|
Advanced Search Options
Income Tax - Case Laws
Showing 181 to 200 of 661 Records
-
2021 (8) TMI 1030 - ITAT MUMBAI
Income from house property - Leasing out the property to its sister concern at a rent lesser than the market rent - AO including the sub-lease income of Fazlani Exports Pvt. Ltd., in respect of sub-lease of Rational House property to M/s. Goldman Sachs on the ground that Fazlani Exports Pvt. Ltd sub-leased aforesaid property at higher rent and treating as Sham Transaction - HELD THAT:- The entire transaction of assessee leasing out the property to its sister concern at a rent lesser than the market rent, cannot be construed as a sham transaction. However, in this recalled proceedings, we have to adjudicate the applicability of the decision of Hon’ble Jurisdictional High Court in the case of CIT vs Akshay Textile Trading & Agencies Pvt Ltd [2007 (10) TMI 251 - BOMBAY HIGH COURT] which was admittedly relied upon by the ld AR as held no case of revenue that transaction was sham – hence annual value of the property is the value received by the owner from the tenant irrespective whether tenant on sub-letting has received higher rent - ITAT was justified in holding that the annual letting value has to be determined on basis of annual rent received by the assessee and not what has been received by its tenants from the ultimate users - Decided in favour of assessee.
-
2021 (8) TMI 1028 - ITAT SURAT
Assessment u/s 144 - Addition u/s 69 - assessee failed to provide details of credit entries in his bank accounts - HELD THAT:- We note that in assessee`s case an enquiry report was received from the Dy. Director of Income Tax (Inv.)-III, Surat regarding huge credits in the bank account of the assessee during the year under consideration. From the enquiry, the AO gathered that the assessee has four bank accounts and total credit entry in the bank accounts. AO treated as unexplained investment and treated income for the year under consideration by passing order u/s 144 r.w.s 147. On appeal, ld CIT(A) directed the assessing officer to calculate the commission @₹ 50 per lacs on the total turnover of ₹ 98,22,26,712/-.
We note that investigation Wing, Surat, reported after examining the assessee and recording his statement on oath u/s 131 of the Act, that the assessee was engaged in the business of cheque discounting business and was using 18 bank accounts. The AO in the A.Y. 2009-10 had completed the assessment order dated 25.11.2016 holding that the assessee had earned commission income @₹ 50 per lacs on the turnover of ₹ 29,84,17,709/- and had made addition of ₹ 14,92,088/-. Therefore, we note that in previous year the Department has accepted the claim of the assessee that assessee had earned commission income @₹ 50 per lacs on the turnover of ₹ 29,84,17,709/-.
It is a well settled legal position that factual matters which permeate through more than one assessment year, if the Revenue has accepted a particular's view or proposition in the past, it is not open for the Revenue to take a entirely contrary or different stand in a later year on the same issue, involving identical facts unless and until a cogent case is made out by the AO on the basis of change in facts.
Assessee is engaged in cheque discounting business. However, considering the time value of money, we note that rate of @₹ 50 per lacs, is lower side, therefore we direct the assessing officer to compute the disallowance @ ₹ 75 per lacs.
Principle of consistency are applicable to the assessee on cheque discounting business and not on the rate of ₹ 50 per lacs, therefore, considering the time value of money, we have directed the assessing officer to compute the disallowance @ ₹ 75 per lacs. Appeal of the Revenue is partly allowed.
-
2021 (8) TMI 1026 - ITAT AHMEDABAD
Initiation of proceedings u/s. 153C - Unaccounted on-money payment for purchase of land - Search and seizure u/s. 132 - addition based on loose paper found and seized - persons who have received the on-money payment have taken contradictory stands before different income-tax authorities and, therefore, the appellate proceedings in connected cases have direct bearing on the case of the assessee - CIT-A deleted the addition - HELD THAT:- After perusal of the material on record and order of the AO it is clearly indicated that the information received from search conducted in Himalyan Group was also utilized in making impugned addition in the case of the assessee. The ld. counsel has also submitted that in addition to the fact that addition was not made on the basis of document seized from the office promises of Saumya Construction Pvt. Ltd., the referred documents dated 19-04-2008 as a copy of agreement between the Sandesh Ltd., Pusti Enterprises and Saumya Construction did not pertain to assessment year in question.
Reliance upon the decision of Sanhgad Technical Education Society [2017 (8) TMI 1298 - SUPREME COURT] wherein held that where loose papers found and seized did not establish co-relation document– wise with assessment year, notice issued under section 153C had rightly been quashed and set aside.
We have considered the judicial pronouncement as supra wherein it is held that where loose paper found and seized did not establish co-relation document wise with assessment year in question notice issued u/s. 153C had rightly been quashed and set aside. Before us, the Revenue could not point out to the contrary. In the light of the above facts and findings and after considering the decision of the ld. CIT(A), the appeal of the Revenue is dismissed. Therefore, this appeal of the revenue is dismissed.
-
2021 (8) TMI 1025 - ITAT MUMBAI
Proceedings u/s. 163 - TDS liability u/s 195 - agent of non-resident assessee - assesses being treated as agent of the non resident for assessment of income of that non-resident - remittances made by the assessee towards reimbursement of expenses that were incurred by the latter on behalf of the assessee - As argued CIT(A) has erred in not appreciating that proceedings u/s. 201 are for treating the assesses in default for failure to comply with the provisions of section 195
HELD THAT:- as the amounts remitted by the assessee company, viz. BIPL to Braitrim U.K have been held to be towards reimbursement of expenses (without any mark-up), therefore, in the absence of any ‘Income’ element therein involved the assessee, viz. BIPL could not be held to be a representative assessee within the meaning of Sec. 160(1)(i) qua the said remittances.
