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Income Tax - Case Laws
Showing 41 to 60 of 640 Records
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2021 (2) TMI 1269 - ITAT VISAKHAPATNAM
Condonation of delay - 234 days delay in filing the appeal before the Ld. CIT(A) - HELD THAT:- We are of the view that the assessee's appeal suffers from 234 days delay in filing the appeal before the Ld. CIT(A). The Ld. Counsel for the assessee has submitted that due to the outbreak of pandemic, COVID-19, the assessee was unable to file the appeal in time as prescribed by the Act. The Ld. Counsel for the assessee has relied on Civil Appeal [2019 (12) TMI 1293 - SUPREME COURT] in which it was held that such delay supported by cogent reasons deserves to be condoned, so as to make a way for the cause of substantial justice. Therefore, after considering the submissions made by the Ld. Counsel for the assessee, we hold that the assessee's impugned delay of 234 days is neither intentional nor deliberate, but due to the circumstances beyond it's control. Accordingly, we condone the delay of 234 days and remit the matter back to the file of the Ld. CIT(A) to adjudicate the assessee's appeal on merits. Appeal of the assessee is allowed for statistical purpose.
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2021 (2) TMI 1267 - ITAT CHANDIGARH
Failure of the assessee to deposit the employees' contribution to PF/ESI for having not paid the same on or before the prescribed due dates as per section u/s. 36(1)(va) - Payment made before furnishing the return of income under section 139(1) - HELD THAT:- In the present case, it is not in dispute that the assessee deposited the contribution of PF & ESI belatedly in terms of section 36(1)(va) of the Act. However, the said deposits were made prior to filing of return of income u/s. 139(1) of the Act. It is noticed that an identical issue having similar facts has already been adjudicated in RAJA RAM [2021 (11) TMI 370 - ITAT CHANDIGARH] wherein 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 (2) TMI 1265 - ITAT AHMEDABAD
Deduction u/s 10B - scope of approval by the STPI - HELD THAT:- The principle accepted by the revenue for 10 earlier years and 4 subsequent years to the assessment years 2007-08 and 2008-09 was that the entire expenditure is to be allowed against business income and no expenditure is to be allocated to capital gains. Once this principle was accepted and consistency applied and followed, the revenue was bound by it. Unless of course it wanted to change the practice without any change in law or change in facts therein, the basis for the change in practice should have been mentioned either in the assessment order or atleast pointed out to the Tribunal when it passed the impugned order. None of this has happened - all have proceeded on the basis that there is no change in the principle which has been consistency applied for the earlier assessment years and also for the subsequent assessment years. Therefore, the view of the Tribunal in allowing the respondent's appeal on the principle of consistency cannot in the present facts be faulted with, as it is in accord with the case BHARAT SANCHAR NIGAM LTD. (BSNL) VERSUS UNION OF INDIA [2006 (3) TMI 1 - SUPREME COURT]
The assessee is eligible to claim deduction under section 10B of the Act by virtue of being 100 % EOU approved by the STPI.
Alternate claim u/s 10A - The assessee contented that condition prescribed under section 10A and 10B of the Act are more or less same and it fulfills all the conditions specified under section 10A of the Act. Thus it should be allowed exemption under section 10A of the Act if not allowed under section 10B of the Act. As such we note that the AO was allowed opportunity vide remand report to verify the fulfillment of the condition specified u/s 10A of the Act. But he restrained himself from making any comment as the same was already verified by him during assessment proceeding. From, this we safely assume that the all condition has been fully met by the assessee. Now the question arise that can the assessee be allowed exemption under section 10A alternatively where it has made claim under other section inadvertently? In our considered view the answer stand positive in view of the fact that the matter has come to various judicial authority wherein it has held that a valid claim of the assessee cannot be deprived merely because, the assessee has not made such claim in return of income filed under section 139.
Accordingly we direct the AO to delete the addition made by him. Hence ground of appeal of the Revenue is dismissed.
Validity of reopening of assessment u/s 147 - HELD THAT:- The Provisions of Section 147 of the Act, authorizes the AO, if he has "reasons to believe" that the income has escaped assessment, to assess or reassess the income escaped from assessment. Now to form the reasons to believe for the escapement of income, AO first, should be in possession of some /fresh new material which was previously not available with him viz a viz it impacts the aspect, that there is some undisclosed income.
We note that all the materials used by the AO in the initiation of reassessment proceedings were available before him during the assessment proceedings and after application of his mind the AO framed the assessment under section 143(3) of the Act vide order dated 01-12-2011. Therefore, the same cannot be used for initiating the proceedings under Section 147 - As such there has to be some new/fresh information on record, which requires a fresh examination. When there is no change in the facts and circumstances of case, the power to re-open u/s. 147/148 cannot be exercised, since at the time of initial assessment a view was formed on the available facts, and the same cannot be re-viewed again.
Our case was duly assessed for A.Y. 2009-10 by the ld.A.O and assessment order u/s.143(3) of the Act was passed dated 01.12.2011. Deduction under section 10B was allowed in the original assessment after enquiry. Now the assessee has been served with notice u/s.147 of the Act stating that the deduction u/s 10B was not allowable. The reassessment proceedings initiated on this ground are not valid - Thus, the action u/s.147 of the Act for A.Y. 2009-10 is not legal. - Decided in favour of assessee.
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2021 (2) TMI 1264 - ITAT DELHI
Revision u/s 263 by CIT - Proof of lack of enquiry - HELD THAT:- Hon'ble Bombay High Court in the case of Gabriel India Ltd. [1993 (4) TMI 55 - BOMBAY HIGH COURT] has explained the meaning of "erroneous" as an order which is not in accordance with law, or which has been passed by the Income Tax Officer without making any enquiry in undue haste.
The Hon'ble Bombay High Court further explained the meaning of "Prejudiced" as "an order can be said to be prejudicial to the interest of the Revenue if it is not in accordance with law in consequence whereof, lawful revenue due to the state has not be realized or cannot be realized."
