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Income Tax - Case Laws
Showing 41 to 60 of 774 Records
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2022 (6) TMI 1414 - MADHYA PRADESHAT HIGH COURT
Condonation of delay filing return - petitioner was required to upload a Form 10B alongwith return whereas because of an error on the part of Chartered Accountant erroneously Form 10BB was uploaded - whether mistake committed by CA should not be treated as a bonafide mistake? - HELD THAT:- Even assuming that pursuant to certain communications filed with the return and the petition, the petitioner had an opportunity to avail alternative remedy, fact remains that application for condonation of delay was indeed maintainable. This is not a case of respondent that said application was not maintainable because petitioner did not avail the alternative remedy. The application for condonation of delay was also not dismissed on this ground and for this reason.
This is trite that validity of an order of statutory authority must be seen on the basis of grounds mentioned therein and not for any other reason.
A Constitution Bench of Supreme Court in the case of Mohinder Singh Gill and another Vs. The Chief Election Commissioner, New Delhi and others [1977 (12) TMI 138 - SUPREME COURT] opined that when validity of an order of the statutory authority is called in question, the validity of order needs to be examined on the basis of grounds mentioned therein. The orders cannot be validated on the basis of counter affidavit or supplementary counter affidavit.
The reasons assigned in the order dated 15/09/2020 alone is to be seen for the purpose of condonation of delay. We find substance in the argument of learned counsel for the petitioner that the delay or mistake is on the part of Chartered Accountant was not taken into account at all in the said order.
Thus, we deem it proper to set aside the impugned order and remit the matter back before the CIT (Exemption), Bhopal to reconsider and decide the matter afresh in accordance with law.
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2022 (6) TMI 1413 - ITAT INDORE
Addition u/s 69A r.w.s.115BBE - assessee has not been able to explain any source qua the excess-cash - HELD THAT:- The assessee was found to be owner of money i.e. excess cash, the excess cash was not recorded in the books of account of any source (i.e. books of business in present case) maintained by the assessee and the assessee has himself admitted that the excess cash found from his premise is earned from undisclosed sources, therefore he is unable to give explanation of its source. Thus, we find that all ingredients of section 69A are satisfied from the material held on record i.e. the statement of assessee. Being so we do not have iota of doubt in the application of section 69A.
The impugned excess cash found by the revenue during survey proceeding attracted section 69A as well as section 115BBE of the act. Therefore, we agree that the lower authorities have rightly invoked / confirmed that the excess cash is taxable u/s 69A read with section 115BBE. The conclusions taken by lower authorities do not require our interference. Decided against assessee.
Unexplained stock - physical stock was found to be short - AO treated this short-stock as unaccounted sales out of books of account, estimated profit @ 10% and thereby made an addition - HELD THAT:- We observe that the difference is very nominal and it can happen despite of all care in carrying out physical verification as well as preparation of books. We observe that the tax effect on Rs. 9,962/- shall be very negligible. Hence in order to impart a justice and taking a holistic and practical view, the addition deserves to be deleted. Decided in favour of assessee.
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2022 (6) TMI 1412 - ITAT DELHI
Belated payment of employees’ contribution to ESI and PF - assessee deposited the said contribution before due date for filing of return of income under Income Tax Act - Due date of payment - Scope of amendment - HELD THAT:- While processing the return u/s 143(1) of the Act no disallowance towards contribution to employees’ PF and ESI is warranted as this issue is highly debatable in nature. Even otherwise we find that the issue in appeals is squarely covered by the decision of the jurisdictional High Court in the case of CIT Vs. AIMIL Ltd. [2009 (12) TMI 38 - DELHI HIGH COURT] Ratio of this decision squarely applies to the facts of the assessee’s cases. Also see case of CIT Vs. M/s. Alom Extrusions Limited [2009 (11) TMI 27 - SUPREME COURT]
Hon’ble Supreme Court in the case of M.M. Aqua Technologies Ltd. [2021 (8) TMI 520 - SUPREME COURT] held that retrospective provision in a Tax Act which is for the removal of doubts cannot be presumed to be retrospective even where such language is used if it alters or changes the law as it earlier stood. The Amendments made to Section 36 and Section 43B by insertion of Explanations 2 and 5 respectively. In these Sections it is clarified that for the removal of doubts the provisions of these Sections were amended.
