|
Advanced Search Options
Income Tax - Case Laws
Showing 121 to 140 of 506 Records
-
2021 (11) TMI 929 - TELANGANA HIGH COURT
Recovery proceedings - Stay of demand - Properties including the stock-in-trade have been attached - petitioner submits that as his properties including the stock-in-trade have been attached, his business activities have been completely jeopardized, for which reason he is unable to generate any revenue for payment of the tax dues - HELD THAT:- In the light of the contentions made and taking an over all view of the matter, we feel that it would meet the ends of justice, if the attachment of the stock-in-trade of the petitioner is withdrawn to enable him to meet the tax dues in terms of the first proviso to Section 254 (2A) of the Act. In view of the statement made by the revenue itself that not much money could be appropriated through attachment of bank accounts, attachment of the bank accounts may be withdrawn.
Order:- Tribunal is directed to expeditiously hear the three appeals of the Revenue and corresponding Cross Objections of the petitioner, preferably within a period of six months from today.Petitioner shall deposit 20% of the tax dues following the order passed by the first appellate authority on 31.03.2018.On such deposit, attachment of the petitioner’s bank accounts as well as the stock-in-trade shall stand withdrawn forthwith
-
2021 (11) TMI 928 - KARNATAKA HIGH COURT
Assessment u/s 153A - replacement of Chapter XIV-B provisions and introduced Sections 153A, 153B and 153C in the Act by Finance Act, 2003 - Whether search u/s 132 of the Act is sine qua non for initiation of proceedings under Section 153A of the Act but it is not dependent on any undisclosed income being unearthed during search? - HELD THAT:- Section 153C provides that where an Assessing Officer is satisfied that any money, bullion, jewellery or other valuable article or thing or books of account documents seized or requisitioned belong or belongs to a person other than the person referred to in Section 153A, then the books of account, or documents or assets seized or requisitioned shall be handed over to the Assessing Officer having jurisdiction over such other person and that Assessing Officer shall proceed against such other person and issue such other person notice and assess or reassess income of such other person in accordance with the provisions of Section 153A.
Assessing Officer while passing the order under Section 153A read with Section 143[3] of the Act, ordinarily cannot disturb the assessment/reassessment order which has attained finality, unless the materials gathered in the course of the proceedings establishes that the finalized assessments are contrary to the material unearthed during the course of 153A proceedings, as held by the Co-ordinate Bench of this Court in the case of IBC Knowledge Park (P) Ltd., supra. A concluded assessment could not be disturbed without there being any basis for doing so which is impermissible in law.
Even in case of a searched person, the same reason would hold good. As observed in Canara Housing Development Company supra, the Assessing Officer is empowered to assess or reassess the total income of six assessment years i.e., the income which was returned in the earlier return, the income which was unearthed during search and also any income which was not disclosed in the earlier return or which was not unearthed during the search by separate assessment orders but in our considered view the completed assessments should be subject to the safeguards provided in IBC Knowledge Park (P) Ltd. [2016 (5) TMI 372 - KARNATAKA HIGH COURT]
As regards the pending assessments are concerned only one assessment shall be made separately for each assessment year on the basis of the income unearthed during search and any other material existing or brought on the record of the Assessing Officer. Even in the absence of any incriminating material abated assessment or reassessment could be done. The returns filed under Section 139 of the Act gets replaced by the returns filed under Section 153A[1] of the Act. Pending proceedings in appeal, revision/application shall not abate subsequent to initiation of Section 153A proceedings. Further, recording of satisfaction under Section 153A may not be necessary unlike Section 153C of the Act which mandates recording of satisfaction.- Decided in favour of assessee.
-
2021 (11) TMI 927 - ITAT JABALPUR
Delayed Employees’ contribution to the employees’ provident fund and the employees’ state insurance fund - Delay deposit (by the assessee-employer) as beyond the due dates - returned income having been made by the AO u/ss. 143(1) and 154 - HELD THAT:- Sec. 43B(b) does not include the employee contribution, and even regarding so is to no avail, rendering the Explanations under reference, even as suggested by their express language, explanatory. An examination of the Notes on Clauses to, and the Memorandum explaining the Provisions of, Finance Bill, 2021, however, resolves the matter beyond the pale of any doubt. While confirming the Explanations under reference to be explanatory of the law, even as signified by the clear, unambiguous language employed therein, are yet stated to be prospective inasmuch as they are applicable assessment year 2021-22 onwards.
Lastly, no decision by Hon'ble jurisdictional High Court in the matter has been either cited before me, or found, which, where so, would, irrespective of the view expressed therein, hold for the relevant years, being prior to the year of applicability of the Explanations under reference. No adjustment, in view of the conflicting judicial opinion could, accordingly, be made to the returned income u/s. 143(1)/154, which sections admit only issues on which there could be conceivably no two views, rampant, irrespective of merits thereof, in the instant case, which aspect, as explained therein, has been given cognizance to in making the provision applicable not retrospectively. The assessee, accordingly, succeeds in his challenge to the impugned adjustments, which are held as bad in law and directed for deletion. This is of course subject to any different view taken by the Hon’ble jurisdictional High Court for any year prior to AY 2021-22. Assessee appeal allowed.