Treatment of the assessee as Agent of non-resident and assessee in Default for non Deducting TDS u/s 195 - HELD THAT:- The Tribunal in [2010 (11) TMI 393 - ITAT, MUMBAI] has observed that as the liability of an assessee to deduct tax at source under s. 195 is different from the liability of an assessee to file a return of income as an agent of a foreign principal, therefore, the claim of the assessee that simultaneous proceedings cannot be taken, i.e holding the assessee as an assessee in default under Sec. 201; and at the same time passing an order under s. 163, holding the assessee as a representative assessee, did not merit acceptance.
We do not find favor with the observation of the CIT(A) that as he had upheld the order passed against the assessee u/s 201 of the Act, therefore, having held so, there cannot be one more assessment in respect of the same income on the assessee pursuant to Sec. 163 of the Act.
Pursuant to the amendment made available on the statute vide the Finance Act, 1987 w.e.f 01.06.1987 as the words “unless he is himself liable to any income-tax” in Sec. 195 stood omitted w.e.f 01st June, 1987, therefore, the innate exception carved out for a person who was himself liable to pay tax as an ‘agent’ of the non-resident person u/s 163 of the Act qua deduction of tax at source u/s 195 of the Act as per the pre-amended law i.e prior to 01.06.1987, had thereafter been dispensed with or in fact obliterated from the statute. We, thus, in terms of our aforesaid observations set-aside the view taken by the CIT(A) that as he had upheld the order passed against the assessee u/s 201 of the Act, therefore, having held so, there could not have been one more assessment in respect of the same income on the assessee pursuant to Sec. 163
Whether the assessee company, viz. BIPL could principally be held to be the ‘agent’ of Braitrim U.K u/s 163? - As observed by the ITO(IT)-TDS-3, Mumbai, that the assessee, viz. BIPL was to be held to be an ‘agent’ of Braitrim U.K u/s 163 of the Act for the reasons, viz. (i). that BIPL has a business connection with Braitrim U.K and its principal business is substantially controlled and managed over by Braitrim U.K ; (ii) that Braitrim U.K is directly or indirectly in receipt of income from or through BIPL; and (iii). that BIPL is the agent office managed on behalf of Braitrim U.K. Although, the assessee has assailed before the CIT(A) the aforesaid observations of the ITO(IT)-TDS-3, Mumbai, on the basis of which it was held to be an ‘agent’ of Braitrim U.K, however, we find that the CIT(A) by merely confining his adjudication to the aspect that the assessee could not have been subjected to double jeopardy under the two provisions of the Act i.e Sec. 201 and Sec. 163 of the Act, had thus, not dealt with the specific contentions that were raised by the assessee before him, therein, assailing its being treated as an ‘agent’ of Braitrim U.K under Sec. 163 of the Act.
Also no contentions qua the aforesaid issue on merits i.e treating of the assessee as an ‘agent’ u/s 163 of the Act were advanced by the authorized representatives for both the parties in the course of hearing before us. As we have set-aside the view taken by the CIT(A) that having upheld the order passed against the assessee u/s 201 of the Act, the assessee could not be held to be an ‘agent’ of Braitrim U.K under Sec. 163 of the Act, therefore, in all fairness we restore the matter to the file of the CIT(A) for adjudicating by way of a speaking order the assessee’s claim on merits that it could not have been held to be an ‘agent’ of Braitrim U.K u/s 163.
-
2021 (8) TMI 1024 - ITAT KOLKATA
Revision u/s 263 - long-term capital loss - HELD THAT:- Documentary evidence placed on record clearly establish that even though the claim of the assessee for long-term capital loss was allowed by the AO only to the extent of ₹ 1,19,29,790/-, even the said loss to the extent allowed in the assessment was not allowed to be carried forward by the AO to the subsequent years as per the computation sheet annexed to the assessment order.
Even the ld. CIT(DR) has not been able to rebut or controvert this position which is clearly evident from the assessment order passed by the Assessing Officer under section 143(3) read with computation sheet annexed thereto and further corroborated by the application filed by the assessee under section 154 before the Assessing Officer and the appeal filed before the ld. CIT(Appeals).
We, therefore, find merit in the contention of the ld. Counsel for the assessee that there was no error in the order of the Assessing Officer dated 28.12.2018 passed under section 143(3) in allowing to carry forward the entire long-term capital loss claimed by the assessee instead of ₹ 1,19,29,790/- only allowed in the assessment order, as alleged by the ld. Principal CIT in his impugned order. The order passed by the Assessing Officer under section 143(3) thus was not erroneous as well as prejudicial to the interest of the revenue and the ld. Principal CIT, in our opinion, was not justified in revising the same vide his impugned order passed under section 263. We, therefore, set aside the order passed by the ld. Principal CIT under section 263.
Appeal of the assessee is allowed.
