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2021 (10) TMI 1287
Reopening of assessment u/s 147 - documents satisfactorily to explain the deposits or not shall be set out in the assessment order when it is made de novo - HELD THAT:- The case on hand is a case of non-consideration of support materials and not giving any reason as to why reply is unacceptable, leading to conclusion that the deposits have not been satisfactorily explained. Respondent may have considered, as contended by learned Revenue counsel, but the point remains that it could have been set out if not eloquently articulated in the impugned order as already delineated to supra. Considering the unique facts and circumstances of the case as a one off matter, captioned writ petition is sent back to respondent.
Impugned order dated 28.09.2021 bearing reference DIN & Documen is set aside solely for the purpose of facilitating the respondent to redo the assessment by considering what according to writ petitioner inter-alia support affidavit - The sequitur to the above limb is, though obvious, it is made clear that this Court has not expressed any view or opinion on the merits of the matter.
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2021 (10) TMI 1283
TP Adjustment - TPO determined ALP at NIL by applying CUP - HELD THAT:- TPO held that, as there is no benefit from services rendered by AE’s, he determined ALP of international transaction at Nil, without carrying out any FAR analysis of intra-group services. This approach of Ld.TPO is not acceptable, as it is necessary to determine ALP of such transaction as per law. Further these services are more or less intangible in nature as the AE’s are helping assessee to set up, run the store’s and other related matters as per the company standards. In our view the Ld.TPO ignored the evidences filed by assessee. TPO cannot consider ALP at ‘NIL’ and value of transaction has to be computed as per law.
We therefore remand this issue back to the Ld.TPO/AO - TPO to consider all the evidences filed by assessee in the light of observations by the Ld.TPO in preceding and subsequent assessment years. The Ld.TPO/AO shall analyses issue in the light of observations by coordinate bench of this Tribunal in assessee’s own case for assessment year 2008-09 and 2010-11 [2021 (4) TMI 778 - ITAT BANGALORE] and compute the ALP of international transactions with AE’s in accordance with law.
Disallowance u/s. 40A(2) in respect of payment made to Home center LLC towards consultance/professional fees - HELD THAT:- We note that on one hand the CIT(A) is observing the casual manner in which the disallowance is made, and on the other hand he is confirming disallowance to the extent of 50% on adhoc basis. We are not in agreement with such ways of the CIT(A) and the TPO.
We have remanded identical issue to the Ld.TPO/AO while considering assessee’s appeal for assessment year 2009-10. The facts for year under consideration is same and the issue of disallowance being identical, we remand this issue to the Ld.TPO/AO. The Ld.TPO/AO shall verify the details mutatis mutandis as observed by us for assessment year 2009-10.
Bogus purchases - AO disallowed the expenses based on information received from the Maharashtra VAT department regarding non genuine/bogus bills being issued by a person under the name and style Mahavir Corporation - HELD THAT:- CIT(A) upheld the addition only for the reason that the proof of physical delivery including transportation receipt were not produced by assessee. It is also a admitted position that assessee could not have undertake any basic verification of its trading partner before entering into a transaction. Merely because Maharashtra bat department has identified Mahavira Corporation to be issuing non-genuine/ bogus bills, the present transaction cannot be doubted.
It is not the case of revenue that the goods were not received by assessee and that payments were not made by assessee on such purchases. There is nothing to corroborate the information received from Maharashtra VAT department. Under such circumstances the purchases made by assessee cannot be treated to be bogus on surprises - We direct the Ld.AO to delete the addition in the hand of assessee.
Addition u/s 43(5) r.w.section 73 - As submitted that assessee imported certain trade merchandise from parties located outside India and the payments were to be made to in foreign currencies on specified dates - HELD THAT:- Admittedly, this is a recurring issue and facts have not been disputed by the revenue for year under consideration - nothing contradictory is placed on record by the revenue, to deviate form the above view. Respectfully following the same, we do not find any infirmity in the view taken by the Ld.CIT(A), and the same is upheld.
