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Income Tax - Case Laws
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2023 (3) TMI 1577
Survey proceedings u/s 133A - excess stock - scope of survey statement recorded on oath - Addition based solely on the basis of statements recorded u/s 133A, especially when the assessee has retracted such statements - HELD THAT:- As observed by the lower authorities, and, rightly so, the assessee had in the garb of reconciliation of the excess stock sought to nullify the disclosure of additional income towards discrepancies in stock that had emerged in the course of survey proceedings. Also we find substance in the claim of the DR that retraction of the statement of the assessee in the course of the survey proceedings was merely based on an afterthought. We, say so, for the reason that though it is the claim of the assessee on one hand that as the impugned statement in the course of the survey proceedings was recorded under confused state of mind, while for at the same time she had in her return of income admitted the additional income of Rs. 10 lac towards unexplained investment that was disclosed in the same statement.
Claim of the AR that the impugned variance in the value of the closing stock as had been arrived at by survey officials on the basis of tentative trading account prepared on 03.03.2011 as against that found available on the basis of physical stock taking was, inter alia, attributable to the reasons that purchase of Rs. 3,29,702/- had remained unrecorded in the books of account on the date of survey i.e. on 03.03.2011, we are unable to persuade ourselves to subscribe to the said unsubstantiated claim. Assessee had neither before the lower authorities nor before us placed on record any such material which would substantiate the authenticity of his aforesaid claim. Also, on the same footing the unsubstantiated claim of the assessee that certain direct expenses were not recorded in the tentative trading account that was compiled in the course of the survey proceedings can also not be accepted in absence of any material in support thereof.
Thus we are unable to persuade ourselves to subscribe to the contentions advanced by the Ld. AR, wherein, he had tried to explain the reasons leading to the impugned variance in the stock that was found lying with the assessee on the basis of physical stock taking as against that disclosed in her books of accounts at the time of survey proceedings. Thus, the Ground of appeal No. 1 raised by the assessee is dismissed.
Disclosure as made by the assessee towards excess cash found in the course of the survey conducted on 03.03.2011 u/s. 133A - We are of the considered view that as the assessee had failed to come forth with any plausible explanation as regards the said variance, therefore, no infirmity could be related to the orders of the lower authorities who had rightly made/upheld the addition to the said extent in the hands of the assessee. Thus, the Ground of appeal No. 2 raised by the assessee is dismissed in terms of my aforesaid observations.
Excess stock found on survey u/s. 133A only on the basis of survey statement recorded on oath - A.Y. 2011-12 - Incorrect figure of opening stock - HELD THAT:- We find substance in the claim of the Ld. AR that the lower authorities were not justified in taking the figure of the “opening stock” i.e. on 01.04.2010 at Rs. 75,16,539/- as against the value of closing stock of Rs. 1,09,82,356/- (supra) reflected in the audited account of the assessee on 31.03.2010. Nothing has been brought to our notice which would reveal that the “closing stock” of Rs. 1,09,82,356/- (supra) on 31.03.2010 as disclosed in the audited financial statements of the assessee for the immediately preceding year i.e F.Y 2009-10 was incorrect, and thus, was not to be acted upon. We, thus, in terms of our aforesaid observations direct the A.O. to recast the aforesaid tentative trading account that was compiled in the course of the survey proceeding on 03.03.2011 and accordingly rework out the value of the closing stock on 03.03.2011.
Incorrect amount of purchase - As the Ld. AR had failed to substantiate his said claim on the basis of documentary evidence, therefore, we finding no infirmity in the view taken by the lower authorities uphold the same to the extent they had rejected the same on the said count.
Applying of GP rate 24.14% as against actual/correct GP rate of 5.8% - We are principally not in agreement with the aforesaid methodology adopted for compiling of the tentative trading account on the date of survey i.e 03.03.2011, i.e, by applying of an ad-hoc GP rate to the sales (recorded) of the assessee upto the date of survey and taking the “closing stock” as the balancing figure. The aforesaid methodology in our considered view militates against the basic principles of accountancy.
