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Income Tax - Case Laws

Showing 41 to 60 of 10010 Records

• 2018 (12) TMI 1901 - ITAT DELHI
  

  Income accrued in India - Centralized services fee received by the appellant for rendering various marketing, advertisement & other services to customers in India - whether taxable as “Fees for Technical Services” (FTS) in terms of Section 9 of the Income Tax Act, 1961 as well as Article 12 of the India US Double Taxation Avoidance Agreement (DTAA) - HELD THAT:- This Tribunal not only in the earlier years in the case of group concern, but also in assessee’s own case for the assessment year 2010-11 has decided this issue following the judgment of Hon’ble Delhi High Court in the case of DIT vs Sheraton International Inc. . Thus respectfully following, the judgment of the Tribunal which has been affirmed by the Hon’ble Delhi High Court also, holding that the, issue in question, is covered by the ruling of this court in the case of DIT vs. Sheraton International Inc [2009 (1) TMI 27 - DELHI HIGH COURT]

  Thus, respectfully following the binding judicial precedents in the earlier year, we hold that the payment received by the assessee from the aforesaid services is not taxable in India as FTS, either in terms of section 9 of the Income Tax Act, 1961 or under Article 12 of the India US DTAA. Accordingly, the appeal of the revenue is dismissed.

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• 2018 (12) TMI 1899 - ITAT MUMBAI
  

  Existence of Permanent Establishment/Business connection in India - Taxability of business Income earned in India, by company incorporated outside India - DTAA between India and Switzerland - HELD THAT:- As decided in own case [2015 (4) TMI 905 - ITAT MUMBAI] assessee does not have any business connection in India in the light of Explanation-2 to Section 9(1) of the Act. The assessee does not have PE in India. The facts on record show that there is neither Service PE nor Agency PE in the form of SESIPL. Considering the facts in totality in the light of the relevant provisions of the law and DTAA and the judicial decisions referred to herein above, we have no hesitation in setting aside the assessment order and accordingly we direct the AO not to treat the income of the assessee as taxable under the Act. - Decided against revenue.

  Non-granting of credit for tax deducted at source (TDS) as claimed in the revised return of income and non-computing of interest u/s 234B - HELD THAT:- Since these matters are factual and required verification on account of non-verification of the revised return of income as well as calculation of interest in accordance with law, therefore, we set aside the finding of the AO on these issues and restored of the matter afresh before the AO to decide the matter of controversy afresh by giving an opportunity of being heard to the assessee in accordance with law.

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• 2018 (12) TMI 1898 - ITAT ALLAHABAD
  

  Disallowance of the expenses - Assessee contented that CIT(A) ought to have deleted the disallowances in toto rather than restricting them to 10%, again on adhoc basis, without any defect having been pointed out in the claim of the assessee - HELD THAT:- It is settled law that where the taxing authorities do not point out any defect in the claim of the assessee, nor are the books of account maintained by the assessee rejected, no such ad-hoc disallowance at a whimsical figure can be made and the claim of the assessee requires to be accepted as such. See ALLIED CONSTRUCTION. [2005 (10) TMI 227 - ITAT DELHI] and SUBHASH CHAND AGRAWAL [2013 (11) TMI 471 - ITAT ALLAHABAD]

  Thus the grievance of the assessee is found to be justified. It is accepted as such. The additions made are, hence, deleted in their entirety. - Decided in favour of assessee.

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• 2018 (12) TMI 1894 - ITAT AHMEDABAD
  

  Addition u/s 2(22) (e) on account of deemed dividend - HELD THAT:- We find that Id. First Appellate Authority has recorded a finding of fact that assessee is not the share holder of both the companies. CIT(A) has followed the decision of Special Bench of ITAT in case of ACIT vs. Bhaumik Colour Pvt. Ltd. [2008 (11) TMI 273 - ITAT BOMBAY-E]. This decision of ITAT has been upheld by the Hon'ble Bombay High Court. Hon'ble Delhi High Court has also held in 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. As concurred with hon'ble Delhi High Court. Therefore, respectfully following the decision of Hon'ble Gujarat High Court in case of CIT vs. Daisy Packers (p.) Ltd.[2015 (7) TMI 253 - GUJARAT HIGH COURT] we do not find any error in the order of Id. CIT(A) on this issue. This ground of appeal is rejected.

  Addition u/s 41(1) being cessation of liability - HELD THAT:- The assessee has shown sundry credit in the name of Sarovar Park Plaza, Mumbai which was carried forward from after year without any transaction from A.Y.2007-08. The assessee has shown outstanding balance of creditors account as liability in its books of account and such amount was not written back in Profit & Loss Account After taking in to consideration the decision in the case of CIT v/s. Bhogilal Ramjibhai Atara [2014 (2) TMI 794 - GUJARAT HIGH COURT] and in the case of CIT v/s. Nitin S. Garg [2012 (5) TMI 30 - GUJARAT HIGH COURT] as elabortaed in the findings of the Ld. CIT(A) we are of the view that there was nothing on record to demonstrate that there was remission or cessation of liability relevant to Assessment Year 2007-08. Therefore we do not find any error in the decision of the Ld. CIT(A). Accordingly the appeal of the revenue is dismissed.

