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2017 (9) TMI 1972 - ITAT KOLKATA
Exemption u/s 11 - cancellation of registration u/s 12AA(3) & 12AA(4) - CIT(E) observed that the assessee had indulged in the practice of money laundering through payment of bogus donations - these facts were confirmed in a survey operation conducted u/s 133A of the Act on 3.9.2015 in the case of M/s Batanagar Education & Research Trust, wherein a statement of Sri Rabindranath Lahiri, Vice Chairman and Trustee, was recorded during the survey operation - HELD THAT:- We are in agreement with the arguments of the ld AR that there is no need to cross-examine Sri Rabindranath Lahiri by the assessee as no adverse statements / contents were reflected against the assessee in the said statement. In fact there is not even a whisper about the assessee society or its office bearers in any manner whatsoever in the entire statement of Sri Rabindranath Lahiri. Hence the ld CIT(E) deciding against the assessee on the ground that the assessee society had not availed the opportunity of cross-examination is of no relevance for invoking the provisions of section 12AA(3) of the Act.
CIT(E) had made a bald allegation that the assessee society was involved in money laundering by receiving cash from various other trusts in lieu of donations paid to them by cheques. This allegation is not proven by any material evidence brought on record and is completely without any basis. It could be seen from the statement reproduced supra that Sri Rabindranath Lahiri had in fact deposed that certain corpus donations received by Batanagar Education & Research Trust were bogus. But the assessee had not given any corpus donations to the said trust. Infact it had given only revenue donations to the said trust.
It is well settled that the person making the allegation has to prove with material evidences that the allegation leveled against any other person is true and correct. In the instant case, except making a bald allegation, no evidences in any manner whatsoever had been brought on record . We find that the assessee trust had been unnecessarily impleaded by the ld CIT(E) in the entire episode, without any basis. Moreover, we find that when the ld CIT(E) examined the President of the assessee society Mr Mukul Agarwal, no questions were posed on him about the transactions with Batanagar Education & Research Trust. This is evident from the copies of order sheet entries filed by the ld AR. All the details called for by the ld CIT(E) from Mr Mukul Agarwal about the other three trusts were duly filed in writing by him vide letter dated 15.2.2016, which we find had been ignored by the ld CIT(E) in the order of cancellation of registration. Accordingly we hold that there is no case made out by the ld CIT(E) for invoking powers of cancellation of registration u/s 12AA(3) and 12AA(4) of the Act
Thus we hold that the ld CIT(E) ought not to have invoked the provisions of section 12AA(3) and 12AA(4) of the Act for cancellation of registration to the assessee society. Accordingly the grounds raised by the assessee are allowed.
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2017 (9) TMI 1971 - ITAT MUMBAI
Interest granted as per Sec. 244A - interest on refund - Whether CIT(A) erred in granting interest upto the date of issuance of refund voucher, i.e. 29.3.2010 whereas as per the assessee, it is entitled to interest upto April, 2010 (i.e. upto the date of receipt of refund voucher on 6.4.2010)? - HELD THAT:- We find that in the case of Pfizer Limited, [1991 (3) TMI 121 - BOMBAY HIGH COURT] has held that assessee is entitled to interest upto the date of receipt of the refund order. Similarly, our coordinate bench in the case of M/s. Novartis India Limited [2011 (3) TMI 1822 - ITAT MUMBAI] has decided a similar issue in favour of the assessee wherein the claim of the assessee for interest was upheld upto the date when the Pay Order is “actually received by the assessee pursuant to the order sanctioning the refund”. Therefore, following the aforesaid precedents, in our view, the assessee is justified in seeking interest u/s 244A of the Act upto the date of receipt of the refund order, i.e. 6.4.2010. Thus, on this aspect, assessee succeeds.
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2017 (9) TMI 1970 - ITAT JAIPUR
Addition made on account of inflation of purchases - HELD THAT:- AO has in the remand report reiterated the reasons given in the assessment order and has not been able to bring on record any evidence to hold that purchases made from these parties are inflated & bogus. The fact that all the payments for the material purchased have been made through the banking channel against the receipt of bills, the yield in the production process, no. of cylinders manufactured, etc. have not been disputed by the AO.