Employees contribution to provident fund and employees State insurance after the date - HELD THAT:- As decided in Hon’ble Karnataka High Court in case of Sabri Enterprises and Ors. [2007 (7) TMI 169 - KARNATAKA HIGH COURT] and Essea Teraoka(P.) Ltd [2014 (3) TMI 386 - KARNATAKA HIGH COURT] has held that contributions made by assessee to provident fund and employees State insurance are allowable deductions to assessee even though it is not made in the stipulated period as contemplated under the provisions of section 36(1)(va) of the act, but the same has been paid on or before the due date for punishing the return of income as per section 139(1) - we do not find any infirmity in the view taken by the Ld.CIT(A) and the same is upheld.
Claims not made in the return allowed by the Ld.CIT(A) - HELD THAT:- The restriction of considering fresh claim except by way of filing a revised return is cast only on and assessing officer. However there is no such embargo to consider the claim made by the assessee for the first time before the appellate authorities. We note that the CIT(A) directed the AO to consider the claim of assesssee which is in accordance with the ratio laid down by Hon’ble Supreme Court in case of Goetz India Ltd [2006 (3) TMI 75 - SUPREME COURT] - Similar is the view by various other decisions of Hon’ble Supreme Court and High Courts. We therefore do not find any infirmity in the decision of the Ld.CIT(A).
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2021 (10) TMI 1282
Non-deposit of the employees’ contribution towards PF/ESIC before the prescribed due dates - disallowance u/s 36(1) - HELD THAT:- It is an undisputed fact that there has been slight delay in the deposit of employees’ contribution of PF and ESI by the assessee and the contribution have been deposited beyond the due date prescribed by the relevant authorities but at the same time it is also a fact that the amounts have been deposited with the appropriate authorities by the assessee before filing the return of income for the relevant assessment year.
Co-ordinate Bench of Tribunal in the case of Indian Geotechnical Services [2021 (9) TMI 182 - ITAT DELHI] has held that amendment made by Finance Bill 2021 shall take effect from 1st April 2021 and will accordingly apply to A.Y. 2021-11 and subsequent years. In the present case assessment year involved is 2018-19 and therefore following the aforesaid decision in the case of Indian Geotechnical Services (supra), amended provisions would have no application to the case under consideration. Before me, Learned DR has relied on the decision in the case of Vedvan Consultants Pvt. Ltd. [2021 (8) TMI 1219 - ITAT DELHI]. It is settled law that when two judgments are available giving different views then the judgment which is in favour of the assessee shall apply as held in case of Vegetable Products Ltd. [1973 (1) TMI 1 - SUPREME COURT]by the Hon’ble Supreme Court - no addition u/s 36(1)(va) of the Act is called for in the present case. - Decided in favour of assessee.
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2021 (10) TMI 1280
Delayed payments of employees contribution to ESI and PF by invoking the provisions of section 36(1)(v) - Revenue has disallowed the same in the impugned year by applying the amendment made by Finance Act 2021 to section 36(1)(va) and 43B allowing the claim of such deduction only when paid by due dates specified in their respective Acts, holding the amendment to be applicable on all pending cases post the amendment - HELD THAT:- As consistently held that the amendment to section 36(1)(va) and u/s 43B of the Act effected by the Finance Act 2021 is applicable prospectively ,reading from the Notes on Clauses at the time of introduction of the Finance Act, 2021, specifically stating the amendment being applicable in relation to assessment year 2021-22 and subsequent years. Therefore the addition, we hold, cannot be made on the strength of the amendment effected by Finance Act 2021 to section 36(1)(va)/43B of the Act. Moreover it is an admitted position that the jurisdictional High Court has in various decisions held that employees contribution to ESI & PF is allowable if paid by the due date of filing return of income u/s 139(1) of the Act. See M/S NUCHEM LTD. [2010 (2) TMI 959 - PUNJAB AND HARYANA HIGH COURT] and M/S HEMLA EMBROIDERY MILLS (P) LTD. [2013 (2) TMI 41 - PUNJAB AND HARYANA HIGH COURT]
We hold that the claim of employees contribution to ESI and PF as per section 36 (1) (va) of the Act cannot be denied in the impugned year, i. e. 2019 - 20 on the basis of amendment made to the section by Finance Act 2021. The order of the Ld. CIT(A) upholding the said disallowance to the tune of ₹ 6,87,309 /- is therefore set aside and the AO is directed to allow the claim of the assessee.
