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Income Tax - Case Laws
Showing 41 to 60 of 571 Records
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2021 (1) TMI 1134 - ITAT MUMBAI
Disallowance u/s 14A r.w.r. 8D - assessee has suo-moto disallowed an amount - whether the disallowance under Rule 8D(2)(iii) is to be restricted to the extent of exempt income i.e. dividend income earned by assessee or the disallowance as suo-moto computed by assessee? - HELD THAT:- As gone through the decision of Hon’ble Supreme Court in the case of Maxopp Investments Ltd [2018 (3) TMI 805 - SUPREME COURT] wherein as categorically held that the disallowance cannot exceed the exempt income. Hence, we delete the suo-moto disallowance made by assessee at ₹ 5,86,52,973/- and restricted the disallowance to the extent of exempt income claimed by assessee at ₹ 13,17,233/-. We direct the Assessing Officer accordingly. Appeal of assessee is allowed.
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2021 (1) TMI 1130 - ITAT PUNE
Rectification of mistake u/s 254 - determination of ALP of the international transaction of Management Fees - Tribunal has restored the issue of determination of the Arm’s Length Price (ALP) of the international transaction of payment of Management Fees to the AO/TPO with a direction to select the correct method and then determine its ALP - Tribunal, in its order u/s 254(1), has rejected the selection of the Cost Plus method (CPM), the Transaction Net Marginal method (TNMM) and the Comparable Uncontrolled Price (CUP) method - HELD THAT:- Tribunal observed certain inconsistencies in the application of the methods by the assessee and the TPO, which did not properly fit into the application mechanism. Those were the raison d’etre for discarding their application. For example, the assessee wrongly considered foreign AE as a tested party or did benchmarking under the TNMM in an aggregate manner.
The Tribunal did not approve this. Both these fall in the domain of wrong application of method. Similarly, the TPO did not select any comparable uncontrolled transaction under the CUP method, which got disapproved by the Tribunal in its order u/s 254(1) of the Act. This is again an instance of wrong application of method.
Overruling the wrong application of the method doesn’t mean ruling out the selection of that Method as well. If the wrong application of a method is corrected, there can be no impediment in its selection. To put it simply, it is still open in the fresh proceedings to choose the assessee as a tested party and benchmark the transaction on segregate basis and apply the TNMM; or to find out a suitable comparable uncontrolled transaction and apply the CUP method; so on and so forth. The long and the short of the whole thing is that selection of any of the methods is open before the TPO, who can reshuffle the existing data or require the assessee to make good the deficiencies in the existing data as observed by the Tribunal in its order u/s 254(1) and proceed with the determination of the ALP of the international transaction.
Once the matter has been sent back to the TPO for a fresh determination of the ALP of the international transaction of the payment of Management services, we do not wish to clip his wings by directing to adopt a particular method only. Now it is within his domain to find out the most appropriate method in the facts and circumstances and proceed accordingly.
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2021 (1) TMI 1127 - ITAT KOLKATA
Revision u/s 263 - Addition u/s 14A - selection of the case for limited scrutiny - HELD THAT:- PCIT could not have exercised his revisional jurisdiction on the issue on which he found fault with the action/omission on the part of AO because in the first place the AO could not have been faulted for not conducting any enquiry on the issue of Section 14A of the Act in respect of exempt income, since the assessee’s case was selected for scrutiny only for limited purpose under CASS and the issue of disallowance u/s 14A read with Rule 8D in respect of exempt income was not the reason for selection of the case for limited scrutiny.
Therefore, as per the CBDT circular (supra) the AO could not have initiated enquiry on the issue of section 14A of the Act and it is settled that CBDT circulars are binding on income tax authorities. Therefore in such a scenario, the Ld. PCIT could not have invoked jurisdiction u/s 263 of the Act because he could not have held the AO’s order to be erroneous because the AO was justified in not enquiring in to the issue of disallowance u/s 14A read with Rule 8D in respect of exempt income, since the AO has gone as per the dictum of CBDT circular on the subject. Therefore, the AO’s action/ omission of not looking into the issue of 14A of the Act cannot be a ground for the Ld. PCIT to exercise his jurisdiction since he cannot hold the AO’s omission to be erroneous as well as prejudicial to Revenue and the impugned action of Ld. PCIT is akin to do indirectly what the AO could not have done directly.
PCIT has ventured to exercise his revisional jurisdiction by issuing SCN without even satisfying the condition precedent to invoke the jurisdiction u/s 263 - Therefore the SCN itself is bad in law and therefore it is quashed - Decided in favour of assessee.
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2021 (1) TMI 1126 - SUPREME COURT
Reopening of assessment u/s 148 - whether documents furnished by the Petitioner that an assessment order under Section 143(3)? - HELD THAT:- The special leave petition is dismissed. We have not entered into the merits of the questions involve in this petition.