  Disallowance in respect of belated contribution to provident fund and ESIC u/s. 36(1)(va) - HELD THAT:- As the assessee has failed to make payment of the PF/ESIC received from the employees within the time allowed as per the PF/ESIC act. We have further noticed that hon’ble high court in the case of CIT vs. GSRTC [2014 (1) TMI 502 - GUJARAT HIGH COURT] held that with respect to the sum received by the assessee from any of his employees to which provisions of sub-clause (10) of clause (24) of section 2 apply, the assessee shall be entitled to deduction of such amount in computing the income referred to in section 28, if such sum is credited by the assessee to the employees account in the relevant fund or funds on or before the due date. In the light of the above facts and judicial findings, we do not find any error in the decision of ld. CIT(A) in sustaining the disallowance, therefore, this ground of the appeal of the assessee is dismissed.

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• 2018 (12) TMI 1893 - ITAT MUMBAI
  

  Disallowance of Legal and Professional Expenses paid to Associated Enterprise - HELD THAT:- Since, the AO and the Ld. DRP have held that the evidence on record is not sufficient to substantiate the contention of the assessee, the assessee has collected the additional documents from M/s Inventa Research and submitted before us for admitting as additional evidence. As perused these documents and we are also of the considered view that these documents are essential for proper adjudication of the issue raised by the appellant/ assessee.

  Admittedly, these documents were not available with the assessee during the assessment proceedings or proceedings before the Ld. DRP, the assessee could not furnish the same before the authorities concerned. We therefore, admit these documents as additional evidence in the interest of justice - since these documents have been placed for the first time the same are required to be verified and taken into consideration by the AO - we set aside the findings of the Ld. DRP and send this issue back to the file of AO for deciding the same afresh after hearing the assessee in the light of the additional documents submitted by the assessee. Hence, this ground of appeal is allowed for the statistical purposes.

  Disallowance towards commission on sale on the ground that payments made on account of commission on sales is not a genuine transaction or not incurred in relation to the business of the appellant - HELD THAT:- In the case of Commissioner of Income Tax vs. Septu India Pvt. Ltd.[2008 (2) TMI 306 - PUNJAB AND HARYANA HIGH COURT] has held that when the assessee had proved the actual payments of amounts of commission and service charges as well as receipt of the same amount by the parties concerned then the claim put forth by the assessee should not have been disallowed merely on the ground that the same was not supported by any documentary evidence - the assessee has discharged the primary onus of establishing the genuineness of the expenditure made in connection with its business. DRP has confirmed the disallowance without pointing out any cogent evidence which rebut the claim of the assessee. We accordingly allow this ground of appeal and set aside the DRP direction. Hence, we direct the AO to allow the expenditure claimed by the assessee.

  Disallowance paid on account of proving financial consultancy and human resources consultancy services - HELD THAT:- We notice that the assessee has not produced any evidence to establish that the services of Smt. Namrata Goel and Nidhi Goel were availed by the assessee - assessee has not placed on record any evidence to explain the nature of services rendered by them for which the assessee company had paid each to the aforesaid parties during the year relevant to the assessment year under consideration. Even before us, the Ld. counsel did not point out any evidence available on record to substantiate that the expenditure was incurred and that too in connection with the business of the assessee.

  Under section 37(1) of the Act, expenditures incurred wholly and exclusively for the purposes of the business are allowed in computing the income chargeable under the head. In the present case, even if it is assumed that the assessee had paid the said amount to the aforesaid parties, it has failed to establish that the expenditure has been laid out wholly and exclusively for the purpose of the business of the assessee. Hence, we endorse the findings of the Ld. DRP and uphold the disallowance made by the AO in terms of the DRP directions. Accordingly, we dismiss this ground of the appeal of the assessee.

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• 2018 (12) TMI 1891 - ITAT LUCKNOW
  

  Depreciation on goodwill - AO rejected the assessee’s claim, observing that the assessee had not claimed any depreciation on goodwill, but had allocated the entire amount of share capital issued to the share holders of M/s JKSL free of cost, among all the fixed assets of the assessee company and has thus enhanced the value of the fixed assets, which is not permissible - HELD THAT:- For all these years, the ld. CIT(A) reversed the orders of the AO on the ground that issuance of shares was towards part payment of purchase consideration and hence was included in the cost of acquisition of the cement undertaking; that therefore, the assessee could not be deprived of depreciation by merely debiting the issue of shares to the goodwill account. The CIT(A) held in the alternative that even if the consideration in the form of shares was paid for purchase of goodwill, this payment could be considered as payment for acquiring brands of the demerged company, on which depreciation was allowable u/s 32 - Tribunal followed “CIT vs. Smifs Securities Ltd.’, [2012 (8) TMI 713 - SUPREME COURT], ‘CIT vs. Manipal Universal Learning Pvt. Ltd.’, [2013 (7) TMI 169 - KARNATAKA HIGH COURT] and ‘CIT vs. Hindustan Coca-Cola Beverages (P) Ltd.’[2011 (1) TMI 138 - DELHI HIGH COURT]

  Claim of additional depreciation - HELD THAT:- CIT(A) allowed the assessee’s claim, following ‘M/s Automotive Coaches & Components Ltd. vs. DCIT’,[2016 (4) TMI 34 - ITAT CHENNAI], for A.Y. 2008-09, wherein, it was held that if additional depreciation could not be allowed at the rate of 20% during the year in which the machinery was installed, the balance 50% has to be allowed in the subsequent year, and ‘CIT vs. Rittal India (P) Ltd.’, [2016 (1) TMI 81 - KARNATAKA HIGH COURT] in which, it was held that the proviso to Section 32 (1)(iia) of the I.T. Act would not restrain the assessee from claiming the balance of the benefit of additional depreciation in the subsequent assessment year.No decision contrary to the above decisions has been brought to our notice. Hence, finding no error therein, the order under appeal on this issue is also confirmed.

