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Income Tax - Case Laws
Showing 121 to 140 of 745 Records
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2021 (10) TMI 1196 - ITAT BANGALORE
Addition u/s 36(1)(va) - employees' contribution to ESI before the due date for filing of return u/s. 139(1) - HELD THAT:- Admittedly, the assessee has remitted the employees' contribution to ESI before the due date for filing of return u/s. 139(1) of the I.T. Act. The Hon'ble jurisdictional High Court in the case of Essae Teraoka (P.) Ltd. [2014 (3) TMI 386 - KARNATAKA HIGH COURT] has categorically held that the assessee would be entitled to deduction of employees' contribution to ESI provided the payment was made prior to the due date of filing of return of income u/s. 139(1).
Whether the amendment to section 36(1)(va) and 43B of the I.T. Act by Finance Act, 2021 is clarificatory and declaratory in nature? - Supreme Court in the recent judgment in the case of M.M. Aqua Technologies Limited v. CIT [2021 (8) TMI 520 - SUPREME COURT] had held that retrospective provision in a taxing Act which is "for the removal of doubts" cannot be presumed to be retrospective, if it alters or changes the law as it earlier stood - amendment brought about by the Finance Act, 2021 to section 36(1)(va) and 43B of the I.T. Act, alters the position of law adversely to the assessee. Therefore, such amendment cannot be held to be retrospective in nature. Even otherwise, the amendment has been mentioned to be effective from 01.04.2021 and will apply for and from assessment year 2021-2022 onwards. The amendment to section 36(1)(va) and 43B of the I.T. Act by Finance Act, 2021 is only prospective in nature and not retrospective.
The amendment by Finance Act, 2021 to Sec. 36(1)(va) and 43B of the I.T. Act will not have application to relevant assessment year, namely A.Y. 2019-2020. Accordingly, we direct the A.O. to grant deduction in respect of employees' contribution to ESI since the assessee has made payment before the due date of filing of the return of income u/s. 139(1) - Decided in favour of assessee.
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2021 (10) TMI 1195 - ITAT DELHI
Revenue recognition - method of accounting - sale of residential/commercial units - revenue from booking of units by the customers - Addition invoking percentage of completion method -"completed contract method" v/s percentage of completion method - Addition deleted by CIT(A) - HELD THAT:- Accounting standard AS-7 relied upon by the Assessing Officer is applicable strictly in the case of construction contracts only.
CIT(A) has followed binding precedent of the jurisdictional High Court in the case of Paras buildtech India private limited [2015 (11) TMI 1217 - DELHI HIGH COURT]; Sabh infrastructure Ltd. [2015 (11) TMI 1283 - DELHI HIGH COURT] and Manish Buildwell P. Ltd. [2011 (11) TMI 35 - DELHI HIGH COURT] Further, the assessee is following consistently this method of revenue recognition in prior years as well as in subsequent years and which has been accepted by the revenue and thus rule of consistency also demand that in the year under consideration the assessing officer is not justified in deviating the consistent approach of the Department. No error in the order of the Ld. CIT(A) on the issue in dispute and accordingly we uphold the same. The grounds of the appeal of the revenue are accordingly dismissed.
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2021 (10) TMI 1194 - ITAT RAIPUR
Revision u/s 263 by CIT - As per CIT sale of land parcels as taxed under the head "Capital Gains" - AO found that the actual sale consideration of land parcels shown as business assets/stock-in-trade in the books of accounts is lesser than the corresponding value assessable for the purposes as stamp duty - HELD THAT:- If the course suggested by the PCIT is adopted and on profits arising on sale of land parcels are taxed under the head "Capital Gains", the assessed income could be lower than the income assessed by the AO. The tabular statement demonstrating the aforesaid fact is self-speaking in this regard and does not require much delineation. Consequently, where the course suggested by the PCIT results in greater prejudice to the Revenue and the course adopted by the AO has resulted in lesser prejudice, the action of the PCIT under Section 263 falls flat on the ground.
In order to usurp jurisdiction u/s 263, both the conditions, i.e. order being erroneous as well as prejudicial to the interest of the revenue, must simultaneously coexist. In absence of any prejudice caused to the Revenue by the action of the Assessing Officer, the order cannot be revised even if it is momentarily considered to be erroneous. Hence, the revisionary action of the PCIT requires to be set aside on this ground alone without going into other aspect of arguments.
