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Income Tax - Case Laws
Showing 81 to 100 of 774 Records
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2022 (6) TMI 1362 - ITAT MUMBAI
Proceeding initiated or continued till the completion of liquidation proceedings - parallel proceedings under Income-tax Act, 1961 and IBC, 2016 - HELD THAT:- We observe that the liquidation proceedings has commenced as per the order of the Hon’ble NCLT, Mumbai, in assessee’s case thereby appointing Official Liquidator. We are aware that from the time of appointment of Official Liquidator, the assessee company became defunct and the Official Liquidator steps into the shoes of the assessee. In the present case, it is seen that the Official Liquidator has not appeared before us so far to present the case of the assessee. Even during the moratorium period specified under section 14(1)(a) of the IBC Code, the Ld.representative for the AR made no representation on several hearings and the case was adjourned on various hearings.
Therefore, we are of the considered opinion that no suit or other legal proceedings shall be initiated by or against the corporate debtor which is also applicable for pending proceedings and the Proviso to section 33(5) also provides prior approval of the Adjudicating Authority to be obtained by the Official Liquidator.
It is also to be observed that in case of parallel proceedings under Income-tax Act, 1961 and IBC, 2016, the IBC has an overriding effect over the provisions of the Income-tax Act which has been decided by Hon’ble Apex Court in Principal Commissioner of Income-tax Vs Monnet Ispat & Energy Ltd [2018 (8) TMI 1775 - SC ORDER] wherein the Hon’ble Apex Court had observed that as per section 238 of IBC, the IBC Code will override anything inconsistent contained in any other enactment, including the Income-tax Act. We hereby dismiss the cross appeals filed by the Revenue and the Assessee with the liberty to the appellants / Official Liquidator to recall the present order when the occasion warrants.
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2022 (6) TMI 1361 - ITAT BANGALORE
TP Adjustment - calculation of interest on delayed receivables - separate international transaction - TPO has held that the outstanding receivables from the AE is in the nature of loans and calculated the interest on receivables from AE by following CUP method - TPO added 100 basis points towards currency risk and arrived at the applicable rate of LIBOR + 400 points which worked to 4.836% - Whether interest on receivables is separate international transaction and requires benchmarking separately? - credit period considered by the DRP at 30 days - HELD THAT:- As relying on case of Applied Materials India Pvt. Ltd. v. ITO [2022 (6) TMI 1357 - ITAT BANGALORE] interest on receivable is a separate international transaction which has been rightly considered by the TPO/DRP.
Determination of ALP in respect of interest on receivables - We notice that the coordinate Bench of the Tribunal in the case of Barracuda Networks India Pvt. Ltd. [2022 (5) TMI 322 - ITAT BANGALORE] the issue with regard to determination of ALP in respect of the international transaction of giving extended credit period for receivables should be directed to be examined afresh by the AO/TPO on the guidelines laid down in the decision referred to in the earlier paragraph, after affording Assessee opportunity of being heard. As held in the aforesaid decision the prime lending rate should not be considered and this reasoning will apply to adopting short term deposit interest rate offered by State Bank of India (SBI) also. The rate of interest would be on the basis of the currency in which the loan is to be repaid.
Thus we are of the view that the issue has to be restored back to the AO/TPO for determination of ALP afresh with appropriate benchmarking. Assessee has entered into a service agreement with its AE with regard to providing ITeS on 1.10.2009 and later entered into amendment agreement on 26.12.2003 whereby clause 2.3 of the original agreement was amended to increase the credit period to 90 days. This fact has not been taken into consideration by the DRP - Thus direct the TPO to consider the credit period of 90 days while determining the ALP afresh, after providing reasonable opportunity of being heard to the assessee. The assessee is directed to provide the relevant details for fresh benchmarking of the ALP with regard to interest on receivables. With these observations, we set aside the order of the DRP on this issue and remit it back to the AO/TPO for fresh decision.
Appeal by the assessee is partly allowed.
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2022 (6) TMI 1359 - ITAT MUMBAI
Penalty levied u/s 271(1)(c) - bogus purchases - AO made estimated addition of 12.5% of bogus purchases - HELD THAT:- Undisputedly, the additions made on account of bogus purchases were partially confirmed by the Tribunal. The assessee failed to discharge its onus in proving genuineness of the purchases and dealers. During assessment proceedings, the addition was made on estimation @ 12.5%. In first appeal, the addition was restricted to 3% and on further appeal to the Tribunal by the Revenue, the addition was enhanced to 6%. The entire addition right from assessment stage to the Tribunal was merely on estimations. There is no definite finding on the quantum of concealment of income. It is an accepted legal position that penalty u/s 271(1)(c) of the Act levied on additions made merely on estimations is unsustainable.