Apart from that, as the GP rate of the assessee for the immediately preceding year i.e. relevant to A.Y. 2010-11 was 5.83%, Page 228 of APB and that for the year under consideration was 5.80%, Page 56 of APB, therefore, on the said count itself we find substance in the claim of the Ld. AR that there could be no justification for adoption of GP rate at 24.14% while preparing the tentative trading account on the date of survey i.e. on 03.03.2011. We, thus, in terms of our aforesaid observations direct the A.O. to adopt GP rate of 5.8% i.e for the year under consideration while recasting the trading account on the date of survey i.e on 03.03.2011.
Indirect income wrongly credited in the trading account - It is though the claim of the Ld. AR that the indirect income of Rs. 11,33,994/- was wrongly credited in the tentative trading account that was prepared by the survey officials on the basis of incomplete books of account of the assessee on 03.03.2011, however, as the assessee had not only failed to substantiate her aforesaid claim but also had herself held the said income as “direct income”, therefore, we are unable to accept the said claim.
We, thus direct the A.O. to give effect to our aforesaid findings. Thus, the Ground of appeal No. 1 raised by the assessee is partly allowed in terms of our aforesaid observations.
Disclosure as made by the assessee towards excess cash found in the course of the survey conducted on 03.03.2011 u/s. 133A - We are of the considered view that as the assessee had failed to come forth with any plausible explanation as regards the said variance, therefore, no infirmity could be related to the orders of the lower authorities who had rightly made/upheld the addition to the said extent in the hands of the assessee. Thus, the Ground of appeal No. 2 raised by the assessee is dismissed in terms of my aforesaid observations.
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2023 (3) TMI 1575
Cash deposited in the bank account during demonetization period - HELD THAT:- Assessee closed down its business operations on 31-10-2016. As the assessee closed down its business on 31-10-2016, all the outstanding debtors were realised, creditors were paid off and the stock in hand was liquidated. That is the reason that the figure of sundry debtors, sundry creditors and stock in trade as at the end of the year have been reflected at Nil.
Opening cash balance has been shown in such tabulation at Rs.5,29,870/-. Figures of cash sales and opening debtors realised along with payment to all the creditors and other expenses are also depicted on page 5 of the impugned order.
Since the business was closed down on 31-10-2016, the assessee, after realising all the debtors, had cash of Rs.30,60,000/- that was deposited in the bank account, against which the AO made the addition of Rs.29,10,000/-. Source of cash deposits in the bank is fully substantiated by the cash sales and realization from debtors. In such circumstances, there can be no warrant for making or sustaining any addition. Therefore, order to delete the addition.
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2023 (3) TMI 1574
Disallowing the claim on the interest income u/s 80P(2)(d) as received from Maharashtra State Co-operative Bank Ltd - HELD THAT:- Though the co-operative banks pursuant to the insertion of sub-section (4) to Sec. 80P would no more be entitled for claim of deduction u/s 80P of the Act, but as a cooperative bank continues to be a co-operative society registered under the Co-operative Societies Act, 1912 (2 of 1912), or under any other law for the time being in force in any State for the registration of co-operative societies, therefore, the interest income derived by a co-operative society from its investments held with a co-operative bank would be entitled for claim of deduction u/s 80P(2)(d) of the Act.
As relying on M/s. Rema Sahakari Karkhana Ltd [2022 (1) TMI 419 - ITAT PUNE] assessee Co-operative Society’s claim for deduction on Interest income from Maharashtra State Co-operative Bank Ltd. is allowable deduction u/s 80P(2)(d) of the Act. Therefore, the appeal of the assessee is allowed.
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2023 (3) TMI 1571
Seeking extension of stay on recovery of outstanding demand - HELD THAT:- As observed, while considering the initial stay application filed by the assessee, the Tribunal vide order [2022 (9) TMI 1664 - ITAT DELHI] had granted conditional stay subject to adjustment of refund of Rs. 39,00,00,000 against the outstanding demand.
Though, early hearing of the appeal was directed, however, the cause of non-disposal of appeal cannot be attributed to the assessee. We are informed, now the appeal is fixed for hearing on 03.05.2023.
Since, the material facts based on which stay was earlier granted to the assessee have not changed, we are inclined to extend the stay for a further period of 180 days from the date of this order or till the disposal of the corresponding appeal, whichever is earlier. In the result, the stay application is allowed.
