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Income Tax - Case Laws
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2022 (6) TMI 1235 - ITAT MUMBAI
Condonation of delay of 10 years in filing the present appeal. - winding up proceedings against the assessee was initiated in the year 1998 and winding up petition was filed before the Hon’ble Bombay High Court - HELD THAT:- In the present case, winding up petition was filed against the company in the year 1998 and the winding up order was ultimately passed by the Hon’ble High Court on 30/03/2010. Thus, even if the provisions of section 458A of the Companies Act 1956 are said to be applicable to present case, the period from filing of the winding up petition till 30/03/2010 and a further period of one year from the date of winding up order i.e. till 30/03/2011, can be the excluded for the purpose of computation of limitation period of present appeal. In the present case, the impugned order by learned CIT(A) was passed on 03/12/2007. As the due date for filing the appeal against the aforesaid impugned order before the Tribunal was falling during the exclusion period, as stated in section 458A of the Companies Act, 1956, in our considered view, the limitation period in the present case started from 31/03/2011
The present appeal was filed by the assessee on 16/05/2018, i.e. after a more than 7 years from 31/03/2011. Further, in the present case, despite the cause of action having arisen after passing of the impugned order by learned CIT(A) and Official Liquidator also having power to initiate proceedings in the name of and on the behalf of the assessee, with the leave of the Court, no action was taken for filing the appeal against the impugned order.
Section 446 of the Companies Act, 1956 only stays the commencement or continuation of any suit or other legal proceeding, except with the leave of the Court, inter-alia, after passing of the winding up order. The entire purpose or the scheme behind this section is to protect the company, if the order of winding up is made or a provisional liquidator is appointed, so that the Court itself, if possible, disposes of the matters pertaining to the assets and properties of the company. However, neither in the application nor in the affidavit supporting the same there is any claim or any supporting document that the Hon’ble Court was approached for such permission on behalf of the assessee. From the facts stated in the affidavit, it is evident that the assessee initiated the process of filing appeal against the impugned order only after the Official Liquidator handed over the position of factory and other assets to the management of the assessee, pursuant to recall of winding up order dated 30/03/2010 by the Hon’ble High Court.
Thus, in view of above and in the facts and circumstances of the present case, we are of the considered view that the assessee has failed to prove any sufficient cause for not preferring the appeal within the limitation period.
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2022 (6) TMI 1234 - ITAT PUNE
Disallowance in respect of agricultural expenses - assessee declared gross agricultural receipts - AO found the expenses to be on lower side by considering the general market trend for agricultural expenses being incurred at 35% of gross agricultural income - HELD THAT:- AO has simply rejected the assessee’s claim of agricultural expenses being on the lower side on the basis of a yardstick of 35% being “trend of current year”. It is not understandable as to where from such ‘trend’ came into vogue. If the percentage of agricultural expenses shown by the assessee for the year under consideration is lower than that of the immediately preceding year, it is better than that for the two years immediately prior thereto.
Here is a case in which the assessee maintained complete details of agricultural expenses, which have not been faulted with by the AO. If the expenses were inadequate or wanting in any respect, the AO ought to have rejected such expenses by giving some plausible reasons, whereafter, he could have gone ahead with making a best judgment on some rational basis. Having not done so and simply making the addition on the basis of some ‘trend’, we find no reason to sustain the disallowance. For the foregoing reason, we are satisfied that the authorities below were not justified in making and sustaining the addition in such an ad hoc manner. The same is directed to be deleted. - Decided in favour of assessee.
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2022 (6) TMI 1233 - ITAT MUMBAI
Penalty u/s 271D - entries through journal entries - Violation of provisions of section 269SS - undisclosed transactions by the group, in one of the allegations against the group is of resorting to round tripping of funds to evade taxes - proof of reasonable cause u/s 273B - HELD THAT:- As decided in own case we find from the aforesaid factual narration and the basis of passing journal entries by the assessee in its books that these entries are merely passed for squaring up of transactions or adjustment of entries. This categorical finding given by the ld. CIT(A) in his order has not been controverted by the Revenue before us. Yet another categorical finding recorded by the ld. CIT(A) which remain uncontroverted by the Revenue before us is that these transactions were not made by the assessee with a malafide intent to evade tax and that there is no evidence brought on record to even remotely suggest that the assessee company by passing the aforesaid journal entries had sought to introduce its unaccounted income into the system. We find that these are genuine transactions carried out in the normal course of the business of the assessee. Hence, if the aforesaid transactions are looked into from the perspective of the object and intention behind introduction of provisions of section 269SS and 269T of the Act , then the provisions of section 269SS and 269T of the Act cannot be made applicable to the facts of the instant case. Moreover, from the detailed explanation of the aforesaid transactions together with the purpose for which those journal entries were passed, it could be safely concluded that these entries neither reflect any receipt of loan nor repayment of loan. - Decided in favour of assessee.