As in the case of CIT vs. Krishi Tyre Retreading and Rubber Industries [2014 (2) TMI 21 - RAJASTHAN HIGH COURT] has held that where addition is made purely on estimate basis, no penalty u/s. 271(1)(c) of the Act is leviable. Thus penalty levied u/s. 271(1)(c) of the Act on estimated addition has been held to be unsustainable. - Decided against revenue.
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2022 (6) TMI 1358 - MADRAS HIGH COURT
Revision u/s 263 - CIT setting aside the 2nd assessment orders - question of limitation - whether principle of merger of original assessment with the reassessment order, does not apply, when the issues settled in the original assessment order remain untouched in the reassessment order? - HELD THAT:- Limitation to invoke jurisdiction under Section 263 of the Act in respect of the issues that stood resolved in the original assessment, ought to be reckoned from the date of original assessment. Tribunal correctly allowed the appeals, holding that the assessments are barred by limitation.
We find that the order of the Tribunal holding that the exercise of power under Section 263 of the Act by the Commissioner of Income Tax is barred by limitation in terms of the judgment of Alagendran Finance Ltd. [2007 (7) TMI 304 - SUPREME COURT] does not warrant any interference.
The substantial question of law relating to limitation is answered against the Revenue. Accordingly, the appeals stand dismissed. Substantial question of law pertaining to deduction of 10% of cumulative advances under section 36(1)(viia) raised herein, is left open for adjudication in appropriate cases.
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2022 (6) TMI 1357 - ITAT BANGALORE
TP adjustments - determination of Net Cost Margin - Determining effective NCP margin for provision of the software development services - TPO was of the view that the sub-contracting charges formed part of the operating cost of the Assessee for provision of SWD services and thus cannot be excluded from either its cost base or operating revenues as it would not give a correct picture of the profit margin earned by it - HELD THAT:- Determination of net cost margin excluding the sub-contract charges is decided against the assessee by the Tribunal in assessee’s own case for the AY 2011-12 [2016 (9) TMI 1458 - ITAT BANGALORE] as held outsourcing cost in software development services activity is part and parcel of cost of providing the service to the AE and cannot be separated from the operating cost and operating revenue of the said segment of services. Accordingly, the cost of software development services cannot be treated in this fashion as claimed by the assessee. Hence we do not find any merit in the contention raised by the assessee on this issue.we see no reason to interfere with the decision of the lower authorities and hence these grounds of the assessee are dismissed.
Comparability analysis adopted by TPO for determination of ALP - HELD THAT:- We direct the AO/TPO to apply 15% RPT filter in respect of all the comparables.
Interest on the average outstanding trade receivables - TPO Rejected the contentions of the Assessee and computed the TP adjustment on the basis of average receivables and considered the interest rate at LIBOR+400 basis points - HELD THAT:- As relying on judgment of AMD (India) Pvt. Ltd [2018 (8) TMI 2094 - KARNATAKA HIGH COURT] we hold that the treatment of interest on deferred receivables is rightly considered as an independent international transaction and benchmarked separately by the revenue authorities.
Calculation of interest - Considering the fact that the average receivable days is 83 and that the TPO in assessment year 2018-19 has allowed 90 days credit for the assessee, we are of the view that it is reasonable to allow 90 days credit for the purpose of calculating interest on receivables. We are also of the opinion that the interest rate to be adopted is LIBOR rate + 2%, taking a consistent view as held in the aforesaid order of the Tribunal, following the judgment of Aurionpro Solutions Ltd [2017 (6) TMI 1087 - BOMBAY HIGH COURT] We direct the AO to recompute the interest on delayed payments accordingly.
Reduction in amount of income-tax depreciation claimed on computer peripherals - HELD THAT:- In the year under consideration, the assessee has produced the list of assets with the details of date of purchase. We notice that the AO while computing the disallowance had not taken into consideration the date of put to use of the asset. We also notice that in assessee’s own case [2020 (5) TMI 407 - ITAT BANGALORE] the coordinate bench of the Tribunal has allowed the rate of depreciation based on the nature of assets. Given this, we remit the issue back to the AO to verify the nature of asset and allow depreciation considering the principle laid down by the coordinate bench of the Tribunal in assessee’s own case (supra) and the date of asset being put to use. This ground is allowed in favour of the assessee for statistical purposes.
