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Income Tax - Case Laws
Showing 81 to 100 of 506 Records
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2021 (11) TMI 1043
Late payments towards EPF and ESI u/s 36(1)(va) r.w.s. 2(24)(x) - HELD THAT:- Since the facts involved in the present case are identical to the facts involved in the case of Mohangarh Engineers and Construction Company Vs. DCIT [2021 (8) TMI 563 - ITAT JODHPUR] and in the case of Bikaner Ceramics Private Limited, Bikaner Vs. ADIT, CPC, Bangaluru [2021 (9) TMI 1319 - ITAT JODHPUR] wherein addition deleted as the said deposits were made prior to filing of return of income u/s 139(1) - So respectfully following the aforesaid referred to order, the disallowances sustained by the Ld. CIT(A) are deleted. - Decided in favour of assessee.
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2021 (11) TMI 1041
Disallowance of delay in deposit of employee's contribution to PF/ESI u/s. 36(1)(va) - payment before the due date of filing of return of income u/s. 139(1) - HELD THAT:- Principle laid down in the case of Vinay Cement Ltd.[2007 (3) TMI 346 - SC ORDER] have passed series of judgment holding the same proposition that prior to the amendment brought in the statute w.e.f. 1-4-2021, no disallowance can be made that the payment to the employee's contribution to PF and ESI paid by the assessee before the due date of filing of return of income u/s. 139(1). Accordingly, we hold that no disallowance can be made in the assessment year prior to Assessment Year 2021-22. In the result, the disallowance confirmed by the Appeal Centre is deleted. - Decided in favour of assessee.
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2021 (11) TMI 1038
Additions in respect of employees contribution towards ESI/PF - assessee’s failure to pay the employee’s contribution of PF/ESI within the prescribed due dates as per Section 36(1)(va) - HELD THAT:- In the instant case, admittedly and undisputedly, the employees’ contribution to ESI and PF collected by the assessee from its employees have been deposited well before the due date of filing of return of income u/s 139(1) - D/R has referred to the explanation to section 36(1)(va) and section 43B by the Finance Act, 2021 and has also referred to the rationale of the amendment as explained by the Memorandum in the Finance Bill, 2021, however, we find that there are express wordings in the said memorandum which says “these amendments will take effect from 1st April, 2021 and will accordingly apply to assessment year 2021-22 and subsequent assessment years”.
In the instant case, the impugned assessment year is assessment year 2018-19 and therefore, the said amended provisions cannot be applied in the instant case. Similar view has been taken in case of Shri Gopalkrishna Aswini Kumar [2021 (10) TMI 952 - ITAT BANGALORE].
Addition by way of adjustment while processing the return of income u/s 143(1) made by the CPC towards the deposit of the employees’s contribution towards ESI and PF though paid before the due date of filing of return of income u/s 139(1) of the Act is hereby directed to be deleted. - Assessee appeal allowed.
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2021 (11) TMI 1035
Late payments towards EPF and ESI under section 36(1)(va) - amount deposited after the due date but before the due date of filing of return of income - AO made the additions of the impugned amounts for the reasons that the assessee did not deposit the amounts of employees contribution as per the provisions of section 36(1)(va) - HELD THAT:- As decided in MOHANGARH ENGINEERS AND CONSTRUCTION COMPANY [2021 (9) TMI 1319 - ITAT JODHPUR] we do not accept the Ld. CIT(A)’s stand denying the claim of assessee since assessee delayed the employees contribtion of EPF & ESI fund and as per the binding decision of the Hon’ble High Court in Vijayshree Ltd. [2011 (9) TMI 30 - CALCUTTA HIGH COURT] u/s 36(1)(va) of the Act since assessee had deposited the employees contribution before filing of Return of Income. Therefore, the assessee succeeds - also see SALZGITTER HYDRAULICS PRIVATE LIMITED VERSUS ITO, WARD 3 (1) HYDERABAD [2021 (6) TMI 1059 - ITAT HYDERABAD] and MOHANGARH ENGINEERS [2021 (8) TMI 563 - ITAT JODHPUR].
Thus the impugned addition on account of deposits of employees contribution of ESI & PF prior to filing of the return of income u/s 139(1) of the Act, in both the years under consideration prior to the amendment made by the Finance Act, 2021 w.e.f. 1.4.2021 vide Explanation 5, are deleted. - Decided in favour of assessee.