In the absence of any material/evidence to the contrary available on record,thus hold that there is no justification on the part of the AO to treat the purchases from these parties as inflated/not genuine
Disallowance on account of suppression of scrap sales - CIT-A deleted the addition - HELD THAT:- We find that the ld. CIT (A) after taking into consideration various aspects of the matter and also following the decision of the Tribunal in the assessee’s own case for the assessment year 1999-2000, deleted the addition. We find no reason to interfere into the order of ld. CIT (A), the same is hereby affirmed. The grounds of the revenue are rejected.
Disallowance of bogus payment of commission - HELD THAT:- As perused the material on record and gone through the orders of the authorities below. Both the parties have advanced the similar arguments as made for the assessment year 1998-99. We have adjudicated the identical grounds in the appeal of the revenue - Since there is no change in the facts and circumstances for the assessment year under consideration, we affirm the order of ld. CIT (Appeals) who had rightly deleted the additions by following the decisions of the Tribunal in the assessee’s own case for the A.Y. 1999-2000. The grounds of the revenue are rejected.
Reopening of assessment u/s 147 - HELD THAT:- We do not find any reason to interfere into the order of ld. CIT (A) in respect of this ground, the same is hereby upheld, as the ld. Counsel for the assessee could not point out any illegality into the re-opening of assessment by furnishing any contrary material on record. The ground of the assessee is rejected.
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2017 (9) TMI 1966 - ITAT AHMEDABAD
Non perusal of appeal by assessee - HELD THAT:- Notice of hearing was sent through RPAD post, but the same was returned by the postal authorities with the remark “not known,” which is placed on record. The assessee has also not filed any application for adjournment of the case. Therefore, it is presumed that the assessee is not interested in pursuing with its appeal before the Tribunal, therefore, following order of the ITAT, Delhi Bench in the case of CIT Vs. Multiplan India Pvt. Ltd [1991 (5) TMI 120 - ITAT DELHI-D] we dismiss the appeal of the assessee in limine for want of prosecution. - Decided against assessee.
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2017 (9) TMI 1964 - ITAT CHENNAI
Maintainability of the claim qua advances written off - advances as found by AO are to related parties - HELD THAT:- Explanations/details, among others, would be readily available with the assessee if the transactions have actually arisen in the normal course of its business, to which surprisingly no reference has at all been made, even in passing, by the assessee while pleading its’ case. The facts/incidents referred to are only to enable definite findings of fact in the conspectus of the case. We, accordingly, only consider it proper to restore the matter back to the file of the AO to allow the assessee, in the interest of justice, another opportunity to prove its claims, which could be so on various counts and per a number of supporting documents and corroborative circumstances. Needless to add, he shall decide per a speaking order. The burden to prove its claims being on the assessee, an inability on its part to do so shall entitle the AO to draw inference(s) as may be proper under the circumstances. Reference here may be made to the decision in Kapurchand Shrimal [1981 (8) TMI 2 - SUPREME COURT].
Disallowance of personnel and administration expenses - extent of expenditure incurred for or attributable to the property income, which constitutes the principal receipt and, correspondingly, the principal activity during the year - HELD THAT:- It was upon the assessee to show that the expenditure incurred in relation thereto is lower in proportion to that obtaining on the basis of the proportionate receipt in the total turnover - both before the AO as well as the ld. CIT(A) no explanation, muchless materials, stand furnished by the assessee toward the same. The position continues to be the same before us. How, therefore, we wonder, can the AO’s estimate, who is entitled to make the same on the basis of the material and the information on record, be faulted with (refer Consolidate Coffee Ltd. v. State of Karnataka [2000 (11) TMI 136 - SUPREME COURT] - AO is entitled to make a reasonable estimate is well settled. The reasonability of the estimate apart, personnel and administrative expenditure is inadmissible u/ss. 23 & 24, so that the AO has in fact, in allowing proportionate expenditure thereon, been liberal. Under the circumstances, we find no infirmity in the impugned order and, accordingly, confirm the disallowance.
