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Income Tax - Case Laws
Showing 81 to 100 of 906 Records
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2019 (2) TMI 1926
Demand u/s 201(1) and u/s 201(1A) - defects in Form No.15G and 15H - Powers of the Commissioner (Appeals) - CIT-A remitting back the issue to the AO with the direction to give a final opportunity to the assessee to produce form 15G /15H collected before the due date from the deductees and give credit to the same - HELD THAT:- . As per section 251(1)(c) of the Act, the CIT(A) may pass such order as he thinks fit. In other words, he can confirm, reduce, enhance, annul or remit the issue back to the file of A.O. for fresh consideration. Since the impugned order under which the assessee is in appeal is not an assessment order or penalty order, the provisions empowers the CIT(A) to pass an order as he thinks fit. Therefore, the CIT(A) did not travel beyond the scope of section 251(1)(c) of the I.T. Act. Hence, we do not find any infirmity in the orders of the CIT(A) with regard to remitting the issue to the file of A.O. to give an opportunity to the assessee to produce Form No.15G / 15H collected before the due date from the deductees and grant due credit for the same.
Whether CIT(A) was correct in directing the Assessing Officer to grant an opportunity to the assessee to furnish the correct PAN No’s of the deductees? - CIT(A) correctly directed the Assessing Officer to re-compute the tax u/s. 201 of I.T. Act at the rate of 10% for those deductees, where the assessee furnished the PAN Nos. This direction of the CIT(A) is in the interest of justice and equity. Further, we make it clear that the assessee has to produce correct Permanent Account Number (PAN) of the deductee, so as to get corresponding credit. With these observations, the appeals of the Revenue are dismissed.
Jurisdiction of the Assessing Officer to pass an order u/s 201 and 201(1A) - assessee is treated as an ‘assessee in default’ - assessee contented that there should be proceedings against the deductee/payee and the finding to be rendered by the revenue that the taxes are not recoverable from the deductees and only in such an eventuality, the assessee can be declared as an ‘assessee in default’ - HELD THAT:- Section 201 has been amended with effect from 01.07.2012 whereby the burden of proving that the payee / deductee had paid the taxes is on the assessee / deductor. In other words, the assessee is to provide proof that payee / deductee has filed the return declaring the income on which the TDS ought to have been deducted and duly paid the taxes on the same. The relevant amendment in section 201 introduced by the Finance Act, 2012 with effect from 01.07.2012.
In view of the above amendment, the burden is cast on the assessee to prove that the deductee / payee had duly paid the taxes on the income which ought to have been subjected to TDS by the assessee-deductor. In the instant cases, the relevant assessment years are 2013-2014 to 2016-2017, and the amended provision has application. Therefore, this ground raised by the assessee is rejected.
TDS u/s 194A - Liability on the correct person who is responsible for the deduction of tax at source - so many managers who is actually responsible for the actual payment in firm - HELD THAT:- In the instant case, the liability to pay taxes as per section 201 of the Act has been fastened on the assessee’s firm and the managing partner, as its representative. For proceedings u/s. 201 of the Act, the liability to pay taxes is on the assessee who had failed to deduct tax at source. It has been correctly done so in the instant case. Therefore, this ground raised by the assessee is also rejected. It is ordered accordingly.
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2019 (2) TMI 1925
Maintainability of appeal - Low tax effect - HELD THAT:- This Appeal under Section 260A of the Income Tax Act, 1961 has been filed challenging the order passed by the Income Tax Appellate Tribunal.
The learned counsel appearing in support of the appeal, states that he has been instructed to withdraw this appeal. This is for the reason that the tax effect involved in this appeal is less than the threshold limit of ₹ 50 Lacs as provided in CBDT Circular No. 3 of 2018 dated 11.7.2018. In view of the above submission, the appeal is dismissed as not pressed.
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2019 (2) TMI 1924
Addition on account of accommodation entry - information received from the Director General of Income Tax (Investigation), Mumbai intimating that the assessee company is one of the beneficiaries in the accommodation entry operation carried out by Shri Praveen Jain in Mumbai - HELD THAT:- Assessee is engaged in the construction of multi storage building. In the usual course of business, the assessee was receiving the advances for flats. The advance from M/s. Josh Trading Co. Pvt. Ltd. was also received in the usual course. The assessee has given the address, PAN number and confirmation of the parties. The advance was received through banking channel - when the deal did not materialize, the advance was returned also by banking channel. All these facts are not disputed by the Revenue.
A.O. has not made any enquiry himself to rebut the submission of the assessee. It is not the case that the address given by M/s. Josh Trading Co. Pvt. Ltd. is bogus or that the A.O. has made an enquiry and the said M/s. Josh Trading Co. Pvt. Ltd. has not responded. In these circumstances, in our considered opinion, the assessee has discharged the onus cast upon him. The A.O. has not brought on record any cogent material for the proposition that the advance received was bogus. It is settled law that the addition based upon surmise and conjecture de hors any enquiry whatsoever is not sustainable. Hence, in our considered opinion, there is no infirmity in the order of the ld. CIT(A). Accordingly, we uphold the same.