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2021 (11) TMI 1033
Income accrued in India - royalty receipts - India - USA DTAA - Taxability of offshore software and hardware maintenance and support services - long-term software and hardware maintenance and support agreements, signed between the assessee and PGCIL for Southern and Western region - HELD THAT:- From the explanation provided in the MOU that forms an integral part of tax treaty that service only, if it makes available technical knowledge, experience, skill, know-how or processes to the service recipient. The receiver of this service can be said to acquire the relevant skills used by service provider only if he acquires those skills in such a way that he can himself use them independently without getting any assistance or being dependent on the service provider in future.
The facts of the present case clearly show that the offshore maintenance and support services provided by the assessee PGCIL are not geared towards making available any technical knowledge, experience, skills, know how or processes to PGCIL.
Our view is supported by the fact that the term of the agreement is five years and services provided by the assessee are repetitive and ongoing in nature. This means that PGCIL is not able to apply technical or skill use by the assessee for rendering such services. Given that repetitive nature of the services, it would be factually incorrect to allege that the services make available any technical knowledge, expertise, skill, knowhow or processes to PGCIL.
The taxability of offshore software and hardware maintenance and support services has to be examined in terms of beneficial provisions of Article 12 of the tax treaty.
We find that in the case in hand, the customer would not be able to apply technology on its own and the customer would continue to depend on the assessee for provision of software and hardware maintenance and support services in future as well.
DR, in his written submissions, has reiterated the findings of the DRP which, as mentioned elsewhere, were based on incorrect facts. Further, judicial decisions relied upon by the ld DR are not applicable on the facts of the case In hand qua the agreement under dispute.
Considering the facts of the case in totality, in light of the judicial decisions discussed here in above, we are of the considered view that the receipts from PGCIL do not qualify as ‘Royalty’ under Article 12(4)(a) and 12(4)(b) of the India US DTAA. The same is directed to be deleted.
Scope of NDPL contract. This is relevant only for Assessment Years 2010–11, 2011–12 and 2012–13 - NDPL contract is divided into two purchase orders. The first purchase order is towards software licenses and second purchase order is for offshore services. For Assessment Year 2010–11, the assessee received consideration under both purchase orders but for Assessment Year 2011– 12 only license fee under first purchase order was received and in 2012– 13 only service fee was received under second purchase order.
Under the first purchase order, no copyright has been transferred to NDPL and there is only right to use the software, which is clear from the relevant contract. This issue has now been well settled by the Hon'ble Supreme Court in the case of Engineering Analysis Centre of Excellence Pvt Ltd [2021 (3) TMI 138 - SUPREME COURT]
In light of the aforementioned decision of the Hon'ble Supreme Court, since the payment towards software license does not qualify as “Royalty” services even if connected with such software, do not qualify as FIS under Article 12(4)(a) of the India US DTAA read with MOU/Protocol. The DRP’s findings in Assessment Year 2010–11 are premised on the basis that the software supplied by the assessee qualifies as “Royalty”. This finding is incorrect in light of the decision of the Hon'ble Supreme Court [supra].
The other finding of the DRP that consideration for US dollar 1 lakh is towards software and hardware is also incorrect. The entire consideration of US dollar 1 lakh is towards software as is evident from the contract with NDPL. The relevant clause of the contract relating to scope of service makes it clear that services are in the nature of remote troubleshooting and do not make available any skill, knowledge, experience to NDPL.
Considering the facts of the case in light of the decision of the Hon'ble Supreme Court in the case of Engineering Analysis Centre of Excellence Pvt Ltd [supra] we are of the considered view that the consideration for services in connection with supply of software do not qualify as FIS under Article 12(4)(a) or 12(4)(b) of the India USDTAA. We, accordingly, direct for deletion of the addition.
Charging of interest under section 234B and 234C - HELD THAT:- This has been settled by the Hon'ble Supreme Court in the case of Mitsubishi India Ltd [2021 (9) TMI 875 - SUPREME COURT] in which the Supreme Court has held that prior to Assessment Year 2013–14, no interest is to be charged under section 234B of the Act. Charging of interest under section 234C is consequential. We, accordingly, direct the Assessing Officer to charge interest as per provisions of the law.
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2021 (11) TMI 1032
TP Adjustment - Comparable selection - HELD THAT:- ICRA Techno Analytics Ltd comparable has been considered as not comparable in the case of Electronics and Imaging India Pvt. Ltd. cited [2016 (2) TMI 1123 - ITAT BANGALORE] Accordingly, we direct the AO /TPO to exclude the same from list of comparables.
Infosys Ltd. having a huge brand value and intangibles as well as having bargaining power, the same cannot be compared with the assessee who is providing services to its AE.
Persistent Systems Ltd is functionally dissimilar, being engaged in software product development and intellectual property led business.