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2021 (1) TMI 1124 - BOMBAY HIGH COURT
Recovery proceedings - Challenge order rejecting the application of the petitioner for complete stay of demand arising out of the order passed by the assessing officer under section 115Q read with section 115O of the Income Tax Act, 1961 for the assessment year 2017-18 till disposal of appeal before the Commissioner of Income Tax (Appeals) - interim protection granted to petitioner - HELD THAT:- Tribunal itself has decided to hear the appeal out of turn, the hearing should be expedited. Further, we feel that if the assessing officer initiates any recovery measure, he should give at least two weeks' prior notice to the petitioner to avail its legal remedy.
We issue the following directions:
(i) Let the Tribunal decide the appeal of the petitioner within three months from today;
(ii) If the assessing officer resorts to any coercive measure for recovery of dues in the meanwhile, he shall give at least two weeks' prior notice to the petitioner to avail its legal remedy;
(iii) All contentions are kept open.
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2021 (1) TMI 1119 - ITAT HYDERABAD
Depreciation u/s 32(1)(ii) in respect of its “right to collect toll” - whether or not the assessee’s claim for depreciation on “license to collect toll”, an intangible asset, falls within the scope of Sec.32(1)(ii) ? - assessee’s stand qua its claim is that it has been holding the concessionare rights in the nature of license to collect road toll of an intangible asset u/s 32(1) - HELD THAT:- We are of the considered view that the issue as to whether an Infrastructure Development company that had constructed a road on build, operate and transfer (BOT) basis on the land owned by the Central Government would be eligible for claim of depreciation in respect of its intangible rights i.e “right to collect toll” under Sec. 32(1)(ii) - See Progressive Construction Ltd. [2017 (3) TMI 1167 - ITAT HYDERABAD]
There does not appear to be any dispute about the fact that the Assessing Officer’s assessment order; take for instance, the order dated 30th December, 2017 has not controverted the assessee’s plea that Clause 3.1 of the concession agreement has resulted in the NHAI granting concessionary rights to reconstruct, operate and maintain the corresponding national highway project. We wish to repeat here that the Assessing Officer has only quoted the Board’s Circular No.9/2014 dated 23rd April, 2014 in favour of amortization by following matching concept only. We observe in these factual backdrop that Revenue’s arguments supporting the impugned disallowance are not sustainable.We make it clear that assessee’s stand qua its claim is that it has been holding the concessionare rights in the nature of license to collect road toll of an intangible asset u/s 32(1)
Coming to the exclusive usage part; we see no material on record which would indicate that anybody other than the assessee is entitled to dilute its rights to construct, operate, maintain the project in lieu of the toll collections right for the specified agreement period. We therefore hold that the assessee’s right to collect toll would form an exclusive right in the nature of license eligible to be treated as an intangible asset as per Special Bench’s decision (supra).We thus decline the Revenue’s arguments supporting the impugned depreciation disallowance - Decided in favour of assessee.
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2021 (1) TMI 1117 - ITAT HYDERABAD
Correct head of income - Rental receipts - assessable as ‘Income from house property’ OR ‘business income’ - HELD THAT:- As the assessee has itself declared the very kind of receipt derived in the subsequent assessment years under the head ‘business income’ only and therefore, it does not dispute the lower authorities action under challenge which has been the subject matter above extracted twin grounds. And more so, in view of hon’ble apex court’s decision in Chennai Properties & Investment Ltd. [2015 (5) TMI 46 - SUPREME COURT] and tribunal’s decision in assessee’s own case for A.Y. 2010-11 dated 11.7.2016. We decline the assessee’s above two substantive grounds in foregoing terms therefore.
Admission of assessee’s additional ground - HELD THAT:- We are of the opinion that the tribunal’s jurisdiction continues right from filing of the appeal till final disposal u/s 254 of the Act. Their lordships landmark judgement in NTPC [1996 (12) TMI 7 - SUPREME COURT] has clarified that this second appellate jurisdiction has to be taken in widest than in a narrower sense. We make it clear the hon’ble jurisdictional high court’s decision (supra); even if taken as directly dealing with the issue, came much prior in time. We thus go by the judicial hierarchy to decline the Revenue’s objections regarding admission of asssessee’s additional ground. We also quote this tribunal’s decision All Cargo Global Logistics Ltd. Vs. DCIIT [2012 (5) TMI 466 - ITAT MUMBAI] that we can very well entertain and admit an additional ground to determine the correct tax liability of an assessee provided the relevant facts are already on record.