Addition on account of long term capital gain - CIT(A) deleted the addition - HELD THAT:- The assessee had sold Tenement situated at Mumbai to the purchaser and also right of piece or parcel of tit-bit plot adjacent to the said tenement to the same purchaser. The tenement and the land were sold through two agreements. This was because there were some disputes with the purchaser. The agreement of the lease deed shows that as per the terms of the lease agreement, the lease tit-bit land is to be held by the leaseee only along with the tenement and not separately. In the case of transfer of tenement, the tit-bit area will automatically get transferred. The above makes it abundantly clear that the tit-bit land was to be sold along with the tenement and it was only due to some dispute that the agreement for the tit-bit land was entered later on. The A.O. has found difference in the stamp valuation of the tit-bit land at the time of registration.
The assessee has received the entire consideration in July 2011. The stamp valuation of tit bit land as on 31.03.2012 was ₹ 1,49,44,020/-. Hence, if both the agreements are considered in cohesive manner, it will be found that the total stamp duty valuation comes to ₹ 1,37,37,500/- and ₹ 1,49,44,020/- as compared to the sale consideration received by the assessee totaling to ₹ 2,20,000/- + ₹ 80,000/-. If this is considered, the sale value received is higher than the combined stamp duty value of the property. On this account, the ld. CIT(A) is correct in deciding the issue in favour of the assessee.
Applicability of section 50C - A.O. has invoked the provision of section 50C in the context of tit-bit leasehold land. It is admitted that it is a lease hold land and it has been held by the ITAT, Mumbai Bench in the case of Atul G Puranik [2011 (5) TMI 576 - ITAT, MUMBAI] that section 50C cannot be invoked on transfer of lease hold rights. Since there is no dispute that the impugned tit bit land was under lease, this decision fully applies and the application of section 50C in this case by the A.O. is not justified.
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2019 (2) TMI 1923
Addition u/s 68 - Appellant Company had not discharged its onus with respect to justification of credit received as share application/ share premium money - HELD THAT:- In this case, the share application money along with premium was received through banking channel . The details of the bank account of the investor have been duly supplied. Even the source of funds of the Investor is also explained. The income tax returns of the investor are also furnished. The investor companies have been duly registered under the Indian Companies Act and there is no evidence on file that their registration has been cancel led or that the investor companies have been declared as nonexistent or shell companies. In response to summons issued by the DDIT (Inv) , Kolkata, investor companies duly filed al l the details and duly confirmed that they had invested in the shares of the assessee company.
The only reason for which the aforesaid investment has been disbelieved by the Assessing Officer is on the ground that the Inspector of the Income tax at Kolkata had reported that the aforesaid companies could not be traced out at the given address - we find from the record that the assessee company has furnished the bank details of the investor companies. The address on the existence of the said companies could have been verified from the account opening forms etc. it is in the common knowledge that the accounts are opened in the bank through introducers who approve that the account holder is known to him / her and is genuine. Enquiries could have been made from the said introducers also.
There is voluminous record placed on the file such as share application forms, share certificates, bank accounts statements, confirmation from the investors, certificate of incorporation of the said companies, directors report , auditors report and balance sheets etc. So far as the question as to why the said investment company would investigate the assessee company, that in our view, is the internal / market decision of the said investor company and that cannot be a basis for holding that the said investor is bogus. So far as the observation that the investor companies were running into losses, the Ld. Counsel for the assessee in this respect has demonstrated from the balance sheet , that as on the date of investment, the said companies were having huge surpluses, which were sufficient to make the aforesaid investment. Under the circumstances, the sole report of the Inspector that he could not trace the companies, which has been submit ted in the back of the assessee without any opportunity to the assessee to confront the same, is not sufficient to hold that the aforesaid transactions were bogus. Moreover , there is no evidence on the file that the amounts invested by the aforesaid companies was the own money of the assessee. - Decided in favour of assessee.
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2019 (2) TMI 1921
Reopening of assessment u/s 147 - Report received from Investigation Wing regarding share capital being received from the two companies - HELD THAT:- Assessee has received share capital from Geefcee Finance Ltd. and from Mahanivesh (India) Ltd. It has filed confirmation, bank Financial Stock statement, ITR and Audited Financial Stock statement of both these companies. The assessment thereafter was completed under section 143(3) of the Act by the AO vide order dated 27.12.2007 meaning thereby the AO has accepted the contention of the assessee. Thereafter the assessment was reopened by issue of notice under section 148 of the Act.
After reopening of assessment the AO has not made any further inquiry. In fact, in the assessment order after making a reference to the report received from investigation wing, the AO has not stated anything particular to the assessee. The AO has also not commented adversely on any of the document available on record regarding these two companies. In view of these facts, the document submitted by the assessee were not rebutted by the AO. It is noted that the reliance placed by the AR on the various judgments supports the case of the assessee whereby it has been held that in the absence of any inquiry made by the AO the addition on this account can’t be sustained.
