunal in assessee’s own case cited supra, we find no infirmity in the impugned order passed by the learned CIT(A) on this issue. As a result, ground No. 3 raised in Revenue’s appeal is dismissed.
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2022 (11) TMI 1057 - ITAT SURAT
Default u/s 201(1) r.w.s 201(1A) - time period for passing order u/s 201 - limitation period as prescribed u/s 201(3) - HELD THAT:- We find that statement of quarterly Nos.1 to 4 for assessment year 2008-09 is filed by assessee on 15.07.2008, 27.10.2008, 30.01.2009 and 22.05.2009 respectively. Admittedly, the last statement of last quarter (Q4) was furnished by assessee on 22.05.2009 a time period for passing assessment order under section 201(1A) as per the time period for passing order at the relevant period, was two years from the end of financial year in which statement under section 200 was filed. Since the last statement was filed by assessee on 22.05.2009, the Assessing Officer / DCIT(TDS) could pass the order upto 31.03.2012. However, the Assessing Officer / DCIT(TDS) passed assessment order on 30.03.2016, which is apparently barred by period of limitation.
We find that similar view was taken by Co-ordinate Bench of this Tribunal in the case of State Bank of India Vyara Branch [2020 (4) TMI 430 - ITAT SURAT] and ITAT Mumbai Benches in the case of Sodexo SVC India Pvt. Ltd. [2019 (4) TMI 310 - ITAT MUMBAI]
Hon'ble ITAT Mumbai Benches in the case of Sodexo SVC India Pvt. Ltd. [2019 (4) TMI 310 - ITAT MUMBAI] while considering the similar objection of Revenue held that such correction was in the form of rectification was very meager which were pitted in the information like PAN or the details of authorized signatory or details of CFO of the assessee. Such changes have no bearing on the amount on TDS / or deposited or likely to be deposited with this Revenue. Such correction made by way of rectification are negligible. Therefore, we do not find any substance in the submission made by Ld. Sr- DR for the Revenue. Therefore, the appeal of assessee is allowed on legal position / additional ground of appeal.
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2022 (11) TMI 1056 - ITAT JABALPUR
Rectification of mistake u/s 154 - Addition made on account of set off of speculation loss against business income - HELD THAT:- The assessee’s claim of the set-off of the impugned loss against business income in assessment as correctly allowed by the AO upon verification, accepted by the ld. CIT(A), was, on examination, found to be de hors both the facts of the case and the law in the matter. There had been, after the initial inquiry, which was again a general inquiry in respect of ‘large expenses’, no further verification or even finding by the AO in assessment, who had failed to take note of s. 43(5) of the Act, much less examine the satisfaction of the requirements thereof.
Section 43(5) being clearly attracted on the basis of facts borne out by the record, i.e., commodity derivative trading, which is, by definition, speculative, unless, of course, it is qua eligible transactions, defined thereunder and, further, carried through the members of a recognised association, on which commodity transaction tax has been charged. There is in fact no claim of satisfaction of these attributes, or even reference to s. 43(5).
The set off of the impugned loss against the assessee’s other income without reference to s. 43(5) is clearly a mistake apparent from record which includes a mistake of law as well. The AO thus had the necessary jurisdiction for rectification in respect of the adjustment of the said loss, and the notice dated 14/12/2016 u/s 154, discussed in detailed at para 3.5 of this order, is, thus, a valid notice in the eyes of law.
AO, however, rather than ascertaining in the rectification proceedings if the impugned transactions did indeed satisfy the requirement/s of s.43(5) r/w clause (e) of proviso thereto, i.e., defining speculative transaction, issued a finding without any verification and indeed de hors the material on record, stating the impugned loss as on unlisted shares and speculative. Her order therefore, cannot, be approved, and the mistake that imbued the assessment order accordingly continues to obtain. The same ought to have been corrected by the ld. CIT(A), enjoying coterminous powers, in appeal.
Both the rectification order, as well as the appellate order holding original assessment as not mistaken, i.e., without impugning the notice for rectification, found valid, its merit apart, cannot have our approval and, thus, be upheld. Both the orders are accordingly set aside, and the matter restored to the file of the AO for causing an adjudication in accordance with law.
Lest it may be argued that the matter cannot be in rectification proceedings remitted back with clear directions, reference may be made to the decision in T.S. Rajam v. CED [1967 (9) TMI 139 - MADRAS HIGH COURT] which is in respect of estate duty, with cognate provision. The whole premise of rectification proceedings, it needs to be appreciated, and as even explained therein, is toward causing justice, for which reference may also be profitably made to L.Hirday Narain [1970 (7) TMI 2 - SUPREME COURT] - The facts of this case, as indeed some others, are striking and illustrative, to which reference may therefore be made, though are not being recounted here so as not to burden this order further (viz. Karamchand Premchand (P.) Ltd [1992 (12) TMI 42 - SUPREME COURT] AND T.S. Rajam (supra)).
Revenue’s appeal is allowed for statistical purpose and the assessee’s CO is partly allowed for statistical purposes.
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