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Income Tax - Case Laws
Showing 141 to 160 of 506 Records
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2021 (11) TMI 879 - ITAT BANGALORE
TP Adjustment - determination of ALP of AMP expenses - HELD THAT:- In view of the above order of the Tribunal own case for assessment year 2015-2016 [2021 (2) TMI 857 - ITAT BANGALORE] which is identical to the facts of the instant case, we restore the issue of determination of ALP of AMP expenses to the files of AO/TPO. AO/TPO is directed to afford a reasonable opportunity of hearing to the assessee and take a decision in accordance with law. It is ordered accordingly.
Depreciation on intangible assets - whether design and technical knowhow, vendor network relationship (VR) acquires as part of slump sales? - HELD THAT:- An identical issue was considered in assessee's own case by the co-ordinate Bench of the Tribunal for assessment year 2015-2016 [2021 (2) TMI 857 - ITAT BANGALORE] followed the Tribunal order for the assessment year 2011-2012 [2019 (11) TMI 1701 - ITAT BANGALORE] and held that the assessee is entitled to depreciation on intangible assets.
Deduction in respect of education cess and secondary higher education cess u/s 37(1) - HELD THAT:- The issue raised in the additional ground is a pure legal issue, which does not require any verification of facts. Therefore, we admit the same for adjudication. As in the case of Sesa Goa Limited [2020 (3) TMI 347 - BOMBAY HIGH COURT] had held education cess is an allowable expenditure as the word "cess" is conspicuously absent under the provisions of section 40(a)(ii) .
The Mumbai Bench of the Tribunal in the case of Voltas Limited [2020 (7) TMI 125 - ITAT MUMBAI] had admitted additional ground of appeal with regard to the claim of education cess and adjudicated the matter in favour of the assessee, by following the judgment of the Hon'ble Bombay High Court in the case of Sesa Goa Limited - In the light of the aforesaid judicial pronouncements, we hold that education cess is to be allowed as deduction. It is ordered accordingly.
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2021 (11) TMI 878 - ITAT SURAT
TP Adjustment - adjustment on account of interest on loan to Associated Enterprises (AE) while determining Arm’s Length Price of international transaction - HELD THAT:- Unsecured loan to Associated Enterprise is outstanding on which Arm’s Length Price for interest was computed by TPO in earlier years. Therefore, respectfully following the order of Co-ordinate Bench, we direct the AO/TPO to follow the order of the Tribunal in A.Y. 2008-09, 2010-11 and 2011-12 [2020 (4) TMI 522 - ITAT AHMEDABAD] and re-compute the interest adjustment.
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2021 (11) TMI 877 - ITAT ALLAHABAD
Unexplained payment of margin money and excess payment for purchase of two LPG Tankers - CIT-A enhanced the addition - HELD THAT:- For addition made by the Assessing Officer on account of payment based on the invoices issued on the M/s. Spark Engineers by treating the same as bogus the said addition is unwarranted as the assessee has shown the said payment as part of the total cost of the Tankers.
CIT(A) has though taken up this issue but has not confirmed the said addition but enhanced the addition made by the Assessing Officer on account of the margin money. Even otherwise, once the payment of the said amount is not in dispute as the said payment was made through banking channel then the said payment considered by the Assessing Officer as excess cannot be treated as income of the assessee because the source of the said payment is not disputed. It may be an issue for determining the total cost of the capital asset in the shape of the two LPG Tankers but the amount cannot be added to the income of the assessee merely because the assessee has paid this amount in excess.
Addition on account of margin money - Assessee has produced the invoices before the Assessing Officer by suppressing the total cost of two LPG Tankers so as to match the amount of payment being the loan amount of ₹ 50,00,000/- and cash payment of ₹ 50,000/-. Whereas at the time of taking the loan, the assessee has produced the invoices showing the total cost of two Tankers at ₹ 64,60,000/- out of which assessee undertook to pay ₹ 14,60,000/- as margin money from her own source. Since the assessee has paid only ₹ 50,000/- out of ₹ 14,60,000/- and the balance of ₹ 14,10,000/- was treated by the Assessing Officer as unexplained investment/payment. The Assessing Officer conducted an enquiry from the bank which has confirmed the fact that the total cost of two LPG Tankers as per the invoices/quotations filed by the assessee is ₹ 64,60,000/- out of which a margin money of ₹ 14,60,000/- was directly paid by the assessee to the supplier. Once the bank has confirmed the payment of margin money by the assessee to the suppliers then in the absence of explanation of source, this amount of ₹ 14,10,000/- is rightly added to the income of the assessee by the Assessing Officer. The CIT(A) enhanced the addition from ₹ 14,10,000/- to 15,38,880/- without issuing a show cause notice as required under section 251(2) of the Income Tax Act. Therefore, in the absence of the show cause notice, the enhancement made by the CIT(A) is not sustainable and liable to be deleted.