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2021 (10) TMI 1275
Assessment u/s 144C - period of expiry to file objections before DRP - case of the petitioner that in view of the circular of the Central Board of Direct Tax (CBDT) dated 25th June, 2021 the last date of filing such objections under that section was extended till 31st August, 2021 and it is the case of the petitioner that without allowing the aforesaid period of expiry as per the circular of the CBDT the respondent Assessing Officer should not have passed the impugned assessment order - HELD THAT:- Respondents is not in a position to defend and justify the action of the respondents of passing the impugned assessment order in disregard to the aforesaid circular of the CBDT and also the action of the respondent Assessing Officer concerned in passing the impugned assessment order without getting any instruction from the DRP within the time stipulated under the statute.
Considering the submission of the parties, this writ petition is disposed of by setting aside the impugned assessment order dated 30th July, 2021 and all subsequent actions or steps on the basis of such assessment. The respondent Assessing Officer shall proceed with the relevant assessment proceeding in question after getting the direction from the DRP in accordance with law.
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2021 (10) TMI 1274
Validity of National Faceless Assessment order u/s 143 (3) r.w.s.144B - Non communicating to the Petitioner any draft order - HELD THAT:- As in the present case the impugned assessment order was passed without communicating to the Petitioner any draft order of assessment under Section 144B of the IT Act.
This Court sets aside the impugned order of assessment of the NFAC as well as all consequential notices/orders. The Court nevertheless grants liberty to the Department to pass a fresh assessment order for the AY 2017-18 after complying with the requirement of the law by giving the Petitioner a personal hearing at a date and time, which should be communicated to the Petitioner sufficiently in advance. It is needless to say that the Petitioner assessee will cooperate in the fresh assessment proceedings and furnish all the documents and information as are available with it relevant to the proceedings.
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2021 (10) TMI 1272
Rectification of mistake - ex facie erroneous / mistake apparent on record - Wrong appeal number mentioned - incorrect mention of name who appeared on behalf of assessee - HELD THAT:- Appeal numbered as ITA No.108/Gau/2017 was preferred against the order of the Ld. CIT(A)- 1, Guwahati dated 11.01.2017, whereas in the impugned order of the Tribunal it has been wrongly mentioned that the appeal has been preferred against the order of the Ld. CIT(A)-Shilling dated 11.11.2017 which assertion of assessee, we find to be correct and therefore, this particular fact needs to be rectified and it should be read as appeal numbered as ITA No.108/Gau/2017 was preferred by the assessee against the order of the Ld. CIT(A)-1, Guwahati dated 11.01.2017, in place of the impugned order wherein it has been wrongly mentioned by the Tribunal as that of Ld. CIT(A)-Shilling dated 11.11.2017. This is ordered accordingly.
And also we note that there is a mistake apparent on the face of the record because it has been recorded in the impugned order that Shri Ashok Kr. Agarwala, CA, had appeared on behalf of the assessee on 28th July 2017. Therefore, the observation of the Tribunal that none appeared on behalf of the assessee despite issual of notice, needs to be rectified and therefore, we are inclined to recall the impugned order in ITA No.108/Gau/2017 for assessment year 2012-13 and we direct the Registry to fix the case on 07.10.2021.
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2021 (10) TMI 1271
Rectification application u/s 254 - whether the order passed on an application under Section 254(2) of the Act is an order in appeal which is amenable to further appeal under Section 260-A? - HELD THAT:- As decided in M/S LACHMAN DASS BHATIA HINGWALA (P.) LTD [2010 (12) TMI 105 - DELHI HIGH COURT] no appeal lies under Section 260-A of the Act against an order rejecting the application filed under Section 254(2) of the Act. Therefore, in the absence of any statutory remedy against it, the writ petition is the only remedy, if any, available. Accordingly, the petitioner has rightly invoked the writ jurisdiction of the court so as to challenge the order dated 24th April 2009 passed by the tribunal.
Denied benefit u/s 80IB on failure to produce evidence regarding consumption of electricity - The petitioner has not produced the requisite bills or payment vouchers to establish that electricity was consumed for the purposes of production and that payment thereof was duly made to the department. The mere obtaining a sanction for electricity connection was rightly not deemed to be a proof of the consumption of electricity.
