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Income Tax - Case Laws
Showing 201 to 220 of 643 Records
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2021 (3) TMI 987 - ITAT SURAT
Cash deposits as unexplained investments u/s. 69A - HELD THAT:- No finding was given on such documentary evidence. No adverse evidence was acquired by the Assessing Officer except assuming and presuming the deposit in the bank account has unexplained cash credit. The assessee has admitted the ownership of the credit and that outgoes have gone to her son for his study in Australia. The lower authorities were of the view that the assessee has not explained the sources. Before us, the assessee has also filed the copies of ownership of land holdings of about fifty bigha of land.
Considering the entire facts and circumstances of the case, we are of the view, it is a fit case for granting benefit of peak credit to the assessee, as no adverse material is brought on record except taking view that keeping of such cash at home is abnormal. Therefore, we deem it appropriate to restore the appeal to the file of assessing officer to consider the plea of assessee to grant her the benefit of peak credit and grant appropriate relief to the assessee. Ground No. 1 of the appeal is allowed for statistical purposes.
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2021 (3) TMI 986 - ITAT MUMBAI
Non adjudication of the additional ground raised by the assessee - Allowability of depreciation on non-compete fees - additional ground in assessee’s appeal which the ITAT has not adjudicated - HELD THAT:- Miscellaneous Application there is no whisper of additional ground remaining un-adjudicated. We note that additional ground was not adjudicated by the ITAT as there was no discussion on the subject. However, since the assessee has submitted photocopy of the ITAT receipt for filing additional ground in the interest of justice, we deem it appropriate that appeal [2020 (3) TMI 416 - ITAT MUMBAI] be recalled only to consider the veracity and adjudication of the said additional ground raised by the assessee.
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2021 (3) TMI 984 - ITAT BANGALORE
Disallowance of claim of deduction u/s. 80P(2)(a)(i) - CIT(A) held that the assessee is a co-operative society, eligible for claim of deduction u/s. 80P(2)(a)(i) with regard to income derived from business of providing credit facilities to its members but income earned from persons other than regular members of the assessee was not eligible for deduction u/s. 80P(2)(a)(i) - HELD THAT:- Referring to Section 18 of the Karnataka Co-operative Societies Act, 1959 as amended with effect from 01.06.2014, the Co-operative Societies registered under the Karnataka Cooperative Societies Act, 1959 is allowed to do have nominal/associate members up to 15% for its total membership.
In the instant case, the assessee has not provided the details sought by the CIT(A), namely, copies of bye-laws, details of investments, details of income derived from non-members, etc. The Hon'ble Apex Court in the case of The Mavilayi Service Cooperative Bank Ltd. & Ors. [2021 (1) TMI 488 - SUPREME COURT] had clearly stated that when assessee is accepting deposits and providing credit facilities to non-members, the respective State Coo-operative Act will have application.
Since the assessee has not provided the details, in the interest of justice and equity one more opportunity should be granted to the assessee to provide the same. Issues raised in this appeal are restored to the files of the CIT(A). Appeal filed by the assessee is allowed for statistical purposes.
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2021 (3) TMI 983 - ITAT SURAT
Validity of penalty levied under section 271C - order passed by ITO-TDS under section 201(1)/201(1A) - assessee vehemently argued that for service of notice, assessee has given the address of his Counsel for the purpose of service of notice, no notice at the address mentioned in Form-3 was served upon the counsel of assessee - HELD THAT:- CIT(A) allegedly fixed the hearing on 22.08.2014 and the order was passed on 27.08.2014. In our view, no sufficient and fair opportunity was given to the assessee either by ITO-TDS or by Ld. CIT(A). Therefore, we deem it appropriate to restore the matter to the fire of AO to pass the order afresh after considering the submissions of the assessee, including the pattern of shareholding of the directors of the assessee. Needless to direct that before passing the order, the ITO, TDS shall grant fair and proper opportunity to the assessee and pass the order in accordance with law.
So far as, objection of the DR for the Revenue that holding pattern shareholding should not be examined afresh, we are afraid to hear such a submission from ld. DR of the Revenue. The submission of learned DR for the revenue is not acceptable to us, which will be amounting to close the door of audi alterum pattern.