We also take into account the other line of arguments propounded on behalf of the assessee that the nature and character of an income depends on host of factors which are required to be cumulatively weighed and thus is inherently a very highly subjective exercise. There is no straight jacket formula to determine whether an asset held by the assessee should be treated as capital asset or business asset. Such issues are inherently highly debatable and arguable in nature. One cannot definitely say with precision and more so under the revisional jurisdiction that the action of the AO in adopting one course of view is erroneous per se. There is invariably a scope of argument on determination of character of income. Indulgence on such aspect under the revisional jurisdiction is not appropriate in the absence of cogent facts adverse to the assessee. We do not see any such material which can make the conclusion of the PCIT indefeasible. This being so, the action of the PCIT cannot be endorsed on this ground also. Hence, looking from any angle, the revisional action of the PCIT under Section 263 is not sustainable in law. Consequently, the revisional order under Section 263 of the Act is quashed and set aside. - Decided in favour of assessee.
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2021 (10) TMI 1193 - ITAT KOLKATA
Unexplained deposits in bank - Withdrawal of cash from bank and re-deposit of the same into the bank account - contention of the assessee i.e. withdrawn the money for the purpose of giving advance to the landlords and since the land deal could not materialize, the amount had been re-deposited back into his bank accounts - HELD THAT:- Withdrawal of cash has been accepted by the AO. In such scenario, unless the AO is able to show that the assessee has been able to utilize this withdrawn cash for some investment/undisclosed expenses of the same/like amount, we infer that the assessee has been able to show that money re-deposited in the bank account of the withdrawn/like amount, so the assessee's contention need to be accepted without any rebutted material to suggest otherwise.
DR could not rebut/controvert the cash flow statement vis-à-vis the bank statements filed - The assessee had enough money in his bank as disclosed, therefore, no addition u/s. 68 of the Act was warranted in this case and therefore, the assessee succeeds and since the assessee has been able to explain the nature and source of the deposits in the bank account which has been found adversely by the Department. Therefore, we direct the AO to delete the addition - Decided in favour of assessee.
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2021 (10) TMI 1192 - ITAT CHENNAI
Levy of penalty u/s 271B - violation of section 44AB - assessee has failed to maintain the books of accounts - assessee is a Civil Contractor - Proof of reasonable cause within the scope of section 273B - A.O has completed the assessment u/s. 143(3) by disallowing 5% of the expenses on the ground that non submissions of bills and vouchers - HELD THAT:- In this case, the assessee has not maintained any books of accounts and the assessee has offered an income on estimate basis and the same is accepted by the A.O. Keeping in view of the case of CIT v. Bisuali Tractors [2007 (5) TMI 181 - ALLAHABAD HIGH COURT] penalty u/s. 271B imposed by the A.O in this case cannot be sustained. Therefore, the penalty imposed by the A.O and confirmed by the Ld. CIT(A) is cancelled. Thus, the appeal filed by the assessee is allowed.
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2021 (10) TMI 1191 - ITAT INDORE
Validity of Proceedings u/s 153C - whether no proper satisfaction note of the Ld. Assessing Officer has been prepared having jurisdiction over the searched person as well as the assessee for initiating the proceeding u/s 153C - HELD THAT:- As in the case of M/s Super Malls Pvt. Ltd [2020 (3) TMI 361 - SUPREME COURT] and on examining the satisfaction note reproduced above we are of the considered view that a proper satisfaction note of the Ld. Assessing Officer has been prepared having jurisdiction over the searched person as well as the assessee for initiating the proceeding u/s 153C of the Act and therefore we find no merit in the additional legal ground raised by the assessee. We accordingly dismiss the same.
Long term Gain on sale of land - claim of section 54 - From perusal of records we find that registered sale deed was executed on 12.12.2006 but on perusal of paper book we find that the possession of the said flat was given to the assessee on 10.02.2007. The transfer of residential flat in favour of the assessee is completed only when the possession is given i.e. 10.02.2007. On adopting the date of purchase of flat on 10.02.2007 the assessee’s claim for section 54F of the Act would be valid as it is within one year.
The revenue authorities have adopted the date of sale of land on the basis of registered sale deed dated 28.12.2007 but have not considered the date of possession given by the assessee of the said land on 06.12.2007 but for the purchase of flat revenue authorities have adopted the date of purchase as the registered deed i.e. 12.12.2006 but not considered the date of possession of flat received by the assessee on 10.20.2007. If for sake of academic discussion the basis of possession of the immovable property is taken then also the assessee succeeds as the date of sale of land would be 06.12.2007 and purchase of flat would be 10.02.2007.
Assessee has rightly claimed the deduction u/s 54F of the Act for purchase of residential flat on 10.02.2007 which is within one year from the date of sale of the land on 28.12.2007( when the total payment for sale of land was received) and since we have held the claim of section 54 F of the Act for deduction against Long Term Capital Gain as valid, the impugned addition of not utilizing the deposit in Capital Gain Account Scheme will not stand for and therefore, the addition made by the Ld. Assessing Officer stands deleted - Decided in favour of assessee.