Facts mentioned elsewhere clearly show that this is not a case of lack of enquiry or assessment being framed in haste. Proper enquiries were made by the Assessing Officer during the course of assessment proceedings and after considering all the facts and evidences, the Assessing Officer took a view which is a plausible view. Therefore, it is not open to the ld. PCIT to direct a re-enquiry as he is of a different view.
We are of the considered opinion that the assessment order dated 26.12.2018 is neither erroneous nor prejudicial to the interest of the Revenue. - Decided in favour of assessee.
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2021 (2) TMI 1263 - SC ORDER
Prayer for de-tagging of cases - Petitioner has been advised to explore the remedy under the provisions of “Direct Tax Vivad Se Vishwas Act, 2020” for settlement of disputed tax involved in the present petition and has also filed application seeking permission to withdraw the special leave petition with liberty to revive the petition, if need arises.
Accordingly, this petition and pending applications are disposed of as withdrawn with aforesaid liberty.
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2021 (2) TMI 1254 - ITAT DELHI
Reopening of assessment u/s 147 - addition on account of cash deposit in the bank account - claim of the assessee was that the deposits in bank were made out of past savings and agricultural income - HELD THAT:- During the course of hearing the learned counsel for the assessee has drawn my attention to Revenue record in the form of copy of Jamabandi and Khasra Girdawari. As per copy of Jamabandi, which is enclosed at paper book page 15, it is recorded that the agricultural land was under self cultivation of the assessee. The Revenue has not rebutted this evidence by placing any contrary material on record. Therefore, the finding of the authorities below is contrary to the record. The Assessing Officer is hereby directed to delete the addition.- Decided in favour of assessee.
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2021 (2) TMI 1253 - ITAT DELHI
Exemption u/s 11 - Denial of registration u/s. 12A being engaged in the activities in the nature of trade, commerce or business, inasmuch as one of the dominant activities of the Assessee-Authority is acquisition and sale of immovable property, the receipt of which are in excess of ₹ 25,00,000/-, being the ceiling stipulated in second proviso of section 2(15) - HELD THAT:- Now the issue is no longer res integra, as it has already been held that “there is no good reasons for holding that Statutory bodies could not be treated as charitable within the meaning of section 2(15) of the Act, as its object is to provide shelter to the homeless people”.
So there being no material/evidence on record supporting the case of the Revenue to reach the conclusion that the assessee was conducting its affairs on commercial lines with the profit earning motive and as such the proviso to section 2(15) of the Act is not attracted in this case and the assessee was entitled to exemption provided u/s. 11 of the Act. Moreover, no cogent reason or distinguishable facts have been brought on record by the Revenue if the year under consideration is different from earlier years, i.e., A.Yrs. 2009-10 to 2011-12 [2018 (6) TMI 685 - ITAT DELHI] which have already been decided in favour of the assessee. So, in these circumstances, the Revenue authorities are required to follow the “principle of consistency”, as has been laid down by Hon’ble Supreme Court in the case of Radhasoami Satsang vs. CIT [1991 (11) TMI 2 - SUPREME COURT] Consequently, grounds Nos. 1 to 4 are decided in favour of the assessee.
Addition being the residual amount of opg. Bal. of infrastructure fund related to earlier years - as submitted amount of infrastructure fund is belonging to state and which was only on capital a/c credited to B/s etc and not belonging to assessee of which assessee is only a custodian - HELD THAT:- As infrastructure fund, development and reserve fund IDRF as per Notification dated 15.01.1998 belongs to State and the assessee-authority is a mere custodian, the same cannot be taxed in its hand. Even otherwise, the same has been utilized for general utility. So, in view of the matter, grounds Nos. 5 to 10 are also decided in favour of the assessee.
Benefit of excess utilization of earlier years - HELD THAT:- Since the issue in controversy has already been decided by coordinate Bench of Tribunal in favour of the assessee in A.Y.2009-10 to 2011-12 on the basis of principle laid down in the case of CIT vs. Shri Plot Swetamber Murti Pujak Jain Mandal [1993 (11) TMI 17 - GUJARAT HIGH COURT] “that income derived from the trust property has also got computed on commercial principles and if commercial principles are applied, then the adjustment of the expenses incurred by the trust for charitable and religious purposes in the earlier year against income earned by the trust in the subsequent year will have to be regarded as application of income of the trust for charitable and religious purposes in the subsequent year”, and as such, the assessee is entitled for benefit of excess utilization of earlier years. Moreover, such benefit has already been granted to the assessee in earlier years at the level of ld. CIT(A) which has been accepted by the Revenue. So, “rule of consistency” is also applicable to this issue. Consequently, we decide ground No. 11 in favour of the assessee.
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2021 (2) TMI 1250 - ITAT DELHI
TP Adjustment - addition on account of corporate guarantee - CIT(A) directed the AO to adopt 0.5% as service fee for corporate guarantee given by the assessee to Dabur Egypt however, held that no service fee towards corporate guarantee can be charged for the corporate guarantee in case of Dabur Nepal - whether a guarantee fee is chargeable by the assessee to its associated enterprises? - HELD THAT:- Such guarantee was for a short duration of four months which was thereafter released on 27th July, 2006, a fact not disputed by the Revenue. The submission of assessee that there was no interest savings on account of corporate guarantee issued by the assessee also remains uncontroverted since the letter filed by the assessee dated 31.10.2013 from NABIL Bank, Nepal, copy of which is placed at page 346 of the paper book clearly shows that the corporate guarantee provided by the assessee in no way influenced the interest charged by the bank to Dabur Nepal Pvt. Ltd. - we find no infirmity in the order of the ld.CIT(A) that in absence of any savings/benefit no service fee could be attributed to corporate guarantee issued by the assessee on behalf of Dabur Nepal Pvt. Ltd.
Corporate guarantee issued on behalf of Dabur Egypt Ltd. - We find merit in the argument of the ld. Counsel for the assessee that the benefit of an explicit guarantee accrue to both the guarantor and the borrower, therefore, the interest benefit should be split between the parties to the transaction, i.e., the borrower and the guarantor and as per rule of thumb such benefit should be in 50:50 basis. Although the ld.CIT(A) has attributed 50% of such savings as the service fee on account of guarantee, however, he had taken the savings on interest due to such guarantee provided by the assessee at 1%. Under these circumstances, we find merit in the argument of the ld. Counsel that charging of service fee at an ad hoc rate of 0.5% should be reversed and may be restricted to 0.30% in respect of corporate guarantee issued to Dabur Egypt Ltd., as against 0.5% held by the CIT(A). Thus, the ground raised by the Revenue on this issue is dismissed and the ground raised by the assessee is partly allowed.