Depreciation on leasehold improvements included in the block of 'furniture and fixtures' - Denial of depreciation as assessee had not furnished the invoices & bills supporting the expenditure and that the assessee had not provided evidence for completion of the work - HELD THAT:- We notice that the AO has considered the entire WDV while computing disallowance and not the current year additions to the assets which is not the right way to compute the disallowance. In our considered view, the computation of disallowance should be restricted to the additions made during the year. We therefore set aside the issue and restore it to the AO with a direction for proper verification of additions made to assets in the year under consideration based on the evidences submitted by the assessee for the purpose determination of disallowance in accordance with law. Accordingly this issue is remitted to the AO for fresh decision, after giving opportunity of being heard to the assessee.
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2022 (6) TMI 1355 - ITAT DELHI
Stay on recovery of outstanding demand - proposing the draft assessment order National Faceless Assessment Centre (NFAC) has not followed the mandatory procedure of section 144B - HELD THAT:- The case of the assessee qua the violation of section 144B is, without issuing a show-cause notice and providing the assessee an opportunity of hearing, AO has proposed the draft assessment order. As observed, while disposing of assessee’s objection in this regard, DRP has directed the AO to pass a speaking order on assessee’s allegation of violation of provisions of section 144B - In the final assessment order, AO has remained completely silent on the issue.
As observed, the major addition resulting in the present demand being share capital received from non-resident shareholders treated as unexplained investment u/s 68 - While disposing of assessee’s objection on this issue, learned DRP, while observing that the AO has not considered the evidences filed by the assessee, directed him to consider the evidences and pass a speaking order.
We find, AO, while passing the final assessment order on the issue has simply repeated the observations made in the draft assessment order. The aforesaid facts clearly reveal that while passing the final assessment order the AO has failed to implement the directions of DRP in letter and spirit.
AO, as it appears, has not followed the mandatory provisions of sub-section (10) and (13) of section 144C of the Act. Though, at this stage, we are not required to dwell upon the merits of the disputed issues, however, on appreciation of facts and materials placed before us and keeping in view the relevant statutory provisions and ratio laid down in the judicial precedents cited before us, we are convinced that the assessee has made out a strong prima facie case in its favour.
Considering the prima facie case and balance of convenience, we are inclined to grant stay on recovery of outstanding demand for a period of 180 days from the date of this order or till the disposal of the corresponding appeal, whichever is earlier.
Further, accepting assessee’s prayer for early hearing of appeal, which was not opposed by learned Departmental Representative, we direct the Registry to fix the appeal for hearing on 29.08.2022 on an out of turn basis. Paper-books, if any, must be filed by the parties sufficiently ahead of the date of hearing of appeal. Since, the date of hearing of appeal was announced in open court, in presence of both the parties, there is no need for issuance of separate notice of hearing to the parties. It is made clear, in case, the assessee seeks unnecessary adjournment, the stay granted will be vacated.
We make it clear, the observations made by us in this order are purely in the context of grant of stay on recovery of outstanding demand and will have no bearing on the decision to be taken in deciding the appeal.
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2022 (6) TMI 1353 - ITAT CHENNAI
Disallowance of write-off - write-off represents amounts due to the assessee by various state transport corporations - assessee submitted that these amount represent price difference / discounts deducted by the Government undertakings which were written off as bad debts since they were not recoverable though they were in the nature of discounts - AO held that the assessee could not produce any details such as copies of invoices to prove the claim relating to the claim of discounts and any correspondence to show that the Government undertaking claimed discounts on the invoices raised by the assessee - HELD THAT:- The undisputed position that emerges is that the assessee has received short-payment against invoices from various transport undertakings. The same is evident from the ledger extract furnished by the assessee. Undisputedly, these undertakings are the customer of the assessee and the shortfall of amount so received by the assessee has been claimed as bad-debts / discounts.
In our considered opinion, to claim the same, it was not necessary for the assessee to map each of the amounts against particular invoices. It was sufficient to show that there was shortfall in receipt of amount against the invoices. This fact has already been established by the assessee. Therefore, the expenditure is clearly allowable as business loss. Assessee appeal allowed.
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2022 (6) TMI 1352 - JHARKHAND HIGH COURT
Additional depreciation - Whether Tribunal is justified in deleting the disallowance of claim of additional depreciation during the year by merely relying upon the judgment passed in M/s Brakes India Limited [2017 (4) TMI 511 - MADRAS HIGH COURT] not applicable to the facts of the present case and ignoring the Tax Audit Report in Form 3CD issued by the Tax Auditor certifying the allowable depreciation as per law?
Whether the instant case falls under the exception clause in circular no. 3 of 2018 issued by the CBDT, where Board has directed to file an appeal on merits in cases where audit objection has been accepted by the department?
