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Income Tax - Case Laws
Showing 1 to 20 of 7776 Records
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2021 (12) TMI 1525
Exemption u/s 80P - appellants has submitted that they would like to place on record additional documents, including the statutory rules, which may have bearing on the nature of income, and entitlement to exemption under Section 80P - HED THAT:- We permit the appellants to file the said documents, including the statutory rules, within a period of four weeks from today. The respondent i.e. Revenue would be entitled to file additional documents and also place written reply on record within a period of eight weeks from the date a copy of the documents is furnished.
Accordingly, we would set aside the impugned order passed by the High Court and the Tribunal with the request that the Tribunal would decide the issue of exemption under Section 80P on merits and in accordance with law without being influenced and being bound by the earlier orders passed by them and the High Court. We would clarify that the above direction would not entitle either the Revenue or the assessee to reopen the closed cases where assessments have become final.
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2021 (12) TMI 1521
Revision u/s 263 - CIT passed the impugned order exparte - HELD THAT:- As noticed that the assessee could not furnish the relevant documents before the CIT on the date mentioned in the notice issued u/s 263 for the reason that the assessee was Corona Positive as per the report dt. 10/03/2021 while the time allowed vide notice dt. 04/03/2021 by the Ld. Pr. CIT was 11/03/2021.
We, therefore, set aside this case back to the file of the CIT to be adjudicated afresh in accordance with law after providing due and reasonable opportunity of being heard to the assessee. Appeal of the assessee is allowed for statistical purposes.
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2021 (12) TMI 1514
Assessment u/s 147 or 153C - documents found during a search - HELD THAT:- Incumbent upon the AO to proceed against the assessee in light of provisions of section 153C of the Act as provisions of section 153C of the Act covers the situation where an alleged incriminating document pertaining to an assessee is found during search at third party premises.
The provisions of section 153C of the Act are non-obstante provisions and the same specifically excludes the operation of Section 147 of the act. Therefore, in our considered opinion, the AO in the present case has grossly erred in invoking the provisions of section 147 instead of section 153C of the Act.
We are of the considered view that if the alleged action of the AO u/s 147 of the Act is permitted on the basis of documents found in the course of search of third parties premises, then provisions of section 153C of the Act would become redundant.
Considering the facts of the case in totality, in light of the relevant provisions of the Act, we have no hesitation in quashing the assessment order qua Ground No. 1.3 making all other grounds of appeal otiose.
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2021 (12) TMI 1510
Reopening of assessment u/s 147 - jurisdictional error issue of the ITO, Ward, Kurukshetra to reopen the assessment - HELD THAT:- ITO, ward-3, Kurukshetra was duly informed by the assessee that he was in Spain from the period June 2004 to October 2008 and it was bought to the knowledge of the ITO, Kurukshetra that the status of the assessee during the assessment year under consideration was that of a NRI and, therefore, jurisdiction to reopen the assessment and frame the assessment u/s 147 of the Act lied with DCIT (International Taxation), Gurgaon. However, the ITO, Ward-3, Kurukshetra having no jurisdiction to reopen the assessment proceeded to issue notice u/s 148 of the Act and, thereby, reopened the assessment and continued with the assessment proceedings till the case was transferred by him to DCIT (International Taxation)Gurgaon on the directions of the JCIT, Kurukshetra.
The concerned AO, who was having jurisdiction to frame the assessment, apparently, did not record reasons of having belief of escapement of income and also did not issue any notice u/s 148 of the Income Tax Act and, therefore, the assessment framed by him without assuming a valid jurisdiction to reopen the assessee, was bad in law.
We hold that the notice issued u/s 148 of the Act for reopening of the assessment by the ITO, Kurukshetra was without jurisdiction, therefore, the reopening of the assessment was bad in law and the consequent assessment framed by the DCIT (International Taxation) is not sustainable in the eyes of law and the same is hereby quashed. Decided in favour of assessee.
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2021 (12) TMI 1505
Validity of reopening of assessment u/s 147/148 - reasons to believe v/s suspect - bogus purchases of goods - HELD THAT:- Reasons were recorded based on the information received from DDIT Investigation wing Mumbai that search was carried out by the investigation wing, Mumbai in the case of Gautam Jain & others (Surat Diamond concerns) group of Mumbai. The group is indulged in providing bogus purchase bills / unsecured loans through various benami concerns.