Tata Elxsi company even in the software development segment is engaged in diversified activities of product design services, innovation design, engineering services, visual computing labs, etc. No contrary view has been brought to our notice regarding comparability of this company with that of a pure software development service provider. Accordingly we direct to exclude from the list of comparables.
Cat Technologies Ltd.- This has to go back to the file of AO/TPO to verify the related party transaction and if there is no related party transaction, this comparable is to be considered as comparable, while determining ALP of international transactions. With these observations, we remit the issue to the file of AO/TPO for fresh consideration.
Disallowance u/s 40(a)(ia) on deprecation claimed on purchase of Software - HELD THAT:- We find force in the argument of the ld.AR in view of the judgment in the case of Engineering Analysis Center of Excellence Pvt. Ltd., [2021 (3) TMI 138 - SUPREME COURT] wherein it is held that software purchased from nonresident is rightly capitalized by assessee in its books of account and are entitled for depreciation u/s 32 of the Act and not allowable to deduct TDS. As such, it cannot be denied depreciation on the purchase of software which has been actually capitalized by the assesee and directed to grant rate of depreciation on purchase of software and this been capitalized by the assessee.
Disallowance of depreciation on goodwill - HELD THAT:- Similar issue came up for consideration in assessee’s own case before the Hon’ble Supreme Court in the case of CIT Vs. Simfs Securities Ltd. [2012 (8) TMI 713 - SUPREME COURT] wherein it is held that “A reading of the words "any other business or commercial rig nature" in clause (b) of Explanation 3 to section 32(1) indicates that good-will would fall under the expression. The principle of ejusdem generis would strictly apply while interpreting the expression which finds place in Explanation 3(b). Goodwill is an asset under Explanation 3(b) to section 32(1) of the Act. Where the Commissioner (Appeals) held that the difference between cost of an asset and the amount paid by the assessee constituted good-will and that the assessee in the process of amalgamation had acquired right in the form of goodwill because of which the market worth of the assessee stood increase.
Depreciation @ 60% of turnover and net working equipment allowed.
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2021 (11) TMI 1026
Revision u/s 263 - claim of carried forward of losses u/s 72A allowed by AO - as per HC Sanction of a scheme of amalgamation under Section 18 of the said Act necessarily implies that the requirements of Section 72A of the Income Tax Act have been met and the BIFR must exercise the power conferred upon it by Section 3 2 ( 2} of the said Act and make the declaration contemplated by Section 72A of the Income Tax Act - action of the assessing officer, though prejudicial, can hardly be termed as ‘erroneous’ - HELD THAT:- SLP dismissed.
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2021 (11) TMI 1025
Additions of delayed employees contribution towards ESI/PF - AR submitted that the assessee-company deposited employee’s contribution of PF/ESI though with a delay of few days from the due dates mentioned in the respective Acts, however the same was deposited well before the due date of filing of return of income - HELD THAT:- In the instant case, admittedly and undisputedly, the employees’ contribution to ESI and PF collected by the assessee from its employees have been deposited well before the due date of filing of return of income u/s 139(1) of the Act. Further, the ld D/R has referred to the explanation to section 36(1)(va) and section 43B by the Finance Act, 2021 and has also referred to the rationale of the amendment as explained by the Memorandum in the Finance Bill, 2021, however, we find that there are express wordings in the said memorandum which says “these amendments will take effect from 1st April, 2021 and will accordingly apply to assessment year 2021-22 and subsequent assessment years”.
In the instant case, the impugned assessment year is assessment year 2019-20 and therefore, the said amended provisions cannot be applied in the instant case - See SHRI GOPALAKRISHNA ASWINI KUMAR VERSUS THE ASSISTANT DIRECTOR OF INCOME TAX, BENGALURU [2021 (10) TMI 952 - ITAT BANGALORE] - Decided in favour of assessee.
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2021 (11) TMI 1024
Denial of exemption u/s.11 - applicability of proviso to section 2(15) - HELD THAT:- This Tribunal for A.Y. 2009-10 in assessee’s own [2021 (10) TMI 224 - ITAT MUMBAI] case had duly addressed the (i) issue of claim of exemption us/.11 of the Act together with its eligibility for the assessee herein; (ii) applicability of proviso to section 2(15) of the Act; (iii) applicability of CBDT Circular No.11/2008 dated 19.12.2008; (iv) applicability of decision of Kolkata Tribunal in the case of Indian Chamber of Commerce vs. ITO [2014 (12) TMI 256 - ITAT KOLKATA], among other decisions; and (v) narrating the objects of the assessee trust, giving a categorical finding that the said objects are indeed charitable in nature and not intended for the purpose of profit.