-
2021 (11) TMI 926 - ITAT KOLKATA
Contribution of employees’ share towards ESI, PF, Superannuation Fund or any other fund set up for the welfare of the employee u/s 36(1)(va) read with Section 2(24)(x) when the payments were made within the due dates of filing of return u/s 139 - whether the amendment brought in by Finance Act, 2021, is retrospective or prospective in operation? - HELD THAT:- When we adjudicate whether the view of Ld CIT(A) that the explanation 2 brought in by Finance Act, 2021 is retrospective, let us look at the “Notes on Clauses and the relevant clauses 8 & 9 of the Finance Bill, 2021 (supra) pertaining to the issue in hand which in clear and unambiguous terms spells out the intention of Parliament that the amendment shall take effect from 1st April, 2021 and therefore will accordingly apply to Assessment Year 2021-22 and subsequent years. So since the legislative intent is clear, the amendment brought in by Finance Act, 2021 on this issue as discussed is prospective and Ld. CIT(A) erred in holding otherwise. So till AY 2021-22, the Jurisdictional High Court’s view in favor of assessee will hold good and is binding on us.
As relying on the ratio of the Hon’ble Supreme Court in the case of Vatika Township Pvt. Ltd. [2014 (9) TMI 576 - SUPREME COURT] and M/s Snowtex Investment Ltd. [2019 (5) TMI 1165 - SUPREME COURT] and also taking note of the binding decision of the Hon’ble Jurisdictional Calcutta High Court on this issue before us in Shri Vijayshree Ltd. Ltd.[2011 (9) TMI 30 - CALCUTTA HIGH COURT] M/s Coal India Ltd [2015 (8) TMI 1451 - CALCUTTA HIGH COURT], M/s Akzo Nobel India Ltd. [2016 (6) TMI 1128 - CALCUTTA HIGH COURT], we set aside the impugned order of Ld CIT(A) and direct the AO to allow the claim of deduction in respect of employees contribution shares towards ESI, PF, by the assessee before the due date of filing of return u/s 139(1) of the Act. Therefore the appeal of assessee succeeds and so, it is allowed in favor of assessee.
Disallowance u/s 14A - HELD THAT:- Since there is no dispute that assessee did not earn any exempt income, we are of the view that no disallowance u/s 14A of the Act was warranted. For taking such a view, we rely on the decision of the Hon’ble Delhi High Court in Chem Investments [2015 (9) TMI 238 - DELHI HIGH COURT] - Therefore we direct the deletion of the addition /disallowance made by the AO in this regard.
Disallowing expenditure incurred on educational sponsorship of assessee company’s Director’s son - HELD THAT:- Since in the present case there is a nexus with expenses incurred for the higher education of Shri Jay Goel with the business of the assessee company and the recipient of sponsorship has later joined the services of assessee company and is discharging the duties as CEO of the assessee company, the expenditure incurred should be allowed since it has nexus with the business of the assessee. This ground of the assessee stands allowed.
Accrual of income - retention money retained by the debtors during the relevant previous year - taken into account while computing the profits and gains of the assessee’s business for the assessment year under consideration - HELD THAT:- Since we note that the retention money kept with the Electricity Board which would be released latter only once the assessee fulfills all the obligations under the contract then only the assessee would acquire the right to receive such retention money so this is contingent in nature, so the amount in question cannot be held to have been accured to the assessee and since on facts the assessee has not received the same, even by applying the concept of real income theory, the money retained by the Electricity Board cannot be brought to tax. Thus, we note that in this year under consideration, since no enforceable liability has accrued or arisen, so, it cannot be said that the assessee had any vested right to receive the retention money in question.
Assessee had no right to claim any part of the retention money till the verification of the satisfactory execution of the contract is over. Therefore, in this assessment year the retention money retained by the electricity Board cannot be treated as income of the assessee and even though the assessee due to mistake of fact has offered the same as income this year in its Return of Income, deduction of the same should be given and since the decision of the Hon’ble Supreme Court in M/s Goetz India Goetz India [2006 (3) TMI 75 - SUPREME COURT] does not come in the way of the Tribunal as held by the Hon’ble Supreme Court as noted (supra), so we set aside the impugned order of Ld CIT(A) and direct the AO to give relief to the assessee on this issue. However, it is clarified that when the assessee receives or when this amount accrues to the assessee, then it should be taxed in that assessment year and not in this assessment year - Decided in favour of assessee.
-
2021 (11) TMI 925 - ITAT BANGALORE
Disallowance u/s 40(a)(ia) - Non deduction of TDS on the guarantee commission paid to Government of Karnataka - HELD THAT:-Guarantee commission is not paid directly to the State Government and they are not levies imposed exclusively on the Assessee. The State Government issues Guarantees on behalf of the Government Departments, Public Sector Undertakings, Local Authorities, statutory Boards and Corporations and Co-operative Institutions. Consequently and hold that the disallowance made u/s.40(a)(iib) of the Act cannot be sustained.
Disallowance of guarantee commission under section 40(a)(iib) of the Act is not sustainable and the addition made in this regard is directed to be deleted. - Decided in favour of assessee.
-
2021 (11) TMI 924 - ITAT DELHI
Revision u/s 263 by CIT - Low income in comparison to very high investments, Large increase in investment in unlisted equities during the year and income in comparison to high loans/ advances/investment in shares - HELD THAT:- The error should be one that is not debatable or a plausible view. Section 263 of the Act invests a power of revision in a superior officer and therefore, by the very nature of the power, does not allow for supplanting or substituting the view of the AO. The appreciation of material placed before the AO is, exclusively within his domain which cannot be interdicted by a superior officer while exercising powers u/s 263 only on the ground that if he had appraised the said material, he would have come to a different conclusion. [See Parashuram Pottery Works Co. Ltd. [1976 (11) TMI 1 - SUPREME COURT].