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2023 (3) TMI 1570
Disallowance of interest received by assessee by holding it to be revenue in nature - HELD THAT:- There is no dispute regarding the principle compensation received by assessee pursuant to an award passed by Subordinate judge of Kozhikode. The award included additional compensation with interest at the rate of 9% pa. for a period of one year from 23.04.2014. The award also included interest of 15% pa. till the date of payment. In our considered view, the interest of 9% received by assessee for a period of one year on the additional compensation was by way of accretion to the value and therefore would not fall within the ambit of the expression “interest” as envisaged u/s. 145A(b) of the act.
Any interest received by the assessee at the rate of 15% for not depositing the compensation within the time frame as directed by the court would assume the character of income. We therefore are of the opinion that only such interest amount i.e. attributed for delayed deposit of the compensation can be treated as income in the hands of the assessee.
In the present facts of the case, AO treated the entire interest received to be income from other sources on which benefit of deduction u/s. 57(iv) has been allowed as deduction. This computation of disallowance is not in accordance with law. What could be considered for disallowance is only in respect of the interest amount computed at 15%, received by the assessee.
We therefore, remand this issue to the AO for necessary verification. The assessee is directed to file the award passed or the intimation issued by the Collector bifurcating the interest payment computed at 9% and/or 15%. AO is directed to consider only the interest that is computed on the compensation at 15% for disallowance, and to grant necessary deduction u/s. 57 of the act, if any. Grounds raised by the assessee stands partly allowed for statistical purposes.
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2023 (3) TMI 1569
Addition on account of low Melting gains shown by the assessee compared to earlier financial years - HELD THAT:- As decided in own case [2022 (10) TMI 1280 - ITAT PUNE] for A.Y.2014-15 held it is a fact that assessee purchases old ornaments. The purity depends on many factors. It is very difficult to generalise the purity. We have gone through the melting gain register which was submitted in the paper book. It is observed that assessee has maintained a proper register
AO has not pointed out any defect in the said melting gain / loss register. The AO has also not pointed out any defect in the books of accounts maintained by the assessee. It is also a fact that the ITAT Pune Bench in assessee’s own case for earlier year has decided this issue in favour of assessee. Therefore, we are of the opinion that the ld.CIT(A) has rightly directed the AO to delete the addition following the ITAT Pune Bench’s decision for the A.Y. 2009-10, accordingly, grounds of appeal raised by the Revenue are dismissed.
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2023 (3) TMI 1564
TP Adjustment - computation of operating cost - rejection of segmental profitability furnished by the assessee - TPO has not accepted assessee’s claim and allocated to both the AE and non-AE segments on the basis of the turnover of the respective segments - HELD THAT:- When the employees of AE and non-AE segments are separately identifiable based on books of accounts maintained by the assessee, we do not find any valid reason why an aggregate approach has to be adopted and the employee cost has to be apportioned between the AE and non-AE segments based on turnover.
It is evident, neither the TPO, nor learned DRP have disputed the fact that the assessee has maintained separate accounts for employee cost.
Basically, DRP has rejected assessee’s claim for two reasons, firstly, on what basis the common employees were allocated is not clear and, secondly, hourly work-sheet of employees was not made available. We do not find the aforesaid reasoning of DRP acceptable. Firstly, as discussed earlier, the assessee has maintained project-wise list of employees working in AE segment.
Therefore, the allegation of DRP that on what basis the common employees were allocated is not known does not seem to be borne out from record. Insofar as, the non-maintenance of hourly work-sheet of employees, we are of the view that there is no valid reason for the assessee to maintain such hourly worksheet, when it is not raising its invoices on hourly basis. We do not approve the decision of the TPO and learned DRP in allocating employees cost between the AE and non-AE segments. Therefore, the PLI computed by the assessee has to be accepted. This ground is allowed.
Comparable selection - Korus Engineering Solutions Pvt. Ltd. - On perusal of the annual report of the company placed in the paper-book, it is observed that the information regarding the business profile of the company is sketchy and lacks necessary details. Further, the balance-sheet and profit and loss account do not give the break-up of the source of revenue earned. Therefore, due to lack of information regarding the functional profile of the company available in the public domain, it cannot be ascertained, whether it is functionally similar to the assessee. Simply based on certain information in the website of the company functional similarity cannot be adjudged. Therefore, for this reason, the company, in our view cannot be selected as a comparable.