Higher and secondary education cess paid - eligible deduction u/s 37 r.w.s. 40(a)(ii) while computing income under the head ‘profits and gains of business /profession’ - HELD THAT:- We hold that the asssessee’s paper book running clearly demonstrate that it had itself added back the education cess amount suo moto. Its further argument that we have to go by hon’ble apex court’s decisions dealing with central excise law also does not find favour with us in view of hon’ble Bombay high court’s decision in Sesa Goa Ltd.[2020 (3) TMI 347 - BOMBAY HIGH COURT] specifically dealing with this plea onwards thereby concluding that “a cess under the provisions of the Act is not to be taken as “tax” for the purpose of s.40(a)(ii) disallowance”. Therefore we accept assessee’s claim seeking to allow education cess and direct the Assessing Officer to finalise the consequential computation as per law. The assessee’s instant additional substantive ground is allowed.
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2021 (1) TMI 1109 - ITAT DELHI
Settlement of dispute relating to the tax arrears for the assessment years under consideration under The Direct Tax Vivad se Vishwas Act, 2020 - as stated that the necessary declaration in accordance with Section 4 of The Direct Tax Vivad se Vishwas Act, 2020 has been filed by the assessee - appeals have been preferred by the assessee against the Separate orders passed by the Learned Commissioner of Income Tax (Appeals)-16, New Delhi {CIT(A)} for Assessment Years: 2008-09 & 2007-08 - HELD THAT:- As aforesaid is subject to a caveat that in case the dispute relating to tax arrears for the captioned assessment years are not ultimately resolved in terms of the aforestated Act, the appellant (i.e., the assessee) shall be at liberty to approach the Tribunal for reinstitution of the appeals and the Tribunal shall consider such applications appropriately as per law. The respondent (i.e., the Revenue) has no objection with regard to the aforesaid caveat.
In view of the aforesaid, the appeals are consigned to the records and, for statistical purposes, are treated as dismissed.
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2021 (1) TMI 1108 - ITAT MUMBAI
Deduction u/s 80P - AO treated the assessee as a cooperative bank other than primary agricultural credit society and denied the claim of deduction u/s 80P - HELD THAT:- As relying on decisions in the case of the appellant [2018 (6) TMI 1746 - ITAT MUMBAI] and the decision of the Hon'ble High Court of Karnataka in the case of Tumkur Merchants' case [2015 (2) TMI 995 - KARNATAKA HIGH COURT] it is held that the appellant is eligible for deduction u/s. 80P(2)(a)(i) in respect of the income and it is also eligible for deduction in respect of dividend income of ₹ 1,19,589/- u/s. 80P(2)(d) of the Act. The AO is directed to allow deduction u/s. 80P as claimed by the appellant and assess the total income at Rs. Nil. Ground no. 1 is allowed of assessee.
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2021 (1) TMI 1106 - ITAT BANGALORE
Foreign tax credit available - Eliminating double taxation of doubly taxable income in the hands of assessee - difference in FTC available to assessee on taxes paid in USA, Japan and Germany vis-s-vis Korea - HELD THAT:- India US DTAA - A perusal of the aforesaid provision makes it clear that, if a resident Indian derives income, which may be taxed in United States, India shall allowed as a deduction from the tax on the income of the resident, an amount equal to the tax paid in United States of America, whether directly or by deduction. The conditions mandated in the treaty is that if any "income derived" and "tax paid in United States of America on such income", then tax relief/credit shall be granted in India on tax paid in United States of America.
India Japan DTAA - Article 23(2) of India Japan DTAA deals with elimination of double taxation.
India Germany DTAA - All these clauses are identically worded as Article 25(2)(a) of India US DTAA. Relevant clauses for elimination of double taxation in the treaties under consideration states that, foreign tax credit shall not exceed the part of the income tax as computed before the deduction is given, "which is attributable as the case may be, to the income which may be taxed in that other State". We also note that, these clauses uses the expression 'income', which essentially means 'income' embedded in the gross receipt, and not the 'gross receipt' itself. We therefore do not agree with the computation adopted by Ld.AO.
For eliminating double taxation of doubly taxable income in the hands of assessee, it would be necessary to establish the taxes paid by assessee in USA, Japan, and Germany. The condition stipulated is very clear that FTC is available on taxes paid in these countries.
India- Korea DTAA - On perusal of the said Article, we find that, in India FTC is available to the taxes paid in Korea and such credit shall not exceed the taxes payable in India on doubly taxed income. Thus there is a difference in FTC available to assessee on taxes paid in USA, Japan and Germany vis-s-vis Korea.