In the present case falls in the other category as the assessment order is silent about the documents available on record in support of the share capital received by the appellant company. We find that there is no adverse observations or comment about the document available on record and submitted by the assessee in support of the share capital received by it in the original assessment proceedings on the basis of which assessment order dated 27.12.2007 was passed under section 143(3) of the Act. The AO having got the information from the investigation wing, the least he could do to make inquiry from the shareholders, the details of which were already on the record. Thus we delete the addition in dispute and allow the grounds raised by the assessee.
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2019 (2) TMI 1919
Offence punishable under Sections 276(1) & 277 - petitioner had willfully and deliberately filed the return of income on 29.07.2002 without reflecting the investment in the form of bank balance in a foreign bank account, thereby, attempted to evade the tax - Also petitioner had stated false statement in verification under the Act and false return of income for the Assessment Year 2002-03 - Commissioner (Appeals) has observed such, he has reduced the penalty from 300% to 100%, for the reason that when these things were brought to the notice of the petitioner, he accepted and agreed for the addition, without protest. On this score alone, the Commissioner (Appeals) has reduced the penalty - HELD THAT:-here are two things for this Court to analyse here. One is that the penalty can be reduced / waived under Section 273A of the Act, provided the assessee should voluntarily and in good faith, made full and true disclosure of particulars and also has co-operated in any enquiry relating to the assessment of his income and has either paid or made satisfactory arrangements for the payment. Here in the case on hand, admittedly, the petitioner has paid the tax amount, without protest and in the meantime, without prejudice to his stand. In other words, the petitioner can still fight for his case. Moreover, the provision is very clear that the assessee should voluntarily give such disclosure.
It does not brush aside the fact that the petitioner has not satisfied the ingredients of Section 273A of the Act, ie., made disclosures voluntarily and in good faith.
The next thing for this Court to analyse here is that Clause 5 of Section 273A of the Act clearly says that every order made under this Section shall be final and shall not be called into question by any court or any other authority. But, the order, which the petitioner refers here for his rescue, ie., the order dated 25.03.2014 passed by the Commissioner (Appeals) under Section 250(6) of the Act, is an appealable order and the same has already been put under challenge by the Department before the Income Tax Appellate Tribunal, where the order of the Commissioner (Appeals) was upheld. Therefore, it is clear that the order passed by the Commissioner (Appeals) reducing the penalty is not an order under Section 273A of the Act and therefore, this Court, with due respect to the decision of the Hon'ble Supreme Court, is inclined to infer that Section 279(1A) of the Act will not come to the rescue of the petitioner.
Since all the grounds raised by the petitioner for quashing the complaint lack merits, this Criminal Original Petition is liable to be dismissed and the same is accordingly, dismissed. Considering the age of the proceedings, the learned Additional Chief Metropolitan Magistrate (Economic Offences – 1), Egmore, is directed to expedite the trial and conclude the same, as expeditiously as possible. Consequently, connected miscellaneous petitions are closed.
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2019 (2) TMI 1918
Deduction u/s 35(1)(iv) - weighted deduction under section 35(2AB) - Disallowance of claim as no approval of expenditure has been received from the DSIR in form No.3CL - claim was not made by the assessee either in the original return of income or in the revised return of income - HELD THAT:- The Hon’ble High Court of Delhi in Maruti Suzuki India Ltd. Vs. Union of India [2017 (8) TMI 248 - DELHI HIGH COURT] had laid down that what was relevant was not the date of recognition or cutoff date mentioned in the certificate of DSIR or even the date of approval, but the existence of recognition. It was further held that if R&D centre is not recognized, it is not entitled to deduction; but if it is recognized, it is entitled to the benefit.
Tribunal in Cummins India Ltd. [2018 (5) TMI 1314 - ITAT PUNE] while deciding the issue of allowability of claim of weighted deduction under section 35(2AB) of the Act on the surmise that the prescribed authority had approved part of expenditure in Form No.3CL had held that once the facility has been recognized by the prescribed authority and an agreement has been entered into between the facility and prescribed authority, then the role of Assessing Officer is to look into and allow the expenditure incurred on in-house R&D facility as weighted deduction under section 35(2AB) of the Act.
Thus it is not the requirement of law to get any certification / approval of expenditure from the DSIR in form No.3CL, there is no merit in the orders of authorities below in denying weighted deduction under section 35(2AB) of the Act. It may further be pointed out that the assessee on a later date had received the said form No.3CL from the DSIR on 08.04.2013. Accordingly, we direct the Assessing Officer to allow weighted deduction at 150% of expenditure incurred in the hands of assessee under section 35(2AB) of the Act. Hence, revised ground of appeal No.1 raised by assessee is allowed.
Disallowance made under section 14A r.w.r. 8D - HELD THAT:- We find merit in the plea of assessee in this regard, where the assessee had sufficient own funds to make the aforesaid investments and applying the ratio laid down by the Hon’ble Bombay High Court in CIT Vs. HDFC Bank Ltd. [2014 (8) TMI 119 - BOMBAY HIGH COURT] we hold that no disallowance is to be made on account of interest expenditure under Rule 8D(2)(ii) of the Rules. Hence, ground of appeal No.4 raised by assessee is allowed.