  Receipt of interest subsidy from the Rajasthan Govt. - Revenue or capital receipt - HELD THAT:- The case of the Department is that in ‘Sahney Steel & Pressing Works Ltd. [1997 (9) TMI 3 - SUPREME COURT] as been held that in the case of subsidy, the assessee is free to use the money in its business entirely as it likes and it is not obliged to spent the money for a particular purpose. However, it has remained to be noted that this observation was in the context of the background that the subsidy in that case was given to the new industries at the commencement of business, to carry on their business and not as an aid for setting up of the industries. It was, therefore, that the subsidy was treated as operational subsidy and not a capital one. With regard to revenue subsidy, it was held that if it is given by way of assistance to carry on trade or business, it has to be treated as a trading receipt. In the present case, the interest subsidy was given only for the payment of loan acquired for acquisition of capital asserts. As such, it is a subsidy given for setting up of business. Hence, it has rightly been treated as a capital receipt.

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• 2018 (12) TMI 1890 - ITAT CHENNAI
  

  Addition u/s 153A - Conflicting views - HELD THAT:- Admittedly, there was no material found during the course of search operation. When there are two conflicting views, this Tribunal is of the considered opinion that the view in favour of assessee has to be followed. Therefore, in the absence of material found in the course of search operation, there cannot be any addition under Section 153A. Therefore, this Tribunal do not find any reason to interfere with the order of the lower authority and accordingly the same is confirmed.

  The cross-objections filed by the assessee become infructuous, therefore, stand dismissed.

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• 2018 (12) TMI 1887 - ITAT JAIPUR
  

  Application u/s 80G(5) rejected - charitable activity u/s 2(15) - assessee trust incurred expenditure more than 5% of religious nature - CIT(E) granted registration to the assessee society u/s 12AA - assessee has incurred certain expenses for upkeep and maintenance of the temple premises - HELD THAT:- It is not the case of the Revenue that the assessee society is governed by section 80G(5)(ii) and has in its instrument/object any provision for the transfer or application of the whole or any part of the income or asset for any purpose other than a charitable purpose. It is also not the case of the Revenue that it is for the benefit of any particular religious community or caste and any of its objects include any object the whole or substantially the whole of which is religious in nature. In view of the same, the provisions of section 80G(5B) cannot be invoked in the instant case and the order of the ld CIT(E) deserve to be set-aside on this ground itself.

  In terms of the nature of the Mandir Pooja expenses, it is noted that the said expenditure has been incurred in respect of an 100 years old mandir situated at village Jogalsar where the pooja is performed regularly by the locals at their expenses however, certain expenses in terms of upkeep and maintenance of the temple premises, distribution of prasad, etc is contributed by the assessee society. It has been stated that the contributions have been made to keep alive the interest of the locals in the said old heritage temple which is ancillary to assessee society’s main object to preserve and promote such heritage temple buildings. The temple is visited by all locals irrespective of their religion, caste, creed or gender and the temple premises is also used for various social and festival gatherings. The line of distinction between religious and charitable purposes is very thin and no water tight compartment between the two activities can be very established. In the facts of the present case, we donot believe that where the assessee has incurred certain expenses for upkeep and maintenance of the temple premises and distribution of prasad to public at large, it would be an activity related to a particular religion or community and the expenses so incurred would be in nature of religious expenses.

  In case of Umaid Charitable Trust [2008 (5) TMI 232 - RAJASTHAN HIGH COURT] has held that unless objective of the assessee society is for spending its income for a particular religion and it is so found in the trust deed, the Revenue cannot reject the application seeking registration under section 80G merely because the assessee has incurred certain expenses for upkeep and maintenance of the temple premises and distribution of prasad to public at large

  We hereby direct the ld CIT(E) to grant the necessary registration u/s 80G to the assessee society. - Decided in favour of assesee.

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• 2018 (12) TMI 1886 - ITAT MUMBAI
  

  Revision u/s 263 - Revising the completed assessment under section 143(3) on the issue that the sum of receipt consisting of share capital and share premium from a company Secunderabad Healthcare Ltd. - HELD THAT:- We find that the assessee has filed complete details of all share holders of the company with full name and address of all share holders along with details of PAN. Even while completing assessment for AY 2012-13, all these details were filed before the AO regarding allotment of 1.40 lakhs shares at a premium to Secunderabad Healthcare Ltd. and all details resolution copies, bank statements, payment of call money letters and PAN Card Xerox were filed.