Since in the instant case the A.O. had indeed made enquiries as per the reasons for which the case was selected for limited scrutiny and the case was not converted to full scrutiny, therefore, respectfully following the decision in the case of PCIT vs., M/s. Brahma Centre Development Pvt. Ltd. [2021 (7) TMI 347 - DELHI HIGH COURT] we hold that the Ld. PCIT was not justified in assuming the jurisdiction under section 263 of the I.T. Act, 1961. We, therefore, set aside the Order of the Ld. PCIT and allow the grounds raised by the assessee on this issue.
So far as various decisions relied on by the Ld. D.R. are concerned, we are of the considered opinion that these are distinguishable and not applicable to the facts of the present case especially when the case of the assessee which was selected for limited scrutiny was never converted to full scrutiny and the assessee had submitted all the details as called for by the A.O. from time to time for the reasons for which the case was selected for limited scrutiny. The grounds raised by the assessee are accordingly allowed.
-
2021 (11) TMI 923 - ITAT ALLAHABAD
Prior pried Expense adjustment - HELD THAT:- As observed from the orders of authorities below that the assessee did not filed any details before the AO, while the assessee has filed additional evidences before ld. CIT(A) for the first time to support its stand. It is observed that ld. CIT(A) did not call for remand report/comments from AO on these additional evidences which is in breach of Rule 46A of the 1962 Rules. Further, the ld. CIT(A) has passed a non speaking cryptic order without offering reasons/comments for not allowing the claim of the assessee on each and every item of expenses claimed by assessee as 'Prior Period Expenses'. In our considered view based on facts and circumstances of the case, that the matter needs to be set aside and restored to the file of Assessing Officer for de-novo adjudication of the entire issue on merits in accordance with law. The assessee is directed to produce all relevant evidences/details/explanation before the Assessing Officer in set aside de-novo proceedings - ground of appeal is allowed for statistical purposes.
Addition of difference in the Opening Stock in Current Year with that of Closing Stock of the immediately preceding year - AO observed from the record that there is a difference in Opening Stock in Current Year with that of the Closing Stock of the immediately preceding year - CIT(A) rejected the contentions of the assessee by upholding the additions to income made in the assessment order passed by Assessing Officer - HELD THAT:- As observed that there is no difference between the closing stock of the preceding year with the opening stock of the current year, which was ₹ 150.12 lacs - DR has also fairly and correctly submitted that there is no difference in closing stock of preceding year with the opening stock of current year and the issue is to be decided in favour of the assessee. We have observed that as on 31.03.2011, the closing stock was ₹ 150.12 lacs and the opening stock as on 01.04.2011 was also ₹ 150.12 lacs. There is no difference at all between the closing stock in the preceding year and the opening stock in the current year, rather the AO adopted wrong figures of closing stock of current year with that of the increase/decrease in the stock of finished goods. CIT(A) passed cryptic order and did not elaborate on facts correctly. Thus, the authorities below erred in making addition. Thus, based on facts and circumstances of the case, the addition as made by authorities below is not sustainable in the eyes of law and is hereby ordered to be deleted.
Allowability of set off of brought forward business losses and unabsorbed depreciation - HELD THAT:- All the earlier year brought forwards business losses which assessee is seeking to set off and carry forward, should be assessed business losses and the return of income for those years ought to have been filed by the assessee within the time stipulated u/s. 139(1) and ought not to be belated return of income filed beyond the due date prescribed u/s. 139(1), otherwise it will be hit by provision of Section 80 and 139(3)
So far as quantum of brought forward business losses and unabsorbed depreciation which were assessed to be carried forward to subsequent years and its period of allowability is concerned, we are of the considered view that these facts requires verification by Assessing Officer from the record, and the material on record available before us is not sufficient to give conclusive finding on these facts, and hence we are setting aside this matter to the file of AO for verification of facts and quantum of allowability of brought forward business losses and unabsorbed depreciation, and while allowing the carry forward of business losses, the AO shall also verify that the return of income was filed by assessee in time within due date prescribed u/s. 139(1) for those years and the loss assessed by Revenue to be carried forward for each of the years and period of allowability of business loss for eight assessment years as is available u/s. 72(3) of the 1961 Act. The assessee has also grievance that unabsorbed deprecation amount is wrongly mentioned in grounds of appeal filed with tribunal, this aspect shall also be verified by the AO from records and correct amount be accordingly considered after due verification of records.