Considering the facts and circumstances of the case, when the document produced by assessee as well as confirmation of the bank regarding the total cost of two LPG Tankers and payment of margin money by the assessee, the addition of ₹ 14,10,000/- is rightly made by the Assessing Officer. An explanation of the assessee is that the total cost of the Tankers is reduced to ₹ 50,50,000/- does not inspire confidence when there is significant discrepancies in the two set of invoices produced by the assessee. Accordingly, the addition to the extent of ₹ 14,10,000/- is confirmed.
Non consideration of additional evidence by the CIT(A) - HELD THAT:- The assessee has raised this ground to challenge the impugned order of the CIT(A) on merit without considering additional evidence filed by the assessee. However, it is a matter of record that the CIT(A) sent all the documents and the contentions of the assessee to the Assessing Officer and called for remand report. The impugned order has been passed by the CIT(A) after considering the remand report of the Assessing Officer and therefore, it cannot be said that the CIT(A) has passed the order without considering these documents. Even otherwise when the contradictory records were filed by the assessee then the alleged additional evidence filed by the assessee would not help the case of the assessee.
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2021 (11) TMI 876 - ITAT AHMEDABAD
Exemption u/s 11 - activity of renting out the hostel facilities to the students - HELD THAT:- There was no change in the aims and objects of the trust. Accordingly in view of the above, we hold that the assessee was entitled to claim exemption under section 11 of the Act with respect to its activity of renting out the hostel facilities to the students being in the nature of education.
Once the activity of the assessee has been held as educational in nature, then the proviso to section 2(15) shall not be applicable. The proviso restricts the exemption to the trust if it’s activities falls in the last limb i.e. advancement of any other object of general public utility. In other words, the restrictions imposed under the proviso to section 2(15) of the Act cannot be made applicable in the case on hand as the assessee is engaged in the activity of education. See circular issued by the CBDT bearing no. 11 of 2008 dated 9 December 2008.
We also draw support and guidance from the judgement of Hon’ble Mumbai ITAT in case of All India Federation of Tax Practitioners case.[2021 (5) TMI 1002 - ITAT MUMBAI]
Whether the income generated by the assessee from renting out the hall can be classified as educational activity in the manner provided under section 2(15) of the Act? - The activity of renting out the hall cannot be categorized as educational activity but the status of the assessee will not change being a charitable organization. It is for the reason that this activity is the ancillary activity which is supporting the assessee to achieve its goals of primary activities. Furthermore, there is no prohibition under the Act that the assessee being a charitable organization cannot carry on the business which is incidental to the attainment of the objective of the trust. Rather subsection (4A) to section 11 of the Act, authorizes the educational institution to carry on the business which is incidental to the attainment of the main objective of the trust. In this connection, we draw support and guidance from the judgement of Hon’ble Delhi High Court in case of DGIT (Exemption) vs. ICAI reported [2013 (7) TMI 205 - DELHI HIGH COURT]
Deduction claimed by the assessee being corpus fund under the provisions of section 11(1)(d) - Deduction was denied by the authorities below on the reasoning that the assessee is not engaged in the educational activity and therefore no benefit can be extended under the provisions of section 11(1)(d) of the Act. However, we find that the tribunal has already held that the activity of the assessee is in the nature of educational activity vide paragraph No. 22-23 of this order. For detailed discussion, please refer the relevant paragraph. Accordingly, we hold that the assessee is eligible for deduction under the provisions of section 11(1)(d) of the Act.
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2021 (11) TMI 875 - ITAT CHENNAI
Exemption from the payment of tax as indigent person - assessee has filed appeal without paying of payment for requisite fee - assessee filed an affidavit before the Tribunal by stating that his day to day life runs only on the money provided by his son and he is not in a position to pay the fee as required by Income Tax Rules - HELD THAT:- As the case of the assessee is that he is an indigent person and he is depend upon the money send by his son. The assessee not filed any details to show that he is an indigent person such as bank statement and house which he is residing to show that it is not his own. The assessee except stating he is indigent person, no details was filed for the same. Under these facts and circumstances of the case and also by considering the conduct of the assessee, the assessee cannot be treated as indigent person. Accordingly, we reject the assessee's request for exemption from the payment of tax and this appeal is dismissed for non-rectifying the defect pointed out by the Registry. Appeal filed by the assessee is dismissed.
