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Income Tax - Case Laws
Showing 201 to 220 of 10077 Records
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2019 (12) TMI 1195
Assessment order passed under section 143(3) r/w section 254 - HELD THAT:- We hold that the present appeal filed by the assessee being not against an appealable order as provided under section 253 of the Act, is not maintainable.
We must observe, the assessee may be having a strong case in its favour on the issue of not forwarding the draft assessment order before passing the final assessment order. However, that issue relating to the validity of the impugned assessment order has to be decided by the appropriate authority as provided under the statute.
In view of the aforesaid, since the appeal of the assessee is not maintainable, we do not find any justifiable reason to entertain the grounds raised by the assessee including the additional grounds. Therefore, the present appeal filed by the assessee deserves to be dismissed in limine without going into the merits of the various issues raised by the assessee.
Accordingly, we do so. However, as observed by the co–ordinate Bench in case of Tevapharm India (P) Ltd. V/s ACIT [2018 (4) TMI 34 - ITAT DELHI] it is open to the assessee to file an appeal before the first appellate authority and contest all the issues including the validity of the order passed by the Assessing Officer.
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2019 (12) TMI 1194
Disallowance of deduction u/s 43B - sum represented deposit of electricity duty in a designated non-lien bank account - HELD THAT:- considering the declaration filed by the assessee in Form No.8 this issue is restored to the file of the AO for a fresh consideration as per the final outcome of assessee’s appeal
Addition u/s 14A - HELD THAT:- In absence of separate investment account, it is presumed that investment was taken place from common accounts which consist of borrowed fund, over draft account and other trading account utilised for business purpose meaning thereby the AO categorically held that the assessee has used interest bearing borrowed funds, over draft and other trading funds for the purpose of investment which earned exempt dividend income of the assessee. Also observed by the authorities below that investment activities and business activities has its separate nature in principle and no expenditure is allowable on investment activities, which brings exempt dividend income of the assessee. The AO went up to the extent to observe that if the interest bearing fund would have not utilised for investment purpose, the interest payment expense would have been reduced in accordance with the taxable income of the assessee.
AO was right in invoking the provisions of section 14A r.w. rule 8D of I.T.Rules. However, the ld CIT(A) after accepting the alternate plea of the assessee and the computation made thereto by the AO, restricted the disallowance to the amount of ₹ 48,17,000/- under Rule 8D. After carefully considering the orders of lower authorities we are of the view that the CIT(A) was right in restricting and confirming the addition. We, accordingly uphold the findings of the CIT(A) and dismiss the ground of appeal of the assessee.
Addition u/s.2(24)(x) - Delayed contribution to EPF was deposited by the assessee - HELD THAT:- In the instant case, it is not in dispute that the contribution to EPF was deposited by the assessee before due date of filing the return of income u/s.139(1) - In view of above findings of Hon’ble Delhi High Court in the case of CIT vs. Bharat Hotels Ltd. [2018 (9) TMI 798 - DELHI HIGH COURT ] the issue is restored to the file of the Assessing Officer to examine the contributions made with reference to the dates when they were actually made and grant relief to such of claim which qualified for such relief in terms of prevailing provisions of the Act. We clearly obverse that the assessee would be entitled to deductions in terms of section 36(1)(va)
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2019 (12) TMI 1193
Assessment u/s 153A - unexplained expenditure u/s 69C - HELD THAT:- Addition made by the Assessing Officer based on the entries in the books found, belonging to and seized at the premises of the third party, in the absence of cross examination of such party based on which the addition has been made cannot be held to be sustainable in the eyes of the law. - Decided in favour of assessee.
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2019 (12) TMI 1192
Disallowance of expenses incurred towards staff welfare, guest house expenses, club subscription expenses and cost of services - addition made as expenses were not incurred wholly and exclusively for the purposes of the business of the assessee - HELD THAT:- Assessee could not provide complete details/evidences/invoices/bills etc. of these staff welfare expenses and cost of other services to prove that these expenses were incurred wholly and exclusively for the purposes of the business of the assessee and hence under these circumstances and keeping in view that it is an old litigation with a view to end litigation and being fair to both the rival parties, we allow 50% of staff welfare expenses and cost of other services claimed by the assessee as business expenses , while we affirm disallowance of balance 50% of staff welfare expenses and cost of other services claimed by assessee in return of income filed with Revenue.
Club expenses disallowance - We hold this issue in favour of Revenue and hold that club expenses incurred by assessee shall not be allowed as business deduction.