Disallowance u/s. 14A in respect of dividend income - HELD THAT:- Almost, the entire disallowance u/s. 14A is qua direct interest expenditure, implying an examination of accounts, as well as of the extent to which the investment has been financed by interest bearing funds.
There is, in fact, another, equally relevant aspect of the matter. The investment in shares and units does not form part of the assessee’s business. The bulk (.56.66 lacs) of the expenditure disallowed u/s. 14A is interest expenditure, of which .56.16 lacs is by way of direct interest cost. Now, inasmuch as holding investments or otherwise dealing in shares/units is not the assessee’s business, the interest expenditure, to the extent the same stands apportioned to investments, cannot be regarded as for the purposes of its’ business, or even in respect of property income. The same would therefore stand to be disallowed, either u/s. 36(1)(iii) or u/s. 24(b), as well. A similar argument would apply to the administrative expenditure admissible u/s. 37(1); the expenditure disallowed u/r. 8D(2)(iii) being only that relatable to the tax-exempt income, i.e., that can be said to be expended toward earning the same - Therefore, a disallowance in the impugned sum arises in the computation of the assessee’s total income. We decide accordingly.
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2017 (9) TMI 1961 - ITAT KOLKATA
Penalty u/s 271(1)(c) - Notice challenged in the absence of any specific mention in the show-cause notices issued under section 274 - whether the assessee is guilty of having “furnished inaccurate particulars of income” or of having “concealed particulars of such income”, the initiation of penalty proceedings - HELD THAT:- If the notice issued under section 274 is issued by the Assessing Officer in the standard printed proforma without striking out the irrelevant clause like in the present case, the same, in our opinion, cannot convey to the assessee as to which of the charges he has to respond and such notice issued by the Assessing Officer without application of mind is liable to treated as vague on the basis of which no penalty can be imposed on the assessee as held by the Hon’ble Karnataka High Court, inter alia, in the case of SSA’s Emerald Meadows [2015 (11) TMI 1620 - KARNATAKA HIGH COURT] and Manjunatha Cotton & Ginning Factory [2013 (7) TMI 620 - KARNATAKA HIGH COURT].
As in the view that the notices issued by the Assessing Officer under section 274 in the present case for both the years under consideration not being in accordance with law, the penalty orders passed by him in pursuance thereof are liable to be cancelled being invalid. We accordingly uphold the impugned orders of the ld. CIT(Appeals) cancelling the penalties imposed by the Assessing Officer under section 271(1)(c) for both the years under consideration although on different grounds.
Voluntary declaration of his foreign Bank account before the Income Tax Department - As declaration made by the assessee surrendering his undisclosed income representing the amount lying in the overseas Bank account with HSBC Switzerland on 26.09.2011 without initiation of any action or issuance of any notice issued by the Income Tax Department was voluntary showing the bonafide of the assessee
The contention as raised by the ld. counsel for the assessee in this regard is that any assessee as per the said Act thus could get away by paying tax @60% on the value of an undisclosed asset located outside India in the year 2015, while the assessee in the present case even after declaring his undisclosed asset located outside India in the year 2011 itself and finally paying tax on such value along with interest thereon, as the corresponding income was ultimately charged to tax in his hands in A.Ys. 2006-07 and 2007-08 could not avail the immunity provided in the said Act introduced in 2015. He has contended that the assessee having declared the income on account of undisclosed asset located outside India voluntarily in the year 2011 itself and having paid tax thereon along with interest thus is put in an adverse position as compared to the other assessees who did not make such declaration and finally got the benefit of the Act introduced in 2015. He has contended that going by the spirit of Rule of Equality before law, the benefit of immunity provided in the 2015 Act thus should be extended to the assessee and the orders of the ld. CIT(Appeals) cancelling the penalties imposed under section 271(1)(c) are liable to be upheld on this ground also. - Decided against revenue.
