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Income Tax - Case Laws
Showing 321 to 340 of 10077 Records
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2019 (12) TMI 904
Revision u/s 263 - case was selected under scrutiny, and accordingly order u/s. 143(3) was passed on 28.12.2016 by assessing total income of Rs. Nil - disallowance u/s.14A read with Rule 8D and the claim u/s. 57(iii) of the Act which is to be proper verified - HELD THAT: - Hon`ble Supreme Court in CIT v. Max India Ltd. [2007 (11) TMI 12 - SUPREME COURT] reiterated that the phrase "prejudicial to the interests of the Revenue" as used in section 263(1) must be read in conjunction with the expression "erroneous" and unless the view taken by the Assessing Officer is found to be unsustainable in law, the powers under section 263 of the Act cannot be invoked.
The order passed by the AO, in our opinion, shall be deemed to be erroneous in so far as it prejudicial to the interest of the Revenue, if the Pr. CIT would have specifically pointed out which of inquiries or verification should have been carried out by the AO in this regard and the AO failed to carry out those inquiries and verification as desired by the Pr. Commissioner of Income-tax.
Since the Pr. CIT has not suggested the basis of inquiry or verification to be carried out by the AO, the order passed by the AO cannot be deemed to be erroneous in so as far as it is prejudicial to the interest of the Revenue. In the light of the above mentioned judicial precedents and facts of the present case, we are of the opinion that the AO has adopted one possible legal view sustainable in law on the issue and mere invoking proviso based on revenue audit objection amounts non application of mind. 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, we find that twin condition were not satisfied for invoking the jurisdiction under section 263 - Appeal of the assessee is allowed.
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2019 (12) TMI 903
Credit of TDS - claim not allowed by the AO on the ground that corresponding amount received from the deductor, M/s Root Corporation Ltd. has been shown by the assessee only as advance rent and not rental income for the year under consideration - Assessee contested that benefit of deduction of the tax has to be allowed to the assessee and the government cannot sit over the money of the taxpayer without any credit - HELD THAT:- CIT(A) after considering the position of the law in detail, relying on the decision of the Hon’ble Andhra Pradesh High Court in the case of Sri Y Rathiesh Vs. Commissioner of Income Tax [2014 (9) TMI 2 - ANDHRA PRADESH HIGH COURT] has upheld the withdrawal of TDS credit by the Assessing Officer. We do not find any error in the order of the learned CIT(A) on the issue in dispute. However, we are of the considered opinion that government cannot sit over amount withheld and credit has to be allowed to the assessee in the year rent in advance is offered by the assessee for income. The grounds of the appeal of the assessee with respect to TDS credit are accordingly partly allowed.
Addition of expenses pertaining to the house property, income from which has been offered under the head ‘income from house property’ - deduction for expenses incurred on said property already stand covered by the 30% deduction under the income from house property - HELD THAT:- Assessee failed to substantiate that the expenses in dispute pertains to portion of the property, income from which is not included under the head ‘income from house property’. The claim of the assessee cannot be allowed in absence of substantiation with documentary evidences. We do not find any error in the order of the learned CIT(A) on the issue in dispute and accordingly, we uphold the same. The ground of the assessee related to disallowance are accordingly dismissed.
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2019 (12) TMI 902
TP Adjustment - Comparable selection - TPO rejected M/s. R System International Ltd. as comparable on the ground that this company is having different financial year ending i.e. December - CIT(A) directing Transfer Pricing Officer to include M/s. R System International Ltd. as comparable - HELD THAT:- When financial results are available in the public domain and result of M/s. R. Systems International Ltd. has been recasted on the basis of audited quarterly result and audited financial results, we are of the considered view that no error has been committed by the ld. CIT (A). So, we find no ground to interfere into the findings returned by the ld. CIT (A) on this issue, hence ground no.1 is determined against the Revenue.