Disallowance u/s 35(2AB) - AO disallowed weighted deduction claimed by assessee u/s 35(2AB) of the R&D expenditure incurred by assessee, while the learned CIT(A) allowed the claim of the assessee for weighted deduction of R&D expenses - HELD THAT:- As per facts emerging from records, the AO has given clear and positive finding that evidences in support of expenses incurred on in-house approved R&D facility are not submitted by assessee during the course of assessment proceedings and there is no findings on this issue by learned CIT(A) but we have already held that no deduction u/s 35(2AB) of the 1961 Act can be allowed to assessee on this short ground of non entering into an agreement for cooperation with Secretary, DSIR and for audit of accounts of approved R&D facility as held by us in this order and in case if at any stage our above decision is over-ruled by Hon’ble Superior Courts on that count, then the matter shall be remitted back to the file of the AO for denovo adjudication for verifying the eligible expenditure spent by assessee on its approved inhouse R&D facility for computing weighted deduction u/s 35(2AB) of the 1961 Act , after considering all the evidences/explanations which the assessee may like to rely in its defense and after giving proper and adequate opportunity of being heard to assessee in accordance with principles of natural justice in accordance with law .
Disallowance of proportionate interest expenditure on interest free advances made by assessee to its group concerns - as stated by AO to be made out of interest bearing funds and the AO has disallowed proportionate interest expenses as the assessee has failed to prove commercial expediency in granting these interest free advances to group companies - HELD THAT:- The assessee has issued Floating Rate Notes(FRN) to the tune of US $ 120 Million in the year 1996 which were due for repayment/maturity in 2003. These FRN’s were denominated in Foreign currency carrying interest and the assessee had incurred interest expenses as well loss on foreign exchange fluctuations on these FRN’s. It was also observed by tribunal that said FRN’s were issued for financing the import into India of capital goods for its operations and projects in which the assessee is involved and for general corporate purposes permitted by Government of India, which is stated in the offer document issued by assessee. It is also observed that Chennai-tribunal in a decision rendered in assessee’s own case [2016 (12) TMI 1800 - ITAT CHENNAI] of which one of us being Hon’ble Judicial Member was part of Division Bench who pronounced that order) has remitted the matter back to the AO for fresh adjudication as to allowability of proportionate interest expenses with interest free advances made to associated companies - we are of the considered view that the matter is required to be restored to the file of the AO for fresh adjudication de-novo
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2019 (12) TMI 1191
Revision u/s 263 - related parties u/s.40A(2)(b) - HELD THAT:- AO had again issued notice u/s.142(1) of the Income Tax Act dated 03.11.2016 which is at page 24 to 26 and in this respect the reply was also filed by the assessee before the AO which is at page no.20 to 23 and had filed all the replies along with documents and participated into the enquiry proceedings being carried out by the AO. We, further noticed that since the assessee has filed the audited reports containing all the details regarding related parties u/s.40A(2)(b) along with name, PAN, Relations, nature of transactions and payments made. Even otherwise, the assessee has also duly furnished the report from expert in Form 3CEB as required by Law, wherein all the details of payment made related to party were mentioned i.e. name of persons with whom specifically domestic transactions as entered into, description of transaction along with quantitative details if any. Total amounts paid or payable in the transaction as per the books and as computed by the assessee having regard to arm’s length price. The method used for determining the arm’s length price which also goes to show that there is nothing on the record to suggest that assessee had made any excessive payments to the related parties which has caused loss to the Revenue.
Payment of bank guarantee commission and renewal fees - HELD THAT:- With regard to payment of bank guarantee commission and renewal fees is concern, in this regard, we have seen from the record that specific query was raised by the AO and the assessee had submitted ledger account vide letter dated 25.11.2016 and also duly replied to the query vide letter dated 26.12.2016.
All those facts goes to show that the AO has applied his mind and after considering the same and has passed the assessment order u/s.143(2) of the Act and hence it cannot be said that this is a case of no enquiry. It is well settled that both the conditions vis-à-vis before of AO should be erroneous and assessment was prejudicial to the interest of Revenue and both those conditions should be cumulatively specified by the ld.Pr.CIT.
In the present case the matter belongs to A.Y. 2014-15 and the Explanation 2 was inserted in the Act u/s.263 by Finance Act 2015 w.e.f 01.06.2015. Even otherwise, taking into consideration the cumulative facts observed by us in the present case as well as the legal proposition laid down by the higher courts we are of the view that in the present case the AO had made enquiry and assessee has also placed on record all the documents as were required by the AO in respect of both the issues as now raised by the ld.Pr.CIT. Thus, the order passed by the AO is neither erroneous nor prejudicial to the interest of the Revenue.
Merely just because the view taken by the AO was not found acceptable does not mean that the AO has failed to make requisite enquiries. Thus, the view taken by the AO was plausible view, which cannot be disturbed by the Ld. Pr.CIT. Therefore, the ld. Pr.CIT was not correct in exercise the jurisdiction under section 263 of the Act. In view of these facts and circumstances, we quash the proceedings initiated in the impugned order passed under section 263 of the Act and allow the appeal of the assessee.
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2019 (12) TMI 1190
Penalty u/s. 271C - TDS default - Period of limitation u/s 275 - Competent officer - reasonable cause for non-compliance with the provisions as envisaged u/s.273B - Assessee in default for not deducting tax at source u/s.201(1) and also levying interest on tax not deducted at source from the date on which tax ought to have paid to the credit of the Central Government till the date on which the payments are made u/s. 201(1A) - HELD THAT:- There was actually non-deduction of tax at source by the Assessee but the TDS deducted was given credit only on the basis that the payees have filed their returns of income showing the amounts received from the Assessee and hence the Assessee was given the benefit of TDS deducted to that extent as per the decision of the Hon’ble Supreme Court in the case of Hindustan Coco Cola Beverage Pvt.Ltd. [2007 (8) TMI 12 - SUPREME COURT] .