We find from the perusal of the order of the ld. CIT(A),had individually analysed the varied stream of receipts/incomes derived by the assessee and had concluded those receipts to be earned with a profit motive. We find that the very same stream of receipts/incomes were indeed present in A.Y. 2009-10 also for the assessee. The very same stream of incomes/receipts were found to be charitable in nature by this Tribunal in A.Y. 2009-10. There is absolutely no differentiating fact brought on record by the ld. Departmental Representative (ld. DR for short) before us to drive home the point that the decision rendered by this Tribunal for A.Y. 2009-10 is not applicable to the years under consideration.
In view of the identical facts prevailing in A.Y. 2009-10 with that of the years under consideration, we hold that the decisions rendered hereinabove by this Tribunal for A.Y. 2009-10 shall apply mutate mutandis for the years under consideration also. Accordingly, ground nos. 1 to 4 raised by the assessee for all the years under consideration are allowed.
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2021 (11) TMI 1023
Income accrued in India - Hardware receipts held to be chargeable to tax in India - receipts on sale of hardware with software embedded therein can be taxed as royalty or not? - assessee is a non-resident foreign company incorporated in United Kingdom - hardware is primarily in the form of viewing cards, Set-top-Box (STB) and other connected components,usually used in viewing television through satellite. The embedded software is required to run the hardware components - assessee claimed before the AO that the receipts not offered to tax cannot be regarded as royalty in the hands of the assessee and in particular in the light of the definition of royalty as given in article 12(3)(a) of the Double Taxation Avoidance Agreement (DTAA) between India and UK - HELD THAT:- Since the AY is AY 2010-11 (ie, prior to the Finance Act, 2012 amendment by way of inserting Explanation 4 to Section 9(1)(vi) of the Act, as per the SC in its judgment, the Finance Act, 2012 amendment has to be read as expanding the scope of royalty with prospective effect from the Assessment Year 2013-14 (After FA, 2012 was enacted) and cannot be upheld as clarificatory so as to apply retrospectively for previous assessment years (para 73 - 74, 78 and 79). Therefore, the payments made under the customer contracts are not be treated as “royalty” under section 9(1)(vi) of the Act itself for the subject AY 2010-11, even without reference to the DTAA. Under the DTAA, clearly these are not “royalty” payments under Article 12 of the India – UK DTAA as held by the SC (UK DTAA has also been examined by the SC para 40.
Hon’ble Supreme Court in the case of Engineering Analysis Centre of Excellence (P) Ltd. [2021 (3) TMI 138 - SUPREME COURT] ) held that A copyright is an exclusive right that restricts others from doing certain acts. A copyright is an intangible right, in the nature of a privilege, entirely independent of any material substance. Owning copyright in a work is different from owning the physical material in which the copyrighted work may be embodied. Computer programs are categorised as literary work under the Copyright Act.
The court held that a licence from a copyright owner, conferring no proprietary interest on the licensee, does not involve parting with any copyright. It said this is different from a licence issued under section 30 of the Copyright Act, which grants the licensee an interest in the rights mentioned in section 14(a) and 14(b) of the Copyright Act. What is ‘licensed’ by the foreign, non-resident supplier to the distributor and resold to the resident end-user, or directly supplied to the resident end-user, is the sale of a physical object which contains an embedded computer program. Therefore, it was a case of sale of goods.
Whether the provisions of the Act can override the provisions of the DTAA? - By virtue of Article 12(3) of the DTAA, royalties are payments of any kind received as a consideration for "the use of, or the right to use, any copyright "of a literary work includes a computer program or software. It was held that the regarding the expression "use of or the right to use", the position would be the same under explanation 2(v) of section 9(1)(vi) because there must be, under the licence granted or sales made, a transfer of any rights contained in sections 14(a) or 14(b) of the Copyright Act. Since the end-user only gets the right to use computer software under a non-exclusive licence, ensuring the owner continues to retain ownership under section 14(b) of the Copyright Act read with sub-section 14(a) (i)-(vii), payments for computer software sold/licenced on a CD/other physical media cannot be classed as a royalty.
The terms of the licence in the present case does not grant any proprietory interest on the licencee and there is no parting of any copy right in favour of the licencee. It is non-exclusive non-tranferrable licence merely enabling the use of the copy righted product and does not create any interest in copy right and therefore the payment for such licence would not be in the nature of royalty as defined in DTAA. We therefore hold that the sum in question cannot be brought to tax as royalty.