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2021 (3) TMI 982 - ITAT VISAKHAPATNAM
Addition u/s 68 - HELD THAT:- As gone into the details of the amount deposited by the assessee in his bank account and came to a conclusion as it can be seen from the record that the assessee had discharged his onus qua identity, creditworthiness and genuineness of the credit. CIT(A) further held that the assessee has already repaid ₹ 5.00 lakhs against the loan of ₹ 7.00 lakhs, however, failed to explain the transaction of ₹ 2.00 lakhs and therefore in the peculiar facts and circumstances affirmed the partly addition of ₹ 2.00 lakhs only. We could not find any material and/or circumstances contrary to the conclusion/observation of the ld. CIT(A), hence, are inclined to dismiss the appeal of the assessee. Appeal filed by the assessee stands dismissed.
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2021 (3) TMI 981 - ITAT KOLKATA
Unascertained Liabilities u/s 41(1) - CIT(A) has surprisingly restricted the disallowance to 50% of the outstanding balance on an ad hoc basis - HELD THAT:- This is not permitted in law. CIT(A) rejected the books of accounts. When the Assessing Officer has not rejected the books of accounts of the assessee, we find no proper reason recorded by the ld. CIT(A) for rejecting the books of accounts. No defects have been pointed out in the books of accounts. The company is a Government company and its accounts are audited both by the statutory auditors as well as C&AG. Such audited books cannot be rejected in such a casual manner. Ad hoc disallowances are arbitrary and cannot be upheld. Under the circumstances, we are of the considered opinion that the entire disallowance made by the Assessing Officer on the ground of cessation of unascertained liability is hereby deleted. The ground of the revenue is dismissed and the ground no.1 to 6 of the assessee’s appeal are allowed.
Disallowance of Stale Cheque - AR has submitted that the assessee from time to time transfers the stale cheque money back to its accounts if the amount has not been claimed - also that if at all the addition was to be made it cannot be made in the current year but should be made in the year in which these liabilities have arisen - HELD THAT:- As perused the assessment order. The assessee is a public sector company, audited by C&AG. The assessee has been following regular system of crediting stale cheques back to the accounts as and when it thinks that the liability has ceased to exist. Therefore, in view of the consistent accounting system followed by the assessee and also due to judgment cited GOODRICKE GROUP LIMITED [2011 (5) TMI 127 - CALCUTTA HIGH COURT] and M/S. DLF LIMITED [2016 (3) TMI 679 - ITAT DELHI] the additions could not have been made in the current year. In view of the above, I agree with the contention of the A/R.
Addition made in the assessment order of interest on income-tax refund - assessee’s case is that the interest of income tax refund is reflected as income during the assessment year 2017-18 i.e. when the interest was received and hence an addition of the same amount in the assessment year 2014-15 would tantamount to double addition - HELD THAT:- We restore this issue to the file of the Assessing Officer for verification. In case the interest to income tax refund has been considered as income of the assessee for the assessment year 2017-18, then no separate addition can be made in this year.
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2021 (3) TMI 980 - ITAT DELHI
TP Adjustment - Assessee applied Transactional Net Margin Method (TNMM) with Operating Profit/Operating Cost (OP/OC) as Profit Level Indicator (PLI) as the Most Appropriate Method (MAM) - adoption of TP analysis made by the Revenue Department in the earlier years - comparability - HELD THAT:- CIT(A) under the garb of "rule of consistency" adopted the TP analysis made by the TPO and accepted by the ld. CIT(A) in taxpayer's own case for AY 2010-11 without examining the legality of the TP study conducted by the taxpayer finding its international transactions at arm's length and TP analysis of the TPO vide which he has adopted the internal comparables and proposed an adjustment of ₹ 1,39,87,736/-.
This method of TP analysis is unheard of as every assessment year is required to be examined independently to reach the logical conclusion to determine the ALP of international transactions. Merely because of the fact that during the year under consideration, there is no change in the business model of the taxpayer and the services rendered are identical, there is no statutory mandate to adopt the TP analysis made by the Revenue Department in the earlier years in order to make the adjustment in the subsequent years. In these circumstances, we are of the considered view that passing such an order on the basis of conjectures and surmises is in contravention of the provisions contained in Rule 10B (2) of the Income-tax Rules, 1962. Consequently, impugned order passed by the ld. CIT(A) is set aside and file is remitted back to the ld. CIT(A) to decide afresh after providing an opportunity of being heard to the taxpayer. The appeal filed by the taxpayer is hereby allowed for statistical purposes.