The plea of the Assessee that failure to deduct tax at source was unintentional and was under the bonafide belief that tax is not deductible on payments in question has to be accepted in the given facts and circumstances of the case. It is also not disputed that the default was noticed only at the time of Survey Proceedings. Taking into consideration the nature of business and small town in which the Assessee carries on business and other circumstances, we are of the view that this is not a fit case for levy of penalty u/s.271-C as the circumstances pointed out above would be reasonable cause for the failure of the Assessee to deduct/short deduct tax at source. We therefore cancel the order imposing penalty u/s.271-C - Decided in favour of assessee.
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2019 (12) TMI 1189
Reopening of assessment u/s 147 - addition u/s 68 - HELD THAT:- AO has followed the due procedure of law and also had specific information in his possession, received from the DIT(Inv.) which indicated that certain amounts had been received in the form of bogus share capital/premium/loan from Sh. Surinder Kumar Jain who were entry operators.
AO has elaborately discussed in the assessment order as to how the amounts received in the form of share capital/share premium etc, had not been properly examined at the time of earlier assessment and also how this information was fresh information and specific in nature, which clearly indicated that there was omission/failure on the part of the assessee to disclose fully and truly all material facts necessary for assessment.
AO has also relied upon various judicial pronouncements stated in the assessment order to highlight such omission or failure to disclosed fully and truly all material facts what clearly justified reopening of the assessment beyond four years.
In the present case there was enough evidence and justification with the AO to reopen the assessment beyond period of four years. It has been widely held by the Courts that it is not necessary to prove beyond doubt that income has escaped assessment and it is sufficient that the AO has recorded his reasons and followed the due procedure of law for reopening of the assessment. In .view of factual matrix of the present case, I do not find any reason to interfere with the findings of the AO that this was a fit case for reopening of the assessment and accordingly the contentions and Grounds of the appellant are dismissed.
Addition on account of share capital and share premium - In the factual matrix of the present case, where entries had been taken from paper companies and Credit worthiness of the Parties as well as the genuineness of the transaction had not been discharged by the appellant, there was no justification to accept the contentions of the AR Of the appellant that the additions were not justified. Accordingly, after careful consideration of the facts of 'the present case, there is no material or submissions provided by the AR of the appellant, which calls for any interference In the decisions of the AO. Accordingly, this addition of ₹ 90 Lacs made by the AO is upheld. These Grounds are therefore dismissed.
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2019 (12) TMI 1188
Disallowance u/s 41(1) - whether merely because assessee has shown the outstanding liability for years and non-furnishing of complete details, cannot be the reason for considering the liability has ceased to exist? - HELD THAT:- Liability has not ceased. The facts remain undisputed by both authorities are that these amounts were debited by the assessee and allowed by the Revenue. We find that the impugned addition was made by the Revenue authorities by doubting existence of these liabilities and that the assessee has not written back and continue to show these liabilities as outstanding in the balance sheet.
AO has not brought any evidence on the record to show that liability has ceased. The assessee has not written off the liability in the accounts. Therefore, there would not be any addition under section 41(1) of the Act. Hon'ble High Court in the case of Bhogilal Ramjibbhai Atara [2014 (2) TMI 794 - GUJARAT HIGH COURT] considered this aspect and observed that even if debt itself is found to be non-genuine from the very inception that also in terms of section 41(1) of the Act, there is no solution for that. In other words, addition cannot be made unless liability in the accounts has been written off. - delete the disallowance - Decided in favour of assessee.
Non-granting of set off of unabsorbed depreciation and carry forward of short term capital loss - HELD THAT:- CIT(A) has recorded a finding that no discussion on these issues has been made by the AO, and also the assessee has not made any submission on this ground. CIT(A) has set aside this issue to the file of the AO with direction to verify the records and allow the claim if allowable as per law. We are of the view that no prejudice will be caused to the assessee with this direction of the ld.CIT(A) to the AO, and therefore, no interference is called for on this issue.
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2019 (12) TMI 1187
Penalty u/s 271D - obtaining cash loan in contravention of section 269SS - the cash has been deposited directly in the Bank account of assessee, for which assessee has no control - reasonable cause u/s 273B - HELD THAT:- A.O. merely initiated penalty proceedings separately for violation of Section 269SS of the I.T. Act. He did not record any satisfaction under section 271D of the I.T. Act before initiating the penalty proceedings under section 271D of the I.T. Act. Further, the explanation of assessee on merit clearly suggest that assessee had a "reasonable cause" for violation to comply with the provisions of Law because no cash given directly to assessee but deposited at Shilong Branch over which assessee did not have any control. The assessee immediately acted on the matter and refunded the amount in question. The finding of fact recorded by Ld. CIT(A) have not been disputed through any evidence or material on record. Therefore, considering the issue in the light of "reasonable cause" under section 273B of I.T. Act, for failure to comply with the provisions of Law, no penalty is leviable in the matter.