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2022 (6) TMI 1232 - ITAT BANGALORE
TP Adjustment - comparable selection - TPO had excluded companies having turnover of less than Rs.1 crore, however, the AO / TPO has not put upper limit to turnover for exclusion of companies having high turnover - HELD THAT:- We direct the AO / TPO to exclude the mentioned six companies [Larsen & Toubro Infotech Limited, Mindtree Limited, Persistent Systems Limited, R S Software (India) Limited, Infosys Systems Limited AND Thirdware Solutions Limited] since it is having turnover exceeding Rs.200 crore. It is ordered accordingly.
Interest on outstanding receivables from AE - TPO did not consider the assessee’s submission that the trade receivables are not separate international transaction and impact if any, gets subsumed by way of working capital adjustment - HELD THAT:- The Tribunal in assessee’s own case for assessment year 2008-2009 (2016 (10) TMI 1211 - ITAT BANGALORE) had directed AO / TPO to determine afresh the ALP in respect of providing SWD services by considering the proper working capital adjustment in comparable prices. It was held by the Tribunal that in case after giving necessary adjustment, the international transaction of the assessee is found to be at arm’s length, then there is no question of separate adjustment on account of allowing credit period from receivables from AE.
Taking a consistent stand, we direct the AO / TPO to redo the transfer pricing analysis in respect of interest on outstanding receivables by taking into account the directions of the Tribunal in assessee’s own case.
Advances to the employees against their salary for meeting expenses on food and travel while working on clients deliverables / projects - advances which could not be recovered has been written of to the profit and loss account of the assessee for the relevant assessment year and claimed as allowable expenses / business loss in terms of section 37(1) r.w.s. 28 - HELD THAT:- The claim made by the assessee is not towards bad debt u/s 36(1)(vii) of the I.T.Act, but under the provisions of section 28 of the I.T.Act as business or trade loss. Giving advance to the employees as well as vendors were essential and wholly and exclusively linked to the business of the assessee. The loss if any is an incidental business loss. In this context, we rely on the judgment of the Hon’ble Delhi High Court in the case of Triveni Engineering & Industries Limited [2010 (9) TMI 26 - DELHI HIGH COURT] - Further, the advances given to the vendors, which is non-recoverable, is also allowable as business loss. This proposition has also been upheld by the Hon’ble Apex Court in the case of Mysore Sugar Co. Ltd.[1962 (5) TMI 3 - SUPREME COURT].
Since the A.O. has not examined the claim of deduction u/s 37(1) r.w.s. 28 of the I.T.Act, we deem it appropriate to restore the issue to the files of the A.O. for de novo consideration. The assessee is directed to furnish necessary evidences before the A.O. The A.O. is directed to dispose of the matter expeditiously after affording a reasonable opportunity of hearing to the assessee.
Disallowance on an adhoc basis 10% of the per diem allowance granted to the employees - company paid aggregate amount as per diem to the employees travelling for business / official purposes outside India to cover actual expenses of meals, travel, laundry and miscellaneous expenses etc - HELD THAT:- The per diem is given to the employees to meet daily expenses for foreign travels. The expenses are reimbursed on the basis of self-declaration of the employees. Since, these amounts are small amounts, reimbursement are given based on the self-declaration given by the employees. Per diem allowance is very minimal amount to meet the daily need and is not disproportionate or unreasonable. In this context, we rely on the judgment of the Hon’ble jurisdictional High Court in the case of CIT v. Symphony Marketing Solutions India (P.) Ltd. [2016 (5) TMI 693 - KARNATAKA HIGH COURT] wherein it was held that "per diem allowance of $50 to $75 paid by the assessee to its employees on official trips to the USA and Europe to be reasonable”
We are of the view that adhoc disallowance of 10% of per diem by AO and confirmed by the DRP is uncalled for. Therefore, we delete the disallowance.
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2022 (6) TMI 1206 - DELHI HIGH COURT
Rectification u/s 154 - non issue of refund - Respondent sought to transfer the refund to a bank account of the Petitioner which had been closed and so the Petitioner informed the respondents regarding the details of an alternate bank account in which such refund could be transferred - HELD THAT:- Keeping in view the averments in the application, the Respondent- Revenue is directed to take on record the details of the Petitioner’s bank account, as mentioned in Para 6 of the present application, within four weeks from today and process the refund expeditiously in Petitioner’s bank account, in accordance with law.