Royalty adjustment - HELD THAT:- Since the facts of the present appeal are identical to the facts decided by the Tribunal in assessee’s own case in the preceding assessment year, therefore, in absence of any distinguishable features brought before us by either side, we, respectfully following the same, hold that no royalty is receivable by the assessee from Dabur Nepal and, therefore, the order of the CIT(A) sustaining the addition on account of Royalty receivable from Dabur Nepal (P) Ltd., at 2% is directed to be deleted. So far as royalty receivable from Dabur International, UAE is concerned, the same is directed to be restricted to 0.75% as held by the Tribunal.
Since the facts of the present appeal are identical to the facts decided by the Tribunal in assessee’s own case in the preceding assessment year, therefore, in absence of any distinguishable features brought before us by either side, we, respectfully following the same, hold that no royalty is receivable by the assessee from Dabur Nepal and, therefore, the order of the CIT(A) sustaining the addition on account of Royalty receivable from Dabur Nepal (P) Ltd., at 2% is directed to be deleted. So far as royalty receivable from Dabur International, UAE is concerned, the same is directed to be restricted to 0.75% as held by the Tribunal.
Addition on account of interest on loan advanced to Dabur International, UAE, an AE - HELD THAT:- Since the assessee in the instant case has charged interest on loan @ 6.75%/7% from Dabur International, UAE, which is higher than the internal CUP wherein interest rate charged by Bank of Baroda for Commercial Papers was 5.675%, therefore, the international transaction of interest received, in our opinion, is considered to be at arm’s length applying the CUP method.
We find, the coordinate Bench of the Tribunal in the case of Bharti Airtel Limited [2014 (3) TMI 495 - ITAT DELHI] too, has held that in a case where loans are advanced in foreign currency, the interest rate on foreign currency loans being qualitatively different, and accordingly, even if one has to see the interest that the assessee would have earned, one has to see the interest that the assessee would have earned on foreign currency loans and not rupee denominated loans. Accordingly, the order of the CIT(A) deleting the addition upheld.
Recompute the deduction u/s 80IB and 80IC of the Act without further allocation of the head office and other expenses to various units eligible for such deduction - HELD THAT:- We do not find any infirmity in the order of the CIT(A) reversing the action of the AO in allocating the head office expenses and depreciation to various eligible units for the purpose of recomputing the deducting u/s 80IB/80IC. The factual finding of the ld.CIT(A) that the assessee has added back the depreciation as per Companies Act, 1956 and claimed depreciation as per the Income-tax and, therefore, the AO was wrong in allocating the difference of depreciation available under the Companies Act and the Income-tax Act to the eligible units could not be controverted by the ld. DR. Similarly, the ld. DR also could not controvert the factual finding given by the CIT(A) that expenses aggregating to ₹ 1,563.02 lakhs being head office expenses were suo motu disallowed by the assessee and added back in the computation of income and once these expenses were claimed by the assessee, the same cannot be allocated to the eligible units for computation of deduction u/s 80IB/80IC and, therefore, cannot be allocated to the eligible units.
As during the financial year under consideration, depreciation was debited to the P&L Account. A perusal of the computation of income,shows that the assessee has added back the aforesaid depreciation under Companies Act and claimed depreciation in accordance with the provisions of section 32 of the Act. The depreciation as claimed in the return of income was duly allocated among all the units including the eligible units. We, therefore, find no infirmity in the order of the CIT(A) in reversing the action of the AO in allocating the difference of depreciation available under the Companies Act and Income-tax Act to the eligible units
Miscellaneous expenses written off, donation and provision for bad debts were suo motu disallowed by the assessee in its return of income. Therefore, once the aforesaid expenses were not claimed as a deduction by the assessee, the same, in our opinion, cannot be allocated to the eligible units and be considered for computing the deduction u/s 80IB/80IC.
Since the scientific research expenses which were included in the head office expenses allocated by the AO are not connected with the units eligible for deduction u/s 80IB/80IC, the same, in our opinion, cannot be allocated to the eligible units. In this view of the matter, the order of the CIT(A) is upheld and the ground raised by the Revenue on this issue is dismissed.
Belated payments of employees contribution to ESI which was treated u/s 36(1)(va) of the Act r.w. section 2(24)(10) - HELD THAT:- CIT(A) deleted the addition on the ground that although such payments were made /deposited after the due date prescribed in the ESI Act, however, such deposits were made prior to the date of filing of the return u/s 139(1). We find, the Hon’ble Delhi High Court in the case of CIT vs. Bharat Hotels Ltd [2018 (9) TMI 798 - DELHI HIGH COURT] has held that Employees’ State Insurance Corporation and Provident Fund dues paid beyond prescribed period is not an allowable deduction. Since the Hon’ble Delhi High Court has decided the identical issue against the assessee which is after the date of SLP dismissed by the Hon’ble Apex Court in the case of Rajasthan State Beverages Corporation Ltd. [2017 (7) TMI 1087 - SC ORDER] and since the decision of the jurisdictional High Court is binding on us, therefore, the various other decisions relied on by the ld. Counsel for the assessee cannot be followed. In this view of the matter, the order of the ld.CIT(A) is reversed and the ground raised by the Revenue is allowed
Disallowance u/s 14A r.w. Rule 8D - HELD THAT:- Since the assessment year involved in the impugned appeal is 2007-08, therefore, provisions of Rule 8D cannot be applied for the impugned assessment year as held in various decisions. Further, it has been held in various decisions that provisions of section 14A are applicable only if the assessing officer at the first place finds that the assessee has actually incurred expenses which have proximate nexus with earning of dividend income and not otherwise. However, in the instant case, there is no such recording of satisfaction, therefore, we find some force in the argument of the ld. Counsel that in absence of recording of any satisfaction, provisions of section 14A cannot be applied mechanically. Further, the interest expenditure, if any, relatable to dividend yielding investment has to be considered as held in various decisions. It is also held in various decisions that only investments yielding dividend income has to be considered for the purpose of making disallowance u/s 14A. Under these circumstances, we are of the considered opinion that the AO was not justified in applying the provisions of section 14A r.w. Rule 8D and disallow u/s 14A r.w. Rule 8D as against the actual dividend income of ₹ 30,000/-.We accordingly hold that the disallowance u/s 14A has to be restricted to ₹ 30,000/-. The ground raised by the Revenue is accordingly partly allowed.