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2021 (10) TMI 1190 - ITAT RAIPUR
Penalty u/s 271AAA(2) - Proof of admission of undisclosed income u/s 132(4) - primary onus - onus is on the Revenue to raise appropriate questions towards manner of deriving undisclosed income and substantiation thereof - HELD THAT:- As the factual position discernable from the record, it is manifest that the assessee has not failed to specify the manner of deriving undisclosed income perse in the absence of any question directed towards the assessee/deponent of the statement in this regard. The substantiation of the manner of deriving undisclosed income naturally has not been called into question by the Revenue.
Assessee has replied to the queries raised while recording the statement as called for. The Revenue does not appear to have quizzed the assessee for satisfying the manner in which the purported undisclosed income has been derived. The income considered as undisclosed income under s. 132(4) of the Act was duly incorporated in the return filed pursuant to search. Therefore, the Revenue, in our view, now cannot plead deficiency on the part of the assessee to specify the manner which has not been called into quest ion at the time of search or even at the stage of the assessment.
AO or CIT(A) has not pointed out any query which remained unreplied or evaded in the course of search or post search investigation. Therefore, looking from any angle, it is difficult to endorse the action of the Revenue - Decided in favour of assessee.
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2021 (10) TMI 1189 - ITAT MUMBAI
Revision u/s 263 by CIT - AO has not examined the large commission expenses and low net profit and there is a mismatch of interest paid to the related persons u/s 40A(2)(b) - HELD THAT:- We find that the claim was allowed by the Hon’ble Tribunal in the earlier assessment year and the miscellaneous application filed by the revenue is dismissed. Whereas in respect of twin conditions of (i) Erroneous and (ii) Prejudicial to the interest of the revenue. We find the revenue is disputing of the Assessment order. Whereas, the assessee has discharged the burden by submitting the information and requisite details as called for by issue of statutory notice u/s 142(1) of the Act along with the questioner which cannot be overlooked. Since the information was available with the A.O in the course of the assessment, the A.O. has considered the facts, submissions and evidences filed and took a possible view.
In the assessment proceedings the assessee has responded to the clarifications/ queries raised by the A.O. and after verification and satisfaction of claims, A.O has passed the order U/sec 143(3) - AO order passed u/sec 143(3) of the Act does not satisfy the twin conditions of erroneous and prejudicial to the interest of revenue and Accordingly, the revision order passed by the Ld.Pr.CIT is quashed and allow the grounds of appeal in favour of the assessee.
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2021 (10) TMI 1188 - ITAT DELHI
Addition on account of 10% of GP rate on the total turnover - CIT-A deleted the addition - HELD THAT:- The agreement with the parties, the affidavits, confirmation and appellant letter filed before the AO the appellant’s letter for personal presence of the parties lifted goods are part of the records lying before us. AO observed that these documents were not produced before us though the same was in fact produced during the original assessment. CIT(A) found no basis to make this addition. Since the assessee has discharged its onus by producing the entire set of documents/evidence as mentioned hereinabove and in the absence of any adverse evidence relied upon by the AO. CIT(A) finally deleted the addition which according to us is of no ambiguity so as to warrant interference and hence, this ground of appeal preferred by the Revenue is found to be devoid of any merit and thus, dismissed.
Unexplained investment - HELD THAT:- As total income of the assessee. However, there was an arithmetic mistake in calculating ₹ 1800000/- which should have been 1702500/- (2102500 – 400000). CIT(A) during the appellate proceeding went through the cash flow statement prepared on the basis of the copies of seized material taking into account the opening cash balance, bank withdrawals which is also made available before us being part of the Paper Book. Apart from that in the remand report dated 27.10.2010 available at page 10 to 15 of the PB so filed before us. The Ld. AO admitted such facts and the documentary evidences filed in its explanation of the sources of funds by the assessee and hence, the Ld. CIT(A) deleted both the additions. According to us, there is no ambiguity in making such decision made by the Ld. CIT(A). Hence, the said is hereby confirmed. This ground of appeal preferred by Revenue fails.
Cash sale of agricultural equipment - HELD THAT:- CIT(A) while allowing the appeal alongwith this ground of appeal relied on the basis of the documents, facts and the remand report and further observed that the cash flow cannot be suspected in the absence of any adverse evidence relied upon by the Ld. AO which according to us is without any ambiguity so as to warrant interference. This ground of appeal is allowed.