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2021 (11) TMI 874 - ITAT ALLAHABAD
Capital gain on sale of land - Nature of land sold - agricultural land - calculation of shortest route - whether the said land is within eight kilometers from the limits of municipal corporation of Allahabad , and thus falls within the inclusive definition of Capital Asset u/s 2(14)? - HELD THAT:- We have to consider shortest road route, and hence we are not concerned with the other two road routes which are not the shortest road routes. Unfortunately, the assessee is relying vide certificate dated 18.12.2012 issued by Tehsildar , Karchana who in turn is relying on afore-stated report dated 14.12.2012, but mentioning the longer road routes number 2 and 3 to reach the land in question, but there is no whisper of road route number 1 via Main Mirzapur road to reach the land in question. Thus, we reject the reliance of the assessee on this report dated 18.12.2012. CIT(A) has passed well reasoned and speaking order, after detailed inquiries and principles of natural justice were duly complied with as the assessee was confronted with the all the material .
CIT(A) relied upon the certificates, reports and maps submitted by Land Revenue and Survey authorities who are Government Authorities assigned with duties of maintaining of land records and other relevant records connected thereto with measurement of land distance . Their reports can not be brushed aside lightly and has to be given weightage , although there is no doubt that conflicting reports were issued by these authorities, but the conclusive report dated 14.12.2012 made it very clear that there are three road routes to reach the land in question, while the shortest road route is from Main Mirzapur Road , and the distance of Aarzai No. 318 is only 7.800 Kms., which is well within 8 kms.
Thus, we hold that the land in question is within 8kms from the Municipal limits of Allahabad and is a capital asset as defined u/s 2(14) and capital gains arising on the sale of land shall be chargeable to income-tax within the provisions of the 1961 Act. This effective issue is decided against the assessee
Applicability of the Section 50C - assessee has challenged before us the value so adopted by stamp valuation authorities and has stated that fair market value is much lower than the said value as adopted by stamp valuation authorities and has claimed that the actual sale consideration of ₹ 48 lacs was the real consideration - As in fairness to both the parties and in the interest of justice ,we are remanding the matter back to the file of the AO for limited purposes of referring the matter to DVO for determining the fair market value of property , in accordance with provisions of Section 50C(2) and 50C(3) , for the purposes of ascertaining the full value of consideration of land in question for the purposes of Section 48 ,in order to bring to tax income chargeable to capital gain tax , of the which the assessee is liable to pay in accordance with the provisions of the 1961 Act - Appeal filed by the assessee is partly allowed for statistical purposes.
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2021 (11) TMI 873 - ITAT DELHI
TP adjustment with respect to receipt of Intra-Group Services - TPO was of the view that the assessee had not received any benefit from such services and hence, the Arm's Length Price of the alleged services were held to be NIL, on application of Comparable Uncontrolled Price (‘CUP’) method - HELD THAT:- The issue of intra group services, availed by the assessee has been benchmarked by the TNMM which has been found to be acceptable by the Tribunal for the earlier year 2014-15 and 2015-16. Since, the facts are identical, we hereby allow the claim of the assessee.
ALP of the royalty determined @1.73% - We have gone through the history of the case and found that the issue has been limited back to the file of the AO to carry out comparability analysis with direction to provide an opportunity to the assessee with benchmarking analysis adopted and the comparables applied so. For the sake of ready reference, the order of the Co-ordinate Bench of ITAT in the case of the assessee for the earlier year [2019 (10) TMI 1477 - ITAT DELHI]
Since, the factual and legal position remains unaltered except the quantum involved, we hereby referred the matter to the TPO to examine the issue afresh after affording due opportunity to the assessee.
Circuit Accruals - The assessee is estimating the expenses to be incurred on account of circuit accruals. The said accounting is through an automated system, which is used by the assessee as an operational tool and such method is followed by all the connected companies of the group worldwide. The assessee claimed the said expenditure as business expenditure. Further, the assessee also following recognized method wherein the actual expenditure incurred against the accrual/provisions for the year is accounted for in the subsequent year. This approach adopted by the assessee in recognizing the provision of circuit accruals was not accepted by the Assessing Officer/ DRP on the ground that similar disallowance was made in the earlier years. We find that the Tribunal has consistently from Assessment Years 2009-10 to 2014-15 allowed the claim of the assessee in entirely.