Tribunals in the cases of Raj Kumar [2022 (2) TMI 1224 - ITAT DELHI] held that the amendment brought in by Finance Act, 20 2021 is effective from 1.04.2021 and no disallowance is called for, on belated payment of employees’ contribution to ESI and PF in case the assessee deposited the said contribution before due date for filing of return of income under Income Tax Act
Thus we direct the Assessing Officer / CPC to delete the disallowance of employees’ contribution to EPF and ESI in all these cases as the contributions were remitted before the due date for filing of return of income. Grounds raised by the assessee are allowed.
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2022 (6) TMI 1411 - ITAT MUMBAI
Taxability of Consultancy Services as FTS - pre-requisites for deriving the benefit of the MFN clause in the Protocol to India’s DTAAs with certain countries - Issue decided in favour of assessee in its own earlier AY's - DR referring to CBDT Circular No.3/2022 has disputed the applicability of earlier orders of the Tribunal in the impugned assessment year - HELD THAT:- We find that in the case of GRI Renewal Industries SL [2022 (2) TMI 769 - ITAT PUNE] Tribunal considered the impact of CBDT Circular No.3/2022 held requirement contained in the CBDT circular No.03/2022 cannot primarily be applied to the period anterior to the date of its issuance as it is in the nature of an additional detrimental stipulation mandated for taking benefit conferred by the DTAA. It is a settled legal position that a piece of legislation which imposes a new obligation or attaches a new disability is considered prospective unless the legislative intent is clearly to give it a retrospective effect - it is ambiguously clear that there is no requirement of separate notification for importing the beneficial treatment from the agreement. Hence, in the facts of the case and the decision referred above, we find no merit in the arguments forwarded by the ld. Departmental Representative. The conditions set out in CBDT Circular 3/2022 would not apply in the impugned assessment year. Consequently, ground No.1 of the appeal is allowed.
Taxability of SAP Licence charges as royalty - HELD THAT:- We find that this issue is recurring. On identical set of facts, the Tribunal deleted the addition in preceding assessment years. The Tribunal in assessment year 2016-17 following the order in assessee’s own case in [2021 (1) TMI 323 - ITAT MUMBAI] deleted the addition as held receipt of software licence fees by the assessee, from its Indian subsidiary, is reimbursement of software licence fees paid by the assessee to a third party, and, therefore, it cannot constitute income taxable in the hands of the assessee. Decided in favour of assessee.
Taxability of IT Support Services as FTS/Royalty - HELD THAT:- The Tribunal in assessment year 2016-17 following the order of Co-ordinate Bench in assessment year 2015-16 deleted the addition as held the taxation under article 12 in the present case can come into play only when the "make available" clause is satisfied, but then the Assessing Officer's justification for the satisfaction of 'make available' clause, for the detailed reasons set out earlier in this paragraph, does not meet our judicial approval - we uphold the plea of the assessee on this point as well - income on account of Information Technology Services is also not taxable under article 12. Decided in favour of assessee.
Taxability of reimbursement expenses treated as FTS/royalty - HELD THAT:- Both sides are unanimous in stating that the DRP has not given any directions on this issue. DRP while considering objections of the assessee on Taxability of reimbursement of expenses as FTS/Royalty has dealt with the issue the directions. DRP has given finding without referring to the reimbursed expenses. Consequently, the issue raised allowed for statistical purpose.
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2022 (6) TMI 1410 - ITAT DELHI
Penalty u/s 271(1)(c) - unsecured loans received during the F.Y. 2003-04 - HELD THAT:- As decided in Manjunatha Cotton and Ginning Factory [2013 (7) TMI 620 - KARNATAKA HIGH COURT] held that notice under section 274 should specifically state the grounds mentioned in section 271(1)(c) i.e., whether it is for concealment of income or for furnishing of incorrect particulars of income. Sending printed form where all the grounds mentioned in section 271 are mentioned would not satisfy requirement of law.