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2021 (3) TMI 977 - MADRAS HIGH COURT
Deduction u/s 10A - Whether Tribunal was right in holding that Internet expenses incurred in foreign exchange should be reduced from the total turnover for the purpose of computing deduction? - HELD THAT:- Question of Law no.1 is covered by the decision of the Hon'ble Supreme Court reported in Commissioner of Income-tax, Central – III Vs. HCL Technologies Ltd. [2018 (5) TMI 357 - SUPREME COURT].
Entitled to deduction under Section 10A in respect of the alleged new unit even though the said unit had been substantially made up using the assets of the old units and thus not fulfilling the conditions laid down in clauses (ii) and (iii) of Section 10A(2) - HELD THAT:- This issue covered by the decision of this Bench in Commissioner of Income Tax, Chennai Vs. M/s.S.R.A. Systems Ltd., No.100, Valluvar Kottam High Road, Nungambakkam, Chennai [2021 (1) TMI 843 - MADRAS HIGH COURT]
Claim for deduction under Section 10A was to be allowed before adjusting brought forward losses and unabsorbed depreciation - HELD THAT:- Question of law no.3 is covered by the decision of the Division Bench of this Court in M/s.Comstar Automative Technologies Private Ltd.[2020 (3) TMI 814 - MADRAS HIGH COURT].
We are convinced that the Questions of Law involved in the present appeal are covered by the decisions relied upon by the learned counsel for the respondent, cited supra. Following the decisions of the Hon'ble Supreme Court and the decisions of this Court, the Questions of Law are decided against the Revenue and in favour of the assessee
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2021 (3) TMI 972 - MADRAS HIGH COURT
Additional depreciation on windmill u/s 32(1)(ii)(a) - AO denied the benefit on the ground that the primary business of the assessee does not include generation of wind energy, generation of sale of energy is not the primary business of the assessee company - ITAT allowed the deduction - As per revenue amended provision under Section 32(1)(ii)(a) permits for additional depreciation of actual cost of any new machinery or plant (other than ships and aircraft) acquired and installed only after 31st day of March 2012 to an assessee engaged in the business of generation and distribution of power? - HELD THAT:- Though the term 'Capital Consumption' is used by the assessee, it does not mean that whatever electricity energy generated by the assessee with their wind mills is directly fed into their system for being used for manufacture of Pet Bottles. If this is to be the opinion, then it will fall fowl of the regulations under which wind energy is being regulated in the State. The assessee, who owns the wind mill, if engaged in the generation of power, is mandated to feed the same into the grid of the Tamilnadu Electricity Board and pursuant to the agreement between the assessee and the Board, a grid is given to the generator. Therefore, going with scheme of things, it is undoubtedly clear that the assessee is into the generation of power, which is being fed into the grid of the Tamilnadu Electricity Board to be distributed.
Identical issues was considered by this Court in M/S. VTM LIMITED [2009 (9) TMI 35 - MADRAS HIGH COURT] wherein held what is required to be satisfied in order to claim the additional depreciation is that the setting up of a new machinery or plaint should have been acquired and installed after 31st March 2002 by an assessee, who was already engaged in the business of manufacture or production of any article or thing. The said provision does not state that the setting up of a new machinery or plant, which was acquired and installed upto 31.03.2002 should have any operational connectivity to the article or thing that was already being manufactured by the assessee. Therefore, the contention that the setting up of a wind mill has nothing to do with the power industry, namely, manufacture of oil seeds etc. is totally not germane to the specific provision contained in Section 32(1)(iia) . Also see TEXMO PRECISION CASTINGS [2009 (10) TMI 140 - MADRAS HIGH COURT] and M/S. HI TECH ARAI LIMITED [2009 (9) TMI 60 - MADRAS HIGH COURT] - Decided against revenue.