HELD THAT:- Issue notice on the respondent in the post admission matter, for which requisites under registered cover with A/D and speed post be filed within two weeks. Office to track the speed post-delivery. Additionally, appellant shall also effect service of notice on the official e-mail address of the Respondent containing attachment of the entire Memo of Appeal and its Annexures within the same time and file supplementary affidavit to that effect within one week thereafter.
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2022 (6) TMI 1351 - ITAT BANGALORE
Tax Collection at Source (TCS) - licence for the said business was in the name of Mrs. Pramila P. Rai[ assessee brothers wife] - TCS was made on behalf of the license holder, who is a different person than the assessee - claim was rejected by the AO as well as the CIT(A) for the reaon that as per the procedure for claiming credit for TCS laid down in Rule 37-I of the I. T. Rules read with section 206C(4) credit can be given only for Mrs.Pramila Rai and not the Assessee - claim of the assessee that there was a family settlement and understanding by which the business of M/s. Prashanth Wines was to be carried beneficially by the assessee, though the licence for the said business was in the name of Mrs. Pramila P. Rai - HELD THAT:- The issue requires to be set aside to the AO for examination afresh in the light of the outcome before the Central Excise authorities for transfer of excise licence from Mrs. Pramila P. Rai to the assessee. AO can take necessary safeguards to ensure that the interest of the Revenue is not affected or prejudiced in any manner. We therefore, set aside the issue of grant of credit of TCS to the AO for examination afresh on the lines indicated above. Appeal of the assessee is treated as allowed for statistical purposes.
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2022 (6) TMI 1350 - ITAT BANGALORE
TP Adjustment - Comparable selection - HELD THAT:- Companies whose turnover in the current year is more than Rs.200 crores needs to be excluded for the purpose of comparable companies.
R.S.Software Ltd., should be excluded from the list of comparables.
Rectification of margin of Harbinger Systems Pvt. Ltd. - The weighted average margin of the company was rightly computed by the TPO 14.74%, however in the final list of comparables of the TPO order, the TPO adopted the margin at 15.06%, which is an apparent mistake. We therefore direct the TPO to consider this afresh while recomputing the ALP in the SWD services segment in the light of the directions given in this order.
Disallowance of provision for Bad Debts - HELD THAT:- We notice that the party wise details of the bad debts written off as furnished before the DRP- Further the sum was created as a provision in the financial year relevant to assessment year 2014-15 was offered to tax in the said year which fact is substantiated by the relevant extracts of the financial statements and the statement of computation of income for the assessment year 2014-15 that can be seen - Based on these facts we are of the considered view that that the disallowance which was already disallowed in the computation of income of the assessee should be deleted since otherwise the same would result in double disallowance.
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2022 (6) TMI 1349 - ITAT KOLKATA
Revision u/s 263 - Deduction u/s 80P(2)(a)(i) - assessee had earned an amount as interest income on deposits with Banks - HELD THAT:- As per section 80P(2)(a)(i) reproduced above, the sums referred in sub-section (1) would be in case of a co-operative society engaged in carrying on the business of banking or providing credit facilities to its members, the whole of the amount of profits and gains of business attributable to any one or more of such activities.
As per section 80P(4), the provisions of section 80P would not apply in relation to any co-operative bank other than Primary Agricultural Credit Society or Primary Co-operative Agricultural and Rural Development Bank. As per the explanation, the terms “co-operative bank” and “primary agricultural credit society” shall have the meanings respectively assigned in Part V of the Banking Regulation Act, 1949. We note that by virtue of section 80P(4), the co-operative banks other than those mentioned therein were meant to be excluded for the purpose of deduction u/s 80P. In this context, in the case of M/s. Jafri Momin Vikash Co-operative Society Ltd. [2014 (2) TMI 28 - GUJARAT HIGH COURT] has held that exclusion clause of section 80P(4) will not apply to cases where the assessee is a primary agricultural co-operative credit society.
PCIT while arriving at a conclusion to set aside the impugned assessment order for fresh consideration by the AO has relied on the decision of Totagars Co-operative Societies Ltd. [2010 (2) TMI 3 - SUPREME COURT] to which ld. counsel placed on record that the said decision is not applicable to the facts of the assessee duly supported by the financial details submitted before us which are reproduced above.
The order of the AO may be or may not be wrong. CIT cannot direct reconsideration on this ground but only when the order is erroneous. An order of remit cannot be passed by the CIT to ask the AO to decide whether the order was erroneous. This is not permissible. An order is erroneous, unless the CIT holds and records reason why it is erroneous. CIT must after recording reasons, hold that order is erroneous. The jurisdictional pre-condition stipulated is that CIT must come to the conclusion that the order is erroneous and is unsustainable in law. It was further observed by the Hon’ble High Court that the material, which the CIT can rely up on includes not only the records as it stands at the time when the order in question was passed by the AO but also records as it stands at the time of the examination by the CIT. Nothing prohibits CIT from collecting and relying new/additional material which evidence to show and state that the order of the AO is erroneous.