On the question whether the sums in question can be taxed as FTS, we agree with the submissions made by the learned counsel for the Assessee set out in paragraph-18 & 19 of this order and hold that the sums in question cannot be brought to tax as FTS.
Whether the sum which was offered to tax by the assessee and which by virtue of our conclusions as aforesaid cannot be regarded as royalty or FTS and hence cannot be taxable, the Revenue should be directed to not to tax the aforesaid sum also - Thus taxability of receipts on sale of set-top-box, the amount offered to tax by the assessee which is now found to be not taxable cannot be brought to tax. We hold and direct accordingly and allow the ground of appeal.
Reimbursements from Cisco Video for expenses incurred on behalf of Cisco Video - HELD THAT:- We hold that pure reimbursement does not give rise to any income and the decisions cited by the learned AR in this regard lay down the above principle. We find that the revenue authorities have not firstly held that as to whether there was one-to-one tally of sums spent by the Assessee that was reimbursed by NDS Pay Tv. Once this factual finding is rendered then there has been no payment for any services whatsoever. The question is can one infer that the sums reimbursed were for services rendered by Assessee when there is one to one tally. In our view it cannot be said so. As we have already mentioned the AO has proceeded to draw inferences on surmises and conjectures. Firstly there is no evidence to show that services were rendered which can be termed as FTS. Under the DTAA FTS can be taxed only when it makes available technical knowledge to the person making payment. On the application of “make available” clause of the DTAA, there is no finding whatsoever as to what was the technical service made available to NDS Pay TV. We, therefore, deem it fit to set aside this issue and remand the same for consideration by the AO in the light of the observations made above (in particular with regard to actual tally of expenses incurred and reimbursed by NDS Pay Tv to Assessee), in accordance with law, after affording assessee opportunity of being heard.
Non-grant of credit for TDS - HELD THAT:- It would be just and appropriate to direct the AO to consider the calim of the assessee and allow credit in accordance with law. The issue raised by the assessee in ground No.6 is with regard to levy of interest under section 234B of the Act. In this regard, we find that the issue with regard to levy of interest under section 234B in the case of a non-resident has been settled by the Hon’ble Supreme Court in the case of DIT Vs. Mitsubishi Corporation [2021 (9) TMI 875 - SUPREME COURT] and took when the assessee is a nonresident foreign company incorporated in Japan and when the entire income that arises to them and the payment them is subject to deduction of tax at source there was no question of advance tax payment by assessee, accordingly, no interest under section 234B could be levied upon assessee.
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2021 (11) TMI 1022
Delay in the payment of EPF relatable to the employees’ contribution as far as the time limit set out by the specific Act - HELD THAT:- It is an admitted fact that there was a delay in the payment of EPF relatable to the employees’ contribution as far as the time limit set out by the specific Act is concerned. It is also an admitted fact that the return was filed by the assessee within the due date as per the time limit as set out u/s 139(1) of the Income Tax Act. Hence, the amount of the employees’ contribution of the EPF stood paid before the filing of the return. It is seen that the disallowance made was sustained by Addl. Commissioner on account of the fact that the Amendments carried out by Finance Act 2021 in Sections 36(1)(va) and Sec. 43B were considered to be clarificatory, hence retrospective in nature. The said view has consistently been held to be incorrect by various orders of the ITAT as on a bare consideration of the Notes on Clauses appended to the Finance Bill it was clarified that the Amendment will take effect from the First April 2021. Thus, the legal position thereon is well settled. See INSTA EXHIBITIONS PVT. LTD, C/O. CHACHAN & LATH [2021 (8) TMI 1235 - ITAT DELHI].
We hold that the disallowance sustained in the present appeal by the CIT(A) qua the employees’ contribution despite late payment qua the specific Act cannot be made. Admittedly, in the facts of the present case the payment has been made well within the time line as set out under the Income Tax Act u/s 139(1). Thus, admittedly the return of income was filed well within time after making the specific payments. The position of law that the Amendments carried out by the Finance Act, 2021 are prospective in nature and not declaratory stand well settled. The disallowance, accordingly, cannot be sustained. - Decided in favour of assessee.
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2021 (11) TMI 1021
Disallowance u/s 36 (1)(va) - disallowance on account of late payment of ESI collected from its employees - addition made on account of the fact that this amount out of a payment was found to have been deposited late in terms of the statutory requirements of the specific Act - HELD THAT:- Tribunal has allowed similar claims of the assessee taking note of the fact the various Co-ordinate Benches have consistently held that the amendment to section 36(l)(va) and u/s 43B of the Act effected by the Finance Act 2021 is applicable prospectively. Reading from the Notes on Clauses at the time of introduction of the Finance Act, 2021, it has been held that the amendment is applicable from 2021-22 and subsequent assessment year. Accordingly, considering the factual backdrop of the present case and considering the amendments in Section 36(1)(va) as well as Section 43B carried out by Finance Act, 2021 and Memorandum explaining the provisions in Finance Bill, 2021 we hold that the impugned disallowance is not sustainable. Accordingly, it is directed to be deleted. The appeal of the assessee is allowed.