Lifting the goods from the Custom Authorities - HELD THAT:- AO has not mentioned anything except that this purchase was not accounted for without any evidence at all. In spite of having all seized material and the documents of Customs Authorities the AO has not verified the same. Neither has given any adverse comment on the audited profit and loss account. CIT(A) has categorically mentioned that all above grounds are being discussed for the source of funds for lifting the goods from Customs and the appellant has already shown purchase in profit and loss account at ₹ 20260309/- In that view of the matter, the conclusion made by the AO that the said sales had not been reflected in the books of accounts of the assessee is without any basis and application of GP rate on the presumed sales outside the books of account leading to addition has been rightly found to be unsustainable in the eye of law by the Ld. CIT(A).
Addition on account of specularity profit earned from sale of shares - HELD THAT:- Case of the assessee is this that these were forwarded transactions, profit and loss is determined when the transaction gets finality otherwise carried forward with notional profit/loss and charges are debited by broker as badlaThe bills and the conciliation with Sh. Pradeep Bhalla & Company has also been perused by us - CIT(A) in his order has deleted the addition on the basis of remand report and the facts that these were speculative transactions and this year these were carried forward and got finality in subsequent year i.e. AY 1993-94, he has referred the Ld. CIT(A) order for AY 1993-94. We do not find any ambiguity in such observation and decision made by the Ld. CIT(A) and hence, the same is hereby confirmed. This ground of Revenue is thus, dismissed.
Unexplained cash deposits in bank - HELD THAT:- As perused the cash flow statement available at page 36 of the Paper Book filed before us which reflects that there were sufficient cash available as on 30.04.1991 and also the sufficient explanation was made by the appellant. Hence, the Ld. CIT(A) deleted such addition. Hence, according to us the Ld. CIT(A) has rightly deleted the same. In that view of the matter, ground preferred by the Revenue is found to be devoid of any merit and hence dismissed.
Addition on account of closing stock - HELD THAT:- CIT(A) deleted the addition on the basis of facts, documents and remand report from the AO on the ground that the appellant has included this quantity while calculating the value of closing stock which is proper and thus, confirmed. This ground of appeal preferred by the Revenue fails.
Addition on account of GP rate at 20% - HELD THAT:- CIT(A) deleted the addition on the basis that the sales as per audited profit and loss account is much more than the sales as per Sales Tax Department because the exempted sales are not included in sales tax returns. Therefore, the estimation is not correct. Regarding GP of 20%, the Ld. CIT(A) mentioned that despite logical explanation the estimation of turnover at 4.50 crore and 20% GP without bringing on record any sound reasoning for doing the same. There was no reason to reject the actual sale of ₹ 44011886/- and GP of 11.15% as of against the Ld. CIT(A) which according to us is without any ambiguity so us to warrant interference and hence, this ground of appeal preferred by the Revenue is found to be devoid of any merit and thus, dismissed.
Addition of notional interest on loan outstanding - HELD THAT:- CIT(A) while deleted notional addition took into consideration this particular aspect of the matter that the Ld. AO has not given any weightage to the circumstances detailed by the assessee that the interest had to be weived to secure the principle. No document was further found during the search to suggest that the assessee had received the interest amount outside the books of account as of the observation made by the Ld. CIT(A) while deleting such addition is according to us just and proper and we hereby confirm the same. The ground of appeal filed by the Revenue fails.
Addition on estimate basis - Addition on the basis of the voucher containing payment of Visa charges by Vandana Goyal from whose residence the same has been seized - HELD THAT:- As the voucher which was seized from the residence of Ms. Vandana Goyal was at ₹ 20858/- being the Visa charges of our travelling and thus, the same was rightly deleted by the Ld. CIT(A). The same is thus, hereby confirmed. This ground of appeal preferred by the Revenue, therefore, fails.
Addition on account of creditors - HELD THAT:- Ld. CIT(A) deleted the addition while doing so. He has relied upon the judgment passed in the matter of Sugauli Sugar Works Ltd.,[1999 (2) TMI 5 - SUPREME COURT]. According to us, there is no ambiguity in such order passed by the Ld. CIT(A). Hence, we confirm the same. - Revenue appeal dismissed.
Unexplained deposit to the bank account - addition was made rejecting the cash flow based upon the documents including sales of agricultural euqipments - HELD THAT:- CIT(A) while deleting the addition mentioned that the appellant has shown total sales of ₹ 11935611/- of agricultural equipment during the year 1992 and the AO cannot reject the cash flow on the basis of cash sale of agricultural equipments at ₹ 813000/- in the month of February, 1992. The reasons so recorded while deleting the addition by the Ld. CIT(A) seems to be adequate and hence, the same is confirmed. This ground of appeal preferred by Revenue is found to be devoid of any merit and thus, dismissed.
Addition on account of interest at 18% of loans and advances - HELD THAT:- The perusal or explanation given by the assessee shows that amounts outstanding as advance represents the transaction of sale by the assessee to the said concern and the amount outstanding is actually on account of the realization to be made of the sales amount. The confirmation filed by the assessee confirming the detailed transaction of purchases, part payment made as been recorded. The above said amount therefore, cannot be treated as advance free of interest.