With the aforesaid directions, present application stands disposed of.
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2022 (6) TMI 1202 - CALCUTTA HIGH COURT
Depreciation on ‘Geographical Report’ as intangible asset - whether the Geographical Report is only a document and not an asset and no deduction is permissible under Section 35E (2) ? - ITAT deleted the addition - HELD THAT:- Assessing Officer raised various queries on the Geographical Report for which the assessee offered certain explanation. The Tribunal elaborately considered the Geographical Report. To examine as to whether deduction can be claimed by the assessee on the said amount, the Tribunal noted that the Geographical Report is a fundamental document which was essential to assess the feasibility of the mine, to evaluate the economics of the mine and contains a mine-plan according to which the mining activity is to be carried on. Therefore, the Tribunal after appreciating the scope of the report held that the activity involves the nature of exploring, locating or providing deposits and it is only after the study of the Geographical Report, the location of deposit can be identified. Further, the Tribunal noted that the report gives the idea of the nature of deposit and whether mining activity can be carried on in the location. Thus, ultimately the Tribunal agreed with the assessee’s stand. However with regard to the claim of the additional depreciation at 15%, the Tribunal did not agree with the assessee. However, the assessee is not an appeal as against such finding
Additions on expenses on Road belonging to Zilla Parishad - HELD THAT:- It cannot be disputed by the revenue that by upgrading/ constructing the link-road from the mine to the railway station, the assessee stands benefitted as the transportation of coal which has been mined, can be transported more efficiently and profitably. Further, the road is a public road and the assessee is not the owner of the road and the road was upgraded/ constructed not exclusively by the assessee but the assessee had made contribution for doing the upgradation/ construction work and the remaining contribution was made by the Zilla Parishad. Therefore, the tribunal agreed with the assessee and dismissed the cross-objection filed by the revenue
The roads which were constructed around the factory with the help of the amount of Rs. 50,000 contributed by the assessee belonged to the Government of Uttar Pradesh and not to the assessee. Moreover, it was only a part of the cost of construction of these roads that was contributed by the assessee, since under the sugarcane development scheme, one-third of the cost of construction was to be borne by the Central Government, one-third by the State Government and only the remaining one-third was to be divided between the sugarcane factories and sugarcane growers.
These roads were undoubtedly advantageous to the business of the assessee as they facilitated the transport of sugarcane to the factory and the outflow of manufactured sugar from the factory to the market centres. There can be no doubt that the construction of these roads facilitated the business operations of the assessee and enabled the management and conduct of the assessee’s business to be carried on more efficiently and profitably. It is no doubt true that the advantage secured for the business of the assessee was of a long duration inasmuch as it would last so long as the roads continued to be in motorable condition, but it was not an advantage in the capital filed, because no tangible or intangible asset was acquired by the assessee nor was there any addition to or expansion of the profit-making apparatus of the assessee. The amount of Rs. 50,000 was contributed by the assessee for the purpose of facilitating the conduct of the business of the assessee and making it more efficient and profitable and it was clearly an expenditure on revenue account.
Revenue appeal dismissed.
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2022 (6) TMI 1201 - ITAT AHMEDABAD
Admission of additional evidence by CIT - Assessment of trust - corpus donation received by the trust unexplained - addition u/s 68 - CIT(A) who admitted the additional evidence under Rule 46A and partly allowed the appeal of the assessee on the ground that in the interest of justice, learned CIT(A) can admit the additional evidence - Revenue’s contention is that Rule 46A prescribed that appellant shall not be entitled to produce additional evidence before the first appellate authority because in the case before us ample opportunity was given to the assessee to file the evidentiary support of his contention and CIT(A) ought to have record in writing the reason for its admission of additional evidences before him - HELD THAT:- CIT(A) can admit additional evidence if he finds it crucial and necessary for the disposal of the appeal. We think if additional evidence is without any blemish and in order to advances the cause of justice the same ought to be admitted.
After considering the plethora of judgments, the paramount consideration of the adjudicating authority should be fair disposal of the appeal/case in order to protect interest of justice. As in the present case, assessee could not file certain details before the learned AO but he filed before the learned CIT(A) and learned CIT(A) forwarded same details for the comments of the learned AO and sought remand report. In remand report, learned AO did not doubt the content of documents but objected to filing of additional evidence under Rule 46A. After considering the remand report, CIT(A) decided the matter. As per Income Tax Act, learned CIT(A) has co-terminus power. Thus, we do not find any infirmity in the order of the CIT(A). We agree with the finding of learned CIT(A). - Decided against revenue.