We find that Ld. PCIT in the present case has not carried out any enquiry of his own and has merely set aside the assessment to the file of the AO to pass a fresh assessment order on the issue of claim of deduction u/s 80P(2)(a)(i) - Therefore, it is contrary to the guidelines as mandated in the case of ITO v. DG Housing Projects Ltd. [2012 (3) TMI 227 - DELHI HIGH COURT] - Therefore, the consideration arrived at by the PCIT invoking provisions of section 263 of the Act on the issue recorded by him is not justified and cannot be sustained under the facts and circumstances of the present case. Appeal of the assessee is allowed.
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2022 (6) TMI 1348 - ITAT DELHI
Reopening of assessment u/s 147 - Notice by ITO being without jurisdiction - HELD THAT:- Admittedly, no notice was issued by the concerned ITO-Ward-50(4) to the assessee before proceeding to frame the assessment. Any notice issued by ITO, Ward-37(4) being without jurisdiction has no legal sanctity. The issue is squarely covered by the decision of the Co-ordinate Bench of the Tribunal in the case of Mukesh Kumar vs ITO [2015 (6) TMI 1142 - ITAT, DELHI]
Thus the assessment framed by the ITO, Ward-50(4) being bad in law for want of issue of notice u/s 148 of the Act is hereby quashed and consequential addition stands deleted. - Decided in favour of assessee.
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2022 (6) TMI 1347 - ITAT DELHI
Reopening of assessment u/s 147 - bogus purchases - HELD THAT:- As decided in assessee own case [2017 (9) TMI 181 - ITAT DELHI] as relying on Unique Metal Industries [2015 (10) TMI 2753 - ITAT NEW DELHI] case we observe that the AO had recorded similarly worded reasons and name of the parties form whom the assessee alleged to have made bogus purchases were also same except the amount mentioned therein in the reasons recorded in the tabular form, as in the case of the present assessee. We, therefore, respectfully following the above hold that the initiation of reassessment proceedings as well as issuance of notice u/s. 148 of the Act was not valid and the same was void ab initio.
Addition of bogus purchases @ 20% - Estimating profit @ 20%) by taking into consideration the or visions of section 40A(3) will not lead to determination of correct real income. Section 40A(3) is meant for a different purpose when the assessee has made purchases in cash. This provision cannot be applied in such cases. Once the purchases are held to be bogus then the trading results declared by the assessee cannot be accepted and right course in such case is to reject books of accounts and profit has to be estimated by applying a comparative profit rate in the same trade. Though there can be a little guess work in estimating profit rate but such profit rate cannot be punitive.
Thus respectfully following the decision of the Tribunal in the case of Unique Metal Industries (supra), whereby the addition of 20% of the purchases sustained by the Ld. CIT(A) has been deleted in the identical facts and circumstances of the case, are not inclined to sustain the similar addition in the instant case. Appeal of the assessee is allowed.
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2022 (6) TMI 1346 - ITAT SURAT
Deduction u/s 36(1)(viia) - deduction of provision for bad and doubtful debts against the advances of rural branches - provision made for bad and doubtful debts in accordance with the provision of the Gujarat Cooperative Societies Act,1961 read with the consequential provision in the bye-laws of the assessee - assessee is a District Co-Op Bank and as such engaged in the business of banking activities, having various branch including rural branch - HELD THAT:- As it is a settled position in the law that explanation to Section 36(1)(viia) includes ‘rural branch’ of ‘cooperative banks’ as per the decision KANNUR DISTRICT CO-OPERATIVE BANK LTD. [2014 (8) TMI 635 - KERALA HIGH COURT] - We find merit in the submission of ld. AR of the assessee. We find that Section 36(1)(viia) was amended vide Finance Act, 2007 and after amendment the benefit of deduction under Section 36(1)(viia) which was available to a scheduled and non-scheduled bank is sought to be extended to a co-operative banks other than primary agricultural credit society or a primary cooperative agriculture and rural development bank w.e.f. 01/04/2007. Further rest while deduction available to such eligible cooperative banks under Section 80P stood withdrawn by Finance Act, 2006 w.e.f. 01/04/2007.