In Mr. Mohd. Farhan A. Shaikh [2021 (3) TMI 608 - BOMBAY HIGH COURT] - Penalty-Concealment-Non-striking off of the irrelevant part while issuing notice u/s 271(1)(c) of the Income Tax Act, order is bad in law. Assessee must be informed of the ground of the penalty proceedings only through statutory notice. An omnibus notice suffers from the vice of vagueness.
In the case of PCIT vs. Sahara India Life Insurance Co. Ltd.[2019 (8) TMI 409 - DELHI HIGH COURT]reiterated that notice under section 274 should specifically state the grounds on which penalty was sought to be imposed as the assessee should know the grounds which he has to meet specifically.
The aforesaid principle has been reiterated in the in the case of CIT vs. SSA'S Emerald Meadows [2016 (8) TMI 1145 - SC ORDER]
Hence, respectfully following the order of the Hon’ble Jurisdictional High Court, the penalty levied is hereby obliterated.
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2022 (6) TMI 1407 - ITAT DELHI
Revision u/s 263 - No enquiry v/s inadequate enquiry - suspicious Share transactions - HELD THAT:- In present case AO had not only made sufficient enquiries, but after satisfying himself, assessment was framed u/s 143(3). After receiving information relating to share transfer proper enquiries were made which is also evident from the office note exhibited elsewhere.
It is a settled position of law that powers u/s 263 of the Act can be exercised by the Commissioner on satisfaction of twin conditions, i.e., the assessment order should be erroneous and prejudicial to the interest of the Revenue. By 'erroneous' is meant contrary to law. Thus, this power cannot be exercised unless the Commissioner is able to establish that the order of the AO is erroneous and prejudicial to the interest of the Revenue.
Thus, where there are two possible views and the AO has taken one of the possible views, no action to exercise powers of revision can arise, nor can revisional power be exercised for directing a fuller enquiry to find out if the view taken is erroneous.
This power of revision can be exercised only where no enquiry, as required under the law, is done. It is not open to enquire in case of inadequate inquiry.
Thus the order framed u/s 263 of the Act deserves to be set aside and that of the AO deserves to be restored. Decided in favour of assessee.
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2022 (6) TMI 1405 - ITAT AHMEDABAD
Miscellaneous Application that the Ground No. 4 in the original appeal in respect to addition on account of production development expenses has not been addressed which admittedly needs consideration by us. Hence, the application is allowed.
Registry is directed to list the matter for hearing on 24.04.2022 solely for consideration of the Ground No. 4 raised for A.Y. 2014-15. Since both the parties were present before the court when the matter was heard and the date fixed for hearing, services the notice to the respective parties by the Registry is hereby dispensed with.
MA filed by the Revenue is allowed.
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2022 (6) TMI 1404 - ITAT MUMBAI
Assessment u/s 153A - Absence of any incriminating material during the course of search - addition u/s 68 - HELD THAT:- CIT(A) has referred purchase/work contract and purchase invoices along with the statement recorded u/s 132(4) holding that because of contrary statements of employees, nature of invoices constituent incriminating material and such facts were not existed at the time of original assessment made in the case of the assessee. No reason to interfere in the decision of the ld. CIT(A), therefore, this ground of appeal of the assessee stand dismissed.
Disallowing film production related expenses - Confirming expenses claimed on account of film production as inflated and bogus - HELD THAT:- To sustain the disallowance it is necessary to have supporting evidences and documents, in the case of the assessee, basis of additions were only retracted statement of the employees which had no strong evidential value. There was no positive material on record brought by the A.O to substantiate that in fact assessee had inflated its expenses by overbilling. AO has only relied on the retracted statement and there was no independent material /evidences to substantiate the same.
A.O has not made further investigation to contrary prove the claim of occurrence of fire as claimed by the aforesaid party. We consider that the decision of ld. CIT(A) to sustain the addition of Rs.5 lac pertaining to the production expenses merely based on retracted statement was contrary to the surroundings facts and material and not justified, therefore, we direct the A.O to delete the addition.
Disallowance of Personal Expenses - A.O has disallowed payment made for J.W. Mariot Hotel Membership. -as claimed that hotel was used for holding meetings with the parties related to production of the films - HELD THAT:- We observe that the part of the hotel facility for personal use cannot be ruled out however, looking to the fact that the impugned addition was merely made on the basis of the retracted statement without fully linking with specific evidences, therefore we restrict such disallowance to 50% of Rs.2,81,265/-. Therefore, this ground of appeal of the assessee is partly allowed.