Insofar as the other contention of the assessee regarding substantially less export turnover compared to the assessee, we are unable to accept assessee’s claim as neither the assessee, nor TPO have applied the export turnover filter. For the reasons discussed above, we direct the AO to exclude this company as a comparable.
TCE Consulting Engineers Ltd. - assessee seeks exclusion of the aforesaid company is due to substantially low export sales turnover, which works out to 6.21% of the total turnover as compared to 100% exports of the assessee - On a specific query, appearing for the assessee fairly submitted that neither the assessee has applied the export turnover filter in its TPSR, nor the TPO has applied the said filter. Therefore, in our view, at this stage, we cannot introduce a fresh filter to select/reject comparables as it will disturb the entire TP analysis of the assessee and the TPO. Therefore, we are inclined to uphold the selection of this comparable.
Onward Technologies Ltd. - only ground on which the assessee seeks exclusion of this company is due to failure of Related Party Transaction (RPT) of more than 25% - Both the TPO and learned DRP have applied RPT filter of more than 25%. Therefore, any company having RPT of more than 25% has to be excluded. However, considering the fact that the assessee is raising the issue of RPT for the first time before the Tribunal, we are inclined to restore the issue to the AO for examining assessee’s claim and excluding the comparable in case RPT is found to be more than 25%. Ground is partly allowed.
Working capital adjustment - We direct the AO to examine assessee’s claim, keeping in view the relevant statutory provisions and judicial precedents applicable to the assessee. Needless to mention, the assessee must be afforded reasonable opportunity of being heard to the assessee before deciding the issue. This ground is allowed for statistical purposes.
Computational error in computing the operating profit margins of the comparables - As we direct the AO to examine assessee’s claim with reference to the facts and materials on record and rectify the computational error, if any, in computing the profit margin of the comparables. The assessee must be afforded reasonable opportunity of being heard before deciding the issue.
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2023 (3) TMI 1561
Validity of the assessment order framed u/s 143(3) - notice u/s 143(2) being jurisdictional requirement was served beyond the stipulated time provided therein - HELD THAT:- Undeniably, it was holiday dated 30 September 2018 being Sunday which was also the last working day for the service of notice under the provisions of section 143(2) of the Act for the year under consideration.
If last working day happens to be a holiday then the authorities concerned have been given power to make the necessary compliance on the next working day.
Thus apparently, it appears that the AO has made sufficient compliance by issuing the notice on the next working day being 1 October 2018 despite the fact that the office of the income tax was operational dated 30 September 2018 and the notice was digitally sign by the AO on 30 September 2018.
To our understanding the Sunday being a holiday cannot be assumed or working day like any other day of the work. In-fact, the officers were working even on the Sunday for the reason that there was cut-off date for framing the assessment as well as for filing the income tax return. In other words, there was more workload on the Government Officers and therefore they had to work even on the holiday. But that does not mean that such holiday shall be presumed as a working day like any other normal day.
The object of working on the holiday was to reduce the workload. Thus, the benefit granted under the General Clause Act as discussed above cannot be deprived to the Revenue.
Accordingly, we hold that the notice, though digitally signed on 30 September and the same was put to service dated 1 October 2018, has been served after the sufficient compliance under the law and therefore in the given facts and circumstances, the assessment framed cannot be held as not maintainable - Appeal filed by the assessee is hereby dismissed.
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2023 (3) TMI 1560
Addition u/s 68 - unexplained cash credit - assessee failed to discharge the onus cast upon it to prove that the LTCG claimed as exempt u/s 10(38) was genuine - abnormal rise in the price of shares of scrip Wagend Infra venture Ltd., which against the human probability in view of the fact that the company was neither making any profit nor declared dividend -CIT(A) deleted addition - HELD THAT:- AO has not conducted any investigation or enquiry in respect of the information submitted by the assessee and relied on the information of the third party whose statement was not cross examined.
CIT(A) has considered the detailed facts, submissions and the financial transactions and catena of judicial decisions to test check the creditworthiness and identity of the investee company. The CIT(A) has also observed that the assessee has discharged its burden on submitting the information in the proceedings. Further in the case of the assessee’s father case, the long term capital gains on sale of same scrip/shares was accepted as dealt in the above paragraphs and the CIT(A) opined that there cannot be two different actions by the revenue in respect of same scrip/ shares.