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2021 (3) TMI 969 - MADRAS HIGH COURT
Exemption u/s 11 - Charitable activity or not - Trust has dropped its demand for registration with retrospective effect - Tribunal set aside the order of the CIT u/s.12AA rejecting the application for registration u/s 12 AA on the ground that all the objects were of the charitable nature and at the time of registration, the Commissioner of Income Tax could only look into the genuineness of the Trust and did not examine the activities of the Trust, relying on the decisions rendered under the old provisions of Section 12A of the Income Tax Act and without considering the new provision of Section 12AA of the Act - HELD THAT:- As far as the question raised relating to the genuineness of the Trust claiming exemption and registration under Section 12AA of the Income Tax Act is concerned, the Hon'ble Division Bench earlier rejected the plea of the Revenue and agreed with the conclusion of the Tribunal stating that it is purely a question of fact. The Hon'ble Division Bench has rightly decided the said question of law against the Revenue. Hence, we are not inclined to give any finding with regard to the 1st question of law.
Whether Tribunal was right in holding that there were sufficient reasons for the delay in filing the application for registration even though the assessee had not explained the delay from January 2003 to 2006 and the assessee Trust itself had by its letter dated 09.10.2009 foregone its claim for registration with retrospective effect? - Tribunal, while setting aside the order passed by the Commissioner of Income Tax with direction to grant registration to the Trust, further directed the Commissioner to decide the issue with regard to condonation of delay by taking a lenient view and in accordance with the observation made by the Tribunal. The application for registration was made by the assessee – Trust on 27.02.2006 for getting the registration done retrospectively from 01.04.2002.
As per Section 12A (1) proviso (2) of the Income Tax Act, the registration of the Trust or Institution shall be made from the first day of the Financial Year in which the application is made. So far as the present application is concerned, admittedly, the Trust had submitted their application on 27.02.2006. Therefore, as per Section 12A(1) proviso (2) of the Act, registration can be done only from 01.04.2005. Therefore, as per the said provision, registration cannot be done retrospectively from 01.04.2002, which the respondent is seeking for.
The respondent – Trust itself, by its letter dated 09.10.2009, had foregone its claim for registration with retrospective effect. Therefore, the question of condonation of delay in registering retrospectively, does not arise. Hence, we are of the considered view that the registration can be done from 01.04.2005 based on the assessee's application dated 27.02.2006.
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2021 (3) TMI 957 - DELHI HIGH COURT
Whether or not the petitioner should be called to Pay 125% of the disputed tax under the revised certificate issued by the designated authority, under Form 3, in exercise of the powers under Section 5(1) of the Direct Tax Vivad Se Vishwas Act, 2020 - HELD THAT:- It is the case of the petitioners that the said question and the answer provided in response to it is beyond the provisions of the Act and the rules framed thereunder.
To our minds, the issue needs examination. Accordingly, issue notice in the captioned matters and the accompanying interlocutory applications.Revenue, whose names are given hereinabove, accept service.
The counter-affidavit(s) will be filed within four weeks from today. Rejoinder(s) thereto, if any, will be filed before the next date of hearing.
Given the fact that the scheme under the Act, insofar as the petitioners are concerned, will expire on 31.03.2021, for the moment, the Revenue will accept the tax, as determined by the designated authority, as per the original certificate issued in Form 3.
Petitioners are not successful in persuading us to take a view in their favour in the instant matters, they will pay the tax, as per the revised certificate issued by the designated authority, along with suitable interest, if any, which this Court may impose, at the time of the disposal of the writ petition.
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2021 (3) TMI 954 - MADRAS HIGH COURT
Reopening of assessment u/s 147 - reopening done beyond the period of four years - whether there is any allegation against the respondent-assessee having failed to fully and truly disclose all the details before the Assessing Officer when the assessment was initially completed under Section 143(3) of the Act on 31.12.2010? - HELD THAT:- Admittedly, there is no allegation against the assessee and the Tribunal was right in holding that there was no negligence on the part of the assessee in furnishing necessary materials in completing the assessment. If such is the admitted factual position, the reason for reopening, stating that expenditure in relation to income not includable in total income under Section 14A of the Act should be calculated as per Clause (ii) of Rule 8D(2), would clearly amount to change of opinion.