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2022 (6) TMI 1200 - ITAT AHMEDABAD
Levy of penalty u/s 271C - assessee failed to pay the deducted tax within the stipulated time - HELD THAT:- From the perusal of the penalty order, it can be seen that the Assessing Officer proceeded on the basis that the assessee failed to pay the deducted tax within the stipulated time but from the perusal of the submissions of the assessee before the Assessing Officer it is seen that except the TDS on the interest payment to two parties the assessee has paid the TDS before the survey proceedings conducted at their premises as there was death of a person who was looking after the Income Tax matter of the Company which is mentioned in paragraph no.3 of the penalty order.
These crucial facts were totally ignored by the AO as well as by the CIT(A) - payment of delayed TDS to the Government Treasury was not a negligent act on the part of the assessee but due to unavoidable circumstances. Therefore, Section 271C of the Act is not properly invoked.
The ratio laid down in CIT vs. Reliance Petroproducts Pvt. Ltd. [2010 (3) TMI 80 - SUPREME COURT] is applicable in the present case though the Section mentioned in that decision is Section 271(1)(c) - CIT(A) has simplicitor confirmed the penalty without looking into the aspect that the levy of penalty was in excess of the default. Thus, the reasoning given by the CIT(A) is not just and proper. Hence, penalty levied under Section 271C of the Act needs to be deleted.
Levy of penalty under Section 272A(2)(g) - assessee made default by not filing quarterly returns in Form No.24Q and 26Q and by not issuing certificates of TDS in time - assessee submitted that the assessee company suffered from liquidity crash due to slow-down of the business and there was a delay in payment of TDS due to non-availability of funds and thus this cannot be treated as wilful default - Penalty was imposed without taking cognisance of the reasons given by the assessee which was genuine reason and cannot be strictly adhered to. The delay in issuance of certificate within the stipulated time was due to the non-availability of financial advise/concerned person who dealt with the tax matters of the company (death of Manish Shah). Thus, the CIT(A) totally ignored crucial aspect of the case and imposed penalty without application of mind. Hence, appeal of the assessee allowed.
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2022 (6) TMI 1199 - ITAT KOLKATA
Revision u/s 263 - LTCG - Difference in valuation of property - AO has acted upon assessee’s calculation indexed cost on the basis of valuation filed by the assessee but as per DVO, the valuation of whole property as on 01.04.1981 determined at Rs. 27,35,720/-, the assessee calculated indexed cost on the basis of valuation at Rs. 42,00,000/- - DR submitted that in the facts of this case, the AO ought to have referred report of DVO and he shall take decision as per law to determine the actual cost of acquisition of the property sold and to determine the correct amount of long term capital gain earned by the assessee on sale of property - HELD THAT:- As relying on the decision of coordinate bench in the case of Monoj Kumar Biswas (2021 (9) TMI 603 - ITAT KOLKATA] we are of the view that the revisionary jurisdiction has not been exercised by the CIT (International Taxation) in accordance with the provisions of the Act. Accordingly we quash the revisionary proceedings initiated u/s 263 of the Act and consequential order passed u/s 263 of the Act. The appeal of the assessee is allowed.
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2022 (6) TMI 1198 - ITAT MUMBAI
Disallowance on account of purchase of shares - Addition of commission expenditure u/s.69C - HELD THAT:- As purchase and sale of share transactions were carried out by the assessee through the registered brokers i.e. Alankit Assignments and RBK Share Broking and Speculative transactions were carried out through the registered broker i.e. Alliance Intermediates and Network Pvt. Ltd. The assessee had incurred short term capital loss and earned long term capital gains in respect of purchase and sale of shares carried out through Alankit Assignments and RBK share broking which has been duly disclosed in the return of income.
Assessee had only incurred speculation loss in respect of future and option transactions carried out through Alliance Intermediates and Network Pvt. Ltd during the year and this loss has not been set off with any speculation profit either during the year or in any subsequent assessment years. This factual aspect has been ignored by the lower authorities in the instant case and the addition has been merely made based on information received from a third party and ignoring the documents placed on record.
Also in the case of Ms. Kokila S. Ajmera [2018 (3) TMI 1967 - ITAT MUMBAI] this Tribunal under same set of facts had categorically held that the speculation loss incurred by those individuals (who are relatives of this assessee before us) had not claimed set off of the same with future speculation income. Even if the speculation loss incurred by the assessee is treated as non-genuine, the same would be of no consequence so far as the determination of tax liability of the assessee in the instant case as well as in the subsequent years is concerned.
The entire disallowance has been made on complete incorrect assumption of facts and on mistaken premise. We categorically hold that there is no purchase of shares made by the assessee through Alliance Intermediates and Network Pvt. Ltd which was claimed as deduction in return of income. Hence, there is absolutely no question on making any disallowance on account of purchase of shares in the assessment.