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2017 (9) TMI 1960 - ITAT BANGALORE
Excess stock of iron ore - Investment in excess stock - unexplained investment - survey under section 133A - valuer has made a professional survey of the stock of iron ore at the mines of the assessee and submitted valuation report on 18.03.2008 - HELD THAT:- Since the excess stock of iron ore was found, the onus is upon the assessee to explain the source of the expenditure incurred in mining such excess ore. The valuation of excess ore was done by the valuer and the same was also confronted to the assessee and the assessee has not disputed the method of valuation done by the valuer while offering the additional income on 31.03.2008. It is not the case where the income was offered or surrendered by the assessee under duress or pressure. Search was conducted on 07.03.2007 and additional income was offered through statement on 31.03.2008.
Even after making statement, the assessee did not come forward to retract the statement on a plea that the statement was recorded under duress or in pressure. The retraction statement comes through letter dated 10.09.2009, almost after a year. Therefore it cannot be said that retraction is valid and there is no value of the statement recorded by the Revenue authorities. Moreover, sufficient opportunity was given to the assessee during the course of assessment proceedings to explain the source of expenditure incurred in extracting the ore but no satisfactory explanations were furnished by the assessee. He simply made a general/legal objections which were duly dealt with by the AO.
Valuation of excess stock was done properly and the assessee was suppose to explain the source of expenditure incurred in mining the said ore and when he failed to do so, the AO has rightly made the additions on account of unexplained investment, which were latter confirmed by the CIT(A). We therefore find no merit in the assessee’s appeal.
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2017 (9) TMI 1956 - ITAT MUMBAI
Reopening of assessment u/s 147 - reason to belive - information received from the DGIT(Inv), Mumbai - assessee availed the accommodation/fictitious bills from the 13 parties - HELD THAT:- The case of the assessee was reopened u/s 147 of the Act after finding the information from DGIT(Inv), Mumbai dated 13.03.2014 in which it was conveyed that the assessee has availed the accommodation/fictitious bills from the 13 parties.
Prima facie there is reason to believe that the income chargeable to tax has escaped assessment. The CIT(A) relied upon the case law title as Raymond Woollen Mills Ltd. [1997 (12) TMI 12 - SUPREME COURT] - this issue was not under consideration at the time of assessment therefore, there is no question of change of opinion. The present case is in connection of availing of accommodation/fictitious bills entries by the assessee which was not on record at the time of the assessment of the assessee. These facts are totally new facts which came into notice before the AO through the letter dated 13.03.2014 received from the DGIT(Inv), Mumbai. Accordingly, we are of the view that the CIT(A) has rightly upheld the reopening of the proceedings u/s 147 of the I.T. Act. - Decided in favour of the revenue.
Estimation of income - bogus purchases - addition of the profit element to the extent of 0.25% on the bogus purchase of 13 parties - contention of the assessee is that the addition should not be more than 1% specifically in view of the nature of the business of diamond of the assessee - HELD THAT:- As per CIT-A purchase of cut and polished diamond from the open market was made mainly to save 1% vet levied thereon and in addition the buyer get the benefit of lower rate/ cash discount. In the said circumstances, the CIT(A) was of the view that the addition of extra profit @ 7.3% of purchases was not held to be justified and reduced the profit embedded in the transaction @ of 2% of purchase value record in the books of accounts. No distinguishable material has been placed on record even after service of the notice to assessee to the contradict the finding of the CIT(A) on record. Nothing came into notice that the assessee produced some material earlier which was not considered by the CIT(A). Taking into account all the facts and circumstances we are of the view that the CIT(A) has rightly estimated the profit @ 2% on gross profit of the purchase value - CIT(A) has passed the order judiciously and correctly which is not liable to be interfere with at this appellate stage. Decided in favour of the Revenue.
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2017 (9) TMI 1955 - ITAT KOLKATA
Nature of expenditure - expenditure in relation to soil cultivation, planting and making sheds - capital or revenue expenditure - whether no expenditure was incurred in the extension/ expansion of plantation? - HELD THAT:- As that there was no expansion in the area of plantation therefore the principle laid down in the case of Tasah Tea Company Ltd. [2003 (2) TMI 42 - CALCUTTA HIGH COURT] is squarely applicable in this case wherein held that iis not an investment of fresh capital unless it is utilized for the purpose of expanding the plantation - Decided against revenue.