Thus, there was an amendment by way of Finance Act, 2007 to Section 36(1)(viia) w.e.f 01/04/2007 wherein cooperative bank other than primary agricultural credit society or a primary cooperative agriculture and rural development bank, were brought under the provision of Section 36(1)(viia) for claiming deduction in respect of provisions made for bad and doubtful debts. Thus, in view of aforesaid factual discussion and the legal view taken by the Kerela High Court in Kannur District Cooperative Bank (supra), we find that the order of ld. CIT(A) is based on proper appreciation of amended provision of Section 36(1)(viia) which we affirm.
So far as objection of CIT-DR and his reliance on the decision of Indore Bench in Jhabua Dhar Khatriya Gramin bank [2018 (9) TMI 533 - ITAT INDORE] we find that the ratio of finding of Tribunal is not applicable on the facts of the present case. In the said case the Tribunal relied on the earlier case law in Narmada Malwa Gramin Bank 2012 (3) TMI 619 - ITAT INDORE wherein the issue was restored to the file of assessing officer to re-computing the claim of deduction to the extent of amount written off in the books of accounts. Thus, the finding in the said decision is not at all applicable on the facts of his case. In the result, the ground No. 2 of appeal raised by the Revenue is dismissed.
Deduction on account of diminution of value of Government securities - shifting of investment from HTM category to AFS category - change in categorisation from HTM category to current category, is not reflected separately by the assessee in its Balance Sheet as on 31.03.2009 - whether change in valuation as a result of reclassification/shifting is allowable? and/or whether only change in market price during the current year is allowable or entire difference between book value and market price as on 31/03/2009 is allowable? - CIT-A deleted the addition - HELD THAT:- CIT(A) held that there is no bar to change the classification in the middle of the year, the classification can be changed only on approval of ‘Board of Directors’ approved such classification, as has been done in the middle of the year, then claim of loss on account of diminution of value in Govt. securities has no connection availability of deduction.
Even if change would have been done in the beginning of the year it could change on 31.03.2009 and the amount of claim would still remain same. On the objection of Assessing Officer that for allowance of claim of deduction is that has assessee regularly followed the method of diminution of value investment under AFS category.
CIT(A) held that in case loss as available to assessee would be only Rs.51.17 lakhs for the year under fluctuation and not Rs.5.86 crores and if such theory of AO is accepted then assessee would lose all the loss relating to earlier depreciation and which cannot be said to be just or fair, if the assessee has claimed the loss on account of diminution of securities for the first time and genuineness and correctness of such losses are not doubtful then such case is the claim of loss is allowable.
CIT(A) held that there is no requirement of separate disclosure of HTM category and ASF category and as per the RBI’s Master Circular, the investment should continue to be classified in Govt. Securities, shares & Bond of PSU and others. The categorization in the case of assessee has been done separately as per RBI’s requirement and held that assessee is eligible for claim of deduction under diminution in the value investment shifted from HTM category to ASF category. See STATE BANK OF MYSORE VERSUS DEPUTY COMMISSIONER OF INCOME-TAX, CIRCLE-12(3), BANGALORE [2009 (5) TMI 610 - ITAT BANGALORE] wherein claim of the assessee towards provision of depreciation on account of transfer of securities from AFS Category to HTM Category is allowed - Decided against revenue.
Disallowance of claim of deduction u/s 36(1)(viia) by taking a view that the definition of rural branch in explanation (ia) does not cover cooperative banks - HELD THAT:- We find that merit in the submissions of the ld AR for the assessee and find that as per section 67A of Gujarat Cooperative Society Act, every society, working in the State of Gujarat, which earned profit from its transactions, shall maintain a bad debts reserve funds. As per sub-section (2) of section 67A, every year, the society shall carry at least 15% of the net profit to the debts reserve funds. All such funds shall be certified by the certified auditors and the expenses incurred in recovering the same shall first be written off as per section 67A(3). It is settled position under law that co-operative banks are primarily a co-operative society. We also noted that the financial statement of the assessee is not only subject to the statutory audit but also subject to the approval of the Registrar of Co-operative society. Thus, considering the aforesaid factual and in view of the statutory provision in the State Co-operative Act, the assessee is also allowed deduction which in line with the provisions of section 67A of Gujarat Co-operative Society Act.
So far as objection of assessing officer is that in the profit and loss accounts of the year no such provision is made by the assessee, is concerned, we find that in Kedar Nath Jute Manufacturing Company 1971 (8) TMI 10 - SUPREME COURT held that nomenclature or treatment in the books of accounts in not decisive or conclusive for a particular deduction otherwise allowable under the law. In the result, the ground of appeal raised by the assessee is allowed.