Depreciation @ 30% of total depreciation claimed on account of unverifiable fixed assets of closed unit at Allahabad and failure to establish usage of these assets for business purposes as is required u/s. 32 - HELD THAT:- The contentions of the assessee that Building and Motor vehicles at Allahabad Manufacturing unit were used for business purposes, building for the purposes of Registered office and Motor Vehicle for the purposes of official usage by Directors, the facts on record are not sufficient to come to conclusive finding that these assets were actually used by assessee and further that these assets were wholly and exclusively for the business of the assessee company to satisfy the mandate of Section 32 and 38(2) of the 1961 Act. Further, contention of the assessee that it only claimed depreciation on Building and Motor Vehicle of Allahabad unit and no depreciation was claimed with respect to 'Plant and Machinery' installed at Allahabad Manufacturing unit, again the facts on record are not sufficient to give conclusive finding on this issue, in the absence of details/break-up furnished by the assessee. The assessee is also aggrieved that figure adopted by AO for disallowance of depreciation is not correct. Keeping in view totality of facts and circumstances of the case, we are of the considered view that the assessee will not be entitled for claiming depreciation on the closed Manufacturing unit at Allahabad, but, however, for verification and adjudication of other claims of the assessee as detailed by us in this order, such as user of building and Motor Vehicles of Allahabad Manufacturing unit for business purposes, that no depreciation was claimed in return of income filed with Revenue with respect to 'Plant and Machinery' installed at Allahabad Manufacturing unit, adoption of the correct amount of disallowance of depreciation, the matter need to be remitted back to the file of AO for fresh adjudication on merits in accordance with law.
Disallowance of Rebate Expenses claimed by the assessee as deduction while computing income chargeable to tax under the head 'Profits and Gains from Business or Profession' - authorities below held that no income-tax was deducted at source by assessee u/s. 194H and the same is not allowable as deduction while computing income chargeable to tax - HELD THAT:- The assessee has merely submitted credit notes, and no further details as to contract/agreement with parties, claim(s) raised by parties and evidences to substantiate the claims are bonafide and genuine etc., are furnished by assessee - material on record, is not sufficient to give conclusive finding that these rebate allowed were actually towards breakage or rate difference, and not commission. This requires verifications and evaluation of evidences to come to conclusive finding, firstly that these are business expenses which are incurred wholly and exclusively for business of the assessee and are genuine claims. Further, if the said expenses are within ambit of deduction of income-tax at source, then due income tax was deducted at source and paid to the credit of Central Government within the stipulated time, as is required for claiming deduction under the provisions of Section 40(a)(ia) of the 1961 Act. Thus, keeping in view, totality of facts and circumstances of the case, the matter need to be remitted back to the file of AO for fresh adjudication on merits in accordance with law. Needless to say that the AO shall provide proper and adequate opportunity of being heard to the assessee in set aside proceedings. The evidences/explanations submitted by assessee in its defense shall be admitted by AO, and adjudicated by AO on merits in accordance with law.
-
2021 (11) TMI 922 - ITAT INDORE
Revision u/s 263 by CIT - Addition on provision of section 41(1) - excess provision made for bad and doubtful debts on ICD was written back in respect of recovery of ICD - HELD THAT:- As during the impugned year assessee was engaged in the process of recovery of loans and interest which was granted earlier and no fresh lending was done in the impugned year. Thus, in the impugned year when the excess provision made for bad and doubtful debts on ICD was written back in respect of recovery of ICD from Som Distilleries Limited, the same was deducted from the net profit as per the audited financial statements in computing income under the head profit and gains from business or profession - no benefit claimed by the assessee in terms of section 41(1) of the Act in respect of the impugned amount. It is also evident that there is no tax advantage derived by the assessee in respect of the impugned amount. It is worth noting that provisions of section 41(1) are attracted only when any allowance or deduction has been claimed in respect of loss, expenditure or trading liability and the assessee has obtained in cash or in any other manner any amount in respect of such loss or expenditure or some benefit in respect of such trading liability by way of remission or cessation thereof. We find that Ld. Pr.CIT has grossly erred in applying the provisions of section 41(1) in the present case which in no situation is applicable in the facts of the present case.
We find that during the course of the assessment proceeding, the Ld. AO specifically asked Vide questionnaire issued on 17.04.2017, to explain large any other deduction claimed in sch. BP creating a loss without any income in Profit & Loss Account and explain mismatch between income/receipt credited to Profit & Loss Account considered under other heads of income and income from heads of income other than business/profession, which was replied.
AO conducted proper enquiry to verify the withdrawal of provision of ICD and allowed the claim on being satisfied with the details and explanation. Thus, the decision of ld. AO cannot be held to be erroneous. We find that the ld. AO has applied his mind while conducting the assessment proceedings. Under these circumstances, where a detailed enquiry has been conducted on particular issue and the Ld. AO has made proper application of mind on the details filed by the assessee and have conducted sufficient enquiry the assessment order cannot be held to be erroneous so far as prejudicial to the interest of revenue. We accordingly quash the impugned revisionary order framed u/s 263 of the Act and restore the assessment order u/s 143(3) - Decided against revenue.
-
2021 (11) TMI 921 - ITAT MUMBAI
Addition u/s 14A r.w.r. 8D - Mandation of recording satisfaction - whether or not the A.O had validly assumed jurisdiction and worked out the disallowance u/s 14A r.w Rule 8D? - claim of the assessee before us that the A.O without recording his dissatisfaction as regards the claim of the assessee that no expenditure was incurred for earning of the exempt dividend income had in a mechanical manner dislodged the same and worked out the disallowance u/s 14A r.w. Rule 8D - HELD THAT:- It is a matter of fact borne from the record that the A.O had merely on the basis of his general observations, viz. that investment decisions are very complex in nature and require substantial market research, day-to-day analysis of market trends and decisions with regard to acquisition, retention and sale of shares at the most appropriate time etc., had dislodged the claim of the assessee that no part of the expenses claimed by him in respect of his other non-exempt income could be attributed or related to earning of the exempt dividend income. The failure on the part of the A.O to strictly comply with the aforesaid statutory obligation that was cast upon him, can safely be gathered from the fact that there is no clear finding by him with reference to the assessee’s accounts as to how the other expenditure claimed by the assessee in respect of its non-exempt income were related to its exempt income.