AO has failed to make further enquiries/investigations and relied on the statement of third party.
CIT(A) has dealt on the facts and provisions of law and judicial decisions and the applied the ratio of decisions to the present case and deleted the addition.
DR could not controvert the findings of the CIT(A) with any new cogent material or information to take different view. Decided against revenue.
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2023 (3) TMI 1554
Revision u/s 263 - development fees from its students had been directly carried to the balance sheet under the nomenclature “Development Fund’ instead of being routed through the income and expenditure account and this was then treated as part of the Revenue and therefore the taxable income u/s 11 (1) - HELD THAT:- CIT (E) simply stated that the impugned assessment order was erroneous and prejudicial in the interest of Revenue.
ITAT has in the impugned order discussed in detail the explanation offered by the Assessee regarding application of funds. Inter alia, it was noticed that CIT (E) had taken the total revenue earned, granted 15% accumulation, without considering the capital expenditure to the tune of Rs.258 crores. As noted by the ITAT, if the said bill taken into account the taxable income would be a loss. It would have been observed the 15% accumulation granted to the Assessee. Further, even after treating the development fees of Rs.111 crores as revenue income, the net figure would still be a loss.
As noted by the ITAT, if only the CIT (E) had undertaken an inquiry, he would have come to the above conclusion and there would have been no need to act to the taxable income of the Assessee. The Court is satisfied that no error has been committed by the ITAT in concluding that the order of the CIT (E) is unsustainable in law. No substantial question of law arises.
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2023 (3) TMI 1551
Exemption u/s 54F - denial of claim for not constructing the building within the due date as prescribed by the section 54F - HELD THAT:- In the case on hand, the assessee has invested the entire amounts before filing of the return of income as mandated in sec.54F & has claimed exemption u/s 54F.
On perusal of the documents filed by the assessee we observed that the assessee had genuine reason for not constructing the building within the due date as prescribed by the section 54F but the intention of the assessee was to construct of the residential house building.
As construction cannot be considered as the assessee has constructed a house property at plot No. 197 as observed by the AO.
Accordingly the assessee is eligible for the proportionate deduction as per section 54F since the entire sale proceeds were not used for the new assets.
Since the purchase of property from BDA is subjudice with the Hon’ble High Court of Karnataka and the assessee could not show us the status of the case before the Hon’ble High Court. If in case the assessee gets refund from the BDA, in such case the assessee will be liable for capital gain tax as per law. Accordingly we direct to AO to compute the capital gain in above terms. Appeal of the assessee is partly allowed.
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2023 (3) TMI 1550
Reopening of assessment u/s 147 as barred by limitation - notices having been issued after passage of six years from the end of the relevant assessment year - Period of limitation to issue notice issued u/s 148A(b) - Time limit for notice - scope of new regime as per section 148A - prescribed permissible timeline of six years - HELD THAT:- As in agreement with the decision in Keenara Industries Pvt. Ltd. [2023 (3) TMI 104 - GUJARAT HIGH COURT] of this Court as well with Allahabad High Court decision in Rajeev Bansal[2023 (2) TMI 1081 - ALLAHABAD HIGH COURT]
The point is no more res integra that all original notices under section 148 of the Act referable to the old regime and issued between 01.04.2021 to 30.06.2021 would stand beyond the prescribed permissible timeline of six years from the end of Assessment Year 2013-14 and Assessment Year 2014-15.
Therefore, all such notices when they would relate to Assessment Year 2013-14 or Assessment Year 2014-15 would be time barred as per the provisions of the Act as applicable in the old regime prior to 01.04.2021. Furthermore, these notices cannot be issued as per the amended provision of the Act.
Revenue was entirely at his receiving end, unable to dispute the position of law holding the field as above.
All the impugned notices in the respective petitions under section 148 of the Act relatable to Assessment year 2013-14 or the assessment year 2014-15, as the case may be, are beyond the permissible time limit, therefore, liable to be treated illegal and without jurisdiction.
Since the petitions deserve to be allowed on the aforesaid crisp legal ground alone, learned advocates for the parties submitted to agree that facts and other legal issues may not be gone into by the Court. Accordingly, they are neither delineated, nor are gone into in respect of the above petitions.