-
2021 (8) TMI 1023 - ITAT DELHI
Validity of the reassessment order u/s 147 which was sought to be revised by the impugned order u/s 263 - validity of re-assessment proceedings cannot be judged or challenged in revisionary proceeding - main contentions raised by the ld. CIT-DR was that once the assessee has accepted the re-assessment order and has not challenged the validity of reopening u/s.147, then assessee is precluded from agitating this issue especially in the proceedings u/s.263 on the ground that assessment order itself is bad in law - HELD THAT:- The present proceedings being collateral proceedings and if the assessment order is inherently invalid or bad in law, then validity of such an order can be challenged at any stage in the collateral proceedings including the proceedings u/s.263, because invalid order cannot be set aside or can be revised to make it valid. Though assessment order may be said to be erroneous but certainly it cannot be held prejudicial to the interest of the revenue in such circumstances when assessment order itself is unsustainable.
The reasons recorded by the AO are totally vague, scanty and ambiguous. The reasons recorded by the AO do not disclose the AO's mind as to what was the nature and amount of transaction or entries, which had been given or taken by the assessee in the relevant year. The reasons recorded by the AO also do not disclose his mind as to when and in what mode or way the bogus entries or transactions were given or taken by the assessee. From the reasons recorded, nobody can know what was the amount and nature of bogus entries or transactions given and taken by the assessee in the relevant year and with whom the transaction had taken place.
There is no live nexus with the information received and the formation of belief by the Ld. AO. At least the reason which is the foundation and edifice for acquiring jurisdiction to reopen the assessment, at least should prima facie indicate that there is live link nexus with the material coming on record with the income escaping assessment. The material should not be specific but also should indicate what is the amount which is escaping assessment. As held above, nowhere the reasons refer what was the nature of accommodation entry, the quantum of the amount of entry which has escaped assessment. In fact the reason is purely based on general observation and the modus operandi without any live link nexus with the assessee.
Thus it is well settled that only the reasons recorded by the AO for initiating proceedings u/s 147 of the Act are to be looked at or examined for sustaining or setting aside a notice issued u/s 148 of the Act. The reasons are required to be read as they were recorded by the AO. No substitution or deletion is permissible. No addition can be made to those reasons. Therefore, the details of entries or amount mentioned in the assessment order and in respect of which ultimate addition has been made by the AO, cannot be made a basis to say that the reasons recorded by the AO were with reference to those amounts mentioned in the assessment order.
Thus since the reassessment order itself is bad in law, therefore, the same cannot be revised under section 263 of the I.T. Act. Only valid re-assessment order can be revised under section 263 - Decided in favour of assessee.
Reopening of assessment - addition of bogus accommodation entry - HELD THAT:- As reasons recorded at least mention what is the nature of accommodation entry and which is the entity from which assessee has received the amount. Whether the entry has been received towards share application money or loan or gift, etc. These reasons are purely vague and show there is a non application of mind on the information which was received and the reason recorded by the AO - he has not even mentioned as to what was the nature of entry as given in the report and simply saying that assessee received entry to the tune of ₹ 20,50,000/- from entry operators during the period is not sufficient. Such a vague reasons cannot justify the reopening and as observed above, the Assessing Officer can validly acquire jurisdiction only when the reasons recorded itself points out or speaks of live link nexus with the material available on record and income escaping assessment and it should not be vague or mere pretence - he should have at least perused the report and examine what is the material pertaining to assessee and what is the nature of entry and whether it is matching with records of the assessee.
He should have prima facie seen what is the nature of bogus entry and from which entity assessee has received. Such vague and general observation made by the Assessing Officer in the reasons recorded does not confer any jurisdiction to him reopen the case - Decided in favour of assessee.
-
2021 (8) TMI 1022 - ITAT DELHI
Validity of satisfaction and proceedings u/s.153C - Satisfaction recorded by the AO of searched person or not? - CIT(A) had held that nothing is incriminating in the documents found and, therefore, additions cannot be made if no incriminating documents exist and no undisclosed income found during the course of search - HELD THAT:- As carefully perused the satisfaction note, written submissions of the appellant and also the contentions of the Ld. CIT (DR). A chart was furnished by the appellant, wherein every seized document was described as to its nature and it was emphasized that all the documents are either statutory records filed with the tax authorities, ROC or are audited accounts and books of the appellant.
As perused the chart from which it clearly comes out that the documents belong to the appellant. However, they do not indicate any undisclosed income that has escaped assessment in the impugned assessment years. The appellant had also submitted a chart demonstrating that the assessment years in appeal are completed assessment years which has been reproduced in the submissions of the appellant.
The tests that the documents belong to the appellant are duly verified. Section 153C of the Act also states that once the assessment is sought to be opened based on the documents belonging to the appellant, further assessment shall be made in accordance with the provisions of section 153A of the Act. There is a further requirement which states that the Assessing Officer must record a satisfaction note that documents must have a bearing on the determination of the total income of the appellant. Both the conditions lead to the conclusion that the documents found must be indicative of escapement of income and that the total income declared by the appellant in its return of income must necessarily be effected by the findings in the seized documents.
From the perusal of the satisfaction note, it cannot be held that it is reflective of any undisclosed income or in the nature of incriminating belonging to the assessee the reason being none of the documents either pertained to the impugned assessment years or are already party of regular books of account.
This is fairly clear from the assessee’s explanation with regard to each and every document incorporated in the tabulated form in the following paragraphs. Most of the documents did not pertain to impugned assessment years or does not specify any assessment year or have already recorded in the books of account or a part of assessment years. The documents at least indicate some prima facie that there is same escapement of income or there is an element of undisclosed income, it cannot be said to be incriminating. If the documents found are available in public domain or are statutory records, same cannot be held to be incriminating.