We note that “unsecured loans” is not a subject matter or an issue in the case of assessee under consideration; therefore, it seems that assessing officer did not apply his mind while recording reasons. Thus, reasons were recorded based of suspicion and in a mechanical way without application of mind.
The provisions of section 147 require that the AO should have 'reason to believe' that any income chargeable to tax has escaped assessment. The word 'reason' in the phrase 'reason to believe' would mean cause or justification. If the AO has a cause or justification to think or suppose that income had escaped assessment, he can be said to have a reason to believe that such income had escaped assessment.
We note that in assessee`s case, the reasons recorded by the assessing officer are not “reason to believe” rather these are “reason to suspect”. Reasons must have a live link with the formation of the belief. This is supported by Circular No. 549 dated 31.10.1989 which clarified that the words “reason to believe” did not mean a change of opinion.
The Hon’ble Supreme Court in ITO vs. Lakhmani Mewal Das [1976 (3) TMI 1 - SUPREME COURT] has lucidly explained the power of assessing officer to bring to tax income escaping assessment u/s. 147.
In the present case, the assessing officer assumed the jurisdiction u/s 147 of the Act solely on the basis of the information received from the Investigation Wing, Mumbai with reference to the search carried out by the Investigation Wing, Mumbai in the case of Shri Gautam Jain and Others.
The own satisfaction of the AO for the alleged escapement of income is the prerequisite condition for initiating the reassessment proceedings, which is absent in the present case. We note that “unsecured loans” is not the subject matter or issue in the case of assessee under consideration, hence reasons recorded are not as per the scheme of the provisions of section 147 of the Act. It is the condition precedent that before initiating the reassessment proceedings, the assessing officer has to carry out deep verification of the information and to apply his independent and judicious mind before issuing notice u/s 148 of the Act but, in the present case, without any effort to examine and to discuss the material received from the Investigation Wing, solely on such borrowed satisfaction, carried out the reassessment proceedings, which is bad in law.
We are of the considered view that the reasons recorded by the AO as set out earlier, are bad in law. Appeal of the assessee is allowed.
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2021 (12) TMI 1504
Reopening of assessment beyond four years - mandation to get prior approval of the Commissioner of Income Tax - review petition - HELD THAT:- Although the point made by the Revenue in this review petition is that this Court in its order [2019 (12) TMI 829 - ORISSA HIGH COURT] erred in drawing a distinction between an Additional Commissioner and Commissioner in terms of their authority, the point involved was that for the purpose of Section 151(1) of the Income Tax Act, 1961 since the reopening of the assessment was beyond 4 years, it had to have the prior approval of the Commissioner of Income Tax, and there was no such approval in the present case.
Consequently, no ground is made out for reviewing the order.
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2021 (12) TMI 1502
Deduction u/s 35AB - AO reiterated the addition based on the orders passed in the earlier assessment years - HELD THAT:- On mere reading of the provisions of section 35AB of the Act, it would reveal that once the claim was allowed in the first year of payment of lump-sum consideration, the balance 5 instalments shall be allowed as deduction in succeeding 5 years without necessity of looking into the admissibility or otherwise of the claim.
Once the claim was allowed in the first year in which lump-sum consideration was paid, the claim in succeeding 5 years shall be allowed automatically unless and until the claim allowed in the initial year was not disturbed under the process known to the law.
Therefore, it would suffice to hold that once the claim for deduction u/s 35AB was allowed in initial year, such claim cannot be disallowed subsequently, without disturbing the decision in the initial year. The balance of claim in succeeding 5 years should be allowed as deduction without adjudicating on admissibility of the law. Therefore, we remand this ground of appeal no.1 to the file of the Assessing Officer with direction to allow claim of deduction u/s 35AB of the Act after due verification, if it is found claim u/s 35AB was allowed in the initial year of payment of lump-sum consideration.