Depreciation @ 25% of the goodwill which were not shown by the assessee as its assets - HELD THAT:- We find, the Hon’ble Delhi High Court in the case of Areva T&D India Ltd. [2012 (4) TMI 79 - DELHI HIGH COURT] has held that specified intangible assets, viz, business claims, business information, business records, contracts, employees and know-how acquired by assessee under slump sale agreement are in nature of “business or commercial rights of similar nature” specified in section 32(1(ii) and are accordingly eligible for depreciation under that section. The various other decisions relied on by the ld. Counsel for the assessee also supports his case that depreciation is allowable on goodwill.
AO should not have refused to consider the claim of depreciation despite the fact that the assessee raised such claim vide its letter dated 13.12.2010 addressed to the AO. In this view of the matter and in view of the detailed reasoning given by the CIT(A) on this issue, we find no infirmity in his order allowing claim of depreciation on goodwill. The order of the ld.CIT(A) on this issue is accordingly upheld and the ground raised by the Revenue on this issue is accordingly dismissed.
ESOP expenses debited in the Profit & Loss Account ought to have been allowed as deduction in computing the income under the head ‘Profit and Gains of Business - HELD THAT:- We find, the assessee in the instant case, has raised the additional ground before the Tribunal relating to the ESOP expenses which were debited in the Profit & Loss Account, but, added back while computing the income under some misconception of facts and law. However, the issue, in our opinion, is legal in nature. We find, identical issue had come up before the Tribunal in [2017 (4) TMI 1521 - ITAT DELHI] has admitted the additional ground and has restored the issue to the file of the AO for deciding the issue in accordance with law, after giving due opportunity of being heard to the assessee.
Royalty chargeable from three Associated Enterprises (AEs) as contemplated u/s 92CA - HELD THAT:- Revenue’s appeal for A.Y. 2007-08 already decided the issue and the grounds raised by the assessee have been partly allowed and the grounds of the Revenue have been dismissed. Following similar reasonings, the grounds raised by the Revenue are dismissed and the grounds raised by the assessee are partly allowed.
Addition to the extent of 0.05% as service fee for the corporate guarantee to Dabur Energy and addition to the extent of 0.513% as service fee for the corporate guarantee to Naturelle LLC, UAE - HELD THAT:- So far as the guarantee issued on behalf of Dabur Egypt Ltd., Egypt is concerned, we have already dealt with this issue while deciding ground of appeal No. 2and 3 for A.Y. 2007-08 and the same has been determined at 0.30%. Following similar reasonings, we modify the order of the CIT(A) and direct the AO to adopt the service fee on account of corporate guarantee at 0.30% in respect of guarantee issued on behalf of Dabur Egypt Ltd., Egypt.
Corporate guarantee issued on behalf of Naturalle LLC, UAE - We have held in the preceding years that interest benefit be split between the guarantor and borrower on 50:50 basis. Therefore, applying the said rule, the benefit can be attributed to the service fee on account of guarantee at 0.30%. We accordingly modify the order of the CIT(A) and direct the AO to restrict the service fee/commission for providing such corporate guarantee at 0.30% on the amount of ₹ 13.06 crores provided to Naturalle LLC, UAE. The grounds of appeal Nos.7 and 8 filed by the assessee are accordingly partly allowed.
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2021 (2) TMI 1247 - ITAT MUMBAI
Unexplained credit u/s 68 - Bogus LTCG - HELD THAT:- We are not in agreement with the conclusion drawn by the Ld. CIT(A) that the long term capital gain earned by the assessee from sale of shares is a non genuine transaction and accordingly we set aside the order of Ld. CIT(A) and direct the AO to delete the addition made under section 68 of the Act and further direct the AO to grant exemption under section 10(38) of the Act in respect of long term capital gain. The ground no. 2 is allowed.
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2021 (2) TMI 1239 - ITAT DELHI
Allowable business expenditure - expenses claimed under the head "Assistance to Law Students" - as per AO similar disallowance had to be made on the ground that the assistance to law students, who are nowhere related to the profession of the assessee, and such claim as a business expense is not acceptable to have been incurred wholly and exclusively for the purpose of business/profession of the assessee - HELD THAT:- As relying on own case [2019 (8) TMI 731 - ITAT DELHI] it is apparent that at least in the case of the professionals, the way they promote themselves, is changing very fast and the benefits of such expenditure are huge and wide. Therefore according to us the impugned expenditure incurred by the assessee is a revenue expenditure allowable u/s. 37 (1) of the income tax act. We do not subscribe to the view of the learned CIT - A these expenditure is capital in nature. The expenditure incurred by the assessee is the routine day-to-day expenditure incurred by the assessee for promoting his professional profile. These expenditure cannot be held to be capital expenditure in nature as no fresh new fixed assets is created by paying the scholarship sum. Further merely because in the agreement it is mentioned as an annual gift in the form of scholarship, it does not become a gift. In fact, it is the expenditure incurred by the assessee in furtherance of his business. Thus we reverse the order of the lower authorities, and direct the learned assessing officer to delete the above disallowance. - Decided in favour of assessee.
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2021 (2) TMI 1232 - ITAT AHMEDABAD
Deemed dividend u/s. 2(22)(e) - inter corporate deposit to the assessee company - CIT(A) has deleted the addition holding that assessee company was not a registered share holder of J.P. Escon Ltd. after placing reliance on the various judicial pronouncements - HELD THAT:- As it is undisputed fact that assessee company was not a registered share holder in J.P. Escon Ltd. from whom it has obtained loan during the year under consideration. Therefore, the addition made by the Assessing Officer as deemed dividend u/s. 2(22)(e) of the Act is not justified. In the light of the above facts and findings, we do not find any infirmity in the decision of ld. CIT(A), therefore, this appeal of the revenue is dismissed.