In the present facts of the case, respective treaty countries withheld taxes against income from the source state at a particular rate. Article 25 of Indo U.S Treaty, Article 23 (2) of Indo-Japan Treaty and the Indo-Germany Treaty, allows FTC in India to the extent of tax paid in these countries, whereas, Article 23 of Indo-Korea Treaty allows FTC which shall not tax payable on such doubly taxable income in India.
We note that authorities below failed to understand the treaty provisions applicable in present facts with these countries regarding granting of FTC to assessee. On perusal of treaty provisions, we are of the view, that assessee is eligible for FTC in full, amounting to taxes paid in USA, Japan and Germany. We draw support from decision of Hon’ble Karnataka High Court in case of Wipro [2015 (10) TMI 826 - KARNATAKA HIGH COURT]
Only in case of Korea, FTC is limited to taxes payable on such doubly taxed income in India, before any deduction. In other words, FTC is limited to or taxes paid in Korea or India, whichever is less. AO is therefore directed to grant FTC in respect of taxes paid in USA, Japan and Germany. In case of taxes paid in Korea, FTC will be tax actually paid in Korea or payable in India on such doubly taxable income, which ever is lower.
Income earned income from Taiwan - We note that, India has not entered into double taxation avoidance agreement with Taiwan. Therefore, foreign tax credit available to assessee against taxes paid in Taiwan will be computed in accordance with section 91 of the Act.
The said provision provides for deduction of tax paid in any country from the Indian Income tax payable by assessee of a sum calculated on such doubly taxed income, even though there is no agreement under Section 90 for the relief or avoidance of double taxation. Explanation (iv) defines the expression income tax in relation to any country includes any excess profit tax or business profits tax charged on the profits by the Government of any part of that country or a local authority in that country. Therefore, even in the absence of an agreement under Section 90 of the Act, by virtue of the statutory provision, the benefit conferred under Section 91 of the Act is extended to the income tax paid in foreign jurisdictions.
We have dealt with FTC available to assessee in respect of foreign taxes paid by assessee in Japan, Korea, Germany and USA. For year under consideration credit has to be computed in similar manner as has been tabulated by assessee for assessment year 2013-14 reproduced hereinabove.
Our observations for assessment year 2013-14 in allowing tax credit to assessee is applied mutatis mutandis for year under consideration.
Insofar as Taiwan is concerned, section 91 also interprets computation of foreign tax credit to assessee in the similar manner. Section 91 contemplates the situation where there is no agreement between the Central Government and the other country concerned for the grant of relief in respect of income which has suffered taxation in both the countries or for the avoidance of double taxation of the same income.
This section lays down its own conditions for and extent of the relief contemplated to be given to an assessee. The first condition is that the assessee should be a resident in India as per term defined in Section 6 of the Act. The second condition is that the income which has accrued or arisen outside India to such resident in India should not be deemed to accrue or arise to him in India. The third condition is that such resident-assessee should have paid income-tax on such income under the law in force in that country. Once these three conditions are fulfilled, such resident-assessee would be entitled to the deduction from the Indian income-tax, as is payable by him, of a sum calculated on the doubly taxed income at the Indian rate of tax or the rate of tax of the other country concerned, whichever is the lower.
Thus, as per section 91 of the Act, in case of Tiwan, FTC is to be computed based on rate of tax applicable in India or Korea, whichever is less, on such doubly taxable income.
We are of the view that assessee is eligible for FTC in full, amounting to taxes paid in USA, Japan and Germany. We draw support from decision of Hon’ble Karnataka High Court in case of Wipro( [2015 (10) TMI 826 - KARNATAKA HIGH COURT]
In case of Korea, FTC is limited to taxes payable on such doubly taxed income in India, before any deduction. In other words, FTC is limited to or taxes paid in Korea or India, whichever is less. In case of Tiwan, FTC is to be computed based on rate of tax applicable in India or Korea, whichever is less, on such doubly taxable income. AO is thus directed to compute FTC accordingly.
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2021 (1) TMI 1103 - ITAT DELHI
Disallowance of the additional depreciation claimed by the Appellant Company u/s. 32(1)(iia) - Manufacture or production - AO has held that the process of delivery of CNG to automobiles at the CNG filling centres does not amount to manufacture or production or an article or thing which is mandatory requirement for claiming additional depredation u/s. 32 (1)(iia) - Whether the compressed natural gas produced by the appellant, having different name, character and use from natural gas can be said to be covered by the phrase manufacture or production? - HELD THAT:- As decided in CENTRAL U.P. GAS LIMITED [2016 (12) TMI 814 - ALLAHABAD HIGH COURT] compressed natural gas in its compressed form has a distinct identity and character and use. It is settled law of the Apex Court in the case of Income Tax Officer Vs.Arihant Tiles and Marbles P. LTD. reported in [2009 (12) TMI 1 - SUPREME COURT] that when a commodity acquires a distinct name, use and commercial identity, it would acquire the trait of 'manufacture'.