We held that the claim for deduction u/s 35AB should be allowed in the year under consideration, once the claim was allowed as deduction in the initial assessment year, in the circumstances, it is not necessary to deal with the additional evidence filed before us as the claim for deduction u/s 35AB for the year under consideration does not relate to the initial year payment of lump-sum consideration. Thus, the first ground of appeal raised by the assessee stands partly allowed for statistical purposes.
Disallowance of royalty expenses - CIT(A) holding that incremental running royalty expenditure of 2.25% is capital in nature - HELD THAT:- Royalty is paid in the case of running business and in terms of number of vehicles sold there is no increase in the capacity and existing productivity. Therefore, royalty paid is to the extent of 2.75% of number of vehicle sold is a revenue expenditure. The relevant findings of the ld. CIT(A) is hereby upheld. Thus, we do not find any infirmity in the order of the ld. CIT(A) holding that the royalty paid in terms of percentage sale is revenue expenditure. Thus, the ground of appeal raised by the Revenue stands dismissed.
Disallowance of miscellaneous expenditure - Addition on account of capital etc. on the presumption that the possibility of incurring expenditure for non-business of personal nature cannot be ruled out - HELD THAT:- This addition is made merely based on the presumption, assumption, not based on any material brought on record by the AO - CIT(A) restricted the disallowance to Rs. 2,25,000/- even without referring to any material on record. The approach of both the AO as well as the ld. CIT(A) making ad- hoc disallowance cannot be accepted in the absence of any evidence of bogus payments and the disallowance of part of payment on assumption and conjectures has to be rejected. The lower authorities are not justified in assuming that the deduction was actually incurred for personal/non- business purposes without bringing any evidence on record. Therefore, we direct the AO to allow the entire miscellaneous expenses.
Ad-hoc disallowance of telephone and travelling expenses - AO disallowed 10% of the travelling expenditure on the ground that the vouchers are self-made - HELD THAT:- On careful perusal of the order of the assessment, it would reveal that the AO had resorted disallowance of 10% of the travelling expenditure solely on the ground that the vouchers are self-made and there is no allegation by AO that the expenditure is bogus in nature. Therefore, we do not find any infirmity in the order of the ld. CIT(A). Thus, this ground of appeal no.1 filed by the Revenue is dismissed.
Allowance of prior period expenses and sales tax set off written off in the books of account - HELD THAT:- CIT(A) considering the evidence filed before him came to the conclusion that the liability on account of technical assistance was crystallized during the previous year relevant to the assessment year under consideration considering the fact that the invoice for the technical assistance fees was received during the previous year relevant to the assessment year under consideration. Similarly, the ld. CIT(A) also held that the sales tax claim written off can be allowed as deduction considering the orders of the sales tax authorities passed during the year under consideration. Therefore, we find that the decision of the ld. CIT(A) is based on the proper appreciation of evidence filed in support of both the claims.
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2021 (12) TMI 1499
Exemption u/s 11 - lower authorities held that assessee’s activities are commercial in nature - Assessee is charging handsome registration and subscription fees for providing its services - HELD THAT:- The trust or education institute is running with a nominal fee to cover cost on account of its activities that cannot be held to be a commercial activity. Sometime trust or the other institution does not get complete donations either from public or from the government.
In that case, if those trusts or education institutes charging nominal amount of fee in order to carrying out its activities in a smoother way, this cannot be called a part of commercial activities. Therefore, as assessee is imparting education and training to students and public, its activities have not been doubted by the lower authorities. Therefore, in such circumstances, benefit of Section 11 of the Act cannot be denied. Assessee appeal allowed.
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2021 (12) TMI 1496
Obligation to pass a draft assessment order u/s 144C (1) - merely procedural or inadvertent error or breach of a mandatory provision - whether curable defect? - HELD THAT:- Argument of Respondents that failure on the part of the AO to follow the procedure u/s 144C(1) is merely a procedural or inadvertent error cannot be accepted. The requirement under Section 144C(1) of the Act to first pass the draft assessment order and to provide a copy thereof to the assesee is mandatory requirement that gave substantive right to the assessee to object to any variation, that is prejudicial to the assessee.