The submission that the petitioner has provided a certificate of electricity department to establish certain payment which was not considered by the authorities and, as such, the decision of the tribunal stands vitiated is completely misconceived and cannot be accepted. The petitioner in moving the rectification application has raised the above point and argued that a certificate from electricity department showing payment of ₹ 68,906/- for electricity consumption for the year 2004-2005 relevant to the assessment year 2005-2006 was produced, but a perusal of the said certificate itself as enclosed by the petitioner himself would reveal that the same was issued by the Department on 26th August 2009 much after the assessment order, the appellate order by the CIT (Appeals) and the order by the tribunal have been passed. Thus, a certificate issued subsequent to the culmination of the above proceedings could not have been produced before any of the authorities and in fact was not available on record. It could not have been filed even along-with the rectification application which was decided on 24th April 2009 as the certificate was issued on 26th August 2009. Petition dismissed.
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2021 (10) TMI 1270
Recognition of TRUST - Taxability of the income accruing on the investments made or proposed to be made in the Indian portfolio companies by the Trust -taxability of income arising by virtue of revocable transfer of assets - Scope of AAR rulling - whether the capital contribution made / proposed to be made / transferred by ADIA to Green Maiden A 2013 Trust be treated as a revocable transfer for the purpose of Section 63 of the Act ? - Whether the entire income which may arise from the investments made by the Trust in Indian Companies (Portfolio companies) be chargeable to income-tax in the hands of ADIA as per Section 61 of the Act or be chargeable to income-tax in the hands of any other person as defined under the Act ? - as submitted trustee is entitled to receive income on behalf of the sole beneficiary, it should be considered as representative assessee of the sole beneficiary - reasoning given by AAR that the trust is registered in jersey, there is no treaty between India and Jersey and Section 61 and 63 of the Act would apply only to those trust which fall under the Indian Trust Act 1882
HELD THAT:- Nothing in Section 61 requires involvement of a trust in revocable transfer. Section 61 is plain and simple in as much as, it provides for income arising to any person by virtue of a revocable transfer of assets shall be chargeable to income tax as the income of the transferor and shall be included in his total income. Further Section 61 is not dependent on Section 63 of the Act. A transfer can be revocable transfer on its own merits without reference to Section 63 of the Act. Clause (a) of Section 63 of the Act merely extends the provisions of Section 61 of the Act to cases which might not otherwise be covered by Section 61 by extending the meaning of word revocable.
The case of AAR that if the transaction does not qualify as a trust, the provisions of Section 63 and/or Section 61 are not applicable, is erroneous. In any event, under Section 63 there is no requirement that a trust covered by it must necessarily be an Indian trust falling under the Indian Trust Act. Such restriction which is not there in the Act cannot be imported into Sections 61 and 63 of the Act. As noted earlier, where such restriction is provided for the Act says so as noted in section 10(23FB) of the Act where it specifically provides that venture capital fund means a fund operating under the trust deed registered under the provisions of Registration Act, 1908.
As can be seen from the definitions, the Trust created in terms of the deed of settlement is consistent with the requirements of both, the Indian Trusts Act as well as Trust (Jersey) Law, 1984 as to what constitutes a trust.
Settlor cannot be a sole beneficiary - First of all the Act does not make any such provision. Secondly, there is no provision under the Indian Trust Act also which debars the settlor from being beneficiary. In the case of Bhavna Nalinkant Nanavati [2002 (1) TMI 48 - GUJARAT HIGH COURT] the settlor of the trust was also the sole beneficiary in the Deed of Settlement.In the present instance, the settlor is not the trustee but is the sole beneficiary which is clearly permissible.