Benchmarking of receivables on the ground that receivables were not separate international transactions - recharacterisation was not permitted, non-application of SBI base rate for benchmarking etc. and has given invoice details of receivables along with their duration, proceeded to apply the interest @ 11.69% to bring the transactions qua receivables at arm’s length by deeming the receivables outstanding beyond the period stipulated in the service agreement/invoice as deemed loan advanced - HELD THAT:- Following the order passed by the Tribunal in taxpayer’s own case for AY 2009-10 [2018 (4) TMI 926 - ITAT DELHI] we are of the considered view that in the instant case, the period of outstanding receivables is ranging between 25 days to 365 days and facts and circumstances are identical, so no interest can be charged on the receivables with AEs, hence ld. CIT (A) has rightly ordered to delete the addition. Consequently, ground no.2 is determined against the Revenue.
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2019 (12) TMI 901
Reopening of assessment u/s 147 - recomputing the book profits of the assessee us/ 115JB - HELD THAT:- As per the first proviso to sec. 147 of the Act an action u/s 147 can be taken in a case where an assessment was already completed u/s 143(3) of the Act within the period of 4 years from the end of relevant asst. year. However, if there is failure on the part of the assessee to disclose fully and truly all material facts necessary for his assessment for that assessment. year then the notice u/s 148 of the Act can be issued within a period of 6 years from the end of the relevant asst. year.
The question therefore is as to whether it can be said in the present case that there was a failure on the part of the assessee to disclose fully and truly all material facts necessary for his assessment. In this regard it is clear from the perusal of the order passed u/s 143(3) of the Act that same item which have not been added to the book profits u/s 115JB were added in the originally concluded assessment. proceedings u/s 143(3) of the Act when the total income of the assessee was computed under the normal provisions of the Act. Therefore, it cannot be said that there was any failure on the part of the assessee to fully and truly disclose all material facts necessary for his assessment.
There was no failure on the part of the assessee to fully and truly disclose material facts, the reopening of the assessment u/s 147 beyond the period of 4 years is not valid. Consequently the order of re-assessment u/s 147 of the Act is liable to be annulled on this ground and is hereby annulled. In view of the decision on the aforesaid ground on the validity of initiation of proceedings u/s 147 of the Act, the issues on merits of the appeal of the assessee are not being considered.
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2019 (12) TMI 900
Revision u/s 263 - Assessment u/s 153A - bogus purchases calculating at the rate of 2% of URD purchases made in cash by AO - HELD THAT:- Assumption of inaccurate particulars/facts: In this regard, we examined the revision order of the Pr.CIT and search for the details of entire facts, which were correctly assumed by the Assessing Officer while making the reassessment u/s 153A r.w.s. 143(3) of the Act. We find that the allegation of the Pr.CIT is unspecific and vague. Therefore, such allegations are now stand rejected. Accordingly, the same is decided in favour of the assessee.
Complete lack of application of mind - The catch words of the new inserted provisions of the said Explanation 2 of section 263 of the Act is (i) without making enquiries or (ii) verification which should have been made and (iii) allowing any relief without enquiring into the claim. On examination of each of these expressions, we find the core issue of URD purchases were repeatedly examined over a period of months/years and issued number of letters/notices after carefully examining three sets of Paper Books containing 1000 and above pages. Further, we find that it is not a case of granting of relief at all but it is a case of making a disallowance out of the URD purchases. Therefore, the provisions of clause (b) of Explanation 2 to section 263 of the Act do not apply to the facts of the present case.