Order of the ld. CIT (A) holding that the additions made in the impugned assessment order are not based on incriminating material, is affirmed. Hence, the appeal of the Revenue is dismissed
-
2021 (8) TMI 1016 - GUJARAT HIGH COURT
Reopening of assessment u/s 147 - Reason to believe - HELD THAT:- There is direct nexus / live link between the material coming to the notice of the Assessing Officer and that, for formation of his belief that there has been escapement of the income of the assessee from assessment in the year under consideration because of his failure to disclose fully and truly all material facts as from the inquiry/investigation by the Investigation Wing of the respondent, some tangible material was found to substantiate the fact that the assessee was the provider of accommodation entries and that, the income from commission, ranging from 0.5% to 1% was not disclosed and thereby, the income chargeable to tax has escaped assessment for the year under consideration.
As emerges from the record, the petitioner has filed RoI for the A.Y. 2012-13 disclosing income despite showing a huge turnover in the audited books of account - a detailed investigation is carried out by the Investigation Wing of the respondent and the outcome of the same is referred to herein above, which prima facie substantiates the case of the respondent - we are of the considered opinion that formation of belief by the AO that the income chargeable to tax has escaped assessment, based upon material derived during inquiry/investigation, appears to be justified.
A perusal of the same revealed that they are mainly based on the aspects of change of opinion and reason to believe. There cannot be any dispute with regard to the ratio laid down in the same, however, as discussed herein above, the petition has failed so far as such aspects are concerned and accordingly, we deem it proper not to delve deep into them as would be of no avail to the petitioner.
-
2021 (8) TMI 1015 - MADRAS HIGH COURT
Reopening of assessment u/s 147 - validity of the notice issued u/s 148 - case reopened is beyond four years, but within six years - HELD THAT:- In the present case, the petitioner has submitted its objections elaborately and the said objections were disposed of by the respondent by issuing an order and while disposing of the objections, the respondent had considered the objections filed by the petitioner and rejected the objections on the ground that for the AY 2003-04, ADIT, International Taxation, Chennai, issued a Notice u/s 148 on similar ground that claim of the assessee as regards payment made towards geological studies, seismic data acquiring and processing and chartered hire charges would not fall for consideration u/s 44BB of the Act to go for TDA at the rate of 4%. On the contrary, the services fell within the definition of “fee for technical services”.
When the AO could able to trace out the material from and out of the materials submitted by the assessee, such new informations or materials undoubtedly would provide the AO for 'reason to believe' to reopen the assessment. This being the factum established, this Court is of the considered opinion that the respondent could able to establish that the AO has 'reason to believe' for reopening of assessment. The other intricacies raised by the assessee on merits are to be adjudicated elaborately with reference to the original documents and evidences to be made available before the authority. Such an elaborate adjudication on merits need not be entertained by the High Court in a writ proceedings under Article 226 of the Constitution of India.
In the present case, the reopening is based on certain materials on record, then further adjudications are to be done before the authority based on the materials available on record. The sufficiency of the reasons need not be gone into by the High Court in a writ proceedings. Thus, the petitioner is bound to co- operate for the completion of the reopening proceedings initiated u/s 147/148 of the Act and the respondent is directed to conclude the assessment / reassessment proceedings as expeditiously as possible by following the procedures as contemplated.
-
2021 (8) TMI 1014 - GUJARAT HIGH COURT
Special audit u/s 142(2A) - AO Jurisdiction to give directions for a special audit - necessary approval of the Principal Commissioner of the Income Tax or not? - HELD THAT:- Assessing officer after going through the said material seized during the search operations and after following the due procedure of giving reasonable opportunity of hearing to the petitioners and after obtaining necessary approval of the Principal Commissioner of the Income Tax as contemplated in Sub-section (2A) of Section 142 has directed the respective petitioners vide the impugned directions to get their accounts audited by the nominated accountant, and to furnish the report in the prescribed form, also setting forth the requisite particulars as prescribed in the questionnaire. Such directions could neither be said to be arbitrary, illegal nor beyond the scope of the said provision.
It is neither permissible to the Court exercising the jurisdiction under Article 226 of the Constitution to enter into the disputed questions of facts, nor is it possible for the Court to analyse each and every direction and come to the conclusion whether it is bad in law or not. The submission of Mr.Soparkar that if some of the questions, which seem to be bad in law cannot be segregated, the entire impugned order containing the directions be quashed and set aside, also cannot be accepted.
It is axiomatic that when an authority has a jurisdiction to pass an order, the exercise of jurisdiction in wrongful manner in certain cases even though held to be illegal, would not necessarily render the order a nullity. All irregular or erroneous or illegal orders cannot be held to be null and void.
In the instant case, as set out herein above the Assessing Officer does have the jurisdiction to give directions for a special audit under Section 142(2A). Even the impugned directions also do not suffer from any illegality or infirmity. In any case, even if two-three queries out of forty five queries are found to be unwarranted, as sought to be submitted by Mr.Soparkar, the entire order giving directions can not be set aside treating it to be a nullity. In that view of the matter, both the petitions being devoid of merits deserve to be dismissed.