AAR’s view that Sections 60 to 64 are designed to overtake and circumvent the counter design by a taxpayer to reduce its tax liability by parting its property in such a way that the income should no longer be received by him but at the same time he retains certain powers over property/income - In the case at hand, if ADIA had invested the amount directly, the income derived from such investment would exempted under Article 24 of India-UAE DTAA. ADIA has not created the trust to avoid tax and that is not AAR's case either. AAR says if ADIA had directly invested they would not have been liable to pay tax. AAR failed to understand why would someone not invest directly if the returns on such investment would be exempt from tax. AAR fails to appreciate that ADIA routed its investment on certain instruments through the trust only for commercial expediency. According to AAR the assessee’s representative could not satisfactorily answer the query as to why ADIA routed its investments in non-convertible debenture funds through Jersey route for investment in Indian market and ADIA itself being an FII registered with SEBI could have directly invested in Indian Portfolios and taken advantage of Article 24 of India-UAE treaty. But the fact is ADIA has explained in detail in its letter dated 13th November 2018 and letter dated 25th September 2019 to AAR, why it routed its investment in non convertible debentures through Jersey route for Indian market.
As regards the ground that Section 160(1)(i) or 160(1)(iv) of the Act, provides that trustee can be representative assessee but in this case trustee being a resident of Jersey cannot be an agent of ADIA, in our view that is not sustainable as the Act does not provide anywhere that only trustee who is resident of India can be an agent under Section 160 of the Act.
Act presupposes that a Foreign Trust is a trust for the purposes of the Act. In Vikramsinghjit of Gondal [2014 (5) TMI 286 - SUPREME COURT], the Apex Court has applied the provisions of Section 164 and 166 of the Act to tax the beneficiary of a trust settled in U.K.
Even if, the trust is based out of Jersey and the trust is settled in Jersey, ADIA being the settlor and sole beneficiary of the trust and resident of UAE as per Article 24 of the India-UAE DTAA, the income which arises to it by virtue of investment in Indian Portfolio companies will be governed by the beneficial provisions of the India-UAE DTAA.
As exemption under Article 24 of India-UAE DTAA would be attracted. Even if for a moment we say that for any reason the provisions of Section 61 are not applicable, then also the trustee can only be assessed in a representative capacity and, accordingly the provisions of Section 160(i)(iv) will be applicable. Therefore, even if the income is taxed in the hands of the trustee in terms of Section 161(1), it will be taxed in the “like manner and to the same extent” as the beneficiary. Once again, ADIA is the sole beneficiary of the trust, the income assessed in the hands of the trustee will take colour of that of ADIA’s income and thereby, the benefit of India-UAE DTAA must be granted.
So long as the settlor has a right to reassume power over the assets settled, the same would amount to revocable transfer. In the facts of the case at hand, ADIA could reassume the power and hence the contribution to the trust was a revocable transfer thereby making the income arising to the trust taxable in the hands of ADIA which was exempt under Article 24 of India-UAE DTAA. The tax liability of a trust has to be determined by applying the provisions of the Act alongwith the provisions of India-UAE DTAA and not apply the law as applicable in Jersey.
The ruling dated 18th March 2020 has to be quashed. The income that accrues to the trust would not be chargeable to tax in India either by virtue of application of Section 61 read with Section 63 or on an application of Section 161 of the Act conjointly with the provisions of Article 24 of the India-UAE DTAA. Since we have quashed the Ruling dated 18th March 2020 of the AAR, the steps taken in furtherance of the Ruling order passed therein are also quashed and set aside.
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2021 (10) TMI 1269
Revision u/s 263 - Dis-allowance of additional depreciation u/s 32(1)(iia) - Claim of assessee was rejected in the year under consideration by order under Section 263 of the Act, since no new plant and machinery was put to use in that Assessment Year - ITAT allowed the appeal relying upon the judgment of Rittal India (P) Ltd. [2016 (1) TMI 81 - KARNATAKA HIGH COURT] HELD THAT:- The judgment of Rittal India [2016 (1) TMI 81 - KARNATAKA HIGH COURT] has been considered by this Court in an unreported order in M/s. Godrej Industries Ltd. [2018 (12) TMI 64 - BOMBAY HIGH COURT] - This Court in Godrej Industries Ltd. [2018 (12) TMI 64 - BOMBAY HIGH COURT] has also relied upon the judgment of T. P. Textiles Pvt. Limited [2017 (3) TMI 739 - MADRAS HIGH COURT] wherein Madras High Court has considered the additional proviso which was inserted to Section 32(1) (iia) of the Act and has also concurred with the view of the Madras High Court that said newly added third proviso to clause (ii) of subsection 1 of Section 32 of the Act being clarificatory in nature would apply to case covering past period also.