Depriving petitioner of this valuable right to raise objection before DRP would be denial of substantive right to the assessee. As held in SHL (India) Private Limited (2021 (7) TMI 1208 - BOMBAY HIGH COURT] failure to follow the procedure under Section 144C(1) of the Act would be a jurisdictional error and not merely procedural error or a mere irregularity. Therefore, the Assessing Officer has assumed jurisdiction to straight away pass the final order without following the mandatory procedure prescribed u/s 144C.
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2021 (12) TMI 1494
Breach of principles of natural justice - Assessment order passed without even considering the submissions in writing submitted and without granting a personal hearing - HELD THAT:- It is one of those blatant cases of breach of principles of natural justice and total non application of mind. In the assessment order, the AO is referring to a show cause notice dated 12th April 2021 by which the DAO proposed modification in returned income and petitioner's initial reply seeking an adjournment of the hearing but conveniently chooses to ignore the reply filed by petitioner on 23rd April 2021 showing cause as to why the modification in returned income should not be made.
We see no reason why we should wait for respondents to file any reply and prolong the agony of petitioner and also waste precious judicial time. If the AO had only considered the file properly and dealt with the reply dated 23rd April 2021, then the need for petitioner to approach this Court would not have arisen. Ignoring the reply and forcing petitioner to approach this Court is again adding to the docket of the already overburdened Court. Hence, it is fit case, in our view, to impose cost on the concerned officer, who shall pay a sum of Rs.5,000/- as donation from his / her personal account to P. M. Cares Fund.
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2021 (12) TMI 1492
Admission of additional grounds of appeal filed under Rule 11 of Income Tax (Appellate Tribunal) Rules, 1963 - legal issue of jurisdiction u/s 147 challenged - Deduction u/s 80IA - AO noticed that the assessee has claimed excess deduction by including income which would not qualify for deduction u/s 80IA - Revenue has challenged deletion of addition made towards foreign exchange fluctuation claimed by the assessee - HELD THAT:- Before us, by filing petition for admission of additional grounds of appeal filed under Rule 11 of Income Tax (Appellate Tribunal) Rules, 1963, assessee has submitted that the assessee is challenging the legal issue of jurisdiction under section 147 of the Act, since, against the original assessment order dated 26.12.2008, the assessee preferred an appeal and vide order dated 24.02.2012, the ld.CIT(A) has allowed deduction under section 80IA of the Act to the extent of ₹.14,11,72,786/- as against the claim of ₹.14,28,54,064/-, which was confirmed by the ITAT in an appeal filed by the Revenue in [2017 (1) TMI 1830 - ITAT CHENNAI] as well as the Hon’ble Jurisdictional High Court vide [2019 (4) TMI 861 - MADRAS HIGH COURT] on further appeal, thereby the issue of eligibility of 80IA relief attained finality.
As contended that no reason was stated by the AO while issuing notice under section 148 of the Act and thus, the reassessment proceedings is bad in law and prayed for suitable directions. The petition filed under Rule 11 of Income Tax (Appellate Tribunal) Rules, 1963 has been admitted. Since the assessee has not raised the legal issue before the ld. CIT(A), we set aside the appellate order and remit the matter back to the file of the ld. CIT(A) to decide the legal issue and thereafter the claim of deductions under section 80IA of the Act, if any, afresh in accordance with law after affording a meaningful opportunity of being heard to the assessee. Appeals filed by the assessee as well as Revenue are allowed for statistical purposes.
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2021 (12) TMI 1482
Validity of Reopening of assessment - non consideration of all the submissions of petitioner as objections to the notice issued u/s 148 - HELD THAT:- As per petitioner if the Court could direct the AO to hear petitioner personally then petitioner could explain to him, before fresh order on objections is passed, and make all submissions before the concerned officer and the Court may then dispose the petition in the above terms.
Revenue leaves it to the Court but states that the Court should not make any observation on the merits of the matter. The request revenue is justified. Therefore, the order dated 20th November 2019 is quashed and set aside.
AO is directed to reconsider the submissions made by petitioner in its letter dated 9th April 2019 in response to the notice issued u/s 148 of the said Act, grant personal hearing to petitioner and thereafter, pass his order in accordance with law within six weeks from today. We clarify that we have not made any observations on the merits of the case.