Disallowance of year-end Accruals - The assessee was following systematic method of accounting from year to year and was creating year end accruals towards normal business expenditure and was debiting the expenditure when paid or reversed in the subsequent years. The said details were furnished before the authorities below and the AR for the assessee has also referred to them before us. The Tribunal in Assessment Year 2014-15 relying on the orders of the Tribunal in the case of the assessee in earlier years had allowed the claim of the assessee. Following the same parity of reasoning, we hold that the said expenditure is duly allowable in the hands of the assessee.
Support Service Expenditure - The assessee had incurred the said expenditure of support services on account of services availed from the group company in different fields of operation, which was necessary and imperative for carrying on its business. No mark up was charged on the said services provided by the AE. The availment of the support services from the AE was through support services agreement. While deciding the said issue, the Tribunal has remitted the same to the file of Assessing Officer with the direction to consider the evidences filed by the assessee of availment of support services from its AE. The AR for the assessee pointed out that all these evidences were duly filed before the authorities below. However, following the same parity and reasoning as in Assessment Year 2015-16, we remit the issue back to the Assessing Officer to carry out the necessary verification exercise and decide the issue in accordance with our direction in the earlier years.
Share based License Fee - We find that the issue stand squarely covered by the order of the Hon’ble High Court in the case of CIT vs Bharti Hexacom Limited [2013 (12) TMI 1115 - DELHI HIGH COURT] wherein held that the Revenue share based license fee was an allowable revenue expenditure u/s 37(1) of the Act. Similar proposition is also being laid down by the Tribunal in assessee’s own case in Assessment Year 2015-16. Since, the matter is repetitive in nature and in the absence of any change in the factual and legal propositions, we hereby direct that the addition made, be deleted.
TDS on Lease Line Charges - TDS u/s 194I OR 194J - assessee had withheld tax on lease line charges paid to other telecom operators u/s 194J of the Act. The claim of the assessee was that the lease line services were standard automatic services which were availed by any telecom service provider for the transmission of data and was not under any exclusive arrangement - HELD THAT:-.As relying on Tribunal for Assessment Year 2014-15 [2019 (8) TMI 552 - ITAT DELHI] we hold that there was no requirement to deduct tax at source u/s 194I of the Act.
Taxability on Education Cess - allowability of cess u/s 37 - HELD THAT:- As keeping in view the provisions of the Act pertaining to Section 40(a)(ii) and Section 115JB, Circular of the CBDT No. 91/58/66 ITJ(19), the orders of Co-ordinate Benches of ITAT and judicial pronouncements of the Hon’ble High Court of Bombay and Hon’ble High Court of Rajasthan, we hereby hold that the assessee is eligible to claim the deduction of the ‘Education Cess’ as per the provisions of Section 37 of the Income Tax Act.
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2021 (11) TMI 872 - ITAT CHENNAI
Revision u/s 263 by CIT - As per CIT AO has not examined the issue of set off of brought forward losses against book profit computed u/s.115JB which rendered assessment order erroneous insofar as it is prejudicial to the interests of revenue - HELD THAT:- PCIT did not dispute fact that brought forward business loss or unabsorbed depreciation as per books is at ₹ 120.46 crores. Further, brought forward book loss, has been increased to ₹ 153.16 crores, after giving effect order to CIT(A) order dated 27-10-2014, because of deletion of addition made by the AO towards brought forward loss of Amalgamated Company M/s Visakha Cement Industries Limited. Therefore, if recomputed book profit of ₹ 88.75 crores is taken in to account, then the assessee can completely set off its book profit of ₹ 88.75 crores, out of unabsorbed depreciation of assessment year 2006-07 of ₹ 153.16 crores and thus, there is no excess allowance of unabsorbed depreciation, while computing book profit u/s. 115JB for the impugned assessment year, as alleged by the ld. PCIT. Therefore, we are of the considered view that assessment order passed by the Assessing Officer on this issue is neither erroneous nor prejudicial to the interests of revenue.