Hence, the same is hereby directed to be deleted. Once the disallowance made on account of purchase of shares is deleted, the alleged related commission expenditure u/s.69C also automatically gets deleted. Hence, the grounds raised by the assessee are allowed.
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2022 (6) TMI 1197 - ITAT DELHI
Disallowance of depreciation claimed at a higher rate of 60% on POS Terminals - whether ‘POS Terminal’ does not come under the purview of ‘Computer Software’ which has been defined as ‘any computer program recorded on any disc, tape, perforated media or other information storage device’ in Note 7 to New Appendix 1 of the Income Tax Rules,1962? - HELD THAT:- Issue decided in favour of assessee as relying on own case [2019 (2) TMI 993 - ITAT DELHI] - Decided against revenue.
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2022 (6) TMI 1196 - ITAT DELHI
Validity of assessment order passed u/s. 143(3) r.w.s. 144C(13) read with section 144B - Reference to Dispute Resolution Panel u/s 144C - period of limitation - HELD THAT:- As amply clear from section 144C(7) that DRP before issue of any direction referred to in sub-section(5) may make such further enquiry or calls any further enquiry and get the result reported to it. Hence there is no provision in the Act that DRP's direction as contained in section 144C(5) may be subject to any further verification by any Income-tax authority other than giving effect by the AO. Hence the plea that since the TPO gave effect to the DRP's direction subsequent to the DRP's direction cannot in any manner be considered to expand the time limit as prescribed in the Act. Even from this date of TPO's giving effect, the final assessment order is time barred in any case. As already noted by us, Ld. DR's plea that TPO's giving effect to the DRP's direction on 18.02.2022 can be considered as sufficient compliance to the time barring provision contained in section 144C(13) is not legally sustainable.
Undoubtedly, in this case, the assessment order has been passed beyond the time limit prescribed u/s. 144C(13) being more than one month after the date of receipt of the directions of the DRP by the AO, as per the information provided in the paper book submitted by the assessee's counsel. The factual veracity of these dates has not been disputed by the Revenue. In this view of the matter, we agree with the contention that the order passed by the AO is void ab initio and liable to be quashed as the final assessment order is time barred. Appeal of assessee allowed.
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2022 (6) TMI 1195 - ITAT JAIPUR
Late deposit of employee contribution to PF and ESI u/s. 36(1)(va) - contribution of PF deposited belatedly but before due date of filing of return of income u/s. 139(1) - HELD THAT:- The Bench has taken into consideration its various orders wherein similar issue has been decided in favour of the assessee on the issue in question. Recently, the similar issue of late deposit of employees PF/ESIC contribution by the assessee but paid the same before due date of filing of return of income in the case of Sanjay Porwal [2022 (4) TMI 898 - ITAT JAIPUR] wherein Issue was decided in favour of the assessee by holding that amendment in Section 36(1)(va) as well as Section 43B of the Act by way of inserting the explanation vide Finance Bill, 2021 are applicable only from A.Y. 2021-22 and subsequent assessment years and therefore, the said amendment is not applicable to the assessment year under consideration.
Thus disallowance made on account of employees contribution towards PF/ESIC deposited before due date of filing of return of income u/s. 139(1) is deleted. Thus, the solitary ground of appeal of the assessee is allowed.
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2022 (6) TMI 1194 - ITAT MUMBAI
Depreciation of certain intangible assets including non computing fee, rights, patents, trademarks etc. @ 25% of the opening WDV - AO has disallowed on the ground that in the schedule of fixed assets the assessee had shown as goodwill of loan and under the head "intangible assets" no other intangible assets were shown to have been held by assessee in the balance sheet - HELD THAT:- Undisputedly the assessee has acquired food and pharma division of L&T by virtue of agreement dated 26.05.2005 by paying excess consideration of net asset value, the excess was reflected as goodwill in the books of accounts of the assessee under the head "intangibles and as such assessee is entitled for claiming depreciation on the said intangible assets/goodwill as held in case of SMIFS SECURITIES LTD. [2012 (8) TMI 713 - SUPREME COURT]. Consequently, ground raised by the assessee are allowed.
TP Adjustment - TPO rejected the TP study undertaken by the assessee and proceeded to apply TNMM at the entity level which the assessee company has objected to - HELD THAT:- We have perused the order passed by the CIT(A) particularly para 9 which is cryptic in nature and fails to lead to the specific conclusions as to why the TP adjustment made by the TPO are being deleted. Merely on the basis of generic observations without going into the functionality of the particular segments/international transactions TP adjustment cannot be deleted.