Inadequate enquiry or verification which should have been made - Allegations in the order of the Pr.CIT are general in nature and unspecific to the indirect assumption of facts and uncertain of the left over enquiries has to be conducted. The Pr.CIT has not made out a case to allege that the Assessing Officer is of complete lack of application of mind. Further, contrary to the same, we find the Assessing Officer and his team invoked the provisions of section 131 regarding the statement of the URD purchases and examining the Paper Books filed by the assessee on this issue etc before a view is taken about the requirement of making disallowance at the rate of 2% of such URD purchases in cash. Para 11 of this order contains the chronology of events and the Assessing Officer’s effects in scrutinizing the same issue relating to URD purchases. Thus, it is a case of taking a view on the matter by the Assessing Officer. Pr.CIT decision to take another possible view, which is not permitted in law. Therefore, from the above, it is not a case for assumption of jurisdiction u/s 263 - Decided in favour of assessee.
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2019 (12) TMI 880
Re-assessment proceedings initiated u/s 147/148 - HELD THAT:- If the recorded reasons shout contradiction and inconsistency it means necessary satisfaction in terms of the statutory provision has not been recorded at all.
AO was not competent to continue with the proceeding under section 147 on some other issues or grounds which were not mentioned in the reasons recorded under section 148(2). A plain reading of Explanation (3) to Sec. 147 shows that for the purpose of reassessment u/s 147 the AO can reassess income in receipt of an issue which escaped assessments and such other income which comes to his notice subsequently in the course of proceedings under the said section even though the reasons for such issue/income were not included in the recorded reasons.
The explanation (3) however pre-supposes that the issue with reference to which the reason was recorded, was found to be legally & judicially tenable and with reference thereto the AO is able to prove that income had indeed escaped assessment. It is only when the AO is able to establish valid initiation of reassessment proceedings with reference to the recorded reasons and in the reassessment u/s 147; such income is also assessed; only then the AO will be able to be expand the scope of reassessment proceedings by assessing any other escaped income which comes to his notice in the course of reassessment. If on the other hand, the AO is not able to justify the reopening of a concluded assessment with reference to reasons recorded u/s148(2) or where on examination of assessee's submissions AO agrees that on the basis of reasons recorded it cannot be held that income had escaped assessment within the meaning of Sec. 147 then in such an event the very reopening of a concluded assessment stands vitiated and therefore the AO cannot expand the scope of reassessment by including some more issues or reasons which did not find mention in the reasons recorded u/s148(2). For that we rely on the judgment of the Hon`ble Bombay High Court in the case of CIT Vs Jet Airways India Ltd [2010 (4) TMI 431 - HIGH COURT OF BOMBAY]
In view of the facts narrated above and the binding precedents applicable to the facts, we are of the view that the reasons recorded are bad in law therefore we quash the reassessment order passed by AO under section 147/148 - Decided in favour of assessee.
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2019 (12) TMI 879
Penalty u/s 271(1)(c) - assessee has challenged the order of the AO before the ld.CIT(A) on the ground that AO imposed penalty u/sec.271(1)(c) which is not in accordance with the provisions of the Act - HELD THAT:- In this case the AO has issued penalty notice in which the AO has not marked one of the two limbs i.e. concealment of particulars of income or furnishing inaccurate particulars of income and has issued notice in mechanical manner in standard format without application of mind. The notice issued by the AO is not valid as the AO failed to mention the charge on which the penalty was proposed to be levied thereby depriving the assessee to respond to the charge on which the penalty was proposed to be levied.
The case is squarely covered by the decision of THE COMMISSIONER OF INCOME TAX-11 VERSUS SHRI SAMSON PERINCHERY [2017 (1) TMI 1292 - BOMBAY HIGH COURT] which provides that failure on the part of the AO to state the charge on which the penalty was proposed to be levied would render the penalty order as invalid and ab initio and thus penalty cannot be sustained. - Appeal of assessee is allowed.
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2019 (12) TMI 878
Revision u/s 263 - non application of mind by PCIT - PCIT need not to take guidance from AO to revise the assessment order - HELD THAT:- PCIT exercised his jurisdiction under section 263 of the Act based on the proposal received from AO for revision of the Assessment Order. It means, the ld PCIT is using the mind of the assessing officer to revise the order of AO u/s 263 which according to us is not the scheme of section 263 of the Act.