Question is answered in favour of the assessee.
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2021 (1) TMI 1090 - BOMBAY HIGH COURT
Condone delay in fling the application for exemption u/s 10(23C)(vi) - extension of the limitation period - HELD THAT:- Neither of the two i.e. the order dated 27.09.2019 and the Circular dated 03.11.2020 deal with an application for exemption under section 10(23C)(vi) of the act in Form No.56D which has a definite time line i.e., upto 30th September of the relevant assessment year, in the instant case 30th September 2019. We do not find any provision for extending the time limit beyond 30.09.2019 though such a power is available with the CBDT.
There is no provision for extension of the limitation period or for condonation of delay in fling the application for grant of exemption under section 10(23C)(vi) of the act by the CIT (Exemption) To that extent respondent No.1 was justified in rejecting the application for the assessment year 2019-20. As per the version of the respondents themselves the application for exemption of the petitioner was not confined to assessment year 2019-20 only. An application for grant of exemption from the assessment year 2019-20 onwards. While respondent No.1 was correct in rejecting the application for the assessment year 2019-20 as being time-barred, it certainly fell in error in not considering the said application for subsequent assessment years i.e. for assessment year 2020-2021 and onwards. Because even if the application was fled on 31.10.2019 which was belated for the assessment year 2019-20, it was before the prescribed date for the subsequent assessment year i.e. assessment year 2020-2021 and thereafter as it had been fled much before the cut of date of 30.09.2020.
We feel that even at this stage petitioner may approach CBDT under section 119(2)(b) seeking a special order to respondent No.1 to condone the delay in fling the application for exemption under section 10(23C)(vi) of the Act for the assessment year 2019-20, there being admitted delay of 31 days in fling the application for the said assessment year, and thereafter to deal with the said application/ claim on merit in accordance with law.
Since we have taken the above view, it may not be necessary to deal with the contention relating to alternative remedy.
Having regard to the above and upon thorough consideration of the matter, we deem it appropriate to issue the following directions :-
I) Petitioner shall file an application before the CBDT under section 119(2)(b) to authorize respondent No.1 to condone the delay in fling its application dated 31.10.2019 for exemption under section 10(23C)(vi) of the act, for the assessment year 2019-20 and to deal with the same on merit in accordance with law ;
II) If such application is fled by the petitioner within a period of three weeks from today, CBDT shall pass an appropriate order in accordance with law within a period of four weeks thereafter with due intimation to the petitioner;
III) Respondent No.1 shall consider the application of the petitioner dated 31.10.2019 for grant of exemption under section 10(23C)(vi) of the act for the assessment year 2020-21 onwards in accordance with law within a period of eight weeks from the date of receipt of a copy of this order;
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2021 (1) TMI 1089 - GUJARAT HIGH COURT
RTI Application seeking information against Private Parties - Allegation of tax evasion - Public interest - Single Judge held that Petitioner is not entitled to get the information in the form of his Income Tax Returns, Status of Agriculturists, disclosure as Business Income or not etc. and from the concerned Authorities of the Income Tax Department under provisions of the RTI Act with respect to private Respondent with whom the present Petitioner has some litigation with regard to the land in question, which the Petitioner claims to have purchased and was again sold by the same Seller in favour of private Respondents also who claimed to be the Agriculturists under a Will - HELD THAT:- We are satisfied that the order of the learned Single Judge does not require any interference in the present intraCourt appeal and the same being without merit deserves to be dismissed.
The Applicant - Petitioner in the present case firstly sought to emphasise that Section 6(2) of the RTI Act does not require any reasons to be given in the Application requesting for the information except those that may be available with him and necessary for contacting him. This, in the submission of the learned counsel for the Applicant - Petitioner, gives a larger latitude and platform to the Applicant under the said Act. The procedure for disposal of such request and application provided in Section 7 of the RTI Act, while the other provisions of remedial nature for further appeal, etc. are contained in Chapter 5 containing Sections 18 to 20 of the RTI Act.
The overriding factor which enables such information to be disclosed notwithstanding the exemption under Section 8 of the RTI Act appears to be larger public interest in such disclosure of information.