Expenditure incurred for premium on redemption of debentures - The assessee has paid ₹ 59.01 crores on redemption of OCDs and same was debited into profit & loss account, but in the profit & loss account the assessee has also credited equal amount of ₹ 59.01 crores by withdrawing from share premium account. This amount of ₹ 59.01 crores from share premium account is actually reduced from OCDs redemption expenditure of ₹ 59.01 crores debited into profit & loss account and thus, there is no expenses debited into profit & loss account . From the above, it is clear that the assessee has not claimed any deduction for expenditure incurred on redemption of FCCB/Debentures. Therefore, once no deduction was claimed for any expenditure by debiting into profit & loss account, the question whether it is capital or revenue in nature does not arise.
Whether total amount incurred for premium paid on redemption of debentures is deductible or not? - In this case, the issue of expenditure incurred on premium paid for redemption of debentures was thoroughly examined by the Assessing Officer not once, but twice, and after application of necessary facts to the relevant law has allowed claim of the assessee. Further, the issue of expenditure incurred for premium paid on redemption of debentures / FCCB is a subject matter of appeal before learned CIT(A) and the CIT(A) vide his order dated 27.10.2014 has held that assessee is eligible for reducing the amount of 59.01 crores from the net profit shown in profit & loss account. Therefore, we are of the considered view that once the issue which was subject matter of proceedings u/s.263 was subject matter of appeal before learned CIT(A), then there is no power to the Pr.CIT to take up said issue in revision proceedings, as per clause (c) to Explanation (1) to section 263 of the Income Tax Act, 1961 - we are of the considered view that assessment order passed by the Assessing Officer on this issue is neither erroneous nor prejudicial to the interests of revenue and hence, assumption of jurisdiction by the Principal CIT u/s.263 of the Act fails.
Investments in shares of M/s. Janani Infrastructure Ltd. - Admittedly, for the first time this issue has been taken up by the Principal CIT in the proceedings u/s.263 of the Act, on the basis of information received by the Assessing Officer from another Assessing Officer, after the Assessing Officer has passed assessment order u/s.143(3) r.w.s.263 of the Act dated 30.03.2013. This issue was not a subject matter of discussion either in the original assessment proceedings u/s.143(3) or revision proceedings u/s.263 of the Act, in first round of 263 proceedings. Therefore, when a issue which is not subject matter of any other proceedings, the period of limitation shall run from original assessment order passed u/s.143(3) of the Act for the purpose of invoking jurisdiction u/s.263 of the Act. If you consider original assessment order u/s.143(3) dated 22.12.2009, the Principal CIT can revise the assessment order within two years from the end of financial year in which the order sought to be revised was passed. In this case, if you take original assessment order dated 22.12.2009, the Principal CIT can issue show-cause notice on or before 31.03.2012. Since the Principal CIT has issued show-cause notice on 09.02.2015, which is clearly beyond the period of two years provided under the Act. Therefore, we are of the considered view that assumption of jurisdiction by the Principal CIT on this issue for revision of assessment order u/s.263 of the Act is bad in law and liable to be quashed.
Assessment order passed by the Assessing Officer u/s.143(3) r.w.s 263 is neither erroneous nor prejudicial to the interests of revenue - Decided in favour of assessee.
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2021 (11) TMI 857 - MADRAS HIGH COURT
Validity of Assessment order passed by the National Faceless Assessment Centre - as argued the impugned order passed without appropriate Risk Management Strategy of the Board is contemplated under Section 144 (B) (1) (xvi) - HELD THAT:- Section 144 (B) of the Income Tax Act, 1961 was inserted with effect from 01.04.2021. As a matter of act the aforesaid provision contemplates that National Faceless Assessment Centre to examine the draft assessment order in accordance with the Risk Management Strategy specified by the Board. The Counsel for respondents was unable to confirm whether any Risk Management Strategy has been specified by the Board. How assessment orders have been passed by the respondents in terms of the aforesaid provisions.
The writ petitioner is, therefore, directed to file a statutory appeal in terms of the above provisions within a period of 30 days from the date of receipt of this order. Considering the fact that the impugned order passed without appropriate Risk Management Strategy of the Board is contemplated under Section 144 (B) (1) (xvi) the Appellate Commissioner may consider the appeal of the writ petitioner, if such appeal is filed on merits and in accordance with law. The mandatory requirement a pre deposit under Section 220 (6) shall however, be waived in the light of the fact that the entire assessment proceedings was complete by the respondents at the fag end of the limitation to avoid lapsing of on account of limitation. The Appellate Commissioner is, therefore, directed to pass appropriate orders on merits.