Expenditure towards production - HELD THAT:- The assessee has also produced ledger account and supporting documents before the assessing officer during the course of assessment proceedings to substantiate these facts that the said amount was not claimed as deduction in the books of the assessee during the year consideration, however the assessing officer failed to prove contrary. Revenue could not controvert the finding of the ld. CIT(A), therefore ,this ground of appeal of the Revenue stand dismissed.
Unsecured loan u/s 68 - loan taken from 5 parties pertaining to Sh.Bhanwarlal Jain Group - HELD THAT:- In the case of the assessee A.O has also failed to controvert the submission of the assessee supported with the relevant material. In the light of the facts and findings of coordinate bench in the Nemichand Jain case as supra, we find that the issue raised before the Tribunal in this year pertaining to the case of the assessee are similar to the case of Nemichand P. Jain. The A.O. had made the impugned addition merely relying upon the retracted statements and failed to corroborate the same with any relevant supporting evidence/material , therefore, addition to be deleted. Decided in favour of assessee.
Disallowance of bogus expenses - expenses as Recee expenses for the different films which comprising Air fare and Travelling Visa fees and Insurance Hotels etc - HELD THAT:- is observed that disallowance was made on doubtful basis without linking to specific seized material demonstrating that claim of the assessee is totally bogus. There is no material brought on record to support the complete disallowances of such expenses. As the nature of personal element cannot be ruled out therefore, we restrict the disallowance to the 50%.
Addition being salary paid to employee in cash - HELD THAT:- It is undisputed fact that lower authority has made impugned addition merely on the sole basis of retracted statement without corroborating the allegation of payment of the such salary in cash with any relevant evidence/supporting material .We don’t find any justification in the decision of ld. CIT(A). Accordingly, this ground of appeal of the assessee is allowed.
Payment towards foreign shooting expenses - HELD THAT:- A.O had not disproved the aforesaid material facts of incurring expenses by the assessee for shooting of the film at London and claim of tax rebate of Rs.3.65 cr. Therefore, we do not find any infirmity in the decision of the ld. CIT(A). Accordingly, this ground of appeal of the Revenue stand dismissed.
Accommodation entry provided by Viking Media Entertainment Pvt. Ltd. - Addition made on the basis of retracted statement of the employees of the assessee - HELD THAT:- During the course of assessment the assessee has submitted the entire document, agreement invoices, bank statement in support of genuineness of transactions. It is undisputed fact that assessee had made the film “Baaghi” on the basis of remake of the telgue film “Varsham”. The A.O has purely relied upon the retracted statement without disproving the correctness of the supporting documents furnished by the assessee. No merit in the appeal of the Revenue.
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2022 (6) TMI 1402 - ITAT AHMEDABAD
Assessment u/s 153A - Bogus exempt LTCG on sale of shares - incriminating material was found or not? - contention of the assessee is this that during the course of search no incriminating material was found from the premises of the appellant - CIT-A quashed proceedings initiated against assessee - HELD THAT:- We find that the assessee’s main contention of not having any incriminating material in the possession of the Ld. AO found during the course of search of the premises of the assessee which ought to have been the main basis of reopening of an unabated assessment and on the contrary addition has been made without due process of law has been taken into consideration in its proper perspective.
The ratio laid down in the case of Saumya construction [2016 (7) TMI 911 - GUJARAT HIGH COURT] and CIT vs. Kabul Chawla [2015 (9) TMI 80 - DELHI HIGH COURT] has been applied rightly by the CIT(A) in the case in hand keeping in view of the particular fact that even the Ld. AO admitted the fact of not having any incriminating material found during the search of the assessee’s premises.
Quashing of the proceeding by the Ld. CIT(A) initiated u/s 153A against the assessee applying the ratio laid down by the judicial forums as indicated hereinabove is just and proper so as to warrant interference.Decided against revenue.
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2022 (6) TMI 1401 - ITAT HYDERABAD
Allocation of the common expenses - CIT(A) accepting the cost of goods sold as the basis for allocation of the common expenses - assessee claiming deduction under section 10 (1) as engaged in the business of seed production, research, marketing of field and vegetable crops and wind power generation - HELD THAT:- It is pertinent to note that as rightly observed by the Ld. CIT(A) every methodology of estimation suffers from limitation and such limitations causing variations how to be smooth and on consistent application of the same principle.