A simpliciter rejection by the A.O of the aforesaid claim of the assessee which is only backed by his general observations, surmises and conjectures can by no means justify the validity of the jurisdiction assumed by him for computing the disallowance u/s 14A r.w. Rule 8D(2)(iii) in the hands of the assessee. We, thus, not finding favor with the view taken by the CIT(A) who had upheld the validity of the jurisdiction assumed by the A.O for computing the disallowance u/s 14A r.w Rule 8D(2)(iii) set-aside his order.Accordingly, the disallowance made by the A.O u/s 14A r.w Rule 8D is vacated - Decided in favour of assessee.
-
2021 (11) TMI 920 - ITAT PANJI
Validity of search action initiated - receipt of search warrant - HELD THAT:- Section 132(1) of the Act clearly stipulates issuance of search warrant against whom the search was conducted in accordance with law. In the present case, the search was conducted in the premises of the assessee company which is duly admitted by the Managing Director of the company at the time of recording of her statement. Further from the paper book, we also found that the Managing Director of the company during the appellate proceedings filed an affidavit and in the affidavit he had stated that she is the Managing Director of the Company and the diary was found belonging to the assessee company.
the search warrant was clearly issued against the assessee company and, therefore, the action on the part of the revenue to initiate the search proceedings against the assessee company was in accordance with law. In our view, the ld. CIT(A) has rightly relied upon the decision of Hon’ble Delhi High Court in the matter of MDLR Resorts Pvt. Ltd [2013 (12) TMI 1116 - DELHI HIGH COURT] and therefore, we do not find any error in the order of CIT(A).
Search warrant was required to be received by Smt.Radha S. Timblo in her individual capacity as well as in the capacity of Managing Director and only one signature appears on the search warrant - We are of the opinion that in the Companies Act and also in the Income Tax Act, the Managing Director of the company is an authorised officer to file the proceeding for and on behalf of the company and is also entitled to receive the document on behalf of the company. Admittedly, in her statement, Smt. Radha S. Timblo has categorically mentioned that she is making statement in her individual capacity and being the Managing Director of M/s Timblo Pvt. Ltd.. Once the Managing Director of the company says that the search was carried out in the premises of the company, therefore, it is not option for the assessee to take diametrically opposite stand stating that no search was carried out in the premises of the assessee company. With the above observations, we found that the legal ground raised by the assessee in all the appeals is not maintainable. Accordingly, we dismiss all the appeals of the assessee.
-
2021 (11) TMI 919 - ITAT DELHI
Reopening of assessment u/s 147 - addition u/s 68 - Validity of two separate assessment orders by two different A.Os. for the same assessee for the same assessment year - HELD THAT:- It is a peculiar case of reopening of the assessment on account of cash deposit in the bank account by two different Assessing Officers for the same assessee for the same assessment year
Once the A.O. has already made an assessment in the order under section 147/143(3) in the case of the assessee for the same assessment year for the reason that assessee has made cash deposit of ₹ 15,02,250/- in his bank account, therefore, in my opinion it is not permissible by another A.O. to reopen the assessment on the very same issue and pass the order under section 147/144 of the I.T. Act, 1961. When the PAN was available with the Department and an order had already been passed under section 147/143(3) for the same assessment year for the same reason, therefore, the second order passed by the A.O. dated 07.12.2017 in my opinion does not stand in the eyes of Law unless and until the first order is withdrawn. In this view of the matter, I am of the considered opinion that the second order passed by the ITO, Ward-32(2) in the instant case does not survive since there cannot be two different assessment orders for the same assessee for the same assessment year with the same PAN by two different A.Os. The grounds raised by the assessee are accordingly allowed.
-
2021 (11) TMI 918 - ITAT CHENNAI
Correct head of income - income arising out of shares - business income or income from capital gains - HELD THAT:- In this case the assessee has purchased shares of Induslnd Bank on 18.12.2009 and sold the same on 23.03.2011. The holding period of the shares is more than 12 months and only single activity carried by the assessee. In the balance sheet also it has shown as an investment. In view of the above facts, we are of the opinion that the activity carried by the assessee cannot be treated as a business activity.
As laid down in the CBDT circular No. 4/2007, the substantial nature of transactions and the manner of maintaining books of accounts plays an important role in determining the nature of transaction. Also, as depicted by the Circular No. 06/2016, in the present case, the appellant has treated the shares as investment and not as stock-in-trade and there are no fine grounds to say that the appellant is a dealer in shares and not an investor especially when the sale of shares was a single solitary transaction - Decided against revenue.
Disallowance u/s. 14A - assessee has disallowed an amount suo-moto as expenses attributable to the earning of the exempt dividend income - HELD THAT:- We find that the Ld. CIT(A) only directed the A.O. to verify entire investments and exclude investments which has no exempt income yielded and direct the A.O. to re-compute disallowance of Rule 8D(2)(iii) of the Rules r/w s. 14A of the Act. Hence, we find no infirmity in the order passed by the Ld. CIT(A).