  We are of the view that in the given facts of the present case the issue is covered on merits in the case of CIT vs. Orchid Industries Pvt. Ltd.[2017 (7) TMI 613 - BOMBAY HIGH COURT] wherein honorable High court has considered the decision of division Bench of Bombay High Court in the case of CIT vs. Gagandeep Infrastructure P. Ltd [2017 (3) TMI 1263 - BOMBAY HIGH COURT] & Hon’ble Supreme Court in the case of CIT vs. Lovely Exports (P) Ltd [2008 (1) TMI 575 - SC ORDER].

  Revision order passed by PCIT under section 263 of the Act is not sustainable because the very basis of the order is that as per the information received from DCIT, Central Circle 2(2), Mumbai the assessee company is one of the beneficiaries of accommodation entry of bogus share premium from Secunderabad Healthcare Pvt. Ltd., the company operated by Shirish Shah, the company has been declared as shell company. We find that the PCIT has no where brought on record what was the information with him in regard to this aspect and how the receipts in the shape of share application money from Secunderabad Healthcare Pvt. Ltd. is part of bogus share premium as alleged by the PCIT. The assessment order framed by the AO is neither prejudicial to the interest of the Revenue nor erroneous for the reason that this information was not available at the time of framing assessment if at all it is true and for this the order cannot be held to be erroneous and prejudicial to the interest of the Revenue. Hence, we are of the view that the revision order be cannot be sustained and accordingly, quash. The appeal of the assessee is allowed.

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• 2018 (12) TMI 1883 - ITAT CHANDIGARH
  

  Addition u/s 14A r.w.r. 8D - disallowance of expenses incurred in relation to earning exempt income - recording of satisfaction - HELD THAT:- As per assessee since no cogent reasons had been recorded by the Assessing Officer for rejecting the correctness of the claim of expenditure as computed by the assessee for the purpose of making disallowance under section 14A the disallowance could not have been made, we do not find any merit in this contention.

  As per order of the AO and on perusing the same we find that the Assessing Officer had recorded due satisfaction with regard to the incorrectness of claim of disallowable expenses made by the assessee, before proceeding to work out the disallowance as per Rule 8D himself. We find that the Assessing Officer had recorded his satisfaction.

  Assessing Officer was not satisfied with the correctness of the amount worked out by the Assessee since he had noted therein that the assessee had not apportioned expenditure of the nature of rent, taxes, salary etc. while working out his estimate of the expenditure to be apportionment u/s 14A - Assessee has been unable to controvert this contention of the Assessing Officer. In view of the above, there is no doubt about the fact that the assessing officer had duly recorded why he found the disallowance made by the assessee incorrect.

  The act of the Assessing Officer in applying Rule 8D for the purpose of working out the disallowance under section 14A we hold has been rightly upheld by the Ld. CIT(A),as being in accordance with law. The contention raised by the Ld. Counsel for the Assessee in this regard is therefore dismissed.

  Alternate contention of the assessee that the disallowance calculated as per Rule 8D(2)(iii) was to be restricted to those investments only on which exempt income had been earned is acceptable. We find that both the Special Bench of the ITAT in the case of Vireet Investments [2017 (6) TMI 1124 - ITAT DELHI] and ACB India Ltd. [2015 (4) TMI 224 - DELHI HIGH COURT] have laid down the preposition that for the purpose of calculating the disallowance u/s 14A read with Rule 8D, only those investments which have earned exempt income have to be considered.

  Thus we hold that the disallowance under section 14A Read with Rule 8D(2)(iii) is to be calculated by taking into consideration only those investment which have earned exempt income during the year. The Assessing Officer is directed therefore to recompute the disallowance in accordance with aforesaid proposition laid down by the Courts. - Decided partly in favour of assessee.

  Disallowance of interest expenses u/s 36(1)(iii) - sole contention raised by Assessee was that since it had enough own funds available no disallowance under section 36(1)(iii) was warranted - HELD THAT:- Various courts have held that no disallowance u/s 36(1)(iii) is warranted where availability of sufficient own interest free funds is demonstrated by the assessee. The Ld. DR has failed to point out any contrary decision either of the jurisdictional High Court or the Apex Court. Therefore there remains no dispute with regard to the said proposition of law. Further the audited financial statements of the assessee show sufficient own funds in the form of share capital and reserves to the tune of ₹ 144 Cr. ,while the amount invested in building in relation to which the impugned disallowance has been worked out is RS.52,46,711/-The Ld. Dr has not controverted the said facts before us. Therefore ,in the light of the fact that sufficient own funds were available with the assessee,no disallowance u/s 36(1) (iii) was warranted in the present case. We therefore set aside the order of the Ld.CIT(A) in this regard. - Decided in favour of assessee.

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• 2018 (12) TMI 1882 - ITAT MUMBAI
  

  Disallowance made on account of replacement of meters - HELD THAT:- Addition as consistently allowed by the ITAT and the Hon’ble Bombay High Court in assessee’s own case in assessee’s favour. The CIT(A) after relying on these decisions of the Tribunal and the High Court have deleted the disallowance - Thus we do not find any reason to interfere in the order of CIT(A) for deleting disallowance on account of replacement of meters.