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2023 (3) TMI 1549
Validity of reopening of assessment - Period of limitation to issue notice issued u/s 148A(b) - Time limit for notice - scope of new regime as per section 148A - prescribed permissible timeline of six years - notices having been issued after passage of six years from the end of the relevant assessment year - HELD THAT:- This Court is in agreement with the decision in Keenara Industries Pvt. Ltd.[2023 (3) TMI 104 - GUJARAT HIGH COURT] of this Court as well with Allahabad High Court decision in Rajeev Bansal[2023 (2) TMI 1081 - ALLAHABAD HIGH COURT]
Therefore, the point is no more res integra that all original notices u/s 148 of the Act referable to the old regime and issued between 01.04.2021 to 30.06.2021 would stand beyond the prescribed permissible timeline of six years from the end of Assessment Year 2013-14 and Assessment Year 2014-15. Therefore, all such notices when they would relate to Assessment Year 2013-14 or Assessment Year 2014-15 would be time barred as per the provisions of the Act as applicable in the old regime prior to 01.04.2021. Furthermore, these notices cannot be issued as per the amended provision of the Act.
Revenue was entirely at his receiving end, unable to dispute the position of law holding the field as above.
The impugned notice in this petition under section 148 of the Act relatable to Assessment year 2013-14 is beyond the permissible time limit, therefore, liable to be treated illegal and without jurisdiction.
Since the petition deserves to be allowed on the aforesaid crisp legal ground alone, learned advocates for the parties submitted to agree that facts and other legal issues may not be gone into by the Court. Accordingly, they are neither delineated, nor are gone into.
As a result, Notice issued by Respondent-Assessing Officer under Section 148 seeking to reopen the assessment in respect of Assessment Year 2013-14, Order passed by the Respondent under Section 148A(d) of the Act, and all consequential actions, as may have been taken, are hereby quashed and set aside.
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2023 (3) TMI 1548
Validity of reopening of assessment - Period of limitation to issue notice issued u/s 148A(b) - Time limit for notice - scope of new regime as per section 148A - prescribed permissible timeline of six years - notices having been issued after passage of six years from the end of the relevant assessment year - HELD THAT:- This Court is in agreement with the decision in Keenara Industries Pvt. Ltd.[2023 (3) TMI 104 - GUJARAT HIGH COURT] of this Court as well with Allahabad High Court decision in Rajeev Bansal[2023 (2) TMI 1081 - ALLAHABAD HIGH COURT]
Therefore, the point is no more res integra that all original notices under section 148 of the Act referable to the old regime and issued between 01.04.2021 to 30.06.2021 would stand beyond the prescribed permissible timeline of six years from the end of Assessment Year 2013-14 and Assessment Year 2014-15. Therefore, all such notices when they would relate to Assessment Year 2013-14 or Assessment Year 2014-15 would be time barred as per the provisions of the Act as applicable in the old regime prior to 01.04.2021. Furthermore, these notices cannot be issued as per the amended provision of the Act.
Revenue was entirely at his receiving end, unable to dispute the position of law holding the field as above.
The impugned notice in this petition under section 148 of the Act relatable to Assessment year 2013-14 is beyond the permissible time limit, therefore, liable to be treated illegal and without jurisdiction.
Since the petition deserves to be allowed on the aforesaid crisp legal ground alone, learned advocates for the parties submitted to agree that facts and other legal issues may not be gone into by the Court. Accordingly, they are neither delineated, nor are gone into.
As a result, Notice issued by Respondent-Assessing Officer under Section 148 seeking to reopen the assessment in respect of Assessment Year 2013-14, Order passed by the Respondent under Section 148A(d) of the Act, and all consequential actions, as may have been taken, are hereby quashed and set aside.
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2023 (3) TMI 1546
TP Adjustment - relationship of AE between the Assessee Company and GLATIPL - Associated Enterprise Relationship - one of the directors of the assessee company and of GLATIPL is common - whether an entity is an associate enterprise and control is not merely in terms of shareholding but participation in management and decision making? - HELD THAT:- It was held by the tribunal in this case that in order to constitute relationship of an AE, the parameters laid down in both sub sections (1) and (2) should be fulfilled. As per the explanation, amendment carried out in sub section (2) of section 92A by Finance Act, 2002 w.e.f. 01.04.2002, as reproduced by the tribunal in Para 11 above, mere participation of one or more persons in the management or control or capital of both the enterprises shall not make them AE unless the criteria specified in sub section (2) are fulfilled and even as per the learned DR of the revenue, clause (j) of sub section (2) of section 92A is attracted but this claim is also devoid of merit because he could only point out that one director of the assessee company and of GLATIPL is common but this fact alone does not establish that the said common director is controlling GLATIPL when the said company is a subsidiary of ILSGL and the assessee company or its directors are not having any relationship with ILSGL or director of ILSGL.