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2021 (11) TMI 856 - ITAT CHANDIGARH
Revision u/s 263 by CIT - Reopening of assessment u/s 147 initiated against assessee - As pe CIT AO had failed to make independent inquiries to verify the source of cash deposited in bank by the assessee and also the claim of interest expenditure as per section 36(1)(iii) - HELD THAT:- What is crucial and important for assuming the jurisdiction to reopen the case of an assessee u/s 147 of the Act is the “belief of the AO of the escapement of income”. The mere fact that the cash is found deposited in the bank account may lead to a suspicion at best but it definitely cannot lead to belief of escapement of income. The cash deposit may be justified by the facts and figures revealed in the income tax return filed by the assessee.
In any case there has to be more information in the possession of the AO to form belief that the cash deposits represent assesses own escaped income. In the present case we find that the AO has no categorical information in his possession either regarding the fact of return having been filed by the assessee nor any other information to the effect that the source of the cash deposits was unexplained. No inquiries were independently conducted by the AO regarding the source of cash deposits, which would have surely assisted in the formation of belief of escapement of income with regard to the same.
The reasons recorded therefore do not justify the assumption of jurisdiction by the AO to reopen the case of the assessee u/s 147 of the Act. The order passed u/s 147 of the Act therefore is clearly not a valid order in the eyes of law.
Collateral proceedings on the said order, u/s 263 of the Act, are therefore, we agree, not sustainable in law. The order passed by the Ld.PCIT u/s 263 of the Act is accordingly set aside. - Decided in favour of assessee.
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2021 (11) TMI 855 - ITAT AHMEDABAD
Validity of Reopening of assessment u/s 147 - addition on the basis of valuation report of District Valuation Officer (DVO) - reopening of assessment was beyond four years - HELD THAT:- Since the allegation of escapement of income is more than ₹ 1 lakh, the reopening cannot be said to be invalid in view of the provision of Section 149(1)(b) of the Act. Thus, the ground of maintainability of the reassessment proceeding as raised by the assessee fails.
Reopening of assessment on DVO’s report - Where the AO completed assessment under Section 143(3) making certain addition in respect of unexplained investment he could not reopen the said assessment for enhancement of said addition merely on the basis of the report of the DVO. In this regard, we are enlightened by the ratio laid down in AKSHAR INFRASTRUCTURE PVT LTD [2017 (3) TMI 393 - GUJARAT HIGH COURT].
Also in MUNIR ISMAIL VORAJI [2017 (5) TMI 684 - GUJARAT HIGH COURT] where on the basis of DVO’s report reopening notice was issued and challenged before the Court. It was further found that no further enquiry was conducted to find out fair market value, neither was there any tangible material available to the AO to form an opinion that income chargeable to tax has escaped assessment. Ultimately such reopening of assessment merely on the basis of the DVO’s report was held to be unjustified. We find similar fact in the case in hand which has been failed to be controverted by the Ld. DR before us. Therefore, we find no merit in the reopening the assessment under Section 147 of the Act merely on the basis of the DVO’s report. - Decided in favour of assessee.
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2021 (11) TMI 854 - ITAT DELHI
Validity of assessment - Addition towards family cash found in search - AR submitted that notice u/s 143(2) was not served to the assessee within the specified time - HELD THAT:- Revenue can avail Section 292BB only if notice u/s 143(2) was issued and not when admitted position is that no notice was issued as in the instant case.
As the notice u/s 143(2) should have been issued till the date 30/9/2014 but the same was issued after the statutory limit. This fact was not denied by the Ld. DR after going through the assessment records. Hence, the additional ground raised by the assessee are allowed. Thus, the assessment order itself becomes null and void ab initio as the notice issued was not issued within the specified time. Since, the assessment itself becomes nullity; there is no need to discuss the merits of the case. The appeal of the assessee is allowed.
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2021 (11) TMI 853 - ITAT SURAT
Validity of reopening of assessment u/s 147 - as argued notice u/s 143(2) was not properly served to the assessee - bogus purchases - HELD THAT:- As in the assessee's case, under the guise of reopening of the assessment, the AO wants to have a roving inquiry ; as observed hereinabove. Even as per the AO in the reasons recorded, has specially mentioned that for the purpose of verification of the claim, it is necessary to reopen the assessment. Under the circumstances, it cannot be said that the AO had any tangible material to form an opinion that the income chargeable to tax has escaped the assessment. Under the circumstances, the impugned action of reopening of the assessment in exercise of power under section 148 of the Income-tax Act for the reasons recorded hereinabove cannot be sustained.