Considering the above discussion in the light of judgment of the Hon'ble Supreme Court in the case of CIT vs. Jai Laxmi Rice Mills [2015 (11) TMI 1453 - SUPREME COURT] set aside the orders of the authorities below and cancel the entire penalty. - Decided in favour of assessee.
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2019 (12) TMI 1186
Assessment u/s 153A - Deduction u/s 80IA - HELD THAT:- In this case, there is no dispute that the assessee has filed the return of income on 28.11.2014 and the time limit for issue of notice u/s 143(2) was expired on 30.09.2015. As per the settled law, the AO is not permitted to make the addition u/s 153A in the completed assessments without the support of incriminating material. In the instant case, there was no incriminating material found and the assessee has filed the return of income claiming deduction u/s 80IA. The audit report in Form 10CCB was filed manually. Therefore, addition made by the AO without support of the incriminating material u/s 80IA is unsustainable, accordingly, we set aside the order of the Ld.CIT(A) and allow the appeal of the assessee.
Addition u/s 69A - survey u/s 133A was conducted in the business premises of Hira Panna Jewellers - HELD THAT:- Loose sheets were extracted from the computer of Hira panna Jewellers pertaining to the period of April 2014 from 01.04.2014, though it was mentioned as JKS, neither the assessee, nor Shri Mahendra Kumar Jain have accepted that loose papers do belong to them. The assessee bluntly denied and stated that these loose papers did not belong to the assessee.
The computer system found during the course of survey belonged to Hira Panna Jewellers, but not belonged to the assessee. As per section 292C of the Act, the loose sheets, books of accounts found during the course of search /survey are presumed to be belonging to the assessee, where the search or survey is conducted. In the instant case, survey was conducted in the business premises of Hira Panna Jewellers. Therefore, as per the presumption u/s 292C, loose sheets pertained to the Hira Panna Jewellers, but not to the assessee. Unless it is established that the loose sheets pertained to the assessee, the AO is not permitted to tax the contents or unexplained money or expenditure recorded in the loose sheets in the hands of the assessee. In the instant case, there was no material placed on record to show that the loose sheets were belonging to the assessee, therefore, the addition made by the AO in the hands of the assessee on account of unexplained money or expenditure is unsustainable.
Accordingly, we set aside the order of the Ld.CIT(A) and delete the addition made by the AO.
Deduction claimed u/s 80IA - mandation to file the audit report u/s 10CCB electronically - HELD THAT:- As per section 80IA, it is mandatory to file the audit report u/s 10CCB electronically and in the instant case, the assessee has failed to furnish the same. Therefore, we do not find any infirmity in the order of the Ld.CIT(A) and the same is upheld. Appeal of the assessee is dismissed on this ground.
Addition of unexplained jewellery - made the value of entire gold jewellery and silver articles as an addition since none of the family members filed the wealth tax returns or disclosed the same in the return of income - CIT(A) allowed 50% of jewellery as explained keeping in view the Board Circular and confirmed the balance addition - HELD THAT:- Since the assessee’s family consists of the assessee, his wife, daughter and son, the assessee is entitled for credit of 950 gms and the balance to be brought to tax. In the assessee’s case, gold jewellery ornaments found was only 792.50 gms., the entire jewellery is treated as explained and no addition is called for. However, we confirm the addition relating to the silver articles found during the course of search. Accordingly, appeal of the assessee is partly allowed.
Levy of interest u/s 234A, 234B and 234C is mandatory - We direct the AO to levy the interest correctly as provided u/s 234A, 234B and 234C of the Act.
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2019 (12) TMI 1185
Loss suffered by the assessee in the derivatives disallowed - HELD THAT:- Since the assessee has furnished all the documents along with bank transaction details, therefore, it cannot be held that primary onus cast upon the assessee has not be discharged. However, at the same time the broker who has carried out such a transaction could not corroborate or confirm the transaction as the notice sent to the broker came back unserved. Thus, the explanation and the evidences submitted by the assessee could not be substantiated. Under these facts and circumstances, we are of the opinion that this issue should be remanded back to the Assessing Officer to re-examine the claim of loss afresh and assessee is directed to substantiate its case and provide not only the confirmation from the broker but also the correct address of the broker and the Assessing Officer would be at liberty to carry out any necessary inquiry as he deem fit to verify the genuineness of the transaction. The assessee shall cooperate with the inquiry as may be asked upon by the Assessing Officer - Ground raised by the assessee is allowed for statistical purposes
Addition u/s 68 - Unesecured cash credits - HELD THAT:- Such stress has been given by the ld. DR and also adverse inference has been drawn by the Assessing Officer that in the subsequent year the sister concern of the assessee has bought back the shares at ₹ 5/- in order to hold that the transaction during the year is bogus or non-genuine. First of all, under the deeming provision what is required to be seen whether the credit appearing in the books of account during the financial year, the assessee has been able to discharge the onus regarding the nature and source of credit or not. Here in this case, the nature of credit is share application money and the source has found to be satisfactorily explained by the assessee as held by Ld. CIT (A). Thus, the onus cast upon the assessee has been fully discharged. Secondly, if a share at a face value of ₹ 10/- and premium of ₹ 90/- has been bought back at ₹ 5/- then Assessing Officer has all the powers under the Act to examine the issue in the year in which transaction has taken place and there he can draw any inference after proper scrutiny and inquiry. So far as this year is concerned, we have to see the genuineness of the transaction of the share application money received during the year. Accordingly, the grounds raised by the Revenue stands dismissed.