CIT(A) was of the opinion that inasmuch as for the earlier assessment years the assessee adopted the basis of cost of goods sold as a reasonable method of apportionment of the agricultural and non-agricultural expenses out of the common expenses.
As both the cost of goods sold and also the turnover of different activities, to be the basis for allocation of the common expenses to have their own way and cess and variations, what is required is the following of the consistent method. Inasmuch as there is no dispute that the assessee has been consistently following the method by forgetting the common expenses on the basis of cost of goods sold, the rule of consistency demands that the same shall not be disturbed for a particular assessment year because it goes against the interest of Revenue. We, therefore, accept the reasoning adopted by the Ld. CIT(A) and hold that there is nothing wrong in the Ld. CIT(A) accepting the cost of goods sold as the basis for allocation of the common expenses.
Allowing the “provision for sales returns" - It is a fact that the assessee supplies seeds to its distributors located in the states of Kerala, Andhra Pradesh and Karnataka and after the season is complete the sales distributors identify the stock of seeds of various varieties which are not sold by the end of Ruby season of plantation.
No perversity in the findings of the Ld. CIT(A). In view of the seasonal nature of the business and also the short shelf life of the seeds, it is imperative for the assessee to take into account the quantity of unsold seats at the end of the year and the need to revalidate their further utility and to take them into stock in the next season. In the circumstances it cannot be said that the provision for sales returns is unascertained or unreasonable. With this view of the matter, we allow the contentions of the assessee and uphold the findings of the Ld. CIT(A).
Decided against revenue.
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2022 (6) TMI 1399 - ITAT CHANDIGARH
Deduction u/s 80IC - substantial expansion - period of deduction limited to 10 years - definition of “initial assessment year” as contained in section 80IC(8)(v) - 10th year of claim of tax holiday - HELD THAT:- Following the decision in case of Pr. CIT Vs. M/s Aarham Softronics [2019 (2) TMI 1285 - SUPREME COURT] where the undisputed facts are that the assessee has started its business activity on 11.7.2005 falling between the period 7th January, 2003 and 1st April, 2012 in State of Himachal Pradesh and has carried out substantial expansion in the financial year 2011-12 and the year under consideration being the 10th year of claim of tax holiday, it shall be eligible for claim of deduction @ 100% and not 25% of profits and gains from its business as held by the lower authorities.
Therefore, respectfully following the decision of PCIT vs Aarham Softronics (supra) wherein as held that its earlier decision in case of Classic Binding Industries [2018 (8) TMI 1209 - SUPREME COURT] doesn’t lay down correct law, the findings of the CIT(A) are set-aside and the matter is decided in favour of the assessee and against the Revenue and the grounds of appeal of the assessee are thus allowed.
Disallowance of claim of deduction u/s 80-IC on account of exchange rate fluctuation - as submitted by A/R that the difference in the foreign exchange rate is a part and parcel of income derived from eligible business and the same should be allowed - HELD THAT:- There is always a difference between the exchange rate at the time of booking of the invoices and the subsequent realization thereof at the time of receipt of payment and thus the exchange rate fluctuation is clearly flowing from the eligible business and, therefore eligible for deduction u/s 80-IC - As decided in case of DCIT vs. Ansysco [2016 (12) TMI 1764 - ITAT CHANDIGARH] wherein it was held that where the foreign exchange fluctuations relate to the export activity carried out by the assessee, the foreign exchange fluctuations is to be treated as trading receipts/receipts from manufacturing activity and which is eligible for claiming deduction u/s 80-IC - Assessee is eligible for claim of deduction u/s 80-IC in respect of foreign exchange fluctuations. Basis the invoices placed on record and following the Coordinate Bench decisions referred supra, the claim of the assessee is allowed.