Addition based on difference of balances - HELD THAT:- It appears that the Ld. CIT(A) deleted the addition on the basis of the reconciliation filed by the assessee before the AO and before him as well without any ambiguity so as to warrant interference. Hence, the appeal preferred by the Revenue is found to be devoid of any merit and thus, dismissed.
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2021 (10) TMI 1164 - ITAT BANGALORE
Deemed dividend u/s 2(22)(e) - assessee herein is a shareholder having substantial interest in concerns imparting loan - HELD THAT:- What is required to be seen is whether CAPL has advanced moneys as pure loan amounts or for business purposes. The agreements produced by the assessee before Ld CIT(A), which were also confronted with the AO, would prove that the transactions entered between the parties are business transactions - both the companies are maintaining accounts as running accounts only and real estate investment activity was agreed to be a continuous activity. Hence the question of making one to one reconciliation, as contended by Ld DR. would not arise in these types of transactions - we confirm the order of Ld CIT(A) in deleting the additions made u/s 2(22)(e).
Addition of unexplained investment - HELD THAT:- Since the addition made on substantive basis in the hands of Brindavan Beverages P Ltd has been upheld by Ld CIT(A), the protective addition made in the hands of the assessee of the very same amount is liable to be deleted - the above said company had filed appeal before ITAT challenging the decision rendered by Ld CIT(A) and further the said company has opted to settle the issue under DTVSV Scheme. The assessee has filed copy of Form No.3 given under the above said scheme. Under the above said scheme, the above said company is required to pay tax shown in Form no.3 and final certificate in Form no.5 is required to issued in proof of settlement of dispute. Since these matters are pending, we restore this issue to the file of AO with the direction to delete this protective addition upon furnishing of Form no.5 by the assessee.
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2021 (10) TMI 1159 - DELHI HIGH COURT
Rectification of mistake u/s 254 - HELD THAT:- Once a mistake/error is brought to the notice of the Tribunal, which is apparent on face of record, either by the assessee or the assessing officer, the Tribunal would have the necessary power to rectify/amend its order. This power will also extend to a situation, such as the one obtaining in the present case, where the petitioner’s counsel withdrew the appeal, for the reason that, the issue concerning transfer pricing adjustment in respect of the assessment year (AY) in issue i.e., AY 2011-12, stood resolved.
The petitioner’s counsel, inadvertently, failed to bring to the notice of the Tribunal, that the issues raised in ground nos. 6 and 7 of the appeal were outstanding, and that they needed to be adjudicated upon.
Thus, having regard to the aforesaid, we are of the view that the impugned order, passed by the Tribunal in the miscellaneous application deserves to be set aside.
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2021 (10) TMI 1158 - BOMBAY HIGH COURT
Assessment u/s 153A - whether the seized material was under Section 132 or books of account, other documents or any assets are requisitioned under Section 132A? - HELD THAT:- Petitioner had filed their returns for the Assessment Year in question, which they thought was the true and correct return of income and that it contained all other particulars as prescribed. If respondent felt that was not enough and petitioner should file a fresh true and correct return of income because of the search, then respondent should certainly indicate in its notice what were the seized material under Section 132 or books of accounts or other documents or any assets requisitioned under Section 132A. Otherwise an assessee would file a copy of what it had filed earlier, which respondent anyways had in its file.
Petitioner has also been seeking from respondent to make available copy of the alleged incriminating material found/seized during the search based on which the notice has been issued. Mr. Chhotaray states that such material has been given later. We are not going into that aspect at this stage because what we find is that the notice issued under Section 153A is bereft of any material. Nothing prevented respondent from mentioning in the notice the basis for issuing the notice under Section 153A so that petitioner could comply with the same as prescribed.
The notice dated 29th November 2018 impugned in this petition is quashed and set aside. We do not make any observation on the merits of the case. Respondent may issue fresh notice under Section 153A and word it suitably, as advised so that petitioner may have some information reading that notice the basis on which such notice has been issued. All rights and contentions of the parties are kept open.
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2021 (10) TMI 1157 - KARNATAKA HIGH COURT
Nature of gain - sale of technical know-how - slump sale - capital or revenue gain - goodwill liable to be taxed u/s 45 of the Act as capital receipt at the value given by the purchaser in its financials - HELD THAT:- It cannot be gainsaid that the assets were self-generated and the cost of acquisition of the said assets was indeterminable. The whole exercise was done by the Revenue merely for the reason that the purchaser in his books of accounts has shown the same as the technical know-how. If such technical know-how could not attract capital gains, in view of B.C.Srinivasa Setty [1981 (2) TMI 1 - SUPREME COURT] the Revenue has made an attempt to treat the technical know-how as goodwill in the second round.