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2019 (12) TMI 1184
TDS u/s 194C - composite / turnkey contract including supply of labour and services with supply of material - Non-deduction of TDS on supply of materials treating the assessee as ‘assessee-in-default’ as per Section 201(1)/201(1A) - HELD THAT:- Award of separate contracts shall not in any way dilute the responsibility for successful competition of the facilities, achieving the guaranteed performance of the erection/installation, proper O&M of the erection/installation after final acceptance by the corporation, etc as per the tender specification and a breach in one contract shall automatically be construed as a breach of the other contracts which will confer a right on the corporation to terminate other contracts also at the risk and the cost of the supplier.
Regarding the closure of projects, the contract mentioned the following clause. Closure proposal will be prepared by the contractor after completion of the project or as per decision of NBPDCL for closure of the project. The details of supplied materials and works executed as per the contract will be prepared by the contractors and reconciled with the engineer to his satisfaction. Therefore, the CIT(A) observed that the two contracts are of the nature of a composite package and that they are inseparable. Both contracts serve the purpose of rendering one single service. The scope of the contract includes design, engineering, manufacture, type testing, and training of power grid personnel and supply of, goods. Further, as per the conditions of the supply of contract, the contract price is inclusive of all customs duties, levies, excise duty, sales-tax and other duties payable on equipments, components, sub-assemblies and, raw materials or any other items used and it is clearly mentioned that no separate claim on these duties will be entertained by the contractee. These are essential elements of a composite contract and therefore the CIT(A) held that the two contracts of supply and erection, shall be taken as composite contract.
As relying on M/S SAHARA INDIA COMMERCIAL CORPN. LTD. ALIGANJ LUCKNOW [2017 (1) TMI 1681 - ALLAHABAD HIGH COURT] we remit the issue to the file of AO for verification and adjudication of the issue after affording an opportunity of being heard to the assessee as per the observations made by the Hon’ble High Court supra. If it is found that in the return of income filed for these years by the deductee, it has included the impugned amount in its receipts and there is loss as per return, no demand can be raised u/s 201(1A) of the Act on the present assessees. In case of found otherwise, the charge of interest u/s.201(1A) is liable to be paid by the appellant/assessees.
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2019 (12) TMI 1183
Addition u/s.145A - method of accounting followed - HELD THAT:- After going through the Audit Report that assessee has already considered the application of section 145A in the audit report and the practice of showing the working of inclusion of cess and excise duty on the purchases, sales and the stock is being followed by the assessee company since last several years.
Section 145A requires the valuation of purchase and sale of goods or services and of the inventory shall be adjusted to include the amount of any tax, duty, cess or fee (by whatever have been called) actually paid or incurred by the assessee to bring the goods or services to the place of its location and condition as on date of valuation. In our considered opinion, assessee is following the same method for several years and therefore this ground of Revenue is dismissed.
Deduction u/s. 10A - if the claim of deduction u/s. 10B is disallowed as assessee unit is included in the business of trading of Computers, Computer Peripherals, software development etc. and was granted license setting up 100% EOU under STP scheme as per letter of permission - HELD THAT:- Assessee has also filed copy of letter from STPI, Gandhinagar, Gujarat and assessee is reflecting on the website of Department of Electronics & Information Technology and assessee has also filed the copy of extract of the said website and which has not been disputed by the ld. A.O. and in the past, assessee has been claiming deduction u/s. 10A. Moreover, assessee company set up in the 100% EOU under STP Scheme as per letter of permission No. STPIG/EXIM/S/503/STTL-SWED/13 dated 2-1-2007 by the Designated officer Software and IT enabled services and same details were submitted before the lower authorities.
The assessee is in this business since 2007 and company has been set up in the 100% EOU under STP Scheme and all details have been submitted before the lower authorities. Since assessee has complied with all the condition for availing of benefit of section 10A. Therefore, we dismiss this ground of the revenue.
Allowing of foreign exchange gain in the claim of deduction u/s 10A - A.O. held that income due to foreign exchange gain are not eligible for deduction - HELD THAT:- Since already we have confirmed the order of the ld. CIT(A) for granting relief to the assessee u/s 10A of the Act. We draw support in favour of assessee from the latest judgment of Hon’ble Madras High Court in the matter of CIT Chennai- III vs Pentasoft Technologies Ltd. [2019 (9) TMI 155 - MADRAS HIGH COURT] wherein similar claim of the assessee was allowed by the Hon’ble Madras High Court.