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2021 (12) TMI 1481
Reopening of assessment - claim made u/s 80IA was rejected for the reason that the conditions laid down by the said provision are not fulfilled - HELD THAT:- Revenue carried the matter in Appeal before this Court and this Court in [2011 (9) TMI 1251 - BOMBAY HIGH COURT], dismissed Revenue’s Appeal relying upon in [2011 (2) TMI 1625 - BOMBAY HIGH COURT]. Therefore, the entire foundation for the proposed re-opening which could, even if considered to be a tangible material, has crumbled. Decided in favour of assessee.
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2021 (12) TMI 1480
Penalty u/s 271(1)(c) - true meaning of concealment of particulars of income and furnishing of inaccurate particulars of income under Section 271 - if, Assessing Officer has accepted the return of income as returned but later it is reassessed based on an order passed under Section 263 of the Act, can a penalty be imposed? - HELD THAT:- The court requested Mr. Madhur Agrawal as Amicus to assist the court. Ms Vissanji stated she will provide a copy of the Appeal Memo to Mr. Agrawal.
Liberty is given to appellant’s counsel to make a photocopy of the order when the substantial question of law was drawn.
The question mentioned above will also be considered as substantial question of law arising out of this Appeal and parties may address on the same on the next date. Stand over to 14th January 2022.
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2021 (12) TMI 1478
Validity of Reopening of assessment - HELD THAT:- As Petitioner has chosen not to press this matter at this stage. We have chosen not to go into the merits of the matter. This disposal will not come in the way of the petitioner in pursuing other legal remedies.
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2021 (12) TMI 1477
Preferring an appeal u/s 246A - as argued if the petitioner is relegated to appellate authority, there will be hindrance in petitioner’s way as the limitation for filing the appeal has already passed - HELD THAT:- Present writ petition is disposed of with the direction to the petitioner to prefer an appeal before the appellate authority on or before 15.01.2022.
In case, appeal is preferred by 15.01.2022, the appellate authority shall consider the same, in accordance with law, ignoring the delay as the petitioner was bonafidely pursuing the present writ petition against the assessment order dated 20.07.2021.
Needless to observe that since this Court has not adjudicated on merit of the case, the petitioner will be free to raise all permissible grounds, including the ground in relation to special audit, in accordance with law.
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2021 (12) TMI 1475
Applicability of Section 115JB on electricity company - assessee is engaged in the generation of power and has been established under the provisions of Damodar Valley Corporation Act, 1948 - scope of amendment brought in Section 115JB of the Act by Finance Act, 2012 effective from 01.04.2013 - HELD THAT:- All taxation is meant for the welfare of the people in a constitutional republic and, therefore, the enquiry as to the mischief sought to be remedied by the amendment becomes irrelevant and, therefore, the Court held that the fiction fixed under Section 115JB cannot be pressed into service against the appellant therein while making the assessment of the tax payable under the Income Tax Act. On this issue, it would be beneficial to refer to the decision of ING Vysya Bank Ltd. [2020 (1) TMI 1116 - KARNATAKA HIGH COURT] wherein held that provision of Section 115JB cannot be made applicable to insurance companies, banking companies or companies engaged in generation or supply of electricity.
Effect of the amendment brought about to Section 115JB by Finance Act, 2012 with effect from 1st April, 2013 and sought to impress upon us the effect of such amendment to sustain their contention - This very issue was considered in the case of CIT, LTU vs. Union Bank of India [2019 (5) TMI 355 - BOMBAY HIGH COURT] as held that the amendments to Section 115JB are neither declaratory nor classificatory but are substantive and significant legislative changes and can be applied only prospectively.
Further, the High Court of Kerala in Principal Commissioner of Income Tax vs. State Bank of India [2019 (10) TMI 638 - KERALA HIGH COURT] had considered the identical issue in respect of a banking company and following the decision of Union Bank of India [supra] had dismissed the appeal filed by the revenue. Appeal decided in favour of assessee.