This reasoning of the Tribunal cannot be faulted with, in the light of the judgment of the Hon'ble Apex Court in B.C.Srinivasa Setty supra. The gain from transfer of business by implication was not a Revenue receipt chargeable to tax either under Section 28 or under Section 56 or Section 10[3] of the Act. Moreover, the order passed by the Tribunal at the first instance has reached finality. Hence, this substantial question of law has to be answered in favour of the Revenue and against the assessee.
Non-competence fee receipt - Since we have held that the technical knowhow is not a goodwill, the arguments of the Revenue for remand would not inspire any confidence.
The non-competence receipt was received by the assessee in cash. See case of Mahindra & Mahindra Ltd [2003 (1) TMI 71 - BOMBAY HIGH COURT]wherein it is held that Section 28[iv] does not apply to benefits in cash or money, referring to the judgment of the Hon’ble High Court of Gujarat in CIT V/s. Alchemic Pvt. Ltd. [1980 (8) TMI 42 - GUJARAT HIGH COURT]
The non-competence fee was in fact a payment for sharing customer database and sharing of trained employees. The receipt towards the said transfer is not attributable to transfer of any assets or right and the mere fact that the receipt is not attributable to noncompete covenant, it cannot be automatically concluded that the receipt was either from business or income of an activity recurring in nature. - Decided in favour of assessee.
Interest under Section 244A - HELD THAT:- If the orders under which such refund was made, subsequently if gets reversed, the interest paid to the assessee under Section 244A if to be withdrawn, no fault can be fixed on the assessee for the delay caused in the entire process, thereby seeking for compensatory interest. Claiming interest on the interest paid under Section 244A of the Act not being provided under the Statute, the Tribunal rightly held that the Assessing Officer shall recompute the interest chargeable under Section 220[2] of the Act by reducing only the principal amount of tax from the refund granted earlier and not to charge interest on the interest granted earlier under Section 244A of the Act, the same cannot be held to be unjustifiable. Thus, we find no perversity or illegality in the order of the Tribunal impugned.
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2021 (10) TMI 1156 - KARNATAKA HIGH COURT
Deduction u/s 35D - foreign currency convertible bonds [FCCBs] as debentures and considered it to be part of ‘capital employed’ for allowing deduction - whether FCCB convertible bonds are debentures or no? - HELD THAT:- As in terms of the Companies Act, 1956 debenture includes debenture shares and the bonds being interest bearing instruments which represent a loan, FCCB bonds, the instruments issued to investors for raising funds which is repayable after certain period is nothing but a debt instrument.
This view is supported by the judgment of the High Court of Madras in case of PVP Ventures Ltd. [2012 (7) TMI 696 - MADRAS HIGH COURT] confirmed by the Hon’ble Apex Court 2014 (3) TMI 1127 - SC ORDER] by the Revenue. For the reasons aforesaid, the finding of the Tribunal that the increase or decrease in liability on account of fluctuation in foreign exchange as on the date of the balance sheet would increase or decrease the liability of the assessee and such liability would be on capital account as such, the gain or loss would be on capital account and not taxable cannot be faulted with. Hence, the challenge made by the Revenue on this issue is answered against the Revenue and in favour of the assessee.
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2021 (10) TMI 1155 - ITAT DELHI
Assessment of trust - Addition on account of provisions of gratuity and prior period expenses - AO observed that the assessee has not claimed exemption u/s 10(23)(iiiab) of the Act and failed to submit requisite Audit Report in form No.10B - HELD THAT:- As the assessee is an educational institution and existing solely for education purpose and not for the purpose of profit. It is noticed that the Assessing Officer has incorrectly stated that the assessee had not made any claim u/s 10(23)(iiiab) of the Act. In fact, the assessee had made claim u/s 10(23)(iiiab) of the Act. Therefore, we do not find any infirmity in treating the income at NIL by Ld.CIT(A). Thus, grounds raised by the Revenue are dismissed.
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2021 (10) TMI 1154 - ITAT PUNE
TDS u/s 195 - payment made by the assessee company to non-resident - whether it is in nature of royalty? - Rectification application u/s 154 - HELD THAT:- The core issue has been decided putting reliance on the decision of the Hon‟ble Supreme Court in the case of Engineering Analysis Centre of Excellence Private Limited [2021 (3) TMI 138 - SUPREME COURT] that the payment made by the assessee company to non-resident are not in nature of royalty and therefore the assessee was not required to deduct TDS as per provisions of the Act. When the core issue is decided in favour of the assessee and against the Revenue, there ceased to be any obligation on the part of the assessee for deduction of TDS. The entire area of the appeal before us by the Revenue against the rectification order u/s.154 of the Act passed by the Ld. CIT(Appeals) is in pursuance to the order of TDS deduction. That when it has been decided that the assessee was under no obligation to deduct TDS for payment to non-resident as it was not in nature of royalty, therefore, the said appeal filed by the Revenue before us becomes infructuous and hence, dismissed.