In the matter of Nuwave Esolutions Pvt. Ltd. vs. CIT (Delhi) [2018 (12) TMI 1752 - ITAT DELHI] has also granted relief to the assessee and granted deduction in foreign exchange gain. Therefore, in our considered opinion, assessee is eligible for exemption u/s. 10B of the Act and we do not find any reason to interfere in the order passed by the ld. CIT(A). - Decided against revenue.
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2019 (12) TMI 1182
Penalty u/s 271C - Payment to Doctors - Employer / Employee relationship or not - failure to deduct tax at source u/s 192 of the Act when making payments during the relevant year to the consultant doctors as against u/sn 194J - HELD THAT:- Assessee placed before us Form 26A issued by accountant of assessee, in respect of payment made by assessee to these alleged nine doctors. As additional evidence in respect of these nine doctors which in our considered opinion, deserves to be admitted and requires due verification also.
We therefore admit additional evidences filed by Ld.AR at this stage.
In our opinion, Ld.AO will have to verify all these details to ascertain true facts. We direct Ld.AO to call for all necessary information/details in respect of these nine doctors, the letter of appointment issued by assessee and returns filed by these doctors.
AO that in the event, it is found that these doctors were providing professional services to assessee which satisfies requirement of a visiting doctor, undoubtedly, it cannot be held that relationship between assessee and the concerned doctors were that of employee-employer and no demand could be raised under section 201(1) and 201(1A) of the Act. On the contrary, if there exist employee-employer relationship, the benefit may be granted to assessee upon verifying the additional evidence filed, which we have already admitted in preceding paras.
Set aside appeals challenging demand raised under section 201(1) and 201(1A) of the Act, back to Ld.AO for de novo assessment.
As we have set aside additions back to Ld.AO for verification on de novo basis, penalty levied under section 271C will not survive. However, the AO is at liberty to initiate penalty proceedings u/s 271C of the IT Act, 1961 in the set aside proceedings, if desired so.
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2019 (12) TMI 1181
Registration u/s 12AA - advancement of any other object of general public utility - Charitable activity u/s 2(15) - activity of providing training in various fields to various persons and the objects also includes preservation of environment, yoga, medical relief and relief of poor. - HELD THAT:- On a perusal of various objects mentioned in the trust deed we agree with the contentions of the ld DR that the assessee has included various type of objects in the object clause.
Even though the assessee has shown certain photographs which are placed in the paper book, the same will not prove that the assessee is engaged in the educational activities or any other specific activities as claimed by it. No other material was placed before us in order to compel us to interfere with the order passed by ld CIT(E). Under the set of facts we have no other option but to confirm the order passed by ld CIT(E) - Decided against assessee.
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2019 (12) TMI 1180
Claim of exemption u/s 44A - mutual concern - for the benefit of members - profit motive - the activities is to get quality grocery, clothes, stationery and durable items at a very reasonable rate to the employees of Ordanance Factory - HELD THAT:- Members of the society are employees of the Ordnance Factory, Ambarnath and they become members by subscribing to the share capital of the Society; the Managing Committee of the Stores effects purchases of various goods from the manufacturers/wholesellers at competitive price and sales are effected to members only, either on cash or on credit basis ; credit sales proceeds are recovered from members through their employer i.e. Ordnance Factory and its allied establishment, Ambarnath from salaries.
Thus it is observed by us that the object is not to earn profit but to provide best possible consumer goods at best price to its members only. It is a case of mutual entity running on principles of mutuality. The essence of mutuality lies in the return for what one has contributed to a common fund. The fund should fulfill the essential requirements that all the contributors to the common fund must be entitled to participate in the surplus and that all the participators in the surplus should be contributors to the common fund. There must be complete identity between the contributors to the fund and the participators in the surplus.
We hold that the essence of mutuality has been established by the appellant. Therefore, we are inclined to set aside the order of the Ld. CIT(A).- Decided in favour of assessee.
Deduction u/s 80P(2)(d) in respect of interest earned on fixed deposits - AO allowed net interest deduction after deducting proportionate expenses for earning such interest income received from another Co-operative Bank - HELD THAT:- As evident from the accounts, the appellant is not enjoying any credit facilities from any financial institution. In order to develop the habit of savings, the appellant is collecting thrift deposit from salaries on monthly basis since its inception and these funds are utilized for the business purpose of the appellant. During the year under consideration, the appellant invested ₹ 11,05,000/- out of interest income and surplus in the fixed deposits against various funds.
There is no merit in the action of the AO to disallow the expenses @ 87.54%. Also there is no merit in the order of the CIT(A) in restricting it to 50%. It is well settled that section 80P(2)(d) of the Act allows whole deduction of an income by way of interest or dividends derived by the Co-operative Societies from its investment with any other Co-operative Society. Having regard to the above provisions, we are of the considered view that there is no basis to restrict the disallowance to 50% as held by the Ld. CIT(A). The apportioning of the expenditure to the interest income is not justified and the appellant is entitled to deduction u/s 80P(2)(d) of the entire interest of ₹ 7,70,784/-. The order of the Ld. CIT(A) therefore reserves to be set aside.- Decided in favour of assessee.