At this stage, the request made by the learned Sr. Advocate Mr.M. R. Bhatt for the respondent to exclude the period during which the present petition remained pending in the High Court after issuance of the notice i.e. from 14.6.20201 till this date, deserves to be considered for the purpose of Section 142(2C) - See VLS FINANCE LTD. & ANOTHER VERSUS COMMISSIONER OF INCOME TAX & ANOTHER [2016 (4) TMI 1133 - SUPREME COURT]
Applying the ratio of the afore-stated judgement to the facts of the present petitions, it is directed that the period during which both the petitions remained pending i.e. from the date of issuance of notice on 14.6.2021 till the date of pronouncement of judgement, shall be excluded while counting the period prescribed in the proviso to Sub-section (2C) of Section 142 of the said Act. Subject to the said direction, the petitions are dismissed.
-
2021 (8) TMI 1013 - MADRAS HIGH COURT
Reopening of assessment u/s 147 - disposal of the objections filed on the reasons furnished - HELD THAT:- Disposal of objections submitted by the petitioner on the reasons furnished is to be done based on objective satisfaction and not on subjective satisfaction. An elaborate adjudication is required and such adjudications are to be done during the course of reopening proceedings and certainly not at the stage of disposal of objections filed by the Assessee on the reasons furnished. Once the Assessing Officer prima facie arrived a conclusion that he has reason to believe and reasons are furnished, objections received and disposed of by the authority, the said procedure as directed by the Hon'ble Supreme Court of India in GKN Driveshafts case [2002 (11) TMI 7 - SUPREME COURT] is to be construed as completion of compliance of the principles of natural justice.
Considering the initiation of reopening proceedings, reasons furnished and the disposal of objections in the impugned proceedings this Court has no hesitation in arriving a conclusion that the respondents have established the reasons to believe for reopening of assessment, which is a pre-condition contemplated under Section 147 of the Act - adjudications with reference to the disputed facts are to be done during the course of reopening proceedings and the High Court cannot venture into an adjudication of such disputed facts with reference to the intricacies in accounting system based on certain original documents in the writ proceedings under Article 226 of the Constitution of India.
The power of judicial review under Article 226 of the Constitution of India is to ensure that the processes through which a decision is taken by the Competent Authority in consonance with the provisions of the Act, but not the decision itself.
This being the scope of power of judicial review, the High Court is not expected to adjudicate certain disputed facts with reference to original documents and evidences, which is to be done by the Competent Original Authority and thereafter by the Appellate Authority in the manner known to law. Once the adjudications are done by the Original Authority and by the Appellate Authorities as contemplated under the Statutes, then those findings of the Authorities at various stages would be of greater assistance to the High Court for the purpose of exercise of the power of judicial review under Article 226 of the Constitution of India in an effective and efficient manner.
Based on the elaborate discussions made in the aforementioned paragraphs, the petitioner has to cooperate for the completion of the reopening proceedings, which is to be done as expeditiously as possible.
-
2021 (8) TMI 1009 - BOMBAY HIGH COURT
Deduction of TDS - Interest u/s 2(28A) - Refund amount with interest to the flat purchasers/Petitioners as per the decree of the High Court - whether the Respondent Nos. 4 to 7 are entitled to deduct TDS on the “interest” payable under the Recovery Warrant dated 15th October 2018, the Consent Terms and the Order of this Court both dated 4th March 2021?
HELD THAT:- The amount so payable is in the nature of a judgment debt or akin to a judgment debt, the payment of which cannot establish a debtor-creditor relationship between the parties. As such, the said sum or any part thereof cannot be liable to tax deducted at source under the relevant provisions of the IT Act. This is in line with the decision of the Hon’ble Supreme Court in ALL INDIA REPORTER LIMITED VERSUS RAMCHANDRA D. DATAR [1960 (11) TMI 21 - SUPREME COURT] as also the judgment of our Court in MADHUSUDAN SHRIKRISHNA VERSUS EMKAY EXPORTS [2010 (1) TMI 1200 - BOMBAY HIGH COURT].
In the present case, the amounts payable being in effect a refund of the amounts paid by the Petitioners to the Respondent No. 4 to 7, along with compensatory interest thereon, such a relationship does not spell out a debtor-creditor relationship nor is the payment made by the Respondent Nos. 4 to 7 to the Petitioners one in discharge of any pre-existing obligation, so as to attract Section 2(28A) of the IT Act.
The compliance of the Respondent Nos. 4 to 7 with the Schedule of Payments under the Consent Terms dated 4th March, 2021 and our Order dated 4th March 2021, is to be made without making any deduction of tax at source. The Respondent Nos. 4 to 7 are directed to pay to the Petitioners the balance sum of ₹ 5,05,989/- deducted from the 5th instalment which became due on 20th July 2021, in compliance with the Consent Terms, within a period of one week from today.
Place the Interim Application No. 2545 of 2020 and Interim Application No. 1151 of 2021 on 25th August 2021 for consideration.
-
2021 (8) TMI 1005 - GUJARAT HIGH COURT
TDS u/s 194H - commission payment - payment received or receivable by a person for rendering medical services - HELD THAT:- As rightly held by the Tribunal, the Explanation to Section 194H of the said Act cannot be interpreted so widely as to include any payment receivable, directly or indirectly for the services in the course of buying or selling of goods. To fall within the Explanation, the payment received or receivable directly or indirectly has to be by a person acting on behalf of the assessee for the services rendered, not being professional services or for the services in the course of buying or selling of goods or in relation to any transaction relating to any assets, valuable articles or thing.