The stand taken by the Revenue before us by placing reliance on the decision in the case of P.V.S. Beedies P. Ltd.[1997 (10) TMI 5 - SUPREME COURT] is not substantiating their case on account of the factual position in the case of P.V.S. Beedies P. Ltd. In the said case, the audit department noted that the trust under the name of P.V.S. Memorial Charitable Trust had been initially granted recognition, which had expired on 22.09.1972 and therefore for the relevant years under consideration in the said case, namely AY 1974-75 and 1975-76, the trust was not a recognized charitable trust. Therefore, the audit department having pointed out the same, the assessment was reopened. The factual position in P.V.S. Beedies P. Ltd is quite distinct and different from the case before us. Therefore, the said decision would not render assistance to the case of the Revenue.
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2021 (3) TMI 949 - ITAT DELHI
Penalty levied u/s 271(1)(c) - Defective notice - non specification of charge - loss on account of forfeiture of advance for land disallowed on the ground that the loss was in the nature of capital loss and not an item of revenue expenditure - HELD THAT:- The notice has not given the specific limb under which penalty has been imposed. Thus, the decision of the Hon'ble Supreme Court in case of SSA’s Emerald [2016 (8) TMI 1145 - SC ORDER] is applicable in assessee’s case. Further, on merit also the contention of the assessee that the claims of the assessee were genuine and there are two opinions about the allowability of those claims found some force.
The decision of the Hon'ble Supreme Court in Price Waterhouse Coopers Pvt. Ltd[2012 (9) TMI 775 - SUPREME COURT] is as the bonafide mistake is always allowable mistake and the absence of due care, in a case such as the present, does not mean that the assessee is guilty of either furnishing inaccurate particulars or attempting to conceal its income. Thus, invoking penalty u/s 271(1)(c) of the Act is not just and proper. Therefore, the assessee succeeds in his legal plea as well as on merit and penalty does not sustain. Appeal of the assessee is allowed.
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2021 (3) TMI 948 - ITAT DELHI
Revision u/s 263 - disallowance of remuneration to working partners - HELD THAT:- When Revenue has not disputed the fact that partners are working partners as per partnership deed and as per clause 5, they are entitled for payment of remuneration which are to be determined as per provisions contained u/s 40(b)(v) of the Act, then Revenue has no business to disallow the same. In these circumstances, we are of the considered view that assessment order framed by the AO is not erroneous.
Question of fulfilling the second condition that, “assessment framed is prejudicial to the interest of the Revenue is concerned”, again we are of the considered view that when it is undisputed fact that remuneration paid to the individual partners has been taxed @ 30%, the same rate to which income of the assessee firm was to be taxed, the assessment order is not prejudicial to the interest of the Revenue.
Apart from non-fulfilling twin conditions to invoke the provisions contained u/s 263 of the Act by ld. Pr.CIT, it is a matter of record that in the preceding years i.e. AYs 2013-14 & 2014-15, the same remuneration as per clause 5 of the partnership deed and in consonance with section 40(b)(v) of the Act has been paid to the working partners by the assessee firm and has been accepted by the Revenue. No distinguishing facts have been brought on record by the Revenue to take a divergent view. So, in the ordinary course of circumstances, Revenue is required to follow the “rule of consistency” though every assessment year is to be assessed separately and independently.
Question framed is answered in affirmative and the ld. Pr.CIT is held to have erred in invoking the provisions contained u/s 263 of the Act directing the AO to disallow the remuneration to the working partners. - Decided in favour of assessee.
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2021 (3) TMI 947 - ITAT DELHI
Disallowance of remuneration to the partners on the ground that the partnership deed does not specify the quantification of remuneration to the partners - AO disallowed the salary to working partners which has been upheld by the Ld. CIT(A) - HELD THAT:- In the instant case, the partnership deed does not specify the manner of computation of quantum of remuneration to partners and the same has been left undetermined, undecided and left to the discretion of partners, therefore, I do not find any infirmity in the order of the Ld. CIT(A) in confirming the addition made by the AO.
In the instant case there is no clause at all regarding the methodology and the manner of computing the remuneration of partners. Therefore, this decision also is of no help to the assessee . In this view of the matter and respectfully following the decision of Hon’ble Jurisdictional High Court in the case of Sood Brij & Associates vs CIT[2011 (11) TMI 3 - DELHI HIGH COURT] relied on by the AO, thus find no infirmity in the order of the Ld. CIT(A) in confirming the disallowance of salary to the working partners - Grounds raised by the assessee are dismissed.