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2021 (2) TMI 1229 - ITAT LUCKNOW
Addition on account of expenses of labour Cess - HELD THAT:- As relying on assessee's own case [2019 (5) TMI 1669 - ITAT LUCKNOW] assessee is correct in contending that the addition, if any, is maintainable only in the hands of the client of the assessee Corporation and not in the hands of the assessee. The provisions made for labour cess, do not stand debited to the profit & loss account and the profitability of the Corporation in the form of centage earned as gross profit, is not affected. The assessee Corporation is only a collecting agency for the purposes of the labour cess and deposit thereof with the Government account. Thus, the action of the ld. CIT(A) in confirming the addition for the provisions for labour cess, is reversed and the addition is deleted. The sole ground raised by the assessee in its appeal is allowed.
Difference in valuation of stock - HELD THAT:- CIT(A) in his finding has clearly held that the difference was due to typographical error and he has further observed that books of accounts of assessee were audited by statutory auditor as well as by CAG and such inventory was physically verified therefore he has rightly allowed relief to the assessee and we do not find any reason to interfere with his finding and therefore Ground No.1 of the appeal is dismissed.
Addition on account of prior period items - HELD THAT:- This issue is covered in favour of the assessee in the case of assessee itself in [2019 (5) TMI 1669 - ITAT LUCKNOW] and in [2019 (8) TMI 46 - ITAT LUCKNOW] .
Addition on account of provision of gratuity - HELD THAT:- The written back provision has been taken in the P&L account under the head other non operating income, which is apparent from paper book Pg. 52 where such schedule forming part of balance sheet is placed. The AO has wrongly made the addition of outstanding balance of provision for gratuity which the ld. CIT(A) has rightly deleted.
Accrual of income - Addition on account of interest income earned on unutilized fund by holding that the assessee was claiming TDS relating to FDRs of unutilized fund - HELD THAT:- CIT(A) has held that the interest on unutilized funds which belonged to clients of the assessee were required to be credited to their account and therefore, this income cannot be said to have accrued to the assessee. The Hon'ble Tribunal in own case [2019 (5) TMI 1669 - ITAT LUCKNOW] for AY 2010-11 and [2019 (8) TMI 46 - ITAT LUCKNOW] in AY 2011-12 has allowed relief to the assessee under similar facts and circumstances.
Addition on account of profit on sale of assets which the assessee had declared under head other income in schedule 12 forming part of balance sheet - assessee had claimed depreciation as per income tax rules on block of assets and therefore, the block of assets was arrived at after reducing the sale value of assets sold and depreciation as per Income Tax Rules was claimed as per Income Tax Rules - HELD THAT:- AO , on the one hand, allowed depreciation as per Income tax Rules but again added ₹ 98,01,151 being profit on sale of assets without appreciating the fact that no such addition was to be made as depreciation was allowed on block of assets as per Income Tax Rules where the sale consideration of assets was already reduced from the block of assets of depreciation was claimed on net block. The copy of computation sheet is placed at paper book Pg.42 where the computation of income is placed and where the assessee had reduced depreciation as per income tax rules and added back the depreciation debited in the P&L account. We find that ld. CIT(A) has made a finding of fact that assessee has claimed depreciation as per I.T. Rules on block of assets and has reduced the sale consideration of assets from gross block of assets and had claimed depreciation on net block therefore, he has rightly allowed relief to the assessee and we do not find any infirmity in the same and therefore, Ground No.5 is also dismissed.
Addition on account of interest on unlisted machinery - HELD THAT:- CIT(A) has made a finding of fact that interest on unlisted machinery is in the nature of notional interest being charged by assessee on the machinery used in the construction work undertaken by it and the notional interest chart on unlisted machinery being used in the work. The ld. CIT(A) further made a finding of fact that such amount has been debited in the contract account and therefore, the assessee had earned centage on this amount as specified by the Government and the centage so earned was taken in the P&L account - The findings of ld. CIT(A) are quite exhaustive and such addition is covered in favour of assessee by the Tribunal order in the case of assessee itself. Therefore, we do not find any reason to interfere in the same and therefore, Ground No.6 is also dismissed.
Addition on account of gratuity which the assessee had written back as no longer required - HELD THAT:- The assessee by writing back the excess provision of gratuity credited the other receipts and declared it as income and simultaneously the assessee reduced the same in the computation chart in computing net taxable income. The assessee had claimed that it never claimed the gratuity expenses and added back the same in computing of income and therefore, the addition was not justified. The Assessing Officer had wrongly made the addition, which the ld. CIT(A) has deleted by appreciating the facts correctly. The ld. CIT(A) has already dealt this issue and has rightly deleted the addition.
Additions on account of interest accrued on investment and other income which was shown in the balance sheet under the head current assets - HELD THAT:- As under the head other current assets declares interest accrued on investment at ₹ 299543067 and other income accrued but not received at ₹ 54497865. When the assessee passed this entry and declared the income as receivable naturally credit would have been given to the income which would have gone to the P&L account. The system of accounting adopted by assessee is that the income is arrived at by first adding interest received during the year less opening balance of interest accrued considered income in earlier years and then by adding accrued interest of the year not received. The ld. CIT(A) has deleted this addition rightly.
Disallowing depreciation in P&L account under the head operating expenses which was added back while computing allowable depreciation as per I.T. Rules - HELD THAT:- There is no justification in the addition made by the AO as the correct depreciation has been claimed by the appellant as per Rules after adding back the depreciation debited to the contract account and profit and loss account. The addition of ₹ 1,19,55,313/- made by the AO is deleted giving relief to the appellant. - Appeal of revenue dismissed.