  Revised claim filed before the AO without filing revised return - revised claim with respect to long term capital gains earned on sale of units, which was not accepted by the AO on the plea that assessee has not filed revised return of income - claim of carry forward of long term capital loss - HELD THAT:- CIT(A) accepted assessee’s claim by observing that the revised claim filed before the AO without filing revised return are required to be admitted in view of the decision of Pruthvi Brokers & Shareholders Pvt. Ltd [2012 (7) TMI 158 - BOMBAY HIGH COURT]. We found that all the facts and figures are very much available before the AO. Therefore, the CIT(A) has verified assessee’s claim wherein he found that since units were held for more than 12 months assessee was eligible for benefit of long term capital gain. Accordingly, he directed the AO to exclude the amount from the total short term capital gain and to allow carry forward of long term capital loss after having the detailed observation - Detailed finding so recorded by CIT(A) are as per material on record, which has not been controverted by bringing any positive material on record. We therefore, do not find any reason to interfere in the findings of CIT(A).

  Disallowance u/s 14A - disallowance of interest under Rule 8D(2)(ii) - HELD THAT:- CIT(A) has given relief with respect to the proportionate interest free funds alleged to be utilized for exempt investment. The CIT(A) has correctly relied on the judicial pronouncements of jurisdictional High Court in the case of HDFC Bank Ltd. [2014 (8) TMI 119 - BOMBAY HIGH COURT] and Reliance Utilities & Power Ltd. [2009 (1) TMI 4 - BOMBAY HIGH COURT] for reaching to the conclusion that no disallowance of interest is warranted in case assessee is having sufficient interest free funds. From the record we also observe that assessee was having sufficient free funds, which was more than the investment so made. Accordingly, following the decision of Jurisdictional High Court as mentioned by CIT(A), we do not find any infirmity in the order of CIT(A) for deleting disallowance of interest under Rule 8D2(ii) of the IT Act.

  With regard to the assessee’s contention for excluding investment in subsidiaries while working out disallowance under Rule 8D(ii) find no merit in the action of CIT(A) and in so far as recently in the case of Maxoop Investment [2018 (3) TMI 805 - SUPREME COURT] held that investment in subsidiary should not be excluded for working out disallowance under Rule 8D(2)(ii) of the IT Act. Accordingly, we reverse the order of CIT(A) on this issue and upheld the order of AO.

  Computation of book profit of 115JB - HELD THAT:- Issue under consideration is covered by the order of the ITAT in assessee’s own case for the A.Y.2010-11 and 2011-12, wherein it was held that provisions u/s.115JB is not applicable to the electricity supply company. In the instant case, the assessee has followed the accounting policies under the Electricity Supply Act and prepared its accounts in view of those very policies. Accordingly, assessee did not prepare the accounts in accordance with Part II and Part III of schedule VI of the Companies Act as the same is not applicable, hence, provisions u/s.115JB were not applicable in assessee’s case. No infirmity in the order of CIT(A).

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• 2018 (12) TMI 1881 - SC ORDER
  

  Exemption u/s 10(23C)(vi) - Assessee’s activities including charging a franchisee fee could not be regarded as a charitable activity within the meaning of section 2(15) - purpose for which section 10(23C)(vi) of the Act was introduced, is adequately fulfilled and not disadvantageously circumvented by vested parties - HELD THAT:- SLP dismissed.

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• 2018 (12) TMI 1880 - ITAT CHENNAI
  

  Bogus LTCG - Denial of claim u/s.10(38) - HELD THAT:- This is not a case where the ld. Assessing Officer has been able point out where the assessee has made a bogus claim of long term capital gains exempt u/s.10(38) - As perusal of the assessment order clearly shows Assessing Officer has only made allegation in respect of these two companies and the modus operandi of the bogus claim u/s.10(38) of the Act.

  The evidences clearly show that the transactions of purchase and sale of the shares by the assessee herein are through online transaction by paying STT. This is not a case for off-line purchase, nor is the case of direct purchase. Neither is the assessee’s name coming out in the Investigation report, which has been received by the ld. AO from Directorate of Investigation, Kolkata. This being so, the claim of assessee cannot be disallowed merely on presumptions and the ld. Assessing Officer is directed to grant the assessee benefit of exemption u/s.10(38) of the Act as claimed in respect of long term capital gains generated by purchase and sale of shares of M/s.NCL Research Limited and M/s.RISA International as claimed by the assessee. - Decided in favour of assessee.

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• 2018 (12) TMI 1878 - ITAT MUMBAI
  

  Revision u/s 263 - AO has not made inquiry in regards to receipt shown in service tax return of the assessee vis a vis as per P&L A/C and that the foreign Principals have paid taxes in India u/s 172 of the Act or not - HELD THAT:- We have noted that in the assessment order, the Assessing Officer has not discussed the issue, which is sought to be revised by ld. PCIT. However, the Assessing Officer during the assessment vide its notice dated 18.12.2015 raised the specific enquiry vide question no. 19, which we have reproduced below:

  “19. Please file copies of service tax return along with the enclosures. It is observed that higher turnover reported in service tax return than the IT Return please reconciles.”