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2019 (12) TMI 1179
Addition u/s. 28(iv) - share transactions - whether the amount of premium paid by the Telenor Group for acquiring the shares of 8 UW companies can be held to be in the form of any benefit or perquisite arising from the business of assessee u/s 28(iv) ? - HELD THAT:- Here, the assessee company had purchased 3.54 crore shares at ₹ 10/- per share from M/s. Unitech Ltd. of 8 telecom companies for an aggregate consideration of ₹ 34.50 crores under share purchase agreement dated 25.10.2008 and any subsequent allotment by such 8 telecom companies independently to Telenor at ₹ 179 per share cannot be the basis to hold that there is any benefit or perquisite arising from business carried on by the assessee company.
In a worst case scenario if there is any benefit the same benefit would be of M/s. Unitech Ltd. which held the shares of 8 telecom companies from whom the three companies have purchased the shares. It would be also relevant to mention that Ld. CIT (A) in one of the assessee company which is also impugned before us, i.e., M/s Acorus Unitech Wireless Pvt. Ltd.,that the benefit if at all in these transactions actually accrued to Unitech Ltd. and to favour Sri Ramesh Chandra and Sri Sanjay Chandra the actual beneficiaries and not to the assessee company. This itself goes to support the contention of the Ld. Counsel that no benefit or perquisite arose in the hands of the assessee companies.
The judgments relied upon by the ld. DR which has also been referred in the impugned order in no manner will apply on the facts of the present case because most of them pertained to waiver of a loan or unclaimed credit balance returned back to the P&L account taken during the course of business. Thus, these judgments do not help the case of the Revenue at all. Accordingly, the additions made by the Assessing Officer and sustained by the Ld. CIT (A) u/s. 28(iv) are directed to be deleted.
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2019 (12) TMI 1178
Disallowance u/s 14A - investments which yielded exempt income - HELD THAT:- Considering the fact that the lower authority has considered all investments made by assessee for calculating average investment for disallowance u/r 8D(2)(iii), the Special Bench of Delhi Tribunal in Vireet Investments P Ltd [2017 (6) TMI 1124 - ITAT DELHI] held that only those investments which yielded exempt income should be considered for disallowance u/r 8D(2)(iii), we restore this part of ground to the file of AO to make fresh computation of average investments by taking into consideration only those investments which yielded the exempt income.
Disallowance u/r 8D(2)(ii) - assessee vehemently argued that the disallowance in respect of net interest has to be made by taking into consideration only 3 investments which yielded dividend income during the year. We have noted that the assessee has raised this plea, for the first time before us and has strongly relied upon the decision of Mumbai Tribunal in Sajjan India Ltd vs ACIT [2017 (12) TMI 47 - ITAT MUMBAI] wherein it was held that mandate of Act is to tax real income and tax can only be levied under authority of law. Even if disallowance fall below disallowance u/s 14A offered by assessee in the return of income, revenue cannot charge tax on income, which never was income of assessee chargeable to tax. Therefore, we deem it appropriate to restore this part of disallowance u/r 8D(2)(ii) to the file of the AO to examine the issue afresh in the light of above referred decision and pass the order afresh in accordance with law.
Disallowance u/s 56(2)(viia) - AO treated the investment in shares as income under section 56(2) (viia) - HELD THAT:- We have noted that the assessing officer during the assessment not provided the valuation (FMV) arrived by him to the assessee. During the first appellate stage the assessee furnished the working of the FMV of the shares of these two entities, however, the AO despite granting opportunity to file his remand report, not controverted the said valuation. The valuation furnished by the assessee is in accordance with Rule 11UA is also not disputed by AO. The values of shares as per valuation furnished by assessee are less than the consideration paid by the assessee for acquisition of shares. The ld. DR for the revenue failed to bring any fact or evidence to our notice to take other view. Thus, we do not find any infirmity in the order passed by ld. CIT (A) in deleting the addition qua the acquisition of shares of Shivalik Solid Waste management and Coimbatore Integrated Waste Management Pvt Ltd., which we affirm. In the result ground No.2 in revenue’s appeal is dismissed.
Addition in respect of purchase of shares of ETL - CIT(A) sustained the addition of difference of FMV as per Rule 11UA. The ld. AR for the assessee vehemently argued that ETL is a closely held company and its shares are not readily available in the market for sale or trading and that the sale by Sidhi Samrat Dychem Pvt Ltd was a mode of exit from the agreement due to certain financial difficulties faced by Sidhi Samrat Dychem Pvt Ltd. No such evidence in the form of correspondence or any communication is brought on record by the assessee that Sidhi Samrat Dychem Pvt Ltd was facing financial difficulties, which may justify the action/ transaction with assessee.
Hence, we do not find merit in the submissions of the ld. AR for the assessee.