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2022 (6) TMI 1345 - ITAT MUMBAI
Rectification of mistake - Levy of interest u/s 201(1A) - on a rectification application filed by the Assessee, demand raised under Section 201(1A) of the Act was reduced to Nil. however, CIT(A) confirmed the levy of interest under Section 201(1A) of the Act for the period commencing from the date on which the tax was first deductible to the date of filing of relevant return of income by the recipient–deductee - HELD THAT:- Having perused the material on record, and the order [2019 (7) TMI 73 - ITAT MUMBAI] passed by the Tribunal, we find merit in the contention of the Assessee that Ground No. 1, 1.1, and 1.2 of the appeal have not been adjudicated which constitutes a mistake apparent on record. Accordingly, the appeal is restored for the limited purpose of adjudication of Ground No. 1, 1.1 and 1.2 of the appeal.
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2022 (6) TMI 1344 - ITAT CUTTACK
Rectification of mistake u/s 154 - CIT justification in invoking jurisdiction u/s.263 and modifying the assessment order passed u/s.143(3) under 'Limited Scrutiny' category in conformity with CBDT instructions on the facts and in the circumstances of the case and valuation of closing stock when the same was not the subject matter of "Limited scrutiny" in the assessment completed u/s.143(3) on the facts and in the circumstances of the case.
HELD THAT:- A perusal of the appeal, more specifically the grounds of appeal before the Tribunal, shows that at the side of grounds No.2 & 3, it is mentioned as “Not. P”, however, it is not signed by either the assessee or the authorised representative. The Vakalatnama in case of the AR was verified. The said Vakalatnama does not give any power to the authorised representative to withdraw the appeal.
This being so, as the director of the assessee company has specifically filed an affidavit that he has not authorised to withdrawal of the grounds as also the fact that he was present to the court and the grounds were not withdrawn as also on the ground that the Vakalatnama of the authorised representative, who represented the assessee in the appeal originally does not have authority to withdraw the grounds, we are of the view that there is a mistake apparent from the order of the Tribunal insofar as grounds No.2 & 3 have been which have been recorded as not pressed. Consequently, the order of the Tribunal passed [2021 (5) TMI 398 - ITAT CUTTACK] for the assessment year 2014-2015 in the case of the assessee stands recalled only for the purpose of the adjudication of the grounds No.2 & 3 of the grounds of appeal.
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2022 (6) TMI 1343 - CALCUTTA HIGH COURT
Reopening of assessment u/s 147 - proceedings were put to challenge on the ground of violation of principles of natural justice -appeal filed by the writ petitioner challening the order passed by single Judge while directing the affidavit-in-opposition to be filed by the respondent department declined to grant an interim order in favour of the appellant/ assessee - HELD THAT:- It is prima facie seen that the assessee has not been furnished the full information based on which the reopening proceedings were proposed. Furthermore, there is a reference to a search action which is conducted and statement being recorded from a Director of the company on 03.01.2019 etc. If that is so, the appellant should have full information so as to enable them to give effective reply. This having not done, this court is of the view that the principles of natural justice have been violated and the appellant should be afforded with an opportunity to put forth their contention.
In the light of the above, the order dated 30.03.2022 under Clause (d) of Section 148A of the Act shall be reckoned for reasons for reopening and the appellant assessee is directed to file an objection not later than two weeks from the date of receipt of server copy of this order and also enclose all documents in support of the claim and thereafter the assessing officer shall consider the reply and documents and afford an opportunity of personal hearing to the appellant/writ petitioner and pass fresh orders under Section 148A(d) of the Act in accordance with law.
In the light of the above, the notice issued under Section 148 of the Act dated 06.04.2022 shall not be enforced and further proceedings be initiated after compliance of the above directions.
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2022 (6) TMI 1340 - ITAT CHENNAI
Addition u/s.56(2)(viib) - excess consideration received on allotment of equity shares over and above fair market value as on date of allotment is income of the assessee - price charged for allotment of equity shares, including premium - HELD THAT:- We ourselves do not subscribe to the reasons given by the AO for simple reason that the assessee has determined value of shares as per discounted cash flow method, as per which fair market value of shares as on date of issue was at Rs.109.21 per share. Assessee has determined such valuation on the basis of discounted cash flow of subsequent years by taking into account project under implementation and its relevance, including intangibles possessed in the line of business carried out by the assessee.
Assessee has also justified fair market value determined as on date of allotment of shares by filing necessary details to establish fair market value of the shares as per net asset value method as at end of the assessment year 2014-15, as per which value per equity share is at Rs.146.3 per share which is higher than issue price at Rs.109.21 per share, which means, fair market value determined by the assessee at the time of allotment of shares is not hypothetical, but intrinsic value of the share based on its future earning capacity.
Therefore, we are of the considered view that even on merits, the assessee has justified price charged for allotment of equity shares, including premium.