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2021 (2) TMI 1209 - ITAT INDORE
Assessment u/s 153A - Disallowance u/s. 40A(3) - AO found during assessment proceedings u/s. 153A that the appellant made cash payments to some sellers for purchase of land - HELD THAT:- Respectfully following the judgment in the case of Gurdas Garg [2015 (8) TMI 569 - PUNJAB & HARYANA HIGH COURT] and Tirupati Construction [2016 (9) TMI 436 - ITAT INDORE] hold that having regard to business expediency, the payment in cash for purchase of land through registered deed was allowable. Thus, considering the facts and the circumstances of the case, the expenditure was allowable as Learned AO could not have questioned the allowability of expenditure without any incriminating document in the assessment u/s. 153A; the payment was covered under Rule 6DD(g); and that the payment was a genuine expenditure and was made under business expediency. The order of the Ld. CIT(A) is therefore sustained on this issue. Thus Ground No.1 of Revenue’s Appeal for Assessment Year 2008-09 is dismissed.
Addition on ‘on-money’ payment - In absence of any incriminating material found during the course of search, and further in absence of any direct or corroborative material even during the assessment, except for the statement of son, who was not a party to the transaction; and whose statement has no evidentiary value for this transaction; and further the fact that cross-examination was not granted; the addition has no legs to stand. The Ld. CIT(A) was justified in deleting the addition .
Deduction u/s. 80IB(10) - As the issue of deduction u/s.80IB(10) of the Act, which has already been settled earlier by this Tribunal for various preceeding Assessment Years in the case of assessee; and that no incriminating material was found in the case of the assessee, claim of deduction u/s.80IB(10) of the Act cannot be denied in present proceedings u/s. 153A r/w. Section 143(3).
Disallowance u/s 14A - HELD THAT:- It is an established fact in the instant case that no interest disallowance u/s.14A of the Act is called for in the years under dispute before us as the assessee had sufficient interest free funds in the form of Share Capital and accumulated Reserve and Surplus to cover the investment in equity shares. However as regards the disallowance as per limb (iii) of Rule 8D of IT Rules, we direct the Assessing officer to sustain the disallowance to the extent of dividend income earned during the year or 0.5% of average investment in equity shares at the end of each assessment year in question before us, whichever is less.
Addition based on loose paper found during the course of search - CIT-A deleted the addition - HELD THAT:- Additions made on the basis of torn papers and loose sheets cannot be sustained as same do not indicate that any transaction ever took place and does not contain any information in relation to the nature and party to the transaction in question - See V. S K Gupta Vs. DCIT[1998 (2) TMI 164 - ITAT DELHI-C] - thus the alleged document is dumb in nature and no nexus is established by the ld AO find no reason to interfere in the finding of Ld.CIT(A) which needs to be confirmed.
Addition in respect of LPS A-13 relating to “on-money” in respect of 21 registries found from the office assessee-company and 6 registries found from the site office of Aakriti Aqua City - CIT-A deleted the addition - HELD THAT:- The fact that the amount was deposited in the bank statement of the sellers is unproved by the Ld AO. If the bank statements as alleged by the ld AO were there, why the same were not brought on record; why a copy of same was not provided to assessee; or why the same were not even brought on record in the Department’s paper book before us. We have gone through the statement of Shri Laxmi Narayan also. It seems that he gave the statement about on-money in confusion, as another land was purchased for a consideration of ₹ 6,48,000/-, the same amount which is alleged to have been paid as on-money. Further, in respect of Smt. Ayodhya Patidar, Smt. Krishna Patidar and other, it is unknown as to why statement of sellers were not recorded, but a statement of third person, who was not a party to the trasaction was recorded. Infact Thakur Prasad Patidar made different statements on different occasions. In his first statement, at PB 362 in question 6 he stated that he was not aware of the consideration. In his second statement, he stated at PB 367 question 11 that the consideration was ₹ 67 lakhs, thus there was no on-money. In his third statement, he stated that the consideration was ₹ 85 lakhs and thus there was on-money of ₹ 17 lakhs. Since his statements changed now and then hence his tesdtimony did not inspite confidence. Interestingly, Ld AO added the difference between the transaction value and stamp value i.e. ₹ 104 lakhs less ₹ 67 lakhs. Further in respect of Shri Arjun Patidar he denied on-money. The addition is merely based on a guess work of the ld AO that the buyer “would have paid” on-money.
Considering the entirety of the facts and detailed finding of fact by Ld.CIT(A) in light of settled judicial precedence, we find no infirmity in the finding of Ld.CIT(A) and thus addition made by the Ld.AO cannot sustain.
Addition on the basis of valuation report given by Departmental Valuation Office - CIT-A deleted the addition - HELD THAT:- We respectfully following the judgment of Khushal Chand Nirmal Kumar [2003 (4) TMI 61 - MADHYA PRADESH HIGH COURT] AND Nishi Mehra [2015 (3) TMI 156 - DELHI HIGH COURT] and also considering the facts of the case that there is a huge difference in Valuation by the Registered Valuer and that of the DVO, both being appointed by the department, the addition after giving deduction for self-supervision, self-procurement of materials and the deduction for rate difference in PWD and DPAR rates and that no incriminating material was found during the course of search to show any unaccounted expenditure, find no reason to interfere in the finding of Ld. CIT(A) and thus dismiss Revenue’s Ground.
Unaccounted receipts - HELD THAT:- CIT(DR) could not point out any evidence to prove that any amount was received in cash from the customer. The amount received as per the books tallies with the amount received as per the loose paper. The addition is uncalled for. We therefore dismiss this ground of department’s appeal.
Unexplained investment - HELD THAT:- As undisputed fact that appellant has entered into an agreement with M/s. Aashirwad Sky Heights Tower Pvt. Ltd. The Ld. AO has alleged that assessee has paid sum of ₹ 21,00,000/- towards security deposit as per agreement. However, assessee has contended that all the payments were made through cheque to the tune of ₹ 4,80,00,000/- and no transaction was made in cash. Assessee has also brought to our notice that statement of Shri Mahendra Singh Namdeo was also recorded wherein, he has admitted that the all the payments were received through cheque and the balance amount is still outstanding. We find that although the agreement raises suspicion that cash payment was made by assessee company of ₹ 21,00,000; but this suspicion is not confirmed by the department by providing any evidence on record. Both the parties to the transaction denied this cash payment. In the books of M/s. Aashirvad Sky Heights Tower Pvt Ltd, this amount is not shown to have been received. On being asked, it was informed that no action was taken in the case of M/s. Aashirvad Sky Heights Tower Pvt Ltd. The addition therefore lacks merits.