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2021 (3) TMI 946 - ITAT DELHI
Rectification of mistake - assessee contends that the Capital Gain only should be considered as part of total income instead of gross receipt as done by the CPC - rectification being mistake apparent from record therefore, the claim made in the return should be allowed - HELD THAT:- It is a fact on record that the assessee has applied for rectification and filed revised return thereby changing the head of this particular transaction from capital gain to income from other sources but the amount and the actual net gain remains the same. The rectification might not be correct under the statute as there is a change of head but when we go by the original return it clearly set outs that the net gain of ₹ 99,125/- has to be taken into account by the CPC.
In the present case, the assessee Trust has accumulated and set apart an amount of ₹ 5,96,00,000/- for financial year ended on 31/03/2016 and furnished the said information to Assessing Officer by filing Form 10 on 29/09/2014 i.e. before the time specified u/s 139(1) of the income Tax Act and invested the said amount into fixed deposits. The assessee has also claimed accumulation u/s 11(2) of ₹ 5,96,00,000/-/in the return of income. Thus, the assessee satisfied all the conditions as specified in section 11(2) and the accumulation should be allowed - the assessee reported the gain on sale of Birla Sun life mutual fund of ₹ 99,125 as income in return of income which should be considered as declared by the assessee instead of ₹ 2,06,00,000/. Therefore, the demand raised of ₹ 2,58,88,130/- and interest u/s 234B and 234C are hereby rejected and the benefit u/s 11 should be allowed to the assessee. Therefore, we are allowing the appeal of the assessee to this extent and the claim made in the return which was originally filed should be taken into account. Hence, the appeal of the assessee is allowed.
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2021 (3) TMI 944 - ITAT BANGALORE
Disallowing the claim of deduction u/s 80P(2)(a)(i) - HELD THAT:- The Hon’ble Apex Court in the case of The Mavilayi Service Co-operative Bank Ltd. & Ors. v. CIT [2021 (1) TMI 488 - SUPREME COURT] had held that the expression “members” is not defined under the Income-tax Act. Hence, it is necessary to construe the expression “members” in section 80P(2)(a)(i) of the I.T.Act as it is contained in the respective State Co-operative Act.
A.O. has merely denied the benefit of deduction u/s 80P(2)(a)(i) of the I.T.Act for the reason that the assessee was also dealing with associate / nominal members, which is against the dictum laid down by the Hon’ble Apex Court in case of Mavilayi Service Cooperative Bank Ltd. & Ors. (supra). The Hon’ble Apex Court has settled many issues. The instant case needs to be examined by the A.O. in light of the principles enunciated by the Hon’ble Apex Court in case of Mavilayi Service Co-operative Bank Ltd. & Ors. (supra). Accordingly, the CIT(A) order on this issue is set aside and the same is restored to the files of the A.O. for examination of the case in the light of the principles laid down by the Hon’ble Apex Court in the case of The Mavilayi Service Co-operative Bank Ltd. & Ors. v. CIT (supra). It is ordered accordingly.
Claim of deduction u/s 80P(2)(a)(i) of the I.T.Act with regard to interest income earned from fixed deposit kept with Co-operative Banks - In view of the above co-ordinate Bench order in the case of M/s.Raithara Seva Sahakara Sangh [2019 (1) TMI 282 - ITAT BANGALORE] we restore the issue of claim of interest income received from other cooperative banks to the files of the A.O. for de novo consideration. A.O. shall follow the directions of the Tribunal contained (supra). Appeal filed by the assessee is allowed for statistical purposes.
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2021 (3) TMI 942 - ITAT AHMEDABAD
Revision u/s 263 - Income derived from the partnership firm and claimed as exemption under s.10(2A) - non-application of mind to the pattern of transaction which smacks of a device to transfer the land in favour of new partners without paying due taxes. The impact of omission of s.47(ii) has also not found to be weighed - HELD THAT:- No document had been placed before us on behalf of the assessee to show that the AO, at any point of time, applied his mind to the apparent mis-match in the amount of exemption income claimed under s.10(2A) of the Act qua the corresponding income declared by the partnership firm. The issue apparently did not weigh in the mind of the AO, which has resulted in serious prejudice to the Revenue. The plea of all pervasive scrutiny conducted by AO thus does not resonate with apparent gaffes shown.