Therefore, to fall within the explanation to Section 194H, the commission payment must have been received by a person who is acting on behalf of the assessee. As rightly observed by the Tribunal, the doctors were not bound to prescribe the medicines as suggested by the assessee. As such there was no legal compulsion on the part of the doctors to prescribe a particular medicine suggested by the assessee, and therefore, the doctors could not be said to have acted as the agent of the assessee. In absence of the existence of the element of agency between the assessee and the doctors, the provisions contained in Section 194H of the Act could not be invoked.
-
2021 (8) TMI 1003 - MADRAS HIGH COURT
Waiver of interest u/s 220(2A) - petitioner filed rectification petition stating that the interest has been levied without taking into consideration the pre-paid taxes and that the credit of pre-paid taxes was not given in full and interest u/s 234A cannot be levied as the return was filed in time and orders were passed on the rectification application nearly after three years, accepting the contention of the petitioner for refund - petitioner made a request to adjust the refund amount due to the petitioner with the demand if any for the other years from 2014 onwards - HELD THAT:- Assessing Officer while passing the original assessment order need not record any such non-cooperation as the assessment order was not an ex-parte order. Only when an application is filed seeking waiver of interest, then the question arises, whether the assessee co-operated for completion of the income tax proceedings or not. Since for claiming waiver of interest co-operation is contemplated as a condition. Therefore, it is necessitated for the parties, while adjudicating the petition filed by the assessee seeking waiver of interest. Thus, the conduct of the assessee throughout the income tax proceedings are vital for the purpose of claiming waiver of interest.
The respondents in the present case recorded the non-cooperation of the petitioner assessee. The observations made in this regard would establish that consequent to search notice under Section 153A of the Income Tax Act dated 09.03.2011 calling for return of income within 45 days of the receipt of the notice. But the assessee furnished the return of income only on 15.07.2011. The other incidents are also recorded to establish that the petitioner assessee had not cooperated for the completion of the Income Tax proceedings. This being the factum established, this Court has no hesitation in arriving at a conclusion that the petitioner has not established all the three conditions stipulated in the provisions for the purposes of grant of waiver of interest. Contrarily, the reasons furnished in the impugned order for rejection of application for waiver of interest are candid and convincing.
-
2021 (8) TMI 998 - ITAT DELHI
Addition on account of unsecured loan and share capital - AO found that the person from whom the assessee has taken unsecured loan have shown Nil or meager income in the profit and loss account. - Nine different companies amalgamated in the assessee company - It is submitted that, assessee has not received any amount during the year but the same is on account of merger.
HELD THAT:- With respect to issue of share capital it is apparent that no share capital has been received during the year but only in exchange of the shares of the transferor companies the shares have been allotted to the share holders of the transferor companies. As there is no sum of money received during the year no addition u/s 68 on account of the share capital can be made. The assessee has also shown form No. 2 of the return of allotment filed with the Registrar of Companies which also clearly shows that the share capital is only on account of amalgamation approved by the Hon’ble High Court.
Similar is the fact with respect to the addition on account of unsecured loan - The assessee has also submitted the annual audited accounts as well as confirmation of the parties to show the above fact. Even the copies of the income tax returns of the parties shown as unsecured loans were also submitted. Thus, assessee has submitted all these evidence before the ld AO and before the ld CIT(A).
The assessee has submitted the details of the transaction with the companies also submitting copies of the return of income as well as the balance sheet of the lenders - most of amount has resulted on account of amalgamation of 9 different companies with the assessee and no fresh sum was received during the year by the assessee with respect to all the loans and advances except as stated above in case of three incidents. Thus addition made by the AO and confirmed by the ld CIT (A) u/s 68 of the Act is despite the facts that no sum are received by the assessee during the year. - Additions deleted - Decided in favour of assessee.
Approval of JCIT u/s 153D - Period of limitation - HELD THAT:- We find that the issue is squarely covered in favour of the assessee as the ld JCIT has mentioned at the bottom of the approval that draft assessment order has been received late by him on 31.12.2016 beyond the time limit as per internal action plan and thus having a very little period for proper examination of the facts of the case and further inquiries. The ld JCIT, Central Range, Meerut has mentioned such a fact on the letter of approval sent by the ld AO. Further, he directed the ld AO to ensure that seized documents and papers have been taken in account. We find that this issue with respect to approval is covered in favour of the assessee by several judicial precedents relied upon by the ld about inappropriate approval granted by the approving authority. We agree with that. However, as we have already decided the issue in favour of the assessee deleting the addition made by the lower authorities, though, issue of approval is covered in favour of the assessee, does not need any further adjudication.
-
2021 (8) TMI 997 - ITAT AHMEDABAD
Addition in respect of commission expenses - disallowance of expenses on account of export commission on the ground that it has not deducted tax on the aforesaid foreign commission payment - HELD THAT:- The year under consideration since the assessee has failed to submit the supporting relevant detail to substantiate the genuineness of the commission payment. Therefore, respectfully following the decision of the ITAT Ahmedabad in the case of the assessee itself for assessment year 2013-14 [2021 (7) TMI 152 - ITAT AHMEDABAD] this ground of appeal of the assessee is dismissed.
Addition u/s. 36(1)(iii) in respect of proportionate interest on capital advances - HELD THAT:- As decided in own case [2021 (7) TMI 152 - ITAT AHMEDABAD] the impugned advance was made out of the interest free fund and no borrowed fund has been used therefore respectfully following the decision of Co-ordinate Bench as supra we are not inclined with the decision of the ld. CIT(A). Accordingly, the appeal of the assessee on this issue is allowed.