Addition on account of delayed deposited in employees P.F account - CIT(A) submitted that employees’ contribution to PF account was deposited after the due date but before furnishing the income tax return as specified u/s. 139 - CIT-A allowed the claim - HELD THAT:- There is no distinction between employees' and employer contribution to PF, and if the total contribution is deposited on or before the due date of furnishing return of income u/s 139(1) of the Act, then no disallowance can be made towards employees' contribution to provident fund. Hence, we are inclined not to interfere in the order of ld. CIT-A. Hence the ground of appeal filed by the Revenue is dismissed.
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2017 (9) TMI 1954 - ITAT DELHI
Addition on account of project expenses - Nature of expenses - whether capital or revenue in nature? - AO treated the claimed expenditure as capital in nature keeping in mind that the purpose of business of the assessee society is trading of fertilizers, which is not correct rather the assets created namely forest on waste land, check dams ponds etc. became the property of the villages managed through village community and the assessee society only provided expertise and funding to them - HELD THAT:- As decided in own case CIT(Appeals) has rightly hold that the Assessing Officer was not correct in holding that expenditure were not incurred wholly and exclusively for the purpose of the business and that alternatively it was capital in nature. We thus do not find infirmity in the first appellate order on the issue also because in earlier assessment years 2004-05 to 2007-08 when assessments were framed under sec. 143(3) of the Act similar expenditure have been accepted. Similar are the facts of the case in the assessment year 2009-10. The finding of the Ld. CIT( Appeals) is thus upheld. - Decided in favour of assessee.
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2017 (9) TMI 1952 - RAJASTHAN HIGH COURT
Benefit of depreciation u/s 32 on the machineries not put to use before the end of the previous year i.e. 31.3.2001 - HELD THAT:- Assessee has furnished the fabrication charges bill, certificate from AGM, production and bill of fuel consumption and quantitative details of work in progress and in such circumstances, there is no reason to hold that the machine is not put to use during the year prior to 31.3.2001.
Tribunal being the last fact finding authority, it will not be proper for us to reverse the finding in favour of the department.Therefore, the first issue is answered in favour of the assessee and against the department.
Excessive wastage under Section 145(3) - HELD THAT:- The issue is required to be answered in favour of the assessee against the Department. All the issues are answered in favour of the assessee and against the department.
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2017 (9) TMI 1950 - ITAT DELHI
Royalty receipt - Income taxable in India or not - existence of PE in India - centralised services fee received by the appellant from rendering various services such as sales and marketing, loyalty programs, reservation service, technological services, operational services and training programs etc to customers in India - fees for technical services amounted to royalty under Article 12 of India – US DTAA - HELD THAT:-Revenue does not dispute the fact of the Hon’ble jurisdictional High Court in assessee’s own case reported in Director of Income Tax vs. Sheraton International Inc [2009 (1) TMI 27 - DELHI HIGH COURT] we are of the considered view that the revenue received by the assessee for providing centralized services is not in the nature of Fee for Technical Services (FTS) u/s 9(1)(vi) Explanation 2, but it is a business income. Since the assessee is not having any PE in India, its business income earned is not taxable in India. - Decided against revenue.
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2017 (9) TMI 1949 - ITAT BENGALURU
Deduction u/s.54F - claim on ‘purchase’ or ‘construction’ of a residential house and not for ‘purchase & further construction/alteration’ of a residential house - whether alteration and additional construction of the residential house attracts deduction u/s 54F - as argued residential house purchased was not in a habitable condition - AO has noted that the assessee is not entitled to the deduction u/s.54F for the alteration / renovation carried out by him to the purchased unit, as also to the construction of the third floor - HELD THAT:- The word used ‘purchased’ is required to be restricted only to actual purchase and if any addition, alteration or demolition of the property is carried out by the assessee for the purposes of reconstruction after the demolition and for making it convenient for his use, then the cost incurred by the assessee for that purpose would not be eligible for deduction u/s.54F, is against the very purpose of providing this deduction in the statute book.