In our view, ITAT has not committed any perversity or applied incorrect principles to the given facts and when the facts and circumstances are properly analysed and correct test is applied to decide the issue at hand, then, we do not think that question as pressed raised any substantial question of law.
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2021 (10) TMI 1266
Reopening of assessment u/s 147 - reopening of assessment has been decided only because of audit objections - HELD THAT:- Compulsory scrutiny of the record has revealed, there was a statement of income but reopening has been because of audit objection. We have also noted that Assessing Officer had taken a stand contrary to the view expressed in the audit objection and had even addressed a letter to the Director of Audit intimating that objections raised by audit authority were not acceptable. Nevertheless the Assessing Officer reopened and issued notice under Section 148 of the Act.
It is settled law that the opinion of the Internal Audit party of the Income Tax Department cannot be recorded as information within the meaning of section 147(b) of the Act for the purpose of opening the assessment. The courts have also held that notice of reassessment cannot be issued based on information received from audit objection. No substantial question of law.
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2021 (10) TMI 1265
TDS u/s 195 - Demand u/s 201(1) and u/s 201(1A) - DTAA between India and UAE - as argued all the replies given by petitioner to show cause notices issued have not been considered and dealt with in the impugned order - as stated show cause notice does not refer to this issue and petitioner has not been called upon to show cause why it should not be held that petitioner was dependent PE for PDR Solutions UAE etc. - HELD THAT:- Issuance of a show cause notice is the preliminary step which is required to be undertaken. The purpose of show cause notice is to enable a party to effectively deal with the case made out by respondents ( See Om Shri Jigar Association Vs Union of India [1994 (5) TMI 24 - GUJARAT HIGH COURT]
In the circumstances, without making any observations on the merits of the case, we are quashing the impugned order dated 30th March 2021 and any consequential demand notice issued therein and remand the matter to respondent no.1 to pass fresh orders after hearing petitioner. If respondent no.1 feels need to add any further points in the show cause notice, respondent no.1 shall issue fresh show cause notice to petitioner and petitioner may respond to the said show cause notice. We keep open all rights and contentions of the parties including petitioner’s right to raise the issue of limitation.
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2021 (10) TMI 1263
Deduction u/s 80P - AO has come to a conclusion that the assessee cannot be treated as a Co-operative society meant only for its members and providing credit facilities to its members - Whether the appellant is a ‘primary co-operative bank’ and that the appellant is not entitled for deduction u/s.80 P(2)(a)(i) ? - Tribunal held that even if the assessee is not found to be a Co-operative Bank, the factual aspects requires to be analysed and thereafter final decision has to be made - HELD THAT:- The Hon'ble Apex Court in the case of Mavilayi Service Co-operative Bank Ltd. [2021 (1) TMI 488 - SUPREME COURT] considering the expression ‘member’ as defined in Section 2(l) of the Kerala Co-operative Societies Act, 1969 and the said Act expressly permitting loans to non-members under Section 59(2) and (3), held that loans given to nominal members would qualify for the purpose of deduction under Section 80P(2)(a)(i) of the Act. In the wake of this judgment, the matter requires re-consideration by the Assessing Officer with reference to Section 2(f) and 60 of the Karnataka Co-operative Societies Act, 1959 read with Section 80P(2)(a)(i) of the Act. The order of the Tribunal impugned being adjudicated and this Court having formed an opinion that the matter requires re-consideration, the consequential order of assessment has to be set aside. Alternative remedy of statutory appeal is not a bar in the circumstances of the case.
For the aforesaid reasons, without answering substantial questions of law, we set aside the orders impugned and restore the matter to the file of the Assessing Officer to re-consider the matter in the light of the observations made hereinabove.