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2021 (11) TMI 1020
Addition u/s 36(l)(va) - Delay deposits of ESI and PF from salary of the employees - as submitted whole of the amount had been,' deposited well before the due date of filing of Income Tax Return - whether the Amendments carried out by the Finance Act, 2021 in Section 36(l)(va) and u/s 43B of the Act were prospective in nature or retrospective? - HELD THAT:- Tribunal has consistently allowed similar claims of the assessee holding that the Amendments effected by the Finance Act 2021 to section 36(l)(va) and u/s 43B of the income Tax Act are not clarificatory in nature and they do not have retrospective effect and are applicable prospectively. Reading from the Notes on Clauses at the time of introduction of the Finance Act, 2021, it has been held that the amendment being applicable in relation to assessment year 2021-22 and subsequent years. Accordingly, considering the factual backdrop of the present case and considering the amendments in Section 36(1|)(va) as well as Section 43B carried out by Finance Act, 2021 and Memorandum explaining the provisions in Finance Bill, 2021 we hold that the impugned disallowance is not sustainable. Hence, the addition is directed to be deleted as the amount stood deposited by the due date as held in Section 139(1) - Decided in favour of assessee.
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2021 (11) TMI 1018
Dismissal of appeal for non prosecution - whether notice of hearing was ever served upon the assessee? - HELD THAT:- CIT(A) has dismissed the appeal without providing proper opportunity to the assessee. Moreover, he has not decided the appeal after discussing in detail, his reasons for agreeing with the assessment order. In this view of the matter, another opportunity of hearing requires to be given to the assessee to represent his case fully before the ld. CIT(A). Even otherwise, it is trite [‘S. Velu Palandar [1971 (8) TMI 42 - MADRAS HIGH COURT] and ‘Ms. Swati Pawa [2019 (4) TMI 89 - ITAT DELHI] and incumbent on the ld. CIT(A) to decide an appeal on merit even in the absence of any representation before them.
The matter is remitted to the file of the ld. CIT(A) to be decided afresh on merit, in accordance with law, on affording due and adequate opportunity of hearing to the assessee. The assessee, no doubt, shall cooperate in the fresh proceedings before the ld. CIT(A). All pleas available under the law shall remain so available to the assessee. Assessee appeal allowed for statistical purposes.
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2021 (11) TMI 1017
Late ESI/PF payments - Payment before filing of the return u/s 139(1) in 2018-19 assessment year - HELD THAT:- As we read from the Notes on Clauses at the time of introduction of the Finance Act, 2021 and have held that the amendment is applicable in relation to the assessment year 2021-22 and subsequent years and not retrospectively. Thus, in view of this legal position as considered in the case of CIT Vs Nuchem Limited [2010 (2) TMI 959 - PUNJAB AND HARYANA HIGH COURT] and CIT Vs Hemla Embroidery Mills Pvt. Ltd. [2013 (2) TMI 41 - PUNJAB AND HARYANA HIGH COURT] we are of the view that the additions cannot be made or sustained on the strength of the amendment effected by Finance Act, 2021 to Sections 36(1)(va)/43B of the Act as the legal position thereon is very clear. The departmental stand that it is clarificatory in nature has consistently been rejected.
We find that the claim of the assessee is to be allowed in the year under consideration which is 2018-19 assessment year. The impugned order, accordingly, is set aside and the AO is directed to delete the disallowance. The appeal of the assessee is allowed.
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2021 (11) TMI 1016
Condonation of delay - appeal of the assessee as time barred by 1969 days - assessee also contended that since it was an addition made u/s 50C by assuming the sale consideration equivalent to the amount on which stamp duty was paid; therefore it was necessary to ascertain the true value of the property u/s 50C(2) - there were co-owners in whose cases a valuation report was called for from the DVO and they were waiting the outcome of those appeals - HELD THAT:- This application does not disclose any reason for not challenging the order of the CIT(A) - This exercise was going on in the case of other co-owners and, therefore, the assessee did not file the appeal. When the appeals of the other co-owners have been decided, the assessee also thought to file the appeal. We are not impressed by all these contentions. It is the assessee who should have taken vigilant step in his own case.