Our reading of the provision makes it abundantly clear that the purchase do not include a purchase which is not a purchase of an asset which is not incapable of being used by the assessee. The assets for the purpose of Section of 54F should be an asset purchased by the assessee and if an assessee incurs a cost for making it useful and convenient after taking approval from the competent authority, as in the present case, then the assessee is entitled to deduction u/s.54F - there is no irregularity or illegality in the order passed by the CIT (A). - Decided in favour of assessee.
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2017 (9) TMI 1948 - ITAT HYDERABAD
Capital gain computation - provisions of section 50C - additional ground raised to adopt the rate invoking provisions of Sec.50C as on the date of agreement - HELD THAT:- Assessee has received part of the sale consideration much prior to the execution of the sale deed, is supported by the Bank statement - we are inclined to admit the additional evidence filed by the assessee. Since the payments are by way of cheques, it has to be presumed that there was an oral agreement of sale between assessee and the vendees, pursuant to which, they have paid some amount to the assessee by cheques.
The oral agreement has been acted upon and therefore, the provisions of section 50C as on the date of oral agreement have to be considered as held by us in the case of Smt. Mumtaz Begum [2015 (11) TMI 1515 - ITAT HYDERABAD]. In the case before us, there is no date of oral agreement and therefore, the payment of advance on 1.7.2011 should be considered as the date of oral agreement. Further, the Legislature had amended the provisions of section 50C w.e.f. 1.4.2017 and in the case of Smt. Chalasani Naga Ratna Kumari [2016 (12) TMI 1406 - ITAT VISAKHAPATNAM] has held the said amendment to be applicable retrospectively - we deem it fit and proper to admit the additional ground of appeal and also the additional evidence and remand the same to the file of the AO for verification and consideration in accordance with law. Assessee’s appeal is treated as allowed for statistical purposes.
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2017 (9) TMI 1947 - ITAT DELHI
Revenue expenditure allowance - Interest payable in EDC charges terming the same as penal in nature - allowable expenditure u/s 37 or penal in nature as interest has been charged by concerned authority for delay - HELD THAT:- We are of the considered view that the facts and circumstances of the case of the assessee’s case is exactly the similar and identical to the decision of the Hon’ble High Court in the case of CIT vs. Enchante Jewellery Ltd. [2012 (12) TMI 169 - DELHI HIGH COURT ] - Therefore, addition confirmed by the Ld. CIT(A) out of interest payable in EDC charges terming the same as penal in nature is hereby deleted and the ground of appeal raised by the assessee is allowed.
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2017 (9) TMI 1944 - ITAT MUMBAI
Addition u/s 68 - burden of proof - identity of the creditor, the credit worthiness of the creditor and the genuineness of transactions proved or not? - HELD THAT:- Assessee has discharged the initial burden of proof placed upon it by furnishing the required documents to prove the three main ingredients, viz., the identity of the creditor, the credit worthiness of the creditor and the genuineness of transactions. AO has summoned the creditor and the creditor also has appeared before the assessing officer and confirmed the loan transactions. Despite these facts, I notice that the AO chose to place reliance on the general statement given by Shri Bhanwarlal Jain, meaning thereby, there is merit in the contentions of Ld A.R that the AO has failed to discharge the burden shifted upon his shoulders.
Identical addition was made in the case of M/s Reliance Corporation [2017 (5) TMI 1261 - ITAT MUMBAI] and the assessee therein also furnished all the relevant details in order to discharge the burden of proof placed upon it u/s 68 of the Act. The creditor also appeared before the AO and confirmed the transactions. The AO, however, made the addition by placing reliance on the statement given by Shri Bhanwarlal Jain. When the matter reached the Tribunal, the division bench deleted the addition. Since the facts of the present case are identical, hold that the Ld CIT(A) was not justified in confirming the addition made in AY 2008-09. - Decided in favour of assessee.