PCIT ought to apply his own mind to examine whether order passed by the assessing officer is erroneous and prejudicial to the interest of revenue. That is, ld PCIT should examine the assessment records and assessment order made by AO to find out the error in the assessment order, as the power under section 263 is given to ld PCIT and not to ld AO.
PCIT need not to take guidance from AO to revise the assessment order. That is, the revisional jurisdiction vested with the PCIT as per the scheme of the Act. The Act gives various powers to various authorities to exercise powers and they have to exercise powers in their respective given sphere which is clearly ear-marked and spelled out by the statute. Thus, the revisional jurisdiction exercised by the ld PCIT is not in accordance to law therefore, order passed by the ld PCIT u/s 263 of the Act is not sustainable in law.
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2019 (12) TMI 874
'Mark to Market' Loss - disallowance of loss on foreign exchange forward contract loss - whether the said loss was a notional loss and hence cannot be allowed? - petitioner, on instructions, issued by the Department of Revenue, Ministry of Finance vide F. No.390/Misc./116/2017-JC dated 22.08.2019, seeks permission to withdraw this Special Leave Petition along with pending applications therein due to low tax effect - HELD THAT:- Permission granted, subject to just exceptions.
The special leave petition and pending applications are dismissed as withdrawn, leaving question of law open
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2019 (12) TMI 873
TDS u/s 194C OR 194J - placement fees/carriage fees paid to cable operators/MSO/DTH operators - Short deduction of tds - Petitioner, on instructions, issued by the Department of Revenue, Ministry of Finance vide F. No.390/Misc./116/2017-JC dated 22.08.2019, seeks permission to withdraw this Special Leave Petition along with pending applications therein due to low tax effect - HELD THAT:- Permission granted, subject to just exceptions.
The special leave petition and pending applications are dismissed as withdrawn, leaving question of law open.
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2019 (12) TMI 872
Reopening of assessment u/s 147 - eligible reasons for reopening u/s 148 - information received from DDIT (Inv) alleging that M/s Nivyah Infrastructure & Telecom Services Ltd is a penny stock listed on the Bombay Stock Exchange and that the petitioner had dealt with the same leading to escapement of income - borrowed satisfaction - non independent application of mind by AO - HELD THAT:- The tax effect in the present matter being less than two crores, in view of the CBDT Circular dated 8.8.2019, we see no reason to interfere. The special leave petition is dismissed.
We however, left all questions of law open to be considered in an appropriate matter.
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2019 (12) TMI 871
Penalty u/s 27(1)(c) - invocation of provisions of Section 263 - Proof of satisfaction of the Assessing Officer/Commissioner (Appeals)/ or Commissioner, recorded ‘in the course of any proceeding under this Act’ for the levy of penalty - HELD THAT:- The provisions of Section 271(1) of the Act call for the satisfaction of the Assessing Officer/Commissioner (Appeals)/ or Commissioner, recorded ‘in the course of any proceeding under this Act’ for the levy of penalty. Thus, while the Principle Commissioner or Commissioner could well initiate penalty under Section 271(1) if he proposed to effect modifications to the assessment itself, he cannot, in law substitute his satisfaction for that of the Assessing Officers’ for levying penalty in regard to the modifications to income effected in original assessment.
This tantamounts to the Commissioner putting himself the shoes of the Assessing Officer who had passed the original order of assessment in 2016 and is impermissible in law.
See Commissioner of Income Tax Vs. C.R.K.Swami [2001 (11) TMI 56 - MADRAS HIGH COURT]
The order of the Tribunal holding that the addition to income was not justified, having become final, the Tribunal’s order holding that the revision of assessment by the Commissioner on the ground that penalty proceedings had not been initiated was unsustainable, in the circumstances, is an order which is required to be upheld.