Assessee could file application before the AO u/s 50C(2) - He could raise plea before the learned CIT(A), but after the decision of the learned CIT(A), he has accepted the result and did not chose to file the appeal for long six years. There is hardly any plausible explanation for this delay. Therefore, we do not find any merit in the explanation for condonation of delay. The appeal of the assessee is, therefore, dismissed being time barred.
Application u/s 154 - sale consideration for the purpose of computation of capital gain - in one of the co-owner’s case, a reference was made to the Valuation Officer who determined the value of the property - For doing the complete justice to an assessee, the learned First Appellate Authority ought to have treated it as an apparent error. Each co-owner should have been treated at par. It is pertinent to observe that the quasi-judicial authorities are being respected not on account of their powers to legalize the injustice on technical ground, but for their capabilities of removing injustice and is expected to do so. In the present case, the learned First Appellate Authority failed to remove the injustice with the assessee. We deem it that there was an apparent error available on record. The valuation report is in existence though in the case of other assessees and, in the moment it is brought to the notice of the learned CIT(A), it should have taken cognizance of that report. Considering that aspect of the matter, we allow the application of the assessee moved under Section 154 of the Act and set aside the impugned order dated 23.01.2019. The error committed in the order dated 26.08.2013 is rectified. The Assessing Officer is directed to take sale consideration in the hands of the assessee equivalent to the amount taken in the case of Prakash Chunilal Shah and Chirag Prakash Shah. Though we have not interfered in the order of the learned CIT(A) dated 26.08.2013 because the appeal was time barred before us, but by rectifying the error, which is a proceeding well taken by the assessee within the limitation, the assessee is able to achieve the same result.
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2021 (11) TMI 1009
Deduction u/s. 54F - As per AO assessee has not appropriated the amount of long term capital gains for the purpose of purchase of residential house before the due date of filing of return of income u/s. 139(1) - main contention of the ld. DR is that the assessee did not utilize the amount of capital gains in purchasing a residential house nor deposited in any capital gain account - HELD THAT:- Admittedly, the assessee had not filed return of income u/s. 139 of the Act which is available up to 31-07-2012 but the assessee filed return of income on 02- 09-2013 which is well within the time available u/s. 139(4).
The entire sale proceeds in acquisition of new residential house prior to filing of return of income u/s. 139(4) of the Act which was not disputed by the ld. DR. The ld. AR also placed on record various decisions in the case laws compilation and submitted that the benefit of section 54F of the Act is allowable when the assessee acquired the new asset before filing of return of income u/s. 139(4) of the Act. It is noted as per the case laws as submitted by the ld. AR, which held that the requirement of utilization of capital gain amounts before the date of furnishing of return of income u/s. 139 of the Act, which include all sub-section 139 of the Act including sub-section (4)
If, the capital gain amount is utilized before the due date of filing of return of income u/s. 139 of the Act i.e. 31-03-2014 u/s. 139(4) of the Act. Therefore, it is clear that section 139 includes all sub-sections but not confined to sub-section (1) of section 139 of the Act alone. It is evident that the assessee invested amount of capital gains before the time available u/s. 139(4) of the Act and therefore, in our opinion the assessee is entitled to claim deduction u/s. 54F - Appeal of assessee is allowed.
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2021 (11) TMI 1008
Deduction u/s 80P(2)(a)(i) denied - interest from investment in Co-operative banks, nationalised banks - whether, interest income earned by assessee is eligible for deduction u/s 80P(2)(d) of the Act, whereas the deduction is one claimed u/s 80P(2)(a)(i) ? - HELD THAT:- As relying on M/S POTTERS COTTAGE INDUSTIRAL CO-OPERATIVE SOCIETY LTD. [2021 (9) TMI 137 - ITAT BANGALORE] we direct the Ld.AO to verify the interest earned on investment earned from co-operative societies and to consider the claim of assessee in accordance with law under section 80P(2)(d)
Benefit of exemption u/s. 80P for transactions done with nominal or associate member - Whether transactions with nominal or associate members can not in anyway forbid the appellant from claiming the benefit of exemption u/s. 80P? - HELD THAT:- In respect of associate/nominal members, Hon’ble Supreme Court in the case of Mavilayi Service Cooperative Bank Ltd. [2021 (1) TMI 488 - SUPREME COURT] has held that the expression “Members” is not defined in the Income-tax Act. Hence, it is necessary to construe the expression “Members” in section 80P(2)(a)(i) of the Act in the light of definition of that expression as contained in the concerned co-operative societies Act. In view of this, the facts are to be examined in the light of principles laid down by the Hon’ble Supreme Court in Mavilayi Service Cooperative Bank Ltd. (supra). Accordingly, we remit this issue of deduction u/s.80P(2)(a)(i) of the Act to the file of Ld.AO to examine the same de novo in the light of the above judgment.