Disallowance of commission paid to liaison representatives - HELD THAT:-From the details furnished by assessee it transpires that liaison representatives were involved in technical issues such as quality control, chemical composition as well as day-to-day issues on sample approval, etc. and especially in view of statement recorded during Survey, we find merit in the plea of the learned Departmental Representative for the Revenue that total expenditure on this behalf cannot be allowed in the hands of assessee. The CIT(A) while allowing the claim in the hands of assessee had in turn, relied on the decision of Tribunal in the case of a Limited Company, whereas the assessee before us was a Private Limited Company and the said ratio cannot be applied. Accordingly, in order to plug loopholes and leakage of revenue, we direct the Assessing Officer to disallow 5% out of commission and liaison expenses.
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2019 (2) TMI 1917
Admissibility of Sections 11 and 12 - AO had ruled that the assessee was disentitled to the exemptions - CIT(A) and the ITAT, h reversed the decision and relied upon the decision of this Court in India Trade Promotion Organization vs. DGIT [2015 (1) TMI 928 - DELHI HIGH COURT].
Double benefit claimed by the assessee i.e. towards depreciation reported in respect of the assets acquired out of previous exempt income - Tribunal relied upon a binding decision of the Supreme Court in CIT vs. Rajasthan & Gujarat Charitable Foundation [2017 (12) TMI 1067 - SUPREME COURT]
Both questions urged are answered by the decisions of this Court and the Supreme Court. Therefore, no substantial question of law arises.
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2019 (2) TMI 1916
Addition invoking provisions of section 43CA - difference between stamp duty valuation and actual consideration - application of the case laws with regard to Section 50C - HELD THAT:- We refer to the decision of the Co-ordinate Bench of the Tribunal, Pune in the case of Rahul Construction [2012 (1) TMI 229 - ITAT PUNE] there is a wide variation between the two values and that they are based on some estimate. Difference between the sale consideration shown by the assessee and the fair market value determined by the DVO which is less than 10%. In view of the fact that valuation is always a matter of estimation where some difference is bound to occur. The Assessing Officer was not justified in substituting the value determined by the DVO for the sale consideration disclosed by the assessee. Therefore, Assessing Officer was directed to take ₹ 19,00,000/- only as the sale consideration of the property.
This case of Rahul Construction Vs. DCIT (supra.) was also followed by the Pune Bench of the Tribunal in [2012 (1) TMI 229 - ITAT PUNE] therein also, the benefit of 10% difference of sale value was allowed in favour of the assessee. Thus, following the aforesaid decisions, we are of the considered view that difference between the sale consideration of the property shown by the assessee and the fair market value determined by the DVO under section 50C(2) being less than 10%, the Assessing Officer is not justified in substituting the value determined by the DVO for the sale consideration disclosed by the assessee. - We set aside the order of the Ld. CIT(Appeal) and allow the appeal of the assessee.
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2019 (2) TMI 1915
Computation of deduction under section 10A - exclusion of expenditure from both the export turnover and total turnover for the purposes of computation of deduction u/s 10A - HELD THAT:- This issue before us stands covered by the decision of the Hon’ble Karnataka High Court in the case of CIT Vs. Tata Elxsi Ltd.[2011 (8) TMI 782 - KARNATAKA HIGH COURT] which proposition has been upheld by the Hon’ble Apex Court in the case of CIT Vs. HCL Technologies Ltd., [2018 (5) TMI 357 - SUPREME COURT]. The only grievance of Revenue in the grounds raised was that the decision of the Hon’ble Karnataka High Court in the case of Tata Elxsi Ltd., (supra) had not attained finality and an SLP by the Department is pending before the Hon’ble Apex Court. Now, in view of the decision of the Hon’ble Apex Court in HCL Technologies Ltd.,[2018 (5) TMI 357 - SUPREME COURT]this issue is no longer res integra and therefore we find no reason to interfere in the decision of the DRP on this issue.
Working Capital Adjustment - DRP in restricting the working capital adjustment on the basis of advances received from AEs in the absence of debtors and inventory in the case of the assessee for calculating the cost of working capital built in the profit margin - Based on the discussions in the body of the TP order, the assessee had raised objections before the DRP, which had issued directions that no such restriction shall be made on the working capital adjustment and it shall be granted as per actuals. As the working capital adjustment has been granted at actuals i.e., (-)1.40%, without making any restriction as contended by Revenue in the grounds of appeal, ground Nos. 4 and 5 raised on this issue are infructuous as they require no adjudication and are accordingly dismissed as infructuous.