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2021 (10) TMI 1153 - ITAT KOLKATA
Disallowance u/s 14A r.w.r.8D - disallowance as per formula prescribed under the aforesaid Rules - HELD THAT:- CIT(A) deleted the disallowance under Rule 8D(2)(ii) made out of interest expenditure observing that the loan taken by the assessee was for specific purposes and further that the assessee had sufficient own funds in the shape of share capital and surplus to make the investments. He, therefore, relied on the decision in the case of “CIT Vs. REI Agro Industries Ltd” [2013 (12) TMI 1517 - CALCUTTA HIGH COURT]. DR could not point out any error in the above findings of the Ld. CIT(A).
Disallowance made under Rule 8D(2)(iii) - CIT(A) relying on the decision in the case of ‘CIT Vs. REI Agro’ (supra) and in the case of “ACB India Ltd [2015 (4) TMI 224 - DELHI HIGH COURT] directed the Ld. AO to consider only those investments upon which exempt income had been earned by the assessee. The Ld. DR could not point out any contrary decision on this issue. In view of this, this ground of appeal of the revenue is dismissed.
Disallowance being the payment of premium on redemption of FCCB( Foreign Currency Convertible Bonds) - HELD THAT:- DR has fairly admitted that the accounting entries are made as per Companies Act, 1956. The expenditure claimed on account of premium is otherwise admissible as per relevant provisions of the Income Tax Act. DR has further admitted that this issue has been decided in favour of the assessee in the earlier assessment year by the Co-ordinate Bench of this Tribunal. In view of this, this ground of the revenue’s appeal is hereby dismissed.
Claim of bad debts written off from the Renukoot Unit, which was already sold out/transferred - slump sale - HELD THAT:- We are not convinced by his argument. The Renukoot Unit in question was sold out by way of slump sale on 23/05/2011, whereas, the assessee has calculated the net worth of the unit as on 31.03.2011 and claimed bad debts in the relevant A.Y 2012-13 - on slump sale, the assets/liabilities get transferred to the purchaser. In our view the assessee deliberately kept the entries continued in its accounts so as to claim the aforesaid loss on account of bad debts at the end of the year, which in our view is not at all justified. This ground of appeal of appeal is accordingly allowed in favour of the department and the order of the Ld. AO on this issue is restored.
Deduction of Education Cess - Whether an allowable deduction while computing the income chargeable under the heads of profits and gains of business or profession? - HELD THAT:- A perusal of the provisions of the Finance Act 2004 and Finance Act 2011 would show that it has been specifically provided that ‘education cess’ is an additional surcharge levied on the income-tax. Therefore, in the light of the decision of the Hon’ble Supreme Court in the case of “CIT Vs. K. Srinivasan”1971 (11) TMI 2 - SUPREME COURT] the additional surcharge is part of the income-tax. The aforesaid decision of the Hon’ble Apex Court and the provisions of Finance Act, 2004 and the relevant provisions of section 2(11) & (12) of the subsequent Finance Acts have not been brought into the knowledge of the Hon’ble High Courts in the cases of ” Sesa Goa Ltd” & “Chambal Fertilisers” [2020 (3) TMI 347 - BOMBAY HIGH COURT]. Since the decision of the Hon’ble Supreme Court prevails over that of the Hon’ble High Courts, therefore, respectfully following the decision of the Hon’ble Supreme Court in the case of “CIT Vs. K. Srinivasan” (supra), this issue is decided against the assessee.
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2021 (10) TMI 1152 - ITAT PUNE
Levy of penalty u/s 271(1)(c) - return of income was filed belatedly - HELD THAT:- Admittedly, there is no variation between the returned income and assessed income. Though the return of income was filed belatedly, nevertheless it is return of income under the provisions of section 139 of the Act and the findings of CIT(A) that the penalty is not leviable u/s 271(1)(c) of the Act is based on correct appreciation of facts and law governing the levy of penalty in the facts of present case. It is settled position of law that the penalty u/s 271(1)(c) of the Act is leviable with reference to concealment in the return of income. See NA MALBARY AND BROTHERS [1963 (11) TMI 5 - SUPREME COURT] and ONKAR SARAN AND SONS [1992 (3) TMI 1 - SUPREME COURT]
In the absence of any variation between returned income and assessed income, no penalty u/s 271(1)(c) of the Act can be levied. Hence, we do not find any merit in the appeal filed by the Revenue. Accordingly, the appeal filed by the Revenue stands dismissed.