The tenor of the application filed by the Applicant shows it is in the nature of a complaint against the private Respondents to the Income Tax Department, rather than any bona fide public interest sought to be served by the disclosure of such information about the status of the private Respondents as agriculturists or not, whether their right to get such status by way of a Will executed by a Testator is sustainable in law or not, etc. Such personal or private information about the Assessees under the Income Tax Act are only meant to be dealt with, investigated, inquired or contested by the Assessees concerned before the Income Tax Authorities and they are not the 'information' in public domain to be made available to any third party
The only interest of the Petitioner who has been fighting against these private Respondents at all possible forums including the RTI Act and criminal complaints appears to be the only private interest and the name of a public interest is just a ruse or excuse given to the public authorities calling upon them to disclose such 'information' to the Petitioner - Applicant. The provisions of the RTI Act are not meant to allow the parties to collect evidence from such Departments or Public Authorities to subserve their private interest
The sanctity of the Income Tax Assessment, filing of Returns, investigation and inquiry under the Act would be thrown open to third parties, if such 'information' was to be disclosed to third parties casually or carelessly. On the other hand, the Act provides for keeping such information guarded in confidence with the Authorities. Therefore, the bar under Section 138 of the RTI Act as well as the exemption against such disclosure contained in Section 8 of the RTI Act, more particularly under Section 8(1)(j) of the RTI Act, completely seals the fate of the Applicant - Petitioner in the present case.
The learned Single Judge, in our opinion, was absolutely correct and justified in dismissing the writ petition at the threshold.
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2021 (1) TMI 1088 - DELHI HIGH COURT
Refunds claim along with interest accrued thereon u/s 244A - what remedies are available under the Act in respect of an error committed by the Tax Authority in calculating the refund? - statutory alternate remedy - HELD THAT:- Learned counsel for the petitioner is unable to point out any specific provision and submits that these remedies lie before this Court.
We would not like to be drawn into the factual controversy. Particularly, since there is a dispute regarding the computation of refund amount, a mandamus, as prayed for, cannot be issued to the respondents. In our view the Income tax Act not only creates rights and liabilities, but also provides for a complete machinery for enforcing the same, as well as a mechanism to challenge the orders of the Revenue authorities. Thus, the Petitioner must only avail the remedy as provided for by the statute. The fact that we have a wide jurisdiction under Article 226 of the Constitution does not mean that we can disregard the substantive provisions of the statute and the mechanism provided thereunder.
We are thus inclined to dispose of the present petition, observing that the petitioner shall be free to pursue its departmental/statutory remedy as available in law with respect to any grievance regarding the calculation of refund made by the respondents.
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2021 (1) TMI 1087 - MADRAS HIGH COURT
Deduction u/s 80(P)(2)(a)(i) - AO disallowed the claims of the assessee on the ground that the assessees had lent monies to the members who were undertaking non-agricultural/ non-farm activities and had received the interest on par with commercial banks - HELD THAT:- As decided in own case [2016 (8) TMI 560 - MADRAS HIGH COURT] CIT (Appeal) and the Income Tax Appellate Tribunal has clearly held that the assessees are not co-operative bank and that their activities in the nature of accepting deposits, advancing loans etc., carried on by the assessees are confined to its members only and that too in a particular geographical area. Therefore, the respondent Societies are eligible for deduction under Section 80P (2) (a) (i) of the Act..
The contention of the appellants that the members of the assessee societies are not entitled to receive any dividend or having any voting right or no right to participate in the general administration or to attend any meeting etc., because they are admitted as associate members for availing loan only and was also charging a higher rate of interest at the rate of 14%, is not a ground to deny the exemption granted under Section 80P (2)(a) (i) of the Act. - Decided against the Revenue.
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2021 (1) TMI 1086 - ITAT BANGALORE
Rectification of mistake - Gain on sale of property - Business income or capital gain - whether the Revenue authorities were justified in treating the gain on sale of properties by the assessee which was considered by the Assessee as a long term capital gain, as giving rise to business income/short term capital gain? - HELD THAT:- Tribunal has not adjudicated the main grievance of the assessee regarding conclusions of the AO that the gain on sale of property was short term capital gain and has adjudicated on the issue whether the income in question give raise to capital gain or business income. The findings of the AO are contradictory as already pointed out above and the CIT(A) has also not rendered any clear finding on the issue. In these circumstances, we are of the view that the order of the Tribunal suffers from mistake apparent from the face of the record in as much as ground No.5 and 6 raised by the Assessee remains undecided. Hence, the proper course would be to recall the entire order rather than deciding the other grounds as these grounds are interconnected or interlinked. The order of the Tribunal is recalled and registry is directed to fix the appeal for hearing afresh in due course after notice to parties. Assessee’s Miscellaneous Petition is allowed.
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2021 (1) TMI 1085 - ITAT AHMEDABAD
Determination of long term capital gain from sale of land - taking jantri value at ₹ 618/- - valuation of the property for the purpose of section 50C - which rate is to be deemed as full consideration for the sale of this property for purpose of section 48? - HELD THAT:- In the present case, the payments have been made through account payee cheque, and time gap between the presentation of the sale deed for registration vis-à-vis revision of rates for the purpose of charging higher stamp duty is not substantive and considerable. The sale deed was presented on 24.5.2011 where as the rates were revised on 18.4.2011. The time gap between the agreement vis-à-vis sale deed is also not substantive.