Disallowance of expenditure - HELD THAT:- At the first instance, the primary evidences in support of the transactions in the form of PAN and TIN of the parties were available, bank statements, bills etc were on record and these transactions were already recorded in the books, before the search was conducted. No evidence whatsoever has ever been stated by the department to have been found out during the course of search to show that the expenditure was bogus. Secondly, Ld. AO referred to the report of the Inspector during the assessment. However, the said Inspector’s report was never brought on record. Even in the Department’s Paper Book before us, the same has not been filed. If such report is available, why the department has never brought the same on record. Similarly, the statement recorded on oath of Shri Verghese Joseph and Smt. Malti Gaur has never been brought on record. In the absence of the same, the reliance of the Department on these evidence is uncalled for - a search was conducted at the premises of the assessee. No discrepancy was found in the work done. Rather the department got the valuation done by the Registered Valuer and later by the DVO. The department on one hand contended that work done was more as disclosed in the books; but on the other hand, they are doubting the expenditure towards work done. The stand of the department is contradictory and inconsistent. We therefore in absence of any concrete evidence placed before us the Revenue authorities and also since Learned Departmental Representative being unable to disprove the evidences filed by the assessee to support of genuineness of expenditure, find no merits in the action of Ld AO making disallowance of expenditure. Thus no interference is called for in the finding of Ld.CIT(A)
Addition of unaccounted receipts under LPS 1/2 page no. 68 - addition based on loose paper found in search - HELD THAT:- We find that a document was found with the heading “AG8 Bhopal” at the residence of Shri Yashovardhan Jain. This document contained certain entries against particular dates mentioning “Cash Bhopal”. How Ld. AO alleged the same to be cash receipt could not be comprehended. Whether this represents cash receipt or payment or cash balance is also not clear. The document can at best be said to be a dumb document in absence of any enquiry by the Ld. AO. We find that once such document was found from the premises of one employee, Ld AO ought to have enquired as to the contents of the documents. Ld. AO merely choose to make his own conclusions. Going by the verison of the Ld. AO himself, it cannot be known as to cash was received from whom and for what purposes. We therefore are in full agreement with the finding of Ld CIT(A) deleting the addition holding the said document as a dumb document.
Penalty appeal u/s. 271(1)(c) and penalty appeal u/s. 271AAB(1)(c) - HELD THAT:- As basis of levying the penalty u/s. 271(1)(c) of the Act and 271AAB(1)(c) of the Act i.e. the addition already stands deleted by us as held by us in preceeding paras, there remains no legs for the impugned penalties to stand for and the same are therefore deleted
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2021 (2) TMI 1208 - ITAT MUMBAI
TP Adjustment - comparable selection - Infobeans Technologies Ltd inclusion/exclusion - HELD THAT:- Considering the fact that Infobeans Technologies Ltd. is engaged in diversified activities and segmental details are not available, the Tribunal, Pune Bench, in Pubmatic India Pvt. Ltd. [2018 (4) TMI 437 - ITAT PUNE] has held that this company cannot be treated as comparable - The same view was again expressed by the Tribunal, Delhi Bench, in M/s. Abhay India Pvt. Ltd.[2019 (9) TMI 1200 - ITAT DELHI] - Keeping in view the consistency in the decisions of the Tribunal with regard to the comparability of Infobeans Technologies Ltd. with a routine software development service provider, we hold that this company cannot be a comparable to the assessee. Accordingly, we direct the Assessing Officer to remove this company from the list of comparables and determine the arm's length price.
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2021 (2) TMI 1207 - MADRAS HIGH COURT
Best judgment assessment u/s 144 - Valid notice issued u/s 142(1)(i) or not - proof of communication of notices and the draft assessment order - HELD THAT:- The petitioner states that notice dated 20.05.2019 and penalty notice were received by her, but, on account of health issues, she could not give suitable instructions to the Chartered Accountant.
A second affidavit has been filed on 18.01.2020, when the petitioner states that none of the notices referred to in the impugned assessment order have been received except notice dated 14.02.2018 that was uploaded in the portal and noted by the Chartered Accountant.
Even assuming that notices dated 14.02.2018 and 20.05.2019 were not served upon the petitioner, notice dated 14.02.2018 was admittedly uploaded in the portal and has come to the attention of the petitioner.
Second affidavit is styled as a 'Better Affidavit'. In my understanding, a better affidavit is one that elaborates and clarifies upon facts where the original affidavit is unclear or inadequate. It does not contemplate a situation where the fact pattern has been altered substantially. Be that as it may, two things are clear: one, that the petitioner has not fied a statutory return of income and secondly that notice dated 14.02.2018 has certainly come to her attention, but has not been complied with. In the absence of co-operation with the Department in the conduct of assessments, this is not an appropriate case for interference under Article 226 of the Constitution of India. WP Dismissed.
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2021 (2) TMI 1205 - ITAT DELHI
Eligibility for exemption u/s 11 - charitable activity u/s 2(15) - whether the assessee’s activities falls within the sixth limb of charitable activity i.e. advancement of general public utility and in lieu of the services of consultancy and technical support assessee is receiving consultancy fee which is in nature of business income? - HELD THAT:- Both sides were in agreement that the issue in dispute is covered in favour of assessee and against Revenue as relying on own case [2019 (11) TMI 1036 - ITAT DELHI]. - Decided in favour of assessee.
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2021 (2) TMI 1204 - ITAT KOLKATA
Disallowance u/s 14A r.w.r. 8D - As per AO allow only that expenditure which is relatable to earning of income and therefore expenses which are relatable to earning of exempt income have to be considered for disallowance, irrespective of the fact whether any such income has been earned during the financial-year or not - HELD THAT:- As AR submitted that the assessee has received only ₹ 1,79,466/- as the dividend income and contended that the disallowance u/s. 14A of the Act even if made cannot exceed ₹ 1,79,466/-. In the light of the aforesaid discussion and the facts taken note by the AO, we note that even if the computation is made by applying Rule 8D, the disallowance cannot exceed the dividend income as held by the Hon’ble High Courts. In such a scenario, we are restricting the disallowance at ₹ 1,79,466/- in place of ₹ 9,37,263/- as made by the AO. This ground of Revenue appeal is partly allowed.