Hence, by respectfully following the Tribunal’s order, that since the parameters laid down in sub section (1) and (2) of section 92A are not fulfilled, there is no relationship of AE between the Assessee Company and GLATIPL and therefore, the provisions of Chapter X of the I.T. Act has no application.
Disallowance of Transportation charges, Disallowance of Expenses under Explanation to section 37 (1) and Addition made on account of sale of Land - In line with the tribunal order in A.Y. 2010-11 in assessee's own case [2016 (7) TMI 1435 - ITAT BANGALORE] we delete first two disallowances i.e. 1) Disallowance of Transportation charges, and 2) Disallowance of Expenses under Explanation to section 37 (1) and in respect of third issue i.e. Addition made on account of sale of Land, we set aside the order of CIT (A) on that issue and restore the matter to A.O. for a fresh decision with the same directions as were given by the tribunal in A. Y. 2010-11.
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2023 (3) TMI 1545
Revision u/s 263 - errors in the assessment-order passed by AO - allowability of prior period expenses, Belated payment of provident funds u/s 36(1)(va), Provision for payment of gratuity, Payments inadmissible u/s 43B and Provision for bad and doubtful debts.
HELD THAT:- We find that in the present case, the revision-action had been taken by Ld. PCIT on the basis of a proposal mooted by lower-authorities and not on the basis of his own examination and consideration of the record. Therefore, the present case is directly governed by decision of Alfa Laval Lund AB [2021 (11) TMI 327 - ITAT PUNE] in which revision action in such a manner was held to be illegal and quashed.
As five items of disallowance mentioned by PCIT, at least four items were such which did not require any disallowance and still PCIT has alleged in his show-cause notice. Thus, it is quite manifest that the Ld. PCIT has given approval as a mere formality, merely on the basis of proposal of lower authorities and without examination/consideration of records.
Clearly therefore, the revision-action undertaken in the present case is not in accordance with the requirement/mandate of section 263. Therefore, we are inclined to quash such revision-order and restore the original assessment-order. Assessee appeal allowed.
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2023 (3) TMI 1543
Revision u/s 263 beyond period of limitation - HELD THAT:- Any order u/s 263 of the Act can be passed only within two years from the date of the order sought to be revised.
In the instant case admittedly the order sought to be revised is dated 31.03.2017 and the impugned notice is issued on 01.02.2023 and the proceedings contemplated as per the notice is liable to be set aside on the ground of limitation.
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2023 (3) TMI 1539
Sale of immovable properties (flats) for consideration lower than the market price of the said flats adopted for stamp duty purposes - Applicability of Section 43CA - HELD THAT:- We observe from the submissions made by the Ld. AR that assessee has sold various flats and the sale consideration declared by them and registered stamp duty are different having a difference between 5.37% to 28.7%.
AR made a submissions that the amendment made to section 43CA are retrospective in nature and in this regard he relied on the decision of the Shri Harish H Gandhi v. ACIT [2022 (6) TMI 1277 - ITAT MUMBAI] as held that language of provisions of Section 50C are exactly pari materia with provisions of Section 43CA of the Act. Hence, though the aforesaid decision was rendered in the context of Section 50C of the Act, the same analogy would apply for provisions of Section 43CA of the Act also as similar proviso is available in Section 43CA of the Act also. Hence we hold that the difference added by the ld. AO in the assessment falls below the tolerance band of 10% and hence, by applying the proviso to Section 43CA of the Act, no addition is required to be made in the instant case u/s. 43CA.
Thus the amendment made to section 43CA is retrospective in nature. Accordingly, as per the proviso the percentage range up to 10% are outside the provisions of section 40CA of the Act . Accordingly, Sl. No. 3, 4 5 & 8 are outside the provisions of this section considering the fact the difference is less than 10%. In Sl. No. 9 for Flat No. 302 the difference is 10.06% which is near to the specified limit fixed at 10%, since the difference is very meager we direct the Assessing Officer to exclude Sl. No. 9 also. We are inclined to partly allow the ground raised by the assessee.