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2019 (12) TMI 870
Revision u/s 264 - capital gains on sale of shares of an entity - One company had gone into liquidation and this Court, appointed an Official Liquidator directing to remit the capital gains on the sale of shares of the Company including the shareholdings of the petitioner in these Writ Petitions as well as four other family members and appropriate the consideration received towards meeting the claims of depositors of RPS - HELD THAT:- As the amount of capital gains has been remitted in full by the company, there can be no double demand made of the same amount, in the hands of the petitioner.
Proceedings u/s 264 maintainability - where subsequent events have ensured that the entire tax demand including the amount offered to tax by the petitioner and the demand of tax payable thereon has been satisfied by the company pursuant to an order of this Court there can be no further demand on the petitioner. R1, as revisional authority, is certainly empowered, under the provisions of the Act, to consider such requests balancing the interests of the assessee as well as the Income Tax Department to ensure that the proper and appropriate of demand is satisfied and no more.
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2019 (12) TMI 869
Assessment u/s 144 - addition u/s 69A - no SCN issued - no reasonable opportunity - HELD THAT:- It is ex-facie apparent that no reasonable opportunity was provided to the petitioner to put forth his explanation. Moreover, no show cause notice under Section 144 of the Act was issued to the petitioner. In such circumstances, this court is of the considered opinion that the order impugned dated 26.06.2019 at Annexure ‘A’ shall be treated as show-cause notice.
The petitioner shall put forth his reply/objections within a period of two weeks from the date of receipt of the certified copy of the order. On receipt of such reply/objections, the respondent-authority shall conclude the assessment after providing an opportunity of hearing to the petitioner. Demand notice which is part of Annexure ‘A’ dated 26.09.2019 issued u/s 156 is set aside.
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2019 (12) TMI 868
TDS u/s 194A - Addition u/s 40(a)(i) - TDS on finance charges - year of assessment - assessee submitted before the AO that though the TDS was not made, the recipient had admitted the income and filed the return of income, hence requested not to disallow the said sum u/s 40(a)(ia) - CIT-A upheld the addition and held that the assessee is entitled for benefit of deduction only in the subsequent assessment year i.e. 2014-15 - assessee argued that the benefit of deduction is to be allowed in the impugned assessment year to the assessee and it should not be postponed to the subsequent year
HELD THAT:- In the instant case, the assessee has made the payment without deduction of tax at source and the recipient has filed the return of income on 28.11.2013 relevant to the F.Y. 2013-14 which is relevant to the A.Y. 2014-15. As per second proviso to sub section 40(a)(ia) of the Act, if the assessee is not deemed to be assessee in default in accordance with the provisions of Chapter XVII-B of the Act, on the said sum it shall be deemed that the assessee has deducted the TDS and paid the tax on such sum on the date of furnishing the return of income by the recipient referred to in said proviso, if the recipient has admitted the income and paid the tax thereon. In the instant case, the payee has filed the return of income on 28.11.2013 which is relevant to the A.Y.2014-15. Therefore as rightly held by the Ld.CIT(A), the assessee is entitled to claim the benefit of second proviso in the subsequent A.Y. i.e. 2014-15, but not for the A.Y. 2013-14. - Decided against assessee.
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2019 (12) TMI 867
Disallowance of claim of interest expenses on assumption and presumption basis - disallowance of interest only in respect of one transaction of payment of interest @ 20% whereas the assessee has earned the interest at the maximum rate of 18% - AO has restricted the payment of interest to 18% - HELD THAT:- When the AO has not disputed the correctness of the payment and genuineness of the transaction, then merely because the payment of interest to one of the parties is higher than the average earning of interest, the same cannot be a reason for disallowing the claim of interest expenditure. The only requirement for allowing the deduction under section 57(iii) is that the expenditure has been incurred wholly and exclusively for the purpose of earning the income. Thus the purpose of expenditure is relevant and not the end result of such expenditure laid out by the assessee.