Exclusion of M/s. Acropetal Technologies Ltd., (Acropetal) - DRP has not adjudicated on the functional comparability of ‘Acropetal’ vis-à-vis the assessee in the case on hand. Instead, the DRP has rendered a finding that the services rendered by ‘Acropetal’ are predominantly on-site services and applied the on-site filter. The DRP further directed that ‘Acropetal’ needs to be excluded from the set of comparables as its employee cost is less that 25% and employee cost filter should be applied.
As seen that neither the assessee in its TP study nor the TPO has applied the on-site filter while determining the ALP. Similar is the case with employee cost filter; which has neither been applied by the assessee nor by the TPO while determining the ALP. As such the DRP has applied these filters suo moto. When new filters are applied, it is necessary to examine whether such an application of a new filter has any impact on the other companies about their inclusion or exclusion. It is also seen that the DRP has not rendered a finding on the functional comparability of ‘Acropetal’ even though a specific ground has been raised and the judicial decisions in this regard have been brought to the notice of the DRP. In view of the above, we deem it appropriate to remand the issue of comparability of Acropetal Technologies Ltd., back to the file of the TPO with a direction that the two filters i.e., on-site filter and employee cost filter, applied by the DRP suo moto, may be applied to the other comparable companies as well and functional capacity be decided.
Exclusion of ICRA Online Ltd. and Sundaram Business Services Ltd. - In the absence of any such discussion or decision being rendered, as claimed, applying the 75% export earning filter suo moto is not tenable. Further, if any new filters are applied, it is imperative to examine whether the application of such a filter has any impact on the other companies about their inclusion or exclusion in the set of comparables. That ‘ICRA’ was not selected as a comparable by TPO’s in other cases cannot be a valid ground for exclusion in this case also, unless the reasons for such exclusion in other cases are known. In view of the above, we deem it appropriate to remand the issue of comparability of this company i.e., ICRA Online Ltd., to the file of the TPO with the direction that the filter applied suo moto by the DRP in the case of ‘ICRA’ be applied to the entire set of comparable companies.
Company, ‘Sundaram’, was selected as a comparable by the TPO and the assessee had accepted the same without any objection. We find that the DRP suo moto examined the comparability of this company and directed its exclusion from the set of comprables on the ground that it fails the 75% export earning filter, a new filter introduced by the DRP, which was not applied either by the TPO or the assessee. Since we have taken the stand that if any new filter is applied, it should be applied uniformly on the entire set of comparable companies, we deem it appropriate to remand the issue of comparablity of this company, Sundaram Business Services Ltd., back to the file of the TPO with a direction that the 75% export earning filter, applied, suo moto, by the DRP, be applied on the entire set of comparable companies.
Exclusion of Infosys BPO Ltd., (Infosys) on grounds of functional dissimilarity, the application of new filters by the DRP will have no bearing on its exclusion or inclusion as it would continue to remain excluded on grounds of functional comparability. Therefore, we find there is no need to remand the comparability of this company to the file of the TPO, as sought for by the learned DR. Consequently, ground of Revenue’s appeal is dismissed.
Exclusion of Eclerx Services Ltd. - No infirmity in the order of the DRP and the direction of the DRP to exclude ‘Eclerx Services Ltd.,’ from the set of comparables is upheld, since this company ‘Eclerx’ is excluded on grounds of functional dissimilarity, the application of new filters by the DRP will have no bearing on its exclusion or inclusion as it would continue to remain excluded on grounds of functional comparability. Therefore, there is no need to remand the matter to the TPO, as sought for by the learned DR.
Accentia Technologies Ltd., be excluded from the list of comparable companies on grounds of functional dissimilarity.
Jeevan Scientific Technology - new filters applied suo moto may be applied on the other comparable companies as well and then the inclusion/exclusion of this company as a comparable be decided.
Comparability of R Systems International Ltd - Respectfully following the decision of Mercer Consulting Pvt. Ltd., [2016 (8) TMI 1163 - PUNJAB AND HARYANA HIGH COURT], we also deem it appropriate to follow the principle that if data, relating to the financial year in which the international transaction has been entered into, is directly available from the annual accounts of that company, then the company ought be examined / considered for comparability. We, accordingly, remand the matter of comparability of R Systems International Ltd., back to the file of the AO to examine / decide afresh.
Short Credit for TDS - HELD THAT:- AO directed to examine and verity the assessee’s claim in respect of grant of short credit for TDS in accordance with law.
Charging of interest u/s 234D - HELD THAT:- The charging of interest is consequential and mandatory and the AO has no discretion in the matter. This proposition has been upheld by the Hon’ble Apex Court in the case of Anjum H. Ghaswala [2001 (10) TMI 4 - SUPREME COURT] therefore, uphold the action of the AO in charging the assessee the aforesaid interest u/s 234D of the Act. The AO is, however, directed to recompute the interest chargeable u/s 234D of the Act, if any, while giving effect of this order.