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2021 (10) TMI 1262
Addition of security charge reimbursed - Assessee failure to credit HV AC charges to P&L A/c - tribunal has set aside the disallowances made by assessing authority - Substantial question of law - Denial of natural justice - whether tribunal is right in law in allowing relief to assessee on the basis of fresh materials brought on record before Tribunal ? - no opportunity was provided to the AO to examine the material evidence furnished before the Tribunal for the first time - HELD THAT:- Revenue challenge that no opportunity was provided to the Assessing Officer to examine the material evidence furnished before the Tribunal for the first time does not holds water for the reason that it was admitted by the CIT(A) as well, that the assessee has provided clarification in rectification proceedings under Section 154 of the Act before the Assessing Officer which came to be disposed of. If such material evidence was placed before the Assessing Officer even in the proceedings under Section 154 of the Act, regarding entries in P&L A/c, the same being available, CIT(A) under hyper technicalities ought not to have confirmed the addition of HV AC charges on the premise that no documentary evidence was placed to substantiate the same.
Tribunal is the last fact finding authority, irrespective of the material evidence examined by the authorities, the Tribunal is equally competent to examine the material evidence placed before it. Having considered the breakup figures available in the P&L report and the clarification offered by the assessee, the Tribunal has rightly allowed the appeal setting aside the orders passed by the authorities. It is well settled law that these factual aspects having been considered by the Tribunal and on the finding of the Tribunal with respect to this factual aspects, no questions of law would arise. It is apt to refer the judgment of this Court in Soft Brands India (P) Ltd. [2018 (6) TMI 1327 - KARNATAKA HIGH COURT] wherein it has been held that the finding of the Tribunal being one of the fact which has not been shown to be perverse, that unless the perversity in the finding of the fact is established before the High Court, no Substantial Questions of law arises for consideration under Section 260(A)
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2021 (10) TMI 1261
Deduction u/s 57(iii) - interest paid to the bank - establish the nexus for claiming the deduction under Section 57(iii) with the borrowed fund - HELD THAT:- It is discernable that the Tribunal has dismissed the appeal solely on the ground that the Annexure/Schedule mentioned in the agreements placed on record by the assessee were not made available to decide the issue of deduction under Section 57 (iii) of the Act. As such, we are of the considered opinion that providing one more opportunity to the assessee to furnish the details would not prejudice the rights of the Revenue. Given the circumstances, we set aside the order impugned and remand the matter to the Assessing Officer to provide an opportunity to the assessee to furnish the Annexure/Schedule mentioned in the agreements in support of her claim made, without answering the substantial questions of law raised.
The impugned order passed by the Income Tax Appellate Tribunal, Bengaluru Bench ‘C’, Bengaluru, is set aside. The matter is remanded to the Assessing Officer for reconsideration keeping open all the rights and contentions of the parties.
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2021 (10) TMI 1260
Delayed deposit of ESI/PF u/s 36(1)(va) - HELD THAT:- It is an undisputed fact that though there has been delay in deposit of PF/ESI dues but it is also an undisputed fact that money collected from employees, have been deposited with the appropriate authorities before filing of return of income. We find that Delhi Bench of Tribunal in the case of Dee Development Engineers Ltd. [2021 (4) TMI 393 - ITAT DELHI] after considering the decision of Bharat Hotels [2018 (9) TMI 798 - DELHI HIGH COURT] has decided the issue in favour of the assessee - no disallowance u/s 36(1)(va) of the Act is called for in the present case. Decided in favour of assessee.
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2021 (10) TMI 1259
Deduction u/s. 80IC - Rejection of books of accounts - estimation of income - HELD THAT:- As pertaining to the discrepancies in the financials of the assessee and has also given the details depicted by way of various charts which reflects the profits of the assessee in the preceding years as well as the profits of other related concern of the same group which were operating in the same field and even in the same geographical area and has reasonably estimated the profit of the assessee company, which cannot be faulted as perverse.
As already agreed with the decision of the Ld. CIT(A) rejecting the books of account, book results and invocation of the provision of section 145(3) of the Act while disposing of the assessee’s appeal - we do not find any infirmity in the order of the CIT(A) in estimating the income of the assessee. We note that from AY 2007-08 the assessee is eligible unit for deduction u/s. 80IC of the Act and, as discussed the estimation is made on the basis of relevant material and has been found by us to be reasonable in the facts and circumstances of the case. Therefore we uphold the impugned action of the Ld. CIT(A) giving partial relief to the assessee and also in the process confirming partly the action of AO. - Decided against revenue.