Alternative submission of the ld AR for the assessee that provisions of section 56(viia) are anti abuse and intended to prevent the practice or receiving property without consideration or for inadequate consideration, are concerned, the ld AR has strongly relied on the Circular No. 01/2011 dated 6th April 2011 issued by Central Board of Direct Tax (CBDT) and the decision of Tribunal in ACIT Vs Subhodh Menon (supra). The throughout the proceedings took the stand that the assessee that the transaction with ETL is bonafide transaction. We are also of the view that in absence of any imputation of any consideration over and above consideration was passed, the addition is not justified.
As we have already noted that in absence of any imputation of any consideration over and above consideration was passed, the addition is not justified. The assessing officer has not made any investigation from ETL nor brought any adverse material on record against the assessee. Hence, we accept this submission of the ld. AR for the assessee and allow the ground of appeal raised by the assessee.
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2019 (12) TMI 1177
Capital gain on property inherited - Exemptions u/s 54F and 54B - inheritance of property of an individual who dies intestate, after the introduction of Hindu Succession Act, 1956 - AO considering the property as HUF property of the respective assessee - HELD THAT:- We find that undoubtedly the land in question was inherited by the assessee and his family members on the death of their predecessor.
In the case of Yudhishter Vs. Ashok Kumar [1986 (12) TMI 380 - SUPREME COURT] has clearly held that after Hindu Succession Act, 1956, when the son inherited the property in the situation contemplated by section 8, he does not take it as Kartha of his own undivided family, but takes it in his individual capacity.
In the case of Uttam Vs. Saughag singh & Ors [2016 (3) TMI 1369 - SUPREME COURT] the Hon’ble Supreme Court has held that the share of the Hindu male coparcener is governed by the proviso to section 6 of Hindu Succession Act and a partition is effected by operation of law immediately before his death and in this partition, all the coparceners and the Hindu Male’s widow get a share in the joint family property. On the application of section 8 of the Act, it was held that such property would devolve only by intestacy and not survivorship. It was also held that after the joint family property has been distributed in accordance with section 8 on the principles of intestacy, the joint family property ceases to be joint family property in the hands of the various persons who have succeeded to it as they hold the property as tenants in common and not as joint tenants.
Thus, the above decisions of the Hon’ble Supreme Court on the inheritance of property of an individual who dies intestate, after the introduction of Hindu Succession Act, 1956, hold that on the death of the Hindu Male, the property devolves on the heirs in their individual capacity and ceases to be the HUF property. Respectfully following said decision, we hold that the property inherited by the respective assessees is their individual property and, therefore, the capital gains, if any, is exigible to tax in their individual hands alone.
Whether the said property is a capital asset u/s 2(14) - It is not required to be adjudicated at this stage as it has already been decided by the coordinate bench of this Tribunal in the assessee’s case in the earlier round of litigation that it is a capital asset u/s 2(14) of the IT Act. Thus, the grounds of appeal on this issue in the case of all the assessee’s are rejected.
Claim of deduction u/s 54B - We find that the AO and CIT(A) have not really examined the allowability of such claim by holding the assessee to be an HUF and held that deduction u/s 54B is allowable only in the case of individuals. Further, with regard to the claim of deduction u/s 54F also, the AO has not gone into the details of the investment made in the residential property and whether the conditions of section 54F are fulfilled by the respective assessees. Therefore, we are of the view that the grounds of appeal on the issue of deduction under sections 54F and 54B needs reconsideration afresh by the AO. Therefore, they are set aside to the file of the AO and the grounds are treated as allowed for statistical purposes.
Expenditures claimed as incurred towards sale of their land, the assessees have not been able to provide any evidence in support of such claim and, therefore, disallowance of such claim is confirmed in each of the cases.
All the appeals of the assessees are treated as partly allowed and only as regards the claim u/s 54F & 54B they are are set aside to the file of the AO.
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2019 (12) TMI 1176
Revision u/s 263 - AO has failed to make inquiries and apply her mind with regard to the applicability of the provisions of section 43CA - HELD THAT:- In the instant case, AO had primarily changed the head of income from business to that of long term capital gains for the reason that the assessee was trying to avoid provisions of section 50C. Provisions section 50C applies with regard to the transfer of long term capital asset, whereas section 43CA applies to transfer of asset (other than capital asset). Therefore, if the transfer of asset is to be assessed under the head `income from business’ necessarily, the provisions of section 43CA would have application and the value of asset for the purpose of stamp duty valuation under the State Government laws would deemed to be the consideration received on account of transfer of such business asset.
AO had failed to take note of the provisions of section 43CA and the impact of such section in the instant case. As mentioned earlier, the assessee has already filed an appeal as against the assessment order holding the transfer of land would be assessable as income from long term capital asset. In context of the appeal filed by the assessee, the application of section 43CA assumes significance.
AO having failed to take notice of section 43CA while framing the assessment order, would render the assessment order erroneous and prejudicial to the interest of the revenue in view of Explanation (2) clause (a) of section 263. Therefore, since the AO has failed to cause any inquiry in this regard nor examined the impact of section 43CA we are of the view that the CIT has correctly invoked his revisionary jurisdiction u/s 263 and set aside the assessment order dated 26.12.2016. - Decided against assessee.
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