In these circumstances it is agreed by the authorized representatives of the parties to the appeal that TP issue is required to be decided afresh by the TPO by grouping commission income and supervisory income together and the remaining international transactions are to be benchmarked independently by going into the functionality of the same.
Disallowance on account of license fee/royalty - HELD THAT:- We are of the considered view that facts on the issue are not completely brought out, neither discussed by the AO nor by the Ld. CIT(A). No findings have been returned if the same is a license fee or royalty. Even no detail of commission or royalty paid has been brought on record. So this issue is required to be remitted back to the AO to decide afresh after providing opportunity of being heard to the assessee.
Disallowance u/s 36(1)(va) - employees contribution to PF has been paid late after the due date as per the provisions of the PF Act - HELD THAT:- We have perused the findings returned by the Ld. CIT(A) which need no inference as the assessee has deposited the employees contribution prior to the filing of the income tax return. In A.Y. 2005-06 the co-ordinate Bench of the Tribunal in assessee's own case deleted the same addition by relying upon the decision rendered by Hon'ble Apex Court in case of CIT vs. Vineet Cement Ltd. [2007 (3) TMI 346 - SC ORDER] - Hon'ble Bombay High Court in case of CIT vs. Ghatge Patil Transports Ltd. [2014 (10) TMI 402 - BOMBAY HIGH COURT] also decided the identical issue in favour of the assessee by upholding the Tribunal order that payment of employees contribution on account of PF before filing of income tax return is allowable deduction and has also decided in case of CIT v. Alom Extrusions Ltd. [2009 (11) TMI 27 - SUPREME COURT]. So in view of the matter, we find no illegality or perversity in the impugned findings delivered by the Ld. CIT(A), hence ground are determined against the Revenue.
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2022 (6) TMI 1193 - ITAT KOLKATA
Revision u/s 263 by CIT - Capital gain computation - HELD THAT:- Computation where capital gain is calculated separately for sale of land and sale of building, the result would be short term capital loss. If the capital gain is calculated in the manner as directed by Pr. CIT, then the assessment so framed shall be prejudicial to the interests of the Revenue. Therefore, under the given facts and circumstances of the case where the purchase of land & building and sale of land & building are covered under a single deed of purchase & sale, the calculation made by the ld. AO showing short term capital gain which has been valued in detail by the ld. AO, in our considered view, the order of the ld. AO is not prejudicial to the interests of the Revenue.
Therefore, since the assessment order dated 26.12.2019 is neither erroneous nor prejudicial to the interests of the Revenue and a detailed enquiry of the issue raised in the show cause notice u/s 263 of the Act has been conducted by the ld. AO, adopting one of the permissible view in law, ld. Pr. CIT erred in assuming jurisdiction u/s 263 - We, therefore, quash the impugned order of the ld. Pr. CIT u/s 263 of the Act and restore the order so framed u/s 143(3) - Hence, grounds of the appeal raised by the assessee are allowed.
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2022 (6) TMI 1192 - ITAT AHMEDABAD
TDS u/s 194C - Disallowance of Lorry Hire Charges u/s 40(a)(ia) - assessee is in transport business and on need basis, he hires lorries from time-to-time - HELD THAT:- In this case, the assessee did not have any sub-contract and he was hiring Trucks from open market on individual and need basis and in support of its contention, assessee has filed Truck Nos. as well different Truck numbers and owners of all trucks are different. In this case, payments have not been made to the any sub-contractor, therefore, question of TDS does not arise. In view of the above we allow the appeal of the assessee.
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2022 (6) TMI 1191 - ITAT MUMBAI
Penalty u/s 43 of the Black Money (Undisclosed Foreign Income & Assets) and Imposition of Tax Act 2015 (hereinafter referred to as ‘the BMA’) - non-disclosure of a foreign asset in the income tax return - HELD THAT:- The assessee is a high net worth individual (HNI), with aggregate payment of taxes around Rs 2,350.66 crores in the last seven years by her, her husband and the private limited company she chairs- as noted by the Assessing Officer himself at page 8 of the impugned penalty order, and, when seen in the light of this financial position, the amount held in the alleged undisclosed foreign bank account is a small, if not trivial, amount of UK £ 2,34,710, and that it is not, by any stretch of logic or imagination, a case of siphoning unaccounted wealth in India to the undisclosed bank accounts abroad. It is also important to bear in mind the fact that there is a categorical finding by the first appellate authority that even though the assessed may have been technically a signatory of the undisclosed foreign bank account, her and her husband’s conduct all along has unequivocally established complete detachment with the said asset so far as any personal interest is concerned- a typical hallmark of someone holding an asset in a fiduciary capacity and in trust. When the beneficial owner of the said bank account, i.e. her late mother, passed away, she and her husband simply donated money to a well-known charity of global repute, as was the wish of the departed soul.