Disallowance of Board meeting expenditure - assessee has conducted a Board meeting at Chennai on various dates and has incurred the above expenditure towards travelling, boarding, lodging, credit card expenditure AND that the assessee's registered office is situated in Delhi, there is no purpose of holding the Board meeting in Chennai - CIT-A deleted the addition - HELD THAT:- We find that when the assessee is having subsidiary and associated offices in Chennai and some of the Directors are staying at Chennai, it is a business convenience of the assessee to conduct the Board meeting. The A.O. cannot decide where the assessee has to conduct the Board meeting. In view of the above, we are of the opinion that the Ld. CIT(A) rightly deleted the addition.
Disallowance of car hire charges - case of the A.O. is that the assessee has taken a Honda Civic car on rent which is registered in Chennai and the assessee is having no business connection in Chennai therefore, the above expenditure incurred by the assessee is not a business purpose it is only personal purpose - HELD THAT:- We find that when the assessee is having a subsidiary companies in Chennai and some of the Directors are residing at Chennai and the assessee has hired a car for his Directors for the purpose of business, it cannot be said that it is a personal in nature therefore, the Ld. CIT(A) rightly deleted the addition made by the A.O. By considering the above order passed by the Ld. CIT(A), we find no infirmity in the order passed by the Ld. CIT(A).
Revenue appeal dismissed.
-
2021 (11) TMI 917 - ITAT CHENNAI
Condonation of delay in filing an appeal - delay of 10 years - sufficient cause to condone the delay explained or not? - HELD THAT:- Assessee knows that there are proceedings pending before the A.O. for which he has appeared already along with his C.A. and also other assessment years pending before the A.O - we are of the view that the assessee knowingly not to choose file an appeal in time before the Ld. CIT(A). Apart from that the assessee filed an affidavit before the ITAT, wherein he has stated in paragraph-I that he is away from family since 11.07.2001, which is factually not correct because the assessee has appeared before the A.O. on 19.03.2003, 18.10.2004, 26.02.2004 therefore, the plea of the assessee that he is away from the family cannot be accepted.
As per the remand report submitted by the A.O. that the assessee suffering from sugar, joint pain since 20.01.2002 for that he is taking treatment from Dr. Muralidharan, BAMS and the assessee is visiting the hospital for the period from 20.01.2002 to 28.08.2010 as an outpatient. From the above, it is clear that his state of mind is perfect and he is taking treatment for his ill-health therefore, he must also aware that there was an assessment order and appeal also to be filed. After careful reading of the remand report and also detailed order of the Ld. CIT(A), we find that the assessee was away from the family for 10 years is not believable. For the condonation of the delay, the assessee has to show that there must be a sufficient cause to condone the delay. In this case, the assessee himself decided as per his affidavit not to go to his house knowingly that there must be an assessment order. No one is prevented the assessee to go to his house therefore, we are of the opinion that there is no sufficient cause to condone delay. Accordingly, the appeals filed by the assessee are dismissed.
-
2021 (11) TMI 916 - ITAT JODHPUR
Understatement of sales - search and seizer operation were carried wherein the certain loose papers were found and seized - second round of appeal before tribunal - CIT-A deleted the addition - HELD THAT:- AO made addition only by making the arbitrary calculation on the basis of above loose papers without bringing any positive, corroborative evidence on records in support he has proceeded on his own imagination, assumptions, presumptions or guess work - when the Assessing officer himself recorded the statements of Marketing manager Sh. Ankit Jain who was handling the sales was recorded on 21/10/2010 U/s 131 wherein he has clearly explained and stated about the size of flats are 1001 sq ft.(built up area) and 1126 sq ft. (built up area) only. He also explained about the size of flats mentioned in the broacher i.e. 1666 and 1484 sq ft. that this was nothing but super built up area of both type of flats constructed by the Company. Regarding charging of rates by the assessee Company from the customer in question No.5 he has clearly stated the facts that the rates per sq ft are charged on built up area only
In all the agreements the built area as well as total sale consideration has been mentioned clearly. When all these explanation, documents were before the AO, he must bring on record any contrary evidence, he must have made the inquiry from the purchasers when the data or details of the purchasers were before him, before making the addition on account of understatement of sales. The Assessing Officer has not brought on record any contrary evidence except these loose papers.
The Notarized sales agreements cannot be discarded in front of loose rough estimated papers without bringing any contrary evidences to rebut the same. On this preposition, we draw strength from the decision of the Hon’ble MP High court in the case of CIT v/s Dolphin Builders (P) Ltd . [2013 (6) TMI 103 - MADHYA PRADESH HIGH COURT] wherein it was held that “Department had not examined any purchaser or flat owner to verify correctness of noting that some higher amount was paid by said purchaser to “B” Builders or fact that actual price was much higher to price which was recorded in account books. The Tribunal had also found that if any amount was collected in excess to the agreed price then “B” could have been liable for that and not the assessee. Aforesaid reasoning of the Tribunal was reasonable. Though there might be some doubt about the price of the flats but until and unless it could have been proved by some evidence, aforesaid doubt could not take place of proof. Until and unless such noting was corroborated by some material evidence, the AO erred in making addition in the income.
AO made the addition own guess work, assumption, presumption and suspicion by using rough estimated cutting noting which were prior to the A.Y.’s under consideration which was not desirable in the eye of law. Hence also no were liable to be made. CIT-DR has not brought on record any new facts or circumstances to controvert the findings so recorded by the ld. CIT(A) qua this issue, therefore, considering all, we do not see any reason to interfere to deviate from the findings so recorded by the ld. CIT(A) qua this issue, accordingly, we uphold the same. - Decided against revenue.