Agreement is dated 31.12.2010 and sale deed was presented for registration on 24.5.2011. Considering this hardship for the vendors, section 50C was amended and second proviso has been brought on the statute book, which authorized an assessee to argue that where the amount of consideration or part thereof has been received by way of account payee cheque, then the appointing day for the purpose of valuation of the property for the purpose of section 50C is to be taken the date of agreement. This proviso has been held to be applicable with retrospective effect by case of Dharamshibhai Sonani [2016 (9) TMI 1259 - ITAT AHMEDABAD]
Assessee has submitted before the ld.CIT(A) that simultaneous sale deed was registered on survey no.932, 951, 899 and 894 where stamp duty valuation authority has also accepted the rate at ₹ 200/- per sq.meter and the sale agreement were entered on 30.12.2010.
We are satisfied that for the purpose of computation of long term capital gain on sale of land, the value shown by the assessee at the rate of ₹ 200/- per sq.meter is to be adopted. We accordingly direct the AO to take value disclosed at the rate of ₹ 200/- per sq.meter, and thereafter calculate the long term/short term capital gain, if any, leviable in the hands of the assessee. First ground of appeal is accordingly allowed.
Disallowance expenditure on account of banakhat agreement, land leveling and its fencing on the ground that the same are excessive - HELD THAT:- We find that disallowance of expenditure in respect of land leveling, fencing and banakhat expenses totaling to ₹ 37,55,750/- a meager amount of ₹ 34,567/- has been allowed by the Revenue, without any realistic consideration.
Even before making such disallowance no explanation was called for by the Revenue, and the assessee was not given any opportunity to furnish the details of the expenses. It is not the case of the Revenue that the expenses incurred by the assessee were not related to the land or the expenses incurred for any other purposes, as he has not called for any details from the assessee. It seems that the disallowance has been made simply on the basis of some surmises that the assessee fabricated the expenses to reduce the tax effect, such assumption of the AO is not tenable. We, therefore, in the interest of justice and fair play remit the issue of disallowance back to the file of the AO for re-adjudication and to decide the issue on the basis of details furnished/to be furnished by the assessee.
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2021 (1) TMI 1084 - ITAT DELHI
Disallowance of 30% deduction for repairs u/s 24 - rental income received by the appellant by holding that the relevant income was service charges and not rent - HELD THAT:- The issue under consideration in respect of the disallowance pertaining to income from house property is identical to earlier Assessment Years and there being no change in facts and circumstances, we see no reason to uphold the disallowance as upheld by the Ld. CIT (A). We also note that the identical issue was decided in favour of the assessee and against the Revenue in earlier orders of the Tribunal for Assessment Years 2001-02, 2002-03 & 2003-04. The copies of all these orders have been placed before us and no contrary material or any higher Court’s orders have been placed on record to show that such earlier orders of the Tribunal have been reversed by any higher forum. Therefore, following the precedents as citied above in assessee’s own case, we set aside the order of the Ld. CIT (A) on the issue and direct the deletion of disallowance.
Disallowance of legal and professional fees - HELD THAT:- As following the order of the Tribunal in earlier assessment years as aforesaid in assessee’s own case and on identical facts [2015 (8) TMI 38 - ITAT DELHI], and [2010 (8) TMI 972 - ITAT DELHI] we set aside the order of the Ld. CIT (A) on the issue of disallowance of legal and professional charges and direct the deletion of the same.
Disallowance of depreciation - HELD THAT:- The issue has been decided in favour of the assessee right from Assessment Years 2001-02 to Assessment Years 2012-13 and on this issue also there has been no reversal of the order of the Tribunal by any higher judicial forum. Thus, this issue has also attained finality. Respectfully following the same, we uphold that action of the Ld. CIT (A) in deleting this disallowance of deprecation.
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2021 (1) TMI 1083 - ITAT DELHI
Disallowance of running and maintenance expenses of foreign office - as seen that these foreign expenses have been debited by the assessee company to the Profit & Loss Account under the head manufacturing, administrative and other expenses under the sub-head miscellaneous expenditure in Schedule-13 of the audited accounts - HELD THAT:- A perusal of the assessment order passed u/s 147 of the Act shows that the Assessing Officer has based the addition merely on the reasons recorded for reopening wherein it has been stated that this expenditure was not allowable as per the provisions of the Act. How and why this expenditure was not allowable has not been specified by the AO. Before us also, the Ld. Sr. DR could not point out any perversity in the findings of the Ld. CIT (A) on the issue.