  Assessee furnished re-conciliation income as per income tax return as well as service tax return. The assessee also furnished the complete details of service tax return. The assessee furnished Note on return filed with service tax authority and has clearly mentioned that assessee is an agent of various foreign shipping lines. The assessee on behalf of the principle collected the charges for shipping from consumer, which are freight and terminal handling charges out of freight and terminal handling charges, no handling charges is liable to be service tax and freight is exempt from payment of service tax. The service tax is collected and paid on such income on behalf of the agent. Therefore, the income of principle is included in the service tax return of assessee. The assessee is an agent earned fixed percentage of commission on export and import on freight. The assessee also collected documentation and other charges which service is taxable income. Thus, we have seen that the assessee has furnished complete details to the Assessing Officer. The Assessing Officer after his satisfaction and without mentioning anything about the issue accepted the contention of assessee.

  Hon’ble jurisdictional High Court in CIT vs. Gabriel India [1993 (4) TMI 55 - BOMBAY HIGH COURT] held that when the Income Tax Officer (ITO) made enquiries with regard to the expenditure incurred by assessee. The assessee furnished detailed explanation in this regard by a letter in writing. All are part of the record of the assessee and the claim was allowed by ITO on being satisfied with the explanation of assessee. Such decision of ITO cannot be held to be erroneous in his order; he has not made elaborate discussion in this regard.

  Also in SHRI ASHISH RAJPAL [2009 (5) TMI 18 - DELHI HIGH COURT] held that merely because the assessment order does not refer to query raised by Assessing Officer during the scrutiny and response of the assessee thereto it cannot be said that there was no enquiry and the assessment order is erroneous and prejudicial. As we have already noted and referred that the Assessing Officer made specific enquiry with regard to service tax return and receipt of income in the original assessment and accepted the same, therefore, in our view, the order passed by assessing officer is not erroneous. Therefore, the precondition for exercise of power under section 263 is not fulfilled. - Decided in favour of assessee.

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• 2018 (12) TMI 1877 - ITAT HYDERABAD
  

  Revision u/s 263 - Whether twin conditions of the assessment order being erroneous as well as prejudicial to the interests of the Revenue are to be satisfied? - HELD THAT:- AO had called for the details during the assessment proceedings and had further issued a notice u/s 154 and after being satisfied, has dropped the 154 proceedings. Therefore, it is clear that the AO has applied his mind to the information filed by the assessee and therefore, the assessment order cannot be said to be erroneous. The issues raised by the CIT as the mistakes/discrepancies are of factual nature and not against the law, therefore, for this reason also, the assessment order cannot be said to be erroneous.

  We also agree with the contention of the learned Counsel for the assessee that the CIT cannot direct the AO to redo the assessment without pointing out the errors committed by the AO and without giving a finding as to how the assessment order is erroneous. From the literal reading of the order u/s 263, we find that the CIT pointed out certain discrepancies and then subsequently reproduced the assessee’s submissions and then directed the AO to redo the assessment. Thus, there is no finding whatsoever, as to whether the assessee’s contentions were acceptable to him or not and as to how the assessment order is erroneous. Therefore, the revision order passed by the Pr. CIT is not sustainable. The assessee’s appeal is accordingly allowed.

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• 2018 (12) TMI 1876 - ITAT MUMBAI
  

  Revision u/s 263 - CIT observed that A.O.has not applied his mind and has allowed the claim of expenses viz. Medical Conference Expenses which were prohibited by Medical Council of India (MCI) - Assessee submitted that the A.O. in these cases has examined the issues and has duly applied his mind. He submitted that as a result of this application of mind, the A.O. has disallowed the sales promotion articles, which were found to be covered under freebies to doctors, prohibited under MCI guidelines and CBDT Circular - HELD THAT:- CIT's observation that the A.O. has not followed these MCA Guideline and CBDT Circular is totally misplaced. As regards the examination of conference expense is concerned, the ld. CIT has held that the same were not examined by the A.O. by holding that the concerned ledger accounts were not available in assessment record. This, in our considered opinion, is not at all sustainable in view.

  There is no rule that the A.O. is supposed to obtain and keep in the assessment records, the copy of all the ledger account which he has examined. Furthermore, the ld. CIT is fully aware of the case law cited by the assessee before him wherein similar expenses were allowed by the ITAT. He has not followed the same holding that it has been appealed against in High Court. Just because the ITAT order has been appealed before High Court, it will not cease to have binding effect on the ld. CIT. It will always be considered to be a permissible view. Hence, if the A.O. adopts a legally permissible view the same cannot be the subject to revision u/s. 263 of the Act.

  While concluding, the ld. CIT has observed that the A.O. shall take into account the binding judicial precedence which may become available on the subject. In this connection, we note that in assessee's own case the ITAT [2018 (7) TMI 1883 - ITAT MUMBAI]has allowed the assessee's appeals and dismissed the Revenues appeals. The issue involved was the allowability of similar expenses. In this view of the matter, we find that admittedly the decision of tribunal is binding upon the A.O. Hence the order u/s. 263 of the Act by the ld. CIT will be of no consequence.

  A.O. has already made the necessary enquiries in this regard. Here it is a case that the A.O. has made some enquiry and the ld. CIT is not satisfied and he wants another enquiry to be done. This direction u/s. 263 is not sustainable legally. This proposition draws support from the decision of the Hon'ble jurisdictional High Court in the case of CIT vs. Gabriel India Ltd. [1993 (4) TMI 55 - BOMBAY HIGH COURT] - Decided in favour of assessee.