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2021 (10) TMI 1258
Disallowance of excess depreciation on computer software - assessee had purchased software being operating system for Windows and claimed depreciation as per Rule 5 of IT Rules, 1962 @ 60% as applicable to computer and computer software. The AO restricted depreciation claimed on computer software @ 25% as applicable to intangible assets being patent, license etc on the ground that payment made by the assessee for acquiring license for software is nothing but an intangible asset - HELD THAT:- Computer software (whether canned form or uncanned form) is goods and a tangible asset by itself. Further Rule 5 of IT Rules, 1962 governing the rate of depreciation for software, has prescribed 60% depreciation on computer and computer softwares. Since, the assessee has purchased software like Windows, MS Office and other operating system which is embaded in computer system and thus, the same is construed as an integrated part of computer system which is eligible for depreciation @ 60% as claimed by the assessee, but not 25% as applicable to intangible asset as considered by the Ld. AO. Therefore, we are of a considered view that the AO as well as CIT(A) were erred in restricting depreciation on software to 25% as against 60% as claimed by the assessee. Hence, we direct the AO to allow depreciation @ 60% as claimed by the assessee.
TDS u/s 195 - disallowance of payment made to a non-resident for purchase of software u/s. 40(a)(i) - assessee has purchased copyrighted software from a service provider from USA and assessee has not deducted TDS u/s. 195 for the reason that software license purchased from non-resident supplier is not in the nature of Royalty as defined u/s. 9(1)(vi) - HELD THAT:- In the case of CIT vs M/s. Dassault Systems Simulia P Ltd.,[2021 (4) TMI 180 - MADRAS HIGH COURT] had considered an identical issue and held that whether assessee had purchased only a right to use copyright, i.e., software and not entire copyright itself, amounts paid by resident Indian end-users/distributors to non-resident computer software manufacturers/suppliers, as consideration for the resale/use of the computer software through EULAs/distribution agreements, is not payment of royalty for the use of copyright in the computer software, and same does not give rise to any income taxable in India, as a result of which the persons referred to in section 195 were not liable to deduct any TDS u/s. 195 of the Act, 1961. In this case, the assessee has purchased software from supplier in USA and said software is a copyrighted article - payment made by the assessee for purchase of software to non-resident supplier is outside the scope of the definition of Royalty as defined u/s. 9(1)(vii) and thus, the assessee does not required to deduct TDS u/s. 195 and consequently, payment made for purchase of software cannot be disallowed u/s. 40(a)(i) of the Act for non-deduction of tax at source. Hence, we direct the AO to delete the additions made towards disallowance of payments made to non-resident for purchase of software.
Assessee appeal allowed.
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2021 (10) TMI 1257
Disallowance of rental expenses - expenses relating to earlier year were not admissible - HELD THAT:- The assessee society was required to pay rent and delayed interest which was paid by the assessee on 29th August, 2009. On the basis of this payment the district collector, Surendranagar has passed an order on 8th Sep, 2008 renewing the lease of the petrol pump land for further period of 15 years.
CIT(A) has incorrectly stated in his finding that assessee has only claimed the interest component and not claimed the rental expenses of earlier year, after perusal of the material on record, we find that amount as comprised of lease rent and interest pertaining to lease rent and interest for the period 2003 to 2008. On perusal of material on record, it is categorically demonstrated that impugned expenses were crystallized during the year under consideration. There is no doubt about the genuineness of the expenditure. Having considered the material on record, we do not find any justification for the disallowance of the claim of the assessee without considering the relevant material fact that the impugned liability was crystallized during the year under consideration. Appeal of the assessee is allowed.
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2021 (10) TMI 1256
Addition u/s 36(1)(va) - delayed deposit of employees contribution of EPF and ESI but paid before the due date of filing of return - HELD THAT:- It is an undisputed fact that though there has been delay in deposit of PF/ESI dues but it is also an undisputed fact that money collected from employees, have been deposited with the appropriate authorities before filing of return of income.
Following the decision rendered in the case of Dee Development Engineers Ltd. [2021 (4) TMI 393 - ITAT DELHI] and for similar reasons hold that no disallowance u/s 36(1)(va) of the Act is called for in the present case. I therefore direct the deletion of addition. Thus the ground of assessee is allowed.
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