This amount has been duly disclosed in the audited financial statements and no fresh material on the issue has been brought on record by the Assessing Officer. Undisputedly, the reassessment is beyond the period of four years and, therefore, it was incumbent upon the Assessing Officer to point out specifically as to how the escapement of income from tax on this issue could be attributed to any fault on the part of the assessee. Therefore, in view of the categorical findings recorded by the Ld. CIT (A) that no adverse inference was drawn by the Assessing Officer and that the payment was duly supported and evidenced by documentary evidences and that the genuineness of expenditure incurred was not doubted by the AO.
Addition pertaining to quota expenses - the quota was allotted on year to year basis and, therefore, it had no enduring benefit - HELD THAT:- In the Assessment Order passed u/s 147 of the Act, the Assessing Officer has not pointed out any reason for treating this expenditure as capital expenditure but has only as referred to the reasons recorded for reopening and has disallowed the same. Even the Ld. SR. DR could not point out any perversity in the findings of the Ld. CIT (A) on the issue - CIT (A) has also placed reliance on case of M.S. Kandappa Mudaliar vs. CIT [1957 (3) TMI 62 - MADRAS HIGH COURT] wherein it was held that the expenditure for acquisition of quota rights is not a capital expenditure. Therefore, on this issue also, the contention of the Department fails and the order of the Ld. CIT (A) is upheld.
Addition on account of ‘advance recoverable by way of income from financial transactions’ - CIT (A) has noted that the amount debited to ‘income from financial transactions receivable’ was in respect of income already credited under the head ‘income from financial transactions’ - HELD THAT:- CIT (A), while deleting the disallowances, has noted that this was a case of double taxation of income as the same was already part of the profit shown by the assessee in its income tax return and was again added back in the order passed in reassessment proceedings. The Ld. Sr. DR could not point out any perversity in the finding of the Ld. CIT (A) that this amount had come to be taxed twice. Accordingly, on this issue also we find that there is no reason to interfere with the findings of the Ld. CIT (A) and we uphold the same.
Appeal of the Department stand dismissed.
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2021 (1) TMI 1082 - ITAT HYDERABAD
Agricultural income - Nature of land - income earned on leasing out agricultural land is agricultural income or not? - HELD THAT:- The undisputed facts of the case are that the assessee is the owner of agricultural land of 20 acres and 10 guntas. The Khasra Pahani also shows that these lands are agricultural lands and that the crop grown thereon is Mango. Therefore, these lands being agricultural land is not in dispute. In addition to these lands, the assessee has taken on lease agricultural lands in Ranga Reddy and Nalgonda Districts from two other persons. These lands also being agricultural lands is not in dispute
Whether the agricultural operations have been carried on by the assessee in these lands? - As regards the agricultural operations carried on by Adisa Agro (P) Ltd during the relevant period is concerned, there is no information available on record nor is there any dispute raised by the authorities below, except for a finding by the CIT (A) that there is no evidence on record to state that the company had actually utilized the land wholly and exclusively for the purpose of cultivating on its own rather than sub-leasing it to outside parties. Therefore, no presumption can be drawn about the agricultural operations being or not being carried out by the company.
Fact remains that assessee has earned lease rent income by leasing out the agricultural land. Whether such income is eligible to be taken as agricultural income is the question before the Tribunal. The term agricultural income has been defined u/s 2(1A) of the I.T Act and for the purpose of ready reference.
From the lease deed, it is seen that the assessee had carried on agricultural operations during the previous year i.e. 2013-14 relevant to the A.Y 2014-15 and thereafter, the assessee has leased out this land to Adisa Agro (P) Ltd on 30.09.2013 i.e. during the previous year 2014-15 relevant to the A.Y 2015-16. Therefore, the assessee had carried on agricultural operations during the previous year 2013-14 and subsequently such agricultural land has been given on lease to a company which is also engaged in carrying on agricultural operations.
The finding of the CIT (A) is that the crops grown are commercial in nature. The definition of ‘Agricultural Income’ does not limit its application to any particular crops/produce. The only requirement is that the basic agricultural operations are to be carried out. The nature of the crop being commercial in nature will not therefore, disentitle the assessee from claiming the income as ‘agricultural income’. Thus, the finding of the CIT (A) that the assessee’s intention of taking the agricultural lands on lease is to exploit them commercially is not sustainable to disentitle the assessee from making the claim of agricultural income.
Having gone through the decisions relied by the learned CIT (A), that they are all are distinguishable from the facts of the case before the Tribunal and therefore, are not applicable. We set aside the order of the AO and direct him to treat the lease rent received by the assessee from ‘Adisa Agro (P) Ltd’ for use of the agricultural land as agricultural income. - Decided in favour of assessee.
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