-
2021 (11) TMI 915 - ITAT INDORE
Reopening of assessment u/s 147 - Non issuing mandatory notice u/s 143 (2) - validity of Notice by affixture - HELD THAT:- Serving officer could not state in his report the any name and address of the witnesses who have identified the house of the assessee and in whose presence the notice was affixed. Further, the affidavit in assessment records is missing thus in contravention of Rule 20 of Order V of CPC 1908. We find that in case of Jagannath Prasad [1976 (9) TMI 19 - ALLAHABAD HIGH COURT] there was only single attempt by the inspector and the reason enumerated was that door was locked. Thus the findings of above case are squarely applicable in assessee’s case. In view of the above judicial pronouncements, we are of the view that the Notice by affixture needs to be done in accordance with procedure laid down in by Order V, rule 17-20 of CPC
Thus the reassessment proceedings, so initiated, are bad in law as the Assessing Officer failed to serve the notice u/s 143(2) of the I.T. Act on the assessee. Accordingly, we quash the assessment order framed u/s 144 r.w.s. 147 of the IT Act for A.Y.2009-10 - Decided in favour of assessee.
-
2021 (11) TMI 914 - ITAT MUMBAI
Validity of assessment - limitation period to issue notice u/s 143(2) - whether the limitation period commences from the date of the actual filing of RoI or rectified RoI. - HELD THAT:- CIT(A) rejected the assessee’s contention and observed that the proviso to section 143(2) allows the AO to issue the notice before the expiry of six months from the end of financial year in which the return is furnished. He interpreted the words “end of financial year in which the return is furnished” to mean that the limitation period given in the Act will extend from the date of actual filing the RoI. He interpreted the provision to mean the limitation period commences from the date of the actual filing of RoI or rectified RoI.
The assessment procedure laid down in the Act are based on the respective financial year and assessment year. The responsibilities of assessee as well as AO are clearly specified in the Act so that the assessment can be completed for the respective AY’s as per the time frame given in section 153(1). The words used in section 153(1) are “any time after expiry of 21months from the end of the AY in which the income was first assessable”.
In case if we accept the proposition of Ld. CIT(A) then there will not be any finality to the assessments selected for scrutiny under CASS or any other method of selection. Itwill defeat themethod specified in the Act. It is irrelevant when the defect is cured by the assessee but what is relevant is the responsibility of the AO to follow the due procedure set out in the Act. It is his duty to issue the notice u/s 143(2) within the prescribed time limit. The Courts have held that once the AO misses the above time frame to issue the notice, the assessment will be bad in law.
With regard to rectification of defect in the RoI filed u/s 139(1) and limitation period to issue notice u/s 143(2) as relying on KUNAL STRUCTURE (INDIA) (P.) LTD. VERSUS DEPUTY COMMISSIONER OF INCOME-TAX CIRCLE-2 (1) (2) [2020 (2) TMI 725 - GUJARAT HIGH COURT] we are inclined to set aside the order passed by the Ld. CIT(A) and the order passed u/s 143(3) is defective and bad in law. Accordingly, grounds raised by the assessee is allowed.
-
2021 (11) TMI 883 - KARNATAKA HIGH COURT
Deduction u/s 57(iii) - Tribunal justification in holding that on the borrowings in question, the appellant was neither entitled to claim any deduction under Section 57(iii) nor for a deduction u/s 36(1)(iii) - HELD THAT:- Sec 57(iii) of the Act mandates that income chargeable under the head 'income from other sources' shall be computed after making a deduction of any other expenditure (not being in the nature of capital expenditure) laid out or expended wholly and exclusively for the purpose of making or earning such income. Section 57(iii) of the Act does not require that the expenditure incurred is deductible only if expenditure has resulted in actual income. As long as the purpose of incurring expenditure is to earn income, the expenditure would have to be allowed as a deduction under Section 57(iii) of the Act. Under Section 57(iii) of the Act a nexus between the expenditure and income has to be ascertained. The assessee was therefore, entitled to deduction under Section 57(iii) of the Act.
The tribunal exceeded its jurisdiction in disallowing the entire interest expenditure and the power of the tribunal is limited to passing of the order in respect of subject matter of the appeal. Thus substantial question of law is answered and is held that assessee is entitled to claim deduction under Section 57(iii) of the Act.
Whether the appellant had failed to prove its contention in the alternative that he borrowings in question were made for business purposes? - Whether Tribunal has not been justified in making the observations that the deduction as claimed was not allowable not only in excess of interest expenditure over interest earned, but also the entire interest expenditure incurred on the borrowings in question? - The second and third substantial questions of law are answered in the affirmative and in favour of the assessee.
-
2021 (11) TMI 882 - BOMBAY HIGH COURT
Validity of National Faceless Assessment - as argued draft Assessment Order was not served on the Petitioner - HELD THAT:- In the fact situation of the present case, it appears that a notice u/s 142(1) of said Act along with questionnaire was issued on 23/12/2020 and 26/03/2021. The draft Assessment Order was prepared based on information furnished by the assessee to the said notices. It was sent to the Risk Management Unit, which accommodated it to the Review Unit. The Review Unit concurred with the draft Assessment Order and submitted its report on 25/04/2021. The impugned Assessment Order was passed on 26/04/2021, and demand notice u/s 156 was also issued on 26/04/2021. From the Affidavit-in-Reply filed by the Respondents, it is not in dispute that the draft Assessment Order was not served on the Petitioner. It is also not in dispute that the variation proposed in the draft Assessment Order is prejudicial to the assessee's interest. It is, therefore, clear that Respondent No.1 has not issued a show-cause notice to the assessee in the form of a draft Assessment Order and made an addition of ₹ 120,94 Crore and second demand of ₹ 8.14 Crore.