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• 2018 (12) TMI 1875 - ITAT PUNE
  

  Addition as deemed rent on unsold flats shown as stock in trade - HELD THAT:- It is seen that similar issue came up for consideration before the Pune Bench of the Tribunal in M/s. Cosmopolis Construction [2018 (9) TMI 1621 - ITAT PUNE] has held that no rental income can be computed when flats are held as stock in trade. In reaching this conclusion, the Tribunal relied on certain other judgments and the orders. In the absence of any distinguishing fact, having been brought to my notice by the ld. DR and respectfully following the precedent, we overturn the impugned order on this score and direct to delete the addition. - Decided in favour of assessee.

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• 2018 (12) TMI 1874 - ITAT JAIPUR
  

  Validity of reopening of assessment u/s 147 - HELD THAT:- Where the Assessing Officer has reopened the assessment mechanically without application of mind and as well as following the decision of this Tribunal in the case of Narain Dutt Sharma Vs ITO [2018 (4) TMI 427 - ITAT JAIPUR] we hold that the reopening of the assessment is not valid and the same is quashed.

  Since we have quashed the reopening of the assessment and consequential reassessment, therefore, we do not propose to go into the other grounds regarding the additions sustained by the ld. CIT(A).Appeal of the assessee is allowed.

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• 2018 (12) TMI 1873 - MADRAS HIGH COURT
  

  Reopening of assessment u/s 147 - Whether parallel proceedings under Section 158-BC as well as under Section 148 of the Income Tax Act is impermissible in law? - HELD THAT:- The block assessment is undertaken with reference to Section 132-A of the Income Tax Act. Now block assessment proceedings are initiated and actions under Section 158-BC are commenced. Pursuant to the block assessment made, based on the informations received on account of search operations, the reopening of the assessment is also simultaneously done with reference to the assessment years 1995-1996 and 1996-1997 alone. Thus, the reopening of the assessment is initiated based on other reasons.

  The learned Senior Standing Counsel also clarified that reopening of the assessment is taken with reference to two assessment years based on the materials available with the Assessment Officer. The notice issued under Section 148 of the Act itself stipulates that the Department has received information that the writ petitioner has made an investment of ₹ 45,71,26,016/- from U.K. Companies and also incurred expenses during the year ended 31.3.1995. But the writ petitioner has not admitted any income accrued or received based on the investment during the previous year ended 31.3.1996 relating to the assessment year 1996-1997.

  The learned Senior Standing Counsel for the Department also clarifies that these informations or materials are independent and unconnected with the block assessment made with reference to Section 158-BC for ten years. Thus, when the Assessing Officer has got reason to believe under Section 147 of the Act, then they are empowered to issue notice under Section 148 of the Act and deal with the case under Sections 147 to 153 of the Act and by following the procedures contemplated under the provisions of the Act.

  When the Income Tax Department come out with a plea that the reopening of the assessment is made based on the independent informations and the documents available, it is left open to the assessee to seek the reasons from the Department, which was already given to the writ petitioner and accordingly, submit his defence to the reasons stated and allow the Assessing officer to assess the income and pass final orders of assessment under the Act.

  In the present cases on hand, the reasons for reopening of the assessment had already been provided to the writ petitioner. Thus, the writ petitioner ought to have given his explanations/objections in respect of the reasons stipulated in the reply by the Income Tax Department. Contrarily, if this Court adjudicate the merits and demerits, the same would cause prejudice to the Income Tax Department in concluding the reassessment proceedings with reference to Sections 147 to 153 of the Act.

  The very object and purpose of the reassessment and reopening of the assessment is to ensure that the tax evaders are dealt in accordance with law. If the assessee failed to disclose the actual income to the Department in a parallel assessment year, the Assessing Officer is empowered to reopen the assessment with reference to Sections 147 to 153 of the Act. Once the proceedings are commenced under Section 148 of the Act, then this Court must allow the Assessing Officer to adjudicate the reassessment and arrive a conclusion and pass assessment orders by affording opportunities to the assessee and by following the procedures. This being the concept and the object sought to be achieved under the provisions of the Act and by quashing the very notice, the very purpose of the proceedings would be defeated.

  Even in the case of Dayanidhi Maran vs. Assistant Commissioner of Income Tax, Non-Corporate Circle-1, Chennai [2018 (10) TMI 811 - MADRAS HIGH COURT] this Court had reiterated the principles that no writ petition can be entertained against the notice in a routine manner. Judicial review against such statutory notices are limited and the aggrieved persons are at liberty to submit their explanations/objections with reference to the reasons stated in the impugned notice and participate in the proceedings so as to reach a logical conclusion.

  In the present cases on hand, admittedly there was search operations. Admittedly, certain materials were secured by the Authorities Competent. Admittedly, in its order dated 15.11.1996, the Assistant Commissioner of Income Tax provided opportunity to the writ petitioner to inspect all those documents. However, opportunities proposed to be provided was informed by the Assistant Commissioner of Income Tax.