As in the assessee's case, the Assessing Officer has initiated proceeding of reopening on the facts that the assessee had not filed return of income and provision of section 147(b) is also not applicable for reopening of assessment proceeding - However, these details are factually incorrect. The assessee had filed his return of income on September 18, 2007 and duly acknowledged by the Assessing Officer in para No. 2 of the assessment order. As the return is originally filed by the assessee and no assessment was made earlier therefore, the assessee's case falls in section 147(b) of the Act. Thus, the case was reopened on incorrect fact which shows non-application of mind by the learned Assessing Officer. Hence, the proceeding is itself bad in law. See RMG POLYVINYL (I) LTD. [2017 (7) TMI 371 - DELHI HIGH COURT].
Thus reasons recorded by the Assessing Officer suffer from an infirmity of being misconceived in law and, therefore, initiation of proceeding thereupon is bad in law. - Decided in favour of assessee.
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2021 (11) TMI 852 - ITAT JABALPUR
Reopening of assessment u/s 147 - addition account of unexplained investment - HELD THAT:- There is no reference to any subsequent facts, i.e., subsequent to assessment of March, 2016, or information coming to the possession of the AO, even if available on record though discovered later, i.e., after 10/3/2016, giving rise to the reason to believe escapement aforesaid, and which is a condition precedent for the issue of notice u/s. 148 and assumption of jurisdiction u/s. 147. The reasons recorded u/s. 148(2) refer to the AO’s letter dated 22/2/2016 and the assessee’s reply thereto, both events occurring prior to 10/3/2016, i.e., during the course of the original assessment proceedings. Further, the AO’s comments to the audit objection make it amply clear that the assessee’s reply to his letter dated 22/2/2016 was accepted by the AO. The Revenue has not shown the said acceptance to be infirm, much less perverse, even as the course available in the former case would be a revision u/s. 263.
It is also not the Revenue’s case that the AO’s opinion accepting the assessee’s reply was perverse, i.e., a view no person properly instructed on facts and in law could take, as where the said reply is irrelevant or does not meet the letter dated 22/2/2016 by the AO. I am conscious, while so discussing, that there is no challenge to the notice u/s. 148(1) by the assessee, which aspect, i.e., the validity of the reasons recorded u/s. 148(2) or of the assumption of jurisdiction u/s. 147, must, therefore, be regarded as having attained finality.
The present discussion only seeks to emphasize the non-sustainability of the argument advanced by the ld. Sr. DR inasmuch as there has been, both factually or legally, no omission to consider the assessee’s explanation qua the impugned investment during the original assessment proceedings, nor the AO’s view in accepting the said explanation perverse, in which either case the AO’s objection to the audit objection would be rendered invalid in law. And the Revenues’ subsequent action in issuing notice u/s. 148 interpreted, even as argued by the ld. Sr. DR, as an acceptance by the Revenue of the revenue audit objection. Needless to add, the Revenue has not shown me any counter by the RAP to the AO’s comments dated 13/4/2016, meeting his objection, so as to exhibit thereby that the audit objection would survive the AO’s comments, i.e., obtain despite the same, which (comments) would thus stand rendered inconsequential - Decided against revenue.
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2021 (11) TMI 851 - ITAT MUMBAI
TP adjustment - Comparable selection - international transactions pertaining to provision of sales and marketing support services - Comparability of Axis Integrated Systems Limited - HELD THAT:- Axis is engaged in the business of trading digital signatures. Further, Axis is also engaged in providing Liasioningservices in the area of service tax, excise, foreign trade policy licensing, duty free credit entitlement certificates, etc -Axis develops and owns unique intellectual property tool 'Axis Mine'. Judicial Pronouncements supporting exclusion of companies deriving significant benefit from proprietary process - See M/S ROLLS ROYCE MARINE INDIA PVT. LTD. [2014 (11) TMI 429 - ITAT MUMBAI],GLOBAL LOGIC INDIA PVT. LTD.[2015 (6) TMI 132 - ITAT DELHI],GENZYME INDIA PVT. LTD. [2018 (4) TMI 1772 - ITAT DELHI] - Axis rejected as a comparable as relying on LI AND FUNG (INDIA) PVT. LTD. [2018 (5) TMI 1009 - ITAT DELHI].
Unearned revenue from subscription services - HELD THAT:- As decided in own case we find that assessee has been following consistent system of revenue recognition. The assessee is inter alia engaged in the business of marketing, promotion and sale of 'Red Hat subscriptions' to customers in Indian sub-continent to avail support services that are for the open source software system during the subscription period ranging from one to seven year, which is established by the special services agreement or contract.