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2019 (2) TMI 1912
Disallowance of interest expenditure u/s 36(1)(iii) - assessee company has used the borrowed funds for non-business purpose - CIT-A deleted addition - HELD THAT:- Since the facts of the instant case are identical to the facts of the case decided by the Tribunal in assessee’s own case for assessment years 2007-08 and 2010-11 [2019 (1) TMI 992 - ITAT DELHI], therefore, in absence of any contrary material brought to our notice against the order of the Tribunal and considering the fact that the own capital and free reserves are substantially higher than the investments, we find no infirmity in the order of the CIT(A) deleting the disallowance made by the Assessing Officer u/s 36(1)(iii). We, therefore, uphold the order of the CIT(A) and the grounds raised by the Revenue are dismissed.
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2019 (2) TMI 1911
Deduction u/s 80HHC - Interest charged /earned from purchasers for the period of 90 days on the delayed payment of sale consideration - whether can be said to be income from other sources and /or it can be said to have nexus with its business activities for which the assessee is allowable the deduction under Section 80HHC? - HC held that interest earned /charged by the assessee on the delayed payment of sale consideration (for 90 days) is not required to be excluded for the purpose of computation of deduction under Section 80HHC - HELD THAT:- SLP dismissed.
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2019 (2) TMI 1910
Addition u/s 68 - unexplained share application money where the identity, genuineness and creditworthiness of the lenders were not proved - HELD THAT:- Assessee has raised money by way of share capital and share application money from 12 parties during the financial year 2006-07 from Shri Pravin Kumar Jain group companies. A search conducted on the said group revealed that the said group was engaged in providing hawala accommodation entries without any business. This was also confirmed by the directors during the recording of their statements during search. So the AO treated the entire money raised as bogus share capital and share application money just on the basis of statements of the directors of these companies.
Asessee’s name was nowhere mentioned by the said entities during search to be beneficiaries of such entries. During the course of assessment proceedings the assessee filed various evidences such as share application forms along with letters of acceptance, confirmation letters, copies of PAN numbers, copies of ITR acknowledgment, balance sheets, profit and loss accounts, master data of companies from MCA website, copies of bank accounts to evidence the transactions through banking channels, copies of MA & AA and share certificates of all the companies. All these transactions were entered into through banking channels and these companies are active on the website of Ministry of Corporate Affairs. Despite the filing all these information with the AO, he did not conducted any verification or investigation to dig out the truth but acted on the information supplied by the investigation wing. CIT(A) considered the contentions of the assessee in detail and came to the conclusion that assessee has duly proved the genuineness, identity and creditworthiness of the parties by filing all the necessary evidences during assessment proceedings.
Addition made under Section 68 is bad in law. These Companies are the assessee's Shareholders - Decided against revenue.
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2019 (2) TMI 1909
Addition u/s 40(a)(ia) - clearing and forwarding expenses in connection with imports - no TDS was deducted on reimbursement of the expenses - AO took the view that assessee could not pick and choose the nature of expenses on which TDS was required to be deducted - HELD THAT:- Before us the ld AR for the assessee has made two fold submissions that (i) the expenses was paid on account of reimbursement, therefore, no TDS was require to be made and (ii) that the receipt has included the said payment in its return and has paid the tax on such income. Therefore, Considering the second contention of the assessee in view of the decision of Tribunal in Ranjana Roy versus ITO . [2015 (12) TMI 1846 - ITAT KOLKATA], in ITO Vs Opera Global Pvt Ltd. [2012 (6) TMI 704 - ITAT, NEW DELHI] and in Bridgegopal Madhusudhan Bhattad [2015 (6) TMI 1045 - ITAT NAGPUR]that when the recipient has paid tax on the income no disallowance can be made in the hand of payer. Hence, this issue is restored to the file of assessing officer to verify the facts if the recipient has included that payment in its income and paid the tax and pass the order in accordance with law. Needless to order that before passing the order the assessing officer shall grant opportunity of hearing to the assessee and to furnish necessary evidences. In the result this ground of appeal is allowed for statistical purpose.
Disallowance of interest expenses - assessee submits that assessee debited interest and financial charges towards the interest paid to Bank and on unsecured loans - HELD THAT:- Assessee has shown his own funds of ₹ 5.68 crore, this fact has been duly recorded and accepted by learned Commissioner (Appeals) - The assessee has made a booking of office premises with Lotus Grhinirman Private Ltd. We have noted that the fund advanced by assessee is of ₹ 45 lacks on account of booking of office premises. The assessee has sufficient interest free funds in the form of reserve and surplus and share capital of ₹ 5.68 Crore. Therefore, keeping in view, the ratio of the decision of Hon’ble Bombay High Court in CIT Vs Reliance Utility and Powers Ltd [2009 (1) TMI 4 - BOMBAY HIGH COURT], no interest disallowance is warranted, when the interest free funds available with the assessee is far more than the investment made by the assessee. Therefore respectfully following the decision of Hon’ble Bombay High Court, we direct the assessing officer to delete the disallowance - In the result, ground no.2 is allowed.