We find that the AO has passed a very cryptic and nondescript order without any discussion on any of the point raised in the revisional order. Alongside, it also could not be shown that the AO was alive to such pertinent concerns and reason thereof at the time of assessment. A plain reading of Explanation to Section 10(2A) of the Act does not summarily rule out an embedded plausibility in the concern of excess deduction claimed as expressed by the Revisional Commissioner. Non-examination of such crucial aspects which has direct bearing on the correct assessment of income has ostensibly rendered the assessment order to be erroneous as well as prejudicial to the interest of the Revenue. We thus hold that the assessment order passed in such gross lack of application of mind causing prejudice is thus amenable to jurisdiction under s.263 - Decided against assessee.
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2021 (3) TMI 936 - ITAT DELHI
Accrual of income - production and sale of steam without any consideration - transaction between holding and subsidiary company - estimating notional receipt by the AO towards the supply of power as against the real income Nil. - HELD THAT:- As decided in M/S SBEC BIOENERGY LTD., DELHI [2012 (3) TMI 665 - ITAT DELHI] Sale price is the income of seller & liability being purchase price to the purchaser. It can be treated as income accrued in the hands of the seller (and liability crystallized in the hands of the purchaser) only if the relevant contract is accepted by both the parties to contract. There is no doubt that the steam was supplied by the SSL as it was done in earlier years.
Earlier the income (being sale value of steam) was credited in the accounts at the rate agreed and confirmed by the SSL. In fact the rate was retrospectively rendered & such reduction was agreed to by both the parties. On this basis itself the ITAT in A Y 00-01 allowed reduction of income from sale of steam. The point to be noted is that the income from any contract (sale) can be said to accrue as per agreed terms of such contract. If there is any dispute by ether party the accrual of income (of expenditure in the hands of other party) will be subject to the outcome of such dispute & accordingly contingent.
Normally the income in such cases can be said to accrue in the year in which the dispute is resolved & other party acknowledges the debt. Even in such cases some party may choose to recognize its income or liability as accrued accordingly to facts & circumstances whereby it is certain to be able to enforce the terms of the contract. However, the appellant did not recognize any revenue from sale of steam in current year according to AS-9, since SSL had categorically refused to make any payment for supply of steam. Therefore, non-recognition of any accrual of income from supply of steam does not appear to be, unjustified.
As the income of one company will be a deductible expenditure for the other and between the two there is no tax gain from this transaction. The income in the case of appellant is eligible to 100% deduction u/ s80 lA also. Hence no allegation of tax planning can be attributed in this transaction, which appears to be wholly for business considerations.
The transaction is between the holding and subsidiary company. Therefore in my opinion the action of the appellant company in not charging for steam supplied to SSL is quite justified on fact and cannot be said to be deliberate or motivated. Moreover even if an assessee gives (sells) his goods free of cost to other, there is no provision in the IT Act to tax its sale value as income on presumptive basis. Legally Speaking since no income has accrued & neither any payment has actually been received by the appellant company, making addition in respect of estimated price of steam amounts to taxing of notional income which is not permissible. In view of this addition is deleted. - Decided against revenue.
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2021 (3) TMI 935 - ITAT DELHI
Additional depredation u/s 32 (1)(iia) - process of delivery of CNG to automobiles at the CNG filling centres - Fulfilment of mandate of manufacture or production or an article or thing which is mandatory requirement for claiming additional depredation u/s 32 (1)(iia) - CIT (A) confirmed the addition holding that the company is not into manufacturing or production of CNG - HELD THAT:- As decided in the case Central UP Gas Ltd. [2016 (12) TMI 814 - ALLAHABAD HIGH COURT] Compressed natural gas in its compressed form has a distinct identity and character and use. It is settled law of the Apex Court in the case of Income Tax Officer Vs.Arihant Tiles and Marbles P. LTD. reported in [2009 (12) TMI 1 - SUPREME COURT] that when a commodity acquires a distinct name, use and commercial identity, it would acquire the trait of 'manufacture'.
The question is answered in favour of the assessee
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