Addition in respect of employees’ contribution to Provident Fund - employee’s contribution to P.F. amounting to ₹ 5,23,396/- to Provident Fund was not paid within the due dates specified u/s. 36(i)(va) - HELD THAT:- The Hon’ble Jurisdictional High Court of Gujarat in the case of Gujarat Road Transport Corporation [2014 (1) TMI 502 - GUJARAT HIGH COURT] held that assessee is entitled for the deduction only if the amount is credited to the relevant funds before the due date, therefore, respectfully following the decision of the Hon’ble Gujarat High Court as referred above, we do not find any infirmity in the decision of the Ld. CIT(A). Therefore, this ground of appeal of the assessee is dismissed.
-
2021 (8) TMI 996 - ITAT BANGALORE
Royalty income - Assessment of sale proceeds received on sale of software licenses as “Royalty income” - DTAA provisions - whether the payments received by non-resident suppliers for selling software licenses are royalty or not? - HELD THAT:- As per the decision rendered by Hon’ble Supreme Court in the case of Engineering Analysis Centre of Excellence Pvt. Ltd. [2021 (3) TMI 138 - SUPREME COURT] sale proceeds received by the assessee on sale of software licenses cannot be categorized as “Royalty” within the meaning of provisions of DTAA. Accordingly, we set aside the order passed by Ld. CIT(A) on this issue and direct the A.O. to delete the addition made as “royalty” income.
Chargeability of interest u/s 234B - CIT(A) has given relief to the assessee - HELD THAT:- As addition relating to sale of software has been deleted by us in the earlier paragraph. According to A.R., it is not liable to pay advance tax at all, since the TDS credit available with it is more than tax payable by it. In view of the above, we are of the view that no interference in the order passed by Ld. CIT(A) on this issue is called for.
-
2021 (8) TMI 995 - ITAT BANGALORE
Exemption u/s 11 - allowance of the amount of fixed deposit as application of income u/s 11(1)(a) - HELD THAT:- In the instant case, the assessee has not shown that the amount kept in fixed deposits have been allocated to or earmarked for a charitable purpose in accordance with the objects of the Trust. The assessee is making only a general statement that it should be considered as “applied”. Hence, in our view, the assessee is not entitled for exemption u/s 11(1)(a) of the Act in respect of deposits made in the banks.
We have gone through those sections of the Act. Section 11(1A) is concerned with the capital gains arising on sale of a capital asset and its reinvestment for the purpose of availing exemption, i.e., conversion of one capital asset into another capital asset. Sec. 11(5) prescribes mode of making investments. In our view, those provisions will not support the claim of the assessee, since the deduction has been claimed u/s 11(1)(a) of the Act, as per which the income has to be applied for charitable purposes. In any case, reference to the other sections, which have been enacted for some other purpose, may not be appropriate. Accordingly, we reject these contentions of the assessee. In view of the above said discussions, we confirm the order passed by Ld. CIT(A) on this issue.
Tax authorities have not accepted application made in form No.10 for accumulation of funds u/s 11(2) - We notice that the time limit for furnishing form No.10 has been prescribed in section 11(2)(c) of the Act by Finance Act, 2015 w.e.f. 1.4.2016. Hence the amendment shall take effect from AY 2016-17 only. It is pertinent to note that Rule 17(2) of the Income tax Rules as amended from 1.4.2016 and also earlier Rule 17 prescribed that the Form No.10 shall be furnished before the expiry of time limit u/s 139(1) for furnishing return of income. We notice that the Chandigarh Bench of Tribunal has held in the case of Infrastructure Development Fund vs DCIT [2020 (12) TMI 542 - ITAT CHANDIGARH] that the amendment has been brought into the Income tax Act with effect from 1.4.2016 and hence it will apply only from AY 2016-17. The Tribunal did not give much credence to the time limit prescribed in the Income tax Rules earlier, since there was no corresponding condition prescribed in the substantive law.
The year under consideration being assessment year 2012-13, the amended provisions will not be applicable to the assessee for the year under consideration. The AO has only doubted the date of Form No.10, but the undisputed fact remains that the Form no.10 and resolution have been filed before him during the course of assessment proceeding itself, i.e., before completion of the assessment.
AO should have entertained Form No.10 and resolution filed by the assessee. Accordingly, we set aside the order passed by Ld CIT(A) on this issue and restore this issue to the file of the A.O. with a direction to consider Form No.10 and resolution filed by the assessee and examine the claim of the assessee u/s 11(2) of the Act in accordance with law.
-
2021 (8) TMI 994 - ITAT BANGALORE
Deduction u/s 80P - AO has disallowed the claim for deduction for the reason that the assessee has failed to furnish the details called for - HELD THAT:- Admittedly, the assessee did not furnish the details called for by the A.O., more particularly that the produce marketed by it was grown by its members. Before us, the Ld. A.R. submitted that the assessee is admitting farmers as members, only after satisfying itself that he/she owns agricultural lands - we notice that the assessee has failed to furnish any details before the A.O. to support the claim for deduction u/s 80P(2)(a)(iii) more particularly, the fact that the agricultural produce was grown by its members. Since the assessee had been allowed deduction u/s 80P(2)(iii) in the earlier years, we are of the view that, in the interest of natural justice, the assessee may be provided with an opportunity to furnish the relevant details before the A.O. to support the claim for deduction u/s 80P(2)(a)(iii) of the Act.