When the interest expenditure was laid out by the assessee for earning the interest income, then the rate of interest for payment of interest is not relevant for the purpose of allowing the deduction under section 57(iii) of the Act. The authorities below have committed an error while disallowing the claim of interest on the ground that the payment in case of one party is at a higher rate than the interest earned by the assessee from such expenditure. The orders of the authorities below are accordingly set aside and claim of the assessee is allowed.
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2019 (12) TMI 866
Maintainability of the suit as per provision of Section 293 - Bar of suits in civil courts - remedy of filing appeal under Section 246A-1 - respondent in the present revision is the legal heir of late assessee - HELD THAT:- It is apparent that by his suit, plaintiff is trying to challenge the order passed by the Income Tax authorities under the Income Tax Act. The Income Tax in itself is a complete code providing remedies with regard to orders passed under the same. The plaintiff respondent had remedy of filing appeal under Section 246A-1 (j) of Income Tax Act, 1961 with regard to orders of the Income Tax authorities, in case he felt injured from the same. Thus, the suit itself is not maintainable and the court below has wrongly rejected the application under Order 7 Rule 11 CPC filed by the revisionist. Section 293 makes an absolute bar to suit filed in Civil Courts with regard to any proceedings held under the Income Tax Act. In view of aforesaid, the revision is allowed.
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2019 (12) TMI 865
Transfer of case u/s 127 - reasons for transferring of the case from Indore to Chennai - HELD THAT:- The need of the revenue for better investigation is of paramount importance. However, the need of the revenue for better investigation of the case cannot override and supersede the statutory provisions as it is being done in the present case
At no point of time, reasons recorded, if any, were communicated to the petitioner and therefore, no opportunity of hearing was granted to the petitioner on the issue of the reasons recorded by the Department. The impugned order passed by the Department transferring the case to Chennai is quashed. All consequential proceedings are also quashed.
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2019 (12) TMI 864
Alternative remedy of appeal under the Act - HELD THAT:- This Court is of the considered view that it would be appropriate to relegate the petitioner to file an alternative and efficacious statutory remedy of appeal available under the Act since the disputed questions of facts and law involved herein cannot be adjudicated in the writ proceedings. Indeed, reasonable opportunity was provided to the petitioner to putforth his case. If the petitioner is aggrieved by the decision of the Assessing Officer, hierarchy of authorities provided under the Act are required to adjudicate upon the said issue.
Without expressing any opinion on the merits or demerits of the case, the petitioner is relegated to file the alternative remedy of appeal under the Act. If such an appeal is preferred within a period of two weeks from the date of receipt of certified copy of the order, the same shall be considered by the Appellate Authority on merits without objecting to the aspect of limitation. All rights and contentions of the parties are left open. The Appellate Authority shall decide the matter in accordance with law in an expedite manner.
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2019 (12) TMI 863
Settlement Application - Reopening of assessment - HELD THAT:- Order passed in the case of Parasmal Jain by the Settlement Commission has become final. While that being so, if the objections of the learned Standing Counsel for the respondents is to be accepted, the possibility of double taxation for one transaction may occur. As such, this Court is of the view that the issue in the case of Umed C. Mehta could be reconsidered, in the light of the subsequent development through the orders passed by the Settlement Commission in the case of Parasmal Jain. Consequently, deem it proper to refrain from addressing any other grounds raised by the petitioner, challenging the impugned proceedings in this writ petition and that any further decision could await, after final orders are passed by the Settlement Commission on remand.
It would be relevant to point out herein that when Umed C. Mehta had challenged the order of the Settlement Commission passed in his Settlement Application before this Court in had set aside the order of the 1st respondent herein dated 23.10.2009 and remanded the matter back for fresh consideration.
It would not be appropriate to interfere with the present impugned notice at this stage, but, it would be appropriate to await the decision of the Settlement Commission, after remand, in the case of Umed C. Mehta.
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