Disallowance sundry balance written off - AO disallowed the entire claim holding that the assessee has not furnished detailed for justifying the decision of write off, the Assessing Officer also noted that certain write off were pertaining to Cenvat Duty, Education Cess etc. - HELD THAT:- As decided in M/S. NCS DISTILLERIES P. LTD., HYDERABAD [2014 (9) TMI 1160 - ITAT HYDERABAD] write off of Cenvat credit by the assessee in its books of account is thus allowable as business expenditure under the provisions of section 37(1) of the Act relatable to the year, in which the manufacturing activities are closed down by the assessee. The claim of the assessee is that they have closed down the business pertaining to the aluminum business and the excess credit of Cenvat was not utilized pertaining to that business. Therefore, we direct the Assessing Officer to verify the fact about the availability of Cenvat Credit to the assessee at the end of relevant Financial Year and allow write off of Cenvat credit.
Sundry balance written off - Assessee has given advances for purchasing various materials like steam coal, LAM Coke and other store consumable - The Hon’ble Apex Court in T.R.F. Ltd. vs. CIT [2010 (2) TMI 211 - SUPREME COURT]held after 1st April 1989, it is not necessary for the assessee to establish that the debt, in fact, has become irrecoverable. It is enough if the bad debt is written off as irrecoverable in the accounts of the assessee. Considering the law laid down by Hon’ble Apex Court, the sundry balances which has been written off by the assessee in its books of account is sufficient to claim the bad debt. In the result, this part of ground of appeal is allowed in favour of assessee.
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2019 (2) TMI 1901
Disallowance u/s 14A r.w.r. 8D - Suo moto disallowance by assessee - HELD THAT:- As the assessee itself had offered a disallowance under Sec.14A, therefore, the CIT(A) had in all fairness restricted the disallowance upto the said amount. We thus not finding any infirmity in the order of the CIT(A) who as observed by us hereinabove had restricted the addition to the extend as offered by the assessee in its return of income, uphold the same to the said extent.
Adjustment made by the A.O to the ‘book profit’ under Sec. 115JB on account of expenses relatable to exempt income under Sec.14A. - HELD THAT:- As relying on VIREET INVESTMENT (P.) LTD. [2017 (6) TMI 1124 - ITAT DELHI] the adjustment made under Sec. 14A is not to be considered for computing the ‘book profit’ under Sec. 115JB - We thus uphold the order of the CIT(A) to the said extent. Decided against revenue.
Additional depreciation u/s 32(iia) - A.O being of the view that as per the provisions of Sec.32(1)(iia) of the I.T. Act the additional depreciation was to be allowed @ 20% of the actual cost of machinery of plant in the year in which it had been acquired and installed and could not be spilled over to the subsequent years, thus declined to allow the additional claim of depreciation @ 10% - HELD THAT:- There is no restriction made available on the statute as per which the assessee who had put to use the new machinery for a period of less than 180 days during a year, would be divested of its entitlement to claim the balance 10% of the additional depreciation in the succeeding assessment year. Our aforesaid view is fortified by the judgment of CIT, Madurai , Vs. T.P. Textiles (P) Ltd [2017 (3) TMI 739 - MADRAS HIGH COURT] and Rittal India Pvt. ltd. [2016 (1) TMI 81 - KARNATAKA HIGH COURT]. We thus being of the considered view that no infirmity arises from the order of the CIT(A) who had rightly deleted the disallowance of additional depreciation.
Bad debts claim - assessee sought adjudication on its claim of ‘bad debt’ on the basis of the facts which were already available on record - HELD THAT:- As per the settled position of law as, we are of the considered view that no infirmity does emerge from the order of the CIT(A) who had directed the A.O to consider the said claim in the backdrop of the judgment of the Hon’ble Supreme Court in the case of TRF Ltd Vs. CIT [2010 (2) TMI 211 - SUPREME COURT] and the CBDT Circular No. 12/2016, dated 30.05.2016. We thus finding ourselves to be in agreement with the view taken by the CIT(A), uphold his order to the said extent. The Grounds of appeal No. 5 and 6 raised by the revenue before us are dismissed.
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2019 (2) TMI 1900
Addition u/s. 41(1) - cessation of liability - AO observed from the schedule of sundry creditors that there were creditors whose outstanding balances as on 31/03/2012 & 31/03/2013 had remained the same - HELD THAT:- CIT(Appeals) observed that the assessee has not filed single submission to controvert the findings of the AO. In the statement of facts, the assessee has filed only the order of Assessing Officer without any new supporting documents to represent her case. This fact shows that the matter needs to be remanded to the file of Ld. CIT(Appeals) for adjudication on merits.
Accordingly, in the interest of justice, we set aside the order of Ld. CIT(Appeals) and restore this issue i.e. with regard to the addition made u/s.41(1) of the Act back to the file of the Ld. CIT(Appeals) to adjudicate on merits after providing reasonable opportunity of hearing to the assessee. At the same time, we direct the assessee to appear before the Ld. CIT(Appeals) with relevant documents and evidences in support of her case and to represent the case on merits, immediately on receipt of this order. Any service of notice is dispensable. Appeal of the assessee partly allowed for statistical purposes.