We set aside the order passed by Ld CIT(A) and restore this issue to the file of the AO for examining the claim of the assessee afresh in accordance with law. The assessee is also directed to furnish relevant details before the AO - Appeal filed by the assessee is treated as allowed for statistical purposes.
-
2021 (8) TMI 993 - ITAT BANGALORE
Deduction claimed u/s 10AA - whether expenses that were reduced from export turnover should also be reduced from the total turnover or not? - assessee reduced communication expenses from both export turnover and total turnover and accordingly computed quantum of deduction - HELD THAT:- The decision rendered in the case of Tata Elxsi Ltd. [2011 (8) TMI 782 - KARNATAKA HIGH COURT] has since been upheld by Hon'ble Supreme Court in the case of CIT Vs. HCL Technologies Ltd.. [2018 (5) TMI 357 - SUPREME COURT] wherein held what is excluded from 'export turnover' must also be excluded from total turnover', since one of the components of 'total turnover' is export turnover. Any other interpretation would run counter to the legislative intent and would be impermissible.
Nature of expenses - disallowance of software expenses by treating the same as Capital in nature - disallowance of “Provision for software expenses” claimed by the assessee treating the same as contingent liability - HELD THAT:- With regard to the question whether the “Provision for software” is a contingent liability or not, we notice the same has been decided in favour of the assessee by this bench of Tribunal in the assessee’s own case in AY 2011-12 [2020 (12) TMI 470 - ITAT BANGALORE].
As assessee has furnished break-up details of “Provision for software expenses” identifying the provision so made with the vendors, who had supplied software. CIT(A) has extracted the relevant details in paragraph 6.0 of his order passed for both the years under consideration. Hence the reasoning given by the Tribunal in AY 2011-12 for allowing the identical claim is applicable to these two years also. Accordingly, we hold that the “Provision for software expenses” cannot be considered as contingent liability. Accordingly, we set aside the orders passed by Ld CIT(A) on this aspect in both the years under consideration.
Disallowance u/s 40(a)(i) for non-deduction of tax at source on provision for software expenses - HELD THAT:- The issue relating to disallowance u/s 40(a)(i) requires to be set aside to the file of the AO for deciding this issue in accordance with the decision rendered by Hon’ble Supreme Court in the case of Engineering Analysis Centre of Excellence (P) Ltd [2021 (3) TMI 138 - SUPREME COURT]
after duly examining the relevant agreements. Accordingly, we set aside the order passed by Ld CIT(A) on this issue and restore the same to the file of AO.
Disallowance u/s 40(a) of the Act in respect of software purchases - HELD THAT:- A.R placed his reliance on the decision rendered by Hon’ble Supreme court in the case of Engineering Analysis Centre of Excellence (P) Ltd [2021 (3) TMI 138 - SUPREME COURT] and contended that there is no necessity to deduct tax at source from the payments made for software purchases. As noticed earlier, the details relating to this disallowance made in both the years are not forthcoming from the assessment record or from the submission made by the assessee. The decision rendered by Hon’ble Supreme Court shall apply only to the payments made for non-resident suppliers of software or through their distributors (Indian or foreign), since the provisions of sec. 195 is applicable on “sum chargeable under the provisions of this Act”, subject to the principles discussed in an earlier paragraph. If the assessee has purchased the software from the domestic supplier, then the decision rendered by the Hon’ble Supreme Court will not apply. In that case, the nature of payments needs to be examined in accordance with the provisions of sec. 9(1)(vi) of the Act. In the absence of relevant details, we are unable to decide this issue.Accordingly, we restore this issue also to the file of the AO for examining it afresh in the light of discussions made supra.
Rejection of claim for credit of “Foreign Tax Credit” - HELD THAT:- What is required to be seen is whether the income u/s 10AA is chargeable to tax u/s 4 and is includible in the total income u/s 5. The fact that the assessee is not paying tax due to exemption or deduction granted under the Act is not relevant. Accordingly, we set aside the order of Ld CIT(A) in so far as it is contrary to the decision rendered in the case of Wipro Ltd [2015 (10) TMI 826 - KARNATAKA HIGH COURT] -The other directions given by Ld CIT(A) with regard to the accounting year, claim of state tax , do not require any disturbance - We restore this issue to the file of AO to determine the Foreign Tax credit in the light of decision rendered by Hon’ble Karnataka High Court in the case of Wipro Ltd and also the direction given by Ld CIT(A) with regard to the accounting year, claim of state tax.
Disallowance u/s 14A - HELD THAT:- It is imperative that the AO should examine the claim of the assessee having regard to the accounts of the assessee and if he is not satisfied with the said workings, then only the AO can have resort to the provisions of Rule 8D of I T Rules. The Mumbai bench of Tribunal has also expressed identical view in the case of Tata Projects Ltd vs. ACIT [2021 (1) TMI 393 - ITAT MUMBAI]. In the instant case, admittedly the AO did not examine the correctness of the workings furnished by the assessee by having regard to the accounts of the assessee. Hence the AO could not have resorted to apply provisions of Rule 8D for computing disallowance as required u/s 14A of the Act. For the above said reason, the Ld CIT(A) was not justified in confirming the working made by the AO.
We set aside the order passed by Ld CIT(A) on this issue in AY 2013-14 and direct the AO to delete the addition made by him u/s 14A of the Act.
............
|