  However, now the learned Senior Standing Counsel for the Income Tax Department made a submission that an opportunity will be provided to the writ petitioner by following the procedures. This being the submission made, this Court is of an opinion that complete opportunity as contemplated under the Act must be provided to the assessee, enabling him to submit his explanations/objections and the documents if any along with the statements for the purpose of concluding the proceedings in all respects and to ensure that the proceedings reaches its logical conclusion.

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• 2018 (12) TMI 1872 - ITAT JAIPUR
  

  Addition towards contribution to the State Renewal Fund - HELD THAT:- As relying on own case [2017 (8) TMI 1382 - ITAT JAIPUR] State Renewal Fund was set up to provide safety to the employees working under the state owned entities in case of restructuring/wind-up/closure of the undertaking. Based on the study done by the State Government, the assessee has provided an amount of ₹ 20 lacs for the purposes of welfare and benefit of the employees. As following case of Principal CIT vs Rajasthan State Seed Corporation Ltd 2016 (9) TMI 59 - RAJASTHAN HIGH COURT] we affirm the order of the CIT(A) who has rightly deleted the disallowance made by the AO towards contribution to State Renewal Fund.

  Disallowance for depositing the employees contribution to PF & ESI beyond the prescribed time limit provided in respective Act - Whether the employees contribution to PF & ESI are governed by the provisions of section 43B and not by section 36(1)(va) r.w.s. 2(24)(x) of the IT Act.? - HELD THAT:- Admittedly, the employees’s contribution to PF has been paid before the due date of filing of return of income u/s 139(1) of the Act. The issue is no more res integra in light of various judicial pronouncements of M/S. STATE BANK OF BIKANER & JAIPUR AND JAIPUR VIDYUT VITARAN NIGAM LTD. [2014 (5) TMI 222 - RAJASTHAN HIGH COURT], M/S. UDAIPUR DUGDH UTPADAK SAHAKARI SANGH LIMITED, UDAIPUR [2014 (8) TMI 677 - RAJASTHAN HIGH COURT] and JAIPUR VIDYUT VITRAN NIGAM LTD AND RAJASTHAN RAJYA VIDYUT UTPADAN NIGAM LTD [2014 (1) TMI 1085 - RAJASTHAN HIGH COURT] - We accordingly affirm the order of the ld CIT(A) who has rightly deleted the disallowance made by the AO towards employees contribution to PF.

  Disallowance of energy conservation fund - expenses was not incurred wholly and exclusively for the business purchases and it is only application of income - HELD THAT:- As relying on own case [2017 (8) TMI 1382 - ITAT JAIPUR] the disallowance on account of contribution to energy conservation fund made by the Assessing Officer is directed to be deleted. This ground is allowed.

  Addition of contribution to Rajasthan Bhawan - HELD THAT:- Assessee got the rebate of 75% as well as the right to use the accommodation by its officers/employees visiting Mumbai. Accordingly, in view of the fact that the assessee has received the benefit in the shape of accommodation against the said expenditure for construction of Rajasthan house, we hold that the claim of the assessee is an allowable expenditure u/s 37(1) of the Act and the AO is directed to allow the same. In view of the same, ground no. 1 of assessee’s appeal is allowed.

  Disallowance of 50% of the expenses incurred on publicity and advertisement - Addition on the ground that in lot of entries, details of expenditure are not appearing in the ledger account without providing opportunity to furnish such detail ignoring the explanation given about the nature of the expenditure incurred which is wholly and exclusively for the purpose of business - HELD THAT:- The matter is remanded to the file of the AO to examine the details of expenditure incurred under the head publicity and advertisement after providing reasonable opportunity to the assessee. In the result, the ground is allowed for statistical purposes.

  Disallowance of the prior period expenditure on the ground that it could not be ascertained whether the expenses crystallized in the previous year or not - HELD THAT:- The incurrence of expenditure for the purposes of business is not been disputed by the Revenue. Further, the ld AR has explained that the expenditure has been booked after seeking the approval from the competent authority during the year and the same is consistent with the accounting practice of booking the expenses in earlier years. We accordingly donot see any basis for disallowance of the expenditure so claimed by the assessee. In view of the same, the AO is directed to allow the same and the ground no. 3 of assessee’s appeal is allowed.

  Disallowing the claim of deduction u/s 80IA - Excluding the indirect income but at the same time not excluding the indirect expenses - HELD THAT:- Firstly, it is not under dispute that revenues in form of sales of services, FDR interest income and other income are not eligible for deduction u/s 80(IA) and hence, the said action of the AO is hereby confirmed. The second issue relates to allocation of indirect expenses incurred at the Head office in form of employees and administrative/establishment expenses. The ld AR has contended that the assessee has worked out the allocation of indirect expenses as per the directions of the Coordinate Bench in AY 2011-12 and as per its working, the indirect expenses allocable to the eligible undertakings amounts to ₹ 18,49,771. Further, taking the same into account, as per the revised working, it is eligible for deduction u/s 80IA at ₹ 8,56,70,349 as against original claim of ₹ 12,21,63,337. The matter is accordingly set-aside to the file of the AO to examine and verify the said revised working so furnished by the assessee available at assessee’s paperbook pages 7-8 after providing reasonable opportunity to the assessee, and where the same is found to be in compliance with the directions of the Coordinate Bench referred supra, allow the same to the assessee. In the result, the ground of appeal is allowed for statistical purposes.

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