All the thirty years that she was the technical owner of this legacy left behind by her father, which was for the benefit of her mother, she simply did not touch the money- did not take a penny or add a penny. It is a somewhat rare situation with touching reverence, almost to a fault, to the wish of the assessee’s late father that the money was kept intact for the benefit of the assessee’s mother, which mother never used, and then donated it, within weeks of her mother’s death, to a charity of her late mothers choice, and a charity which has earned the prestigious Noble Peace Prize in 1999 for its humanitarian work. The degree of reverence for the feelings of the parents, as unambiguously shown by the mother, is undisputed. With this kind of detachment, and truly dealing with this as trust money in letter and in spirit, her belief that she was not required to disclose it as “her’ bank account, cannot be said to be lacking bonafides. While the amount held in the said account is donated to the charity, the entire tax liabilities in respect of the same have been paid by the legal representative of Dr Pramila Gandhi, and the matter has attained finality as such. It is also important to bear in mind the fact that the uncontroverted stand of the assessee is that the assessee, as also her husband, were signatories because Dr Pramila Gandhi was having health issues and was not in a position to travel. It was more of being a signatory for the operation of the bank account, rather than holding the bank account even in a fiduciary capacity, and, as such, the assessee’s belief that she was not required to disclose this bank account cannot be said to be lacking bonafides.
The scheme of penalty is of such a that essentially it does not cover the cases in which the lapses have occurred on account of good and sufficient reasons. A lapse per se cannot be reason enough to punish anyone, and the controversy, if at all, is about as to who has the onus of demonstrating the bonafides of such cases- the assessee or the revenue authorities, but once there is a clear finding of bonafides in conduct, irrespective of whether such conduct is lawful or not, the penalty is not impossible- unless, of course, the penalty is statutorily simply an automatic consequence, in cause and effect relationship. That’s certainly not the case here. The very fact that the Assessing Officer has the discretion to impose a penalty puts him under a corresponding obligation to exercise the said discretion with proper regard to the facts and circumstances of the case in a holistic manner and in totality. The total amount involved in the undisclosed foreign account is UK £ 2,34,710 (equivalent to Rs 2,16,58,946 at the relevant point of time of assessing the said amount), which is relatively small considering the tax exposure of the assessee, as discussed earlier. The money in the said account did not belong to the assessee, was never used by the assessee and is part of the legacy left behind by her father in 1986- and this position is duly accepted by the revenue authorities. Not a rupee out of that bank account is held to be belonging to the assessee, and the entire money has been brought to tax in the hands of the assessee’s late mother. Even before the bank account was detected by the revenue authorities, the entire balance in the said account, as per instruction of the assessee’s late mother, has been donated to a bonafide charity of the global repute. In these circumstances, the plea that such a lapse of non-disclosure, even if that be so, is only an inadvertent mistake, and that conscious non-disclosure or any mens rea in the non-disclosure is completely contrary to human probabilities, does merit acceptance.
No reasonable person would consciously or deliberately withhold disclosure about this foreign bank account, for an ulterior motive, from the tax authorities, and, in any case, admittedly the money does not belong to the assessee- as is the position accepted by the Assessing Officer himself. Viewed thus, on merits of assessee’s conduct, it was not a fit case for the imposition of impugned penalty. It is also not a case of siphoning of unaccounted Indian wealth to the undisclosed foreign bank accounts, prevention of which was the noble cause for which the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015 was enacted immediately upon the present Government coming to the power. Such well-intended stringent legislation as the BMA, enacted for the larger causes of public good and to check tax evaders, cannot be so interpreted as to cause undue hardship to the citizenry for such harmless technical or venial breaches of the law.
Thus it was not a fit case for invoking the penal provisions under the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015, even if it was lawful for the Assessing Officer to do so. In view of these twin reasons also, the conclusions arrived at by the learned CIT(A) cannot be faulted. As we hold so, we may add that there are consequences for the lack of appropriate disclosure in the income tax return, and these consequences are provided under the Income Tax Act, 1961, and our observations hereinabove must not come in the way of those proceedings under the Income Tax Act, 1961.
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2022 (6) TMI 1190 - ITAT DELHI
Penalty levied u/s 271(1)(c) - bogus purchases - HELD THAT:- The quantum addition [2018 (8) TMI 2085 - ITAT DELHI] issue was agitated before the learned Commissioner of Income-tax (Appeals) who directed the Assessing Officer to restrict the disallowance to 30 per cent. of the purchases. Penalty has been levied on such estimation made by the learned Commissioner of Income-tax (Appeals).