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2021 (11) TMI 1007
Validity of Assessment u/s 153A /153C - Mandation of recording satisfaction note for the purposes of initiating the proceedings u/s.153C - as contended by the ld. DR that the satisfaction was not only recorded in the file of the searched person but also in the file of the other person, namely, assessee before us - Deemed dividend addition u/s 2(22) - HELD THAT:- The procedure to be adopted for initiating proceedings under section 153A against a person who has not been searched, has been prescribed in the provisions of section 153C wherein a situation, the Assessing Officer having the jurisdiction over the other person is different from the Assessing Officer having jurisdiction over the person in respect of whom the search has been conducted. Before notice can be issued under section 153C, the Assessing Officer has to be satisfied that undisclosed income found during search operations belongs to the third person. A clear and plain reading of section 153C leaves no doubt that recording of satisfaction by the Assessing Officer of the person searched is mandatory and it has to precede the initiation of proceedings against the other person (not searched).
If we look into the satisfaction note in the file of the searched person namely, Model Construction Pvt. Ltd. It is abundantly clear that there is no recording of satisfaction by the Assessing Officer that the document seized during the search at the premises of Model Construction Pvt. Ltd. Belongs to the assessee and were incriminating in nature. In our view, unless there is a recovery of the document belonging to the other person, section 153C of the Act cannot trigger.
In the present case there is neither the recording of satisfaction by the AO of the searched person that the documents belong to the other person nor there is any finding that the documents so found were incriminating in nature. In our view a detailed scheme has been provided for initiation of Section 153C i.e. first there would be a satisfaction in the file of the AO of the searched person and thereafter transmission of the file along with the incriminating document to the AO of the other person and thereafter recording of satisfaction by the AO of the other person and issuance of notice u/s.153C of the Act and completion of proceedings. In the absence of the fundamental and foundational fact of recording satisfaction by the AO of the searched person no proceeding u/s.153C of the Act can be initiated by the other person. In the present case, there is no satisfaction in the file of AO of the searched person and accordingly, the issuance of proceedings u/s.153C of the Act were without of any basis.
Assuming the proceeding can be initiated without there being any satisfaction in the file of the AO whether the satisfaction on record in the file of the assessee reproduced hereinabove can be said to be satisfaction in the eyes of law.
It is fundamental that in the satisfaction note, it is not only essential to mention the PAN No. of the assessee, his address and other details by the Assessing Officer and invariably the satisfaction note should not be forming part of the order sheet and it should be separately recorded as is satisfaction note showing the application of mind by the Assessing Officer of the assessee before us. Admittedly, the application of mind is conspicuously missing in the order sheet (satisfaction) as neither the description of the document were mentioned nor how those document leads to evasion or concealment of non-disclosure of income by the assessee in all these years.
None of the document belongs to the assessee before us, and, therefore, it cannot be said to be relevant or incriminating in nature.
We may also like to point out that as confirmed by the ld. CIT-DR that none of the additions were made by the AO on the basis of the seized document and were only made u/s.2(22)(e) of the Act as is clear, from the grounds of appeal raised by the revenue before the ITAT, which were not pertaining to the seized document.
In terms of the directions of the Hon’ble High Court in SAVESH KUMAR AGARWAL [2013 (7) TMI 805 - ALLAHABAD HIGH COURT] we hereby decide the verification of the jurisdictional parameter for initiation of proceedings u/s.153C of the Act in favour of the assessee and against the revenue.
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2021 (11) TMI 1006
Ex-parte orders passed by CIT-A - Belated payments of employee's contribution to PF and ESI - HELD THAT:- We find that the CIT(A) had given only one opportunity to the assessee in both the AYs 2018-19 and 2019-20. On the given date of hearing none appeared on behalf of the assessee before the Ld. CIT(A) but, filed written submissions through e-mail/ITBA Module and requested the Ld. Revenue Authorities to dispose off the appeals on the basis of the assessee's written submissions .
CIT(A) adjudicated the appeals based on the material available on record. In this situation, considering the issues involved in the appeal as well as the prayer of the Ld. AR, in the interest of justice, We hereby remit the matter back to the file of Ld. CIT(A) in order to consider the issues involved in the appeals for the A.Y. 2018-19 and A.Y. 2019-20 afresh and decide the matter on merits by providing one more opportunity to the assessee of being heard. Appeals filed by the assessee are allowed for statistical purposes
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