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2019 (2) TMI 1899
Reopening of assessment u/s 147 - capital gain computation - assessee had not shown any long term capital gain under the provision of section 45(2) r.w.s. 2(47) and section 55(2)(b)(i) - CIT(A) has assigned the rate for land at ₹ 900/- per sq. mt. on the date of transfer of the aforesaid land as to the firm - HELD THAT:- We observed there was no material on record which could have clarified the impugned discrepancy of incorrect reporting of income by the assessee. AO was having reasons of to believe that income chargeable to tax has escaped assessment for the year under consideration. After considering the above facts and circumstances as elaborated supra we justify the findings of the ld. CIT(A) that the assessing officer reopened the assessment with valid reason. Therefore, the appeal of the assessee on this issue is dismissed.
Capital gain computation - AO held that non-agricultural land of 4960 kg mtrs held as stock in trade by the assessee was brought as capital contribution to the firm M/s. C.N. Builders and Developer on 18-10-2003 - HELD THAT:- We observe that impugned land forming stock-in-trade of assessee was transferred as a capital contribution by assessee therefore profits or gains arising from transfer of this asset would be chargeable to tax as assessee's income of previous year in which such transfer has taken place. Lower authority has failed to make any reference to the Valuation Officer u/s 55A of the act to determine the fair market value of the asset we direct the assessing officer to adopt rate of ₹ 900/- per sq. mts for the value of the impugned land as determined by the Ld.CIT(A) in his order dated 21st July 2010.Accordingly this ground of appeal of the assessee is partly allowed.
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2019 (2) TMI 1897
Disallowance u/s 14A r.w. Rule 8D(2)(iii) - HELD THAT:- This issue is covered in favour of the assessee in various decisions of the ITAT and one of such decisions is the decision of the Special Bench of Delhi ITAT in the case of Vireet Investments Private Limited [2017 (6) TMI 1124 - ITAT DELHI] wherein it has been held that the disallowance under Rule 8D(2)(iii) can be only of the average of investments which have yielded exempt income. Respectfully following the same, the additional grounds of appeal are allowed.
Computation of income u/s 115JB - This issue is also covered in favour of the assessee by the Special Bench, ITAT Delhi decision in the case of Vireet Investments Private Limited (supra) wherein it was held that the computation u/s 115JB should be made without resorting to the computation as contemplated u/s 14A r.w. Rule 8D of the IT Rules, 1962. Accordingly, grounds raised by the assessee are allowed.
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2019 (2) TMI 1895
Correct head of income - service charges and furniture hire charges received by the assessee -“income from other sources” or “profit and gains of business and profession” - HELD THAT:- There is no error in the order of the Ld. CIT(A) on the issue in dispute and accordingly we uphold that no business activity was carried out by the assessee during the year under consideration and the income from service charges and hire charges is assessable under the head “income from other sources”. The ground No. 1 of the appeal is accordingly dismissed.
Disallowance of the various expenses claimed - in absence of any business activity same cannot be allowed to the assessee except expenses incurred relevant to the income assessed under the head “income from other sources”- HELD THAT:- CIT(A) has examined each and every expenses sustained by him. As regard the “watch and ward”, “water and electricity”, “telephone expense”, “Internet expense” and “office maintenance expenses” towards the premise at B-40, Maharani Bagh, he allowed 1/6th of the expenses in view of the part of the building was used as registered office and disallowed the balance as major part of the premise was used for residential purpose of the directors and their family.
Legal & professional charges, the Ld. CIT(A) has allowed payment of ₹ 2, 78, 700/-to m/s Vaish Associates against income from other sources. The expenses of ₹ 22,060/- have been found related to let out property and accordingly he has disallowed.
Expenses paid to two professionals namely Mr. Suren Singh Rasaily and Mr. Dilip Sudhakar Deshmukh, the Ld. CIT(A) himself summoned the persons and carried out the enquiries, and after detailed enquiry, he concluded that payment of professional charges were not incurred wholly and exclusively for the purpose of earning “income from other sources”. Similarly he has examined allowability of the depreciation allowance , office maintenance expenses and other expenses under the head “income from other sources”. We do not find any error in the above factual findings of the Ld. CIT(A).
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2019 (2) TMI 1893
Legality of the order being passed by AO on a non-existing entity - Cairn India Ltd is an amalgamated company, which has seized to exist in the eyes of law pursuant to amalgamation with Vedanta Ltd.- HELD THAT:- Assessment on a company, which has been dissolved/amalgamated u/s 391 and 394 of the Companies Act 1956 is invalid and further held that framing assessment on a non-existing entity is a jurisdictional defect which cannot be cured u/s 292B of the Act. See DIMENSION APPARELS PVT. LTD. [2014 (11) TMI 181 - DELHI HIGH COURT]
We have no hesitation in holding that the assessment order and the order of the TPO are non est. Since the foundation has been removed, the super structure must fall. See MARKETING SERVIEING PVT. LTD. [2009 (9) TMI 917 - DELHI HIGH COURT] - Decided in favour of assessee.
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