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2017 (9) TMI 1943 - ITAT KOLKATA
Exemption u/s 11 - cancelling the registration of the appellant u/s 12AA(3) - assessee had received a corpus donation - genuineness of the donations given by HHBHRF - HELD THAT:- There is no evidence whatsoever brought on record to show that the cash was paid by the assessee which in turn reached the hands of HHBHRF which was returned in the form of donation to the assessee after retaining the commission. As already observed that the answer to question no.22 given by Shri Swapan Ranjan Dasgupta referred to donations given in the financial year 2011-12 as bogus donations.
With regard to the donations received/given prior to 31.03.2011 there is no reference to such donations given or received by HHBHRF being in the nature of bogus donations. The assessee had received the donation from HHBHRF on 03.03.2011. It is therefore not possible to place reliance on the statement recorded at the time of survey and come to a conclusion that the assessee has been indulging in money laundering.
In answer to question no.23 Shri Swapan Ranjan Dasgupta founder director of HHBHRF has made reference to certain middle men who are engaged in money laundering using HHBHRF as a medium for money laundering. There is no evidence brought on record to show any connection between those brokers and the assessee. In the absence of such corroborative evidence, it is not possible to come to any conclusion that the assessee indulged in money laundering and that the donation received by the assessee from HHBHRF was a bogus donation.
As the grounds for cancellation for registration u/s 12AA(3) of the Act is that the activities of the trust should not be genuine or the activities of the trust are not being carried out in accordance with the objects of the trust. There is neither an allegation in the impugned order nor finding that any of the aforesaid conditions exist in the case of the assessee. We therefore are of the view that the cancellation of registration granted to the assessee u/s 12A of the Act cannot be sustained and the impugned order is hereby quashed. The appeal of the assessee is accordingly allowed.
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2017 (9) TMI 1941 - ITAT PUNE
Revision u/s 263 - rejection of books of accounts - profit estimated on undisclosed sales in the bank accounts - HELD THAT:- As during the course of assessment proceedings, the AO had made enquiries, raised questions for which notices u/s 142(1) of the Act were issued on different dates and after considering the reply of assessee on various aspects, the said view was taken by the AO. Once the AO has taken a view on the basis of assessee having not correctly disclosed its turnover from the business, then the same cannot be substituted by the Commissioner on the surmise that the view of AO is not a reasonable view, where the said view was adopted by the AO after going through the factual and legal aspects of the issue before him.
In any case, the Commissioner has not found any fault with the rejection of books of account but has exercised jurisdiction on the profit estimated on undisclosed sales in the bank accounts being not justified in the absence of any cogent evidence - even if there is some loss of revenue but the Commissioner is not empowered to exercise his jurisdiction u/s 263 of the Act for substituting the view adopted by the Assessing Officer by a view of the Commissioner which is at variance.
While setting aside the issue, the Commissioner has not come to a finding but has asked the AO to do a fresh examination and hence, the matter was set aside to the file of AO with direction to re-examine the issue. We find no merit in such setting aside of the issue. He has directed the AO to re-assess the case and examine the evidence in perspective of the provisions of the Act, whereas which amounts further enquiries and substitution of the view adopted by the AO and the same is not merited. Accordingly, we find no merit in the directions of Commissioner and hold that exercise of jurisdiction u/s 263 of the Act is unwarranted and the same is held to be invalid in law. Accordingly, the same is cancelled. Appeals of assessee are allowed.
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2017 (9) TMI 1939 - ITAT PUNE
Deduction u/s 80IB(10) - Non completion of project on time - projects approved by the local authority or not? - Housing Projects approved prior to the amendment - comparison between the pre-amended and post-amended provisions of clause (a) of section 80IB(10) - HELD THAT:- As the assessee’s project, since approved prior to the amendment to sub-section (10) of section 80IB of the Act by the Finance (No.2) Act, 2004 w.e.f. 01-04-2005 is required to be completed by 31-03-2008 - assessee should have completed his project on or before 31-03-2008 for becoming eligible for claim of deduction u/s.80IB(10) of the Act. It is an undisputed fact that the project in question has never been completed even till date for some reason or the other and sustainable reason or otherwise.