AO has clearly erred in changing consistently followed method of revenue recognition adopted by the assessee.We find due merits of the revenue recognition adopted by the assessee which is duly supported by mandate of AS-9 and other parameters referred above - it is also a settled law that unless there is change in the facts and circumstances or that it can be said that earlier adopted system was wrong, revenue recognition method cannot be disturbed. We note that such case exists here. In these circumstances, we set aside the order of the Assessing Officer and delete the addition in this regard.- Decided in favour of assessee.
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2021 (11) TMI 850 - ITAT MUMBAI
Exemption u/s 11 - claim denied relying on Principle of mutuality - AO considering the activities of the appellant trust as that of a "mutual association" - HELD THAT:- Authorities below have proceeded on the misconception that the assessee trust has claimed tax exemption on the basis of mutuality principle alone. Learned CIT(A) has rather summarily dismissed the contention of the assessee with respect of exemption under section 11 by the virtue of being a charitable institution, and simply observed that “all the case laws relied upon by the AR are distinguishable”.
In our considered view quite clearly the object of the appellant trust is to promote education in the field of science of medicine and the profit on sale of books/journals is incidental thereto. In this view of the matter, proviso to Section 2(15) will have no application in the present case. It may be borne in mind that proviso to Section 2(15) comes into play only in respect of “any other object of general utility” and not in respect of relief to poor, education, medical relief etc. As long as object of the institution is charitable, as in our considered view, in this case, exemption cannot be declined merely on the ground that the assessee has received consideration for sale of training material or journal etc. incidental to furtherance of it’s objective of imparting education.
Thus we uphold the plea of the assessee. The Assessing Officer is, accordingly, directed to allow exemption under section 11 in respect of income of the assessee.
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2021 (11) TMI 849 - ITAT BANGALORE
Revision us 263 - time limit for passing the order of assessment - whether the date of dispatch has to be considered as the date of the order and consequently the impugned order has to be held as bad in law and barred by limitation? - HELD THAT:- As relying on M/S MAHARAJA SHOPPING COMPLEX [2014 (10) TMI 880 - KARNATAKA HIGH COURT] wherein held the date of dispatch of the order of assessment should be construed as the date of order of assessment and consequently quashed the orders of assessment as barred by limitation - Following the aforesaid judgment of Hon'ble High Court of Karnataka, the impugned order has to be held as barred by time and is liable to be annulled and is hereby annulled. - Decided in favour of assessee.
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2021 (11) TMI 824 - DELHI HIGH COURT
Validity of reopening of assessment - As argued by petitioner-company notice issue to an entity not in existence at the relevant time, as it had merged with the petitioner-company - HELD THAT:- Prima facie, there appears to be merit in the contention advanced by petitioner-company
Respondents/revenue.says that, he will revert with instructions on this aspect of the matter. We may also note that although opportunity was given to the respondents/revenue to file a counter-affidavit in the matter; no affidavit has been filed, as yet.
List the matter for directions on 17.11.2021.
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2021 (11) TMI 823 - DELHI HIGH COURT
Validity of reopening of assessment - As argued by petitioner-company notice issue to an entity not in existence at the relevant time, as it had merged with the petitioner-company - HELD THAT:- Prima facie, there appears to be merit in the contention advanced by petitioner-company
Respondents/revenue.says that, he will revert with instructions on this aspect of the matter. We may also note that although opportunity was given to the respondents/revenue to file a counter-affidavit in the matter; no affidavit has been filed, as yet.
List the matter for directions on 17.11.2021.
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2021 (11) TMI 822 - BOMBAY HIGH COURT
Validity of National Faceless Assessment - as argued respondents have not issued the mandatory draft assessment order as required under Section 144B(1)(xvi)(b) - HELD THAT:- This court has in many orders held that provisions of Section 144B are mandatory. Under Section 144B(1)(xvi)(b), if there is going to be a variation prejudicial to the assessee, a draft assessment order has to be issued. Admittedly it has not been issued. It has also been held by this court that non compliance with the procedure laid down under Section 144B of the Act would make the assessment order non est in view of the provisions of sub Section 9 of Section 144B of the Act.
Since admittedly, there has been non compliance with the mandatory procedure laid down under Section 144B, the assessment order dated 13th May 2021 is also non est. The order impugned is hereby quashed and set aside. Consequent demand notice and penalty notice both dated 13th May 2021 are also quashed and set aside.
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