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2021 (10) TMI 1151 - ITAT MUMBAI
Reopening of assessment u/s 147 - Bogus loan transactions - assessee failed to establish the identity and genuineness of the entities - assessee failed to reply to the show cause notices - summon u/s 131 issued to the principal officers of both these entities were not accepted which were confronted to the director o the assessee - HELD THAT:- AO was clinched with specific information which indicated possible escapement of income in the hands of the assessee. The assessment u/s 143(3) was completed on 22/03/2013 whereas tangible information was received by Ld. AO vide letter dated 29/03/2017 wherein it transpired that the loans taken by the assessee during the year were from those entities which were involved in penny stock manipulation and provided exit to beneficiaries of Long Term Capital Gains. These two entities were allegedly dummy paper entities with no real business and involved in sham transactions. These facts, in our opinion, were quite sufficient to reopen the case of the assessee
The arguments made by Ld. AR do not convince us. At the time of reopening, the only requirement is that Ld.AO should have specific tangible information which indicate possible escapement of income in the hands of the assessee. Nothing more is required at this stage to reopen the case of the assessee. The information so received, in our considered opinion, was sufficient tangible material. Therefore, legal grounds raised by Ld. AR stand rejected.
Upon perusal of rectification order u/s 154, it could be gathered that the director of M/s Gateway Leasing Private Limited appeared before Ld. AO and his statement was recorded on oath u/s 131. In the recorded statement, the fact of advancing loan to the assessee as well as repayment was duly accepted. Upon perusal of paper-book as placed before us, it could be gathered that the assessee has duly filed ledger account of the party along with name, address, PAN of the lender, details of brokers who arranged loan, securities offered, term sheet / sanction letter, Board Resolution, Inter-corporate deposit receipt, pledge agreement and various other similar documents in support of the genuineness of the loan transaction. The loan was fully paid on 21/05/2010 along with interest. The transactions were confirmed by M/s Gateway Leasing Private Limited in response to notice u/s 133(6). Thus, the assessee had duly discharged the onus of proving the identity of the lender, their creditworthiness and the genuineness of the loan transaction. This being so, the impugned additions are not sustainable in law.
Estimation of income - bogus purchases - CIT-A estimated profit element @12.5% - HELD THAT:- As it could be gathered that the purchases were supported by primary purchase documents and the payments to the suppliers was through banking channels. The whole of purchases have been disallowed while accepting the sales which could not be held to be justified. Therefore, the estimation made by Ld. CIT(A), for all the three years, is quite fair and reasonable. Finding no reason to deviate from the same, we dismiss the appeals for all the three years.
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2021 (10) TMI 1150 - ITAT CHANDIGARH
Assessment u/s 153A - Undisclosed investment in the residential buildup house - difference in values as declared by the assessee and as opined by the DVO, - Whether no incriminating evidence was found during the course of search relating to the part additions as confirmed by the Worthy CIT(A)? - Tribunal in the second appeal reversed the findings of the Ld. CIT(A) and deleted the addition holding that since no material was found during the search to justify the reference to the DVO, the action was not in accordance with law - HELD THAT:- As in the present case, the authorities below have not pointed out any corroborative evidence to show that the assessee had made investment in question more than the amount declared by the her during assessment proceedings. Hence respectfully following the judgment of Abhinav Kumar Mittal [2013 (1) TMI 629 - DELHI HIGH COURT] we allow the appeal of the assessee and set aside the impugned order passed by the Ld. CIT(A).
Undisclosed capital gain - Addition merely on the basis of the statement of Shri S.S. Bindra, one of the co-owners of the house in question - HELD THAT:- AO has even not examined Shri Iqbaljit Singh to ascertain the actual sale consideration of the said house. As pointed out by the Ld. counsel even the other co-owners were not examined. As per the law laid down in the case of Daulat Ram Rawat Mal [1972 (9) TMI 9 - SUPREME COURT] in the present case the documentary evidence would prevail over the oral statement relied upon by the AO. Hence, we find merit in the contention of the Ld. counsel for the assessee that the Ld. CIT(A) has wrongly upheld the addition made by the AO. Accordingly, we allow this ground of the appeal of the assessee and set aside the findings of the Ld. CIT(A).
Addition of low household expenses - HELD THAT:- As no incriminating material was recovered during the course of search and seizure action, the Ld. CIT(A) has wrongly sustained the addition made by the AO on account of house hold expenses.CIT(A) has not given any cogent and convincing reason for sustaining the addition on account of the household expenses. In our considered view the addition sustained by the Ld. CIT(A) is not based on any evidence on record. - Decided in favour of assessee.
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