Derivative loss v/s business loss - setting off of share trading loss which is deemed speculative loss with derivative income and other business income - AO denying the assessee’s claim of set off of the said loss from income of business of dealing in shares - HELD THAT:- In this case on hand, there is no doubt that the assessee is a company and is in the business of purchase and sale of shares of other companies. And the deeming provision u/s. 73 of the Act is attracted since in this case there is net loss of assessee’s business of purchase and sale of shares of other companies - since the assessee transacted in sale & purchase of shares of other companies, by delivery as well as non-delivery (transactions of derivatives) are not hit by Sec.43(5) of the Act and hence the aggregation of the brokerage, share trading profit and loss from derivative transactions should be done before application of the Explanation to Sec.73.
The assessee had treated the entire activity of brokerage, purchase and sale of shares which comprised of both delivery based and non-delivery based trading as one composite business before the application of deeming provision contained in Explanation to Sec.73 of the Act and accordingly, claimed set off of the loss incurred in non-delivery based trading (derivative) with profit derived from delivery based share trading and brokerage which is legally valid. Therefore, we confirm the action of the Ld. CIT(A) and dismiss this ground of appeal of the revenue.
Addition u/s. 36(1)(va) read with section 2(24)(x) - employees contribution to Provident Fund deposit beyond the due date prescribed under the PF Act - HELD THAT:- We note that the assessee has deposited the employees’ contribution to Provident Fund before filing of return of income which fact has not been assailed by the revenue before us. Since the assessee has deposited the contribution amount to the Provident Fund before filing of return of income, the Ld. CIT(A) relying on the decision of the Hon’ble jurisdictional High court in the case of CIT Vs. Vijayshree Ltd. [2011 (9) TMI 30 - CALCUTTA HIGH COURT] has allowed the appeal of the assessee, which decision is binding on this Tribunal and at the time of hearing before us, no other order of the Hon’ble Supreme Court has been cited reversing this view of the Hon’ble High Court. Therefore, we confirm the order of the Ld. CIT(A) and dismiss this ground of appeal of the revenue.
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2021 (2) TMI 1203 - RAJASTHAN HIGH COURT
Application for settlement of cases - Application u/s 245-C - HELD THAT:- Petitioner claims to have deposited necessary income tax in December, 2020, but he has asserted in particular in para 10 and 11 of the petition that the application of the petitioner was not accepted by the officer at the window. He has further asserted that in terms of the Financial Budget 2020-2021, Chapter 19 and Section 245-C are continue to exist.
Issue notice to respondents of petition as well as stay application, returnable within four weeks. Notice be issued through both modes i.e. by ordinary process as well as registered post. Notices be given dasti also. Additionally a copy of the petition be served upon Mr. Anuroop Singhi, learned counsel usually appears on behalf of the respondent No.1. His name be indicated in the cause list.
Respondent No.2 is directed to receive the application of the petitioner and once the application is received, the respondent No.2 is directed to await for further directions of the court which may be passed in the matter.
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2021 (2) TMI 1202 - ITAT DELHI
Disallowance on account of payment of Royalty - assessee company has failed to prove any legal backing to the agreement and there is nothing mentioned in the agreement regarding the justification for these payments - CIT-A deleted the addition - HELD THAT:- Hon’ble jurisdictional High Court in the case of the assessee for assessment year 2008-09 [2015 (9) TMI 663 - DELHI HIGH COURT] has dismissed the appeal of the revenue filed against the order of the ITAT. Thus, the issue stands settled in favour of the assessee. Hence , the appeal of the revenue is dismissed on this ground.
Non-deduction of TDS on commission paid to foreign companies - HELD THAT:- As held that the commission has been paid to foreign agents deciding outside India and they have not rendered any technical services and hence do not come under the provisions o f Section 9(1)(vii)(b) of the Income Tax Act, 1961. In the absence of any change in the position of the facts and proposition of the law, we hold that the disallowance made by the AO u/s 40(a)(ia) is not legally tenable . We affirm the order of the ld. CIT (A) on this ground.
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2021 (2) TMI 1197 - ITAT BANGALORE
Entitlement for deduction u/s. 54F - AO denied exemption on the ground that construction was not completed within the period of 3 years - contention of the ld. AR is that though the construction was not fully completed, still the assessee is entitled for deduction - HELD THAT:- In order to get benefit of deduction u/s. 54F, the assessee need not complete the construction of the house and occupy the same. It is enough if the assessee establishes that he had invested the entire net consideration within the stipulated period in the construction of a new house. The said view was taken in CIT v. Smt. B.S. Shantakumari [2015 (8) TMI 274 - KARNATAKA HIGH COURT] followed by this Tribunal in the case of Smt. Babita Kemparaje Urs [2017 (10) TMI 581 - ITAT BANGALORE] - Being so, in our opinion, the claim of the assessee is required to be allowed by the AO in the light of above judgments. Accordingly, we hold that assessee is entitled to deduction u/s. 54F of the act, even if the assessee has not completed the construction within the period of 3 years. However, for the limited purpose of quantification, we remit the issue to the file of AO.
Addition u/s. 68 - assessee had taken loan from various parties but has not filed confirmation letters from the lenders of the loan - HELD THAT:- These credits appear in the books of account of assessee and the assessee is liable to produce the proof regarding the identity of parties, genuineness of transaction and creditworthiness. Before us, the ld. AR submitted that the assessee filed the confirmation letter along with PAN before the CIT(Appeals) and the addition cannot be sustained. However, we find no adjudication by the CIT(Appeals) on this issue. In our opinion, it is appropriate to remit this issue to the file of the AO with a direction to the assessee to produce necessary evidence with all ingredients of section 68 about the identity, genuineness and capacity of the lender. Accordingly, this issue is remitted back to the file of Assessing Officer for fresh consideration.
Appeal by the assessee is partly allowed for statistical purposes.
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