As per the case of Multiplier Brand Solutions Pvt. Ltd. [2021 (11) TMI 822 - BOMBAY HIGH COURT] are of the view that the impugned order of assessment and consequent notice of demand cannot be sustained.
Assessment Order passed under Section 143(3) read with Section 144 and notice of demand under Section 156 of the said Act are quashed and set aside.The matter is remanded to Respondent No.1 to complete assessment proceedings, by following procedure as contemplated by Section 144B.
-
2021 (11) TMI 881 - KARNATAKA HIGH COURT
Exemption u/s 11 - cancel the registration granted under Section 12A - exemption under Section 11 of the Act is denied in the present case mainly alleging breach of Section 13(1)(c) - amendment of trust deed - HELD THAT:- As per in the case of Karnataka Badminton AssociationIn [2015 (1) TMI 1202 - KARNATAKA HIGH COURT] registration granted was cancelled in view of the amendment of first proviso to Section 2(15) of the Act, which is not a ground specified in the statute for cancellation of the registration. The Co-ordinate Bench of this Court considering Section 12AA(3) of the Act has held that a registration granted u/s 12A can be cancelled under two circumstances i.e., (i) if the activities of such trust or institution are not genuine, and ii) the activities of the trust or institution are not being carried out in accordance with the object of the trust or institution. Only on these two conditions/grounds found to be satisfied, the registration granted could be cancelled by the authorities under Section 12A.
As further observed that notwithstanding the fact that the assessee is conferred registration under the provisions of 12A of the Act, unless the assessee falls within the provisions of Section 2 (15) of the Act, excluding the first proviso, it will not be entitled to the benefit of exemption of tax. If the case of the assessee falls in the first proviso, the benefit of registration which flows from Section 12A of the Act is not available. But on that ground, registration cannot be cancelled and accordingly, dismissed the appeal filed by the Revenue.
Tribunal has made a threadbare examination of the amendment with the original Objects of the Act and has given a finding that it is in furtherance of the Objects and not contrary to the Objects.
The exemption under Section 11 of the Act is denied in the present case mainly alleging breach of Section 13(1)(c) of the Act. The payment in the name of professional services fees/administrative services fees made to Sri. Suresh Nagpal and Smt. Geetha Nagpal, the Tribunal having analyzed the matter in depth has given a finding that the said fees is not disproportionate to the services rendered by the said trustees - payment made to the trustees towards the services rendered if found to be unreasonable, the same could not be construed as violation of Section 13(1)(c) to deny the exemption under Section 11 of the Act.
The Hon’ble Delhi High Court in the case of DIT (Exemption) vs. Agrim Charan Foundation [2001 (8) TMI 78 - DELHI HIGH COURT] has held that the legislature has clearly contemplated that in a case, where the whole or part of the relevant income is not exempted under Section 11 by virtue of violation of Section 13(1)(d) of the Act, tax shall be levied on the relevant income or a part of the relevant income at the maximum marginal rate. The Co-ordinate bench of this Court concurring with these judgments has held that for violating Section 11(5) of the Act, the entire income of the assessee - trust cannot be assessed for the tax. The same analogy would be applicable even to Section 13(1)(c) of the Act also. Thus, the entire income of the respondent - trust cannot be assessed for tax even for violation of Section 13(1)(c) of the Act.
As regards the amendment of trust deed, the Tribunal has returned the finding that the objects of the assessee - trust even after amendment of the trust being continued to be charitable; the amendment is a mere power conferred on the trust or other institution. There is no finding recorded by the authorities that the amendment to the object clause has resulted in the trust or institution becoming non-charitable in character. Thereby no reason is forthcoming to establish the removal of foundation of charitable in nature on which the registration was granted was removed. We have no reasons to interfere with the finding recorded by the Tribunal since the Revenue itself was satisfied that the objects of the assessee - trust was imparting education and was charitable in nature. If any violation of Section 13(1)(c) of the Act is noticed, it was open to the assessing officer to examine the same and to bring the said transaction into taxable income but that would not be suffice to cancel the registration under Section 12AA(iii) of the Act. Adequate safe-guards being provided in Sections 12 and 13 of the Act, cancellation of registration on the allegation that education is being imparted on commercial lines is not valid reason for the cancellation of registration. We find no exception with the order impugned. - Decided in favour of assessee.
-
2021 (11) TMI 880 - ITAT BANGALORE
Income accrued in India - treating the receipts of assessee's on account of sale of software to the Indian customers, as royalty - DTAA between India and Netherlands - HELD THAT:- As relying on ENGINEERING ANALYSIS CENTRE OF EXCELLENCE PRIVATE LIMITED VERSUS THE COMMISSIONER OF INCOME TAX & ANR. [2021 (3) TMI 138 - SUPREME COURT] we are of the view that Ld. CIT(A) erred in treating the receipts from sale of software with the support services as royalty.
............
|