Disallowance of expenditure related to gifts, charity and donations - given the fact that the assessee was eligible for claim of deduction u/s 80-IC to the extent of 25%, the amount of disallowance was restricted to 75% - HELD THAT:- Where the claim of the assessee has been allowed @ 100% instead of 25% u/s 80IC, even where the whole of the expenses are disallowed on merits, the profits so enhanced and adjusted taking into consideration the disallowance will be eligible for 100% tax holiday and thus, the assessee shall be eligible for relief. In the result, the ground of appeal is allowed.
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2022 (6) TMI 1398 - ITAT DELHI
Disallowance u/s 14A r.w.r. 8D - Sufficiency of own funds - HELD THAT:- On perusal of the balance sheet of the assessee as on 31.03.2016 we observed that the assessee has share capital and reserves and surplus as on 1.04.2015 at 145173.31 lakhs and whereas the investments during the year under consideration stood at 1957.39 lakhs.
In the case of South Indian Bank Ltd. Vs. CIT [2021 (9) TMI 566 - SUPREME COURT] it has been held that if investments in securities is made out of common funds and the assessee has availed non-interest bearing funds larger than the investments made in tax-free securities then in such cases disallowance u/s 14A cannot be made. On observing the balance sheet, we find that the assessee has sufficient own funds much more than the investments. Thus we delete the disallowance made under Rule 8D(2)(ii) made - Decided against revenue.
Disallowance relating to prior period expenses - CIT-A deleted the addition - HELD THAT:- For the assessment year 2009-10 [2014 (11) TMI 1174 - ITAT DELHI] accepted the claim of the assessee for netting off of prior period income against prior period expenses. Decided against revenue.
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2022 (6) TMI 1397 - ITAT CHENNAI
Disallowance u/s 40A(3) - cash payment to various suppliers exceeding specified limit - assessee could not prove that the cash payment was due to exceptional or under unavoidable circumstances - HELD THAT:- Upon perusal of documents, we find that that the assessee has not made cash payment directly to the suppliers but deposited the same directly into their bank accounts. In support, the assessee has placed on record bank deposit slips.
This is stated to have been done on the request of the suppliers and the suppliers themselves have furnished the bank account details to the assessee to ensure fast receipt of payment without delay. It could be also noted that genuineness of the payment or the existence of the suppliers is not under doubt. Assessee has placed on record complete details of suppliers along with their addresses, bank details with copies of deposits slips for each of payment transferred to them.
On the basis of all these documentary evidences, we are of the considered opinion that impugned disallowance is not justified on the facts and circumstances. Hence, by deleting the same, we allow the appeal.
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2022 (6) TMI 1396 - ITAT NAGPUR
Disallowing depreciation on Air and Water Pollution Control Machine - Assessee has claimed depreciation at 100% of the actual cost and not on the valuation as per valuation report - principle of consistency - HELD THAT:- While analyzing the entry we have to see the description of plant as a whole and not the description of various items – small and big which go to constitute the plant. We have no doubt that the plant installed was the plant of air and water pollution control which was admittedly put to use after 30th September.
On the very same plant and machinery the very same A.O. has allowed balance depreciation of 50% in A.Y.2014-15 and that order is final. In view of this fact, we see no reason for lower authorities to disallow depreciation for A.Y.2013-14 the year in question.
Here there is no question of arguing that principle of resjudicata is not applicable and hence the finding of A.Y.2014-15 cannot be said to be binding in A.Y.2013-14. On the same plant and machinery the same A.O. in one year allows depreciation at the prescribed rate of 100% and in another year on the same machinery the same A.O. totally disallows the depreciation. This is most inconsistent, and illogical. Applying the principle of consistency as is firmly established by the decision in the case of Radhasoami Satsang [1991 (11) TMI 2 - SUPREME COURT] and Quest Investment Advisor Pvt. Ltd. [2018 (7) TMI 479 - BOMBAY HIGH COURT] the depreciation as claimed by the Assessee in the year in question i.e. A.Y.2013-14 is allowable.
Disallowing Selling and Distribution Expenses - A.O. considered the expenses at higher side, therefore disallowed to the extent of 2.95% - CIT-A restrict the disallowance at 1% of such expenses - HELD THAT:- In the present case it is worth noting that, higher commission than what is claimed in this year has been allowed in earlier and later years - no justification to make disallow of 1% and thereby retain addition - CIT(A) has specifically mentioned that he has perused relevant copies of accounts and bills etc. and has not found any defect in the accounts. Similarly the department has always accepted the accounts which are duly audited. No defect of any nature has been pointed out or proved.