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2023 (3) TMI 1538
Validity of reopening of assessment - Time limit for notice u/s 149 - Applicability of the time limit for issuing such notices as per the old regime and the new regime introduced by the Finance Act, 2021 - notice issued in the old regime period due to becoming time barred - scope of notices issued u/s 148 of the new regime between July and September 2022 - Application of TOLA to the Income Tax Act after 1 April 2021 -
HELD THAT:- Limitation of six years from the end of relevant assessment year operated as timeline in the old regime for issuance of notice u/s 148 beyond which period, it was not competent for the assessing officer to issue notice for reassessment. This embargo is made to continue in the new regime also.
Now the reopening notices which related to the period prior to 01.04.2021, but issued between 01.04.2021 to 30.06.2021 came to be challenged before the Division Bench of this Court in Keenara Industries Pvt. Ltd. [2023 (3) TMI 104 - GUJARAT HIGH COURT] by placing reliance on directions of Ashish Agarwal [2022 (5) TMI 240 - SUPREME COURT], and thus by contending that since they were issued after six years from the end of the relevant assessment year, they were barred and were without jurisdiction.
Stating differently, as per the old regime, for issuance of notice under section 148, in relation to AY 2013-14, the outer time limit would expire on 31.03.2020 and for issuing such notice in relation with AY 2014-15, the time period would conclude on 31.03.2021.
As already noted, the department took shelter of the time limit extended by Notifications of the Central Board of Direct Taxes to treat the above class of notices to be within time.
In Keenara Industries Pvt. Ltd. (supra), this Court proceeded to hold that enacting the provisions in Taxation and Other Laws (Relaxation & Amendment of Certain Provisions) Act, 2020, was not the permissible device whereby the time limit could be legitimately extended for the purpose of issuing Notices under Section 148, which were otherwise barred in terms of Section 149, as it exists in the old regime.
The Taxation and Other Laws Act, 2020 was rightly viewed to be a secondary legislation. It was therefore held that secondary legislation would not override the principal legislation-the Finance Act, 2021. Also negatived by the Division Bench in Keenara Industries Pvt. Ltd. (supra) as per observations the concept of freezing the time limit. It was held that it was not permissible in law for the Revenue to travel back in time. Nor does the Taxation and Other Laws Act endorse to such concept. It was held as per paragraphs 38 and 39 of the Keenara Industries Pvt. Ltd. (supra) that Notifications extending the due dates under the old provisions could not breath any more after the repeal of the old provisions.
Therefore, the point is no more res integra that all original notices under section 148 of the Act referable to the old regime and issued between 01.04.2021 to 30.06.2021 would stand beyond the prescribed permissible timeline of six years from the end of Assessment Year 2013-14 and Assessment Year 2014-15. Therefore, all such notices when they would relate to Assessment Year 2013-14 or Assessment Year 2014-15 would be time barred as per the provisions of the Act as applicable in the old regime prior to 01.04.2021. These notices cannot be issued as per the amended provision of the Act.
Revenue was entirely at his receiving end, unable to dispute the position of law holding the field as above.
All the impugned notices in the respective petitions u/s 148 of the Act relatable to Assessment year 2013-14 or the assessment year 2014-15, as the case may be, are beyond the permissible time limit, therefore, liable to be treated illegal and without jurisdiction.
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2023 (3) TMI 1536
Demand raised on employees - employer of the petitioners did not pay the Tax Deducted at Source from the salary of the petitioners - HELD THAT:- Allowed, subject to the petitioner filing legible/translated copies of the annexures, at least three days before the next date of hearing.
Petitioner, says that the issue which arises in the instant matter also arises in a bunch of matters, which includes WP(C) titled Shantanu Awasthi v. Income Tax Officer, Ward 67(1), Delhi & ORs [2023 (3) TMI 1535 - DELHI HIGH COURT].
Issue notice.Counter-affidavit(s) will be filed within two weeks.
Rejoinder(s) thereto, if any, will be filed at least three days before the next date of hearing. List the matter on 12.04.2023.
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