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2021 (12) TMI 1474
TP Adjustment - DRP directed TPO /A.O. to exclude eight out of thirteen comparable entities whereby reducing arm’s length price (ALP) adjustment - HELD THAT:- We note at the outset that this tribunal’s co-ordinate bench order in Assessment Year 2009-10 in assessee's case [2014 (11) TMI 129 - ITAT HYDERABAD] itself has already excluded M/s. Eclerx Services Ltd., M/s. Cosmic Global Limited and Infosys BPO on the ground that they provide KPO services, have different business model(s) since having huge sub-contracting company brand value, diversified activity and other functional dissimilarities; respectively. Revenue has admittedly not indicated any distinction for the relevant facts in these twin assessment years.
The outcome is not different qua the remaining comparables as well wherein we find that M/s.Informed Technologies Ltd. fails revenue filter of 75% applied by the TPO himself. M/s. Jeevan Scientific Technologies Ltd. has also been rejected on the very turnover filter as well as in light of huge fluctuating margin pinpointing abnormal trend. Same factual position prevails regarding M/s. Mastiff Tech P. Ltd. having bad debts influencing its profit margin thereby reducing them from 21.78% to 2.28% only.
We lastly note that M/s. TCS E-Serve Ltd. fails to satisfy the turnover filter which is also found to be catering mainly to M/s. Citi Group having diversified portfolio than assessee's IT Enabled Services segment. Suffice to say, the learned panel has taken due note of all applicable judicial precedents as well. We thus decline the Revenue’s instant sole substantive grievance as well as the main appeal.
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2021 (12) TMI 1472
Undisclosed LTCG - entering into a joint development agreements - transfer of capital asset u/s 2(47) - assessee submitted he did not transfer the immoveable property as per the provisions of Section 2(47) r.w.s.53A of the T.P Act and had only entered into joint development agreement wherein she is supposed to receive a portion of constructed area in view of the land contributed by her - HELD THAT:- Assessee has only entered into a joint development agreement with the promoter of the project. As a result, the assessee has contributed her land for joint development, and by virtue of the agreement she is entitled to receive 32.30% of the total saleable constructed/developed area in the project. Hence, it is evident that during the relevant assessment year the assessee has contributed her immoveable property for the joint development of the property and eventually when her share in the developed property is sold, she will be benefited by gain or loss as the case may be unless the assessee opts to retain the developed property.
If the assessee opts for sale of her developed property, provisions of Section 45(2) of the Act may apply and Long-Term Capital Gain for the sale of the land as well as profit from the sale of the developed property would be computed in accordance with the provisions of Section 45(2) r.w.s.48 of the Act and under the head “Income from business” respectively. And if the assessee opts to retain her share in the developed property, then long term capital gain shall accrue to the assessee when the transfer of the immovable property pertaining to the share of land assigned to developer takes place.
Amount received by the assessee of Rs.7 crores is only an interest-free refundable security deposit for ensuring the project to be completed as per the terms of the agreement. Further, it is also obvious that the assessee has only permitted the developer to develop the project in her land. Therefore, it cannot be construed that the possession of the immoveable property of the assessee is vested with the joint developer as per the provisions of the Act.
Thus it is apparent that the assessee shall not be liable to be taxed for entering into a joint development agreement when neither the assessee have received any consideration nor handed over possession of the immovable property during the relevant assessment year. It is Ordered accordingly. Hence the appeal of Revenue is devoid of merits.
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2021 (12) TMI 1468
Revision u/s 264 after eight years - eligible reasons for delay - HELD THAT:- As Petitioner submits that due to mistake he had filed an appeal before the Tribunal against the assessment order in question and it appears from record that the said appeal was dismissed on 25th September, 2014 as it appears from Annexure P-5 to the writ petition and even if the explanation of the petitioner is accepted the time was consumed by him in the appeal in that case also from the order of the Tribunal it is after almost seven years in approaching the writ court and this inordinate delay itself is sufficient ground for refusal to entertain the writ petition.
In justification of delay of this seven years, petitioner wants to rely on Paragraphs 7 and 8 of this writ petition but we are not convinced with the same since the writ court is a court of equity and it is for those who are vigilant and diligent to their rights and not for those who sleep over their rights. The impugned order being passed by giving opportunity of hearing to the petitioner but he did not avail that opportunity and he asked further adjournment.
Considering these facts, this writ petition dismissed.
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