The claim of the Assessee, in our view, cannot be said to be unreasonable. There was neither any material or basis before ld CIT(A) to make an adhoc disallowance of 1% of expenses - Decided in favour of assessee.
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2022 (6) TMI 1394 - ITAT BENGALURU
Addition of interest income under the head income from other sources - Assessee in process of setting up of a plant - whether assessment is bad in law as the AO has exceeded his scope and there is lack of jurisdiction? - HELD THAT:- The assessee was in the process of setting up of a plant. AO took the view that the interest income is assessable under the head “Income from other sources” and the business loss claimed by the assessee should be capitalised. Accordingly he computed NIL income under the head business. Accordingly, the AO assessed entire interest income under the head income from other sources.
CIT(A) confirmed the assessment of interest income following the decision rendered in the case of Tuticorin Alkali Chemicals & Fertilisers Ltd [1997 (7) TMI 4 - SUPREME COURT]
CIT(A) has confirmed the assessment by following the decision rendered by Hon’ble Supreme Court. Accordingly, no reason to interfere with the order passed by Ld CIT(A).
Though the assessee has raised a legal ground challenging the scope of assessment proceedings, no material was placed before me in support of the said ground. Accordingly, reject the same.
Appeal filed by the assessee is dismissed.
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2022 (6) TMI 1393 - ITAT INDORE
Rectification u/s 254 - registration u/s 12A - assessee filed application to CIT in Form No. 10A - assessee filed application in Form No. 10A on 31.03.2000 for grant of registration and on the basis of this application, the procedure of registration was set in motion - HELD THAT:- We observe that the CIT issued certain notices to the assessee on the basis of the application dated 31.03.2000 and the assessee too complied with those notices. Realizing that no decision was coming from CIT and more particularly being aware of the fact that there was a change in jurisdiction from ITO, Ward-2 to Circle-1(1), the assessee refiled a copy of the original application alongwith documentary evidences on 07.01.2004.
AR has pointed out that the filing on 07.01.2004 is a mere re-filing of documents to facilitate the registration process and there was no fresh application. We observe that the application was in fact filed on 31.03.2000 and not on 07.01.2004. We also find that it is not a case of revenue that the application dated 31.03.2000 was rejected by CIT as there is no such material produced before us. In such circumstances, therefore, there is no justification to grant registration from 01.04.2003. In fact, the CIT ought to have granted registration from 01.04.1999.
Direct the CIT(E) to rectify his order and grant registration from 01.04.1999. Appeal of assessee is allowed.
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2022 (6) TMI 1392 - ITAT KOLKATA
Scope of assessment u/s 153A - completed/unabated assessments - proof of incriminating material as found during search - addition u/s 68 - HELD THAT:- As in the case of Kabul Chawla [2015 (9) TMI 80 - DELHI HIGH COURT] in its concluding paragraph has observed that, on the date of the search, the assessments for assessment years 2002-03, 2005-06 and 2006-07 already stood completed and the returns in these years were accepted u/s 143(1) of the Act and these acceptance of returns processed under Section 143(1) of the Act was construed by the Hon’ble Delhi Court as completion of assessments and this acceptance of return, according to the Hon’ble Delhi High Court, could be tinkered with if some incriminating material was found at the premises of the assessee.
In the present case AO was of the view that the assessee company was having assets of real value in lieu of shell company shares.
AO did not make any analytical investigation or recorded any specific findings. He has acted vaguely and recorded a general finding in a superficial manner touching upon large number of entities. His grievance is that in this year, the assessee has been possessing real assets which were ultimately procured by transacting with shell companies. There is no trail of those shell companies from where the assessee has raised equity capital for the first time or as to how the assessee has utilized the available funds in making investment in the assets of real value. The Assessing Officer just disbelieved the submissions of the assessee.
In assessment year 2008-09, when first time capital was raised, its genuineness was accepted by the Revneue. When over a period of time, capital has been used and an asset was created, then the source of such asset cannot be enquired into because it has already been accepted in the earlier year when capital was raised by the assessee. Apart from the above, AO has also not made reference to any seized material which has been fortified to believe that capital raised by the assessee in assessment year 2008-09, was through transactions with shell companies.