The assessee is having obligation to complete the project before the due date for becoming eligible to claim deduction u/s.80IB(10) of the Act. Assessee failed to discharge the same. It appears to be assessee’s case that he wants to avail the benefit of said provisions and does not want to pay taxes on the income of the project while the same is incomplete. Therefore, we dismiss the said ground holding that the amended provisions of clause (a)(i) of section 80IB(10) of the Act apply to the Housing Projects approved prior to the said amendment. - Decided against assessee.
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2017 (9) TMI 1936 - ITAT AHMEDABAD
Addition u/s 40A(2)(b) - fair market value of interest paid by the assessee on the loans obtained from the persons covered u/s.40A(2)(b) - according to the AO loans ought to have been taken at the interest rate of 12% and not the interest rate of 15 or 16% - assessee ought to have provided a security for the loans taken from the bank, These are unsecured loans. It has avoided a lot of formalities by taking loans from the associate concern - HELD THAT:- The payment of interest at a little higher rate to the person even if covered u/s.40A(2)(b) cannot be termed as exorbitant when the fair market value of such interest cost is being considered. The assessee has paid interest commensurate with the interest rate prevailing in the open market. An order rendered in case of Vipul Y. Mehta [2010 (7) TMI 1051 - ITAT AHMEDABAD] has been brought to our notice, wherein Tribunal has upheld the allowance of the interest rate @18% per annum to the relatives on unsecured loan. Considering all these aspects, we are of the view that ld. First Appellate Authority has appreciated the controversy in right perspective. Assessee has not extended any undue benefit to the persons covered u/s.40A(2)(b).
Deemed dividend u/s.2(22)(e) - HELD THAT:- If assessee is not a share holder of both the companies then Section 2(22)(e) of the Income Tax Act cannot be attracted or effected. As it has been held by the Hon'ble Delhi High Court, in the case of CIT vs. Ankitech (P.) Ltd [2011 (5) TMI 325 - DELHI HIGH COURT] that the assessee should be a share holder in the lender company and such holding should be more than 10% of the voting rights, only then Section 2(22)(e) would be attracted. Therefore, this Ground of debarment is dismissed.
Disallowance in respect of late payment to PF & ESIC treating the same as income u/s.2(24)(x) r.w.s. 36(i)(vi) and not allowing the said payment as expenditure in computing total income - HELD THAT:- CIT(A) has decided the matter against the assessee quoting the judgment of CIT(A) vs. Gujarat State Road Transport Corporation, in which it is held (supra) the section 36(1)(va) of the Income Tax Act, 1961 read with sub-clause(x) of clause 24 of section 2 was applied, the assessee shall be entitled to deduction in computing the income referred to in section 28 with respect to such sum credited by the assessee to the employees' account in the relevant fund or funds on or before the "due date" mentioned in explanation to section 36(l)(va).
Consequently, it is held that ribunal has erred in deleting respective disallowances being employees' contribution to PF Account / ESI Account made by the AO as, as such, such sums were not credited by the respective assessee to the employees' accounts in the relevant fund on or before the due date as per the explanation to section 36(l)(va) of the Act i.e. date by which the concerned assessee was required as an employer to credit employees' contribution to the employees' account in the Provident Fund under the Provident Fund Act and/or in the ESI Fund under the ESI Act.
Section 36(1)(va) and section 43B(b) operate in different fields, i.e. former takes care of employee’s contribution and later the employer’s contributions. Therefore, an assessee is entitled to get benefit of deduction u/s.43B(b) as provided under the proviso thereto only with regard to portion of amount paid by the employer to contributory fund. So far as the employee’s contribution is concerned, the assessee is entitled to get deduction of amounts as provided under section 36(1)(va) only if amounts so received from the employee is credited in specified account within due date as provided under relevant statue - Cross Objection of the assessee is also dismissed.
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