In this case, the assessee has filed fair market value of the shares worked out as at end of the impugned assessment year on net asset value method, as per which, share price has been worked out at Rs.147.36 per share which is much higher than issue price of Rs.109.21 per share.
Assessee had also allotted 5 lakhs equity shares to non-resident shareholder M/s.Sojitz Corporation, Japan, at issue price at Rs.450.10 per share, which includes premium of Rs.440.10 per share. If you compare, premium charged on resident shareholders, when compared to non-resident shareholder, premium charged to resident shareholders is much below to premium charged on non-resident shareholders.
It is very clear that the assessee has justified premium charged on issue of shares with necessary evidences, including fair market value of the shares as on date of issue. We are of the considered view that the AO has completely erred in making additions towards securities premium u/s 56(2)(viib) - CIT(A), after considering relevant facts has rightly deleted additions made by the AO. Hence, we are inclined to uphold findings of the CIT(A) and dismiss appeal filed by the Revenue.
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2022 (6) TMI 1339 - ITAT HYDERABAD
Ex-parte order passed by the Tribunal due to non-appearance - HELD THAT:- It is an admitted fact that due to continuous non-appearance of the assessee, the Tribunal dismissed the appeals on the ground that the assessee is not interested in prosecuting the appeals filed by it. Further, these appeals are not decided on merit. We deem it fit and proper to recall the orders passed by the Tribunal. As the appeals are posted for hearing on 4.7.2022 which was announced in the Open Court, no separate notice of hearing be sent to the parties.
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2022 (6) TMI 1338 - ITAT RAJKOT
Disallowance u/s 40(a)(ia) - tds u/s 194I - non-deduction of tax at source on go-down rent expenses - non-submission of details regarding payment of the above mentioned amount to different professionals - Scope of amendment brought in by the Finance Act (No. 2) 2014 effective from 01/04/2015 made in the provisions of Section 40(a)(ia) for 100% disallowance of expenditure, the disallowance u/s 40(a)(ia) of the Act was limited to the extent of 30% of such expenditure - hardships caused to the assessee due to 100% disallowance of the expenditure claimed by the assessee in case of non-deduction of TDS - CIT-A Confirmed by holding that the assessee failed to bring any cogent evidence suggesting that the rent was paid to three co-owners instead of one as alleged by the AO - HELD THAT:- As regards the 1st contention of the assessee that the rent was paid to three different parties amounting to ₹1,20,000 per person and therefore there is no violation of the provisions of section 194-I read with section 40(a)(ia) of the Act, appears to be devoid of any merit. It is for the reason that, the assessee has not discharged the onus by furnishing the necessary details about the payees to whom the rent was paid. The assessee has not furnished any agreement for the rent or any other document suggesting that the rent was paid by the assessee to three different parties. Thus in the absence of any other document supporting the contention of the assessee, we do not find any reason to interfere in the finding of the authorities below.
Alternate contention of the assessee that the disallowance should be restricted to the tune of 30% of the rent paid under the provisions of section 40(a)(ia) read with section 194-I of the Act, we find force in the argument. The amendment was brought by the Finance Act (No. 2) 2014 effective from 1-4-2015 whereas the year before us relates to the assessment year 2012-13. The Finance Act, 2014 brought an amendment to the first proviso to the section 40(a)(ia) of the Act.
In the case of Neena Kaul [2019 (5) TMI 1697 - ITAT MUMBAI] assessee contended that said provisions have been amended in order to ease the hardships caused to the assessee due to 100% disallowance of the expenditure claimed by the assessee in case of non-deduction of TDS. Assesse also submitted that it has been mentioned in the para 14.3 that withholding of taxes is a mode of collection of tax and does not result into final discharge of tax liability.
As in the case of Amruta Quarry works [2016 (7) TMI 1246 - ITAT AHMEDABAD] it was contended by the assessee that Since the amendment has been brought to remove the hardship caused to the assessee, the amendment assumes the character of being clarificatory in nature and is retrospectively applicable. Reliance is placed on Five Members Constitution Bench of Supreme Court in the case of CIT v. Vatika Township (P.) Ltd [2014 (9) TMI 576 - SUPREME COURT] wherein it has been observed that in case the amendment is brought to remove the hardship caused to the assessee, the same assumes the character of being clarificatory in nature. Hon'ble Tribunal upheld this contention and allowed appeal in favour of the assessee restricting disallowance to 30%. In view of the above, we hold that the disallowance on account of non- deduction of TDS should be limited to the extent of 30% of the rent expenses incurred by the assessee. Thus the ground of appeal of the assessee is partly allowed.
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