AO has failed to establish that the assessee has routed its unexplained money through shell companies. When, the Assessing Officer frames the assessment generally by making reference to various events without the help of any seized material no addition can be made u/s 153A of the Act. The assessment order does not even make any reference to the panchnama accepting the evidence found at the premises of the assessee.
CIT(A) has rightly held that there was no incriminating material seized during the course of search authorizing the Assessing Officer to make an addition in the assessment framed u/s 153A/143(3) - Decided against revenue.
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2022 (6) TMI 1391 - ITAT PUNE
Rectification of mistake u/s 254 - AO made disallowance on account of application of section 14A r.w.r. 8D(2)(iii) and charged interest u/s 234A and 234B - Misc. application seeking rectification of order of the Tribunal stating that the Tribunal has wrongly presumed that in any case where there is an addition of more than Rs. 10 lakhs in a case selected under CASS prior written approval is needed from concerned CIT- HELD THAT:- Revenue by filing this Misc. application desires this Tribunal to review its own order, which in our considered opinion, the Tribunal does not have any power u/s 254(2) of the Act to review its order. The power vested with the Tribunal relates to the mistake apparent from record only.
Tribunal after considering the grounds raised in the appeal decided the appeal and passed the order. If the Revenue has any grievance against the order of the Tribunal, the Revenue can go before the Hon’ble High Court by filing appeal u/s 260A of the Act. The Tribunal cannot review its own order in the garb of power vested u/s 254(2) of the Act. Review of the order will tantamount to rehearing of the appeal which power is not vested with the Tribunal. The Tribunal after considering the submissions of both the parties has passed the order discussing the provisions of the law. In our opinion, there is no mistake much less apparent from record in the order of the Tribunal.
In the instant case the Tribunal has already given precise findings on law and facts as per all the materials / documents / evidences placed before it. Such finality of order cannot be disturbed u/s 254(2) of the Act petition in absence of any mistake apparent from record.
Hon'ble Jurisdictional High Court in the case of CIT Vs. Ramesh Electric & Trading Company [1992 (11) TMI 32 - BOMBAY HIGH COURT] has held that the scope of section 254(2) is limited to rectification of mistake apparent from record itself and not rectification in error of judgment - Misc. application filed by the Revenue is dismissed.
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2022 (6) TMI 1388 - MADRAS HIGH COURT
Settlement of case by Income Tax Settlement Commission - petitioner was assessed before an authority in a different State - Writ Filled challenging Order of the Settlement Commission rejected on the ground that the petitioner was assessed before an authority in a different State - HELD THAT:- This Court in Mulberry Skills Ltd Vs. Settlement Commission [2020 (9) TMI 771 - MADRAS HIGH COURT] wherein a writ filed in identical circumstances, challenging an order of the Settlement Commission, came to be rejected on the ground that the petitioner was assessed before an authority in a different State. In that case the assessee in Karnataka, whereas, in the present case the Assessing Authority/R3, is in the State of Kerala. Writ appeal is dismissed leaving it open to the appellant to move the High Court of Karnataka if they are so advised
In this matter as well, it open to the petitioner to move the Kerala High Court, if they are so inclined. Writ Petition stands dismissed. Connected writ miscellaneous petitions are closed.
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2022 (6) TMI 1386 - ITAT HYDERABAD
TP adjustment - interest on trade receivables balances from associated enterprises by applying interest rate of 14.75% being SBI short term deposit interest rate - As per assessee if interest is charged, such interest should only be at LIBOR and not SBI short term deposit rates - HELD THAT:- In our view, in the present case, the outstanding receivables by the assessee are required to be benchmarked. It is an admitted fact that the outstanding receivables by the assessee are more than 30 days as held by the DRP.
In the light of the above, respectfully, following the decision of Zeta Interactive Systems (India) Pvt. Ltd. [2022 (6) TMI 1383 - ITAT HYDERABAD] we modify the order passed by the DRP and direct the TPO to compute by applying 6% interest rate on outstanding receivable at the year end as against 14.75% and recompute the adjustment to be made to the total income of the assessee.Appeal of the assessee is partly allowed.
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