Facts of the earlier assessment year also show that estimation was made in respect of purchases from same party which was subsequently reduced to 25 per cent. while giving appeal effect to the order of the Tribunal.
When the addition as have been made on estimated basis, there is no conclusive evidence to show that the assessee has concealed the income or has furnished inaccurate particulars of income. Therefore, we do not find any merit in the levy of penalty on estimated income. We, accordingly, direct the Assessing Officer to delete the penalty so levied. - Decided in favour of assessee.
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2022 (6) TMI 1169 - ITAT DELHI
Declaration under the Direct Tax Vivad Se Vishwas Act, 2020 - HELD THAT:- We find, accepting assessee’s declaration under the Direct Tax Vivad Se Vishwas Act, 2020, the designated has issued Form 5. Thus, with the issuance of Form 5, for all practical purposes, the dispute arising in the appeal stands resolved. That being the case, we permit the assessee to withdraw the present appeal. Accordingly, the appeal is dismissed as withdrawn.
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2022 (6) TMI 1162 - ITAT RAJKOT
Exemption u/s 10AA or 10A - Claim denied due to the error of the software used by the tax professional while claiming the deduction deduction u/s 10AA - whether the assessee was eligible for deduction under section 10A or 10AA? - assessee also contended that the claim of the assessee under section 10AA of the Act was disallowed by the AO without issuing any show cause notice which is against the principle of justice - HELD THAT:- Deduction under section 10A of the Act has been discontinued with effect from A.Y. 2012-13 for the newly undertaking/unit. Therefore, it was not possible for claiming the deduction under this said section. Thus, any deduction claimed under section 10A of the Act cannot be said that it was claimed by the assessee with mala-fide intent - assessee has already paid the taxes under the advance tax and self-assessment scheme which is an undisputed fact. The assessee being intending to avoid the alternative minimum tax in pursuance to the provisions of section 115JC of the Act, it would have not paid any self-assessment tax on the date of filing the return of Income.
The payment of the self-assessment tax does not raise any doubt on the intention of the assessee merely on the reasoning that the assessee has claimed refund in the income tax return. As such the assessee during the assessment proceedings has come forward and filed the revised return of income declaring income under the provisions of AMT under section 115JC of the Act. Furthermore, the assessee cannot be deprived from the benefit granted under the statute merely on the reasoning that the assessee failed to claim the same in the income tax return. It is incumbent upon the revenue to allow the alleged claimed of deduction for which the assessee is entitled under the provisions of law.
As it is an admitted position that the form 56F is applicable for claiming the deduction under section 10A of the Act. However, we find that at that point of time when the assessee was claiming the exemption under section 10AA of the Act, there was no form prescribed by the CBDT. Thus in the absence of any specific form prescribed by the CBDT, the assessee has opted to use form 56F for claiming the exemption. To our understanding, it was an inadvertent mistake and therefore the assessee cannot be deprived from the benefit available under the provisions of law.
The assessee has made the claim for the exemption under section 10AA of the Act before the issuance of show cause notice by the Income Tax Department with respect to the deduction claimed under section 10A of the Act. Thus, the revised claim by the assessee was made before detection of the same by the AO.
As relying on M/S. RAJASTHAN FASTENERS PVT. LTD. [2014 (6) TMI 291 - RAJASTHAN HIGH COURT] we are of the view that the assessee is entitled to benefit u/s 10AA of the Act though it wrongly claim the deduction u/s 10A of the Act at the time of filing the return of Income.
Whether the assessee is engaged in the manufacturing activity or not ? - It is undisputed fact that the assessee was established in SEZ located at Sachin. It has granted the letter of permission to begin the manufacturing activity from 25-02-2012 by the SEZ authority. Therefore, we are of the view that the letter of permission was granted by the SEZ authority after satisfying the condition of the term manufacture as discussed above.
The agreement entered with the supplier of Gold Ornaments, point no. 9 specified that the assessee is responsible to assemble, studded/mounting of precious and semi-precious stones, Oxidishing, finishing and packaging etc. The assessee has purchased the Gold Ornaments in the form of raw materials with specification and design given by it and make the studded Gold Jewellery for export.
The assessee has sufficient labour manpower to manufacture the gold ornaments into studded gold jewellery as seemed from the payment vouchers issued to labourers by it and gate pass issued by the SEZ authorities. Thus in view of the above, we do not find any infirmity in the order of the learned CIT-A. Hence the ground of appeal of the Revenue is hereby dismissed.
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